samchain/econo-pairs-v1 huggingface dataset:
The need and benefits of living on reclaimed land have been accepted and the focus is on strengthening the infrastructure to sustain this. Similarly, financial integration is a choice. Countries decide to become financially integrated because the perceived benefits of doing so outweigh the costs. Moving forward sustainably requires going beyond coping with capital flows to living with them. This involves developing and leveraging on fundamental economic strengths to enhance countries’ resilience to external shocks. A diversified export base focused on high value-added products and services translates into higher margins and pricing power, and hence less sensitivity to swings in the exchange rate. At the same time, developing a firm domestic consumer base will solidify economies’ internal strength and lessen the dependence on external demand. Much can also be done on the financial side. Deep and liquid markets would help to absorb swings in capital flows without overly large price movements. The availability and widespread usage of risk management instruments, particularly foreign currency hedging, would mitigate the negative repercussions from asset price volatility. Outward capital flows by domestic investors can enhance stability as international asset holdings can provide an important buffer during periods of volatility. Last, but not least, limiting leverage in the banking system can go a long way in cushioning the economy from external shocks. In most cases, exchange rate flexibility will be an indispensible part of living with capital flows.

The more the international investment community succeeds in differentiating each country’s prospects, the better the outcome will be, both for investors’ returns as well as the countries involved. Ladies and gentlemen, I have spent much of my remarks talking about the challenges of financial integration. It is important, however, not to lose sight of the bigger picture. The benefits of being part of an open and integrated global economic and financial system are immense and should be embraced. The question is not whether to be integrated, but how to best do it in a way  4  BIS central bankers’ speeches  that avoids a drift towards financial protectionism. Success on this front ensures that the legacy we leave for the generations behind us is one of opportunities rather than problems. In choosing the appropriate strategies, a balance has to be struck between boldness and humility. We should be bold in our willingness to question conventional wisdom and try new initiatives. But in a constantly evolving global economy, we must remain humble about our understanding of how things work and be acutely aware of the limits of our knowledge. As Albert Einstein once said “The difference between genius and stupidity is that genius has its limits.” At an institution for learning such as this, I think it is fitting to end with that quote. Thank you for your attention. BIS central bankers’ speeches  5
Burgess, S, Fernandez-Corugedo, E, Groth, C, Harrison, R, Monti, F, Theodoridis, K and Waldron, M (2013), “The Bank of England’s forecasting platform”, Bank of England Working Paper 471. Carney, M (2015), “Writing the path back to target”, speech at the University of Sheffield Advanced Manufacturing Research Centre, 12 March 2015, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech716.pdf. Clews, R, Panigirtzoglou, N and Proudman, J (2000), “Recent developments in extracting information from options markets”, Bank of England Quarterly Bulletin, Spring, pages 50–60. BIS central bankers’ speeches  19  Haldane, A (2014), “Twin Peaks”, speech at the Kenilworth Chamber of Trade Business Breakfast, 17 October 2014, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech716.pdf. Hills, S, Thomas, R and Dimsdale, N (2010), “The UK recession in context – what do three centuries of data tell us?”, Bank of England Quarterly Bulletin 2010 Q4. Hills, S, Thomas, R and Dimsdale, N (2015), “Three Centuries of Data – Version 2.1”, available here: http://www.bankofengland.co.uk/research/Pages/onebank/datasets.aspx. IMF (2006), “How Has Globalisation Affected http://www.imf.org/external/pubs/ft/weo/2006/01/pdf/c3.pdf. Inflation”,  available  at:  IMF (2013), “The dog that didn’t bark: Has inflation been muzzled or was it just sleeping?”, World Economic Outlook, April 2013. Phillips, A (1958), “The Relationship between Unemployment and the Rate of Change of Money Wages in the United Kingdom 1861–1957”. Economica 25 pp 283–299. Rogoff, K (2003), “Globalisation and Global Disinflation”, paper prepared for the Federal Reserve Bank of Kansas City conference on “Monetary Policy and Uncertainty: Adapting to a Changing Economy” at Jackson Hole. Rogoff, K (2006), “Impact of Globalisation on Monetary Policy”, available at: http://scholar.harvard.edu/files/rogoff/files/impact_of_globalization_on_monetary_policy.pdf.

Chart 17: Projection for wage growth and inflation, assuming a flatter Phillips curve Percentage change oya  6 4 2 0 -2 -4  Wages - February IR projections Wages - flatter Phillips curve Inflation - February IR projections Inflation - flatter Phillips curve Source: ONS and Bank calculations. 8  For instance, see Rogoff (2003, 2006), Ball (2006), Bernanke (2006), IMF (2006), Borio and Filardo (2007) and BIS (2014). 9  The independent variable is the MPC’s estimate of the hours gap. 10  See Bell and Blanchflower (2011, 2013) for a discussion of the role of underemployment in the UK economy since the crisis. BIS central bankers’ speeches  9  To give a sense of its implications, imagine the level of slack were currently around 2% and was only gradually eroded over the forecast. Chart 18 shows the resulting path of inflation and wage growth. Inflation and wage growth are both materially weaker: at the twoyear horizon, they are around 0.2 percentage points lower than in the MPC’s February Inflation Report. Each of these three explanations of the wage puzzle is empirically plausible.
I should mention that the ASC, with its composition of distinguished academics with different expertise, and in a sense more independent views, has been a catalyst in some of the work I  |3  just mentioned. Some of the topics on which the ESRB has produced and published valuable contributions include, for instance, the regulatory treatment of sovereign exposures; macroprudential assessments of various issues related to shadow banks, an area where there is still a lot of new ground to cover; the insurance sector; and commercial and residential real estate markets in the EU, to name just a few. I am also thinking of the work on structural issues regarding the banking sector, for instance in a report called “Is Europe overbanked?” by the ASC. This is a very relevant question in my view, and one that we will most likely get back to in the first panel today, where the ECB Vice President will lead the panel discussion addressing the effects of the low interest rate environment. The latter is another topic which benefits from being assessed from a macroprudential viewpoint, and which is naturally also on the ESRB’s agenda. The regular identification and monitoring of potential systemic risks also benefits from the ESRB’s broad composition I would like to mention another core task for the ESRB, namely identifying potential risks to the EU financial system at an early stage and, as mentioned, issuing warnings or recommendations about policy actions to mitigate such risks when deemed appropriate.

As we move forward, we may need to strengthen that flexibility even further. We do not have perfect foresight as regards what risks we will have to tackle further down the road. Nor do I think that we will ever develop the perfect tool for every conceivable financial stability risk out there. One thing to bear in mind in all this, is that whether the perspective is global, regional or national, it all boils down to the same thing - safeguarding the stability of the financial system. And in today’s highly interconnected world, it is quite obvious that we to some extent are all in this together. This brings me to a related issue where the ESRB has played a leading role. Reciprocation of macroprudential measures – key for their effective implementation An important prerequisite for effective implementation of macroprudential policy in a financially highly integrated world is that the measures in question can affect all financial actors which influence the specific risk that authorities are trying to mitigate. This is not always the case. For example, foreign branches are regulated by authorities in the home country of the parent company, and may not be affected by measures taken in the country where they are active. Reciprocation may in such a situation help mitigate the risks, minimize potential regulatory arbitrage and also provide a level playing field.
The industrial companies tried to make use of their promised loan facilities with the banks, but the banks were not able to lend money as usual. This resulted in a credit gridlock, which severely limited the access to loans. The problems spread from the United States to Europe and the European credit system also essentially ceased functioning. This meant that the Swedish banks and the Swedish financial system also suffered problems. BIS Review 149/2008  1  …followed by countermeasures and stabilisation In this situation governments, central banks and other authorities were forced to intervene to avoid a collapse in the global financial system. Without these measures the financial markets would most probably have ceased functioning – things were so serious. The measures have taken different forms in different countries, but two main types can be identified. The first is that the banks have been offered risk capital or other guarantees so that they can survive the crisis. The aim is to avoid more defaults like Lehman Brothers occurring when the financial market is so vulnerable. Those who lend money to a bank should be able to feel certain that the bank will still be there when it is time to repay the loan. The second type of measure is that the central banks have continuously supplied the banks with the short and medium-term loans they have not been able to obtain in the usual way on the market.

We at the Dallas Fed have investigated the links between wage inflation and the unemployment rate using the aggregate data that are available for the U.S., and also using state-level data. These investigations have led us to three main conclusions. First, wage growth responds to the unemployment rate with a lag. That’s no mystery: Many employers adjust wage and salaries just once each year. Second, wage growth becomes increasingly sensitive to the unemployment rate as the unemployment rate reaches lower and lower levels. A drop in the unemployment rate from 9 percent to 8 percent may not do much for the negotiating leverage of the typical worker. But the story is different when the unemployment rate drops from 6 percent to 5 percent or below, for example. Finally, taking these two factors into account, there’s been nothing at all unusual about the behavior of wage growth over the period since the national unemployment rate peaked nearly five years ago. We went through a deep recession. Coming out of a deep recession, it takes time for the unemployment rate to reach levels where wage growth picks up noticeably. Wage growth was about 1½ percent in both 2010 and 2011 – not too surprising, given that the unemployment rate was 9.9 percent in the final quarter of 2009 and, at 9.6 percent, nearly as high in the final quarter of 2010.
Reinhart, C M and Rogoff, K (2009), This Time is Different: Eight Centuries of Financial Folly, Princeton University Press. Schularick M and Taylor A M (2009), “Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870–2008”, NBER Working Paper Series No. 15512. Sheppard, D K (1971), The Growth and Role of U.K. Financial Institutions 1880–1962, Methuen. Solow, R M (1957), “Technical Change and the Aggregate Production Function”, Review of Economics and Statistics 39(3), pp. 312–320. Wadhwani, S (2010), “What mix of monetary policy and regulation is best for stabilising the economy?”, Future of Finance and the Theory That Underpins It. Wang, J C (2003), “Loanable Funds, Risk, and Bank Service Output”, Federal Reserve Bank of Boston Working Paper Series No. 03–4. Wang, J C, Basu, A and Fernald J G (2004), A General-Equilibrium Asset-Pricing Approach to the Measurement of Nominal and Real Bank Output, Invited for conference volume on Price Index Concepts and Measurement, Conference on Research on Income and Wealth (CRIW), available at http://www.bos.frb.org/economic/wp/wp2004/wp047.htm Wood, G and Kabiri, A (2010), Firm Stability and System Stability: The Regulatory Delusion, Paper prepared for a conference on Managing Systemic Risk at the University of Warwick 7th–9th April 2010. 16  BIS Review 95/2010

M R Pridiyathorn Devakula: Economic and financial crimes - challenges to sustainable development Remarks by Mr M R Pridiyathorn Devakula, Governor of the Bank of Thailand, at the Eleventh United Nations Congress on Crime Prevention and Criminal Justice, Bangkok, 19 April 2005. *  *  *  Mr. Chairman Thank you for allowing me an opportunity to share with you some thoughts on the issue of "Economic and Financial Crimes: Challenges to Sustainable Development". From the topic of this Plenary Session, I assumed the organizer would probably want an answer as to whether economic and financial crimes are obstacles to sustainable development. The answer is a definite YES. The ultimate objective of managing the development of an economy is the well being of the people. There is little need to elaborate on how activities such as Drug trafficking, Exploitation of natural resources, Exploitation of child labour, Corruption, Misappropriation of funds from banks, Cheque or credit card fraud, Stock price manipulation, and Tax evasion affect the economic well being of the people. The message I would like to highlight today is rather that the consequences of these undesirable activities go well beyond the financial loss and the economic well being of society and the country. In my opinion, what is more important than economic well-being is the feeling of living in a fair and just society.
Hamad Al-Sayari: Economic and structural policy reforms in Saudi Arabia Speech by His Excellency Hamad Al-Sayari, Governor of the Saudi Arabian Monetary Agency, at the Institute of International Finance, INC MENA Regional Economic Forum, Riyadh, 7 November 2007. *  *  *  It is a great pleasure for me to welcome you at this important gathering organized by the Institute of International Finance and hosted by the National Commercial Bank. I would like to thank the organizers for inviting me to speak to this distinguished audience. I understand that for the next two days, the participants will be deliberating on the state of the global economy in general and the opportunities and challenges facing the Middle East and North Africa (MENA) economies in particular. The Gulf Cooperation Council Countries (GCC) are an important constituent of the MENA region, a marketplace that is undergoing significant transformation where the member countries are opening up their markets and significant structural policy reforms are taking place. Let me begin by providing you with an overview of the ongoing economic liberalization and structural policy reforms currently underway in the Kingdom. Since the discovery of oil in the early 1930s, the oil sector has remained the linchpin of Saudi Arabian economy. Nevertheless over the past three decades, a strategic decision was made to diversify and expand the base of our economy.

For instance, the supervisory authority may put pressure on banks to increase the level of capital – for example, through upward adjustment of capital requirements under the Basel III framework. In addition, authorities may resort to bail-in measures whereby a bank’s existing debt holders would be forced to convert parts of their debt into bank equity or to accept a (partial) write-down of their claims. Of course, authorities face several constraints, due to the lack of specific powers to force resolutions, for example, or incentive problems leading to delayed action. For instance, bail-in measures may take some time to administer because of the complexity of large banking groups and the various legal issues involved. In this context, Europe faces specific challenges given the lack of harmonisation of national systems, which strongly complicates the resolution of cross-border banks. Significant steps are being taken to overcome these shortcomings. I will return to this topic after discussing the implications of deleveraging for monetary policy. Monetary policy and the deleveraging process Whereas the deleveraging of the banking sector is a necessary process to correct the imbalances built up prior to the crisis and to bring the economy back to strong and sustainable growth path, “disorderly” deleveraging can represent a serious threat to price stability. I have already described some of the mechanisms through which deleveraging can spiral off. I would like to now focus on the implications of deleveraging for the transmission mechanism of monetary policy.
Efforts are being made both by the financial industry and the policy-making community to address the most important micro issues, including the lack of transparency, product complexity and inappropriate incentives in the  4  BIS Review 75/2010  originate-to-distribute model. However, in recent months there have been some, albeit nascent, signs of improvement in securitisation activity, in part supported by a narrowing of spreads on securitised products (i.e. yield on securitised products over Libor). The narrowing spreads, which reflects the compensation investors are demanding for holding these assets, could bring prices closer to levels where issuance of ABS securities makes economic sense. This has been indicated in the responses to ECB bank lending surveys and in lower retention rates by banks for newly-issued ABS. While it is difficult to disentangle the relative contribution of micro and macro factors to the improvement, it seems clear that the improved economic outlook has played an important role. IV. Overall assessment  Let me now conclude with the overall assessment of the identified risks to euro area financial system stability (slide 15). Although the main risks to euro area financial stability essentially remain the same as those to which attention was drawn in the last issue of the FSR, their relative importance has changed significantly over the past six months.

Given the sizeable decline in projected losses on securities, and the large provisions that had already been made against loan losses by the end of 2009, the potential total future write-downs on securities and loans has fallen quite substantially. BIS Review 75/2010  3  Chart 6 on slide 11 shows the profile of write-downs on securities and loans over time, applying the same methodology as in previous assessments published in the FSR. This time the horizon of the estimates for future losses has been lengthened to 2011 and sizeable loan losses are still expected next year. The expected write-downs on loans will constitute a significant and lasting drag on banking sector profitability and will raise the risk that the recent recovery of profits does not prove durable. At the same time, the pressure on banks to keep leverage under tight control, the disengagement from public support of banks’ balance sheets and the vulnerability of net interest margins of some banks to the prospect of a flattening of the yield curve are likely to contribute to keeping profitability moderate. Regarding the year-by-year distribution of losses by type of exposure, write-downs on securities exposures were the main contributor to the substantial losses for, and capital drains on, euro area banks in 2008. Going forward, while the recovery in securities prices makes valuation write-backs on securities holdings more likely in 2010, write-downs on loans are expected to remain relatively high.
As demonstrated by the thrift crisis, if many firms are all vulnerable to the same shock, ensuring that these firms are small and numerous won’t necessarily reduce the systemic risk they collectively pose to the financial system. Third, the costs incurred in breaking up such firms also need to be considered. Others have argued in favor of separating commercial and investment banking activities of the large banks. In my opinion, there are shortcomings to re-imposing Glass-Steagall-type activity restrictions. It is not obvious to me that the pairing of securities and banking businesses was an important causal element behind the financial crisis. In fact, independent investment banks were much more vulnerable during 2008 than the universal banking firms which conducted both banking and securities activities. More important is to address the well-known sources of instability in wholesale funding markets and to give careful consideration to whether there should be a more robust lender of last resort regime for securities activities. Evaluating the socially optimal size, scope and organizational structure of financial firms is a complicated exercise, and so is establishing a viable transition path to a system of much smaller banks. It would be helpful in this regard if advocates of the break-up solutions would develop detailed proposals that address the essential questions of how such downsizing or functional separation would be accomplished, and what the expected benefits and costs could be from such a restructuring. The recent financial crisis underscores the importance of financial stability as a necessary condition for a vibrant economy.

Persistent weakness in housing is particularly problematic because it acts as a drag on spending and job creation in an environment in which such weakness can not be easily offset  8  A number of these issues were documented by an interagency task force that included the Federal Reserve and are being addressed through consent orders requiring supervised institutions to remedy deficiencies. 9  When the amount of debt secured by a property exceeds its likely net sales price, a “short sale” can be a less costly alternative to foreclosure. The short sale agreement between the homeowner and lender often grants the lender final approval of the sales price and may release the homeowner from any deficiency. 4  BIS central bankers’ speeches  by other policy adjustments. Housing policy should seek to break adverse feedback loops, promote more economically efficient outcomes in housing and support growth. In recent speeches,10 I have called for a “comprehensive approach” to stabilize the national real estate market and lay the foundations for recovery. I believe this should include measures to improve access to mortgage credit, reduce obstacles to refinancing, lessen the flow of homes into foreclosure through bridge financing and accelerated principal reduction, and to facilitate the absorption of REO back into use as owner- or renter- housing.