samchain/econo-pairs-v1 huggingface dataset:
It has also proved possible to combine low unemployment, compared with other European countries, with low inflation, contrary to what many experts expected. But open unemployment has only come down towards 4 per cent in a few occasional years, and stands today at 5.5 per cent. The number of employed now is lower than before the crisis, and some 1.2 million people of working age (16-64 years) are not participating in the labour force. The regime shift and employment Against this backdrop it's not surprising that a lively debate arises from time to time about unemployment and what can be done about it. What is perhaps more surprising is that some people still assert that the shift in stabilisation policy regime at the beginning of the 1990s is what has caused unemployment to be higher today than it was during the 1970s and 1980s. Sometimes the argument goes that Sweden has given up its previous objective of full employment in order instead, for some more or less obscure reason, to introduce a target for inflation. If we only were prepared to return to the high-inflation policies of the 1970s and 1980s, then everything would be better. There is much to say about this. Firstly, it is difficult in a more general sense to imagine that the markedly improved stability in economic policy that the shift in regime brought about in the long run could be something negative for employment.

Over the longer term, the instability, whether inherent or not, would decline if we have more developed financial and capital markets and also, by default, a multi-currency system as they reduce the risk concentration on one individual financial market and currency. Conclusion In closing, I believe that policymakers over the world need to focus our effort on all aspects of policy challenges in parallel including surveillance, financial market developments, regulations, and risk management. I strongly believe that market players respond to policy incentives and therefore policymakers have the responsibility to put the right policy and incentives in place. There is no quick fix and it will take a long time and painful adjustment before countries that were at the epicenter of the global crisis can resume normalcy. In Asia, we have taken a decade to strengthen our economic resilience. Because of our past efforts, we have been able to weather this crisis relatively well. That said, our work in Asia is still ongoing to strengthen the policy framework and tools to deal with future crisis that will surely not be the same as the last. Importantly, we are mindful that the world will have much less fiscal space to cushion potential global contraction, should the next crisis hit. While it may be easier to advance these efforts at the national level, achieving policy coordination on the global level will be much more difficult.
For example,  BIS central bankers’ speeches  7  a negative shock to a country’s income prospects will tend to raise debt sustainability concerns and hence borrowing costs, thereby worsening sustainability. Another friction is that, once internationally-held debt becomes unsustainable, restructuring it is usually a messy process because of the lack of an internationally-agreed legal framework. In part for that reason, countries have tended to delay tackling unsustainable debt. But if debt is truly unsustainable, delay tends to further worsen debt dynamics, ultimately increasing costs for both debtors and creditors (Krugman (1988)). These contractual frictions can make debt a fickle friend. They will tend to aggravate debt sustainability and debtor prevarication problems, thereby encouraging investors to withdraw credit at the first sign of trouble – so-called “sudden stops” (Calvo (1998)). These frictions are well-illustrated by historical sovereign debt restructuring experience, most recently in emerging market economies such as Argentina. Yet it is widely accepted that there are straightforward contractual solutions to these debt problems. One is to issue debt instruments whose contractual features reduce pro-cyclicality, such as GDP-linked bonds. Their repayment profile adjusts with a country’s ability to pay, thereby acting counter-cyclically and quasi-automatically to defuse repayment risk (Shiller (1993 and 2003), Barr et al (2014)). The impact of such instruments on debt dynamics could be significant. A recent Bank of England study considered the debt-to-income ratios of the G7 countries, given shocks to growth and real interest rates, comparing conventional and GDP-linked debt. The latter cut the variability of G7 debt-to-income ratios in half.

Jean-Claude Trichet: I expect that the cooperation with the UK authorities, particularly with the Bank of England, and for me personally with its governor, will be extraordinarily close. It’s a job at the level of the EU 27 where you will need a very close cooperation between Mervyn King and all of us, and I expect that this is the way we are all looking at it. 4  BIS Review 115/2010
11.12.2019  Opening remarks Conference Climate Change. Challenges for the Financial System/Banco de España Margarita Delgado Deputy Governor  Good morning, Welcome to the Banco de España for this Conference, where we intend to take a look at the main challenges that climate change poses for the financial sector. The Conference takes place amid two intense weeks of the COP25, which is full of other interesting conferences and events. But I assure you that you won´t regret your decision to be with us today. The World Meteorological Organization certified last week that 2019 will close a decade of exceptional global warming, retreating ice and record sea levels, driven by greenhouse gases from human activities. 2019 is on course to become the second or third warmest year on record. The global average temperature in 2019 was about 1.1 degrees Celsius above the preindustrial period.1 The IPCC estimated that we could reach a temperature increase of 1.5oC between 2030 and 2052;2 but, given the latest evidence, this may actually occur sooner. There is now broad consensus that global warming above 2°C, relative to pre-industrial levels, would have significant economic and social consequences. The effects of climate change are widespread. It impacts directly on the environment, ecosystems and marine life, but it has also important implications in terms of human health, water resources, food production and migration. There is no time for procrastination. We need to accelerate the reduction of greenhouse gas emissions through the implementation of decisive and forceful climate policies, and we need to begin now.

Unfortunately, it would seem that it hasn´t been till recently that this call for action has been taken seriously. In his keynote presentation Lord Stern will shed some light on whether we are still in time to avoid the worst impact. Thank you very much for accompanying us today. Still, we shouldn´t forget that the fight against climate change also has a human and social dimension. The transition to a low-carbon economy must also be “fair” or “just” for the economic sectors most affected. This is one of the objectives of the 2030 Agenda for Sustainable Development, which commits to eradicate poverty and achieve sustainable development worldwide by 2030, ensuring that no one is left behind. The Agenda integrates in a balanced manner the three dimensions (economic, social and environmental) of sustainable development through seventeen Sustainable Development Goals. Ms. Cristina Gallach, High Commissioner for the 2030 Agenda, will moderate the panel that will follow Lord Stern´s presentation, and will share with us the progress that is being made in this respect. Thank you very much, Cristina, for being here today. I am sure we are all looking forward to hearing Lord Stern’s speech. But first, let me say a few more words about the implications that the transition to a low-carbon economy has for the financial sector, and the kind of actions that Supervisors and Central banks are taking to address this global challenge.
And they have been effective in easing financial conditions and supporting the recovery. Yet it is clear that, for all central banks, the structural backdrop has made monetary policy normalisation slower. Consider lower growth. It is now clear that the long-run growth potential of major economies has been falling for a number of years. For example, the Consensus forecasts for long-run growth real GDP for the US – that is the average growth six to ten years – stood at 3.1% in early 2003. The latest figure is just 2.2%. Long-run growth forecasts for the euro area were revised down from 2.2% to 1.4% over the same period. These lower forecasts represent in part the impact of ageing populations, but also reflect the falling trend in total factor productivity.4 This affects monetary policy because slower growth in potential output reduces what is often referred to as the equilibrium interest rate.5 While not directly observable in the real world, this widely used concept is organised around the notion of an equilibrium level of the rate of interest where there is neither upward nor downward pressure on inflation. If the equilibrium rate falls, the margin above the effective lower bound becomes compressed, reducing the space in which central banks can operate to provide accommodative policy. One might reasonably ask why central banks did not identify this trend sooner. The answer seems to lie in an overreliance on pro-cyclical estimates of potential output.

All these measures aimed to support bank funding markets and ensure that the flow and pricing of credit to the real economy was in accordance with our intended monetary policy stance. But a question often asked is why we did not resort to large-scale asset purchases at this point, as the Fed was already doing. Bear in mind that inflation developments in the euro area at the time did not suggest a tight stance. Headline inflation was rising steeply from its 2009 trough, exceeding 3% in October 2011, partly driven by an increase in underlying inflation. Inflation expectations were well anchored around our objective. Hence our diagnosis of the problem in this period focused more on monetarytransmission than on the policy stance. Our stance was not being transmitted evenly across all parts of the euro area. And so our measures in this period were specifically designed to remove those impairments in transmission. The main issue we faced was the perverse interaction between the euro area banking sector and institutional incompleteness of our monetary union, which had fundamental implications for our policy in a system of bank-based monetary transmission. While the first phase of the crisis can be interpreted as a severe recession amenable to monetary policy, this second phase was the consequence of institutional challenges that monetary policy could only aim to mitigate, but could not overcome.
It reflects the imbalance between national savings and investment, which needs to be addressed by encouraging greater savings. Such Trade and Current Account deficits were financed through net inflows to the capital and financial accounts. It was also observed that Sri Lanka could reasonably and comfortably afford a bulk of the additional foreign exchange cost on account of high oil prices in the first nine months of 2006 as a result of the higher migrant worker remittances and foreign currency denominated loans obtained by the government from external and domestic sources. Worker remittances increased by US dollars 338 million in the first ten months and foreign currency denominated debt rose by US dollars 404 million by end November 2006. The higher quantum of worker remittances was, to some extent, facilitated by the active promotion campaigns launched by the Central Bank with the support of the Sri Lanka Foreign Employment Bureau, overseas job agencies, foreign missions and the state banks and we believe that the impact of such initiatives would be further felt in the next few years as well. During this year, a remarkable increase was also seen in foreign direct investments. All in all, these factors contributed towards the overall balance of payments (BOP) surplus which is estimated to exceed US dollars 150 million during 2006.

Good analytical tools, however, can be helpful even in this respect, by enabling the simulation of different alternative scenarios in a consistent manner. After this general introduction, let me now briefly speak about the progress we have so far achieved in forecasting at the Czech National Bank. We now have more than five years of experience with inflation targeting. The new regime was introduced in a challenging situation, after a period of currency turmoil in May 1997, which ended the fixed exchange rate period and resulted in higher inflation and rising inflation expectations. The economy needed a new nominal anchor in order to return to a disinflation path. Inflation targeting was chosen as “the best of all bad” alternatives at the time. Such a sudden switch from a fixed exchange rate system to inflation targeting required a radical and fast change in the central bank’s mentality. This was perhaps the biggest challenge that the CNB had to face. Over the past five years it has involved much work on improving our forecasting tools, leading to substantial development in our internal analytical processes. These changes culminated a year ago, when the CNB settled on a new forecasting process. This integrates expert judgement and short-term analyses - which were the key pillars of the CNB’s forecasting tool-kit in the first years of inflation targeting - with a small-scale macroeconomic model developed by the CNB’s staff with the assistance of the International Monetary Fund.
During the Governing Council meeting held in Malta last October, President Mario Draghi stated that “Monetary policy should not be the only game in town”, indicating that monetary policy could not solve the euro zone’s economic problems alone, and that “…all countries should strive for growth-friendly fiscal policies”. 8  BIS central bankers’ speeches  In the current state of affairs, an efficient budgetary policy must be built around structural reforms, fiscal responsibility and productive public investment. With the Maltese economy operating close to its potential output, it is the appropriate time to create fiscal buffers that could act as a cushion against any future need. Conclusion The single currency has proved to be a challenge to various countries in the euro area. Instead of exploiting the opportunities offered by the single market, some Member States have been impacted by the fixed nominal exchange rate and their inability to correct macroeconomic imbalances through internal adjustment. This made them more vulnerable in times of crisis. One fundamental lesson to be learnt is that, with a fixed exchange rate, it is of utmost importance that the rest of the economy is as flexible as possible to correct imbalances. In this regard, the Maltese economy has been nimble enough to adapt to the new realities of the single currency. Yet, the challenges that lie ahead will require further structural changes that increase flexibility and strengthen economic fundamentals. To this end, Government has identified health and education as new sectors with growth potential that could be transformed into exportable services.

The proper implementation of these programmes, which have been favourably assessed in the European Commission's follow-up of the Lisbon agenda, is vital if the Spanish economy is to leave behind the path of low productivity growth on which it has been moving. Undoubtedly, the high availability of labour is a factor that partly explains the low increases in productivity. But this should not mask the difficulties faced in increasing and modernising productive capital, in properly training labour and in incorporating technological advances, difficulties that must be overcome to improve the competitiveness of the productive system. Market flexibility and efficiency is a vital requirement for sustaining long-term growth in an area of monetary stability. And it is all the more vital if, as in the case of the Spanish economy, the starting point involves a lag in technology and a relatively low level of productivity. This is why it is so important to move forward the Lisbon strategy in our country. The challenge lies, therefore, in translating the programmes designed into effective government action that is capable of mobilising the innovative energy of the private sector and of extending action to other key areas still requiring a liberalising boost, such as the retail trade sector and the land, housing and rentals markets. The financial system During 2005 Spanish deposit institutions operated in a benign domestic and international environment, both from the macroeconomic and financial-market perspective.
As for the claim that the decision to enter ERM II was hasty and premature, that suggests recklessness! No, there was no rush. The decision was made after thorough consultations with the EU Commission and the European Central Bank (ECB) in the light of the progress achieved by Malta in fiscal consolidation and structural reforms. Their agreement was contingent on a firm undertaking by the Maltese authorities to continue to implement the Convergence Programme. A related objection is that before adopting the euro Malta should first satisfy tests similar to those set for the British economy by Chancellor Brown. This argument betrays an insufficient familiarity with the Chancellor’s five tests. They are, in fact, not so different from the Maastricht criteria, which Malta, together with the six other new Member States currently in ERM II, is seeking to satisfy. The five tests relate to convergence (like the Maastricht criteria); flexibility of labour, product and capital markets (being addressed in Malta’s Convergence Programme); investment, i.e. whether euro will encourage more inward FDI (the British Treasury’s 2003 report suggests that it does); financial services (this applies to the special case of the City of London); and growth, stability and employment. Malta’s strategy document, published jointly by the Government and the Bank last year, argues that the euro would be beneficial in this respect (and so does the Treasury report). The case for adopting the euro sooner rather than later is set out in the strategy document.

For example, a higher deficit means an increase in the public debt of equal amount, and thus more annual interest to be paid out of recurrent revenue. Besides, for the reasons I gave earlier, a higher deficit translates into a wider trade gap (by an estimated Lm7.5 million in the above example). Proponents of more government spending should also bear in mind that even in the absence of the euro adoption factor, Malta would still have to abide by the Stability and Growth Pact (SGP). You might recall that even the British Government, which has no immediate plans to adopt the euro, was called to order by the EU Council some time ago because of its growing budget deficit. Then again, sound public finances are fundamentally a matter of economic common sense and prudence. So much so that in recent years there have been repeated calls on the government from all quarters to reduce the deficit and the public debt. Is it not strange, therefore, that just when headway is finally being made in this very direction, we hear calls for a reversal of this policy and for engineering what would at best be a short-term boost to growth? One should also bear in mind that Malta’s main challenge is to become more internationally competitive. In this respect, an increased fiscal deficit will not solve anything. Malta needs quality growth, preferably resulting from foreign direct investment, which brings with it capital, technology and markets.
Since March, the Bank accelerated the withdrawal of the monetary impulse, with greater intensity than foreseen by analysts’ consensus, bringing the MPR to a level within the normal range. This, coupled with the changed external macroeconomic scenario due to the drop in commodity prices, managed to contain inflation expectations (figure 11). While in mid-year we expected inflation to be around 4% for much of the second half, the data have shown inflation hovering around 3%. The propagation of specific shocks has been similar to the historical average, but lower than that of 2007 and 2008. Today, in Chile and in a large part of the emerging world, inflation forecasts have been lowered and the risk of overheating has lost relevance (figure 12). For the same reason, while in mid-year we foresaw that the MPR would end the year 2011 close to 6%, in recent months we said that there will probably be no more increases, an opinion we have reaffirmed in our latest communiqués and I will come back to shortly. But first let me take a look at what is going on in the developed world. The 2008 crisis is not over yet The crisis of 2008 was not a typical recession because it originated in a financial meltdown, whose effects are deeper and its recovery, slower. This we know first-hand in emerging countries. In Chile we had one in the early 1980s.

08.10.2020  Banking resolution: firm foundations for stability SRB Conference 2020/Session II: Resolution planning under the Banking Package: continuity and innovation Pablo Hernández de Cos Governor  Good afternoon, ladies and gentlemen. Let me begin by thanking the organisers, and the SRB Chair in particular, for giving me the opportunity to participate in this conference. Five years have passed since the Single Resolution Board was established as the resolution authority within the Banking Union. That is certainly a short time by institutional standards but, looking back, I would argue that the progress made has been significant. Under the leadership of its chair, Elke König, the SRB has finalised resolution plans – along with their MREL requirements – for all significant institutions. It has likewise fostered their resolvability, and has put in place effective mechanisms for cooperation with the national resolution authorities. All these arrangements have already proved their effectiveness. From a broader perspective, I would also argue that a more robust European crisis management environment has been conceived. Harmonisation of procedures not only strengthens the Banking Union as it is; I am sure it will also prove essential in future crossborder consolidation initiatives. Bail-in has aligned incentives for managers and creditors alike in reducing excessive risk-taking. And, as a much wished intangible asset to a central banker like myself, the existence of a Single Fund is another milestone, partially mutualising risks in the Euro Area, which is moving forward with a more complete Monetary Union.