samchain/econo-pairs-v1 huggingface dataset:
In the fourth quarter of 2008 and the first quarter of 2009, global economic activity recorded its weakest performance in decades. Today, the situation has improved very significantly. The unprecedented global policy response has had its intended effect. The financial system is showing clear signs of stabilization. Incoming economic data over the last couple of weeks suggest that global economic activity is improving. The economic rebound in the coming months may even exceed expectations. At the same time, looking beyond the near term horizon, our economies and the financial system continue to face considerable uncertainties and challenges. Yet, certain parts of the financial industry appear tempted to go back to business as usual. Industry statements and comments made by some banks on regulatory reforms reflect this trend. Ladies and Gentlemen, I am deeply convinced that it is our common responsibility and duty not to let this happen. Let me begin by laying out three hopefully compelling reasons why we must secure fundamental regulatory reform of the financial sector. The first reason is that too much of the risk taken in the financial sector ultimately resides with taxpayers. The rescue of significant parts of the global financial system from nearcertain collapse by public authorities came at very substantial risk and costs to taxpayers.

If shareholders know that they have to absorb potential  2  Barry Eichengreen and Michael D. Bordo: “Crises now and then: What lessons from the last era of financial globalization?”, NBER working paper 8715, January 2002. 3  “Report of the Financial Stability Forum on Enhancing Market and Institutional Resilience”, April 2008, and the recommendations and principles to strengthen financial systems that the FSB published on 2 April 2009. 2  BIS Review 115/2009  future losses rather than passing them on to taxpayers, they will likely become less willing to let management engage in excessively risky activities. Ultimately, this incentive effect can help make future crises less likely. Strengthening capital requirements The crisis has nakedly exposed the dangers of excessive leverage. It also revealed a number of fundamental weaknesses of existing capital requirements. While model-driven risk-weighted capital requirements are sensible and should be maintained, they are not perfect and very likely never will be. Most of us have had to learn the hard way that the modeling of risk involves substantial risks itself. Despite risk-weighted capital ratios that in most cases exceeded the regulatory minima, leverage was a key source of vulnerability going into the crisis. Excessive leverage not only intensified the impact of mistakes on the financial situation of individual banks. It also amplified the crisis as ongoing deleveraging in the industry inevitably put downward pressure on financial markets and on the real economy. It is now also clear that banks were undercapitalized at the start of the crisis.
Fernando Restoy: Challenges for banking resolution Closing remarks by Mr Fernando Restoy, Deputy Governor of the Bank of Spain and Chairman of the FROB (The Fondo de reestructuración ordenada bancaria – Fund for Orderly Bank Restructuring), at its conference, Madrid, 4 June 2014. * 1  *  *  Introduction  Good evening. I welcome this opportunity to share with you some thoughts on banking resolution. I cannot think of a more qualified audience to discuss this matter than that invited by the FROB for this conference, with representatives of competent authorities in the field, among others. I will organise my remarks as follows. First, I will briefly describe how I see the general global framework for banking resolution established after the crisis. Next, I will review the special features of the European case. And finally, I will concentrate on the lessons to be drawn from the Spanish experience, with a special reference to issues relating to the institutional design of banking resolution. 2  The global framework for banking resolution after the crisis  We all know that banking resolution has not achieved the status of a well-defined policy area until very recently. Actions taken by authorities in relation to failing or likely-to-fail institutions have followed a discretionary case-by-case approach, particularly with respect to the availability of public funds to protect banks’ creditors.

Otmar Issing: A framework for stability in Europe Speech by Professor Otmar Issing, Member of the Executive Board of the European Central Bank, at the University of London, European Economics and Financial Centre, London, 19 November 2004. * 1. *  *  Introduction  The formation of Economic and Monetary Union (EMU) has created a framework for economic policy-making in Europe which is unique in history. While the single monetary policy is oriented towards a union-wide objective, namely the maintenance of price stability, the other policy areas involving fiscal and wage policies - largely remain the competence of national governments and other national actors, such as the social partners. The combination of a centralised monetary policy and decentralised other policies has led to the evolution of a new set of rules and objectives for national and supranational policy-makers. The Maastricht Treaty and the secondary legislation, including the Stability and Growth Pact, established the basic set of rules and objectives to lay out a framework for stability in Europe. 2. Responsibilities under the “Maastricht assignment”  With regard to monetary and fiscal policies, the assignment of responsibilities is defined by the Maastricht Treaty and the Stability and Growth Pact, respectively. The Treaty has assigned the maintenance of price stability as the primary objective to the single monetary policy conducted by the ECB for the euro area as a whole. Without prejudice to its primary objective, the ECB shall support the general economic policies in the European Community.
This has reduced their capacity and willingness to provide new loans, and a number of the largest financial institutions in both the US and Europe have had to raise substantial new capital. Crises and turbulence are built into the workings of the market. The search for yield and market shares may at times become too intense. One lesson from the turbulence so far is that developments in the financial system, with new financial products combined with a possible lag in legislation and regulation, have rendered the financial system vulnerable. The turbulence has also shown that in a situation of widespread uncertainty and turmoil, different segments of the financial market are interconnected, which is not evident under normal circumstances. An important aspect of the current turbulence is the sharp increase in the price of interbank liquidity. History shows that there have been periods where the spread between banks’ funding costs in money markets and risk-free interest rates has increased sharply, but these periods have been relatively short. The persistence of the wide spreads today suggests that banks’ confidence in other banks’ credit quality has been reduced. This would also indicate that banks prefer to hold substantial liquidity in order to limit their own funding costs. The persistently wide spreads is also an indication that this episode of turbulence is not yet a closed chapter. 2  BIS Review 45/2008  Orientation of monetary policy Monetary policy in Norway is oriented towards annual consumer price inflation of close to 2.5 per cent over time.

Compared with other countries, productivity gains have been particularly strong in the banking industry and other service sectors. The business sector has been quick to adapt and change, and to make use of new technology that is available in an international market. This is probably due the modernisation of the functioning of the economy through the 1980s and 1990s, which resulted in more efficient markets. Turbulence in financial markets The financial market turbulence may result in a reversal of some of the positive driving forces in the Norwegian economy. The turbulence was probably triggered by falling house prices in the US. There were reports of an increase in defaults on subprime mortgages from the second half of 2006. Securities portfolios had been developed around these mortgages. Uncertainty arose among bankers and investors who directly or indirectly were exposed to losses on these mortgages. This resulted in a sharp decline in prices for these securities, which then spread to a range of mortgage-backed instruments. In the course of summer 2007, it became clear that the losses had spread to banks, funds and financial establishments in Europe, Asia and the US. The turbulence also spread to other financial market segments. Few knew who was exposed to losses, and financial market participants started to question counterparties’ financial situation, and held on to their money. Many banks have sustained substantial losses on their own investments related to these markets, but have also had to bring back onto their books loans from companies they had established.
Household debt in relation to disposable incomes is now at the same level as just before the banking crisis at the beginning of the 1990s, just over 120 per cent. The bulk of households’ loans have in various ways been secured on homes. A number of factors can help to explain this development. In the housing market the supply of new apartments has been low since 1993 (Figure 2). In the centres of the major Swedish cities, where prices have risen most, it is difficult to build homes at all. Meanwhile, demand has picked up as a result of robust growth in households’ incomes. Disposable incomes have risen by 35 per cent since 1995, measured in current prices. Moreover, migration to the big cities has boosted demand in the very areas where the supply is most limited. During the IT boom, the demand pressure in Stockholm was high, which was reflected in prices. When the equity market and particularly technology companies dropped in value, prices in Stockholm stagnated, but they continued to rise in Gothenburg and Malmö. In the credit market, falling interest rates have of course increased demand and made households more inclined to borrow. Households may also be borrowing more because they are less uncertain than before about how interest rates and inflation will develop. The future seems more predictable, which should increase the willingness to borrow at each given interest rate level. Since the mid-1990s we have gone from a period of high, fluctuating inflation to low and stable inflation.

Jean-Pierre Roth: Swiss outlook and global developments Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Icon Roadshow Euro 2008, Frankfurt am Main, 17 March 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The Swiss economy looks back on a number of successful years during which it was a very active participant in the growth of the world economy. The export sector rapidly expanded its presence in the new markets, thereby making an important contribution to this development. What was remarkable was that the increased foreign activities were not detrimental to Switzerland as a production location. On the contrary, the Swiss location benefited overall. Reforms aimed at strengthening and opening up Switzerland as a business location have also made a substantial contribution to economic prosperity in recent years. The turbulence on the financial markets that erupted in mid-2007 is unlikely to leave the Swiss economy unscathed. The export sector, including the banks, will be affected by the slowdown in the international economy. An additional factor is the substantial rise in the value of the Swiss franc over the past few months against the euro and the US dollar. However, we are already in a position to learn quite a bit from the financial market turmoil.
Despite the ratification of these protocols by some African countries, it is worth noting that rich countries with 16% of the world population emit 51% of the worlds green house gasses (UNDP, 2003). The Kyoto Protocol is yet to be implemented due to non-ratification by some key developed countries, who happen to be the emitters of substantial amounts of the worlds greenhouse gases (Russia ratified the Protocol in September 2004). A United Nations Forest Forum (UNFF) was established in 2000 to promote the management, conservation, and sustainable development of forests. The institution effectively serves to monitor national, regional, and global developments of forests. United Nations Organisations such as United Nations Environmental Program (UNEP), United Nations Development Programme (UNDP), United Nations Convention to Combat Desertification (UNCCD), and the World Bank have done a commendable job in implementing multiple projects that aim to promote environmental sustainability in Africa. These organisations provide both financial and technical support to programmes designed to promote environmental sustainability in Africa. African governments have pledged to support such programmes. 6. Recommendations  From the foregoing, it is clear that environmental protection goals should be realised in order to achieve sustainable economic growth.

Regional and international policies on environmental management, governance, and conservation have an important role to play in this area, as environmental decisions of one economy may adversely affect other economies. The achievement of environmental goals will facilitate the achievement of other MDGs. Equally important are transfers of technology that is friendly to the environment as globalisation takes root. 8  BIS Review 74/2004
Real interest payments are below growth, so the ratio of national debt to GDP falls, even if loans are taken for interest payments and the debt is not amortised. Helicopter money as a means of funding fiscal policy stimulation Another idea brought up is for the central bank to fund a fiscal policy expansion with the banknote presses. It is difficult to find an exact definition of helicopter money, but the important questions concern which part of it is fiscal policy, which part is monetary policy and which part is coordination. The basic idea plays with fire a little: everybody knows that a failed monetary policy in which control has been lost of the banknote presses can easily end in hyperinflation – history gives us several clear examples of this. But in these examples, the initiative usually comes from elsewhere: central government puts pressure on the central bank to fund an expansionary fiscal policy as tax revenues are insufficient and credit arrangements are limited. The discussion today instead concerns a situation where inflation is too low and monetary policy needs the assistance of a more 16 See also Posen (2020) for a discussion of the interest rate peg introduced by the Bank of Japan. See Coenen et al. (2012), who estimate the so-called fiscal policy multiplier with and without a lower bound for the policy rate. 17  17 [25]  expansionary fiscal policy.

We have been able to affect expectations for the following years through our communications. Other central banks that have not traditionally engaged in this type of communication have, as I mentioned earlier, experimented with different forms of rough ‘triggers’ of various kinds. The academic background to the concept is the insight that expectations of future policy rates are at least as important as their current level when it comes to affecting investment and consumption decisions. In normal cases, the central bank is assumed to be able to influence expectations satisfactorily through its systematic monetary policy. But when the policy rate reaches its lower bound, it is possible to communicate an intention to diverge from normal behaviour and keep the rate low for a longer period and thus substitute, to a certain extent, for an immediate policy rate cut. There has been, however, some discussion of how effective such communication actually is, particularly over longer horizons. 12 The Riksbank's method provides a more complete picture of how we see the situation and the development of the economy. But other ways of communicating about the future have their advantages. One variant of this is the state-contingent US approach: saying that the policy rate will not be raised until the outcome for inflation has reached 2 per cent. 13 In situations where the market does not share the Riksbank’s view of the development of inflation, the US way of communicating can provide more information than inflation and interest rate forecasts.
18  All speeches are available online at www.bankofengland.co.uk/speeches  18  The Bank introduced last year “Knowledge Bank”. This is largely intended as an educational device, covering how the economy works and how central bank policies may be affecting it. It contains cartoons and videos as well as prose. It is targeted, explicitly, at younger age cohorts. Its reading score of 8 means it is capable of reaching almost half of the UK adult population. The Bank, in common with many other central banks, is making greater use of social media. As a two-way personalised, socialised, distributed communications medium, with high penetration among the young, it has real attractions. The Bank has a Twitter account with over 200,000 followers. Individuals do not have Twitter accounts and nor does the Bank have a cohort of Bloggers and Vloggers providing daily diaries of time spent at the central bank coalface. But it is early days. These are examples of layered and targeted content, the like of which a number of other central banks, including the Federal Reserve System, are investing. The Bank’s existing publications are now more flexible and layered in their length and content, potentially making them accessible to a wider audience (Chart 18). But this is clearly just the start. I shall resist the temptation to say it is going to be great. (b) Minding your Language  The changing nature of public language means central banks will need to adapt their own language to increase its penetration and reach with the general public.

This was evident from Sweden’s history of uncertainty about government finances and high inflation were Sweden to choose the outsider alternative on the grounds of the insurance argument, this could be perceived as a signal that Sweden’s economic policy would again become accommodating. This risk was also mentioned in the report. The Riksbank fully agreed, on the other hand, that unemployment is a serious problem in the Swedish economy. But we did not consider that this problem could be resolved by remaining outside the monetary union. As the report had indeed pointed out, other measures were needed to improve the workings of the labour market and wage formation. The Riksbank underscored that the necessary structural measures for the labour market would be easier to implement if we had established the credibility of an economic policy for sustainable growth. Does the stronger economy warrant different conclusions? In the light of all that has happened in the past two or three years, the assessments presented in the report and by the Riksbank should perhaps be modulated. The case for an insurance policy and freedom of action was argued at a time when public finances were weak and unemployment was still at a record level. The measures of economic policy had admittedly begun to build up public confidence in a more stable future after the profound crisis in the early 1990s but the outlook was still uncertain. Today the situation is better, with a central government budget surplus and high ambitions for fiscal policy.
This could lead to higher growth being feasible for longer without inflation taking off. There are arguments in favour of each of these explanations but the empirical support is not clear-cut. The issue of potential growth and higher productivity has recently attracted particular attention in the light of economic developments in the United States, for example. Productivity growth in Sweden has improved but we do not yet have any notable evidence that potential growth has risen as it has in the American economy. An expected increase in trend productivity can also affect components of demand. The prospect of higher corporate profits leads to higher share prices for listed companies. Besides prompting companies to step up investment and improving the supply of venture capital, the appreciation of shareholdings may make households feel more wealthy and stimulate consumer demand. The strong upward stock market trend in Stockholm in recent years may be a sign that players have incorporated expectations that economic growth in Sweden will be appreciably higher than earlier. The relative paths of supply and demand in the Swedish economy and the development of the inflation propensity are obviously central issues in the assessment of inflation. If supply and demand develop at the same rate, no inflationary pressure will build up. This is what seems to have happened for a time in the United States. But there is, of course, a risk of one of them predominating and that would alter the conclusions for monetary policy.

A process was therefore initiated in November that amounts to successively taking our foot off the monetary “accelerator”. As the after-effects of the Asian crisis and the financial market turbulence in the autumn of 1998 subsided, a strong economic stimulus from monetary policy was no longer required. In November 1999 and February this year the repo rate was therefore increased by a total of 0.85 percentage points. The analytical and monetary policy challenges that confronted the Riksbank during 1999 were not minor. The strong growth of demand in recent years has been accompanied by paths for underlying and trend inflation that have been weaker than earlier relationships seemed to suggest. A number of reasons have been put forward as to why these relationships may have changed. One reason may be that when inflation has been brought down to a low level, price and wage setting behaviour is different. Households as well as firms in Sweden count on inflation remaining low. Another reason may be increased competition, for instance due to deregulations, globalisation and IT commerce. A third reason may be that our assessments of resource utilisation are faulty and the actual level is lower than we have assumed to date. Economic growth can then be higher for a time, without generating increased price pressure. A fourth reason may be a higher productivity trend and an ability to produce more goods and services without generating increased prices; in other words, a higher potential growth rate.