samchain/econo-pairs-v1 huggingface dataset:
Today, I will first elaborate on two challenges that will continue uniting us: the need for good national economic policies, pro-business and long-term oriented; and the need for active multilateralism to face our global challenges. Then, I will dwell on a challenge that we will have to address together: our future relationship and Brexit. ** I. The need for pro-business and long-term national economic policies  Let me start with the challenge of national economic policies. In the euro area, the economic recovery is now robust and broadly-based across countries and sectors. GDP growth should stand at at least 2.2% in 2017 according to our ECB forecast. The ECB’s accommodative monetary policy has contributed to this acceleration of growth in the euro area. Yet monetary policy cannot be the only game in town. Structural reforms in each country, along with stronger European coordination, are of the essence to boost potential growth in the medium term and to treat the fatal disease of mass unemployment. In recent years, several European countries, including in Southern Europe, have successfully carried out in-depth reforms that are yielding positive results in terms of growth and employment. Germany, the Netherlands and Nordic countries, as well as Spain and Portugal, are proof that economic success, a solid single currency, and the European social model are compatible. We should run pro-business, long-term oriented, fiscally sound economic policies, while keeping the core elements of a common social model, which can be the DNA and pride of Europe in this highly divided world.

To supplement this backward-looking analysis the FPC layered on a forward-looking judgement that the new bank resolution framework, put in place following the crisis, would reduce the gross benefits of capital. Holders of bank debt and equity now expect to be bailed-in if a bank is resolved, and so exert greater market discipline on banks to prudently manage their risks. This reduces the probability and severity of future crises (GDP-at-risk), and reduces the additional benefits of also adding more capital. The ‘gross costs’ were based on estimates of the relative costs of equity and debt funding, as well as macroeconomic estimates of what a given increase in bank lending rates implies for growth. Both of these costs and benefits are estimated to be largely constant over time. 24 “Supplement to the December 2015 Financial Stability Report: The framework of capital requirements for UK banks”,  Bank of England (2015). The analysis underpinning this framework is published in Brooke, M et al. (2015), “Measuring the macroeconomic costs and benefits of higher UK bank capital requirements”, Bank of England Financial Stability Paper No. 35, December. 24  All speeches are available online at www.bankofengland.co.uk/news/speeches  24  The FPC’s analysis pointed to an optimal range for structural capital requirements and buffers totalling 1014% of risk-weighted assets (Chart 17). This range maximised the expected future level of GDP. The range reflects the considerable uncertainty around the estimation.
The emphasis in the new Accord on improved data standards should not be interpreted solely as a requirement to determine regulatory capital requirements, but rather as a foundation for risk management practices that will strengthen the value of the banking franchise. In addition to building on the current state of risk management practices, Basel II also promotes continued improvements in those practices. As I emphasized a moment ago, bank supervisors now are heavily focused on critically assessing risk management and control systems - where we find shortcomings, we constantly urge banks to make risk management improvements. Those shortcomings can reflect individual firm failings, in which case, we press the individual firms to bring their approaches up to the evolving best practices of well managed competitors. But the shortcomings can also reflect more systematic problems across the industry - necessitating supervisory efforts to move the industry ahead more broadly to improve its standards. Clearly, both through the microjudgments for individual firms and through the issuance of broader public guidance to address crossindustry concerns, the supervisory process is critical in ensuring improvements in risk management practices. Basel II can materially reinforce these efforts by setting strong qualification standards and capital incentives for firms to measure risk more accurately. Historically, the supervisory method for evaluating credit risk at banks in the U.S. focused on the identification of individual commercial loans that were already troubled.

With these elements in place, comparability should be greatly enhanced. Moreover, unlike Basel I, the new Accord allows for the evolution of bank practice over time by building on the core elements of a bank’s internal methodologies - methodologies that are expected to continue to improve, particularly with supervisory and market encouragement. Basel II: Risk management improvements The second, and perhaps more significant, benefit I mentioned is the encouragement to improvements in bank risk management practices. Basel II has always had this objective in mind in addition to creating a stronger, more risk sensitive measure of bank capital. We are clearly already seeing this objective being realized. Basel II builds on risk measurement concepts that have emerged in the industry, although clearly the application of these leading practices varies within and across firms. There has been enormous progress as banks commit to programs that will bring their systems and practices into alignment with the standards articulated in Basel II. 2  BIS Review 35/2005  As I have emphasized, a major focus of our supervisory activities has been on ensuring that banks are actively engaged in advancing the linkage of quantified risk-taking to capital, as this is at the heart of both sound banking and Basel II. Let me offer some specific examples, beginning with credit risk and then turning to operational risk. An example can certainly be seen in the management of retail exposures.
Such transparency and accountability is likely to enhance the credibility of the Central Bank and well anchor inflation expectations, resulting in increased economic stability and supporting high economic growth and increased international competitiveness of Sri Lanka. Meanwhile continued commitment by the government towards greater fiscal discipline and stronger fiscal position remains key to the successful adoption of flexible inflation targeting. Therefore, the Central Bank will continue to support government’s efforts to reduce the debt to GDP ratio to 70 per cent by 2020 and 22  curtail budget deficits at 3.5 per cent of GDP from 2020. The government’s intention to strengthen the Fiscal Management (Responsibility) Act is very encouraging in this regard. In conclusion, I would like to take you back to the beginning of Central Banking in Sri Lanka. In 1949, John Exter, the founder of the Central Bank of Sri Lanka, in his “Report on the Establishment of a Central Bank for Ceylon” stated as follows: “The decision of the government of Ceylon to establish a central bank was a decision with far reaching implications for the people of Ceylon. One implication already stands out very clearly: in taking steps to establish an independent monetary system to be administered by a central bank the government has demonstrated unmistakably its intention to achieve genuine economic freedom as a corollary of the political freedom achieved a year and a half ago.

The Central Bank also introduced a Monetary Policy Consultative Committee (MPCC) comprising academics, professionals and private sector representatives, enabling the Central Bank to obtain views of the private sector to be used in the monetary policy formulation process. In addition, the Central Bank started to enunciate its monetary  13  and financial policies for a medium-term horizon though a Road Map, which was unveiled at the beginning of each year. 105 Consecutive Months of Single Digit Inflation In spite of these modifications to the framework of conducting monetary policy over time, Sri Lanka continued to suffer from double digit inflation until 2009 as a combined outcome of high budget deficits and loose fiscal policy, reactive rather than proactive monetary policy, frequent domestic supply disruptions and international commodity price shocks. In June 2008, inflation increased to 28.2 per cent, the highest level of inflation since 1980s. In order to manage this situation within the monetary targeting framework, the Central Bank used strict quantitative monetary targets with increased policy interest rates while also imposing restrictions on access to the Central Bank reverse repurchase facility. In a display of validity of monetary targeting, the Central Bank was able to bring down inflation from the peak to near zero levels within a 12-month period. It was the sharpest disinflation the country has experienced in the history of Sri Lanka, but it must also be noted that the weak global commodity prices also contributed to this decline to some extent.
The exit from exceptional monetary measures should be fully in the hands of the central bank and guided by its mandate of price stability. Fiscal authorities must also be credible and give guidance on their future actions, by committing to tightening the stance when the economy has recovered. They should follow a stronger countercyclical fiscal policy in good times, to create the space that is necessary in bad times. What Blanchard and Summers5 call “semiautomatic stabilizers” – stabilising fiscal policies that operate according to predefined triggers – could be an avenue worth exploring. Let me add as a conclusion that, against this backdrop, the Next Generation EU package constitutes a new and innovative element of the European fiscal framework, which contributes to a sounder policy-mix. Beyond the most recent political and institutional discussions, which belong to elected leaders, a quick implementation of this European Recovery Fund is an economic must. This innovation, while still a one-off, could also imply lessons for the Economic and Monetary Union, which from the start has lacked a permanent fiscal capacity at supranational level for macroeconomic stabilisation in deep crises. Either we succeed in designing – at end – credible and coordinated countercyclical rules for national fiscal policies, or we should think about some 4/5  BIS central bankers' speeches  central fiscal capacity, reversible in its use, controllable in its size, but effective through the cycle. This should be one area of discussion in the “European momentum” which the crisis has initiated. Thank you for your attention.

Four times a year the Riksbank presents a more comprehensive account; at present we are working on this year’s first Inflation Report. Let me remind you that for those who are interested, these reports are easily downloaded from our website: www.riksbank.se. Perhaps I should add that in addition to the text, the site provides the equally relevant statistics behind the charts. Two routes for a central bank Any central bank with an explicit target is faced with a choice that in its most extreme form looks something like this: either aim to keep inflation continuously on target or admit that there will be deviations that may last for quite some time. If inflation is to be kept close to the target all the time, there will be a constant need for sizeable repo rate adjustments, with the attendant marked fluctuations in market interest rates, output and employment. If temporary deviations from the central bank’s target are tolerated, on the other hand, monetary policy can be implemented more smoothly. A gradual adjustment of output and employment ultimately brings inflation back into line with the target. Both these routes have their drawbacks. Negative effects on employment and output from major changes in the repo rate are liable to erode public confidence in the central bank and the monetary policy regime. At the same time, undue acceptance of large deviations from the inflation target may weaken the target’s credibility and lead both to rising inflation expectations and to high costs for ultimately bringing inflation back on target.
A deeper market reduces transaction costs, and it is easier to find counterparties. This has provided companies with greater scope for hedging against foreign exchange risk. The use of instruments that reduce the risk associated with a floating krone is also increasing in Norway. A considerably larger portion of credit in other countries is now channelled via the bond market. Less risk is being accumulated in banking systems. The development of new markets and instruments, for example credit derivatives, has also led to a broader risk spread than earlier. The improved diversification of risk is probably one of the reasons that world financial markets have coped with the stock market decline and the accounting scandals with limited damage to the wider economy. This is probably one reason why the downturn following the stock market decline in 2000 was considerably less pronounced than earlier downturns. The new instruments spread risk, but do not eliminate it. Financial markets have become highly complex. This alone entails an operational risk, which is a challenge to participants and the supervisory authorities. 2  BIS Review 11/2004  A shift in the international division of labour Increased trade promotes growth and lays a basis for prosperity. A number of Asian countries have experienced strong, export-led growth - Japan from the 1950s and several countries in Southeast Asia from the 1960s. Chart 3.

Thus, it is possible that the level of output that is consistent with stable inflation will increase. Credit developments are giving ambiguous signals to our interest-rate setting. The interest rate can be used to reduce credit demand. At present - with low interest rates abroad and a close link between domestic interest rates and the krone - a tighter monetary policy will restrain credit demand primarily because job security would be reduced. When inflation gradually moves up from a very low level, we can begin to move towards a more normal short-term interest rate level in Norway. This may counter the emergence of excessive pressures on domestic resources in the medium term. Interest rate developments in other countries may also have a considerable impact on the krone and hence on interest rates in Norway. When inflation is low - and as low as it is now - it is appropriate to place considerable emphasis on pushing up inflation. Therefore, we are particularly vigilant with regard to consumer price developments. BIS Review 11/2004  19
From a business management perspective, this point is obvious: to be useful in shaping strategy, a metric has to be something with a direct influence on investment decisions. And from a financial markets perspective, it has to be relevant to understanding risk and return. A lack of meaningful, consistent metrics makes it hard, or impossible, for investors to construct viable portfolios by comparing climate performance across firms. And that, in turn, dampens the incentive of those firms to improve and disclose their climate performance in the first place. 23  https://www.fsb-tcfd.org/wp-content/uploads/2019/06/2019-TCFD-Status-Report-FINAL-053119.pdf 9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  Chart 4: Correlations between environmental scores from different rating providers24  Key Each matrix displays correlation coefficients between Environmental ratings given by five rating providers (labelled P1 – P5 in the charts) on a sample of 924 firms (2017 data). Right: Correlation coefficients between aggregate Environmental ratings. Below: Correlation coefficients between ratings of a selection of more granular environmental categories.

A ‘tilt’ strategy starts from the same investment universe as a standard market capitalisation-weighted index, but then adjusts the weights on individual securities or sectors in that index up or down to reflect various climate factors. A common tilt might be ‘low carbon’, in which portfolio weights are adjusted based on a measure of each issuer’s carbon footprint – or better still a forward-looking assessment of an issuer’s transition trajectory to net zero, such as that produced by the Transition Pathway Initiative.39 Tilt strategies avoid binary composition issues of the previous strategies, and can be dynamic in nature as the parameters used to construct the portfolios evolve. But they can be more reliant on those very consistent, decision useful and forward looking metrics I mentioned earlier, which are not yet universally available. 39  https://www.transitionpathwayinitiative.org/. 19  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  19  ‘Unconstrained’ investment – the final category in the chart – is a catch-all for the wide variety of active management strategies that investors can employ, either across an entire portfolio, or as an overlay. Such strategies may for example be driven by top-down or bottom-up research, or by quantitative statistical analysis of correlations between environmental factors and risk-adjusted returns. While such approaches have at least the potential to deliver stronger performance, by substituting judgment or modelling for current data gaps, they are clearly more costly to undertake and harder for end-investors to monitor.
Data from Credit Counselling Singapore (CCS) also shows that the people who over-spend and over-borrow are not just low-income people. In fact, most of them are not low-income. The average income of those who come to CCS with serious debt problems is around $ per month, not far below the median income level; and quite a few are higher income. Hence everyone can over-borrow because of overspending. According to the CCS, the most common problem is actually over-spending. 5. MAS has also found from the survey that more than half of those surveyed had insufficient insurance to protect their dependents if something were to happen to them. One in three of those surveyed did not know that they were covered by Medishield. Hence the level of awareness is not very high. 6. Quite a few people are passive towards managing their money. That means not planning ahead or finding out information that would help them to manage their money well. This is again something we find all over the world. In most countries, they find that many people do not plan ahead, and they take life one step at a time, taking things as they come. But eventually, they may end up with problems if they have not saved enough or not anticipated some future expenses for their children or themselves. So we can do more to help Singaporeans to plan ahead, by expanding financial education for all age and income groups, all over Singapore.

ONS, KLEMS and authors' calculations, see Appendix A.1 to Bailey et al. (2022) for more details. Unfortunately, there does not seem to be a consensus yet on what exactly lies behind this observed relationship. A growing literature shows that there are barriers to intangible investment, for example because intangible assets cannot be easily used as collateral. [24] Thus, the tightening of financial conditions following the global financial crisis could have disproportionally hindered the development of intangible-intensive industries, with potentially long-term consequences for productivity growth. [25] However, intangible investment has recovered in recent years, while productivity growth has remained weak. Could it be, perhaps, that the barriers to intangible investment benefit investment by low-productivity firms? Or are other factors at play? Other recent studies have highlighted the impact of the intangible economy on competition. Intangible technologies tend to require large upfront investments, what economists call fixed costs. This may give firms with high-intangible adoption a competitive advantage and make it difficult for new innovative firms to enter the market. In that case, entrenched incumbent firms may have fewer  Page 15  incentives to innovate, potentially slowing innovation adoption in the long run. [26] However, the UK data do not seem to provide strong evidence in favour of this second mechanism, compared with research studying the United States. While the US literature reports a decline in business dynamism and an increase in market power alongside the rise of intangibles, business dynamism seems to have been less affected in the United Kingdom.
This is why it’s crucial to eliminate the obstacles to offering jobs to young and old, to everybody in fact. With the right institutions in place, not only would entrepreneurs be able to offer a higher number of jobs that were profitable for their companies but, more importantly, workers would have the option to decide whether they wanted to accept these jobs or not. Because the problem now is that, with no jobs being offered, they do not even have the possibility of deciding. It is sometimes claimed that, whatever our legal and institutional framework, unemployment can only fall if we manage to substantially raise the GDP growth rate. Admittedly, past experience shows that, on average, the Spanish economy has created jobs when it has been able to grow at over 2%. But these relationships are not unmovable since they are precisely an outcome of the institutional framework in place. If structural changes are made to eliminate the obstacles to offering jobs, lower unemployment rates with lower GDP growth rates may be attained. The reforms aimed at increasing the supply of jobs are, moreover, absolutely unavoidable now we are in the Monetary Union. And this should be stressed because, although I believe there is broad consensus on the need to adjust our economy, there is still not sufficient recognition that this adjustment must be different from those made when we had the possibility of devaluing our currency.

I am convinced that, just as the need for fiscal consolidation or pension reform was ultimately recognised, so too will the unavoidable need to change our legal and institutional framework in such a way as to allow entrepreneurs to increase the supply of jobs and workers to decide whether to take them. In the past 50 years, Spain has made numerous reforms across its economic structure. Tariffs have been lifted and companies privatised, and competition has been fomented in many industries. Yet the institutional framework for employment has remained practically and essentially unchanged since the onset of democracy. Meanwhile, in recent decades, other economies, most notably the Nordic countries, have introduced so-called flexicurity, i.e. they have introduced the flexibility needed to reduce the unemployment rate and to increase wages where productivity is growing most, and they have at the same time maintained and even strengthened the social protection which is a hallmark of our European model of society. Finally, the measures I have mentioned are not the only ones that should be adopted. The reform agenda is an extensive one. For instance, it is essential to reduce administrative burdens, to simplify and coordinate economic regulation, and to alter oligopolistic structures, as was recently recommended by the Competition Board for the case of oil products. We could draw up a very extensive list of measures, but you will understand – and I hope appreciate – that, with limited time at my disposal, I have confined myself to what I consider most important and pressing.