samchain/econo-pairs-v1 huggingface dataset:
Without aiming to be exhaustive, I should like to highlight some of the key priorities for reform in three main areas, namely: •  Getting more people into work,  •  Increasing competition,  •  And finally, supporting an innovative environment. Getting more people into work First of all, well-functioning labour markets are indispensable in fostering higher economic growth. The differences in labour market developments, especially with regard to the level of labour utilisation, between the US and Europe has prompted some economists to suggest the existence of a “European model” and a “US model”, related to the trade-off between labour and leisure 6 . One view is that the lower levels of GDP per capita in Europe reflect a European preference for more leisure time. However, we should bear in mind that lower participation rates are not necessarily associated solely with personal preferences, but are also triggered by the legal and regulatory environment, tax systems and social institutions. Necessary measures to increase labour utilisation or labour supply include the reform of tax and benefit systems in order to increase incentives to work. The use of flexible forms of work such as part-time and temporary work may also provide further working incentives 7 . High unemployment rates in the euro area and in particular unacceptable high youth unemployment rates clearly suggest the need to spur not only labour supply but also labour demand. There is a need to reduce labour market rigidities restricting wage differentiation and flexibility.

Svein Gjedrem: The conduct of monetary policy Introductory statement by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the hearing before the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 28 September 2004. The text below may differ slightly from the actual presentation. The statement is based, among other things, on the assessments in Norges Bank’s Annual Report for 2003 and Inflation Report 2/2004. The  Charts in pdf-format can be found on the Norges Bank’s website. *  *  *  I would like to take this opportunity to thank the Storting for again inviting Norges Bank to appear before this Committee to report and answer questions on monetary policy in connection with the Storting’s deliberations on the Government’s credit report. Inflation-targeting countries Price stability, in the sense of low and stable inflation, is the objective of monetary policy in a number of countries. Historical experience from Norway and other countries has shown that high inflation has resulted in unstable output and employment. In addition, a fall in the price level will often accompany a period of decline. The first inflation target was introduced in New Zealand in 1990. Canada followed in 1991, the UK in 1992, and Sweden and Australia in 1993. In Norway, the government issued a regulation introducing an inflation target in 2001. Monetary policy in euro area countries and Switzerland is also aimed at price stability, even though this is not referred to as inflation targeting in these countries.
This would include any changes that needed to be made to the organizational structure of our supervisory function within the HKMA and the supervisory policies, guidelines and techniques which we use. The study will also examine whether we have the necessary resources to do the job. Conclusion 25. In conclusion, the Asian crisis has been a major “wake-up” call to supervisors in the region and has given fresh impetus to international efforts to raise supervisory standards. One point which bears repeating however that tightening of supervision is not the whole answer, particularly if the effect is simply to impose more rules on the banks. More external regulation may indeed have to be the short-term response in a number of countries, particularly those where blanket government guarantees have been given to depositors. However, the long-term solution must lie in devising a supervisory approach which gives the right incentives for management of banks to take responsibility for their own actions. BIS Review 28/1998  ˝

Øystein Olsen: Management of the Government Pension Fund Global (GPFG) Introductory statement by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), before the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 4 May 2015. *  *  *  Please note that the text below may differ from the actual presentation. I would like to thank the Chair of the Committee for the invitation to speak on the management of the Government Pension Fund Global. The objective of the Government Pension Fund Global is to underpin long-term considerations in the spending of government petroleum revenues. Norges Bank manages the GPFG with the aim of achieving the highest possible return subject to the framework defined by the Ministry of Finance, including the limitations set for risk-taking. The investment strategy is designed with a view to achieving this aim. The proportion of real assets in relation to nominal assets is the most important choice with regard to the investment strategy. Today, the allocation to equities is 60 percent. The proportion invested in real estate is likely to reach 5 percent in a few years. The Ministry of Finance has started work on assessing the allocation to real estate and the possibility of investing a portion of the GPFG in unlisted infrastructure. We have been requested to provide advice to the Ministry on this matter. Real estate investment, and infrastructure in the event, is more resource-intensive than securities investment, both in operational and management terms.
The decline in the number of credit institutions is mainly the result of mergers among savings and cooperative banks, which epitomise what are known as “consolidating” or “defensive” mergers, aimed at cutting costs and possibly also at diversifying risks. So far, this consolidation process has taken place mainly within national boundaries, with the possible exception of some mergers in the Benelux and Nordic countries. The preference for domestic mergers, as opposed to cross-border mergers, may be explained by the fact that the relevant market for retail services is still national rather than pan-European in character. Furthermore, the scope for cost cutting appears to be larger if the activities of the institutions merging overlap, although there is no particularly strong empirical evidence of this as yet. The fact that cultural “proximity”, notably in the corporate style of governance and management, is traditionally seen as a key factor in the success of mergers may also help to explain the limited cross-border merger activity. It has to be said that although most mergers have been domestic, they have often been instigated and influenced by area-wide market developments and the integration of financial markets following the introduction of the euro. As of today, there is no doubt that the introduction of the euro has fostered the internationalisation of banking activities. In particular, the rapid integration of the wholesale banking and capital markets, as well as large-value payment systems, has already produced more and new kinds of links among banks.

By structural change, I mean not only domestic consolidation, but also increased cross-border cooperation and mergers. In short, the euro area banking sector is expected to look and behave more like the banking sector of a single economy in the future. Economies of scale and scope may have been changing in different areas of banking and may even have taken different directions. However, the general picture is that the banking industry needs to be in a position to adjust to a new reality. Indeed, since the introduction of the euro, a number of bank mergers in the euro area, including mergers between relatively large institutions, have been announced. Such “high-profile” mergers are likely to contribute towards an acceleration of the pace of both the consolidation and integration process of the banking systems in the euro area. The recent pattern of consolidation constitutes a continuation of a longer-term trend in the European banking industry, as is highlighted by the large decline in the number of credit institutions in the euro area countries over the past decade or so. In the mid-1980s, there were more than 11,000 credit  3  BIS Review 83/2000  institutions in the euro area countries, compared with around 7,500 now. This reflects a decrease of 3,500 credit institutions over 15 years, or an average annual decrease of around 230 institutions. The changeover to the single currency seems to have intensified the consolidation trend in the euro area banking sector.
BIS central bankers’ speeches  1  Second, guidance on CCP recovery and resolution: in 2014, as a supplement to the PFMI, CPMI-IOSCO published comprehensive guidance on financial market infrastructure (FMI) recovery.3 It considered the types of tools that CCPs and other FMIs can use to deal with severe financial problems that could threaten their existence. In addition, the FSB adopted a framework on FMI resolution.4 Third, specific treatment of banks’ exposures to CCPs: the BCBS has revised its previous Basel II capital framework, which applied a zero capital charge to banks’ exposures to CCPs, in order to better capture the risks stemming from the financial system’s increasing reliance on CCPs. One of the main features of this revised framework is the preferential treatment given to exposures to qualifying CCPs, i.e. CCPs supervised in a manner consistent with the PFMI. Finally, enhancing the understanding of CCP risks via increased transparency: in order to ensure CCPs are providing participants with the necessary information to evaluate the risks linked to clearing, CPMI and IOSCO have published two disclosure frameworks. The Disclosure Framework and Assessment Methodology,5 released in December 2012, and The Public Quantitative Disclosure Framework6 for CCPs, released in February 2015, which require CCPs to disclose information on topics such as the size of their credit risk, liquidity risk, collateral, margins, business risk, custody and investment risks. Let me add that public disclosure requirements are particularly important for indirect members who, unlike direct members, do not play a direct role in the CCP’s risk governance.

Should authorities be doing more to address potential weaknesses in CCP risk management? As I just mentioned, the regulatory standards have been significantly strengthened since the financial crisis. However, catastrophic losses beyond those already covered by the regulatory requirements could still occur. Given the critical role of CCPs in financial markets, regulators need to think the unthinkable. Indeed, stress events concerning CCPs are – thankfully – rare: the most recent example of a CCP failure was the collapse of the Hong Kong Futures Exchange clearing house in 1987. A more recent – albeit less dramatic – stress event was the uncertainty caused by the default of a clearing member at KRX, the South Korean CCP, which caused it to tap its mutualised default fund, and revealed that clearing members were not always aware of their potential liabilities towards the CCP. When such events occur, they have the potential to shut down the markets they serve. With the emergence of supersystemic CCPs serving global derivatives markets, a CCP failure could be a catastrophic event of global proportions. In September 2014, the gross notional outstanding amount of centrally cleared positions was estimated at USD 169 trillion for OTC interest rate derivatives, and at USD 14 trillion for credit derivatives.7 The sheer magnitude of these figures (around ten times the GDP of the United States or European Union) gives us an idea of the severity of the potential consequences from a stress event at a major global CCP.
The main thing to do to prevent new crises for stabilisation policy is to develop and possibly reinforce the framework for budget policy that has applied in recent years. Government debt can then be run  BIS Review 6/2002  5  down more quickly and reserves can be built up so that the automatic stabilisers can be left to do their work. An important issue in this context is the construction of the social security system. Changes will be needed and there may well be reasons for increasing the element of funding. It may be asked whether some institutional changes are also needed to facilitate a discretionary fiscal policy. This is certainly not a minor question but it has taken up too much of the discussion about economic policy. The possibility of implementing a discretionary fiscal policy in a meaningful way is limited. The discussion should therefore concentrate on what can be done to manage situations when more serious shocks are likely to occur. The problem here has been a lack of knowledge, plus the difficulties in mobilising sufficient support for a restrictive policy when the economy is overheating. There are presumably some things that can be done to improve our knowledge, though it is mostly a matter of trimming an existing structure. But that must be done in the light of the limited competence for empirical economic analysis in Sweden and the numerous challenges that lie ahead in other respects than stabilisation policy.

That means there is no room for the type of misguided economic policy that characterised the 1970s and ’80s, for example, when Sweden used repeated devaluations in an attempt to rectify the situation. Such failures must be avoided at any cost. Against this background it is not remarkable that the discussion about economic policy with EMU has focused on stabilisation policy. Even so, it is important to start from a broader perspective. The issues to do with stabilisation policy have featured prominently in the Swedish debate. This has to do with a strong Keynesian tradition and the ability of Lars Calmfors and his former colleagues to place the so-called insurance argument in the centre of the whole discussion about a monetary union. The latter naturally has to do with the fact that the very dramatic crisis which hit Sweden in the early 1990s was so closely connected with stabilisation policy. It is hardly surprising that in many other countries the discussion took a very different course before they adhered to the EMU. It is extremely important that our discussion about economic policy – with or without the euro – does not overlook or play down the supply side of the economy. Countries that create conditions for a smooth adjustment of labour markets and a favourable development of productivity will almost certainly do well as members of the monetary union. Measures to this end are naturally warranted in any event – they promote prosperity.
The savings glut has in turn had a contribution into the increase in prices on the stock exchanges in the US, and subsequently to the increase of property prices, which has in turn lowered the level of savings of American households. The International Monetary Fund argues against the hypotheses of Bretton Woods 2 and the global savings glut by stating that the source of the current account surplus is an exceedingly low level of investments in Asia, except for China. Therefore, one should speak of a global investment draught rather than anything else, 30 as over the five years following the Asian crisis in 1997-1998, the investment level was by 7 percentage points lower than in the five-year period preceding that crisis. Considering the above, an appropriate recommendation for those countries is not limiting their savings rate, but rather improving their investment climate. There are numerous theories that attempt to explain the occurrence of global imbalances. According to some of them, the major reason behind global imbalances is the low level of savings in the US household and public sectors, 31 i.e. the fact that Americans spend more than they earn, and that the budget deficit, from a substantial surplus in the year 2000, turned into a level estimated at 4.7% of the GDP in 2004.

Urban Bäckström: The Swedish economy Speech by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, to the Swedish Shareholders’ Association, Stockholm, 27 November 2001. *  *  *  First a word of thanks for the invitation to this evening’s meeting. I intend to talk about the Swedish economy and monetary policy. The past year has been marked by a successive weakening of economic activity in Sweden as well as abroad. Forecasters all over the world have made sizeable downward revisions to the prospects for growth both this year and next. Consider the picture of the economic future that Consensus Economics compiles once a month from the predictions of 200 professional observers. At the beginning of this year the combined assessment was that in 2001 and 2002, GDP growth in the United States and Sweden would amount to between 2.6 and 3.5 per cent. It was foreseen that the slowdown would be comparatively moderate and be followed by a quick recovery. Today, growth in the United States is judged to be just a modest 1 per cent or so this year and even weaker in 2002. In Sweden, GDP is now expected to rise 1.4 this year and 1.7 per cent next year. In other words, it now looks as though the slowdown will be both deeper and more protracted than many observers counted on less than a year ago.
Principles that guide the monetary policy decisions in the new interest rate assumption When our forecasts were based on an unchanged repo rate, monetary policy could be explained by the simple rule of thumb that I described – the repo rate would normally be changed if the forecast showed inflation deviating from target. With the new interest rate assumption, monetary policy can no longer be described by a simple rule of thumb of this kind. How do we then reason instead when we make monetary policy decisions applying inflation forecasts based on our new interest rate assumption? If inflation is expected to be close to target in a two-year time perspective, given the interest rate path on which the inflation forecast is based, this could indicate that the interest rate movements expected by the market are desirable. However, to determine this we must also take into account the consequences for the whole paths of inflation and the real economy that this interest rate policy is expected to give rise to. BIS Review 33/2006  3  Let me illustrate this by explaining how we reasoned at the Executive Board meeting when we chose to raise the repo rate by 25 points in February, despite inflation being low during a large part of the forecast period and close to but still under target in a two-year time perspective 2 .

Let me now go on to how the interest rate assumption is to be used and interpreted in connection with the monetary policy decisions. 2  BIS Review 33/2006  Communication and the interest rate path The interest rate path which the Riksbank uses in the Inflation Reports is based, as I have said, on implied forward rates, and these are calculated on the basis of interest rates on treasury bills and government bonds. The implied forward rate curve on which the forecasts are based is an average of 15 different daily implied forward rate curves. For instance, the interest rate path used in the latest Inflation Report was based on an average of the daily curves between 20 January and 9 February 2006. The reason we have chosen to use an average is because we wanted to exclude temporary movements in the implied forward rates (see Figure 1). At the same time, this means that the implied forward rate curve, as we calculate it, does not reflect market expectations about the future repo rate at a particular point in time but instead the estimated average expectation during the selected 15-day period. Despite the fact that we now base our forecasts on an interest rate assumption that is normally reasonably realistic, it is important to underline that this assumption does not necessarily coincide with the Riksbank’s own expectations about future repo rates. Our assessment of how the economy will develop can differ from that made by market participants.
All this means that tradable output responds powerfully to the depreciation and, on the demand side, net trade and investment grow significantly. In reality, perhaps because there are significant frictions and uncertainties in the real world, the actual response of the tradable sector has been much more modest (even though the fall in the exchange rate has been bigger than 10%). 8  The impact of news about the future on the current economy is an area of active research for economists. See, for example, Beaudry and Portier (2006), Kurmann and Otrok (2013), and Kamber, Theodoridis and Thoenissen (2017). 9 The model used here is based on the model in Di Pace, King and Theodoridis (2017). 10 Broadbent (2017). 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  Chart 9a: Total factor productivity  Chart 9b: Real exchange rate  Chart 9c: Investment  Chart 9d: Hours worked  Chart 9e: Saving ratio  Chart 9f: Consumption  Chart 9g: Output  Chart 9h: Inflation  11  All speeches are available online at www.bankofengland.co.uk/speeches  11  But there’s also a significant difference in the predicted behaviour of consumption, this time in the opposite direction. Because they agree about the coming hit to income, households cut their spending immediately in this simulation – it falls 1½% in the year after the news comes through – and the saving rate goes up. This dominates the sizeable response of net trade and investment, such that aggregate demand and output also decline.

In terms of monetary policy, this is the sensitivity of inflation expectations to temporary or local factors which induces risks, rather than the fact that households’ inflation expectations exceed inflation measures. This is clear from the analysis of the reasons causing inflation deviation away from our October’s forecast. This deviation is quite notable — +0.7 percentage points. According to preliminary estimates, 0.2 percentage points of this deviation stem from a faster rise in sugar and sunflower 1/4  BIS central bankers' speeches  oil prices and 0.3 percentage points — from the growth of grain export prices and their passthrough to prices for both bakery products and a broader range of food products. The remaining 0.2 percentage points are interpreted as additional steady inflationary pressure. It may result from both a faster revival of demand in a number of industries already facing supply-side constraints and secondary effects brought about by increased inflation expectations. This is what may impact a steady level of inflationary pressure in the future as well. Therefore, today it is rather important how the situation will be unfolding in the future, including how inflation expectations will be changing and whether secondary effects may become more intense. This may result in a longer-lasting influence of one-off factors on prices. Moreover, we should take into account that a rise in inflation expectations may speed up the growth of the demand for consumer lending which has already been expanding materially amid the accommodative monetary policy.