samchain/econo-pairs-v1 huggingface dataset:
I wish more people had dared to work on disruptions of energy supply (or global value chains) a few years ago. Likewise, the latest report of the Working Group III of the IPCC (dedicated to climate mitigation) contains a chapter (#5) that places great emphasis on the need for sufficiency and behavioral changes, and it discusses the literature exploring how we could thrive as societies and individuals without depending so much on GDP growth. Professor Dasgupta also invites us not only to acknowledge that GDP growth will be limited at some point even if you are a techno-optimist, but also to think about new approaches to economic value and social well-being that do not rely on GDP. All this begs us, and especially the young scholars present today, to ask what will be essential in 5 to 10 years from now. In addition to this need to promote new approaches, it is urgent to act. 9  Page 10 sur 12 We cannot afford to lose time or to wait until we have elaborated “perfect” tools. We need to seek how transformative changes can be implemented as soon as possible and if needed, develop and revise our scenarios, metrics, approaches. The responsibility to revert nature loss falls first and foremost with governments, and no central bank – above all in a democracy - can replace them.

It may partly reflect very low levels of current policy rates and any spillovers from that.3 It may also reflect the term premia for inflation that are currently very compressed in some countries, for example, the US and in the Euro area. And it may also be a symptom of a more entrenched pessimism – an over-pessimism in my view – about long-term economic prospects, possibly due to fears of the de-integration of the global economy or concerns about future effectiveness of monetary policy. But, more fundamentally, the very low level of market interest rates reflects an underlying structural trend – the fall in long-run real interest rates since the early 1980s4 – that has been the subject of a great deal of research. The literature has identified a large number of candidate explanations – both real and financial – for a structural decline in the long-run real interest rate. These include: demographic trends and, in particular, increased longevity; lower trend productivity growth; the liberalization of financial intermediation and an increase in the risk borne by individuals and households.5  The long-run equilibrium real interest rates determined by these factors are, of course, unobservable. There is a range of estimates for how far they have fallen.
In this context, the ECB, together with other policymakers in Europe, has a particular responsibility in setting the right conditions for sustainable non-inflationary growth in the euro area so as to contribute to long-term economic welfare of the world economy. Thus, in my presentation today, I should like to concentrate on three aspects related to the challenges we are facing in Europe today and in the future and, in that context, on the contribution of the ECB and the Eurosystem: first, I shall reflect on how we can seize the opportunity to ensure that the current economic recovery in the euro area becomes a prolonged phase of sustainable non-inflationary growth and employment creation. Second, turning to Europe as a whole, I shall refer to the challenges related to the accession of new countries to the EU and, eventually, to the euro area. Finally, broadening the perspective, I will discuss the role of Europe, the euro and the ECB in the world economy. 1. Challenges in the euro area: how can the ECB and the Eurosystem contribute to sustainable non-inflationary growth and employment creation? Starting with the euro area, recent economic developments point to a much brighter outlook than was expected earlier this year. An improved international environment should support these positive prospects. As shown by the IMF’s recent World Economic Outlook, the growth prospects in individual countries and for the global economy in 1999 and 2000 are now much better and more balanced than expected.

A greater challenge is the potential accession of still more countries to the European Union and, ultimately, the euro area. Negotiations are currently being conducted with six countries. Negotiations with another six candidates may start soon. The eligibility criteria for their accession to the EU were formulated by the European Heads of States and Government at their summit in Copenhagen in 1993. These criteria set out what should be required of a future Member State of the European Union and thus ensure equal treatment of all applicant states. Let me briefly recall the three criteria that have to be fulfilled: •  first, the political criterion requires stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities;  •  second, the economic criterion requires the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the EU; and  •  third, the so-called “acquis communautaire” criterion requires the ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union. While accession is a political decision, it is clear that extending the EU to include new members will have consequences for the ECB and the Eurosystem.
The shift to a new policy took place between 1993 and 1995. 3  BIS Review 59/1999  However, it should be added with regard to the failed defence of the krona, that experiences of free capital movements were not especially extensive. The Government and the Riksbank and political analysts in Sweden did not have any experience of the conditions for economic policy in a globalised world. The new stabilisation policy regime The Government formulated the goal for monetary policy itself in January 1993. Inflation was to be maintained at two per cent per year with a tolerance interval of +/- 1 per cent. The goal is symmetric. It is as important to bring inflation up to two per cent when actual inflation is under two per cent as it is to bring down inflation when it is higher than the target. This can be said but a lot of practical issues remained to be resolved and the answers are not at all obvious: 1. How is inflation to be measured: by CPI, the GDP deflator, or some other measure of price movements? 2. Shall the Riksbank have other objectives besides price stability? 3. Shall policies be directed at controlling the money supply or inflation directly? 4. How is confidence to be established in the Riksbank’s policy and expectations about low inflation? 1. The inflation target The Riksbank’s objectives has been expressed in the following way in legislation: “The objective of the Riksbank’s operations shall be to maintain price stability.

These trustees have a legally binding obligation to exercise all of their rights as majority owner of AIG in the best interests of the U.S. taxpayer, with the proceeds of any ultimate sale of shares going directly to the Treasury of the United States. Efforts to reduce risk at AIG Financial Products As has been widely noted, the activities at AIG's Financial Products unit (FP) were a principal cause of the losses that drove AIG to the brink of bankruptcy in September 2008. Risks of substantial magnitude – including derivatives positions with a current total notional value exceeding one trillion dollars – still remain in force at FP, meaning that not millions but billions of taxpayer dollars are potentially at stake as the orderly wind-down of FP continues to progress. The winding down of these risk positions at FP is a delicate and complex matter with systemic implications for the U.S. and global economy. Our oversight of this riskreduction process remains a top priority.
So members of the Committee vote on interest rates according to the economic data, which change from month to month, and the analysis of those data. No one takes a position that higher interest rates are a good or a bad thing out of principle. If you drove past an infant school at 40mph, you might well be described as driving dangerously fast. But if you drove at 40mph on a motorway, you might well be described as driving dangerously slowly. Actions must be judged in the light of the circumstances. In terms of monetary policy, that means that the positions which members of the MPC take on interest rates will change over time according to the way the economy evolves. But if interest rates themselves cannot be predicted, because they depend on changing economic data, what should be predictable is the way MPC members respond to those data. A predictable “policy reaction function”, to use the jargon, should, over time, diminish the interest which market commentators take in the meetings of the MPC and direct that interest to what is happening in the economy. So, as the voting record shows, it is seriously misleading to think of the MPC in terms of fixed camps of “hawks” and “doves”. As circumstances change, it is easy to imagine that the “hawks” shall be “doves” and the “doves” shall be “hawks”.

Even if we need to wait for the Parliament's proposal and the outcome of the trialogue discussions, this agreement is overall positive. On the supervision side, it provides the European Union with all the prudential ratios of the international framework. It also provides for the gradual introduction of the revised market risk framework, the Fundamental Review of the Trading Book (FRTB), which is still being finalised in Basel. In addition, a first step has been taken towards recognising the euro area as a single jurisdiction, in which cross-border exposures within the Banking Union are considered domestic exposures for measuring the systemic importance of European banks. On the resolution side, we have obtained an agreement to broaden the subordination requirement of the Minimum Requirement for Own Funds and Eligible Liabilities (MREL) to  Page 4 of 6 beyond global systemically important banks (G-SIBs), thereby reducing the threshold effect between G-SIBs and other banks. In addition, the text defines a subordinated debt ceiling, very close to the international Total Loss Absorbing Capacity (TLAC) standard. However, this agreement contains a number of more problematic aspects about which we shall remain vigilant. To name but one, as regards the internal MREL, cross-border exemptions within the Banking Union similar to the methodology for calculating the capital surcharge for systemic banks would have been desirable.
A message that emerged with great clarity and force from the non-financial sector participants was that there remains a major lack of trust in financial markets and financial institutions because of misconduct. Participants saw cultural and ethical changes as an essential component of restoring the social license for financial markets. The Bank of England is not responsible for market conduct and integrity in the UK. That task rests with the FCA under the very able leadership of my erstwhile colleague Andrew Bailey. But our overall responsibility for the financial stability of the UK, our prudential responsibility for the major wholesale financial firms and the Bank’s close and historic interaction with London as an international financial centre means we have a very active interest in the integrity and fairness of the wholesale financial ecosystem which is located here. That is why the Bank, alongside colleagues from the FCA and HMT, led the fair and effective markets review which reported last year and why we have made significant progress in ensuring that its recommendations are implemented. 8  7  See ‘From ‘ethical drift’ to ‘ethical lift’: Reversing the tide of misconduct on global financial markets’, Remarks given by Minouche Shafik, 20 October 2016, available at: www.bankofengland.co.uk/publications/Pages/news/2016/078.aspx.

And I for one will continue to treat with caution generalised claims of ‘unintended consequences’, comparisons of conditions with the pre-crisis years and dire threats that regulation is preventing the financial sector from doing its job of providing credit and liquidity. My second point about regulation is that the past is not a perfect guide to the future. Financial centres innovate and change at speed. New products and ways of working can become significant very quickly. And sectors that have not generated risk in the past can change their profile quickly. In this respect I would mention the explosive growth since the crisis in the size and importance of asset managers and in the funds they manage, especially open-ended investment funds. Market-based finance has grown very strongly in recent years. Since the crisis it has accounted for virtually all of the growth in net lending to businesses in Europe and the US. 9  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  9  The assets under management of the top 500 asset managers grew by nearly $ trillion over the last 10 years or so. It now stands at $ trillion, broadly equal to annual global GDP. Over half of this is accounted for by open-ended funds, most of which promise daily liquidity to their investors. Such funds have generally been stable in times of stress – during the crisis they experienced relatively modest outflows. Unlike the banking sector they are not in the main highly leveraged.
Furthermore, the level of government welfare services (including unemployment insurance, social security and welfare services, and senior citizens’ assistance insurance) is systematically lower in the United States than in the euro area countries; at present it stands 19 at 12% of GDP in the United States and at 15% of GDP in the euro area. Thirdly, the importance of automatic stabilisers depends also on the taxation system, in terms of its level  16  Cimadomo, J. (2008), Fiscal Policy in Real Time, ECB Working Paper, No 919. 17  See, for instance, Brunila, A., M. Buti and J. in’t Veld (2002), Cyclical Stabilisation Under the Stability and Growth Pact: How Effective are Automatic Stabilisers?, Bank of Finland Research Discussion Paper, No 6; Darby, J. and J. Melitz (2008), “Social spending and automatic stabilizers in the OECD”, Economic Policy, Vol. 23, pp. 715-756. 18  Girouard, N. and C. André (2005), Measuring Cyclically-Adjusted Budget Balances for OECD Countries, OECD Economics Department Working Paper, No 434. 19  Debrun, X., J. Pisani-Ferry and A. Sapir (2008), Government Size and Output Volatility: Should We Forsake Automatic Stabilization?, European Economy – European Commission Economic Paper, No 316. BIS Review 135/2008  7  of taxation and of the overall fiscal drag in the tax system.

Since 2000, and especially in recent months, the picture has changed. The mines have opted for another strategy and have cut back on price hedging. This strategy change can be partly attributed to more positive expectations regarding the gold price. As a result of the central bank agreement on gold sales, producers no longer fear large-scale sales by the central banks. Moreover, it seems that producers have recently become more upbeat in their assessment of private investment demand. It is interesting, in this respect, that gold producers' hedging activity tends to accelerate market trends. When they expect price decreases, prices do in fact decrease faster as a result of hedging, and when they expect price rises, prices do rise faster owing to the decrease in hedging. Such strategy changes, which are always due to changed market expectations, have to be reckoned with in future as well. •  Reviving private investment demand in the industrialised countries has also contributed to giving the gold price a boost. This phenomenon has been particularly pronounced in Japan, but Europe and the United States have also seen gold demand booming. Economic imponderables, concern over the financial health of some companies, heightened political tension in different parts of the world, the terror attacks of September 2001 and concomitantly subdued stock markets have caused investors to increase their holdings of the  BIS Review 39/2002  1  yellow metal. It seems as if gold is, for the time being, once again assuming its role of a safe haven investment.
The members of the Committee shared this concern when we decided to undertake work on the prudential treatment of certain trading-related exposures under Basel II. We do not intend to overhaul the capital rules for trading book exposures, but rather seek to address narrowly a handful of concerns that relate either to potential inconsistencies that could arise with the new treatment for banking book assets or that relate to a limited number of issues that have arisen since the adoption of the Market Risk Amendment. The implementation of Basel II With that, I would like to turn now to my third topic and report on our efforts to smooth the path from the existing capital standards to the new Basel II framework. On the regulatory side, supervisors are working with national authorities to transform the framework into enforceable rules and regulations, within the context of each jurisdiction’s process. This work is well underway in all of the Basel Committee member jurisdictions, but also in many other countries as well. On the supervisory side, let me mention three areas in particular where we are devoting resources to promote a seamless transition to the new framework. Calibration First, we are verifying that Basel II has been calibrated appropriately. The Committee has long stated its intention to conduct work to re-confirm that the new framework meets our objective to broadly maintain the aggregate level of capital requirements, while keeping incentives to adopt the more advanced approaches that are offered.

Some reforms underway represent efforts to ensure that our rules keep pace with the achievements that the industry has already made. On this note, I would argue that Basel II is just as much about aligning supervisory practices more closely with the industry’s latest advances as it is about promoting improvements in the management of risk within the industry itself. But I sympathise with the sense that the wide range of standards that are evolving in parallel represents a drain on the limited resources that firms have to keep pace with those changes. I agree that we must find a way to balance the dangers we are trying to ward off against the time and resources it takes to adapt to new circumstances and new rules. And I want to work with you to make sure that the labours you undertake are not merely exercises in compliance with new rules, but rather will represent honest efforts to strengthen your practices and your long-term prospects for growth and innovation. From my perspective as chairman of the Basel Committee, I can say that the Committee’s main focus in the near future will be on completing the current work and on implementing Basel II in a sound, consistent, and effective manner. This will allow us all a period to digest the framework we have designed. At the same time, we have always said that Basel II should be an evolutionary approach. This does not mean a moving target.
The banks we allow to access our markets need to meet the high standards we expect and be capable of being effectively supervised. What does responsible openness mean? Sam Woods set out the three pillars of responsible openness in 2019 (and, also built upon this in his Mansion House speech3 last November). 1. First that we should engage strongly in international standard-setting processes and make sure that we are at the forefront of implementing those rules in a thorough way; 2. Second that we adopt practices and structures which promote strong collaboration with colleagues in other jurisdictions; and 3. Third, that we are open to hosting cross-border business in the UK – but only if it is resilient and appropriately controlled and governed, and if we have sufficient visibility of and influence over the necessary supervisory outcomes. My policy colleagues take the lead on our work in international standard setting. As we have reinforced many times now4, we have absolutely no intention of weakening prudential regulation in the UK. The changes that we introduced post 2008, have stood the banking sector in very good stead, for example in enabling it to withstand the stresses posed by the Covid pandemic in 2020. This statement sets out our expectations on the second and third of these pillars.

Supervisory Cooperation  To support responsible openness to international wholesale banking, be it as branches or subsidiaries, and to meet our objectives on safety and soundness and financial stability, we need confidence that: a. the Home State Supervisory regime delivers outcomes which are sufficiently equivalent to the UK regime; b. there is effective supervisory cooperation; and c.  3 4  there is assurance over the home state resolution framework. https://www.bankofengland.co.uk/speech/2020/sam-woods-city-banquet https://www.bankofengland.co.uk/financial-stability-report/2020/december-2020 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  The first and last points concern in large part the legislative framework, rules and powers of intervention that home states and authorities have. The better the outcomes they deliver, so the more reliance we can place on risks arising from overseas operations being manageable. The second point is about how those powers are applied, the practices, and openness of overseas authorities that wield them. It is on this point that I want to focus as a supervisor. Cooperation with Home State Supervisors  For both branches and subsidiaries, the PRA places reliance on cooperating closely with the Home State Supervisor, for branches this is particularly the case for prudential requirements, because a branch is not a separate legal entity. But for both there needs to be effective regulatory and supervisory cooperation if openness is to be ‘responsible’. We have a long history of working very effectively with a range of supervisory authorities, including the US, EU, Switzerland, Japan, and many others.
I am confident the banking industry will use this moment to identify the best opportunities to restructure and improve its performance and expand its activity, thus reassuming its role as the engine for the country’s economic development. Thanking you for the invitation, I would like to wish you all good health and a prosperous and successful New Year! Happy New Year! 2  BIS central bankers’ speeches

Indeed, the moral for me of recent failures and near-failures is not that resolution is misguided and will not work, but that it will not work if firms are not regulated and supervised in a way that makes them resolvable. This is the story of the last five years. We have focussed on organising firms in such a way that authorities’ resolution powers can be used without significant adverse consequences for the rest of the financial system or the wider economy. This moves us progressively to where we want to be against risk appetite. And though we are not yet where we finally need to be, what has been done has already yielded significant benefits. For 3  example rating agencies have largely removed government support uplifts to bank’ credit ratings. Where UK firms have come under stress, our resolution arrangements have been one factor that has helped secure recovery. Today I want to review where we are on the journey: what has been done and what is left to do. I want to focus in particular on three topics:  1  See FSB ‘Declaration on Strengthening the Financial System – London Summit’ (2009) http://www.fsb.org/wpcontent/uploads/london_summit_declaration_on_str_financial_system.pdf and FSB ‘ Leaders’ Statement the Pittsburgh Summit’ (2009) http://www.fsb.org/wp-content/uploads/g20_leaders_declaration_pittsburgh_2009.pdf 2 See FSB ‘Key Attributes of Effective Resolution Regimes for Financial Institutions’ (2014) http://www.fsb.org/wpcontent/uploads/r_141015.pdf. 3 See S&P Global ‘An Illustrative Rating Path for a Systemic Bank In A Bail-In Resolution’ (2017) http://images.ratingsinfo.standardandpoors.com/Web/StandardPoorsRatings/Illustrative%20Rating%20Path.pdf.