samchain/econo-pairs-v1 huggingface dataset:
While Europe has long had a strong tradition of economic regulation, it must be acknowledged that deregulation is well underway in most countries. The change is particularly noticeable in several key sectors such as telecommunications (mobile phones, long distance calls), transportation (particularly airlines) and the power-supply industry (electricity and gas) to mention only a few. Major countries have embarked upon an ambitious overhaul of their public sectors. In countries with a large public sector, such as Italy or France, ambitious privatisation programmes have steadily reduced the number of state enterprises. In addition to privatisation, state enterprises are changing; companies that remain government-owned are becoming more profit-minded (particularly airlines, railways, etc). Tax reforms should accompany the reduction of fiscal deficits within the framework of the Stability and Growth Pact. They have already been initiated in several key countries, especially Germany and France. European firms are restructuring and becoming more internationally competitive. European firms are going through a deep restructuring process. Mergers and acquisitions have hit new records as companies seek to create national, regional or global champions (M&As close to USD 1,500 billion in 1999 compared with USD 500 billion in 1997). Venture capital and start-ups are booming as investors and entrepreneurs become more convinced that Europe can compete with America in knowledge-based industries. Heavy industries and large conglomerates are restructuring as never before. Finally, new rules on corporate governance are spreading. The outflows of foreign direct investment merely mirror the dynamism of European firms.

Øystein Olsen: Monetary policy from the perspective of a commodityexporting country Dinner speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the European Central Bank, Frankfurt am Main, 19 November 2012. *  *  *  Please note that the text below may differ from the actual presentation. I would like to thank the ECB for hosting this conference on a topic that is a core interest for us in Norges Bank. It is a pleasure to visit the ECB in Frankfurt. In my remarks tonight, I will give you a glimpse into the historical background for our economic framework and the conduct of monetary policy in Norway today. As you know, Norway is in the fortunate position of having ownership rights to large natural resources. Oil was discovered in the North Sea in 1969. Back then, it soon became clear that oil and gas would be a source of substantial wealth – and government expenditure and social programmes expanded rapidly. By 1977, a surplus on the current account had turned into a deficit of 12 percent of GDP. The deficit was three times larger than that of Italy and Spain last year. Predictably, we also experienced a contraction in the non-oil tradable sector. Fiscal policy had fuelled a boom-bust economy and had to be reversed and tightened. Many Norwegians experienced a decline in real income. When oil prices fell in 1986, the Norwegian economy was hit again.
•  Banks in the region could face higher non-performing loans. They could also face reduced US Dollar funding if there are large capital outflows from ASEAN. •  But their liquidity and capital positions are generally sound and they should be able to weather this. ASEAN growth story still good Over the medium to long term, ASEAN is expected to remain among the fastest growing regions in the world. Last year, the combined GDP of ASEAN was close to $ trillion – larger than India. •  The ASEAN-4 – Indonesia, Malaysia, Thailand and the Philippines – are projected to grow by at least 4% per annum on average over the next five years. •  It could be as high as 6% if ASEAN becomes more integrated and these countries successfully implement structural reforms to raise productivity and competitiveness. For banks in ASEAN, it is not just the size and growth of the economies that matter. It is the composition of that growth and demand. Rising incomes and the agglomeration effects of urbanisation will significantly expand the ranks of the middle class in ASEAN. •  In 2010, ASEAN had a population of 600 million, with around a quarter making up the middle class. BIS central bankers’ speeches  1  •  In 2030, ASEAN will have a population of 700 million, with about two-thirds attaining middle class status. •  In other words, the size of the middle class will swell by as much as three times over two decades.

Affordability risks of new mortgages financing residential investment property are high and have risen further. These developments have taken place against a background of persistent imbalances in the mortgage and real estate markets. Both mortgage-lending volume and prices for single-family houses and apartments continued to rise at a moderate rate in 2019. Although prices of residential investment property have stagnated of late, there is still a risk of a price correction in this segment in particular. On the one hand, this is due to the sharp price increases in previous years. On the other, larger numbers of vacant dwellings suggest that brisk construction activity in rental apartments may have led to an oversupply. Despite banks’ high risk appetite and the persistent imbalances in the markets, SNB stress tests suggest that the resilience of the domestically focused banks remains adequate overall. Thanks to robust capitalisation, most of these banks would be able to absorb the losses incurred in adverse scenarios. Given the risks I just mentioned, this is positive. It is crucial for the stability of the financial system that banks continue to hold sufficient capital to be able to cover the risks on their books. Ongoing pressure on margins means that the incentive for domestically focused banks to take on risks remains high. This applies to mortgage lending in particular. The revised selfregulation rules for banks in the residential investment property segment, which come into force at the beginning of 2020, should help to prevent a further build-up of risks in this segment.
Much has already been done by way of strengthening fiscal and macroeconomic governance of the euro area. In EU jargon we talk about the “six-pack” and the “two-pack”, of which the former entered into force already in December 2011, and on the latter a final agreement was reached just last week (“trilogue agreement” on 20 February). These packages of legislation included the reform of both the preventive and corrective arms of the Stability and Growth Pact (SGP), the new minimum requirements for national budgetary frameworks, the new Macroeconomic Imbalance Procedure (MIP), and a stronger enforcement mechanism through new financial sanctions, under both the SGP and the MIP. The two additional regulations that are just about to be adopted will further strengthen surveillance of euro area countries. Rather than talk about what has already been achieved I would like to sketch out the further improvements that are in the pipeline, in particular in the area of financial regulation and supervision. One of the structural flaws that exacerbated the crisis was that supervisory policies often failed to prevent excessive risk-taking in the financial sector. Supervisory decisions at the national level did not always take their potential effect across national borders into account. More fundamentally, supervisory decisions were “microeconomic” in nature, concentrating on the financial health of individual institutions rather than on systemic impact at the “macroeconomic” level.

The same expectation was expressed in the European Commission’s Winter Forecast released on Friday last week. These somewhat better prospects are primarily due to policy changes in the field of fiscal and structural policies at the national level as well as in the European Union. For sure, the ECB’s monetary policy has contributed to the process by maintaining an accommodative monetary policy stance and by fostering improved financial market confidence. As host of both the ESRB and soon also the SSM, the ECB is committed to playing a positive role in the further development of the euro area as a well-structured and stability-oriented part of the global economy. We call on the euro area’s governments to keep up the efforts to undertake still necessary reforms, while acknowledging what has already been achieved. Adjustment of such a magnitude as was needed to address the crisis is a long haul, and I am confident that we are on the right track to get there. Thank you very much for your attention. BIS central bankers’ speeches  7
Financial Globalisation Beyond international trade, financial globalisation has also expanded tremendously. Cumulative global bond and equity market flows are now more than 80 times larger than that in the year 2000 and far exceeded trade flows. There is no doubt that financial integration, if properly managed, can catalyse a more efficient allocation of productive capital and know-how transfers, with the intended benefits. However, financial globalisation has also been accompanied by highly-volatile short term portfolio flows, which frequently led to major disruptions to emerging economies’ financial markets. At the extreme, global financial flows can lead to the build-up of domestic vulnerabilities, such as currency mismatches, external indebtedness and broader financial imbalances. When financial globalisation becomes in itself a source of shock, financial markets can be easily overwhelmed. In Malaysia, two-way capital flows have increased by almost three-fold in the aftermath of the Global Financial Crisis. Similar to other emerging economies, we have also experienced several episodes of sharp capital flow reversals. Supported by firm macroeconomic fundamentals, our deep and broad financial markets were able to intermediate these flows in an orderly manner. The experience of emerging economies in dealing with capital flow volatility underscores the need to always keep our “own house in order”. While this is necessary, it is not sufficient. Often, we have seen how external developments that are beyond our control, such as the Taper Tantrum and trade tensions, could trigger periods of sharp capital flow volatility in emerging economies with severe consequences. There are “innocent bystanders”.

In fact, it has to be recognised that around the world domestic authorities have been putting in place defensive measures, mostly below the radar of commentators, over the past few years. This comes back to the use of public money. A world in which public money is used to bail out banks or dealers, is a world in which balkanisation is likely because the authorities that deploy public money are accountable to domestic tax payers – people with votes in their jurisdiction – and to nobody else. But by delivering the FSB’s global agenda – not only on resolution, but more widely – we will significantly reduce, if not remove, the need for some of those balkanising tendencies. By making finance safe and orderly failure possible, I think we can take off the stage the most basic force towards balkanisation. The stakes are high. BIS central bankers’ speeches  5
Chart 4: BCC survey activity indicators Balance reporting increased sales/deliveries 60 Services  Manufacturing 40 20 0 -20 -40 -60  Mar-07  Sep-07  Mar-08  Sep-08  Mar-09  Sep-09  Mar-10  Note: Sales/deliveries relate to domestic market Source: British Chambers of Commerce (BCC)  BIS Review 99/2010  5  The CBI’s most recent surveys show a similar picture, with manufacturing industry bouncing back strongly alongside a muted recovery in the services sector (see Chart 5). According to the CBI, retail sales growth appears to have been weak in the last couple of months – though this may reflect some temporary uncertainties relating to the change of government and the Budget, which could have affected consumer confidence and spending patterns. Chart 5: CBI survey activity indicators Balance reporting/expecting increased sales/output 40 Manufacturers output expectations  30  Retail sales  20 10 0 -10 -20 -30 -40 -50 -60  2007  2007  2008  2008  2009  2009  2010  Note: Retail sales – percentage balance reporting annual increase (3 month average); Manufacturing output – percentage balance expecting rise in the next 3 months. Source: CBI Monthly Trends Enquiry and Distributive Trades Survey  I would not want to play down the uncertainties which remain in relation to the growth outlook here in the UK. Access to credit is still being adversely affected by the problems in the banking system.

But monetary policy needs to be forward looking, so that does not add up to a compelling case for a change in monetary policy. The question is how has the growth and inflation outlook changed as a result. In my experience, recoveries have momentum. While growth might not be totally steady and even across sectors, as recovery progresses, various mechanisms begin to operate which can give it added momentum. Pressure on existing capacity grows, causing companies to dust off their investment plans. Supply chains tighten and firms start to re-stock. Memories of the uncertainty created by the shocks that generated the recession fades and confidence recovers. The labour market stabilises and unemployment should eventually start to fall, improving job prospects. These things happen over a period of time, so from month to month not much change may be perceptible. But looking back over a longer period, improvement is clear. In my view, this is the process that has been underway for the last year, and this process of gradual healing and recovery is likely to continue in the absence of big negative shocks which could derail growth. Given our experience over the last few years, we should certainly worry about future major shocks from the international economy. But the big downside worries resulting from the financial crisis which were present a year ago have receded, in my assessment. And the response of monetary policy has played a part in that process – though it has not been the only factor at work.
I want to stress two things here: •  The euro area has very rapidly and efficiently set to work to cure its fiscal weaknesses and can today boast some of the best results among the major developed economic regions: its public deficit has been reduced from 6.3% of GDP in 2009 to approximately 3% today; by the end of 2013, the euro area should show a positive primary balance;  •  While the commitment to progressively achieve sustainable levels of public debt and deficit has to be achieved; the measures need to be designed in such a way as to limit the negative side-effects on growth. For instance, efforts need to be focused on non-productive spending. In fact, there is only one way to durably raise the growth potential of our economies, and that is by structural reforms that enhance competitiveness. It is clear that the euro area is well equipped to confront the challenges of the 21st century. With 370 million consumers and high purchasing power, it remains the biggest market in the world. It is also the most economically integrated area, with highly qualified manpower and very good infrastructures. Too often, however, euro area countries are prevented from reaping the benefits of their position by the rigidities that have accumulated over time, during the periods of easy growth. Now, the international environment is more challenging: new and powerful competitors have emerged and comparative advantages are shifting. There is no alternative to adjustment.

Having said this, the workshop you are attending today and tomorrow has the following key objectives: i.  to explain the practical aspects of “Context Establishment” and the “Risk Identification” processes so as to ensure that you fully understand these initial, but critical steps, in the risk management process so as to enable you to assist your respective departments to complete these important stages of the process; and  ii. to remind you of your role and responsibilities, as Risk Liaison Officers, Alternates and Risk Coordinating Officers, in the Risk Management Framework. Ladies and Gentlemen: Allow me to reiterate what I said during the risk sensitization workshops – the success of the Bank of Zambia Risk Management Framework will in a large measure depend on how well this process will be understood and how well its implementation at departmental level will be facilitated by you. As Risk Liaison Officers, Alternates and Risk Coordinating Officers for your respective departments, you will be expected to not only provide leadership and guidance to your respective departments on risk management matters, but you will also be required to play a catalytic role in the whole risk management process. As the proverbial saying goes, the buck for managing the risks in your respective Departments stops at you! The Risk Management Department’s role will remain confined to the coordination and facilitation of the Bank-wide risk management activities. In conclusion, I wish to urge you all to take a keen interest in the deliberations of this workshop.
Our latest economic projection as of January 2010 suggests an economic expansion of 3.3–5.3 per cent in 2010 and 2.8–4.4 per cent in 2011, with an increasing role of private investment replacing government expenditure, which will gradually subside since the need for continued fiscal stimulus wanes as the economic growth becomes self-sustaining. Here, I would like to point out that this projection is due for a revision in April. With the stronger-than-expected performance in the last quarter of 2009, it is highly likely that these numbers will be revised upward. Ladies and Gentlemen, Having pointed out a fairly positive outlook, I will now turn to the second topic of my talk: the key challenges going forward and I must quickly add that looking ahead there are both external and domestic uncertainties. Policymakers therefore will have to be watchful and well-prepared to implement appropriate policy to ensure continued growth momentum amidst these challenges. First, the global economic recovery, particularly those of the industrialized economies, remains fragile and subject to downside risks. In spite of the higher-than-expected growth in the fourth quarter of 2009, the US economy is still beset by high unemployment, continued deleveraging, and weak financial institutions. All of these will have dampening effects on domestic demand, especially consumer spending – the main growth driver for the US economy. At the same time, concerns on the Eurozone’s sizable fiscal deficits especially those of the peripheral economies may trigger another round of confidence problems.

Here, the latest development on sovereign debt crises in Europe underscores the importance of the restoration of our fiscal discipline. If there are no changes in our policy, the ratio of public debt to GDP will increase to over 60 percent by 2012. This will not only leave little room for the government to use more fiscal stimulus should there be a new crisis in the region or in the global economy but it could also put Thailand in the spotlight of the foreign investors who have become much more sensitive to the issue of fiscal sustainability. This is why we have to rethink the stance of our fiscal policy once the short-term political and economic uncertainties fade away. Furthermore, to ensure fiscal sustainability over the medium to longer term, Thailand will need fiscal reforms that include: •  Continued fiscal consolidation;  •  Broadening of our tax bases;  •  Reforms to increase the efficiency and equality of the tax system; and  •  Greater allocation of public spending toward investment expenditures. Indeed, the government realizes the need for fiscal consolidation and reforms. With the better-than-expected tax revenues, thanks to the solid economic recovery, the budget deficit for this fiscal year and the extent of public debt will probably be lower than originally expected. The government has also taken initiatives to work on some reform measures such as the introduction of property taxes. These are commendable initiatives that remain to be seen whether will be successfully implemented.
6  BIS central bankers’ speeches  Changes in market prices can, of course, affect the value of the collateral the Bank has taken in its operations. As a result, the Bank calls margin on any shortfall.8 In its sterling operations, the Bank calls margin daily and is moving to that standard for all other transactions. Limits The Bank also manages the risk on its balance sheet using concentration limits. Those serve two purposes. First, they help the Bank diversify across institutions – for example, counterparties can only bid for a maximum of 30% of the funds on offer in the Bank’s ILTRs. That helps ensure that any single counterparty doesn’t corner the market for reserves (intentionally or by accident). Second, they help diversify across instruments in the wider collateral pool – for example, the Bank requires that the adjusted market value (AMV) of securities that any single issuer delivers to the Bank as wider collateral in OMOs is less than the greater of £ million or 25% of its total OMO collateral delivered. Other recent policy initiatives The Bank has, for a number of years, been refining and improving its collateral policy. In November 2010, the Bank announced that it would allow counterparties to use “raw” (i.e. unsecuritised) loans as collateral in the DWF. By removing the need to securitise assets, that initiative expands the range of collateral that banks would be able to use in times of stress.

In particular, there are policy decisions required in the following dimensions: (i)  eligibility (what collateral should be accepted, and what should not);  (ii)  valuations and haircuts (how much is the collateral worth? );  (iii)  what fees should apply, if any, and  (iv)  limits (how much diversification should we seek across the collateral delivered?). These are important questions for the banking system as a whole, and have presented new and complex risk management challenges for central banks over the past few years. It is on these issues that we focus in this paper.3 To start with, we briefly outline some of the main features of the Bank’s lending operations. The sterling monetary framework The Bank’s main activity in the sterling market prior to the financial crisis was via its shortterm repo open market operations (STR OMOs). Those regular weekly operations provided the banking system with the right level of reserves such that short-term market interest rates would remain close to Bank Rate set by the MPC.4 In addition, in order to reduce the size of weekly STR OMOs to a manageable size, the Bank undertook longer-term repo OMOs (LTR OMOs) of 3, 6, 9 and 12 months maturity. The remaining operation of note was the Standing Facilities in which a commercial bank could borrow from, or lend to the Bank overnight, albeit at a less attractive rate than Bank Rate.