samchain/econo-pairs-v1 huggingface dataset:
Ireland and the dynamic Asian economies grew 9-10 per cent a year during their most intense catch-up phase. But the largest of the new member states - Poland, Hungary and the Czech Republic - are only growing a few percentage points faster than the average for the old countries; an average that furthermore is being pulled down by the poor performances of Germany, France and Italy. From this we can come to at least two conclusions: Firstly, Poland, Hungary and the Czech Republic, which already have fairly substantial public expenditures for their income level, should take care not to end up in the same situation as Germany, France and Italy, with high expenditures, large deficits and considerable needs for reform. Secondly, both new and old countries need a broader injection from the enlargement for their economic performance. Mobility for goods has been one of the key factors behind the new member states' growth. When the process towards EU entry was initiated in the mid-1990s, the majority of the EU’s barriers to trade for the future member states were abandoned through the Europe agreements. This resulted in one of the most dramatic and least publicised changes in trade in modern time - far more significant for most EU countries than, for instance, trade with China today.

The long term: mobility and prosperity Although much of the debate necessarily focuses on the short term, the key issues are those that concern the long run. On the one hand, how can the new member states catch up sustainably on the EU average in terms of prosperity and productivity? On the other hand, how can the “old” EU countries benefit from the enlarged EU in order to boost growth, which in many cases has left much to be desired? 2  BIS Review 51/2004  Firstly, let me point out where we stand today. According to the EU’s statistical agency, Eurostat, the purchasing power adjusted GDP per capita of the eight new eastern and central European member states ranges from 77.3 per cent of the EU average in Slovenia to 42.6 per cent in Latvia. The richer new member states - Slovenia, the Czech Republic and Hungary - are in terms of purchasing power closer to the EU average than Spain and Portugal were when they joined in 1986 (Slovenia is actually on a par with Portugal and Greece today). The other countries are all just under the relative level that Portugal had in 1986. Sometimes the GDP curves are extended up to the beginning of the 1990s and the fall in output that followed the liberation from communism. These figures are in many ways misleading, however. Firstly, there was considerable manipulation of statistics under the dictatorship, making correct data difficult to reconstruct.
This might include actions to 1)  prudently expand access to mortgage credit for homebuyers, including by limiting putback risks that discourage loan origination and addressing problems with appraisals;  2)  eliminate frictions and lower costs to refinancing for all borrowers with prime conforming loans;  3)  enable borrowers who are “underwater” on their loans but continue to make their monthly payments to earn accelerated principal reduction over time;  4)  provide bridge financing for borrowers with proven ability to service their debts who lose their jobs and may take longer than normal to find new jobs in today’s weak labor market; and  5)  manage the disposition of homes repossessed by creditors in a manner supportive of large-scale conversion into rental units. I am encouraged by the recent decision by the Federal Housing Finance Agency (FHFA) to make it easier for certain borrowers with high loan-to-value ratios to refinance. I hope this initial step will be followed by others that collectively move in the direction of stabilizing house prices. I believe this would not just be good economic policy, but it would also be extremely beneficial for taxpayers, who now effectively own the credit risk of those home loans guaranteed by Fannie Mae and Freddie Mac. On the fiscal policy front, ongoing support for demand from the public sector at a time when many households are deleveraging sustains jobs and incomes.

Our focus as the supervisor of the banking sector will remain in having institutions that are well capitalized and liquid, and that continuously improve their standards of risk management. In our forthcoming communication with banks, we shall pay special attention to how they assess and monitor credit, market and liquidity risks; and how they include the results of this process in the management decisions. Finally, I want to stress again the importance of economic reforms that would ensure stronger economic growth in the medium term, and will provide for more effective banking activity. The objective of such reforms must be to improve the productivity and competitiveness of our economy through: reducing uncertainties over the direction of future developments by identifying the right policies and reforms; creating a favorable fiscal, legal, business and political climate that will promote investments in the economy; improving the workforce education and specialization; generating the benefits of economies of scale through integration of businesses in the regional or European market; and increasing the efficiency of the public and private sector through the improvement of governance. In the financial system, the reforms must focus on deepening and broadening the financial market, with the objective of improving access to finance, improve efficiency and reduce risks. I hope that this forum will bring up new ideas on how to overcome current challenges that the real economy and the financial sector is facing.
However, for reasons not very clear, this assistance was sought from USA and not from the UK, the traditional advisor of the country. Thus, the Federal Reserve Bank of New York was approached by the then Minister of Finance, J. R. Jayawardene, to obtain the services of a suitable consultant. The Bank, in turn, informed the government that it could not release its best consultant, namely, David L Gosse, for this purpose, because he had been occupied in some other assignment at that time. Gosse was considered the ideal expert for the job, because he already possessed the required experience for the job at hand by pioneering the work relating to the establishment of the Central Bank of the Philippines. However, Gosse was kind enough to recommend his assistant, John Exter, for the job. Hence, Exter was not the first choice, but an engagement done by default. Yet, the wisdom, erudition and professionalism shown by Exter in both making the recommendations and subsequent running of the Bank, is a testimony that he was the correct choice for the job at hand. John Exter had an illustrious academic as well as professional career. After graduating from the College of Wooster, he completed post graduate work at both the Fletcher School of Law and Diplomacy and Harvard University. After a brief stint at MIT during World War II, he joined the Federal Reserve System as an economist. Then, in 1948, he was on release to serve the Government of the Philippines as advisor to its Secretary of Finance.

In order to minimize the ill effects of using a central bank’s profits for government expenditure, Exter has made special provisions in the Monetary Law regarding the application of profits of the Central Bank. Accordingly, out of the surpluses of the Central Bank, the first charges should be to build the reserves of the Bank to support the currency it issues. Any remaining balance should be utilized to retire the government’s borrowings from the Central Bank or paid into the government as a normal profit transfer. However, it has to be done collaboratively by the Minister of Finance and the Monetary Board, having taken into account the inflationary impact of each such measure. As such, the government does not have the first claim on the profits of the Central Bank, though it is owned by the government. The profit criteria that are applicable to other governmental institutions are, therefore, not applicable to the Central Bank. A general concern which has often been raised at numerous public fora has been the existence or the absence of the independence of the Central Bank. Many have found fault with Exter for making the Secretary to the Ministry of Finance a member of the Monetary Board. They have argued that this official member with his own self interest in funding the government expenditure programs would use the opportunity to dictate terms to the Monetary Board, thereby permitting the fiscal policy to override monetary policy.
We must always bear in mind that monetary policy is not an “exact science” based on well-defined natural laws. It is not possible to fine-tune the interest rate to attain the objectives with high degree of precision. Irrespective, the criteria for a good interest rate path provide a guide for our interest rate policy. 4. Inflation volatility, deviations from the inflation target and external shocks Inflation adjusted for energy prices and taxes has been low in Norway in recent years. It has risen somewhat, but it is still considerably lower than the target of 2.5 per cent. BIS Review 26/2006  3  Inflation has been and is still being restrained by the fall in prices for imported consumer goods, an unexpected high level of competition in domestic markets and increased cross-border labour flows. The trend in prices for consumer goods and services over the past two or three years is a result of favourable developments in the Norwegian economy. Low inflation is being accompanied by real income growth and a rise in production and is not the result of declining demand, activity or employment. Deviations from the inflation target in Norway have been somewhat higher than in other countries, which may partly reflect the degree of openness of our economy. Chart 12 shows deviations from target and the degree of openness. The higher the columns, the larger the deviations are from target. The lines indicate the degree of openness.

Third, even in the case where the central bank knew that financial imbalances were building up, the size of the interest rate rise needed to reduce the imbalances might be so large that it could lead to a severe economic downturn. In Norway, the central bank is one of the institutions with responsibility for analysing and monitoring the financial system. As a flexible inflation-targeting country, we have chosen to incorporate financial stability considerations into the monetary policy decision-making process, partly because asset prices and debt are important for inflation and output, and partly because it provides focus on potential risks to financial stability. It may also be useful to cross-check by assessing our interest rate policy in the light of simple rules like the Taylor rule, which are less dependent on a specific analytical framework for the Norwegian economy. On the other hand, the rules will not capture all details in the projections, but can provide an indication of whether the current interest rate level is reasonably adapted to the economic situation. As we now publish our own interest rate forecast, market interest rate expectations are one cross check of particular interest. If expectations deviate from our projection, it may indicate that the market has a different view of future economic developments. If we are to influence interest rates in the money market, we must be able to explain such deviations. Of course, it might also be the case that the market’s view is the most accurate.
Vítor Constâncio: Reflections on financial integration and stability Speech by Mr Vítor Constâncio, Vice-President of the European Central Bank, at the Joint ECB-EC Conference on “Financial Integration and Stability in a New Financial Architecture”, Frankfurt am Main, 28 April 2014. *  *  *  Ladies and gentlemen, Dear colleagues and friends, It is indeed a pleasure to participate in this joint presentation of two important policy reports: the European Commission’s European financial stability and integration report 2013 and the ECB’s Financial integration in Europe 2014 report. Both studies illustrate that some steady, albeit uneven, progress is being made towards financial stabilisation. Banks are reducing their liquidity buffers, repaying our LTROs and regaining confidence from the markets. Money market integration is slowly improving, particularly in the secured segment. Quantity-based indicators confirm a stabilisation in bond markets and improved integration in equity markets. Given where we stood barely two years ago – on the edge of redenomination risks – such progress is encouraging. However, it does not mean we are entirely out of the danger zone. If we look at banking markets, there is still a large dispersion of borrowing costs for nonfinancial corporations across euro area countries. Thus, significant financial fragmentation still remains in the euro area. This is a concern for the recovery and also for monetary and macro-prudential policy. Under the pressure of the global financial crisis and the sovereign debt crisis in the euro area, several solutions – both global and European – have indeed been adopted.

Stronger crisis prevention mechanisms are now in place and a new crisis management framework has been developed. We have financial backstops. A Single Supervisory Mechanism and a Single Resolution Framework have been decided. Most of the countries in IMF/EU/ECB adjustment programmes are “graduating” successfully, and several other stressed countries are implementing structural reforms and financial consolidation. These are important steps forward, towards a more stable and equitable functioning economic and monetary union. We have certainly turned a corner and stabilised the situation. It is an important achievement but it is not the end of the road as it is too soon to declare that the crisis is over. The euro area still faces large challenges in terms of lacklustre growth, excessive unemployment, remaining fragmentation and a low inflation period that threatens to aggravate the burden of the debt overhang still besetting governments and private economic agents. That the stressed countries were able to restore fundamental equilibria, like their external accounts, and to resume positive economic growth is of great importance. However, we face now structural medium term challenges that impair the European potential growth rate. In my remarks today I will concentrate on issues such as the changing financial integration and financial stability nexus, on how to restore a sound and resilient financial system and finally on the need to improve our analytical tools and policy instruments.
New concepts in various facial or voice recognition techniques could be demonstrated by the developers in the Fintech Innovation Hub to gather feedback from potential users and to receive regulatory guidance from supervisors at an early stage. This should help shorten the time-to-market of useful industry-wide solutions. Second, I envisage that the Fintech Innovation Hub will also benefit the HKMA. In this place, we could explore with innovators options and possibilities of using new technologies, such as Big Data Analytics and other “regtech” initiatives, to achieve our objectives  BIS central bankers’ speeches  3  more effectively without creating undue risks or burden for our internal systems or databases. Fintech Supervisory Sandbox 16. Meanwhile, there is also a quite commonly-held perception that the development of Fintech in the financial services sector in Hong Kong has been slow. I do not subscribe to this view, at least insofar as the banking sector is concerned. In the past few months, banks and stored value facility operators have already launched new payment facilities built on smart phones and Near Field Communication technology. These facilities have the potential of altering fundamentally the way consumers make payments. Many banks have also reported to the HKMA their intention to roll out very soon new technology with a view to providing more secure and efficient services to customers. I mentioned earlier biometrics authentication technology involving voiceprints and fingerprints. This is indeed something that many banks are planning to roll out.

In this regard, I am pleased to say that Hong Kong has done reasonably well so far. Within a few years, Hong Kong has become the global hub for offshore RMB businesses, with the largest RMB liquidity pool and being the largest offshore RMB bond issuance and asset management centre in the world. As for the Belt and Road Strategy, Hong Kong as an IFC is uniquely well positioned to play a crucial role. However, since it is a new strategy aiming to cover markets that are less familiar to most of us, there will unlikely be too many “low hanging” fruits. Putting it bluntly, Hong Kong must work doubly hard to get into the game and stay ahead of the others. In this connection, the launch of the Infrastructure Financing Facilitation Office (IFFO) by the HKMA in early July is a concrete step to help Hong Kong capture the business opportunities that may lie ahead. This is only the beginning of a challenging process to build Hong Kong as the preferred platform for implementing the Belt and Road Strategy. Please rest assured that the HKMA stands ready to collaborate with the industry and the practitioners on this important mission. The first panel of today’s Summit will discuss Hong Kong’s value proposition in the Belt and Road Strategy, including the facilitating role to be played by IFFO. Technological advancement and financial services 10.
Australia, which is slightly bigger than the Netherlands, also has 4 big banks, but they are mainly domestic, smaller than the Dutch although bigger than the Singapore banks. The Australian government maintains a “Four Pillars” policy, under which it will not allow any of the 4 banks to merge or take over any of the others, in order to maintain sufficient competition in the domestic market. But there is debate in Australia over whether this “Four Pillars” policy is sustainable, or whether it will cause Australian banks to lose out in the long run, by preventing them from becoming large enough to be truly viable. Singapore’s economy is ¼ the size of Australia’s. Singapore cannot afford a “Four Pillars” policy. If we tried that, our banks would be like bonsai plants, root-bound by the small pots in which they grow. Our biggest bank – DBS, even after the merger with POSBank, is ranked only 115th in the world by asset size. In banking size is not everything, but size is important. If the local banks fail to achieve enough scale, they will not be able to invest in cutting-edge technology and management systems, or to attract the talent necessary to compete with the best players. Their service standards and product range will not be able to keep up with their foreign competitors. They will find it difficult to diversify their earnings by competing in fee-based businesses, like asset management and cash management.

I think there is very broad agreement in the Governing Council of the ECB that a high degree of monetary accommodation will remain needed and that's irrespective of the trade war or anything we've seen recently. That's because the economy and in particular the inflation in the eurozone is not yet where we want to see it. Monetary accommodation will remain needed but we'll see a change in the mix of our instruments. In particular as we come closer to the point where our medium-term inflation objective is met, I would expect the role of rate guidance to be strengthened. We've been clear on that. In terms of the models which you must be running that a trade war could affect as well and could affect Europe as well, those models would've been run at the ECB, I'm sure. What are they saying? 1/3  BIS central bankers' speeches  They clearly say that a trade war would have a damaging impact on the global economy, more so in the US and more so in economies which are either very closely related to the US or are deeply integrated in global value chains. The impact on the eurozone would be less and it all depends on how this conversation on trade will evolve and we don't know yet. That's why I'm saying we should look through it. Does the ECB have the tools, though, to negate the effects of a trade war if indeed the worst ramifications do happen?
These changes have also affected the central banks. With the onset of the crisis, the so-called conventional policies and instruments were reconsidered, the scope of our functions increased, and the expectations from us enhanced. Macroprudential function, bank resolution, consumer protection, financial inclusion and literacy are just some of the areas requiring from the central bank to play the leading role. The crisis itself and the subsequent changes to the overall central bank profile and decision-making infrastructure entail modifications in the scope, granularity, and the systematization of the available statistical data. A number of new statistical initiatives (such as the G-20 Data Gaps Initiative) aimed at enriching the statistical spectrum have emerged post crisis. The mere fact that global crisis arose exactly from the financial sector suggests that many of the post-crisis recommendations and needs for changes in the statistical system concern the central banks. The crisis has shown that excessive risk-taking can lead to a collapse of the financial system. Underestimation of the strength of the financial system’s links with the real sector and the cross-border exposures has led to inadequate assessment of macro-financial links within some economies, as well as of the global implications of shocks in some countries. This whole new context, as well as the unconventional responses of central banks to this shock had major implications for the requirements for expansion and modification of the regular statistics, as the most important “ingredient” for making appropriate monetary as well as micro and macroprudential policy decisions.

1 Draghi, M. Welcome address at the Eighth ECB Statistics Conference, Central Bank Statistics: moving beyond  the aggregates, Frankfurt am Main, 6 July 2016. www.ecb.europa.eu/press/key/date/2016/html/sp160706.en.html  3/3  Available  at  the  ECB  web  site:  BIS central bankers' speeches