samchain/econo-pairs-v1 huggingface dataset:
It confers collective social and economic benefits, at both the micro and macro level, but at some cost. Which one is likely to win the day? The cost/benefit balance seems to be context-specific. It also seems to depend on a country’s level of economic development. 43 For developing countries, there is evidence this balance may sometimes be growth-negative. For developed countries, the evidence is more compellingly growth-positive, perhaps owing to their more developed public and social infrastructure to support diversity. Diversity of what? Thus far, I have used the word “diversity” in a very general sense. That is inadequate when it comes to crafting policies which promote diversity. Diversity of what exactly? Specifically from a policy perspective, which dimensions of diversity are most important if we wish to maximise the social externalities it confers? In his book, The Difference, Scott Page distinguishes identity diversity (race, gender, ethnicity, age etc) and cognitive diversity (intelligence, problem-solving, personality etc). 44 To this, we might usefully add a third – experiential diversity (socio-economic background, skills, experiences etc). While there is some overlap between them, these measures are conceptually distinct: the first physiological and pure nature; the second neurological and part nature, part nurture; the third environmental and pure nurture. The aspect of diversity most extensively studied is identity, specifically ethnicity and gender. That is for the very simple reason that these dimensions of diversity are the ones most easily observable and, latterly, reportable.

The strict regulation of the rental market also means, for instance, that households may feel forced to buy a home even at stages of their lives when ownership and a mortgage may entail taking a major risk. Although a mortgage is a longterm undertaking for both the borrower and the lender, the households mainly choose variable-rate mortgages; only around one percent choose fixed rates at maturities longer than five years. In addition, the banks largely fund their lending using mortgage bonds with maturities that are significantly shorter than the maturities of the loans.1 I see the specific aspects I have just listed as risk factors, even though arguments can easily be found for each aspect to explain why this particular one does not actually constitute a risk. For example, one can point out that the high level of household debt is offset by the high level of household saving and households having assets that are substantially larger than their debts, or that the low level of construction over several decades limits the scope for a fall in housing prices.2  1  In many countries, mortgages are amortised over periods of 20 to 40 years. This was also the case in Sweden a few decades ago, but it subsequently became increasingly common with interest-only loans. Over the past few years, a larger proportion of new mortgage borrowers have chosen to amortise their loans, but still at a slow rate.
While this issue is at the heart of risk management challenges for the provision of credit more broadly, the rise in the relative size of the private leveraged fund sector and the rise in the importance of new derivative financial instruments may complicate the design of policies and risk-management practices to counteract these traditional frictions. Virtually all types of credit markets suffer from informational problems - consider the challenge faced by a bank in assessing the risk associated with lending to a small unrated company. But the complexity of new financial products, the rapidity with which positions can change, and the lack of a long time series of historical relationships seems likely to enhance these problems for leveraged institutions operating in new markets such as credit derivatives. Funds typically deal with several different banks and investments banks. The desire to maintain the confidentiality of their trading strategies has traditionally led firms to be quite opaque to outsiders and reluctant to give their banks sufficiently detailed information on a real time basis about the risk profile of the overall fund. Without that information, individual dealers or banks have a difficult time evaluating the probability of default of a leveraged counterparty and the potential covariance with other positions of the firm. Individual firms may also see only a piece of the hedge fund’s positions, and if their direct exposure to the individual fund is small, may perceive less need to worry about the overall risk profile of the fund.

Øystein Olsen: The role of monetary policy revisited – welcome address Welcome address by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Norges Bank conference “The role of monetary policy revisited”, Oslo, 26 September 2013. *  *  *  It is a great honour and pleasure for me to welcome you all to this Norges Bank conference: The role of monetary policy revisited. In his famous 1967 presidential address before the American Economic Association, Milton Friedman set out to answer three interrelated questions. What should be the role of monetary policy? What can it contribute to achieving the major goals of economic policy? And how should it be conducted to contribute the most? Five years after the onset of the global financial crisis, these questions are yet again at the forefront of our minds. The crisis and subsequent recession have presented substantial challenges to monetary policy. Central banks have responded with great activism and have resorted to unconventional policies such as quantitative easing and an increasing use of forward guidance. And the crisis has led to a review of monetary policy frameworks. Successful as monetary policy has been in safeguarding low and stable inflation, many argue that it should take risks to financial stability into account. Moreover, a new set of macroprudential policy tools has been proposed to address systemic risks in financial markets directly. In Norway, inflation targeting was introduced in 2001.
•  That doesn’t tackle biggest issue of all. Central banks can, to a degree, smooth the necessary adjustment of economies and so create time for households, firms, governments to strengthen their balance sheets where necessary and adjust to shifts in the relative pattern of demand for goods and services. That is what is going on in the West now. But obviously central banks cannot force others to act. And our actions can make delay seductive. •  Given central banks’ responsibility to explain, we can nudge but we must stay within our remit. •  In the present crisis, part of the real-side adjustment is needed within the banking system. For that the Bank of England does have a special role. Through the new Financial Policy Committee (FPC), we have been pressing the banking industry to adjust given the external threats, as sound banks are needed for sustainable recovery. •  This represents the first intervention of so-called macro-prudential policy. Can view the role of the FPC as being to ensure that the need for stability in the financial system is not overlooked. Looking ahead, this will mean keeping the regulatory regime up-to-date as the financial system evolves and, when the time comes, ‘taking away the punchbowl’ before the next party gets as dangerously out of control as the last one did. •  The case for operational independence here is just as strong as for monetary policy. Taking Away The Punchbowl is something that requires a medium-term orientation.

Chart 6: Major UK banks’ regulatory capital, MREL resources and requirements, % RWA (2011-2022) End-state requirement  2014: UK bail-in power introduced T1 + other total capital resources (~T2)  MREL resources  Interim requirement  35% 30% 25% 20% 15% 10% 5% 0%  2011 2012 2013  2016  2020  2022  Sources: FSA regulatory returns, MREL+ returns, Bank calculations  43  All speeches are available online at www.bankofengland.co.uk/speeches  43  Chart 7: G-SIB and D-SIB high-quality liquid assets (liquid asset ratio) Per cent  14 12 10 8 6 4 2 0  2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total GSIBs DSIBs Sources: S&P Capital IQ and Bank calculations Notes: Weighted average based on a sample of 189 banks which are systematically important as of 2016. Yearly is defined as the fiscal year of reporting of the individual banks. Liquid Asset Ratio = (Cash equivalents + government securities)/Total assets  Chart 8: G-SIB and D-SIB loan-to-deposit ratio Per cent  3 2.5 2 1.5 1 0.5 0  2006  2007  2008  2009  2010  2011  Total  2012 GSIBs  2013  2014  2015  2016  DSIBs  Sources: S&P Capital IQ and Bank calculations Notes: Weighted average based on a sample of 189 banks which are systematically important as of 2016. Yearly is defined as the fiscal year of reporting of the individual banks. Loan to Deposit Ratio = Loans granted by a bank/Stable deposits received.
Shanghai will become a big financial centre, first serving the Chinese market, and later, an international financial centre. Mumbai and Dubai also aspire to be international financial hubs. India will grow its manufacturing sector in a big way and make its presence felt in the export market. All countries, including Singapore, will have to adapt to these realities. Domestically, we have other long-term headaches. We are facing a demographic crunch, with a rapidly-ageing population and a declining birth rate. Our people are increasingly mobile. In a borderless world, ensuring that our best remain rooted to Singapore, physically and emotionally, will be a challenge. Despite these challenges, I am optimistic about our prospects. I base my optimism on our fundamentals. We have two basic strengths – good governance and our ability to nurture and attract talent. Good governance and talent form a virtuous cycle for sustaining economic growth. Let me elaborate. First, good governance. A World Bank Institute report released in September 2006 ranked Singapore among the top 10% of countries around the world with good governance. Good governance is possible only if you have an honest, capable and committed government. In our case, the government must, in fact, be exceptional to overcome the exceptional challenges faced by Singapore, given our land and space constraints and geopolitics. For the next decade at least, I do not see any danger of a drop in the quality of our governance. The new team under Prime Minister Lee Hsien Loong is firmly in place.

But in typical Singapore fashion, we kept our cool to battle the crises and, at the same time, strategise to meet the larger challenges posed by globalisation. We formed the Economic Review Committee (ERC). The ERC came up with a comprehensive strategy to restructure, upgrade and transform our economy. The government accepted most of the ERC’s recommendations. We have since cut corporate and personal income taxes, reduced business costs, made wages more flexible, restructured the manufacturing sector, invested more in R & D (Research and Development) and revamped our education system. Our economy is now stronger and more broad-based than ever before. In 2006, our GDP was $ billion, 55% bigger than in 1998. Annual growth rate over the past 3 years averaged 8%, double the figure for the period between 1997 and 2002. This year, jobs are chasing after people. Two weeks ago, I attended the Gala Dinner for Merrill Lynch’s inaugural “Pan Asia Rising Stars Conference”. Several foreign bankers and business executives I met – some had not visited Singapore for many years and a few were here for the first time – told me that they were surprised and excited by the “buzz” in Singapore. It is not just the business buzz of the financial industry, the Integrated Resorts, the sizzling property market, and so on. It is also the glitz of our nightlife and our arts, culture and restaurant scene. How have we managed this quick and dramatic rebound?
First, macroeconomic policies need to be adjusted pragmatically and where appropriate, swiftly. We do not simply mean that policy must be loosened but rather authorities ought to consider carefully their full range of options, giving due regard to the circumstances they find themselves in. For instance, in an environment where credit markets have ceased to function, monetary policy alone cannot do the heavy lifting needed to stabilize economic conditions. Second, swift action to clean up the balance sheets of financial institutions is very important to allow the financial system to resume its key intermediation role. Third, reforms, be they structural, legal, regulatory or accounting, should be an important part of the medium-term agenda, as they would serve affected countries well going forward. Not only should regulators be alert and vigilant in systemically important markets, they also need to keep up with the rapid pace of innovation. Finally, there needs to be a multilateral effort to improve transparency, standards and the quality of regulation. We welcome the work being undertaken by all parties in the Financial Stability Forum, of which the Fund is a key member, and expect the results will prove illuminating. 7. In drawing these conclusions, we must remember that we cannot entirely exempt ourselves from the booms and busts in credit markets, but instead recognize that sound regulations and prudent capital market practices can play a role in alleviating these cycles.

In this connection, we underscore the importance of future realignment of quota shares on a periodic basis, beginning with the Fourteenth General Review of quotas, as is currently proposed in the package. We maintain that PPP GDP and compression factor should remain in the formula for it to credibly capture the dynamic contribution and relative economic size of countries in the world economy. We also support the future work program, in particular further refinements to the definitions of openness and variability to guide future realignment of quota shares. 12. The New Income Model is also a critical element of the Reform Package, without which the Fund cannot discharge its functions properly. We are pleased to note the broad  BIS Review 51/2008  3  consensus on the core elements of the proposed new income model for the Fund and are prepared to give our support to the emerging package. We would simply underline the importance of establishing the necessary governance arrangements that allow the Board and the Management to deal effectively with the risks that broadening the Fund’s investment mandate will undoubtedly bring. We are also pleased to support the limited sale of Fund gold to establish an endowment to generate income. In fact, we see this as a critical component of the new income model, without which it may be difficult for the Fund to close its budget deficit. We look forward to a prompt resolution on this issue, particularly from the major shareholder. Strategic directions 13.
In the case of employment, the statistics traditionally used in Chile are built by extrapolating the results of surveys to the population, using expansion factors, which in turn are based on population projections that are updated at every Census. Thus, between one update and the next, the surveys do not have the capacity to reflect exogenous changes in demographics. Therefore, a phenomenon of immigration of the magnitude that our country has experienced in recent years cannot be represented correctly until the expansion factors are updated. So, information about levels in the labor force such as employment and other aggregates delivered by the different surveys do not necessarily provide a faithful representation of the reality whenever substantive changes occur in population aggregates. As you can see in Box III.3 of the Report, using different sources of information a revision can be made of the evolution of employment, factoring in the impact of the migrant inflows we have seen recently in Chile. In particular, this exercise shows that between 2016 and 2018 employment would have grown between one and two percentage points annually more than shown by the surveys, that is, between double and triple the data obtained from the surveys over the last few years. The difference in growth originates in the assumptions made regarding the new immigrants that entered the country in the last year, which are not available as yet.

4/4  BIS central bankers' speeches
Is this the “68 generation” that first went on a spending spree and is now arguing in favour of saving to secure their own pensions? 5 Moreover, all we have to do is read today’s press to understand that it is not a matter of course that economic growth will maintain its current pace. It is not a given that our children will be that wealthy. For those with roots in agriculture, it is second-nature to leave the farm in at least as good shape as when it was taken over. A policy of high and rising spending, which would crowd out internationally exposed industries and lead to unsustainable public expenditure levels, would be a heavy legacy to leave behind. The next generations would have to increase taxes substantially because of our consumption. If we, as a nation, set money aside instead, our wealth will grow and contribute to improving prosperity for our children. Spending and saving are mutually exclusive actions. The definition of saving is quite simply to abstain from spending. But with Norway’s huge oil revenues and the return on the portion saved we can increase spending while accumulating considerable savings. But spending must be adapted to the return on the portion saved. Sound and long-term management of oil wealth also requires separating saving decisions from spending decisions. The fiscal rule sets an important cap. 6 The rule states that petroleum revenues are to be saved, while the government may spend the return on the oil fund.

After his death, Collett’s heirs insisted on maintaining an extravagant lifestyle as if the income was still intact. Their wealth rapidly withered away and in 1829 the coffers were empty. The farm was taken over by the state. 1 The time it took Collett to make a fortune is about the same as it took Norway to build up its oil-based financial wealth. Nearly 40 years after Phillips Petroleum discovered commercially viable oil reserves in the Ekofisk field 2, we have an oil-based sovereign wealth fund worth more than NOK 3 trillion. Few other countries are sitting on such huge financial reserves. But our wealth primarily comes from other sources than the oil fund, now called the Government Pension Fund Global. The value of our current and future labour resources is more than ten times as great as the value of our oil and the oil fund combined. 3 The oil fund would be depleted in three years if government tax revenues were to disappear entirely. Our economic future depends above all on our capacity to produce goods and services that others value. But the visible oil revenues may give the impression that we have a huge treasure trove at our disposal. Sound wealth management is therefore first and foremost a question of maintaining and developing the value of our productive resources, particularly our labour resources. A nation that comes into a large fortune must make a number of choices and trade-offs. They can be considered from a legal, ethical or financial standpoint.
And the balance that assesses households’ views about “whether it is a good time to make a major purchase” has also fallen back substantially since the start of the year – although that is likely, to some extent, to reflect the impact of the rise in VAT. Chart 8 Measures of consumer confidence Optimism over the next year(a) Good time to make a major purchase? Balance 40 30 20 10 0 -10 -20 -30 -40 -50  1985  1990  1995  2000  2005  2010  Source: Research carried out by GfK NOP on behalf of the European Commission. (a) Average of the questions on households’ current financial situation, and the general economic situation, over the next 12 months. Other factors, such as the ongoing restrictions on the availability of credit and households’ concerns about their levels of debt, may also contribute to the likely weakness of household spending going forward, by encouraging households to save more and spend less, for a given level of income. Overall, given the continuing squeeze in household real incomes and the renewed fall in consumer confidence, I wouldn’t be surprised if there was only slow growth in consumer spending over the next year or so. The risks around that are probably skewed to the downside. Even if we do get the anticipated boost to net exports, overall growth in output is unlikely to be much above its historical average rate.

As always, I stand ready to change my views should the economic outlook change sufficiently to warrant it. BIS central bankers’ speeches  9
Indeed, I wish to argue that the evolution of central bank policy frameworks over recent years can be seen as an attempt to make them robust to  1  It was a term first popularised by Ben Bernanke, then-Chairman of the US Federal Reserve Board (Bernanke (2004)). 2  In Greek mythology, Nemesis was the spirit of divine retribution against those who succumb to hubris (arrogance before the Gods). The term hubris now typically refers to a loss of contact with reality and an overestimation of one's own competence, accomplishments or capabilities. 3  Loewenstein et al (2008), Kahneman (2011), Mischel (2014), Urminsky and Zauberman (2014). 4  Blinder (2004), Reis (2013) and Friedman and Schwartz (1963). 5  There are some obvious exceptions in research on monetary policy decision-making, discussed below. Sibert (2006) also discusses the topic of “Central bank psychology”. BIS central bankers’ speeches  1  psychological biases. I want to illustrate that by reference to the Bank of England’s policy framework. And, based on that analysis, I want to suggest some areas where a further evolutionary “nudge” in those frameworks might be warranted. 6 Behavioural biases in practice The literature on behavioural economics has sky-rocketed over recent years. 7 This identifies a long list of cognitive ticks that can affect human decision-making. All of these are likely to affect policy decision-making to some degree. But from that potentially very long list, let me highlight four biases which may pose a particular policy-making challenge.

Both FIDE Forum and ICLIF are uniquely positioned to advance corporate governance in the financial sector. After all, they bring together those who represent the ultimate governing body of financial institutions, with great responsibilities and accountability. Such an opportunity must be capitalised and not wasted. FIDE Forum and ICLIF should therefore complement each other and avoid duplication. There are significant benefits to be gained from an effective partnership where resources can be channelled to increase the collective impact of programmes and initiatives by the two organisations. In my own engagements with the industry, over the years, coordination and cooperation among financial institutions can become game changers for the industry. In this respect, we should fully appreciate the distinctive purpose of ICLIF and the FIDE Forum and how they coordinate with each other within the space of directors’ development. With close coordination and cooperation we can avoid the redundancies and wastage and realise the synergistic benefits from the alliance between the two organisation. Being a director of a financial institution will demand a lot from the individual. It is a position of trust where integrity is the norm. It should be, given the critical role of financial institutions in any economy. 2  BIS central bankers’ speeches  As a network of financial institution directors, FIDE Forum provides a valuable resource for directors as they navigate the heavy responsibilities that come with the position.