samchain/econo-pairs-v1 huggingface dataset:
If the private sector continues to grow – in line with the latest business survey evidence – and headline inflation remains high, it is hard to see why private sector pay settlements should not return to their pre-recession average of around 3.5% and possibly move higher.9 Issue 4: Inflation expectations and credibility That brings me to my final key issue – the role of expectations and credibility in the framework for monetary policy. Chart 12 shows a diagram which I have used in a number of speeches now and which I believe sums up well the challenge that the MPC faces in trying to stabilise UK inflation in a potentially volatile global economy. The global economy affects inflation in the UK through the cost of imports, the impact of world demand on the UK economy and through the way in which international businesses perceive the pricing climate changing on global markets – which will have an impact on their pricing strategies here in the UK. All these factors can affect UK inflation – but monetary policy has three powerful counter-influences: the influence of monetary conditions on the exchange rate and the level of domestic demand, and the ability of the monetary authorities to anchor price expectations through their commitment to the inflation target or some other monetary anchor.

That, in turn, would have provided some offset to the global inflationary pressures we have been experiencing over the past year. Instead, as Chart 5 shows, sterling has remained relatively weak, both against the full trade-weighted basket of the currencies of our trading partners, and particularly against the euro – which is the most important currency for UK trade, with the euro area accounting for around half of our total exports and close to half of total UK imports. Chart 5 Sterling depreciation since 2007 Rebased to 100 in January 2005 110 105 100 95 90 Euro-Sterling exchange rate  85  Sterling EER *  80  Average EER *, 97-07  75 70  2005  2006  2007  2008  2009  2010  2011  *: Effective exchange rate Source: Thompson Datastream and Bank for International Settlements  This weakness of sterling is one of the key reasons why UK inflation has been much higher than our peer group of European economies. As Chart 6 shows, the differential between inflation in the euro area and the UK is closely associated with the relative strength and weakness of the sterling/euro exchange rate. And there are good reasons for this. While the  BIS central bankers’ speeches  7  UK has an independent monetary policy, it is a member of the Single European Market which covers all European Union economies.
Or, if emergency liquidity assistance was provided at some point during the course of the crisis (on the erroneous assumption that the bank was basically solvent), a loan loss may be incurred on the national central bank that acted as a lender of last resort. And, of course, when giving liquidity support to a bank with cross-border operations in many countries, you can never be entirely sure in what jurisdiction your money ends up. In the case of a branch structure, it may end up in any country in which the bank operates, and ring-fencing a subsidiary may prove equally difficult in practice. Furthermore, in some situations it may be socially optimal to spend public money in order to reconstruct a failed bank. If the reconstruction is successful, the money spent may eventually be recovered by the public. But it could take a considerable amount of time before this happens, and a precondition is that you are not betting on the wrong horse. The taxpayers in one country may not be so keen to take on such risks in another country. In addition to fiscal costs, there may of course be substantial indirect social costs in the form of a dipping GDP that may occur when the financial system is suffering efficiency losses or is being temporarily disabled as a result of a financial crisis. These indirect costs are basically a function of the systemic relevance of the financial institution(s) in question.

In both cases, government debt increases. The ultimate cost of a major banking crisis is therefore likely to hit the taxpayers in one way or the other. So, any deposit guarantee scheme will in practice contain an element of a government guarantee, which could be either implicit or explicit. In the case of a cross-border bank with branches in other countries, the important question is, of course, how far the taxpayers in the home country would be willing to go in order to bail out the depositors in the host countries. This could entail substantial cross-border transfers, which is something that most politicians tend to view with considerable scepticism. There are also challenges in the potential reconstruction of a failing cross-border bank. A reconstruction of a cross-border bank will increasingly impact the financial system in the other countries where the bank has major activities. To achieve a successful reconstruction, coordination of the activities of the authorities in the different countries would therefore be essential. In addition, as banks merge cross-border, some banks tend to grow in size to the extent that it will be very difficult for a small country to save the entire group. Traditionally there has been a fear that banks are becoming “too big to fail” because of their critical importance for the stability of the financial system. For a small country, which is home to a large bank with an extensive network of foreign branches, there is a real risk that the bank will rather be “too big to save”.
•  Only the financial sector has undergone substantial deleveraging to-date. Essentially, the process of deleveraging remains incomplete. The world as a whole has lived beyond its means. It must now work off these past excesses. The gradual unwinding of the debt build-up in both the private and public sectors will have a dampening effect on economic growth in the advanced economies for several years. The second driver of growth is demographics. Slowing population growth and rapid ageing are the most daunting headwinds buffeting the global economy over the next 10–20 years. In fact, demographic trends will negatively impact virtually all of the world’s major economies, both advanced and emerging. •  In the US, UK, and France, annualised labour force growth will be barely positive over the next two decades. •  In Japan and Germany, the labour force is expected to shrink, subtracting from GDP growth. •  The most dramatic decline will be in China. Labour force contribution to GDP growth will swing from a positive 1.5 percentage points over the last 20 years to virtually zero over the next 20 years, with much of the decline occurring in the immediate future. But demographic decline is not universal. Many emerging market economies – India and South-east Asia, for example – will continue to have favourable demographics that will support growth. Demographics is not destiny. This brings us to the third driver of growth – productivity. Human ingenuity to coax higher production out of scarce resources has overcome past demographic challenges.

Despite ultraaccommodative monetary policy, most advanced economies have not attained so-called escape velocity. •  The legacies of the financial crisis – in the form of debt overhangs – continue to exert a drag. •  The structural deficiencies in the major economies, such as under-investment, cast a dark cloud on future potential growth. But one thing that ultra-low interest rates over the past six years have clearly done is to depress returns, particularly in fixed income assets. •  US bond returns since 2009 has averaged 2.3% p.a. compared to returns of 5.8% p.a. over the past 20 years. This has contributed to a more challenging investing environment for government funds – namely pension funds, sovereign wealth funds, and central banks – many of which have significant allocations to developed market fixed income instruments. Mean reversion is a key tenet of investment theory – the expectation is that as interest rates normalise, returns should revert to pre-crisis levels. But the cliché that this time is different could well be true. Secular trends weigh on future economic growth, and consequently the real return on investment. Drivers of future economic growth What are the prospects for future economic growth? There are, in my view, four key drivers of long-term growth: deleveraging, demographics, productivity, and energy. Let me elaborate on each of them. First, deleveraging. Global balance sheets need to undergo significant adjustments. This is a structural issue that will take time to address.
As an additional way of sharpening incentives, individuals could be recognised or rewarded, locally or nationally, for passing certain volunteering milestones – 5,000 hours, 10,000 hours etc. If we wanted a more systematic way of calibrating the UK honours system, what better metric than the credit balance in an individual’s IVA? Conclusion So let me briefly sum up. Whether seen from an economic or social perspective, volunteering is big business, with annual turnover well into three-figure billions. But it is a well-hidden jewel, whose social worth is rarely the subject of a public valuation. One of the purposes of this lecture was to provide such a valuation, however imperfect. If the value of volunteering remains largely out of sight, it is likely also to remain out of mind. The potential economic and societal benefits from volunteering then risk remaining untapped. Yet with a nudge, that volunteer army could swell further. Indeed, I hope some of you here tonight might swell the ranks by signing-up to PBE as a volunteer. My message to you is that, by doing so, we – individually and societally – stand to receive. 38  Booth et al (2013).

Svein Gjedrem: Interest rates, the exchange rate and the outlook for the Norwegian economy Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), to the Mid-Norway Chamber of Commerce and Industry, Trondheim, 28 November 2007. The text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 31 October and in Monetary Policy Report 3/07. *  *  *  Introduction Monetary policy in Norway is oriented towards low and stable inflation with annual consumer price inflation of close to 2.5 per cent over time. The objective of low and stable inflation provides the economy with a nominal anchor. This means that all economic agents – households and enterprises, whether large or small – can plan ahead on the assumption that inflation will be low and stable. In a small, open and decentralised market economy like Norway, and with our particular industry structure, there will be cyclical fluctuations. When economic agents have confidence that inflation is low and stable over time, the interest rate can also be set with a view to dampening the fluctuations somewhat. Low inflation and solid growth in the Norwegian economy Inflation in Norway decelerated markedly from the late-1980s to the mid-1990s and has since been low and stable, and fairly close to, but somewhat lower than the target of 2.5 per cent, with considerably lower variability than earlier.
On our side, we are ready to face any outcome: the financial industry has been prepared. Even with a 2/3  BIS central bankers' speeches  welcome withdrawal agreement, all aspects of a possible trade agreement and its financial services component will still have to be negotiated in 2020. The uncertainty surrounding Brexit will therefore continue. Whatever, the UK will continue to participate in international forums where cooperation will be much needed to face our common challenges, including with Japan. In this respect, I would like to stress the strong convergence between France and Japan on numerous international issues, and notably the defense of a multilateral order, taxation, digital regulation and green finance. The excellent cooperation between our respective G7 and G20 Presidencies this year proved it eloquently. I also heartily welcome the cooperation agreement that was signed between Paris Europlace and FinCityTokyo in June. Now, we have to look beyond Brexit. We expect Europe’s financial services architecture to move from being monocentric, centred on the City of London, to a more polycentric model. Paris has major assets which it can build on to enhance its central role in this post-Brexit European financial architecture. Firstly, it benefits from a strong financial ecosystem: our capital city is a leader in key activities such as life and non-life insurance and in asset management; it is home to four of the euro area’s eight global systemically important banks, and to two of the three European Supervisory Authorities – ESMA and the EBA.

One prime example of this possible groundswell is the preparation, under the impulse of the Euro Retail payments Board (ERPB), of a pan-European instant payments scheme by the European Payments Council (EPC), based on the existing SEPA Credit transfer scheme. This new scheme, which should be finalized by the end of 2016 and operational before the end of 2017, will serve the development of further innovative products, especially via smart devices, for proximity and mobile payments. This is a relevant example of how the harmonisation and standardization work done in the context of the so-called “SEPA 1.0.” for legacy payment instruments (direct debit and credit transfer) may serve as a basis for market players to develop new innovative real time and paperless payment solutions, what I would call “SEPA 2.0.”. Secondly, we observe the emergence of new payment behaviors and new market players, in relation with further technological innovations. This is mostly led by the rising prominence of e-commerce, which has fundamentally changed payment usages in the last few years. The  BIS central bankers’ speeches  1  search for a payment instrument adapted to these evolutions has first led to a wider usage of payment cards, beyond proximity transactions. These Card-not-present payments over the internet now account in France for nearly 7.5% of all card based-transactions in volume, and for 11.6% of the overall value of these transactions.
The most recent episodes when inflation has been below target – at the end of the 1990s and the start of this decade – have been characterised by unexpectedly high productivity, unexpectedly low imported inflation and other more temporary supply shocks. The low inflation has not been because we have actively tightened monetary policy and dampened demand. In reality, monetary policy has been very expansionary. With the aid of the repo rate the Riksbank can influence demand. How companies then meet this demand by varying the number of employed depends on how productivity develops, and that is nothing that monetary policy can control. Nor have we any possibility to govern how many people enter or leave labour market policy measures. Is Swedish wage formation competitive? When an economy is in balance, with wage and profit shares constant, companies’ real wage costs increase in parallel with productivity growth. But the relationship between wage increases and competitiveness is different under a fixed and floating exchange rate. With a fixed exchange rate, competitiveness is determined first and foremost by how big wage increments in Sweden are compared with other countries. If wage costs increase too rapidly, costs crises arise that can result in higher unemployment or that force the country into devaluations with a view to restoring competitiveness, as was the case in Sweden during the 1980s. The problem with the repeated devaluations was that they eroded the fixed exchange rate’s credibility.

Villy Bergström: The labour market and wage formation Speech by Mr Villy Bergström, Deputy Governor of Sveriges Riksbank, at the Association of Swedish Engineering Industries' HR director conference, Rimbo, 22 November 2005. *  *  *  Introduction Thank you for your invitation to come and speak here. Today, I will not be touching upon current economic policy in Sweden or the weakening of the krona exchange rate. I will return to those issues in a couple of days in a different speech. The shift in economic policy at the start of the 1990s has entailed better conditions for wage formation in Sweden. Among other things, the adoption of the inflation target has reduced uncertainty over future price developments. Wage-earners do not have to worry that their wage increases will be eroded by excessively fast price rises, while it is easier for employers to determine their scope for wage costs. The lower uncertainty over inflation is reflected in the fact that inflation expectations since the mid1990s have been firmly anchored around 2 per cent. It is important to remember that the current conditions for wage formation in Sweden – a floating exchange rate and inflation target – are considerably different from our previous regime with a fixed exchange rate. A fixed exchange rate was the norm in Sweden for some 130 years, even though the systems for maintaining it changed.
It had already demonstrated its advantages, even before it was officially introduced, and I have no doubt that it will continue to demonstrate these advantages and reveal new ones, providing for better business conditions in Croatia, higher economic growth and the improved living standards of our citizens. Thank you! 2/2  BIS - Central bankers' speeches

Despite the significant reduction in recent years (branch numbers down by 51% and staff numbers down by more than 36% since the peak levels of 2008), Spain continues to have one of the highest numbers of branches per inhabitant among the main European countries. That said, the reduction in recent years has drawn us closer to the levels in other countries,10 and certain demographic factors, such as lower population density, explain, at least in part, this gap. Moreover, in efficiency ratio terms, the Spanish banking sector is better placed than its main European counterparts, although it is some way off from the most favourable levels observed in recent history (43.2% in 2009, compared with 49% in 2020). The second significant variable here is the cost of capital which, despite the improvements in bank solvency, continues to be very high. The initial high increase in this variable (from March 2020) and the subsequent decline back to pre-crisis levels (from 2020 H2) have been largely explained by changes in the overall equity risk premium. However, the greater perception of banking sector risk among investors also led to a lower correlation with the stock exchange general index. As the recovery progresses and economic activity returns to normal, the gap between ROE and the cost of capital can be expected to narrow, having widened significantly in 2020 on account of the divergent developments in the two variables.
The regulatory framework and respective methodologies are drafted pursuant to the requirements of Basel II, and in accordance with European Union directives. About regulatory amendments, I would like to highlight two of the most important ones, which have now taken the form of a law: The Law on the Functioning of Savings and Loan Associations and their Unions and the Law on Recovery and Resolution in Banks. The first provided for a comprehensive revision of the regulatory framework for the supervision of savings and loan associations, which consists in respective regulations on licencing and risk management in these institutions, as well as the reporting system about their financial activity. The second provides the Bank of Albania with the attributes of the Resolution Authority, through a set of legal instruments. This law is an important qualitative step towards guarantees for safeguarding financial stability in Albania. Moreover, in response to the negative events in the previous year, when the security related to transportation and keeping monetary values was affected, the Bank of Albania has urged the cooperation between banks and law enforcement authorities to take measures for eliminating the deficiencies; it has added on-site inspections to examine the probability of occurrence of a risk; and, has strengthened the regulatory framework for establishing criteria on the minimum physical security. Lastly, a good functioning of the financial system in general and the banking sector in particular has been endorsed by efficient payment systems. The national payment systems operated by the Bank of Albania have operated uninterruptedly and correctly.

You also ordered setting a minimum wage of Rls 3,000 for all Saudi government employees, allocated a monthly amount of Rls 2,000 for job seekers, and raised capital of the Saudi Credit and Saving Bank by Rls 30 billion. The number of family members covered by the social security was increased from 8 to 15 with an allocation of Rls one billion for that purpose. The government subsidies for charity associations rose by 50 percent to Rls 450 million annually, and needy families’ sons and daughters were supported to join  BIS central bankers’ speeches  1  universities through allotting them a portion of seats, facilitating their admission requirements, and exempting them from some tuition fees. This package of honorable royal decrees will enhance the standard of living of the least-income segment of population and promote its ability of saving and, thereby, raise its future productivity and income, and reduce poverty, to which you always attach considerable attention. In the health care arena, you ordered supporting the Ministry of Health with Rls 16 billion in order to carry out the expansion of a number of hospitals and health centers. You increased the maximum limit of the Ministry of Finance’s financing program of private hospitals from Rls 50 million to Rls 200 million. This would hopefully enhance health care services in the Kingdom.