samchain/econo-pairs-v1 huggingface dataset:
In the first ten years of membership of the euro area, Spain enjoyed a long phase of growth in an environment in which monetary policy, with relatively low interest rates, was highly expansionary. This period saw rapid increases in the standard of living and in economic welfare, as reflected by the rapid rise in GDP per capita, which in 2007 edged above the average of that of the countries then comprising the euro area. This achievement largely reflected very labour-intensive growth. The insufficient adaptation to the euro gave rise to significant imbalances However, the expansion in those years was based on a pattern of household and corporate spending which, driven by the property sector boom and by cheap and easy credit, systematically exceeded the economy’s productive capacity. This imbalance has been at the root of the difficulties of the Spanish economy since the international financial crisis began. First, demand-side pressure led to significant pressure on costs, margins and prices, which tended to grow systematically faster than those of our European partners, with a notable worsening of our external competitiveness. This was not at all consistent with the decision to forgo the exchange rate as an economic policy instrument. Second, the lack of sufficient domestic output to meet domestic demand had to be increasingly covered by imports. This caused a sizeable imbalance in our foreign trade, as reflected by the balance of payments, which in 2007–2008 ran a deficit of around 10% of GDP.

Great efforts are being made, involving significant sacrifices from broad sections of society; but they will eventually bear fruit and help to absorb the mass unemployment that is currently Spain’s most serious problem. To overcome the deterioration in solvency stemming from the economic crisis and the end of the unsustainable growth in construction and related lending activity, part of the banking sector has required an extensive clean-up, restructuring and recapitalisation. The main thrust of this process is already well-advanced, and this is having positive effects on the ability of our banks to raise funds abroad. Its completion will be a fundamental step in the recovery of confidence, activity and employment. We can affirm that the tensions experienced by the Spanish economy over the last 18 months have begun to abate, as a result of greater confidence in both the ability of the euro area to reform and in the adjustment drive of our economic policy. The deep-seated change in our trade balance, which will be manifest in a significant balance of payments  4  BIS central bankers’ speeches  surplus in 2013, is the prime example of the adjustment under way in the Spanish economy and of the competitiveness gains that are materialising. To conclude: you ask me what my prognosis is (not surprisingly, given who you are). I think you will understand if I reply that I still reserve my judgment. But, it was significantly worse a few months ago.
GDP growth and GDP components contributions (p.p.)

PLATFORM FOR DISCUSSION Speaking note  SPEAKER:  Ana Mitreska, Vice Governor  DATE:  20-22 November, 2019  LOCATION:  Prague, Czech Republic  NATIONAL BANK OF THE REPUBLIC OF NORTH MACEDONIA info@nbrm.mk www.nbrm.mk   GLOBAL IMBALANCES, EXTERNAL SECTOR VULNERABILITY AND CAPITAL FLOWS – SELECTED COUNTRIES OVERVIEW This Speaking note was prepared for the 42nd Meeting of the Governor’s Club of Central Asia, Black Sea and Balkan Countries, 2019  Contributors to the Note: Dijana Janevska Stefanova, Vesna Stojchevska and Danica Unevska Andonova1 Department: Monetary Policy and Research  1 Special thanks to Aneta Krstevska, Chief Economist, and Biljana Davidovska Stojanova, Monetary Policy and Research  Department, for the useful comments. 1  Global imbalances, external sector vulnerability and capital flows – selected countries overview  Overview of the global external imbalances The discussion on the issue of global imbalances and the overall profile of the external sector comes at a very proper moment, given the rollback of the globalisation and rising trade tensions. The recent changes might affect the external imbalances globally, if not directly, then indirectly by affecting macroeconomic fundamentals of the economies. Tariffs can define productivity, output, and employment over the longer term, and thus affect the potential to grow. In the last three decades, the decline of tariffs gave ground to global value chains, enhanced competition, and improved productivity across countries.
Abstracting from the scope for other policies to boost demand, Williams puts the cost to the United States of this constraint on policy rates at around $ trillion of foregone output over 2009–2012. 12  BIS Review 111/2010  Some might be tempted, therefore, to argue that a modest increase in target inflation rates from the current norm of around 2 per cent is called for. There are, however, potential costs associated with accepting higher average inflation. First, while the costs from perfectly anticipated inflation might seem likely to be modest, the academic literature suggests that may not be the case. Moreover, there is a well documented empirical relationship between the level and the volatility of inflation, and unexpected movements in inflation are more likely to generate resource misallocation and the capricious redistribution of income and wealth. There is, therefore, a risk that even a modest increase in the target of a few percentage points could lead to a corresponding increase in inflation volatility and associated welfare losses. Second, unlike in most macroeconomic models, expectations formation is not costless. A bonus from low and stable inflation is that economic agents do not have to expend much effort in predicting inflation; the simple heuristic that inflation is a constant – or even that prices are stable – will suffice (Brazier et al., 2008). That is particularly valuable for households, who are likely to be relatively less informed.

Furthermore, after rising in the second half of 2018, credit default swap premia are now back at roughly the same level as in mid-2018. In the area of resolution, the Swiss big banks have improved their gone-concern lossabsorbing capacity since last year’s Financial Stability Report. Credit Suisse and UBS already meet all look-through requirements on a consolidated basis. Page 1/3  Berne, 13 June 2019 Fritz Zurbrügg  News conference  In addition to those at group level, the Federal Council has drawn up requirements on big banks’ loss-absorbing capacity at the level of individual group entities, and in early April initiated a consultation on a corresponding amendment to the Capital Adequacy Ordinance. These requirements are intended to ensure that not only the group as a whole, but also material group entities have sufficient loss-absorbing capital in the event of a crisis. The SNB supports the proposed amendments to the Capital Adequacy Ordinance. Work is also underway with regard to liquidity in a crisis, known as ‘funding in resolution’. It is aimed at ensuring that the big banks have sufficient liquidity during preparations for and in the phase immediately after resolution. For this purpose, FINMA is drawing up resolution funding plans in line with international standards. In cooperation with the SNB and the two banks concerned, it is currently assessing the big banks’ liquidity needs under possible crisis scenarios.
The effects on the international financial system were thus slight, although the crises affecting both Asia and Russia led to extensive redistribution of wealth and political tumult in the countries concerned. There are probably several reasons why the effects were so limited. One is probably that economic policy has become more predictable in many countries in recent decades, with sound public finances and stable, low inflation. The markets should therefore be less sensitive to shocks. However, another reason is actually that the financial system has become more resilient. The fact that risks have a better spread makes the system more stable. The risks are also transferred to the agents who want them or should have them. There is also the fact that the banks have gained more experience of operating in deregulated financial markets. The development towards more market-based transactions means that banks can now concentrate on the risks they are best at managing. They have also become better at managing them, with well-developed risk management methods and models. So far, so good. A better spread for risks and improved risk management can contribute to better absorption of shocks to the financial system. On the other hand, there can be elements that increase the risk of more serious shocks that also spread throughout the whole system. …or have they become more prone to risk? One such tendency could be an increased propensity among market agents to take greater risks and to copy others’ actions.

If the asset managers are lucky, they will manage to predict the period with a positive yield and the rare loss will not become a reality during the period they are being evaluated. This appears more likely the shorter the evaluation period is. Willingness to take risks can increase in a low interest rate environment. Agents may then wish to take more interest rate risk and perhaps come further out on the yield curve, thus becoming more sensitive to rapid interest rate fluctuations. They may also look for new types of investment. The fact that they are evaluated in comparison with others in the market may also lead to asset managers adopting herd behaviour, even if they have a different opinion of the current developments in the financial markets. It is better to lose in good company than to stand alone with an investment that might provide a good return in the long-run, but which results in short-term losses. The word might is central here, as no one can predict market developments and it is therefore difficult to go against a trend. Herd mentality can thus lead to asset prices deviating from fundamental economic conditions during a relatively long period of time. The contagion effects can also increase when the view of the world changes. Herd behaviour among market agents does not only involve investing in the same assets. There are signs that this also includes researching information.
SPEECH  Demystifying wholesale central bank digital currency Speech by Fabio Panetta, Member of the Executive Board of the ECB, at the Symposium on “Payments and Securities Settlement in Europe – today and tomorrow” hosted by the Deutsche Bundesbank Frankfurt am Main, 26 September 2022 Let me first thank the Deutsche Bundesbank, and President Nagel in particular, for inviting me to speak at today’s symposium. I would like to use this opportunity to discuss the implications of rapid technological change for our payment systems. I will focus not on people’s daily transactions, but on the infrastructure that underpins the smooth functioning and stability of our financial system. Payments have long been an underestimated aspect of the monetary system, running reliably in the background and allowing the smooth implementation of policies in other areas, which took the spotlight. But a burst of creative digital innovation is now breaking this perception. This is most visible in the area of retail payments. The digitalisation of finance has broadened the available payment options. Fintech start-ups have emerged. Big techs have entered the payments market, capitalising on the networks they operate. The crypto universe has boomed and burst. These disruptions show that we need to preserve – at all times – an anchor of stability for the monetary and payments systems. Safeguarding this anchor is what our digital euro project is about.

If given enough authority, rules can induce symmetric behaviour. It remains to be seen how the discretionary fiscal measures adopted in response to the crisis can be wound down and reversed to support fiscal sustainability in the longer run. Since the ECB has started to gradually phase out its extraordinary liquidity support measures, fiscal authorities should also start to withdraw stimulus to safeguard public solvency over the medium term. To support this, we have the right mechanisms in place in Europe. Governments will have to comply with and, as experience shows, even re-enforce the fiscal rules enshrined in the Stability and Growth Pact. Concluding remarks: some lessons From this quick overview, I draw two lessons for monetary policy. The first lesson to be learned is that central banks need to broaden – not restrict – their overview of the economy. Monetary data are critical in warning against risks that are slow to appear in inflation forecasts. Monetary analysis at the ECB consistently sent early signals that risk was broadly under-priced, when inflation was quiescent and measures of slack were moderate. BIS Review 22/2010  3  The second lesson is that price stability is the only anchor which can pin down the economy in turbulent times. It is not sufficient to guarantee financial stability, but it is certainly necessary to prevent financial instability. Increasing the level of inflation that central banks should aim at would be a step in the wrong direction.
These countries have sought a return on their financial capital abroad by investing, for instance, in US treasuries. The increased demand for US treasury bonds has for a long time been pushing down long-term interest rates in the United States. In addition, the US central bank conducted expansionary monetary policy in connection with the recession at the beginning of the 2000s and in the years immediately following. The low interest rates have stimulated consumption and investment in the United States. They contributed in particular to house prices rising more quickly than household incomes. The rising stock market and house prices contributed to a reduction in household saving, which largely explains the rising current account deficit until the housing market bubble burst. However, the problems of a previously overheated housing market are not limited to the United States, they can also be found in a number of other countries. New forms of borrowing, including subprime loans, contributed to overheating in the US housing market During the years 2004 and 2005 new loan forms became increasingly common in the housing market in the United States, not least subprime loans. Subprime loans are loans aimed at households with low incomes. Often the lenders used very low interest rates during the first two years of the loan as an enticement. However, after this period the interest rates rose substantially. It is likely that the credit assessment of the households was not too comprehensive.

However, since the end of March the situation has brightened marginally as the  4  BIS Review 56/2009  bad news has been followed by some positive news. In the United States a number of confidence indicators are pointing upwards, there are some signs of stabilisation in the housing market and in household consumption. It is as yet too early to talk of a stabilisation in the US economy, particularly given that the labour market is continuing to weaken rapidly. However, there are signs that the rate of the downturn may be slackening. The Riksbank cut the repo rate further in April to attain the inflation target and to counteract the fall in production and employment Weaker growth is predicted The economic downturn in the world and in Sweden at the end of last year was greater than expected in the February Monetary Policy Report. Indicators point to developments still being weak at the beginning of the current year. There are still risks that the development of the global economy will be weaker than the Riksbank is predicting as a result of self-reinforcing contagion effects between the weak real economy and undercapitalised financial systems. It is also important to remember that different countries have different capacities and willingness to resolve the problems in the financial sector. They have also been affected to different degrees by the decline in world trade. The countries that have quickly taken concrete measures will probably come out of the recession first. This indicates that the recovery will not be synchronised.
•  Our banks, overall, remain profitable: over EUR 7 billion in the first half of the year. We ensure, contrary to certain rumours, that these earnings are reported using the strictest standards. In all probability, this trend – of lower but positive profits – should continue for the rest of this year. •  One reason for this profitability is that our banks have regular sources of income. They are universal banks. This sets them apart from banks in some other countries that depend exclusively, or for the most part, on financial markets. Our banks have a sound and recurrent source of future profits. This is a vital asset in periods when it is impossible to raise capital by issuing shares on the market. •  Lastly, the “manoeuvrability” of our banks remains excellent, as the recent takeover of Fortis’ assets by BNP Paribas shows. •  It should be recalled that almost all money-market mutual funds (SICAV de trésorerie) are offered by major banks. Everything that the President of the Republic has said and everything that I have just said about the soundness of our banks also applies to these funds. Credit developments are the subject of much focus in the current period. A cautious and balanced approach is required in their analysis and excessive optimism or pessimism should be avoided. The main facts can be resumed as follows: •  As a snapshot, credit growth remains strong (over 10% per year for companies and 9% for households).

Ladies and Gentlemen, it is a well known fact that the Covid 19 pandemic has affected millions of people worldwide in the last three years, and Zambia is no exception. While the significant adverse impacts of the pandemic on global economic growth are subsiding, the pandemic is still a risk for future economic growth and consequently financial inclusion. I therefore encourage everyone to get vaccinated and continue adhering to health guidelines as prescribed by the authorities in order to protect ourselves and our communities. Ladies and Gentlemen, the contribution of the financial sector towards the attainment of Vision 2030 and its underlying principles is being undertaken through the implementation of the National Financial Sector Development Policy, the National Financial Inclusion Strategy, the Rural Finance Policy and Strategy, the Capital Markets Development Plan and the National Strategy on Financial Education. These financial sector strategies aim to broaden and deepen the types of financial services in the banking, capital markets, microfinance, insurance and pensions sectors as well as to promote financial inclusion. As financial sector regulators, we have vested interest in ensuring that the financial sector is innovative, responsive to demand for financial services and that it supports Zambia's economic growth, while maintaining stability. It is essential therefore, that the financial sector continues to expand its portfolio of products and services by leveraging reforms, digital innovations and targeted outreach.
Given the size and scale of the concentration of financial market activity in the UK, that is particularly true for the Bank of England. The events of eight years ago are receding into time. But I very much doubt that the generation of regulators that lived through the great financial crisis will revert to their pre-crisis tolerance and ignorance of systemic risk. And I very much hope that our successors do not forget those lessons either. The regulatory reforms now being implemented will not in practice prove perfect in every specific. There will be places where reforms aimed at one part of the financial sector will cut across changes made elsewhere. And where reforms have both an unintended and an undesirable effect greater than their benefits. The Bank has made very clear that we will look carefully at hard and clear evidence of such effects. Where justified we are prepared to adapt the reforms. In this respect, I would point to the changes we and the ECB have championed to the EU regulations on securitisations. And to the change the Financial Policy Committee recently announced to exclude reserves held by banks at the Bank of England from the application of the UK leverage ratio capital requirement. We will offset this elsewhere to ensure that the overall stringency of the capital requirement is not weakened. But while I can envisage that there might be specific and targeted change based on clear evidence, I do not envisage wholesale changes to the reforms.

For example, the market for derivatives encompasses more human capital (in the form of law experts writing contracts) than physical capital. Given the dominance of UK law, this would tend to encourage activity in London. Finally, regulatory changes may have played a role. London became the main trading centre for the Eurodollar market in the 1960s. The City went through a wave of deregulation in the 1980s and beginning of the 1990s which may have contributed to its position as a global financial centre. All of these drivers are likely to have played a part in concentrating financial market activity in London. And indeed they are likely to have been mutually reinforcing. The social license for financial markets  I have described at some length why concentrations of financial services develop and the economies of scale, lower costs and greater efficiency they should bring. In the case of financial markets and financial centres, however, one does have to ask the question, ‘for whose benefit’? Financial services exist, as we would all agree, to serve the real economy by channeling savings to investment, by providing insurance and by facilitating economic activity and trade.