samchain/econo-pairs-v1 huggingface dataset:
Some common rules, for example the Stability and Growth Pact, have been constructed to ensure that national fiscal policies do not pose problems for the union as a whole. There is also a continuous discussion of economic policy in various fora, of which the foremost are the Ecofin Council, made up of the ministers of finance and economy, and its subordinate committee, the Economic and Financial Committee, which also includes representatives of the national central banks. The euro countries’ ministers of finance and economy also meet in what is know as the Euro 11 Council. This framework has been finalised in principle but is being reassessed continuously in the light of new challenges. Economic activity in the euro area this spring has been weaker than anticipated and this has been accompanied by growing disparities between national growth rates, budget balances and inflation. As a result, a number of central questions about how the monetary union functions have quickly come to the fore in the member states’ discussions. Although Sweden is not participating in the euro area, developments there will affect us. This is a large currency area in our immediate vicinity with which we have widespread trading relationships. As a member of the European Union, moreover, we have to observe many of the established rules and guidelines; we also participate in the European discussion on the formation of economic policy. Against this background, my talk today concerns economic policy in Europe and the new conditions that accompany the euro.

Against this background I now want to consider three issues to do with European economic policy that in my opinion have been illustrated by developments in the past six months and should be discussed in the European economic policy debate. All these issues concern the need to develop the institutional framework so that it covers coordination problems that may arise even though the rules are being followed. Firstly, monetary policy is naturally not fully attuned to every euro country at present. Cyclical activity as well as other factors that affect inflation vary over the euro area and as I mentioned earlier, these differences have become somewhat larger. By itself, this need not be a major problem for the monetary union as a whole. The differences may reflect entirely natural deviations in productivity growth, for instance. In these cases the differences in inflation need not be all that important in the longer run. The differences in inflation are more of a problem if they derive from differences in the development of demand. But even in this case it can be argued that they will mainly lead to problems for the particular country where inflation is higher; rising costs ultimately result in downward adjustments of production, employment and inflation. There may be uncertainty, however, about the smoothness of such an adjustment and its consequences for the union as a whole.
Monetary policy is most effective when it is firmly established. International upswing is continuing Both real economic activity and inflation in Sweden are highly dependent on developments abroad. Broadly speaking, demand and economic growth since the end of last summer have followed the paths expected by the Riksbank at the time and subsequently. However, when seen over the entire period, growth in the US has been somewhat faster than anticipated. This also applies to the situation in Asia and in Eastern and Central Europe. Conditions are different in Western Europe, particularly in the core countries of the euro area - Germany, France and Italy. Here, demand has not risen as expected and the upswing has been delayed. What has happened since the Riksbank’s last decision on the repo rate in February has followed the same pattern. Recent developments in the US economy have also been unexpectedly positive. This also applies to large parts of Asia, led by China and Japan. In addition, a number of Sweden’s other important export markets such as the UK and Norway appear to have performed somewhat better than anticipated. As regards the euro area, the most recent data does indeed suggest that the recovery in industry has taken root but at the same time domestic demand continues to be weak. The situation in China deserves a special mention. Since 1990, output in China has grown at an average rate of 9 per cent per year. Over the past three years, it has been 8 per cent.

BIS central bankers’ speeches  9  The international data on consumer prices are relatively rich: we have annual numbers for over 70 countries, most of them back to 1960 17. In all, across countries and years, there are 3,300 separate post-war observations. In only 70 of these – barely 2% of the sample – has inflation actually been negative (Chart 12a); the majority of these “deflations” (46 out of 70) have lasted no more than a year, many of these shorter episodes coinciding with falls in oil prices; of the 24 deflations lasting two or more years, 20 have been in economies with fixed exchange rates, most of those emerging economies; among countries with freely floating exchange rates, only Bahrain and – somewhat more famously – Japan have experienced protracted deflations, both of them twice (Chart 12b). This is not a common occurrence. A credible monetary policy reduces the persistence of movements in inflation Why might deflations be rarer in countries with floating exchange rates, and in emerging economies, and should this provide any reassurance today? Yes, I think – to a degree. One plausible reason for this pattern is that countries with fixed exchange rates give up autonomy to control their own rate of inflation. Instead, domestic inflation is determined by (i) inflation in the country to which their exchange rate has been fixed (most often the US) and (ii) forces affecting their real exchange rate.
The krone exchange rate functions as a stabiliser. The depreciation of the krone through the past year indicates that this mechanism is functioning. As long as there is confidence that inflation will remain low and stable over time, the krone can depreciate markedly even if the key policy rate is low. The benefit of a national currency is lost if the temporary rise in inflation due to the depreciation is countered by higher pay increases. The result could then be a higher key policy rate and a stronger exchange rate than would otherwise be the case, and higher unemployment. The social partners have a particular responsibility in this regard. Oil companies had already given notice of lower investment, workforce reductions and cost cuts in winter 2014. This tendency has been reinforced by the sharp fall in oil prices, resulting in spillover effects on the mainland economy and rising unemployment. Chart: Key policy rate reduced As long as inflation expectations are firmly anchored, monetary policy can serve as a first line of defence when the economy turns down. Since December 2014, Norges Bank has reduced the key policy rate by a total of 0.75 percentage point, to 0.75 percent. The weaker outlook for the Norwegian economy has been given weight in our assessments. From the end of the 1990s, the price of North Sea oil rose from about USD 10 per barrel to over USD 100 per barrel.

It is the inflation target that is the economy’s nominal anchor. The future size of the Petroleum Fund depends on oil price developments. The fiscal guideline ensures that we only use the return on wealth that has already been accumulated. This makes policy robust to changes in oil prices and ensures that petroleum wealth will be of benefit both today and in the future. The government invests petroleum wealth in foreign securities through the Petroleum Fund. Government wealth is thereby more diversified. These investments have no impact on the Norwegian capital market. The Norwegian government’s most important assets are the Government Petroleum Fund, assets in the National Insurance Fund and government direct ownership interests in enterprises. The Petroleum Fund’s equity investments are distributed across many countries, and all equity holdings are less than one per cent of a company’s total value. The National Insurance Fund's investments are mainly confined to Norway. As a result, changes in the value of the Fund's equity portfolio primarily reflect developments in Norwegian business and industry. The Fund has larger ownership interests in individual companies than the Petroleum Fund, and wider fluctuations in value. The government has substantial direct holdings in individual enterprises. In general, concentrated ownership requires a more strategic ownership approach and gives rise to higher risk than diversified ownership. The capital market serves as an intermediary between the government as investor and enterprises seeking capital. This market makes it possible to separate the government's choices from companies' choices.
This element of surprise illustrates the need to carry out stress tests, that is, to test positions against extreme and unforeseen events – such events that may perhaps have a one in a million chance of happening according to the statistical correlations. Stress tests are being carried out to a greater extent, but there is a need to work on and refine the methods. Another weakness lies in the difficulties in identifying the risks that are associated with structured products and the valuation of these. Too many investors have relied on the rating institutes’ ability to assess risk and have thereby failed to make their own assessments. In some cases they appear to have relied on the credit rating institute to such an extent that they have failed to take liquidity and market risk into account, that is, risk that is not captured by the credit rating institutes. In this context one may also note with some surprise that the innovative development has gone so far that certain more or less tailor-made products are not traded and thus cannot be priced on the market but must be valued with the aid of complicated mathematical and statistical models. This creates problems when regulations and auditors demand a valuation of the products to market price. Perhaps it is so that not all ideas from the first years of this millennium deserve to survive.

In fact, the World Bank has always emphasized the importance of knowledge, the necessity of continuous training – a key part of the educated workforce for creating jobs and economic growth. An additional argument are the targeted investments aimed at improving the quality of the educational process in the Republic of Macedonia and taking actions to facilitate the access of Macedonian citizens to the best global expertise. The importance of investment in human  BIS Review 175/2010  1  capital, as economists say, or in the so-called social capital, according to sociologists, is unquestionable. Within that platform, within the slogan – learn continuously to progress continuously, the cooperation between the National Bank and the World Bank has produced a nice event, a good product: logistical support for the process of increasing the knowledge. This logistical support is called: Joint Public Information Center of the NBRM and the World Bank. Today, we are practically announcing its official opening. Its primary function is to promote awareness of the Macedonian public about the work of the World Bank, through the dissemination of information and documentation of the Bank, and to provide access for the Macedonian citizens to extensive collection of contemporary professional literature. In fact, this center is another public information service of the World Bank in Macedonia, along the Depository Library, which operates within the Faculty of Economics, “Ss. Cyril and Methodius” University in Skopje.
The Bank continues to promote London’s merits as a financial centre and, despite EMU, London remains the primary financial centre in Europe. The UK economy Let me conclude with some thoughts on the UK economy. With inflation below target and sterling so strong, whilst the MPC’s recent decision earlier this month to raise rates was expected by the market, it also attracted some criticism. But if the inflation target is to be met, the MPC cannot afford to ignore evidence of inflationary pressure emerging in the economy. Domestic demand is strong and the economy as a whole is growing above trend (at around 3%); a rate that is unsustainable unless, that is, UK productive capacity and the trend rate of growth have increased, such that the UK can enjoy a period of rapid non-inflationary growth similar to the US. The labour market is clearly tight with average earnings rising at close to 5%, even before the large jump in December’s data which we think may have been influenced by bonuses and Y2K payments. Increases through last year in the price of oil and other commodities are beginning to feed through the supply chain to producer prices. At the same time, increases in asset prices - share prices and housing - are fuelling consumption further, not least through the pick-up in mortgage equity withdrawal. Given the time it takes for interest rate changes to feed through to inflation, it is important for the MPC to be forward-looking and proactive in dealing with these threats.

While responsibility for individual firms lies with the FSA, the Bank takes a close interest in the impact on the wider economy of the regulatory structure and the links between individual institutions and markets. The Bank also has a direct role as lender of last resort. In the event that a bank has liquidity difficulties that might undermine confidence in banks more generally, the Bank has the power to step in to provide support on a temporary basis. But in exercise of this power and in other aspects of financial stability, the Bank works closely with the FSA and HMT; and this common interest is governed by a Memorandum of Understanding. The three parties also meet monthly in a Standing Committee to  BIS Review 19/2000  2  discuss any issues of current concern; and relations with the FSA are further cemented by the fact that I sit on the FSA Board and Howard Davies is a Member of Court. One of the major driving forces in financial markets currently is technology. The face of banking is changing rapidly, with barriers to entry in particular markets and between markets falling as first telephone banking and now internet banking and e-commerce impact on more traditional banking services. Technological innovation creates opportunities for integration of services and wider access to markets that previously did not exist. This can be seen clearly in the movement towards integration of stock exchanges and clearing houses. But more technology brings with it more operational risk.
Besides the mitigation of imported inflation, the cancelling out of the effect of regulated price increases in the previous year and the lack of any further increase in them are factors impacting on the downward trend of the annual inflation rate. From the viewpoint of macroeconomic factors, the annual inflation volatility was induced by supply-side factors, while the demand-side inflationary pressures remained low. Anchored inflation expectations prevented transmission of supply shocks to the cost structure of the Albanian economy, dwarfing the effect of the supply shocks only on the first round effects. On the other hand, below-potential growth of the Albanian economy led to an incomplete utilization of production capacities, generating moderate pressures on wages and production costs in the economy. Also, the sluggish aggregate demand reduced businesses’ ability to dictate prices in the economy and hence their profit margins remained at historically low levels. These developments were also reflected in the performance of core inflation, which fluctuated around the lower half of the Bank of Albania’s target band. Finally, the Bank of Albania prudentially supplied the economy with liquidity and monetary expansion was in line with the economy’s needs for monetary assets, thus preventing the generation of inflationary monetary impulses. Bank of Albania’s monetary policy maintained its expansionary nature in 2011, responding to the performance of inflationary pressures balance and taking into account the contained fiscal stimulus.

In this fast-changing environment, public policies should be agile and should help build innovation and growth • The success of the payment services directives (PSD1&2) has illustrated that the European legislation can accompany new trends and trigger innovation. With new settlement assets such as Global Stablecoins, the adaptation of existing regimes will have to fit into a larger regulatory framework, to be adopted at a global level. • Central banks need to have an in-depth understanding of innovation and souldn’t be afraid to “learn by doing”. The Banque de France is now engaging with the innovators from the private sector to conduct a program of 8 experiments, with a view to integrating a wholesale CBDC into innovative procedures for exchanging and settling tokenized financial assets. The expansion of the BIS Innovation Hub with the establishment, in Paris and Frankfurt, of the Eurosystem Centre will definitely accelerate the collaboration among central banks in innovative financial technologies. • We, the ECB and the Eurosysteme, may decide to issue a money in digital form. Let me be clear: we cannot allow ourselves to lag behind on CBDC. That may mean that we create if necessary a retail CBDC, in order to ensure the accessibility of central bank money for the general public, in particular in countries where the use of cash in payments is declining. And/or it may mean that we Europeans may decide to issue a wholesale CBDC, with the aim of improving the functioning of financial markets and institutions.
In my view, it is essential that we move forward in this fashion in order to enhance the responsiveness of required capital to risk and to address the unfortunate incentive problems that have evolved from the 1988 Accord. Because of the Committee’s desire to produce a capital adequacy framework with a greater sensitivity to risk, some observers may note that we inevitably introduce a dynamic element into our standards. That is, the capital requirements for loans to troubled borrowers will tend to increase at just the point when such trouble is becoming apparent. I see an important positive aspect to such an outcome. I would argue that the global financial system needs to become better prepared to address potential credit problems pre-emptively, before these problems have time to grow from minor disturbances into major disruptions. Implementing capital standards that are more responsive to the dynamics of risk could help move us in this direction and away from a mindset that waits too long to address problems. In particular, the Committee is interested in hearing views on how we should think about these issues. The second pillar in the proposed new capital adequacy framework has to do with the supervisory review of capital, a critical complement to minimum capital requirements.

4  BIS Review 9/2001  Credits The monetary projection for 2001 envisages continuation of the intensified credit activity of banks registered in 2000. It is consistent with the expected growth in the banks deposit potential and the growth in the government deposits with the Central Bank. In 2001, total banks’ credits in favor of the non-government sector should increase by Denar 5,420 million or by 13.1%. Observed by structure, the Denar credits are projected to increase by 10.9%, or by Denar 3,610 million, while the foreign currency credits are projected to increase by 21.5% or by Denar 1,810 million. The monetary policy will be aimed at achieving the projected dynamics of the economic growth in the Republic of Macedonia, creating room for growth of banks’ credits to the non-government sector. Simultaneously, the downward trend in lowering the share of the non-performing credits in total banks’ credit exposure is expected to continue. This should derive from the initiated improvements in the commercial banks’ credit policy, stimulated by the strengthened banks' corporate governance, on one hand, as well as by the continuous strict supervision examination on the banks operations by the Central Bank, on the other hand.
Contrarily, some of the larger losses have been in regions where income was already-low – Northern Ireland (18% lower than the UK average) and Yorkshire and Humberside (14% lower). Put differently, since the crisis the regional distribution of incomes has widened. This widening of the income distribution means that aggregate GDP figures may over-state somewhat the impact of the recovery on societal well-being: gains by the already-rich boost well-being by less than equivalent losses by the already-poor. To demonstrate that, Chart 12 plots an illustrative measure of “social welfare”. This is constructed by aggregating up regional measures of well-being on the assumption they have a logarithmic relationship with GDP per head. 9 This is plotted alongside aggregate GDP per head. Although conventionally-measured GDP per head has recovered to above its pre-crisis peak, the same is not true of aggregate well-being, so defined. It fell after the crisis and has remained at those lower levels over the past three years; it currently stands just below its 2007 peak. In other words, in a subjective well-being sense, there may have been no real recovery in the UK over the past few years. If we turn from income to wealth, the picture is much the same. Chart 13 plots median wealth on a regional basis since 2007. This has risen across all regions.

That meant the output gap was no longer shrinking at any pace, if at all. Meantime, price pressures had remained weak. External deflationary forces – from energy prices and sterling’s earlier appreciation – have started to wane. But domestic wage growth had not picked up discernibly. Wage inflation had remained in the “2-point-something” zone it had occupied for much of the preceding 5 years. Indeed, this looked increasingly like a new, post-crisis, “going rate”. Given job insecurity, and given slowing employment growth, that new going-rate seemed unlikely quickly to dislodge. This has been an uneven economic recovery, looking across regions, income and age cohorts. Large parts of the UK – many regions, those on lower incomes, the young, renters – have not experienced any meaningful recovery in their incomes or in their wealth. Perhaps it is not so surprising, then, that reflation in spending, prices and wages has been modest over the past few years and interest rates, contrary to financial market expectations, have hence remained on hold. Over the past month, the outcome of the EU referendum has added another important ingredient to this mix. It has increased materially the degree of uncertainty – economic, policy, and political – around the UK’s economic recovery. 15 And while some of this uncertainty may dissipate, a good chunk is likely to linger throughout the Bank’s two to three-year policy horizon. This uncertainty is likely to weigh on domestic spending by both companies and households for the foreseeable future.