samchain/econo-pairs-v1 huggingface dataset:
Let me tell you the story of a young economist who joined a large multinational business corporation many years ago. The post he held was that of a junior economist in the “central staff of economics”. Coming straight from university, he was clearly impressed by the sheer size of the headquarters and the complexity of the organisational structure of the company. There was a plethora of administrative units and of important production units. The organisation was of the matrix type, i.e. there were product divisions, there were so-called “regions” responsible for large segments of the globe like Europe, North America, Latin America and Asia, there were central functions like human resources, legal services, research and development and there were central staff units like corporate planning, politics and economics. Numerous important persons assuming significant responsibilities rushed from meeting to meeting and from business lunch to business lunch, mostly with clients and corporate visitors from abroad and sometimes just with local colleagues. The food and the wines served at the visitors’ restaurant easily matched what was on offer in the best restaurants in town. Clearly the junior economist felt great from the very first day. He sensed that he was expected to contribute to the development of this grand corporation, that he was finally in a position to apply what he had learnt at university and that his superiors, the more senior or even very senior economists in his unit, were waiting for him to deliver.

It was clear in September that the labour market had tightened further. The increase in the number of persons employed had been around as large as we were expecting in the June Report. However, the number of people in the labour force had not increased at the same rate we expected then. This meant that unemployment was also lower than we had predicted. Given these signs of a tighter labour market, it was fairly reasonable to believe that wages would increase more rapidly in future than they had done in previous years. But we could note that this was not yet visible in the statistics. The picture painted by the National Mediation Office’s statistics shows very moderate increases. But as I pointed out at our September meeting, it is probable that this picture will change when the new central wage agreements signed in the spring begin to make their mark in their respective sectors. And just as for developments in the labour market as a whole, this is something we follow closely. As I have just noted, it is now clear that an increasing number of people are working. It is normally the case that when many new people obtain work towards the end of an upturn phase of the economic cycle, the work is a little less efficient, that is, productivity growth declines. And this is just what we have seen during the first half of this year.
In response to the worsening of the crisis, the Government approved two Decree-Laws in February and in May 2012 on the write-down of real estate risks on credit institutions’ balance sheets; and in July 2012, a reinforced strategy for capital restructuring and strengthening was adopted through the Memorandum of Understanding (MoU) with the European Commission. This included an injection of funds, provided through the European Stability Mechanism, for more than € billion. That same summer, the European Union took further steps in the reform of the euro area’s institutional architecture, which were crucial in dispelling redenomination risk. The measures included the approval of the plans for the Banking Union and the decision in September 2012 by the European Central Bank on possible direct purchases in the secondary market for government bonds subject to economic adjustment programmes or precautionary programmes. Chapter III in the Report explains the strategy agreed upon in the MoU. The main features of the measures were as follows: a new recapitalisation and restructuring process with public aid via the FROB, including an external assessment of the Spanish financial system, all of which is detailed in Diagram 3.1 and Table 3.3 of the Report; the segregation of a substantial volume of impaired assets of the banks that received public aid, which were transferred to Sareb, as detailed in Table 3.5 of the Report; and compliance by all banks with a level of top-quality capital of 9 %.

Furthermore, securitisation in Spain has mainly been used as a financing tool, to raise resources on the wholesale financing markets in order to meet the demand for loans from households and businesses. Since the element of credit risk transfer was limited, Spanish banks have had little incentive to issue overly complex financial instruments. Furthermore, we have always required capital to be held against liquidity enhancements to securitizations, which we consider may have significant credit risk. Let me take this opportunity to make a brief observation on the securitisation sector, which some have described as being in “dire straits”. I am sure that this sector will ultimately recover. But to do so, it must distinguish between traditional products that are sound,  2  BIS Review 70/2008  transparent, standard and easy-to-value, and “multi-layer” securitisations and complex structured products which are difficult to understand and assess. The good news is that the market is starting to differentiate between products. An example of this is the recent placement of several Spanish banks’ issues of simple covered bonds. In short, our recent experience shows that to be successful supervisors we need to combine an open attitude to financial innovation whilst keeping at the same time some good old fashioned supervisory suspicion towards it, especially when it entails overwhelming complexity or elements of regulatory arbitrage. The Spanish banking system has faced the recent turmoil from a well-capitalized, profitable and efficient position. However, there is no room for complacency.
•  Similarly, inflation also puts further pressure on the government budget by raising current expenditure due to increases in the prices of inputs and the salaries of employees. It also causes the revenue to fall behind the increases in the national income. Therefore, the use of inflation as a measure for funding government budgets is not an advisable strategy for any government. This was very cogently expressed by Dr. Goh Keng Swee, economic pundit behind Singapore’s economic miracle, in his reminiscences of why Singapore chose to retain the currency board system, as follows:  BIS Review 64/2007  3  “Financing budget deficits through Central Bank credit creation appeared to us as an invitation to disaster. There was no effective way of exchange control in an open trading economy like ours to deal with inevitable balance of payments troubles. ……The way to better life was through hard work, first in schools, then in universities or polytechnics and then on the job in the work place. Diligence, education and skills will create wealth, not Central Bank credit.” There is no better explanation of the evils of inflation tax than the above statement of wisdom. Countries which did not have this wisdom fell through the line and were gripped by uncontrollable hyper-inflation in their economies. The most recent example is Zimbabwe where inflation presently runs at mo re than 3700% p.a.

4/9  BIS central bankers' speeches  MAS has comprehensively expanded its liquidity facilities – in four ways: what currency we lend in; how long we lend for; what rate we lend at; and what collateral we take. The MAS USD Facility has helped to maintain stable US Dollar funding conditions. Since its introduction in March last year on the back of a swap line with the US Federal Reserve, the MAS USD Facility has provided $ 25 billion to banks for use in Singapore and the region. Alongside the extension of the Fed swap line, MAS has extended the USD Facility to endDecember 2021. The MAS SGD Term Facility has extended the tenor of Singapore Dollar lending from overnight to up to three months. The facility was set up pre-emptively to meet higher precautionary demand for SGD liquidity by banks and finance companies. This helped promote more stable funding conditions and support credit intermediation to businesses and households. The MAS SGD Facility for ESG Loans has provided funding at 0.1% to financial institutions for lending to small and medium enterprises under the ESG loan schemes. The Facility, which has helped to reduce the borrowing costs for viable businesses, has been extended till end-September 2021. As of 31 March 2021, about $ billion was lent to eligible financial institutions, catalysing around $ billion of ESG loans and benefitting more than 22,000 firms. Utilisation of the Facility was lower in 2021 compared to 2020 as the cashflows of firms improved.
UNDIX inflation, which excludes indirect taxes, subsidies and interest expenditure, is judged to be 1.8% one year ahead and 2.1% after two years. (Figure 5). The Riksbank also attempts to identify any risks of developments that differ from the path in our main scenario. This time round we saw somewhat greater risks of inflation being above the target than below. The main reason for this is the uncertainty about how the stronger growth will affect the labour market and wages. To this I want to add another evident risk—that the price of oil does not fall back as we ave envisaged. An oil price around $ in the coming years would lift inflation 0.1-0.2 percentage points above the main scenario. On the downside the main risk is a more marked slowdown in the US economy. Lower trade-off between growth and inflation? Now I want to touch on a matter that has been prominent in the debate after the publication of the Inflation Report. How will inflation be affected by the higher growth we foresee? The attention accorded to this question is only natural, for several reasons. The Riksbank now counts on growth that is clearly higher than we expected in June but has not made much of an upward revision to its assessment of inflation. Moreover, good growth is foreseen by virtually all observers and the consequences of this for inflation are therefore a central concern for everyone. But no one has the answer and that is what usually fuels a lively discussion.

Recovery in the world economy Over the past year or so, the world economy has bounced back strongly, led by growth in Asia but also supported by recovery in the US and a more gradual turnaround in the European economy. Consensus forecasts for 2010 growth in the three main regions of the world economy have improved significantly over the last twelve months, as Chart 1 shows. The US economy is now projected to grow by over 3% this year, and GDP in Japan is also projected to rise at a similar rate – very strong by comparison with its recent poor growth performance. True, the European economies appear to be lagging behind in this global recovery. But even is this region of the world economy, the growth outlook has improved  2  BIS Review 99/2010  compared with last summer when average growth in the European economies in 2010 was projected to be barely above zero. Chart 1: Improving growth outlook for 2010 Percentage increase in GDP projected by Consensus Forecasts 7 Asia Pacific European Union  6  US  5 4 3 2 1 0 Jun-09  Sep-09  Dec-09  Mar-10  Jun-10  Source: Consensus Economics  Last week, the IMF updated its growth forecasts and these showed a further uprating of their expectations for growth this year across the world economy, though they also highlighted some of the risks looking ahead. The latest IMF projections are now for world growth of 4.6% in 2010 and 4.3% in 2011.
Watch making in Switzerland, films in Hollywood, the high-tech sector of Silicon Valley are all classic examples. But the pattern of geographical hubs is particularly prominent in the financial industry. In most countries, one city has tended to become predominant even if cities such as Chicago and Edinburgh have developed important niches in particular financial services. Over time some of these have become hubs for international finance like New York in the US, Zurich in Switzerland, Hong Kong and Singapore in Asia and, of course, London in the UK. The history of each centre has been shaped by a myriad of factors from empire, the role of guilds, and the proximity of kings and governments. But a number of economic forces have also been at work and are still reinforcing the pattern. 5 First, there are great advantages for both firms and workers from operating in a market with a deep pool of labour with the right skills. Workers know that if their firms fail or shrink they can easily find another job; firms can easily acquire new workers to start up or expand. Second, firms which have expertise in supplying the main industry become established close to the cluster so new front-line firms find the inputs they need on the spot. The 37,000 strong membership of the London Society of Accountants is a good example of this. Third, where specialist firms and highly skilled workers are grouped together the transfer of skills and information can be quicker.

2 We know that financial intermediation as a whole accounted for about 8.5% of UK Gross Value Added in 2005. And a recent estimate 3 of the professional services supporting financial services accounted for a further 3.6% of economic activity in 2005, giving a total of some 12%. That compares with around 14% of GDP for the UK manufacturing sector and the jobs in financial and business services taken together have increasingly outnumbered those in manufacturing. 1  “Sustaining New York’s and the US’ Global Financial Services Leadership”. Report by McKinsey & Company to Mayor Michael Bloomberg of New York and Senator Charles Schumer (pages 14 and 54). 2  Indeed the ONS has announced that it will be revising its estimates of the level and composition of GDP to incorporate changes to the measurement and treatment of value added for banks and to take better account of in-house software development. 3  International Financial Services, London. “International Financial Services in the UK”, November 2006. BIS Review 29/2007  1  And since 1999 financial services and insurance taken together have accounted for over 20% of the UK’s exports of services. So it is clear that the financial sector is an important industry for the UK. But financial intermediation covers a great deal more than the City. Retail banking and insurance, like other retail services from restaurants to hairdressing, is widely dispersed across the country. In general one would expect this part of the industry to reflect the size of the population and their wealth.
The board is also responsible for the follow-up of recommendations made by the ESRB. A further euro area governance reform relates to the Single Supervisory Mechanism (SSM) which involves the establishment of effective and early intervention mechanisms. The SSM endows the ECB with the ultimate responsibility for specific supervisory tasks related to the financial stability of Euro area banks. The rationale for a single supervisory mechanism comes from the increasing interconnectedness between financial institutions and markets across the euro area. In addition, the proposed banking union does not only provide for the shifting of supervision of banks to the European level, as in SSM, but also brings up for consideration the introduction of an integrated system of bank crisis management and deposit protection. 4  BIS central bankers’ speeches  Various recent reports, such as those authored by Liikanen, Volcker and Vickers, recommend a structural reform of the banking sector. The proposed reforms are designed to limit the likelihood of banking crisis, improve the resolvability of banks and safeguard taxpayer interests. Furthermore, the Liikanen Group concludes “that it is necessary to require legal separation of certain particularly risky financial activities from deposit-taking banks within a banking group.” Conclusion Regardless of the particulars of the eventual governance changes, it is clear that the economic and financial crisis has been the spark for reforms that may reshape economic institutions and financial supervision at both the national and international levels.

The Fiscal Compact also accelerates the application of the excessive deficit procedure by introducing sanctions when the debt and deficit to GDP ratios are excessive. Fiscal surveillance has been extended to a broader excessive imbalances procedure, which goes beyond fiscal imbalances and seeks to identify and correct a range of macro imbalances and shortcomings in competitiveness. In fact, various euro area member states ran into problems despite of their adherence to the SGP criteria, to the extent that they nonetheless manifested other types of imbalances, such as excessive private indebtedness. Preventive recommendations are provided to member countries at an early stage in the formation of imbalances. The severity of the financial crisis has also exposed the inadequacy of the current financialsector regulation and supervision. As already indicated, macro-prudential risks were overlooked and the link between sovereigns and banks was underestimated. In reaction to this, European institutions and member states have engaged in a major overhaul of bank regulation and supervision with the objective of creating safer, sounder and more transparent financial institutions. One of the major initiatives to strengthen the governance framework was the establishment of the European Systemic Risk Board (ESRB). In its first year of operation, the ESRB tackled key issues relating to the interaction between three factors: the creditworthiness of European sovereigns, the increasing difficulty of banks in raising funds, and weakening economic growth.
Accession of new Member States to the EU and EMU Twelve countries from central, eastern and southern Europe are currently negotiating accession to the EU. According to the calendar endorsed by the European Council, new accessions will take place as st from the 1 of January 2004. It provides further evidence, if such were necessary, of the attractiveness of the European framework, which has provided us with both political stability and economic progress for almost half a century. The accession countries have accomplished significant progress in stabilising and strengthening their economies and institutions. Observing the accession countries since the beginning of the nineties, we see the huge improvements that these countries have made, in barely 10 years, on the road towards convergence with the EU. Nevertheless, there is also a general agreement on the fact that the gap in terms of average GDP per capita between the accession countries and the euro area, although diminishing, still remains quite significant. On average, GDP per capita in terms of purchasing power parity is around 44% of that of the euro area, while in terms of current exchange rates it is only around 22%. The size of the gap, combined with the limited growth differentials between the two groups of countries, suggests that the process of real convergence will be very gradual and will have to continue far beyond the tentative dates for EU accession.

Society expects higher standards, and the PRA supports the FCA in upholding these standards as part of the global effort to restore trust between financial institutions, regulators and – most importantly – the public. Three things strike me as important as part of this effort and I pick these three because they are close to my role and that of the PRA and the wider Bank of England. First, the Fair and Effective Markets Review under my colleague Minouche Shafik, with Martin and Charles Roxburgh, is vitally important to establish the better standards that society reasonably expects. Second, we need better international coordination among authorities to enable conduct risks to be dealt with effectively, but also in ways that do not threaten safety and soundness. That is a high priority. And third, to support credit and borrowing in the economy, and thus growth, we must all work to ensure that people feel confident to use banks and thus overcome the legacy of mistrust from revealed misconduct. The fourth issue on which I want to comment concerns incentives. These lie at the heart of good pro-active supervision, getting the incentives right. Unfortunately, we see areas where that has not happened. I want to cover two of those. The first is remuneration. Once again there is a lot being said on this subject. My view has not changed.
There are good arguments to create international instruments providing a reliable store of value. There are also conceptual and political difficulties. A choice would have to be made as to the true nature of the “super reserve currency”. Would it be a basket of existing monies such as the SDR today? Or would it be a new “fiat” currency? More fundamentally, a new reserve currency would, in fact, grant a collective guarantee against exchange risk. This guarantee would benefit surplus countries and would be given by deficit countries. When the substitution account was discussed more than 25 years ago, it became clear, at the time that it would have to be part of a package encompassing explicit, binding and symmetric rules on balance of payment adjustments. Most likely, the same questions would be raised again today and the creation of a new reserve currency would have to be part of a broader framework. That may take time, as our Chinese colleagues are fond of reminding us when we discuss those issues. 4  BIS Review 170/2010  In the meantime, financial development in emerging economies can go a long way towards expanding the range of safe and liquid financial assets available to domestic and international investors. Capital markets in local currencies have developed significantly over the last decade as fiscal positions in emerging countries have dramatically improved. There seems to be considerable scope for regional financial and monetary arrangements to prosper in the future.

I will argue that those phenomenons can all be ascribed to two common causes: a worldwide based shift in the primary distribution of income; and asymmetries in financial development among countries. Together, they combine to produce (1) excess saving in emerging economies (2) strong capital inflows to the US (3) an increasing frequency in financial booms and busts and asset price bubbles in both advanced and emerging economies. Let’s look first at income distribution. In China, the share of wages in GDP has declined from 55% in 1992 to 48% in 2008. In the US, the median real wage has been stagnant over the last fifteen years despite the fact that real GDP has grown annually by above 3% over the same period. These are deep changes mostly driven by technology and demographics, in proportions which are hotly debated, and partly unexplained. In contrast to wage developments, consumption trends have been widely divergent. In China, the share of consumption has gone down by more than 10 % of GDP over the last decade. In the US, consumption kept growing (both in absolute and in GDP share) fueling the demand for imports. Households in the US could consume more and save less because they felt richer. And they felt richer because the value of their houses and financial assets was rising at a quick pace and that trend was expected to persist. Broadly speaking, the worldwide equilibrium between demand and supply of goods was based on a continuing asset price bubble in the United States.