samchain/econo-pairs-v1 huggingface dataset:
The GPFG pursues a responsible investment policy to increase the GPFG’s expected return or reduce the risk associated with the fund’s investments. We also consider that a systematic approach to responsible investment will contribute to maintaining confidence in Norges Bank as manager of the GPFG. Conclusion After 20 years, we have gained some experience of risk in our management of the fund. We have for example experienced two of the worst periods in equity markets since 1900. This experience will be useful the next time financial markets fall sharply. But next time will also be different in many ways. Norway, through the GPFG, owns a small part of listed companies’ share of global value added. Our investments have made solid gains. We have been willing to take on risk and have been compensated for it. History has taught us that we must be prepared for falls in market value that are both deep and prolonged. In a crisis, there will be no place to hide for a large global fund. Managing a crisis is demanding, but for a financial investor, it is essential. Although we must seek to limit the risks we encounter, we must at the same time reiterate that some risk is worth undertaking. Broad support for important principles in the management of the GPFG is a strength that will stand the fund in good stead the next time turbulence erupts in financial markets. 1 Dimson E., P. Marsh and M. Staunton (2018) Credit Suisse Global Investment Returns Yearbook 2018/E.

Chart 8: Proportion of part-time workers  Percentage of total employed 30 25 20 15 10 1985  1988  1991  1994  1997  2000  2003  Source: ONS and Bank calculations  BIS Review 16/2005  11  Chart 9: Real household disposable income growth and terms of trade  Percentage change on a year earlier 8.0  1990 = 100 112  Real household income growth  6.0 108  4.0 2.0  104  0.0 100  -2.0  Terms of trade  -4.0  96  -6.0 -8.0 1990  92 1992  1994  1996  1998  2000  2002  2004  Chart 10: Margins on personal loans to households  Per cent 10.0 8.0 6.0 4.0 2.0 0.0 1993  1995  1997  1999  2001  2003  Source: Bank calculat ions.
And this is not good for the confidence and general acceptance of the public. However, if we go back to the glory days of Islamic civilization, diversity and differences of opinions were celebrated and one of the primary reasons for Islamic civilization to prosper. In this respect I very much believe that mutual recognition and diversity of opinions on Shariah matters would go a long way in resolving different interpretation and understanding. In fact diversity of opinions and interpretation would enable resolution of problems faced by the ummah who live in different systems, cultures and customs. Start small but with confidence and achieve success with a series of well-targeted group. Action speaks louder than words. The starting point does not require focus on highend Islamic financial products such as sukuk and fund management. Instead, start where it matters most. Embark on initiatives that could assist the low and middle income groups. Devise a scheme that could provide alternative for source of funds for the small and medium enterprises (SMEs). Start with basic banking facilities; saving accounts, current accounts and term deposits. Provide financing facilities that are simple and easy to understand such as microfinancing and microtakaful. In Africa, the retail banking market segment has an enormous potential for growth. Currently, less than five percent of individuals aged 15 and above are likely to borrow from a formal financial institution in Sub-Saharan Africa and the MENA region. Many adults in Africa use informal methods to save and borrow.

I believe that Asia-9’s experience of growth, or more specifically, intra-regional trade and production, can provide an interesting case study for our South Asian counterparts. The emergence of the Asia-9 economies To bring this perspective even closer to home to this audience, let us look at these developments from India’s perspective. Traditionally, India’s trading partners have been the G3 countries, with the US, the EU and Japan accounting for 52% of India’s total trade with the world in 1990. At that time, India’s trade with Asia-9 accounted for only 8.3% of India’s total trade. Fifteen years later, the structure has changed remarkably. The share of trade with the G3 countries, in terms of India’s total trade, has fallen to 33.9%. During the same period of time, India’s trade with Asia-9 has risen from 8.3% to 23.3% - an almost three-fold rise. From the perspective of Asia-9 themselves, intra-regional trade among themselves has risen from 29.1% of their total trade in 1990 to 41.4% in 2005. More striking, the share of intra-regional trade  BIS Review 7/2006  1  among the Asia-9 economies has outgrown the share of their trade with the G3 countries over the same period, which has in fact fallen from 52.6% to 39.2%. In terms of growth, trade among Asia-9 economies has grown at an average 23% in the past 3 years, exceeding the average 17% growth in trade with G3 countries. What message can we draw from these developments?
The supply side - history repeats itself  Second is the argument that the world is merely reverting to its more natural historical state of 2 declining price levels, following the interruption of the second world war and ensuing decades. The current deflationary tendency is, on this view, being driven not only by the IT revolution but also by the evolution of China and some other emerging economies as a huge competitive and price-reducing force in world markets, in a manner reminiscent of the productivity surge and market opening which 1  Average for Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand, weighted by nominal GDP. Indonesia is excluded because of its considerable institutional and political instability in the period - it suffered particularly intense inflation in 1998-99. 2  I am grateful to Eisuke Sakakibara for a lucid exposition of this point in an address last month to the Hong Kong Foreign Exchange and Market Practices Committee. The 69th Annual Report of the Bank for International Settlements (pages 77-81) provides an interesting snapshot of the topic, as seen three years ago. BIS Review 38/2002  1  produced falling price levels in other parts of the globe in the closing decades of the nineteenth century. Allow me to digress for a moment into this history.

Although my role has changed since then, my belief in the fundamental importance of this issue remains the same. Indeed, my conviction has been reinforced by the Banque de France’s own commitment to supporting VSEs, both at a central level and through its local presence in France’s regions. One of the main advantages of this nationwide network is that it makes it easier to listen to and support local businesses, the majority of which are clearly VSEs. Through its local branch network, the Banque de France is responsible for dealing with credit mediation applications. It provides valuable insight for economic and social actors by publishing statistics on VSEs, and is the only central bank in the Eurosystem to publish data in this level of detail. In addition, the Banque de France conducts studies into VSE finances and their positioning in the French economic landscape. Clearly, this symposium is not just a one-off event reflecting a passing interest in a subject that’s currently in the spotlight. In fact, it is part of an ongoing and enduring initiative, and will provide additional impetus to the work already being undertaken at the Bank. I shall come back to this in a few minutes. *** First of all, let me underline the importance of VSEs for growth and employment, and for the strength of our regional economic fabric.
What is different between the macroprudential regime we now have and the past is that the FPC will be steering and, once the legislation is complete, Recommending and sometimes Directing the microregulators to take action. That is a major change in the UK’s regime. And it will occasionally mean Taking Away The Punchbowl, leaning against excess. No set of static regulatory requirements will suffice for all seasons. The FPC will be ready to alter regulatory requirements dynamically, so far as the constraints of EU legislation are consistent with actions to preserve stability.1 Conclusion The new Social Contract for banking insists on resolvability and on the health of the system as a whole. In doing so, the goal is to move towards a financial system that is able to keep lending even during dark times. Rapid payout from deposit insurance; liquidity provision against wider collateral; constraints on shadow banking to limit regulatory arbitrage; simplification of SIFIs’ internal structures and practices to aid resolvability; powers for resolution agencies to reconstruct the capital structure of a distressed bank or dealer, to avoid the disorder of orthodox liquidation; a capital surcharge for SIFIs; the FPC temporarily raising capital or liquidity requirements in the face of stability-threatening exuberance – these will all be parts of the new Contract. It is unfinished business, but the shape should be clear by the time of the G20 Heads of Government Summit in November. 1  See Tucker P M W, “Macroprudential policy: building financial stability institutions”, April 2011.

What then is the role of central banks in this new financial landscape, where institutional investors and other nonbank financial institutions hold a larger share of assets and a larger share BIS Review 108/1998  –3–  of credit risk than they ever have before – and where an increasing share of conventional credit risk is intermediated through the capital markets? I would argue that the role of a central bank in this new environment is very much in keeping with its traditional responsibilities. Central banks in all countries fundamentally care about the flow of credit in their economies, whether this credit flows from banks, nonbank financial institutions, or institutional investors. Why is this so? The answer is simple. It is because the credit intermediation process is ultimately what determines how well our economies function and therefore how well our economies are able to grow and allow their citizens to prosper. When the credit intermediation process does not work well, when there are disruptions to the supply of credit to the economy, as history has amply shown, the costs for our businesses and our people can be enormous in terms of lower output and fewer jobs. A well-functioning credit intermediation process is, in short, critical to the sustainability of any economy’s success. It is for these reasons that central bankers are interested in the flows of credit from the global securities markets, just as we have needed to know about the flows of credit from the banks whose operations we are charged with overseeing.
At least ex-post, one might therefore expect to be able to identify crowded technical points in the market. Analytically, such points reflect moments of extreme market tension. An acceleration of an upward trend in prices, or a sharp reversal, can be a potential precursor to a new market equilibrium. A combined review of speculative positions in the market place, news flows and various hedge fund performance figures provides tentative evidence that heightened market volatility can at times be related to clustering patterns in the hedge fund industry. The following example provides a potential illustration of this dynamic. During the May to June 2003 period, speculative positioning in the US bond market appears to have been very long, based on the assumption that the Federal Reserve would have to cut interest rates below 1% because of deflationary risks. Long positions were further encouraged by market speculation that convexity hedgers such as Fannie Mae, Freddie Mac would eventually be forced to buy more duration and therefore drive interest rates lower. Ten-year Treasury yields promptly rallied more than 80 basis points until mid-June. This strongly trending market helped a number of hedge fund strategies generate exceptional returns during the month of May 2003. The combination of a smaller-than-expected 25 basis point interest rate cut by the Federal Reserve on 24 June 2003, together with a discernible turn in language in the accompanying FOMC statement, took the market by surprise. A sharp sell off in the bond market followed immediately.

I shall not enter that discussion but simply note that a number of important decisions have been made in the past ten to fifteen years. They include the deregulation of credit and foreign exchange markets, the reform of the tax system, changes to components of the transfers system and the enhancement of competition. All this has helped the Swedish economy to function better. Moreover, price stability is now monetary policy’s statutory objective and the Riksbank, now also formally independent, has been made accountable for this. Other steps, in the form of a far-reaching consolidation of the government budget, provide a stable and credible framework for this objective. As a further move in the new direction of economic BIS Review 99/2000  2  policy, Sweden joined the European Union in 1995. This opened up sectors that previously had been protected from international competition. Competition grew in many fields and prices for some goods and services began to be adjusted downwards towards European levels. The economic policy realignment, which began some time in the 1980s, has coincided with larger changes in the global economic environment. The Swedish economy has therefore been in a position to benefit from the developments elsewhere and so far this has led to a favourable economic path. The realignment of economic policy and the ongoing globalisation were accompanied in the 1990s by a rapid development of the new information technology, globally as well as in Sweden. The innovations have been adopted successively in various segments of our economy.
These universal banks combined traditional bank lending with various forms of investment banking activities. By using economies of scale from these different areas, they were able to offer competitive prices - but also to exploit various conflicts of interest. When prices fell, the banks were accused of having contributed to issues of securities of dubious quality and of having painted an overly bright picture of the companies’ future in their prospectuses. The commercial banks were also accused of having converted loans lacking creditworthiness into shares, by contributing to new issues, where shares were sold to an uninformed public. In addition, it was claimed that certain company management had lined their own, and their families’, pockets in various ways. Although it was difficult to prove that the banks had knowingly and systematically misled the general public, it was revealed that prominent figures in various banks had earned large sums at the cost of their customers, and in some cases at the cost of the banks. This contributed to the introduction of the Glass Steagall Act in the United States in 1933. The Act required complete legal separation of commercial banks and investment banks. A commercial bank could not be included in the same group as a bank that mainly conducted operations in the securities markets. However, during the 1960s and the 1980s the regulations in the United States were gradually loosened up. Commercial banks were given increasing opportunities to conduct investment banking activities, albeit on a limited scale.

Before the crisis, many countries focused financial regulation on the risks faced by individual financial institutions (as indicated by Basel II), and macroeconomic policy on the preservation of price stability. This approach may have worked well during calmed times, but it also may have allowed hidden financial risks to build up unchecked. As a result, there is growing consensus that the pursuance of macro financial stability has to be considered in its own right, in a way that combines micro regulation with a systemic view of the financial system. BIS central bankers’ speeches  1  However, while there is consensus in the approach, there is still debate on what institutions should be in charge of ensuring financial stability, and in particular, what should be the role of central banks. There are advantages in having central banks involved in preserving financial stability, but these advantages do not necessarily mean that they have to be the sole institutions in charge. Central banks have a systemic vision of the economy that allows them to visualize links between different players of financial systems and their potential consequences for the real economy. Also, as lenders of last resort, the preservation of financial stability is of natural interest for central banks. Thus, even if not formally in charge, central banks should and do care about financial stability. But at the same time, there are important risks in having central banks in charge of financial stability. First is the risk of diluting the mandate of the central bank and damaging its credibility.
Bank of England  Page 7  Successive MPR forecasts in 2022 have remained too pessimistic about the near-term path of unemployment; rather than slowing as demand in the economy has slowed, demand for labour has remained resilient, at least until recently. Unemployment fell further and at 3.6% in the three months to September remains close to its recent 50-year low. Although labour demand has eased more recently, the level of vacancies remains high and recruitment difficulties remain widely reported in surveys of firms. This sustained tightness has been driven by a much weaker recovery in the participation rate post-pandemic, in marked contrast to most OECD countries4. Evidence for this ‘participation puzzle’ for the UK only emerged in the spring5. Six months on, the causes remain unclear though the latest survey evidence suggests some of this inactivity reflects people with long term sickness and those who have decided to retire early. Many more people moving into inactivity now say they don’t want a job compared to the period after the global financial crisis6. This points to the role of labour supply effects rather than cyclical weakness in labour demand and indicates that this increase may be persistent, as there is a much lower flow rate into employment compared to those who want a job. As such it is one example of a pattern for recent shocks to have as much or more impact on the supply side than the demand side of the economy, which further complicates assessment of the economy and the appropriate policy response7.

By restoring low inflation, consistent with its remit, the MPC can best contribute to securing stability and certainty, the foundations for sustainable growth. With thanks to Rupal Patel for her assistance in preparing these remarks, and to my fellow MPC members and numerous Bank colleagues, including Callum Ashworth, John Barrdear, Kieran Dent, Izzy Dought, Swasti Gupta, Zish Jooma, Zaar Khan, Simon Kirby, Nades Raviraj, Kate Reinold, Andrea Rosen, Harry Rigg, Saugata Sen, Fergal Shortall for their many helpful contributions.
It is because the main objective of the monetary policy is to maintain price stability in the economy, which is considered to be the main prerequisite for acceleration of the economic activity and for accomplishing sustainable economic growth. Hence, the adequate measurement of inflation, which is an issue that has been interesting for the central banks for years, and which is even more important when inflation rates are low, is so challenging and crucial for the central banks, i.e. for the monetary policy decisions. Non-expert public listens to the information about the inflation indicators. It neither wants nor it is able to go into the numerous statistical problems when measuring inflation. However, it senses the possible discrepancies between the officially announced indicators and the real ones since that public confronts its nominal and real purchasing power on a daily basis. On the basis of that confrontation and daily market-based check-up of the official statistical information, confidence or lack of confidence in the authorized institutions is created, influencing positively or negatively the behavior of all market participants. The authorized institutions are responsible for making precise the differences between the nominal and the real aggregates, for selection of more precise statistical methods and techniques for measuring inflation, simultaneously as transparent and as understandable as possible for all market participants.

Page 5 says that Croatia and Macedonia have been invited to intensify their efforts to conform with HICP (harmonized index of consumer prices), and that with respect to the monetary and financial statistics, the central banks of the candidate countries (and therefore our central bank), will be legally bound to start with the harmonization, which is necessary to bring the statistics in compliance with those of the ECB, as a legal requirement, once they are admitted to the ECB, and that it is desirable to start earlier to prepare for the membership in the European System of Central Banks. And finally, that the candidate countries have been invited to intensify urgently their efforts in this respect and that the EFC (EconomicFinancial Committee) should keep on directly monitoring the progress on the basis of the annual Progress Report on the Action Plan". Consequently, we and those we want to be with are aware that we should strengthen our endeavors to make our statistics better, and hence, I consider that this workshop will make a positive contribution from this aspect, as well. Thank you for your attention, and once again I wish you a nice day on the premises of the Central Bank. I would conclude here and I would kindly invite Ms. Blagica Novkovska, Manager of the State Statistical Office, to give her address. 2  BIS Review 54/2007