samchain/econo-pairs-v1 huggingface dataset:
In light of the buoyancy of domestic demand in recent years, it is reasonable that private consumption and residential investment should show somewhat lower growth rates, although, as has been the case so far, a continued robust employment and population growth rate would fairly effectively counter the possible deceleration of these two variables. In the construction sector, moreover, investment in civil engineering and in non-residential building, which has so far shown greater resilience, will foreseeably remain vigorous in the  4  BIS Review 134/2007  next few years. This could soften the negative impact on growth caused by the slowing of residential investment, where a cyclical downturn seems to have started. Productive investment will probably continue to be the most buoyant component of domestic demand, although it is hardly likely that it alone will offset the lower contribution of household spending. Therefore, the role of net external demand will be fundamental in ensuring that a certain containment of expenditure is compatible with continued growth of around 3%. The contribution of this variable will hinge crucially on the behaviour of Spain’s export markets, but also on competitiveness, which is a factor that firms and the economic authorities are actually able to influence. In this respect, the basic channel through which the recent episode of financial instability and heightened international uncertainty could affect the Spanish economy’s expected growth scenario depends on the performance of the foreign sector.

One particularly positive effect of this pattern of behaviour in the current situation is that the institutions’ practice of keeping credit risks on their own balance sheets has acted as a powerful incentive for them to ensure that their risk  BIS Review 134/2007  5  quality controls continue to work properly. Also, since the securitisation processes used by Spanish institutions have aimed to raise fresh funds rather than redistribute risks, instruments such as covered bonds or asset-backed bonds have been used, which are not very complex and are much easier to price than the structured products that have proliferated in other parts of the world. These sources of solidity should not lead us to overlook the danger that an excessive prolongation of the current bout of turbulence could ultimately have undesirable effects on investor confidence. These effects might extend above and beyond a desirable and healthy correction of abnormally low risk premiums and volatility levels, and substantially reduce the capacity of financial markets to offer useful yardsticks by which investors can discriminate the true credit quality of the different instruments. If this were to happen, the need for the Spanish economy to turn to the international markets to finance a large part of the investment spending of Spanish households and firms could become an obstacle to continued high buoyancy in the future.
We have limited experience to indicate how the interest rate at the current low level will affect output and prices over time. If growth in household demand proves to be stronger than expected, the interest rate may be raised to a higher level and more rapidly than currently envisaged. BIS Review 139/2009  11  Fiscal policy is expansionary this year, and according to the National Budget for 2010, fiscal policy will provide further, albeit milder expansionary impulses to the economy next year. Under the fiscal rule, the government budget deficit should be reduced to about 4 per cent of the capital in the Government Pension Fund – Global when activity in the economy has resumed a normal level. Norges Bank’s projections are based on the technical assumption that the structural, non-oil budget deficit in 2011 and 2012 will remain unchanged from the level in 2010. If growth in the Government Pension Fund – Global is lower than in previous years, the deficit will still be more than 4 per cent of the Fund’s capital, even after capacity utilisation has risen to a normal level. If economic developments are broadly in line with projections, fiscal policy conducted in accordance with the fiscal rule could result in a lower interest rate and a weaker krone than projected. Unemployment is high in many countries. Unemployment in Norway has not risen as sharply as previously projected. The number of registered unemployed was 2.8 per cent of the labour force in October, unchanged from September.

The current unusual circumstances are one of the main drivers for the prolonged boom in the local property sector. The risk of over-heating in the property sector to financial stability in Hong Kong is no smaller than that seen in 1997. We should note in particular that while mortgage rates were generally over 10% in 1997, after the burst of the property bubble, US interest rates have fallen, and mortgage rates in Hong Kong have spiralled down reaching about 2% in 2004. The situation we faced now is just the opposite. Mortgage rates are around 2%. And, even if the low interest rate environment were to remain until 2015 as anticipated by the US Federal Reserve, the US interest rates are bound to head back to more normal levels. Will mortgage borrowers in Hong Kong then be able to withstand the impact of interest rate hikes and property price falls? For example, under a 30-year mortgage, even though the borrower will be able to enjoy a low interest rate in the first two years, the repayment burden could become much heavier as a result of interest rate hikes in the years that follow. This could have serious consequences for the well-being of those families in the coming years. Therefore, I hope that the public will be cautious and should not underestimate the risks that rising interest rate could have on repayment ability, asset prices and the overall economy in Hong Kong. 2  BIS central bankers’ speeches
The measures aimed at raising the supply of housing and its accessibility will not be sufficiently effective if they do not include a reorganisation of the land market, which remains one of the main unresolved issues facing the Spanish economy. Also, a more neutral tax treatment of house ownership and further measures to foster rental could improve the working of this market. There are also implications for the behaviour of financial intermediaries and I will look at these now as I review the main recent developments in the Spanish financial system. The financial system The international financial system benefited in 2004 from the favourable trends in train since 2003 and still apparent in the early months of 2005. Very low long-term interest rates, stable interest rate spreads both in emerging countries and in the corporate sector, the performance of the main stock market indices, low levels of volatility and ample liquidity all made for a relatively easy scenario that contrasted with the difficulties experienced at the beginning of the decade. Despite this favourable environment, the financial situation is complicated by certain circumstances that cannot be ignored. First, financing activities are becoming increasingly complex in terms of both demand and management. Low interest rates have thus increased the appetite for risk and spurred the development of new financial products, such as credit derivatives, and of new intermediaries, such as hedge funds.

As virtual banks are not allowed to operate physical branches, they will have to come up with innovative ways to offer attractive and competitive banking services. This is likely to force existing banks to consider how to further upgrade their services, and better make use of technology in their offerings. The result, I hope, will be a more innovative and globally competitive banking sector in Hong Kong, offering customers more diversified and efficient services. Technology use is a means to an end 20. Last but not least, we should bear in mind that the use of technology is a means to an 2/5  BIS central bankers' speeches  end, and not an end by itself. Most people appreciate new technology for what it can do to improve their lives. They don’t really care whether the algorithms or the chips are amazingly innovative. To achieve wide adoption, any innovation has to offer users a “unique value proposition”. In plain language, the consumer wants to know “what can it do for me?” 21. Take mobile payment as an example. This has rapidly taken off for retail payment in Mainland China and some other places. In Hong Kong and other markets, people already use credit cards and e-payment systems like Octopus, so mobile payments will grow more slowly. The point is that mobile payment technology is only the means to an end. The Hong Kong consumer will ask: “what can it do for me?”.
Openness and clarity can thereby contribute to increased credibility and anchor inflation expectations around the target. This was an important reason why the Riksbank began to publish its forecasts and other material on which decisions were based early on in the new inflation-targeting regime. I am convinced that we would not have been able to build up confidence in the price stability target as quickly as we did if we had not been as open as we were regarding our work and our decisions. The economic argument in favour of transparency is also linked to the fact that openness and clarity are today considered an important part of the monetary policy in itself. According to economic theory, there is a correlation between interest rates with different times to maturity. Expectations of short-term interest rates, which the central bank governs, are important to the long-term interest rates. By influencing expectations of short-term interest rates, a central bank can therefore also indirectly affect interest rates with longer maturities. Greater influence over rate-setting for all maturities – the yield curve – will raise the degree of impact of monetary policy. This is sometimes called conducting monetary policy by “management of expectations”. Monetary policy is to a large degree about influencing expectations. And the best way to do this is to provide good information. The most obvious way for a central bank to influence expectations of monetary policy is to present the future path for the policy rate that the bank itself considers most reasonable.

Central banks probably invest greater resources than any individual agent into studying the economy, assessing the economic situation and making forecasts. Reasonably, central banks should also know more about their own intentions than any other agent. It is therefore possible to construct theoretical cases where a lower degree of transparency is preferable to a higher degree. But on the whole the research appears to indicate quite clearly that a high degree of transparency is something the central banks should aim at. It is easy to agree with this conclusion. Here I think that the demands on a public authority in a democracy have great importance. Then I believe that in practice there are limits as to how transparent a central bank can be. In some respects it is quite simply difficult to be open and clear. This applies, for example, to how much emphasis the central bank places on stabilising the real economy relative to stabilising inflation. In theoretical models this is usually represented by a special parameter in the central bank’s so-called goal function. However, placing a value on this parameter which is then published would probably be  2  Morris, S. and H.S. Shin, (2002), "The Social Value of Public Information”, American Economic Review 92, 1521-1534. 3  Svensson, L.E.O., (2006), “Social Value of Public Information: Morris and Shin (2002) Is Actually Pro Transparency, Not Con,” American Economic Review 96, 448-451. BIS Review 40/2007  3  very difficult in practice.
BIS Review 131/2009  3  Output in Norway fell through two successive quarters and although unemployment picked up last autumn, it is still lower than in previous downturns. Norwegian banks felt the impact of the turnaround in the economy, but government measures have prevented the liquidity crisis from becoming a crisis in the real economy. Norwegian banks primarily experienced a liquidity crisis and not a solvency crisis. The Icelandic bank Glitnir’s Norwegian subsidiary received a short-term loan from the Norwegian Banks’ Guarantee Fund. But there has never been any risk that distressed banks would overstretch our fund-based guarantee scheme. Lessons from the crisis – the work ahead The global financial crisis has revealed weaknesses in the financial system. The Basel Committee on Banking Supervision and the EU are working on proposals for revising the regulatory framework and introducing new regulations. Banks will be required to build up larger capital and liquidity buffers and to strengthen the quality of bank capital. The proposals also aim to reduce the procyclicality of bank behaviour. Banks should build up buffers in good times that can be drawn on in periods of stress. The authorities will focus in particular on methods of regulating systemically important banks. Bank capital Banks play a key role in ensuring that depositors’ savings are managed securely, in extending credit and providing payment services. Banks are commercial enterprises, but they are also similar to public utilities.

Bond premiums are nevertheless likely to remain clearly higher than prior to the financial crisis. Investors cannot be certain that government will cover bond investors’ losses when banks’ capital evaporates during the next banking crisis, c.f. the planned UK proposal to impose a “living will” on the large institutions. A favourable source of funding for banks is covered bonds, referred to as OMF in Norway. These debt instruments are secured by sound collateral backed by residential mortgages, public loans or commercial property loans. The risk premium on these loans is therefore lower than on ordinary bank bonds. The covered bond market was also heavily impacted by the financial crisis. Activity in the secondary market has been low, and investors showed little interest in new issues. The swap arrangement introduced by the Norwegian authorities eased the situation for banks. The market has recently improved. Covered bonds have a long tradition in other countries’ housing markets. As manager of the Government Pension Fund – Global, Norges Bank has taken initiative to strengthen the European covered bond market. Together with several other large investors and support  14  BIS Review 131/2009  from a number of central banks, the “Covered Bond Investor Council” was established. One of the main aims of the Council is to improve liquidity in the covered bond market, through for example more transparent and standardised borrowing terms. The Norwegian covered bond market is new and small compared with that of other countries.
Global institutions and fora play an essential role for three reasons. First, they achieve a better understanding and a common assessment of the global spillovers from domestic policy actions and the potential policy trade-offs. The discussion on capital flow management measures is a good example.12 The IMF should continue to lend its analytical and impartial voice to this effort. Second, even if the scope for coordination is limited in good times, they make coordination possible in bad times. Consider, for example, the establishment of a system of bilateral swap agreements among major advanced economy central banks, or the recent decision to establish such an agreement between the ECB and the People’s Bank of China. 9  See B. Eichengreen (2014), “A Requiem for Global Imbalances”, Project Syndicate. 10  See H. Rey (2013), “Dilemma not trilemma: the global cycle and monetary policy independence”, Proceedings – Economic Policy Symposium – Jackson Hole, Federal Reserve Bank of Kansas City, pp. 1–2. 11  See Forbes, K. and Warnock, F. (2012), “Capital flow waves: Surges, stops, flight, and retrenchment”, Journal of International Economics, vol. 88(2), pp. 235–251. 12  See IMF (2012), “The liberalisation and management of capital flows: An institutional view”, IMF Policy Paper.

We have often argued in Europe for simpler approaches for small firms, but the differing legal traditions across the EU27 and the desire to harmonise regulation and supervision are powerful forces in the opposite direction. It is impossible to know at this stage, but under some Brexit outcomes we might have room to revisit this question for small domestic firms. It is notable that both Switzerland and the U.S. are taking quite radical steps in this area; while I am cautious about the leverage-ratio-only capital regimes they are working on, and small British firms might be cautious about a 9% leverage ratio requirement, we are taking a close interest. Sixth, there is the debate – which came up most recently in the context of the Treasury Select Committee’s inquiry into Solvency II – about whether our competition objective would be better cast as a primary objective. I have a number of reservations about this idea. One is purely practical: with the FCA and CMA already having primary competition objectives, do we really want a third regulator doing this for the financial services sector? It strikes me as a recipe for bureaucratic overlap. Another is that the sort of referee role the PRA often plays, making sure that firms are competing fairly and not by running excessive risks with policyholders’ and depositors’ funds, is itself the most important contribution we make to competition.
These will help affected professionals, including women and working mothers, to find jobs suitable for their skills. We believe that industry professionals such as yourselves will be able to make significant contributions towards this initiative, and we urge you to participate in any way that you can. BIS central bankers’ speeches  3  20. As leaders in your respective companies, we hope that you will be welcoming to those looking to rejoin the industry, and acknowledge the experience that these professionals bring to the table. 21. Thirdly, given the challenging environment in financial services, it is more important than ever for employees to take charge of their own learning, careers, and development. Each of you can do much to encourage and institute training initiatives in your company, and to allow more time for employees to pursue further education in their specialisations. We look to FWA to continue being that strong influence in encouraging professionals to pursue continual rejuvenation, both in terms of skills and mindsets. Celebrating successes 22. I am glad to say that many financial institutions are with us in the journey of developing talent in the sector. In fact, a number of them are institutional members of FWA, who not only are close partners with us in building a strong manpower pipeline, but are also especially supportive of nurturing female talents. 23. For instance, Barclays, our host today, is the first bank in the world to join the United Nations initiative, HeForShe, which promotes gender parity in corporations.

Today, from this modest ceremony, I would like to assure you that we are fully responsible for this as useful as difficult mission. The Bank of Albania will be always attentive to ensure macroeconomic and financial stability for the country. In the spirit of end-year celebrations, I cannot help focusing on the Albanian young generation, an inspiration to our work and a fruit of our investments for a better future. Following its established tradition, the Bank of Albania has the pleasure to announce the Governor’s Award for the best diploma theses in 2011”. This year, we decided to announce this award in this important activity, in the presence of friends and colleagues. This is an expression of our appreciation for research by these today’s students – tomorrow’s colleagues. The Bank of Albania pays particular attention to the young generation, especially to its education. When I look back and see how we started financial education five years ago, I recall what may be a naive but a significant comparison; Neil Armstrong’s landing on the moon. In addition to his famous quote “...That’s one small step for (a) man, a giant leap for mankind” he said “...the surface is fine and powdery. I only go in a fraction of an inch, maybe 1/8 of an inch, but I can see the footprints of my foot from the trail”. Looking back, we may spot our footprints.
M R Pridiyathorn Devakula: Outlook for 2002 and the road ahead Speech by Mr M R Pridiyathorn Devakula, Governor of the Bank of Thailand, to the Foreign Banks Association, Bangkok, 6 March 2002. *  *  *  Mr Weerasinghe, distinguished guests, Ladies and Gentlemen, Let me begin by thanking the Foreign Banks Association for hosting this enjoyable event and for inviting me to speak. I am honored to be here and would like to extend once again my congratulations to Mr. Weerasinghe on his presidency of the FBA. The formal meeting we had in late January offered an opportunity for me to exchange many useful views and ideas with you. I consider that fruitful and I also appreciate the opportunity given to me this evening. I hope my talk tonight will enhance communication and our mutual understanding even further. I wish to use my time tonight to share with you our view on the current state of the Thai economy as well as what we see now as the outlook for 2002. It is my intention to discuss with you our assessment of the nature of the incipient recovery process that is now taking place, and to identify the risks and challenges we may face in the near future. Ladies and gentlemen, permit me to go straight to the crux of the matter. We enter the year 2002 with more confidence. The Thai economy had most assuredly bottomed out last year.

The IMF’s projection is just over four percent for real global GDP growth. The consensus of private forecasters sees growth in Europe and Japan close to estimates of potential, or in the neighborhood of two percent. Growth in the major emerging markets looks impressive, reflecting not only the benefits of a positive external environment, but also the impact of better economic leadership and policies more supportive of macroeconomic stability and reduced external vulnerability. In China, officials now seem more confident that they have induced the desired moderation in growth to a more sustainable, but still high pace of growth. The global economy has weathered the oil price shock quite well. If the long term futures prices are right, we need to be prepared to live with the possibility of a sustained period of higher oil prices, and perhaps more volatility in oil prices, and the world seems to be getting itself more prepared for that prospect. In the financial markets, this broadly positive outlook has been accompanied by a dramatic reduction in risk premia, leaving the price of insurance unusually low against a less favorable or more volatile environment. These developments imply a view among market participants that future macroeconomic shocks will be more moderate than in the past and more likely to be absorbed without broader damage to economic performance or the financial system. They reflect a general increase in confidence that monetary authorities here and in other countries can keep inflation stable at appropriately moderate levels.