samchain/econo-pairs-v1 huggingface dataset:
Studies of the contributors to productivity growth since the 1960s indicate that the two top-performing sectors have been retail and wholesale.21 This is attributed to improvements in business processes in these sectors – the “Wal-Mart effect”. It is also attributed to wider and faster dissemination of innovation courtesy of new entrants. Economist W. Brian Arthur believes this digitised network of automated processes, linked by a common language, may have put the world on the cusp of a second industrial revolution.22 Arthur describes a “second economy” – the digital root system of the physical economy – and predicts it could become larger than the physical economy within a couple of decades. If so, those estimated benefits of a common language – in this case HTML and GS1 rather than Hindi and Mandarin – will need revising upwards. A. Common language for finance  Since the collapse of Lehman Brothers, the international financial policy community and the private financial sector has begun laying the foundations of their own second economy. A sequence of international initiatives, often led by the private sector, has taken us materially closer to constructing a global financial map. The co-ordinates of that map are defined by a fledgling global financial language. This global mapping effort is underpinned by two, mutually supporting, pillars: greater financial data to help forge links in the financial information chain and common standards for recording and aggregating these data. Progress on data collection has been material.

With financial data captured in a homogenous fashion across financial firms, the stage would be set for mapping much more comprehensively the contours of the financial world – an atlas of financial complexity to mirror Hausmann’s atlas of economic complexity. Technologically, there is no reason why tracking the financial web should be any more complex than tracking global supply chains or the web. Monitoring global flows of funds, as they ebb and flow, should be possible in close to real time. To get a sense of the possible, consider the case of meteorology. It operates within a huge, interconnected global network, with cross-border information pooling. The logistics are eye-watering. Forecasting the weather involves massively large-scale data sampling of over 100 million observations per day, across hundreds of thousands of locations scattered across the globe, measured along multiple dimensions. The result is a very high-dimension information grid, similar in some respects to the web. The information embedded in this high-dimension web is then aggregated, filtered and used to forecast weather patterns in close to real time. These weather predictions can be telescoped to any level of geographic granularity, from the smallest town to the largest continent. And the forecasts are made for timelines ranging from minutes to decades ahead. 40  G20 (2008). BIS central bankers’ speeches  13  There is no reason why, with the right data infrastructure captured in a common language, technology could not be used to map and simulate the risk contours of the global financial system.
Figure 6 Real loans (1) (2) (annual change, percent) 25  Interest rates by type of loan (3) (index, 2002-2018=100) 25 200  Consumer  20  Commercial  20 175  Housing Commercial  15  200  15 150  175 150  Consumer  10  10 125  125  5  5  100  100  0  0  75  75 Vivienda (4)  -5  -5 02  05  08  11  14  50  17  50  02  05  08  11  14  17  (1) Real data built with CPI splicing of 2013 annual base (2) (3) Weighted average rates of all operations performed each Dashed horizontal lines show each series' average for the last 10 month. (4) Loans denominated in UFs. years. Source: Central Bank of Chile using SBIF data.

The analysis reveals that, in general, there are multiple margins for adjustment that allow to cushion macroeconomic shocks and moderate the effect on employment that would exist absent those margins. These include changes in the composition betwee salaried and self employment, changes in participation rates, high turnover and rapid transitions between salaried jobs, the creation of jobs in new firms, and wage flexibility in hired work. At the same time, evidence has it that the costs associated to such adjustment, both for the workers and for the economy’s aggregate productivity, can be significant. The results presented also have implications on how the shocks hitting the economy can affect the evolution of wages and inflationary 8  pressures, information that is of particular importance for monetary policy. Thus, despite the labor market’s capacity for adjustment, the weak periods entail important costs. In particular, the process of realocation to quality jobs and more productive enterprises, with the consequent impact on aggregate productivity and the workers’ purchasing power, is diminished in the lower phase of the cycle. For some workers, especially those in the early stages of their working lives, the effects can be very persistent. These situations explain the need to have a wider toolkit with indicators to monitor the behavior or the labor market over the short term. In particular, it is useful to complement survey data with information from administrative data bases and traditional aggregates on occupation and unemployment with statistics on resignations, firings and hirings. Anyway, the BCCh has made progress on these matters.
Resilience: three lessons from the financial crisis1 Speech given by Dave Ramsden, Deputy Governor for Markets & Banking  Inverness Chamber of Commerce 30 May 2019  1  With thanks to Tom Smith for his assistance in preparing these remarks and to staff across Bank, including Alex Baiden from the Bank’s Advanced Analytics division and Nick Bate and Liam Crowley-Reidy from the Bank’s Monetary Analysis directorate, for their many contributions, as well as my colleagues on the MPC for their helpful comments and suggestions. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  1 Introduction It’s great to be here in Inverness, and to be speaking here this morning. My talk today is going to focus on resilience. The first definition of resilience thrown up by Google is “the capacity to recover quickly from difficulties; toughness”. It seems apt that I should be focusing on this here in Inverness as Scotland itself is a famously resilient nation. Robert the Bruce was taught resilience by a spider. Scotland’s mountains epitomise geological resilience and tests the physical resilience of walkers and climbers. The Scottish economy has been through some tough times, but proved relatively resilient during the financial crisis, with Scottish onshore GDP falling much less than overall UK GDP. Even the existence of the Loch Ness monster has proved resilient to continued scientific investigation. And resilience is a word that you hear a lot these days (Chart 1). Psychological resilience is lauded as a virtue as life becomes more complex and challenging.

In fact, since 2000 real GDP growth in NMS was on average more than double that registered in the euro area member countries. These considerations acquire greater significance when viewed in the context of fiscal developments. On the basis of 2005 data, among the NMS participating in ERM II only Malta failed to satisfy the relevant criterion, with a fiscal deficit to GDP ratio of 3.3%. Malta, however, expects to be within the reference value by the end of this year. This represents a considerable fiscal consolidation effort, especially when viewed in the context of an average ratio of 6.7% during the first five years of this decade. This progress is expected to prove durable, as it has been based not only on tax measures, but also on the restructuring of public sector entities, spending cuts and efficiency improvements. Challenges to fiscal sustainability in NMS remain, nevertheless, mainly arising out of the future dynamics of the welfare system combined with population ageing, but these are hardly different from those being faced by euro area members. It is furthermore interesting to note that on average the NMS participating in ERM II recorded lower deficit to GDP ratios compared to the present euro area member countries in 2005, among whom five posted deficits in excess of 3%. The positive fiscal performance of these NMS is further underscored, with some individual exceptions, by their lower levels of public debt, which as a percentage of GDP average around one half of those of the current euro area member countries.
In addition, this strategy will not suffice to disentangle the financing of the economy from the status of its sovereign. For that, we need a pan-euro area safe asset. I have set out a number of reasons why a euro-based safe asset is desirable. Several operational proposals have been suggested in the literature.8 Most of them, such as the one for sovereign bond backed securities (SBBS),9 which have been subject to a thorough analysis by the European Systemic Risk Board, entail the creation of a synthetic bond backed by national sovereign bonds. This proposal emphasises that, through diversification, it will be possible to provide a senior tranche with lower risk than German debt. An alternative option is E-bonds,10 which would be single tranche bonds issued by the ESM or any euro area body with the capacity to issue bonds, backed by loans to all euro area sovereigns. I think we need further reflection on the properties of these proposals and the constraints and incentives involved. Let me point out three conditions that any of the proposals must fulfil in order to improve the current framework. First, they should have the potential to generate a sufficient amount of safe assets at the European level. They cannot simply involve a swap of one form of safety for another, as that would not solve the shortage of safe assets. Second, they should preserve liquidity in the markets for national sovereign securities. This would allow the market to price idiosyncratic risks correctly and help treasuries to meet own funding needs.

The result is a recession or a period of sluggish growth, which, in turn, reduces the wealth of savers and their demand for safe assets.7 Do we have alternative ways of escaping this trap? We require, following my earlier metaphor, an update to our electricity grid. On first thoughts, two ways to expand the set of safe euro-denominated assets spring to mind. On the one hand, euro area countries with a sovereign bond that is not considered sufficiently safe should focus on reducing their idiosyncratic sovereign risk, in particular by implementing credible medium-term fiscal 7  Caballero, Farhi and Gourinchas (2017), “The safe asset shortage conundrum”, Journal of Economic Perspectives, 31(3). 6/8  plans, in order to jump on the safety bandwagon. On the other hand, increases in the amount of current safe instruments could mitigate the safety trap. However, this strategy may not be enough to ensure a sufficiently stable and ample supply of safe assets. First, its success depends on the capacity of the less safe countries to become safe. The sovereign debt crisis has shown that it is not sufficient to start from a low level of debt and a budget surplus, as was the case of Spain in 2007. Second, countries with fiscal space might face restrictions on the amount of debt they can issue. As a consequence, one cannot guarantee that, faced with another negative shock, risk perceptions will not differ nor fragmentation increase.
Naturally, the outlook is also being affected by the political unease in North Africa and the Middle East and the repercussions of the natural disaster in Japan, but contagion effects have as yet been limited. Another risk is that the strong growth in the world will push up prices for energy and commodities beyond expectations. A significant part of the rise in oil prices since February can be ascribed to uncertainty over how the supply of oil will be impacted by the political unease in North Africa and the Middle East. Essentially, however, it is the strong growth in Asia in particular that is making these commodity prices increase. This may result in higher inflation and lower growth in the United States, Europe and other developed economies. The Swedish economy remains strong The high rate of growth in Sweden in 2010 means that GDP has now returned to roughly the same level as prior to the financial crisis. This year, we expect a GDP growth of 4.6 per cent, while, for the next two years, we expect growth averaging 2.4 per cent per year (see Figure 6). Employment is now increasing rapidly. Over the last year, it has increased by 120 000 jobs. This increase has primarily taken place in the service sector and the construction sector, which were not impacted so severely by the crisis.

Developments were marked by the financial crisis, which resulted in low wage agreements which were largely in line with the Riksbank’s forecasts. The crisis also meant that the commonest agreement period became two years instead of three years, as had been normal since 1995. The centrally-agreed wage increases were calculated to average 1.8 per cent per year in 2010 and 2011. However, the economic recovery was significantly stronger in 2010 than most people had expected. The growth in GDP was the highest in 40 years. The labour market also developed above expectations. Among other reasons, this was because the decline in employment was primarily concentrated on the manufacturing sector, which is less labour-intensive than many other sectors. Furthermore, the so-called crisis agreements in the manufacturing sector contributed towards dampening the decrease of employment. Due to the low agreed wage increases, the wage bargaining rounds in 2010 probably contributed to the strong development of the Swedish economy we experienced in 2010 and the start of 2011. According to our present assessment, the average increase of hourly wages in 2010 and 2011 has been 2.8 per cent per year, which is 0.5 percentage points per year more than we had estimated before the wage bargaining rounds. BIS central bankers’ speeches  3  But at the same time, the wage bargaining rounds in 2010 entailed a couple of problems for future developments. One such problem was that the dates for the expiry of the various agreements became more spread out than before.
It is important for the banking sector to utilise and support this valuable attribute of economic agents, both private and public, offering them a constant satisfaction of their needs for funding and other services. This action should rely not only on the insofar-successful experience, but also on an economic logic, while only a few countries in the region have retained their positive economic growth rates. Nevertheless, the economic environment will remain a challenging one and it should be assessed pragmatically. Various actions that may be taken should be oriented by the concept of prudence and in respect of regulatory and supervisory framework requirements. I would like to underline that a responsible bank management during this period will be recognised by its ability to control and administer operational risks in general and your swiftness to develop institution’s capacities to test the resilience and performance in various scenarios of potential future developments in particular. International standards require that the focus be not placed on planning highly probable events, but on the assessing the institutions’ resilience to relatively extreme and unfavourable developments. 2  BIS central bankers’ speeches  Moreover, this process should be part of a broader and constant analysis that you need to conduct with a view to assess your needs for stable operational capitalisation and define safeguarding measures. These requirements are actually present in the regulatory and supervisory framework and the Bank of Albania stands ready to share with you its experience for effective development.

Your Honour, apart from Zambian delegates, this international seminar has drawn participation from several other countries including: Angola, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mauritius and Mozambique. Other participants are from Namibia,  2  BIS Review 26/2008  Nigeria, Sweden, Tanzania, Swaziland and Uganda. With this wide participation, I have no doubt that the seminar will be thought-provoking and highly participatory, given also the high calibre of resource persons from institutions such as the International Monetary Fund and the Bank of International Settlements. I therefore wish all of you good deliberations and a memorable stay in Livingstone and Zambia in general. It is now my privilege to call upon His Honour the Vice President of the Republic of Zambia, Mr Rupiah Banda to deliver the official opening speech for the seminar. Your Honour Sir! Thank you. BIS Review 26/2008  3
Because it is more common for US households to fix the interest rate on their home loans for very long periods, they are mainly affected by changes in long-term interest rates. Moreover, the pick-up in inflation in the US has meant that real rates of interest have not increased in line with the rises in the Federal Funds rate. Estimates at the Riksbank suggest that the upswing in Swedish house prices to date is largely attributable to rising incomes, low interest rates and low construction activity. Since house prices began to increase in the mid-1990s, nominal disposable incomes have risen by around 40 per cent and interest rates have dropped sharply. In 1996 the average nominal mortgage rate for households was just over 9 per cent. In June this year it was a little less than 4 per cent. Meanwhile, construction of new homes has been very low, even though low interest rates and rising prices have meant that construction has picked up relatively well in recent years. My assessment is that so far there are no indications of any significant overvaluation of house prices on average in the country at current interest rate levels. Furthermore, Sweden essentially has no buyto-let market, i.e. a market in which private investors buy homes solely with a view to letting them. That limits speculation in housing.

At that time the price increases were driven instead by expectations that prices would continue to rise strongly in the future. When it eventually became evident that these expectations were not going to materialise, the prices fell quickly. Such speculative elements do not appear to exist today. At the same time, property companies’ earnings and debt-servicing ability are good. As things stand today, the property sector will hardly cause any large loan losses for the banks and so it does not constitute a threat either to the stability of the financial system. Housing prices and household debt Over the past one to two years we in the Riksbank’s Executive Board have devoted quite a bit of attention to the house market, where a rapid rise in prices has gone hand in hand with an increase in household debt. But it is important to distinguish between the conclusions we have come to regarding  1/6  the significance for financial stability and the discussions we have had in connection with our monetary policy decisions. I will come back to this. That house prices have risen rapidly in Sweden and many other countries can hardly have escaped anyone’s attention. In Sweden, house prices in the past ten years have more than doubled, and the upswing has been especially strong in metropolitan areas. Increasing house prices have been accompanied by an accumulation of household debt. Due to the fall in interest rates, households’ interest costs have dropped, despite the rise in debt.
This list is only illustrative. It is not by any means exhaustive. The traditional means to address bad behavior are enforcement actions against the bad actors and the organizations where they worked. 1 This traditional response, in my view, is appropriate and I strongly support the actions that have been taken and that will continue to be taken. All enforcement actions, though, are essentially retrospective. Of course, we like to think that enforcement actions will not only punish but also deter. But I wonder if this hope is really a prospective strategy. We would better serve the public good if we could do something – anything – more forward looking, and complementary to what our enforcement colleagues are doing to deter future bad behavior. Ethical culture The new emphasis on an ethical culture within financial services firms arises from the policy interest in preventing some of the bad behavior that has been observed. Now I use the phrase “some of the bad behavior” deliberately. I fully embrace the goal of eliminating all bad behavior. But we cannot let the goal of perfection become the enemy of progress. We need to start making progress, so let us agree that perfection is probably not realistic. Even an organization with the strongest ethical culture will have episodic bad behavior. Although culture is no panacea, I believe that the ethical culture of an organization can improve the behavior of the people who work there.

The pace of technology adoption by incumbent banks is high, while level of fragmentation among finance providers is low. This is a more ambitious, albeit possible, scenario where banks successfully adopt the best strategies and emerge as the dominant winner in all finance segments; b. Here we see banks as incumbent institutions responding quickly to technology shifts, realigning their business processes and delivery channels to meet customer expectations. They succeed in nurturing both tech-literate management personnel and digitally-savvy talent; c. Emerging tech firms remain important sources of innovation but are acquired by the incumbents. As a result, these institutions can successfully retain and expand their customer base; and d. In this scenario, although we will not see a dramatic change in terms of players in our financial system, the functions and ways in which they conduct businesses will be dramatically different. The second scenario is “Plugged-in Finance” a. Both technology adoption by incumbent banks and fragmentation among finance providers are high. Finance is marked by an ecosystem of “co-dependence” between banks and tech start-ups that target specific, profitable segments of the market rather than the whole suite of financial services; b. The resulting partnership is one that is both rich and dynamic.