samchain/econo-pairs-v1 huggingface dataset:
However, policy-making becomes significantly more challenging at times of market stress, when historical regularities cannot be entirely relied upon, while increased volatility blurs the information content of market variables and other indicators. In periods of stress, analytical tools that under normal conditions provide valuable inputs into the information set available for policy decisions may at least to some extent lose their utility. And although comparisons with previous episodes of turmoil may add historical perspective and provide benchmarks for policy actions, spells of financial tensions often resemble each other only to a limited extent. Indeed, when thinking about the dynamics of financial turmoils and crises, one is tempted to recall the Ana Karenina’s opening that “All happy families resemble one another, but each unhappy family is unhappy in its own way.” Indeed, the current turmoil has been “unhappy” in its own way. From its origin in the relatively small sub-prime segment of the US market for mortgage loans to its somewhat unusual dynamics of transmission (for instance, the fact that the current turmoil initially manifested itself in the difficulty for banks, mainly European, to obtain short-term liquidity in the US dollar market), a number of factors have set this episode of turmoil apart from previous experiences. Thus, during the current turmoil we have been less able to rely on standard analytical tools and conventional information sets, particularly in the area of liquidity management. To illustrate this point, let me briefly recall how our liquidity policy normally works.

Evidently the supervisor’s aim must be to ensure that the banking sector is a fortress against the storm and not an added problem that we have to face at the worst time imaginable. 1  Recently, it has been frequently said that the banking sector is in much better shape than it was before the previous crisis. This will allow it to become part of the solution. In any event, crises are, by definition, periods of transition and COVID-19, despite its specific features, will be no exception. I believe this crisis will serve as a catalyst which will speed up many of the trends that we have already seen and discussed on many occasions at our meetings. First, as regards the importance of digitalisation. Second, in respect of the need to gain in efficiency and cut costs. Also, naturally, as regards the criticality of good governance and risk control, underpinned by the best international practices which will allow institutions to react appropriately to such changing circumstances. And, above all, regarding having a sound and sustainable business model for the medium and long term. We do not know what the future holds for us, but what we do know is that the better prepared we are, the better we will fare. Before I conclude, let me apologise for not having made the most of this address to introduce a supervisory “wedge”.
C’est pour cette raison que je souhaite attirer en particulier votre attention sur les trois points suivants : - premièrement, l’Union économique et monétaire repose sur des fondations théoriques et économiques solides et profondes qui ont permis une introduction réussie de l’euro sur les marchés de capitaux ; - deuxièmement, la zone euro devra relever un certain nombre de défis si elle veut rester une zone de stabilité monétaire où la croissance est durable ; - troisièmement, le succès de l’euro contribuera largement à l’avènement d’une situation monétaire internationale plus équilibrée. I. L’UEM REPOSE SUR DES FONDATIONS SOLIDES ET PROFONDES QUI ONT PERMIS, IL Y A UN PEU PLUS D’UN MOIS, UNE INTRODUCTION REUSSIE DE L’EURO SUR LES MARCHES DE CAPITAUX Le 31 décembre 1998, les chefs d’État et de gouvernement ont adopté les taux de conversion irrévocables de l’euro vis-à-vis des monnaies des onze pays qui avaient été qualifiés pour participer à la zone euro. Cette étape historique correspond à l’avènement de l’Union économique et monétaire. Les progrès impressionnants qui ont été réalisés, en matière de convergence économique, dans les années qui ont précédé cette décision, ont contribué de façon déterminante à ce processus. Afin de donner une orientation aux marchés de capitaux, la méthode de détermination des taux de conversion irrévocables de l’euro avait été décidée à Bruxelles, le 3 mai 1998. Au total, c’est une idée tout à fait fondée qui est à l’origine de la création de l’euro; en outre, cette création constitue le couronnement d’un long processus économique et politique (A).

First, there were too many large financial businesses for which an AAA rating was, fatally, more than a description of their credit standing; it constituted their business model. Examples include Fannie and Freddie; the Landesbanks; the US monoline insurers; the SIVs; and, if they can be thought to have a business model, the ABCPs. These institutions distorted the supply of credit across the global economy. (In the case of the monoline insurers, for structured finance they were effectively in the business of providing “end-of-the-world insurance with a settlement period of T+1”.) An even wider group of private-sector AAA institutions were not required to collateralise derivatives-related counterparty-credit exposures. The effect for the system as a whole was to introduce an extraordinary vulnerability to a ratings downgrade of any of these institutions or structures. There was, in effect, a potentially systemic cliff. A second serious faultline in global capital markets – arguably the greatest – was the firm expectation of “no break the buck” in the massive global Money Market Mutual Fund industry; c. $ in the US, more or less the same size as commercial bank deposits. The failure to pay par at a major US money fund when Lehman collapsed helped trigger the unravelling of confidence across global markets.
The growth rate intensified as the year unfolded, rising to a rate of 5.8% at the start of 2005. This acceleration has been driven by a higher increase in private consumption and the renewed buoyancy of construction coupled with a pick-up in investment in equipment. Households’ expenditure has been underpinned by the recovery in their disposable income, which has benefited from higher employment growth and from a comparatively favourable contribution by general government, through the net effect of benefits and taxes. But above all it is the increase in household wealth in recent years - largely linked to the rise in real-estate asset values - and favourable financing conditions which are most underpinning household consumption and residential investment decisions. The behaviour of productive investment has, in recent years, reflected the opportunities and uncertainties of this expansionary phase, many of them related to the external environment. However, business investment progressively took a lead from the robustness of demand during 2004 and it started the current year on a clearly more expansionary path. Lax financial conditions, the healthy position achieved by those corporations with most investment potential and favourable expectations about economic developments are behind this rise. Set against the increase in domestic demand, external demand has exerted an increasingly contractionary influence. Although world trade picked up in 2004, goods exports grew less than external markets, while imports climbed at very high rates, increasing their penetration in the Spanish market.

Inflation and Monetary Policy Outlook  Now, I would like to present our inflation and output gap forecasts based on the outlook I have described so far. When forming our forecasts, we assumed that the tight monetary policy stance will be sustained for a while; and consequently, annualized loan growth rate will hover around 15 percent and the Turkish lira will display a mild appreciation trend. Accordingly, inflation is expected to be, with 70 percent probability, between 5.1 and 7.9 percent with a mid-point of 6.5 percent at the end of 2012, and between 3.3 and 6.9 percent with a mid-point of 5.1 percent at the end of 2013. We expect inflation to stabilize around 5 percent in the medium term (Chart 17). Chart 17. Inflation and Output Gap Forecasts  * Shaded region indicates the 70 percent confidence interval for the forecast. Overall, although demand and cost conditions have not changed notably since the publication of the October Report, we revised our inflation forecasts for end-2012 upwards due to higher initial point (the initial point referring to the latest inflation data before the forecast period) resulting from higher-than-expected inflation during the past three months. As elaborated on in the Report as well, cumulative increases in the exchange rate and commodity prices coupled with soaring unprocessed food prices and the developments in administered prices pushed inflation to high levels in 2011. We estimate that inflation will remain flat in the first quarter and exhibit a gradual downtrend starting from the second quarter (Chart 17).
Professor Tilakaratna’s greatest contribution to economics was his continuous upgrading of the standards of the syllabuses and examination papers in economics at the GCE (Advanced Level) Examination to be on par with international standards. New theories, trends and ideas in economics were all built into his examination structures with a time gap of only one or two years. This strategy forced students, teachers and, above all, tuition masters, to continuously update their knowledge. The failure to do so would have meant failure at the examinations. From his side, to help them, he wrote text books, appeared on the educational services of both Rupavahini and the Broadcasting  BIS Review 4/2007  1  Corporation and attended frequent public and teachers’ seminars. When the Central Bank broadened the definition of money supply and introduced the concept of high powered money, it took only less than two years for these new subjects to be a part of the examination paper. He confessed to us that he had to learn these concepts anew in order to handle them safely as examination material. He was also an administrator par excellence as the Chairman of the University Grants Commission. In this position, he was able to perform his duty without fear or favour. He had the remarkable ability of effectively managing politicians, friends and even relatives who made unreasonable demands which were against the approved rules and regulations.

Countries with cost-advantages, driven by technology and innovation, have been able to attain  6  The Consumer Finances and Socio-economic Survey Report 2003/04 – Part I, Central Bank of Sri Lanka p. 66  7  World Development Report, 2006, Table 3, pp 296-7  BIS Review 4/2007  5  specialization in sub-components of given final industrial products which are assembled in global factories. As reported by the World Bank 8 , the Ford Escort Motor Car which is finally assembled in the UK or Germany, had main components manufactured in 15 different countries. In the modern production processes, it has been observed that product development relating to personal computers takes place in USA. The components for them are manufactured in Taiwan. The final assembly takes place in Malaysia. The marketing is undertaken in Singapore. The inquiries relating to the products are handled by call centers in India. It, therefore, behooves developing countries like Sri Lanka to be a part of this ‘global factory process’ in order to raise their industrial production capacity and wealth. But the prime pre-requisite for that is the existence of a vibrant and dynamic services sector equipped with a free flow of information and capacity to impart knowledge on time. In other words, the modern industry cannot survive or sustain without services. Hence, any attempt at developing industry in isolation would drain it of a vital requirement for growth and sustenance, viz., competitive advantage.
The importance of fisheries as a generator of foreign exchange revenue has diminished in relative terms - to less than a half of the total - while the importance of other sectors has risen, such as manufacturing industry, information technology and tourism. In these developments, Iceland is among other things drawing benefits from globalisation to strengthen the foundations of the economy. Foreign direct investment regulations are liberal with the exception that such investment is not permitted in the fishing sector. Foreign direct investment is most noticeable in power intensive industry, such as the production of aluminium, which is based on Iceland’s abundance of untapped renewable energy resources. Recent changes in corporate taxation in Iceland, lowering corporate taxes to among the lowest to be found, serve to attract foreign business to Iceland and encourage Icelandic companies with international operations to favour Iceland as the base of their operations. 2  BIS Review 55/2002  Direct investment by Icelandic companies abroad has risen rapidly in recent years and in a variety of areas, such as fisheries and fish processing, pharmaceuticals, retail commerce and financial services. These developments also benefit the Icelandic economy in the long run as they integrate Iceland further into the global economy, allow Iceland to draw more easily on the experience of others and bring in dividends.

This slowdown has been reflected in a fall in equity prices – including a sharp fall in the previously hugely overblown “tech-heavy” NASDAQ index; and this in turn has contributed to a typically rapid escalation in the florid language of commentators, from slowdown, to downturn or recession, to possible slump (though I haven’t yet seen meltdown as we did in 1998), which many of the commentators appear to regard as near-synonyms. Of course it is always possible that it will come to this – no-one has a crystal ball – and it goes without saying that we are all watching what’s happening very carefully. But that is not my own view of the most likely outcome, nor that of my central bank colleagues from around the world when we met in Basel a week ago. We met in the wake of the Fed’s move to cut interest rates which was widely welcomed as timely and appropriate, demonstrating sensitivity to the possibility of a spiralling decline in financial market and business and consumer confidence. We noted, too, that in announcing its move the Fed had made a point of emphasising its expectation of continuing relatively strong productivity growth, giving it more room for manoeuvre than it would otherwise have.
This makes it indispensable for the international community to strengthen the financial capacity of its central monetary institution to assist countries in a crisis situation. This is also why the Fund has established an emergency financing mechanism to allow financial assistance to be provided more speedily, when countries facing external crises are willing to take strong corrective action. This mechanism was used effectively to expedite the recent programs for the Philippines, Thailand, and Indonesia. Even if it would be naive to believe that such programs could produce an immediate return to the status quo ante, we are confident that once these programs have produced their full effects in the next months, these economies will be in a much better position to start growing again at a strong, but more sustainable, rate. In conclusion, these are trying times in Southeast Asia. But the mechanisms are in place at the national and multilateral levels—and soon, I hope, at the regional level -- to enable your countries not just to pull through this crisis, but to emerge stronger than before. The only other pre-requisite for your success is the resolve to put current problems behind you. I see no reason why we will not see the same determination in Southeast Asia in the future as we have seen in the past. BIS Review 111/1997

Given the uncertainties, it should not surprise you that the Committee members disagree more often than not, but usually at the margin, on what should happen in any particular month to interest rates. I regard that as a strength rather than a weakness of the process. It should not surprise you either that even though we consistently aim to hit the target, we rarely achieve it precisely. As a matter of fact, I have been genuinely, and agreeably, surprised that the outcome over the past few years has been as consistently close to the target as it has been. The best we can realistically hope for is that we come close on average and over time. And to achieve that, when we identify developments which are likely to move us away from our target on one side or the other, we must be ready symmetrically to adjust our policy to bring us back on track. That is why, even though the economy as a whole continues to perform relatively well on the data, we have moved interest rates downwards this year, to reflect the emergence of the new downside risks; and it is also why we indicated, in our recent press release, that we will continue to monitor those downside risks. That is not a promise of further interest rate reductions, but it is a promise that we are prepared to move further if we have evidence that those risks are increasing.
This willingness of American workers to move themselves and their family is a cultural characteristic of our people, no doubt based in the history of the United States as a nation of immigrants. To complement its high degree of labor mobility, the United States also has in place a federal fiscal system that allows the federal government to channel large transfers from fast-growing regions to slow-growing regions. Progressive income taxation, a high elasticity of corporate tax profits to changes in income, and an integrated federal budget are the main components of this system. In contrast to the United States, Europe is characterized by a more segmented labor market and very limited integration of its national fiscal systems. Both these characteristics limit the ability not only of Europe’s private sector to shift resources in response to regional recessions, but also of Europe’s public sector to compensate for this rigidity. This lack of flexibility is widely acknowledged to be one of the root causes of the high unemployment rates that Europe has experienced during the last decade. But, we may well ask, does it necessarily follow that because of the greater rigidity of its labor markets and the lack of a federal fiscal system, Europe cannot accommodate a common currency and instead needs to rely on periodic exchange rate adjustments as surrogates for productive flexibility? I do not think so.

Were we still producing the same labour-intensive goods as before, with output concentrated in industries like agriculture (including hops), textiles, coal-mining and ship-building, we too would have seen the price of our own output fall, just as it did for hop growers a century ago. Instead we allowed output and employment to expand in those industries where we could exploit a comparative advantage. In Kent, the expanding sectors include financial services, transport (with 18 million tons of freight passing through the Channel Tunnel each year) the exploitation of life sciences, and higher education (with five universities in the county). As consumers, we have benefited from falling prices of goods made in China and elsewhere in Asia. Between 1995 and 2005, the prices of imported manufactured goods fell by a sixth and, relative to the price of domestically produced output, by no less than a third. So over the past decade we have been able to increase consumption by more than the increase in production. Openness to the world economy has resulted in a higher standard of living. The second signpost marks the rise in oil and other commodity prices. Rapid growth of production in China, India and other newly integrated economies has led to a substantial rise in the demand for oil and other raw materials. Between 1995 and 2004, net imports of oil to China rose by a factor of seven.
On the other side of the Atlantic, one of those drawing breath was the then-Governor of the Bank of Canada, Mark Carney. I am not sure what Mark went on to do next. But it was not just internationally where the regulatory reform bandwagon was rolling. In the UK, the Vickers Commission reforms created a fire-break between banks’ services to the domestic economy and their other activities. Complexity scientists would have approved. And sweeping institutional reforms were also underway in the UK, with the FSA’s prudential responsibilities merged into the Bank and a new consumer protection agency, the Financial Conduct Authority (FCA), created. The return of prudential regulation to the Bank was not, fortunately, a reversion to the pre-1997 orthodoxy. The Global Financial Crisis had laid bare the costs of separating finance and the economy, the micro and macro – a separation that had also been a feature of the Bank in the past. Crisis needed to be the catalyst for change, forging a link between the Bank’s analytical brain and its regulatory hands. And so it was, with the creation of a new policy body, the Financial Policy Committee (FPC). The FPC was charged with safeguarding systemic risk in the UK using new macro-prudential tools. An interim FPC was set up in 2011 ahead of a new statutory framework being put in place. And the interim FPC gave way to a statutory FPC in 2013 when the new Financial Services Act came into place.

Goods in consumer and producer channel 7  7 Consumer goods, producer prices (HM PI)  6 5  5  Consumer goods, import prices (IM PI)  4  6  4  Goods CPI  3  3  2  2  1  1  0  0  -1  -1  -2  -2  -3  -3  -4 jan-98 Jan 98  jan-99 Jan 99  jan-00 Jan 00  jan-01 Jan 01  jan-02 Jan 02  jan-03 Jan 03  jan-04 Jan 04  -4 jan-05 Jan 05  Note. 12-month changes in per cent. Inflation measures computed according to Statistics Sweden’s new method. Sources: Statistics Sweden and the Riksbank  5. Product price, intermediate goods and profit margin in Swedish manufacturing sector 6  20  5  18  4  16  3  14  2  12  1  10  0  8  -1  6  -2  4  -3  Intermediate goods  Product price  Profit margin level (right scale)  -4  2 0  1995  1997  1999  2001  2003  Note. Intermediate goods and product price are annual percentage changes, profit margin is the level in per cent of the value of gross output. Source: National Institute of Economic Research. BIS Review 25/2005  9  6.