samchain/econo-pairs-v1 huggingface dataset:
While this would certainly involve outlays, these would be offset by reduced defaults. Whether there is a net cost or not depends on the reduction in the default rate that would come with principal reduction and how this reduction would affect the performance of the overall housing market and the economy. Based on recent data on borrower behavior,17 my staff calculates that the taxpayer (through the effect on Fannie Mae and Freddie Mac) would be better off with earned principal reduction under a base case of roughly flat house prices and persistent weakness in the jobs market. Under a scenario of modest house price increases, the combination of fewer defaults and shared appreciation also produces a net benefit. This result occurs before taking into account the positive externalities of nudging house prices onto a stronger path, which would reduce the magnitude of losses on loans that do default. On an expected value basis, such a program appears still more compelling, since  17  Lender Processing Services data. BIS central bankers’ speeches  9  Fannie Mae and Freddie Mac are currently exposed to the downside risk of further declines in home prices. Of course, just focusing on the impact on Fannie Mae and Freddie Mac is much too narrow even from a taxpayer perspective. If you believe as I do that improving the outlook for housing would materially strengthen the over economy, one must also include the fiscal benefits generated by stronger economic growth.

BIS Review 76/2009  3  their decisions to spend on durable goods, awaiting uncertainty to clear up. Households, however, would continue to spend on non-durables. Actually, the share of goods like foodstuff in the total consumption basket would increase. Durable and investment goods, meanwhile, are the ones subject to this wait and see strategy and, by their own nature, their purchase can be postponed. Thus, there are two possible equilibria: B and C, both with output below the original level A. Furthermore, we can think that in case C the loss of confidence is very big, which magnifies the fall in demand that may result from a cyclical adjustment. In such a case pessimism dominates. Everyone thinks that economic activity will fall due to increased uncertainty and that is exactly what happens, so pessimism is justified. This point is more general: facing multiple equilibria, how do private expectations coordinate for the economy to converge to one or the other? Evidently there is no natural mechanism, so failed coordination can easily lead the economy to settle in the worst equilibrium. The exercise I have presented is pretty simple and it surely overlooks many relevant aspects, especially the dynamics that might allow us to analyze the loss of confidence. It is still helpful because it explains why the increase in uncertainty triggered by the deterioration in output and the financial crisis deepens the fall in output, whose effects can be substantial.
And growth may even have contributed to the incidence of global conflicts and wars having fallen to their lowest levels, perhaps in human history. 3  That makes growth a gift, one necessary (if not necessarily sufficient) to deliver secular improvements in living standards. And it is what makes a good understanding of the determinants and drivers of growth so crucial for societal progress. By understanding the forces driving growth, past, present and future, we can begin to devise and implement economic policies that support improvements in society. I thought I understood the story of economic growth, its drivers and determinants. But recently I have changed my mind. I have a new story of growth. I think this story carries important implications for understanding the future challenges of technology and for devising the future policies and institutions necessary to meet them. That might require, among other things, a repurposing of successful institutions like this one, turning them from universities into multiversities. The Story of Growth  The story of economic growth often begins with a chart like this one (Chart 1). This plots the path of global economic growth, measured by Gross Domestic Product (GDP) per head, over the past 1000 years. And what a story it tells. It is a tale of two halves – or, more accurately, a tale of three-quarters and a quarter. 4  For the first three-quarters of the past 1000 years, the global economy stood still in growth terms.

To be successful, these spokes would need to be repositories of knowledge and expertise on technologies and their application to companies. And, ideally, these repositories would have regional and sectoral reach to enable them to touch the long tail. The UK’s existing university network would be one institutional solution to this spoke problem. They have regional and sectoral reach. They also have embodied expertise and knowledge. By working in partnership with local businesses, they could serve as repositories of expertise on good company practices – in management, organisation, logistics, robotics, AI and the like. A new set of business parks attached to these universities could serve, not so much as innovation incubators for new companies, but as diffusion clinics for existing ones. This idea goes with the grain of the earlier proposal; it would broaden the scope and purpose of universities. In future, these would develop a broader set of capitals – beyond human capital (in people) to include physical and intellectual capital (in firms). And they would do so throughout the lifecycle of companies, not just in their early years. As it happens, this would also be consistent with Newman’s original conception of universities as diffusion-engines, every bit as much as innovation-engines. In Germany, a network of applied research institutes, run jointly by universities and industry, has been in place since 1949. The Fraunhofer institutes now total 72. 75  Their extensive project work means they can  apply technological solutions quickly to a wide variety of firms.
The Second Financial Sector Master Plan and the First Capital Market Master Plan have already been announced. The Government is working on tax reforms and a few infrastructure projects have been decided upon, some of which already launched. Although at an early stage, and it may take some time before these tasks of longer-term nature will start to bear fruits, I believe that Thailand is set on the right course of economic progress. Indeed, the private sector continues to see favorable investment opportunities in Thailand. Despite current uncertainties, the expected Business Sentiment Index (BSI) has improved in recent months, boding well for further investment going forward. Our discussions with several domestic and foreign chambers of commerce also confirmed similar positive sentiment and confidence in Thailand’s strength by long-term investors. This positive opinion has also been evidenced by a stable level of BOI investment privilege applications similar to last year’s. For our part, the Bank of Thailand has recently amended our regulations (effective June 11, 2010) to allow multinational corporations to set up treasury-center operations to facilitate more efficient financing flows in Thai baht and foreign currencies. To conclude my remark today, I would like to reiterate that, with resilient economic fundamentals, the prospect of the Thai economy remains robust in the medium term. I believe that going forward gradual policy normalization of fiscal and monetary policies will enhance our economic resiliency and provide more policy space for the future.

First, in light of the changing global financial landscape and regulatory environment, continuing to strengthen the financial system is an important agenda for both the authorities and the financial sector. The financial system must remain focused on risk management, as well as be competitive and responsive to customers’ demand for access, and more variety of products and services. Such a financial system is necessary to efficiently support and grow with the economy. Second, given the changing structure of the Thai population, fiscal reform is vital to address the ageing society. At the moment, only one-sixth of the labor force is in the tax base. Tax revenue thus accounts for only 16 percent of GDP, half of that of developed countries. So improving the tax restructure is one of the priorities to be addressed to enhance fiscal sustainability as well as overall social welfare of the country. Third, we need to continue to elevate Thailand’s competitiveness by enhancing our productivity, both in industries and agriculture. Productivity gain in agriculture, which accounts for the majority of population, in particular, will also help increase farm income and reduce poverty. Improvement in productivity, of course, involves a whole range of issues from more effective training, education, investment in research and development, to infrastructure investment – all of which require long-term commitment of both the public and private sectors. Ladies and Gentlemen, I am pleased to say that these medium-term priorities are well-recognized by both the authorities and the private sector.
In the UK the share of mortgage lending in Scotland has been essentially flat through the crisis period (chart 9), suggesting that there has been little if any divergence in credit conditions between the UK and Scotland. 21  This downward spiral of confidence can be most acute in countries with large banking sectors relative to their economies – Iceland, Ireland and Cyprus all had banking sectors exceeding 600% of GDP in 2007 (table 4). In the extreme, doubts about the sustainability of a nation’s membership of the currency union can only be relieved by massive external support. 22  In theory these could be pre-funded. For small countries with large, concentrated banking systems, pre-funded schemes are unlikely to be realistic in the short-term. Protected Scottish retail bank deposits are over 100% of GDP, compared to around 50% for the rest of the UK. New European rules mandate deposit guarantee funds to be built up only slowly over a decade and even then only to less than one per cent of insured deposits. 6  BIS central bankers’ speeches  Fiscal arrangements While banking union requires common fiscal backing, there are two broader justifications for shared fiscal arrangements within a currency area.

83, Issue 1, Apr, pp 141–146. Asdrubali, P., B. Sorensen and O. Yosha (1996), “Channels of Interstate Risk Sharing: United States 1963-1990”, Quarterly Journal of Economics, CXI, Nov: pp 1081–1110. Barroso, J., M. Draghi, J-C. Juncker and H. Van Rompuy (2012), “Towards a genuine economic and monetary union”, available at http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/ec/134069.pdf. Bean, C. (1992), “Economic and Monetary Union in Europe”, The Journal of Economic Perspectives, Vol. 6, No. 4 (Autumn), pp 31–52. Beetsma, R. and H. Uhlig (1999), “An Analysis of the Stability and Growth Pact”, The Economic Journal, Vol. 109, No. 458 (Oct.), pp 546–571. Blanchard, O. and L. Katz (1992), “Regional Evolutions”, Brookings Papers on Economic Activity, 1: 1–77. Buiter, W. (2000), “Optimal currency areas: why does the exchange rate regime matter? (with an application to UK membership in EMU)”. CEP Discussion Paper 462. Carney, M. (2013), “Canada Works”, remarks at Board of Trade of Metropolitan Montreal, available at http://www.bankofcanada.ca/wp-content/uploads/2013/05/remarks-210513.pdf. Chamberlin, G., Dhami, P., Farrington, S., Helgadottir, T. and Robins, J. (2012), “Cyclically adjusting the public finances”, Office for Budget Responsibility Working Paper No. 3, http://budgetresponsibility.org.uk/pubs/Working-paper-No3.pdf. Chari, V., and P. Kehoe (2007), “On the need for fiscal constraints in a monetary union”, Journal of Monetary Economics, Vol. 54, Issue 8, Nov. 2007, pp. 2399–2408 Commission of the European Communities (1990), “One market, one money: an evaluation of the potential benefits and costs of forming an economic and monetary union”, European Economy, No. 44, Oct. Crucini, M. (1999), “On International and National Dimensions of Risk Sharing”, Review of Economics and Statistics, LXXXI, 1, Feb., pp.
A second group would be those supervisory agencies, central banks, multilateral financial institutions, and other public authorities around the world who shared with us the perspectives and needs of banking systems that are based in many different markets, economies, and legal systems. Thanks to discussions with these colleagues, such as through joint working groups like the Core Principles Liaison Group and through regional consultations and meetings, the Committee was better able to ensure that the new framework would be relevant to many different kinds of banks and economies that are in various stages of growth and development. The cooperation of so many public authorities worldwide has helped to make Basel II a truly global product. The Committee will continue to seek opportunities to deepen its relationships, and its opportunities for discussion, with other supervisors and central banks in the months and years ahead. Of course, this work would have been impossible without the sponsorship of the Bank for International Settlements. I would like to offer my sincere thanks to Malcolm Knight, the General Manager of the BIS, for his institution’s support of our work on Basel II. The BIS has been a staunch ally and advocate for our work over the entire thirty-year history of the Committee. With regard to Basel II itself, the BIS is fostering a greater understanding of the new framework among central bankers and supervisors  BIS Review 38/2004  1  worldwide through programs organised by its Financial Stability Institute, the “FSI”.

Jaime Caruana: Announcement of Basel II Opening remarks of Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the press conference announcing the publication of Basel II, Bank for International Settlements, Basel, 26 June 2004. *  *  *  I would like to thank President Trichet for his kind words, which I will certainly share with my colleagues. On behalf of the Basel Committee on Banking Supervision, I am honoured to join him in announcing the publication of the revised framework for bank capital adequacy, a document that we have officially entitled, the “International Convergence of Capital Measurement and Capital Standards: a Revised Framework.” I will not go into details about the document in my opening remarks, although of course I will be delighted to answer questions afterwards. What I would like to say is that the new framework represents a significant step towards achieving a more comprehensive and risk sensitive supervisory approach. It also represents an unparalleled opportunity for banks to improve their capital strategies and risk management systems. And finally, it provides supervisors with an opportunity to improve their ability to identify banking risks and to enhance the dialogue with the industry and among banking supervisors. This new approach can be expected to play a significant role in reinforcing the soundness of individual banks and thereby enhancing financial stability. Our objective is also to ensure a consistent application across jurisdictions.
A comparison with similar investments – for example, with the average yield on Swiss investment trusts and investment funds for foreign currency bonds – shows that this is a remarkable result. Gold holdings (Sfr 21 billion) and Swiss franc assets (Sfr 5 billion in securities, Sfr 16 billion in repos) also contribute to the earnings from monetary assets. The overall yield is largely determined by gold price and exchange rate fluctuations, while interest rate and credit risks play a lesser role. In the past year, overall aggregate income on monetary assets amounted to approximately 4.5%. Other than in earlier years, the price of gold contributed to a positive yield. Still, the gold price is subject to strong fluctuations and its development is difficult to foresee. Moreover, as in the past, unfavourable currency movements are to be expected. These influences were clearly at work during the past year. The appreciation of the Swiss franc has had a noticeable adverse effect on yields. In the first quarter, the soaring gold price led to a yield of approximately 3% on monetary assets. In the second quarter, considerable losses resulted on the currencies; these losses have already cancelled out a part of the positive overall yield from the first quarter. This illustrates the strong yield fluctuations to which our assets are exposed. With the current composition of monetary assets, average returns of close to 3% per annum are to be expected in the long term, however accompanied by high annual fluctuations.

Among the currencies (graph 1), the US dollar and the euro predominate with shares of 42% and 46% respectively. The maturities of the investments extend over the entire interest rate curve, with the average maturity being around five years. In the debtor categories, government paper predominates, accounting for a share of more than 50%. The rest comprises claims against international organisations and banks or bank-like borrowers with an above-average rating. Aside from these traditional bonds, US mortgage-backed securities were introduced in 2000, a new investment category which represents an ideal addition to the portfolio. In the context of the primary requirements specific to a central bank – extremely high liquidity, investment focus on the major currencies US dollar and euro, a mainly passive investment style – risk/return considerations are of prime concern. The goal is to achieve the highest possible return by means of all available concepts and techniques of modern asset management with adequate risk control. The investment strategy is developed by inhouse investment specialists. It is mostly implemented internally by a team of eight portfolio managers. We resort to external asset managers for the investment of approximately Sfr 4 billion (global bonds and mortgage-backed securities). Our entire investment activity is systematically monitored by risk specialists. In 2001, a yield of 5.2% was achieved on foreign exchange reserves. The average yield in the past four years was 6.3%.
Svein Gjedrem: The economic outlook for Norway Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), for Norges Bank’s regional network, Region East, 19 November 2008. Please note that the text below may differ slightly from the actual presentation. The speech is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 29 October and Monetary Policy Report 3/08. *  *  *  Financial market imbalances The first signs of an emerging crisis in financial markets came into evidence in early 2007. The crisis intensified in August last year and entered a new phase in March this year when the US authorities had to bail out the investment bank Bear Stearns. What began as isolated losses in a small segment of the US housing market gradually had substantial spillover effects on the global financial system. The crisis took a new and dramatic turn when Lehman Brothers, the fourth largest US bank, filed for bankruptcy on 15 September this year. The failure contributed to a weakening of confidence between financial market participants, and many financial markets abroad, but also in Norway, almost stopped functioning. Confidence was further eroded when the crisis spread to US commercial and savings banks. Among other things, bondholders suffered losses after the largest US savings bank – Washington Mutual – was split up and partially acquired by JPMorgan Chase in the wake of heavy mortgage losses.

More generally, the start-up of the SSM has necessitated major changes in the internal structure of both the ECB and the national authorities. In the case of the ECB, four new directorates general for microprudential supervision have been created, and the staff has been increased to assign to this new function more than 1,000 employees. At the same time, the national authorities have made a great effort to adapt to this new framework. In our case at the Banco de España, the Directorate General Banking Supervision was restructured and its departments reorganised to create a structure mirroring that adopted by the ECB, so as to provide for smoother interaction between both institutions. However, the most significant change has been the creation of the joint supervisory teams, made up of employees from the ECB and from the national authorities. These teams are the basis for the day-to-day supervision of each significant bank. They are coordinated by an ECB member of staff, who is assisted by one or several sub-coordinators from the national authorities, on whom the coordinator draws support for the organisation of the work and the management of the local teams. This admittedly novel design is in response to the need to combine a centralised management framework while harnessing the knowledge and proximity to banks that national supervisors provide. It should be stressed here that more than two-thirds of the members of these teams are from the national supervisors. The staff from these authorities are also generally entrusted with leading on-site inspections within their jurisdiction.