samchain/econo-pairs-v1 huggingface dataset:
The 21st century financial marketplace is too dynamic, too complex, and supervisors must work within the political realities of our respective nations. Instead, what I envision is a flexible, multi-faceted strategy that emphasizes prudence and prevention, compatibility with the market, and that fosters a close and cooperative partnership between the private and public sector. With these priorities in mind, I believe there are three essential elements of a modern supervision framework: •  effective bank-level management;  •  market discipline; and  •  official supervision. Let me discuss each of these in turn, noting that each should reinforce the others to effectively promote a safe and sound financial system. Effective bank-level management Primary responsibility for the safe and sound operation of a banking institution lies with its board of directors and senior management. The purpose of the board of directors is to oversee the development  3  BIS Review 27/2000  of the overall strategy of the organization and the decisions made by senior management in pursuit of those strategic objectives. The role of senior management, in turn, is to oversee day-to-day decisions made within the organization and to ensure their consistency with long-term objectives and policies as determined by the board. There are several aspects to effective bank-level management.

See V. Ramey (2019), «Ten Years After the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?», Journal of Economic Perspectives, vol. 33(2), pp. 89-114, for a review of the existing evidence. Nevertheless, the estimates are subject to a particularly high degree of uncertainty. Thus, for instance, A. Abiad et al. (2016), The macroeconomic effects of public investment: Evidence from advanced economies, Journal of Macroeconomics 50: 224240, estimates a public investment multiplier of 1.4 after four years for a group of advanced economies. Further, the estimated value could nearly double if the investment is made in highly efficient projects or during periods of low economic growth. Conversely, other studies find that the public investment multiplier cannot, in the short term, exceed a value of 0.6, especially in cases of short-run fiscal stimuli (see M. Alloza and C. Sanz (2020), Jobs Multipliers: Evidence from a Large Fiscal Stimulus in Spain, forthcoming in the Scandinavian Journal of Economics). 9 This multiplier effect largely depends on the degree of complementarity between public and private investment. See Box 5.2 of the Annual Report 2019 of the Banco de España for a detailed analysis of the channels through which public investment supports medium and long-term growth. One of the channels accounting for the high public investment multiplier, even in the short term, rests on the idea that, as it is more powerful in the medium and long term, rational agents consider it in their decisions.
There could be economic policy mistakes; for instance, if the Central Bank’s real rate declines more than is justified by fundamentals, or if fiscal policy provides a similar stimulus. Were this to happen, the output gap would remain open longer and inflation would be higher. The correction, when it came, would be steeper, and the adverse impact on GDP growth would be more pronounced. The markets could undershoot or overshoot, derailing the economy at least temporarily. External shocks could strike as a result of trade disputes or further increases in oil prices, and indeed, the alternative scenario in the most recent Monetary Bulletin includes just such factors. Wage negotiations could result in broad-based pay rises far larger than the already sizeable ones provided for in the Bank’s forecast. The inflation outlook would then deteriorate, which would call for interest rate hikes. GDP growth would weaken as a result, perhaps even ending in a contraction. 2  But there is always some uncertainty in both directions, and naturally, we could end up on the receiving end of positive shocks that improve the situation. But under these conditions, it is likely that the risk to GDP growth is tilted to the downside. In this connection, it is important to remember that we have seldom, if ever, been as well prepared for adverse shocks as we are now. Our external assets exceed our external liabilities. Our international reserves are close to an all-time high and are almost entirely financed domestically.

A turning point Már Gudmundsson, Governor of the Central Bank of Iceland Chamber of Commerce Monetary Policy Meeting, Hilton Reykjavík Nordica, 8 November 2018  Mr. Chairman, honoured guests, Once again, we gather here at the Iceland Chamber of Commerce’s monetary policy meeting, which for years has been held after the Central Bank has published its autumn forecast and, in latter years, the Monetary Policy Committee’s interest rate decision. I would like to thank the Chamber of Commerce for continuing this tradition and for giving me the opportunity to talk to you about monetary policy. The economy is now at a turning point, with a strong upswing and below-target inflation giving way to weaker growth and increased inflationary pressures. Underpinning the progress of the past few years were, on the one hand, a vast improvement in external conditions, which could be seen most clearly in improved terms of trade and a surge in the number of tourists visiting the country, on the one hand, and on the other, in economic policy that proved successful in historical context, keeping inflation under control and ensuring that the exchange rate of the króna was a shock absorber rather than a shock amplifier, as has sometimes occurred in the past. Monetary policy was successful in bringing inflation — and thereafter, inflation expectations — back to the target after 2012, without sacrifice costs in terms of employment.
xiii  Chart 9: Wealth inequality high but broadly flat since mid-1990s … Wealth  Chart 10:… yet it has sharply deteriorated across generations, largely driven by housing wealth  Gini coefficient  Income  Net real financial and housing wealth £ '000)  1  350  1995 2006-08  0.8  300  2012-14 250  0.6  200 150  0.4  100 0.2 50 0  0 1995  2000  2005  25-34  2006 - 2008 - 2010 - 2012 2008 2010 2012 2014  Source: 1995-2005 is from the British Household Panel Survey (BHPS, Institute for Social and Economic Research); thereafter from the Wealth and Asset Survey (WAS, ONS). The BHPS wealth data exclude physical and pension wealth. Income Gini coefficient measures consistent with Chart 7. 35-44  45-54  55-64  65+  Age Source: 1995 is from the British Household Panel Survey (Institute for Social and Economic Research); thereafter the Wealth and Asset Survey (ONS). The BHPS measure is adjusted for the average wedge between the BHPS and WAS surveys to correspond to the WAS using overlapping periods. III. The Way Forward Given these developments, the challenge is how to manage and moderate the forces of innovation and integration which breed aggregate prosperity for the economy as a whole but which also foster isolation and detachment for substantial proportions of the population. In the balance of my remarks, I will focus on three priorities for doing so.

Monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target. Since early November, the sterling exchange rate is up around 6% and market interest rates in three years’ time are up around 30 basis points. Long-term interest rates are back to their pre-referendum levels. Markets also responded strongly to the US election result, with both breakeven inflation and real yields rising. Alongside those market developments, UK indicators suggest continued solid growth, and the pace of fiscal consolidation is now expected to be slower. The MPC will assess these and other developments at its meeting next week as it plots the monetary course ahead. Whatever economic developments and prospects, the MPC will always set monetary policy to maintain price stability and promote the good of the people of the United Kingdom. As it did when it was the only game in town after the global financial crisis; and as it will going forward, in better balance with fiscal and structural policies. Monetary policy will continue its good work as the UK economy adjusts to new opportunities with Europe and the rest of the world. In the end, monetary policy isn’t a spectre but a friendly ghost. 18  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  18  i  Monetarism is the view that the dynamics of money have a temporary influence on demand and, via the celebrated “quantity equation”, a major influence of prices.
Up to autumn 2008, it appeared that capacity utilisation in the Norwegian economy would most likely decline to a normal level, inflation would stabilise around 2½ per cent and the key rate ahead could be held at what we consider to be a normal level – between 5 and 6 per cent. But the outlook was regarded as uncertain. Commodity prices rose and pushed up inflation in many countries. At the same time, wage growth in Norway had become high and productivity growth was slowing. On the other hand, the financial turbulence, if it gained momentum, could have a severe impact on the global economy and our exports. In September 2008, the turbulence in financial markets erupted into a full-blown global crisis. The failure of Lehman Brothers on 15 September last year triggered a confidence crisis in financial markets. The turnaround hit hard, with synchronised effects on virtually all financial and goods and services markets, not only in the US but also in Europe, Asia, Latin America and Oceania. The crisis abroad rapidly fed through to the Norwegian economy. Our banks and the flow of credit and funds are tightly interwoven with foreign markets. Banks’ foreign funding became expensive and almost dried up. In response, banks increased interest rates on loans to businesses and households, and they tightened the lending tap. As autumn progressed, an increasing number of business sector segments were feeling the impact of contraction. In August 2008, manufacturing enterprises in our regional network reported that they expected growth to remain high.

While there is still a high degree of uncertainty, recent economic data confirm the positive underlying momentum of economic activity in the euro area. The sovereign crisis in Europe While economic prospects have improved, we still face challenges. The most important one is certainly “the sovereign crisis” in the euro area. Broadly speaking, opinions and views  BIS central bankers’ speeches  1  expressed on this by people outside the euro area can be divided into three categories: hostility, skepticism and support. First, outright hostility: gloomy predictions about the imminent demise of the euro came predominantly from deeply anti-European commentators. While these views, like all opinions, should be treated with respect, there is no point in trying to refute arguments that are largely irrational and mainly reflect wishful thinking. Second, skepticism: it comes mainly, but not only, from academic circles. Prestigious and well-respected economists have been pointing to the fact that the euro is not an optimum currency area and that some form of fiscal federalism is missing to compensate for insufficient labour mobility. Let me simply recall a few facts. The benefits of the euro cannot be assessed exclusively through the lens of the optimum currency area theory. The euro has brought to more than 300 million European citizens unprecedented stability: price stability, of course, with inflation averaging 1.97% over the past decade, but also financial stability. It is always useful to think of counterfactual (?) when assessing a situation.
First, each bank holding company will be asked to evaluate the credit losses that are likely to occur under an adverse economic environment. These losses would then be evaluated relative to the bank holding company’s ability to absorb those losses. Second, if this analysis indicated that the banking organization was likely to fall short of wellcapitalized in the stress environment, the bank holding company would be able to obtain additional capital via mandatory convertible preferred stock purchased by the Treasury. Third, if the stress scenario were actually to occur, generating losses that depleted common equity capital below what is deemed adequate, then the mandatory convertible preferred would be available to be converted into common equity. The government’s mandatory convertible preferred investment is, in some sense, contingent capital that is available to be converted into common equity only as needed. I believe this program is very important if we are to break the adverse dynamic that I outlined early. As I mentioned earlier, many bank holding companies don’t have an incentive to raise sufficient capital to ensure that they can handle a very bad outcome. That is because such capital-raising would severely dilute existing shareholders. This implies that, left to their own devices, banks might end up being undercapitalized in a stress environment. The risk of this outcome makes these banks (and their counterparties) very cautious in terms of their behavior.

The MAS staff responsible for the Gallery have put a lot of thought into its design and content. But the Gallery will keep evolving, and we will want it to stay relevant to Singaporeans young and old. It is significant too that we are opening the Gallery in 2016, when we commemorate the 45th anniversary of the MAS. If we think about what we have achieved in these 45 years, what’s most precious is credibility. Credibility is the most precious asset that a central bank and a financial regulator can have. The MAS’ credibility was founded in its early years. I want to mention the leaders and staff who were involved in putting in placed these foundations of today’s credibility. Mr Hon Sui Sen in particular, our first Chairman (1971-1980), Mr Michael Wong Pak-Shong, who was the Managing Director, and the staff at that time, including Mr Ng Kok Song, Mrs Ong-Ang Ai Boon, Mrs Elizabeth Sam. Together they built an organisation, bringing together no fewer than nine different offices and functions in Government at the time, melding them together in one organisation. They also set the foundations for an international financial centre. Singapore was not a serious financial centre until then. Mr Hon Sui Sen and his team built the foundation for a financial centre that went beyond Singapore.
In addition, these prices are significantly more volatile in Spain than in the euro area as a whole. 5  See M. Pacce, A. del Río and I. Sánchez (2022). “The recent performance of underlying inflation in the euro area and in Spain”, Analytical Articles, Economic Bulletin 3/2022, Banco de España. 6  This difference is attributable not only to the larger increase in these prices in Spain, but also to this component's greater weight in Spain’s consumption basket. By contrast, the contribution of transport-related items was slightly smaller than that observed in the euro area, due to both the lower inflation observed in Spain and their smaller weight in the aggregate. 2  8. Compensation per employee grew by 4.8% and 3.4% in the euro area and Spain, respectively, in 2022 Q2, figures markedly lower than actual inflation.7 As a result, households have lost considerable purchasing power. Profit margins are holding relatively stable at aggregate level. In Q2 the ratio of the GDP deflator to unit labour costs was similar to pre-pandemic levels both in Spain and the euro area. Figures from the Banco de España's Central Balance Sheet Data Office also point to a slight reduction in firms’ profit margin (defined as the ratio of the gross operating profit to sales) between 2021 H1 and 2022 H1.8 However, this change belies very high heterogeneity across sectors and firms. 9.

Third, even in the case where the central bank knew that financial imbalances were building up, the size of the interest rate rise needed to reduce the imbalances might be so large that it could lead to a severe economic downturn. In Norway, the central bank is one of the institutions with responsibility for analysing and monitoring the financial system. As a flexible inflation-targeting country, we have chosen to incorporate financial stability considerations into the monetary policy decision-making process, partly because asset prices and debt are important for inflation and output, and partly because it provides focus on potential risks to financial stability. It may also be useful to cross-check by assessing our interest rate policy in the light of simple rules like the Taylor rule, which are less dependent on a specific analytical framework for the Norwegian economy. On the other hand, the rules will not capture all details in the projections, but can provide an indication of whether the current interest rate level is reasonably adapted to the economic situation. As we now publish our own interest rate forecast, market interest rate expectations are one cross check of particular interest. If expectations deviate from our projection, it may indicate that the market has a different view of future economic developments. If we are to influence interest rates in the money market, we must be able to explain such deviations. Of course, it might also be the case that the market’s view is the most accurate.
Firstly, as Professor Dasgupta made clear in his Review, nature and many of the ecosystem services it provides are often “mobile, silent and invisible”, and therefore incredibly complex to fully appreciate. We may understand the price of wood and some of the services provided by forests (such as climate regulation or flood prevention) but we will never understand all the interactions that exist within nature. Secondly, different social groups and individuals relate differently to nature, as the IPBES made clear in its recent report on the diverse ways of valuing nature.xxv For instance, a poor fisherman or an indigenous person may not be able to put a high price tag on the fish he catches or the forest she lives in, yet their entire livelihoods directly depend on the existence of specific ecosystems. In other words, nature does not have a fundamental value but rather means 6  Page 7 sur 12 different things to different people. Recognizing this diversity of values, at the global level, is key to enable its protection. We cannot say how much a seaside or a bird song represents. Thirdly, even if we could perfectly account for the points above (complexity and multiplicity of values), nature remains only very partially substitutable. This means that we risk underestimating the costs of losing ecosystem services. For instance, Professor Dasgupta provocatively but insightfully reminds us that if we only look at how much pollination contributes to agricultural outputs in highincome countries, we may end up with a very small percentage of GDP.

For instance: -  How could we design scenarios that account for what IPBES experts are telling us, for instance with regards to the different values of nature, the rights of indigenous people and the need to think comprehensively about economic, social and environmental inequalities? -  How much can the global economy grow while accounting for all planetary boundaries? And how to distribute this “remaining growth  8  Page 9 sur 12 potential” between rich and developing countries, as a fair transition is key? -  What could be the impacts of lower growth rates or potential no growth on global value chains, on employment, on different economic sectors that could win or lose from the transition? -  Which assumptions do we make about demographic trends? I actually greatly appreciated that in his review Professor Dasgupta mentioned demography. I am aware that this is a delicate issue but it has several ecological and macroeconomic implications and we should be able to assess them. -  How should we tackle climate change and biodiversity, taking into account the complexity of each of both issues but also their interaction? If you think that this is too political for central bankers, let me strongly oppose this view: what would be too political is to deny all the evidence gathered by natural and social scientists for the past decades. Just one year ago, before the war, it would have been unlikely to think about potential energy constraints linked with a hybrid war.
The first is that price formation for rental properties in relation to tenant-owned properties is distorted, which means that the stock of tenant-owned apartments may come to comprise an overly large part of the total apartment stock. This could be negative for growth, as it could mean that, for instance, young people and other groups with a shortage of capital may experience difficulty in entering the housing market and moving to where the jobs are. Prices of apartment blocks are largely governed by prices for tenant-owned apartments, as apartment blocks are currently sold most often in connection with a changeover from rental property to tenant-owner associations. This means that as long as the utility value principles apply for apartment rents and prices for tenant-owned apartments remain high, the difference between the development in rents and prices will remain. As the utility value system limits the income a rental property can generate, the market value of rental property is also limited, and both the owner of the rental property and the future tenant owners profit if the property is transferred at a price somewhere between the market value for rental properties and the market value for tenantowner apartments. Despite the fact that prices for tenant-owned apartments have fallen slightly, the difference between the price of apartment blocks sold to tenant-owner associations and the price of rental properties indicated by rent levels.

I want to say a little about the tragic events of September 11th, which have further underlined the complex nature of the world we live in. Second, I would like to look at some of the ways in which formal models of market and credit risk of the type you will be studying here have already influenced the design of our regulatory regimes. Much has been achieved here, but much also remains to be done, and the current state of the art by no means captures every type of risk run by financial firms. So, third, I want to talk about some other safeguards which will continue to be necessary to improve the chances of maintaining financial stability. The Bank of England's role in financial stability The maintenance of stability in the overall financial system is one of the Bank of England's three core tasks - the other two being responsibility for monetary stability, and promotion of the efficiency and effectiveness of the UK financial system. That concern for system-wide financial stability does not reflect a paternalistic belief that central banks know better than the markets - indeed market disciplines have a very important role to play in maintaining stability. Rather, it derives from the fact that some types of problem which initially affect only individual financial institutions may subsequently threaten the stability of the system as a whole.