samchain/econo-pairs-v1 huggingface dataset:
Our aim is that by the end of 2016 we will have agreed a blueprint for high-value sterling settlement in the years ahead, with technological development of that blueprint beginning in 2017. To reach that deadline, there is a great deal to do – and we cannot do it on our own. In the first part of 2016 we will be seeking input from a wide range of stakeholders, both in the industry and outside it, to help define the questions and ensure we have identified the right options. We will be looking overseas to learn what we can from similar exercises conducted in other jurisdictions. Later in the year we expect to consult formally and in public on a focussed set of alternative ways forward. Throughout that process, we will need your help and guidance – to ensure we understand how the future payments landscape is likely to develop, to identify the needs of market participants, and to provide practical guidance and assistance. At a time when firms face many competing initiatives, we understand the importance of minimising uncertainty, and providing rigorous costings for what we propose. Throughout the year and beyond, we will work closely with the industry, our supervisory colleagues at the Bank of England, the Payment Systems Regulator and its Payments Strategy Forum, HM Treasury and the Financial Conduct Authority to develop a blueprint with the broadest possible buy-in.

I will start with the financial markets and international developments, before turning to economic developments and monetary policy in Sweden, with particular attention paid to the development of prices and wages. The functioning of the financial markets continues to improve, but they have not recovered completely The functioning of the financial markets is continuing to improve, both in Sweden and abroad. One sign of this is that various risk premia in the money and credit markets continued to decrease during the second half of 2009. The levels of a number of risk premia now seem to have stabilised within a historically normal interval. Possibilities for various market participants to acquire funding at longer durations through the securities market have improved. Moreover, the Riksbank’s risk survey shows that access to funding without government support has increased. The developments on the financial markets can be illustrated by the so-called TED spread, the difference between the three-month interbank rate and treasury bill rates (Figure 1). However, despite this, the situation has still not completely normalised. There are still markets that have not recovered. There also exists some uncertainty regarding the extent of as-yet unrealised loan losses, particularly in European banks, leading to negative consequences for confidence among financial market agents. Furthermore, it must also be expected that bank lending in the United States and a number of other countries will be restrained for some time to come.
On that assumption, around two-thirds of the net job losses from the Covid crisis have already occurred, with a further 500,000 losses expected in the remainder of the year. That unemployment projection, while necessarily very uncertain, flowed from an assumption that UK output would be around 7% below pre-Covid levels by year-end. With an Okun coefficient of around 0.6, that translated into a rise of unemployment of 3-3.5 percentage points. In the August projections, this took unemployment from its pre-Covid level of 4% to around 7-7.5% at its year-end peak. 11  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  11  Since then, there have been three significant pieces of news about the jobs outlook. First, output has continued to recover faster than expected. By the end of Q3, output is now expected to be only around 3-4% below its pre-Covid level. Other things equal, this lowers risks to the MPC’s unemployment projections. Second, acting in the opposite direction, there are downside risks to this output projection as we move into the fourth quarter due to the new lockdown measures and any future measures. The third piece of significant news is the announcement of the Government’s new JSS last week, which provides wage subsidies to workers returning on reduced hours for a six month period. With details still to be finalised, it is too early to reach quantitative conclusions on the impact of the JSS.

By the end of the month, it had supported 100 million meals across the UK. The scheme also provided an interesting test-bed for answering the question: what price do people put on overcoming their caution about visiting a restaurant? At £ the answer was strikingly low. The economic news has not all been positive. Job losses have continued to mount (though the Bank revised down its estimate of job losses by around 720,000 between May and August). And the recovery in consumer spending has not been matched among businesses. Business surveys suggest investment is still 20-30% below its pre-Covid level and online job vacancies are around 45% lower. For the worst-affected sectors, such as retail, hospitality and culture, the situation is weaker-still. Where Next for the Economy? The key question, at this juncture, is what happens next? Will the positive momentum of the past few months continue or was this a false dawn? Will the resilience of the consumer, or the reticence of companies, win out? Is the economic glass nine-tenths full or one tenth empty? Such is the uncertainty, it would be imprudent to make confident predictions about the shape of the recovery from here - which is one reason why, contrary to some commentary, I have not done so. Recovering the final few percentage points of lost output was always certain to be the hardest. Adding to that difficulty, storm clouds have recently begun re-gathering over the recovery.
Our focus should now move to a consistent and rigorous implementation of the Basel III framework across the globe. Concluding remarks Ladies and Gentlemen, I have discussed the challenges Switzerland faces as a financial centre. While I consider these challenges to be high hurdles, they are not insurmountable. The Swiss financial industry has constantly adapted throughout its history; it will continue to adapt to the current challenges and continue to be successful. What can the SNB contribute to the success of the financial industry? I am convinced that an independent, stability-driven central bank with a clear mandate, willing and able to act forcefully if appropriate, is a necessary condition for a competitive and vibrant financial centre. However, this condition is far from being sufficient. In that spirit, allow me now to throw the ball into your court. The future of the Swiss financial industry is in your hands. It is your integrity, your power of innovation and your service to the customer that is pivotal for the Swiss financial industry. It is up to you to shape the future of this industry. While I certainly do not pretend to know the business decisions you will have to take in the years to come, I am pretty sure that jumping out of the window is not the best option. In this regard, it may be worthwhile remembering that Voltaire himself made a fortune, and went on to be celebrated as an old wise man – without, to my knowledge, ever following his own advice.

Due to this pivotal function, the banking sector plays a crucial part in the transmission of monetary policy. On the other hand, however, it may also be the source of financial shocks that impact on the real economy. Second, the industry is itself a large part of the Swiss economy. The significance of the financial industry and our position as a global financial centre are important contributors to the wealth of our nation. This is especially apparent here in Zurich, where the financial sector generates much employment, wealth and tax revenue. In my remarks, I will first discuss the macroeconomic challenges associated with the banking sector’s key role in the transmission of monetary policy, as well as the risk that it may  BIS central bankers’ speeches  1  propagate financial shocks to the economy. Then, I will discuss the challenges for the industry itself. Lastly, I will address the main implications from the SNB’s point of view. Macroeconomic challenges Let me start by focusing on the macroeconomic challenges associated with the importance of the Swiss financial industry, and, in particular, the banking sector, for the rest of the economy. The main reason why the banking sector is so important for the Swiss economy and the SNB lies in its traditional function as financial intermediary. As banks collect funds and provide financing to firms and households, they are the “life blood” of the economy. Related to this traditional function, there are two distinct aspects I would like to point out.
Such assessments are further complicated by the fact that there have been a number of important structural changes in the mortgage markets. Without going into detail, weighing the available evidence together, we do not think that residential property in Sweden is significantly overpriced in general. Nor do we believe that households in general are overly indebted. However, this does not preclude the possibility that there are other countries where house prices and household indebtedness have risen to levels beyond what can be fundamentally motivated. Yet, even if we don’t believe that house prices and household indebtedness have been disconnected from their fundamental drivers, there are still reasons for us to be concerned by the rise in property prices and household indebtedness. In the last years, in Sweden as elsewhere, household debt has grown much faster than disposable income. Obviously, this is not sustainable in the long run, as households then ultimately would be unable to service their debts. In the long run it is likely that indebtedness and house prices will increase roughly at the same rate as the nominal growth of the economy. This type of adjustment, to more restrained growth rates, will normally occur smoothly, as households begin to feel that their finances cannot tolerate a higher level of indebtedness. However, if there is an overly sharp correction or “hard landing” if you like, it could lead to weak growth in the economy for a long period of time. In this case, it would also have effects on inflation.

Secondly, I think that the problem of how to manage the risks from asset prices in the monetary policy decision process to a large extent is pedagogical, i.e. explaining that we do not target asset prices, but that we do not completely ignore them. However, monetary policy is a topic on which a lot of people have an opinion, and you are never going to please everyone. In fact, in recent years the Riksbank has been criticized for putting either too much, or too little, emphasis on property prices. Finally, I would like underscore the necessity of stress-testing the banking sector for sudden shifts in property prices. You can have a whole staff of PhDs running all kinds advanced models telling you that assets are not overvalued. That’s fine, but at the end of the day they might be wrong, and then you would like to know what the consequences are going to be for the banking system. Let me end by thanking the central bank of Bosnia and Herzegovina for hosting this conference and congratulate the bank on its 10th anniversary. 4  BIS Review 101/2007
According to a recent report by the World Economic Forum (WEF) on the future of jobs, 75 million jobs may be displaced by 2022, while 133 million new roles may emerge.15 Are we preparing our graduates for such a shift in the labor market? This is an equally pertinent question for the banking industry. According to the WEF study, 56% of bank employees will need to be re-skilled. Talent and resources in a number of functions will need to shift towards analytics, with fewer resources likely to be involved in manual work. New staff will need to be data scientists with expertise in AI, machine learning, etc. And business staff will be required to have the ability to translate such data insights into business actions. The WEF has reported that the largest barrier to embracing technology in banks, identified by 74% of financial institutions surveyed, was a lack of skill sets in the local labor market. If this is the case today, what will happen in the future? This is why the banking industry needs to build strong partnerships with educational institutions, to ensure that they are preparing the graduates the industry will require for its transformation. ii. Regulators The other key stakeholder in the banking industry’s transformative journey is the regulator. Regulatory authorities need to strike a balance between protecting consumers, establishing standards for sound regulatory and supervisory practices, safeguarding financial and monetary stability, and at the same time facilitating growth and innovation in the industry.

But contrary to government debt, twothirds of the growth in corporate debt has come from developing countries. This poses a serious risk to these economies, especially where the debt is in foreign currencies. We have also seen the quality of borrowers deteriorate. Bonds rated BBB- and below now account for half of global corporate bonds, compared to just a quarter in 2007, before the financial crisis. Global debt over the past 20 years has grown on average by 6% annually. If these rates continue, and global GDP grows by 3.5% per annum as projected, we could see global debt over the next 20 years reaching $ trillion, or 500% of GDP. This is clearly unsustainable, and requires urgent action by both governments and financial institutions. More critically, the low interest rate environment has curtailed banks’ profits in some of the advanced markets, jeopardizing their longer-term viability. And record high debt levels are likely to pose increasing risk of defaults once monetary policy tightening takes course, potentially hurting the quality of banking assets. Collectively, these trends have serious implications for financial stability in general. Beyond banking, there is increasing risk of policy inaction amid weakening global governance, as evident from trade disputes. During the global financial crisis of 2008, advanced countries joined hands to fend off depression through a wellcoordinated and robust policy response.
In its earlier years, the Committee worked closely with comparable committees sponsored by central banks in other major jurisdictions, as well as with the Financial Markets Lawyers Group here in the United States, to improve standardization in the market, including through developing standardized documentation in the FX market, such as master agreements. Over the years, the Committee has evolved as the market has changed. For example, as entry to the FX market has expanded and as nondealer firms have come to play important roles in the market, the FXC expanded to include buy-side representatives. I believe that this has strengthened the FXC’s ability to contribute on FX market issues, including the work now required to help strengthen the best practices landscape on a global basis. Before turning to these global efforts, I would like to briefly highlight a couple of recent changes to the Committee’s Charter, which I believe will further support the FXC’s ability to contribute in particular to this global work. 12 First, the revised Charter language places a more direct emphasis on the role of Committee members to help promote the efficiency and integrity of the market through, for example, the development and implementation of best practices. Second, the revised Charter better highlights the importance of incorporating an even broader set of perspectives and expertise directly on the FXC.

Engaging a broader set of perspectives across operations, legal, and compliance professionals – as well as individuals across buy-side, sell-side, and various market infrastructure firms – will help the Committee to apply this more comprehensive perspective to its work on best practices. It will take some time for these changes to be fully  11  See http://www.bis.org/review/r150213c.htm. 12  See http://www.newyorkfed.org/fxc/FXC_Charter_2015.pdf. 6  BIS central bankers’ speeches  implemented, but it is expected that the various steps that move us in this direction will also help us to engage even more effectively in the important work ahead. Global best practices efforts The FXC has been engaged in two global efforts with its counterparts abroad: development of the Global Preamble and work, now under way, to extend the Global Preamble into a single global code of best practices in the FX market. The Global Preamble (“Preamble”) is a document that was developed collaboratively by the eight central-bank-sponsored foreign exchange committees to provide a common basis from which our individual codes of conduct for the FX market follow. The Preamble lays out key, shared principles that underpin our respective codes. The publication of a revised Global Preamble earlier this year was an important development that built upon a tradition of increasing engagement across the committees. The initial Global Preamble was published in 2013 and marked the first time the committees had come together to provide a single voice around best practices.
We will be able to take a deeper insight into the economic growth slowdown after detailed GDP statistics are released. However, the 2018 data released in April and preliminary Q1 2019 estimates allow us to update our GDP forecast for this year. In particular, the revision is associated with lower export growth rates and a tempered outlook for growth in the global 1/3  BIS central bankers' speeches  economy and external demand. We have left the forecast for consumer and investment demand unchanged in view of the expected rise in public expenses in the second half of the year. As a result, we have updated the 2019 economic growth forecast from 1.2-1.7% to 1-1.5%. Third. Proinflationary risks have declined over a one-year horizon. First, we no longer expect any deferred effects of the VAT hike. Second, the US Fed consistently eased it rhetoric since the year start amid the expected slowdown of global economic growth. All else being equal, this constrains the risks of considerable capital outflow from emerging markets. In March-April, we noticed that the risks of accelerated growth in prices of certain food products diminished. Overall, they remain moderate, though current food inflation was somewhat higher in May than in the previous three months, seasonally adjusted. Moving forward, we expect that record crop areas, early spring, and overall favourable weather will bring a good harvest of vegetables, grains and other crops. Domestic and global grain prices have been down since the beginning of the year. This contains proinflationary risks for food products.

But I will leave the Bank of England in the good hands of my successor, Mervyn King, when I step down in June, and I have every confidence that he will, by the time of your next dinner, have a positive story to tell.
This can also weigh on productivity as older workers may have a harder time adapting to new technologies. Another important demographic factor is increasing longevity which would also, for a given retirement age, increase savings. Lastly, inequalities – both on a global level and within countries – can also affect demand [slide 6]. Growing income inequality within countries – even if it remains significantly lower in 2/3  BIS central bankers' speeches  continental Europe – implies reduced relative spending power for low-income households, which have a high propensity to consume. More inclusive societies with fewer unemployed and more even income distribution would most likely result in more dynamic demand. 3. Are we witnessing a permanent slowdown in the pace of technological progress? The debate between techno-pessimists and techno-optimists over the future pace of innovation is well-known. It resulted from the slowdown in productivity and in the contribution of ICT to growth in the mid-2000s, even before the Great Recession. For the United States, there was a downward break in the productivity trend as early as 2006. In fact, the diffusion of technology can suffer from two types of lag: a time-lag, but also a spacelag. Time-lags refer to the delay in incorporating innovations efficiently into the production process, as the required structural adaptation of the economy and learning processes can take decades. What stage of diffusion are we at for ICTs? Have structures in individual firms evolved sufficiently to allow them to reap the full benefits of ICTs?

In that respect, Jens Weidmann’s call for significant pay rises in Germany in 2014 was a courageous and welcome move. Deleveraging is another factor that can act as a drag on demand. A significant deleveraging process took place after the recent financial crisis – among households, firms and also governments. Household debt declined the most in those countries where it had grown the most, such as the United States or Spain. Corporates reduced their net debt positions to insulate their balance sheets from the crisis. And, to make sure that debt remained sustainable, governments had to reduce their deficits from the very high levels reached during the Great Recession of 2009. Unfortunately, fiscal consolidation polices were not sufficiently coordinated in the euro area. While deleveraging might be individually desirable for over-indebted groups, if all agents scale down their debts simultaneously, aggregate demand inevitably slows. Turning to more structural factors, demographic trends and productivity can also weigh on demand through their impact on savings. What are the determinants of savings in the long run? According to economic theory, people save more when the rate of the economic growth slows, either because fewer people are in work or because the productivity of each worker decelerates. Several factors are likely to reduce the growth rate of the working age population and increase the average age of workers: the gradual exit of baby boomers from the workforce, the one child policy in China and the decline of fertility rates in the OECD.