samchain/econo-pairs-v1 huggingface dataset:
This is particularly important in a country such as Spain where the business sector consists basically of small firms, since these firms generally lack collateral, have highly uncertain future cash flows and do not have credit ratings allowing investors to get an idea of the risk associated with investing in them. Furthermore, the high uncertainty surrounding the return on investment in R&D&I and the long time horizon at which it materialises (above five years)13 are arguments for government involvement in their financing, particularly in the area of basic research. This is all the more so in view of the positive – and potentially disruptive – effects which certain investment in these areas may have on the population as a whole. It should be noted in this respect that the seed of the Internet was a basic research project for military use undertaken by an agency of the US Department of Defence, an initiative which would have had little chance of obtaining finance from the private sector. Moreover, the range of possible government actions go beyond providing an R&D&I investment budget. For example, they also encompass the introduction of changes to the researcher promotion and career system so as to stimulate the entry and development of promising new researchers, or the overall 11  See E. Moral-Benito (2018), The microeconomic origins of the Spanish boom, Occasional Paper 1805, Banco de España. 12 See Chapter 2, “Financing and investment decisions of Spanish non-financial corporations”, Annual Report 2016, Banco de España.

This sounds quite straightforward but actually it would be quite a step because, of course, all of us are answerable to our national parliaments. But nor do I think it is realistic for countries to engage in or embark on what one might think of as unilateral disarmament, where a country that acts as host to financial institutions says to the home countries “I will let you lead in the resolution of all banks in all circumstances, notwithstanding whether you take account of the interests of my country”. So countries probably need to reserve some powers for themselves but should eliminate from their regimes any automatic triggers that can cut across sensible resolution led by a firm’s home country. The other step that we could sensibly take, I suspect, is for there to be much closer planning on a bilateral basis between host and home countries in respect of particular banks. I mean at the level of entering into more or less binding agreements on who would do what in the event of distress. That, again, sounds easy, but actually it would be embarking on quite a change from where we are right now.
The question is then how we can maintain the benefits of financial integration at the same time as we avoid ending up in another crisis such as this one. It is especially important to answer this question in our respective countries, that is, in Sweden as well as in Greece. Both you and I represent countries with domestic banks that are heavily engaged in cross-border banking activities. In Sweden, the domestic banks conduct roughly half of their lending in international markets, mainly in the other Nordic countries and in Germany. However, over the last five years we have also seen three of our largest banks (SEB, Swedbank and Nordea) capturing substantial market shares in the Baltic States. In some of these countries the Swedish banks account for up to 80 per cent of the domestic banking system. 1 Greek banks are also extensively involved in cross-border banking. National Bank of Greece, for instance, operates subsidiaries in over 20 countries in South-eastern Europe and the Eastern Mediterranean. 2 I will devote most of this speech to a discussion about the main implications and challenges arising from this new banking structure. Before turning to that, however, I will say a few words about how cross-border banking has developed and describe briefly why we may have seen such a rapid globalisation of the banking sector to begin with. Then I will focus on the need to enhance cross-border cooperation between national authorities.

8  The estimated simple gravity equation is lncij=4+0.9lnGDPi+0.8GDPj-1.4lndistij, where lncij is the log of consolidated claims of country i’s banks in country j, lnGDPi and lnGDPj are the logs of GDP in countries i and j, respectively, and lndistij is the log of the greater circle distance between the capital cities of country i and j. All estimated coefficients are statistically significant at the 1 per cent level. The country sample includes all EU countries for which data on foreign claims by nationality of reporting banks, immediate borrower basis, at the end of September 2009, is available from the Bank for International Settlements. Data on GDP in 2009 have been collected from the International Monetary Fund’s World Economic Outlook Database, April 2010. Data on greater circle distance have been collected from www.distancefromto.net. 16  BIS Review 82/2010  Bulgaria and Romania belongs to Greek banks, a large share of the foreign banking assets in the Czech Republic, Hungary and Slovakia belongs to Austrian banks, a large share of the foreign banking assets in Poland belongs to German banks, and a large share of the foreign banking assets in Estonia, Latvia and Lithuania belongs to Swedish banks. 9 One reason why cross-border banking is especially widespread in Europe is the efforts that have been made to achieve the long-term goal of creating a single market for financial services. In the early 1990s, a number of legislative reforms aiming to liberalise the financial sector were introduced.
So pursuing a strategy of monetary accommodation will be in the interests of savers in the medium-term, even if it feels like the opposite in the short-run. We should all want to see sufficient growth such that interest rates can start to rise. 4  BIS central bankers’ speeches  Taking all that together, my policy vote has been driven by the need to continue supporting the required real adjustments – which still have much to work through – but cautiously, so as not to risk inflation expectations becoming de-anchored. My personal view is that faster growth in the near-term might actually help keep inflation down for a while as productivity growth picks up. Eventually, however, reductions in the degree of spare capacity in the economy should bring domestic inflationary pressures back to normal, so it will be important that other factors influencing inflation do not remain elevated. The MPC is committed to getting inflation back to around the 2% target – which it will in due course, in the absence of further shocks and if we are careful with policy. Monetary accommodation should generally be helpful to balance sheet rebuilding, but there are limits. For example, I am not convinced that a further reduction in interest rates would stimulate demand at this stage. Cuts in interest rates work in part by encouraging spending (or investment) at the expense of saving.

Mr. George assesses how sustainable the current rate of growth of the UK economy is Speech given by the Governor of the Bank of England, Mr. E.A.J. George, at the Chartered Institute of Bankers in Scotland Biennial Dinner in Edinburgh on 20/1/97. Mr. Chairman, the last time we came together for this great occasion, two years ago, I was pleased to be able to report to you that the British economy was making encouraging progress. We had, already then, seen very nearly three years of continuous and reasonably steady economic growth, which had produced a gradual fall in unemployment. And this steady expansion had brought few of the usual tell-tale signs of emerging imbalance between overall demand in the economy and our supply-side capacity to meet that demand. Our external current account was close to balance. And underlying retail price inflation was then lower than it had been for a generation. Even so, we had - as you will recall - begun to apply a touch on the monetary policy tiller to avoid being blown off course by rising world commodity prices at a time when domestic activity had already gathered pace. I am delighted to be with you again this evening and to be able to report that this encouraging progress continues. Output has now been growing, continuously and reasonably steadily - at an annual rate of 2.2% - for very nearly five years.
And, crucially, within this, we’ve seen a fall in the proportion of heavily-indebted households and the share of households spending a high proportion of their income on debt repayments (Chart 7).11 But the position is sensitive to upward shifts in interest rates without a similar increase in incomes, especially if some of the powerful forces that have pushed rates down since the 1980s begin to unwind. And it is very vulnerable to a resumption of the rise, in credit relative to GDP driven by housing that we have seen for most of the last 40 years and that we saw particularly in the upswing of the last financial cycle. How much do such risks matter? The growth of credit and household debt relative to GDP and income in the UK did not, as some commentators have pointed out, trigger the financial crisis in the UK. The proximate cause was the overseas exposures of UK banks to very risky assets and the extreme fragility  10  Debt service ratio is defined here as mortgage interest payments plus mortgage principal repayments as a proportion of total household income. 11  The share of households with very high mortgage debt to income ratios (above 5), for instance, has fallen back significantly since 2012 and is now back to levels seen in the 1990s. The share of households with moderately high mortgage debt to income ratios (between 3 and 5) has also fallen.

NBER  Working Paper No. 13568 (November, revised December). 8 OECD, 2015. Education at a Glance 2015: OECD Indicators, OECD Publishing. p. 78. 9 Wiswall and Zafar, 2011. Determinants of College Major Choice: Identification using an Information Experiment. Federal Reserve Bank of New York Staff Reports, no. 500 (June; revised August 2014). 10 Bleemer and Zafar, 2015. Intended College Attendance: Evidence from an Experiment on College Returns and  Costs. Federal Reserve Bank of New York Staff Reports, no. 739 (September). 11 Wiswall and Zafar, 2015. “How Do College Students Respond to Public Information about Earnings?” Journal of  Human Capital, vol. 9, no. 2 (Summer). 117–169. 12 Chen, 2016. Remedial Coursetaking at U.S. Public 2- and 4-Year Institutions: Scope, Experiences, and 6/7  BIS central bankers' speeches  Outcomes (NCES 2016–405). U.S. Department of Education. Washington, DC: National Center for Education Statistics. 13 Shapiro, Dundar, Khasiala, Yuan, Nathan, and Hwang, 2015. Completing College: A National View of Student  Attainment Rates – Fall 2009 Cohort (Signature Report No. 10). Herndon, VA: National Student Clearinghouse Research Center (November). 14 Isaacs, 2012. Starting School at a Disadvantage: The School Readiness of Poor Children. Brookings Institution  Center on Children and Families (March). 15 Wat, 2010. The Case for Pre-K in Education Reform. A Summary of Program Evaluation Findings . The Pew  Center on the States (April).Grunewald and Rolnick, 2010. An Early Childhood Investment with a High Public Return. The Regional Economist, Federal Reserve Bank of St. Louis (July).
Establishing an Oil Stabilisation Fund, which ensures that the government balance sheet is strengthened when oil price movements are favourable, should help insure against the type of debt servicing problems faced by many emerging market economies during the difficult international environment of 1997-98. Iran was able to maintain an excellent debt service record through this period, and prudent debt management policies should help preserve this record going forward. Total external debt is expected to decline to around 10% of GDP this year, and short-term debt to only about 40% of reserves, having fallen from around 65% in 1999/2000. The strong external position has encouraged the World Bank to approve loans of some $ million this year. Importantly, it should hold Iran in good stead in attracting inflows of private capital, which are so crucial to a country’s long-term growth prospects. The international financial crises of 1997-98 stemmed largely from vulnerabilities within countries’ financial systems. In the aftermath of the crises, the official community has been assisting the financial sectors in emerging market economies through technical assistance and improved surveillance. This has been an area of notable success in the redesign of the international financial architecture. A key step in this regard has been the joint IMF-World Bank initiative of Financial Sector Assessment Programs, or FSAPs.

There has already been progress with privatisation, especially in the hydrocarbon industry. There are plans to restructure and privatise over 500 state enterprises during the next five years, and to commercialise - or “autonomise” - Iran’s state-owned banking system. Trade and foreign investment are being encouraged by the extension of Iran’s free-trade zones. And new legislation is expected soon to simplify and clarify the Law for the Encouragement and Protection of Foreign Investment. These are all clearly positive steps. Iran is, of course, OPEC’s second largest producer and has the second largest reserves of gas in the world. It has benefited from the recent rise in oil prices and is playing a positive role in promoting the stability of the oil market. President Khatami recently noted that OPEC may need to raise output in proportion to the increase in global oil demand to stabilise prices. The government has taken positive steps to encourage foreign investment in the petroleum sector. For example, they have facilitated foreign participation in contracts to redevelop oil fields, and they have also signed an agreement with a consortium of nine leading international oil and gas companies to study Iran’s potential as an exporter of gas. The government is, moreover, actively seeking to cushion the economy from future fluctuations in the oil price.
Inflation fell from 4.0 per cent in October to 0.9 per cent in December. Inflation was much lower than we had expected in December, as a result of the repo rate cuts made in the autumn having a greater impact on mortgage rates than anticipated and petrol prices being lower than forecast. Underlying inflation excluding interest rates and energy (the CPIF excluding energy) declined slightly from around 2 per cent earlier this year to 1.7 per cent in December, entirely in line with the forecast at the most recent monetary policy meeting. The krona has weakened further since the beginning of December. Since the financial crisis moved into an acute phase in mid-September, the krona has weakened by around 12 per cent when measured against a trade-weighted index. This could give a slightly larger inflationary impulse than we had previously forecast. There are a number of signs that the situation in the financial markets has improved somewhat since the beginning of December. The TED spreads have fallen to the levels that applied prior to September and it has to some extent been possible to issue bonds. The forceful measures taken in many countries have in any case meant that it has been possible to avoid a collapse in the financial markets. But there are other signs that are more worrying. The financial markets are still far from functioning normally. Surveys indicate that the companies’ difficulties in obtaining loans have increased, although there is as yet no solid data showing that bank lending has begun to decline.

“The Aftermath of Financial Crises.” Paper prepared for presentation at the American Economic Association meetings in San Francisco January 3, 2009. BIS Review 7/2009  7  out of the crisis by, for instance, increasing exports than when it is a national or regional crisis as most of the previous crises have been. My assessment is that one should not attach too much importance to the exact figures. They are dependent on which countries are included in the averages. But they nevertheless imply that there is a tangible risk that the economic downturn will be both more profound and more prolonged than we are assuming in our main scenario, and that 2010 will also be a year of weak or negative growth in many countries. The current economic situation and monetary policy Using monetary policy to combat a financial crisis is not particularly effective. It is not possible to manage a financial crisis by means of adjustments to the repo rate. The Riksbank has therefore been concentrating on other measures to promote financial stability since the Lehman crisis. On the other hand, monetary policy can be used to alleviate the effects of the financial crisis on macroeconomic developments. At the most recent monetary policy meeting on 3 December, we Executive Board members decided to cut the repo rate by 1.75 percentage points. This was the largest cut made since the repo rate system was introduced in 1994.
Are there any other objectives than price stability and financial stability that may be suitable for a modern central bank? Many countries also have objectives for developments in the real economy written into the regulatory framework governing the central bank’s activities. For instance, in the US legislation it says that the Federal Reserve shall promote “maximum employment”, while the British legislation says that the Bank of England shall support “the economic policy of Her Majesty’s Government, including its objectives for growth and employment”. In Sweden there is no specific objective for real economic developments written into the law, but it is nevertheless considered to be understood that the  4  See, for instance, Oosterloo, S. and J. de Haan, (2003), ”A Survey of Institutional Frameworks for Financial Stability”, Occasional Studies Vol.I/No. 4, De Nederlandsche Bank, for an overview of how the task of promoting financial stability is dealt with in different central banks’ regulations and in practice. 4  BIS Review 21/2006  Riksbank – as an authority under the Riksdag, the Swedish parliament – shall support the objectives of economic policy with the aim of attaining sustainable growth and a high level of employment. Exactly how the objectives are worded thus varies considerably between countries, often depending on the fact that changes and modifications have gradually been made to regulations originally written much earlier. I dare to claim nevertheless that the essence of modern central banks’ wording of their objectives is the same.

This perception, however, is incorrect for a number of reasons. First, the “euro project” is to be seen as a further logical step in the European integration process, which started more than half a century ago, immediately after the Second World War. Its objectives were not - and are still not - purely economic, as European integration aims not only at the creation of a prosperous but also a stable and peaceful Europe. For a large part, trade, economic and financial integration aimed at the removal of all barriers to free competition has been the engine of this process. In this context, the euro is to be seen as a major contribution to the completion of the Single Market in Europe. The primary objective of the ECB is to maintain price stability in the euro area. Second, the international use of the euro is, first and foremost, the outcome of a market-driven process, not to be steered by central banks or by political bodies. The ECB has adopted a neutral stance on the internationalisation of the euro. The ECB intends neither to foster nor to hinder the use of the euro. In the past, major countries have, at times, tended to promote the international use of their currency, primarily with a view to potential benefits for their national financial sectors. There have also been cases in which major countries have resisted the internationalisation of their currency, owing to the uncertainties that this process may imply for the conduct of monetary policy.
Ultimately, the outlook for business investment, like the outlook for the economy more generally over the forecast period, depends largely on how households and businesses react to Brexit and on the process that accompanies it. The central case outcome in the February Inflation Report is that the economy will gently slow as higher inflation squeezes households' real earnings. But that's not the only conceivable scenario. There are, however, both upside and downside risks. So as the Committee has made clear, we will be looking closely at the incoming evidence, particularly on pay growth, labour market slack, household consumption, inflation expectations and the impact of the lower level of sterling on consumer prices. Conclusion  I want to conclude by saying a little about why all of this matters to the Bank and our role in issues surrounding investment and productive finance. As I noted at the outset, it was the great financial crisis of 1825 – when the country, according to one contemporary commentator, was within 24 hours of returning to barter and a run on the Bank of England was only halted by a last minute shipment of gold by Nathan Rothschild – that led to the establishment of Bank of England branches in Birmingham and elsewhere. That crisis was due in part to the constraints on the UK’s under-developed banking system.

We would like to see only a gradual increase in non-performing loans or a gradual decrease in credit quality, given the extent of the crisis. We try to make sure that this is a gradual process and nothing unexpected or unforeseen happens. Next: lay the foundation for the longer term Aside from an immediate task of keeping the recovery intact, the other thing we have been doing is to lay the foundation for the longer term. Specifically, we try to ensure that our financial sector responds well to the landscape post-Covid-19. It is hard to say how exactly the post-Covid-19 landscape would look like, but there are at least two trends that will become significant in the future. Firstly, the world will become much more digital, and secondly, there will be a much greater emphasis on sustainability. On this, we have published the Bank of Thailand’s financial landscape consultation paper that put out our view about how we see things evolving in the financial sector. The paper indicates what we want and do not want to see and what are the red lines in each of these areas that we regulate. In the digital space, the first element of our plan is an open competition. For instance, the current financial landscape in Thailand, as in many markets in the region, is dominated overwhelmingly by banks.