samchain/econo-pairs-v1 huggingface dataset:
As the Swiss economy is on the upswing, income is rising, as are the prices of assets. Demographic changes could also add to the pressure. For instance, immigration of well-qualified persons with high purchasing power has increased quite steeply since the agreement on the free movement of persons entered into force almost five years ago. These factors all tend to drive up demand for residential space. So far, supply has been able to keep pace with the increasing demand. Nevertheless, with supply adjusting only slowly, a higher level of demand could well accelerate price increases in the real estate market. It would then be the SNB’s responsibility to ensure – under these more difficult circumstances – that price movements in the real estate market did not threaten price stability as a whole. BIS Review 11/2007  1

Advocates of the secular stagnation hypothesis argue that this is a result of underinvestment in capital; others point to declining business dynamism, excessive household debt that leads to the misallocation of resources, and some attribute it to measurement errors given the expansion of the digital economy. And then, there are those who question the productivityenhancing-value of recent technological innovations. What is the value of an Apple Watch as compared to the invention of the internet? It is indeed a challenge to comprehend this rapidly changing complex system that we operate in, let alone diagnose it. We need to humbly recognise the boundaries of our understanding for now, but at the same time relentlessly expand the frontier of thinking and conduct robust deliberation on the implication for public policy formulations. The last paradox, one that is familiar to many policymakers, a disquieting calmness. In the financial markets, the VIX – a standard indicator to measure volatility in the global financial markets – is at its lowest in the last two years. In fact, it is close to the all-time low of below 10, last seen just before the global financial crisis. Yet, a quick scan of financial news would reveal significant uncertainty in the global economy, amid an ongoing series of policy adjustments in major economies, volatile commodity price movements and geopolitical tensions. To a large extent, this paradox is an outcome of the combined policy efforts by central banks and governments worldwide to maintain stability since the global financial crisis.
BIS Review 60/2006  9  financial institutions, 17 which apply less restrictive policy of financing business entities, expecting that when problems arise, the taxpayers of a given country will pay part of the bill. Last but not least, an unfavourable effect of globalization is the centralisation of risk management and sometimes even of liquidity management at the bank group level. The process results in transferring operations from small, local markets to more developed ones. This phenomenon has been observed e.g. in Poland. Owners of foreign banks operating in Poland more and more often decide to transfer their activity on the zloty market and the FX options market to London (Chart 9). It reduces the liquidity of the domestic market, and the zloty exchange rate becomes ever-more dependent upon investment decisions of non-residents. 18  Chart 9: Turnover in the zloty market and the zloty currency options, by entity (April 2004)  100 80  % 32.82  29.85 45.00 61.08  60 30.72 40 20  61.20 36.46  5.59 33.33  8.95  0 Spot market  34.62 20.38  FX swap market  Outright-forward FX option market market Transactions between non-residents (offshore market) Resident - non-resident transactions Transactions between residents Source: NBP and BIS. Does globalization really take place: well-known economic puzzles The data and mechanisms presented above illustrate the fast progressing globalization of financial markets. Nevertheless, numerous studies have shown phenomena that should not occur in a situation of growing commercial and financial links.

New services offered by banks on the FX market, such as the prime brokerage, also create difficulties. Under a prime brokerage agreement, the bank makes its credit limits available to other institutions that speculate on the FX market, most frequently to hedge funds. As the product becomes widely used, supervisors are faced with a growing difficulty in monitoring the credit risk and liquidity risk of operations concluded on the FX market, 42 where the average daily net turnover amounts to USD 1,900 trillion. This creates quite a challenge for supervisors, who must have human and financial capital available to properly assess the risk in the increasingly global and complex world of finance. The understanding of the mechanics of financial markets is a never-ending challenge for supervisors. 40  Kapstein E. “Architects of stability? International cooperation among financial supervisors”, BIS Working Papers No 1999, February 2006. 41  Schinasi G. J. “Safeguarding financial stability: theory and practice”, Washington, D.C., IMF, 2005. 42  Kos D. “Developments In the FX Market: New Opportunities, Risks and Responsibilities”, a speech at the “Future of FX” conference in New York, October 24, 2003. BIS Review 60/2006  15  The response of bank supervisors gathered in the Basel Committee on Banking Supervision to the increasing complexity of financial instruments in banks’ portfolios is the New Capital Accord (“Basel II”), which is to replace the regulations currently applicable in over 100 countries.
This number accounts for 16% of total farms in the country, providing the highest share of income from the sale of agricultural products, and about 20% of Albania’s total income. Related to livestock, Fier, and mainly Lushnja district, have a considerable share in livestock products. As a district, Fier produces 20% of total livestock production (milk), whereas Lushnja produces 9%. The above setting witnesses private efforts and entrepreneurship to develop this sector. In order for this process to go ahead at a more accelerated pace, the policy-makers should identify the advantages and problems this sector encounters, in order to address them quickly. In 2012, the Oxford University published a book focused on economic growth in SouthEastern European region. This book elaborates on a number of structural problems and challenges facing the Albanian economy, in its efforts to develop further. Agriculture has significant share in this analysis. Some of these problems are acknowledged and frequently mentioned, such as the important infrastructure-related issues that include the road, watering, draining, storage and processing systems. Problems with land ownership and the transformation of its function for other activities continue to remain a major obstacle for the country’s normal development, and raise ongoing concerns relating to the price and use of this important factor of production, and further on, to the normal functioning of product markets and other land-related factors. Agriculture is affected by other structural problems that need a long-term solution.

My sense is that presently, we could do this: (a)  While still maintaining the attractiveness of investing in Treasury and agency securities relative to other highly liquid sovereign markets and not sparking significant increases in rates;  (b)  Simultaneously providing some alleviation of the collateral shortage we have helped create, and;  (c)  Reducing the need for the New York desk to perform the complicated jujitsu we at the FOMC have tasked it with in creating alternative strategies that stretch its traditional mandate and which may give further rise to congressional criticism of the Federal Reserve and a New York Fed that some influential lawmakers already consider to be either too big for its britches or not being able to fill out its suit. This would make crystal clear to Congress and the public our stated desire to make the ON RRP facility a temporary one that will be eliminated when it is no longer necessary. Mind you, the above proposition does not imply any rush to raise the fed funds rate or its equivalents, such as the rate on excess reserves. That will depend on progress made toward meeting our dual objectives of maintaining price stability around the FOMC’s 2 percent target while facilitating full employment. Nor should it be interpreted as a criticism of the very able people we have on the trading desk: I hold them in highest regard; they perform their duty admirably.
The depreciated exchange rate has stimulated the traded goods sector. The manufacture of consumer and capital goods has a relatively low weight in the Icelandic economy, but the demand for these was hit disproportionally during the postLehman economic confidence crisis in the second half of 2008 and first half of 2009. Finally, although the destruction of wealth that Iceland has experienced as a result of the collapse of the Icelandic banks is enormous, it is not proportionate to the size of the banks, as foreign creditors will lose much more. Let us now turn our attention from the macroeconomic part and explore further the story of Iceland’s cross-border banks, which to my mind holds important lessons for cross-border banking more generally, both from the standpoint of the small economy and at the European and global levels. In the rest of my remarks, I will first give you a short overview of how the Icelandic banks failed. I will proceed to explain the build-up of these cross-border banks and the associated vulnerabilities. I will then return to the collapse of the banking system by discussing crisis management and resolution before turning to some of the causes. Finally, I will reflect on the lessons learnt and some of the issues that remain unresolved. How did the banks fail? Iceland’s three cross-border banks all failed and were placed in special resolution regimes during the first full week of October 2008.

Credit lines were closed, margin calls were made, and all but the safest assets sold off at fire sale prices. Emerging market assets experienced a sell-off as a part of this process, and funds were repatriated back to the US in order to meet margin calls and repay debt. In normal times, managing liquidity across currencies from countries with free movement of capital and relatively developed capital markets is not much of an issue. In these conditions, FX swap markets can speedily be used to convert liquidity from one currency to another at spreads that closely reflect the differences in domestic money market rates in the two countries concerned. In other words, the covered interest parity condition broadly holds. Visà-vis the US dollar, this relationship showed periodic strain for most currencies after the  BIS Review 9/2010  3  financial turmoil erupted in late summer 2007, but it broke down almost completely after Lehman. There are probably several reasons for this, some of which were analysed in BIS publications such as the Quarterly Review during the period when I was still there. 2 Thus, for instance, we know that before the crisis, European banks had a structural imbalance where they had invested in longer-maturity USD assets and financed them partly in USD interbank markets at shorter maturities. When these dried up, there was probably a scramble to get USD liquidity through FX swap markets, with the result that those markets became dysfunctional as well.
Having said that, while these gains have so far been based mainly on the moderation of labour and financial costs, in the future they will have to come increasingly from genuine increases in productivity. Long-term growth of the Spanish economy: the challenge of productivity The productivity challenge  The timid gains in productivity seen in the past recession and subsequent recovery proved to be insufficient to close the gap separating us from the core European countries. The limited headway in productivity by the Spanish economy should be a cause for great concern, since productivity gains are the only mechanism which can generate sustained, stable growth of per capita income in the long term. The consensus in this respect in economic circles is practically unanimous, and the repute of the studies in this area is attested to by the Nobel prizes in economics awarded to Robert Solow and Paul Romer in 1987 and 2018, respectively, for their contributions in the fields of productivity and longterm economic growth. A few figures will suffice to illustrate how improvements in a community’s standard of living over the long term depend almost entirely on productivity gains. Thus, for example, 80% of the increase in US per capita income since 1948 can be attributed to the growth of total factor productivity (TFP).2 In other words, increases in TFP of around 2% per year have allowed the average US citizen to enjoy inflation-adjusted annual income which in 2015 was about $ 30,000 higher than in 1948.

Furthermore, global financial conditions are still favorable, partly because the main central banks continue to carefully and gradually withdraw their large monetary stimuli, helping to keep interest rates and term premiums low. In addition, capital has continued to flow to emerging markets and the prices of various assets are high. Commodity prices, in general, remained above the levels foreseen in September, especially copper and energy sources (figure 8). The copper price rose 3.5% to USD 3.2 per pound during the period, to settle around USD 3.1 at the closing of this Report. This behavior is common to most metals, in a context of still high pressures coming from financial factors and improvements in some fundamentals. Among the latter, the increase in demand and perspectives is worth noting, something that has occurred thanks to increased global industrial production and the performance of the Chinese economy. This, combined with some stabilization in output, has gradually reduced inventories. Beyond recent movements, the weakening of the US dollar during the year has also been sustaining the copper price. Thus, the baseline scenario in this Report adjusts it to USD 2.95 and USD 2.75 per pound on average for 2018 and 2019, respectively. Regarding oil, the prices of Brent and WTI rose a 2  An abbreviation from its Spanish Indice Mensual de Actividad Económica, literally Economic Activity Monthly Index. 4  significant 20% in the period, to near USD 63 and 56, respectively, explained largely by a somewhat more balanced market.
Among Iceland’s major trading partners, weighted output growth measured 0.8% in 2012, as opposed to 1.7% in 2011. To a degree, the capital controls have shielded the Icelandic financial system from the euro area crisis. The effects felt through external trade were unavoidable, however, and Iceland’s terms of trade deteriorated over the course of the year, while the import purchasing power of export revenues stagnated. This played a part in slowing down output growth, even though Iceland’s growth rate was much faster than in trading partner countries. According to preliminary figures from Statistics Iceland for 2012 as a whole, output growth measured 1.6% during the year, which is somewhat below the Central Bank’s February forecast of 2.2%. On the other hand, year-2011 growth figures have been revised upwards, from 2.6% to 2.9%. This is well in line with the Central Bank’s first forecast of GDP growth in 2011. It is not uncommon that output growth figures are revised upwards during upward cycles, when more detailed investment figures become available. It will be interesting to see how estimates of 2012 develop. Output growth in 2012 was driven by growth in private consumption and business investment, while other items, such as net trade and public consumption, made a slightly negative contribution. This is similar to the whole recovery phase in 2010–2012, where business investment and private consumption contributed to output growth more or less equally, with business investment holding a slight advantage.

But none of this changes the fact that we must lift the controls as soon as it is safe to do so, both because of the economic cost of retaining them and because of Iceland’s international obligations. In my speech a year ago, I said that this was one of the most complex tasks facing the Icelandic authorities at the time. That has not changed. A prerequisite for success is that we base our efforts on the best possible analysis of the problem and the potential solutions to it. Until now, the controls have been viewed as providing shelter during the  BIS central bankers’ speeches  3  resolution of the balance of payments problems caused by the collapse of the financial system. If all non-residents’ potentially volatile claims on residents were paid in a short period of time, Iceland would pay down foreign debt much more rapidly than is desirable. If worse comes to worst, the deleveraging could amount to roughly half Iceland’s GDP in relatively few years. Under such circumstances, the króna would depreciate significantly, at least over a considerable period of time, the banks’ liquidity would be weakened, and public sector finances would do likewise. Domestic and foreign Treasury financing would be much more difficult and expensive to come by. But is this analysis correct? Is Iceland faced with a balance of payments and refinancing problem rather than a debt sustainability problem?
In brief, it is because we believe that financial stability is a precondition for sustainable economic 2 1/7  BIS central bankers' speeches  growth.2 A stable and well-functioning financial system exists to serve us all. It enables the efficient allocation of resources, so that businesses can exploit productive opportunities and households can meet their needs. And it allows the risks incurred in the course of generating economic growth to be shared. The banking system supplies credit to households, to buy homes or spend more than they currently earn; and to businesses, so that they can hire more workers, invest in capital, and innovate and expand. Non-bank financial firms further transform long-term savings into new investments via bond and stock purchases; and they enable both households and businesses to insure themselves against risks that could prove costly were they to crystallise. The financial system also facilitates payments, so that households and businesses can pay safely for the goods and services they choose to receive. A stable financial system is one that is resilient to shocks and so is able reliably to support households and businesses through the consistent supply of the vital services that they demand. Financial stability thus supports growth and prosperity, just as good health supports us in our daily lives.

The consequence is that like any health check the list of what we need to review is long. And so the key is how we prioritise our work and what prescriptions we write on the back of it. That’s a daunting task. But helpfully while for some issues only the macro-prudential policymaker can do the job, for other issues just like a GP we can call on the help of specialists. I’m not proposing to write any prescriptions in this speech today. But the Bank and FPC are working hard on their diagnoses and will aim to communicate further on issues that they wish to prioritise later this year, through the Bank’s Financial Stability Strategy and the FPC’s mediumterm priorities. And I hope that today has given you a flavour of the importance of building a macro-prudential framework that’s as fit for the risks and opportunities of the future as it is for those we have faced in the past. The views expressed here are not necessarily those of the Financial Policy Committee. I am grateful to Nicola Anderson, Kristina Bluwstein, Giovanni Covi, Tom Daniels, Emma Moriarty, Nicholas Vause, Danny Walker and Gabija Zemaityte for their assistance in drafting these remarks. I would like to thank Jon Cunliffe, Alina Barnett, Geoff Coppins, Lee Foulger, Grellan McGrath, Jon Relleen and Matt Waldron for their helpful comments. 1 Numbers based on the Office of National Statistics publication “The 2008 recession 10 years on”.
In addition, pilot arrangements were introduced allowing offshore entities to use RMB to invest in the interbank bond market and the Mainland stock market.   A longer-term factor is China’s 12th Five-Year Plan, which was released in March last year. The Plan made clear that the wider use of RMB in cross-border transactions will be promoted as a matter of national policy. Where we are now? Taken together, those steps mean that the use of RMB for trade is today largely liberalised. Let me just illustrate that with a few figures:   In 2011, some RMB 2 trillion yuan, or 8% of the Mainland’s external trade and current account transactions, were settled in RMB.   The use of RMB for direct investments has also seen an encouraging start, amounting to some RMB 90 billion yuan for inward direct investments and RMB 20 billion yuan for outward direct investments in 2011.   As for portfolio investments, some 40 offshore institutions have been allowed to invest in the interbank bond market, within varying quotas. Meanwhile, some RMB 20 billion yuan have been invested in the stock market through the RMB Qualified Foreign Institutional Investor (QFII) scheme. As of course you know, over this period of liberalisation, a rapidly growing offshore RMB market has also emerged, centred in Hong Kong. The rising level of RMB trade flows to and from the Mainland has produced an expanding pool of RMB liquidity.

Now, we’ve all become very familiar with breathless reports on China’s “economic miracle,” so I won’t go over this at length. Still, the startling pace of growth does warrant underlining. In a little over a decade since the year 2000, the Mainland’s nominal GDP increased sixfold from 1.2 to 7.2 trillion US dollars; and its external trade expanded more than sevenfold, from less than 500 billion to over 3.6 trillion US dollars. At the same time, its cross-border direct investments rose fourfold, from just over 40 billion to approaching 180 billion US dollars. These are all impressive indicators of the vast amount of business opportunities present. It is perhaps even more astonishing that, by 2016, the Mainland is expected to contribute over a third of total world economic growth, according to the projections of the International Monetary Fund. Change in the international financial system Such shifts in the global economy have inevitably foreshadowed a change in the international financial system. As the Mainland economy has grown, its currency and financial sector have moved increasingly centre-stage. Over the last decade or so, policymakers, investors and others have shown more interest in using a greater mix of currencies for international trade and financial transactions. This trend has been accelerated by the recent Global Financial Crisis, as the need to reduce reliance on just one or two global currencies has grown. Taken together, these trends imply a greater role for the RMB in the Mainland’s trade and investment with the rest of the world.