samchain/econo-pairs-v1 huggingface dataset:
Mr Duisenberg focuses on the possible future impact of the unique monetary unification in the European Union and shares some observations on the challenges facing the ECB and the EU  Speech given by Mr Willem Duisenberg, President of the European Central Bank, at the Villa d’Este Workshop in Cernobbio on 4 September 1999. *  *  *  Ladies and Gentlemen, A great number of you are clearly familiar with the political and economic developments which led to the introduction of our new currency, the euro. I should therefore like to look ahead and focus my remarks on the possible future impact of this unique monetary unification and share with you some observations on the challenges facing the European Central Bank and the European Union as a whole. Since 1 January 1999, the euro has been the common currency for eleven Member States of the European Union. This was rightly described as a historic event, since the completion of Economic and Monetary Union indeed marks an unprecedented degree of economic and political integration among the European countries participating in this endeavour. I am sure that the introduction of the single currency will help to further realise the efficiency and welfare gains of the Single Market, although this will probably be a gradual process, and will become apparent only over time. However, with the establishment of Economic and Monetary Union, the integration process has certainly gained a new quality.

Figure 1 Unemployment calculated according to Okun’s law7 Per cent of labour force 14  14 Outcome  13  13  Okun 1 (differences, 1980-) Okun 2 (differences, 2001-)  12  12  11  11  10  10  9  9  8  8  7  7  6  6  5  5 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2007  2008  2009  2010  2011  2012  2013  2014  Note: The difference version of Okun’s law captures the relationship between GDP growth and the change in unemployment. The figure shows unemployment forecasts based on estimates of this relationship in two different time periods. Source: The Riksbank  According to the historical relationship between changes in GDP and changes in unemployment, the change in GDP between the first quarter of 2009 and the third quarter of 2011 should have led unemployment to increase by 1.5–2.5 percentage points above the actual increase. The functioning of the labour market is decisive. Actual unemployment is not only influenced by economic activity, but also by structural factors that shape the functioning of the labour market. These structural factors influence both the decision to enter the labour market and companies’ decisions to hire and fire.
The new international division of labour thus affects every stage of the production process; it influences the localisation of added value and raises the question of the financing of the external imbalances of economies that focus on the design and marketing of products rather than their manufacture. The second session will deal with the impact of trends in productivity and competitiveness on international capital allocation and global imbalances. These trends may have contributed to the increase in global imbalances reflected in current account balances, and highlight several paradoxes. The first paradox is that of the US economy, which combines the structural surge in its productivity with a possible loss in competitiveness illustrated by the increase in its external deficit. This paradox is perhaps only apparent if we consider that the improvement in the US’ relative productivity performance is mainly in the non-tradable sector and as compared to the industrialised rather than the emerging economies. In addition, while this pick-up in productivity does boost the profitability of investments, logically, it goes hand in hand with an excess of investment over national savings that calls for increasing foreign capital inflows. However, the predominant nature of capital inflows to the United States changed at the start of the 2000s, switching from mainly purchases of equities and foreign direct investment by the private sector to purchases of government securities by central banks, which are not motivated by the search for increased profitability. This leads us to the second paradox, a twin to the first, i.e.

Furthermore, economic agents should not be given any cause to act on the basis of expectations that central banks would insure financial markets against considerable losses. Otherwise, there would be serious moral hazard problems and the public would hold the central banks accountable for specific developments in financial markets such as the performance of the stock market. This might seriously impair the central banks' goal of pursuing price stability, and thus their credibility. Central banks also face considerable problems in terms of identifying financial bubbles. After all, a bubble can only be confidently identified as such once it has burst. 5  J.E. Core, W.R. Guay and D.F. Larcker, “Executive Equity Compensation and Incentives: A Survey”, Federal Reserve Bank of New York, Economic Policy Review, April 2003, pp.27-45. 6  A. Greenspan in his Testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, 16 July 2002; see also A. Greenspan, “Stock Options and Related Matters”, remarks at the 2002 Financial Markets Conference of the Federal Reserve Bank of Atlanta, 3 May 2002. 7  P. Maidment, “In Nothing We Trust”, Forbes Magazine, 7 January 2001; F. Fukuyama, “Trust: The Social Virtues and the Creation of Prosperity”, Free Press, 1995. 8  F. Fukuyama, “Social Capital and Civil Society”, 1 October 1999, paper presented at the IMF Conference on Second Generation Reforms; J. Sobel, “Can We Trust Social Capital?”, Journal of Economic Literature, Vol. XL, March 2002, pp.139-154.
Measures of broad (commercial bank) money globally rose by only around 85% in the decade following the global financial crisis and by even less  11  Global figures are based on data on OECD M1, while UK figures based on central bank reserves plus notes and coins in circulation. 9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  in the UK. Put differently, the money multiplier in the UK – the ratio of broad money to central bank money – fell by around two-thirds following the global financial crisis (Chart 9). Chart 9: Ratio of Broad Money to Narrow  M4ex/(Reserves+ Notes and Coins)  35 30 25 20 15 10 5 0  06  07  08  09  10  11  12  13  14  15  16  17  18  19  20  Source: Bank of England and Bank calculations. This should come as no surprise. The global financial crisis impaired financial intermediation, slowed the growth in bank credit and money and thus contributed to the sluggish growth in money spending. Interestingly, the relationship between broad money growth and money spending growth – the velocity of circulation of broad money – remained relatively stable following the global financial crisis (Chart 10). The velocity of circulation of narrow money, by contrast, fell dramatically. The Covid crisis has added to these long-standing disinflationary pressures.

9  8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  official interest rates to close to zero and expanded their balances sheets progressively by around $ trillion or 13% of global GDP (Chart 8). Chart 8: Central Bank Balance Sheets  20000  USD (billions)  18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2006  2007  2008  2009  Fed  2010  2011  2012  ECB  2013  BoJ  2014  2015  BoE  2016  2017  2018  SNB  2019  2020  Total  Source: Respective central banks and Bank calculations. Interestingly, this rapid growth in central bank money creation was not mirrored in money spending growth in the economy. In the ten years prior to the Covid crisis, narrow money globally rose by over 150%, while money spending globally rose by less than 50%. In the UK this contrast was starker still, with central bank money rising by around 200%, while money spending rose by less than 50%. 11 One way of reconciling these diffuse trends in the monetary and real sides of the economy comes from looking at a different measure of money - commercial bank money.
Indeed, in the case of those prepared by the Banco de España, the impact of the crisis on Spanish public finances is estimated to be somewhat more severe than what was envisaged in the scenarios published on 20 April, given that they were made on the assumption that the duration of some of the measures was more time-limited than what certain subsequent economic policy decisions infer. The Banco de España will publish an update of its macroeconomic and fiscal projections in early June. 13  The impact of the crisis on the financial system The severe impact of the pandemic on economic activity has significant consequences on many fronts. One such front is financial stability. In this connection, as highlighted in the Banco de España’s latest Financial Stability Report,5 published on 4 May, the economic impact of the crisis has substantially increased the risks to financial stability. That said, the national, European and international economic policy measures adopted should help mitigate these risks. In the specific case of banks, the disruption of activity is increasing credit, market and operational risks. 5  See Banco de España (2020), Financial Stability Report, Spring 2020. 14  Indeed, the pandemic has meant that credit risk has increased substantially. This is particularly the case of credit exposures to non-financial corporations, which have seen how their revenue has fallen, initially as a result of the shutdown in productive activities and subsequently further to the lower demand for their products.

The effectiveness of monetary policy in the euro area has unfortunately been hindered during the crisis by financial fragmentation – and in the countries where low interest rates are most needed. But we are now seeing signs that monetary policy is once more gaining traction across the euro area, in particular via the bank lending channel. On the funding side, bank funding conditions have eased considerably since mid-2012. Interbank counterparty risk has fallen, as evidenced in the sharp decline in the spread between secured and unsecured money market lending. And benchmark interest rates, notably sovereign yields, have been responding much more homogenously to our rate reductions. On the lending side, the transmission of our interest rate decisions to bank lending rates is still uneven across euro area countries, but the dispersion has narrowed considerably. Our latest Bank Lending Survey also confirmed a stabilisation in lending conditions, with improvements highly concentrated in stressed countries. In short, we have reason to be optimistic that our accommodative monetary policy is feeding through to the real economy and, as such, can help prevent damage to potential growth caused by a prolonged period of economic weakness. Yet it is also clear that low interest rates cannot raise growth on a structural basis. What is crucial to actually lift productivity is credit being allocated where it is most productive. Let me therefore turn to the issue of financial sector repair.
In this we write that monetary policy should normally be aimed at attaining the inflation target within two years. But the current situation is not normal. In the present situation it is more reasonable to aim for CPIF inflation being close to 2 per cent towards the end of the forecast period. And it will be, according to our forecasts. CPI inflation varies substantially over time, partly as a result of our own repo rate decisions. The substantial fall in inflation this year is primarily due to our own repo rate cuts and falling energy prices. Inflation measured in terms of the CPIF, on the other hand, is more stable and provides a better picture of the underlying inflation trend. During the period 1995-2008, in which we have hade an inflation target, inflation measured as the CPIF has on average been close to 2 per cent and rarely outside of the tolerance interval of 1-3 per cent. The target for monetary policy is still that CPI inflation should be 2 per cent, but we must accept that it fluctuates around 2 per cent as a result of repo rate changes. BIS Review 25/2009  7  At the most recent monetary policy meeting my colleague Lars E.O. Svensson took up the question of temporarily replacing the inflation target with a price level target. Lars has put forward this idea earlier in his research into monetary policy with a zero interest rate and experiences from Japan's deflation problems in the 1990s.

None of us at that time could have foreseen that a virus would change the picture completely and lead the Norwegian and the global economy into a deep decline. Chart: A historically deep decline The economic outlook has changed dramatically in a short period of time. Activity in the Norwegian economy has fallen abruptly owing to the coronavirus pandemic. The virus outbreak and the extensive measures taken to contain it have led to production halts and lower activity across a range of businesses. Unemployment has risen to very high levels. Mainland GDP is projected to fall by around 5 percent in 2020. We have not seen a contraction like this since the war years. Chart: An abrupt and deep decline in the global economy The countries around us have also been severely affected. Measures taken to contain the spread of the virus, combined with changes in behaviour and uncertainty about developments ahead, have resulted in substantial declines in output across economies. In early March, we expected moderate economic growth among trading partners. Now a deep decline appears likely this year followed by a gradual rebound. The subsequent path of developments is, however, highly uncertain. The authorities in many countries have implemented powerful fiscal policy measures to alleviate the situation. Central banks have cut policy rates and taken extensive measures to stabilise financial markets. The sharp global downturn amplifies the challenges for a small open economy like Norway.
In view of the high success penetration rate of bancassurance service providers and the fact that bank backed insurance companies have ready pool of the banking customers within the group to tap, they should seriously explore the bancassurance route to exploit the effectiveness of bancassurance to gain new market share. Ladies and Gentlemen, I am confident that the commitment of Axa Affin's foreign partner to introduce its best practices in Malaysia and its strategy to "Think Global Act Local" in terms of product innovation, operational and distribution strategy will go a long way towards ensuring the success of this new business venture, founded on the sound relationship they have nurtured via the general insurance entity, i.e. Axa Affin Assurance Berhad. This would also contribute to the development of the industry through the transfer of expertise, providing leadership in innovation and expanding the range of quality products and services available to Malaysian consumers. Having such strategic partnerships which allows equity participation from international players of up to 49% under BNM new liberalized operating environment would enable insurers to leverage on the experience and financial capabilities of the foreign partner and this would allow them to grow in size. They would also have the capacity to improve their competitiveness and enter into foreign markets, taking more complex risks and expand their product portfolio more significantly.

Florin Georgescu: Challenging the status quo in management and economics Opening remarks by Mr Florin Georgescu, First Deputy Governor of the National Bank of Romania, at the Strategica International Academic Conference "Challenging the Status Quo in Management and Economics", Bucharest, 11 October 2018. * * * Distinguished guests, Ladies and Gentlemen, I am glad to welcome you at the National Bank of Romania, as we host today the 6th edition of this prestigious international conference, together with the National University of Political Studies and Public Administration, and the Romanian Academic Society of Management. The debates today will be held under a generous and timely topic: “Challenging the Status Quo in Management and Economics”. We couldn’t have a better moment to discuss challenges to the status quo than today, as we witness a whole range of economic, social and political forces pushing for change all over the world. If this change is in the sense of progress or not, that remains to be seen. I trust that your presentations and insights will shed more light on these trends. I confess that I had a look at the titles of the presentations in both days of the conference, and the word that appears most frequently in these titles is knowledge. And I realize that not less than 50 years ago, Peter Drucker, the philosopher and management guru, launched the concept of knowledge economy. Since then, economists and management specialists of all doctrines, put knowledge at the forefront of their views of the world.
It was only such an infusion that would allow us to maintain stability, as well as be able to have the much needed funds to keep the infrastructure development effort going. Some financially savvy members of the Opposition too, realized the significance of such a fund infusion into the economy, and tried their utmost to scuttle that effort. But, fortunately, we were able to defeat those endeavours, and raise the all important bond, and tide over the risky period. The infusion of the new funds immediately brought stability to the economy and also acted as an important stimulus for growth, with the new additional resources quickly filtering down into the economy. Hence, as a result of the move, the Fiscal framework was supported with the moderation of interest rates; the monetary framework was facilitated with the stabilization of prices; and exchange rate was supported by the buttressing of international reserves. Mr. Chairman, I believe that, some day when Sri Lanka’s economic history is being written, this 2007 infusion of $ 500 million through the international sovereign bond, would be marked as a major “turning point” in our economic landscape. I also believe that the benefits of this land mark move has been of an enduring and permanent nature, as evidenced by the fact that, over the next 5 ½ years, the Government has been able to raise a further $ ½ billion from international bonds, with the coupon rates tightening considerably each year.

This probably reflects the strong competition that Norwegian producers of consumer goods encounter from international operators. At the same time, domestic demand is being stimulated by low interest rates, and in some industries capacity utilisation is providing a basis for higher margins. Service prices, which showed little rise last year, have increased again this year. In many industries, including the airline industry, where price competition is strong, low profitability has led to an increase in prices. High oil prices have also resulted in increased prices, for example for transport services. On the basis of the pay increases agreed upon in this year’s wage settlement, combined with the estimates for wage drift and wage carry-over, annual wage growth is projected at around 3½ per cent this year. This is somewhat lower than the average for the past ten years. The relatively low level of inflation implies, however, that real wage growth is in line with the average for the past ten years. Prices for imported consumer goods are still falling from the level prevailing one year earlier. Sharply rising production capacity in the world economy as a result of high investment levels in many low-cost countries has led to subdued price increases for many internationally traded goods. The dismantling of trade barriers has also boosted imports of consumer goods from countries with low cost levels. For example, clothing imports from these areas have increased markedly in the past few years. This has contributed to a significant fall in clothing prices.
Our Asset Purchase Program, especially the PSPP, its largest component, is a case in point: the Eurosystem applies strict eligibility requirements. Purchases are subject to issuer and issue limits. We closely monitor the risks of the programme in place and any possible deviations from the benchmarks, e.g. in the CBPP3. Our due diligence can, under very strict conditions, lead to purchases of covered bonds that credit rating agencies rate below our regular eligibility threshold. On the other hand, our due diligence can also lead to additional risk control measures for particularly risky covered bonds. Given that we have not suffered any impairment since we started the expanded asset purchase programmes, I feel justified in saying that the financial risks have been successfully contained so far. Maintaining the risk management principles while returning to a more conventional monetary policy It is clear that, once we have seen a sufficiently sustained adjustment in the path of inflation, we will continue to prudently adjust our tool-box of monetary policy instruments, as we have been doing since December last year. This will also be the moment when we have to carefully review how our operational and risk management framework has deviated from its pre-crisis state. Where necessary, some temporary measures will be rolled back. But we will also consider whether there are areas where we have taken new risks onto our balance sheet – and consequently where certain elements should be kept.

Second, the “storm broke out”: after the default of Lehman Brothers, it became evident that such standard measures were no longer sufficient to achieve price stability in the euro area. We therefore provided enhanced credit support and, later on, non-standard credit operations in the light of the increased liquidity demands from the banking system. To avoid potential collateral shortages when satisfying this increased demand, we expanded the range of assets against 2/4  BIS central bankers' speeches  which banks can draw liquidity from the Eurosystem. But at the same time, we followed the principle of risk equivalence with the assets accepted under the pre-crisis rules. Let me give you a concrete example: since 2012, several national central banks of the euro area, including the one hosting this conference, have accepted additional bank loans as collateral. To ensure risk equivalence, haircuts on these assets were higher than those used in regular operations. This brings me to the third phase of the crisis, the “crosswinds”: in recent years the continued decline in inflation rates in the euro area called for additional non-standard measures – I am referring, of course, to the asset purchase programmes. This type of liquidity provision was a novelty for the Eurosystem, although the instrument of outright purchases has been envisaged as one of the legal and operational tools of the Eurosystem since its inception. Accordingly, additional risk control frameworks needed to be developed to keep the financial risks in check given the significant rise in exposures.