samchain/econo-pairs-v1 huggingface dataset:
Higher wage agreements in 2007 than in preceding agreements I personally was rather optimistic ahead of the rounds of collective bargaining in the spring of 2007 in the sense that they would mainly be conducted in good time before the old agreements expired and without serious conflicts, and that they would result in wage increases that were compatible with the Riksbank's inflation target. My assessment was based on three factors. Firstly, the economic conditions prior to the bargaining rounds were good. Wages had increased moderately in the preceding years and there was spare capacity on the labour market. Secondly, wage formation had improved since the crisis at the beginning of the 1990s. Thirdly, the monetary policy framework had improved and thereby the conditions for maintaining low and stable inflation. The public's expectations were that inflation would be around the target of 2 per cent per year. At the same time, my assessment was that the risks were on the "upside", that is that it was possible that wage increases could be higher. There was strong growth in the economy and employment was increasing rapidly. Despite the positive experience of the preceding years, there was a possibility that the rounds of collective bargaining could be much less straightforward than expected. Market forces could also push up the rate of wage increases to higher levels. I became more concerned when the content of the agreements became apparent. The levels of the agreed wage increases were significantly higher than in the preceding rounds of collective bargaining.

On average the term structure of volatility is relatively flat, making this a reasonable approximation for the one-year volatility. 9  Hördahl, P. and O. Tristani (2007) “Inflation risk premia in the term structure of interest rates”, ECB Working Paper Series No 734, and Garcia, J. A., and T. Werner (2009), “Inflation risks and inflation risk premia”, ECB Working Paper Series, forthcoming. 10  Ciccarelli, M. and J.A. Garcia (2009), “What drives euro area break-even inflation rates?”, ECB Working Paper Series No 996. BIS Review 81/2009  5  particular, actual inflation readings are the main reason for movements in short-term BEIRs, but play no role in explaining long-term ones. Thus, the expected brief spell of negative overall inflation in the coming months does not seem to have no noticeable impact on longerterm BEIRs, thereby supporting the idea of well-anchored expectations in the euro area. At least so far. Overall, the evidence suggests that the euro area is a long way from generalised, persistent and expected deflation. The severity of the recession points to inflation remaining low in the next two years or so, but this is not expected to lead to the emergence of outright deflation. In any case, continuous monitoring is needed, as history shows ‘that deflation and deflation expectations can take root surprisingly quickly’. 11 The overall assessment is supported by a number of other indicators, in particular by developments in the labour market. In early 2009, wage growth remained fairly robust, although this may partly reflect hysteresis (slide 16).
Its members, individually and collectively, are publicly accountable for the way in which that responsibility is exercised. The supply-side agenda, under successive governments has inevitably been more diverse. It has included a strong commitment to free markets and competition as the motive forces for productive efficiency, and as the essential means of allocating financial and real resources. It includes an equally strong parallel commitment - both regionally within the European Union but also more broadly - to international free trade in goods and services and to the global free flow of capital. The supply-side agenda has included an extensive program of “privatisation”, bringing market disciplines to bear on commercial activities previously undertaken within the public sector, but often involving new forms of regulation in areas of activity that might otherwise be dominated by natural monopolies. It has included extensive deregulation - for example in relation to financial services, including banks and building societies, though this has been accompanied by improvements in the financial infrastructure and by enhanced prudential supervision. It has included measures of labour market deregulation and Trade Union reform. And it has included increased emphasis on education and training; measures to encourage business enterprise - especially among smaller businesses; and reforms to the welfare system to improve incentives to work. The list could go on.

It is true that, to the extent that the present imbalance within the economy reflects sterling’s appreciation against the euro, we would have been protected against that. But, with accelerating inflation in the economy as a whole, the price of such protection of the suffering sectors would have been tantamount to real exchange rate appreciation, which would in any event have damaged their competitive position. And, it would not in that case be possible to reverse that effect through exchange rate adjustment. Joining EMU from the start would in fact, as things have turned out, have been a strong form of relaxing our objective for consistently low inflation in the economy as a whole to ease the pressures on the internationally-exposed sectors which I argued against a few moments ago. There are no easy answers so long as our economies continue to diverge. Coping with such tensions as may emerge within the Eurozone - with or without the UK - is likely to be easier in a context of structural, supply-side flexibility and adaptability - which also, as I say, essentially determines the underlying rate at which the economy can expand in the medium and longer-term. The Eurozone started with chronically high unemployment. Some countries still have very high ratios of public debt to GDP. And most face the prospect of an increasing burden on their public finances with ageing populations.
Like the MPC, it has external members, drawn from outside the Bank’s executive team, a published record of its meetings and a regular Financial Stability Report to explain how it is using its powers to achieve its statutory objectives. There is substantial cross-membership between these two Committees to ensure effective policy co-ordination. But though the institutional set up for the Financial Policy Committee mirrors that of the Monetary Policy Committee, the nature of its task is different. The Monetary Policy Committee is, in the main, engaged with guiding the economy towards the best achievable path for output consistent with keeping inflation at target – or with bringing it back to target. In the jargon – which some of you in the logistics field, for example, may be familiar with – the problem is one of “optimal control” or “dynamic programming”. What setting for interest rates is consistent, looking forward, with the best central outlook for the economy? The Financial Policy Committee’s job is really about identifying risks and preventing them from crystallising. This is not just about the most likely and visible risks. What we learned in the financial crisis was that the financial system, has a myriad of connections and actors and a phenomenal ability to change and adapt. It needs to be thought of as a complex “ecosystem”. At times of stress, it can behave in very extreme ways – or break down altogether. In such a world, it is not enough to know that every individual part is managing its own risk.

Likewise, bringing the safety car in when the danger is passed will also have an impact. These can be difficult judgments to make. They need to be coordinated with the Monetary Policy Committee so that the latter can take them into account in steering demand in the economy as a whole. But the focus of the FPC is financial stability risk: ensuring the system is robust to stress and taking steps to make periods of stress less likely and less severe. That is its comparative advantage. I want to finish by setting out two recent examples of how the Committee approaches this task: first, the stress test of the major UK banks which is currently in train, and second, the action the FPC announced last week on the housing market. In April, the Bank of England launched a stress test of the 8 major UK lenders, as part of an EU wide exercise. Stress testing is one of the tools developed in the aftermath of the financial crisis to test the resilience of the financial system. In essence, a stress test sets out a so called “adverse scenario” in which the economy gets into trouble and financial risks materialize. Together with the banks, we can then look to see how they would cope with a scenario like this. Of course, supervisors in the UK have regularly stress-tested individual banks. But this is the first time that we will test all the major lenders at the same time.
Under the new membership drive, ACIHK, traditionally consisted of practitioners drawn from the foreign exchange and money markets, has recruited new members from other treasury markets. In particular, with the support of the HKCMA, many of you working in the debt origination as well as trading sides have now joined the ACIHK. The number of ACIHK members has by now grown to over 1,800. As part of the training and accreditation programme for ACIHK members, two new courses, one on dealing and the other one on debt securities, have been developed together with the Chinese University of Hong Kong and the University of Science and Technology respectively. The HKCMA has provided very useful contributions in designing the debt securities course, which commenced last November. Secondly, “product”. Here I’m not referring to the wide array of financial products that are offered to the investors, which should best be left to individual financial firms to develop. What the TMF and the HKCMA can help is to seek to develop the necessary infrastructure so that new products can be launched in Hong Kong. For example, the TMF, together with the HKCMA and the HKMA, have been seeking to develop the HK dollar repo market in Hong Kong. For the repo market to kick off, we will need the necessary repo settlement facility operated by the Central Moneymarkets Unit. As a result of  BIS Review 6/2005  1  this effort, an efficient and highly automated platform for repo settlement has been made available since December 2004.

They are helping the economy to gradually increase its resilience, by significantly increasing the diversification of the production and the export structure of the economy, but also by yielding positive second-round effects, improving the labor market conditions, increasing the know-how, integrating domestic suppliers in the production process. Secondly, the economy has been impacted favorably by the fiscal stimulus in the infrastructure, an area continuously being pinpointed as a weak spot, when it comes to the structural competitiveness. Hence, albeit the fiscal impulse does have positive short run effects on growth – bridging over the current “anemic external environment”, it also affects the long-term potential of the economy. The solid economic recovery is significantly improving the labor market conditions, increasing the labor demand, reducing the unemployment, positively impacting the participation rate, but also boosting the productivity growth of the economy. As being largely export and investment-led, the solid growth does not create pressures on the external position of the economy, nor on the inflation. On the contrary, the external sector is in a relatively good shape, with the current account deficit being brought down to 1.3% of GDP, hitting the low end of the average of around 2% in the last five years. The incessant improvement in the current account, to a large extent reflects the rising net-impact on trade of the new foreign production facilities, this particularly being the case in 2014. Yet, as the foreign demand has started to recover, some positive shifts in the more traditional export segments are also visible.
However, not least because of experiences in recent history, it is widely acknowledged that the stabilisation of aggregate demand through changes in public spending is not an easy task. Preferably, policy makers should refrain from fine-tuning, not least against the backdrop of inside and outside lags that distort the timing of such policies. It is far more important to ensure that the government budget is balanced over the course of a business cycle. Over the last couple of decades, monetary policy has been geared towards price stability, thereby also indirectly contributing to stabilising demand. Given the success in regaining price stability, Uganda being one of many examples, it seems sensible to take a closer look at the guiding principles that have been important factors in making this possible. Using inflation targeting regimes by independent central banks as a special case, four advantages of this strategy can be singled out as illustrated in a recent study (Schmidt-Hebbel and Mishkin, 2006). First, the nominal anchor should be based on the institutional set-up and not on individual policy makers, this to ensure consistency. Second, a credible commitment as just described produces stable expectations of a continued focus on the long-run. Third, transparency reduces uncertainty about the tools and goals of monetary policy. Finally, without a target, a lack of accountability might undermine the central bank’s independence.

Initially however, these effects may be hampered by practical issues such as different product standards. Laws and regulations that enforce common standards can thus be used to lay the ground for a further increase in competition. The possibility to create supervisory bodies means, for instance, that unwanted practices such as price dumping in certain markets now become more difficult. As for preparations in the above-mentioned aspects, the ambitious program outlined in the EAC Development Strategy bodes well. Another type of institution building concerns the common monetary policy and how it is to be handled. As is well described by for instance Alexandre Lamfalussy, the task of institution building in the European monetary unification process was formidable (Lamfalussy, 2006). A number of vested interests meant that a lot of things could have gone wrong. That the project was successful after all is attributed to “the exceptional convergence of several facts and influences” (p.2). Naming but a few, importantly, the initiators of the project were heads of state. Also, the central bankers were entrusted by the politicians, in issues concerning central banking, to play a major role in the forming of the Maastricht Treaty. Although this important document left open a number of issues, it was clear on the independence, institutionally as well as financially, of the European Central Bank and the national central banks within the European System of Central Banks. Furthermore, it made clear what the convergence criteria were for accession to the Euro area.
Basel II is only one component of prudential regulation, and hence must not be viewed in isolation. In this context, the suitability of other rules such as the provisioning framework and the stress testing practices must also be discussed with a view for future enhancements. Ladies and gentlemen, While we engage in the intricacies of implementing Basel II we should not loose sight of the ultimate objective of maintaining financial stability. This dialogue is most important in providing a forum for the exchange of views and the sharing of experiences. Indeed, the outcome of the discussions should be escalated to a higher level of policy deliberation so as to further accelerate the progress in detailing the issues relating to the cross-border implementation of Basel II. On that note, I wish all of you for a stimulating and productive discussion. Thank you.

Miguel Fernández Ordóñez: Spanish financial institutions in the face of the new competitive scenario Opening address by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, of the XVI Financial Sector Meeting “Spanish financial institutions in the face of the new competitive scenario”, ABC-Deloitte Forum, Madrid, 21 April 2009. *  *  *  Thank you very much for inviting me to participate in this meeting which will address a subject –Spanish institutions in the face of the new competitive scenario – of the utmost importance at the current juncture. The highly exceptional difficulties besetting the global financial system and economy require decisive action from all of us who, in one way or another, have responsibilities in these matters. The public authorities of different countries, including those in Spain, are taking measures which in many cases are unprecedented. But their efforts cannot and should not be restricted to this area: the managers of financial institutions must reorganise and adapt their business models to the new competitive environment, actively seeking out levers permitting this process of change. I will devote the bulk of my address to this issue, not without briefly describing the situation of the Spanish banking system as a whole set against the international outlook. The external environment remains hugely complex.
Most of all, they are stoking fears of a fall in the purchasing power of money, paradoxically at a time when inflation (the key measure of the purchasing power) in developed countries is lower on average than it has been for years! Put simply, we have been warning about the risk of flooding for so long that we are now unable to explain that drought can be just as big a problem and that at times of drought you have to water the garden, not keep draining it dry. If the hosepipes are blocked, moreover, you have to use other means to supply the plants with water. If we do not succeed here, we central bankers will have great difficulty being credible in the future. 4/5  BIS central bankers' speeches  Literature: Holston, K., Laubach, T., & Williams, John C. (2016): “Measuring the natural rate of interest: International trends and determinants,” Working Paper Series 2016–11, Federal Reserve Bank of San Francisco. 5/5  BIS central bankers' speeches

I have already mentioned in my intervention how the financial crisis has blatantly revealed the flaws with this measurement and how in certain circumstances, namely when markets are dislocated, applying full fair value accounting to the financial statements of the banking sector raises financial stability concerns and does not provide decision-useful information to investors. Just to re-emphasise, the ECB strongly opposes a full fair value approach. In this context, convergence should not come at the expense of high-quality accounting standards. Finally, with regard to recent assertions made by the IASB and FASB that convergence is on track, I would like to highlight that we are not so optimistic. In this regard, putting in place a reconciliation mechanism that simply discloses figures at amortised cost and fair value for each item on the balance sheet would certainly not achieve the aim of convergence. As regards governance, which improvements do you envisage in relation to the elaboration of accounting rules? First, I would like to stress that the ECB fully supports the concept of “independent accounting standard setting”. In their April 2009 DECLARATION ON STRENGTHENING THE FINANCIAL SYSTEM, when identifying the main areas of concern in the accounting area, the Leaders of the G20 never challenged this concept. Second, the ECB very much welcomes the recent efforts of the IASB with a view to enhancing their public accountability. We appreciate the open dialogue between the IASB and various stakeholders, including prudential supervisors, on various accounting issues.
•  Any short-term international capital flows that occur must be carefully examined to determine their direction and nature. In addition, the ratio of usable external reserves to short-term debt must be kept at reasonable and internationally accepted levels. •  Weak banking systems have been the most important contributors to past crises. A sound and transparent banking system is an absolute requirement for avoiding future crises. Risk-taking strategies should be appropriate to a market system. Off-balance-sheet items and cross-border lending should be under tight discipline. An independent supervisory authority is the best guarantee of efficient, sound, and effective banking supervision. BIS Review 50/1998  -3-  •  Last but not least, the pursuit of sound macroeconomic policies in a low-inflation environment is an essential precondition for building public and market confidence. Confidence also requires that both public and private sector institutions be guided by strong, high quality governance and accepted ethical rules.

The absence of a sufficiently thorough system of banking supervision and the lack of transparency not only became problematic before the crisis, but also caused confidence problems later on. Fourth, the quality of the assets of the banking system is vital for the soundness of macroeconomic policy. In allocating savings to investment use, the banks should be extremely careful about the risks that must be taken for a variety of reasons. There are five main types of risk that the banking system and of course the appropriate authorities have to deal with: interest risk; foreign exchange risk; maturity risk; loan risk; and market risk. A sound financial system is the best assurance of efficient monetary and fiscal policies. In my view, all four of these factors contributed to the change of foreign perceptions and sentiment and produced a cutback in normal financing (in fact, 95 percent of external flows to emerging market countries come from the private marketplace). This cutback, in turn, weakened the external reserve positions of these countries. Then the combination of weak reserves and a weak financial sector brought on a liquidity crisis. We are now in a position to draw some lessons from the East Asian crisis. First, policy implementation must pursue sound macroeconomic policies in order not to lose the confidence of the markets. And second, four main principles must constantly be kept in mind: •  The currency should not be allowed to appreciate, except as part of a bold anti-inflation program.