samchain/econo-pairs-v1 huggingface dataset:
By unambiguously assigning the primary objective of price stability to an independent central bank, the Treaty recognises that focusing monetary policy on the maintenance of price stability in the euro area ensures that monetary policy will make the best possible contribution to improving economic prospects. This view is rooted in the fact, supported by decades of practical experience and empirical evidence, that the benefits of price stability for growth are substantial. Without putting forward all the arguments, allow me to highlight, in particular, that the maintenance of price stability helps to allocate resources efficiently both across uses and across time. Inflation causes economic agents to confuse transitory with permanent price changes, and therefore distorts their decision-making process. In evaluating investment opportunities, firms need to have confidence in the signals conveyed by relative price changes, and to discriminate between relative price adjustments and general changes in the overall price level. This process is facilitated in a situation of overall price stability. Price stability therefore improves the transparency of the relative price mechanism and can promote an adequate environment to increasing the growth potential of the euro area economy. Moreover, as experience has shown, stable prices minimise the inflation risk premium, thereby lowering long-term interest rates and helping to stimulate investment and growth. In order to maintain price stability, the ECB has designed a monetary policy strategy wherein risks to price stability are assessed on the basis of two pillars. The first pillar assigns a prominent role to monetary developments.

While the ECB will maintain its commitment to the maintenance of price stability, other policy-makers should assume responsibility for increasing the growth potential of the euro area. This, in turn, is the best allocation of responsibilities to contributing to sustainable non-inflationary growth in the euro area and, thereby, also at a global level. 2  BIS Review 50/2001
The banks’ credit assessment procedure is not a static process. The major Swedish banks currently have well-functioning organisations, methods and systems for assessing loans and managing credit risk. Developments in financial theory and rapid advances in IT over the past decade have created new and improved conditions in this field, and the banks have made good use of this. As a borrower it is important to be aware that the individualisation in the modern credit granting process has also been taken up in the shaping of the new capital adequacy rules, where it will be possible to price loans more fairly. Why do we have capital adequacy rules? As the banks play such a central role in the payment system, and the costs of disturbances in the system and in the credit market would be very large and have to be borne not only by the borrowers and lenders, but by society as a whole, the banks have long been subject to scrutiny and oversight with regard to their risk-taking. Since 1988 we have had an international agreement, the Basel Accord on capital adequacy rules. This involves, in simple terms, regulations as to how much capital a bank must hold with regard to different borrower groups for each hundred krona it lends out. It is much more costly for the banks to finance themselves by holding their own capital than through borrowing, just as for other companies.

Asia’s share of global wealth Let us start by taking a look at Asia’s share of global wealth to see how far it has come, and where it is projected to go. Back in 1980, Asia accounted for 19% of global GDP in PPP (purchasing power parity) terms. Today, Asia’s share stands at 35%. In 2020, this is expected to rise to 45%. Compare this with America and the EU. Each accounted for roughly 21% of global GDP in 1980 and 2005. Both are expected to see their share drop to 19% by 2020. Let us look at another measure. Asia’s share of global exports in 1980 was 14%. It doubled to 27% in 2006. By 2020, this is expected to rise to 35%. The picture is the same for Asia’s share of global outward FDI (Foreign Direct Investment) stock. In 1980 it was 5.9%. By last year, it doubled to 11.4%. It is expected to grow to 20% in 2020. What this suggests is that Asia is no longer just a recipient of investments from US and Europe. Increasingly, Asia will become a major source of FDI for the rest of the world. In terms of private wealth, a 2006 Merrill-Lynch study noted that Asia-Pacific contains 27% of the global population of High Net Worth Individuals (HNWI) and 23% of global HNWI wealth. Merrill-Lynch expects private wealth in Asia-Pacific to exceed $ by 2010, growing at an annual growth rate of 6.7%, outpacing the global rate.
I shall in two examples illustrate how the slope of the Phillips curve is affected by two different exogenous changes. 16 The two examples aim to illustrate how the slope can be negative or positive, depending on which exogenous changes are driving economic developments. My hypothesis is thus that the flatter Phillips 15 An example of a true exogenous change that is sometimes mentioned is the weather, but weather is of course of less significance in today’s developed economies than it was during the days of the agricultural society. 16 For a description of the theory I have used, see Jonsson and Theobald (2019). This study also contains other examples than the ones I show here, which illustrate other possible causes of the flatter Phillips curve. 10 [24]  curve may be due to the economy being exposed to different types of exogenous changes after the financial crisis than before it, which has changed the slope of the Phillips curve in a flatter direction. It is of course difficult to verify this hypothesis in practice, just as it is difficult to verify other possible hypotheses, and this cannot be done today. It would require a more in-depth analysis, where one tries to identify in more detail which exogenous changes have been important prior to and after the financial crisis. In the first example, the exogenous changes are in labour force participation. To illustrate the economic intuition, let unemployment increase as a result of more people entering the labour force.

The most important factor behind this development is rising wages, but lower compensation ceilings in the unemployment insurance and income tax credits have also had an effect. Another trend on the labour market is that fewer and fewer employees are members of trade unions. Since the early 2000s the percentage of trade union members has declined by around 15 per cent. Part of the downturn reflects the fact that people born abroad more often refrain from joining a trade union and these  8 For a description of how matching efficiency is estimated, see Jonsson and Theobald (2019). 5 [24]  people are also overrepresented in the private services sector, where the percentage of trade union members has fallen the most. 9 There has also been a trend increase in the number of people with fixed-term employment contracts, see Figure 2b. These people often have a weaker foothold in the labour market and probably also a weaker negotiating position. The reduction in trade union membership and increase in fixed-term employment contracts may be indications that employees’ negotiating power has declined. If that is the case, it could have implications for both wage developments and inflation. Figure 2.
This not only applies to the less regulated players in the financial system, such as hedge funds, but also to a certain extent to banks. For instance, the rating agency Moody’s came to the conclusion in a report 1 published last year that banks generally do not disclose their risks sufficiently. In our Financial Stability Report, we also point out that it would be beneficial if Swiss banks were to provide more data in this regard. By providing more comprehensive data, banks would be helping investors and authorities to better assess the risks banks take. Banks should, for example, publish more results from their stress tests. Similar to crash tests, stress tests examine how severely the bank would be affected by a major crisis. Secondly, it is difficult to assess how the traffic would react in poor weather conditions. Even though the braking distance is relatively short on a dry surface, this is by no means a guarantee that the car will react in the same way on a wet or even icy road. A number of instruments currently in use in the financial system have not yet had to prove their worth in extreme stress situations. It is therefore not clear whether the risks for these new and complex products have been adequately assessed. These products are typically not assessed in a central market, but by using complex models. In other words, the analysis is not a mark-to-market one, but a mark-to-model one.

However, in some situations it may be necessary to allow a little longer time than two years for inflation to return to target, in order to avoid causing unnecessary fluctuations in the real economy,” continued Mr Öberg. “My experiences of forecasting work are that there is considerable uncertainty linked to longer-term forecasts. This makes it important to take into account different types of risk when making monetary policy decisions. One risk that I envisage is connected with the strong developments in the real economy – the strong growth and rapid increase in employment. We will probably attain a fairly normal capacity utilisation level in the labour market in the not too distant future, while the central wage agreements for the greater part of the labour market will be renegotiated next year. In the February Inflation Report, underlying domestic inflation was calculated at up to 3 per cent at the end of the forecast period, which reflects an expectation of relatively high domestic cost pressures,” said Mr Öberg. “In my opinion, there can be some risk that the expansionary monetary policy will overly reinforce the economic upswing and allow domestic prices and costs to rise. It could have more long-term consequences for price-setting and wage formation. The policy rate is still below what can be regarded as an average figure over a long period of time. The question is at what pace it should be raised to a more normal level. This will in turn depend on how the economy develops,” considered Mr Öberg.
In the past year we regrettably posted once again the highest unemployment rate in the OECD; and furthermore, the speed at which joblessness in Spain is increasing during the current crisis is the fastest among all the developed countries. In countries facing a contraction in activity similar to that in Spain, the unemployment rate rose only slightly last year (e.g. by 0.2 pp in France), or even fell (Germany). We might argue that these countries show much lower increases in the labour force than Spain and that the expansion in their construction sectors was not comparable. The problem is that when we compare with countries that do have these two characteristics, such as the United States or the United Kingdom, Spain's unemployment increase continues to stand out. Specifically, the US unemployment rate rose by "only" 2.3 pp in 2008, somewhat more than in the United Kingdom, where the increase from January to October 2008 was 1.4 pp. These are very moderate increases when compared with the figure of over 5 pp for Spain in 2008. Evidently, the Spanish economy’s labour adjustment mechanisms are not working properly. Another harmful effect of an inefficient labour market is that it reduces the room for workers' real compensation to improve. In recent years, the Spanish economy has had to compete abroad on the basis of holding down its real labour costs, which was imposed by the economy’s low productivity.

Thus, even if our economy’s many strengths (a very small public sector, privatisation, low public debt, etc.) remain in place and there is no slippage in progress made, Spain will face more demanding situations for having forgone these two possibilities. Naturally, were we to backtrack on competition, for instance, or were the budget deficit to surge to unsustainable levels, our growth would be even more severely impacted, as occurred in the past decade in some European countries. The only possible means here of recouping the external competitiveness lost following the latest upturn is to increase our productivity. And higher productivity, in addition to requiring a priority focus on education and training, inevitably involves structural reforms in numerous fields. As we have limited time, I’ll refer exclusively to the reform of labour institutions, where the Banco de España researchers have made most valuable contributions. Also, this is surely the reform that can most contribute to resolving the problem most concerning Spaniards, namely unemployment. Yet while not mentioning them today, we should remember there are many other vital structural reforms needed, such as that of the rental market, boosting competition in services, railway freight transport, energy, public administration, etc., and that can also contribute to enhancing productivity and to a return to higher growth than the EU average. Clearly, inadequate labour institutions generate very harmful effects not only on productivity and economic growth, but also on employee welfare. Spaniards need little convincing of the problems unemployment poses, problems which assail us even when the business cycle is buoyant.
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.

On the contrary, monetary tightening works to constrain the growth of mortgage rates. They have risen far less than inflation. Unsecured consumer lending is rapidly expanding too. Banks often lure people with belowinflation rates — which may seem like an excellent offer. The borrower thinks: I take a loan for repairs and buy all the construction materials today, or else tomorrow they will be more expensive (indeed, prices have grown rapidly in this market) so I will end up overpaying less than if I bought the materials later. This is a typical situation. The same logic works with regard to other goods. And borrowers end up getting ripped off by a loan rate with an additional loan agreement attached, or through tied products forced on them. We are fighting this practice. Fines for misselling need to be raised. Banks should calculate the full cost of credit in such a way as to make all hidden fees visible to borrowers. It is an absolute priority for us protecting individuals’ rights in their interaction with financial providers. Now that inflation is above target, our action may even be tougher than before. It is important that we protect people from unnecessarily paying for openly pushed services they do not need and overspending on fees. I will spare you the details, but will say that we are developing regulatory measures to reduce consumer costs related to interaction with financial institutions. That would present an opportunity to improve people’s well-being, and we should use it.
We will continue to monitor and assess the impact of the low interest rate on the search for yield and long-term saving behavior. We are also vigilant on other pockets of risks which may have destabilizing effects on the economy, such as those in the real estate sector. Let me now turn to the Bank of Thailand’s plan to handle an increased volatility of foreign exchange, which is the second element of our policy navigation. As a matter of fact, a certain degree of foreign exchange flexibility is desirable for the economy as it allows foreign exchange to act as a shock absorber and facilitates real economic adjustments. With weaker outlook of growth across Emerging Market economies, and the expected Fed’s policy rate hike, many Emerging Market currencies, including the Thai Baht, have depreciated. In case of Thailand, with relatively strong external financial position and well-managed foreign exchange risk exposure by public and private sectors alike, the risks from substantial foreign exchange debt exposure are currently contained. In addition, as part of the Capital Account Liberalization Master Plan, the Bank of Thailand announced earlier this year the relaxation of capital flows measures in a bid to promote more balanced fund flows, and greater flexibility in the foreign exchange markets. As the global financial markets will continue to be volatile in the near term, the Bank of Thailand thus remains focused on mitigating short-term excessive exchange rate volatility to cushion any impact it would have on the domestic financial conditions, and consequently the real economy.

To put it simply, eurozone membership turned Germany from a hegemon into just one important player in rule making and practical policy making. If I use a simple analogy from the world of motoring, in the German mark era Germany controlled the steering wheel, pedals and gearstick of the monetary vehicle, whereas in the euro era – and especially since the crisis broke out – it has had a firm foot only on the brake. And only sometimes, one must add. Why is that? Well, in a euro-style monetary union, many important issues are put to a vote (or complicated negotiations), and votes and negotiations typically have different outcomes than dictates or decisions of a hegemon. If there had ever been a notion that the euro could be as depoliticised as the former mark, it simply had to fail. In reality it had to be more politicised by definition. The euro could not be a depoliticised German mark, because in many key decisions and respects it had to be a rather more politicised French franc, Italian  BIS central bankers’ speeches  1  lira or Spanish peseta. Otherwise, it seems to me, it could not have come into being in the existing set-up in the first place. A bitter remark: Allan Meltzer once said the ECB’s biggest advantage over the US Federal Reserve System is that it doesn’t have a government standing against it. This, he believes, is the best safeguard of the ECB’s independence.
I would now like briefly to address three central points connected with oversight: which systems should be overseen by the National Bank? What minimum requirements should the operators of these systems fulfil? And finally: how will collaboration with other regulatory and supervisory authorities especially the Swiss Federal Banking Commission (FBC) - be structured? Oversight focuses on systems which might constitute a threat to the stability of the Swiss financial system. The question of the systems to which this applies cannot be answered in precise terms. The ordinance lists a number of criteria that we will consider when assessing the systemic importance of an infrastructure. In addition to the type, number and monetary volume of the transactions that are cleared or settled via a system, the outcome of the assessment will depend, for example, on the other financial market infrastructures with which a system is linked, and whether or not the clearing and settlement of transactions can be diverted temporarily to another system in the event of a failure in the first system. The latter option alleviates the problem somewhat. Given these and other criteria, it can be assumed that the group of systems overseen by the National Bank will be composed first and foremost of those payment and securities settlement systems that are part of what is known as the Swiss value chain. These are the interbank payment system Swiss Interbank Clearing (SIC), the SECOM securities settlement system and x-clear, the central counterparty.

I would like here to outline how the Swiss National Bank can help to ensure more efficient and more reliable financial market infrastructures through its oversight of payment and securities settlement systems. I would, however, like to make one key point right away: state intervention in, or regulation of, financial market infrastructures is justified only if it must be assumed that the private sector will not necessarily perform these functions of its own accord in a manner that is best for the economy. In reality, when designing a system its operators and participants will probably consider the direct costs that they would bear themselves in the event of a system failure or the withdrawal of a participant. However, the remaining costs that are not borne directly by the parties involved in the event of a system crisis tend to be forgotten in management calculations. It cannot be ruled out, then, that operators and participants take less account of the security of a system than would be necessary from the perspective of the broader economy. It is a classic problem of market failure. The sense and purpose of overseeing payment and securities settlement systems is to give due consideration to the externalities that would be neglected by the private sector and to ensure that financial market infrastructures provide the optimum degree of reliability from the point of view of the national economy.