samchain/econo-pairs-v1 huggingface dataset:
6 However, the expansion in exports in China has been made possible by the fact that production per worker has increased, rather than by a dramatic increase in the amount of labour. 7 The "supply shock” is the result of modernisation and industrialisation, i.e. that workers who are not very productive move from an old-fashioned structure of collective agriculture and state-owned companies to modern companies that produce goods for export. The effects of this development on the labour market and on real wages in the west will depend on how the exchange of various types of traded goods develops and how this in turn affects relative prices. Globalisation could certainly entail downward pressure on Swedish real wages, but both data and historical experiences so far indicate that this is not the case. At least, there is nothing in the statistics to indicate that there has been any deterioration in industrial nations’ trade conditions towards either China or other Asian countries. In the long term, Swedish and Chinese wages will probably converge, but this does not necessarily mean falling real wages in Sweden. It is particularly those with no higher education who risk experiencing pressure from the new industrial nations, but a general reduction in real wages does not appear very likely. Sweden has been exposed to international competition for a long time without suffering any deterioration in our welfare, and over the past 10 years we have had rising real wages, despite the expansion in China.

But, ultimately, the crisis was borne out of structural changes in the world economy and our collective inability to adjust. Looking forward, many features of the precrisis environment will still be with us. Emerging economies will still be saving a high proportion of their income. A significant part of those savings will be invested in foreign exchange reserves. Downward pressures on wages will subsist. There are signs that wage dynamics are changing, especially in China, whose economy is deemed by many analysts to have reached the “Lewis turning point” where demographic pressures are offset by increased demand for (at least) qualified labor. Nevertheless, the process will likely be very gradual. As for advanced economies, biased technical progress and pressures from the emerging world as well as unemployment may work to constrain wage dynamics. A general sense of economic insecurity will lead to increase in savings. In most countries and especially in Europe there is an urgent need for strong fiscal consolidation. Market discipline will act powerfully to impose strong consolidation of public finance over an extended period of time. Therefore, it is a valid question to ask: where will growth in world demand come from in the future ? This may sound paradoxical. In most of the emerging world, demand seems to be booming, and, for many analysts future economic growth will be primarily constrained by the scarcity of natural resources and environmental pressures. These are real and unprecedented and they call for a new technological revolution. I am optimistic.
Several companies have applied, and Royal Decrees were issued approving the establishment of 21 insurance companies. Approvals were issued by SAMA for 50 offices to provide insurance related services such as brokerage, loss assessment and insurance consultations. Some offices completed necessary procedures to obtain commercial registrations and others are about to finalize necessary procedures. More licenses are expected to be issued soon. The banking system is also being expanded by allowing foreign banks to open branches in the Kingdom. So far ten licenses have been issued for that purpose to 5 GCC banks and to 5 banks from other countries. All of them have already established their branches in the Kingdom, or are likely to open their branches in the very near future. Also, in March 2006 the Council of Ministers approved the foundation of a Saudi joint-stock company under the name "Alinm'a Bank" with a capital of SR 15 billion to carry out normal banking business and investment. This bank is likely to become operational in the near future. Saudi Arabia has one of the youngest populations in the world. This means that one of the challenges facing the national economy is to continue creating jobs for our young people to enter the labour market. This involves development of education and training to qualify the youth and prepare it to meet the requirements of the labour market.

These include external ones such as higher prices of foodstuffs and commodities, and internal factors such as the remarkable rise in rents in the main cities due to the economic expansion, increasing demand for housing and offices resulting from an increase in spending on investment, and the expansion of services sector especially in the financial and construction sectors. Although the inflation rate in the Kingdome is less than that in most countries of the region due to the size of domestic production base and due to the availability of directly and indirectly subsidized goods and services such as flour, fuel, water, electricity, and some  2  BIS Review 150/2007  foodstuffs, the continuing increase in inflation requires SAMA to keep a close watch on it and adopt all possible policies to confront this challenge. Dear audience, The banking system’s performance has continued to strengthen over the years with proactive monitoring and guidance from SAMA. Saudi banks achieved good profits, such as the average Return on Equity and average Return on assets. They have not been affected by turmoil in global markets. The banks also have average Basel Capital Adequacy Ratios of over 21 percent well above the mandated international standard of 8 percent. To ensure the continuation of this trend, we continue to accord high priority to appropriate prudential regulations and close supervision of banks. During 2005, SAMA rolled out a risk based approach to bank supervision with on site and off site risk assessments undertaken on an ongoing basis.
And as Ben Bernanke drew out in 1983, the financial system can amplify those movements, such that relatively small news can create crises for the financial system and it is the impaired financial system that then does the severe economic damage. And the rational expectations view of the world is even compatible with purely self-fulfilling crises, triggered not by a change in fundamentals but rather by a change in confidence. The classic model of a bank run is entirely rational; since there may not be enough liquidity to repay all depositors if all of them try to withdraw their money at once, each depositor has an entirely rational incentive to get their money out first if they think there will be a run.12  11  That quote comes from Chapter 12 of his General Theory, another quote attributed to Keynes, but harder to source, is also relevant here: “markets can stay irrational longer than you can stay solvent”. Or as Warren Buffet has put it: “As a group, lemmings have a rotten image, but no individual lemming has ever received bad press.” Relatedly, Aikman et. al. (2015) develops a model showing how career concerns could motivate rational bankers to make more risky investments when economic fundamentals are good. 12 Diamond and Dybvig (1983) 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  But there are many studies showing that the predictions of rational expectations do not hold. Something else seems to be driving expectations.

And because now is the time to strengthen our economic instruments in order to deal with a future European recession, the day it comes. Otherwise monetary policy may be overburdened. My second wish concerns our country. The French economy is in much better shape, but there are still major drags on growth. At around 1.9%, we are above our potential growth rate, which means that we are coming up against more structural limiters. There are at least two indications of this: a persistent negative growth differential vis-à-vis the euro area of around half a percentage point, and a current account deficit and hence a lack of competitiveness. In order to increase the speed of the French economy, we need to boost the power of the engine: reforms, including those underway, are therefore necessary. And, beyond bureaucratic barriers or corporate interests, the greatest priority is to reform vocational training and apprenticeships: we cannot remain in a situation where we have almost 3 million unemployed, of whom 600,000 are young people, and companies cannot recruit the skills they need. I hear this everywhere from the entrepreneurs who participate in the advisory boards of the Banque de France, from Besançon to Châteauroux last week. According to INSEE, hiring difficulties have been the main obstacle to corporate activity. My third wish is for financing. Often, the Governor of the Banque de France encourages banks to lend more; this is not the case at present! Bank lending in France is very buoyant.
The decline in demand in the economy is documented by the following: Household consumption, which is crucial for the future course of demand-pull inflation, fell for the sixth consecutive quarter. The saving rate is now 21.7%, while the long-term average is 12%. The decline in demand is also illustrated by the fact that prices of new apartments are already falling quarter on quarter. This is accompanied by the fact that the economy is below potential output and we have a negative output gap. I would like to mention two important problems: (1) the CNB's large balance sheet and (2) government debt. Regarding the CNB's large balance sheet, over the last ten years, interest rates were too low, in fact zero for a long time. In addition, in early 2017, interventions led to an increase in the CNB's balance sheet within four months, or rather in the banking sector's liquidity. It increased from CZK 1,300 billion in December 2016 to CZK 2,300 billion in April 2017, i.e. there was an additional CZK 1,000 billion in the balance sheet, or an almost doubling of the balance sheet within four months of 2017. During these interventions, demand for Czech government bonds from non-residents increased. This further expanded the country's borrowing options. Budget constraints  3/7  BIS - Central bankers' speeches  were eased. Then, during Covid, in particular at the end of March 2020, interest rates were reduced too close to zero.

Let me also thank Ms Linda Zuze (the International Consultant on the project) and Mr Shebo Nalishebo (the Local Consultant) and IPSOS Zambia for successfully conducting the Survey. 1/3  BIS central bankers' speeches  The Bank of Zambia and its collaborating institutions mentioned earlier are greatly indebted to the respondents who participated in the Survey for completing the questionnaires. We thank you most sincerely for your cooperation. In particular, we are aware that the survey got into the way of your work as you completed the questionnaires. We are pleased to note that the response rate was 90%. This points to the fact that you share in our resolve to bridge the financial inclusion gender gap and engender economic development. Ladies and Gentlemen, having launched the commencement of the project for the development and implementation of a framework for collection of supply-side sex-disaggregated data almost a year ago, I am pleased that today we can mark a significant milestone towards achieving the objective of the project as we disseminate the results of the baseline survey. The survey results not only give us the situation analysis regarding the availability of supply-side sexdisaggregated data, but also provides a synopsis of the magnitude of the financial inclusion gender gap, which we must all work hard to bridge.
As you see from Chart 13 – the blue line plots the ratio of broad money to nominal GDP – this trend continued for many years afterwards, including through the first fifteen years of the inflation targeting era[15]. Page 22  Chart 13: Demand for broad money increased from the 1980s as banks started paying interest on deposits  Sources: ONS, Bank of England, Thomas and Dimsdale (2017), Building Societies Association Year Books and Bank calculations. Broad money is defined as M4ex from 1997, projected backwards with official data for M4 to 1963 and estimates from Thomas and Dimsdale’s Millennium of UK data (2017) to 1945, based on Capie and Webber (1985) and Sheppard (1971) , and digitised here . Inverse velocity is defined as the stock of M4ex divided by annual nominal GDP. The rate of interest on broad money is a stock-weighted average of interest rates across the sectoral components of M4. These are based on annual averages of Divisia rates of return back to 1977. Prior to this they are based on data from Thomas and Dimsdale (2017) derived in part from estimates by Billings and Capie (2004)  . It may be that, in the latter part of this period, the very rapid growth of banks’ balance sheets – which was even more marked if you include their overseas balance sheets – was telling us something about the build-up of risks in the banking system.

Situations may take unexpected turns. In the face of such uncertainties, being prepared and ready is always a good proposition. 2  BIS Review 74/2007  Reputation risk and fair dealing with consumers Moving on from macroeconomic and financial risks to something closer to home, there is another risk which banks should remain mindful of. Unlike the other risks I had raised earlier, this is a risk which is fully within your bank’s domain. This is reputation risk. You all appreciate the value of a good reputation in doing business. A good reputation takes years to build. It can also be damaged within a short period of time through incidents that undermine consumer confidence and that are not managed properly. You have read the newspaper articles in recent months concerning public unhappiness and questions about the transparency and fairness of practices concerning multiple home loan board rates and promotional fixed deposit rates. You might have asked yourself why these issues should concern you as they may not pose any significant impact on the financial standings of your banks. While of limited short term bottom-line impact, these issues can affect the longer term reputation of and consumer confidence in your banks. The internet has empowered consumers with unprecedented reach. A disgruntled customer can post his or her unhappiness on a forum or blog and quickly reach a wide audience. It has become more important for banks to incorporate good and fair consumer outcomes as integral parts of the way they do business.
Downsizing of the overbanked market is possible. It took us 20 – 25 years to do so, bring down the number of banks by two thirds. With good planning and a good resolution system that can be done without provoking financial instability and without much cost to the budget. 2. The combination of microprudential and macroprudential policies is needed, while the monetary policy also needs to take financial stability considerations into account. Boom-bust cycles can be managed with macropru, but if not hand in hand with monetary and fiscal policy, there is a need to do a lot, much beyond what is currently in our macropru toolbox. 3. Entry into the euro area has been without any doubt beneficial, and would be beneficial for a peer group of EU countries. The risk premium declines with entry, primarily because of the removal of the foreign currency risk. If Croatia is compared with the peer group of countries over the last three years since we entered the ERM mechanism, it is obvious. Most of the benefits happen during the crisis times. That is also a clear benefit for financial stability and the financial system. However, the health and strength of our banking system was built even before entry into the banking union and the euro area.

Not all of them disappeared though, for example, Charlemagne capital bought four regional banks and consolidated them into a single bank. Cleaning up the market, by removing inefficient banks, laid foundations for a healthier banking system, resistant to macroeconomic disturbances and improved risk management. Moreover, these two crises made us attentive to emerging risks, such as rapid credit growth or lax risk management practices and generated political support required to provide us with the toolkit needed to prevent future disruptions in the financial sector with large spillovers to the real economy and potentially huge costs to the budget. Since then, we continued cleaning up the system with no threat to either the financial stability or the budget. Navigating the Boom and the Bust The resumption of growth and resolution of weak banks eventually stabilized the banking system, setting the stage for the period of rapid international integration and financial deepening of the 2000's. After the first clean-up at the turn of the century, the number of banks has fallen to slightly above 40, and consolidated institutions started to compete strongly. In their pursuit of higher market shares, banks turned to foreign sources of financing, facilitated by extremely favourable financing conditions and high liquidity at the global level. At the surface, the financial sector supported the story of economic growth and convergence. However, experiences from the 1990s provided an optics needed to spot risks emerging underneath.
I’ve considerable sympathy for this argument: the high and variable rates of inflation seen in recent years have affected the ability of both households and companies to plan their spending and investment decisions with any degree of certainty. But the remit of the MPC recognises that trying to keep inflation at target in the face of large shocks and disturbances “may cause undesirable volatility in output.”3 I fear that to some this might sound like I’m resorting to technical loop-holes to bolster my defence. But that is not the case. This element of the remit has been central to the operation of monetary policy in recent years. The foremost task of monetary policy over the past few years has been to ensure that the financial crisis did not lead to a prolonged depression. To have offset these price level shocks would have meant presiding over an even deeper recession. I’m not saying that if I had had perfect foresight, I wouldn’t have changed my policy stance at all. But the hurdle for wanting to have had materially tighter policy in the face of the most severe downturn in the post-war period is pretty high. But this argument is hypothetical. As many of you may know, the MPC did not have perfect foresight. Indeed, far from it! Which leads to the second charge against the MPC: why has inflation been so much higher than we expected? Why has inflation been so much higher than we expected?

In my view, portfolio flows in the opposite direction – i.e. portfolio outflows from Mainland China – will also present huge  BIS central bankers’ speeches  1  opportunities to the asset management industry, especially given the fact that the Mainland economy is the single largest provider of savings in the world. Currently, outward portfolio investment (OPI) from the Mainland is only around 5% of its GDP, still far below 57% for East Asia, 42% for the US and over 100% for the UK. Our inhouse research findings show that an economy’s portfolio investment outflows as a percentage of GDP tend to grow along with the level of economic development measured by per capita GDP. So, given the huge potential outward portfolio investments from Mainland China, how will they be allocated across different financial markets? Our researchers have studied this particular subject in depth and found that the home bias is still very much there, i.e. the closer the potential investment destination to Mainland China, the more OPIs it will receive from Mainland China. As such, Hong Kong is likely to be one of the key destinations of Mainland’s OPIs and the amount of those OPIs Hong Kong will receive will increase as China’s GDP grows. Apart from being the final destination for these investments, Hong Kong can also act as an ideal launch platform for these investment flows to reach other major global markets.
This weakened incentives to conduct prudent screening and a thorough monitoring of loan quality. Credit became plentiful and market liquidity expanded at a pace that could ultimately no longer be justified. Looking ahead, three steps will be required to a more resilient system. •  First, the tendency for finance to become pro-cyclical even at a system-wide level needs to be strongly mitigated. The quality and quantity of bank capital and their liquidity buffers have to be improved in good times to provide a sufficient buffer for bank equity when the cycle turns. The cyclicality of market economies is inevitable. But the financial system should not be allowed to amplify swings. •  Second, the transparency of the financial structures needs to be enhanced. Informed decisions by market agents are a key element of market economies. Lack of transparency of financial products masked abuse and led to disaster. Looking into the future, all institutions, instruments and markets of any relevance for systemic stability need to enhance risk disclosure. •  Third, once more, incentives need to be aligned. Market participants – traders, loan managers, risk committees and boards of directors – were given strong economic incentives to focus on short-term profits. Long-term value creation was not a concern in the pre-crisis world. Collectively, this has resulted in excessive risk taking. A reform of the executive compensation schemes and practices is an essential part of our effort to secure financial stability. At the financial level, reform in Europe will follow a two-pronged approach.

Jean-Claude Trichet: Key lessons from the crisis Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the “Annual conference 2009”, organised by the Asociación de Mercados Financieros, Madrid, 23 November 2009. *  *  *  Ladies and Gentlemen, First of all let me thank the Asociación de Mercados Financieros for inviting me to its Annual conference. It is a special honour for me to speak directly to so many active participants in Spain’s financial sector and beyond. Your association provides an important platform for market participants to reflect and address the challenges and opportunities for the sector in a rapidly changing environment. The financial industry is a key part of the service sector, the infrastructure that makes businesses efficient and a source of value for the economy. We all have been witnessing the formidable change and progress of the Spanish economy since its accession to the European Community in 1986. Today, and despite the crisis, the Spanish economy is close to the highest standard of economic and social progress available worldwide. The 1990s and the early years of this century have inspired perceptions that a renewed siglo de oro had started. But the crisis has not spared this country. Spain’s unemployment rate is once again edging above euro area averages, with impacts on private consumption and capacity utilisation. Looking forward, Spain’s convergence to a balanced growth pattern will require a more balanced progression of income components.