samchain/econo-pairs-v1 huggingface dataset:
These measures should be accompanied by structural reforms that increase competition in product markets, particularly in services – including the liberalisation of closed professions – and, where appropriate, the privatisation of services currently provided by the public sector. At the same time, the Governing Council stresses that it is absolutely imperative that euro area national authorities rapidly adopt and implement the measures announced and recommended in the Euro Summit statement of 26 October 2011. We are now at your disposal for questions. BIS central bankers’ speeches  3

For the solvent banks, the challenge is to maintain their lending capacity. This is particularly important given that other credit markets are not functioning normally, so that it is difficult, or impossible, for businesses to acquire funding directly from bond markets. But without more capital, the banks are not willing to accept new loans on their balance sheets. The main challenge facing the authorities today therefore is to ensure that solvent banks increase their financial strength and thereby their lending capacity. At the same time, it is important to have an exit strategy so that capital injections today do not translate into an increase in state ownership when the crisis is over. Second, cross-border banking has been increasing. Twenty years ago, all the main Nordic banks were national banks. Today, for example, four of the five largest banks in Norway are foreign-owned (three branches and one subsidiary). A national authority cannot be expected to bolster the financial strength of branches of foreign banks: indeed, it could be complicated  BIS Review 12/2009  1  to do this even for foreign-owned subsidiaries. While we were able to choose national solutions to the banking crisis 20 years ago, any effective solution to today’s situation will require an internationally harmonised approach. As today’s financial crisis progressively gets resolved, it will be necessary to start the process of preventing future crises. This will require substantial reform of the regulatory framework. Banks will have to strengthen their capital and their liquidity buffers.
With this motivation, I would like to talk now about the main characteristics of the period of transition to inflation targeting regime in this country, a period that indeed lasted longer than planned, and about the main issues that we have faced during this period. I am strongly convinced that there are important lessons that can be drawn from the Turkish experience. Distinguished guests, The Turkish economy has lived through 30 years of high and volatile inflation rates and massive dollarization together with financial sector instability, high public sector debt burden and unstable and low growth rates. Living with such weaknesses for such a long period of time has created a strong inertia in inflation dynamics. Besides, in the latter half of that period, the currency crisis of 1994, contagion effects of Asian and Russian crises in 1997 and in 1998, and finally our own financial crisis in 2001 have been among the many events that increased the vulnerability of the economy. All these developments that negatively affected economic and social life, highlighted more and more the importance of price stability as the primary goal of monetary policy and made all of us realize the importance of a transparent framework for monetary policy that has a clear nominal anchor. Accordingly, the macroeconomic policy framework has undergone major changes and some institutional arrangements have been introduced after and since the financial crisis in 2001.

Süreyya Serdengeçti: Inflation targeting – performance and challenges Opening speech by Mr Süreyya Serdengeçti, Governor of the Central Bank of the Republic of Turkey, at the Conference on Inflation Targeting: Performance and Challenges, Istanbul, 19 January 2006. *  *  *  Ladies and gentlemen, I would like to welcome you all. It is a great honor for me to open this conference entitled “Inflation Targeting: Performance and Challenges”. I am very pleased to host such distinguished guests and I’d like to thank you all for joining us here in Istanbul and share your knowledge and experience on inflation targeting. The inflation targeting regime has been adopted by a growing number of countries, especially by emerging market countries, in the last fifteen years. As economic and political conditions of emerging market countries have generally been considered as vulnerable and unstable, these countries perceive inflation targeting as a credible and a safe “way out”, after the successful experiences of industrialized countries. Turkey is now the newest member of the club. We have studied the experiences of more than 20 industrialized and emerging market countries as we were working on the general framework of the inflation targeting regime for Turkey. Along with these experiences, historical, socio-political and economic dynamics of the Turkish economy have been taken into account to create a model that is specific to Turkey. I believe that those countries who will adopt this regime in the future will benefit from our experience as we did from others.
I believe, for instance, that it would be fully possible for the Riksbank to explain, together with Finansinspektionen (the Swedish Financial Supervisory Authority), that the mortgage ceiling is being lowered to counteract excessive credit expansion and rising prices in the housing market, at the same time as the Riksbank holds the policy rate unchanged because this is justified by events in the economy as a whole. Of course, this makes considerable demands on the authorities’ communication, but I believe that it is fully possible to put this message across and gain understanding. I can also imagine that under certain circumstances it might be difficult in a purely practical manner to avoid some amount of coordination between monetary policy and financial stability policy. Some countries have chosen to place the main responsibility for maintaining financial stability with the central bank. Other countries have created some form of cooperation between the central bank and the supervisory authority and I believe that this would be a good model for Sweden, too. Macroprudential supervision entails to a large extent using traditional supervision instruments with the focus on the entire financial system instead of individual financial institutions. 4  See, for instance, Svensson, L., “Monetary policy after the crisis”, speech at the Federal Reserve Bank of San Francisco, 29 November 2011, Sveriges Riksbank. BIS central bankers’ speeches  3  In any case, the central bank becomes deeply involved also in macroprudential supervision.

6  BIS central bankers’ speeches  Figure 2 Government bond yields, 10-year maturity Per cent 8  8 Italy  7  UK  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0 08  09  10  11  Source: Reuters EcoWin. This situation is very similar to the one experienced by Argentina, for instance, when they had a “currency board” that firmly tied their domestic currency to the US dollar. In the event of a crisis there has been no central bank that could create currency – in other countries with similar problems the physical currency has run out and the only solution has been to fly in dollar bills from the Federal Reserve. Now, of course, the fundamental problem is that Italy, like Argentina, has lost competitiveness, had a deficit on its current account and built up debt until the market has gradually lost confidence and demanded higher and higher interest rates. Competiveness then needs to be restored through some form of internal devaluation. This is unavoidable, but it takes a long time and does not help the acute liquidity crisis. The situation is different in the United Kingdom. If investors are concerned over the British credit worthiness they will sell their government bonds as in the example above.
For the first 60 of those years, real pay growth grew steadily at over 2 ¼% on average each year. Over the past 10 years, real pay growth has averaged minus 0.4% – a “lost decade” for the average worker. Despite some recovery recently, that leaves the inflation-adjusted pay of the average UK worker still over 5% lower today than it was just prior to the crisis. You have to go back to the 19th century to find a similar period of stasis in UK living standards. The UK’s jobs bonanza has been accompanied by a pay disaster. Chart 7: Real pay Index, 2007 = 100 120 100 80 60 40 20 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Sources: ONS, Bank of England Millennium of Data and Bank of England calculations. Notes: Data at annual frequency using AWE deflated by CPI. Prior to AWE and CPI we use AEI and RPI, respectively, to extend the series backwards. 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  These falls in real pay have been widely spread geographically. Chart 8 compares average real wage rises across UK regions in the ten years either side of the global financial crisis. In the ten years prior to the crisis, all regions experienced annual rises in real pay, averaging between 1.3% (Wales) and 2.2% (London). These pay rises were roughly in line with pre-crisis economic growth rates.

For securitization markets, the U.S. Congress as well as regulators are considering changes to ensure incentives are properly aligned and that there is sufficient transparency around the underlying assets. For the housing GSEs, reforms are beginning to be crafted to reach an  BIS Review 40/2010  5  appropriate model, as described in the testimony by U.S. Treasury Department Secretary Geithner earlier this week. For OTC derivatives, financial reform legislation contains provisions to increase the transparency of the market and to clear trades through central counterparties. For the triparty repo market, a task force is considering recommendations to make the market more robust to weather financial strains among its participants. And for money market mutual funds, the U.S. Securities and Exchange Commission has offered a reform proposal to better prepare those institutions for abrupt changes in investor demands. As you can see, the efforts are extensive and affect many different areas. Together, they should be aimed at achieving some common goals. We should have a system in which regulatory arbitrage is not the primary driver of where or how financial activity or innovation takes place. We should have a system in which government support is well defined and is priced correctly. We should have a system in which investors receive adequate, accurate and timely information to make independent judgments about credit risk through the life of a security. And we should have a system that ensures adequate capital and liquidity standards for firms with deep and intertwined linkages to the financial markets.
Kristina Persson: Globalisation, structural changes and monetary policy Speech by Ms Kristina Persson, Deputy Governor of Sveriges Riksbank, at at seminar arranged by the Confederation of Swedish Enterprise, Stockholm, 14 April 2004. *  *  *  Thank you for the invitation to take part in this important conversation on the consequences of globalisation for Swedish economic policy. I shall primarily highlight the significance for inflation and monetary policy, although I shall also briefly discuss the increased demands for structural changes and political management entailed by globalisation. Globalisation - or “the increasing interdependence of countries around the world as a result of growing cross-border trade in goods and services, investment and financial flows” (the IMF’s definition) - is not a new phenomenon. It has been going on for some time and has given rise to rapid structural changes with considerable demands for adaptation of people and businesses. It has led to a change in the division of labour and to specialisation, as well as access to new markets, which in turn has formed a base for increased real wages and growing welfare. How well Sweden can manage these requirements for change in the future will be decisive for our economic development. In recent years, both the scope and rate of change of the globalisation process appear to have increased.

Another important feature to note is the decentralisation of knowledge: With a touch of their screen, consumers are now able to access an almost infinite repository of information about the products that they want; including comparisons and peer reviews. The days of the insurer or agent knowing best have passed, and it is important to recognise how this tilts the bargaining power in favour of the consumer. From this, there are fundamental questions that need to be asked of the agency force: Are the current incentives of the industry aligned with the best interests of consumers? Should insurance companies still be thought of as the main principals that agents serve, or should consumers be seen as an equal principal in that relationship? How can the remuneration and more generally, culture, change from one focused on volume of sales to one where agents are recognised for more customer-centric, and a consultative role? These are some of the questions that I hope this convention will touch on, and perhaps for me to share some thoughts. 1/4  BIS central bankers' speeches  There are many concerns over the potential upheaval of the status quo arising from the digitalisation of services. But I can share with you that we firmly believe that the agency force will continue to have a role to play in the general insurance sector even as it evolves into the Digital Economy.
See Haddow et al. (2013) and also Bloom (2009) 6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6  Specific effects of uncertainty about the impact of EU exit  Let me make a few additional points that may be particularly relevant in the current context: First, this uncertainty effect applies to all sunk-cost decisions about the future – in particular, it would make firms more hesitant about scrapping capacity, not just adding to it. That’s not to say that such decisions are never taken. If a firm gets genuine news that makes a particular activity unprofitable, it may well come to the point where it has to withdraw, writing off the capacity involved. But uncertainty per se raises the bar for all such decisions, disinvestment and new investment alike. So a lack of clarity about the UK’s future trading relationships needn’t result in visible, headline-grabbing closures of productive capacity. The effect is likely to be more insidious: decisions to expand, that might otherwise have been taken, are delayed. Chart 8: Correlation with uncertainty is higher for  Second, one would also expect the impact to be  slower-lived investments  more acute for long-lived (low-depreciation) investments – buildings more than IT equipment, for example. Intuitively, this is because their consequences last longer – the slower the rate of depreciation on a particular investment, the less like consumption it becomes. In the data, the correlation with uncertainty does seem to be higher for longer-lived investments (Chart 8).

There was too much financial globalisation, and this led to volatility and systemic risk and it has eroded fiscal resources because multinationals have become footloose. To a certain extent, financial openness cancelled out the benefits of trade openness. We need to come up with a new international order that can overcome these problems. But returning to a system based on domestic priorities alone will clearly not work. Don’t you think that central banks have been charged with too many roles and responsibilities? Yes, I do. People expect too much from central banks, considering what we can do and the mandate they have given us in the first place. If you give a central bank too many objectives, you transform it from an apolitical entity with a narrow mandate into a political institution. We have a duty to deliver on our mandate, that is price stability. But giving us too many objectives would make us political, which we certainly don’t want to be. 2/2  BIS central bankers' speeches
Japan aside, it is now close to seven years since the last episode of concerted intervention among the major economies; and there has been no Japanese intervention for two years. Among emerging economies, too, we have seen a marked trend toward more flexible exchange rate regimes. This is particularly pronounced in parts of Latin America. At the other end of the spectrum, some of the newer members of the European Union are gearing up to adopt the euro. Somewhere in the middle between these extremes of flexible exchange rate regimes and full monetary integration are the emerging market economies, mostly in Asia and among the major oil exporters in the Gulf, that still sustain fixed or partially fixed exchange rate regimes. Most of these countries link their currencies to the dollar, though we see varying degrees of flexibility in the closeness of that link. How has the world fared under this diverse mixed of flexible and fixed exchange rate regimes? In general, I think, the costs of living with exchange rate volatility have been less than feared and attempts to limit volatility have been more damaging and less effective than expected. Take the experience of the major economies. Despite periods of very substantial swings in exchange rates, and the amplitude of the changes in exchange rates among the major currencies since 1973 have been exceptionally large, economic growth in the major economies have become more stable, not less.

11  See H M Treasury (2013), which points out, for instance, that “The Government intends that the frameworks for monetary policy and macro-prudential policy, operated by the MPC and FPC of the Bank of England respectively, should be coordinated” (p. 5), and “In order to foster coordination between monetary and macroprudential policy, there is overlap between the membership of the Monetary Policy Committee and the Financial Policy Committee” (p. 10). BIS central bankers’ speeches  5  need to provide support to macroprudential policy when it comes to counteracting the buildup of financial imbalances.12 One argument in favour of monetary policy needing to provide support to macroprudential policy is that there will probably always be incentives to try to circumvent macroprudential policy measures, as it may be profitable for the party that succeeds, in much the same way that there are always incentives to avoid paying taxes. We do not yet know how successful the systems for macroprudential policy now being implemented around the world will be. However, we do know that changes in policy rates are significantly more difficult to circumvent.13 It may therefore be necessary to use the policy rate in certain situations, despite a side-effect being that some areas of the economy that do not need a higher interest rate will also be affected. Failure to take macroprudential policy measures, or measures that are too weak, will put more pressure on monetary policy in this respect.
Given the importance of the US dollar in trade, debt issuance by the non-financial corporate sector in EMEs, and funding for their domestic banks, most of these reserves are dollar-denominated. As well as coming at a domestic high cost to EMEs,22 this vast accumulation of safe assets has pushed down the global equilibrium interest rate – the rate that central banks must deliver in order to balance demand with supply and so achieve stable inflation.23 More fundamentally, by making the world a riskier place, the flaws inherent in the IMFS are reinforcing the downward pressure on global r*. The IMFS is not only making it harder to achieve price and financial stability but it is also encouraging protectionist and populist policies which are exacerbating the situation. This combination reduces the rate of global potential growth, increases its downside skew, and bolsters the likelihood of an extreme downside event (a fatter left tail). As my colleague on the MPC Jan Vlieghe has illustrated, such a change in the distribution of economic outcomes reduces the global equilibrium rate of interest.24 Past instances of very low rates have tended to coincide with high risk events such as wars, financial crises, and breaks in the monetary regime. Whether the last happens is still within our control, but for now the lower global equilibrium interest rate is reducing monetary policy makers’ scope to cut policy rates in response to adverse shocks to demand, and increasing the risk of a global liquidity trap.

When it comes to the supply of reserve currencies, coordination problems are larger when there are fewer issuers than when there is either a monopoly or many issuers. While the rise of the Renminbi may over time provide a second best solution to the current problems with the IMFS, first best would be to build a multipolar system. The main advantage of a multipolar IMFS is diversification. Multiple reserve currencies would increase the supply of safe assets, alleviating the downward pressures on the global equilibrium interest rate that an asymmetric system can exert. And with many countries issuing global safe assets in competition with each other, the safety premium they receive should fall.40 A more diversified IMFS would also reduce spillovers from the core and by so doing lower the synchronisation of trade and financial cycles. That would in turn reduce the fragilities in the system, and increase the sustainability of capital flows, pushing up the equilibrium interest rate. While the likelihood of a multipolar IMFS might seem distant at present, technological developments provide the potential for such a world to emerge. Such a platform would be based on the virtual rather than the physical. For a comparison with the UK as a hegemon in the period 1870-1914, see van Hombeeck, C (2017), ‘An exorbitant privilege in the first age of international financial integration’, Bank of England Staff Working Paper No. 668. 39 Investors switched between pound and dollar depending on their perception of each country, leading to increased volatility in currency flows.