samchain/econo-pairs-v1 huggingface dataset:
Chart: Saving and investment as a share of GDP Looking back on the financial crisis, the question may be raised whether international capital markets have been able to cope effectively with large capital flows. A large savings surplus in Asia has sought investment opportunities in rich countries. This has been possible, not because of high investment demand, but because of the sharp decline in saving in advanced economies. The high level of saving in Asia has been the driving force and is the reason for the decline in long-term real interest rates. Chart: US long-term interest rates The effect of global imbalances on long-term interest rates set the stage for the financial crisis. In the US, as shown in the chart, interest rates had shown a persistent downward trend. Low interest rates induced investors to seek new investment opportunities in the search for higher returns. Expected return rises with an increase in risk. A strong appetite for risk combined with financial innovation resulted in an underpricing of risk in financial markets, while low interest rates led households, enterprises and governments to overestimate their own ability to pay. Combined with weak regulation and inadequate supervision of the financial sector, these were some of the root causes of the financial crisis. BIS central bankers’ speeches  3  As I mentioned, trade deficits and surpluses are not in themselves unusual. But the imbalances eventually became so large that countries became vulnerable to turbulence.

The size of the equity allocation has an impact on the  5  Recent research shows that the theory of purchasing power parity holds true to a greater extent than suggested by previous results. Cf. : Lucio Sarno (2011): Purchasing Parity in Tradable Goods, Working Paper for the Ministry of Finance  6  Report No. 15 (2010–2011) to the Storting: The management of the Government Pension Fund Global in 2010  6  BIS central bankers’ speeches  Fund’s return and risk and has increased from zero in 1996, to 40 per cent in 1998 and to the current 60 per cent allocation adopted by the Storting in 2007. The equity allocation was increased from 40 to 60 per cent in the period from June 2007 to June 2009. Norges Bank purchased NOK 1 trillion in equities for the Fund through the financial crisis, more than doubling the Fund’s total equity holdings. The owner’s adherence to the strategy through the period of decline in equity prices will undoubtedly prove profitable over time. A maximum of 40 per cent of the Fund is now invested in bonds and other fixed income instruments, which are usually associated with lower risk but also lower expected return than equities. Earlier this year, Norges Bank advised the Ministry of Finance on the design of the benchmark index for fixed income investment. The strategic benchmark index should reflect the role fixed income investment is expected to play in the Fund’s portfolio.
On the one hand we can choose a path towards fully-integrated international regulatory and supervisory structures, in order to achieve a better match with the global format of the financial system. On the other hand, we can choose a path towards shrinking the financial system back inside national borders, within the perimeters of current regulatory and supervisory arrangements. Obviously, reality will not be as black and white as to make a simple choice between these two paths possible. Future regulatory reform will probably take some kind of middle road. But if someone asked me for directions my answer would be clear. The benefits of financial globalisation are too great for us to afford to close national borders and to roll back financial integration. A new European supervisory structure – the de Larosière proposals As you all know, the European Union chose its path already some time ago. Based on the belief that integrated markets contribute to economic growth (and also to other important policy objectives) the European Union has established a legal and institutional framework for the supervision and regulation of financial markets. However, even though we have come a long way towards establishing a single European market, the regulatory and supervisory structures are still very much fragmented along national lines – a fact that we have been painfully re-minded of during the current crisis. The problems experienced with the Icelandic banks and the Benelux-based conglomerate Fortis are just a couple of examples.

To address these problems the European Commission last fall initiated a fundamental overhaul of the EU supervisory structure. A group chaired by the former head of the IMF, Mr. Jaques de Larosière, was mandated to come up with proposals for needed reform. The recommendations made by the group were broadly embraced by the EU member states and we are now at that stage in the process where final details are being negotiated. The new supervisory structure will rest on two pillars. The first pillar – micro prudential supervision The first pillar consists of several initiatives to strengthen micro prudential supervision in the EU. Regulatory measures at the EU level shall ensure strengthened and more consistent  BIS Review 134/2009  1  supervisory powers at the national level. Supervisory colleges will be mandatory for all the major cross-border firms in the EU. Differences in national laws will be indentified and removed. All these reforms will take place within the new European supervisory network, the European System of Financial Supervisors (ESFS). The main element of this reform is the transformation of the three existing EU supervisory committees into independent EU authorities. These authorities will form a central hub of the European supervisory community and will be equipped with both regulatory and supervisory powers. The day-to-day supervision will still be a national responsibility and carried out on a decentralised basis. The new authorities are therefore primarily to be seen as a complement to the national regulators and supervisors and not as a replacement.
The distributional effects of the central banks’ asset purchases have been in focus in, for instance, the United States, the United Kingdom and in Germany, where there has been considerable discussion of the effects of low interest rates for savers.1 In Sweden, the Riksdag Committee on Finance has included distributional effects in the questions that are to be included in the ongoing review of the monetary policy framework and the Sveriges Riksbank Act – in the terms of reference for the review it says that the committee making the review shall consider in particular whether the Riksbank should give consideration to the consequences that conventional and unconventional monetary policy may have on, for instance, the distribution of income in the economy.2 Explaining why the distribution of income and wealth changes is a challenge that is not made easier by the fact that the statistics in some cases lag behind and in other cases have large gaps. Those of you who have read Piketty's best-seller Capital in the Twenty-First Century also know that one can give the question of distributional effects much greater room than I have scope for today. What I want to say with these reservations is that those of you who are expecting to hear exactly how great the distributional effects of monetary policy have been will  1 See, for instance, the Bank of England (2012), OECD (2015), Bindseil et al. (2015), Deutsche Bundesbank (2016),  European Parliament (2016), Domanski et al. (2016) and Amaral (2017).

Although the market realizes that a further rise in the asset price would virtually compress yield, the market appears to be less concern about a bubble in asset prices. Therefore, there is a risk of a sharp correction which we all witnessed in the recent episode in the Thai stock market last week. 6. The second dimension of the great rotation is the global fund flow, which is one of the greatest challenges emerging markets are experiencing. The continued monetary easing in advanced economies, economic growth differential and protracted low interest rate environment are key factors pushing investors to search for yield; fund flows have therefore switched from advanced to emerging economies. 7. This second dimension of the great rotation is a concern to policymakers in the region and has called for wider public discussions among academics, businesses and policymakers. Discussion typically centred on the potential recourse to macroprudential or  BIS central bankers’ speeches  1  unconventional measures on the part of recipient countries, given that such practice has been adopted by the source countries of the fund flows. As market participants, we all recognize the benefits of capital inflows that provide a two way view for the market, thus adding depth and breadth to emerging financial markets. Therefore any considerations on the use of capital flows policies need to be carefully thought out with consideration of potential unintended consequences and impacts.
The European Commission estimated that if Member States achieve their targets, R&D activities will rise by 50% in 2025, generating an increase of between 2.6% and 4.4% in GDP on the basis of conservative assumptions (see report from European Commission “Implementing the renewed Lisbon strategy for growth and jobs: A year of delivery” (2007)). 6  BIS Review 18/2008  euro area, and are crucial to maintaining and ensuring the competitiveness of the individual European companies over the medium to long run. We should keep in mind that in a context of monetary union, not only fiscal policies, but also price competitiveness and unit labour cost developments across countries should be continuously and closely monitored. III. Conclusions  Ladies and gentlemen, I would like to conclude by stressing a few points. Europe is in the process of reforming its economy so as to adapt to the challenges of globalisation, technological change and an ageing population. Significant progress has already been made as reflected by the notable rise in employment growth over the last decade. Monetary Union has been effective – and hugely successful – in supporting growth through a credible monetary policy that delivers price stability in the medium run, hence contributing to lower financing costs in the euro area through a reduction of risk premia. It has also given a further impetus to resolute European integration, particularly in financial markets. The challenges ahead are a reminder that European integration is a dynamic process and that it will bring about deeper structural transformations.

These include, inter alia, the unlocking of business potential by creating an entrepreneurial-friendly economic environment, measures to support innovation through higher investment in research and development (R&D) and policies aimed at improving human capital. First of all, Europe needs more new and thriving firms willing to reap the benefits of opening markets and to embark on creative or innovative ventures for commercial exploitation on a larger scale. It is increasingly new and smaller firms, rather than large ones, that are the major providers of new jobs. An entrepreneurial-friendly economic environment would imply less red tape for small and medium-sized enterprises to help them develop at home and across borders, as well as positive action to ease access to the finance they need. Europe is significantly lagging behind in this field. For instance, venture capital financing in Europe remains only a fraction of what it is in the United States relative to the size of each economy. Second, promoting R&D investment is also a major issue. While many Member States expect to increase their R&D spending, Europe will fall short of the 2010 overall EU target of achieving 3% of GDP. In 2005, R&D investment relative to GDP was 1.9% in the euro area compared to 2.7% in the US. The efforts of European countries to increase R&D investment are still insufficient. 16 Finally, to make these measures most effective, they need to be accompanied by efforts to improve the labour force’s level of education and expertise.
It is possible that the e-krona could increase competition for household deposits on the margin, but this does not mean that lending need be affected. New loans are not created solely from new deposits in the modern economy. For instance, the Swedish bank have around SEK 6,000 billion in loans issued on their balance sheets, and just under half of this in deposits, around SEK 2,800 billion. 10 Another way of putting it is that Swedish banks get around half of the financing for their loan portfolios on the market. This is more than the banks in the rest of Europe, and it has not prevented Swedish credit granting from growing at a faster pace. Deposits are thus not necessary to create lending. On the other hand, they have traditionally been a source of cheap financing for the banks. If deposits were to decline somewhat as a result of the e-krona, the banks would have to replace this with wholesale funding, which tends to be somewhat more expensive. Alternatively they can raise the interest on deposits. Another question that often arises is whether central bank digital currency can increase the risk of bank runs. The idea is then that in times of unease a bank can rapidly lose its deposits, as it is easier to move electronic money than withdraw cash. 11 However, it is questionable whether cash is the relevant point of comparison in this context.

As the Riksbank and the banks must have personnel in place, the system is only open during normal office hours, and even if these can be extended by an hour or so, it is not likely that we will operate it 24 hours a day. At the same time, we want all payments in Swedish krona to be settled in Riksbank money. This reduces counterparty risk in the financial system. If, for instance, a private bank were to run such a system, all participants would have a claim on that bank before the payments are settled. If that bank were to go bankrupt, all of the money would be lost. That risk does not exist if the central bank runs the system. Additionally, it would be preferable if the system were run by a competition neutral actor in the form of the central bank. We therefore want to ensure that all payments in Sweden will continue to be settled with us. However, instant payments require systems that can manage payments around the clock. The European Central bank, ECB, is in the process of developing a new technical platform called “Target Instant Payment Settlement” (TIPS). This will enable instant payments around the clock and it will be operational at the end of 2018. It will also be prepared to handle other currencies than the euro, for instance the krona.
Jerry, of course, was instrumental in working with then Chairman Alan Greenspan in devising a response to provide liquidity to the market, and an episode that could have ended in financial crisis soon passed. Jerry also tackled many other difficult issues during his tenure, including the Latin-American debt crisis and the development of the first Basel accord. We also have Bill McDonough, the eighth president of the Bank, who built on the accomplishments of Jerry’s tenure, and made great strides in connecting the New York Fed to the broader region. At the same time, he helped ensure that the Federal Reserve was prepared to face new, salient challenges presented by developments in the global economic and financial landscape. During his tenure, the city, the country and the Bank experienced a very significant crisis on September 11, 2001. Under Bill’s leadership, New York Fed staff worked tirelessly on Liberty Street, supporting the efforts of first responders, while ensuring that financial markets continued to operate and serve their vital function in the U.S. and global economy. A number of the members of our Board of Directors, including Chairwoman Rafferty, are with us, as is one of the Federal Reserve’s friends from the international central banking community: Mervyn King, the recent head of the Bank of England. Mervyn and his wife recently moved to New York City, so we should extend a warm welcome to them.

Sam Woods: Adapting to Solvency Speech by Mr Sam Woods, Executive Director of Insurance Supervision of the Bank of England, to the Association of British Insurers, London, 9 July 2015. *  *  *  It is a great pleasure to speak to you today. I plan to give another speech in a few months’ time, focussed on the history of insurance regulation and supervision here in the UK. But today I will talk about my immediate priority, which is getting Solvency II over the line for go-live on 1 January 2016. The industry has made a tremendous effort to make the transition a successful one. The circumstances have been difficult, with a delay to political agreement on important aspects of the new regime compressing the time that the industry has had to prepare. The delay has also added to the costs of implementation. However, the time has not been wasted and firms have used it to make important improvements to their Own Risk and Solvency Assessments, as well as their internal model applications. Today I want to make sure that investors and insurance firms understand the approach the Bank of England will take to capital under Solvency II.
To the extent size is a proxy for productivity, this is also as we would expect.18 During expansions, more productive firms hire more, and lose fewer, of their workers than less productive firms (Charts 14a and 14b). Other patterns in the data less obviously fit the facts, however. Despite jobs flows picking up, pay growth has until reasonably recently remained slow and low. Meanwhile, productivity growth has remained 18  For example, Bernard et al (2014) and Wales et al (2018). 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  stubbornly subdued despite a seven-year jobs recovery. So has the jobs ladder broken? Have its rungs been removed? To understand these developments, it is useful to break the decade down into phases. Charts 14a and 14b: Hire and quit rates by firm size Hire rate  Quit rate  7%  2.5%  1.0%  Small firms (< 50 workers) Medium firms (50-499 workers) Large firms (500+ workers)  0.9%  6%  2.0%  0.8% 5%  0.7%  4%  0.6%  1.5%  0.5% 3% 2% 1%  0.4% Small firms (< 50 workers) - LHS  0.3%  Medium firms (50-499 workers) - RHS  0.2%  Large firms (500+ workers) - RHS  0.1%  0%  1.0%  0.5%  0.0%  0.0%  Sources: ONS LFS and Bank of England calculations. Notes: Charts show four-quarter moving average of hire and quit rates.

24  All speeches are available online at www.bankofengland.co.uk/speeches  24  Chart 27: Global activity indicators Index, 50 = no change  Percentage change, 3 months on 3 months ago Global manufacturing new orders PMI (lhs)  56  5 Global services PMI (lhs)  54  4 3 2  52  1 0  50 CPB world IP  -1 48  CPB world trade in goods  Global manufacturing PMI (lhs)  -2 -3  46  -4 44 2017  -5 2018  2019  Sources: IHS Markit, CPB and Bank of England calculations. It is notable that movements in global asset prices and companies’ expectations appear to have been large relative to the modest announced tariff increases. Based on the higher trade tariffs announced so far, and using standard trade models, we would expect a negative impact on global growth of a few tens of basis points.25 The adjustments in asset prices and business survey responses have been multiples of that. One way of beginning to make sense of this puzzle comes from casting our minds back a decade. Back then, we also saw outsized responses in global asset and output markets following a modestly-sized shock – a collapse in the US sub-prime market which at the time accounted for less than 1% of global wealth. This market’s collapse prompted the sharpest fall in global output and asset prices since the 1930s.
BIS Review 39/2005  3  price differences between low-price chains and traditional food shops in the Stockholm region; differences of up to 30 per cent. The prices at low-price chains outside the city centre were a further 10-20 per cent cheaper than those of the traditional chains in the city centre. Other surveys also indicate large price differences. The stiffer competition is being facilitated by a greater ambition on the part of politicians to increase the number of shop sites for low-price chains. For example, in Stockholm there are plans to raise the number of new sites considerably. •  Another trend we are seeing is that shops are becoming bigger and the share of sales accounted for by hypermarkets is rising. The total shop space is increasing at the same time as small food shops are being driven out of business. That entails a drop in costs and enables lower prices, partly in order to respond to the new chains’ lower prices. •  Food chains are also concentrating more and more on private labels, which is clearly evident on their shelves in terms of the greater share of products that bear the shops’ own brands as a complement to the different suppliers' brands. The purpose of private labels is to strengthen the chain’s brand name and to reduce costs through lower marketing expenses and fewer middlemen.

Ardian Fullani: Overview of Albania’s latest economic and financial developments Speech by Mr Ardian Fullani, Governor of the Bank of Albania, on the Monetary Policy Decision-Making of the Bank of Albania’s Supervisory Council, Tirana, 30 January 2013. *  *  *  Today, on 30 January 2013, the Bank of Albania’s Supervisory Council reviewed and approved the biannual Monetary Policy Statement. Based on the latest monetary and economic developments in Albania, and following the discussions on their future outlook, the Bank of Albania’s Supervisory Council decided to lower the key interest rate by 0.25 percentage points. After this decision, the one-week repurchase agreement rate drops to new record-low level of 3.75%. The Supervisory Council deems that further easing of monetary conditions will help in meeting the inflation target in the medium term. Let me now proceed with an overview of economic and monetary developments, and key issues discussed at today’s meeting. * * * The Albanian economy improved slightly in the seconds half of 2012. This performance was driven by a fuller reflection of monetary stimulus and improved external economic and financial environment. However, the economic activity remains below potential and the growth resources appear unstable. Production growth is not reflected in decreasing the overall uncertainties, which contain private investments and consumption, and lead to downward credit demand and supply. The banking system has sound and liquid balance sheets but it remains highly prudent in terms of financing long-term investments. These tendencies will condition the economic developments over the period ahead.