samchain/econo-pairs-v1 huggingface dataset:
This evidence suggests it is far better to be born rich and stupid than bright and poor. Moreover, these early-stage differences in educational attainment, shaped by socio-economic background, have a life-long impact. That is why there is a very high degree of intergenerational persistence in incomes and wealth, even once account is taken of ability. As one diagnostic on that, consider the following evidence, courtesy of the Commission on Social Mobility and Child Poverty: although independent schools comprise only 7% of pupils in the UK, the independently-educated comprise over 70% of the upper echelons of the judiciary, 55% of permanent secretaries in the civil service and 62% of senior armed forces officers. 70 Branching of the opportunity tree starts early, it appears, and then keeps widening. At present, as with cognitive diversity, there is often a lack of recognition of these inbuilt socioeconomic biases. And, as with cognitive diversity, one reason for this lack of recognition is a lack of measurement. There is no agreed set of metrics for measuring someone’s socioeconomic background. In the UK, the Social Mobility and Child Poverty Commission has begun to develop some metrics. But there is widespread recognition that we are still in the early stages of measurement. Measurement would enable organisations to draw their own experiential diversity maps. As with cognitive diversity, beyond that there is potentially value in making transparent those maps to provide incentives for purposive action if experiential diversity is found to be wanting.

The scale of these flows has waxed and waned, but it is clear cross-border flows of people today are at high levels historically. 7 In London, the fraction of non-UK born residents was almost 3 million or 37% of the population in 2011. And Edinburgh has the largest non-UK born population of any region in Scotland at 16%. Accompanying this co-mingling of ethnicities and cultures has been an evolution, bordering on revolution, in social attitudes. Through the course of several centuries, laws have emerged forbidding discrimination based on race, gender, disability, ethnicity and age. And, during the latter part of the 20th century, there has been rapid growth in a new set of social norms and policies to promote diversity in schools and universities, in the workplace, in sport and leisure activities and in wider society. One interesting window on these changing societal attitudes is provided by looking at the etymological roots and evolution of the word “diversity” itself. These can be traced to the Latin “divertere” meaning “to turn aside” – which in turn led to our word ‘divert’, meaning to change course - and the old French expression “diversite” meaning “difference, uniqueness, oddness”. In other words, the semantic roots of diversity support a dual interpretation, part positive, part negative. 8 That dual interpretation has continued through the ages. Chart 1 plots the incidence of the word diversity in books printed since the 15th Century. 9 Diversity entered the English lexicon in the mid-14th century. At that time, its meaning was broadly neutral.
Thomas Jordan: A new role for central banks? Speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the Zürcher Volkswirtschaftliche Gesellschaft, Zurich, 16 January 2014. *  *  *  The speaker would like to thank Peter Kuster for his valuable support in preparing this speech. I am also indebted to Katrin Assenmacher, Rita Kobel, Thomas Moser, Attilio Zanetti and the SNB’s Language Services. Ladies and gentlemen A country’s prosperity largely depends on how the different agents perceive their role and their responsibility. This is true for both private agents and government institutions. Within the regulatory framework, private agents must continuously reappraise their role and their business model and make adjustments so they can compete in the marketplace in the long term. This is the only way for them to create and secure jobs and income for the population. Given the dramatic changes both in the regulatory framework and in the economic environment in the past few years, this is no easy task. Today, however, I am not going to speak about the future role of others and the challenges they face, but rather look into the mirror, as it were. Should central banks not also have to fundamentally rethink and perhaps redefine their role after the financial and debt crisis? Unlike other private agents in an economy, central banks are obviously bound to their legal mandate.

The relevant legislation contains a number of mechanisms designed to ensure the SNB’s independence. One of these is our distribution practice, which has been developed on the basis of the provisions of the National Bank Act (NBA). We are happy to make distributions to the Confederation and the cantons; we can only do so, however, where the balance sheet and annual results allow for this. As we announced some days ago, this will unfortunately not be the case for the 2013 business year – the first time since we began our profit distributions in the current form, over 20 years ago. Thus the provisions regarding profit distribution clearly set out in the NBA have come into effect. This ruling takes automatic account of the fact that the risks in our balance sheet have increased as a result of combating the crisis. According to the legislative authority, a strong SNB balance sheet is more important than distributions to shareholders or to the Confederation and the cantons. It therefore supports the SNB in its conduct of an independent monetary policy, something which is particularly valuable in difficult times. Nevertheless, I am conscious that the lack of a distribution can be very distressing for the Confederation and the cantons, in particular, and will be a challenge. However, distributions will not be assured in the future either, since our results will continue to be subject to considerable fluctuations.
 However, the report and the subsequent analysis are restricted in the definition of structural features, in particular on the demand-side. 1   Financial stability is seen in the narrow sense of households being able to repay loans, and banks being exposed to the risk of non-performing loans, mainly because of sharp changes in the house prices. Much emphasis is put on the flow and on trends, and little attention is being paid to the stock.  I would like to focus on these structural features at households’ level, which eventually influence not only the RRE markets but also pose risks to financial stability in a broader sense. The discussion is particularly timely, as residential real estate prices have resumed an upward cycle in the last three years in all EU countries except Greece and Cyprus.  Ex-communist countries in CEE have high ownership rates (mostly as a result of a policy in the early 90’s to sell the state’s houses at affordable prices in the urban areas, as well as due to their large share of rural population). (Figure 1).  They also have low households debt to GDP ratios and low household mortgage debt to income ratio (Figure 2 and 3). However, these countries started from a very low debt level (practically zero), and they witnessed only one major boom and bust cycle of RRE prices in recent history.  These combined features seem to spare them of RRE vulnerabilities. But the devil is in details...meaning the structural features of households in CEE.

As for the PSPP, Greek government bonds lost their eligibility on 21 August when the programme ended. At that point, the Eurogroup’s debt measures had still not been ratified. In any case, purchases would have been very limited over such a short period. Is there any chance that Greek bonds could be included at some point in the future in the reinvestment phase of the PSPP? How many years do you think the reinvestment of maturing securities will last? Without a programme, Greek government bonds are now treated like any other bonds for the purpose of ECB eligibility. Once they regain investment grade status they could be included in all ECB programmes, subject to a Governing Council decision. As you know, we intend to reinvest the principal payments from maturing securities purchased under the asset purchase programme (APP) for an extended period of time after the end of our net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. The government seems to have put on hold, for the time being, plans to return to the markets. Do you think that Greece has now regained full access to international capital markets? Do you think it should wait until after the elections to go back to the markets? Greece’s market access conditions have clearly improved compared with one year ago.
The Federal Reserve has shifted to a ‘wait-and-see’ stance and markets are expecting cuts in interest rates. This has significantly loosened financial conditions, and bond yields have fallen across the board. US GDP growth for this year, projected at 2.5%, is still the strongest among the G3 economies. China has eased fiscal and monetary policy significantly since late 2018. The Chinese government has stepped up support for infrastructure investment. Efforts are underway to enhance credit flows to small firms and private enterprises. But the effects of the stimulus will be somewhat restrained. The high level of indebtedness is likely to constrain the scale of stimulus measures. Policy stimulus is unlikely to be able to prevent China’s GDP growth falling below last year’s 6.6% but may be able to avoid a slippage below 6.0%. Private consumption remains resilient in the major economies as well as in Asia, underpinned by healthy labour markets. Unemployment in both the advanced economies and in Asia is at low levels, and wage growth is picking up gradually. 3 / 11  BIS central bankers' speeches  With strong labour markets, household consumption is providing an important support to global growth. In ASEAN, domestic demand has so far proven resilient to the slowdown in trade. The services sector has continued to be resilient globally. The global services PMI averaged 53.1 in the first four months of this year, similar to that for the whole of last year. However, it fell to 51.6 in May.

To keep the $ within its policy band, MAS had to intervene in the foreign exchange markets to mop up these large and persistent capital inflows. In the process, MAS accumulated a large stock of OFR. MAS’ foreign exchange intervention operations are essentially how we conduct monetary policy – which is solely directed at securing price stability. This is what we explained in our response to the US Treasury’s Report last month. Singapore’s monetary policy is centred on the exchange rate because it is the best way to secure price stability in a small, highly open economy. MAS manages the exchange rate as its monetary policy tool in the same way that other central banks conduct monetary policy by managing interest rates. Other central banks buy and sell government securities to affect liquidity and attain their interest rate targets. MAS buys and sells foreign currency against the Singapore Dollar to keep the $ within its policy band. Just as other central banks’ monetary policy operations cannot be construed as interest rate manipulation, MAS’ foreign exchange operations cannot be described as currency manipulation. 7 / 11  BIS central bankers' speeches  MAS has been in active dialogue with the US Treasury to ensure that our monetary policy framework and the role of foreign exchange intervention operations are well understood. The criteria the US Treasury uses is part of a generic framework that it has developed to assess the policies of its major trading partners.
What is also important is our high degree of flexibility in the use of instruments and lengthening of the balance sheet. These two facilities allow us to combat major economic disruptions rapidly and effectively, as shown so impressively in the crisis. New monetary policy instruments merely serve to fulfil our mandate in a transformed environment. What also appears important to me is that central banks do not take on tasks that they cannot tackle with their existing instruments, thereby awakening false expectations and hopes. To ensure that monetary policy remains effective, it is important that central banks do not depart from their mandate of price stability. If expectations are too high, central banks are bound to disappoint them in the long run. This will cause them to lose credibility in their core BIS central bankers’ speeches  5  area, and this could lead to politicians becoming involved. In this situation, central banks’ independence would be at stake. Caution is to be recommended with respect to monetary policy trends. Certainly, the SNB will not simply go with the general flow, but will instead pursue its own path tailored to the needs of our country. Extended role and new financial stability approach I will now say a few words about financial stability. Financial stability means that financial system participants are able to carry out their functions and are resilient to disruptions. It is an important prerequisite for economic development and effective monetary policy implementation.

Independence is therefore a further condition for ensuring that a central bank retains its freedom of action at all times. Independence is more than an abstract construct. It gives the central bank the freedom to act swiftly, resolutely and credibly, if needed. What independence also means, however, is the responsibility to use this freedom strictly within the meaning of the statutory mandate, no matter what the prevailing political climate may be. Independence cannot be taken for granted, it is a privilege. It was granted to us under the Constitution in order that we could achieve the goal of price stability in the long term. As a counterweight to its independence, the SNB has a duty of accountability and information with respect to parliament and the public. The SNB is thus  4  BIS central bankers’ speeches  firmly anchored in our constitutional democracy. In a free society, an authority with a complete free hand would be a foreign body. Favourable environment created by Confederation and cantons Yet independence must also be lived. The SNB may not accept instructions from political authorities; neither can it allow itself to be put under pressure by public opinion. It must conduct a monetary policy that serves the interests of the country as a whole, to the best of its ability, and in accordance with its mandate. It is only natural that our monetary policy cannot please everyone at all times. However, an independent central bank must not be put off by this.
According to recent data from INSTAT, the Albanian economy accelerated the growth rate in the fourth quarter of the previous year, posting 3.8% annual growth. The economic activity upturn was driven mainly by output increase in the services sector. Value added of this sector surged 7.5% in annual terms, with a higher contribution by the branch of trade, transport and other services. Similarly, the construction and agriculture sectors posted  BIS central bankers’ speeches  1  positive but low annual growth rates, 1.2% and 1.9%, respectively. Positive contribution to economic growth was also provided by the branches of extractive industry and the processing industry, but they did not manage to balance the significant contraction in the branch of “Electrical energy, water and gas”, which has resulted in negative contribution by the industry sector to the domestic product growth. From the perspective of aggregate demand components, economic growth in Albania continued to be driven by foreign demand also in the last quarter of the past year. Notwithstanding unfavourable developments in the global economy, net exports in real terms have shown higher growth rates in this period. In addition to foreign demand, the public sector demand provided a high contribution, in the fourth quarter of the past year, in the form of increased capital expenditure. In turn, private consumption and investments, while showing signals of recovery, were assessed as slow during the fourth quarter of 2011. Statistics on the real economy for the first quarter of 2012 are only partially available.

Indirect data suggest that aggregate demand has carried forward positive growth rates, but growth remains significantly below the potential of the Albanian economy. Macroeconomic factors determining private consumption and investments, and a prudent fiscal policy sustain the assessment for contained growth of the domestic demand in the first quarter of the year. Moreover, in the absence of complete data and in real terms on developments in the external sector of the economy, assessments suggest that the contribution of foreign demand to economic growth will be lower than in the past year. Fiscal policy was subject to a consolidation nature over the first quarter of 2012, in line with its objectives to keep budget deficit and public debt in check. The contained fiscal approach has been reflected in minimum public expenditure in the first quarter of the year, with an annualised rate of 0.7%. Furthermore, low growth rates of fiscal revenues continued their trend, settling at 1.2% in this quarter. The budget deficit was ALL 11.5 billion, or about 2.5% down compared with the first quarter of a year earlier. Developments in foreign trade over the first two-month period of the year point to contracted trade exchange in annual terms. Value of exports in these two months dipped by 20.5% against the corresponding period of a year earlier, reflecting the moderation of foreign demand and price developments in global markets. On the imports side, their growth rates were significantly decelerated, reaching a nominal annual growth of 1.8% during this period.
First, not enough was done to reflect changes in business models in disclosure regimes and practices. In some distant world, banks in, say, Germany were exposed largely to German companies and households; and similarly Californian banks to Californian borrowers and projects. So if conditions deteriorated in Germany, California or wherever, the markets would be alert to the need to scrutinise the “home” banks operating in those regions or sectors. In today’s world, the markets knew that risk really had been dispersed. But they did not know where it might be concentrated; and, crucially, did not know how or how far it might flow back to the banking sector and so towards the core of the payments system that supports our  BIS Review 77/2008  1  monetary economy. It is in the interests of banks themselves – and certainly in the interests of their creditors and shareholders – to make those risks clearer in future; and if they do so, they will face stronger incentives to avoid risk concentrations. But my second point is that talk of the shift to “Originate & Distribute” can be overdone. Many of the largest global banks seem to have occupied a half-way house. They retained large positions on what amounted to a view that macroeconomic conditions could never get so bad as to cause material impairment, but booked them to portfolios that were marked-to-market (or to models).

At the level of the system, the underlying issue is not that bankers are wicked or stupid. There is, though, a nasty collective action problem. In the period leading up to the turmoil, many market participants on both sides of the Atlantic thought financial risk was under priced, especially in credit markets. But they did not know when the correction would come, or indeed that it would definitely come abruptly. Each feared that by “stepping off the bus” before their competitors, they would crystallise “business risk” as customers and activity flowed away from them. This seems to point to the need for some kind of intervention by the authorities. And, perhaps with hindsight, it is baffling that the authorities internationally contented themselves with issuing warnings. What instruments might the authorities have? There are already welcome exercises underway to make the Basel Capital Accord less procyclical. The accountancy world is also moving towards understanding that its policies affect behaviour and so system-wide conditions. On both these fronts, the design of micro measures affects macro outcomes. At a more macro level, we need to debate whether or not it would be feasible to design discretionary levers that the authorities could employ as credit-cycle circuit breakers. Candidates include the authorities adjusting industry-wide benchmark capital requirements or margin requirements to slow commercial banks’ supply of leverage to the financial system during the upswing. The debate needs to be international, as capital flows freely across borders and so the capability of national authorities to act alone is constrained.
Again, in principle, this can take place through two channels: through retrenchment of cross-border banking so that national safety nets of big countries are more sufficient, or through international expansion of safety nets. There was significant retrenchment during and immediately after the crisis, and it was unavoidable and necessary at that point in time.6 There are significant benefits to be derived from financial globalisation, including crossborder banking, so we will have to hope that extending public frameworks through international and regional co-operation will be an important part of the story. Here progress is uneven and occurs on three tracks: national, regional, and global. Policy initiatives taken at the national level after the crisis have partly made banking safer by contributing to the retrenchment of cross-border banking. In the absence of credible multilateral safety nets, countries will have to take unilateral action to reduce the risks they face. In my country, we have taken action to limit the FX liquidity risk of our banks by imposing limits on the size and composition of their FX balance sheets. Thus we have a specific liquidity coverage ratio in FX, as does Sweden. We have also introduced a specific net stable funding ration in FX, which at present goes one year out but might be extended further as we make the system safer in anticipation of lifting capital controls.7 There has been major progress within the EU through the implementation of a banking union.

Finally, I would like to briefly discuss an important unresolved part of the story: the future of central bank swaps of the type initiated between the US Fed and several other central banks  8  See IMF discussion paper on “Cross-Border Bank Resolution: Recent Developments”. June 2014. 9  I have described this case in more detail in other publications and speeches. See in particular: Már Guðmundsson and Thorsteinn Thorgeirsson (2010) op. cit. Már Guðmundsson (2011) “The Fault lines in cross-border banking: Lessons from the Icelandic case”. OECD Financial Market Trends. Vol. 2011, Issue 2. Paris; and keynote address at the “Eighth High-Level Meetings for the Middle East & North Africa Region: Recent Policy Developments for Strengthening the Resilience of the Financial sector”, Abu Dhabi, 28 November 2012. 4  BIS central bankers’ speeches  around the globe during the crisis10. It should be noted, however, that there are several other arrangements around the globe which, with time and modifications, could become partial substitutes for these swaps. Examples of this are the multilateralisation of the Chiang Mai Initiative in this part of the world, swap lines among BRIC countries, and the bilateral swap network of the People’s Bank of China. But as they are currently constructed, these are not well suited to large-scale and speedy provision of liquidity in reserve currencies more or less directly to internationally active banks.