samchain/econo-pairs-v1 huggingface dataset:
We at the ECB and other central banks have reacted swiftly, flexibly and decisively. The ECB took the lead with some exceptional decisions as early as 9 August 2007. We have, since then, modified our operational framework and used an exceptional set of non-standard policy tools. These tools, combined with the bold action taken by euro area governments over recent months, have played an essential role in preventing a collapse of the financial system and in bolstering confidence. I would like to emphasise that despite this upheaval and our exceptional measures, our objective remains unchanged: to preserve price stability over the medium term, and that’s what guides our policy. In so doing, we support the conditions for financial and economic stability. The crisis has not changed this objective. Interest rates As regards interest rates, the ECB’s Governing Council has reacted promptly and decisively to the intensification and broadening of the global financial turbulence. We have lowered our  2  BIS Review 66/2009  key interest rate by 325 basis points since October 2008. This is the largest cut ever decided over such a short period in Europe. These moves were fully in line with our strategy. The upside risks to price stability have indeed receded considerably over that period due to the sharp fall in oil and other commodity prices, and the abrupt slowdown in economic activity. As price stability is the needle in our compass, we took account of the easing of inflationary pressures and lowered interest rates.

According to the latest IMF forecasts, world output will shrink by 1.3% and the advanced economies by no less than 3.8%. However, GDP in emerging markets, though lower than in previous years, will still grow by 1.6%. Despite the crisis, the long-run prospects for emerging market economies remain bright. Projections for long-term growth, based on demographic trends and models of capital accumulation and productivity, suggest that the emerging markets are likely to gain in global importance. A number of studies found startling results regarding the growth prospects for emerging markets. According to one study, Brazil, Russia, India and China (the so-called BRIC economies) could account for over half the size of today’s six largest industrialised economies from 2025 onwards. 1 We have to prepare for a very profound structural rebalancing of world output during the next years. The world economy is changing profoundly, as so should its governance. The creation and the recent reinforcement of the G20 and the enlargement to the G20 of the Financial Stability Board are milestones in this respect. The rise of the emerging economies will also be reflected in the reforms of the international financial institutions. What are the specific implications of the growing role of emerging markets for the euro area? The euro area has close links with emerging market economies. In trade terms, the euro area is actually more open than other major economies. Our exports and imports of goods and services account for more than 40% of GDP, significantly more than in the United States or in Japan.
In the case of households, employment creation and wage growth might decline. As to non-financial corporations, the rise in their profits might diminish. The public sector would also see its balance of revenue and expenditure affected by the operation of the automatic stabilisers. That would all mean that both private and public levels of debt might ultimately be higher than expected, with further implications both for spending decisions and financial markets’ perception about the debt sustainability path. Logically, the deteriorating macroeconomic context would also affect deposit institutions. Compounding the fall in the value of some of their assets would be lower demand for credit. Moreover, asset quality might worsen, given that the ability of their borrowers to pay would be negatively affected. They would also face greater difficulty in continuing to jettison their non-earning assets. As a result, their income statements would be subject to downward pressures. This is particularly significant in a context, such as the present, in which banks are posting low profits. Against this background, it would be desirable in economic policy terms that, after the elections, a stable government were formed. That would lessen uncertainty over the future course of economic policies, give fresh momentum to structural reforms and see a resumption of fiscal consolidation, with the aim of improving potential growth and reducing the main sources of vulnerability in the Spanish economy, in particular high public and external debt levels.

Bandid Nijathaworn: Post-crisis challenges to emerging markets – what are at stake for central banks? Keynote address by Mr Bandid Nijathaworn, Deputy Governor for Monetary Stability of the Bank of Thailand, at the South East Asian Central Banks (SEACEN)/Bank of England Seminar on Macroeconomic and Monetary Policy Management, Brunei Darussalam, 22 March 2010. *  *  *  First, I want to thank SEACEN, the Centre for Central Banking Studies of the Bank of England, and Ministry of Finance, Brunei Darussalam for inviting me to deliver this morning’s keynote address. The SEACEN’s advanced course and seminar have always been an important learning forum for central bankers in Asia to discuss common challenges as well as to share practical experience. So, I very much appreciate the opportunity to be speaking to all of you today. On a personal note, it has also been a few years since I last spoke at this forum, as my responsibility at the Bank of Thailand as a deputy governor up to October last year changed from monetary policy to financial regulation and supervision. This brief tenure of overseeing financial stability, especially managing the financial system at the height of the global financial crisis, has been a valuable experience and makes me appreciate even more the responsibility, the complexity, and the challenge to central banking. And it is a reflection of this experience that I want to share with you this morning, on the post-crisis challenge to emerging economies and what are at stake for central banks.
Hence MAS, as the statutory regulator, will be in a better position to aggregate and review different pools of information in the activities across exchanges and market sectors to anticipate possible risk and to investigate potential misconduct and market abuses. 33. Advancement in technology, particularly in the field of data analytics, has brought about enhanced surveillance techniques. In terms of capacity building, the MAS will enhance our analytics and thematic studies of big datasets to detect hitherto complex patterns, for potential market misconduct and abuses. 34. What all these mean, is that in each market, both the exchange and MAS will be looking out for potential risks, albeit based on different parameters. This will increase the robustness of the overall oversight of market activities. Robust enforcement and market discipline 35. These enhancements to our surveillance efforts will complement, in a significant way, our enforcement actions against market misconduct. The objective is on early detection as well as to support more expedient investigations and tough enforcement actions. This will also augment our toolkit to combat misdemeanors such as market manipulation and insider trading. 36. MAS has and will spare no effort to investigate any serious market misconduct and to take appropriate enforcement action. This is not always an easy task because investigations into market misconduct often involve complex and large scale relationships, which will necessitate considerable investigation resources. Market misconduct is often perpetrated by multiple parties, some of whom may be outside our jurisdiction.

In my view, given the evidence that reforms have been halted in many countries after entering the eurozone, these measures should be taken before the euro area accession. The last twenty years have been unusually good for the global economy. Growth was high and less volatile, inflation fell to low levels in both developed economies and in emerging markets. Real returns enjoyed by investors in bond and equity markets were higher than ever in the post-war history. There are however signs that this “Great moderation” era may be coming to an end. If this is the case then the coming years may prove truly challenging for the central banks in EMU-graduation zone. Let me explain in some detail several factors that justify such claim. 1. Agflation, is the rise of inflation due to increase of food prices. In recent months we have witnessed a significant increase of food prices, grain and oilseeds being the leaders. Prices of food products on international markets has risen by almost 40 per cent within last two years and prices of grain and oil seeds has almost doubled within this period. Many forecasters suggest that this trend will not end in the nearest future. There are several explanations of such situation. Firstly, rising oil prices increase demand for alternative sources of energy, biofuels being high on the agenda in many regions. In effect industrial demand for food commodities will further rise. By the way, it is worth to mention what may be the ecological consequences of growing biofuels production.
Based on these commonalities and differences, I will then draw some tentative economic, financial and political conclusions about the respective experiences and relations of our two countries with Europe and more specifically with EMU. UK and Switzerland: Common features and differences: It seems to me that even a perfunctory comparison of our two countries’ relations to Europe and EMU needs to touch upon law, politics and recent economic history. Law and politics There is a fundamental judicial divide between the common law tradition of Anglo-Saxon countries and the civil law tradition of Continental Europe. Over the centuries, this divide has undoubtedly spread into culture and minds. The custom and case-based common law was institutionalized in 1154 by Henry II through elevating local custom to a unified system of law “common” to the country. It may be unwritten, as it was at the outset, or captured in statutes and codes. This judicial history is reflected by the absence of a written constitution in the United Kingdom. Civil law in Continental Europe, on the other hand, has its roots in the Corpus Juris Civilis of Emperor Justinian. It constitutes broad legal principles and doctrinal writings and is explicitly written law. This explicit and written tradition is reflected in the “acquis communautaire” of the European Union with nearly 100’000 pages and some 20’000 laws, decisions and regulations.

In the public domain, however, their responsibility should be to illustrate potential economic consequences of the ultimately political decision to join or not to join the European Monetary Union. Conclusion Ladies and Gentlemen, the decision formally to join EMU does not appear to be a policy issue of imminent concern in either of our two countries. In the United Kingdom, the issue was indefinitely pushed back in time in June of last year. Here in Switzerland, it is the ratification of the second package of bilateral treaties with the European Union that dominates our current external political agenda. Since this contractual arrangement with our European partners was designed from the outset as a multi-issue legal document with costs and benefits spread over multiple issues, the Swiss government is to be commended for insisting on negotiating the agreement as a comprehensive package and not break it down into multiple single issues. Meanwhile, globalization is set to proceed. With the rapid integration of China and India into the global economy and the subsequent reorganization of production processes, global competition is rapidly increasing with changes in relative prices that become increasingly a function of global demand and supply. Needless to say, the globalization path will neither be linear nor smooth. There are risks, perhaps none less so than the temptation of governments to resort to protectionism in a misguided effort to respond to the costs associated with global economic integration. In Europe, integration is also proceeding. In less than a week, ten countries will join the European Union.
We partnered with other organizations throughout the year to help provide technical training for community development professionals. We cover the costs of two to three professors who are engaged in macroeconomic and monetary policy research to attend our annual symposium on current economic conditions held at the New York Fed. We also recognize that a healthy banking system and accurate economic statistics are both important components of a favorable business climate. To improve our understanding of the Puerto Rican economy, the New York Fed joined a group of local businesses to sponsor and fund a household survey, undertaken by the Center for the New Economy to benchmark Puerto Rican consumer finances. To help businesses and government in Puerto Rico, we have also been providing technical assistance to Puerto Rico’s new Institute for Statistics in launching the new monthly manufacturing survey I mentioned earlier. We applaud this and other efforts to improve the measurement of economic conditions in Puerto Rico. As a financial regulator, the New York Fed works to help the financial system run smoothly so that it can support economic growth. We are working hard to prevent the type of financial crisis that we recently experienced from recurring in the future, in a way that does not inhibit businesses from growing and prospering. We are working closely with all of the banking supervisors and other key parties to facilitate an effective resolution to the problems facing the island’s banking sector.

Last year, some of Puerto Rico’s banks were consolidated and many improved their balance sheets by selling underperforming assets. Both of these steps are likely to produce stronger, healthier institutions more able to make the sound lending decisions that support economic growth. 6  BIS central bankers’ speeches  All of these activities, ranging from effective monetary policy and prudent financial regulation to fostering economic literacy and measurement, complement and reinforce each other to help support a strong economy in Puerto Rico. Conclusion To sum up, the mainland economy experienced a pick-up in activity during the second half of 2010 that shows signs of continuing in 2011. The recovery in Puerto Rico has taken longer to get off the ground, but now shows signs of firming. On the mainland and in Puerto Rico, unemployment remains stubbornly high, but many indicators suggest that conditions are in place for stronger employment growth in the coming months. With government and business leaders like yourselves working together to build a better future for Puerto Rico, I am hopeful that we will soon be able to look back at 2010 and see not only the end of the island’s long recession but also the beginning of an era of growth and prosperity for Puerto Rico. Thank you for your kind attention. I would be happy to take a few questions. BIS central bankers’ speeches  7
For 30 countries that have defaulted on sovereign debt in recent decades, the interest rate on government bonds was 4 percentage points higher than normal one year after default and 2.5 percentage points higher the second year. 4 Thereafter, interest rates fell rapidly to more normal levels. Third, a creditor can impose sanctions, such as trade blockades, seizure of foreign assets or choose even more severe measures. At the end of the 19th century, England took control of Egypt’s government finances because of the country’s payment problems. Egypt had raised a number of loans to finance the construction of the Suez Canal. The administration established by the British government restored order to Egypt’s government finances and remained in the country for 40 years. It is likely that economic incentives also play a part in today’s armed conflicts, but such instruments are not used to recover sovereign debt. The most effective weapon available to a creditor today is probably to take legal action to seize the debtor’s foreign assets. In the past 30 years, creditors have won several such cases. Several studies of sovereign debt crises over the past century have shown that creditors’ actions have not resulted in particularly high costs for the debtor state. A state soon regains access to capital markets after default and borrowing costs fall back fairly rapidly. If the costs of default are transient, defaulting could be a profitable proposition.

Public occupational pension schemes seem to enjoy slightly stronger constitutional protection than national insurance pensions, but the Supreme Court has  14  ROBEK – register of all municipal and county authorities subject to approval pursuant to Section 60 of the Local Government Act. 15  See discussion in Appendix 5 to the Report of the Pension Commission (NOU 2004:1). 8  BIS Review 123/2010  repeatedly stressed the authorities’ need for freedom of action when it comes to making changes to pension schemes. The Norwegian national insurance scheme is a pay-as-you-go system. This means that a given year’s pension payments from the scheme are covered by government budget revenues that year. When the national insurance scheme was introduced in 1967, a fund was established to provide for an expected reduction in private saving. However, pensions were still included in the central government budget at an early stage and financed by current tax revenues. Transfers to the National Insurance Fund were soon discontinued. Nevertheless, confidence in the pension system has actually remained intact, reflected in a low level of household saving, primarily through home investment. Perhaps there is some element of miscalculation here. A fall in value may occur if many homeowners free up housing capital to cushion old age. (See Chart: Government Pension Fund Global.) It was only when transfers to the Petroleum Fund were introduced in 1996 that funds were accumulated that could also be used to cover future pension payments.
A recent Banco de España article8 finds that this measure has, in conjunction with other measures adopted, enabled the provision of bank lending to the productive sectors of the economy to be increased. Also, the ESRB has during the crisis analysed various issues, such as: i) the implications for the financial system of the public guarantee programmes and other fiscal measures to protect the real economy; ii) the lack of market liquidity and its consequences for asset management and insurance companies; iii) the procyclical impact of debt downgrades on markets and financial institutions, and iv) the liquidity risks derived from margin calls. These avenues of research led to a set of recommendations for the EU Member States’ authorities to act in unison on the appropriate monitoring of the risks and vulnerabilities identified and on potential measures to mitigate them during the crisis. The future of macroprudential policy Allow me to conclude with some brief thoughts on the future of macroprudential policy. In my view, there are two aspects on which we should focus in the coming years. First, the current crisis should be used to draw lessons about macroprudential policy; and, among these lessons, one key aspect relates to the use of capital buffers. The empirical evidence shows that it is precisely during crises when the CCyB and, generally, the instruments that increase capital requirements acquire their full potential via the effects of their release [see Broto and Galán (2020)].

Along with purely statistical procedures, the estimation of the long-term equilibrium level of the non-financial private sector’s long-term financing that the calculation of these indicators requires can be done using models that include the determinants of the demand for credit [Galán y Mencía (2021)]. In any event, the decision to activate the CCyB, which is reviewed quarterly, should not follow an automatic rule based on the trend of this indicator; rather, the regulations in force emphasise the need to take other complementary indicators into account. The Banco de España also tracks potential imbalances in house prices, and in the current account balance, among others. This latter variable reflects how in small, open economies, when the financial cycle is in expansion, a portion of this financing is usually obtained abroad, consequently materialising in a current account deficit. It is moreover crucial to analyse the sectoral disaggregation of credit indicators to identify risks that may be originating in specific sectors. Lastly, we pay particular attention to the output gap, which I will discuss in greater detail later. 13  As to the cross-sectional dimension of systemic risk, the key indicators seek, inter alia, to measure the relative size of a bank, its centrality in the national banking network, its interconnectedness to the rest of the financial system and to other countries’ financial systems, and the complexity of the activities it pursues.