samchain/econo-pairs-v1 huggingface dataset:
However, this is no consolation - on the contrary, a poor development among our trading partners could cause further  2  BIS Review 17/2003  difficulties for our own economy. Moreover, it is our own ambitions in welfare policy that should be put in relation to our growth capacity. The future age structure has great significance for labour supply and production. This is because labour force participation varies in different age groups. It is higher in the age group 25-54 years (87 per cent) than in younger and older age groups. The age group 16-24 years studies more today than at the beginning of the 1990s. Labour force participation for the oldest age group has also fallen over the past decade. One reason is that the retirement age from the labour market has been lowered and now the actual pension age amounts to 62 years. The only group that has increased its participation in the labour force in recent years is older women. This could be because those who are reaching a more advanced age today have a higher level of education than their predecessors. The age structure accentuates the problems. According to Statistics Sweden’s forecasts, the age group 20-64 years will need to support an increasing percentage of younger and older age groups. While the number of elderly people increases, the number of those between the ages of 20 and 64 will become an ever smaller percentage of the population.

In Malaysia, despite the increased significance of the domestic capital market, the banking sector continues to be the predominant source of financing in our financial system, as it evolves to offer more innovative financial solutions to meet the more sophisticated needs of customers and investors. The increasingly complex nature of their operations have had a significant impact on their risk profile over the years. The domestic financial environment has also become more competitive, following an intensification of the liberalisation and deregulation process. Domestic banking institutions have now also ventured beyond our domestic borders. Increasingly, supervisory attention is therefore directed towards ensuring that a robust risk management framework is put in place to support such business expansion and growth strategies. Against this background, the call for improvements in risk management through the adoption of Basel II and the discussions on the effectiveness of supervisory arrangements on cross-border banking and financial activities are most relevant. The case of the BCCI in the early 90's and Baring in the mid-90's have also brought to the fore the gaps in supervisory oversight activities and highlighted the need for greater cooperation between home and host supervisors. Similarly, the arrangements for cross-border activities involving either international branch networks or the operation of subsidiaries is a subject of much discussion within supervisory circles, particularly with respect to its implications on supervisory cooperation.
So the Bank won’t hesitate to withhold approval of inadequate or opaque models”. There are many things I could say about Solvency II, but I want to concentrate on what it means for the future. One particular aspect is that it sensibly allows for a smooth transition, over a period of 16 years in some cases. It is recognised that for insurers (particularly life insurers), Solvency II with the introduction of a “going concern” regime, is a considerable shift. In particular, firms will have to hold a risk margin to ensure that the insurance liabilities reflect the value for which they could be transferred to a third party. To allow for the gradual introduction of the risk margin, firms will be able to make a transitional deduction from their  BIS central bankers’ speeches  5  technical provisions. Together, the various transitional measures within Solvency II should ensure a smooth progression, avoiding the market dislocation, volatility and increased costs that could result should a number of firms have to augment their capital base at the same time. They rightly recognise that the underlying risks have not changed overnight, even if the regime has. Firms making use of transitional measures will be afforded time to reach the level of financial resources required by the full Solvency II regime. In the meantime we can be sure that the transitional deduction from technical provisions will not result in a firm’s resources falling below those required under the existing UK regime.

Instead it is technological and organisational advances, together with innovations, that have largely been the driving forces behind productivity. During the 1990s a number of markets in Sweden were opened up to competition. This included the markets for electricity, telecommunications, post and a large part of the transport sector. At the same time, there was a general reinforcement of the competition policy through the establishment of the Swedish Competition Authority and the introduction in Sweden of a new, stricter law on competition. When competition stiffens, companies are forced to become more efficient and cost-conscious, which leads to an increase in productivity. Studies by the OECD indicate a clear relationship between deregulation of product markets and productivity growth. 3 This factor has probably been significant for the relatively rapid increase in productivity during the past 10-15 years. One important aspect in today’s globalised knowledge-based society is that competition promotes innovation and thereby productivity. 4 To avoid being driven out of the market companies are forced to constantly improve existing products and processes and also to develop new ones. Sweden is at the forefront in Europe and pointed out as an innovation leader alongside Denmark and Finland, for instance. 5 Another explanation for the growth in productivity in Sweden, as in many other countries, has been that the percentage of highly educated persons in the labour force has shown an increase trend, partly as a result of technological developments.
As a result, we continue to expect real GDP to grow at a moderate but steady pace and euro area inflation to rise gradually over the coming months, in line with the path already implied in our June 2016 staff projections. The Governing Council will continue to monitor economic and financial market developments very closely. We will preserve the very substantial amount of monetary support that is embedded in our staff projections and that is necessary to secure a return of inflation to levels below, but close to, 2% over the medium term. If warranted, we will act by using all the instruments available within our mandate. Meanwhile, the Governing Council tasked the relevant committees to evaluate the options that ensure a smooth implementation of our purchase programme. Let me now explain our assessment in greater detail, starting with the economic analysis. Euro area real GDP increased by 0.3%, quarter on quarter, in the second quarter of 2016, after 0.5% in the first quarter. Incoming data point to ongoing growth in the third quarter of 2016, at around the same rate as in the second quarter. Looking ahead, we continue to expect the economic recovery to proceed at a moderate but steady pace. Domestic demand remains supported by the pass-through of our monetary policy measures to the real economy. Favourable financing conditions and improvements in the demand outlook and in corporate profitability continue to promote a recovery in investment.

Although developments in bank credit continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non-financial sector balance sheets, the monetary policy measures in place since June 2014 are increasingly filtering through to support borrowing conditions for firms and households and thereby credit flows across the euro area. To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need to preserve the very substantial amount of monetary support that is necessary in order to secure a return of inflation rates towards levels that are below, but close to, 2% without undue delay. Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. As emphasised repeatedly by the Governing Council, and as strongly echoed in both European and international policy discussions, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the European level. The implementation of structural reforms needs to be substantially stepped up to reduce structural unemployment and boost potential output growth in the euro area. Structural reforms are necessary in all euro area countries. The focus should be on actions to raise productivity and improve the business environment, including the provision of an adequate public infrastructure, which are vital to increase investment and boost job creation.
Other examples of modularity in organisational structures include:   The management of forest fires, which typically involves the introduction of firebreaks to control the spread of fire; 16    The management of utility services, such as water, gas and electricity, where the network often has built-in latencies and restrictions to avoid overload and contagion;    The management of infectious diseases which these days often involves placing restrictions on travel, either within a country (as in the case of foot-and-mouth disease in the UK) or outside of it (as in the case of H5N1); 17    The control of computer viruses across the world wide web, which is typically achieved by constructing firewalls which restrict access to local domains;    Attempts on the world domino toppling record, which involve arranging the dominos in discrete blocks to minimise the risk of premature cascades. These are all examples where modular structures have been introduced to strengthen system resilience. In all of these cases, policy intervention was required to affect this change in structure. The case for doing so was particularly strong when the risk of viral spread was acute. In some cases, intervention followed specific instances of systemic collapse. The North American electricity outage in August 2003 affected 55 million people in the US and Canada. It had numerous adverse knock-on effects, including to the sewage system, telephone and transport network and fuel supplies. A number of people are believed to have died as a consequence.

BIS Review 40/2010  11  43 countries found a conglomerate “discount” in their equity prices. 38 In other words, the market assigned a lower value to the conglomerate than the sum of its parts, echoing Merton’s 1973 insight. This is evidence of diseconomies of scope in banking. On the face of it, these findings are a puzzle. The most likely cause was articulated by Austin Robinson back in the 1930s – “Man’s mind and man’s memory is essentially a limited factor…Every increase in size beyond a point must involve a lengthening of the chain of authority…at some point the increasing costs of co-ordination must exceed the declining economies”. 39 Oliver Williamson’s “span of control” theory of organisations made rigorous this intuition thirty years later. The essence of these arguments is that limits on the optimal size and scope of firms may be as much neurological as technological. Numbers of synapses may matter more than numbers of servers. The history of military units provides a good illustration. In Roman times, the optimal size of a military unit was 100 – hence the Roman centurion. This was the maximum number of men a general felt able to know well enough to lead and control. The constraint was neurological. Two millennia have passed. Extraordinary advances have been made in military telecommunications technology. And the optimal size of the military unit in the US army today? Just under 100 people.
BIS central bankers’ speeches  3  To understand our prospects a bit better, we need to look at the likely behaviors of business and household sectors separately. Circumstances for the business sector are mixed with larger corporations generally in much better shape than smaller businesses. Many large corporations entered the recession with healthy balance sheets. While leverage1 did increase sharply in the recession, it has subsequently come back down to levels similar to the 1990s. Record profit margins have enabled large corporations to build substantial buffers of highly liquid assets. Large businesses are cautious because of concerns about the sustainability of growth and demand, political dysfunction, the health of the financial system and their ability to retain their access to credit throughout the business cycle. For smaller firms, the situation is generally more difficult. Because this sector has a higher exposure to real estate, falling real estate values pushed up leverage for this group and it remains well above previous historical highs. Although small businesses identify weak demand as their major problem, the availability of credit is also an issue. An improvement in their ability to obtain credit would seem to require some stabilization of real estate prices and a substantial increase in demand for their products and services. Turning now to the household sector, Chart 4 shows that a combination of the fall in interest rates, paying down of debt and debt write-offs has substantially lowered the share of income required for households to service their debt.

In parallel, all programme countries have strengthened their active labour market policies, including by fostering traineeship programmes and dual-apprenticeship systems, also with the support of EU funds. This is important, as having an adequate social safety net and job search and retraining programmes can reduce unemployment duration and so lower the long-term costs of an adjustment phase. There is also a fairness dimension: we should not forget that some citizens paid high entry costs to enter previously closed professions, for example by purchasing expensive licences, and may now need help transitioning to new employment. Product market reforms have generally aimed at improving competition in network industries – energy, telecommunication, transport – and highly regulated professions, as well as reducing administrative (licencing) burdens to wholesale and retail trade and provisions of services. Such reforms have tended to face greater implementation obstacles than labour market measures, partly owing to the micro or sector-specific dimension of the reform needs. 1  Blanchard, O., F. Jaumotte, and P. Loungani (2013), “Labor Market Policies and IMF Advice in Advanced Economies During the Great Recession”, IMF Research Department. BIS central bankers’ speeches  5  This has required policymakers to confront more concentrated opposition from vested interests within the sector that is subject to reform. However, among programme countries, Portugal has some impressive achievements to show in terms improving product market functioning and economic framework conditions.
It is of course obvious that this paradox is not unintentional, and has, in fact, been carefully thought through and deliberately introduced, and has obviously been done in order to establish an extremely vital and far reaching principle. That is, the need for the Central Bank to retain intellectual and operational independence, but to temper it with the pragmatism of the national deliverables of the economic agenda that has been decided by a democratically elected government. Going further, Exter’s comment that “the effectiveness of this cooperation and coordination between the Board and the Government will depend more upon the men occupying the key positions at particular times, than upon any legal formula”, emphasizes the complexity and the delicateness of the relationship, which he has described in lucid and clever language. Mr. Chairman, All these positions that I described to you now highlight another very important fundamental principle that was set out in Exter’s Central Bank Report of 1949. That is, Exter’s wise words that “good central banking is less good law than good practice”. After 7 years as the Governor, I can tell you that that is one of the wisest comments in the Exter Report, and an appreciation of that principle must be understood by all stakeholders, especially at the current turbulent times, when Sri Lanka is on a fast track to economic development. In fact, over the past several decades, monetary policy objectives, instruments and operating mechanisms have changed significantly.

Mr. Chairman, a dispassionate comparison of the conditions prevailing in 2006 and 2013 tells us that our economy has made an unprecedented transformation over the past 7 years, with strong economic growth, and stable macro-economic conditions. Harmonization of monetary and fiscal policies – case studies The discussion point that then arises is, as to what factors, processes and conditions contributed to this current level of growth and stability. Of course, we are all aware that many factors contributed to the current state of affairs of the country, and those could be the subject of, maybe 50 other Orations! But, for today’s discussion, let us confine ourselves  6  BIS central bankers’ speeches  to examining the background of some significant initiatives that would have influenced the current state of the economy, and to understand how the present day outcomes were supported and/or impacted by the harmonization of the Fiscal and Monetary policies. One striking feature in the implementation of Monetary and Fiscal policy over the past 7 years, has been that both institutions, MoF and CB have been taking a keen and enduring interest in both monetary and fiscal policies. We realized that a “blame game” would be of no value to the country or to the stakeholders, and that it was absolutely vital that we should deliver on both fronts simultaneously.
Capital is a source of funding and sits on the liability side of the balance sheet. What matters is how a firm goes about improving its capital ratios. 10  6  Recommendations to PRA or FCA could be made on a “comply or explain” basis. That is not the normal approach, which is more consensual. BIS central bankers’ speeches  Reducing lending is only one way of adjusting a capital ratio up. As well as raising new capital, retaining more cash, rather than paying dividends or staff bonuses, can also contribute. And it turns out that, at the start of the financial crisis, the larger banks had many non-core assets 11 on their balance sheets, beyond lending to households or non-financial companies. In the past few years, capital positions have been rebuilt in many firms by running down or selling on these other, non-core assets, rather than seeking to reduce direct lending to households and businesses. The regulatory action most likely to affect the capacity to lend is that of increasing liquidity requirements – liquid assets obviously do compete with other assets on the balance sheet including less liquid loans. But in a proximate sense, most firms fail not at the point when they have run out of capital, but when they run out of cash (although the latter may be a forward indicator of the former). Firms holding enough liquidity in reserve is a crucial defence in maintaining a robust financial system and hence financial and monetary stability.

We should get well prepared or would lose the momentum quickly. 3. Exit by the U.S. Fed from its unconventional monetary policies is one of the most important external challenges that the region will face in the next year or two. A timely and orderly normalisation of monetary policy in the US should help to slow credit growth and contain asset price inflation in the region. However, a disorderly normalisation process could lead to significant outflows of capital, abrupt tightening of financial conditions and a severe re-pricing of assets. This can result in financial instability and even a sharp slowdown of economic growth in the region, particularly in those economies with weaker fundamentals and higher reliance on external financing. Yet, there is a lively debate about the size of the labour market slack in the US, which could complicate the judgment about inflation risks and the conduct of monetary policy. Indeed, the path of exit is not necessarily smooth, and interest rate volatility could be higher than currently anticipated. 4. While monetary policy normalisation may reflect a pick-up in the growth momentum in the US which should help support Asia’s exports, the strength of this support is subject to some uncertainty. We also need to be aware that economic integration has increased within the region. As identified by the IMF in the REO, the increase in trade and financial integration have strengthened the propagation of growth shocks between regional partners. 5. So, what are our major policy challenges?
4  BIS Review 70/2001  The Bank of Thailand has announced new rules for the Internet banking – simply what can be done over the counter, will be allowed over the Internet. This should facilitate development of financial products in this area. ·  And for the alternate forms of financial intermediaries, capital market, bond market, and equity market will play a greater role in the future. They will help increase the efficiency of our banks’ operations by providing new instruments to help manage, mitigate and repackage risks. ·  The second agenda of the financial sector reform is enhancing our risk management capacity, particularly of the Thai regulatory bodies and financial institutions. On this front, our Supervision Group have moved from regulation and transaction-testing toward riskbased supervision early this year. ·  From our preliminary assessment, these changes have fostered corresponding and encouraging changes in the Thai financial institutions. Several have hired foreign consultants to transfer the know-how and adopted the best international practices on risk management, while many have imported several standard off-the-shelves risk management software to help improve their current practices. Of course, there remain several impediments to change; these include scarce and expensive human resource in this particular field, and it is even more difficult to re-engineer the business process to ensure that such resources are employed productively. ·  The New Accord is a major challenge and milestone in this area.

Third, smaller banks are increasingly becoming direct customers of larger banks, which means that less trading is taking place on the interbank market. Nevertheless, because the interbank market allows for price determination and therefore provides reference prices, it performs a key function for the foreign exchange market. Consequently, a well-functioning interbank market is also very important for the SNB. Our analyses show that the decline in turnover has not yet resulted in a deterioration in market quality. Despite the fall in turnover, transaction costs are low and the interbank market is still working properly. However, we are keeping a close eye on developments in the structure and quality of the market. The focus of monetary policy implementation is currently the foreign exchange market. However, a well-functioning money market is no less important to us. Structural changes have also taken place in this market. On 2 May 2014, SIX Group Ltd commenced operations with a new trading platform for the Swiss money market. Since then, the SNB has conducted all open market operations, all transactions for its standing facilities as well as the auctions for the Swiss Confederation through this platform. This also means that banks can only obtain funds under the liquidity-shortage financing facility through this platform. The successful launch of the new platform can be measured by the fact that 140 foreign and domestic participants already have access, and additional participants have applied to join. With the introduction of the new platform, collateral eligible for SNB repos has been combined in new baskets.