samchain/econo-pairs-v1 huggingface dataset:
In particular, from a U.S. perspective, the access of U.S. firms to some foreign markets and the protection of intellectual property rights are issues that deserve close attention. But, in addressing these issues, we should take care to preserve the vital benefits of trade to higher standards of living in both advanced and emerging market economies. Our focus should be on further strengthening an open trade regime, and, as appropriate, amending and improving these agreements. 1/6  BIS central bankers' speeches  The Pace of Globalization To begin, let me briefly describe the pace of globalization as a reminder of what is at stake. Global economic integration has increased dramatically in recent decades. Trade, for example, has grown from nearly 40 percent of global GDP in 1990 to 57 percent in 2015. Over the same period, the stock of foreign direct investment has increased from roughly 10 percent of global GDP to 34 percent. Ultimately, economies have become more integrated and interdependent.2 This rapid growth in trade reflects falling trade barriers, declining transport costs, and improved information and communication technology. These trends have enabled the development of complex global supply chains that allow companies to manage their production more efficiently. Emerging market economies now make up a much larger share of global trade, the global economy and global growth.

William C Dudley: Benefits and challenges from globalization Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Bombay Stock Exchange, Mumbai, India, 11 May 2017. * * * Thanks, Ashish, and thanks to the U.S.-India Business Council, the Confederation of Indian Industry, and the Bombay Stock Exchange for organizing this event. As always, what I have to say reflects my views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System.1 It is a pleasure to have the opportunity today to talk about the issue of globalization. Although the debate about the benefits and challenges of globalization is not new, it has recently come into sharper focus. This debate is important to all of us, and I think it is particularly relevant to India given its growing role in the global economy. Globalization means different things to different people. In my remarks today, I will focus on the role of globalization as a force for international economic integration and economic development. I will highlight three themes: First, the important role that trade plays in promoting higher standards of living globally. Second, how changes in trade can create challenges for industries that become less competitive. We have not adequately considered and remedied the very large costs this can impose on certain communities and households. Third, the answer to those challenges is not greater protectionism.
Within a few miles of this conference room are companies like Apple, Facebook and Google that have transformed the way in which services can be provided worldwide. And even the older services have become tradable – over the course of a century the All England Lawn Tennis Club Championships at Wimbledon have grown from a small local tournament to the world’s premier tennis event driven by a global television audience of around 400 million people in 187 countries (as many as are members of the IMF). But international trade requires a monetary system to flourish – the rise of the successful Asian economies would never have occurred if they had been restricted to barter. If flexible exchange rates were allowed to determine the relative values of different currencies in competitive markets, why should there be any need for “rules of the game” or an international currency? Indeed, is the phrase “international monetary system” an oxymoron? That leads to the question I want to discuss today: what is meant by the international monetary system and do we need one? Over the years, views on the need for “rules of the game” governing international payments have ebbed and flowed. So it is not surprising that France has chosen the international monetary system as a theme of its presidency of the G20 this year. Why not leave these issues to market forces? What are the externalities in the international monetary system which mean that one country’s actions distort the choices open to others?

The main externalities in today’s international monetary system are most visible in the interaction between the advanced and emerging economies. The rising importance of the emerging economies has perhaps been the most important development since the Bretton Woods framework of fixed exchange rates was abandoned in the early 1970s. China and India alone have brought 2 ½ billion people into the world trading system, with many more in other countries such as Brazil and Russia. And over the next five years, emerging economies are expected to account for almost three quarters of total growth in world output. Trade has promoted development in China and other emerging markets, and has benefited the rest of the world as the costs of a range of traded goods and services, particularly manufactured goods, have been driven down. But the emergence of the accompanying imbalances in current accounts had huge effects on the global pattern of spending. Between 1998 and 2006, annual output in high-saving economies expanded by around $ trillion – $ more than the growth in domestic demand in the same economies. The rise in  BIS central bankers’ speeches  1  output relative to demand in the high-saving countries was only possible because there were matching capital flows. Capital flowed “uphill” from many of the emerging markets to advanced deficit economies, not an obvious sign of capital moving to exploit profitable investment opportunities.
As I initially explained, the institutional reforms that have been adopted or are being adopted to establish a banking union constitute important progress. But to meet the ultimate objective of strengthening financial stability, implementation is key. And implementation is well under way: the Supervisory Board has held its first three meetings; a Framework Regulation has been prepared and is now the subject of a public consultation; and work is progressing on the supervisory model of the SSM with the Supervisory Manual. One of the first major implementation tests is the comprehensive assessment, the health check of the euro area banking system, which is currently being conducted as a prelude to the SSM becoming operational. Here, the ECB is making good progress in establishing the new structures and ensuring that the exercise will be fair, transparent and stringent. But many more steps still lie ahead of us. A final challenge relates to the macro-prudential arm of the SSM. As you know, the SSM Regulation gives the ECB the power to apply stricter macro-prudential measures than the national authorities if it deems them necessary. We can also advise on the calibration of instruments. This goes some way towards insuring against an inaction bias at the national level, thus improving the prospects for a more stable euro area financial system. We will maintain a clear separation of objectives between the macro-prudential policy framework and monetary policy and a clear hierarchy, with price stability remaining the ECB’s overall primary objective.

What we are experiencing now is a prolonged period of low inflation, which will be followed by a gradual upward movement towards inflation rates below, but close to, 2% later on. Of course, inflation remaining low for a prolonged period of time is a risk in itself. It implies that there is only a small safety margin away from zero. And it makes structural adjustment efforts more difficult. Hence, it is important to carefully assess the causes of low inflation. In recent times, energy price developments in particular put downward pressure on headline inflation, a phenomenon that has contributed to weaker inflation at the global level. Moreover, low inflation partly reflects internal rebalancing efforts by way of which several countries, especially those in economic adjustment programmes, have aimed at improving their competitiveness. However, the low inflation outlook is also driven by continued weakness in demand. At this point in time, we do not have evidence of consumers postponing expenditure plans, which is  BIS central bankers’ speeches  3  something one would observe in a deflationary environment. But any setbacks in the absorption of economic slack may give rise to further negative developments. Against this background, we will remain alert as to whether any indications on further downside risks to price stability emerge and we stand ready to act. A second challenge we will be facing in the coming months is to make the Single Supervisory Mechanism really work.
The two first-named banks have supplemented low policy rates with quantitative easing to try to make monetary policy more expansionary. 14  See Smets (2013) for a review of various points of view on this question. BIS central bankers’ speeches  7  short time before other macroprudential policy measures are in place. But studies show that typical credit cycles are much more protracted than normal business cycles.15 The status of the inflation target would probably be questioned if monetary policy “leans against the wind” – that is, results in an inflation rate below the target – for many years to dampen an expanding credit cycle. This reasoning becomes increasingly important the lower the inflation and policy rates are. If inflation expectations fall, increasingly expansionary monetary policy will be required to bring inflation back up to the target.16 And as the policy rate has a lower bound, it may be difficult to make monetary policy sufficiently expansionary once this bound has been reached. One conclusion from these insights may be that monetary policy should react asymmetrically when inflation is low.

Financial awareness supports a more rational decision-making process for individuals by improving their literacy against financial risks. Increasing financial literacy will contribute to the more efficient functioning of financial markets, enhancement of financial stability and consequently the social welfare by increasing productivity in the overall economy. Therefore, financial education assumes importance not only for individuals but also for giving depth to the financial system and improving market efficiency. Parallel to increased financial literacy, the volume and variety of information sought by individuals from financial institutions will also increase. This will, in turn, lead to more transparency in financial markets. Besides, consumers’ demands for products and services that meet their needs will enable the development of creative, innovative and competitive financial products and services in financial markets. Moreover, financial education will lead to an increase in the individuals’ propensity to save and create a more efficient social security system. Higher rates of savings will have favorable effects on investment and growth and contribute to economic development and financial stability. I would like to especially underline that financial education is not an abstract concept. As a matter of fact, we clearly witnessed the close relationship between financial education and financial stability in the recent global crisis. I believe that the awareness created by this crisis can be interpreted as an opportunity, as highlighting financial education will be beneficial for policy-makers, individuals and financial markets. In Turkey, many institutions carry out projects with regard to financial education as a part of their responsibilities.
12 On this occasion, our new interest rate forecast just confirmed what the  12  6  Norges Bank’s forecasts of market rates are calculated as a forecast of the key policy rate plus an estimated 3-month interbank risk premium. Both are given as quarterly averages. BIS central bankers’ speeches  market had already learned and expected from our reaction pattern. In such a case, the market interest rate path works as an automatic stabiliser: If the market expects the outlook for the economy to change, and it – correctly – anticipates the central bank’s reaction to it, the appropriate tightening or loosening will be reflected in market rates even before any action is taken. The example illustrates an important point: By being transparent and by regularly and over time providing information about the revisions of the forecasts, economic agents are kept up to date with the central bank’s reaction pattern. Since the world changes, our interest rate forecast may at times come as somewhat of a surprise. And in situations where we observe that market participants are not well enough informed about our reaction pattern, we do not hesitate to surprise the market. The huge shock to the international – and hence the Norwegian – economy during the financial crisis in 2008 may serve as an example. In this case, we were able to guide the market and affect expectations when we presented a new interest rate forecast.

At the same time, economists are increasingly being given the opportunity to help governments design new policies and regulations2. And, in this respect, we should bear in mind that carefully designed scientific experiments have been an engine of economic, technological, and social progress. Social experiments have become crucial to ensure that governments implement policies with a proven record of success3, that are based on evidence and not on prejudice or intuition. We are now in a position to create a virtuous circle that begins with the allocation of resources to the compilation of data and the provision of access to them, continues with the evaluation of public policies, and ends with the application of the findings to the design of policies. However, unlike medical trials, social experiments – large-scale, publicly funded randomised controlled trials – have not become the gold standard for the evaluation of public policy interventions. 1  Einar, L. y Levin, J. (2014) "The data revolution and Economic Analysis", Working Paper 19035 National Bureau of Economic Research (NBER) 2  Duflo, E (2017)"The Economist as Plumber" Richard T. Ely Lecture, American Economic review: Papers and Proceedings 2017, 107(5):1-26 3  Heffetz, O y List, J (2021) "Who's afraid of evidence-based Policymaking?" Artefactual Field Experiments 00739, The Field Experiments Website 1  In many cases, critics argue that such experiments are inherently unfair. Ironically, this resistance to experimentation could eventually lead to less progress and even less fairness.
This amendment entitled the government by Royal Decree to write down the share capital of a bank against losses in the audited interim accounts, if the shareholders’ General Meeting did not do so. This authority was used in two instances where shareholders refused to write down a bank’s shares as required by GBIF. Shareholders in one bank brought the case to the courts, but lost. 2  BIS Review 58/2003  That shareholders in this way were forced to take a bank’s losses before tax payers’ money was put on the table, was to my mind imperative in order to muster the necessary political support and acceptance among the electorate for the rescue operations. It is hard to imagine that it would at all have been possible to support the banks if the old managers and shareholders were allowed to maintain their stakes in a failed bank. The conditions attached to the capital injections from the Government Bank Insurance Fund were explicitly set out in a written agreement between the bank and the GBIF. This agreement was made public. The bank was required to report regularly to the fund on the fulfilment of the terms of the agreement. The GBIF was headed by a decision-making board of experts and its operations were carried out at a distance from the political authorities. However, the GBIF kept in close contact with the financial supervisors and the central bank. The central bank also played a part as lender of last resort once the banks had been recapitalized.

Most often these included: •  the management and board of directors of the bank were replaced  •  the existing share capital was written down to cover losses to the fullest extent possible  •  the bank’s operating costs were reduced and some of its activities downsized  •  measures were taken to restrain growth in the bank’s total assets. An example of the conditions that were imposed can be found in chart 8. These conditions were of course rather unattractive to bank managers, board members and shareholders. And that was part of the objective; the management of a troubled bank should have a strong incentive to try other solutions before approaching the GBIF. For those that had to resort to the GBIF, an important aim was to force them onto a sounder track of business. Curbing the activities of banks receiving capital from the GBIF also implied that there was no competitive advantage for these banks over rival banks that were not receiving this kind of support. In addition, the value of the existing share capital in the bank would be written down according to the bank’s losses. In cases where the losses exceeded the existing share capital, the entire capital would be written down to zero. Such decisions would normally have to be made by the banks’ General Meetings. In order to avoid a stalemate if a majority at the meeting objected to the decision, the Storting had one month earlier made an amendment to the Commercial Bank Act.
Thirdly, there is no indication – from our perspective – that the risks entered into in the banking industry have risen: market and interest rate risk have only increased slightly on an aggregate level, and credit risk even seems to have fallen. Consequently, the banking sector is in good shape at the moment. As far as prospects for the near future are concerned, we believe that the macroeconomic environment and financial market conditions pose no major threat to the stability of the Swiss banking system. The outlook for 2005 indicates that economic growth in most regions will only slow down at a moderate pace. In addition, the available indicators suggest that there is currently little risk of contagion effects causing a crisis in the Swiss banking sector. Nevertheless, there are still potential sources of risk. They pertain to credit risks in particular. Firstly, an unexpectedly sharp economic downturn could have a serious impact on the quality of the loan portfolios and the stock market. Secondly, should we witness a swift economic recovery, however, a sharp rise in the still very low interest rates could also result in a deterioration of the loan portfolio. This  is because the growing interest burden would suddenly put considerable pressure on households and companies with mortgages to pay off. Banks would also be directly affected by the steep interest rate hike, as the interest rates on their assets tend to be fixed for a longer period than those on their liabilities.

Niklaus Blattner: Developments in the Swiss banking sector Introductory remarks by Mr Niklaus Blattner, Vice-Chairman of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Berne, 16 June 2005. *  *  *  With its Financial Stability Report, the Swiss National Bank (SNB) informs the public of the state of the financial system and presents its assessment of system stability. Moreover, the Bank provides indicators that may be used for an in-depth analysis. The SNB tracks developments in the banking sector from a macroprudential, i.e. a system-wide perspective. In so doing, it complements the task of the Swiss Federal Banking Commission (SFBC), which is responsible for microprudential oversight, i.e. for individual institutions. The part of the report that focuses on the banking sector mainly highlights strains or imbalances which could pose a threat to system stability in the short or longer term. In addition, the SNB reports on its activities in connection with the oversight of payment and securities settlement systems. This year it also provides information on the “Business Continuity Planning” (BCP) project, i.e. on preventive measures to overcome disruptions, thus strengthening the operational resistance of the Swiss financial centre. Banking sector The banking sector is currently stable. The stress index developed by SNB – an indicator which combines comprehensive information on potential stress symptoms in the banking industry – shows that the strains on the Swiss banking industry were extraordinarily low compared with the historical average. This is mainly attributable to three factors.
Central banks simply cannot set different interest rates for different sectors or individuals or regions. Monetary policy tools are thus too blunt an instrument to offset distributional differences. So whether viewed from an objectives or instruments perspective, the case for monetary policy needing to take much account of its distributional impact is weaker than for the other arms of public policy, such as fiscal and social policy. The latter have objectives which are often explicitly distributional and their instruments are better-equipped to achieve such redistribution. This much is relatively well-accepted in academic circles. 12  It does not follow from that, however, that distributional effects are irrelevant in the setting of monetary policy. Both in theory and in practice, there are several reasons why distributional effects might still matter to monetary policy and to monetary policymakers and hence why understanding and explaining these effects might be important public policy-wise. 13  First, even though it may be neutral over the longer-run, monetary policy can and does have potent effects on the economy over the shorter-term, including potentially on the distribution of resources. This should not be a bone of contention. We know this is likely to be the case because this is the very reason monetary policy is non-neutral in the first place. Monetary policy, like all policy, relies on redistribution for its efficacy. For example, changes in interest rates redistribute interest payments between savers and borrowers at any point in time. They also affect, over time, the balance between saving and borrowing in the economy.

Now is the time to act in France, where stepping up reforms is a priority, with a focus on two main areas: on the one hand, sustainably consolidating our public finances, and on the other, aiming to achieve an overall transformation, with and a major simplification effort in both labour market and the goods and services market, and large-scale investment in education, vocational training and apprenticeships. Even though we must pursue this course, this is what the new government appears to be doing with the labour market reform underway since this summer, and efforts to bring the government deficit down to 2.6% in the 2018 budget, well below the threshold of 3% of GDP for the first time in 11 years. Now is the time to act in Europe, above all. We cannot both overburden monetary policy – our German friends are right in this respect – and refuse Economic Union which is the prerequisite for a sounder Monetary Union. So we must not let ourselves be slowed down by sterile debates or false suspicions: there is no question of implementing a “transfer union”, which would only benefit certain countries; we must not get bogged down by  Page 7 sur 8 considerations about methods either, between intergovernmental and community methods.