samchain/econo-pairs-v1 huggingface dataset:
Such recommendations might be called for if there are structural developments – for instance, new financial instruments – taking place in the financial system that appear to increase the risk of financial instability. Second, once the Act has come into force, the FPC will be able to direct the prudential regulator to implement changes to a small set of instruments in order to achieve its objectives. On the basis of advice from the FPC, the Treasury is presently consulting on those instruments (HM Treasury, 2012). As it stands, the current proposals include three tools. First, there is a countercyclical capital buffer. Under the Basel III capital framework, banks will be required to hold a higher level of bank capital relative to their risk-weighted assets. But national regulators will be able to require an additional time-varying buffer that can be increased during the upswing of the credit cycle and released during the downswing. Under Basel III, the countercyclical capital buffer will be phased in from the beginning of 2016, becoming fully effective only at the start of 2019. But the Government has said that it plans to use whatever flexibility is available to give the FPC power over the buffer as soon as is practicable. There are two ways that such an additional capital buffer mitigates systemic risks. First, it provides a larger cushion against potential losses, so providing greater resilience in the face of a bust.

More intensive implementation of structural reforms, in particular, improving the business climate, also played a very important role, whose positive effects have become especially prominent in recent years. Thus, despite the weak growth in foreign demand, our economy has grown by solid rates. The external environment is still not sufficiently stimulating. Foreign effective demand has not yet offset the sharp decline of nearly 5%, registered in 2009, although it shows signs of recovery, which gradually reduces its importance as a limiting factor for the growth of the domestic economy. It is estimated that it will continue to gradually recover, moving around 2% in 2016. However, the key factors that ensure solid economic performance, with economic growth of 2.7% in 2013 and 3.9% in the first three quarters of 2014, are factors that are specific to Macedonia, i.e. they are of inner character. One of the key factors that cause “decoupling” of the speed and intensity of the recovery of the Macedonian economy and foreign effective demand, and increase the resilience of the economy to external shocks is the presence of new companies – foreign investments (mainly in the tradables sector), which gradually and steadily increase  BIS central bankers’ speeches  1  the capacity utilization and diversify the production and export structure of the economy. Since 2010, their activity has grown steadily, with the current exports of these facilities accounting for around 35% of total exports. However, more importantly, their net value added is constantly increasing and thus relieves the trade deficit of the economy.
33 See Carney (2020) The Road to Glasgow, speech given 27 February 2020 at the launch of the COP26 Private  Finance Agenda. 31  All speeches are available online at www.bankofengland.co.uk/news/speeches  31  The stress test will reveal the financial firms – and by extension the companies – that are preparing for the transition, and it will expose those that are not. On returns, our citizens need to be able to see whether their investments are consistent with the path to net zero. And all companies that are transitioning to net zero should be encouraged. Asset owners and managers will increasing need to disclose whether their clients’ money is being invested in line with their values. Thus far, approaches to doing so have been inadequate. Carbon footprints are not forward-looking. Moreover, a whole economy transition isn’t about funding only deep green activities or blacklisting dark brown ones. We need fifty shades of green to catalyse and support all companies towards net zero and be able to assess collectively whether we’re “Paris aligned”. Given that net zero is both an imperative of climate physics and a commitment by 120 countries; companies, banks, insurers, pension funds and investors will increasingly be expected to develop and disclose their transition plans.

It is not surprising that across 800 years of economic history, financial crises occur roughly once a decade (Chart 3). Chart 3: Financial crises occur with fairly regular frequency Proportion of countries with banking crises, weighted by share of world income  Sources: Reproduced from Reinhart, C, and Rogoff, K (2013), “Banking crises: An equal opportunity menace”, Journal of Banking and Finance, vol 37(11), pp. 4557-4573  9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  Creating a unifying framework for macroprudential policy can help to break this dreary cycle, guide policymakers and improve the understanding and effectiveness of macroprudential policy. It can also promote self-reinforcing behaviour within the private financial sector, just as with credible monetary policy. And a clearer framework will improve the transparency and accountability of the FPC to parliament and the people we serve. IV. Grand Unifying Theory of Macroprudential Policy  The FPC is accountable to Parliament for operating the instruments of macroprudential policy to achieve the objectives of macroprudential policy, as determined by the Government. Society chooses the ends, and, within pre-set boundaries, the FPC determines the means to achieve them. The FPC framework mirrors that of the MPC because of the time-inconsistency problems. The (often) long lag between boosting growth today and the damage it does in the future makes an even stronger case for delegating operational responsibility for macroprudential policy to an independent authority than for monetary policy.
So the problem of global imbalances is hardly new. It was behind many of the currency crises in the post-war period and exercised the participants at the Bretton Woods conference in 1944. And for the past decade it was a regular item on the agenda of international meetings of finance officials at the IMF, G7 and elsewhere. But the incompatibility of different countries’ policy frameworks has proved difficult to resolve. At the Bretton Woods Conference, the British economist John Maynard Keynes identified the asymmetry of the obligations placed on surplus and deficit countries as the main source of the problem. He had argued that, “the process of adjustment is compulsory for the debtor and voluntary for the creditor. If the creditor does not choose to make, or allow, his share of the adjustment, he suffers no inconvenience. For whilst a country’s reserve cannot fall below zero, there is no ceiling which sets an upper limit.” Both the British and the Americans put forward proposals for a system with more symmetric obligations – but without success. For most of the post-war period, the obligations on debtor countries, asymmetric though they may have been, prevented the imbalances from becoming too big. More recently, the fact that the largest deficit country, the United States, was the issuer of the world’s reserve currency allowed the imbalances to continue for a long period, inducing a sense of complacency and threatening the stability of the global economy.

So the challenge of designing an international monetary system that could prevent the emergence of “too high to last” imbalances remains. The financial crisis has reminded us all of the importance of solving this problem. Sudoku for economists shows that it is essentially a political and not a technical problem: how can we ensure that the economic policy frameworks of countries are consistent with each other? At present there is no political mechanism for achieving that consistency. Finding such a mechanism is urgent. Having narrowed somewhat at the height of the crisis, the imbalances are now widening again. There is a risk that countries will, out of frustration, impose unilateral  BIS Review 4/2010  3  and ultimately self-defeating protectionist responses. Because the number of countries involved in the international trading system is now so large, and the countries so diverse, the idea of another Bretton Woods conference is wholly impractical. The IMF, despite the legitimacy bestowed by its membership of 186 countries, is too unwieldy without reform. The G7 omits some of the key players, such as China. Of more immediate promise is the G20 group of countries, which produces almost 90% of world GDP. Last year, under the UK Presidency, the G20 agreed to a new policy coordination framework which commits member countries to a process, using the expertise of the IMF, of assessing the consistency of their national policies. G20 Heads of Government will meet twice this year, in June and November, to discuss progress.
According to 2009 figures, labor force participation rate in developed economies is above 70 percent. This rate is hovering at around 60 percent in Eastern European countries. Although the labor force participation rate has surged by 3 percentage points in Turkey, it still remains low, at 49 percent. We see that the limited increase in this period was mostly attributable to the rising trend of labor force participation among the female population. Government incentives for social security contributions oriented towards newly recruited women and young people, which have been in place since 2009, are very influential in this development. Nevertheless, at 28 percent, the female labor force participation rate in Turkey is very low compared to European countries. While the labor force participation among females with a university degree converges towards the EU average, with a ratio of 71 percent, only 23 in every 100 women with a high school or lower education participate in the labor market. Regulations to be implemented in the labor market in the forthcoming period will contribute to sustainable growth and an increase in employment on a permanent basis. Within this scope, it is essential that:   Flexibility of the labor market should be increased,    Competition within the private sector is promoted,    Pay-roll taxes are reduced, and    Necessary policies for establishing an educated and qualified labor force, which will accommodate private sector requirements, are followed.

However, further work is also required in other policy areas to cement the foundations of the European Union, foster innovation and productivity, and put the economy back on a path of robust, sustainable growth and job creation. Thank you for your attention. I look forward to taking your questions. BIS central bankers’ speeches  5
I’m aware of the risk of showing optimism amid the crisis, in the same way that during the bubble whoever dared denounce the imbalances being built up was called a pessimist. But I hope my optimism is qualified by my reminder that complacency, that is to say believing that we have already done everything that has to be done and that nobody can teach us any lessons, is the arch-enemy in the battle to exit the crisis. To earn the confidence provided by the knowledge that Spain has been capable of adjusting and reforming during these years of crisis, I have chosen two examples. First, the rapid improvement in our current-account balance; and second, the headway during these years in restructuring our banking system. BIS central bankers’ speeches  1  As is well known, under normal conditions the current-account balance is very easy to finance in a monetary union, but its size is a good indicator of two of the deepest imbalances that came about in Spain during the expansionary phase: the explosion in debt and the loss of competitiveness. Indeed, from 1996 credit began to outpace gross domestic product, doing so systematically until 2006, when its annual growth peaked: at a rate of over 25% for total credit, and more than 40% for credit extended to real estate development activities. Over the same period, Spanish CPI growth was systematically higher than that of the euro area.

Traditionally, Spain’s trade balance with our European partners has run a deficit. Two years ago, this deficit had already fallen to € billion, but the good news is that at the end of last year it ran a surplus of a similar amount, meaning that, last year alone, there was a favourable turnaround of € billion in terms of Spain’s trade balance with the countries of the Union. At a greater level of detail we can see how the non-energy goods balance improved from a deficit of € billion, i.e. 5% of GDP, in 2008 to a deficit of only € billion, i.e. 0.5% of GDP, at end-2011. And the balance of non-tourist services, which has traditionally run a deficit, moved into a surplus of € billion at end-2011 after posting a deficit of € billion in 2008. A further example of the progress made during these difficult years has been the restructuring of our credit institutions. The Lehman Brothers crisis forced many countries to adopt numerous measures during 2009 to repair their banking systems. As is known, in Spain’s case the direct effect of the international financial crisis – the sudden emergence of toxic assets on bank balance sheets – was minimal, thanks to the soundness of our regulation and supervision and to our banks’ business model. But the indirect effects of the international crisis, such as the decline in GDP and the drying up of bank funding, seriously affected our system.
As long as inflation is firmly anchored, monetary policy can also address other concerns. We can seek to counteract the build-up of financial imbalances by keeping the interest rate a little higher than would otherwise be the case. But Norges Bank cannot take the main responsibility for developments in house prices and debt. Nor can monetary policy influence the economy’s long-term growth capacity. The past couple of years have been demanding for the Norwegian economy. Growth is now picking up, but the pace of growth is not expected to rise to the levels prevailing before the fall in oil prices. The Norwegian economy is undergoing restructuring. Monetary policy can facilitate this process, but the necessary adjustments must come from the business sector. Thank you for your attention. 4/4  BIS central bankers' speeches

Free flows of capital across borders can make the domestic financial market deeper and wider, increase liquidity, and facilitate price discovery, thus improving efficiency of resource allocation. At the same time, diversification by investing overseas can help raise investment returns for households, which would in turn help promote private consumption and support sustainable growth. For emerging markets in particular, participation of foreign financial institutions can speed up the  1  Kaminsky, G.L., C.M. Reinhart and C.A. Vegh (2004), "When it rains, it pours: procyclical capital flows and macroeconomic policies", NBER Working Paper, 10708. BIS Review 141/2008  1  learning process and facilitate the adoption of best international practices by the financial sector. Therefore, while a more liberal regime for capital flows could at times bring about negative impacts, the relevant response should not be to keep the capital account closed forever, but to find ways of effectively managing the potential risks. International experiences have provided some broad suggestions on how such risks could be managed. Foremost is the importance of appropriate sequencing between liberalising the capital account and other domestic reforms. Development of financial institutions and markets, enhanced macroeconomic stability, and proper risk management by banks and enterprises would help to increase the resilience of the domestic entities in dealing with volatile capital flows. In addition, prudential regulation and supervisory framework need to be established, in order to prevent excessive risk-taking by domestic financial institutions.
The UK’s Productivity Problem: Hub No Spokes Speech given by  Andrew G Haldane Chief Economist Bank of England  Academy of Social Sciences Annual Lecture 28 June 2018  The views expressed here are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Sandra Batten, Shiv Chowla, Gabor Pinter, Patrick Schneider, Brad Speigner and Pawel Smietanka for their help in preparing the text. I would like to thank Tera Allas, Ben Broadbent, Caroline Butler, Jeremy Franklin, Colm Manning, Richard Sherrington, Silvana Tenreyro, Ryland Thomas and Jan Vlieghe for their comments and contributions. This work contains statistical data from ONS which is Crown Copyright. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Introduction I am delighted to be giving this year’s Annual Lecture of the Academy of Social Sciences and honoured to be a Fellow of the Academy. I thought I would use the occasion to discuss an issue of pressing public policy concern, an issue that affects the living standards of each and every one of us and has, as best we can tell, since the dawn of time: productivity. It is a terrible word, as it leaves most people dazed and confused.

Covering the failings of previous regimes is not simply some academic exercise, it is crucial in understanding why regulators have taken the actions they have, and why there is still some work to be done. The Basel capital adequacy regime dates back to the Basel Accord of 1988, which led to the introduction of what we now know as Basel I. This was an historic agreement, representing the first international initiative on bank capital standards. Basel I focussed mainly on the assessment of the quantity of credit risk, and had a (what now looks like) simple categorisation of assets on risk grounds into one of five categories, with risk weightings of 0%, 20%, 50%, 100% and finally a set of assets that were fully deducted from capital, the most risky sort. There was also a simple reporting framework for off balance sheet items which were factored into the risk-weighted asset framework. Basel I also set out for the first time an internationally agreed definition of the quality of qualifying capital for banks. Basel I was simple, and I will return to the consequences of that later. The first amendment to Basel I came in 1996 and 1997 in the form of the so-called Market Risk Amendment. It was significant both in extending the Basel Accord to capture market risk, and in introducing two alternative approaches to the measurement of market risk, a standardised method and an internal models approach. The latter was the first appearance of the use of firms’ own models in the capital framework.
In my view the actions taken by us in the Nordic-Baltic countries can constitute a promising way forward. We have decided to increase coordination by creating a permanent structure for regional cooperation. This structure takes the form of a so-called cross-border stability group. To the best of my knowledge, it is the first of its kind. The Nordic cross-border resolution stability group includes 22 stakeholders from eight countries that will meet on a regular basis to share information and discuss financial sector developments. To facilitate coordination we have also agreed on a number of specific and detailed crisis management procedures and prepared for a clear division of roles and responsibilities between the authorities and ministries. Ultimately, this should enhance our preparedness for managing a crisis in any of our common international banking groups. At the EU level, the member states have recently agreed that countries with common crossborder banking groups shall establish such stability groups in one way or another. As these arrangements will call for extensive information-sharing and more cooperation across jurisdictions they will impose strong demands on the different national authorities involved. But most importantly, they will make it easier to solve cross-border problems within the EU. As Greek banks are heavily engaged in cross-border banking operations, it may be in the Greek authorities’ interest to consider setting up such a group. It is important to emphasise that the establishment of a well-functioning cooperation structure is not something that is done overnight.

Second, since foreign banks are active in more than one market they usually hold a more geographically diversified credit portfolio. Therefore they are less likely to be affected by stress in the local market. Third, as affiliates of foreign-owned banks generally have better access to international funding they contribute to less volatile lending over the local business cycle. For this reason they can serve as a countervailing force to the local business cycle. Finally, as I have already touched upon, foreign bank entry can have a positive impact on the host country authorities, which in turn may induce stricter regulation and improved financial supervision. For all these reasons foreign banks have the potential to contribute to the overall soundness of local banking systems. Having said this, I am of course aware that there are also problems associated with cross-border banking. First of all, as has become evident during this crisis, the increasing globalisation of financial markets can create strong contagion effects across markets. Problems in one country tend to spill over to other countries very fast, generating a snowball effect where problems grow along with the costs of handling them. Furthermore, it has become clear that it can be extremely difficult and costly to deal with distressed banks in a cross-border setting. The reason for this is that there are many stakeholders involved and that the resolution of failing institutions is even more poorly defined at the international level than at the national level.