samchain/econo-pairs-v1 huggingface dataset:
The development of new markets and instruments, for example credit derivatives, has also led to a broader risk spread than earlier. The improved diversification of risk is probably one of the reasons that world financial markets have coped with the stock market decline and the accounting scandals with limited damage to the wider economy. This is probably one reason why the downturn following the stock market decline in 2000 was considerably less pronounced than during earlier downturns. The new instruments spread risk, but do not eliminate it. Financial markets have become highly complex. This alone entails an operational risk, which is a challenge to participants and the supervisory authorities. BIS Review 16/2004  1  Increased trade promotes growth and lays a basis for prosperity. A number of Asian countries have experienced strong, export-led growth - Japan from the 1950s and several countries in Southeast Asia from the 1960s. In recent years, China has become an important player in international trade, and is now probably the world’s fourth largest trade nation. The Asian economies and the rest of the world have become more integrated. Technological advances and a sharp fall in prices in the IT and telecommunications sectors have exposed a number of services that were previously sheltered from competition from low-cost countries. EU enlargement this spring, with ten new members, is also influencing the division of labour in Europe. Implications for the Norwegian economy Intensified competition from Japanese and Korean shipyards had serious implications for Norwegian shipbuilding in the 1970s and 1980s.

There are prospects that house prices may show a fairly sharp rise between 2003 and 2004. Buoyant activity in the housing market and high house prices are contributing to strong growth in credit to households. The household debt burden has shown a considerable increase and is expected to rise further in the period ahead. A high debt burden means that an increase in interest rates to a more normal level may have a relatively pronounced impact on household income and hence consumption growth. The difference in growth in credit to households and non-financial enterprises is a good illustration of Norway’s dual economy. Over the past few years, credit growth has been far higher for households than for enterprises. The level of household credit growth has remained high recently. An important reason is the sharp rise in house prices in recent years. Low investment demand is reflected in credit to non-financial enterprises, which has declined to a very low level. Developments in prices for commercial property compared with house prices also indicate that the situation is better for households. Developments in mainland enterprises have been characterised by low output growth, falling investment and declining profitability in many industries. In order to boost returns on invested capital, enterprises have taken steps to reduce costs, primarily by reducing their workforce or relocating parts of their production abroad. By way of conclusion, I would like to present a summary of the economic outlook for the Norwegian economy.
In our approach the normal target horizon is set at between one and two years. A third issue is the degree of transparency. It is widely agreed that transparency is not merely compatible with an inflation target regime but actually essential if the regime is to function properly. For one thing, the central bank must be accountable for its conduct of monetary policy. This is a question of monetary policy’s basic legitimacy, which is important not least when the central bank operates independently. For another, the actual implementation of monetary policy needs to be as predictable as possible. Would maximum transparency be preferable? Is there really any point at which a line should be drawn or would it be more reasonable to try to identify a certain minimum level of transparency? Should the minutes of monetary policy meetings and the voting be published? Would it even be right to allow the central bank’s monetary policy meetings to be shown on television? For my part, it seems reasonable to publish relatively detailed minutes of monetary policy meetings without revealing exactly who said what at which stage in the discussion. It is, after all, important that discussion during the meetings is open and unprejudiced, so that the participants can listen to their colleagues’ arguments, change their minds in the course of a meeting and accept joint responsibility for the decisions that are made. At the same time, it is important that each individual is responsible for arguing for his or her position.

One conceivable explanation is that, having waited longer than other countries, the road back to price stability was more difficult for us. There were also a number of exceptional events along the way. What was perhaps the worst bank crisis of the century erupted in the wake of the 1980s’ bubble economy. Exchange rate turmoil was such that, during some dramatic days, the instrumental rate was hiked to 500 per cent. In the early 1990s the budget deficit grew to be the largest in the industrialised world. There are many similarities, as well as some differences, between the financial crisis in Sweden and those in Mexico and Southeast Asia. In recent years the situation in Sweden has become more stable and, with a resolute economic policy, developments have taken a positive turn. The bank crisis has been resolved, the economy is in an expansionary phase and inflation expectations are low. Step by step, the credibility of the new regime is being established. Experience in other countries clearly shows that the consolidation of a changeover to a low-inflation regime takes many years. Inflation target’s historical roots and advantages The idea of focusing monetary policy on price stability goes back, as I mentioned earlier, at least to Wiksell’s arguments a century ago. It seems to me that Wiksell’s emphasis on deflation being as important to avoid as inflation has much to do with the acceptance of this policy today.
This is partly because electricity prices rose to record-high levels at the turn of the year 2002-2003 and then fell back somewhat. We judged that to be a temporary effect and predicted that electricity prices would fall back, thus bringing inflation figures down again. For both CPI and UND1X inflation this meant that the change in relation to the  1  Inflation measured according to the method for computing the CPI that was used up to the end of 2004. The analysis in the rest of the discussion is based on the new CPI method, though  2  BIS Review 25/2005  corresponding month a year earlier dropped sharply at the beginning of 2004 – an effect that was partly expected, as I was saying. But excluding energy prices, too, inflation since the beginning of 2003 has been very low, with non-energy UND1X averaging 0.9 per cent. There are many reasons for that, but the most important is unusually low import prices and surprisingly high domestic productivity growth. Allow me now to discuss this in a little more detail. One way to do so is to look at the developments in different components of the CPI. As a first step, the CPI can be broken down into prices of goods and services. I then choose to exclude oil, electricity and mortgage interest, which we already know has contributed to the low CPI inflation. Goods prices (Chart 2) rose weakly in 2003, but since the end of the same year they have been falling.

And it was that ‘design feature’, coupled with weak governance, and the huge stock of assets priced off LIBOR, which gave such a strong incentive for manipulation. Though governance arrangements for LIBOR have since been strengthened, the vast majority of term LIBOR rates remain largely or wholly based on judgment, reflecting the absence of any material underlying market (Figure 2). -  Third, despite these two profound drawbacks, the informational and liquidity advantages of using a common established benchmark, coupled with the deep embedding of LIBOR in a range of systems, accounting and regulatory requirements have meant moving away from the use of LIBOR has required determination, forward-thinking and co-ordinated effort – even for those large parts of the market where it is manifestly the wrong rate to use. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Figure 2: Input sources for current LIBOR tenors 4  What opportunities will a post-LIBOR world offer? Taken together, these three observations show why LIBOR transition is both necessary from a risk perspective and beneficial for the long-term efficiency of the financial markets, whilst also being unpopular in terms of the one-off transition costs involved. Indeed, there is a material risk that those transition costs are obscuring a clear perspective of the commercial benefits to users of moving beyond LIBOR. What are those benefits? It would be brave for me as a public official to attempt anything approaching a complete answer to that question.
Paul Tucker: Central banking and political economy – the example of the UK’s Monetary Policy Committee Speech by Mr Paul Tucker, Executive Director and Member of the Monetary Policy Committee of the Bank of England, at the Inflation Targeting, Central Bank Independence and Transparency Conference, Cambridge, 15 June 2007. *  *  *  Over the next couple of days, this conference will take forward debates on many of the strategy issues preoccupying monetary economists and policy practitioners. The role of inflation targets and communication in anchoring inflation expectations. The place of money in central bank analysis and policy frameworks. Whether to be transparent about any expectations policymakers form about the path of their policy rate. After more than a decade in which monetary authorities across the world have generally succeeded in maintaining price stability, it is hard to know whether these continuing debates – and, more important, the variations in central bank practices that underlie them – are vital or peripheral. Time will tell. Some architectural features of monetary regimes are plainly important and, unsurprisingly, are broadly shared: central bank independence; a definition of price stability that, with credibility, can act as a nominal anchor; a forward-looking “reaction function”. Within that broad canvas, the remaining variance in central bank practice may owe something to differences in the governance structure for their decision taking, and to the genesis of those differences.

François Villeroy de Galhau: Ensuring confidence in the currency Introduction by Mr François Villeroy de Galhau, Governor of the Bank of France, at the conference on "Recent monetary policy developments", Paris, 4 May 2017. * * * Our currency, the euro, is at the centre of debates that are particularly important to French citizens. The Banque de France is independent from politics, but in keeping with our mandate within the French Republic to ensure confidence in the currency, it is my role to provide certain clarifications. I hear proposals for a dual currency with the return of a national currency in parallel to a European currency. I must say that such suggestions would put confidence in the currency in danger. No advanced economy has this type of parallel circulation. Where two currencies exist (or have existed) and can be used to make payments, one always inspires less confidence than the other. Generally, it is the “national” currency that suffers – the only one accessible to households, particularly poorer households, and to SMEs. The currency therefore quickly loses its value, leading to excessive price increases and a negative impact on purchasing power. If we were to consider returning to the ECU, it is important to remember that it has not existed for 18 years and was not a real currency: the ECU was a unit of account that could not be used by either individuals or companies to make payments.
Muhammad bin Ibrahim: Charting new frontiers – financial advisers the future Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the Inaugural Conference of the Association of Financial Advisers “Charting new frontiers – financial advisers the future”, Kuala Lumpur, 31 October 2012. *  *  *  I would like to congratulate the Association and its members for your commitment, which has resulted in the successful formation of the AFA to champion and promote the interests of all licensed financial advisers in Malaysia. The formation of AFA is most timely, and marks a significant milestone in the progressive maturing of the financial advisory industry. Since the introduction of FAs in 2005, we have seen commendable growth within the industry, with the number of licensed FAs rising from 2 to 17, and the number of licensed FA representatives increasing from 17 to 229 today. The formation of the AFA is timely as it provides a platform to encourage greater collaboration among FAs to instill greater professionalism among its members and I expect the AFA to play an important role in coming up with clear strategies to propel the financial advisory sector towards greater progress and growth. Developments in the insurance and takaful sectors There are some broad developments within the economy and the financial sector that will expand the opportunity for growth in the provision of independent financial advisory services.

Many representatives of trade unions and employers express a strong ambition and determination to arrive at wage increases that are commensurate with the macroeconomic situation. This is all to the good. But the fact remains that even in recent years, the rate of wage increases in Sweden has been higher than in major competitor countries and also above the macroeconomic potential. Real wage increases in excess of productivity growth enlarge the wage share and reduce the gross profit share. That is what is happening now in Sweden. Bit by bit, at least a part of the increased profit margin that resulted from the krona’s fall in the autumn of 1992 is being eroded. This is a difference from the United States. There the economy has entered what might be described as a good spiral, where higher productivity increases and comparatively moderate wage increases have generated profits that help to drive new investment in advanced technology. In such a process, unduly high wage increases can bring the changes to a halt, as happened in Sweden in the late-1960s and early-1970s. Present economic assessments do not generally suggest that a break is imminent in the path of Swedish wage formation. So will this have a negative impact on the propensity of firms to invest in the new technology? The financial system This brings me to the significance of the financial system and access for corporate financing in the transitional phase.
2  Speech by Adair Turner on 18 February 2011, Reforming finance: are we being radical enough? 3  Speech by Paul Tucker on 23 May 2011, Building resilient financial systems: macroprudential regimes and securities market regulation  BIS central bankers’ speeches  5

The regulations and supervisory practices that are put in place should be determined by what is good for the public good writ large, rather than what benefits some narrow set of private financial institutions or markets. Finally, we need to be persistent. There is much work that still lies ahead. As the crisis recedes in memory, the natural reflex will be to relax and grow complacent. Already, some bankers are arguing that it is time to get back to “business as usual.” We have seen that “business as usual” results in unacceptable outcomes. So we need to keep working on a continual basis to make the global financial system more resilient and robust. We will not be able to avert all future failures or crises, but I know we can do much better in limiting the frequency, severity and the breadth of their impact when they occur if we keep pushing forward. Thank you for your kind attention. I would be happy to take a few questions. 8  BIS central bankers’ speeches
Chart 5: GDP and unemployment  Chart 6: Unit wage cost Percentage change on year earlier  Percentage change on year earlier  5  7  9  6  4 8  3  5  2  4  7  1 0  1  -2 -4 -5  2  6  -1 -3  3  5 GDP growth (LHS) Unemployment rate (RHS)  4  -6  3 96 98 00 02 04 06 08 10 12 14 16 18  0 Unit wage costs 1996-2007 average  -1  -2 -3  96 98 00 02 04 06 08 10 12 14 16 18  In fact, the combination of the shortfalls against expectation of productivity and pay growth – which were in part related – had the effect of keeping unit wage costs and hence domestically generated inflation roughly at the level the Committee had expected to see at higher rates of pay growth and productivity growth. The key point here, I think, is not that pay and productivity growth serially undershot the MPC’s forecasts but rather the need to be ‘a bit stodgy’ when faced with evidence that consistently suggested the possibility of fundamental changes in the way the economy works – or, in more technical language, uncertainty about the macro-economic ‘model’. 5  5  The prevailing macro-modelling paradigm had become largely one of cyclical models – given that described the pre-crisis economy well.

A number of commentators have suggested that if policy rates stay much closer to the zero lower bound than in the past, monetary policymakers will have insufficient conventional ammunition to stimulate demand in future downturns. All else equal, this would argue for erring on the side of speed and perhaps higher rates to create future room for manoeuvre. One cannot help acknowledging this concern. If, as seems likely, we are and will continue to be in a lower natural interest rate environment, policy rates will not approach levels seen before the financial crisis. The average level of Bank rate was around 5% for the 20 years preceding the crisis. The current yield curve sees bank rate rising slowly over 3 years and levelling off at under 2% for the next 30 years. The average policy loosening cycle in the UK was around 2% over the pre-crisis period. If that remained the case, we would clearly have less room for manoeuvre in the face of a sharp downturn, particularly if that happened in the near future. However, raising rates faster, and perhaps to a higher level, than warranted to meet the inflation target in order to have the room to cut them in a downturn, assumes that the impact of policy on activity is asymmetric and that monetary policy will have less impact on the economy when it is tightened than when it is loosened.
First, it was geared to supporting banks which, while viable, required restructuring to ensure their ability to resume a path of sustainable profitability, by reinforcing their solvency with public funds. Significantly, in certain countries where the need for a similar instrument has been acknowledged, this has not yet been created. Second, the FROB involved giving the Banco de España wide-ranging powers to swiftly and effectively take control and resolve the problems of those banks that are not viable. Rounding off the remit of the FROB has been the approval of the reform of the legal regime for savings banks. To date, the limitations inherent in their legal status had prevented savings banks from reinforcing their core capital, except through the capitalisation of profits. The reform opens the way for savings banks to tap private capital by enabling them to issue core equity instruments, it provides for improvements in their management and it subjects them to greater market discipline. Restructuring was considered on the basis of two criteria that have proven to be most useful. The first is the requirement that those banks applying for public aid should reduce capacity. 2  BIS Review 171/2010  During the expansion, our banking system became excessively big in parallel with the growth of the construction sector. If aid had not been conditional upon the presentation of a capacity-adjustment programme, the profit and loss accounts of all banks would have continued to perform poorly, not only in conjunctural terms but also structurally.

And as you know, the profit and loss account is the first line of defence when it comes to averting banking crises. Another criterion that has proven most useful relates to the substantial amount (up to € billion) authorised by Parliament to meet the recapitalisation needs that may arise during the crisis, but to contain in turn the budgetary impact of the restructuring process. The more than € billion that are to be lent to Spanish banks are no doubt a considerable sum. But it is actually a very small amount when compared with the outlay in other countries, which reacted by pumping towering amounts of public funds into private banks, leading to most serious increases in public debt that in some cases have ultimately caused problems for the country concerned. Where necessary, there are more than sufficient backstops to meet recapitalisation needs, but it is absurd to inject public funds unnecessarily. Let’s now turn to the role of financial markets in the second phase of the financial crisis, the so-called “sovereign debt crisis”, which erupted very recently, in spring this year. The behaviour of the sovereign bonds markets could be analysed from the standpoint of market failures or in how they are regulated. While this is an interesting perspective, proposals for reform on any major scale have not yet been set in train, unlike with banking regulation. The crisis has disclosed numerous shortcomings in the functioning of markets, and one frequent criticism is that these same markets influence the public policy agenda.