samchain/econo-pairs-v1 huggingface dataset:
There is little reason that I can see to suppose that global growth will not recover to at least its earlier trend rate over the next 2-3 years once the immediate shock has been absorbed. But in the meantime, the UK cannot be wholly immune from a more pronounced or prolonged global slowdown in the short term than we had previously expected - if that is indeed what occurs - even though we are better placed than some others to withstand it. Inflationary pressures remain well contained. Domestic demand appears to have been sustained into the third quarter, underpinned by increasing government spending in line with the Chancellor's intentions and by the easing of monetary policy. And consumer confidence in this country - on most of the evidence - seems to be holding up well despite the terrorist attacks. While business confidence generally weakened further in the third quarter, it remains stronger in the services sectors than in manufacturing. And on the basis of last week's BCC survey - it is notable that confidence in the services sectors here in Wales actually increased quite strongly. No-one can know quite how things will turn out in the present climate of uncertainty. We cannot rule out a further slowdown here in the UK. But all-in-all I am still persuaded on the evidence that we will avoid the overall recession that is widely spoken of in the media - though it may be a bumpy ride for a time.

The return on the GPFG in 2019 was the second highest percentage return since 1998 and the highest measured in NOK. But global equity markets fell abruptly in the first quarter of the year. The value of the GPFG's equity investments sank by over 20 percent, measured in international currency. Central banks and authorities all over the world have responded forcefully to dampen the crisis. Equity markets picked up. The GPFG posted a positive overall return in the first three quarters of 2020. Equity market volatility is not new. The GPFG has a long-term investment horizon. History has shown that we are able to ride out temporary falls in value. Measured over the whole period from 1998 to the third quarter of 2020, the annual net real return was 4 percent. As long-term interest rates are low, we cannot expect the return to be as high in the years ahead. The return on the GPFG is measured against the return on a benchmark index of global equities and bonds set by the Ministry of Finance. In 2019, the return on the GPFG was 0.23 percentage point higher than the return on the benchmark index. We arrive at the same figure when we measure the annual excess return over the whole period from 1998 through the third quarter of 2020. One of the areas that has generated a substantial excess return over time is our external equity management.
How do we at the Banque de France and the ACPR, given our role and experience as a supervisor, plan to address these new challenges? This is what I would like to briefly discuss with you today, after a quick recap of the regulatory framework for open banking and the lessons that can be drawn from it to guide the development of open finance. Part I: Openness and security A- As regards the assessment of and lessons learned from the regulatory framework for open banking, I would like to start by recalling: 1- The key principles that governed the sharing of payment data: on the one hand, the creation of appropriate statuses and, on the other, the strengthening of security requirements for access. The creation of the payment service or electronic money service provider status has fostered the emergence of an open banking ecosystem. The introduction of an agent status has also contributed to this process, by creating a gradual – proportionate – regulatory framework: it thus allows emerging players to test the suitability of their services with the market under the aegis of a licensed institution, before applying for a license themselves, if necessary. 2 – These developments have led to the rapid growth of Fintechs, drawing on their competitive advantages: speed, agility and responsiveness to customer needs.

Against this backdrop, we welcome two European texts that are currently being finalised (i) the Digital Operational Resilience Act (DORA), which aims, among other things, to bring critical service providers under the supervision of financial regulators; (ii) and the Digital Market Act (DMA), which is intended to ensure that service providers have equal access to the hardware and software components of electronic devices. These competition and sovereignty concerns should also be taken into account in the revision of PSD2. Secondly, the industrial lever. While our market is and must remain open, it is nonetheless essential to encourage innovation by European players. This is why, in the area of payments, the Banque de France actively supports the EPI2 initiative for a modern European solution. In conclusion, we can see that the changes taking place in the financial sector offer the prospect of even more accessible, efficient and innovative financial services, while at the same time raising new challenges for both market participants and public authorities. I am convinced that the only way to meet these challenges is through a multi-faceted approach, with cooperation between public and private players. That is why the Banque de France is fully committed to promoting innovation within a framework of trust: first, at the level of the regulatory framework and as a supervisor, then by facilitating private initiatives and mobilising the market, and lastly, as a driver and player in innovation.
Member States’ individual discipline has therefore been too weak, and collective discipline, which was nonetheless provided for in the Stability and Growth Pact, was not applied in practice. I would like to recall the spirit of this Pact. It was designed to be the fiscal pillar of monetary union. It was based on a peer-review mechanism. But, on the one hand, it was deliberately misinterpreted: whereas countries were required to maintain a fiscal balance over the cycle, without  BIS central bankers’ speeches  1  breaching the 3% of GDP reference value for the annual public deficit, they interpreted this to mean: “we can constantly run a 3% deficit”. And, on the other hand, the Pact was not respected, as sanctions were not imposed on Member States that breached these rules (including France and Germany around 2002). 2. The second cause of this crisis lies in the competitiveness gaps that had widened for a long time before the crisis. The economic rationale is easy to understand: when joining a currency area whose goal is to achieve an inflation rate of just below 2%, changes in unit production costs must be in line with this central bank objective, modulo the productivity gains. In all countries that did not abide by this calculation and this discipline, year after year, there was a loss of competitiveness that ultimately proved very significant. As regards these budgetary slippages and competitiveness losses, I hasten to add that markets did not play their role.

Today there are a number of positive signs: bond market activity is reasonably buoyant, yields of peripheral countries have declined slightly and stock markets have picked up. However, two major weaknesses persist: –  Financial markets are highly fragmented within the euro area and sovereign yield spreads remain substantial;  –  Growth is weak and, here too, there are major disparities within the euro area. In the second quarter, growth stood at -0.2% for the area, after stagnating in the first quarter. Germany posted the highest growth, at 0.3%, and Portugal the weakest, at –1.2%. We are still expecting growth to recover very gradually next year. Before discussing how to address these problems, we have to correctly analyse the causes. In my opinion, three mutually reinforcing causes gave rise to the euro area crisis. 1. The main origin of the crisis lies in the lack of fiscal discipline on the part of most Member States. While these countries had had to make considerable consolidation efforts to fulfil the convergence criteria and to be allowed to join the euro, almost all of them became more lax as soon as they entered. In the first ten years of EMU, they ran up deficits and debts, including during times of growth. As a result in 2008, when the crisis started, these countries had no more fiscal room and their public finances deteriorated substantially.
Let me show you the hidden side of Switzerland. You will see that modern Switzerland is adjusting rapidly to the changing reality of the world economy. Let's consider a few facts: •  With 7.5 million people, Switzerland is indeed a small country. Although we have no natural resources, we have a highly developed economy and a GDP per capita that clearly exceeds the European average. Contrary to the situation among some of our neighbours, our population is still growing, thanks to immigration. Our foreign population now represents about 20% of the total population and 25% of the labour force. Despite strong immigration, our unemployment rate – 3.5% – is relatively low. •  Switzerland remains a slow-growing country when compared to the United States. Our weak growth performance is due in part to the full employment, the relatively high level of personal income and the limited scope for domestic investment. However, in recent years, the Swiss economy has been doing better than its neighbouring countries in terms of growth and employment, and also in terms of price stability. Obviously, the fact that we are not a member of the European Union is not an obstacle to our development. •  Switzerland is increasingly becoming a service-producing country. The flagship of our service industry is the financial sector, which expanded markedly in the 90s and now accounts for 15% of our GDP – more than the machine tool industry and the chemical industry together.

The present situation – with free movement of goods, capital and labour, but without monetary and fiscal integration – is probably the best solution for us. •  Since we are so well integrated, why don't we peg the franc to the euro instead of pursuing an independent monetary policy? Wouldn't this help eliminate the exchange rate risk, without giving up monetary flexibility entirely? •  There is no such thing as a free lunch in monetary affairs! It is not at all certain that a peg would engender the foreign exchange stability that exporters dream of. We have learned from our experience with flexible exchange rates that any explicit foreign exchange target stimulates the appetite of speculators instead of calming the atmosphere. And this would be especially true if our pegging decision were to be taken unilaterally, without the prospect of a full and permanent integration into the euro area. Today, with global markets and global speculation, it would be an illusion to believe that a central bank can defend a specific exchange rate target unless there is strong convergence of economic fundamentals with the economy whose currency it is pegging the domestic currency to. Furthermore, a nominal peg against the euro would do little to stabilise the real value of the Swiss franc – the only thing that matters for the international competitiveness of the Swiss economy – or to stabilise the franc vis-à-vis third currencies, especially the US dollar.
Monetary policy has been aimed at maintaining price stability, which has given us lower interest rates and an increased stability and predictability, which is beneficial for the willingness to invest. Fiscal policy has also contributed through a consolidation of central government finances and the new budget system, which also gives us increased predictability. Sweden's membership of the EU's common market and deregulation also mean that several markets that were previously monopolies and screened off from competition, have now been opened up to competition. These include financial services, transport, telecommunications and energy. The pressure on companies to use their resources efficiently has thereby increased. The stiffer competitive pressure is both a result of increased internationalisation and of deregulation of various sub-sectors. The new competition act introduced in 1993 should also have contributed. However, despite the fact that it is several years since the new competition legislation was introduced, the development towards increased competition appears to be moving very slowly. One indication of this is that price levels in Sweden are higher than in many other countries, without this being completely explained by differences in VAT and wage levels. This applies, for instance, to foodstuffs and to the construction materials sector, areas characterised by a high company concentration, significant entry barriers for new companies and weak competition from imports. Some of the limitation in import competition is due to norms, standards and regulations that are specific to Sweden.

At the end of 2001, it was estimated that the number of persons who had been on sick leave for longer than one year amounted to 120,000, which is almost three times the figure for 1997. The number of those on 4 sick leave shorter than one year is also continuing to rise. The problems are accentuated by the fact 1  According to Stephen Oliner and Daniel Sichel at the Federal Reserve in Washington, the productivity trend has increased by one percentage point during the second half of the 1990s. Half of this increase is a result of investments in IT. 2  Economics council report 2001: kluster.se. Sweden in the new geographical economy 2001. 3  800 000 full-time posts is calculated on approximately 400 000 early retirements plus total sick leave, including the qualification days and absence during the sick-pay period which when translated becomes approximately 400 000 full-time posts (Source: SOU 2002:5, An action plan for increased ill-health at work.) 4  Source: SOU 2002:5, An action plan for increased ill health at work. 4  BIS Review 14/2002  that the pensioner support ratio, which expresses the number of professionally active in relation to those retired due to ill-health or old age, is moving up from 2.1 in 2000 to 1.4 in 2030, according to 5 Statistics Sweden's population forecasts. This means that if potential growth is to be sustained through more people working, more need to participate in working life in the higher age groups.
[2] In the UK, the MPC has raised Bank Rate at each of its past nine meetings. Bank Rate now stands at 3½%. [3] Of course, a process of ‘normalisation’ begs the question of what should be seen as ‘normal’. This question is often couched in terms of the level of the ‘natural’ or ‘neutral’ interest rate. [4] In the past, I have been very cautious in quantifying a specific neutral level for Bank Rate. Not only are empirical estimates surrounded by the usual confidence intervals, but the concept of neutral rate is itself elusive: is it an object that evolves at high frequency with the many shocks that strike the economy, or is it a more stable longer-term concept that looks-through such disturbances? Communicating as if there were agreement on these issues where there is not risks causing confusion. [5] That said, for central banks with inflation targets of 2% and that take the view that trend real growth remains positive,[6] there was something unusual in seeing policy rates floored close to zero for such a long time. On this basis, the rise in policy rates to current levels can be seen as representing significant progress in the normalisation of the monetary policy stance. Achieving balance between aggregate demand and aggregate supply But of course, the world does not stand still. In parallel with central banks’ efforts to normalise the  Page 5  stance, new shocks to price stability have emerged in recent years, this time on the inflationary side.

The  BIS Review 30/2009  1  combined effect now is a painful deleveraging process that drives down asset prices, shrinks balance sheets, and feeds straight into the real economy in the form of credit contraction. Adverse feedback loops between the financial system and real economy have become entrenched. The Eurozone, which accounts for the second largest share of global GDP, has deep financial linkages with the US. Through these linkages, financial stresses were transmitted across the Atlantic rapidly. Many banks in Europe, as well as other financial institutions such as insurance companies and asset managers had large exposures to US assets. Many were over-leveraged and dependent on benign conditions for liquidity to continue flowing. So they got sucked into this vortex. We have a similar story of credit evaporating and strains being felt in the real economy. Over in Japan, recovery from a decade of economic growth stagnation has been derailed by the collapse of external demand with serious knock-on effects on domestic activity. Japan’s capacity to support the growth of other advanced and emerging economies is now diminished. So a global recession is now upon us. The three economic giants – the US, Europe and Japan – together accounted for just over 50% of global GDP in 2007. All three cylinders are sputtering. The impact has already been felt worldwide. How long and how deep this recession will be is still an unknown, though many economists are predicting a long L-shaped trajectory.
The upswing in the global economy spread to the Norwegian economy through strong export growth and higher prices for Norwegian exports. At the same time, demand in the sheltered sector remained buoyant. There was also slippage in government budget spending allocations throughout 1999. Private consumption continues to rise, fixed investment is increasing in service sectors, and unemployment remains low. The decline in petroleum investment is necessitating restructuring and lower production levels in some Norwegian manufacturing sectors. Developments so far indicate that this turnaround has been offset by continued high employment growth in the public sector, private services and non-petroleum-related manufacturing. Chart 10 Wage shares by industry Labour costs as a percentage of factor income  However, enterprises’ financial position is vulnerable. The growth in labour costs in the latter half of the 1990s left its mark on profitability. Both in manufacturing and other industries, labour costs as a percentage of factor income have increased since the mid-1990s. The analysis in the June 2000 Inflation Report indicates that consumer price inflation in 2001 and 2002 may exceed levels which are consistent with exchange rate stability over time. The risk of rising wage and price inflation has increased, while there now appears to be little risk of a pronounced recession over the next two years.

Consistently, monetary policy had a strong reaction. The Monetary Policy Rate (MPR) was increased by 200 basis points in just four months, starting in June. By September 2008, before the collapse of Lehman Brothers, the Central Bank estimated that it would be necessary to increase the MPR further, even above market expectations. Monetary and fiscal policy during the crisis As in most of the world economies, financial tensions in Chile were severe after the collapse of Lehman Brothers. Interest rates in both peso and dollar markets posted substantial increases in the most stressful times from mid-September to mid-October 2008 (Figure 4). The Central Bank acted quickly, providing peso and dollar liquidity facilities to the financial system to mitigate liquidity tensions, but also to ensure financing in foreign currency should foreign loans become scarce. Also, the foreign exchange reserves accumulation process was cancelled. Local money market conditions normalized rapidly, over a period of weeks. The additional liquidity facilities put in place were not used extensively by financial institutions, reflecting their sustained access to external markets. Beyond the stressful episodes in local money markets, the global confidence crisis that swept around the world was very important in Chile. The events of developed financial markets prompted a deep and widespread revision of investment and spending plans of businesses and households, bringing expenditure to a halt. Domestic demand and economic activity dropped significantly and lending standards tightened (figure 5). 2  BIS central bankers’ speeches  The inflation outlook changed radically, and monetary policy reacted forcefully.
It means measures to reduce disruption to financial markets if a bank is wound up. And crucially it means agreement between the authorities in the countries in which these global banks operate on how they should be resolved if they fail. We have made a lot of progress on too big to fail. But we are not yet there. I do not think we can say with confidence now that we could resolve a failing global giant. Getting agreement on international standards to end Too Big to Fail is perhaps the most important regulatory priority for the G20 Summit in Brisbane in November this year. When you stand back and look at the progress of this unprecedented programme of international financial reform, on the capital and liquidity framework, on inter-connectedness, on shadow banking and on too big to fail, a huge amount has been achieved. 4  BIS central bankers’ speeches  If we can get the progress that G20 leaders committed to this year by the Brisbane G20 summit in November we will have “completed the job” of agreeing most of the key international standards and rules. And, in many areas, we will have gone a substantial way to implementing them. And I am very pleased to say that the Bank of England has played a key role – and in many areas a leadership role – in moving this programme forward. And I hope we can continue to do this as, increasingly, we move into the implementation phase. IV. Have we succeeded?

Have we made major progress towards that? Yes. First, the UK, the EU, the US and many other jurisdictions now have or will soon have the legal powers to break up and wind up failing banks with far less threat to the economy as a whole. These powers include the ability to “bail in” a bank’s creditors, making them not the taxpayer responsible for a failed bank’s losses once a bank’s equity has been exhausted. I should say here that it is crucial that the European Parliament now gives its final approval to the proposed resolution directive. And that the directive and the new “bail in” rules form the bedrock of the new Single Resolution Mechanism for the Banking Union in the Euro Area. Second, in the UK and US legislation – Vickers and Dodd Frank has been passed, structurally separating the activities that systemic banks are allowed to carry out. The aim is to ensure that riskier activities are not cross subsidised by, and do not jeopardise, the essential activities these banks carry out in the domestic economy. The EU is also considering how to address this issue following the Liikanen report. Third, and for the major international banks, with operations in many countries, we are moving towards international agreement on how these giants can be safely resolved. This means standards to ensure banks fund themselves with debt that is in a form that can be safely bailed-in should the bank fail.