samchain/econo-pairs-v1 huggingface dataset:
Our more partial models and assessments have some forecasting ability up to one year, but the uncertainty is considerable, even one year ahead. This is indicated in particular by the revisions to the forecasts for this year. It is thus necessary to take into account experiences of earlier financial crises. Harvard professor Kenneth Rogoff, who is also one of the advisers to the Executive Board of the  1  4  The IMF’s most recent forecast update from see http://www.imf.org/external/pubs/ft/weo/2009/update/01. the  end  of  January  2009,  BIS Review 25/2009  Riksbank, has together with his colleague professor Carmen Reinhart studied the effects of various financial crises. They consider the Swedish bank crisis of the 1990s to be one of the five most serious financial crises, “the big five”. 2 One of their studies shows that the financial crises that have occurred in industrial nations in recent decades have been followed by long periods of weak growth. 3 Seen as an average of the 18 crises reported, this concerns a period of three years of low growth and for the "big five" an average of three years of negative growth. In their most recent study of financial crises, which was presented in January, professors Reinhart and Rogoff have also chosen to include growth economies. 4 They find three common elements with regard to the consequences of the financial crises: •  Firstly, house and share prices fall substantially and over a long period of time.

But experiences with the regime provided useful insight, and the ambitions were later adjusted. When confronted with shocks, small open economies in particular experienced that a rapid return to the inflation target could have undesired consequences for the real economy. 1 Norges Bank has addressed this concern by giving greater weight to output and employment. The inflation target horizon has been extended and monetary policy has gradually become more flexible. A few weeks ago, on 2 March, the Government adopted a new, modernised regulation on monetary policy. 2 The new regulation clarifies the monetary policy mandate and underpins the Bank´s flexible approach to inflation targeting. In Norges Bank ´s assessment, the new regulation will not result in significant changes in the conduct of monetary policy. 3 Let me elaborate somewhat on the implications of the new regulation. “Monetary policy”, according to the new regulation, “shall maintain monetary stability by keeping inflation low and stable.” The regulation thus clarifies the primary task of monetary policy. Price stability is the best contribution that monetary policy can make towards sound and stable economic developments over time. It does so by ensuring that inflation stays within a range somewhat above zero, while being kept under control. Since inflation targeting was introduced in Norway, inflation has been close to, but on average somewhat below, the previous target of 2.5 percent. Inflation has consistently remained within a band where the deviations from the target cannot be said to have entailed significant economic costs.
If it turns out that the anticipated fall in asset prices does not materialize, the policy constructed under the assumption of a decline will likely have been too easy, and that might itself contribute to further rises in asset prices. This might sound like a more or less generic statement about the perils of having to make policy based on forecasts, but there is a sense in which the forecasting of asset prices, or indeed even understanding the driving forces behind movements in asset price after they have occurred, is particularly challenging. This is why there is a vast literature focusing on these challenges and characterizing the many "puzzles" of the behavior of asset prices. More generally, despite the fact that policymakers can’t be completely confident in their assessment of the future path of asset prices, it seems unavoidable that these assessments will factor into policy decisions. This is not to say that central banks should lean against bubbles or against asset price movements themselves. Nor should the appropriate response to a given change in asset prices be to change policy by more than what would be appropriate to address the effects on the central objectives of the central bank. But policy, in some circumstances, will need to respond to asset price movements when those movements alter the central bank’s assessment of the risks to its outlook, and that change in the assessment of the risks to the forecast should be part of the central bank’s communication with the public.

Again, we are seeing the two-way flow of talent for the different areas of professional expertise and the workforce leading to an increasingly diversified background of employment in different parts of the world. Malaysian professionals can be found in every continent in wide ranging areas of employment. Let me turn to the participation of women in the economy. About half of the Malaysian population are women and they account for about 47% of the workforce. The representation of women at the professional, managerial and technical levels has increased from less than 30% in 1990 to about 40% currently. Such progress has been achieved given the educational opportunities that have been made available to women. Literacy rates among women is about 90% due to the countries comprehensive and inclusive education system. Female primary and secondary students account for half of total enrolment, while at the public universities, female students account for 55% of the total enrolment. It is this educational foundation which has accorded equality to women in Malaysia . It has enabled women from all walks of life and backgrounds to contribute and participate fully in Malaysia's economic prosperity. Women in Malaysia have also participated significantly in the small and medium enterprise sector of the economy. A significant number of women run family businesses makes up a large part of this sector.
Then, we used to stand in line to receive a pay packet, life assurance employees bicycled round to customers’ homes to collect premiums and almost everyone stood in line at the post office to pay their rent, electricity bill, etc. From freedom to regulation and the return to freedom The conditions for Sparbanken Gripen and the financial sector have certainly varied over the past 150 years. During the first part of this period, the financial sector was able to operate under considerable freedom. Bank deposits were developed as a basis for the banks’ lending. This meant that the banks created money by expanding credit to the extent that they dared to reduce their reserves. The banks also played an important role in the foreign borrowing that occurred, mainly in the form of bond issues in Germany and France. The banking system was particularly expansionary around the year 1900, when many new banks were established. Some of these did not last long. In 1907 the financial sector suffered a widespread crisis and many banks went into liquidation, were refinanced or taken over by other banks. The next financial crisis coincided with the deflation at the beginning of the 1920s. This crisis was particularly severe in rural Sweden, partly because of a severe fall in agricultural product prices. Deflation made the situation difficult for farmers encumbered with debts and thereby for the banks active in rural areas.

There has also been some further deregulation. For instance, state monopolies have been abolished and freedom to establish new companies with regard to, for instance, transport, communications and energy has been introduced. Changed competitive conditions thus affect productivity growth, but they can also affect price developments more directly. Despite the fact that we gained much stiffer legislation on competition in 1993, developments in this field appear to be moving slowly. Swedish prices remain higher than in other countries in several areas without explanations for this in the form of differences in VAT rates and wage levels. Increased competition can contribute to price levels converging, but this assumes that the relative price changes will be accepted and it can entail, as in the 1990s when electricity and telecommunications were deregulated, such large price reductions in some sectors that our inflation rate will be lower than that of other countries. Special interests and consumer interests Limits to competition are a clear example of how special interests dominate over general consumer interests. There are many examples of this in various areas of the Swedish economy, and in particular the construction sector. This means that we allow inefficiency to remain, which reduces growth and the development of most people’s standard of living. One interesting and very recent example of how special interests have declined concerns pharmaceutical prices.
The public bank was tasked with estimating the value of the 500 or so different coins that were around and exchanging them with its own currency, the rijksdaalder. By having a single currency, the highly chaotic system was improved, and the bank quickly became a hub for settling international payments.2  The modern banknote In Sweden, problems with the coin system were of a different kind. At that time, Swedish coins were made of copper, not gold or silver. As a consequence, they had to be quite sizeable, as their value still depended on the metal used. Obviously, this made daily purchases a fairly heavy exercise. But again, great ideas seemed to come to our rescue when Latvian-born Dutchman Johan Palmstruch, with the blessing of Charles X Gustav, set up Stockholms Banco to issue the first ‘modern’ European banknotes. This was in 1661. However, Mr Palmstruch hadn’t thought it through properly. Or at least, he had underestimated the collateral needed to operate a business like that. When people started to queue up outside the bank to have their notes redeemed, he quickly ran out of metal. The bank was liquidated in 1667, and poor Mr Palmstruch was imprisoned, though reprieved from his initial death sentence. The year  2 See, for example, Gerarda Westerhuis , and Jan Luiten van Zanden, ‘’Four Hundred Years of Central Banking in  the Netherlands, 1609–2016’’, in Sveriges Riksbank and the History of Central Banking (2018): 242–264, for more about Amsterdamsche Wisselbank.

Nevertheless, in the last couple of years, most measures of inflation expectations, be they survey-based or market-based, have pointed in the same direction of a prolonged period of too low inflation, well below our target of being close to but below 2% over the medium term. As a consequence, monetary policy has become progressively more accommodative. First, in a context of fixed rate full allotment introduced on the 15th of October in 2008 to offset liquidity risk in the market by ensuring banks’ continued access to liquidity, we have introduced forward guidance to avoid an unwarranted tightening of the effective monetary policy stance. Initially implemented in July 2013, this guidance was “firmly reiterated” in early 2014 and remains in place today. Second, the Eurosystem introduced targeted longer-term refinancing operations (TLTROs) and the asset purchase programs for covered bonds and asset-backed securities in June 2014, with the goal of improving the transmission of our monetary policy. Third, the main refinancing rate was cut to 5 basis points and the deposit rate entered into negative territory in two steps (–20 basis points). However, by January this year it was clear that economic recovery as well as monetary and credit indicators were too weak to bring medium term inflation close to but below 2%. Marketbased measures of inflation expectations, even if prone to liquidity shocks, had been falling further below the target and at longer term horizons. The Governing Council was determined to act boldly to counteract the risk of a too low for too long inflation.
As well as giving me a different window on the world, these experiences were fuel for the imagination. That links to the second factor – social capital, the relationships we grow as individuals. “Grow” is the right word here because these working relationships, like any relationship, need to be fed and watered. Remote working inhibits our ability to cultivate and grow these working relationships. It has meant social capital has been another casualty of the crisis, with existing capital run down and new capital not built to replace it. Virtual meetings can be an efficient way of getting things done, indeed often more effective than the physical alternative. The Monetary Policy Committee (MPC) on which I sit and which sets interest rates has taken place virtually since March, having never taken place virtually in the more than 20 years prior to March. MPC deliberations have been no less effective, and MPC decisions no less expeditious, for this shift. What virtual meetings risk losing, however, is the capacity to explore uncharted territory, to share tacit knowledge and personal information. Those informal between-meetings conversations are, in my experience, the bedrock of relationship-building and the key to trust–building. It is the loss of those informal  23 24  Opezzo and Schwartz (2014). Barrero et al (2020b). 8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  moments that has resulted in many of us running down our past stock of social capital for the past six months. This cannot be done indefinitely.

I always knew that I picked up a lot of information from the unscheduled time between meetings, when informal and sometimes chance conversations take place. Having now lived without them for 6 months, I now realise these informal non-meetings were often my main source of information. The informal chat in the 5 minute walk from the lift to my office often contained more useful knowledge than the subsequent one-hour meeting in my office. The other week I spoke to the Bank’s new crop of graduates. When I was in their shoes, almost all of my knowledge came from informal conversations in the pub with my graduate cohort on their jobs, bosses and experiences, rather than from listening to talking heads like me. This year all of that is lost and, with it, a significant down-payment of social capital. Those losses are being replicated among organisations right around the world. This social capital, once lost, will be difficult to reacquire. Whether it is creative sparks being dampened, existing social capital being depleted or new social capital being lost, these are real costs and costs which would be expected to grow, silently but steadily, over time. They weigh on the other side of the ledger when it comes to assessing the case for home-working. They cast doubt on whether it will lead to the promised land of improved productivity and greater happiness. If you asked me if I am happier working from home, I genuinely would not know. I do not miss the commute.
11  Assuming that the improvement in the outlook is not endogenous to the chosen policy setting to the extent that it would disappear if purchases were slowed. 4  BIS central bankers’ speeches  Because growth this year will be constrained by fiscal consolidation, there is a risk that this could happen again. As a result, it is premature to conclude that we will soon see a substantial improvement in the labor market outlook. Efficacy of the asset purchase program exceeds the costs Our asset purchases are also conditional on our ongoing evaluation that the efficacy of the program exceeds the costs. That clearly has been the case to date – affirmed by our policy decisions. Since we put the outcome-based approach in place in September, my assessment is that efficacy has been as high or higher than I expected at the onset of the program, and costs the same or lower. Efficacy has two components: the effect of the purchases on financial conditions and the effect of financial conditions on the economy. Our latest purchase program has been associated with a substantial easing in financial conditions, higher equity prices, and narrower credit spreads. The resumption of additional agency MBS purchases in September pushed down MBS yields. With some lag, much of the drop in yields has been passed through to primary mortgage rates. Meanwhile, the impact of the improvement in financial conditions on the real economy has been somewhat stronger than I had expected.

15  Among many other changes, the Dodd-Frank Act allowed banks to pay interest on corporate deposits, and those depositors, because they deposit large amounts, are likely more interest-sensitive, than individual depositors. Furthermore, the wholesale money market is intensely competitive, and, as evidence that reserves are distributed across banks in a way that reflects competitive considerations, note that currently, reserves are held in disproportionately large amounts by Foreign Banking Organizations. The reason I think this happens is that those FBOs do not have to pay the FDIC assessment fee on their liabilities (as they hold no U.S. deposits). That suggests that all banks face competition in attracting liabilities to match their reserve holdings, and that the FBOs, because they face a lower cost in doing so, have managed to attract those deposits at a faster clip than domestic banks. This is the sort of competition that I expect to see that will result in the interest on reserves being passed through by banks to their customers and to the broader economy. BIS central bankers’ speeches  7  Moreover, even if we were to put any weight on this consideration, the incentives go the other way – our enlarged balance sheet creates an additional reason to tighten monetary policy in a timely way. If the Fed were to delay in raising short-term rates to protect its current earnings, inflation would rise and this would push long-term rates higher. This would just necessitate a bigger rise in short-term interest rates and a greater loss of earnings later.
And we need, and will most probably also obtain, better support from the framework for financial stability that we and others are now working to develop both in Sweden and abroad. When this project is complete, it will contribute to monetary policy more rarely needing to take into account untenable developments in the housing and credit markets. But I do not think we can achieve an entirely “bubble-free” world. 10  BIS Review 70/2010

This is because greenhouse gas emissions stemming from the financial sector are very low and also because the activities it engages in do not significantly affect the environment. While this is true, the financial sector is actually highly exposed to risks associated with climate change by funding other sectors including those that are exposed to extreme weather events or those that will be affected by the transition to a more sustainable economy. Therefore, climate change poses two types of risks for the financial sector: physical risks and transition risks. First, physical risks are those that would materialise as permanent alterations of the climate, if we do not act to prevent global warming. Natural disasters would then become more frequent and their economic damage probably greater. In fact, there is evidence that such risks are already materialising to some extent: according to the FSB,2 global economic losses associated with catastrophes related to weather events have doubled since the 1990s, up to USD1.6 trillion over the last ten years. And while it’s true that financial markets and instruments covering these risks have been developed, these developments are unlikely to fully tackle the challenges of climate change due to: (i) the sheer magnitude of climate risks; (ii) the sizeable exposures of the financial sector to this form of risk; and (iii) the presence of externalities. The financial sector is exposed to these physical risks through several channels. Physical risks are of course relevant for the valuation of real estate assets, the main collateral of bank loans.
The same message was also conveyed repeatedly by my predecessors, in three quarters of all press conferences since the introduction of the euro. The term “structural reforms” is actually mentioned in approximately one third of all speeches by various members of the ECB Executive Board. By comparison, it features in only about 2% of speeches by governors of the Federal Reserve. Our strong focus on structural reforms is not because they have been ignored in recent years. On the contrary, a great deal has been achieved and we have praised progress where it has taken place, including here in Portugal. Rather, if we talk often about structural reforms it is because we know that our ability to bring about a lasting return of stability and prosperity  BIS central bankers’ speeches  1  does not rely only on cyclical policies – including monetary policy – but also on structural policies. The two are heavily interdependent. So what I would like to do today in opening our annual discussions in Sintra is, first, to explain what we mean by structural reforms and why the central bank has a pressing and legitimate interest in their implementation. And second, to underline why being in the early phases of a cyclical recovery is not a reason to postpone structural reforms; it is in fact an opportunity to accelerate them. The importance of structural reform Structural reforms are, in my view, best defined as policies that permanently and positively alter the supply-side of the economy.

All this confirms my main contention that the current environment, per se, creates no reason for delay. Conclusion Let me conclude. The economic outlook for the euro area is brighter today than it has been for seven long years. Monetary policy is working its way through the economy. Growth is picking up. And inflation expectations have recovered from their trough. This is by no means the end of our challenges, and a cyclical recovery alone does not solve all of Europe’s problems. It does not eliminate the debt overhang that affects parts of the Union. It does not eliminate the high level of structural unemployment that haunts too many countries. And it does not eliminate the need for perfecting the institutional set-up of our monetary union. But what the cyclical recovery does achieve is to provide near perfect conditions for governments to engage more systematically in the structural reforms that will anchor the return to growth. Monetary policy can steer the economy back to its potential. Structural reform can raise that potential. And it is the combination of these demand and supply policies that will deliver lasting stability and prosperity. BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches