samchain/econo-pairs-v1 huggingface dataset:
•  There has perhaps been too much focus on the slowdown in China’s headline growth rate and not enough attention paid to the changes in the composition of that growth. •  More than China’s economic slowdown, its economic transition will have a bigger impact on the world, and Asia in particular. Let us consider first some of the near-term effects on Asia. First, the slowdown in China’s investment and associated imports will impact exports in the region. •  IMF data shows that China’s goods import volume contracted by 0.7% in 2015, the first shrinkage in at least 18 years and a large step-down from its 10-year average growth rate of 10.5% (2005–2014). •  In value terms, China’s nominal goods imports fell by a sharper 14.2%, which can be attributed to steep falls in global prices of commodities, delivering a harsh “negative terms of trade” blow on the affected countries. Second, China’s rebalancing away from investment and towards consumption will weigh on the exports of economies which are most exposed to Chinese demand for capital goods. •  Asian economies as a whole cater more to Chinese investment demand rather than its consumption demand. Therefore, at least in the short term, the impact of China’s rebalancing is skewed towards the downside for the region. •  The Asian NIEs which export manufactured capital equipment to China will be adversely affected.

2  BIS central bankers’ speeches  However, this requires that enterprises that are no longer viable are unwound in an orderly manner. •  Earlier this year, Chinese authorities announced plans to reduce excess capacity in the steel and coal sectors. •  The government has also issued directives to banks to stop extending loans to firms that are persistently loss-making, while providing credit to competitive companies which are experiencing temporary difficulties. The road to addressing China’s debt vulnerabilities is long and fraught with risks along the way. But if recent efforts are sustained and economic growth does not tank, the prospects are good for an orderly and gradual deleveraging. Structural reforms More than the moderation in economic growth or even the vulnerabilities in the financial system, it is the outcome of the structural reform effort that will be decisive for the long-term prospects for the Chinese economy. The Third Plenum reform blueprint of 2013 provides a comprehensive roadmap for China’s full transition to a market economy. It is a thoughtful, coherent, and well-conceived plan. While implementation has been slower than expected in some areas, China has probably made more progress in structural reforms than any major economy during the last few years. But much work still lies ahead. Take for instance fiscal reform. China has taken several steps to improve the sustainability and transparency of its public finances, especially at the local government level. •  Changes to China’s budget law last year have helped to bring more government spending on-budget.
I will then turn to the main issue I want to discuss – the implications of a ‘low for long’ world on financial stability and the interaction with monetary policy. My colleague, Ben Broadbent, has argued in an excellent speech for the separation of powers, with which I agree, between monetary and financial stability (or ‘macro-prudential’) authorities.2 But monetary and financial stability, to some extent, depend upon each other and I will look at the implications that ‘low for long’ has on those interdependencies. Chart 1. UK long-term nominal interest rates (a) Percent  18 16 14 12 10 8 6 4 2 0 1753  1778  1803  1828  1853  1878  1903  1928  1953  1978  2003  Source: A Millennium of Macroeconomic Data (available at https://www.bankofengland.co.uk/statistics/research-datasets) and Bank of England calculations (https://www.bankofengland.co.uk/statistics/yield-curves). The red line shows yields on new long-term issues of perpetuities and consols (a mixture of month-end and monthly averages). The last remaining consols were repaid in June 2015. The blue line shows the 30-year zero coupon spot rate (monthly average). The data are up to September 2019. 2  Broadbent (2018). 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  Low for Long  What explains the current very low level of market interest rates in advanced economies?

It may partly reflect very low levels of current policy rates and any spillovers from that.3 It may also reflect the term premia for inflation that are currently very compressed in some countries, for example, the US and in the Euro area. And it may also be a symptom of a more entrenched pessimism – an over-pessimism in my view – about long-term economic prospects, possibly due to fears of the de-integration of the global economy or concerns about future effectiveness of monetary policy. But, more fundamentally, the very low level of market interest rates reflects an underlying structural trend – the fall in long-run real interest rates since the early 1980s4 – that has been the subject of a great deal of research. The literature has identified a large number of candidate explanations – both real and financial – for a structural decline in the long-run real interest rate. These include: demographic trends and, in particular, increased longevity; lower trend productivity growth; the liberalization of financial intermediation and an increase in the risk borne by individuals and households.5  The long-run equilibrium real interest rates determined by these factors are, of course, unobservable. There is a range of estimates for how far they have fallen.
The men of Eidsvoll needed a bank that could provide credit in Norway. Norges Bank quickly became an important lender. It was not until the latter half of the 1800s that a private banking system truly came into being. Norges Bank acquired its present-day role of the bankers’ bank and lender of last resort. With private banking came banking crises. The 1899 crash in Christiania triggered the first serious banking crisis in Norway. A real estate bubble in the capital burst and house prices  4  BIS central bankers’ speeches  plummeted. It took more than 100 years for real house prices in Oslo to return to their precrash level.4 Banks play a key role in the payments system and channel credit from savers to investors. If the flow of credit seizes up, problems will rapidly spread through the entire economy, as witnessed during the latest financial crisis. A robust banking system is of benefit to us all. Banks are now adapting to new capital requirements. On top of the new capital requirements is a countercyclical capital buffer. The countercyclical capital buffer will vary over time. It will be increased when financial imbalances build up. In the event of economic stress and large bank losses, banks will be able to draw down the buffer. Chart 7: Key policy rate and bank lending rates Even if the key policy rate is low, interest rates on loans to households and enterprises are not particularly low.

1  The Scandinavian Journal, 1799, in The travel diaries of Thomas Robert Malthus, edited by Patricia James, Cambridge University Press (1966). 2  See Norges Bank Working Paper 23/2013, Contributions to a history of prices in Norway: Monthly price indices, 1777–1920, by Jan Tore Klovland. BIS central bankers’ speeches  1  The Storting delegated the task of supervising the monetary system to Norges Bank, which was established in 1816. The king would no longer have the authority to print money at will. At its inception, Norges Bank’s head office was located in Trondheim, a twelve-day journey from the government in Christiania, and even farther from Stockholm3, giving the central bank a geographical – and not just formal – distance from the government authorities. The value of money would be guaranteed by a stock of silver and a silver tax was introduced. But establishing confidence would take many years. The banknotes that were printed were not fully redeemable in silver until 1842. Since then, the value of Norway’s currency has been fairly stable for long periods, but we have also experienced periods of deflation, high inflation and waning confidence. The lesson has been the same every time: restoring confidence comes with a cost. Much has happened since 1814. Norway no longer lags behind other western economies. Inflation is low and stable. We have established a clear division of responsibility for economic policy and well developed institutions founded on the Constitution written at Eidsvoll 200 years ago.
In addition, Banque de France has launched in June 2017 “Le Lab”. Le Lab is a genuine Open Innovation laboratory: its goal is to bring new practices and technologies into our activities, and to that end experiment where necessary within short and flexible cycles. To do so, it works in close collaboration with innovative firms. And, we launched this year our first “suptech” program to promote the use of artificial intelligence in the performance of supervisory tasks. To illustrate how we can leverage on the daily contact with innovators, to help changing regulation or defining supervisory expectations, I will take the example of the on-going work on artificial intelligence by the ACPR Fintech team. When the ACPR published their report on AI in 2018, we made it clear that the purpose was not to regulate ex ante, with a risk of hindering a promising technology. However, it seemed to us important to raise at an early stage the key  issues of governance, ethics, auditability and explainability, in order to promote a sound development of AI in the financial sector. And the Fintech team did not stop there. They have been conducting experimentations with voluntary financial institutions or providers to explore these issues further, on a few significant AI use cases (AML-CT, internal models and consumer protection). Bilateral meetings were complemented by tests in real conditions, where ACPR experts and data scientists from the Banque de France were able to run algorithms, modulate parameters, test new population samples or compare different models.

However, at the global scale, between systems of different areas, it is more complex, in particular when several currencies are involved. Central banks through their operational role could look for ways to contribute to the emergence of a solution to promote faster, more reliable and less costly payment solutions. Conclusion To conclude, let me underline that technological innovations create opportunities and risks, and therefore challenges, not only for financial intermediares but also for public authorities. Central Bankers and Supervisors can and should contribute to meet those challenges. To that end, we  should have an open-minded approach and develop an in-depth understanding of innovations currently spreading through the financial sector. This is critical for our capacity to help delivering a sound, adapted and updated regulatory framework supporting innovation, mitigating adequately their inherent risks. This is also critical for our capacity to adapt the performance of the different roles we play to fulfil our financial stability mandate. This is the reason why we are, at the Banque de France and the ACPR, determined and ready to further engage with innovators, be they financial sector incumbents or new comers, observe the ecosystem, test and learn. Thank you for your attention. 4/4  BIS central bankers' speeches
Significant improvements have been made to procedures related to the inventory, processing  2  BIS central bankers’ speeches  and storage of banknotes, including those for destruction. Particular attention has been paid to setting clear criteria to guarantee high integrity of the employees designated in charge of values or assigned in other units engaged in control, supervision or other similar activities. 2. Economic developments and monetary policy  The Albanian economy continued to improve in 2015. The growth rate accelerated compared to the previous year, and the main indicators of economic and financial equilibriums have been overall improving. Thus: •  current account deficit reduced;  •  budget deficit fell 1.6 percentage points against the GDP;  •  firms’ balance sheet appear more liquid;  •  banking system non-performing loans and profitability indicators have been improving. However, aggregate demand remains insufficient to fully utilise production capacities. Subsequently, the internal economic environment has exercised low pressures for rising inflation, which have been further strengthened by the disinflationary trend noted in international markets. While upward, inflation continued to range below our 3.0% target, during the past year. Following, I will present a summary of the macroeconomic backdrop underlying Bank of Albania’s monetary policy decisions and their results. According to INSTAT data, the Gross Domestic Product rose 2.7% during the first three quarters of 2015. Available data suggest that the economy continued to grow at a similar pace even in the fourth quarter.

By ‘all parties’ I mean both the industrialised countries and the emerging market economies. Countries that perceive that they have little at stake in improving the system from their own perspective may be underestimating the implications on their own growth of sound growth in emerging market economies. And emerging markets that have been through the crises of the past two years have valuable experience to contribute and special needs to address. The path taken by Hong Kong Let me now turn to Hong Kong’s experience in the light of the general points I have made above. As you may know, Hong Kong had only a relatively brief experience with floating exchange rates, from 1974-83. This episode was not very satisfactory: inflation rose to rather high and volatile levels, and the period ended in an exchange rate crisis triggered by uncertainties about the objectives of monetary policy and about Hong Kong’s political future. Against this unfavourable background, the linked exchange rate system was reintroduced to restore confidence and stabilise expectations. In addition to these psychological factors, there was - and still is - a strong case for believing that a fixed exchange rate regime was appropriate from the point of view of Hong Kong’s fundamentals. Hong Kong is a very externally oriented economy, with a completely open capital account and a large financial sector. These factors leave us heavily exposed to financial shocks stemming from volatilities either in domestic confidence or in external markets.
In general, the lower such risk premia are, the greater the interest rate differential with abroad, and the lower the exchange rate is, the more favourable the conditions for lifting controls of this type. This is because the exchange rate is supported by a larger risk-adjusted interest rate differential and expectations of currency appreciation are more likely to outweigh expectations of depreciation. In my opinion, all of the conditions for a marked decline in risk premia should be in place in the next few months. Inflation will also fall somewhat further in the near future. Consequently, I am of the opinion that plans to lift the capital controls do not change the fact that there is still some room for further reduction of interest rates. Last Wednesday, in connection with the Bank’s interest rate announcement, I issued a statement on the capital controls. There is no reason to repeat it in full here, as it is available on the internet, but the thrust of it is that no broad-based steps will be taken to lift controls on capital outflows until March 2011 at the earliest, and before that is done, a revised financial account liberalisation strategy will be publicised. The intervening months will be used to lay the foundations for potential liberalisation. To all appearances, the statement was well received, and bond market yields fell markedly thereafter. As I said at the beginning of my speech today, monetary policy implementation is unusually complex at present.

Ladies and gentlemen, thank you for the trust you have placed in the SNB in the past. We look forward to your continued support in the future. 6  BIS central bankers’ speeches  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches
But in order to achieve this, three cross-cutting levers will be needed: revitalising the single market; providing equal access to training and skills in the southern countries, including France; and pooling our funding. Europe has on the one hand the resources, i.e. a savings surplus of EUR 300 billion per year, and on the other hand huge digital and ecological investment needs: to build the bridge between the two, it is urgent to speed up the Capital Markets Union. The remaining two-thirds of this targeted additional growth could be achieved by addressing two issues specific to France: primarily, inadequate labour supply. To increase potential growth, we do not lack public spending or capital overall, we lack labour. In France, more than 50% of companies are experiencing recruitment difficulties whereas there are still 2.4 million unemployed, including 600,000 young people: this paradox is socially unacceptable. France has almost 3 million fewer people in employment than Germany, and the majority of these are young and elderly people. In this respect, the levers of reform are: for young people, the strengthening of basic education and apprenticeships; for older people, a fair pension reform. And for all working people, professional training more focused on the key issue of skill enhancement; a reform of the unemployment insurance system that provides good incentives for long-term employment and work; and negotiated wage increases for jobs that suffer from a lack of attractiveness.

Only then, will our financial system become less prone to risk and will the extent of future crises clearly decrease. In order to achieve this goal, several measures have been decided on in Switzerland. First, new capital adequacy requirements were enacted in 2008. Big banks will have to double their risk-weighted capital. In addition, they will have to hold a minimum amount of equity capital, irrespective of the risk models they use internally. This is because the crisis has shown that internal risk models massively underestimated the risks taken. Second, new liquidity regulations will be adopted. In the future, big banks will have to hold a sufficient amount of high-quality liquid funds to be able to cover unexpected liquidity losses for a period of at least 30 days. The reason for this is that, in the financial crisis, even solvent banks had liquidity problems. Finally, measures to solve the “too big to fail” issue must be put into practice. No bank should be so systemically important that governments feel forced to rescue it from impending failure, fearing the economic costs such a failure would cause. Possible solutions to the “too big to fail” issue are the creation of incentives to encourage banks to reduce their size or change their organisational structure. BIS Review 36/2010  1
Central banks took greater, though not total, mastery over their monetary destinies. With increased global integration of capital, goods, and labour markets, inflation stabilisation has faced powerful countervailing forces. Perhaps as a result, advanced economy inflation rates have moved more closely together under Inflation Targeting than under Bretton Woods. The correlations between inflation rates in major economies grew in the wake of the crisis (Chart 5 (d) – see annex). As they have written their monetary scripts, central banks have at the very least had an editor. If they are not careful, they could become ghost writers. 7  First identified by Irving Fisher (1933), “The debt-deflation theory of great depressions”, Econometrica. 8  See IMF (2013), World Economic Outlook, Chapter 3, April. 9  In the UK, “the framework for monetary policy was, at best, opaque”, according to King (1997), “The Inflation Target five years on”. 4  BIS central bankers’ speeches  3. Why is inflation low globally? Of course, an important global factor behind current low headline inflation has been the sharp fall in the price of oil, which has been driven primarily by large increases in its actual and potential supply. This means that while it’s been a short-term drag on inflation, it’s good news for growth. The Bank estimates that lower oil prices will boost the level of UK-weighted global GDP by a little under 1 percentage point over the next three years, with a consequent boost in demand for UK exports of around 2 ½ %.

In the short term, under the adverse scenario there could be a substantial price correction on financial markets, and economic growth could slow markedly. Such a scenario would affect the two big banks in particular. For domestically focused commercial banks, the main risk stems from a potential fall in Swiss real estate prices over the medium term. This risk increases the more market prices diverge from those justified by fundamentals. Given the high risks in the economic and financial environment, the SNB considers that there is a need for action by big banks and domestically focused commercial banks alike. The SNB’s recommendations are aimed at strengthening the resilience of the Swiss banking system, to ensure that it is in a position to continue performing its essential functions for the Swiss economy, even if the adverse scenario I have just described were to materialise. Situation at the big banks I would now like to present the key points of our assessment of the big banks. Since June 2011, both big banks have made further progress in improving their resilience; first, by increasing their highest-quality capital – by which I mean loss-absorbing capital – and, second, by reducing their risk-weighted assets. CDS spreads, for example, suggest that the market considers the solvency of both big banks to be above average compared to other international banks. This is partly explained by the fact that they are only moderately exposed to the most vulnerable peripheral euro area countries.