samchain/econo-pairs-v1 huggingface dataset:
In this regard, the ECB’s recent moves to reduce its main refinancing rate to 0.05%, its deposit facility rate to –0.2%, and to commence large-scale asset purchases are both timely and welcome. In an environment of low rates everywhere, even Bank Rate of ½% might look high-yielding. And the fear of a bad outcome abroad could trigger safe-haven capital flows into the UK that push the value of sterling higher, making exporting more challenging, with knock-on implications for wages and prices here. That would come against the backdrop of a 5 ½ per cent sterling appreciation on a tradeweighted basis in the last year (Chart 9), which has extended the currency’s appreciation to around 17 per cent since its trough two years ago. These moves are reinforcing the disinflationary impulse from abroad, which could take a while to pass through to the sterling prices in the shops.14 5. Getting back to target in the UK  All of this puts a premium on generating the domestic inflation necessary to return inflation to the target. We are on track to do that. The UK economy is performing well. UK growth is solid, unemployment is coming down, and jobs have risen by 600,000 in the past year. Wage growth is showing signs of picking up, rising to 3% for the economy as a whole at the end of last year, and to 3.3% in the private sector.15 Average hours worked continue to recover on a strong upward trend.

A sustainable financial system, oriented to new long-term horizons and prudential to risks, serves to channel savings into the most competitive sectors of the economy. *  *  *  In the following, I would like to address the above-listed topics in more details, focusing on key points of the Bank of Albania’s work. 1. Economic and financial developments in 2010  According to INSTAT data, the Albanian economy is estimated to have grown by 3.9 % this year. Compared to 2009, economic growth is more balanced in terms of sectorial distribution and demand components. During 2010, the Albanian economy was characterised by gradual improvement of the aggregate demand and further consolidation of the macroeconomic stability. Economic development was followed by price stability, while the public debt and current account deficit narrowed. Economic growth relied mainly on foreign demand and increased Albanian exports, while domestic demand was sluggish. The latter decelerated due to public finances consolidation and budget deficit reduction in 2010, while consumer spending and private investments were affected by insecurity about the future and presence of spare capacities. Fiscal policy was oriented towards fiscal consolidation in 2010, following the stimulating nature in 2009. Fiscal consolidation accelerated especially in 2010 H2, following the approval of the revised budget. This consolidation was present on both, income and expenditure sides. Budget revenues increased by 8.4% y-o-y, reflecting the economic growth, expansion of taxpayers’ base, and privatisation receipts. On the other hand, budget expenditures decreased by 4.5%, attributable to reduction of government capital expenditures.
For Mr Keynes and the Classicists, they would have been anything but.13 For example, an early set of papers found “excess volatility” in asset prices relative to future dividends and earnings.14 Investor myopia was one interpretation, with too great a weight on near-term dividends causing even transitory changes to affect valuation.15 Using an augmented version of this basic asset pricing framework, Miles (1993) tested formally for excessive discounting of future cash-flows using company-level equity price data from the UK between 1980 and 1988, finding evidence of short-termism over this period. Similar approaches applied to longer time-series across a range of countries reached broadly similar conclusions.16 Yet, latterly, the quantitative evidence appears, as in the mid-1970s, to have dried up. This time the efficient markets hypothesis cannot be held responsible, for it has come under increasingly critical scrutiny. Instead we have seen scraps of evidence drawn from the types of surveys familiar from the 1960s. For example, among asset managers, a 2004 MORI survey of members of the Investment Managers Association (IMA) and the National Association of Pension Funds (NAPF) asked if investment mandates created short-termism. A third of NAPF members and two-thirds of IMA members agreed. In 2006, a CFA (Chartered Financial Analyst) symposium of financial institutions concluded “the obsession with short-term results by investors, asset management firms, and corporate managers collectively leads to the unintended consequences of destroying long-term value, decreasing market efficiency, reducing investment returns, and impeding efforts to strengthen corporate governance”. Echoes, here, of Graham’s anti-social voting machine.

Between May 2000 and March 2001, the BIS sold 220 tonnes on behalf of the SNB. For the first 120 tonnes, the SNB paid the BIS a fixed commission while the performance risk resided with the SNB. For the next 100 tonnes, the BIS agreed to pay the average price of the AM and PM London gold fixing plus a small fixed premium. In April 2001, the Governing Board decided that there was no reason to continue to sell through the BIS. The SNB now had the necessary professionals, know-how, trading resources and contacts to the international gold market to trade directly. Two types of selling operations were subsequently pursued: spot sales in the market and sales programs with price caps. Over the next three and a half years, 730 tonnes were sold directly in the spot market. For these sales, the SNB used 25 counterparties in four different continents. In an effort to receive consistently competitive pricing, the Governing Board allowed the SNB traders to become two-way participants in the market. In other words, traders were allowed to buy gold on an intra-day basis up to two thirds of the daily allocated sales volume. Overall, the sales had to be conducted within a clearly defined corridor which was structured around daily sales volumes of approximately one tonne (Figure 5). Typically, the Bank of England was used for the physical settlement of these operations. Apart from spot operations, 350 tonnes were sold through option programs.
Given the healthy public finances in Thailand (with 9 years of fiscal surplus prior to 1997), the expanding foreign private sector debt was interpreted as a sign of euphoria and confidence in the emergence of a new tiger of Asia. In Europe, a similar story of mispricing occurred when some peripheral nations were able to access financing at a much cheaper rate than the country’s underlying credit rating would have allowed them to do so - and this was made possible out of sheer membership of the Euro zone. A single currency and a convergence in risk rating, like our  BIS central bankers’ speeches  1  fixed exchange rate, gave the market a false sense of security that encouraged borrowing beyond our means and without proper risk management. Second, both crises occurred as a result of a failure to fulfill the necessary “pre-conditions”. In Asia, they were preconditions for liberalization, and in Europe they were preconditions for integration. A number of Asian countries embarked on ambitious liberalization programs with insufficient safeguards, appropriate infrastructure and policy tools. Liberalizing capital flows while still maintaining a fixed exchange rate system eventually ran up against the impossible trinity. The country must give up control over monetary policy. Recourse to macroprudential policies to stem the excessive bank credit expansion and asset price inflation, was not well-known then. Along the same line, the currency union proceeded without the necessary preconditions for integration.

In the case of Asia, the sharp devaluation and swift recovery in exports led the Asian economies to become addicted to large volume of export at low prices. And, in the case of Thailand, with little incentive to invest in research and development to raise the products’ value and enhance human capital, the average growth of labor productivity3 had trended down from the 1990s to 2000s. Ladies and gentlemen, This brings me to my third part on the lessons from the Asian financial crisis. I would like to offer three reflections that may not necessarily pertain to Europe but may provide food for thought for policymakers. First, conventional policy prescriptions may not be appropriate for unusual circumstances and there is no one-size-fits-all solution. Asia was a case in point of ill-timed austerity measures. Public sector debt in Thailand then was less than 15% of GDP; yet the policy prescription for Thailand was to tighten fiscal policy and maintain tight monetary policy, resulting in (interbank) interest rate rising from 10% at the beginning of 1997 to over 20% at the end of 1997. With large private external debt beyond the ability of the country to service, a way out should have been debt restructuring with international creditors to give the country a breathing space and avoid the painful shock from the sharp reversal in capital.
Our history and that of the region is paved with stabilization measures based on the exchange rate, which generated severe setbacks, and ended in balance of payments crisis, financial turmoil and economic disasters. For this reason, we have evolved into a floating exchange rate regime, which permits to better reconcile the stability of the Chilean economy with the volatility of the external scenario. This is not the time or the place for a lengthy discussion on the subject; suffice it to recall that every economic crisis in Chile over the past fifty years – except the recession of 2009 we are leaving behind with unprecedented vigor – have been associated to exchange rate misalignments and rigidities. Furthermore, a very significant element to explain why the emerging economies were spared the worst effects of the recent global crisis was that their currencies floated, which allowed them to absorb the shocks, eliminated the invitation to investors to wager against currency weakening and opened room to relax monetary policy and provide liquidity. However, although a floating exchange rate has many advantages for economic and financial stability, it may happen that, at times of high uncertainty or excessive optimism, financial flows could persistently push the real exchange rate away from its medium- and long-term fundamentals, with negative effects on the economy. In such situations, the Central Bank may intervene in the foreign exchange market with the purpose of mitigating or eliminating these imbalances.

Such a policy has sought to save the transitory income from copper, cushioning the impact of terms of trade cycles on fiscal expenditure, demand, and the real exchange rate. When confronted with the worst international recession since the Great Depression, this fiscal prudence allowed putting in place countercyclical measures that had no precedent in our economic history. In the present circumstances where the economy has already gained momentum, it is adequate to withdraw part of the fiscal stimulus. The plan of gradual reduction of the structural fiscal deficit announced by the government will contribute to moderate demand and remove some pressure from the real exchange rate, although its effects will become apparent gradually over time. Beyond the business cycle, it is also worth mentioning that the persistence of high copper prices in the world markets has been translating into better expectations for its long-term price. In the first five years of the fiscal rule of structural balance, the average reference price for copper was, in real terms as of today, $ per pound; now it is more than twice, at $ per pound. The higher earnings from copper have allowed financing an important increase in public spending as a percentage of GDP and greater transfers over the past few years. This situation has consequences also on the real exchange rate.
The more the international investment community succeeds in differentiating each country’s prospects, the better the outcome will be, both for investors’ returns as well as the countries involved. Ladies and gentlemen, I have spent much of my remarks talking about the challenges of financial integration. It is important, however, not to lose sight of the bigger picture. The benefits of being part of an open and integrated global economic and financial system are immense and should be embraced. The question is not whether to be integrated, but how to best do it in a way  4  BIS central bankers’ speeches  that avoids a drift towards financial protectionism. Success on this front ensures that the legacy we leave for the generations behind us is one of opportunities rather than problems. In choosing the appropriate strategies, a balance has to be struck between boldness and humility. We should be bold in our willingness to question conventional wisdom and try new initiatives. But in a constantly evolving global economy, we must remain humble about our understanding of how things work and be acutely aware of the limits of our knowledge. As Albert Einstein once said “The difference between genius and stupidity is that genius has its limits.” At an institution for learning such as this, I think it is fitting to end with that quote. Thank you for your attention. BIS central bankers’ speeches  5

Apart from answering to shareholder interests, the board of directors and management also have a fiduciary duty to their policy-holders. Sound internal risk management and controls are needed to protect policy-holders' interests. Currently, our regulations oblige the Appointed Actuary to take responsibility for monitoring the financial soundness of life insurance companies. But the Board and management cannot just sit back and rely on the actuaries. Board and management themselves must acquire a better awareness and understanding of actuarial assessment. We need to set clear expectations of the role that the Board and management play, in ensuring the financial soundness of their companies. MAS will work with industry and professional associations to set out guidelines for this important area. In Singapore, we established the Corporate Governance Code for listed companies last year. MAS has tightened corporate governance standards for local banks. We recently required auditor rotation for local banks, a policy which we had been considering for some time, even before the latest wave of accounting scandals. For insurance companies, we are currently working on a draft corporate governance framework. MAS is consulting the industry and will issue guidelines for internal governance for local boards of directors, as well as guidelines for the roles and responsibilities of Principal Officers of insurance companies.
Less than 150 thousand private dwellings, on average, were built in the UK between 2005 and 2014 – compared to estimates that 200-250 thousand that would be needed to keep up with growing demand (Barker 2004). 7 The FCA carried out its Mortgage Market Review over 2011 to 2012. The recommendations were implemented in early 2014 and required lenders to test the affordability of new loans. The test was not prescribed by the FCA but rather for each lender to implement their own. 8 In 2017 the FPC clarified that the 3pp stress should apply to the reversion rate at the moment of origination. 5  5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  The stress test on the major banks then in train indicated that they had sufficient capital to absorb very major losses from their mortgage portfolios.9 The risks did not seem to lie primarily on the lender side. And the experience in the UK, with full recourse mortgages was that households would do everything possible to pay their mortgages, cutting consumption to do so.10  But even though, as a result, mortgage defaults were relatively low in the crisis, high mortgage debt did appear to have had an impact more generally. Evidence from the crisis supported the view that more debt is associated with deeper downturns.

Second, at the time of the action, the FPC did not have powers of direction in relation to borrower focussed macro-prudential risks. The Committee’s powers of direction were confined to bank capital. The FPC’s actions in 2014 took the form of recommendations to the PRA and FCA under the Committee’s general recommendation powers. In response to a request from the Chancellor of the Exchequer to review its powers in relation to the housing and mortgage market and advise on whether any changes were necessary, later in 2014 the Committee recommended that it be given the power of direction in relation to debt to income and loan to value.23 Parliament approved these new powers for the owner-occupier market in 2015. Conclusion  There has, since the crisis, been a lively and often intense debate about the most appropriate allocation of macro-prudential responsibilities and powers between authorities in different jurisdictions. There is also currently a debate in train about the powers and responsibilities of central banks in different fields, including macro-prudential policy. That is a subject for another, probably longer, speech. I would only point out that no matter how responsibilities are organised, there needs to be some mechanism for assessing and addressing the macro prudential risks that can flow from borrower balance sheets. And that if this responsibility is allocated to a technocratic as opposed to a political authority, it is particularly imperative that there is maximum transparency and accountability around that authority’s approach and justification for action.
So what could account for the recent poor productivity performance? One possibility is that the weakness of measured productivity growth may exaggerate the true extent of underlying weakness. Let me explain. An encouraging aspect of the recent recession is that although unemployment increased, it rose by far less than we might have feared given the depth of the recession. The recent data on employment and unemployment are worrying in that context, with unemployment edging up over the summer, after having previously fallen by over 50,000 from its peak in early 2010. If this weakening in the labour market continues that could materially change the relationship between output and employment. But to date, companies appeared to have held onto a greater proportion of their labour force than in past recessions. My own experience of speaking to businesses at the depth of the recession is that this was driven by a desire to retain valuable skills and experience. Many companies had learned from past experience how difficult it is to re-employ skilled workers once let go. But a consequence of this labour hoarding is that the amount of output produced per worker fell very sharply, in many cases partly because working hours were cut back. And although there has been some rebound since then, the level of labour productivity has still not recovered to its previous level. This greater retention of labour suggests that firms may be sitting on a substantial degree of spare capacity.

More  11  The impact on the physical capital stock would be compounded to the extent that the recession also weighed on the growth in human capital. In particular, employees ability to “learn by doing” on the job or through job related training is likely to have been reduced as a result of the decline in average hours during the recession. Weale (2010) suggests that the learning by doing channel could eventually reduce aggregate labour productivity by around ½%. 12  “Investigating the characteristics of patents and the businesses which hold them”, Thomas, A., Economic and Labour Market Review, April 2011  BIS central bankers’ speeches  5  generally, the amount of management time devoted to raising finance and managing banking relationships has increased very substantially, diverting attention from the search for new products and new markets. It is impossible to quantify with any precision the effect that strains within the banking system have had on the growth of productivity over the past few years. But evidence from previous periods of financial turmoil suggests that the effect might be material. In particular, research by the IMF suggests that persistent falls in TFP growth following banking crises can account on average for around one third of the loss of output seen following such episodes (IMF 2009). So where does all this leave us? As I warned you upfront, I don’t think there is a single, simple explanation for the recent surprising weakness of productivity. Some of it may well get revised away.
The market’s belief that a too big to fail firm is more likely to be rescued in the event of distress than other firms weakens the degree of market discipline exerted by capital providers and counterparties. Since the government does not charge for this implicit guarantee, this reduces the firm’s cost of funds and incents the firm to take more risk than would be the case if there were no prospect of rescue and funding costs were higher. The fact that firms deemed by the market to be too big to fail enjoy an artificial subsidy in the form of lower funding costs distorts competition to the detriment of smaller, less complex firms. This advantage, in turn, creates an unfortunate incentive for firms to get even larger and more complex. As a result, the funding benefit of being seen to be too big to fail causes the financial system to become skewed toward larger and more complex firms in ways that are unrelated to true economies of scale and scope. Thus, the too big to fail problem consists of two intertwined issues. The first is that the negative consequences to the financial system and to the economy from failure for a given set of firms are unacceptably high. This is the financial stability risk. The second is that anticipated interventions to prevent catastrophic failure create an uneven playing field.

So far, the results of these questionnaires have been indirectly reflected in the periodical analysis and reports and in other different papers of the central bank. The further consolidation of these indicators, paves the path of their publication for the purpose of being used by the economic agents, as an extra way of communicating with the central bank. A preliminary step in this direction is also the consolidation of the applied methodology for calculating these indices, through a professional expertise as that of IFO. The undertaken steps, in expanding and consolidating the statistical basis of the monetary authority in real time, will enable the management on time of the situations and challenges, which are lead by economic development and the further integration of the regional markets. Coordination of the work between regional central banks for adopting the methodology and the indices enables the maximal use of existing knowledge basis on the specific features of our region, against that of the most developed economies. The use of the same methodology for establishing the indices will make it easier to compare them to each other. In parallel, these indicators will serve as a communication tool with the international institutions, specialized in best presenting and identifying the priorities according to the countries and with the foreign investors interested in our country. BIS Review 118/2006  1  Our purpose is to maximally adapt the indices we are drafting to the best international practices in this field, far from voluntarily solutions.