samchain/econo-pairs-v1 huggingface dataset:
Even if the development of inflation in one country may conceivably disturb the path for the union, that country cannot be required to tighten its fiscal policy as long as it complies with the Stability and Growth Pact. 5  BIS Review 76/1999  Secondly, at present there is thus no mechanism whereby a fiscal adjustment could be spread over the participating countries. This is also a problem because the implementation of the Pact indicates that there is a risk of this contributing to a procyclical budget policy. To date, the Pact’s surveillance process has focused on countries with a budget deficit close to the limit. There is nothing remarkable about that: this is where the problems are most apparent and the risk of failure — with problems for the credibility of the Pact as a whole — is most acute. But there is also the risk of the Pact having a procyclical effect. Countries that are close to the maximum deficit on account of weak activity are obliged to follow a restrictive line, while those with good activity and a surplus do not need to tighten their policies in this way. This problem has arisen because the Pact was actually constructed so that it only functions properly when all the member states have established the necessary margins. That is still not the case. For the euro area as a whole it would presumably be best in the present situation if the countries with high activity were to tighten their policies even more.

But it is also important to maintain the peer pressure that has been used to ensure that the member states observe the common rules. Arguing the case for adhering to these rules in a country’s internal debate is difficult if other member states lower their ambitions. BIS Review 76/1999  4  Policy interaction Economic policy in the euro area is accordingly formed in the interaction of the single monetary policy and what are primarily national fiscal and structural policies. If this interaction is to function properly, much is required of the parties involved in the way of clarity and a dialogue. The available structure for coordinating economic policies in the European Union consists of a network of different bodies and reports, with the ultimate purpose of arriving at a shared picture of the framework for economic policy. The forms for cooperation are being developed all the time and a number of new instruments have been introduced in recent years. A schedule has been established for the continuous exchange of information and views during the year between the member states, the Commission and other Community bodies, including the ECB. Reports on compliance with the guidelines for fiscal policy, employment and structural policy are submitted by each country for discussion and examination by the other member states, the Commission and the ECB.
So, what are the possible policy implications of these recent patterns or trends on financial markets? My opinion is that financial authorities might reflect on some ways to foster behavioral diversity in financial markets. As we have just seen before, some specific factors, such as short-termism, mimetic behaviour etc… have tended to make “contrarians” less pro-active on financial markets. As a consequence, in order to safeguard the smooth functioning of the markets, the diversity of participants’ behaviours must be protected or even reinforced. This necessary diversity should logically reflect natural differences in time horizons, strategies and reaction functions of market players. On this point, I would like to explore amongst many others three possible avenues for future action for both monetary or financial authorities and the financial industry. First avenue: Strengthening the continuing efforts aiming at market transparency Experience shows that uncertainty and incomplete information are determining factors in mimetic behaviour. These shortfalls in market transparency make mimetic behaviour seem rational to agents, who prefer to follow bigger participants, who are thought to be better informed, rather than develop their own analysis. Therefore, strengthening transparency continues to be the priority. In the same vein, attention should be paid to expand the skills and competencies required by the analysis of a more detailed and complex information. Transparency is useless if only a limited number of experts are able to deal with it. One of the objectives of transparency is to enable better differentiation of borrower creditworthiness.

Jean-Claude Trichet: Asset price bubbles and their implications for monetary policy and financial stability Keynote address by Mr Jean-Claude Trichet, Governor of the Bank of France, at the Asset Price Bubbles conference held at the Federal Reserve Bank of Chicago, Chicago, Illinois, 23 April 2002. *  *  *  Ladies and Gentlemen, It is a great honour and pleasure for me to talk today in Chicago at the invitation of the World Bank and the Federal Reserve Bank of Chicago in front of such a distinguished audience on the theme of asset price bubbles. As a central banker, my main focus will be on the implications of asset price developments and bubbles for both monetary policy and financial stability. The far-reaching changes observed over the last decade on financial markets, the growing role of these markets for the financing of the economy, and the evidence gathered over the recent period on the key role that financial factors may play in shaping and amplifying the business cycle, have drawn attention to the relative importance of asset prices and wealth effects on the real economy. There are at least two reasons why asset prices and wealth effects may have grown over the last decade: ·  first, changes in asset valuations, mainly driven by the rise in the new economy stock prices from the mid-1990s and their subsequent collapse in 2000, have been dramatic. This is well documented for the United States.
The market for new dwellings was saturated. Real house prices did not revert to the 1899 level until the mid-1980s. The rise in house prices has been high in Norway in recent years, but not particularly high compared with other countries. We have limited scope for restraining structural changes that occur when households increase their debt over several years to invest in housing and other property and assets. An interest rate that would effectively restrain these structural adjustments would also have an adverse impact on economic activity. But households are more vulnerable when debt levels are high. Long periods of a sharp rise in asset prices and debt may give rise to instability in output and employment at a later stage. Debt developments also affect banks’ behaviour. A particular responsibility for monitoring developments in financial institutions has been assigned to Kredittilsynet (Financial Supervisory Authority of Norway), and we are happy to have a well-equipped supervisory authority in this field. In its forecasting of economic variables, Norges Bank uses a broad approach. Current statistics and impressions from Norges Bank regional network are important in assessing the current economic situation. In its forecasting, the Bank uses several macroeconomic models: one core model and a number of smaller models. There is, however, no mechanical relationship between the models the Bank uses and its forecasts. The Bank’s forecasts are based on a broad and varied range of information sources and include a substantial element of judgment.

In my view, that now points to a gradual withdrawal of some of the stimulus we provided to the economy in more difficult circumstances last year – not so much as to undermine the recovery, but to keep it on a low inflation path, consistent with the Committee’s remit. 7  10  See Sentance (2009a) and Sentance (2009b) for a more detailed discussion. BIS Review 99/2010  References Eurostat (2010) “Regional GDP per inhabitant in 2007”, Press Release 25/2010 – 18 February 2010 Lee, N. (2010) “No city left behind”, published by the Work Foundation, July 2010 Sentance, A. (2009a) “Monetary policy in turbulent times” Speech at the Agricultural Engineers Association Annual Conference, Institution of Civil Engineers in London on 21 April 2009 Sentance, A. (2009b) “Energy and environmental challenges in the new global economy” Speech at the British Institute of Energy Economics Sustainable Energy Seminar, London on 21 September 2009  BIS Review 99/2010  11
Smaller firms have higher average growth rates, and greater dispersion in these growth rates, than larger ones. Finally, when it comes to companies’ leverage, the picture is also a nuanced one. 54  High leverage is a  characteristic of firms with two very distinct productivity profiles (Chart 22g). Very low-productivity firms tend to have high leverage because their profits, repayment capacity and investment are low. But high leverage also characterises high-productivity firms, whose profits, borrowing and investment are high. These patterns provide an explanation for the damaging impact of the crisis on productivity growth. The absence of credit may have affected disproportionately high leverage, high productivity companies operating in the upper tail. The distribution of debt is also important when gauging what impact monetary policy and regulatory forbearance may have had on the lower tail of companies, to which I now turn. The Role of Monetary Policy  These distributional data enable us to look closely at the lower tail of companies who have potentially been protected from failure since the global financial crisis by regulatory forbearance and accommodative monetary policies. Chart 16b plots this lower tail on three dates, pre-crisis (2002), mid-crisis (2008) and post-crisis (2014). Unsurprisingly, the crisis fattened the lower tail. Since the crisis, however, this tail has shrunk again. The tail of low-productivity companies today is, if anything, smaller than it was pre-crisis.

The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. This note applies to all charts and analysis using data from the ONS Research Database. Chart 16: The distribution of productivity across firms  (a) Distribution in 2014  (b) Lower tail of distribution in selected years Density 2014  Density  0.016 0.014 0.012  2002 2008 2014  0.018 0.016  0.014  0.01  0.012  0.008  0.01  0.006  0.008 0.006  0.004  0.004  0.002  0.002  0  0  -0.002 -50 0 50 GVA per worker, £  100  150  200  0.02  -0.002 -50 -30 GVA per worker, £  -10  10  Source: ONS Research Database and Bank calculations. Notes: Gross value added per worker.
However, during the summer the countries affected have managed relatively well in issuing government bonds, and the banks’ interim reports have been positive. The European Central Bank has been able to reduce both its purchases of government bonds and its lending to the banks. The general picture is, to summarise, that the unease in the financial markets has been subdued during the summer, at the same time as the situation is still not normal. From this international perspective I shall now move on to a national one, and take a look at economic developments in Sweden. Economic developments in Sweden At the beginning of this presentation I summarised the picture of developments in Sweden painted in the Riksbank’s Monetary Policy Report. The Swedish economy is developing strongly following the severe downturn. GDP was expected to grow relatively quickly over the coming years, and the labour market was expected to improve. Inflationary pressures are currently low, but are expected to increase as resource utilisation rises. I will now describe developments in the Swedish economy in a little more detail, and at the same time discuss new information received during the summer. 1  Somewhat simplified, one can say that a CDS is a contract where the buyer pays the seller a premium for the seller to take on the credit risk linked to an underlying asset, such as a bond. The premium then becomes a measure of the credit risk.

The rapid rebound in oil prices and a weaker krone provided a boost to the economy. The interest rate was lowered sharply to a historically low level and public spending increased markedly. The downturn was milder than we had expected when the interest rate was reduced – partly because oil prices proved to be higher than expected and partly because the policy measures were more effective than we had dared to assume. Therefore, we now expect to raise the policy rate at a gradual pace back to more normal levels. The emerging economies were hardest hit by the global crisis in the late 1990s. This time OECD countries were the most severely affected. But Norway largely escaped both crises. Overall, output fell less in Norway than in other countries and is recovering more quickly. Unemployment has remained low. 1  4  IMF Country Report No. 10/24. Norway: Staff Report for the 2009 Article IV Consultation. BIS Review 44/2010  Norway is not unique We cannot expect underlying forces to be as beneficial in the future. Real interest rates cannot be expected to fall. Another sharp boost to export prices is not likely. In addition, there are vulnerabilities in the Norwegian economy. Labour has never been as costly, and businesses may be at a disadvantage in tenders and competitions given the current high level of spare capacity in other countries. Moreover, it has never been more profitable to relocate activities abroad.
20.04.17  Challenges and opportunities for the Spanish banking industry Opening address, Day Two of the “XXIV Encuentro del Sector Financiero” (24th Financial Industry Meeting), ABC, Deloitte and Sociedad de Tasación Javier Alonso Deputy Governor  I would like to thank you for inviting me to participate in day two of the twenty-fourth (24th) Financial Industry Meeting organised by the newspaper ABC, Deloitte and Sociedad de Tasación. It is a pleasure to be here with you today. I wish to take this opportunity, my first public address as Deputy Governor of the Banco de España, to share with you some reflections regarding the challenges facing the Spanish banking industry in the short and medium-term. In particular, I am going to focus on three aspects that I consider especially important: i) the need to maintain the profitability of the industry in order to guarantee its correct functioning, ii) the challenge for traditional banking posed by the development of new technologies (FinTech) iii) and, finally, the importance of increasing customer confidence, the linchpin of banking activity. 1 Profitability Bank profitability has been a recurrent challenge lately and is, once again, one of the priorities of the Single Supervisory Mechanism (SSM) for 2017. A number of factors are putting pressure on the profitability of Spanish deposit institutions and of their European peers. First, the very low interest rate environment puts pressure on financial intermediation margins. Although the interbank market interest rate, Euribor, is negative, banks find it very difficult to reduce their deposit rates below zero.

Tarisa Watanagase: The international monetary system Remarks by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the Executives’ Meeting of East Asia-Pacific (EMEAP) – Eurosystem High Level Seminar, Sydney, 10 February 2010. *  *  *  Liquidity challenges after the crisis While advanced countries at the epicenter of the global financial crisis had to adopt unconventional measures, Asian economies did not face liquidity crunch, hence no need for unconventional measures. In the case of Thailand, our financial institutions have relied entirely on local deposits and not encountered any liquidity problem. Nevertheless, for contingency, the central bank expanded the list of collaterals that can be used to get liquidity from the central bank. As for the international liquidity, there are bilateral central banks swap lines readily available and IMF’s Flexible Credit Line was also a welcomed prompt response. As you know, Asia also has the Chiang Mai Initiative or CMI, which serves to anchor confidence through the psychology channel. On the broader global liquidity issue, there is the Triffin Dilemma view that the issuer of an international currency can take the advantage of such a special status to stimulate domestic demand and liquidity in the global market. I will return to this point in the later part of my remark. Lessons learned from the Asian crisis From my first-hand experience in dealing with the Asian crisis, I believe that it is important to go back to the origin of the vulnerabilities, be it liquidity or solvency problem.
Designing reforms in the right way and creating a productivity-enhancing environment can maximise the former, and let me add: the faster, the better. But while the full benefits of these efforts are still emerging, aggregate demand should counteract the potentially destabilising effect of lower prices and higher real interest rates. This can be done by fiscal policy, when it is available without questioning long-term debt sustainability. And it can be done by monetary policy, even when interest rates have reached  18  For an explanation of this phenomenon in the US context see Bernanke, B (2005), “Productivity”, remarks at the C. Peter McColough Roundtable Series on International Economics, January 2005. 19  Andrews, D., C. Criscuolo and C. Menon (2013), “Do Resources Flow to Innovative Firms? Cross-Country Evidence from Firm-Level Data”, OECD Economics Department Working Papers, forthcoming. 20  Andrews, D., C. Criscuolo (2013), “Knowledge-based capital, innovation and resource allocation”, OECD Economics Department Working Papers No. 146. 21  World Bank (2013). 22  Veugelers, R. (2011), “Mind Europe’s early-stage equity gap”, Bruegel Policy Contribution 2011/18, December 2011. 23  See also speech by Cœuré, B. (2013), “Completing the single market in capital”, ICMA Capital Market Lecture Series 2014, Paris, 19 May 2014. BIS central bankers’ speeches  7  the lower bound, by expanding the central bank’s balance sheet and channelling liquidity to the real economy.24 This is what the ECB has been doing and will continue to do. It is sometimes argued that monetary policy can weaken the incentives to reform.

Within that time, Jim reviewed the claim, cross-referenced it with the policy, ran 18 fraud-detection algorithms, approved it, sent wiring instructions to the bank and notified the policyholder of the claim payment. The average claim payout in the US is about 30–45 days. 3/3  BIS central bankers' speeches
If the ECB is bound by the law, it would also have to ensure continuous progress in enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change. Moreover, it would have to ensure that its policies on adaptation are coherent with and supportive of other such policies in the Union. [5] That is quite a full plate. So, is the ECB bound by the Climate Law? There are definitely indications that it is. The Climate Law is addressed to “relevant Union institutions and the Member States”. In the European Anti-Fraud Office (OLAF) judgment[6], the European Court of Justice made it clear that, in principle, the ECB is bound by all regulations which bind the Union. There is no distinction to be made between the different institutions, bodies, offices and agencies. All are equal under the law, so to say. However, the word “relevant” is ambiguous. Does it refer to any institution, where relevant? That would mean that every EU institution should comply with the Climate Law, whenever it develops policy or takes action relevant to the objective of the law. Or does it refer only to those institutions with competence to create policy relevant to achieving the objective of the Climate Law? The ECB would be directly bound by the law under the first interpretation but not under the second. The Climate Law is not crystal clear on this point. It does not define “relevant institution”.

SPEECH  The European Climate Law and the European Central Bank Keynote speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, Lustrum Symposium organised by Dutch Financial Law Association Amsterdam, 1 December 2022 I am honoured to speak at this 20th anniversary dinner, with so many distinguished lawyers around me. In this setting, I feel quite comfortable dwelling on legal issues for a while. A topic close to my heart – apart from the law – is the ongoing climate and environmental crises. I am glad that we have long since moved on from the time when only scientists and activists were concerned with this topic. It is now high on policymakers’ agendas, as we saw at the recent United Nations Conference of Parties (COP27) at Sharm el-Sheikh, at which – along with world leaders and a wide range of policymakers and interest groups – the ECB was also represented. I was struck by one story in particular. [1] The tiny Pacific nation of Vanuatu is badly exposed to cyclones and rising sea levels. To the inhabitants of Vanuatu, climate change is a human rights issue. And, as Vanuatu’s president, Nikenike Vurobaravu, stated, “we are measuring climate change not in degrees of Celsius or tonnes of carbon, but in human lives.” Vanuatu now plans to ask the UN General Assembly to seek an opinion from the International Court of Justice on the human rights implications of the climate crisis.