samchain/econo-pairs-v1 huggingface dataset:
5  See OECD (2005) and (2006) “Going for Growth” and OECD (2005) “Economic Surveys: Euro Area”. 6  See Economic Policy Committee of the EU (2005), “Responding to the challenges of globalization”, Brussels. 2  BIS Review 44/2006  Without aiming to be exhaustive, I should like to highlight some of the key priorities for reform in four main areas, namely getting people into work, increasing competition, unlocking business potential and supporting an innovative environment. First of all, well-functioning labour markets are extremely important in fostering high economic growth. The divergent pattern displayed by growth and labour utilisation in the US and in Europe has prompted some economists to suggest the existence of a ‘European model’ and a ‘US model’, related to the trade-off between labour use and productivity. 7 One view is that the lower levels of GDP per capita in Europe reflect European preferences for more leisure. However, we should bear in mind that lower participation rates are not necessarily solely associated with personal preferences, but are also triggered by the legal and regulatory environment, tax systems and social institutions. Benefit systems that are too generous discourage job search, early retirement schemes encourage early withdrawal from the labour market - employment rates for older workers aged 55-64 stood at just 40.2% in the euro area in 2005 and, according to the OECD, at around 60% in the US - and marginal tax rates that are too high discourage labour market entry and have a downward effect on average hours worked.

In March 2006, the European Council called for the establishment of “one stop” arrangements in each Member which would allow the setting up of company in one week by end 2007. Today it takes on average 27 days to set-up a new business in the euro area compared to 5 days in the US. 13 Fourth, to fully exploit productivity potential, the labour and product market reforms just mentioned need to be accompanied by policies that help to diffuse innovation and technological change. This includes, inter alia, measures to support innovation by higher investment in research and development (R&D). In 2004, roughly 1.9% of euro area GDP was spent on R&D compared to 2.8% in the US. Europe has set itself the target of achieving a share of 3% of GDP by 2010. Analyses made by the European Commission 14 show that if the effects of the increased knowledge investment foreseen within the Lisbon strategy were added in, the increase in annual EU potential output growth could reach up to three quarters of a percentage point. Of course, these are just crude calculations, which can certainly be challenged, but they give a notion of how large the welfare-enhancing potential of implementing structural reforms is. Of crucial importance in this strategy are the efforts to improve the labour force’s level of education and expertise. The impact of education on growth may be related to innovation, as well as the adoption of new technologies.
We can test how the system is likely to behave under stress. But we have until recently been in a very muted phase of the credit cycle. We are now, I hope, entering a more normal phase of the cycle, and approaching the point at which, from a macroprudential stand point, the Financial Policy Committee (FPC) will have to spend less of its time on the design of the regulatory framework and a lot more of its time on whether and when it needs to address the build-up of cyclical risk in the financial system. And, as we learn how the financial system behaves in first the more normal and then the more challenging parts of the credit cycle, we will also learn more about how the new regulatory framework functions as a whole. There will, as I and others have said, be areas where we find the reforms do not work as intended and that it is necessary to adjust them. It would be surprising if this were not the case. In response to the biggest global financial crisis since the 1930s the international regulatory community has agreed and is carrying through the biggest, most complex and most comprehensive programme ever of interlocking regulatory reform. There will be elements that need to be adjusted – indeed this process has already started with the reforms to securitisation now underway in the EU motivated in no small part by the joint work of the Bank of England and the European Central Bank.

Assets that tend to be traded primarily by “buy-and-hold” investors may require greater warehousing of risk to facilitate the matching of trades at or close to prevailing market prices. By way of illustration, there is a sharp contrast between the frequency of trading in equities and corporate bonds. For example, McKinsey estimates that NYSE and NASDAQ-listed equities trade around 3800 times per day, compared to around 85 times per day and 65 times per day for the most liquid US investment-grade and high-yield corporate bonds respectively. Assets exposed to tail risks tend to exhibit larger price falls and become less liquid in times of stress. Examples of such assets include high yield/EME bonds, financial debt and OTC derivatives. Complex and/or opaque assets are less well understood and the risks can be more difficult to manage, so reducing the pool of potential buyers. Finally, assets with relatively news-insensitive cash flows like investment-grade corporate bonds may be less attractive to more active investors seeking to profit from information, but more attractive to buy-and-hold investors seeking predictable long-dated cash flows. And the related issue of how assets are traded matters. The costs of liquidity on order driven electronic platforms is much lower than in markets that depend on voice quotes from market makers. Against that backdrop, I’d like to make two observations. First, funding and monetary liquidity can exacerbate the illusion of market liquidity.
Locally, our humanitarian operation had entered a final and most critical stage, and enormous pressure was being exerted on the economy. In that background, when a systemically important bank showed signs of a liquidity crisis, we knew that such an event, if allowed to escalate, could have dragged our economy to chaos, and our humanitarian operation to a standstill. We had to act decisively, and fast. We could  8  BIS central bankers’ speeches  not have delayed responding to this grave threat, or got it wrong. Fortunately, the Central Bank was ready. We had already developed a bank intervention operation, code named “Sigiriya”, to deal with a situation of a liquidity crisis in a bank. The time had come to activate such a mission. But to do so, the first step was vital. That was to apprise the Minister of Finance and obtain his approval to make the intervention. If the Minister of Finance were to approve such an intervention, if would be the first time ever, in Sri Lanka, that such a rescue operation was attempted. At the same time, the experiences of other countries during that period, were not too encouraging. In many countries, including the UK, (as in the case of the Northern Rock Bank), the Finance Ministers and the Governors of the Central Banks had been in protracted discussions for many weeks about this type of intervention, without reaching agreement. Fortunately for Sri Lanka however, such procrastination did not take place.

While I firmly believe it is up to history to judge as to whether I have been successful or not in discharging my responsibilities as Governor, I also believe that even at this late stage, it may be useful for those critics to reflect on the profile  BIS central bankers’ speeches  13  that John Exter had in mind for the position of Governor when drafting the MLA, and then perhaps consider, whether or not, I fitted the envisaged profile! In that background, I am inclined to believe that the education, training, and professional skills imparted by the Institute of Chartered Accountants of Sri Lanka, had a major role in my being appointed to this pivotal position as the Governor of the Central Bank of Sri Lanka. Therefore, please permit me to officially and publicly thank the Institute of Chartered Accountants of Sri Lanka for the tremendous impact that the Institute has had on my academic and professional career, in addition to the singular honour you bestowed on me this evening, by inviting me to deliver this prestigious Oration. Conclusion – running between the wickets! Mr. Chairman, let me now conclude, with a little story. About 6 months ago, a journalist friend asked me to explain the official relationship between the Governor and the Secretary, Treasury. In response, I gave him a long lecture for about half an hour, like what I have done today! While listening to me, I could see that he was quite restless, and somewhat bored.
Particularly prominent among them are the indirect and second-round effects on inflation that may stem from the latest price increases. Indirect effects occur when, in an attempt to maintain profit margins, firms pass higher energy costs through to the price of their products. To a certain extent, the spreading of inflationary pressures beyond the energy component is already a reflection of this effect. Profit margin indicators point to a recovery in the euro area in 2021, after the sharp fall in 2020. Margins in Spain appear to have been less buoyant and, according to several (still partial) sources, even declined in the last stretch of 2021 and the first quarter of 2022. Second-round effects arise when, in an attempt to preserve their purchasing power, workers demand wage increases in line with inflation, driving up labour costs and putting additional pressures on final prices. On the latest evidence, significant second-round and indirect 9  effects are not yet materialising in the euro area. Indeed, the latest data on wage settlements point to employees bearing a considerable loss of purchasing power in recent quarters. The limited pass-through of prices to wages could partly be the result of the relatively scant prevalence of indexation clauses, after a long period of low and stable inflation. The percentage of euro area private sector workers covered by this type of clauses in 2021 was the lowest in recent decades.

Lars Heikensten: Risks and financial stability Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at the Department of Business Studies, Uppsala University, Uppsala, 7 October 2005. *  *  *  Let me begin by thanking you for the invitation to your homecoming party, although I have never studied at the Business Studies Department at Uppsala University. I intend to take this opportunity to speak about the rapid developments in the financial markets over the past 10-15 years and to discuss the question of whether this entails risks being built up that will later result in serious setbacks. The trends and tendencies I intend to highlight today with regard to market agents’ behaviour may be primarily observed outside of Sweden’s borders – it is important to emphasise this. I have nevertheless chosen to discuss these partly because they can give us an idea of what might happen in Sweden in the long term, and partly because these tendencies may lead to problems in the international markets and thereby indirectly affect the Swedish market, too.1  What has happened on the financial markets? The financial markets have developed rapidly in recent years, and there are many reasons for this. Technological developments have radically altered the potential for making financial transactions. Developments in IT, for instance, have enabled large numbers of prices to be stored and extensive calculations can be made in various risk models.
François Villeroy de Galhau: Presentation of the 2016 Annual Report of the ACPR Speech by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), at the press conference, Paris, 29 May 2017. * * * I am pleased to welcome you today for the presentation of the 7th activity report of the Autorité de contrôle prudentiel et de résolution (ACPR), with Bernard Delas, Vice-President of the ACPR, Rémi Bouchez, President of the Sanctions Committee, and Edouard Fernandez-Bollo, Secretary General of the ACPR. As you know, the ACPR and its 1,046 staff members have a broad field of action. The ACPR guarantees the stability of our financial system, through the supervision of banks and insurance companies, but it also guarantees the protection of French customers and savers. First of all, I would like to mention our essential involvement both at the European and the international level. I will then present the results of the main French banking and insurance groups, before addressing four major challenges that strongly shape the ACPR’s action: low interest rates, digital finance, customer protection, the fight against money laundering and the financing of terrorism. * * *  I. The ACPR’s action at the European and international level At the European level, the ACPR has taken an active part in furthering the deployment of the Banking Union.

It can also be tomorrow the major digital platforms – the GAFA – and today the transformation of banks and insurance companies. They have committed themselves to it, much more actively in 2016; monitoring the consequences for their business models is one of the priorities of European supervision in 2017. New opportunities will also have to be seized: the possible exploitation of data, while protecting customers and ensuring a real level playing field with the GAFA; or the development of cyberinsurance. 2/3  BIS central bankers' speeches  The third challenge is the protection of the customers of banks and insurance companies, which is of course one of our core tasks. The ACPR received more than 6,500 letters in 2016, an increase of almost 20% in two years, and made more than 600 interventions among the bodies, institutions or intermediaries concerned. The ACPR has also continued to work towards the dissemination of good practices, with five recommendations adopted or revised in 2016, notably regarding the new practices related to social media or “complex products”. Finally, in its audits, the ACPR focused on providing advice on health insurance contracts, the de-linking of home loans and borrower insurance, and on compliance with obligations related to unclaimed life insurance policies.
To enhance their own self-image, members of the group often then systematically exaggerate differences with other groups, while emphasizing similarities within their own. 11 Perhaps most important of  7  Goldin et al (2011). 8  Further details available on the http://www.etymonline.com/index.php?term=diversity. 9  It uses Google’s Ngram Viewer. 10  For example, Tajfel et al (1971). 11  Karlan and List (2007). BIS central bankers’ speeches  Online  Etymology  Dictionary  at  3  all, people may discriminate or negatively stereotype the “out-group”, as a means of enhancing the image of the “in-group” and hence their own self-image. Behaviour consistent with social identity theory has since been detected in a wide range of social settings: in families, sports teams, schools, gangs, colleges and organisations. It generates important, but often subtle, biases in decision-making which may discriminate against members of the out-group. Despite laws against racial discrimination in most developed countries, there is evidence that racial stereotyping and discrimination in everyday decision-making has persisted, in everything from selling cars to making loans. 12 While deeply undesirable, these behaviours cannot be dismissed as entirely irrational. Indeed, economists and psychologists have developed models to show this behaviour may indeed be rational once the role of social identity and social norms are recognised. 13 And because a multicultural society gives rise to greater numbers of distinct groups and identities, this sociallydiscriminatory behaviour might even have become more, not less, powerful over time.

Andrew G Haldane: The Sneetches Speech by Mr Andrew G Haldane, Executive Director and Chief Economist of the Bank of England, at the Scottish Business Friends dinner in aid of BBC Children in Need, Edinburgh, 12 May 2016. * * * Accompanying charts can be found at the end of the speech. I would like to thank Kiran Bance, Venetia Bell, Stephen Brown, Gurmaj Dhillon, Will Dowson, Jeremy Franklin, Richard Galletly, Cat Hines, Charlotte Hogg, Tom Mann, Matthew Manning, Alex Mitchell, Ben Nelson, Raakhi Odedra, Charlotte Pope-Williams, Alice Pugh, Amandeep Rehlon, May Rostom, Emma Sinclair, Anne Wetherilt and Richard Wyatt for their comments and contributions. I would also like to thank Professors Philip Bond and Heidi Johansen-Berg and Alan Milburn and Emma Hardaker-Jones for their insights. In 1953, Dr Seuss published The Sneetches. 1 It tells the tale of an imaginary creature of which there are two types: those with and those without stars on their bellies (Figure 1). Star-bellied Sneetches are perceived in Sneetch society to be superior to those without. Until, that is, those without discover a machine for adding stars to their bellies. At that point the original star-bellied Sneetches, no longer distinctive, begin removing their stars to regain their special status. And so it goes on in a merry-go-round, until the Sneetches collectively realise they are better off treating equally those with and those without. The Sneetches is a parody of status and discrimination.
The interest rate level which has now been established should, in addition to directly contributing to stabilising the krone exchange rate, dampen price expectations.”  32  Svein Gedrem (1999) “Utfordringer i pengepolitikken” [Monetary policy challenges], Aftenposten, 4 May. 33  Kydland, Finn E. and Prescott, Edward C. (1977): “Rules Rather than Discretion: The Inconsistency of Optimal Plans.” Journal of Political Economy No. 87, pp 473–492. 34  Barro, Robert J. and David B. Gordon (1983): “A Positive Theory of Monetary Policy in a Natural Rate Model”, Journal of Political Economy No. 12 pp. 101–121. BIS Review 154/2010  9  long-term cost can be considerable and the short-term gains limited. Norway and other countries learned this in the 1970s and 1980s. The British prime minister Harold Wilson once remarked, “A week is a long time in politics”. This attitude also influenced economic policy in our country. The result was economic instability, with both high inflation and high unemployment. Just as Ulysses had himself tied to the mast to resist the Sirens’ 35 temptations, the government authorities can prevent themselves from pursuing a policy that is harmful in the long run by setting objectives and delegating tasks. A central bank should be independent in its use of policy instruments, though the objective of monetary policy should naturally be set out by the government and the Storting. 36 The division of responsibility was clearly defined when the government presented its guidelines in 2001.

Throughout the 1990s, the objective of monetary policy was to stabilise the krone and thereby make a contribution to low inflation. The central government budget was to smooth fluctuations in output and employment. This became increasingly demanding as favourable economic developments and oil revenues generated government surpluses. Both the interest rate and the government budget had then, in periods, the effect of amplifying, not dampening, cyclical developments. This resulted in fluctuations in the krone exchange rate. 31 Norges Bank was forced to recognise that it could not fine tune the exchange rate from day to day or month to month. Nor would the Bank knowingly contribute to fuelling inflation or deflationary downturns. Interest rate policy was then instead geared to keeping inflation in line with euro area countries. As from 1999, the Bank’s policy was in practice oriented towards an inflation rate of around 2 per cent. 32 Keeping inflation low and stable is the best contribution monetary policy can make to economic stability and a stable krone exchange rate. A formal inflation target – with a target of 2.5 per cent – was introduced in Norway in March 2001. The new monetary policy framework was introduced at the same time as the government drew up new fiscal policy guidelines that provided for a gradual, albeit sustainable, phasing in of oil revenues into the Norwegian economy.
For instance, I mentioned before that Banking Union will tend with time to consolidate the banking sector and open the possibility for an increased role of capital markets in diversifying the financing of the European economy. However to fully reap the benefits of capital markets integration we need legislative changes that complete the programme of financial services integration, particularly in relation to the capital markets. That would include changes to company law, bankruptcy rules and procedures, and higher harmonisation in the taxation of financial products. I would urge the Commission to promote these issues. Other necessary institutional developments have also been well identified in the President Van Rompuy’s Report “Towards a genuine Economic and Monetary Union”.14 They include the reference to progress towards fiscal union, economic union and political union. First, a more complete Fiscal Union along the lines described in that Report seems necessary for the euro area, which goes beyond mere disciplinary rules. Specifically, it calls for the euro area “….the establishment of a fiscal capacity to facilitate adjustment to  13  Dirk Schoenmaker and Daniel Gros “A European Deposit Insurance and Resolution Fund: An Update” DSF Policy Paper Series September 2012. 14  See “Towards a genuine Economic and Monetary Union” a Report by the President of the European Council in close collaboration with the Presidents of the European Commission, the Eurogroup and the ECB, (http://www.european-council.europa.eu/the-president/eurozone-governance). BIS central bankers’ speeches  9  economic shocks.

As long as house prices rise faster than wages, as they have during the course of this year, this upward creep in households’ debt burden will continue. And the higher this debt burden, the more sensitive will household spending be to any eventual upwards adjustment in mortgage rates. In some ways more important from a financial stability perspective is the distribution of mortgage debt. Households representing almost 20% of this debt have a debt-to-income multiple above 5 – that is, around 1 million households. Around a third of debt, or around 1.6 million households, is owed by those with a debt-to-income multiple above 4. Just over a quarter of this debt is owed by households with £ or less in monthly disposable income after essential expenditure is taken into account. And just over a half of all UK households say they would need to take corrective action (cutting spending, working longer hours etc) if mortgage rates were to rise by as little as 2.5 percentage points, if income were unchanged. None of this is to suggest an immediate problem, especially with interest rates so low. But financial stability is about protecting against future tail risks. It was against this backdrop that the authorities recently decided to reduce some of the stimulus being provided to mortgage lending – for example, stimulus provided by regulatory capital relief and the Bank’s Funding for Lending Scheme.