samchain/econo-pairs-v1 huggingface dataset:
Therefore, the existing rules should be applied, and they should not be stretched to a point where they would lose their credibility. There is built-in flexibility in the Stability and Growth Pact to account for the cost of major structural reforms – but it cannot be based on empty promises. The sequencing should be clear. First, reforms need to be adopted and implemented. Then,  3  Euro area GDP is expected to recover at a pace of 1% in 2014 and 1.7% in 2015 according to the latest ECB staff projections. 4  Total investment in the euro area has shrunk by almost 20% since the peak in economic activity in 2008. In addition, total factor productivity has also been disappointing in the euro area since 2000: it grew by 0.45% annually from 2000 to 2007 before receding by 0.47% annually between 2007 and 2012 (source: Ameco database, European Commission). 5  See Barroso, J.M., “Remarks by President Barroso on the Country Specific Recommendations 2014”, speech given in Brussels on 2 June 2014. BIS central bankers’ speeches  3  the cost of such a reform, independently assessed, could be taken into account under the Stability and Growth Pact, with due attention to the limited fiscal space provided by the high debt levels. Economic stability is a necessary condition for growth, but is not sufficient alone. For our economies to grow out of high debt and unemployment, and thereby ensure social stability, we need to do more.

The last BIS Review 26/1998  -2of these factors - the general welfare of the population - is dependent precisely on the creation of the appropriate economic framework I mentioned earlier. I should add that this task can only be accomplished if a sufficient number of citizens actively help in shaping developments. This is especially the case in the sphere of fiscal policy. In the wake of extremely dynamic growth, public budgets have grown considerably in all developed countries over the past few decades. While the original purpose of this spending was to meet a pressing and legitimate need such as in the area of social security - there has been a growing disparity between the claims made on the public purse and the willingness to generate the necessary resources. Today, we have reached a point where this trend needs to be reversed. However, neither rules and regulations nor government ordinances can achieve this alone. Instead, we have to take small but persistent steps to rectify the situation both from the spending and the revenues side, and - not least of all - to improve productivity. Because such ongoing measures need the backing of the community, the chances of success tend to be greater in smaller communities than in larger ones. Our experience suggests that a federally structured society based on direct democracy is well suited to achieving the interaction between economic and political stability I have just outlined.
Your work will be vital to making these new standards a reality and thereby to establishing a stronger, more consistent standard of resilience across the EU. But amidst our work to embed new regulatory standards, it must not be forgotten that the responsibility for running insurers rests with their Boards and senior managers. This leads to the second right idea we are putting into practice: the people running insurance companies should be more clearly held accountable for their actions. It is now clear that in some parts of the financial sector, the link between seniority and accountability had become blurred or even severed. The Parliamentary Commission on Banking Standards recognised this when they recommended a new regime for the seniormost managers in banks, ensuring their accountability. The principles underlying that regime are more widely relevant. Those individuals that run financial institutions should act with integrity, honesty and skill regardless of whether they work for global investment banks, regional building societies or in the general insurance sector. Solvency II recognises this imperative. It requires both firms and regulators to monitor the fitness and propriety of staff with key responsibilities in the insurance sector. As a consequence, the Bank of England is now working with other regulators to develop a regime for the key people in your industry. That doesn’t mean we are about to extend the banking regime indiscriminately. For one thing, unlike in banking, there will be no statutory provision for applying a “reverse burden of proof” in the insurance sector.

Mark Carney: Putting the right ideas into practice Speech by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the Institute and Faculty of Actuaries General Insurance Conference, Wales, 25 September 2014. *  *  *  Introduction It is an honour to be invited to address you today. Insurance is at the core of the new Bank of England. As regulator, we are tasked with ensuring the safety and soundness of the UK’s insurance companies and the protection of their policyholders. To discharge these responsibilities, we draw on the entire resources of the Bank. Fully one third of our regulatory staff – over 200 supervisors and 50 actuaries – are engaged in supervising insurance companies. But that is just the start. Our supervisors are supported by hundreds of credit risk analysts, scores of monetary policy experts and macro-financial analysts. As a central bank with responsibilities for both monetary and financial stability, we have a view of both the asset and liability sides of your balance sheets. And as a highly active participant in global financial reform, we influence the measures that are reshaping the global system. In all of our actions, we recognise the importance of insurance to the economy. The UK insurance industry makes a major, direct contribution: £ to annual GDP and 300,000 high-paying jobs including many of the 14,000 members of the Institute & Faculty of Actuaries. It is a major exporter with about 30% of premiums earned overseas.
Inflation targeting means setting the interest rate so as to achieve a numerical target for inflation. Norges Bank sets the interest rate with a view to stabilising inflation at 2.5 per cent within a reasonable time horizon, normally 1-3 years. The more precise horizon will depend on disturbances to which the economy is exposed, and how they affect the path for inflation and output. The inflation target represents a framework for, not an obstacle to, monetary policy’s contribution to stabilising output and employment. We have chosen flexible inflation targeting. Variability in output and employment as well as inflation is given weight. The objective of monetary policy is to safeguard the value of money in the long term, and seek to contribute to stabilising economic developments in the short and medium term. The objective of monetary policy is low and stable inflation. The instrument is the interest rate. The interest rate influences inflation with a lag and with varying intensity. As interest rates fall, household and local government consumption and investment tend to accelerate. Higher demand leads to higher output and employment. Wage growth may pick up. Higher wage growth combined with higher profit margins will result in higher inflation. BIS Review 61/2004  1  Lower interest rates normally lead to a depreciation of the krone. Imported goods then become more expensive and inflation accelerates. Expectations play a key role in price and wage formation, and they are influenced by the interest rate.

At present - with continued low interest rates abroad and a close link between domestic interest rates and the krone - a tighter monetary policy would restrain credit demand primarily because job security would be reduced as a result of a stronger krone. House prices and developments in household credit influence consumption and housing investment. We seek to take account of these indirect effects in interest-rate setting. A turnaround has occurred in the Norwegian economy. The economy has experienced a soft landing after the long period of high cost inflation in Norway and sluggish external activity. •  Output has returned to trend and is now showing a marked rise. •  Employment has returned to trend and is rising. •  Unemployment is at the 1996-level and is equal to the average for the 1990s. •  Wage growth is broadly in line with a level that is consistent with the inflation target given normal productivity growth. •  Overall credit growth is balanced. Credit is expanding approximately in line with trend growth in nominal GDP. •  Labour costs in Norway relative to our trading partners are now broadly in line with a long-term average. •  The nominal krone exchange rate is on a par with the average for the 1990s. •  The interest rate level is close to the level prevailing among our trading partners. •  Inflation expectations are approximately the same as the target.
And mindsets must change on all sides: the financial institutions, the investing public, and the MAS. Institutions In the recently liberalised industries like banking, insurance and stockbroking, institutions need a sense of urgency, to be aware that even if they are not immediately threatened they will be unless they act soon. Singapore bankers used to feel very comfortable about things. To quote one who knew that the salad days would not last: “As a banker, all I need to do is to do what MAS tells me to do, and not do what MAS disallows, and the bank will make money”. Contrast this with what Rolf Breuer of Deutsche Bank said in London two weeks ago: “There is a sense of being insecure, afraid and uncertain. The markets have changed, the customers have changed, and the competition has changed. On the internet, many traditional banking services are obsolete”. [reported in Straits Times] Fortunately, attitudes in Singapore are also changing. Mr Wee Cho Yaw, in announcing good results for UOB this year, said that he foresaw fierce competition ahead. Straits Times reported [25 Mar]: “the outlook is OK for the next one or two years, but beyond that is an open guess. Three to four years on … I don’t know … how the big banking giants will affect us, but I assume margins will be squeezed”. Mr Wee is one of our shrewdest bankers and the industry would do well to take note that he is worried.

Some of the firms that encountered difficulties in 2008 paid out large bonuses early in 2008 despite the deterioration in market conditions and in their own financial performance. There is an opportunity to rethink capital preservation policies to ensure that banks’ incentives are consistent with the supervisory objectives of a safe and sound banking system. Such capital conservation rules could operate on both sides of an economic downturn – conserving capital going into the downturn and rebuilding capital coming out. One example would be the imposition of constraints on the ability of banks to reinstate or increase dividends prematurely or to undertake share buybacks during a downturn or during the early stages of an economic recovery. Higher capital requirement for systemically important institutions Currently, some large systemically important institutions may have a competitive advantage because they are perceived to be “too big to fail.” Unless we address this disparity, we will have an ongoing moral hazard problem and inevitable market structure distortions as institutions take steps to become systemically important in order to gain a competitive advantage. The regulatory regime could lean against this in two ways. First, we could improve the resolution mechanisms for large, complex institutions and thereby reduce the costs associated with failure. A more robust resolution regime would make it more feasible to allow the failure of a large financial institution without that failure threatening the stability of the entire financial system.
Indeed, in the absence of the extra £ billion of gilt purchases announced two weeks ago, we judged that inflation would be rather more likely than not to undershoot our 2% target in the medium term. That was why we decided that it was necessary to do more. Moreover, the longer capacity lies idle, the more likely it is to be scrapped completely. And the longer people are out of work, the more likely they are to become disconnected from the labour market altogether. So there is an added incentive to getting the recovery back on track quickly. The euro area represents the biggest single downside risk to this picture. Greece is the country in the headlines right now, but several countries of the euro-area periphery face, in varying degrees, a challenging mixture of unsustainably high public and/or private indebtedness and weak competitiveness. Correcting those problems requires: fiscal consolidation; bank recapitalisation; and a rebalancing of demand towards net exports. The first two are under way, but the third is harder to achieve in a monetary union where no exchange rate movement is possible to bring about the necessary improvement in international competitiveness. At best, these countries face an extended period of very low growth while the necessary adjustments take place. And while this morning’s agreement between the Greek government and the euro-area authorities is certainly welcome, there still remains a possibility that events could unfold in a disorderly and damaging fashion at some stage in the future.

If the referendum should result in a vote in favour of an independent Scotland, the associated monetary arrangements would then be one of many matters needing to be settled. But the exact form of those arrangements would be for the Westminster and Scottish parliaments to decide, not the Bank of England. Until asked to do otherwise, the Bank will continue to use the powers delegated to us by the UK Parliament to try to deliver, to the best of our ability, monetary and financial stability for the United Kingdom as it stands, including being represented here through our Agency in Scotland. In keeping with that, my remarks tonight will focus not on what may, or may not, happen to the UK’s monetary arrangements some years down the road, but rather on our more immediate economic prospects and the actions that the Bank’s Monetary Policy Committee has taken to try to sustain the recovery. As you will be aware, last October the Monetary Policy Committee resumed its purchases of government debt, financed by the issuance of additional claims on the Bank of England – so-called quantitative easing. At our most recent policy meeting less than a fortnight ago, we voted to make a further £ billion of purchases, which will take the total sum bought to £ billion. To give you some context, that represents about a fifth of the annual output of the United Kingdom and around a third of the total stock of UK government debt in issue.
4/6  BIS central bankers' speeches  We have heard that CLS, has established a public register on their website, where CLS members are able to post their Statements to publicly demonstrate adherence to the Code. The BIS Governors have asked the BIS Markets Committee, which I currently chair, to assess the effectiveness3 of the Code over time. This will likely take place 3 years after the launch and will be conducted together with the GFXC. This is a demonstration of the BIS Governors’ ongoing commitment to the Code. Embedding, monitoring and demonstrating adherence are actions that we hope that you will take to support adherence of the Code. As a first step, I strongly encourage all of you to read the Code. You will find that it is written in simple language and addresses many issues where there were previously no guidance on. Consider how it can be applied to your firm, taking into account proportionality – i.e. how the principles are embedded must be in the context of the nature and the significance of your activity in the FX market. Consider how you can encourage counterparties to adhere. It would be a positive outcome if it becomes a norm that each new counterparty relationship starts off by bilateral indication that both parties adhere to the Code. Central banks leading the way We, in our capacity as central banks, will lead the way.

The growth in the sukuk market also reflects the commitment and combined efforts of the Malaysian government and regulators. There is a clear articulation of the vision and policies to drive the local Islamic capital market. This is reinforced by the implementation of a strong legal, regulatory and tax framework. Bank Negara Malaysia and the Securities Commission have worked closely on a sequence of vital blueprints: the 10-year Financial Sector Master Plan, the 10-year Capital Market Master Plan and the Islamic securities guidelines. The government has reaffirmed all these plans and initiatives with the announcement of a range of tax measures in the 2006 budget. Another important aspect of the development of the sukuk market is the development of the other key components of the Islamic financial system, the money market, banking, and takaful sectors. The various components are able to meet the different requirements of the economy including the differentiated tenor for which the funds are required. This includes providing stable long-term funds for large investments and development projects. These would allow for a balanced allocation of financial and economic resources within the economy, diversifying the risks through the Islamic financial system, and enhancing its flexibilities to adjust, thus strengthening its resilience. As Malaysia moves to a more liberalised and globalised Islamic capital market, the role of the industry in advancing the Islamic financial system becomes increasingly important. The role of the industry has been important in spearheading product innovation, branding, profiling, promotion and marketing of the Islamic capital market products and services.
The increase in payroll tax rates, the rise in high income tax rates, the increase in taxes associated with the Affordable Care Act, and the sequester will result in fiscal drag of about 1¾ percentage points of GDP in 2013, an unusually large amount of fiscal restraint when the economy doesn’t have strong forward momentum and unemployment is still elevated. In terms of the labor market, we have seen only a moderate improvement in labor market conditions over the past six months or so. After an encouraging pick up in the pace of job creation around the turn of the year, the employment report for March showed a gain of only 88,000 jobs. While I don’t want to read too much into a single month’s data, this underscores the need to wait and see how the economy develops before declaring victory prematurely. I’d note that we saw similar slowdowns in job creation in 2011 and 2012 after pickups in the job creation rate and this, along with the large amount of fiscal restraint hitting the economy now, makes me more cautious. Since September, payroll employment has increased an average of 188,000 per month, compared with an average of 172,000 per month over the previous two years. The unemployment rate has declined from a peak of 10 percent in October 2009 to 7.6 percent in March; however, much of the decrease is due to a fall in the number of people actively looking for a job.

Clearly, those retail banks with little or no tradition in issuing capital and other securities in capital markets will have particular difficulties coping with the enhanced regulatory framework. Admittedly, though, the corporate structure of many retail banks -particularly those which are not yet regular corporations listed in capital markets - may face less immediate pressure to restore higher profitability levels. That may allow them to buy some time. 3/5  Yet, low sustained profitability is often a symptom of vulnerability and, certainly, of inefficient allocation of the resources employed in the banking business. There is therefore a need to reflect on the best way to strengthen retail banks, to make them better able to cope with the new macroeconomic and regulatory conditions without damaging the social benefits associated with their activity. It would be unsound to try to establish specific strategies with the pretention to be unconditionally applied in all circumstances. However, I see some difficulties for numerous retail banks in adapting to the low-profitability and tighter regulatory environment if they are not able to increase their ability to compete with banking corporations in terms of costefficiency, business diversification and access to capital markets. Some transformation of the retail and, in particular, the saving banking sector therefore seems unavoidable in order to meet the target. We, in Spain, have already taken some steps in that direction.
This brief review shows, I believe, that in periods with a heavily regulated financial system, the world economy has been somewhat less prone to generate pronounced financial cycles. It should be born in mind, however, that the regulations also created other problems which impeded long-term growth. Innovations and new enterprises are hardly stimulated when banks and markets are closely regulated. So it is symptomatic that the high growth in the 1950s and ‘60s came mainly from the rationalisation of existing firms rather than from new enterprises. When the deregulation of trade and of markets for goods and services got under way again in the decades after World War Two, attention was naturally drawn to the financial barriers that the tight regulations had set up against future growth. An awareness of the need for new, expanding companies and the emergence of new markets made it natural to promote this with a freer financial system. While this financial deregulation was probably both natural and necessary, it also meant that the world economy again became vulnerable to the kind of exaggerated optimism, with the attendant risk of pronounced financial cycles, that had characterised the late 19th and early 20th centuries. Meanwhile, the institutions connected with the financial system had lagged behind. By “institutions” I mean everything in and around the financial system that affects its development. Examples are sets of rules, the banking system as such, the general public, the political system, the authorities and the media. The shortcomings took various forms. Important rules were wrongly formulated or non-existent.

But, in EMEs, there are many tensions and challenges that we must deal with appropriately in order to build more resilient economies and take full advantage of the great progress achieved during recent years in terms of macroeconomic and financial stability. These are the main contributions central banks can make to their countries. Figure 1  World output (1) (annualized quarterly change, percent)  Output gap (3)  15  15  4  4  10  10  2  2  5  5  0  0  0  0  -2  -2  -5  -5  -4  -4  -10  -10 -6  -6  05  06  07  08  09  10  Emerging economies (2) Developed economies  00  02 04 06 08 10 Developed economies Emerging Asia Latin America  (1) PPP-weighted regions. (2) The fourth quarter is an estimate. (3) Gap obtained with the HP filter, except in advanced economies, where OECD estimates were used. Sources: Central Bank of Chile based on data from Bloomberg, Consensus Forecasts, OECD, and the statistics offices of each country.