samchain/econo-pairs-v1 huggingface dataset:
18.0  13.0  8.0  Dwellings  Other construction Transport equipment  ICT equipment  avg.2009-17  avg.2000-08  avg.2009-17  avg.2000-08  avg.2009-17  avg.2000-08  avg.2009-17  avg.2000-08  avg.2009-17  avg.2000-08  -7.0  avg.2009-17  -2.0  avg.2000-08  3.0  Other machinery and Intellectual property equipment products  -12.0 CEE  SEE  Baltics  CESEE  -17.0  Source: Eurostat and NBRM calculations. Another important aspect in the investment-growth nexus is the infrastructure quality and spending on infrastructure. Do CESEE countries spend enough on infrastructure? World economic forum indicators show infrastructure quality gap between CESEE region and EU-28 in the period 2017-2018 - the quality of infrastructure in the CESEE region, is around 4.3 on average, whereas the same index for the EU-28 is 5.14. The picture is very similar if one looks at the data on stock of public capital, which reflects to a large extent the availability of infrastructure – stock of public infrastructure in CESEE countries in 2015 is around 60% compared to EU-28 stock. According to both indicators, SEE region has largest infrastructure gaps in the group. EBRD5 concludes that current spending on infrastructure in CESEE region “are low by historical standard” and that “infrastructure spending needs to rise by at least half a percentage point of GDP, unless significant improvements can be made in terms of the cost-efficiency of infrastructure spending”. 4  5  NBRM calculations based on World Economic Forum estimates (2017-2018 edition).

Such financing are also in line with ethical and responsible financing principles, that contribute towards the long-term sustainability of this business. Governments around the world are also playing a critical role in catalysing sustainable development, through policies and regulations that encourage the adoption of green  BIS central bankers’ speeches  1  solutions. South Korea, for example, has adopted a shared vision for green growth and established the Green Growth Institute to implement efforts to deal with climate change and resolve environmental and energy issues. The Philippines introduced new legislation on climate change and established a Climate Change Commission to coordinate, monitor and evaluate the government’s actions to mitigate and adapt to the effects of climate change. In Malaysia, sustainability represents one of the key principles underpinning the New Economic Model and has been identified as a Key Strategic Reform Initiative which has led to the establishment of key agencies such as Malaysian Green Technology Corporation (MGTC) and Sustainable Energy Development Authority (SEDA). In the foreseeable future, green technology will be a driver to promote sustainable growth and development. It is in the financial industry’s interest to be involved and engaged in its rapid development. The Government has put in place, the necessary support, incentives and infrastructure. Therefore the banking industry must reciprocate in kind, by allocating more resources and putting in place the required ecosystem to expand financing into this exciting new era of new financing.
But the idea that monetary policy may need to be used in support of macroprudential policy and contribute to preventing new imbalances arising on financial markets is nevertheless a question that is climbing higher up the agenda in these countries, too, as the economy and the housing market recover.26 A clear example is the United Kingdom, where the most recent remit for the Bank of England’s Monetary Policy Committee (MPC) states that circumstances may arise in which the MPC  24  One recent example is Lagarde (2014): “But where macroprudential policies fall short, monetary policy will have a larger role than in the past to maintain financial stability.” Other examples include White (2009), OECD (2010), Caruana (2010), Borio (2011b), IMF (2013), BIS (2013), Bayoumi and Habermeier (2014). See also Mishkin (2011) and the Committee on International Economic Policy Reform (2011). 25  It should be noted that the central banks in these countries have not necessarily made the assessment that there was motivation for leaning monetary policy against the wind in practice. The point is that they consider such deliberations as important to include in monetary policy as a question of principle. 26  Examples in the US Federal Reserve are Hoenig (2010), Bernanke (2011), Kocherlakota (2013) and Stein (2014). Within the ECB it has been noted that the strategy of a so-called “second pillar” that focuses on developments in monetary aggregates implicitly contains an element of leaning against the wind. See ECB (2010) and Stark (2010).

Even before the crisis, there was of course an insight that financial imbalances entail risks for macroeconomic developments and for financial stability. Maintaining financial stability has traditionally been one of the central bank’s main tasks, in addition to maintaining price stability. And analysing financial risks has been an important part of this work. But in the standard framework, financial risks and other financial stability aspects could, and even should, on the whole be kept separate from the monetary policy deliberations – at least over and above the impact that these factors have on the inflation forecast and economic outlook for the coming years.4 There were of course arguments in favour of monetary policy explicitly taking financial risks into account.5 These discussions most often concerned “bubbles” on the asset markets and whether monetary policy should counteract their build-up – “leaning monetary policy against the wind” as it came to be called. However, the consensus among both practicians in central banks and academics was that this is difficult and that in practice it can do more harm than good. Better then to wait and to use monetary policy to stimulate the economy once the bubbles had burst – to “clean up afterwards” instead. However, the financial crisis showed that the effects of financial imbalances and, in some cases, financial instability could be enormous and that the “cleaning up” could require massive and prolonged efforts from economic policy. The earlier consensus has thus been increasingly brought into question.
The question is how the so-called transmission mechanism looks and in what time frame interest rate changes affect inflation. If a central bank overestimates the deviation from the inflation target or underestimates the effect of a change in its interest rate policy, there is a risk that it will raise or lower interest rates too much. In such a situation, the policy in the end will become excessively restrictive or expansive and it may become necessary for the central bank to shift its policy in the opposite direction. Such a change may create instability and reinforce cyclical swings. Therefore it would appear that there is reason to proceed with some caution when the policy is changed. Central banks also tend to adjust interest rates in relatively small steps. Nevertheless, the conclusion that a central bank should proceed carefully is not self-evident. The question is how the markets players interpret a certain behaviour. Ever so small changes in the instrumental interest rates, which may be interpreted as the first step in policy change, can have a big impact. (cf. the Federal Reserve’s increase in February 1994). There is probably no obvious and simple rule for action. Most likely, the central bank’s task is to account for, as clearly as possible, both its long-term plans and the uncertainty that is inherent in its assessment.

What we saw in the international financial markets—after the bond markets’ crash in 1994 or the Mexico/Barings unrest in 1995—is an interaction between market tendencies in a more limited sense and weak public finances or other credibility problems. High international interest rates and currency unrest have aggravated the problem of public finances,  BIS Review 56/1997  -7-  so that on these occasions economies such as Sweden’s have moved from a virtuous to a vicious circle. Examples of how one could analyse exchange rate developments in the above terms can also be found in events of the last half-year. An explanation of developments with respect to the krona has to do with the position of the Swedish and continental economies in the business cycle. In recent months the dollar and the pound especially have appreciated relative to continental currencies. Monetary policy in the USA and Great Britain has been relatively tight. (Figure 4). This is still not the entire explanation. The krona has also fallen somewhat against continental currencies, especially during the winter and spring. In part, this has coincided with concerns with respect to the EMU process, possibly strengthened in Sweden’s case because Sweden’s position on the EMU issue is unclear. In addition there has been some uncertainty about the steadfastness of long-term economic policy connected with, inter alia, continued high unemployment. The studies that have been done by the Riksbank indicate that there is room for an appreciation of the krona.
This policy would in practice be unsustainable because it does not provide the answer to how monetary policy should respond to wage - and cost-driven unemployment. This would mean ignoring the experiences of the 1970s and 1980s. If economic agents feel confident that inflation will remain low and stable, and take account of this in their behaviour, inflation will move more quickly towards the target. The interest rate will then need to be adjusted less each time inflation has to be brought back to the target. This will also result in more 2 stable developments in output and employment. Developments in financial markets after inflation targeting was introduced indicate that market participants are confident that we will keep inflation low and stable. This is reflected, for example, in the long-term interest rate differential between Norway and the euro area. The interest rate differential currently stands at around 1 percentage point, which corresponds closely with the difference in monetary policy objectives. Confidence among financial market participants is an important asset if it proves necessary to use monetary policy to sustain the level of economic activity. It also lays the basis for lower interest rates over time. We do not have to pay an additional risk premium because there is uncertainty about inflation. Maintaining a firm monetary policy over time is therefore highly valuable in itself.

Payment service providers will have to apply these requirements as of 19 April 2020. 2/3  BIS central bankers' speeches  With regard to Regulation (EU) 2019/518, Regulation (EU) 2018/389 and the Corrigendum of Directive (EU) 2015/2366, amendments to the Law on Payment Services and Payment Systems have been prepared which are due to be adopted by the end of 2019. 1 Commission Delegated Regulation (EU) 2018/389 supplementing Directive (EU) 2015/2366 of the European  Parliament and of the Council with regard to regulatory technical standards for strong customer authentication and common and secure open standards of communication 2 Directive (EU) 2015/2366 of the European Parliament and of the Council on payment services in the internal  market 3 Regulation (EU) 2019/518 of the European Parliament and of the Council of 19 March 2019 amending  Regulation (EC) No 924/2009 as regards certain charges on cross-border payments in the Union and currency conversion charges  3/3  BIS central bankers' speeches
In the consultation document, we ask whether that process should go further, whether through industry-led standardisation, removing barriers to entry for new electronic trading platforms or utilities, or further transparency enhancements to practices such as new issue allocation. Or could imposing standardisation or transparency standards in excess of those already in place harm, rather than enhance, market functioning and risk transfer? Do practices such as ‘internalisation’ – where banks match off client orders internally – pose any challenges? 2. Competition and market discipline  The second structural category is competition and market discipline. Concentration in some FICC markets is relatively high both amongst intermediaries and amongst the major asset managers, and has risen further since the financial crisis. For example, the top six dealers account for over 60% of the UK interdealer FX market. In some cases, firms have also engaged in horizontal or vertical integration – raising potential conflicts of interest and concerns about information asymmetries. A number of recent misconduct cases have involved attempted collusion, abuse of market power or inadequate management or control of conflicts. The ability of FICC market participants to exercise market discipline against those engaging in misconduct may also have diminished somewhat in recent years. At the same time, the market maker system has delivered important benefits, including tight pricing and deep and near-continuous liquidity in a wide range of market conditions.

In such structures, focus on maintaining a firm’s reputation – normally a bulwark against misconduct – became heavily diluted, with some traders feeling greater loyalty to their desk or peers in the market than to their firm. A lot has happened in this field since the crisis. The better alignment of incentives has been a key plank of the reform agenda. In the UK, we are looking to introduce strong new accountability measures through the proposed Senior Managers and Certification regime, and new powers to defer payment of bonuses, or where necessary even claw them back. Several banks have already moved to withhold bonuses or cut bonus pools as the result of recent misconduct cases affecting their firms. Such moves make it more likely that individuals will ultimately face the long-term consequences of their choices. But looking more broadly, the risk is that, as memories of recent enforcement cases fade, bad practices may re-emerge. Some say that may already be happening. We want to ask what more can be done to hardwire sounder approaches, including improved measures for appraising performance, promotion and advancement of individuals; better safeguards  5  http://www.newyorkfed.org/newsevents/speeches/2014/dud141020a.html  6  http://www.federalreserve.gov/newsevents/speech/tarullo20141020a.htm  BIS central bankers’ speeches  7  against inappropriate staff moves; ways to strengthen the role of boards in the governance of FICC activities; and ways to strengthen the role of front line managers, the so-called first line of defence. 6.
The HKMA’s subsidiary, the Hong Kong Mortgage Corporation (HKMC), which was set up with an objective of buying mortgage loans from banks to supply the markets with additional liquidity, could hardly find any seller in recent years. 4. And our banks are also highly capitalised. Their average Capital Adequacy Ratio is over 20% whereas the average classified loan ratio stays at low levels under 1%. Therefore, they also do not have a strong motivation to issue capital efficient products like synthetic securitisation. 5. However, that does not mean that this will always remain the case, and there is no place for structured credit products here. There are a few factors that can spur the further development of these products in the coming years. 6. First of all, Hong Kong has always excelled as an international financial centre that serves not just the local economy, but also the whole region in the Asian time zone, especially the Mainland of China. Everyone knows the success of the Hong Kong equities market. It is disproportionately large compared to our GDP, but it is still growing at a rapid pace with a strong pipeline of IPOs of companies from the Mainland and elsewhere. 7. In the bond space, there is a fairly common misconception that we do not have a bond market to speak of.

Jean-Pierre Roth: Heading for more sustained growth? Summary of an address by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the General Meeting of the Swiss Italian Chamber of Commerce, Zurich, 20 June 2006. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Lately, Switzerland has been experiencing an encouraging upturn in the economy on the back of growth in the international economy. This development is particularly welcome because it follows a number of years of economic listlessness which have prompted repeated criticism from international bodies, due to the lack of growth in the Swiss economy. However, Switzerland's medium and long-term growth problem has not disappeared. Faster economic growth is the only possible response to the challenges posed by an ageing population. Moreover, it is the sole antidote to Switzerland's continuing loss of ground with respect to the other members of the OECD. Reforms are needed to ensure that, in the future, we can achieve more with fewer resources. The ways and means of doing this are evident. The Federal Council's package of growth measures is a move in the right direction, and the current improvement in the economy gives Switzerland the opportunity to move ahead with the requisite reforms. BIS Review 59/2006  1
The rapid increase in house prices during the second half of the 1990s is partly due to the decline in interest rates. However, there are also other explanatory factors. Naturally, income growth has also played an important role. Other driving forces behind house price trends include demography and relocation flows that have contributed to a large demand for housing in certain areas of the country, particularly the metropolitan regions. There are also other factors that have had an impact, such as reduced housing subsidies and rising construction costs. There has also been relatively little new building since the crisis years, despite substantial demand for housing. Nevertheless, it now appears that the trend regarding construction has turned. The increase in house prices has in turn contributed to a rise in the value of household wealth, as well as in the collateral for most of their loans. Household debts as a percentage of total assets, which among other things include housing, equity and saving in insurance policies, have therefore shown relatively little increase, despite the fact that the loans have risen in relation to disposable incomes. The fall in interest rates has also meant that the percentage of households’ disposable income used to pay interest expenditure after tax is currently low, despite the increase in indebtedness. Is there reason to be concerned that households have acquired such large debts and house prices have risen so much that it could cause problems in future? To determine this, it is necessary to have some perception of the long-term sustainable levels.

It is difficult to completely capture a sequence of events where changes in different variables tend to reinforce one another in economic calculations. If the households have also been overly optimistic - irrational - in their expectations, it becomes particularly difficult to capture these effects. It is therefore important for forecasters to make more “qualitative” assessments in addition. Another reason for not trusting solely to formal models based on historical data is that the effects of structural changes that have taken place fairly recently can easily be underestimated. Let me give an example that to some extent captures these problems. During the years from the mid-1980s to the beginning of the 1990s, substantial changes were made in the economic structure and there was a clear correlation between the change in house prices and the change in household borrowing. The decline in house prices during the financial crisis at the beginning of the 1990s was largely due to an unfavourable combination of changes of both a structural and a cyclical nature. In connection with the deregulation of the credit markets during the second half of the 1980s, household borrowing increased substantially and the loans were largely used to buy houses. The fairly high and fluctuating inflation rate contributed to real interest costs after tax often being low, sometimes even negative, which in practice meant that one could at times make a profit from borrowing.
Groshen, Erica L. 2011. “Temporary Layoffs during the Great Recession.” Federal Reserve Bank of New York Liberty Street Economics Blog, April 6. 4  BIS central bankers’ speeches

Christian Noyer – The main issue being discussed in the G20 – raised moreover by Nicolas Sarkozy – is how to reduce the large global current account imbalances, which weigh on world growth and generate dangerous capital flows. Monetary policy alone will not provide the solution. Each economic area should move towards a better balance between savings, consumption and investment. And, we would all benefit from reforming the international monetary system, but in a structural, orderly and calm manner, and certainly not in a hurry. It  BIS Review 152/2010  1  is a long process to move from a system in which only the currencies of major industrialised countries counted to the multipolar world in which we now live. Le Figaro – This G20 should also provide the opportunity to validate the new prudential framework (Basel III). Do you find it adequate? Christian Noyer – We have reached a balanced agreement. It is out of the question to be confronted with a situation where States fly back to the aid of banks. That is why we are enhancing both the quantity and quality of banks’ capital requirements. But we have also provided for a very long adjustment period to avoid an artificial reduction in funding. This agreement is universal and is intended to extend to the United States and to all developing countries. This too is a balancing factor. Le Figaro – Has the project been completed? Christian Noyer – We have factored in a long observation period for some aspects.