samchain/econo-pairs-v1 huggingface dataset:
It depends on a range of factors including an economy’s factor endowments, the complementarities that exist between these and its production technologies, and the correlation of shocks between the domestic and world economies.5 Although openness supports dynamism, integration also brings greater exposure to foreign shocks. 2.2  Openness and stability  Those observations point to a second important influence of openness on the UK economy: stability. As the UK has become more open over time, its interdependence with other economies, including others in the EU, has increased. For the macroeconomy, this has two opposing effects. First, openness can enhance the investment returns and opportunities to diversify risks of households, firms and financial institutions. Well-managed openness can therefore grow wealth while enhancing risk-sharing, insuring households’ consumption, smoothing their working patterns, and augmenting their borrowing and saving opportunities. That insurance helps people plan for the future in the knowledge they’ll have to change their plans less abruptly when the unexpected happens. The flip-side is that openness can change the nature of the unexpected itself, altering the type and scale of shocks hitting the economy. For example, the complexity of financial linkages can grow and become more opaque, creating new vulnerabilities and more severe shocks. And openness has the potential to exacerbate existing distortions or inefficiencies. In times of euphoria, foreign capital can flood in and amplify domestic trends. The speed of its flight when passion turns to panic can then deepen the bust that follows boom. Most obviously, openness ties the fates of trading nations together.

This is, so to speak, one specificity of our approach in this country. We believe in strong and efficient supervision. We don’t think that bigger cushions are a substitute for competent supervisors. We are strong supporters, in our jargon, of the “Pillar 2” approach, whereby the supervisor is in charge, at any single moment, to check the adequacy of capital buffers with the effective level of risk in the system. Needless to say, we also strongly support the development of macro prudential tools allowing authorities to detect and prevent systemic risks. Given that all economic cycles are not simultaneous, to be fully efficient, those tools should be set and implemented at each jurisdiction’s level and not a regional one, in order to take into account national cycles and the level of risks of individual economies. Overall, I can assure you we are very keen to monitor in real time the economic impact of financial regulation. For the first time, economic and systemic assessments have been made of the new projected Basel 3 framework. We will continue to update them permanently. A good example of our constant vigilance relates to projected liquidity ratios, where the systemic impact and implications for monetary policies are being thoroughly reviewed at this time. *** To conclude, let me emphasize that policy makers are fully aware of possible macro consequences of regulatory reforms and will be eager to limit the economic costs.
In addition, only 12% thought that the willingness of banks to provide a loan had deteriorated, while the number of those replying that banks were actually more willing to extend credit was among the highest in the EU. At the same time, however, the demand for bank loans by domestic small enterprises last year was weak. Only 10% of respondents applied for bank loans compared to 22% in the EU. The indication of a subdued demand for loans is confirmed by information derived from the Bank Lending Survey and from other intelligence collected by the Central Bank of Malta. One possible explanation could be the fact that small businesses in Malta rely on a mix of internal and external finance to a greater extent than their European counterparts. Another is  5  Flash Euro Barometer No. 271. BIS Review 50/2010  3  the reported postponement of investment plans in the light of the slowdown in both domestic and external demand. Albeit to a lesser extent, supply side factors also seem to have been present. For example, according to the joint EC/ECB survey more than half of the small businesses in Malta considered the interest rate as the most limiting factor for obtaining a bank loan, a higher proportion than in any other country surveyed. And about one fifth reported that they had actually refused the loan offered because they considered the interest rate as too high.

New, cost-effective solutions such as QR payments and “Tap-on-Phone”, which leverage on the already high penetration of smartphones in Malaysia, may be preferred over traditional POS terminals. Indeed, we are encouraged to see that industry players are starting to roll out interoperable solutions. Notably, these include several pilot initiatives ahead of the nationwide roll-out of PayNet’s Interoperable 1/4  BIS central bankers' speeches  QR payment solution. Such solution has the potential to become a game-changer by facilitating merchants to accept payments from customers of different participating banks and non-banks by using only a unified QR code. Beyond that, we should accelerate the digitisation of the value chain for both users and merchants. This could include digitising salary payments, and payments to suppliers, wholesalers and distributors. These developments would make it more compelling for consumers and businesses to maintain funds digitally, thereby providing a natural incentive to keep using and accepting e-payments. The second key area is on strengthening public confidence. Some segments of the population may still lack awareness and confidence in e-payments, despite fraud levels being relatively low in Malaysia. Some consumers are also concerned about overspending, as they are used to relying on cash withdrawals as a way to budget and control expenses. These are cognitive barriers that can be overcome with concerted efforts. Banks and non-banks alike should intensify efforts on awareness-building and education campaigns. These could focus on use cases that are central to day-to-day life, such as paying for fuel, groceries and F&B.
For clarity’s sake I should perhaps add that I am speaking in a personal capacity, not expressing an official position on behalf of the Riksbank. Some new conditions for economic policy If Sweden were to adopt the euro, responsibility for monetary policy would be transferred to the European Central Bank (ECB), which acts, not in the interest of particular countries but for what is appropriate for the euro area as a whole. Thus, Swedish economic policy would no longer have recourse to the short-term interest rate and the exchange rate. Tendencies to overheating and inflation just in Sweden could no longer be countered with the monetary alternative of raising the interest rate here, just as the interest rate could not be lowered to mitigate a marked slowdown in our economy. This is clearly a change in the conditions for economic policy that needs to be analysed and discussed in advance of a decision to adopt the euro. Having said that, the issue should not be seen too dramatically. The set-up for economic policy in a monetary union is much the same as in a country with a fixed exchange rate. In Sweden that was actually the case in 73 of the past 100 years, with results that were excellent in some periods and considerably worse in others. It is important to learn from those experiences. What distinguishes a monetary union is that the exchange rate is locked irrevocably.

That immediately highlights two major problems of using this concept in real time: GDP figures are frequently revised; and our view of the economy’s capacity and its trend rate of growth has to be estimated as it cannot be measured directly. Both of these problems are particularly acute in the aftermath of a recession, when early estimates of GDP may be less reliable than normal and when we are more likely to see structural changes in the economy which may change our view of the level of capacity in the economy and its growth rate. On the question of GDP data revisions, I well remember the experience of the early 1990s recovery, when I was working as Economics Director at the CBI. Initial estimates of GDP growth were much weaker than the picture that we now have of that recovery. And we have already started to see something similar happening over this recovery too. The first GDP growth estimate which signalled the economy was coming out of recession – for the final quarter of 2009 – has already been revised up from 0.1% to 0.5%. For this reason, I would caution against putting too much weight on the initial estimate of GDP growth for the first quarter of this year which we will receive tomorrow. Such early estimates of GDP need to be interpreted alongside the other evidence we already have about the performance of the economy – including business surveys and employment data.
In a developing economy such as Thailand, the customary savings behavior is to save first and spend later. BIS Review 50/2004  1  Developing economies can and should benefit from this type of behavior since it allows for vital investments to be madc using domestic savings, thereby lessening reliance on extemal capital inflow, while at the same time promoting an economically viable savings-investment gap. On the other hand, the savings behavior of the west and developed economies tend to lean toward spend now save later. This type of behavior is practicable in western countrics due to many factors that can be summed up under the heading of high level of economic development. The existence of social welfare systems, mature capital markets, diversified economy, and highly educated workforce are a few factors that allow such countries to be able to grow under a relatively low savings environment. Without such factors, a country could find it difficult to grow and develop without straining its finances. Coming back to Thailand, it is possible to say that with more widespread usage of credit cards and other types of consumer loans, we can expcct Thailand’s savings behavior to become more in line with those of the developed economies. This trend is a double-edge sword that if not managed carefully can cause a severe negative savings-investment gap. Such predicament will worsen Thailand’s dependence an extcrnal capital inflow that historically has shown its ability to change direction rapidly and jeopardize macroeconomic stability.

Specifically, the US and Europe, the two largest markets for Asia’s exports, are still facing steep challenges in the adjustment process and the situation is still rather fluid. For the US, the rather sticky structural constraints such as high unemployment and depressed housing markets suggest that self-sustainable growth momentum remains uncertain when policy supports are withdrawn. In the case of Europe, while some progress has been made in resolving the sovereign debt issue, risks remain on whether certain economies can overcome the challenge without substantial debt restructuring. Looking ahead, external demand from these two markets is likely to remain subdued in the near future. Meanwhile, closer to home, the disastrous earthquake and the ensuing nuclear crisis hitting Japan, a key importer and exporter for many economies in the region, is adding further downside risk to export and production growth in the region. Last but not least, political instability in the Middle East and North Africa (MENA) region will likely keep oil prices elevated for some time. This in turn would drag on global economic growth, add upward pressures on inflation and heighten volatilities in the global financial markets. 4. All these complications are making life difficult for policy makers in the region. While Asia, having learned well the lessons from the Asian financial crisis, has managed to get through the recent global crisis relatively unscathed, we are now entering uncharted waters, and there are both imminent and longer-term policy challenges. 5. First and foremost, it is challenging to manage the large capital flows.
The board of directors has an important role to play in establishing the overall culture of an organisation. It is also the ultimate body for resolving the type of complex ethical dilemmas I referred to earlier, and ensuring in particular that the reputation risks in new business strategies or products are carefully addressed. I hope that this conference and my speech, have demonstrated that high ethical standards in banks are neither a luxury nor an abstract ideal. Rather, they are a vital aspect of protecting and enhancing the bank’s brand image, and ensuring its long-term business survival. Behaving ethically is not only the right thing for banks to do, it also makes sound business sense. BIS Review 98/1999  4

Start ups are well aware of this, but our scale-ups, midcaps and SMEs also need greater access to equity leverage. In this field, our economy, like that of our neighbours in the euro area, is seriously lagging behind: in France, equity only accounted for 64% of GDP at end-2016, which is half as much as in the United States (128%). It is true that French and European savers are very attached to safe investments. The bulk (69%) of the EUR 4,765 billion in financial wealth held by French households is invested in interest rate products, compared to only 31% in equity products, i.e. invested in corporate capital in the form of listed or unlisted shares.1 However, it is important to distinguish, with respect to savers’ expectations concerning security, two components: they are attached to the protection of capital, even more so than to liquidity. With the increase in life expectancy, and with a greater need to prepare their retirement, savers are increasingly being steered towards long-term products; the liquidity component is becoming less decisive. Here, insurers have an essential role to play, by taking the lead on new forms of life insurance that aim for a three-fold compatibility: with low interest rates, our economy’s need for equity financing and the expectations of the French people. This requires new long-term savings products that are less liquid but feature a form of capital protection and offer over time the higher equity-type returns. Let me make myself absolutely clear: the development of unit-linked policies is not a sufficient response.
Third, the industrial sector had also borrowed heavily during the export boom period of the 1980s, but when the recession occurred in 1990, they had overextended themselves and in many cases were unable to repay their debts. Many borrowers had their loans denominated in foreign currencies but earned their main revenues in the domestic currency. Their debt payments increased drastically in the end of 1992, when the Swedish currency was suddenly and sharply depreciated by some 25 percent. This led to further loan repayment problems. Losses for these and other reasons led to a severe and systemic banking crisis in Sweden. The costs to bank owners and to the general public to re-stabilize the banking system were huge, and in addition the overall macroeconomic development and welfare of the citizens suffered for several years. As an example, unemployment soared rapidly from 2½ to some 14 percent. But the crisis is not the main theme for today’s presentation so I will only make a few observations. The crisis was clearly not a result of deregulation. However, shortcomings in the deregulation process did contribute to the crisis. As I mentioned, bank managers and also the supervisory authority were not prepared for the transition from strictly regulated banks to a situation in which banks were allowed to assume more risks. Thus they did not recognise, manage and monitor the risks properly, which led to problems.

In addition, the large Swedish exporting companies learnt how to evade the restrictions on capital movements which gave them a competitive advantage over smaller competitors also in the domestic market. The increasing deficits in the fiscal budget and in the current account made the restrictive system nonoperative. The government finally decided to abolish them, although in a careful and gradual fashion to minimise disturbances to the markets and the economy. During a period spanning the late 1970s and the early 1980s the domestic regulations and the restrictions on capital movements were gradually scrapped. The credit market restrictions were finally rescinded in 1985 and the capital movements’ restrictions in 1989. This was very late compared to most other European countries. However, domestic policies were not adjusted to an environment of free capital flows and a free credit market. The fiscal policy and the tax system induced borrowing and monetary policy could not act as a brake since it was geared to the fixed exchange rate regime. Consequently, a few years after the completion of the deregulation, a financial crisis broke out. In today’s presentation, I will not go into detail about the manifold reasons leading to the crisis but instead focus on the aspects relevant to the financial sector.
Even in the slightly shorter term, there are difficult considerations that must be made and risks connected to our interest rate decisions. As we often point out, the repo rate path is a forecast and hence by definition uncertain; it is not a promise. How we will conduct our monetary policy in practice in the future will depend on how economic developments in Sweden and abroad affect the prospects for inflation and economic activity. There is a risk that the upturn in inflation during the winter will not be temporary, but will persist a little longer. One indication of this is the fact that the rate of price increase has risen with regard to many goods and services. Risks that could put greater upward pressure on inflation in the future are if the krona were to weaken or wage increases were to be higher than the Riksbank has forecast. We may then need to raise the repo rate more quickly than expected. If, on the other hand, wages increase more slowly or the supply of labour is higher, then monetary policy may instead need to be more expansionary than in the forecast. We must now begin to lay a safer foundation for the future With the monetary policy we presented a couple of weeks ago we expect to meet the inflation target and for the recovery to continue from a more stable foundation.

We have passed the worst economic trough in several decades and have now entered a new phase of economic recovery. Monetary policy will probably begin to be adjusted to a more normal economic downturn situation in the summer or early autumn this year. And this is a healthy sign. The road ahead of us is certainly not an easy one. New challenges and considerations await us, but we are at the same time more than ready to meet them. The resources that we were forced to use some time ago for more or less acute crisis management can now be partly used for analysis, development of our methods and the work on preventing imbalances in the economy and future crises. No one can say that the latter is a simple task. There are many problems that need to be solved. But we are not alone in this work, which must be conducted on both a national and an international level. As long as we have the motivation and the will to succeed our chances are good. In the most acute phase of the crisis many of the countries of the world joined together and took action to prevent a total collapse. When it has been necessary, the authorities here in Sweden have showed an excellent ability to cooperate. We must make use of the drive and spirit of cooperation that were demonstrated in the crisis.
The red line in the figure also shows an aggregate measure for the components with the lowest volatility. Their weight in the CPIF is on average 38 per cent during the period. The remaining share is also aggregated and plotted in the same figure (pale blue line). The series of volatile prices oscillates between 4.5 and 10.1 (14.6 percentage points) measured as an annual percentage change, while the index with less volatile prices amounts to between 1.1 and 3.8 per cent during this period of time. 20 This component actually only follows prices in the CPI as a whole. 21 The capital stock index measures the purchase price of the properties (houses and apartments) and improvements such as refurbishments and extensions. 12 [19]  Figure 6. Prices with high and low volatility in the CPIF respectively Annual percentage change. 12 10 8 6 4 2 0 -2 -4 -6  95  00  05  10  15  Prices with high volatility (weight about 17 percent) Prices with low volatility (weight about 38 percent) Other prices  (weight about 45 percent)  Sources: Statistics Sweden and the Riksbank  The average for the index with high volatility is 3.0 per cent, calculated from 1995. 22 The average for CPIF inflation since 1995 is 1.6 per cent. In other words, if one excludes the groups with high volatility one obtains a measure of underlying inflation that has a much lower average than the actual inflation for the period of time concerned.

3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5  11  12  13  14  15  16  17  18  19  CPIF Sources: Statistics Sweden and the Riksbank  A simple way of getting rid of the white noise and clarifying the actual trend is to calculate a twelve-month moving average for the series. 14 Figure 3 shows the results of such a calculation. Now the white noise has been removed and the underlying development is shown more clearly. But it must be emphasised that this is the underlying development given the method I have chosen. 14 First I have calculated the level for a twelve-month moving average for the CPIF. Then I have calculated the twelve-month change for the moving average. 6 [19]  Figure 3. CPIF inflation, twelve-month moving average Annual percentage change. 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5  11  12  13  14  15  16  17  18  19  CPIF, twelve-month moving average Sources: Statistics Sweden and the Riksbank  The second common method of calculating underlying inflation is, as we said, to exclude certain predetermined prices or groups of prices. Perhaps the most common measure used internationally is inflation excluding energy and food prices. Energy prices contribute to more temporary and short-term price movements, the same applies to food prices. One reason for these price movements is temporary variations in demand. Unusual weather can also temporarily affect prices of, for instance, electricity, cereals, fruit and vegetables.