samchain/econo-pairs-v1 huggingface dataset:
We know that recoveries from financial crises tend to be slow; it takes on average about eight years to reach the pre-crisis level of real per capita income following financial crises. 3 Distorted and damaged financial sectors don’t allocate resources effectively. We may not pay the price for a number of years as the boom builds up. But in the end the price we pay is large when a financial system misallocates resources in the boom and in the following bust. Real GDP per head – the best measure of our aggregate living standard – remains 1% below its pre-crisis peak. This high cost to the economy and to society is why we need not only robust regulation of financial institutions but also of the financial system as a whole. Financial stability and sustainable growth are complements. They are not alternatives. Turning back to the reallocation mechanism, there are now some positive signs. The financial sector is well into its recovery. Bank lending growth to non-financial businesses was positive in 2015 Q1 for the first time since the crisis. Beyond the banking system, the Bank’s agents are reporting private equity firms purchasing debt-laden companies and restructuring their funding. The creation of new firms, a sign of vibrancy and reallocation in the economy, increased by 30% in 2013. And labour market ‘churn’, the movement of workers between firms is almost back to its pre-crisis average having fallen sharply in the crisis. In addition, we have seen a return of business investment over the past two years.

And the last seven years are not the only productivity puzzle in history that we can’t explain. Economists are still arguing over the explanation of the industrial revolution which as I said heralded the largest step-change in productivity growth ever seen But even if we can’t fully explain the puzzle, we can I think now point to an alignment of factors that suggest that productivity growth will start to move in the right direction over the next few years. This is of course the MPC’s forecast. It is not a given. We have been disappointed by UK productivity often over the last seven years. We seem now to be coming to the end of the reservoir of labour capacity and to the end of low cost labour. So if productivity were to continue to disappoint over the next few years, other, lower growth outcomes are likely to follow. I have set out why I think that is not the most likely scenario. But I for one will continue to watch the evolution of pay and productivity very carefully as it is crucial to the prospects for growth and inflation in the UK over the next three years. And, when it comes to productivity, I very much hope the UK economy as a whole will take its lead from the UK automotive industry. Thank you. 6  BIS central bankers’ speeches
An unexpectedly steep increase in global demand for oil, not least from the rapidly growing Chinese economy, seems to have been a significant driving force behind the rise in the oil price in 2004. This has led to a marked decrease in the idle capacity in the oil sector. Other relevant factors include unease over the situation in the Middle East and the various circumstances surrounding the Russian company Yukos. The rapid, short-term changes that have characterised the price formation in the oil market also point to a not insignificant element of speculation. Exactly what weight should be attributed to different factors from time to time is difficult to establish. But it is clear that the overall price rise in 2004 has been demand-driven to a larger degree compared with other occasions when the oil price has risen sharply. The increases in the oil price in 1973-74, 1979-80 and 1990 were as we know essentially a result of reductions in the oil supply. The demand for oil will of course play an important part for price developments in the period ahead as well. A key aspect is that more and more countries that previously were economically undeveloped will take the step towards more energy-intensive production. Even if new innovations can be put to use in a couple of years, the fast growth in many developing countries points to a relatively high oil price in the period ahead, too.

In the long term, the most important factor will be how we manage our national wealth. Even though Norway’s petroleum wealth is substantial, it is our human resources that account for most of our national wealth. Even a small increase in the “return” on human capital might generate considerable gains. The return on this capital partly depends on our pension schemes and the application of social security rules. These should be designed in such a way that they provide incentives and opportunities to work. Labour market legislation must also promote production and employment. In May, the Storting (Norwegian parliament) deliberated the Pension Commission’s proposals for reforming the national insurance system. There was agreement on some of the main points, but the specific content has yet to be determined. If we succeed in reducing the  6/7  growth in pension expenditure by modernising the national insurance system and introducing other reforms, this will be an important step towards addressing the fiscal challenges facing us. 7/7
But before that, let me say a few words about our monetary policy. Our monetary policy is doing its part, thanks to its persistence and patience, as Mario Draghi stressed this morning. Past questions about its effectiveness and our exit strategy seem to have receded – and rightly so. We confirmed last week our course of gradual normalisation, with the removal of the so-called “easing bias” on the APP. What we see now is a welcome alignment of the stars: against the economic background of a robust expansion with gradual progress on inflation, there is a broad convergence of market expectations with the views within our Governing Council. At present, there is very little debate among us. But this convergence doesn’t preclude vigilance. We’re closely watching the somewhat slow pace of inflation – I believe the Phillips curve is still at work, although with a time lag – and the global risks, starting with US trade policy and the evolution of the exchange rate. Let me now turn to the core of my message: the need to strengthen our Monetary Union by making concrete progress on Economic Union. There is currently a window of opportunity: the economic recovery is robust, and many euro area reform proposals point in the same direction, including the Commission roadmap of December 2017, President Macron’s speech at the Sorbonne last September and, more recently, the European chapter of the German coalition agreement. The outcome of the recent elections in Italy shows that we can’t waste any more time with theoretical debates.

It is high time we took pragmatic and decisive steps, beyond the three old clichés which are impeding progress towards a more sustainable European Monetary Union. They draw a pointless distinction between vision and pragmatism, European-level action and national reforms, and between risk reduction and risk sharing. There are three solutions: first, a “Financing Union for Investment and Innovation"; second, better coordination of economic policies supplemented by a stability-oriented instrument within the ESM (or EMF); and third, a euro area investment budget for the financing of common goods. Thank you for your attention. 3/3  BIS central bankers' speeches
There must also be a concerted effort by project developers to make project delivery more cost-efficient, productive and financially viable to mitigate risks for investors While considerable attention has been focused on increasing the supply of infrastructure financing, we also need to think about how we can “get more for less” by optimising the project delivery value chain. Improving project implementation processes McKinsey has estimated that productivity of the infrastructure value chain could be increased to achieve 40% savings, if project sponsors globally adopt proven best practices. This would translate to an average of $ per annum in infrastructure cost savings over the next 18 years. Such best practices may include having processes in place to select projects that best address infrastructure needs, finding innovative ways to structure and execute these projects, as well as maximising the use of existing capacity. This is not just a regulatory or public sector issue. On the part of project developers, greater attention has to be paid to productivity improvement across the entire value chain. Put simply, project developers must find ways to deliver projects on time and on budget, boost asset utilisation and undertake proper maintenance. If investors have confidence that there is “less leakage” from cost overruns, this will help to reduce financial buffers and in turn the required hurdle rate. There are various ways in which sponsors can enhance their delivery of projects. They could invest in project design at an early stage to avoid costly subsequent changes.

Furthermore, Romania’s membership in the Banking Union would ensure the country has an active voice in the decision-making process; as such decisions would affect it anyway, regardless of its membership status. I will end here my brief comment. Once again, we take pride in hosting what will be a substantial dialogue about the role Romania will take within the transatlantic renaissance as a faithful partner and ambitious player. I wish you fruitful discussions and to enjoy the Leadership Awards and Gala dinner tonight, hosted in the beautiful Marble Hall of the Old Palace of the National Bank of Romania. Built in the late half of the 19th century, following the French architectural style, it has harbored the central bank from the moment it was founded. The National Bank of Romania is the 16th oldest central bank in the world, established 33 years before the Federal Reserve. I do remember, two years ago, on December, 5th, when Aspen Institute Romania celebrated five years of operations, I was presented with the “Values-based Leadership” award on behalf of Aspen Network of International Partners. I cherish that memory and what this award stands for. I would like to thank each and every one of you for joining us. 2  BIS central bankers’ speeches
I believe that long run success and real independence of monetary policy is gained in the well functioning of this simultaneous relationship. Albanian Constitution and the current Bank of Albania Law grants the responsibility of monetary policy design and implementation exclusively and without equivoque to the Bank of Albania. We believe that such legal framework and Albanian society aspirations and commitment toward Maastricht criteria’s of convergence provide essential assurance for future compliance of monetary and fiscal policy. C.  Financial market efficiency  Albania is a small open economy and relatively highly euroized. In general the financial markets are characterized by low trade volumes and interest rate volatility. This situation represents a high concentration in assets and liabilities in the banking system as well as a very limited supply of financial instruments in domestic currency. In this respect, we have been very aggressive to prepare and introduce a new set of rules for operational framework. The new regulation aims to increase the efficiency of the inter-bank borrowing market, it targets thinking on the margin behavior of the banks by reducing the frequency of treasury bills auctions, rearranging required reserves regulation and introducing a prime rate. Our objective is to have this package operative by the beginning of 2008. D.  Financial stability  This process has progressed with the increase of the banking activity. However I have to admit that increase and consolidation of the banking activity is accompanied by a rapid growth of credit to economy.

It was a quest to understand and the role and position in this new market economy; to rediscover the incentives of the private initiative and the risk that embodied in economic decision making. Along this process Albanian society established the foundations of the macroeconomic consolidations that started with the new millennium and accession to EU has scored significant progress. For a long period of time the economy has grown around 6 % percent annually, contributing to an upward trend of GDP per capita reaching around 2.500 euro. Inflation has been quite stable within our target band 2-4 % supported by responsible Monetary and Fiscal policies. Further structural reforms improved the functioning of the market economy. Privatization of big and medium enterprises, the privatization of former public banks, the modernization of legal framework and many other important reforms contributed to such impressive performance of Albanian economy. In the last years I believe the country has made a substantial progress in its way towards European Union. After wasting our chances during ‘90s I believe we are in the right track and  2  BIS Review 119/2007  personally I’m confident that the distance to our final destination, Brussels is getting shorter day after day. The coming years are of a vital importance in adhering to EU as far as Albania is preparing itself to move with its own feet. The current agreement with IMF will finish at the end of 2008.
Above all, these pre-conditions have to be in conformity with the Shariah framework. Whilst it is necessary to have in place the market infrastructure, institutional players and the regulatory, Shariah and legal framework, it is still not sufficient in sustaining the robustness and dynamism of an Islamic financial system. To achieve this, the strong linkages and synergies especially among the components in the financial markets, namely, the money market, foreign exchange market and the capital market, have to be extensively capitalised. The Islamic money and foreign exchange markets are integral to the functioning of the Islamic banking system, firstly, in providing the Islamic financial institutions with the facility for funding and adjusting portfolios over the short-term and thus the necessary liquidity mechanism to promote stability, and secondly, serving as a channel for the transmission of monetary policy. The inter-linkages in the functioning of the Islamic financial markets have brought about a natural environment for innovation of Islamic financial instruments. A broad spectrum of instruments, such as Government papers including bonds and treasury bills, Central Bank notes and Islamic accepted bills, can be structured on a Shariah-compliant basis to meet the needs of these markets. In addition, instruments for a risk mitigating mechanism for hedging or value protection need to be developed. While risk mitigation is desirable in Islamic finance, innovations need to be made for this purpose.

Sabine Lautenschläger: Fostering global growth Speech by Ms Sabine Lautenschläger, Member of the Executive Board of the European Central Bank, at the panel during the G30 International Banking Seminar, Lima, 11 October 2015. *  *  *  I would like to thank Jacob and Jean-Claude for inviting me to participate in this panel. You will not be surprised that I will focus on the growth challenge faced by the euro area countries in my intervention. Let me stress from the outset that I believe that the euro area can make a much stronger contribution to global growth than it has done so far. But for this to happen, we need a stronger reform impetus in many euro area countries. To substantiate this claim, I would like to address two questions: first, where do we stand on growth and reforms in the euro area? And second, which structural reforms are still needed to support stronger and sustainable growth? Where do we stand on growth and reforms in the euro area? Growth has been recovering in the euro area, albeit at a modest pace. Output growth has been gathering pace throughout 2014 and in the first half of 2015 and employment has been increasing. However, developments are still uneven across member countries and it is not clear that the recovery can be sustained in the medium term.
Imagine that the state of California would have had to come up with the TARP money for Wells Fargo instead of the US Treasury. Imagine that the state of New York would have had to provide the guarantees to Citigroup. Think about how the markets, how would the rating agencies have treated these states? And how they would have treated these banks? The lesson for the euro area is clear: federal institutions can prevent local crises from becoming systemic. In Europe, we do not yet have these federal institutions that can act as shock absorbers. So far, responsibility for dealing with bank problems lies exclusively with the individual EU countries. The result is that – to quote an FT editorial – “national taxpayers subsidise banks implicitly in good times, explicitly in bad times, and suicidally in a sovereign debt crisis”. Indeed, the crisis in Ireland has shown that problems in domestic banks can overwhelm the fiscal capacity of national sovereigns. The causality can also be the other way around, as the case of Greece has shown, where fiscal problems have dragged down the banking system. These countries got caught in a vicious fiscal-financial feedback loop, which in the end also drags down the economy, breaks up the internal market, and impairs our monetary policy conduct. Removing this vicious feedback loop is what Banking Union is all about. Creating a banking union will be good for the euro, good for the internal market, and good for the recovery.

For the fiscal union, finding the balance between cooperation and diversity is difficult. National preferences for taxing and spending are stronger, and the case for elevating certain functions to the European level is more complex. And there can be no taxation without representation, meaning any shift to a more European fiscal policy must be accompanied by the same shift towards European democratic control. So to frame the discussion, I think it is helpful to recall the taxonomy of economic policy functions described by Richard Musgrave. He distinguished between stabilisation, allocation  3  Schoenmaker, D., (2011). “The financial trilemma,” Economics Letters, vol. 111, pages 57–59, April. BIS central bankers’ speeches  5  and distribution. Broadly speaking, stabilisation helps smooth the business cycle, allocation ensures that resources are used efficiently and distribution ensures an equitable sharing of income. Stabilisation Concentrating on stabilisation, there is a long-standing debate in Europe about whether monetary union needs a federal budget to support counter-cyclical stabilisation. As you may know, the report by the four Presidents on a genuine EMU suggested that a small fiscal capacity could be used for this purpose. I do not want to comment on the specifics of this proposal, but there are questions about whether national preferences are sufficiently aligned to permit it. For that reason, we have to think carefully about whether it is essential for the euro area. In particular, we have to consider how having a genuine banking union might change the debate.
According to the last two measurements, inflation has edged up again, to 2.2% at the beginning of March. This did not come as a surprise. According to the joint declaration by the Government and the Central Bank of Iceland from March 27, 2001 on an inflation target and a change in the exchange rate policy, the Central Bank, in consultation with Statistics Iceland, was supposed to devise one or more indices for assessing the underlying rate of inflation, which the Bank could take note of in the implementation of monetary policy. Two such core indices have been published since November. Both are compiled on the same basis as the CPI, but Core Index I excludes prices of vegetables, fruit, agricultural products and petrol, and Core Index II excludes prices of public services as well. The components excluded from the two core indices are either fairly volatile or more or less beyond the impact of monetary policy, or they reflect relative price changes that monetary policy should normally not respond to. Over the past 12 months, Core Index I has risen by 2.6%, i.e. marginally more than the inflation target, and Core Index II by 2.3%. I would like to underline that, notwithstanding the publication of core indices, the CPI is still the official reference on which the inflation target is based. For decades, a far too high rate of inflation was one of Iceland’s main economic problems. This had an adverse effect on businesses, making effective planning difficult.

These vacancies won’t be filled instantly—it takes time for employers to find the right workers. And second, a full recovery means a recovery in employment, not just lower unemployment. Employment dynamics are driven by both the unemployment cycle and the labor force participation cycle. Because employed workers are more likely to remain attached to the labor force, these cycles are interrelated, as lower unemployment raises participation by reducing labor force exits. This relationship also means that the participation cycle lags behind the unemployment cycle, which is an important feature to keep in mind in assessing the state of the labor market.1 Even with this in mind, demand for workers and progress on hiring remain strong, and I expect some pandemic-related factors to diminish as progress is made on containing the virus both here and abroad. Therefore, I am confident that we will continue to see meaningful job gains and continued progress toward maximum employment. Inflation and Inflation Expectations The last aspect of the outlook that I’ll speak about is inflation. Core Personal Consumption Expenditures (PCE) inflation, which excludes volatile food and energy prices, has averaged about 2-3/4 percent since the start of the pandemic. This is above the Federal Reserve’s 2 percent longer-run goal. We saw some very high monthly inflation readings in the second quarter of this year, reflecting pandemic-related supply bottlenecks and imbalances, but more recent data have shown that the inflation rate is moderating.