samchain/econo-pairs-v1 huggingface dataset:
Growth forecasts have been revised downwards as a result of the interest rate increase in July. GDP growth will pick up, but will remain below the growth potential next year. The internationally exposed sectors of the economy are moving on a different path from some sheltered industries. Whereas private consumption is buoying demand growth, scaling back is expected in the manufacturing industry. Frictional unemployment is expected to rise. High real wage growth is resulting in divergent developments between private and public consumption. A large share of the growth in public spending will go to covering higher labour costs in the central and local government sector. As a result there will be little scope for increased activity in the public sector, and instead high growth in private consumption. A time horizon of two years for interest rate setting allows monetary policy to contribute to stabilising production. This horizon prevents monetary policy in itself from causing unnecessary fluctuations in the economy. As an alternative, we could have sought to achieve the inflation target of 2½ per cent using a time horizon of six months to one year. We would then have had to reduce the interest rate sharply this summer. This would have amplified the pressures in the Norwegian economy that are so clearly reflected in wage developments and household demand for loans. In all likelihood, this would have required marked interest rate increases one to one and a half years ahead.

This labour has to be recruited from the exposed sector, or through the natural increase in the labour force finding its way to the sheltered sector. Over time, the size of the internationally exposed sector will be affected by the portion of the petroleum revenues that is absorbed into the Norwegian economy. The size of the internationally exposed sector is independent of monetary policy. An appreciation of the krone may, nevertheless, affect the speed at which changes occur in the business and industry. To maintain balance in the Norwegian economy, the phasing in of petroleum revenues must be countered by a monetary policy stance that is tighter than it would otherwise have been. This may be accomplished by keeping interest rates higher than they would otherwise have been, or by an appreciation of the krone, or both. A clear monetary policy target is a necessary complement to the fiscal guideline with a view to ensuring reasonable macroeconomic stability. Monetary policy is oriented towards low and stable inflation. The inflation target is set at 2½ per cent. BIS Review 66/2002  1  If evidence suggests that inflation will be higher than 2½ per cent with unchanged interest rates, the interest rate will be increased. If it appears that inflation will be lower than 2½ per cent with unchanged interest rates, the interest rate will be reduced. Inflation in Norway is determined by both domestic and international inflationary impulses. Domestic inflationary impulses are influenced by the state of the Norwegian economy.
Also within the framework of inflation targeting, the manner in which monetary policy has been conducted has seen some development over the years as experience and knowledge have increased. For quite a long period of time, monetary policy in Sweden took guidance from a rule reading approximately as follows: “If the forecast for inflation two years ahead exceeds the inflation target – raise the repo rate. If the forecast falls below the target – decrease the repo rate.” (Figure 1). Figure 1 A simple rule of action  Inflation  Repo rate  2  r 2 yrs  This simple rule had a number of advantages, above all in the communication of monetary policy decisions. For example, it clearly indicated that inflation was the overriding goal and that monetary policy had to be forward-looking. These were important points to make when the inflation-targeting regime was new. However, in many ways, this presented an excessively simplified view of monetary policy. One weakness was that the forecasts for inflation and the other variables were based on the assumption that the repo rate would be held unchanged for the entire forecast period. This assumption was often quite unrealistic, for example during a strong economic upturn with rising inflation, when an increase in the repo rate was widely expected. Consequently, it could be difficult to reconcile this assumption of an unchanged repo rate with credible and consistent forecasts. 2  1  Roger, Scott, “Inflation Targeting Turns 20”, Finance & Development, March 2010, International Monetary Fund.

In most areas, inflation has fallen significantly and has been more stable than previously. The real economy also seemed to be developing with more stability, which was probably partly due to the fact that the policy was being conducted in a better reasoned manner than previously. There may be those who believed that most problems had been solved, and that the improved stability of the macroeconomy was here to stay. But the Great Moderation would turn out to be a deceptive calm. But an improved monetary policy was not enough The recent period has seen frequent discussion of the financial crisis and its causes, to put it mildly. Consequently, I do not intend to go into any detailed description of the development of the crisis, but will remain on a relatively intuitive level. The origin of the financial crisis lay in a number of interacting macroeconomic and microeconomic factors. However, the core of the crisis was that the banks and other participants took on too much debt in relation to the risks they were taking. Shortcomings in the regulatory framework, combined with a lack of understanding of new complex financial instruments, contributed towards the altogether too low pricing of risk by the market. Regulatory frameworks and supervision also failed to ensure that the banks had enough high-quality capital to maintain confidence when the economy took a downward turn and inflated asset values fell.
It is also important that economic policy is focused on finding ways to reduce the distortional effects of the tax and benefit system, not least as regards people’s willingness to work and the motivation of entrepreneurs to start up new businesses within all Swedish industries. It is mainly an increase in productivity that lays the foundations for long-term growth. Thus, a fundamental precondition for success is to re-establish a high rate of capital formation and thereby the introduction of new technology. But we do not primarily need to increase saving, since we have a substantial current account surplus. Investment in Sweden could replace capital exports. The evolution of basic industries also demonstrates that investment in R&D has the potential to yield considerable productivity gains and that old industrial sectors do not have to be written off. Therefore, it is important that we do not lose our traditionally successful basic industries and only focus on ICT and biotechnology, not to mention the so-called creative industries. Our basic industries  8  BIS Review 56/2003  have demonstrated their staying power; they have coped with major structural change and are growing steadily. They are also the industries in Swedish business that, compared with their counterparts in other countries, have come furthest in terms of technological level, productivity and innovation. So there is also scope for an expansion of the capital-intensive basic industries. Allow me to conclude by saying that we certainly have the potential to be among the best again.

So, as regards net investment, in other words the contribution to capital formation, this was more than halved as a percentage of GDP in the mid 1970s. This meant two things. First, capital growth per employee, or per hour worked, fell. For a number of years, investment dropped so much that capital per employee in the business sector actually declined. In other words, each employee worked with less capital. In order to illustrate what capital per employee means, we can take an extreme example, namely what a lone worker can accomplish when digging with a spade and iron bar compared with a hydraulic excavator. The latter represents considerably more capital per employee than just digging with a spade, as well as substantially less physical effort for the worker. Therefore, we should expect productivity growth to fall when capital per employee declines. But there is also another indirect effect. With new capital, new technology is introduced into the production process. Investment is the means for putting new technology and research into practical production. Through investment, new methods and new technology are ushered into production processes. For this reason, we should expect less technological progress in production when capital formation falls. An excavator is so much more than a large number of spades; it represents entirely new technology that affects the whole production process. Figure 1 shows that capital formation, net investment as a percentage of GDP, fell in the mid 1970s from around 15 per cent of GDP to about 5 per cent.
Lest you get carried away with excitement, I must note that some of the acceleration in activity will be a function of inventory adjustment, and much will stem from an unwinding of the disruption caused by the Japanese earthquake and tsunami as the Japanese make up for supply interruptions to the auto and other industries faster than many thought possible. Looking beyond 2011, I hope that growth above 3 percent can be sustained, again assuming the fiscal authorities get it right. As Jim has referenced, I may have called the bottom of the recession in the summer of 2009 well before most anybody else did, but I made the point in that Dallas Morning News interview that going forward, we were going to have a slow slog.8 I have said many times since then that, in light of the fact that we were recovering from “post-traumatic shock syndrome” stemming from the Panic of 2008 and 2009, economic recovery would proceed hesitantly, taking two steps forward and one step back until it finds its new legs. We took a step backward in the first half; I expect we will proceed forward, however haltingly, in the second half and into 2012. 6  Eminent Economists: Their Life Philosophies, ed. Michael Szenberg, Cambridge, England: Cambridge University Press, 1992. 7  “Consumer and Business Spending to Spur Expanding U.S. Economy,” by Phil Izzo and Justin Lahart, Wall Street Journal, Feb. 14, 2011.

Efforts have now to be pursued as regards the prioritization of these Standards and Codes (the Financial Stability Forum Task Force on Implementation identified 12 of such Codes and Standards out of 65) and the development of incentives to implement them. Is there a better demonstration that we are experiencing globalization than to observe that 65 global workshops including countries in transition and emerging economies have worked out 65 Codes and Standards to be implemented BIS Review 52/2000  2  universally? The commitment of economies to implement Codes and Standards might be reinforced if market participants reflect information on observance of Codes and Standards in differentiated credit ratings. 1.4  Private sector involvement  The main objectives of private sector involvement is to avoid moral hazard and other distortions in the functioning of international financial markets and to facilitate more orderly adjustments in case of crisis. Market participants should be encouraged to assess adequately the risks involved in investment decisions on the basis of a country’s underlying fundamentals, including the soundness of its financial system, rather than on the expectation that official flows will possibly support repayments to them in times of crisis. We have to promote approaches that permit appropriate coordination among creditors, and between creditors and borrowers. Appropriate instruments to reach that goal include collective action clauses, private contingent credit lines, call options on interbank credit lines and the removal of put options from bond contracts.
The prestigious Chartered Banker qualification, for example, aims to provide comprehensive education on banking to support sound judgment and decision-making. The industry should therefore take full advantage of these opportunities to build a solid team of professional bankers that are able to perform effectively in a rapidly evolving landscape. Fundamental role of banks to support inclusive financial participation for all It is important to bear in mind that growth in financial services must also serve to enhance economic opportunity for all. Since the establishment of the Financial Inclusion Framework in 2011, major inroads have been made in widening the accessibility to financial services in Malaysia. Agent banking has been a key strategy to improve access, particularly in the rural areas. 92% of our population has some form of access to financing. Moving forward, expanding public access to financial services will remain important for the remaining 8% of the  BIS central bankers’ speeches  5  unbanked population in Malaysia. There will also be greater emphasis on the quality of services provided. The social impact of greater financial inclusion is significant as it helps improve people’s lives. In this respect, banks have a critical role to play to make it easier for people to save, make payments and obtain affordable loans to improve standards of living and build more resilient communities. It would be a remiss to talk about the future of banking without embracing this very fundamental role of banks.

Jean-Pierre Roth: The financial crisis is receding – what will the future bring? Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Centro di Studi Bancari, Vezia, 15 December 2009. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  After the financial crisis, the global economy will enter a phase of weak economic growth. Unemployment levels in the industrialised countries will be comparatively high. Public finances in these countries have been heavily depleted, both by the crisis and by the needs arising from the ageing of their populations, and will need to be consolidated. In monetary terms, inflation will remain under control, at least in those countries whose central banks enjoy a strong level of independence. Switzerland is comparatively well equipped to meet these challenges. Its public finances are in a healthy state and it is sufficiently open to the world to participate in its most dynamic markets. With its tradition of high quality and cutting-edge technology, Switzerland is well positioned to react to specific market requirements. Moreover, it can draw on considerable financial resources and, thanks to the openness of its labour market, also has easy access to labour resources, without which growth would not be possible.
Final thoughts As is customary in our presentations to the Senate, we have tried to present as clearly and transparently as possible our assessment of the current economic situation and its implications for managing the policy tools entrusted to us. Always keeping a watchful eye on the compliance of the mandates we have been given. The Chilean economy is on a good stand to face the challenges ahead, which certainly does not mean that we feel immune to whatever happens beyond our borders. We have managed economic policies seriously and responsibly in good times, which should allow us to move with relative ease through a not so favorable period. The country’s domestic and external position is strong, our financial system has limited risks, and the monetary policy is in a position that, if necessary, can deal with a different, more complicated phase. In addition, a strong fiscal position with public debt that in net terms is virtually nil, something that not many countries can show. 6  BIS central bankers’ speeches  In the last two months we cut 50 basis points off the MPR, to 4.5 percent. The scenario that today we see as the most likely does not envisages the need for significant additional adjustments to the policy rate. However, in a different scenario where further adjustments are called for, there is the room and the will to carry them out.

By moving the banking industry collectively back to Figure 1 from Figure 2, the “bad state of the world” becomes less likely. In the SCAP, we had to make a number of important decisions. These included:   The appropriate capital target. We focused on the Tier I common ratio because we believed that this was the most credible form of capital. This put much greater emphasis on common equity than previously.   The severity of the stress test. We assumed a stress scenario with an unemployment rate 1.5 percentage points higher than the baseline scenario, and further home price declines of about 29 percent compared with 18 percent in the base case. We were aiming for a stress test scenario that had about a 5 percent to 10 percent probability of being realized.   The capital target at the end of 2010 and the stress test severity were both important in terms of the credibility of the SCAP. Going in, we were worried that with our capital goal, the BHCs’ needs might turn out to be higher than the available  BIS central bankers’ speeches  3  resources from the private sector and the U.S. Treasury. We decided not to compromise the credibility of the stress test to save on needed capital resources.
I applaud the proactive efforts by financial advisers to publish educational and informative pieces on social and mainstream media platforms. And I look forward to the continuation of such efforts and more effective partnership with the MFPC in other FEN initiatives moving forward. We have seen enough misinformation being peddled on social media by self-proclaimed financial gurus, who have irresponsibly advised borrowers that are not facing distress to seek loan 2/3  BIS central bankers' speeches  moratoriums, or to channel the savings from deferred loan repayments into other higher risk investments as a way of making a quick buck. What they fail to mention is that while it helps in easing cash flow problems for those affected, moratoriums do come at the cost of higher overall borrowing costs to the consumers, who may even be faced with the prospect of loan defaults should these short-term investments go sour. With the recent announcement of the enhanced iSinar package, we anticipate that similar unethical advice will surface again to encourage EPF account holders who are not in financial distress to make withdrawals from their Account 1 for reinvestment into far riskier investment assets. In such circumstances, I expect all financial practitioners to serve as a source of sound financial advice to counter such unscrupulous publications and to dissuade your clients from making irrational financial decisions that are not in their best interests.

This may require you to take the higher ground, to set aside the temptation to promote such risky investment or insurance products that can earn you high commissions. While this may dampen your earnings prospects in the short term, you stand to gain the trust, confidence and loyalty of your clients over the long term. I have faith that all of you – who have taken the time to participate in this conference – will rise to this challenge and contribute to the building of a financial intermediation industry that is both profitable and ethical. I began with Shakespeare, now let me end with Confucius, the ancient Chinese philosopher. He once said: “I used to take on trust a man’s deeds, after having listened to his words. Now, having listened to a man’s words, I go on to observe his deeds”. To put this in context, it is not enough for financial institutions and practitioners to publish client charters that claim the customer is king and that their interests will always be prioritised. Given the pace and pervasiveness of social media platforms, if your actions do not match your words, you will soon be called out very publicly by your own dissatisfied customers. On the other hand, if you successfully build a reputation of high professionalism and integrity, this will ensure the longevity and growth of your business and consumer base. 1  The FEN is an inter-agency platform comprising of institutions and agencies committed to improving the financial literacy of Malaysians.
This is the case irrespective of whether we have pan-European banks, or whether discrepancies remain in local retail markets. The case of the United States is illustrative. Even when strong inter-state banking limitations were in place – restricting retail banking activities to small local markets – the US banking system was, nevertheless, commonly viewed as a single system. Illustrative facts The progress made with integration in wholesale activities has been rapid and remarkable. First, a common euro money market has been in place since the early days of the euro. A large number of financial products can be traded easily with minimal price distortions, small enough to prevent arbitrage across countries. Likewise, data on cross-border trade flows provide a strong indication of market unification. In the case of the predominantly used unsecured interbank contracts, the share of counterparties from other euro area countries has more than doubled after the introduction of the euro. In addition, a large proportion of the activity in euro is conducted with counterparties outside the euro area, especially in London. The share of cross-border transactions is somewhat lower in the case of repo transactions, because of remaining legal and tax barriers and settlement difficulties. All in all, less  BIS Review 91/2001  1  than 40% of all interbank market activity is now conducted with domestic counterparties. In 1998, the share was still over 60%. Second, the wholesale payment infrastructure for the euro area – including TARGET, Euro I and Euro Access Frankfurt – is already very unified.

I am passionately convinced of the need for a public service, and affected by its current crisis: its necessary modernisation, its re-legitimisation, recognition for civil servants, is not incompatible with its capacity to perform and innovate, on the contrary. The transformation of the Banque de France is a modest but real example. The idea is not to reduce public spending overall, but to stabilise it. Bringing spending growth down to 0.5% per year from 2023 onwards would lower the debt ratio to 100% of GDP in ten years, assuming the rate of tax and social security contributions remains constant - I insist on this condition; stabilising our spending in volume terms would enable us to reduce our debt even further, to 90% of GDP. The target to be set is obviously a matter for democratic debate. But the most important thing is that the targets set for this "overall spending limit" actually be respected, which unfortunately our country has never been able to do in the long term. The choice of priorities or savings to be made also legitimately belong to the political debate. I would just like to point out that the key issue of the quality of spending is the blind spot in our budgetary debate, whereas it can guide us here. Economic analysis shows that spending for the future – most investment, education, research – has a much better "multiplier" effect on growth over time than simple current spending.