samchain/econo-pairs-v1 huggingface dataset:
We have thrived by being nimble and efficient, and by doing what is in the long-term interest of our people. These attributes have taken us from third world to first in one generation. In the process, we have remade ourselves at least twice. Third World to NIE The first phase of our take-off, from third world to NIE, started at the time of independence. Our success despite great uncertainties and dangers was the result of several paradigm shifts. The first shift was to industrialise our economy. Our entrepot trade had reached its limits, and going forward, the only way to create more jobs was to build a manufacturing sector. We started industrialising even before we joined Malaysia. Indeed, one major reason for Merger was to create a Common Market, so that our factories could sell to all the states of Malaysia. Such an import-substitution strategy was then the conventional wisdom for developing countries. Our factories produced mosquito coils, cosmetics, toys and garments, and we protected locally assembled cars, refrigerators, air-conditioners, and even a sugar factory with tariffs and quotas. But this vision of a Common Market of 10 million people did not materialise. Singapore never succeeded in getting its products into the rest of Malaysia tariff free. For this and other reasons, Singapore separated from Malaysia in 1965. We were now left with a domestic market of less than two million people. An import substitution strategy had become patently unworkable. We made another paradigm shift, to re-orientate our industries towards serving world markets.

The more we develop such a leadership group, the better our chances will be.”  BIS Review 19/2003  5  Collective response Third, while strong and visionary leadership is necessary, it is not enough. To be effective, the leadership must evoke a response, a resonance from the society as a whole. The society must rise to the challenge of changing itself and establishing a new order. There needs to be broad consensus among the population in support of the changes. In the Meiji Restoration, crucial roles were played by the peasant class that formed the armies and the merchant class that financed the military. In 19th century China, the reformers failed because of infighting within a weak leadership, as well as the advanced state of decay of the entire society. But a century later, Deng Xiaoping's reforms took root as the people experienced the benefits of rapid growth and the widespread improvements in living standards. In post-war Britain, the turning point in the public mood began with a sense of humiliation when the Labour Government had to call in the IMF in 1976, after the Exchequer ran out of money. In Singapore, our previous remakings succeeded because we mounted a strong collective response at independence a determination to beat the odds and survive, in 1985 a sense that if we made sacrifices together, we could make our economy competitive again.
The very low inflation is prompting some to argue that policy normalization may have to wait still, but perverse effects need not be underplayed. But it is likely that policy normalization – understood as a return to positive real policy rates, will be quite a time consuming process, particularly in Europe. Major risks persist, or even grow, in the global economy; they are due to interconnectedness and synchronicity of business cycles, the search for yield that has stimulated big bubbles again, a propensity to resort to protectionism measures (which adds to fragmentation tendencies), the accumulation of systemic risks in non-banking markets. When it comes to monetary policy let me mention a few challenges. The models central banks use have baffled in quite a few instances; we still do not have clear answers as to why inflation is persistently so low in most of the Union, in spite of economic recovery. Financial stability concerns are increasingly on our radars. There are other puzzles, like the flattening of the Philips Curve and I would range here the fall of financial intermediation in some Non-member Sates –in Romania and Hungary in particular. This seems to be a clear case of credit-less recovery, but that may also be the outcome of financial integration – for international companies prefer to source credit on external markets (where these may be cheaper). The global financial cycle poses a major challenge.

I should say that we are not oblivious to what it takes for accession to be a success. No matter how much one wishes to put accession on a fast lane, success hinges on having achieved a critical mass of real and structural convergence with the Euro area. The lessons of the Euro area crisis remind us starkly this reality. The more robust the Euro area turns, as a result of institutional and policy reforms, the better for us. When it comes to reforms of the Euro area, I would highlight the respect for rules and their 1/3  BIS central bankers' speeches  enforcement, on one hand, and the introduction of risk-sharing schemes on the other. Among the latter I range a collective deposit insurance scheme (EDIS) which, together with a much stronger Resolution Fund (SRF) would complete the Banking Union, and the introduction of instruments that can help member states deal with asymmetric shocks. A euro area budget does make sense in this respect. Let me make a few remarks on the macroeconomic scene in Europe. The economic recovery of recent years has been heavily dependent on non-standard operations of the main central banks and very low interest rates. There are still large public and private debts, which are especially burdensome in the Euro area – and which complicate the mission of policy normalization, of unwinding special operations of the ECB. Fortunately, some countries in our region (including Romania) enjoy a much better situation in this respect.
However, it is fair to say that financial innovation in the last decade or so contributed in no small part to the breakdown of market discipline. 2  BIS central bankers’ speeches  Coming back to the US, the proliferation of MBS and complex financial derivatives of CDOs had, as we now know, greatly increased the leverage and thus risk of the entire financial system. What was worse was that the structure of these financial products was so complex and so far removed from the underlying assets that it was virtually impossible for anyone, including the rating agencies, to fully understand the risks involved and to price such risks appropriately. We now know that there were thousands and thousands of CDOs sold before the Global Financial Crisis that were given Triple-A ratings simply because seriously flawed assumptions and models were used in assessing the risk of defaults. As I mentioned earlier, these financial derivatives had helped amplify the shocks and transmit these shocks across the global financial system during the latest Global Financial Crisis. An era of awakening? While we have seen many instances where market discipline has broken down, it is hard to believe that market discipline will break down permanently. As Europe has recently found out, the market can suddenly awaken and begin to doubt the fiscal sustainability of some members of the Euro Zone. This belated awakening has so far created considerable dislocation to the banking system and capital markets.

Distinguished Ladies and Gentlemen, allow me to conclude my remarks by reminding commercial banks that they must become proactive in identifying new markets and developing appropriate new products and services, especially for the excluded population if they have to remain competitive and relevant in our fast growing banking sector. As has been echoed at various meetings, the Bank of Zambia has financial inclusion as one of its strategic objectives and initiatives by market players to make this vision a reality are always highly commended. The Bank of Zambia will play its own role and make every effort to create an environment that supports innovation and market developments by financial institutions. Managing Director, distinguished Ladies and Gentlemen, It is therefore, the Bank of Zambia’s expectation that Zanaco and other banks will take advantage of opportunities arising from the general positive economic outlook on account of improving macroeconomic conditions and improvements so far recorded in various sectors of the economy and foster greater developments in the financial sector. Finally, let me extend my gratitude to the Board of Directors and the Managing Director of Zanaco inviting me on this occasion to mark the official launch the Ndola west Branch. It now my honour and privilege to declare the Ndola west Branch officially opened. I thank you. 2  BIS central bankers’ speeches
That is also the way it is with expectations. If we become overly concerned with past events, we may miss signals about what lies ahead. So the question we must ask is: is household debt in Norway based on unrealistic expectations? Will debt be reduced? How did we get here? Debt takes various forms. An important distinction is made between public and private debt. Norway’s public debt is low at present and its assets in the Government Pension Fund Global (GPFG) are substantial. The return on the Fund is a source of large annual government 1/7  BIS central bankers' speeches  revenues. This year, transfers from the Fund account for one sixth of central government spending. On the other hand, private debt is high, both from a historical perspective and relative to other countries. Chart 1: Record-high private debt This chart shows private debt in Norway relative to GDP all the way back to 1830, a period of nearly two centuries. We see that debt has multiplied. The average debt of households is more than twice their disposable income. This debt comprises mostly residential mortgages. For those under age 40, average debt is well over three times their income. How did we get here? Over the past 150 years, something has happened to the Norwegian national character. In Ibsen’s A Doll’s House, Helmer says: “There can be no freedom or beauty about a home life that depends on borrowing and debt.” Helmer was probably harsh, even for his time.

When borrowers discover that prospects are not as bright as before, they will become more cautious. So, if anything, Norwegian household debt will be reduced, perhaps not in absolute terms, but at least relative to income. The higher the level of initial debt, the greater the risk to the Norwegian economy. A sudden debt correction would then be more likely, potentially resulting in a sharp fall in GDP. When economic conditions deteriorate, good credit becomes bad debt. Households will then deleverage and cut back on consumption, adversely affecting businesses. It will then take time for growth to recover, as we are witnessing in many European countries that continue to struggle following the financial crisis. Norway has a well-equipped toolkit for counteracting crises. There is room for manoeuvre in monetary and fiscal policy. Norwegian authorities have also introduced a number of measures to reduce the vulnerability of the economy to shocks, especially in the wake of the financial crisis in 2008 and 2009. Banks are required to hold more equity and more liquid assets, which strengthens banks’ resilience. Borrowers are also regulated. The regulation on requirements for new residential mortgage loans was first introduced in 2015. The regulation limits the level of debt a household can take on, reducing the number of vulnerable households. Recently, limitations on consumer credit have also been introduced. Together with room for manoeuvre in fiscal policy and a gradual normalisation of the policy rate, we may believe that these measures will be sufficient to avoid a new crisis.
It can discourage the central bank from expressing views in public but gain little in terms of credibility from doing so; it can to varying degrees encourage greater independence on the basis that this would strengthen public confidence but accepting that it could involve a greater degree of constraint on its policies; or, where there exists a sufficient consensus on the particular role of monetary and financial policy, it can devolve operational responsibilities to the central bank, holding it publicly accountable for the way in which it exercises those responsibilities but accepting the limitation that such arrangements place on the government’s own operational discretion. There is no single model to fit all situations. The appropriate arrangements for a particular country at any particular time depend upon the economic and financial environment and upon political perceptions relating to the approach to monetary and financial policy. I believe that we are now well served in the case of the UK by the present arrangements involving operational independence, based upon the principles of clearly defined responsibilities, transparency and accountability, which I have described. But I am very conscious that, whatever the formal arrangements applying to the central bank, the political and public confidence on which our position depends is something that we, all of us, need continuously to earn through personal and professional integrity, objectivity and competence. It is in the end, as I say, up to us. BIS Review 66/2000  6

This was not the case in Sweden. As there were expectations of continued high inflation and of the Swedish krona being devalued, in other words of the target for the exchange rate being abandoned sooner or later, the wage inflation trend in Sweden was stronger than it was abroad. As the exchange rate was fixed, the competitiveness of Swedish companies weakened and a cost crisis arose. To rectify this, no other solution than to devalue the krona was thought to be available, which meant that the expectations of the krona’s devaluation were met. This in turn meant that the inflation trend could continue, competitiveness gradually weakened again, the exchange rate was once more adjusted downwards, and so on. What is normally referred to as “the nominal anchor” – the benchmark for inflation expectations and thus for price-setting and wage formation – did not function as intended. It was far from obvious that inflation targeting, introduced in 1993, would succeed in achieving what the fixed exchange-rate policy had failed to – to re-establish the anchor for price-setting and wage formation. Today, we know that it did succeed and furthermore did so relatively quickly. If I was to pick out the most important contribution made by inflation targeting, it would be precisely this – providing a nominal anchor for the economy.
Nevertheless, there still remain a number of challenges for banks and financial supervisory authorities with regard to internal models. For instance, the calculation of a bank's risk-weighted assets may mean that several thousand parameters must be calculated. Therefore, it is almost unnecessary to point out that the complexity of the calculations of the banks’ capital requirement can be considerable. It is then natural that some form of safety net is needed, to ensure the banks’ risk weights do not fall too low. ...and a floor for risk-weighted assets will be introduced The Basel Committee has therefore discussed introducing a new floor for riskweighted assets that prevents them from falling too low. The Basel II Accord contained this type of floor, but it has been implemented in different ways in different countries and now needs to be revised. The new floor will in practice mean that no bank is allowed to have risk-weighted assets below a percentage of what they would have been if the Basel Committee's standardised methods had been used. Within the scope of these standardised methods, the banks are not given the opportunity to use internal models to determine risk weights. These standardised methods are currently used by smaller banks that do not use internal models. There are several other reasons for this proposal as well. In addition to the fact that a floor would contribute to increased transparency it will make it easier to compare banks’ capital levels over time. This will enhance confidence in bank’s capital ratios.

4  See the BIS publication “Consultative Document -Reducing variation in credit risk-weighted assets – constraints on the use of internal model approaches”, http://www.bis.org/bcbs/publ/d362.pdf  9 [12]  Time to start a review of Sweden's special national requirements Some of the special Swedish requirements have arisen over the years following the financial crisis, as Finansinspektionen and other Swedish authorities have assessed that Swedish banks need more capital than the current minimum requirement supplies. These special Swedish requirements are thus not the result of international agreements. It is therefore reasonable that we should review our current special national requirements when Basel III will be introduced in full in Sweden, especially in the perspective that Basel III will imply higher minimum requirements of the major Swedish banks than before. Although no decision has yet been made on when Basel III shall be fully implemented in Sweden, my assessment is that we will have plenty of time to review our special national requirements and assess what level they should be at when Basel III is introduced in Sweden. One conclusion of this analysis may be that today’s CET 1 capital requirement of 18 per cent of risk-weighted assets for the major Swedish banks in total needs to be changed in future. Under these circumstances it is too early to make any precise analysis of how, for instance, Swedish GDP will develop or how borrowers’ interest rates will be affected by the coming changes in the regulations.
Restoring market  BIS central bankers’ speeches  1  confidence, in turn, requires achieving fiscal sustainability while spurring economic growth. Some have described the task as akin to redesigning an aircraft in mid-flight amidst severe turbulence! 7. Nonetheless, important progress has been achieved and the situation today is visibly better than it was even six months ago. •  The European Central Bank’s Outright Monetary Transactions programme has materially reduced the tail risk of a disorderly breakup of the monetary union. •  Sovereign bond yields in Italy and Spain have come down, on average, some 200 basis points from their peak levels in the middle of last year. •  Bank deposits in the peripheral countries of Greece, Ireland, Portugal and Spain have shown signs of stabilisation. 8. But Europe remains mired in recession. There is still no compelling growth agenda. Domestic demand is weak amidst fiscal consolidation. Banks are not lending amidst an uncertain investment environment. And several structural issues remain unresolved. It will not take much to reignite financial market stresses. In short, the crisis in the Eurozone is not over. Japan: dealing with deflation, demographics, and a natural disaster 9. Japan has a different set of problems. Its economy has recovered less than two-thirds of the output lost during the crisis. It has fallen prey to weak external demand and is still reeling from the aftershocks of a major natural disaster. 10. Japan is caught in the pincer grip of prolonged deflation and unfavourable demographics.

But while we are at the bottom of the business cycle, it is appropriate that real interest rates should be well below long-term levels. Nonetheless, it is clear that, as interest rates fall, there will be less scope for further rate cuts. At present, however, I think we have not reached the bottom of the interest rate cycle. Let us turn now to the capital controls. When we begin to lift controls on capital outflows, sometime after March 2011, the exchange rate will lose the support the controls have provided. If all of the capital controls were lifted today, the exchange rate would probably fall sharply. But no such plan is in the offing. On the contrary: work will be done to create the conditions for removal of the controls without necessarily causing a marked drop in the exchange rate. The liberalisation strategy publicised in August 2009 specified three conditions for removal of the controls: 1) macroeconomic stability, including credible measures to ensure fiscal sustainability and declining inflation; 2) a sound financial system; 3) sufficient foreign exchange reserves. The financial system soundness requirement has not yet been met, but the other two are relatively well in place. But why were these conditions chosen? They were chosen because they are essential if risk premia on Icelandic financial assets are to fall to any significant degree.
It is an institution, it is said, which has lost its way. What is the truth of these allegations? Certainly, the Fund’s remit is unclear. Its lending activities have waned, and its role in the international monetary system is obscure. The tasks given to it by the conferences at Bretton Woods in 1944 and Savannah in 1946 need to be adapted to the financial circumstances of the 21st century. That was attempted in 1976 with the Second Amendment to the Fund Articles. But 30 years later it is evident that there is still more to do. We have an opportunity to return to first principles and ask some basic questions. Do we need an IMF? Is there a role for a multilateral institution in the management of the international monetary system? If so, what is it? Not before time are those questions now being asked in the corridors, if not the main floor, of international meetings which rotate endlessly around the world from one windowless room to another. Belatedly, the G-7 has started to discuss the future role of the Fund, and the IMF has initiated its own strategic review. Last October, the ministers and governors of the G-20 countries said that “more work is needed to develop a ‘roadmap’ for the future strategic reform of the Bretton Woods institutions”. And speeches by several G-7 ministers and governors, and as recently as ten days ago from the Managing Director himself, show that the debate on the role of the IMF is live.

Relative to its 5.6 percent long-run average, net investment as a percent of GDP fell by twice as far as it had in any prior postwar recession. More to the point, the recovery in investment has been exceptionally anemic. Today, four full years after the trough of the recession in second quarter 2009, net investment as a percent of GDP is still only 3.2 percent – a level typical of past recession lows. Net investment as a percent of GDP was last at or above its 5.6 percent long-run mean 6½ years ago. Small wonder then that nonfarm payroll employment has been slow to recover too. Through August we had restored less than 80 percent of the 8.7 million jobs lost during the Great Recession. Less well known is the fact that real GDP per capita only recovered its prerecession peak this past summer.5 That’s 5½ years to make up the ground lost during the recession. Previous post-WWII recoveries never required more than nine quarters maximum. A Dallas Fed analysis suggests that the recent financial crisis and its aftermath put the U.S.  4  Net investment includes additions to fixed capital net of depreciation. 5  Real GDP per capita was $ in 2009 dollars in second quarter 2013 versus $ in fourth quarter 2007. BIS central bankers’ speeches  3  back by more than an entire year’s worth of output, an equivalent of more than $ per American household.6 Baker-Bloom-Davis and better comprehending uncertainty And what of uncertainty?