samchain/econo-pairs-v1 huggingface dataset:
The significance of IT is visible in two ways; in production and use. If we look at the production of IT, we can observe that the telecom industry's share of total industry is relatively large in Sweden compared with many other countries. This means that the rapid development in productivity that has occurred in the telecom sector has contributed to pushing up productivity growth in the business sector as a whole. If we instead look at use of IT, Sweden has a relatively large share of IT capital in the total capital stock, compared with other countries. Sweden is in this respect more like the United States than continental Europe. The use of IT means that one can simplify and automate the work so that those who work can carry out more tasks in a shorter time, that is, productivity increases. The financial sector is very skilled at making use of IT to increase productivity. Its customers currently carry out many simple tasks from home in front of their computers instead of going to a bank office. During the second half of the 1990s, major investments were made in IT capital. These investments accounted for approximately half of the growth in productivity during the period 1996-2000 (see Figure 4). The investment upturn was broken in connection with the IT bubble bursting at the beginning of the 2000s. After that the contribution from IT capital to productivity growth has declined substantially.

The cost to income ratio of the Cyprus Banking Sector, which amounts to 76 percent as at June 2022, is significantly higher than the respective EU average of 63 percent. Investment in technology can become the catalyst in the effort to strengthen efficiency and build sustained profitability, which will ultimately bridge the gap with the rest of the EU area banks. The second challenge relates to the risks of climate change. The ongoing effort to reduce the dependence on Russian energy may increase the transition risks and as such banks must enhance and adapt their climate risk mitigation strategies. The fact that certain banks have started making tangible steps in this regard is a positive development, but they are still early on the learning curve and behind their European peers. They must act faster and more decisively to meet our expectations of incorporating climate-related risks into their overall risk management frameworks, which will ultimately also target their clientele and the submission of detailed climate related information in order to feed the banks' risk management processes. Professional accountants also have an important role to play in this overall transformation of the economy by providing relevant advice to their customers to set up the appropriate management information systems that could enhance the relevant disclosures. And this takes me to the third challenge which is the overall interaction of credit institutions with their clientele. It is in the interest of both clients and banks to cultivate a relationship of mutual respect and trust.
Chart 18. Average return in the US Rolling 10-year periods. Per cent 25  25 20  Equities  20  15  15  10  10  5  5  0  0  Fixed income instruments  -5  -5 1935  1945  1955  1965  1975  1985  1995  2005  Sources: Ibbotson Associates and Datastream  Since short-term fluctuations in equity prices are difficult to predict, it may be a sound strategy to keep the share of equities constant over time. This means buying a relatively large volume of equities when prices are low, and buying a smaller volume - or selling - when prices are high. This is the strategy applied by the Petroleum Fund. Optimism and pessimism, confidence and doubt influence equity prices. In periods when markets are characterised by optimism and confidence in the future, equity prices tend to be high. When markets are marked by pessimism and fear, prices tend to be low. The actual income flow from equities - the dividend - depends more on developments in the global economy over time. This is a far more stable variable than equity prices. Investing a large share of the capital in bonds diversifies risk even further. We are nevertheless left with the question of whether we are now entering a long period of very low or negative returns on investment in global business.

The level of investment in the US was high during the expansion, which may have resulted in excess capacity in the business sector. The fall in equity prices is having a negative effect on household wealth. In addition, US household saving is low and low interest rates have induced households to accumulate debt. The fall in the value of the dollar may make a contribution, but growth in the business sector is still not self-driven and the depreciation of the dollar is reducing other countries’ exports. The impetus generated by the US economy may be weak for several years ahead. Nor is the rest of the world showing clear signs of an imminent recovery. Japan is dragging down growth in the world economy. The large European economies, in particular Germany, are stagnating. Unemployment is high, but the growth potential appears to be low. Interest rates in the US and Japan have been reduced to such a low level that there is little room for further stimulus. The monetary policy authorities could use more unorthodox measures. For example, the central bank could purchase massive volumes of long-term bonds - as seen in Japan - or other assets. It is uncertain how effective such measures are. Traditional fiscal policy instruments may also prove to be ineffective when budget deficits are rising sharply. This may fuel expectations of future fiscal retrenchment and tax increases. If the world economy continues to stagnate over a longer period, the effects will also spill over to the Norwegian economy.
Overall, it is surprising how little commentary there has been from the perspective of securities market regulators. An exception is Luigi Zingales, “The Future of Securities Regulation”, Chicago Booth School of Business Working Paper No. 08–27. While I do not necessarily support all of his prescriptions, the paper is noteworthy for approaching the reform agenda from the perspective of securities markets and regulation rather than solely that of bank soundness and prudential supervision. 12  See Gorton, op cit. 13  See Bank for International Settlements (1986), “Recent innovations in international banking”, prepared by a Study Group established by the Central Banks of the Group of Ten Countries, known as “the Cross Report”. 14  For examples of market intelligence on innovations at the beginning of the latest cycle see, Rule D (2001), “Risk transfer between banks, insurance companies and capital markets: An overview”, Bank of England Financial Stability Review, December 2001. BIS Review 6/2010  7  “shadowing banking” has become significant to sustaining stability in the provision of essential financial services to the broader economy; when it is founded on liquidity lines, incomplete risk transfer or other kinds of support from the core commercial banking system; and when it involves the provision of the liquidity or monetary functions of banking as well as credit intermediation. Running leverage and liquidity risk is not sufficient to make a firm or fund a de facto bank. I do not think AIG’s securities lending/credit spread business was really a bank. More like a hedge fund.

To go beyond this first step, we need to build a regulatory framework adapted to the specificities of DeFi. In my view, when designing this framework we should not try to replicate existing financial regulations at all costs. On the contrary, it could be advantageous to draw inspiration from regulations in other sectors. For example, one could imagine setting rules on "products" even when their "producer" or "issuer" is not clearly identified. In addition, we have to recognise the technical specificities of decentralised finance and pay a particular attention to the three layers (blockchains, applications and access gates) that schematically constitute DeFi. First, we should evaluate the resilience of the blockchain infrastructure supporting DeFi. That leads to an open question: can public blockchains provide the right level of security, and if so, how? Second, we need to address the security of the applications, on which DeFi "services" are provided. A logical avenue for regulation would be to define the perimeter of protocols that are deemed "secure", i.e. whose computer code has been certified. Of course, this leads to many subsequent operational issues that deserve careful analysis. 2/4  BIS - Central bankers' speeches  Third, we should regulate access to DeFi, in order to protect users, and in particular individual customers. Intermediaries – or "access points", whatever their form – who provide access to DeFi should comply with rules of good conduct, and be subject to a duty of care and advice as well as KYC requirements, when necessary.
The euro is relying now on a more than 20-year old solid track record of stability: it is backed by a soft power based on the respect of international rules, multilateralism and openness. The euro is also at the centre of broad international trade links. It is at least a credible complement to the dollar as a safe asset. II. Promoting the international role of the euro as a pillar of monetary cooperation From the inception of the euro and during the last two decades, the Eurosystem adopted a neutral stance with regard to the development of the international role of the euro. It does not belong to the Treaty’s objectives: the euro was created for internal purposes, to avoid exchange fluctuations within Europe and accelerate economic convergence between Member States, not primarily to act as an international currency. Economic developments since 1999 have alleviated concerns voiced at that time about a potential loss of monetary policy control in case of a swift internationalization of the euro. A stronger international role of the euro would now be associated with more monetary policy autonomy and reduced impacts of exchange rate shocks on inflation. After a decade in existence, by the time of the GFC, the euro had become the second most used currency globally. But since then its growth has stalled. Today it still accounts  Page 5 sur 7 for roughly 20% of global currency holdings in central banks as well as just short of 20% of global debt and global loans.

In this context, the idea of a global currency did not prosper in the academic debates – and even less so in policy discussions. One recent exception stands out, to which I would like to pay a special tribute. In 2010, Michel Camdessus launched the Palais Royal initiative. This initiative sheds light on the shortcomings of the International Financial System, in particular its global governance and an overreliance on a single central currency. The initiative suggested a greater role for SDRs and enhanced cooperation between the World Bank, the IMF and the G20. However, other major projects have in parallel been assigned higher priority for instance the successful creation and development of the euro - or have been dictated by necessity - for instance the strengthening of the global financial safety net (GFSN) induced by the great financial crisis and then the Covid crisis. That said, there have been significant progress such as the increase of IMF resources, the two special drawing rights (SDR) allocations (including the last one of 650 billion USD in 2021) and the creation of the Resilience and Sustainability Trust (RST) on the 1st of May by the IMF, which will help deliver the G20 commitment to rechannelling at least 100 billion USD of this allocation to the countries in need. 2. The dangers of a fragmented financial system But there are dangers ahead. We have to avoid shifting from a dollar-dominated system to a confrontational non-system with, for instance, a dollar world opposed to a renminbi world.
Unfortunately, Member State's implementation record of Internal Market legislation is worsening and the number of Internal Market infringements remains stubbornly high in some European countries. Let me also briefly mention labour mobility. Labour mobility is an essential element of the Internal Market and an important factor of adjustment mechanism in a context of monetary union. Evidence however suggests that, overall, cross-border labour mobility is still low in the euro area. And we still have formal barriers to labour mobility across the euro area. This is in clear contrast to the situation in the United States 10 . All in all, increasing product market competition and labour mobility – at the EU and national level, would enable more efficient production structures associated with a more competitive price setting. Following the principle of “an open market economy with free competition” is pivotal to fostering long-term economic growth. Let me now focus more specifically on the financial sectors. Financial integration is indeed of key importance for the ECB, given the relevance for the conduct of the single monetary policy. The process of European financial integration is gradually taking place and considerable progress has been made for instance in capital markets and wholesale banking. However, the retail banking sector appears not yet to have reached its potential, and competition seems insufficient in this area leaving European consumers unable to take full advantage of the benefits of the EMU and the Single Market 11 .

Jean-Claude Trichet: How can we increase growth potential in Europe? Speech by Jean-Claude Trichet, President of the European Central Bank, at the Suomi Areena 2007, Pori, Finland, 20 July 2007. *  *  *  Dear Governor Liikanen, I would first like to thank you very warmly for inviting me on the occasion of the “Suomi Areena 2007” event. It is a pleasure and a honour to be here today and to share with you my views on “How can we increase growth potential in Europe”. In light of the partly disappointing euro area economic performance in the past, it is a major policy issue. By contrast, the impressive performance of the Finnish economy, with output and productivity growth over the second half of the 1990s among the highest in the European countries, [Real GDP and hourly labour productivity grew on average by 3.8% and 2.7% respectively between 1996 and 2006], offers a good illustration of what could be done to increase growth potential in Europe. The transformation of the Finnish economy over the last decades represents one of the examples of the “knowledge based-economy” taking hold in Europe. Against this background, I will first review the past economic growth performance of the euro area in comparison to the US and focus on some of the underlying factors of potential output growth. Then I will elaborate on the reforms which I consider essential to increase the potential growth rate of Europe.
Microprudential policy, which addresses risks in individual banks, interacts with macroprudential policy, which aims to address risks in the whole system. In both micro- and macroprudential policy, the national and European levels must work in tandem. And in the banking union, they do. While it is the national authorities that take decisions in the first place, it is the ECB that assesses these decisions. And if it sees a need to take stronger measures, it can do so; it can “top up”, as we say. For this to happen, the ECB’s Governing Council would act on a proposal from the Supervisory Board. So, the Supervisory Board is again strongly involved. In addition, the Supervisory Board and the Governing Council meet regularly to discuss macroprudential issues. Again, everything is done to avoid a situation where a Member State disagrees with a decision taken by the Governing Council. Now, in order to work together, we must apply common standards and approaches. As I have already said, I see such harmonisation as a major benefit of the banking union. It helps to level 5/7  BIS central bankers' speeches  the playing field, and it ensures strong and consistent supervision. But I know that some see this from a different angle. They feel that harmonisation is more of a threat than a benefit. They fear that it will lead to a uniform banking sector, which leaves no room for diversity – either for banks, or in terms of supervision and regulation.

Thus, the current size and composition of the Federal Reserve’s balance sheet actually create strong incentives to adjust policy in a timely way. A far more important threat to central bank independence than the use of unconventional monetary policy is whether the fiscal authorities act in a manner consistent with the central bank’s objectives. As recent history has shown, central banks may not be able to achieve their objectives when an inconsistent fiscal regime is in place. That is, monetary and fiscal authorities need to share the same objectives. When the objectives differ, fiscal dominance  BIS central bankers’ speeches  3  can become a major problem for the central bank. For example, if the budget trajectory were clearly unsustainable, then monetary policy may no longer be able to credibly act in a way that keeps inflation expectations in check. But I don’t think the issue of fiscal dominance is linked back to whether the central bank pursues unconventional monetary policies or not. At the end of the day, I think that the best way to maintain independence is for central bankers to use all their available monetary policy tools, including unconventional monetary policy tools when needed, to best achieve their objectives. The historical record is clear: Central bank independence tends to lead to better monetary policy outcomes. But, the causality also runs in reverse: Good monetary policy outcomes help ensure monetary policy independence. Thank you for your attention. 4  BIS central bankers’ speeches
In particular, the Fed communicated clearly from the very beginning that it would meet the increased requirements for dollar liquidity at any time. BIS Review 101/2001  1  Against this background it is not surprising that the terrorist attacks on the United States failed to seriously impair the functioning capacity of the financial markets either in Switzerland or in the rest of Europe. Even though the global financial system had been hit in its very core, the extensive transmission of problems that was theoretically possible did not take place. This is not least due to the fact that the institutions concerned on both sides of the Atlantic comported themselves in an appropriate manner, as did the central banks. The biggest immediate problem for some Swiss banks is likely to have been the inability to act of a major correspondence bank in New York that was hit by a simultaneous power failure in the main supply and the backup system. In such cases, liquidity requirements soar. The Fed's generous supply of USD liquidity to the market also benefited Swiss banks. We did not, however, observe a similarly higher demand for Swiss franc liquidity. Nevertheless, the Swiss National Bank was, of course, present in the CHF money market. (Cf. the remarks of Bruno Gehrig.) For the time being, I would sum up the situation as follows: 1. The terror attacks of 11 September 2001 did not succeed in destabilising either the US part of the international financial system or those of the rest of the world. 2.

The Eurosystem has decided to take firm action when it considers that these interest rates do not reflect a genuine credit risk differential, but rather unfounded fears about the reversibility of the euro. Because at that point, the effectiveness of the single monetary policy is clearly jeopardised: the key interest rates that we set no longer feed through to the real economy in the same way in all countries via the bank lending channel – which is a crucial channel in the euro area given the predominance of intermediated financing. In order to fulfil our mandate of maintaining price stability, our monetary policy impulses need to be transmitted homogeneously across the whole area. This is why we decided to create a new instrument: Outright Monetary Transactions. The idea is to have a credible backstop to counter unjustified increases in sovereign yields. This backstop must naturally be accompanied by strict conditionality to guarantee that the country concerned makes effective progress towards a more robust economic situation. By means of this new tool, as with all of the other tools that we have deployed since the start of the crisis – in particular the measures to support bank liquidity – the Eurosystem is endeavouring to relieve the pressure from the markets which may undermine the ability of countries to implement the reforms embarked on, and which may eventually jeopardise price stability.
In the interest of long-term economic stability, fiscal policy, monetary policy and the wage formation process must complement each other. A shared understanding of how these components interact is very important. Monetary policy’s most important contribution to economic stability is to maintain monetary value through low and stable inflation. Both too high and too low inflation can involve costs to society, with arbitrary wealth redistribution, underinvestment and scarce resources that may be misallocated or left idle. This is usually referred to as providing the economy with a nominal anchor. When households and enterprises can base their economic decisions on low and stable inflation, this provides an important foundation for higher activity and welfare over time. As long as there is confidence that inflation will remain low and stable, monetary policy can contribute to smoothing fluctuations in output and employment. When the economy is exposed to shocks, such as a financial crisis or a fall in oil prices, monetary policy can respond rapidly. Sufficiently flexible inflation targeting could help ensure that lower employment levels do not persist over the long term following a downturn. This can reduce the risk of unemployment becoming entrenched at a high level. The probability of a pronounced downturn in the economy has been shown to increase after periods of rapid asset price inflation and debt growth. Monetary policy can also to some extent contribute to high and stable output and employment by giving weight to counteracting the buildup of financial imbalances. However, monetary policy must not be overburdened.

The outlook suggests that it will soon be appropriate to raise the key policy rate – and this is a good sign. Thank you for your attention. 4/4  BIS central bankers' speeches