samchain/econo-pairs-v1 huggingface dataset:
In this regard, the recent decision to scrutinise the operations of the wholesale fruit and vegetable market is most welcome. The relevant authority should also ensure, however, that the lower cost of imports from outside the euro area resulting from the appreciation of the euro is passed on to the consumer. Another factor contributing to domestic cost pressures is the mechanism for the partial indexation of wages, or COLA. It is estimated that the COLA accounted for one-half of the increase in the average wage in 2004-2008. While its impact on public sector pay is limited up to 2010 by the terms of the collective agreement, this is not necessarily the case in the private sector. Any benefit that this mechanism may be perceived to have in terms of stable industrial relations must be weighed against its potential to ratchet price levels upwards, so that the initial improvement in earnings may prove to be short lived. This is because the higher wage costs that employers incur tend to be passed on in higher end prices, with the resulting inflationary impact feeding into the following year’s indexed wage adjustment. Thus, an attempt to restore consumers’ purchasing power feeds a wage-price spiral in which there are no winners, only a possible loss of competitiveness. Experience shows that in a currency union it is only if accompanied by productivity gains that wages can increase without being harmful in the long run.

Furthermore, recent studies  BIS Review 154/2009  3  indicate that wage indexation is a major factor amplifying the transmission of oil shocks to the prices of non-energy products. 2 Considerable welfare gains could be achieved, therefore, if agreement were reached by the social partners to gradually phase out COLA and replace it with a productivity-linked wage mechanism negotiated at enterprise level. … higher productivity … Competitiveness is not only about keeping costs down. It is also about higher productive efficiency and increasing the value added content of exports. Encouraging progress in this direction has been made, especially since Malta joined the EU. One need only mention the expanding pharmaceuticals and aircraft maintenance sectors, as well as the steadily increasing surplus in the services component of the current account, which has remained quite resilient during the recent turmoil. We cannot, however, rest on our laurels for the record shows that overall labour productivity has declined from more than 90 per cent of the euro area average in 2000 to 79 per cent last year. A key consideration here is the extent to which resources are allocated to capital formation rather than consumed. Between 2000 and 2008 the share of gross fixed capital formation averaged 19 per cent of GDP in Malta, compared with 21 per cent in the euro area. In 2008 the share fell to 15 per cent for Malta. There is clearly scope for improvement.
One possibility is that recent budget cuts may have forced these colleges—which tend to be mid-tier public institutions—to raise tuition and change their admissions policies more than other institutions, such as less budget-constrained elite private institutions. Empirical evidence points to a greater sensitivity to college costs in the higher education decisions of low-income populations. As a result, continued increases in college costs and debt burdens could inhibit higher education’s ability to serve as an important engine of upward income mobility. In my view, these developments are important and deserve increased attention. Thank you for your kind attention. I will now turn it over to Wilbert van der Klaauw, who will give a brief overview of the current state of household debt. 1 See Economic Opportunity and Income Mobility, Remarks at the Association for Neighborhood and Housing  Development Annual Community Development Conference, April 11, 2016. 3/3  BIS central bankers' speeches

The acceleration in exports growth has, to some extent, contributed to higher job creation and increase in wages. This shows that it is important that we have a diversified economy that helps to mitigate external shocks. 19. It is also important that we preserve orderly financial market conditions. This means avoiding large swings in the exchange rate, so as not to disrupt economic activities. This will enable the exchange rate to serve as a shock absorber – not a shock amplifier – to the domestic economy. While Bank Negara does not target any level of exchange rate, we will closely monitor and ensure orderly market conditions. On this, I should highlight that even with heightened volatility in global financial markets, daily onshore FX transaction volume and bond market activity remain healthy. Reforms to deepen the domestic bond market have helped to strengthen the fundamentals of the economy by enabling businesses to meet their funding needs more effectively. 20. While the current depreciation of the ringgit is due to the strength of the US dollar, corporate Malaysia can help in maintaining orderly market conditions by taking actions which do not exacerbate the situation. BNM will ensure that our onshore foreign exchange market remains liquid, so businesses can be assured that all their foreign currency needs can be efficiently fulfilled. So there is no need to hoard or frontload US dollar purchases. Corporates and domestic financial institutions should also be prudent in managing their balance sheets.
In contrast, the debates among the MPC are published in the monthly minutes and are the subject of much commentary in the press. I want, this evening, to pose four questions about the role and record of the MPC. First, why give the power to decide interest rates to a committee rather than an individual? Second, does it matter that the MPC frequently disagrees about its decision? Third, has the Committee communicated clearly the reasons for its decisions? Fourth, does the MPC require reform? Let me try to answer those questions in turn. BIS Review 34/2002  1  1. Why give the power to decide interest rates to a committee? The academic argument for central bank independence is well established, but why delegate monetary policy to a committee rather than an individual? In many other situations where expertise is crucial, groups of experts are often regarded as superior to individuals. So one motive could be that committees make better decisions. The technical nature of the monthly interest rate decision gives a natural division of responsibilities between a democratically elected government that chooses the target and an appointed group of experts who set rates to meet that target. One dissenting voice comes from Sir Alec Issigonis - inventor of the Mini - who once said, ‘A camel is a horse designed by a committee’. Despite this view, there is a wide range of evidence to suggest that in many other real-world scenarios, a committee is often the preferred decision-making body.

First, greater clarity on liabilities should encourage more appropriate matching with assets in a way that was absent in the run-up to the crisis – some assets suit a deposit contract, some do not. Second, resolving failed banks without the use of public money depends on a very strong delineation of bank liabilities to make clear what can be bailed in. This is a key to unlocking the answer to the too big to fail problem. Third, as the Bank of England announced in December, we are now in a position to clarify the expected steady state regime for bank capital and because we can distinguish going concern capital  BIS central bankers’ speeches  3  and thus loss absorbency from resolution or gone concern absorbency, we can put a lower number on the former. Clarity is therefore a good thing when it comes to balance sheets. Put like that, the wonder is that so much was unclear in the previous system. And, finally, the same principle holds for assets under management. Make sure investors know the characteristics of the assets they hold and that they are not promised access to their investment on terms or with a promise (explicit or implicit) that is out of line with what financial markets could deliver. Thank you. 4  BIS central bankers’ speeches
REASONS FOR HIGH SAVING IN NORWAY The Norwegian fiscal rule implies a more cautious spending path than the permanent income rule. The government spends the expected return on its current financial assets, which is significantly lower than total oil and gas wealth. Graph: Oil and gas revenues and government spending The fiscal rule implies that real spending will increase as long as production continues, i.e. until all oil and gas resources are transformed into financial wealth. As the economy grows, spending as a share of mainland GDP will nevertheless fall slowly. This is illustrated in the graph. The graph also illustrates that we have been able to cut through the very large, but temporary income flows at the beginning of the present century. Since 2016, government spending has exceeded the net cash flow from the oil sector. This means that we are running a primary deficit and will continue to do so for the foreseeable future. Currently, the transfer from the fund equals 8 percent of mainland GDP. Eventually, as delayed consumption increases accumulated returns, spending according to the fiscal rule will also surpass the current estimate of the permanent income. The real issue is thus a question of timing. Has this spending profile been too conservative, and the increase in consumption delayed for too long, as Bergsten and Gagnon claim? My brief answer is no. My first argument is that the conclusion to spend the permanent income does not take into account the resource movement effects discussed above.

To simplify, I believe that the logic underlying the current regulatory system consists in ensuring the financial stability of market segments, but without adopting an overall approach. However, the crisis has forced us to acknowledge that this fragmented approach to regulation does not necessarily ensure the stability of the entire financial system. During this crisis, the fact that financial institutions had considerably increased their use of leverage and that risk was concentrated among a relatively small number of banks was neither well assessed, nor well captured, nor prevented by regulation. In view of this failure and in order to mitigate the impact in terms of financial instability, government interventions were designed, not to stabilize the situation of any particular institution, but to prevent systemic risk from materialising. As a result, we now require macro-prudential regulation. This naturally leads us to address the issue of the scope of financial regulation. Who should be regulated? The problem is not new; it is also complex. Like me, you will have noticed that, at their last summit meeting, the G20 Heads of State and Government laid down a clear principle on the matter. They have indeed committed themselves to ensuring that “all financial markets, products and participants are regulated or subject to oversight, as appropriate to their circumstances”. The crisis shows quite clearly that the markets and institutions that have a systemic role must be regulated. This criterion implies re-examining the functioning of certain OTC markets, such as the interbank money market or the credit derivatives market.
Saying this, one has to acknowledge, of course, that the US is a fully integrated federal state whereas the European Union will remain a construction sui generis for the foreseeable future. Therefore, the US approach cannot serve as a blueprint for Europe, but its direction may prove right for Europe as well. The elements of the US approach fall into two basic categories: first, what I call the US’s “public banking union” – its federal institutions for dealing with banking crises. Second, what I dub its “private banking union” – its integrated financial market that dissipates the costs of crises. Public banking union Clearly, the key difference between Europe and the US is that banking problems in the US have been mainly taken care of at the federal level, whereas in Europe responsibility for troubled banking has thus far remained national. During the crisis in the US, it was federal institutions that stepped into the breach. The Federal Deposit Insurance Corporation (FDIC) resolved 490 unviable banks, using resources from its deposit insurance fund financed by all the banks. The US Treasury provided recapitalisation support and guarantees through its Troubled Asset Relief Program (TARP). The Federal Reserve undertook a thorough stress-test, determining banks’ additional capital needs. BIS central bankers’ speeches  1  To understand the situation we are in in Europe, it is useful to make a thought-experiment, and imagine that no such federal institutions exist in the US.

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Clearly this put the ball very much in our own court in the sense that we needed to do all that we could to persuade successive Governments, but also financial markets and the public at large, of our integrity and objectivity on the one hand and of our technical and analytical competence on the other. Without that our input to policy would not have been worth very much, and would not have carried conviction. In fact integrity and objectivity together with professional competence are in my view the essential foundations of effective independence whatever the statutory framework. Fundamentally it is up to us! For much of the period after 1946 two contextual factors served in any event to limit the degree of independence we could realistically expect to achieve. The first was the post-war context of direct intervention and controls, including initially the physical allocation of scarce materials and consumer rationing but extended to the financial system for example through credit ceilings and directional guidance as well as exchange controls, which were only finally removed in 1979. Direct resource allocation rather than allocation through market mechanisms involves intrinsically political judgements - choices between the social value of some forms of activity against others - which cannot easily be devolved to appointed officials. It would put the officials dangerously in the political firing line - calling their impartiality and objectivity into question - if they were.

Monetary policy: achievements and challenges Már Guðmundsson, Governor of the Central Bank of Iceland. Monetary policy meeting of the Iceland Chamber of Commerce, held at Gamla Bíó in Reykjavík on 16 November 2017 Madame Chairman, honoured guests, Once again, we gather here at the Iceland Chamber of Commerce’s monetary policy meeting, which for years has been held after the Central Bank has published its autumn forecast and, in latter years, the Monetary Policy Committee’s interest rate decision. I would like to thank the Chamber of Commerce for continuing this tradition and for giving me the opportunity to talk to you about monetary policy. In my speech at this same meeting last year, I noted that the Icelandic economy had seldom been stronger, as we were experiencing the combined effects of robust GDP growth, full employment, large rises in real wages, below-target inflation, a current account surplus, a strong international investment position, and lower private sector debt than had been seen in years. At that time, we had also achieved a historical milestone in bringing inflation expectations back to target by most measures. The outlook was positive as well, with the prospect of continued strong GDP growth, a current account surplus, and target-level inflation throughout the forecast horizon. But there were concerns, too: the potential for overheating, the possible overvaluation of the króna, and the uncertainty about what would happen after the general liberalisation of the capital controls.
When and how the central bank intervenes – and what the appropriate preconditions should be to maintain market discipline and mitigate moral hazard – are important open questions. As always what I have to say today represents my own views and not necessarily the views of the Federal Open Market Committee or the Federal Reserve System. 1 Turning first to the issue of market liquidity, the evidence that market liquidity has diminished is mixed. Some market liquidity metrics have not changed much in recent years. For the U.S. Treasury market, quoted bid-ask spreads in the inter-dealer market have remained stable since 2010 at their pre-crisis levels (Exhibit 1). And, order book depth, while lower now than  1  Tobias Adrian, Nina Boyarchenko, Michael Fleming, Catherine Kung, Ernst Schaumburg, Joseph Tracy, Erik Vogt and Nathaniel Wuerffel assisted in preparing these remarks. BIS central bankers’ speeches  1  in 2012 and 2013, does not appear low by historical standards (Exhibit 2). 2 For the corporate bond market, some evidence even suggests improving market liquidity. For example, excluding the financial crisis period, the realized bid-ask spread calculated from TRACE data has been trending down since the early 2000s (Exhibit 3). 3 But these metrics don’t tell the whole story. In particular, we have significant data gaps that make it difficult to comprehensively measure market liquidity. For example, in the U.S. Treasury market we have poor visibility into dealer-to-customer transactions.

Although the Federal Reserve may be able lend to a securities affiliate under its emergency lending authority under Section 13(3) of the Federal Reserve Act, this is not a standing facility – it can only be established if “unusual and exigent” circumstances exist and the program or facility must have broad-based eligibility, among other requirements. 8  8  A program or facility has broad-based eligibility only if it is designed to provide liquidity to an identifiable market or sector of the financial system. The program or facility will not be considered to have a broad-based eligibility if fewer than five persons or entities would be eligible to participate, or if it is designed to assist a company avoid bankruptcy, resolution or insolvency (including by removing assets from its balance sheet) or aid a failing financial company. See Regulation A, 12 CFR 201.4(d). In addition to the “unusual and exigent” circumstances and broad-based eligibility requirements, other conditions for making Section 13(3) emergency credit include obtaining the affirmative vote of a requisite number of Federal Reserve Governors and the prior approval of the U.S. Treasury Secretary, the emergency credit is not extended to an insolvent borrower, the lending Federal Reserve Bank is secured to its satisfaction, evidence is obtained regarding the unavailability of adequate credit accommodation from other banking institutions under prevailing circumstances to borrowers of the emergency credit, penalty interest rate is set for the emergency credit, and meeting disclosure/reporting requirements.
With effect from 2010, CPI inflation will also rise, according to our forecast. Once again interest rate changes have had a powerful impact, but they are now pushing in the opposite direction. In 2010 we are expecting to raise the repo rate again. Mortgage rates will then cease falling and begin to rise instead. At the same time, energy prices will begin to rise slightly. The repo rate will then be raised fairly rapidly, from a level of around 1 per cent to around 3 per cent at the end of the forecast period. The fact that I am now talking about the forecast for the CPIF should not be interpreted to mean that we have changed the monetary policy target. Our target is still that CPI inflation shall be 2 per cent. But we are also constantly studying a number of other measures of inflation. In this situation with exceptionally large changes in the repo rate –first down to just below one per cent and then rapid increases at the end of the forecast period – it is very important to openly and clearly illustrate the direct consequences this can have on the CPI. However, in the longer term, beyond the horizon for our forecast, the repo rate is assumed to be stable and then the rate of increase in the CPI and the CPIF will coincide.

In November 2011, the Riksbank, the Ministry of Finance and Finansinspektionen announced that the four major Swedish banks would meet the capital adequacy requirements of 10 per cent of the risk-weighted assets from 1 January this year and of 12 per cent from 1 January 2015. All of the four major banks now have CET 1 ratios that are higher than 10 per cent according to the definition in Basel III. Three of the banks are also above 12 per cent. The Swedish authorities have also said that the banks should meet the short-term liquidity measure in Basel III (the LCR) both in total and separately for the euro and the US dollar. This requirement has been compulsory for the eight largest Swedish banks since 1 January this year.3 The Riksbank has also recommended the banks to improve their public information on liquidity risks and the degree of encumbered assets. This is because greater transparency increases both confidence and market discipline. I am pleased to say that the banks’ public  3  These are Nordea, Swedbank, Handelsbanken, SEB, SBAB, Svensk Exportkredit, Kommuninvest and Länsförsäkringar Bank. 8  BIS central bankers’ speeches  reporting has improved in line with the Riksbank's recommendations, although some work still remains to be done (see Table 1). Table 1 The banks’ public information on liquidity risks  These measures have contributed to the relative stability of the Swedish banks. But I don’t think we have finished yet.