samchain/econo-pairs-v1 huggingface dataset:
Excess saving in some parts of the world would be efficiently allocated to investments in other regions. Risk would also be efficiently shared between agents and countries according to their respective needs and risk appetite. Shocks to GDP and/or consumption would be smoothed over time. And, finally, liquidity would be permanently available for those agents and countries whose solvency was not in doubt. In such a world, balance of payments crisis would not exist. Current account imbalances would not matter as they would reflect savings and investment decisions made by fully informed and non constrained rational agents. This vision may serve as a reference for future reforms: “The vision that underlies most proposals for reform of the international financial system is that the international capital markets should operate at least as well as the better domestic capital markets” (Fisher, 1999). But, of course, we don’t live in such an ideal world. Global capital markets are neither fully integrated nor complete. Complete markets do not exist, either at the national or international level, for a broad array of securities. Moreover financial markets are still naturally fragmented by national borders. Specifically, we can identify five important deviations from the model of perfect international markets: 1. Information asymmetries. These are natural features of all financial markets and they give rise to significant frictions through, in particular, adverse selection and moral hazard which prevent many profitable investments to be properly financed.

It is important for monetary policy that expectations of the interest rate are in line with the repo rate path. This is because it is market expectations of interest rate developments, and not the Riksbank’s own repo rate path, which determine the interest rates offered to households and companies. In addition, households’ and companies’ own expectations of interest rates govern their actions. Thus, expectations of future interest rates are important for the development of the economy. At the same time, the Riksbank’s ability to steer expectations in the longer run is limited in that we only steer the shortest interest rate, the repo rate, while the repo rate path is only a forecast. During the summer, market expectations of the repo have risen slightly in the short term, but fallen by more than 30 basis points in the longer run. Household expectations of variable mortgage rates, on the other hand, have risen significantly according to the National Institute of Economic Research. They are now largely consistent one and two years ahead with the Riksbank’s repo rate path from the most recent monetary policy meeting. However, households were still expecting a relatively low mortgage rate five years ahead. BIS Review 109/2010  7  Normalisation of monetary policy in general The normalisation of monetary policy includes, in addition to interest rate raises, the phasing out of the support the Riksbank has given to the banks.
Christian Noyer: Economic and financial crisis – the post-G20 outlook Speech by Mr Christian Noyer, Governor of the Bank of France, at a luncheon organised by the Hong Kong General Chamber of Commerce, Hong Kong, 11 June 2009. *  *  *  Ladies and Gentlemen, It is a great pleasure for me to speak to you today. At a time when the regulation of the financial and banking sectors is being discussed in-depth, this meeting is a unique opportunity for exchanging our ideas and thoughts on the most topical issues. I would like to raise three questions that seem absolutely essential today, a couple of weeks after the G20 summit and the Spring meetings of the IMF. These three questions are the following: •  What is the economic and financial outlook? •  What type of financial regulatory framework are we moving towards? •  How can we strengthen financial stability at the international level? What is the economic and financial outlook? After the recession that has been affecting the world economy since September 2008, the first signs of a recovery are being examined very closely. While in the first quarter output data confirmed a further decline at a similar or stronger pace than by end-2008, survey indicators point to deceleration of the slowdown in the second quarter, which justifies cautious optimism. Indeed, I see several reasons for hoping that “the worst is behind us”.

This is one of the main thrusts of the reforms proposed by Jacques de Larosière. How can we strengthen financial stability at the international level? The overall reform agenda that I have just outlined would not be complete without a component concerning the strengthening of the international financial architecture. Let me conclude my speech on this point. This strengthening currently has two very visible faces: the IMF and the Financial Stability Board. The IMF has once again become one of the key actors in the new international architecture. It is tasked, together with the Financial Stability Board, with monitoring the implementation of the G20 agreements on financial regulation. It also has a central role to play in the multilateral surveillance of financial risks: since late April, it has been conducting early warning exercises on financial and macroeconomic risks jointly with the Financial Stability Board; it will also extend its analysis of the resilience of domestic financial sectors as part of the Financial System Assessment Programs (FSAP) to include all systemically important countries. Indeed, one of the notable outcomes of the G20 is that all the member countries undertook to accept this assessment by their peers, including, for the first time, the United States. This broadening of the Fund's role is being supported by a trebling of its resources, which will increase its lending capacity to USD 750 billion.
The UK is the largest magnet for tech talent in Europe. This creativity and entrepreneurship is reflected in business start-ups. Over 1,100 new businesses start up in Britain each day – roughly, one every 75 seconds. 12  And when started, a disproportionately large number  succeed, with the UK home to half of the top 10 fastest-growing companies in Europe. 13  Financing them is a  venture capital industry which, in 2017, invested more in the UK than in Germany and France combined. The upper tail of UK companies, then, is large and thriving. It more than holds its own relative to international competitors. Although there is ample scope for improvement, the upper tail is fairly well-spread, sectorally and geographically. Its success is built on world-leading education, innovation and research. The UK is, genuinely, an innovation hub, with companies to match. Let us now reduce altitude and take a closer look at the lower tail. As Chart 7 also illustrates, there is a materially larger lower tail of UK companies, productivity-wise, than there are in Germany and France. 14  The  bottom 25% of UK companies have levels of productivity around 80% or more below the UK median. Their Germany and French counterparts have productivity around 60% or more below the median. If we look more closely at this lower tail, what is striking is both its scale and longevity. Table 1 shows growth in average productivity among the bottom 99% of the productivity distribution.

Table 5: UK Catapults vs. German Fraunhofer Dimension Age Number of centres Industry projects per year Annual budget Annual budget (% of nominal GDP) Employees  UK Catapults 7 years (from 2011) 10 600 £  German Fraunhofer 69 years (from 1949) 72 6,000 – 8,000 € billion  0.01%  0.07%  > 1,400  24,500  Sources: catapult.org.uk, Ernst and Young (2017), Comin, Trumbull and Yang (2011) and fraunhofer.de/en Notes: UK Catapults have delivered around 4,100 industry collaborations in total to date, which equates to around 600 per year. Their funding was £ over a five-year period, which equates to around £ per year. Table 6: UK and German bank lending to businesses Dimension % of total bank assets % of nominal GDP  UK 6% 23%  Germany 18% 49%  Sources: Bank of England, Deutsche Bundesbank, ONS, Thomson Reuters Datastream and Bank calculations. Note: UK data refer to lending to non-financial corporates by UK resident monetary financial institutions (MFIs) for 2018Q1. German data refer to lending to enterprises and the self-employed by Germany resident Banks in 2018Q1. Table 7: British Business Bank vs. KfW Dimension Age Total assets Assets as a share of annual nominal GDP Employees  British Business Bank 4 years (2014) £  KfW 70 years (from 1948) € billion  <0.1%  16%  144  6,284  Sources: British Business Bank, KfW Group, ONS, Eurostat and Bank calculations. 41  All speeches are available online at www.bankofengland.co.uk/speeches  41
The adoption of IRB approach would entail significant changes to their existing systems, the collection of extensive data as well as the fulfillment of many other qualitative and quantitative requirements. Such banks are advised to start building up the necessary data systems now itself in order to be able to qualify for the advanced approaches and to plan the application of the ratings for their credit management. The IRB approach will permit the banks to use their own estimates for the measurement of credit risk with regard to certain parameters. CBSL will stipulate the minimum qualifying criteria regarding the comprehensiveness and integrity of the rating systems, including the ability for those systems to produce reasonably accurate and consistent estimates of risk. This will be done in consultation with the industry and by announcing a timeframe for permitting the Foundation IRB approach and the submission of applications in 2007. Irrespective of whether the advanced approaches are used or not, the Central Bank encourages all banks to study carefully the more advanced risk management concepts and practices embodied in Basel II and consider adopting those relevant to their risk management purposes, even though they may not use them for capital allocation as such.

4  BIS Review 3/2007  V.  Involvement of boards, senior management and governance issues  Basel II requires the involvement of the senior management in the process of identification, evaluating and mitigating risks. Does this mean that the senior management and the board members should use some supervisory and monitoring powers to ensure that the technical and other officers continue to engage in risk mitigation activities and that the board is satisfied with action taken by them? When there are several layers of supervision, you might need a liaison officer to communicate with the management and the board. The bank management should address this issue early and avoid serious governance issues. VI. Capturing new risks  When financial market innovation takes place globally, new products such as derivatives, securitization will be introduced and they are likely to bring in new risks including operational risks. How do we balance these new risks with other internal risks, systems, processes and also with supervisory prudence? It is evident that Basel II enables banking to be based on more market driven systems which is conducive to financial innovation and it requires setting aside risk mitigation processes to deal with ever increasing financial innovation. VII. Handling of operational risks  Should banks use stress testing or best practices in handling operational risk? Stress testing is merely a tool which gives results on a reliable set of data.
The interest rate rise by 0.5 percentage point is estimated to have normalised the annual monetary supply growth rates, fully responding to the public and private sector demand for monetary assets. Monetary policy operations have assisted in stabilizing inflationary pressures of economic agents in the medium run. Fiscal policy The Bank of Albania has estimated that during 2006, the fiscal policy provided a satisfactory support to inflation developments. Fiscal indicators were realised in accordance with the budgetary program, preventing premises for inflationary pressure rise in the economy. During the fourth quarter of 2006, a high concentration of budgetary spending was noticed. The budget deficit realization as of year-end, estimated at about 3.2 percent of GDP or 0.7 percentage point less than that of the previous year, has influenced on the contraction of inflationary pressures and control of monetary expansion. Demand factors During 2006 domestic demand has significantly sustained the positive economic growth rates. Good performance of the domestic demand has been indicated by a number of economic activity indicators. Hence, the sales index for the first nine-month period of the year recorded an annual growth of 12.4 percent. In particular, the rise of imports of machinery and equipment and the real estate credit growth are indicators of investment expansion in the country. The domestic demand has been increasing also due to rapid growth of lending  4  BIS Review 80/2007  activity, which recorded a 57 percent increase in annual terms.

The EMU will reinforce monetary and financial stability The international role of the euro With regard to the international role of the euro, let me say that the Eurosystem does not regard it as part of a zero sum game in an atmosphere of confrontation. On the contrary, I view it as a positive sum game, based upon close international cooperation and certainly not on confrontation. The international role of a currency is a complex matter. A currency can be used by different groups of economic agents for different purposes, as an anchor and reserve currency on the official side, as an invoicing and payment currency for international trade, as well as a currency of denomination for financial assets, on the private side. BIS Review 81/1999  6  My understanding of the process towards internationalisation of the euro is based on the following observations: í  firstly the euro , as I said before, has the full legacy of the most credible currencies in Europe, taking into account the fact that the European monetary convergence process has been based upon a benchmarking principle. The euro is not starting from scratch but from the solid soil of currencies having proved their solidity over time like the franc, the DM, the guilder, and so forth;  í  secondly, the policy which is pursued by the European Central Bank is a policy of stability, credibility, low inflation so that the euro will be an excellent store of value. This is called upon us by the Treaty.
José De Gregorio: The Chilean economy in the current conjuncture Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, before the Executive Committee of Chile’s Confederación de la Producción y del Comercio, Santiago, 30 June 2009. *  *  *  First and foremost, thank you for inviting me to speak about the Chilean economy’s current situation and future prospects. The world crisis that is underway poses big challenges, and the effects it is having on our country as it unfolds stress how important it is to keep in contact with the entrepreneurial community to share our vision and become aware of your impressions. When we presented our Monetary Policy Report (the Report) of last May, we gave an account of the difficulties facing the world economy, which will see output drop for the first time in six decades. Moreover, this crisis has been characterized by great synchrony among countries, regardless of the strengths or weaknesses of each one (figure 1). As we have said over and over during and after the most stressful times in external financial markets, our country could not and would not be immune to the effects of the crisis. Actually, the macroeconomic outlook changed radically while fiscal and monetary policies reacted accordingly to the challenge, by adding a stimulus of unprecedented magnitude and speed. In the case of our Central Bank, between January and June we reduced the monetary policy interest rate (MPR) by 750 basis points to 0.75% annually, the lowest ever.

SPEECH DATE:  29/05/2018  SPEAKER:  Deputy Governor Henry Ohlsson  VENUE:  Örebro University  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Data, correlations and economic policy challenges∗ At the beginning of the Riksbank’s monetary policy reports, there is a page describing the monetary policy strategy. The basis of the strategy is that the Riksbank shall strive towards an annual change of 2 per cent in the consumer price index with a fixed interest rate (CPIF). Given that there is confidence in the inflation target, monetary policy shall also support good growth in output and employment. The Riksbank therefore conducts what is generally referred to as flexible inflation targeting. This is the basic framework for monetary policy. Within this framework, the Riksbank must cope with the fact that the economy and the way it works change over time. My intention here today is to discuss some of the challenges facing monetary policy and economic policy in general as a result of changes that have occurred over the last decade. In brief, it is a question of surprisingly subdued wage increases, the apparent difficulty in reducing unemployment further via expansionary policy alone, and the apparent deterioration in matching on the labour market. I intend to discuss this with the help of a simple survey, in which I look at how five key variables covary. The time period I’m studying is 2007–2018 and I’m using monthly data.
Looking forward, a number of factors seem to be dampening the underlying growth momentum in the euro area, including a moderation in the pace of global demand and unfavourable effects on overall financing conditions and on confidence resulting from ongoing tensions in a number of euro area sovereign debt markets. At the same time, we continue to expect euro area economic activity to benefit from continued positive economic growth in the emerging market economies, as well as from the low short-term interest rates and the various measures taken to support the functioning of the financial sector. In the Governing Council’s assessment, the downside risks to the economic outlook for the euro area are confirmed in an environment of particularly high uncertainty. Downside risks notably relate to a further intensification of the tensions in some segments of the financial markets in the euro area and at the global level, as well as to the potential for these pressures to further spill over into the euro area real economy. They also relate to the impact  BIS central bankers’ speeches  1  of the still high energy prices, protectionist pressures and the possibility of a disorderly correction of global imbalances. With regard to price developments, euro area annual HICP inflation was 3.0% in October according to Eurostat’s flash estimate, unchanged from September. Inflation rates have been at elevated levels since the end of last year, mainly driven by higher energy and other commodity prices.

Looking ahead, they are likely to stay above 2% for some months to come, before falling below 2% in the course of 2012. Inflation rates are expected to remain in line with price stability over the policy-relevant horizon. This pattern reflects the expectation that, in an environment of weaker euro area and global growth, price, cost and wage pressures in the euro area should also moderate. The Governing Council continues to view the risks to the medium-term outlook for price developments as broadly balanced, taking also into account today’s decision. On the upside, the main risks relate to the possibility of increases in indirect taxes and administered prices, owing to the need for fiscal consolidation in the coming years. In the current environment, however, inflationary pressure should abate. The main downside risks relate to the impact of weaker than expected growth in the euro area and globally. In fact, if sustained, sluggish economic growth has the potential to reduce medium-term inflationary pressure in the euro area. Turning to the monetary analysis, the annual growth rate of M3 increased to 3.1% in September 2011, up from 2.7% in August. The annual growth rate of loans to the private sector, adjusted for loan sales and securitisation, was 2.7% in September, unchanged from August. As in August, inflows into M3 also reflect the heightened tensions in some financial markets. In particular, inflows into money market fund shares/units, as well as into repurchase agreements conducted through central counterparties, appear to have significantly affected monetary developments in September.
They need stronger and robust risk management and better governance in all parts of the financial industry. They need increased oversight and stronger supervision of systematically important institutions. As a result of the crisis, the financial system will be permanently changed. Reforms will make it possible to increase its efficiency and, at the same time, improve its stability. This will be achieved through stronger international cooperation. It is very significant that the leaders announced in Pittsburgh that Basel II will soon become a truly international standard and, at the same time, it will be reformed and adapted to take on board the lessons of the crisis. Striking a balance The regulatory agenda is comprehensive and complex. It has been thoroughly debated. It has to be taken as a whole and cannot be implemented in a piecemeal fashion; otherwise we would recreate distortions and new possibilities of regulatory arbitrage. Let me give you two examples. First, on procyclicality. It is widely recognized that, in the past, prudential and accounting regimes have increased the procyclicality of financial systems, especially in boom periods, by encouraging excessive risk taking. Accordingly, reforms are being considered both in the capital and accounting frameworks. As a consequence of decisions taken by the G20 and the FSB, countercyclical capital requirements will be implemented by the Basel Committee and accounting standard setters have been asked to put in place a countercyclical provisioning regime. While respecting the independence of standard setters, it is very important that these two efforts progress in parallel.

In the labour market this was reflected in a rise in employment of some 1.65 million to an all-time high on the latest figures (for the three months to last November) of 26.6 million. It was reflected, too, in a fall in the rate of unemployment from a peak of 10.6% (on LFS figures) to the current rate of 6.1%, which is the lowest rate for almost 20 years. As far as the regional impact is concerned, I would note that over this period unemployment in Scotland – though still higher than in the UK as a whole – has also declined – to 7.6% on the latest LFS data, compared with a peak of 10.8%; and on a claimant count basis it, too, is currently lower than for 22 years. These developments in the labour market produced only a fairly gradual pick up in pay settlements and earnings growth compared with past periods of labour market tightening – though we have, of course, been unsighted on what has happened to earnings growth more recently. And underlying retail price inflation – on the Government’s inflation target measure (RPIX) – averaged some 2¾% a year through the expansion, and is currently exactly on target at 2½%. By the time of your last dinner it was already becoming clear that overall output growth needed to moderate if we were not to run into overall capacity constraints and a pick-up in inflation.