samchain/econo-pairs-v1 huggingface dataset:
The interdependencies between countries can be illustrated by a simple three by three table which I call “Sudoku for economists”, showing the composition of demand in, and the trade flows between, the high- and low-saving groups of countries. “Sudoku for Economists”: 2008 data Domestic Net trade Demand  GDP  High-saving countries  18,000  1,000  19,000  Low-saving countries  28,500  -1,000  27,500  Total  46,500  0  46,500  Source: IMF. Data for G20 countries, rounded to the nearest $ billion. The key point is that the entries in the table – corresponding to economic policy choices – are interdependent reflecting economic constraints. Total demand or GDP is the sum of domestic demand and net trade. And, assuming for simplicity that the world can be divided  2  BIS Review 4/2010  into high- and low-saving countries, the trade surplus of one group is the deficit of the other. Just as in a sudoku puzzle, the nine numbers in the table cannot be chosen independently. Sudoku for economists is simpler than ordinary sudoku because the economic adding-up constraints mean that of the nine numbers in the table, only three can be chosen independently. So, for example, if both groups of countries want to achieve full employment levels of GDP, and the high-saving group targets a trade surplus, the low-saving group cannot target a reduction in its trade deficit. Either trade deficits must remain high, which is not likely to prove sustainable, or something else must give.

Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the University of Exeter, Exeter, 19 January 2010. *  *  *  Some dates are easier to remember than others. 1789 and the French Revolution, 1989 and the fall of the Berlin Wall, 1929 and the Wall Street Crash are easily recalled. How will 2009 be remembered: as the year when the world economy fell off a cliff but was rescued by government and central bank intervention around the world? Or the year when we finally recognised that genuine reform to the international monetary and banking system was essential to restore prosperity? Time will tell. The world economy is now coming out of recession. But the cost of the banking crisis has been high. After an unprecedented period of sustained growth, total output in the United Kingdom has now fallen for six consecutive quarters. It contracted last year by around 5%, the largest fall in output since 1931. National income is around 10% below the level it would have reached in the absence of the financial crisis. Around the world, governments and central banks put a massive sticking plaster on the wounds in the form of an extraordinary degree of monetary and fiscal stimulus. As a result, business confidence, orders and output, which all collapsed at the end of 2008, are gradually recovering. But there is a long period of healing ahead.
A key issue is how emerging markets will be impacted by tighter financing conditions (and the ensuing capital outflows) and to what extent this will have repercussions for euro area foreign demand. Against this background, ensuring the continued resilience of the euro area economy is paramount. Second, there are policy challenges related to our financial markets. The euro area financial system weathered several episodes of stress in the second half of last year. This is a sign that a lot has already been achieved with the establishment of banking union, which, however, is not complete yet. To make our financial system truly safe and sound we need to progress in two main domains, which complement each other. On the one hand, we need to finalise and implement the work we started when establishing the Single Supervisory Mechanism and Single Resolution Mechanism as the initial pillars of banking union. This includes further regulatory work to harmonise our rules for supervisory action and ensure a consistent application of the Bank Recovery and Resolution Directive’s bail-in provisions. On the other hand, we need a common public backstop for the Single Resolution Fund to strengthen its credibility and we need to ensure that confidence in the safety of deposits is equally high in all 2  BIS central bankers’ speeches  euro area Member States by establishing a European Deposit Insurance Scheme.

Norman T L Chan: Global deleveraging – the right track Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the Hong Kong Economic Summit 2013, Hong Kong, 10 December 2012. *  *  *  At this very same forum last year, I put forward my view that excessive leveraging, or over-borrowing, in major industrialised countries was the root cause of both the global financial crisis and the more recent sovereign debt crisis plaguing Europe. Today, I’d like to expound my view on this very important issue. As you may recall, I pointed out that during the period between mid-1950s and early 1980s, the total debts of households, businesses other than financial institutions and the government in major industrialised countries remained relatively stable at about 150% of GDP. However this ratio kept increasing after the 1980s, reaching an alarming 320% even after the outbreak of the global financial crisis. As we all know, it is wonderful to have a credit line to meet our funding needs. We can use it to pay hefty tuition fees for our children studying abroad. We can use it to meet emergency needs, such as footing medical bills for a family member suddenly fallen ill. But more often than not, people borrow to fulfil their desire to consume, or to finance their property and equity purchases. In the case of companies, loans may be crucial to their business expansion plan, which would hopefully increase sales.
Stefan Ingves: The inflation target and monetary policy Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, to the Swedish Economics Association, Stockholm, 4 April 2006. *  *  *  Introduction Discussing monetary policy at the Swedish Economics Association has become something of a tradition. I very much appreciate being invited to initiate this evening’s debate and I hope you will find the discussion stimulating. I would like to take the opportunity to discuss the general foundations for monetary policy. I will mainly focus on how a policy of inflation targeting can and should take into account developments in the real economy. From time to time it is claimed in the general debate that the Riksbank's inflation target needs to be supplemented by various targets for the real economy, such as capacity utilisation or employment. Those who advocate this appear to argue that our inflation target means that the Riksbank focuses solely on price developments. This was true to some extent when the inflation target was still a fairly new concept. The primary objective of monetary policy was then to establish confidence that inflation would really be kept at a low level. The fact that there is a discussion of these issues now, may be because we have not always discussed the various considerations we make as directly as we do now. There has been a gradual development in our reasoning on monetary policy. Monetary policy is no exact science and the Riksbank is a learning organisation.

After the adoption, last December, of a sustainable taxonomy, sustainable reporting is actually the next critical step ahead of us to mainstream green finance. I am looking forward to the report the EFRAG is currently preparing to address this issue [report to be published on 31 January 2021]. We should indeed strive to design our own framework for non-financial data, which meets our own needs (which means, for instance, integrating the ambitious concept of double materiality). It is a European responsibility, and a public one: we cannot just leave it to private bodies, at the global level. We should be committed to make our common framework operational and easy to transpose. We Europeans would then be in a position to inspire potential international initiatives aiming to produce a global sustainable reporting framework, and then make sure that the EU standards are widely recognised. Such a necessary endeavour for the EU also has domestic grounds: we will have to implement the new article 29 of the “Loi énergie et climat”, which will replace article 173. I dearly hope that, the ACPR and the French Treasury together, we can use the decree scheduled for early next year to strengthen harmonisation along the lines of the European standard that is to come. If not – but that would be a second best – we should at least ensure a French comparability. *** I have insisted on what we can do, must do, and will do: regarding supervision, monetary policy, and the harmonisation of financial disclosures.
The various Islamic finance centers operating around the globe must operate as one! We should allow a diversified number of players to operate in our market. Recognising the benefits of foreign competition and presence, we have announced a further opening of the Malaysian financial system to new players. Islamic banking market share in terms of asset vis-à-vis total banking asset as at the end of 2009 is 19.6% (2000: 6.9%) including DFIs. This data is very close to our target of 20% by the end of 2010. Domestic Islamic banks accounted for about 85% of market share in Islamic banking sector. Annual growth rate of Islamic banking assets was 20.8% per annum for the years 2000 to 2009. For takaful, the market share, although still small, it has shown significant progress of 7.9% and 11.09% in terms of asset & contribution respectively. Annual growth rate of takaful assets was 24.2% per annum (2000–2009). Total financial assets had also increase significantly. The Islamic sukuk is larger than the conventional PDS. What are the factors that contributed to the development of Islamic finance in Malaysia? One of the factors is a comprehensive legal, tax, accounting, regulatory and supervisory framework and this are well articulated and generally known. Let me attempt a few additional factors that might not be that well appreciated. It is the willingness of the players and the  2  BIS Review 49/2010  developers of Islamic finance to explore new initiatives.

There needs to be a robust revival in consumer demand in order for the increases in the capacity utilization rate to be sustainable over the medium term. Uncertainties regarding aggregate demand and lower capacity utilization continue to suppress fixed capital investments. The current trend in investment demand is far from signaling a robust economic recovery. Subsequent to the recent rate cuts and fiscal measures, we anticipate that domestic demand in Turkey might gain relative stability in the second quarter of 2009 and growth will post positive figures from the last quarter onwards. In other words, the recovery in the Turkish economy might start earlier than that of the global economy. Our expectation is underpinned by two main factors. The first of these is the sound and stable structure of our financial system. The restructuring plans along with regulatory and supervisory reforms, which were put into effect in the aftermath of the 2001 financial crisis at the cost of imposing a heavy burden on the public budget, reinforced the Turkish banking system’s resilience to shocks compared to the banking systems of other countries. Another factor that will facilitate a relatively faster recovery for the Turkish economy is the household indebtedness ratio, which is lower than those of many other emerging economies. Households have been affected relatively less by exchange rate shocks owing to the significantly low share of FX loans in consumer loans.
Under the Initiative, a Credit Guarantee and Investment Facility has been set up as a Trust Fund of ADB to provide credit guarantee to allow investment-rated issuers to issue local currency bonds in ASEAN+3 markets. Another good example is the Asian Bond Fund project of the Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP). The launch of the ABF funds introduced to the region’s bond markets a new low-cost and efficient product in the form of passively-managed index bond funds and helped catalyse infrastructure, tax and regulatory reforms at both the regional and domestic levels. The Hong Kong Monetary Authority took an active part in the design and implementation of the project. These efforts, along with the rapid economic growth and improved investment climate, have contributed to considerable growth in the local currency bond markets. According to ADB, the  BIS central bankers’ speeches  1  amount of local currency bonds outstanding in emerging East Asia increased by more than ten folds from $ billion prior to the Asian financial crisis in 1996 to $ billion in 2011. We have also seen the interesting development of offshore bond markets. In Hong Kong, the RMB bond market has grown substantially since the first issuance in 2007, with total issuance increased to over RMB 100 billion in 2011 from RMB 10 billion in 2007. The range of issuers has also diversified, from predominantly the sovereign and banks in China to multinational companies and international financial institutions.

They made loans to the trusts they judged solvent, but the Knickerbocker Trust, the second-largest in the country, did not make the cut, and its collapse precipitated panic throughout financial markets. To stem that panic, Morgan and his banking colleagues lent more generously to the surviving trusts. 1/4  BIS central bankers' speeches  The consequence of these events was a severe recession, and the U.S. economy contracted more than 10 percent. As a result of the financial sector’s inability to contain recurring financial panics, Congress realized the need for the public sector to step in, a process that led in 1913 to the creation of the Federal Reserve System. An Unprecedented Challenge Returning to more recent events, as the pandemic began to unfold in the U.S., we saw intense strain and disruption to financial markets. In response, the Federal Reserve has taken a set of strong and decisive actions to supply liquidity and to assure the continued flow of credit in the economy.2 The unique nature of this recession—a global pandemic—has required us to design an innovative response. Some of our actions have the hallmarks of those taken during the 2008 financial crisis, but many more have required a fresh approach. As uncertainty about the coronavirus took hold, we saw disruptions in short-term funding markets.
In London, LCH’s move to clear repos in Spanish government bonds helped that market stay open during some dark days last year. Why are CCPs important? There has been a resumption of interest in the network characteristics of the financial system. CCPs simplify the complex web of counterparty exposures through multilateral netting – precisely what the US authorities contemplated trying to achieve ad hoc towards the end of a weekend when Lehman was slipping away. But they do more than facilitate multilateral netting. They substitute themselves as the counterparty to the trades they clear – hence a central counterparty. This makes them unusual financial institutions, because they run a completely matched book, and so ordinarily are not exposed to market risk in their core activity. They are exposed in a big way to counterparty credit risk. If a counterparty defaults, they have uncovered market risk positions, and need to enter the market to get back to square. Everything important about a CCP concerns how they manage those risks. In essence, having centralised risk upon themselves, they redistribute it to their clearing members. They do that through a waterfall under which, in the event of a counterparty defaulting, the CCP can draw on, first, the margin pledged by the firm, then its contribution to the default fund, then the rest of the default fund etc. CCPs as risk managers Given that CCPs centralise and concentrate risk, their job is not just to deliver ever greater operational and capital efficiency for their clearing members.

A pre-programmed allocation of losses would be akin to the old “Down To The Last Drop” rule that used to be employed by a Chicago clearing house, under which surviving clearing members ultimately had collectively to absorb all losses: mutualisation. (It was dropped because, as banks became futures-exchange clearing members, bank supervisors didn’t like the unlimited exposure of CMs who were banks. An example of unjoined-up thinking.) That’s the option around propping up the clearing house to keep it going. The other option is some kind of wind down of the Clearing House’s book. That involves a combination of closing out part of the book in the market, and doing something with any residue that can’t be dealt in the market. One obvious thing to do with the residue is to put it back, pro rata, to the surviving (and fit) clearing members. But that is also a variant of the DTTLD rule, but “in kind” rather than cash. BIS central bankers’ speeches  3  Maybe I’ve got this wrong but, in summary, it seems to me that questions about orderly resolution of a failed CCP have to involve clarity around the extent to which surviving clearing members pick up the pieces. Summary The design, management and oversight of CCPs is something that we are going to come back to again and again in the years ahead.
The ratio of current account deficit to GDP is 11.8 percent in Bulgaria, 8.7 percent in Romania, 7.9 percent in Hungary and 7.2 percent in the Slovak Republic 1 . Another point that I would like to highlight about the current account deficit is that sustainability of high current account deficit depends on the financing quality of the deficit. Within this framework, I would like to present some figures on the maturity structure of capital inflows to Turkey. In April 2006, net capital inflow excluding IMF credits was USD 53.6 billion. The share of direct foreign investments and long-term capital in financing of current account deficit increases rapidly. In April 2006, long-term capital inflow became USD 23.2 billion and credit utilization of the non-banking private sector became USD 21.1 billion. The primary source of the capital inflow was long-term capital and credit utilization of the non-banking sector; 85 percent of which was long-term. Making a projection, we expect this financing structure to continue. According to the “Foreign Direct Investment Confidence Index”, which questions the countries’ capacity to attract investments over a 13 year period and which is an indicator of foreign direct investments that will come to the country, Turkey was the 13th most attractive foreign direct investment destination among 25 countries in  1  IMF, World Economic Forum, April 2006. BIS Review 68/2006  7  2005 2 .

On the other hand, we can take risk onto our balance sheet should we regard this as absolutely necessary in order to fulfil our mandate. In this respect, the lesson learned from the crisis is that, in good times, we need to ensure that our balance sheet is as robust as possible, so that we can burden it in bad times. Finally, in terms of staff, our independence is expressed by the fact that the members of the SNB executive bodies – the Governing Board members and their deputies – are appointed by the Federal Council for a fixed and comparatively long term of six years.5 Ladies and Gentlemen, our independence is not unlimited, however. First, it is not absolute but related only to our mandate. It is not we ourselves but the Swiss legislators who charge us with maintaining price stability. Incidentally, that also applies to mandates other than the monetary policy core mandate, which I will not be talking about today. The SNB has specified its monetary policy mandate and rendered it measurable. A situation of price stability prevails when the consumer price index (which is calculated by the Swiss Federal Office of Statistics, and not by us) shows an average annual rate of below 2%. Deflation is also regarded as a failure to attain the objective of price stability. Where we are independent is in our choice of the means by which we fulfil this mandate. Under article 9 of the National Bank Act, we may use a great many instruments, as needed.
Figure 3 shows that productivity in the paper and pulp industry is a result of internally generated technological progress as opposed to closures of weak units, which is predominant in other sectors. BIS Review 56/2003  7  Figure 3. Breakdown of total factor productivity, 1990-1998 100 90  Paper and pulp (SNI 21-22), average productivity grow th: 5.2 Telecom products (SNI 32), average productivity grow th: 9.2 M anufacturing, average productivity grow th: 4.2  80  Per cent  70 60 50 40 30 20 10 0 Percentage of productivity grow th that is due to internal im provem ents in productivity  Percentage of productivity grow th that is due to the closure of low -productivity operations and the start of high-productivity operations  Sources: Statistics Sweden and the Riksbank Note. The Figure does not show a complete breakdown of productivity and therefore does not sum up to 100. A full breakdown would also include covariance terms. See, for example, Foster, Haltiwanger and Krizan (1998), Bureau of Census, USA. Overall, the standard of living in Sweden has dropped in comparison with other countries because the country’s total factor productivity has lagged behind. We have fallen from a leading position in terms of standard of living to being a relatively poor industrialised nation with a below average income per capita among OECD countries. Our fall behind in total factor productivity is evident in industries such as engineering and chemicals while our basic industries have performed well.

Full and consistent implementation of the Stability and Growth Pact over time and across countries remains crucial to ensure confidence in the fiscal framework. At the same time, it is essential that all countries intensify efforts towards achieving a more growthfriendly composition of fiscal policies. We are now at your disposal for questions  2/2  BIS central bankers' speeches