samchain/econo-pairs-v1 huggingface dataset:
Global economic developments are marked by the turnaround in the US economy. The US accounts for about 20 per cent of the world economy. The turnaround in the world's largest economy will have an impact, also in Europe. The question is how severe the turnaround will be, and how strong the impact will be on European economies. 2  BIS Review 19/2001  The US economy expanded by 5 per cent last year. The upturn in the US has spanned almost 10 years - the longest cyclical upturn ever. The chart shows OECD forecasts and actual developments over the past five years. As we can see, growth has been stronger then expected every year in this period. At the same time, inflation was moderate and unemployment declined. Many observers attribute the prolonged period of strong growth to the new economy, which features three main aspects: •  The labour market had become more flexible. While earlier experience implied an acceleration in the rate of increase in wages and prices at an unemployment rate of six per cent, unemployment fell to four per cent without triggering higher inflation. •  Productivity growth increased in both the IT sector and in other industries. The forecasts for the annual growth potential of the US economy were revised up substantially to around 4 per cent. •  Equity prices for technology stocks advanced sharply, with more than a sixfold increase in the Nasdaq index from the beginning of 1995 to the peak in March 2000.

In such market we indeed observe the emergence of monopolistic situations and systemic risk is associated to the possibility of the default of such market infrastructures. We should therefore make sure that we –all collectively- are shielded from a too strong market concentration in terms of clearing, which create risks that can’t be addressed by cooperation among their supervisors and overseers. Conflicting interests may indeed arise between (i) the authorities in charge of the oversight of the CCP, and its financial resilience, and (ii) the authorities in charge of the financial stability of the offshore markets served, especially in times of crisis, as we have seen in Europe during the sovereign debt crisis. To prevent such situation levers to be used include in my view a location policy of clearing activities and direct oversight by authorities in charge with the financial stability of the markets served. 3/3  BIS central bankers' speeches
They will benefit all member states in the single market. However, they will take time to design and longer to implement, and they will have no impact on the burden of the debt overhang that already exists. For complete solutions to both current and potential future problems the sharing of fiscal risks is required. It is no coincidence that effective currency unions tend to have centralised fiscal authorities whose spending is a sizeable share of GDP – averaging over a quarter of GDP for advanced countries outside the euro area (Table 1). I have already discussed how parts of the UK have benefitted from fiscal risk sharing. The euro area also stands out from federal systems like the US, Canada and Germany. In those systems, the impact of localised shocks to income is reduced by between one tenth and one fifth by centralised fiscal transfers (Chart 6). Without this risk sharing, the euro area finds itself in an odd position. As the Presidents of the European Council, European Commission, Eurogroup and European Central Bank argued in their report, European Monetary Union will not be complete until it builds mechanisms to share fiscal sovereignty. Possible options for sharing fiscal risks range from a transfer union to a pooled employment insurance mechanism. The latter would appear to be an opportunity to combine the current enthusiasm for labour market reform with the longer term imperative to build elements of an efficient transfer union. And it would ensure risk sharing was based on cyclical, rather than structural, labour market positions.

Recognising this does not mean denouncing low rates: they have been put in place for the common good and not just for the benefit of banks or insurers. But recognising it means accepting the need to adapt: a solid financial sector in Europe constitutes an asset. For insurers first, we support this urgent need for adaptation. Low rates have a dual impact on them in that they lead to a revaluation of their commitments on the liability side – via a reduction in the discount rate – but also reduce the returns on their investments on the asset side. Insurers therefore need to start reassessing in depth both their product offering and their positioning. Similarly, for banks, the first part of this adaptation has to come from their own digitalisation and consolidation strategies. But part of it also falls to us: in September 2019 we decided to put in place a so-called “tiering” system, which will reduce the cost of negative rates this year by close to EUR 4 billion for European banks, of which around EUR 800 million will benefit French banks. We are pursuing a macroprudential policy to encourage banks to manage their  Page 12 of 14  risks prudently. This is the role of the Haut Conseil de stabilité financière (HCSF – High Council for Financial Stability), which since 2018 has put in place an additional countercyclical capital buffer (CCyB), and then in December 2019 introduced recommendations for real estate lending which, if necessary, will be transformed into binding rules.
Most recently, a pilot “blended financing” programme has been introduced to enable micro-entrepreneurs in the low income group generate more sustainable income from viable business activities. The provision of zakat funds as initial capital is complemented by affordable microfinancing arrangement for working capital and a customised training programme to enhance business productivity. Participants of the programme also receive 12 months of business mentoring with impact-based monitoring implemented to monitor the effectiveness of the programme. The pandemic has been a test of resilience for nations around the world. This test also presents many opportunities for the global Islamic finance community to accelerate the progress of sustainable and inclusive finance towards achieving shared prosperity, sustainability and inclusive growth. The launch of the two reports on Islamic fintech and Islamic finance for financial inclusions should be seen as a call for collective action – each one of us has a part to play in 3/4  BIS central bankers' speeches  creating a more sustainable and equitable financial system. I look forward to the discussion on this important topic over the course of today. On this note, I wish to thank the World Bank Group for this invitation and I wish all of you a productive week. 1 John Hopkins University of Medicine, Coronavirus Resource Center (data as at 29 September 2020). 2 The 2017 Global Findex database is the world’s most comprehensive data set on how adults in more than 140  economies access accounts, make payments, save, borrow and manage risks.

2  BIS Review 17/2006  Important components in the assessment of what constitutes a good interest rate path – and which stress the element of judgment in this assessment – are expressed in a set of criteria that should be met. The criteria are included in the Inflation Report. Criteria have been set for robustness and financial stability. It is also appropriate to assess interest-rate setting against cross-checks such as simple monetary policy rules. The central balance is nevertheless between the inflation outlook and the outlook for capacity utilisation in the economy, expressed in the chart as the output gap. The projections are from Inflation Report 3/05. If monetary policy is to anchor inflation at the target, the interest rate must be set so that inflation moves towards the target. Inflation should be stabilised close to the target within a reasonable time horizon, normally 1-3 years. Provided inflation expectations are on target, the inflation gap and the output gap should be in reasonable proportion to each other until they close. Looking ahead, the inflation gap and the output gap should normally not be positive or negative at the same time. Several of the recommendations from Norges Bank Watch can be translated into how we should weigh the outlook for these two variables against each other. According to the report, Norges Bank’s inflation projections through 2005 were fairly accurate. Inflation has risen somewhat but is still very low, even 2½ years after the cyclical change.
4  BIS central bankers’ speeches  If such tools had been made available at an early stage, it may have been possible to slow down the dramatic expansion of credit that proved to have such devastating consequences. The IMF can play an important role in the work with macroprudential policy Macroprudential policy has come increasingly to the fore in the effort to find ways of preventing crises in the future. Macroprudential policy entails preventive work aimed at analysing and counteracting risks in the financial system. This includes the development of methods and forms of cooperation to discover and assess potential threats to stability in the financial system. I believe that the surveillance- and analytical capacity of the IMF means that the organisation can play an active role in this context by systematically collecting, analysing and providing information on the lessons learned in different countries and regions. I also believe that the IMF can support the exchange of information between authorities on the development of methods and models in the field of systemic risks. The range of possible tools and the division of responsibility between authorities and countries are now being discussed intensively within the framework of macroprudential policy. The tool that is attracting most attention at the moment consists of the countercyclical capital buffers that form part of the new Basel regulations. This means that the banks will be forced to hold more capital in periods when a credit boom risks triggering problems in the financial system.

How this policy should actually be carried out in practice is a complicated issue and I believe that the IMF can play an important role in this context too. The financial crisis revealed major problems The era in which we were said to be living in the best of all possible worlds, popularly known as “The Great Moderation”, came to a disastrous end in 2007. Following a long period of steady growth and stable low inflation, we had been lulled into the belief that this would never change. We believed that the financial markets were excellent at converting savings to loans and distributing risks so that they were taken by agents who both wanted and were able to  1  The Nordic-Baltic constituency consists of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. BIS central bankers’ speeches  1  bear them. The risks that were mainly discussed were the imbalances in the global economy in the form of countries with large current account surpluses and those with corresponding deficits. Those who raised questions about the stability of the global financial system and the risks relating to a rapid expansion of credit found it difficult to be heard in this situation. The financial crisis brought into focus the inability of the international community to prevent and manage crises in the global financial system. There were several problems. First, there was a lack of knowledge about the links and the contagion risks in the financial system.
The outcome on this front is quite favorable, as headline and core inflation were well contained at 2.3 and 1.1 percent, respectively, by end2007. Despite the unusual global situation, the Thai financial markets also remained resilient through 2007 with only moderate fluctuations. And while credit and deposit grew slowly, profitability of banks and financial institutions remained at a satisfactory level. Overall NPLs in the banking system remained moderate, as low income households’ ability to service debt started to decline mostly on account of slow income expansion. Ladies and gentlemen, These growth and stability outcomes under significant downside risks paint a picture of a resilient economy. As far as the outlook for the Thai economy in 2008 is concerned, I would like to address first the growth momentum and then talk about the risks and uncertainties confronting the economy this year. Preliminary data indicate that private consumption and investment are firming up after recovering during the fourth quarter last year. This is good news, as private consumption and investment constitute almost 70 per cent of total demand. Clearer political landscape postelection and continued spending by the government has helped revive private demand. Reflecting that, we have started to see strong pickup in imports in January. February data also confirmed the strength of imports. Moreover, plans for further fiscal stimulus as well as accelerated budget disbursement should ensure that domestic demand revival is firmly in place.

Businesses and governments are looking for best response strategies to ensure smooth expansion of their enterprises and the economy in general. Tonight, I would like to focus on 3 related and timely subjects. I will begin with my view on the outlook of the Thai economy and the risks surrounding its prospects. Then, I would like to outline what I think is necessary for monetary and exchange rate policy going forward. And lastly, I would like to talk about how we can foster private investment and what Japanese businesses can do, in your role as investors and employers, to help make Thailand an even better place to invest. Ladies and gentlemen, As you well know, the Thai economy had to weather through a host of challenges over the past 2 years. To my mind, and from the view of the Monetary Policy Committee, domestic political uncertainty, high and rising energy prices and sharp US dollar decline were at the top of our concern. Indeed, political uncertainty, coupled with rising retail oil prices, took a toll on private sector confidence and consumers’ purchasing power. These negative developments dented domestic demand during the first 9 months of 2007. The fall of the US dollar, while widely anticipated, had been a major risk that could disrupt Thailand’s robust export activities. In fact, the risk was even greater after the extent of the US financial crisis became clearer during the second half of 2007.
The European Commission estimated that if Member States achieve their targets, R&D activities will rise by 50% in 2025, generating an increase of between 2.6% and 4.4% in GDP on the basis of conservative assumptions (see report from European Commission “Implementing the renewed Lisbon strategy for growth and jobs: A year of delivery” (2007)). 6  BIS Review 18/2008  euro area, and are crucial to maintaining and ensuring the competitiveness of the individual European companies over the medium to long run. We should keep in mind that in a context of monetary union, not only fiscal policies, but also price competitiveness and unit labour cost developments across countries should be continuously and closely monitored. III. Conclusions  Ladies and gentlemen, I would like to conclude by stressing a few points. Europe is in the process of reforming its economy so as to adapt to the challenges of globalisation, technological change and an ageing population. Significant progress has already been made as reflected by the notable rise in employment growth over the last decade. Monetary Union has been effective – and hugely successful – in supporting growth through a credible monetary policy that delivers price stability in the medium run, hence contributing to lower financing costs in the euro area through a reduction of risk premia. It has also given a further impetus to resolute European integration, particularly in financial markets. The challenges ahead are a reminder that European integration is a dynamic process and that it will bring about deeper structural transformations.

On the other hand, the uncertainty stemming from the war in Ukraine as well as the coronavirus lockdowns in China are curbing the development of the global economy. That said, unemployment has continued to decline in many countries. In the advanced economies, it is now back around the low levels seen prior to the pandemic. Since March, there has been a further considerable and broad-based increase in inflation in many countries. The war in Ukraine has been a significant factor here, too, in that the prices of many commodities have risen as a result. In addition, persisting supply bottlenecks have led to further price increases for various goods. In our baseline scenario for the global economy, we assume that energy prices will remain high for the time being, but that there will not be an acute energy shortage in the major economic areas. The positive development of the economy should thus continue overall. Owing to the increased prices for energy and food, coupled with the supply bottlenecks, inflation is likely to remain high for some time. However, the importance of these factors should diminish over the medium term. With monetary policy also becoming increasingly tighter in many countries, inflation is likely to gradually return to more moderate levels. Our scenario for the global economy is subject to significant risks. For example, inflation could rise further and thus weigh even more heavily on real incomes and consumer demand.
In such cases - is it self-evident that the general public will consider that the economic advantages of cutting the interest rate to far below zero justify the nullification of old rules on for example saving – that you will at least get back what you saved? In a small, open economy, it may be even more complicated, as there are alternative means of payment. It could be said that the local currency is exposed to competition. So if the central bank in a small, open economy were to cut the level of interest rates far below zero, there would not only be a risk of large capital outflows (the traditional macroeconomic analysis), but also a risk that the general public would start to use other currencies for its savings and transactions. Reasoning like this may seem very foreign to us in Sweden. We associate events like this with poorly-functioning countries a long way away. But my argument is that we also need to take account of public confidence in the currency, payments and the central bank when the suggestion of deeply negative interest rates is being discussed. The advantages need to be weighed up against the disadvantages. And alternative measures also need to be considered, for example fiscal policy. This discussion becomes even more relevant when new digital currencies, such as the Facebook currency Libra, are waiting round the corner. New times place new demands on the Riksbank’s balance sheet Requirement to be able to absorb risks...

Similarly, those extending loans will find it more difficult to assess the real value of collateral security and the borrower’s wealth. This situation must be corrected sooner or later, and when bubbles burst the risk of debt crises and financial instability is high. We have seen examples of this in Norway and in other countries. If we allow imbalances to develop in the domestic economy, this may trigger major capital movements with wide fluctuations in the exchange rate and long-term rates. Distributional effects of monetary policy The distributional effects of changes in nominal interest rates figured prominently in discussions concerning interest rate policy in the 1970s. There is probably a basis for saying that the consideration of distributional effects was an important reason behind the low interest rate policy. However, as developments were to prove, this was not the right approach. The low interest rate policy contributed to increased disparity. People are affected in different ways by a change in interest rates. Households with considerable debt will, ceteris paribus, be adversely affected by an increase in interest rates because they must use a higher proportion of their income to service the debt. However, the increase in interest expenditure in  BIS Review 92/2000  8  relation to household income is about the same for all income groups. This is because households with high income generally have a higher level of debt.
Benoît Cœuré: Liquidity regulation and monetary policy implementation – from theory to practice Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the Toulouse School of Economics, Toulouse, 3 October 2013. *  *  *  I wish to thank Conception Alonso and Stefano Corradin for their contributions to these remarks. I remain solely responsible for the opinions contained herein. Ladies and Gentlemen, It is a great pleasure for me to speak at the Toulouse School of Economics. In my remarks today, I would like to discuss the recent developments on liquidity regulation and the interplay between the new liquidity requirements and monetary policy implementation. The recent financial crisis provided a vivid illustration of how liquidity risk that materialises in some segments of the financial system can lead to the drying-up of liquidity in entire market segments, such as unsecured interbank markets, causing a system-wide scramble for liquidity. In that context, central banks have played a role of intermediary for interbank transactions and prevented our bank based financial system from collapsing. At the beginning of my remarks, I will talk about the rationale for liquidity regulation and I will provide an overview of the new set of liquidity requirements that the Basel Committee on Banking Supervision has proposed to complement its revised capital requirements framework. These recent developments give rise to two issues that I would like to address today. First, how do liquidity regulation and monetary policy implementation interact?

Alternatively, a solution would consist in requiring banks to form pools of liquidity and to sign multilateral credit lines commitments, specifying the conditions under which an illiquid bank would be allowed to draw on its credit line. However, the risk of coordination failures is substantial and a purely private solution, by shifting inside liquidity around the system, does not address the aggregate liquidity need that arises in the case of systemic shocks.22 In such a situation, the public sector should intervene and provide outside liquidity ex-post. 20  See Bindseil (2013, op. cit.). 21  Rochet and Vives (2001) provide a theoretical foundation for rescuing Bagehot’s view; see J.-C. Rochet and X. Vives “Coordination failures and the lender of last resort: Was Bagehot right after all?”, Journal of the European Economic Association, 2, 6, 1116–1147, 2004. 22  See B. Holmström and J. Tirole “Private and public supply of liquidity”, Journal of Political Economy, Vol. 106, No. 1,1998. Tirole (2011) emphasises the role of macro-prudential policies to deal with shortages of aggregate liquidity; see J. Tirole “Illiquidity and all its friends”, Journal of Economic Literature, Vol. 49, No. 2, 2011. 8  BIS central bankers’ speeches  Conclusion Let me conclude. In my remarks today, I have focused on new liquidity regulations and have argued that the interaction with monetary policy implementation is expected to be significant and complex. I would therefore conclude that liquidity regulation and central bank operations cannot be looked at in isolation.