samchain/econo-pairs-v1 huggingface dataset:
Consensus as to what reforms to undertake and with what content, supported by the findings of sound economic evaluations, would provide economic policy with stability beyond the electoral cycle and, therefore, with credibility in the eyes of citizens and investors, thus multiplying its positive impact. Once more, these principles may also be particularly relevant when it comes to maximising the transformative impact of the European funds our economy will receive in the coming years. Broad agreement on their use, based on constant and rigorous evaluation, would offer most possibilities of bringing about a more prosperous country that provides more and better opportunities for all: for our youth, so they may freely and confidently pursue their plans for the future; for our elderly, so they may face retirement securely; and for our workers, so they may adapt and prosper in an increasingly demanding and competitive world. 5/6  BIS central bankers' speeches  In sum, we need wide-ranging – political, social and also intergenerational – agreements in order to confidently face our future. In our recent history, whenever Spanish society has looked far ahead and resolutely addressed a long-term horizon, the outcome has been greater freedom and prosperity. At the Banco de España we believe that, taking a rigorous and independent view, we can contribute decisively to this objective.

If we continue to practise these values daily and effectively, in my opinion the Banco de España can, among other things, help establish a fully fledged assessment culture that boosts the efficiency and transparency of public policies and enables us as a society to properly integrate long-term considerations into decision-making. The importance of incorporating long-term considerations into economic policymaking The available evidence on the determinants of long-term growth points to democracy and the quality of its institutions as a factor that contributes positively to economic growth. The fact that institutional quality determines the ability to incorporate long-term considerations into decisionmaking may help explain this relationship. These considerations are essential to the idea of progress and, in economic policy, to defining and implementing measures that foster prosperity and opportunities for all citizens, both present and future. Central bank independence is warranted precisely on those grounds.1 An inflationary bias arises when the monetary authority lacks independence and, in pursuit of short-term objectives, stimulates demand by repeatedly using monetary policy beyond what would be consistent with its inflation target. Higher levels of economic activity and employment can be attained in the short term, but the costs come later. The inflationary bias is ultimately anticipated and built into agents’ expectations and, therefore, into pricing and into wage negotiations. The final outcome is higher inflation, without persistent improvements in the level of output or employment in the economy. This renders monetary policy ineffective and commitments to price stability cease to be credible.
Sources: The National Institute of Economic Research and the Riksbank  14  BIS central bankers’ speeches  Figure 3 Price developments for houses and apartments Index: January 2005=100  Source: Valueguard  Figure 4 Lending to Swedish households Annual percentage change 14  14  12  12  10  10  8  8  6  6  4  4  2  2  0  0 06  07  08  09  10  11  12  13  14  Note. Refers to the MFIs’ lending to Swedish households including HIOs (households non-profit organisations), with a home as collateral, adjusted for reclassification and bought and sold loans. Source: Statistics Sweden  BIS central bankers’ speeches  15  Figure 5 GDP per capita and employment rate compared with pre-crisis figures Change in per cent 2007–2013 and 2008Q1–2014Q2 6 GER  6 JPN  2  GBR BEL  Employment rate  -2 ITA  NED NOR  FIN  -6  FRA EU  SUI AUT NZL SWE CAN AUS  2  USA  -6  -2  DEN POR  -10  -10  IRL -14  -14 ESP  -18  -18 GRE  -22  -22 -23  -18  -13  -8  GDP per capita  -3  2  7  Note. GDP per capita, annual data, constant 2005 USD (adjusted for purchasing power parity), 2007–2013; Employment rate, 15–64 years, 2008Q1–2014Q2. Seasonally-adjusted data.

Examples are the slowdown in international economic activity which became evident during the second half of 2011 and the fall in inflation at the end of 2013 and the beginning of 2014. It is easy to verify that these events were difficult to predict – and not merely something that everyone but the Riksbank was aware of in advance – by examining how forecasters in general viewed developments at the time. Thus, I think it is quite clear that the current low inflation is not a logical and predictable consequence of the repo rate not being held at 0.25 per cent after the crisis. As I mentioned at the start, there is an international debate on to what extent the central banks’ policy rates should be used as a complement to macroprudential measures to try to prevent lending and housing prices from rising too quickly, or more generally to counteract the build-up of financial imbalances. This is an important discussion and it would be very unfortunate if the critics’ alarmist but incorrect conclusions regarding the Swedish experiences, which can roughly be summarised as ”don’t try this at home – you may burn down your house”, were to be regarded as a truth in the debate. It is important that monetary policy is evaluated. But one condition for drawing the right conclusions is that the evaluation is based on a correct description of what has actually happened. The recent criticism has, in my opinion, become alienated from actual events.
It’s the freedom to decide how best to achieve a defined goal, typically price stability or a combination of price stability and sustainable growth. Independence does not mean freedom from accountability, and accountability does not compromise independence. It does not mean full independence from the government or legislature or the freedom to choose its own leaders. It does not mean that the central bank has the freedom to define its own mandate or set the objectives to which it is held accountable. Why is central bank independence desirable or important? The classic rationale is to make a commitment to price stability more credible in the face of the inevitable and perhaps understandable growth bias of governments and their elected officials. Growth bias in turn creates an inflation bias, which is the temptation to use monetary policy to try to achieve higher rates of growth or lower rates of unemployment by maintaining short-term interest rates at levels lower than are consistent with price stability over time. This temptation, and the related pressures produced by unsustainable fiscal positions, have produced a disturbing legacy of financial crises and economic deprivation. These political pressures can’t be wished away, even with the much broader and deeper public appreciation that now exists of the costs of high inflation. A central bank that is subordinate to that temptation, in reality or in perception, will necessarily be less able to deliver price stability, and growth outcomes over time will necessarily be worse.

Internal auditors report on these aspects to the top management of a central bank, while the external auditors do so to alert both the management and the legislators. Such compliance auditing is necessary and useful, but not sufficient to gauge the risks faced by a central bank and, accordingly, to take early prescriptive measures. A central bank may operate quite perfectly with regard to its internal procedures and systems. The accounts of a central bank may have been prepared having compliance to the best accounting standards. The external auditors may have given an unqualified certification to a central bank’s financial statements. In the eyes of the public, a central bank may have been projected as a model institution to be emulated by others. Yet, all these salutary features which pertain to a central bank’s past or current actions may hide the major risks it may be facing with regard to its future operations. It is the duty of the auditors to dig out these risk aspects and alert the management and, if necessary, the legislators, before it becomes too late to take any prescriptive measures. This poses a daunting challenge to the auditors of a central bank. A central bank, with its unrestrained resources, may have staffed itself with the best technical talents in the main field of its operations. Auditors are now required to assess their work and make judgments about the adequacy and the consequences of such work.
Kristina Persson: Why is inflation so low? The example of the retail sector Speech by Ms Kristina Persson, Deputy Governor of Sveriges Riksbank, at the Nordic Retail College, Norrtälje, 24 May 2005. *  *  *  Introduction Strong forces are affecting the developments in the world economy today. Globalisation and stiffer international competition are having an impact on individual countries' economies in many different ways. In Sweden, this has contributed, among other things, to a very low inflation rate in recent years. The subdued developments in the prices of imported goods partly reflect the integration of countries such as China and India into the world economy. Likewise, the surprisingly robust productivity growth can probably to some extent be attributed to the increased international competition. Also contributing to the low inflation is the increasing establishment of low-price chains in the Swedish non-durables sector in recent years. This increases competition and helps squeeze Swedish food prices. I intend to begin by briefly discussing global structural change in general and thereafter to concentrate primarily on the changes that we are seeing in the Swedish non-durables sector at the moment. Finally, I also intend to touch upon the current economic situation.

In the short term, the present situation, marked by the necessary increase in interest rates and the high uncertainty regarding growth and inflation projections, means that banks face significant risks in different balance sheet segments. At the net interest income level, the substantial improvements recorded by some banks cannot be considered long-lasting and it is reasonable to believe that, as the higher interest rate environment persists, their funding costs will likely rise further. The increase in the cost of funding may accelerate for banks, driven by the gradual reduction in Eurosystem liquidity facilities, and their increased cost, and the developments seen in deposits, with depositors seeking better remunerated financial instruments and part of the savings buffers accumulated during the pandemic having been depleted. The continuation and/or heightening of the recent tensions in the global banking sector could also contribute to this increase. 6  Moreover, the value of fixed income financial exposures (e.g. bonds, especially those with longer maturities) has declined. In addition, credit quality, which remains highly resilient, may ultimately weaken as inflation and rising interest rates erode real disposable income. This would drive up provisioning and reduce income generation capacity. In this respect, although the debt levels of non-financial corporations and households have fallen considerably since the global financial crisis,15 debt-servicing costs are climbing sharply as interest rates rise.
Although Asia’s potential growth remains higher than in other regions, recent studies pointed to a possible reduction in trend growth since the 2008 financial crisis.1 In my reading of anecdotal evidence and through policy discussions, two common drags to long-term growth among emerging Asia are the labor shortage and the decline in productivity growth. Let me explain the labor market issue using the case of Thailand as an example. The problem of labor shortage has been deep rooted in Thailand for many years but has not received much attention until recently. This could be partly due to favorable economic expansion during the past years that has masked this problem and also because of the ability on the part of firms to employ immigrant workers. But now with protracted external demand slowdown coinciding with recent weakening in domestic demand, long-standing weakness of the labor market has emerged as an important bottleneck hampering potential growth. Leaving aside the demographic aging problem that has yet to reach its peak, pervasive skills mismatch has been identified as a main cause of labor shortage. In particular, workers with vocational training needed by manufacturing industry, is in much shorter supply relative to university graduates. This has been one of the major holdbacks on manufacturing capacity.

This brings me to the final topic of my talk, that of regional economic and financial integration in Asia. Under ASEAN economic community (AEC), the region’s prospects will be much enhanced by further integration efforts to foster freer international trade and more mobile movements of factors of production. Four broad facets of regional connectivity are expected to contribute to ASEAN economic growth and stability. First, with barriers to trade in goods and services brought down, there will likely be a substantial expansion in intra-regional demand. This increasing role of intra-regional trade in final consumption goods should provide the region with a potential source of resiliency against global demand shocks. Second, higher mobility of factors of production and crossborder infrastructure development can help unlock the tremendous potential of the region by removing supply-side constraints and bottlenecks to growth faced by individual countries, while also making best use of resources and comparative advantages through regional and global supply-chain networks. Third, through closer ties of financial and capital markets, ASEAN countries stand to benefit from tapping the vast pool of Asian savings, to finance intra-regional investment activities. This will prove particularly valuable given that many ASEAN countries are currently in much need of investment to lift their potential rates of growth after a prolonged period without largescale upgrading.
Although equity and property prices serve as important indicators for the future development of economic activity, they are not a goal of monetary policy. Many reasons militate against a direct monetary-policy response to changes in asset prices. The question nevertheless arises as to whether monetary policy could not do more to prevent any speculative bubbles from forming in the first place. BIS Review 53/2003  1

Investment of the remaining sectors of the economy represented 31% of total investment over the period 2004–08. In 2008, this ratio was 26.4%, although investment in these sectors increased sharply during this year (+37.4%). In the context of structural excess savings over investments, the structure of investment financing in Algeria over the past 5 years reflects the predominance of self-financing (82.5%) on account of the budgetary financing of the public investment programs. Indeed, with significantly increased financing capacity, domestic financing has been the sole source of public investments financing, at a time where external debt was significantly reduced, notably through advanced repayments of nearly all public external debt (which amounted to $ billion 13.9 by end 2003). Domestic public debt has also been significantly reduced to a level representing 6.6% of GDP in 2008, down from 18.7% of GDP in 2003. In addition, available resources in the stabilization fund amounted to $ billion 59 by end 2008, representing a sizeable self-financing capacity which allows continued implementation of the investment program (2009–10) in the context of external shocks. While Sonatrach’s investments were partly – although to a large extent – financed on the company’s own resources over the period 2001–04, accumulated savings (reaching $ billion 18 by end 2008) have since allowed for total self-financing of the oil company’s investments, with investments in 2009 upstream and downstream significantly increasing, in view of the important opportunities in the sector and in line with the objective of achieving potential capacity.
There is need for Zambian products to penetrate into various markets such as the USA under the Africa Growth and Opportunity Act, (AGOA) the European Union under the Everything but Arms Initiative, as well the Chinese, Canadian and other markets. Access into the regional markets through regional arrangements such as COMESA and SADC should also be promoted. We also need to take full advantage and actively participate in the manufacturing sector through the established Multi-facility Economic Zones (MFEZ). As educated and hard working Zambians with MBAs, it is imperative that you are able to apply some of the relevant skills and knowledge gained in your studies to everyday situations in businesses. The challenge is for you to steer your organisations and businesses to success and to progress in a way that will lead to economic advancement of the country. That in my view is what “Innovation for Leadership Excellency” means. As educated Zambians, we need to offer business solutions where there are none. I am happy that today we are witnessing the launch of this association whose, among other objectives is to offer business solutions. Mr President, allow me as I conclude to advise you and your new association to ensure that all members demonstrate high ethical standards and values in your businesses as well as places of work at all times. I urge all of you gathered here today to take ethics seriously in order to enhance efficient and effective delivery of services.

In this connection, it should be emphasized that, because of the inherently partisan nature of politics, and for other reasons as well, the government or state is not well-equipped to make credit decisions. Recent experience here in Asia, and before that in the former command economies of Eastern Europe, makes clear just how dangerous “policy lending” can be. Decisions as to who gets credit and who does not must be left to private initiative within a context where those making the decisions have a major stake - their own capital and economic livelihood. If the system is working properly, those receiving credit will be the most efficient, competitive, and profitable - those most capable of producing the stream of goods and services that will enable the economy to grow and, as a result, for living standards to rise. The purpose of supervision - preserving financial stability This, then, is the fundamental tension of commercial banking - how to meet the credit needs of a healthy and expanding market economy, which necessarily entails the taking of calculated risks, and yet preserve the confidence of depositors whose savings are the raw material that enable banks to perform their essential functions. Negotiating that tension, helping banks meet that challenge, is the critical task of supervision. And so what is the purpose of supervision in the 21st century? What are the objectives? How can those objectives be best pursued? Let me say first of all that there is no quick-fix or single answer.
There is ample international evidence on the cyclical pattern of credit, which is very strongly correlated to GDP growth, as shown in Graph 2 for the case of Spain (with an elasticity higher than one, meaning that when real product grows, credit tends to grow more, and when real product falls, credit likewise tends to fall even more). Demand and supply effects are difficult to disentangle in credit cyclical dynamics. On the one hand, more economic activity tends to cause more credit demand. At the same time, credit rationing tends to diminish when the economy is booming and tightens when the economy is in recession. Both demand and supply seem to account therefore for credit cyclical swings. Competition is a key factor in explaining credit supply dynamics. Strong competitive pressures may exacerbate the trend towards looser credit conditions in the upturn, because the fight for a market share coincides with the observation of low non-performing loans, leading towards an over-optimistic perception of low risk. The probability of losses exists from the moment the loan is granted, but it will only become apparent ex-post, with the emergence of default problems. Most credit risk mistakes are actually made during  BIS Review 35/2002  3  the expansionary phase, when optimism is prevailing, although only in the downturn will they become evident. Empirical estimates show that there is a strong correlation between credit growth and bad loans, with an average lag of around three years (see upper part of Graph 3).

The annual return on the actual portfolio was ½ percentage point lower than the return on the benchmark portfolio. The results were not due to investment in high-risk fixed income instruments. At the end of 2008, as much as 64 per cent of the bonds in the Fund’s fixed income portfolio had the best  BIS Review 58/2009  5  credit rating, AAA, 20 per cent had the second best, AA, while ten per cent were rated A. Five per cent of bonds were rated BBB. Only one per cent of the fixed income portfolio has a lower credit rating. Realised losses as a result of bankruptcies have been low. How then can an excess return become negative from one year to the next? The Fund’s fixed income portfolio is well diversified across different types of bonds and different regions and the active strategies had low correlation in normal markets. However, the financial crisis revealed that these strategies were exposed to more underlying, systematic risk. Correlation was not expected to be high between investments in, for example, Japanese inflation-indexed government bonds, bonds issued by international organisations such as the European Investment Bank, European covered bonds and US mortgage-backed bonds. These experiences and the abrupt turnaround in market liquidity suggest that active management of the fixed income portfolio should be limited and measured on the basis of a number of criteria, as laid down by Norges Bank’s Executive Board. The Fund currently has extensive holdings of bonds that are difficult to trade in today’s market.