samchain/econo-pairs-v1 huggingface dataset:
There is no doubt that even in a pure, selfish, domestic approach in each of the European countries, meeting the fiscal criteria would be welcome for the sake of the economy, for the sake of the appropriate financing of the competitive sector, for the sake of the credibility of the signature of the State, for the sake of the confidence in the currency and therefore for the sake of growth, job creation and the fight against unemployment. All European governments are saying that Maastricht or no Maastricht, they would pursue their sound fiscal policies and strategies. In the case of France, the proof is even easier. For it was in June 1982 that France adopted the 3 % rule, on the basis of a multipartisan consensus and for domestic reasons, ten years before the ratification of the Maastricht Treaty. As regards the monetary side of the coin, shall I also say that we in the Banque de France would pursue exactly the same kind of monetary policy based on low inflation, exchange rate stability, a high level of credibility and confidence, and therefore a low level of long-term interest rates. Implementing what our law says, namely price stability, through exchange rate stability and the monitoring of our domestic monetary aggregates, the French independent central bank would meet spontaneously on pure domestic considerations the three Maastricht criteria that are in our monetary and financial domain, namely a low level of inflation, a low level of long-term market rates and exchange rate stability.

EMU is not just some abstract concept dreamed up by a few people. It is based on solid economic grounds. When the exchange rate stability provided by the Bretton Woods system and by the barriers between national financial markets disappeared in the 1970s, a number of European governments became progressively convinced of the need for a single currency. The Maastricht Treaty is indeed the result of past major initiatives, such as the Werner Report in 1970 and the Delors report in 1989. BIS Review 63/1997  -5-  The removal of all tariff and non-tariff barriers to trade has made Europe the largest market in the world. The EU accounts for 21% of total world trade, against 17% for the US and 10% for Japan. The benefits of the sheer size of the Single Market are plain to see. The allocation of savings and investments is more efficient, competition is stronger, and the greater liquidity of financial markets makes more capital available at lower cost to finance profitable ventures. No doubt the European Monetary System and its Exchange Rate Mechanism have helped curb exchange rate instability and eradicate the inflation culture that prevailed in some countries; yet the current level of economic and business integration calls for the Europeans to take a further step towards monetary integration, for the benefit of all European economic agents and citizens. The benefits of the single currency are clear. It will reduce uncertainty and facilitate production and investment decisions.
7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  Chart 1: Range of GDP forecasts in 2007Q4  Chart 2: Forecasts for World Growth by the IMF since 2007  Latest vintage of GDP data  Year on year growth 4 3  Apr-07 Oct-08 Apr-10 Oct-11 Apr-13  Oct-07 Apr-09 Oct-10 Apr-12 Oct-13  Apr-08 Oct-09 Apr-11 Oct-12 Apr-14  Percent year on year 7 6  2 November 2007 IR  5 1 4 0  3  -1  2  -2  1  -3  0  -4  -1  -5  -2  2002 2003 2004 2005 2006 2007 2008 2009 2010 2011  2000 2002  Source: Bank of England November 2007 Inflation Report; Bank of England Survey of Economic Forecasters. Source: IMF World Economic Outlook. 2004 2006  2008  2010  2012 2014  2016  For me, this is not really a defence. Economics is important because of the social costs of extreme events. Economic policy matters precisely because of these events. If our models are silent about these events, this jeopardises the very thing that makes economics interesting and economic policy important. It risks squandering the human capital endowment the financial crisis has bestowed. Even if some of the post-crisis criticism of workhorse macro-economic models is overdone, it still raises the question of whether new modelling approaches might be explored which provide a different lens on the world or which better match real-world dynamics.

Many critiques had pointed out, and the technical staff in the Bank had experienced, that the Bank could not succeed in its main task of taming inflation and bringing about price stability, if it was saddled with other tasks that would go against its main objective. Hence, there emerged a general consensus that the central bank should do only what it can do effectively and not otherwise. That consensus required the Central Bank to pursue a single objective, viz., the attainment of price stability. Following this consensus that emerged through the consultative process involved in the modernization, the technical staff of the Bank proposed an amendment to the Monetary Law by mandating the Bank with the task of attaining two core objectives. They were the attainment of both “price stability” and “financial system stability”. When the draft law was submitted to the then Governor, Mr. A. S Jayawardena, for clearance, he had changed the “price stability” to “economic and price stability”. The puzzled and bewildered technical staff flocked into his room seeking a clarification, since it was not in line with the accepted international trend. The writer recalls that even the Resident Representative of the IMF too was puzzled by this seemingly inappropriate mandate being added to the Bank’s objectives. But, Mr. Jayawardena, assuming his usual erudite and serious posture, offered a different explanation which had never occur red to the technical staff.
I would at the same time like to emphasise that monetary policy often involves difficult considerations. If I and my colleagues were to come to the conclusion that serious imbalances were building up in the economy in a way that threatened the stability of the payment system, or in a way that we felt would have serious consequences for the real economy in the future, we may want to take this into account when conducting monetary policy. However, so far, considerations concerning the effects of house prices and household indebtedness on other elements than inflation have only played a marginal role in monetary policy. 6  BIS Review 51/2004

Any one who travels outside the United States today returns with an appreciation about how rapidly public infrastructure is improving in many parts of the world, relative to what is evident in many parts of the United States. As global markets become more integrated and companies and capital can move more freely across borders, policymakers will face new challenges in the design of regulations. They will have to look more carefully at the balance of benefits and costs, when companies have more choice about where to invest. They will have to find ways for regulations to evolve more quickly in response to developments in markets. They will have to explore ways to cooperate more closely with other governments, where national approaches alone cannot be effective. We need to get used to a world in which we will see, in many areas, less willingness to adopt a U.S. model or to defer to a U.S. view on the appropriate global standard. You can see some of these dynamics in the financial arena, and concern about the erosion in the relative position of the U.S. financial system. Financial markets outside the United States are now deeper and more liquid than they used to be, making it easier for companies to raise capital domestically at reasonable cost. These financial markets are at an earlier stage in the process of capital market development, and they will therefore experience rapid growth in securitization and the role of derivatives.
governance and risk management  The Central Bank is ready to receive duly  framework that balances return  completed applications from eligible  objectives with prudent risk  companies, which would be submitted  management and controls, Strategic  to the Monetary Board. Continuous  Asset Allocation (SAA) for the  surveillance and on-site examinations of  international reserves, managed by  Licensed Microfinance Companies  Central Bank, has been developed and a  (LMFCs) will be conducted by the  new Investment Policy Statement has  Central Bank. We expect to maintain a  been drafted in line with it. The  constant dialogue with the LMFCs and  Investment Guidelines have been  increase awareness on regulations. reviewed to reflect the revised  While we are proposing policies and  investment criteria. plans for the financial sector, as the apex  Going forward, we expect to ensure a  financial institution in the economy, we  proper Enterprise Risk Management  also need to ensure the stability,  (ERM) Framework for the Central Bank,  continuity and safety of our own house. which involves setting up a new Risk  In particular, it is important to foster a  Governance Structure and developing  risk culture within the Central Bank as  systems and procedures to monitor  central banks are considered as the  financial and non-financial risks of the  trustee of public assets.

The resumption of growth of the Spanish economy will depend above all on our perseverance in pushing through the reforms. As I mentioned in my address to the Spanish Parliamentary Budget Committee, and as I believe bears repeating here, economic policy has to continue striving towards two main goals: promoting competitiveness and growth, and restoring the sustainability of public finances. I will focus particularly on this second stage of the adjustment. Fiscal consolidation In the present circumstances, ensuring the credibility of the process of fiscal consolidation is a priority. After the heavy slippage in the deficit in 2011, it is crucial to dispel doubts as to the capacity to control the upward path of public debt. Credibility is the main alleviating factor to mitigate the contractionary impact, in the short run, of the necessary adjustment measures. For the consolidation to be credible, the expenditure-reducing and revenue-enhancing measures have to be well-designed and consistent with our chosen path; in addition, experience indicates that to prevent slippage, it is advisable to work with a highly conservative projection of public revenue. When forecasting revenue, underestimates are more acceptable than overestimates. Also, adequate early warning tools are required to detect in advance any possible deviations and to make, where necessary, the required corrections in time. The Budgetary Stability Law provides an appropriate tool for controlling expenditure.
Nonetheless, regardless of the form of institutional organisation, it seems inevitable that monetary policy and regulatory activities will increasingly approach each other. Can monetary policy prevent a credit-driven property boom? One issue that has been discussed for a fairly lengthy period of time, and which has gained fresh impetus from the financial crisis, concerns the extent towards which monetary policy should be used to attempt to counteract a rapid increase of property prices and credit  12  BIS Review 68/2010  volumes. This focus on the property market in particular exists because problems there often have greater effects on the financial system and the economy in general than problems on, for example, the stock market. Allow me to use the property market as an illustration here too. The dynamic of a creditdriven increase on the property market can be described as follows. When the price of an asset starts to rise, it becomes possible to borrow against that asset for a higher amount. This frees up money to buy more of the asset, but also for consumption. The latter implies that rising property prices may lead to a credit-driven consumption boom. When the price increases, there also arises a tendency to regard the asset as being less risky, meaning that the credit risk premium decreases and the loan-to-value ratio is allowed to increase. In the lending rate equation, this implies a decrease in the interest rate margin. Cheaper credit feeds further price increases, which, in turn, feed further credit expansion, and so on.

Regarding policy implementation, besides monetary policy measures, we have also used non-standard monetary policy measures that are still in place, and additionally in several occasions we have modified some of the prudential measures for further strengthening of financial stability. Managing economic and financial cycle spillovers and putting them on the right track, go beyond monetary policy scope of operation and refer to the overall macroeconomic policy mix. Additionally, international developments and regulation could also affect domestic cyclical movements. Nowadays, we live in a world of ongoing recovery of the advanced economies from the long-lasting crisis, rising vulnerabilities of emerging economies, increasing and unpredictable volatility of the international financial markets and, on top of that, quite persisting geo-political risks. In this complex environment, we need to continue with internal policy coordination and international cooperation. Therefore, we have been discussing here today quite comprehensive economic phenomena that require multiple angles of observation and profound analysis. Although I believe that the research papers that are going to be presented today will shed light on some of the issues that I have mentioned, this will definitely be a challenge for the researchers in the period ahead, too. As policy makers, speaking today, many years after the onset of the global crisis, we can probably say that many policy challenges are already behind us, but still there are more to come.
The FPC has said that it would take a proportionate and graduated response to evolving housing market risks. Experience suggests that momentum in the market, and an associated increase in indebtedness, can be hard to check, particularly if expectations of a rapidly rising market become deeply entrenched. A number of countries have had to take a series of actions over time to slow fast growth in housing market activity to more sustainable rates. 2  See the Box on page 22 of the May 2013 inflation report. BIS central bankers’ speeches  5  To return to where I started. The Financial Policy Committee of the Bank of England is charged with looking ahead to identify and to counter risks to financial stability. There will always be a number of blinking warning lights – risks generated at home and risks coming from abroad – on our dashboard. The growing momentum in the market is now in my view the brightest light on that dashboard. It has not yet been accompanied by a substantial increase in aggregate mortgage debt, though gross mortgage lending is growing and there are signs that debts are becoming more concentrated. This could fade as affordability and lender constraints act increasingly as a brake on momentum. But other outcomes are very possible and the Financial Policy Committee will need be both vigilant and ready to act. 6  BIS central bankers’ speeches

The low level of saving also reflects a higher risk-willingness among households. Household debt in Norway is now almost twice as high as disposable income, and the debt to income ratio is higher than ever. The increase in household debt has occurred in tandem with a surge in house prices. Non-residential property prices have also increased over the past years. There is now strong growth in credit to enterprises. At the same time, enterprises are rapidly building up their liquid assets. In the assessment of monetary policy, potential effects of asset prices, such as property prices and equity prices, but also of movements in the krone exchange rate, on the prospects for output, employment and inflation are taken into account. The krone exchange rate depreciated in the latter half of 2006, but has appreciated somewhat in 2007. BIS Review 47/2007  9  Under an inflation targeting regime, it is important to be mindful of the effects of higher interest rates on the krone exchange rate when inflation is low. Interest rate developments in other countries are therefore of importance for interest rates in Norway. Early in this decade, inflation and economic growth were low in many countries. Interest rates were cut. The rate cuts, in conjunction with strong growth in emerging economies, particularly in Asia, led to cyclical turnaround. Growth in the world economy is now the strongest witnessed in several decades. External interest rates have increased and are approaching a normal level.
In the December assessment last year the Riksbank assumed that during the forecast period the annual contribution to inflation from import prices would amount to about half a percentage point. Some downward revision was made in March, followed by a further adjustment in June, when it was envisaged that the impact of import prices on the CPI would not be sizeable. The lower outcome and the adjusted forecasts mainly reflect a price fall for raw materials, though the international price trend for manufactured products has also been weaker than expected, presumably in part as a consequence of the Asian crisis. Rents are another CPI item that has been more subdued than foreseen in the spring. Since the beginning of the year, the rate of rent increases has dropped to levels that are historically low. This is partly attributable to lower mortgage interest costs and lower expectations for wages and inflation but it also reflects the cut in property tax and decreased heating costs. Wages seem to have developed more or less as the Riksbank foresaw. Today we count on an annual wage rise of 3.5–4 per cent in the period 1998–2000; that is only a little below our estimate last December before the wage negotiations had been completed. Opinions differ as to the effect which the Riksbank’s actions may have had on the latest wage round. In the light of contacts with labour market representatives, my view is that monetary policy’s influence on the wage settlements was positive.

Since September 28th the krona has weakened almost 2 per cent in terms of the TCW-index, while since the depreciation began last May the exchange rate has fallen about 9 per cent. Just as on previous occasions, financial unrest has hit the Swedish krona as investors play safe and move to larger and more stable currencies. This time, however, the unrest seems to have less to do with uncertainty about the future for Sweden’s economic fundamentals. Instead it appears to involve general risk aversion among investors. Support for this interpretation is to be found in market letters (Swedish as well as foreign), et cetera, as well as in price setting of # and ##. That should point to an appreciation in the next phase, when the general unrest has subsided and investors concentrate once again on economic fundamentals. Judging from Prospera’s surveys for the Riksbank, for instance, it seems that market players are also allowing for this in their assessments. The recent market weakening of the Swedish krona is a reminder of both the advantages and the drawbacks of a flexible exchange rate. The weaker exchange rate can serve as a mechanism for adjustment when international activity is slowing down. This could be valuable if the crisis is profound. At the same time, the recent events illustrate that our vulnerability with a flexible exchange rate is considerable. The krona has fluctuated even though economic policy is basically focused on stability.
On one hand, banks have been able to gain access to the ECB’s long-term financing under most advantageous conditions thanks to the purpose-built programmes introduced by the ECB. On the other, the public guarantees on loans to firms and the self-employed approved by the Government have contributed to lessening financial institutions’ potential reluctance to take new risks on board in such an uncertain setting. Analyses by the Banco de España based on the evidence available suggest that these guarantee facilities are, in particular, paving the way for the financing both of firms facing greater difficulty gaining access to credit and of small enterprises, marked by having been affected by the impact of the health crisis and for having a greater risk profile. Thanks to the guarantees, SMEs have been able to finance themselves in recent months under more favourable conditions in terms of the interest rate, the amount of credit and, above all, the maturity of the operation, which on average has stood at close to five years. The role of lending to companies in the current crisis is thus proving to be of great importance. It is contributing to reducing the risk of bankruptcy for firms that are viable but which face temporary liquidity problems, with the adverse consequences this would have in terms of job destruction and damage to the productive system, and, in sum, to the robustness and momentum of the economic recovery.

Pricing, underwriting and reserving in wholesale general insurance and reinsurance markets  Our primary prudential concern about current market conditions is that pressure on pricing will lead to weakening of underwriting standards, under-reserving against risks and insurers being tempted to take short 4  cuts on capital. On underwriting and reserving, Anna Sweeney’s ‘Dear CEO’ letter , published a few months ago, set out nine areas where our supervisory review work had suggested weaknesses, including:   Formulating business plans based on loss ratio (and future reserving assumptions) which appear optimistic given current market conditions and historical performance. In particular, we have seen a number of examples of insurers expecting improvements in claims experience due to portfolios changes, leading them to exclude historical years of poor performance from reserving benchmarks without good supporting evidence.   Insufficient use of technical pricing models, even for lines of business where such models are generally considered to be more developed and reliable.   Slow reaction to emerging loss development, with insurers taking false comfort from reserving benchmarks which appear to show business as still profitable despite emerging underwriting results.   Diversifying into new lines of business (for example, casualty classes) despite insufficient underwriting expertise or oversight. Aggregate analysis for a sample of London Market insurers suggests that initial estimates of reserves were inadequate for more recent years of account, with insurers needing to strengthen reserves over the past couple of years.