samchain/econo-pairs-v1 huggingface dataset:
Last but not least, the changes to the euro area governance framework for solving the deficiencies highlighted by the crisis need to stand the test of applicability. Only one year ago, Professor Issing insisted that the euro area prosperity was conditional on the observance of the rules of the club by its members. The turn that the Greek crisis has taken is relevant for the effectiveness of the new institutional architecture of the euro area. Unfortunately, the expectations that the Riga Summit should bring us closer to an orderly resolution have not been confirmed. IV. Should we be concerned, should we think positively or should we use our sense of humour? Currently, the debates over the present and future of the euro area are dominated by the assessment of the situation in Greece. For us, as EU members having not yet joined the euro area, these debates also raise the question of whether we should be very much concerned or take a positive, constructive approach. Although the trials and tribulations caused by the situation in Greece have often been described as a conflict between two totally different mentalities – namely, the Teutonic strictness versus the Levantine easygoingness – my view is that it is an overstatement, just like any generality.

The large volumes implied by the cut in reserve ratios and the potential impact on the exchange rate call for a gradual approach to this process, possibly spanning one year to one year and a half, which is yet another reason why ERM II entry in 2016 and hence euro adoption in 2019 are highly ambitious goals. 2  BIS central bankers’ speeches  III. The rationale behind other EU Member States’ wait-and-see approach to euro adoption  In fact, Romania is the only non-euro area EU Member State that has set a target date for the adoption of the single currency. The other countries show a prevailing wait-and-see approach, driven not necessarily by the difficulty to observe the limits provided for by the nominal convergence criteria (generally achieved or within reach), but rather by a fundamental change in the overall approach to euro adoption. This occurred amid the benefits of euro adoption becoming less obvious and the costs more apparent. I have already pointed out at the beginning of my speech the fading benefits that euro area membership provided in terms of financing costs. Additionally, the benefits of trade integration, previously deemed as irrefutable, have been drastically diminished by the weak euro area growth. As for the costs of euro adoption, Central and Eastern European economies with floating currencies went through relatively milder economic contractions than those with fixed exchange rate regimes, which highlighted the relevance of this element of policy flexibility.
The international integration of finance and production flows made it possible for the sub-prime crisis in the US real estate market to spread so quickly to so many countries. The global extent of the crisis called for rapid and coordinated intervention. And that is exactly what happened – governments and central banks around the world joined together and took decisive action. The extent of this cooperation was unprecedented in both scale and scope. It prevented a worst-case outcome. Nonetheless, the world economy experienced the most severe financial and economic crisis since the 1930s. What was impressive about the crisis was the speed and force with which it spread not only through financial markets, but also impacted world trade. In just three quarters, world trade contracted by 15%. This was by far the most significant decline since World War Two. 1 The slump was particularly pronounced in the goods trade. 2 As a small open economy, Switzerland could not escape this historical collapse in world trade. Exports and, in particular, goods exports were hit hard. However, compared with other industrialised countries – especially Germany – the decline was less pronounced. What’s  1  Cf. WTO (2010): World trade 2009, prospects for 2010. 2  Cf. Richard Baldwin (2010): The great trade collapse: What caused it and what does it mean?

To begin with, the economic data looked brighter at this point in 2010 and again in 2011, only to fade as we got into the second and third quarters of those years.1 Moreover, the United States has experienced unusually mild weather over the past few months, with the number of heating degree days in January and February about 17 percent below the average of the preceding five years. While this reduces the amount that households and businesses must spend for heating, I suspect that it temporarily boosts economic activity overall. For example, the mild weather is certainly conducive to higher than normal levels of construction activity, and we did see a surge in hours worked in that sector over the past few months. More importantly, real economic activity has yet to be strong enough on a sustained basis to make a big dent in the overall amount of slack in the U.S. economy. While it is true that growth was stronger in the fourth quarter, most of that growth was due to inventory accumulation. Growth of final sales was actually quite weak. Historically, a quarter in which inventory investment makes a significant growth contribution is typically followed by a quarter in which that growth contribution is modest or even negative. That appears to be what is shaping up for the first quarter of this year. Based on available data, current expectations are that real GDP will expand at around a 2 percent annual rate during the first quarter of 2012.
However, the recent reversal of past adverse supply shocks, if sustained, could spur confidence and support higher growth than currently expected. The continued resilience of the labour market, by bolstering household confidence and spending, could also lead to higher growth than anticipated. There are still significant upside risks to the inflation outlook. These include existing pipeline pressures that could send retail prices higher than expected in the near term. Moreover, Russia's war against Ukraine could again push up the costs of energy and food. A lasting rise in inflation expectations above our target, or higher than anticipated increases in wages or profit margins, could also drive inflation higher, including over the medium term. Recent negotiated wage agreements have added to the upside risks to inflation, especially if profit margins remain high. The downside risks include renewed financial market tensions, which could bring inflation down faster than projected. Weaker demand, due for example to a more marked slowing of bank lending or a stronger transmission of monetary policy, would also lead to lower price pressures than currently anticipated, especially over the medium term. Financial and monetary conditions The euro area banking sector has proved resilient in the face of the financial market tensions that arose ahead of our last meeting. Our policy rate increases are being transmitted strongly to risk-free interest rates and to the financing conditions for firms, households and banks. For firms and households, loan growth has weakened owing to higher borrowing rates, tighter credit supply conditions and lower demand.

Yes, a big step forward has been made thanks to Next Generation EU, financed by a shared debt instrument. Before thinking of possibly increasing its size, we should accelerate its implementation: speed, even more than weight, is what is currently lacking in Europe. But our real leap forward will come when the existence of a permanent common fiscal capacity, – although less limited in amount, although different from a standing budget because not systematically activated, – allows genuine countercyclical action to be taken. Conversely – and not contradictorily –, adequate fiscal discipline is key to cope with economic reversals. Look at Germany, which fixed the roof while the sun was shining, and made appropriate use of its financial leeway during the crisis. There will be a debate, to be concluded most likely next year after the German and French elections, on the Stability and Growth Pact, following three years of warranted suspension between 2020 and 2022. We should avoid a fruitless confrontation between “illusionists” – who plead for debt cancellation, which is completely out of the question – and “traditionalists” – who want to keep the same old rules as if nothing had changed, including on the level of interest rates. We do still need rules, but revised and simplified ones. Indeed, the current low interest rate environment (with r<g) does not mean that public debt sustainability issues have become irrelevant: it only implies that governments have more time to ensure debt sustainability.
On the contrary, most empirical studies, as you know, show that there is a negative relationship between inflation and output in the long run. Inflation is a tax on financial assets; it distorts investment decisions and increases overall uncertainty. In Switzerland, monetary stability has become part of the country’s culture and has been the guideline of monetary policy for more than 30 years now. After the collapse of the Bretton Woods system in 1973, the Swiss National Bank made it clear that the overriding objective of its policy was to preserve long-term price stability. Convinced that inflation was a monetary phenomenon, it opted for a strategy aiming at a steady growth of the money stock in line with the potential growth rate of the economy. At the time, the Swiss National bank was actually one of the first central banks to adopt a rule-based strategy. Between 1975 and 1999, we implemented a “pragmatic” policy, with monetary targets serving as benchmark and communication devices. Here I would like to emphasize the term “pragmatic”, because it was never the goal of our policy to fulfil monetary targets mechanically. As a small economy with an international currency, we had to face severe exchange rate shocks or money demand instability. In such circumstances, pre-announced monetary targets could not be met. In these particular and difficult periods, however, we never gave up our objective of preserving price stability in the long term. In the late 1990s, day-to-day implementation of monetary targeting turned increasingly difficult because of financial innovations.

And with Switzerland now being fully surrounded by euroland, is there any danger the euro replacing the Swiss franc? BIS Review 70/2004  3  Those are, of course, the questions we had to answer when the euro was launched in 1999. Our experience so far has shown that the much feared euroization of Switzerland has not taken place. To date, the Swiss franc has kept its attractiveness. It has been stable enough to be relied on as a valuable medium of exchange and store of value. Euros are accepted in Switzerland as a means of payment, like dollars or pounds sterling, but there is no sign of the franc being crowded out. A more important question, however, is the desirability of an independent monetary course for a small country located in the midst of the euro zone. Isn’t an autonomous policy a myth in a world where capital markets are so well integrated? Wouldn’t a country be better off by importing the monetary stability of its large neighbour? Unfortunately, the painful case of Argentina shows that fixing the exchange rate does not solve all the problems. When country-specific shocks are large and persistent, the absence of a national policy can be extremely costly. But let me again take the example of Switzerland. Shocks to the Swiss economy are not perfectly correlated with shocks to the euro area, and our business cycle is more influenced by developments in the investment goods market and in the financial market than the rest of Europe.
Tan Sri Dato' Dr Zeti Akhtar Aziz: Economic and monetary developments in Malaysia for 2001 Statement by Tan Sri Dato' Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the BNM 2001 Annual Report Press Conference, Kuala Lumpur, 20 March 2002. *  *  *  In the tradition of Bank Negara Malaysia, I have the pleasure to officially release the Bank Negara Malaysia Annual Report for the year 2001. The report releases the Bank's Annual Accounts for the year 2001, and provides an analysis of the economic and monetary developments in 2001, and gives the forecast for the Malaysian economy for year 2002. The country's economic performance in 2001 was significantly influenced by the unprecedented external developments during the year that had widespread implications on the global economy. Being a highly open economy, Malaysia was affected by the weak external economic environment. The impact was compounded by the effects of September 11. Malaysia's strong economic fundamentals and the promotion of domestic sources of growth have however, reduced the impact of the external developments on the domestic economy. The strengthened macroeconomic fundamentals have also increased policy flexibility to implement pro-growth policies without creating imbalances in the domestic economy. With adequate domestic resources, stability in domestic financial markets and prompt pre-emptive actions, Malaysia has been able to weather this global economic slowdown to record a positive growth for the year at 0.4% and to contain unemployment at below 4%.

I am sure that the participants in the different sessions scheduled today will elaborate more on the best economic policies to ensure that globalisation and technological innovation will continue contributing to economic growth and prosperity in an increasing number of countries. Ladies and gentlemen, I leave the floor now to the President of the Executive Committee of the European Institute of the Mediterranean, Mr. Senén Florensa, thanking him for the cooperation in the organisation of this event and, of course, thanking you all for your presence here today. 4/4
Our growth forecast entails that resource utilisation is still expected to rise only weakly and thereby remain relatively moderate during 2004 and 2005. Signs of lower domestic cost pressure Last year employment growth in the business sector was weaker than expected, while economic growth was approximately in line with expectations. This means that productivity growth exceeded our expectations. The most recent National Accounts figures also indicate stronger productivity growth last year than was assumed in December. It is likely that this has contributed to lower inflationary pressure during 2003. However, of greater interest for monetary policy is what this says about the future; is what we’re seeing an indication of permanently higher productivity growth? We don’t know this yet of course. There are many problems associated with the data in this area and even if this were not the case, it would be difficult to determine what had caused the developments we have seen recently. But this uncertainty is no reason to completely disregard the new information we have received. Just like the latter part of the 1990s, when productivity was also unexpectedly positive, there is now perhaps cause for a somewhat more optimistic view of supply conditions in the Swedish economy. One important, perhaps decisive question is what consequences the weak labour demand and the strong productivity growth will have for the outcomes of wage negotiations. It is clear that labour market conditions suggest moderate wage rises.

This is an incarnation of the wise measures adopted by the government under the leadership of the Custodian of the Two Holy Mosques to carry out more structural reforms (institutional and regulatory) which we have begun to feel their positive effects in all aspects of economy. It will be appropriate here to say a few words about the dynamic and crucial role played by the banking sector in the Kingdom, which is manifested in the substantial increase in the credit extended to the private sector which grew by 29 percent annually during 2003 – 2005; and it amounted to Rls 436 billion at the end of 2005. As a result of the expansion in banking business, the assets of the banking sector increased by 14.4 percent annually during the past three years (2003 – 2005). At the end of the first quarter of 2006, they stood at Rls 797.4 billion, constituting about 70 percent of the Kingdom’s economy. Deposits with the banking sector rose by 13.7 percent annually during the past three years, and they amounted to Rls 521.5 billion at the end of the first quarter of 2006. The positive indicators of the banking sector which rest on the robust fundamentals of the Saudi economy have prepared an appropriate environment for banks to adapt to successive, regional and international changes during the previous period. Banks operating in the Kingdom have been able to overcome the crises that hit other economies, and have been able to benefit from banks’ experiences and modern banking technology.
Studies indicate that the probability of suffering a large fall in housing prices almost doubles if the saving ratio is unusually low.20 An important difference between Sweden and countries that have experienced severe falls in housing prices, such as Ireland, Spain and the United States, is that the latter have also had a construction boom (see Figure 4). This gradually led to an over-production of housing, which in turn contributed to housing prices falling even more once the market began to weaken. A construction boom appears to be an important – perhaps necessary – ingredient in the recipe for crisis in the property sector. 17  A “left-to-live-on” calculation estimates the difference between disposable income and housing and maintenance costs, possible alimony payments and a standard for households’ cost of living. The banks take into account the borrower’s whole loan situation and assume on average a mortgage rate of around 8 per cent when calculating interest costs and assume some amortisation will be made. Finansinspektionen (2012). 18  A stress test of housing prices in the report shows that a large price fall of 40 per cent and an increase in unemployment of 20 percentage points without unemployment benefit means that only 10 per cent of the new mortgage borrowers have a loan-to-value ratio of over 100 per cent and a deficit in a “left-to-live-on” calculation. (Finansinspektionen 2012, Figure 17). 19  Claussen, Jonsson and Lagerwall (2011).

The efficient-market hypothesis presupposes that investors are rational and base share valuations on fundamental factors. If their market behaviour is not rational, it is assumed to be random, which means that individual actions have no impact on financial prices. If irrational players nevertheless act in a similar way, any influence on financial prices is eliminated by other, more professional agents via 3 arbitrage, which is assumed to be quick and effective. The irrational players accordingly suffer losses and therefore ultimately leave the market. In this way, the competition between rational and irrational investors, together with the existence of arbitrage, results in financial markets remaining efficient. 4  In the past two decades, however, the notion of financial market efficiency has been challenged, which will hardly surprise those with practical experience. This is mainly because the possibility of arbitrage has proved to be much more limited than assumed earlier. Studies in recent years have demonstrated the occurrence of periods when prices deviate appreciably from more fundamental levels. A new line in financial science, Behavioural Finance, has emerged, aimed at explaining why price deviations occur and developing tools for predicting them. Academics in this field have turned to 5 experimental psychology and other disciplines to explain the mind-set of financial market players. In a notable paper by a Princeton professor, Robert Shiller, it had already been shown in the early 1980s that share prices are considerably more volatile than would be expected if they were 6 determined by the current value of expected future dividends.
In the first place, let me tell you that it is very information-intensive. It requires a lot of detail on how a bank’s business is structured and run. And that information needs to be available at an early stage. Amongst many things, it includes details of netting and derivative contracts, and I am struck that, in the US, the FDIC now requires troubled banks to demonstrate that they could report each day the relevant details of derivative portfolios. The Bank of England plans to consider whether or not something like that might be warranted in the UK. More generally, the UK FSA has said that the authorities will need to be assured that firms are able to provide the necessary data to assess resolution options and to execute the authorities’ chosen strategy. But it is not just the resolution authority which needs lots of information. Potential bidders for all or parts of an ailing bank do too – of the kind typically offered to bidders in a “friendly” M&A transaction. Banks probably need routinely to maintain such “Data Rooms” as part of their contingency plans – something which the FSA is examining. As will be abundantly clear from this brief review, the “recovery and resolution plan” enterprise requires the regulators to work closely with the resolution authorities, and with central banks as liquidity providers.

At the same time, deposits from households and non-financial corporations also rose in October. Overall, more observations are needed to distinguish between shorter-term volatility and more lasting factors. Unlike in the case of monetary developments, there has been little change in credit growth. The annual growth rate of loans to the private sector (adjusted for loan sales and securitisation) remained at –0.4% in October, unchanged from September. But this development reflects further net redemptions in loans to non-financial corporations, which led to an annual rate of decline in these loans of –1.5%, down from –1.2% in September. The annual growth in MFI lending to households remained unchanged at 0.8% in October. To a large extent, subdued loan dynamics reflect the weak outlook for GDP, heightened risk aversion and the ongoing adjustment in the balance sheets of households and enterprises, all of which weigh on credit demand. Furthermore, in a number of euro area countries, capital constraints, risk perception and the segmentation of financial markets restrict credit supply. In order to ensure an adequate transmission of monetary policy to the financing conditions in euro area countries, it is essential to continue strengthening the resilience of banks where needed. The soundness of banks’ balance sheets will be a key factor in facilitating both an appropriate provision of credit to the economy and the normalisation of all funding channels. Decisive steps for establishing an integrated financial framework will help to accomplish this objective. A single supervisory mechanism (SSM) is one of the main building blocks.