samchain/econo-pairs-v1 huggingface dataset:
19  Changes to the world of work, technology and a greater sense of insecurity, therefore may well have changed workers perception of their bargaining power, their appetite for risk and weakened their response, in terms of seeking higher pay, to signals of a tightening labour market. This would have flattened the Phillips curve as well as lowered it. To the extent that greater risk aversion has played a role, one might expect the impact to be asymmetric so that the effect on pay from falling unemployment is less than the effect of rising unemployment. 20  Globalisation and technology have almost certainly contributed to a greater sense of job insecurity. But they may also have a more direct effect on the Phillips curve relationship between unemployment and pay by enabling global supply and production chains that have resulted in a more global labour market. To put this in its starkest terms, the global Phillips curve matters much more now. Claudio Borio and Andrew Filardo at the BIS argue that traditional models are too ‘country-centric’ and that a more ‘globe-centric’ view of the inflation process is now not only warranted but has been growing in importance over time. 21  18  My colleagues on the MPC, Michael Saunders and Andy Haldane have explored these issues in great detail. See Saunders (2017) and Haldane (2017) for a discussion of how labour market flexibility may have affected pay determination.

There were also inadequacies with regard to credit granting. Large loans were made to new customers, new sectors and new geographical areas. This type of lending strategy is not wrong in itself, but it requires that the credit-granter has done his homework and is aware of the possible risks. In some parts of the banking world, they talk about credit-granting according to the church tower principle, i.e. that loans should be primarily made to customers living and active close by. How this principle was applied in connection with investments in Atlanta or Brussels is not easy to see. In addition, the banks contributed to their customers building up a comprehensive credit exposure in foreign currencies, regardless of whether or not they had matching income in their loan currency. As the krona exchange rate was high, some borrowers chose to take out loans in foreign currencies that had a lower nominal interest rate. The risks with this strategy became evident after the krona’s rapid fall of almost 25 per cent in six months, calculated from when the krona was allowed to float in November 1992. When the banks’ borrowers found that their debt amounts had increased by up to 25 per cent, calculated in kronor, many of them were unable to meet their obligations and the banks’ loan losses increased further. These actions by the banks are actually quite remarkable.
From my vantage point as a banking supervisor, the most prominent impact of the pandemic has been a substantial increase in the popularity of digital banking among consumers. Customers were kind of “crash-coursed” into accepting the provision of banking services through digital means. As an example, we have seen that the total applications for personal banking credit products via digital channels recorded a significant growth of more than 40% in the second half of 2020 compared to the first half year, and among that, those made via mobile apps already surged to account for 40% of the total digital applications. So the digital transformation has basically become a new normal. 3. Against such a rapidly surging acceptance of online services, it is indeed extremely important for banks to substantially enhance their operational resilience on top of all the challenges that they face due to changes in the pandemic situation. The industry has been doing a fantastic job in that, but also we should not lose sight of the impact that this is having on some areas which may not surface immediately. From our supervisory dialogue with banks, two notable impacts on bank culture caused by the pandemic situation are particularly worth our attention. 4. First, the pandemic disruptions may be taking away the momentum of culture effort which banks have been investing a lot in the past 4-5 years.

Thus, it can be said that slow export growth is as much the cause of the current account deficit as the expansion of domestic demand. Business Profitability and the Labour Market The external conditions of the economy in 1997 were largely unchanged from 1996, and were on the whole favourable. Business profitability seems to have been fairly good, although not as favourable as in 1996, because of the wage increases at the beginning of the year BIS Review 42/1998  -2-  and large depreciation and interest charges related to the high levels of investment in recent years, especially in the fisheries. The labour market situation improved further and unemployment declined to 3.9 percent on average, having come down from a peak of 5 percent in 1995. Real wages grew by 5.7 percent in the course of 1997, and were at year-end at their highest level since 1989. Prices Inflation remained subdued in 1997, or 2.2 percent in the course of the year, and 1.8 percent on average between 1996 and 1997. The Central Bank had, in the wake of the wage settlements, forecast somewhat higher inflation but wage increases did not translate into price increases to the extent shown by past experience. Productivity growth was higher than expected and the rise in import prices lower. In addition, the Central Bank’s measures restrained price increases, as I will discuss in greater detail shortly.
The fiscal authorities have no choice but to come to terms with the need to bring about a better balance between taxes and spending and to not only bend the curve, but reverse the inexorable growth in federal debt accumulation. This is the stuff of the great negotiations taking place among the executive branch and the two houses of Congress. This is no small chore. The parties involved must stop the hemorrhaging without inducing cardiac arrest; they must solve the long-run debt and deficit problem without, in the short run, pushing the economy back into recession, creating still more unemployment. And they must not only confront their addiction to debt and spending beyond their means, but they must reorganize the tax system, redirect the money they collect and rewrite the regulations they create so as to be competitive in a world that wants to beat us at our own game. This is an essential point. It will not be enough to reach a deal on the debt ceiling or on partially reining in deficits. In the post-Cold War, post-Bamboo Curtain world, there are many governments and great swathes of people outside the United States that want to attract investment and improve their lot. We are being challenged as the place to invest job-creating capital. Our fiscal and regulatory authorities do not operate in a vacuum; we live in a globalized, interconnected world where money is free to go to wherever it earns the best return.

News conference  Zurich, 17 December 2020 Andréa M. Maechler  Introductory remarks by Andréa M. Maechler I will touch on two areas in my remarks today: First, I will review developments on the financial markets over the last half-year; here I will comment briefly on our foreign exchange market interventions in 2020. Then I will speak about the imminent changeover from Swiss franc Libor to SARON. Situation on the financial markets  Investor risk sentiment has been extremely volatile since our last news conference in June, mainly due to developments surrounding the coronavirus pandemic. Over the summer months, economic activity and investor sentiment recovered following the relaxation of the containment measures introduced during the first wave of infections. In the autumn, the second wave of infections dampened investor confidence again, especially in Europe. Then, in November, news that coronavirus vaccines might soon become available caused market sentiment to return to a positive footing. In addition, various political risks, such as the Brexit negotiations and the US presidential elections, influenced risk sentiment. Monetary and fiscal policy on both sides of the Atlantic also played an important role in market developments. Having taken extensive measures to stabilise the markets in the wake of the turbulence in March, the US Federal Reserve (Fed) and the European Central Bank (ECB) have since confirmed the expansionary stance of their respective monetary policies. The ECB recently eased its monetary policy further by, among other things, increasing the size of its bond-buying programme.
In any case, the RER is within the range considered to be consistent with its long-term fundamentals. The materialization of any of these risk scenarios will have direct effects on domestic growth and inflation scenarios foreseen by the Board. After consideration of the aforesaid elements, the Board believes that the balance of risks for inflation and growth is unbiased. As pointed in the Financial Stability Report, these risks are also relevant for the Chilean economy’s financial stability. Therefore, banks and other financial intermediaries should consider these threats in their management and planning for 2010, assessing the adequacy of their capital base, prudently managing their liquidity in pesos and other currencies, and actively diversifying by counterparties and credit sources. The Board will continue evaluating the probabilities of these risks and their consequences on domestic inflationary and financial stability prospects. Conclusions I wish to wrap this presentation with some brief concluding remarks. As I said at the beginning, the last eighteen months have brought events that will be forever recorded in world history. Chile suffered the consequences of the financial earthquake of developed markets on confidence around the world. Economic activity dropped not only sharply but also with unprecedented speed. The same happened with inflation, which was in its long-time peak in October 2008 and is now in its lowest for decades. Activity already began to pick up in the third quarter. Although the y-o-y variation of the Imacec remains in negative territory, in four of the last five months it posted a monthly increase.

Domestically, monetary policy will remain expansionary, which, together with less tight financial conditions, also backs this projection. It is worth saying that these projections use as a working assumption that the policy rate will be kept at its low of 0.50% until at least the second quarter of 2010 and that its normalization will occur at a similar pace to that in December’s Economic Expectations Survey (EES), which is more gradual than the one implied by financial asset prices in the two weeks before the statistical closing of this Monetary Policy Report (figure 15). The scenario outlined here is, as usual, subject to several risks. On one hand, doubts about how robust will the global economic recovery ultimately be still persist. The latest data have been better than predicted in several economies, but financial markets continue to react with volatility in the face of unexpected events while credit losses are still being absorbed by financial intermediaries. The labor market situation is still complex in several economies, which, combined with the de-leveraging process under way, adds doubts about the capacity of consumption and investment around the world to regain strength. Another substantial risk has to do with the way in which central banks and governments will withdraw their unconventional monetary policy measures and fiscal and financial packages, and how this could affect the functioning of financial markets.
Two factors played leading roles in that development. The first is the relatively large share of foreign-denominated loans – an average of 20% for households and 70% for businesses. The latter factor is an unusually strong exchange rate pass-through effect, which stems from the magnitude of the exchange rate drop and the lack of confidence that the króna would recover in the near future. As a result, the principal of indexed loans – which constitute about 70% of household debt and 10% of business debt – was written up. As is often the case in severe financial crises that are at the same time country crises, there was a genuine risk of a multi-faceted spiral of currency collapse, inflation, debt crisis, and economic contraction. It was critical to stave off such a vicious cycle, and therefore of vital importance to stabilise the exchange rate. BIS Review 146/2009  1  But this was problematic because of the large amount of capital that had accumulated in Iceland through carry trading during the economic upswing. Current estimates indicate that some 500 b.kr. remain in the Icelandic economy. There was the risk that this money would try to escape through a collapsed foreign exchange market, with unimaginable consequences for the exchange rate. Thus it was quite possible that astronomical interest rates would have been required if exchange rate stability were to be achieved through interest rate policy alone.

However, when the adjustment is over, we should not be faced with persistent inflation, and it is the chief role of monetary policy to try to ensure that inflation does not become entrenched. The Central Bank published a new macroeconomic forecast yesterday, as well as announcing the Monetary Policy Committee’s interest rate decision. The highlights are as follows: •  GDP will contract by about 8½% in 2009 and by almost 2½% in 2010. •  The contraction for 2009 is rather smaller than previously forecast. •  Private consumption has declined less sharply so far in 2009, probably because disposable income rose more in 2008 than previously forecast, and because of pension fund payouts amounting to some 1½%of GDP in 2009. •  In addition, unemployment has risen less than previously projected. •  Recovery will begin in early 2010, in the sense that quarter-on-quarter GDP will begin to grow. 4  BIS Review 146/2009  •  At that point, however, Icelanders will still consider the situation unfavourable, and it will keep deteriorating for a while, as unemployment and the output slack will continue growing well into the year, as will the contraction in private consumption. •  As the second half of the year progresses, these factors, too, will begin to improve. •  As always, these projections are uncertain, and the economic recovery could prove stronger or weaker.
The deterioration in Norway's competitiveness relative to other countries stems from high wage growth over several years since 1998. The nominal krone exchange rate measured by the trade-weighted  BIS Review 66/2004  3  index (TWI) is now approximately at the level prevailing in the mid-1990s, while labour costs in manufacturing have risen considerably more than among our trading partners in the same period. The business sector is still burdened with the loss in competitiveness that can be attributed to high wage increases in the period 1998-2002. The exposed sector has been scaled back. Companies that are still in operation may be in a better position to cope with the high wage level. A more efficient service sector may also have strengthened the export industry. Nevertheless, costs may have negative impact on activity and employment. The cost level with the current krone exchange rate is close to 15 per cent higher than in the mid-1990s and about 6 per cent higher than the average for the past 30-35 years. Norwegian businesses are losing market shares in domestic and foreign markets partly because of the strong real krone exchange rate. In the face of major restructuring as a result of shifts in the international division of labour, it is a disadvantage for Norwegian business and industry that costs are high. Reports from Norges Bank’s regional network confirm the picture of an expanding economy. In the August/September round of interviews, our contacts throughout the country reported continued growth in all the main industries.

7 Consequently, our proposition could now include this consideration: Different economic agents will be more or less willing to invest in negative rate investments to the extent that their costs of handling currency are lower or higher than others’, and to the extent they have available to them zero interest rate economic arrangements. In addition, having talented individuals looking for these opportunities is a dead-weight loss to society. We would rather have them use their talents for more socially productive purposes. In addition to the convention that all prepayments of debt carry a zero interest rate, creditors often have the option of deciding when to settle a debt, for example by choosing when to deposit a check once it is received. In an environment in which negative nominal rates prevail, one would want to collect debts slowly (at least from creditworthy counterparties). 8 For example, if one were to receive a check from the U.S. government for a tax refund, one could simply put it in a safe place and earn zero interest on it during the time the check remained undeposited. (These practices could trigger further innovations, such as a check with a “deposit-by” date embedded in it.) How strong these incentives are depends on the level of the negative rates. The lower the negative rate and the more persistent it is expected to be, the more attractive these practices would be. Consequently, these zero rate economic arrangements form another constraint that would prevent rates from going too far into negative territory.
We believe that, in order to prevent problems at an early stage, the Bank of Russia should be granted the right for professional judgment, because the current strictly formalised approach to banking supervision often does not allow us to intervene when banks still have some assets, i.e. the owners have not yet withdrawn all of them. It is important mainly to protect creditors’ rights. The changed attitude to resolution also needs further discussion. Resolution has become a more frequent measure. We tightened requirements for turnaround managers over the year and will continue to do so. Now about the Bank of Russia’s activity as a megaregulator. We seek to enhance cross-sectoral approach in supervision and regulation, and in 2015, we worked out the first key document covering all sectors of the financial industry, ‘Guidelines for the Development of the Russian Financial Market in 2016–2018’. This document is envisaged by the law. We held detailed discussions of this project with business associations, including in parliamentary hearings, presented it in Russian regions for businesses to understand and contribute to our measures to develop the financial market. Some words about our achievements in the sector of non-bank financial institutions. Today, OSAGO is likely to be the most socially significant type of insurance. Let me remind you that in 2015 the tariffs were adjusted for the first time since the introduction of the compulsory motor insurance. By that time the situation in the OSAGO market was a challenging one.

In some regions it was almost impossible to buy the policy without additional foisted services, there were difficulties with reimbursement of damages. The overall situation has improved, but some regions still experience difficulties with OSAGO. We have introduced an electronic OSAGO policy. For now, only 200,000 electronic policies have been issued, that is not many. Therefore, we welcome the law that would bind insurers to issue an electronic policy upon the customer’s request from January 2017. Last year, we improved the European accident statement rules – documenting road traffic accidents without involvement of the road police has become easier and more convenient. Microfinance organisations. Microfinancing is discussed with fervour. I would like to stress, that we believe it to be short-sighted to ban microfinancing. Short-term loans are in demand and if there is no regulated business, consumers will turn to illegal lenders. We took measures to ensure better protection of citizens’ rights, primarily, by limiting the maximum effective interest rate and fines and interests on overdue loans. And I believe we should move from the fourfold maximum to the twofold on the legislative level. As for illegal lenders, this problem needs a legislative solution, among other things. The accountability of illegal lenders is currently not very serious, so to say. Moreover, ironically enough, the illegal lender can recover the debt in court. We believe it to be important to deprive agreements with illegal lenders of relief at law. Non-governmental pension funds. We have established a system of pension savings guarantees.
Diversity in financing instruments has also widened beyond green bonds, with around half of the funds raised so far in 2021 expected to come from the issuance of sustainability, sustainability-linked bonds as well as transition bonds. Fourth, an equity capital market with significant potential for growth. Singapore’s public equity market has seen increased trading interest amid the COVID-19 pandemic. However, other exchanges in the region have grown even faster. SGX has traditionally had more active volumes in less volatile, income-generating investments, such as REITs, compared to other growth-focused exchanges. This is a gap we are committed to bridging. An extensive consultation with market participants last year highlighted two key challenges: a perceived lack of institutional investor interest, and a dearth of high-growth companies listing in Singapore. These are chicken-and-egg challenges. The public and private sectors have together come up with a slate of measures to enhance the ability of our equity market to better meet the needs of issuers and investors: strong co-investment support; reduced listing costs and improved research coverage; a new listing pathway; and a platform for sustainable investments. We have launched two new funds for co-investment. The government has come together with Temasek Holdings to establish a new $ billion fund, called Anchor Fund @ 65, which will act as a cornerstone investor for promising companies looking to list on SGX.

Confronted with such dramatic developments, the Swiss National Bank (SNB) introduced a minimum exchange rate of CHF 1.20 per euro on 6 September 2011. Against the backdrop of a rapidly deteriorating global economic outlook and policy rates that were already at the zero lower bound, this measure helped to avoid an extreme tightening of monetary policy conditions. By setting a cap on exchange rate appreciation, the SNB provided some relief to businesses and bought them time to adopt measures that would reduce costs and improve productivity. Nonetheless, the Swiss franc remained highly valued. However, the minimum exchange rate of CHF 1.20 per euro was only ever meant to be an exceptional and temporary measure. A few weeks ago, on 15 January, the SNB announced its discontinuation. Publishing such a decision as a surprise announcement for the markets and the public was unavoidable. No pre-emptive guidance is possible for this kind of decision. Any guidance would have invited speculative attacks. Markets reacted accordingly, and the Swiss franc appreciated massively within minutes after the announcement. Although some of the overshooting has since been corrected, our currency is still trading at a significantly overvalued level as we speak. Once again, the reasons for the SNB decision are to be found in international developments. In particular, over the course of 2014 it became increasingly evident that the European Central Bank (ECB) and Fed policies would diverge. In the US, the ongoing recovery rendered the prospect of an exit from the unconventional policies more likely.