samchain/econo-pairs-v1 huggingface dataset:
They account for around half of total employers’ contributions to private pension schemes. 4  It is option-like because of the asymmetry between extracting surpluses from pension funds and making good deficits. BIS Review 47/2006  3  In the asset allocation of a fund, company sponsors face, at one remove, a trade-off. On the one hand, if a fund holds risky assets, it will earn a risk premium but its value will tend to be more volatile, varying with the long-term risk-free rate used to discount its liabilities and the value of its risky assets. On the other hand, a fund could choose to hold only risk-free assets matching the characteristics of the scheme’s liabilities; for example, buying annuities which can hedge the duration and longevity risk in known pension liabilities. In that case, the fund’s expected returns will be lower, and so sponsor contributions will have to be higher in order for the fund to meet the scheme’s future obligations. In short, company sponsors face some sources of avoidable uncertainty about the future value of their pension funds, with the level of their contributions akin to a premium paid to reduce or remove that uncertainty. (The funds’ trustees face a subtly different risk trade off, in which they need to weigh the correlation of the risks in the asset-liability mix of their fund with the risks to the sponsor’s business and net worth, and so to its capability to meet any future fund shortfall.)

Paul Tucker: Uncertainty, the implementation of monetary policy, and the management of risk Speech by Mr Paul Tucker, Executive Director and Member of the Monetary Policy Committee of the Bank of England, at the Association of Corporate Treasurers, Newport, 19 May 2006. *  *  *  Many of us would probably say that we do not much like uncertainty, whether at work or home. But we cannot escape it, and it provides opportunities. Rather, we want to be compensated for the risk, or to mitigate it, or both. What I think we actively dislike is avoidable uncertainty. And from the point of view of society, we should dislike uncertainties that are both avoidable and especially costly to mitigate for those who bear the consequent risks. I am going to discuss some sources of avoidable uncertainty – or volatility – that have affected you as corporate treasurers. And I will discuss some unavoidable sources of uncertainty, and what they might mean for risk management, at the level of firms and of the financial system as a whole. Avoidable uncertainties: the monetary regime, and the implementation of monetary policy For too many years in the UK, we lived with a large but avoidable element of macroeconomic uncertainty. It was unclear what rate of inflation households and businesses should expect to prevail over the medium-to-long run. In other words, it was unclear what policymakers were trying to achieve; whether their goals shifted about; and whether policy makers would succeed in delivering those goals.
Over time, growth in real wages must be consistent with growth in labour productivity. An inflation target of 2½ per cent and trend productivity growth of around 2 per cent, according to updated national accounts figures, imply annual nominal wage growth of about 4½ per cent. Under the “Solidarity Alternative” in the 1990s, a stable exchange rate and the rate of wage growth among our trading partners functioned as an anchor for the social partners. Up to 1997, this anchor remained effective. However, growth in labour costs jumped in 1998 and has since been around 2 percentage points higher than among our trading partners. Wage growth is high in relation to earnings in many enterprises. It is demanding to improve efficiency at the pace required to keep up with the rise in labour costs. 10  BIS Review 49/2002  The sharp rise in labour costs in recent years carries with it a potential for higher unemployment. The interest rate is an effective instrument for countering lower demand and growing unemployment when measures to stimulate demand do not translate into higher wage growth or unstable financial markets. However, there is little monetary policy can do to prevent an increase in unemployment that is driven by high cost inflation. Developments in wage settlements have been a driving force behind the appreciation of the krone. The foreign exchange market has responded as expected.

In financial law, the accession countries need to satisfy a number of provisions of the Treaty which have been applicable to the EU Member States since before the establishment of the ECB and the start of the third stage of EMU. In particular, statutory provisions providing credit facilities for public entities with a national central bank have to be revoked, together with provisions providing access for public entities to funds from credit institutions on terms which are not market-oriented. Moreover, capital movements need to be liberalised and statutory obstacles to the freedom of capital movements removed. BIS Review 84/2001  3  Some of these changes may be difficult to introduce before accession, and several accession countries will only achieve full compliance at a later stage when accession is imminent. In the area of banking law, more immediate progress has been achieved. For instance, several accession countries have introduced completely new banking legislation, aiming at compliance with the standards for EU financial markets in accordance with EU Directives relating to credit institutions. A similar need for legal implementation pertains to the areas of capital markets and payment and securities settlement systems, but in these fields further changes are required. Finally, the reduction of risks related to central bank operations also requires a legally sound collateral regime, which provides legally effective arrangements not only for repurchase and pledge transactions, but also in relation to insolvency proceedings. Again, this is a technically difficult area where the accession countries still need to catch-up with EU standards.
It inspires confidence, even though it may lack precision - in fact what I think it means is that the authorities will not stand in the way of a strengthening of the dollar, rather than that they would necessarily resist a weakening. By contrast, different Japanese officials have over the past years made rather different pronouncements about where the yen should be and what they might or might not do to secure that. International sentiment towards the yen and investment in Japan appear to have been damaged by such apparent vacillation. BIS Review 23/2000  4  If these arguments are transposed to Euroland, they imply that the ECB must continue to develop its own identity and assert its own policies. Emerging uncertainties over whether an exchange rate policy is lurking somewhere in the background should be firmly resolved. Furthermore, national central bank governors and finance ministers should exercise extreme self-discipline in commenting publicly on monetary policy if their views in any way diverge from the official ECB line, notwithstanding the withdrawal symptoms from which they may suffer. The problem was nicely summed up by the caption beneath a photograph of G7 finance ministers in a recent edition of your German magazine, “Capital”. It noted that there was just one minister each to speak for the dollar, yen and pound, but three who debated with one another about the euro.

This includes the increased pressure on financial institutions  BIS central bankers’ speeches  3  and regulators to have incentive systems, governance, accountability and controls to address the issues of over-emphasis on short term performance, reckless risk-taking and the pervasive conflict of interests. In tandem with this, is the stronger focus to spur consumer activism as a means to encourage more responsible and sustainable business practices. It is in this area that financial institutions can have an important role in creating positive conduct and behaviours among financial participants in the industry, as well as contributing towards uplifting the state of financial education and consumer awareness. Third, is the strengthening of boards’ effectiveness and accountability, and sound governance of financial institutions. Following the crisis, i.e. the global financial crisis, corporate governance practices in the financial industry have come under significant scrutiny. There have been increased expectations on the management, boards of financial institutions and on regulators to significantly improve governance practices, particularly in the area of risk management policies and procedures. At the international level, substantial enhancements have been made to standards on corporate governance. The growing expansion of ASEAN banks in the region, must therefore be accompanied by an increased emphasis for the boards and senior management of financial institutions to provide the leadership and oversight of group-wide risks arising from cross-border operations. Greater diversity of boards to appreciate cultural nuances and competitive dynamics in different markets will hence be key to support sustainable cross-border operations of the institutions.
Hong Kong is fortunate to have a strong presence of international financial intermediaries who can leverage on their global network of expertise to develop and structure a variety of Shariahcompliant products here. 16. It is also crucial for fund raisers and investors to be aware of the benefits of Islamic capital market instruments and understand their structures and operations. So, we have been working very closely with the TMA and international bodies like the IFSB in bringing Islamic finance seminars and workshops to Hong Kong market participants, like the seminar today, in an effort to raise the awareness and deepen the knowledge of Islamic finance among the financial community. With the gathering of such a distinguished group of speakers, I am sure that we shall obtain useful insights and get a clearer picture on how to prepare ourselves for the exciting developments in the years to come. 17. I wish this seminar every success, and to our overseas friends, an enjoyable stay in Hong Kong. Thank you. BIS central bankers’ speeches  3

Developed countries must make costly, complex, yet unavoidable adjustments. The experience of the developed world confirms the need to safeguard macroeconomic balances, both public and private, as well as a strong, well regulated financial system. The fragility of financial systems and fiscal accounts of some developed economies have caused a recoiling of living standards and could compromise their growth ability for a long while. 6  BIS central bankers’ speeches  Figure 1 Gross domestic product  (index, IV.2007=100, quarterly series) 115  115  110  110  105  105  100  100  95  95  90  90  IV.07  IV.08 Chile  IV.09 U.S.  Eurozone  IV.10 U.K.  Sources: Central Bank of Chile and Bloomberg. Figure 2 Real exchange rates around the world (index, July 1994-July 2011 average = 100)  180  160  160  140  140  120  120  100  100  80  80  60  60 Russia Brazil Czech Rep. Australia Hungary Canada Indonesia Switzerland N. Zealand Poland India Philippines Turkey China Chile Thailand South Africa Israel Norway Mexico Peru Malaysia Eurozone Japan South Korea Sweden U.S. U.K.  180  Range (*)  Spot  Average  (*) The range shows peaks and troughs of the local currency during indicated period. The scale has been adjusted to 180. The peak value for this country was 225. Sources: Central Bank of Chile and Bank for International Settlements (BIS).
And even if inflation expectations are well anchored to the target they will remain so only if interest rates continue to be set to keep inflation close to the target. The 1980s provided a stark example of a rapid acceleration of prices with few early warning signs. From 1983 onwards, RPIX inflation was stable - relative to recent experience at that time - with most of the outturns in the 3.5% to 5.5% range until mid- 1989, and wage inflation was high but not on any clear upward path. Within a year, and despite a 6 percentage point increase in interest rates between 1988 and 1989, RPIX inflation reached 9% and wage inflation exceeded 10%. Inflation expectations, as measured by surveys, began to rise as soon as inflation itself took off. What does this analysis mean for the future path of interest rates? For some time the Monetary Policy Committee has been expecting a rebalancing of the economy as domestic demand, especially consumer spending, slowed in order to make room for faster growth in public spending, net exports and investment. Revisions to the official statistics suggest that consumer spending has slowed to a more sustainable rate over the past two years from its heady pace during the previous five years. Investment has now picked up, growing by over 7% over the past year. And this has been against the background of the fastest growth of the world economy for almost thirty years.

Is it established, or is it new and unknown technology? We also know that attitudes towards security and operational risk are important. But with tech firms rushing to offer new products to the market, there is the risk of insufficient emphasis on security. This is a risk that must be monitored – not only for new products or for new players, but also for incumbent businesses. Tech giants like Google, Apple, and Alibaba look set to become dominant players. Their advantage comes from providing cross-border services and having already gathered significant information about users. They are already present in the Nordic marketplace. This development may lean towards monopolies, as it can create entry barriers for new and smaller players in the market. If that proves to be the case, it could have a negative impact on competition and go against the aims of the PSD2 (the recent EU Directive on payment services in the internal market (2015/2366). This risk is greater when the payment mechanisms are outside the jurisdiction of the relevant state. Then there is the question of supervision. Will the new solutions be supervised, and if so, how? The challenge here is that many new solutions are global, and thus outside the European Economic Area or the European Single Market. Such supervision thus requires crossborder cooperation among supervisors. The challenge for the supervisor is also to maintain a comprehensive overview of the market.
In a crisis there should not be any need for systemically important banks to be bailed out by the state. Monetary policy and macroprudential measures are closely linked. Sometimes monetary policy demands a low policy interest rate in order to ensure price stability and support economic activity, especially if the Swiss franc is overvalued. However, low interest rates can translate into a build-up of imbalances on the mortgage and real estate markets. To increase banks’ resilience to the correction of these imbalances, macroprudential measures are needed. The countercyclical capital buffer, for which the SNB may propose changes, is one such measure. Stability: a long-term asset with potential short-term costs Ladies and Gentlemen, price stability and financial stability are indeed important long-term assets for the financial sector and the entire economy. As an independent central bank with its own currency, the SNB has been successful in providing long-term stability. Switzerland has had significantly lower and more stable inflation rates than most other countries (cf. chart 2). Our long history of price stability, a reliable political and legal environment, and efficient institutions have resulted in an interest rate bonus. This is more pronounced for the long-term part of the yield curve than for the short-term part. Ten-year government bond yields have typically been lower in Switzerland than in Europe and the US. In addition, having its own currency plays an important role in Switzerland’s attractiveness. It makes it possible for us to conduct our own monetary policy, with monetary conditions adapted to the Swiss economy.

Thomas Jordan: Monetary policy and the business cycle Summary of a speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the 75th anniversary celebrations of the KOF Swiss Economic Institute, Zurich, 23 September 2013. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Monetary policy contributes to the prosperity of an economy by ensuring price stability in the medium and long term. This makes it possible to put resources to more efficient use, from an economic point of view, and also promotes investment and, with it, long-term growth. Price stability also helps to avoid undesirable distribution effects. Households with lower incomes derive particular benefit from this. Monetary policy can be used to dampen cyclical fluctuations. However, it is not suitable for short-term fine-tuning of the economy. From the point of view of the business cycle, the goal of monetary policy must rather be the reduction of larger risks and the alleviation of extreme situations. An example of one such measure is the minimum exchange rate, which the Swiss National Bank (SNB) set on 6 September 2011 to halt the Swiss franc's upward trend, thus averting a deflationary spiral and warding off the danger of a serious economic crisis. Monetary policy decisions are always subject to uncertainty. It is therefore of key importance that the SNB has a sound decision-making basis.
Conclusions for monetary policy All in all, growth prospects for the short term are somewhat more unfavourable than when we published our most recent inflation forecast. However, the major economic policy realignment in a number of important countries looks like paving the way for a recovery after a time. But this does presuppose that households and firms really do start to consume and invest. Major risks here are saving imbalances and over-investment. In Sweden, too, there has been an expansionary realignment of economic policy that is helping to strengthen household income. Provided there is an international recovery, the weak krona should have a stimulatory effect on exports. As regards inflation, the rate since April this year has been above the Riksbank’s target. The increase is mainly due to transitory factors and I envisage that it will, as before, dwindle during the spring. This presupposes, however, that the price rise does not spread to other items or lead to wage increases. Another argument for a future easing of inflationary pressure is the existence of unutilised resources as a result of the slowdown. However, in my opinion, the Riksbank must watch developments closely to ensure that the recent rise in the inflation rate actually falls and does not stick. Most indicators appear to imply that inflation will be close to the target level of 2 per cent, or at least within a small margin on one side or the other.

What I have in mind is next year’s prospect of a relatively large increase in fiscal policy’s contribution to household disposable income, accompanied by low interest rates. An expansionary economic policy normally tends to stimulate cyclical activity, which implies that 2002 should be a fairly good year for domestic demand. However, there are at least two factors that could limit or counter this effect. One factor has to do with the lower share prices and the tendencies for house prices to stop rising and in certain cases to fall. In recent years, purchases of cars and other consumer durables have been stimulated by the appreciation of assets that feature in household wealth. Conversely, falling asset prices during the past year have tended to subdue these purchases. The stimulus from economic  BIS Review 98/2001  3  policy may accordingly be dampened or delayed as long as asset prices continue to fall. Of course, the situation will be reversed if share prices and property prices instead stabilise, or even begin to rise once again. Another factor is connected with the risks in the labour market. The redundancy statistics suggest that employment will level out or even fall next year, which may involve an attendant increase in unemployment. Households are already expressing such fears in Statistics Sweden’s surveys. Besides the direct downward effect on household disposable income, a weaker labour market may make people in Sweden more cautious when making purchasing decisions.
This may affect the formation of monetary policy. The risk of conflicts between the inflation target and the need for exchange rate stability is sometimes emphasised in discussions. For several reasons I do not believe we need to be particularly concerned about that. For one thing, ERM2 participation is not an ordinary system of fixed exchange rates but the preliminary stage of acceding to a monetary union in which exchange rates are irrevocably locked. So currency unrest during this period should really only occur in the event of uncertainty about Sweden's EMU participation on account of problems either in Sweden or in EMU. Note that these risks are not really economic but political. Presumably they would also be extremely small in a situation where accession to ERM2 has been preceded by political agreement both in Sweden and in the rest of the European Union. Moreover, currency risks arise as a rule when economic policy is out of step with the fixed exchange rate. If Swedish monetary policy before and during the ERM2 period is focused on price stability and economic policy in other respects is also in line with the direction in the monetary union, the risks of a currency crisis would no doubt be even smaller. Furthermore, the ERM2 period will presumably be comparatively short and directly connected with Sweden's subsequent full participation in the monetary union. If the Swedish economy is in step with the euro area on accession to EMR2, the probability of any serious imbalances having time to arise is therefore small.

In contrast to the United States, slower growth of external demand was not sufficiently offset by stronger domestic demand growth in the Eurozone, so that, instead of the expected pick-up in overall output growth, activity in fact increased progressively more slowly. Largely as a result, the euro has depreciated in the foreign exchange market and economic performance in individual participating countries has diverged more than might have been expected. This has been a disappointment to some proponents of the euro and has been seized upon by eurosceptics as evidence of its risks. We need to be cautious, in my view, in interpreting this initial experience in the present unusually difficult global economic environment. As demand strengthens in the Eurozone – and the latest indicators from Germany are more encouraging – the likelihood is that the euro will recover and some of the present tensions ease. It has always been clear that there are potential risks of economic divergence within the Euro area to be weighed against the more obvious potential economic benefits of the single currency. The question has been just how significant are those risks likely to be. That will, ultimately, always be a matter of judgement. But it would be premature, in my view, to reach that judgement based on today’s abnormal circumstances. Now we, in this country, have of course been battered about, like everyone else, by the global turbulence. There is no way that we could have avoided its impact – either through fiscal or monetary policy.