samchain/econo-pairs-v1 huggingface dataset:
There is no doubt that in the past few years saving has been particularly high in the Asian economies. In part, this reflects their wish to build up large balances in US dollars to protect themselves from financial crises that several of them experienced in the 1990’s, and also to maintain competitive exchange rates to allow export industries to absorb surplus labour. For example, although China invests an extraordinary 45% of its national income each year, it saves even more than this - 49% of national income in 2004. The resulting current account surpluses have been saved overseas, much of them in US government bonds. So, rather surprisingly, capital is flowing from some of the poorest countries of the world to some of the richest. Moreover, the rise in oil prices has raised the incomes of oil-producing countries, which have also chosen to save much of their additional revenues in overseas financial assets. Those surplus savings have depressed long-term real interest rates. In the industrialised world, consumers have realised that this is a good time to borrow and spend, resulting in the “imbalances” evident in the current account deficits of both the US and the UK. Whether long-term real rates around 1% are sustainable is an interesting question, and that uncertainty poses serious questions for monetary policy. On the one hand, the increased propensity to save across the world could start to unwind.

We are monitoring developments closely in order to evaluate any potential impact on the housing market, financial institutions and the overall economy. The key role that housing has played during this recession and recovery makes it a timely topic for our regional economic briefing. Regional economic conditions (update since the July regional press briefing) Now, let me turn to regional economic conditions. Overall, the recession seems to have been less severe in much of our region than in many other parts of the country, though unemployment remains unacceptably high. As attendees at previous Regional Press Briefings may recall, the New York Fed produces Coincident Economic Indicators to help track the performance of the regional economy. Since July, these indicators point to recovery in New York State, and particularly in New York City. Although New York City and New York State are recovering, elsewhere in the region, the story is different. In New Jersey, although activity is no longer declining, there has yet to be a sustained recovery. New Jersey’s economy remains essentially flat. An index produced in Puerto Rico by the Government Development Bank shows that the pickup in economic  BIS Review 137/2010  3  activity there in late spring and early summer has retreated and activity in the past few months has again turned down. Now, let’s look at jobs, which are the key for people to truly feel the recovery in their lives.
The issue was not capital raising as in the SCAP, but instead how fast should they continue to build their capital. What’s prudent? This translated into an evaluation about the amount of capital that they could prudently pay out via dividends and/or share buybacks. Fourth, with respect to the distribution requests, we were not calculating the amount of capital that the banks can distribute. Instead, we were making an “up” or “down” decision per their requests. Either we “objected” or we “did not object.” We want banks to have good capital planning processes and make intelligent decisions with respect to capital. We don’t want to determine their capital actions or what their distributions should be. They need to be able to do this. Fifth, with respect to disclosure, this decision was left to individual firms. In some cases, banks disclosed whether we objected or not to their plans for distributions, while in other cases they simply announced their intention with regard to future capital distributions. So what have been the lessons from our stress test exercises? One key issue during the financial crisis was the unwillingness of banks to proactively raise capital so they would be better prepared to withstand a “bad state of the world” scenario should that transpire. Banks didn’t want to do this for two reasons. First, capital raises might signal that they were, in fact, weak. Second, the capital raises would be dilutive.

We were fortunate that the need turned out to not be that great: $ billion of capital needed prior to capital actions already implemented and revenue generated during the first quarter of 2010; $ billion of capital needed after these first quarter actions.   We decided to apply the stress scenario on a consistent basis across all 19 banks. This entailed economists and bank supervisors working together to do analysis on both a top-down and bottom-up basis. This allowed us to generate aggregate estimates that made sense on an economywide basis. If we had just used the initial estimates supplied by the banks – we would have had a Lake Wobegon outcome – the banks would all have said that they were above average.   We specified the capital need in terms of dollars rather than in terms of a capital ratio. In other words, we did not allow banks the option of shrinking their risk-weighted assets in order to push up their capital ratios. We didn’t want banks to shrink to minimize the amount of capital needed because such behavior might have damaged the macroeconomy. I think this was an important macroprudential element of the SCAP.   Disclosure. This was hotly debated. There was no precedent for the disclosure of supervisory information. However, senior policymakers – including myself – thought disclosure was essential for the SCAP to be credible and we resolved to disclose extensive information. Disclosure allowed private-sector analysts to kick the tires and this was important.
It does not make sense to call for an increase in emergency reserves – gold holdings – and simultaneously prohibit the use of these reserves even in emergencies. The SNB’s overriding objection to the gold initiative stems from the danger it poses to the conduct of a successful monetary policy. It would severely impair the SNB’s ability to fulfil its constitutional and legal mandate to ensure price stability while taking due account of economic developments, in the interests of the country as a whole. Drawing the lessons: reinterpreting the financial stability mandate Let me close this digression and return to my main theme. Once the initial shock of the crisis waned, policymakers began to address the root causes. The crisis has revealed two deficiencies of the existing regulatory framework. And because central banks are well placed to address these deficiencies, it has led to a reinterpretation of their financial stability mandate away from managing financial crises and towards preventing them. In this final section of my speech, I will explain in more detail what the deficiencies of the precrisis regulatory framework were, and why central banks are well placed to address them. The first deficiency of the framework was the focus on crisis management. Before the crisis, it was thought best for central banks to act decisively once financial crises had occurred, rather than to try and prevent these crises from happening.

A telling example is our decision to implement the exchange rate floor vis-à-vis the euro that I mentioned above: with the initiative’s legal limitation in place, we would have been forced during our defence of the minimum exchange rate not only to buy euros, but also to buy gold in large quantities. Our defence of the minimum exchange rate would thus have involved huge costs, which would almost certainly have caused foreign exchange markets to doubt our resolve to enforce the rate by all means. Even worse consequences would result from the initiative’s proposal to prohibit the sale of gold at any time. An increase in gold holdings could not be reversed, even if necessary from a monetary policy perspective. In combination with the obligation to hold at least 20% of total assets in gold, this could gradually lead the SNB into a situation where its assets would mainly consist of gold: each extension of the balance sheet for monetary policy reasons would necessitate gold purchases, but whenever the balance sheet needed to be reduced again for the same reasons, we would not be able to resell our gold holdings. This would severely restrict our room for manoeuvre. Furthermore, because gold pays no interest or dividends, the SNB’s ability to generate profits and distribute them to the Confederation and the Cantons would be impaired. As a final point, note that currency reserves which cannot be sold are not truly reserves.
We estimate the GDP growth rate that can be sustained without pushing up inflation – potential GDP growth – at between 1.5% and 2%. This is lower than the growth rate we have observed since 2006. Measuring the output gap is tricky, however, because certain favourable factors, such as the influx of skilled labour, the deregulation of certain domestic markets and increased global competition might have pushed up potential GDP growth. Having said this, however, we should not overlook those factors which have the opposite effect. For instance, equipment investment has receded, which has a dampening effect on potential growth. Moreover, even if capacity utilisation as a whole is not excessive, bottlenecks might occur in certain sectors of the economy. And, above all, experience has shown that the output gap is often underestimated during phases of growth. Consequently, the risk of underestimating the output gap may now be greater than that of overestimating it. The third risk is associated with the future development of the Swiss franc. As its exchange rate is determined by the market, it is subject to fluctuations. Movements in the export-weighted Swiss franc index alter the degree of restrictiveness of our monetary policy. Normally, during periods of rising  2  BIS Review 67/2007  interest rates, this index tends to increase, thereby amplifying the effects of monetary policy by mitigating price increases in imported products and slowing the expansion in economic activity. This reaction pattern was not observed during the past two years, which could put pressure on interest rates.

Real interest rates for long maturities have therefore registered an increase. This is a new development because up until now, long-term interest rates had not clearly reacted to the progressive increase in the Libor. This will reinforce our efforts to tighten monetary conditions, since economic activity reacts more noticeably to long-term interest rates than to short-term ones. By contrast, in foreign exchange markets, movements in the Swiss franc have resulted in a relaxation of monetary conditions. As of the beginning of 2006, the Swiss franc started losing ground steadily visà-vis the euro. However, it firmed slightly against the dollar during the same period. Since our March assessment, the actual depreciation of the Swiss franc, i.e. weighted in terms of exports , amounts to 1.7%. The corresponding relaxation in monetary conditions is weakening the effects of our policy of lifting interest rates and is increasing inflationary pressure through two channels. One the one hand, it is bringing about an increase in import prices, which could have an effect on consumer prices. Even though the impact of this channel may have diminished during the past few years due to increased competition, there is no guarantee that – against the current backdrop of near full employment – it will not again be reactivated. On the other hand, it is strengthening the competitive position of our economy, thereby giving exports and economic activity a boost. As a consequence, the weak franc could heighten inflationary pressure in an economy already running at full steam.
The end price of a good is therefore influenced by factors such as the degree of competition, profit margins, wage developments and productivity growth in this sector. The ability to investigate this in greater detail is limited, however, by insufficient data. The part of the distribution sector that involves transportation saw a fall in unit labour costs in 2003 and 2004, while profit margins have recovered somewhat. In the statistics this sector includes a number of less relevant groups, such as restaurants, hotels and communication. In wholesale and retail trade, unit labour costs have increased at a lower and lower rate in recent years, and didn’t rise  4  BIS Review 25/2005  at all in 2004. Meanwhile, profit margins rose slightly after having fallen from 23 to 15 per cent in the past ten years (Charts 8 and 9). In addition, competition in the retail sector has increased considerably in recent times due to the establishment of more and more low-price chains. Among other things, that is being reflected in large-scale marketing campaigns in which one big chain store after another is advertising price cuts. Food prices in the CPI have also dropped. Nevertheless, profit margins appear to have increased slightly in 2004. That may be attributable to increased efficiency as a result of larger shop space, a higher proportion of own brands and possibly a more effective use of IT. Supply factors behind the low inflation This shows that supply factors are the main force driving the low inflation.

Irma Rosenberg: Why is Swedish inflation so low? Speech by Ms Irma Rosenberg, Deputy Governor of the Sveriges Riksbank, at the shareholders’ meeting of SBAB - Sveriges Bostadsfinansieringsaktiebolag, Stockholm, 13 April 2005. *  *  *  Introduction Thank you for your invitation to come here today. Inflation today is low and has fallen short of our inflation target since the middle of 2003. There are several explanations for this. One obvious reason is that our own interest rate cuts affect an important component in the consumer price index (CPI), namely homeowners’ interest costs, which decrease as a result. Another is the developments in electricity prices, although we had largely foreseen the effects of these. The principal factors, however, seem to have been the recent years’ high productivity growth in the Swedish economy and the drop in import prices. Current inflation is not the decisive factor behind the interest rate decisions that we make today. That is because it takes 1-2 years before rate adjustments have their full impact on inflation. Consequently, our interest rate decisions are based on an assessment of inflation prospects in the coming years. The current inflation rate is the starting point for this assessment, however, and it is therefore important to understand the underlying reasons for why inflation is so low today. Another reason is that it may be warranted in some situations to allow inflation to deviate from target for a period that extends beyond the normal forecast horizon, which is something I will be coming back to.
- by discouraging the repetitive and unjustified recourse to short-term contracts, including by some employees themselves, the recent unemployment insurance reform provides better incentives to work and to manage companies' human resources in a long term perspective. It will be necessary to assess whether it is both sufficiently effective and sufficiently fair. - of course, there remains the issue of wage increases when it comes to enhancing job attractiveness. These are currently highly expected by our fellow citizens in the face of the inflationary hump; but we must prevent the return of a general price-wage spiral, which would be a loss for all. Nevertheless, for certain jobs where there is a deficit not in skills but in attractiveness, wage increases and negotiated improvements in working conditions are the key. Page 12 sur 15 All these levers for influencing labour supply must be combined, instead of being too often opposed to one another in our public debate. They must be used with perseverance, rather than remain fleeting announcements. Only then can we find the other two missing thirds to gain the half point of potential growth in five years. Only then can we hope to achieve a 5% unemployment rate in ten years. And only then, and I'm coming to this point, will we finally be able keep our public spending under control. 2) Public finances and debt The figures on public debt are well known.

I would now like to discuss three questions in particular. The first is whether CSR is a stable concept or one that is still evolving? This concept broadly stems from that of sustainable development, which is defined as development that meets present needs without compromising the ability of future generations to meet their own. Its blueprint was set out at the 1992 UN Conference on Environment and Development in Rio de Janeiro (the first Earth Summit). It is based on the principle of development that is economically efficient, socially equitable and ecologically sustainable. CSR, whose initial objective was accountability, still largely appears to be an evolving paradigm closely linked to the current transition towards a new economic model. BIS Review 132/2008  1  In this respect, Rio brought to the fore the need for an ISO standard at the company level in order for companies themselves to take account of their impact and change their processes as part of a preventive approach. The UN addressed this dimension and brings together, under its aegis, the initiatives of the major companies that adhere to a relatively general charter. The Johannesburg World Summit on Sustainable Development (also known as Rio Plus 10 or the Second Earth Summit), largely focused on companies wishing to take centre stage in the protection of the planet and adopt a proactive role. The ethical dimension of CSR lends strength to the questions of stakeholders and employees as to how their funds are used.
[13] Building block 14: The European Central Bank is migrating to ISO in Real-time Gross Settlement (RTGS) payments in November 2022,[14] with the Bank of Japan having already migrated to ISO and completing version upgrade in 2025. To support further progress, in May 2022, the CPMI published reports on expanding access and extending operating hours. [15] These relate to two foundational building blocks that can enable the progress of many other building blocks of the roadmap. Today I want to discuss why these two reports are critical and how central banks, industry and public authorities can play a key part in advancing the roadmap. How improving direct access can enhance cross-border payments The Building block 10 report assesses the benefits and risks of expanding access to domestic payment systems in particular RTGS systems. Expanded access could enable non-bank PSPs, financial market infrastructures (FMIs) and foreign banks to gain direct access to the payment systems they rely on to provide payment services to end-users, without relying on an intermediary (who maybe also be a competitor). According to a CPMI survey, approximately 30% of the payment systems allow non-bank PSPs and FMIs direct access[16] and 28% reported have made significant changes to their direct access policies since 2010. And despite the fact that the 61% of payment systems that are considering to expand access within the next 5 years, only 7% have concrete plans to do so. Expanding access could have some clear benefits for cross-border payments: 1.

Frantic Treasury officials tried to correct the Chancellor’s mouse-handling technique – but they needn’t have bothered because the equipment had wisely been disconnected from anything that mattered. Indeed, CREST had already been running for some hours… Figure 1: The official launch of crest (15 July 1996)  CREST itself was far from a publicity stunt, however. Its introduction finally enabled the much-needed dematerialisation of equity settlement into electronic form, sweeping away the antiquated paper-based Talisman system, bringing some of the UK’s most important financial market plumbing into line with its front office systems, and catapulting it towards best-in-class internationally. Today, CREST accounts for half of the payments processed through the Bank’s RTGS system – around a quarter of a trillion pounds every day. BIS central bankers’ speeches  1  The launch of CREST was a particularly important moment for the Bank of England, because the team that designed and built CREST was drawn predominantly from the Bank’s own staff, hurriedly called into service after the disastrous collapse of the Stock Exchange’s own project to dematerialise equity settlement, “TAURUS”. Indeed that time also has an important place in my memories. My first job at the Bank was in its Financial Markets and Institutions Division, one of the areas from which the CREST team was taken. I vividly remember the gaping hole left in the office, complete with empty coffee cups and discarded paper files, when the team left for their new premises.
Under Pillar II, supervisors will assess the integrity of banks’ internal economic capital models - focusing on aspects that are not well-captured in the Pillar I framework, such as the firm’s correlation assumptions within and across portfolios and the rigor of its stress testing programs. Finally, under Pillar III, supervisors will seek to ensure that accurate information about risks will be disclosed by banking organizations. Areas of possible concern with Basel II Procyclicality While I have emphasized the various benefits of Basel II for effective supervision and the preservation of financial stability, there clearly are some possible downsides of the new approach. Concerns have been raised that the adoption of the new Accord will have some destabilizing effects on the international financial system, and emerging market economies in particular. Chief among these is the concern that Basel II will amplify procyclicality as Basel II adopters severely tighten credit standards in response to rising capital requirements in the event of deterioration of credit conditions. We do expect that minimum capital requirements will rise and fall in response to changes in the risk of a bank’s activities, just as the internal economic capital models currently used by banks reflect changing risk exposure by changing capital levels. By itself, this will mean that, even with some changes the Basel Committee made over the years to lessen the effect, some procyclicality still remains.

Impact on financial stability  Like other central banks, the Bank of Algeria faced the need to strengthen the surveillance of systemic risk, particularly in relation to the volatility of hydrocarbon prices in international markets and the interconnectedness of financial institutions within the banking sector. To address these concerns, banking legislation, as amended in 2010, has extended the central bank’s mandate to include the objective of financial stability. With this amendment, the financial stability mandate becomes of equal importance to the price stability mandate. In practice, it is worth noting that the contribution of monetary policy to monetary and financial stability in Algeria is crucial in view of the dominance of the banking sector in the financial system and its potentially important role in the development of financial intermediation. This contribution is of particular importance in the context of persistent excess liquidity in the money market since 2002. To strengthen the operational framework of financial stability, and following the introduction, in 2010, of new accounting rules of international standard, risk assessment rules with regard to new financial products and the introduction, in 2011, of new regulations regarding liquidity risk identification, measurement, management and control, the Council of Money and Credit (the monetary authority) promulgated in 2014 a new prudential framework to ensure conformity of the prudential rules to the new Basle norms and standards.