samchain/econo-pairs-v1 huggingface dataset:
Last autumn, the Storting decided to spend less than 3 percent of the Fund over the fiscal budget for 2014. It would seem that the return and actual spending of petroleum revenues are moving in opposite directions. The figures 3 and 4 have apparently switched places since 2012. Petroleum revenue spending is not falling in absolute terms. On the contrary, fiscal policy has stimulated overall demand in the mainland economy over several years. The sharp increase in the value of the Fund is the main reason behind the decline in the percentage share of spending via the fiscal budget. Quite paradoxically, low growth and low interest rates abroad are probably the main factors behind the solid performance of the Fund over the past two to three years. 6  BIS central bankers’ speeches  Chart 10: Annual return on the GPFG Since the end of the 1990s, a persistent fall in yields has driven up government bond prices. In recent years, the unconventional monetary policy measures of the world’s major central banks have contributed to even lower interest rates and higher prices for equities and other securities. This has resulted in above-normal returns on the Fund’s investments. But today there is no longer room for a considerable fall in interest rates and equity prices have risen to fairly high levels. Chart 11: Annual return on the GPFG divided into value gains and cash flow Our return measure includes both value gains and direct cash flows, which comprise dividend and interest income.

It is now feeling the full force of a severe shock that is impacting both supply and demand. Our monthly business survey of 8,500 businesses carried out between 27 March and 3 April illustrates the effect of the lockdown measures that have been in force since 17 March. The measures have had a major impact on business activity, which was down by 32% in March, and consequently on our quarterly GDP growth estimate which was down by around 6% in the first quarter. In all sectors, activity is dropping, and in most cases, dramatically. This decline is not solely the result of the context in France. Orders from abroad have also been badly hit, as the epidemic is affecting the majority of French businesses’ major trading partners. In industry, the automobile, metallurgy, and machinery and equipment manufacturing sectors were the worst affected by the decline in activity. For  Page 2 of 8 industry as a whole, the capacity utilisation rate fell from 78% in February to 56% in March, which is the lowest rate ever recorded in the survey. In services, the greatest slump was seen in accommodation and catering. Construction sector activity also deteriorated significantly, as a number of construction projects were put on hold at the beginning of the lockdown period (Slide 3). In short, at the end of March, the economy was running at two-thirds of its normal pace.
Easy money is bad for you Slide 1: Landes quote In his book The Wealth and Poverty of Nations the historian David Landes describes how the Spanish empire went into a long period of decline when the flow of Latin-American gold dried up in the mid-17th century. According to Landes, the moral of this story is that “easy money is bad for you. It represents short-run gain that will be paid for in immediate distortions and later regrets.” 1 As a country rich in natural resources, Norway has shared and tried to learn from this experience. Perhaps the quotation from Landes also rings true for all those who borrowed cheaply during the boom before 2008, and who now have to face the consequences. Windfall gains, like large and unsustainable capital flows from abroad, are double-edged. They provide short-term relief from hard choices, but may carry with them hardship in the longer term. Slide 2: Output gap: A boom-bust economy After the discovery of oil in the North Sea in 1969, government spending and social programs expanded rapidly in anticipation of future petroleum revenues. We sought to build a bridge across the post oil-shock recession in Europe. But it was a bridge to nowhere. Fiscal policy had fuelled a boom-bust economy. Inflation soared to double digits. A deep recession started in the late 1970s. Slide 3: Current account balance: Large external deficits The non-oil tradable sector struggled as costs had increased. By 1977, Norway’s current account surplus had turned into a deficit of 12 percent of GDP.

Lessons from the crisis The high equity share, the capacity to increase the risk level in certain periods and the need for diversification are derived from the Fund’s characteristics. Let me now review some of the lessons from the financial crisis that have also shaped the development of the Fund’s strategy. These changes are closer to the centre of the European debt crisis. The risk tolerance of the Fund is to a large degree defined by the strategic equity share, which, as I mentioned, is 60 per cent. Since the Fund is heavily exposed to risk by virtue of its relatively high equity share, the function of government bonds is in essence to reduce the overall volatility of the portfolio. From this perspective, the most important role for government bonds is to hedge the equity portfolio. The hedge is best achieved by holding liquid government bonds with high credit quality. Typically, this entails an overweight of the safest, low-yield government bonds. Conversely, high-yield government bonds are more volatile, and thus they do not serve the overall purpose as a hedge in a global portfolio. 4  BIS central bankers’ speeches  Slide 14: Fixed income: new benchmark The Fund’s benchmark index for bonds is divided into 70 percent public and 30 percent corporate debt. Previously, the allocation in the bond portfolio was based on market weights, and thus the portfolio was allocated in proportion to volume of the sovereign debt issued by each country.
M R Pridiyathorn Devakula: Economic and financial crimes - challenges to sustainable development Remarks by Mr M R Pridiyathorn Devakula, Governor of the Bank of Thailand, at the Eleventh United Nations Congress on Crime Prevention and Criminal Justice, Bangkok, 19 April 2005. *  *  *  Mr. Chairman Thank you for allowing me an opportunity to share with you some thoughts on the issue of "Economic and Financial Crimes: Challenges to Sustainable Development". From the topic of this Plenary Session, I assumed the organizer would probably want an answer as to whether economic and financial crimes are obstacles to sustainable development. The answer is a definite YES. The ultimate objective of managing the development of an economy is the well being of the people. There is little need to elaborate on how activities such as Drug trafficking, Exploitation of natural resources, Exploitation of child labour, Corruption, Misappropriation of funds from banks, Cheque or credit card fraud, Stock price manipulation, and Tax evasion affect the economic well being of the people. The message I would like to highlight today is rather that the consequences of these undesirable activities go well beyond the financial loss and the economic well being of society and the country. In my opinion, what is more important than economic well-being is the feeling of living in a fair and just society.

Singapore aims to peak its carbon emissions around 2030 and achieve net zero as soon as viable after 2050. Climate change presents two significant risks to the financial system. Physical risk arises from the impact of climate-related natural catastrophes and widespread environmental degradation. Transition risk arises from the process of adjustment to an environmentally sustainable economy, including changes in public policies, disruptive technological developments, and shifts in consumer and investor preferences. At the same time, the financial sector plays a key role in the fight against climate change. Finance is key to unlocking a sustainable future. It can support the transition to a less carbon intensive economy and channel capital to green technologies and infrastructure. This is why MAS is incorporating climate change and environmental sustainability across all its functions. As central bank and financial regulator, MAS is working with financial institutions to strengthen the Singapore financial sector’s resilience against environmental risks. 1/9  BIS central bankers' speeches  As promoter of Singapore as an international financial centre, we are working with financial institutions to develop a vibrant green finance ecosystem to support Asia’s transition to a low-carbon future. As the guardian of Singapore’s official foreign reserves, MAS is integrating climate risks and opportunities into its investment framework. As an organisation, MAS is reducing its own carbon and environmental footprint to support Singapore’s broader climate ambitions and commitments. A FINANCIAL SECTOR RESILIENT AGAINST ENVIRONMENTAL RISKS Let me begin with strengthening financial sector resilience against environmental risks.
Domestic institutional investors – particularly the pension funds – will play an important role in bringing about sustainable stability. As of the end of July, Iceland’s pension funds owned over 500 b.kr., or 3.3 billion euros, in foreign assets, but their liabilities are entirely in Icelandic krónur, and their ability to hedge against foreign exchange risk is limited. As such, given the historically low real exchange rate, it is reasonable to expect that there might be an opportunity to reduce their exchange rate risk. Some pension fund executives, however, have stressed that the dearth of domestic investment opportunities with an acceptable risk-return balance makes a shift to domestic assets problematic. The Icelandic economy is still fettered by a debt crisis, and for a while Government-guaranteed bond yields fell below levels that many pension funds considered acceptable. But domestic investment opportunities will grow in number as corporate debt problems are solved. It may also be the case that the pension funds’ required yield for the lowest-risk domestic bonds is simply too high. Although the actuarial assessment of their position is based on a given yield, it appears unrealistic to demand this yield on assets with the lowest-risk with respect to the pension funds’ liabilities. The capital controls – and more particularly, it seems, some parties’ expectations that they will remain in effect for a very long period of time – have played a role in generating relatively low yields.

The real exchange rate of the króna is somewhat below its likely long-term average, although it has risen in the past year. 6  BIS Review 138/2010  As economic recovery gains pace, the outlook for capital account liberalisation improves. Recovery tends to be accompanied by increased inflow of foreign capital in the form of credit or direct investment. Significant inward foreign direct investment could set the stage for removal of the controls. Although suggestions that recovery began late in 2009 or in the first half of 2010 have proven to be a mirage, a number of indicators imply that Iceland has hit bottom or is close to it, and that growth will resume in the latter half of this year. But the pace of the recovery will depend greatly on our success in attracting foreign capital for exportgenerating investment. The main objective of the IMF programme is to build confidence in Iceland’s economy and economic policy. If that confidence existed now, it would be possible to lift the controls today. Considerable discussion has been devoted to the instability of foreign capital that could flee as soon as the controls that hold it in place are reduced or eliminated. Although the magnitude of foreigners’ frozen ISK assets is broadly known, information on non-resident retail owners of ISK assets is largely hidden.
I gave a speech last November setting out by views on the longer-term effects of Covid more generally, on what we buy, what we make and how we work. I don’t have time today to repeat everything I said then; and indeed with only eight months having elapsed, there is a limit to how much more we have learned on the subject. That part of the map remains sketchy at best. But I will mention a few points that are particularly relevant to my subject for today and to the three considerations that I outlined earlier. The first point is about the sectoral impact of Covid. One of the most striking economic features of the pandemic has been the differential impact between and within sectors. At the peak of the crisis the pandemic induced a material change in consumption patterns. Much of that sectoral shift has unwound as the economy has recovered; but some of it has persisted, and some further shifts have occurred – it is that sectoral imbalance between demand and supply that accounts for many of the bottlenecks and cost increases that I 9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  mentioned earlier, and that explains why some firms are continuing to hold workers on furlough even as others are posting vacancies. How rapidly the balance of sectoral demand and supply adjusts will be one factor that determines how quickly inflation returns to target – my second consideration. The second point is about potential scarring effects.

Back in February this year the MPC asked the Bank to take steps, and the PRA to engage with PRA-regulated firms, to ensure negative rates could be implemented in practice if needed; that work is due to complete in August. And the MPC have begun work to reconsider our previous guidance on the appropriate strategy for tightening monetary policy, as we committed to in our February minutes. Of course I am just one of nine members of the MPC navigating a path for the economy on this journey – different MPC members will have their own views about where the economy is heading and what the appropriate path should be. The personnel on the expedition are also changing; at the August MPC meeting we will temporarily be down to eight members and there will be two new members joining later in the year. Back in March last year the outlook for the economy was in pretty uncharted territory. Over time prospects have become clearer and we have become more able to rely on the map provided by our forecasts. Now that the recovery is becoming more established, and the risks are once again two sided, we are heading back to more familiar, but still challenging, ground. The map is becoming more detailed and the contours for the immediate path ahead are filling in, but at the same time choosing the precise direction of travel is becoming less straightforward.
Although the details of this programme are still being worked out, the volume of the funds involved, which including the IMF contribution could amount to as much as € billion, seems sufficiently illustrative of the determination of governments to defend the common European project. Naturally, as in the case of the initial support package for Greece, the possible financial support will always be subject to a strict principle of conditionality, as an indispensable factor to ensure that the underlying problems are addressed with sufficient ambition and determination, and to avoid possible situations of moral hazard which could degenerate into the accumulation of new risks for the future. The European Commission and the European Central Bank have also contributed decisively to this task of strengthening the common pillars of the area. In this respect important steps have been taken to establish a sounder framework of policies to preserve the smooth functioning of the euro area. I refer in particular to the Commission’s recent proposals to strengthen in various ways the Stability and Growth Pact and to extend the areas of mutual oversight and consultation within the EU. The ultimate aim of these proposals is the early detection and redressing of those imbalances which, as has become clear to us in these last few months, will put the stability of the euro area at risk if allowed to continue and accumulate. In this respect, the European Central Bank has also reacted to the emergency situation.

This result was significantly influenced by the positive balance of trade, due to both higher exports and lower imports. In the services balance, reduced shipment costs and the temporary increase in imports of services stood out (figure 7). On the external front, until the beginning of March, there was an environment of higher growth and concern about inflation. On the one hand, the increase in global growth expected for this year was based on upward surprises in the performance of several important economies, such as the United States, China and the Eurozone. On the other hand, in developed world economies, core inflation indicators were high, despite the fall in total inflation. All this heightened the concerns about inflation and the need to raise interest rates by the main central banks. In this scenario, commodity prices rose and risk aversion Fell. In general, interest rates rose as a result of the higher inflation outlook (figure 8). The tone of the external scenario changed significantly in the last month, as doubts arose regarding the financial health of international banks. The problems of several banks in the United States and Europe opened a scenario of greater global uncertainty. This has generated volatility in financial markets, which reduced risk appetite and led to an appreciation of the dollar and a decrease in government bond yields, anticipating a slower pace of rate hikes by the main central banks. It is worth noting that the market anticipates a lower Fed funds rate path than the Federal Reserve itself has communicated.
Anecdotally, the role of migrant labour has increased in various sectors – partly associated with the enlargement of the EU’s single labour market. If that continued, with new residents continuing to help to meet particular skill shortages, the labour supply available to UK businesses would increase, implying that the economy could potentially accommodate stronger aggregate demand than otherwise. However, the available data do not really enable us to get beyond anecdote and speculation. Financing Another important input for firms is finance – for working capital and investment. Here too, there seem to have been changes – in the range and terms of the sources of finance available to both firms and households – that could potentially influence the extent of cyclical fluctuations in output and inflation. One characterisation of the past would be that firms and households depended on bank loans for external finance; and that banks loosened or tightened credit conditions sharply in the different phases  5  See, for example, Nickell S. and Quintini G.,(2002), ‘The recent performance of the UK labour market’, Oxford Review of Economic Policy, Vol. 6(4), pages 26-35. BIS Review 16/2005  3  of a business cycle, reining back when the economy suffered a downturn and arrears and losses mounted.

For example, with regard to retirement – one-in-three Malaysians are very worried about their retirement. Despite the worries, Malaysians adopt a passive strategy for their retirement planning – such as relying mainly on the government or statutory bodies such as KWSP to fund their retirement needs. As mentioned earlier, many of KWSP’s contributors have insufficient funds for their retirement. This brings us to another question – what are their fall back plans? Apparently, nothing concrete. The top three plans indicated in the survey are: a. First – to rely on passive savings, which may not be sustainable; b. Second – to rely on children or family members; and 2/3  BIS central bankers' speeches  c. Third – to always continue working. Most financial decisions are influenced greatly by a person’s behaviour and attitude. Notably, this will require behavioural change from within, which can be harder to initiate but not impossible to achieve. When equipped with the relevant knowledge and skills – an individual would acquire a positive attitude and be able to make financial decisions – rationally and responsibly, for his wellbeing in the short and long-term. The positive behavioural change includes prudent use of money and credit; not easily influenced by emotions; actively seeking of information for financial product comparison; as well as making adequate provisions for old age.
The rules and procedures of the various payments systems that settle in RTGS – CHAPS, Bacs, FPS, LINK, Cheque & Credit, and Visa Europe – are maintained by their respective private sector members, though there is close cooperation between the schemes and the Bank’s operational team. The recognised payments schemes are themselves supervised by the Financial Markets Infrastructure Directorate of the Bank. We will want to examine the Bank’s role in delivering payments and settlement services, looking closely at how the United Kingdom compares to elsewhere around the world and the international guidance on risk standards set out in the Principles for Financial Market Infrastructure. The Bank’s experience, particularly during the financial crisis, has been that having direct operational control over RTGS has paid substantial dividends in terms of the delivery of its mission, so I think it is fair to say we start with a certain bias in that regard. But the appropriate model for IT development, service governance and risk management depends quite heavily on the chosen way forward for the RTGS infrastructure. In light of the emerging results of the blueprint, the Bank’s supervisory function will review whether any changes are necessary to the supervisory model for the high value sterling payments system. A blueprint with buy-in The agenda I have set out today is an ambitious one, with important implications both for the many institutions and infrastructures that interface with the system today and for those that might do so in the future.

Major changes to the access arrangements to settlement accounts raise both policy and practical questions for the Bank – and could have implications for market participants and fellow regulators too – so it is right that they should be considered as part of the development  9  See Davey and Gray (2014). 10  Further information on the planned extension of RTGS opening hours http://www.bankofengland.co.uk/markets/Pages/paymentsystem/extending.aspx. 11  The Bank stands ready to act as a settlement agent for payment systems recognised under the Banking Act or whose access to settlement in central bank money is otherwise judged by the Bank to be likely to reduce the risk of widespread disruption. There are currently 6 payment schemes for which the Bank acts as settlement agent (as well as the CREST securities settlement system) and there are around 40 settlement account holders in RTGS. BIS central bankers’ speeches  can  be  found  here:  5  of a broader blueprint. Targeted extensions in access could bring benefits in terms of innovation. But we need to think through the implications for stability, market structure and costs. The final theme of the blueprint is the role of the Bank. The Bank developed the RTGS infrastructure itself, and is responsible for the maintenance and development of all elements of its hardware and software. The Bank is also responsible for the day-to-day operation of RTGS, although these running costs are in turn charged out to its users on a full cost recovery basis.