samchain/econo-pairs-v1 huggingface dataset:
Today we have instead a surplus on the current account and sound public finances that provide a different degree of freedom for fiscal policy. Nor do we have a starting situation with nominal interest rates in some cases way above 10 per cent as we did then. The current established inflation target also provides scope for stimulation from monetary policy. The interest rates in the economy are relatively low, despite the crisis, and we are expecting the real repo rate to be very low over the coming years. All of this means that things should go better this time. There probably remains a lot of hard work before we can leave this financial crisis behind us – until we reach a situation where the financial markets are functioning efficiently without the aid of government measures, and where uncertainty over future developments has taken on more normal proportions. But in addition to the measures aimed at managing the more acute stage of the crisis, a number of changes that may provide a more stable, better development have begun to take shape around the world. As I said last time I was here – once we have closed the accounts on this crisis, we will hopefully have purged the parts that function poorly and replaced them with something better. I am still convinced that we will succeed in this together!

Three-month moving average, goods exports in fixed prices calculated by the Riksbank. Sources: Statistics Sweden and the Riksbank  14  BIS Review 23/2009  Higher unemployment Per cent of labour force, seasonally-adjusted data 14  14 Unemployment 16-64 year Unemployment 15-74 year  12  12  February December  10  10  8  8  6  6  4  4  2  2  0  0 80  82  84  86  88  90  92  94  96  98  Note. Broken lines represent the Riksbank’s forecasts. 00  02  04  06  08  10  12  Sources: Statistics Sweden and the Riksbank  Forecast for GDP growth in Sweden and abroad Quarterly change in per cent calculated as an annual rate, seasonallyadjusted data 5  5  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2  Sweden USA Euro area TCW  -3 -4  -3 -4 -5  -5 07  08  09  Note. Broken lines represent the Riksbank’s forecasts.
In an important financial centre like Edinburgh, we need to be well connected, and to understand your assessment of the threats to financial stability and we need to explain what we are doing to tackle these threats. Our market intelligence function under my colleague Paul Fisher plays an important role here, and is in frequent contact with the Scottish financial community. This contact will be even more important under the new arrangements in which the Bank will be responsible for macroprudential policy and its focus on the stability of the financial system, with a new policy making body, the Financial Policy Committee, or FPC. Alongside and feeding into the Bank’s macroprudential role will be our new responsibility for microprudential supervision of deposit takers, insurers and major securities dealers, also in a new body, the Prudential Regulation Authority, or PRA. It is therefore a period of major change at the Bank, and we are taking very seriously our role in building a system of regulation in the UK that must meet the very reasonable expectations of the public for a safer and sounder financial system. The overarching objective for the Bank is to put the stability of the financial system at the heart of the mission of financial regulation. We are now in the fourth year since the financial crisis started in the middle of 2007. The Scottish banking system took a pounding during the earlier stages of the crisis.

That was not just deeply regrettable for the institutions concerned, but also it damaged a proud and long tradition of sound banking in Scotland. It pained me, in my role as the person responsible for resolving a number of these problems, to see the lack of regard for the basics of a well run bank, the foundations which must be there to be sound and successful. I have spent the last seven years also responsible for the Bank of England’s banking operations, and I know from this experience that unless you really understand your balance sheet and its risks, the systems and control environment that supports the balance sheet, and you have the basics needed well covered – the reconciliations work, the right management information available promptly – you aren’t doing your job. It isn’t sexy or headline grabbing, but it is surely what the good Scottish bankers of the past taught us to do, and what I hope is back with the current generation. The financial crisis has moved on since those earlier days. Over the last twelve months, concerns with both sovereign states and their banking systems have intensified in other parts of Europe. Recently, the IMF and European authorities have moved to put in place a substantial package of support for Ireland.
For example, we monitor excessive credit card loans to sub-par debtors, excessive foreign exchange speculation, and formation of a real estate bubble. Apart from abovementioned policies, the managed float exchange rate regime helps maintain stability in capital flows. Under this regime, Thai Baht is allowed to move in line with the market forces but gives the central bank ability to influence the exchange rate in the time of excessive volatility. All the mentioned policies have helped to keep the current economy in good balance. Today, capital flows, private sector balance sheets, as well as real estate values remain healthy, which should enable fast recovery. Although the economy is anticipated to recover after private confidence regains, some notable risks must be addressed and closely monitored over next year. One that is worth mentioning is the expected U.S. interest rate normalization after recovery of the U.S. economy, which could lead to capital flow volatility in Thailand. Even with headwind from the Fed’s action of hiking policy interest rate, we anticipate only limited impact on overall Thai economy as the market has already gradually priced in the Fed’s stance since last year. Additionally, our reserves remain high, allowing the economy to be cushioned from the possible outflows of capital. Moreover our managed float exchange rate regime automatically stabilizes against possible volatility. At the same time, household debt, currently at 83% of GDP, requires a long-term solution. While its effect so far remains contained, its risk cannot be ignored.

Credible macroeconomic policies  A key strength of the Thai economy is sound macroeconomic policy management, which has allowed the country to weather through various shocks relatively well. In fact, it often tops the list of positive factors cited by credit rating agencies in their sovereign credit assessment reports. More specifically, the country is often credited for having a robust macroeconomic policy framework and close coordination among public agencies. –  Monetary Policy:  Under a flexible inflation targeting framework, the Monetary Policy Committee (MPC) cautiously weighs overall stability against downside risks to growth. In the absence of a fullyfunctioning fiscal authority prior to changes in the political situation, the MPC stepped up and reduced the policy rate to support the economy. –  Fiscal Policy:  Fiscal policy formulation and public debt management are guided by explicit fiscal rules, which provide checks and balance against potential challenges to fiscal discipline from offbudget expenditure and financing. In this connection, public debt-to-GDP stood at 46.85% in July 2014, indicating favorable fiscal discipline. Recently, the government has announced concrete roadmaps which help bolster public confidence. Going forward, the government will continue to play proactive roles in supporting an economic rebound. 2. Strategic location  Thailand is located in the center of the Greater Mekong Sub-region (GMS). Rich human and natural resources in the GMS will make it a new frontier for economic growth in ASEAN, providing clear opportunities for the region.
Today, we are well into our ninth consecutive year our thirty-third consecutive quarter of relatively steady growth (despite having to absorb the global emerging markets financial shock of a couple of years ago) at an annual average rate of 2.8%; the number of people in employment has risen to an all-time high; the rate of unemployment, on a claimant count basis, has fallen to 3.6%, which is the lowest rate for 25 years for the UK as a whole and the lowest rate for 20 years in every individual region of the UK; and retail price inflation on the target RPIX measure has now averaged 2.7% over the past eight years, and on the standardised HICP measure is currently the lowest rate in Europe. And if you ask me today the same question - can we keep up that performance, my answer is still a cautious yes - on the same three conditions - low and stable inflation, fiscal prudence and supply-side flexibility. Now I am very well aware that some of you - perhaps many of you - thinking of your own businesses may conclude that I’m living on a different planet.

Analytically, it is useful to distinguish between procyclicality of capital and procyclicality of leverage. Procyclicality of capital is easy to understand. When conditions are good, financial institutions are profitable and their strong capital base allows them to take larger positions in the markets. This mechanism has been amplified by mark to market accounting 4 . In a mark to market environment, an increase, for instance, in asset prices quickly translates into stronger capital for financial institutions. This, in turn, triggers additional demand for assets and a further increase in their prices. This kind of "inverted demand curve", where demand increases with prices, potentially creates powerful feed back loops. Procyclicality in leverage is more subtle. It has been shown that financial institutions' balance sheets expand and contract with the economic cycle 5 . Many different mechanisms are at work: •  First, risk management techniques: tools used to measure and value risk, such as VaR are naturally and strongly procyclical, especially when constructed with very short data series. Risk management practices hardwired to valuations (such as margin calls) strongly amplify fluctuations in leverage and may lead to fire sales and "one sided" markets. •  Another mechanism 6 relates to the dynamics of short term money markets : when liquidity is perceived as abundant, there is strong incentive for dealer-brokers to engage in maturity transformation through strongly leveraged positions. •  Finally, risk appetite itself moves along the economic cycle. Animal spirits obviously play a role.
Although this would reduce unemployment, it would lead to a permanent reduction in labour supply and growth potential. So is there any evidence of this in the euro area? The overall picture suggests not: the euro area has not been affected by strong adverse participation effects, as was seen for example in the United States – where the unemployment rate would have been significantly higher during the crisis had it not been for workers dropping out of the labour force. You can see this on the left-hand side of slide 2. For the euro area, this is not a statistical artefact due to pension reforms or other possibly distorting measures: participation is growing virtually within all age groups.4 Workers have on the whole remained attached to the labour market and, today, headcount employment has virtually regained its pre-crisis level. This is shown on the right-hand side. The same is true of the euro area employment rate, which expresses headcount employment as a share of the population aged 15 to 74. This in itself provides strong evidence against participation-related hysteresis in the euro area. But even though labour force participation has held up relatively well in the euro area, the second issue we need to look at is the composition of the unemployed.

First, and most importantly, unlike in the US, allowing inflation to overshoot our price stability definition for the sole purpose of bringing more people back into employment would not be consistent with our primary mandate. The “divine coincidence” applies only insofar as employment developments are consistent with our definition of price stability. Beyond that there is no room for trade-offs. Second, there are doubts as to the likely efficacy of such a policy. We have seen some evidence in the United States that the participation rate can become partially endogenous to demand, as discouraged workers return to job-seeking in a strengthening labour market. But we have seen no such evidence in the euro area. Our participation rate has continued to increase over time. So the question in the euro area is much more whether, or not, long-term unemployment is likely to be amenable to continued policy accommodation. The evidence raises at least doubts. For example, although many claim that monetary policy was too accommodative during the boom years of 2005 and 2006 – as also evidenced by policy rates often being lower than what standard Taylor rules would have predicted – the share of long-term unemployed in the euro area has remained fairly constant over this period. So, even if the desired effects of accommodative policy lead to more investment and employment, it remains questionable whether employers will respond by taking on chronically unemployed or whether they would instead rely on “insiders” whose pay has been stagnant or, alternatively, on fresh university graduates.
Finally, the weight of credit to construction and real estate promotion activities, which at one point accounted for 27% of total credit to the non-financial private sector, now stands at around 10%. Turning to solvency levels, Spanish banks increased their ordinary - or Tier 1 - capital. This rose from € billion in 2007 to € billion at present, entailing an increase of slightly more than 35%. In terms of total assets, the increase was of the order of 1 pp between these dates, to 5.8%. The increase in capital has meant a notable extension of absorption capacity for the losses that will emerge as a result of the growth of bad debts that the crisis will cause. Almost half this total amount of capital is in the form of buffers above the regulatory minimum level. These may be released, as I will explain later, as part of the prudential response to the crisis should it prove necessary. The amount involved - some € billion could cover a volume of losses equivalent to almost twice the current volume of doubtful loans in the system, i.e. approximately 8.2% of the total credit to the resident private sector. As I said, the risks to financial stability have been mitigated by the various economic policy measures adopted. In particular, these measures should provide for more benign developments in NPLs by directly supporting the financial position of households and firms and through macroeconomic stimulus.

Against this backdrop, an exhaustive review of the various budget expenditure items should be undertaken in order to identify areas where there is room for efficiency improvements, as the Independent Authority for Fiscal Responsibility (AIReF) has done in recent years. 35  Turning to taxation, improving revenue-raising capacity and tax system efficiency should also be a priority, for which comparisons with other European countries can act as a guide.9 Once again, the review under way by the Independent Authority for Fiscal Responsibility of the numerous tax benefits in place should be useful for streamlining their use and enhancing their efficiency. It also seems reasonable to continue exploring, in a coordinated fashion internationally, certain possible tax reforms that have been the topic of recent discussions. Included here is the review of the taxation levied on certain multinationals, with a view to preventing the use of aggressive tax planning strategies to move tax bases to lower-taxation jurisdictions. In any event, irrespective of the structure in terms of receipts and expenditure, the anchoring of the gradual process of budgetary consolidation will be determined in the medium term by the prescriptions of the Stability and Growth Pact (SGP). In this respect, it is estimated that, under certain plausible assumptions,10 public debt will tend to decrease gradually as a percentage of GDP in all of the Banco de España’s scenarios outlined above. This is assuming that, once the effects of the crisis have faded, the structural deficit continues to fall in terms similar to those required under the SGP, i.e.
Luis M Linde: The internationalisation of the Spanish economy Testimony by Mr Luis M Linde, Governor of the Bank of Spain, before the Special Senate Committee for the Development of Internationalisation, Madrid, 2 June 2014. *  *  *  Ladies and gentlemen, Allow me to begin by thanking Mr. Pío García-Escudero and the Chairman of this Special Committee, Mr. Iñaki Anasagasti, for the opportunity to participate in your work. First, today, I shall set out some matters relating to the internationalisation of the Spanish economy and capital flows between Spain and the rest of the world. Next, I shall detail the main characteristics of the international trade financing structure and of the funding of longerterm projects. And finally, I shall review the characteristics of, recent developments in and regulatory treatment of such trade in respect of the remit of the Banco de España. Recent developments in the external sector of the Spanish economy In the second half of 2013 a scenario of recovery began to take shape in our economy. A combination of several positive factors, both at home and abroad, has contributed to a situation in which Spain is beginning to overcome its second recession since 2008. The gradual improvement in GDP growth figures has been accompanied by a sustained correction of the main imbalances built up during the previous upturn.

For instance, for Benjamin Franklin, the term “temperance” should be understood as follows: “Temperance first, as it tends to procure that coolness and clearness of head, which is so necessary where constant vigilance was to be kept up…”. This, to my mind, is one of the virtues that central bankers must impose on themselves. My Eurosystem colleagues and I have made it one of the guiding principles of our actions. Benjamin Franklin continues his description of these virtues in the following terms “Frugality and Industry freeing me from my remaining debt, and producing affluence and independence, would make more easy the practice of Sincerity and Justice, ...,”. He emphasises the importance of being freed from one’s debts and recovering one’s independence. We know from his political activity that he attaches a great deal of importance to the independence of the Nation, but here we are talking about that of individuals and therefore of the institutions for which they are responsible. As we will see later, this is the type of independence that lies at the heart of the Eurosystem. Furthermore, sincerity can be associated with transparency, another key principle of the Eurosystem. As in most human activities, the conduct of monetary policy involves some risk-taking and may, justifiably or not, be subject to debate and criticism, as we will see later on.
Yes, there are new and continuing challenges to business models across the whole of the insurance sector, whether from changes to Government regulations affecting annuity businesses, through the advent of new capital, particularly in re-insurance, to challenges from overseas insurers. Those challenges are short, medium and long-term and very considerable. We can’t – and won’t – take our eyes off those challenges to the industry. But Solvency II is a train of the future speeding down the track towards us – for both regulators and firms the message is: be on board or get left behind. So it is a key priority for us, working with you, to get implementation right and on time. The clocks are counting down. We are now at a pivotal moment for Solvency II preparations. Solvency II will bring about the most significant change to the industry in decades. Following years of negotiation and delays, we are finally at a point where the end is in sight and the regime is to become a reality. With the majority of the legislation now finalised, the PRA’s focus has shifted to implementation. Since assuming this responsibility in early August, I have been struck by the volume of activity and the energy with which PRA staff are working to ensure that we – and most of you – hit the 1/1/16 deadline.

I understand that some of your work depends on responses by us – I can assure you that we will be making our best endeavours to react quickly and make any remaining decisions or give necessary guidance as soon as we are able. As Governor Mark Carney noted in his speech in September, the PRA will not hesitate to withhold approval for inadequate or opaque models. The responsibility to meet the Solvency II Tests and Standards rests solely with firms and their senior management. Although the Bank will continue to work with firms as they finalise their models, be under no illusion that each model will be assessed comprehensively and objectively against the full Tests and Standards, and that those failing to meet the requirements will not be approved. We have to get this right and can’t allow weak models to go into live. 2  BIS central bankers’ speeches  IMAP firms must ensure that they have contingency plans in place so that they are still able to meet the 1/1/16 implementation date in the event that their model fails to be approved. For all firms, there are important deadlines to be aware of in relation to reporting and nonIMAP approval permissions, which will be discussed in the sessions later today. We are implementing new IT and data collection systems and will be ready to accept the submission data required under the directive from June 2015.