samchain/econo-pairs-v1 huggingface dataset:
According to the survey of damages from the earthquake and tsunami delivered by the government on March 23, the cost to replace the destroyed capital stock amounts to 20.94 billion US dollars. Following the reasoning described above, this figure is the equivalent to the gross value of the lost capital stock. How then can we estimate the net value of the capital destroyed? Estimates in our national accounts indicate that between the years 2000 and 2008 the net value of the capital stock was around 63 percent of the gross stock. Applying this percentage directly, we estimate that the damage to the net capital stock, consistent with the figure disclosed by the government, is 13.2 billion US dollars. If we consider that the net capital stock amounted in 2009 to an estimated 435 billion US dollars, the aforementioned loss is equivalent to nearly 3 percent of the total. Therefore, given a loss of 3 percent in the net capital stock, the Board estimates that during this year the level of trend GDP will fall 1.0% to 1.5% because of the catastrophe. The magnitude of the short-term impact of the natural disaster depends on the share in national GDP of the hardest hit regions, the sectoral composition of production by region and the duration of downtime in productive processes, among other factors. In 2008, Regions VI, VII and VIII produced nearly 16% of national GDP, mostly concentrated in the manufacturing sector. As for the labour market, the three regions generate almost one fifth of national employment.

Some CCPs are systemically relevant for multiple jurisdictions in view of the direct and indirect clients they serve worldwide and their interconnectedness with systemically important global banks. We have seen progress in making global CCPs safer and more resilient, starting with the safeguards introduced to address the shortcomings that the global financial crisis revealed. Today, clearing risks are much lower than they were ten years ago. And the robustness that CCPs have displayed since the outbreak of the pandemic shows that regulatory efforts are paying off. We should, however, continue to strengthen the resilience of CCPs. Last March we saw spikes in volatility and trading activity, coupled with a surge in liquidity and credit risk at the global level. Such situations call for closer cross-border regulatory, supervisory and oversight cooperation between CCPs, banks and public authorities. To prevent market fragmentation and preserve financial stability, both domestically and internationally, in the face of such adverse shocks, CCPs must meet the highest standards of financial and operational risk management. And an enhanced dialogue is necessary between CCPs, clearing banks and clients to ensure that, while managing their risks prudently, they each consider the impact that their actions may have on others and on the entire financial system. Central clearing is critical for sharing and managing risks effectively, and thus for supporting economic growth. Euro-denominated central clearing must not be a source of instability in the euro area or hamper the transmission of monetary policy.
4  BIS Review 40/2001  The correlation between interest rate changes, GDP and inflation is, however, not so unambiguous and clear. There may be considerable uncertainty on the time lag and the strength of the effect of monetary policy on inflation. It is probably the case that the strength of the effects and the time lag will vary. As I previously discussed, it is also uncertain what role inflation expectations play in the transmission mechanism. Should monetary policy take asset prices into consideration? A discussion that has become pertinent due to the great increase in the price of IT and technology shares in particular that preceded the economic downturn in the United States as well as in Sweden – is the extent to which it is reasonable and possible to counteract the building-up of financial imbalances by monetary policy. If monetary policy is exclusively focused on an inflation target, asset prices are taken into account to the extent that they affect inflation by wealth effects and stimulation of investments and consumption. Appreciation of the currency, temporary productivity gains and loan financing of financial assets can, however, lead to the accumulation of major financial imbalances without this being fully visible as inflationary pressure. This was the case in Japan in the 1980s, Thailand in the 1990s and in the United States today. Unmotivated increases in asset prices will sooner or later lead to corrections, however. The strong boom in growth will then be replaced by a deep and prolonged downturn.

There is a school of thought that suggests the sole objective of central banks should be price stability. Accordingly many countries have adopted the inflation targeting approach in their conduct of monetary policy. Price Stability indeed is essential for sustained economic growth and there is no argument that it should be pursued. Moreover, the inflation targeting approach has the benefit of building up the credibility and commitment of a Central Bank. However, there is a risk that central banks may concentrate on achieving price stability as measured by a consumer price index, which may not necessarily guarantee economic and financial stability. With globalization and improvement in productivity, there has been a general tendency for inflation to remain relatively low. Though, price stability in terms of a consumer price index is achieved, there could be other imbalances arising from excessive demand pressure which may be reflected in assets price inflation and external payment imbalances. There could also be a danger of developing deflationary conditions which depresses growth. Therefore, it is important that central banks take into account other signs of economic imbalances in designing their policies, even though the sole objective may be defined as price stability. The Central bank of Sri Lanka has defined its key objective, not simply as price stability, but as economic and price stability. This is expected to prevent the Bank from trying to stabilize a price index rather than ensuring overall price stability in the economy.
There is no other way to forecast future developments intelligently than to examine the indicators from the recent past, apply to them the metrics that the copious experience from Iceland and abroad has taught us to use, and to use both indicators and metrics as a guideline in projecting future developments. If we didn’t use this method, there would only be one left: to pour tea into a cup, turn it upside down, and read the tea leaves when the saucer is dry. The Central Bank has no comment to make on those who wish to pursue that course, but it isn’t likely to be terribly successful. When the Central Bank announced its interest rate decision, it stated that several factors that have made inflation harder to control could change over time. Sooner or later, higher mortgage interest rates will affect the real estate market. Global financial market conditions have changed for the worse. Those changes are already being felt, and sooner or later they will be felt in Iceland as well. In its forecasting, the Bank takes these factors into account, and it does not rule out the possibility that their actual impact will be greater than projected. Many people hoped that the unrest in the financial markets, which stems largely from the subprime mortgage market in the US, would blow over rather quickly. Some even seemed to believe that a modest drop in US interest rates would be sufficient to coax everything back into place once again.

There has been an enormous increase in lending activity at a time when the nation is engaged in the largest investment it has ever undertaken, its financial system has been revolutionised, and the housing market has seen a virtually unparalleled injection of capital, to name just a few things. Neither can it be denied that competition has abated considerably, the market has become much more concentrated, and duopoly is common. It cannot be debated that effective competition in as many areas as possible is the main premise for the successful transmission of any central bank’s decisions into the economy. Managers of companies in the export sector have complained vociferously about the policy and activities of the Central Bank of Iceland. Their comments and criticisms are understandable, especially those coming from the fishing industry, which has had to stand up to the double blow of unfavourable exchange rates and an unavoidable cut in the cod quota. What has lightened the load for exporters, however, is that many of them, especially those in the aluminium and fishing sectors, can command high export prices at the moment. But while we must understand that exporters are dissatisfied with the current circumstances, it is not a given that their complaints are founded on the right premises. Many people consider the exchange rate of the króna disquietingly high and blame the Central Bank’s interest rate policy for it.
That is not to say, however, that all behavioural adjustments are either exactly as intended or desirable. This is particularly the case when these responses seek to avoid regulation entirely – so-called regulatory arbitrage. Risk, like energy, does not disappear into the ether. It is typically conserved, at least to some degree. In response to tighter financial regulation, risk is likely to change shape or location, often both. This is not just a conceptual point. The history of financial regulation can be seen as an on-going, evolutionary race to adjust regulatory rules to limit avoidance incentives (Haldane (2013)). The first Basel Accord (“Basel I”) was a direct response to cross-border regulatory arbitrage. Basel II came largely as the result of standardised approaches to risk measurement being arbitraged. And Basel III came in part as a response to both risk models, and the Basel framework itself, being arbitraged. This race has been characterised as “bloodhounds in pursuit of greyhounds” (Eichengreen (2009)). Regulators need both to learn from past experience and to anticipate future opportunities for avoidance (Woods (2017)). The arbitrage problems faced by the bloodhounds were well-exemplified in the run-up to the global financial crisis.

At the bottom of the chain are service providers such as fund administrators, custodian banks and dealer brokers. They provide services to the asset managers. Therefore, asset allocation decisions by end-investors, either institutional or private wealth owners, have a knock-on impact throughout the rest of the asset management value-chain. Currently, the portfolios of asset owners in the advanced economies are still significantly underexposed to emerging markets. For example, at present, a typical US pension fund has just 6% of their investment exposure in emerging markets. Not surprisingly, given the economic challenges facing the advanced economies outlined earlier and the growth opportunities in Asia, there is growing interest from these end-investors in increasing their investment exposure to Asia, rather than relying on investing in fixed income products of the developed economies as they have in the past. This change in allocation preference towards Asia will generate significant demand for asset and wealth management services that Hong Kong’s financial institutions are well placed to provide. But the immediate question is: are we in Hong Kong ready to meet this growing demand? Well, we do start with a number of strengths and advantages. As Asia’s premier asset management centre, Hong Kong is the largest hub for Asian hedge funds and the second largest hub for private equity in Asia, only slightly trailing Mainland China. Hong Kong’s private banking platform offers unparalleled access to the growing wealth pool in Mainland China and across Asia.
4/16  The economic literature fairly unanimously considers that trade openness in the world economy in recent decades has been fundamental for global growth and social well-being.2 Against this background, the proliferation of protectionist measures is one of the greatest threats to the world economy. Along with their direct repercussions on global activity, such measures generate additional adverse effects through their impact on global confidence. And these effects are so far proving significant. Accordingly, any future proliferation of additional protectionist actions, further undermining confidence and affecting financial conditions (and, therefore, business investment), might ultimately impact global GDP severely.3 Turning to Brexit, it is over three years since the UK referendum on EU withdrawal. Doubts persist over how the exit process will be resolved, and Brexit remains a primary source of uncertainty for global economic activity and, especially, for the rest of the EU. After the latest developments, including the new prime minister’s decision to suspend parliament until midOctober, the markets now consider a hard Brexit to be more likely. On the simulations available, a Brexit with a trade agreement would have a relatively limited effect. But the adverse consequences of a no-deal Brexit would be significant, especially for the UK economy.4 Against this background of uncertainty, UK GDP has already posted negative growth in the second quarter of this year. The economic situation in the euro area: economic slowdown and low inflation The more open European and East Asian economies have been those most affected by these international trade developments.

However, the adverse effects have spread to many other economies through global value chains. The euro area, in particular, has slowed significantly since early 2018. This is mainly due to the strong easing in its exports. As a result, average GDP last year grew by 1.8%, 0.7 pp down on 2017, and year-on-year growth in late 2018 and early 2019 fell to around 1%. The euro area’s high degree of openness (its trade flows with third countries account for 50% of the area’s GDP, compared with 38% for China and 28% for the United States) means it is particularly sensitive to external shocks and to the slowdown in world trade. Moreover, the above-mentioned uncertainty over Brexit has prompted a contraction in exports to the UK economy in recent years. Also contributing to the slowdown in growth in the euro area have been specific circumstances in certain sectors and countries. I refer in particular to the difficulties the automobile industry is undergoing in adapting to the new environmental regulations, to new production technologies and to protectionist threats. 2  For a summary of this literature, see, for example, A. Estrada, J. Martínez-Martín and F. Viani (2018), “Una revisión de la literatura económica sobre los efectos de la globalización en el crecimiento y la distribución de la renta”, Notas Económicas, Boletín Económico, 2/2018, Banco de España.
It is not part of the real political agenda, and we now have a fourth or so government in a row declaring that this issue will be left “for the next government after the next elections” – so it is being postponed to political infinity. The anteroom for euro adoption, the ERM II, is not being considered either. This approach has the full backing of the central bank. Ten years ago, supporting the euro was a sign of “good social morals among the better classes”, whereas today only the brave confess to ardently supporting it. That’s how much the mood of the elite and the electorate has changed over the last decade. Why is that so? Here my eight personal comments come into play. 1. The euro and political union: A stateless monetary union is inherently unstable. A currency is usually a consequence, not a cause, of the establishment of a state. In Europe, however, we began to build the “currency house” from the roof down, and then in 2008 everyone was very surprised at how the tiles flew off when the first wind appeared. Is there a prospect of a political union – a single European state – in the pipeline? Even if there is, do we want to be part of it? If the question is no, which would seem to be the case, thoughts of introducing the euro in the Czech Republic should, for that reason alone, be left on the back burner. 2.

Meanwhile, the Asian region has shown strong growth performance amidst robust intra-regional trade. This will be mutually reinforcing for the region in expanding the cumulative domestic market of the region and thus contributing to the overall growth prospects of the region. While growth remains strong, there are risks on the horizon. The recent moves to raise interest rates have however aimed to adjust the economic expansion to converge to more sustainable levels. Policies in a number of the major economies have now shifted from addressing a deflationary environment to a more neutral position that is aimed at removing the inflationary bias. This is in contrast to an anti-inflationary stance which would require aggressive tightening. On the domestic front, Malaysia continues to be highly integrated with the world economy in which economic and financial developments in our major trading partners will have implications on our economy. The strengthening of our economic structure, our financial system and our macroeconomic fundamentals, particularly since the Asian crisis in 1997-1998, has raised our tolerance level for absorbing volatility, enhanced our resilience to shocks, improved the agility to adjust to change and increased our policy flexibility to mitigate any adverse external developments on our domestic economy. Going forward, the strong growth in manufacturing and services sectors will continue to sustain growth. The prospects for higher consumption spending is also positive.
Does that imply that consumers would shrug off a downturn in the housing market? Not necessarily. The rise in house prices has meant that households have taken on a lot of debt, and higher interest rates will mean they have less money to spend on other things. While there are few signs of obvious financial stress at current interest rates, given the strength of the current jobs market and the current housing market, this could change, especially if several of these factors weakened at the same time and the economic climate deteriorated sharply. That’s a long way from our central forecast, but uncertainty about how consumers might react to higher interest rates has been an important reason for tightening policy gradually since last November. We have also avoided springing surprises. I think that’s important: people are more likely to believe what we say, if our behaviour is reasonably predictable. But we wouldn’t be doing our job if we didn’t constantly revise our views in the light of new information and new research. That is why every month has to be a fresh decision. And why I can honestly say that I don’t know, any more than anyone else, where rates will be in a year’s time. Compared with a year ago, interest rates have risen from 3.5% to 4.5%. But the international outlook is clearly stronger now, the domestic economy is buoyant, and inflation remains low.

The tests suggest that major financial institutions in Singapore would be able to withstand adverse financial and economic shocks. MAS will continue to monitor closely developments in the Eurozone and their potential impact on Singapore’s economic and financial stability. The 2008 financial crisis and current crisis in the Eurozone underscore importance of building a sound financial sector through strong regulation and supervision. 4  BIS central bankers’ speeches  A sound financial sector Singapore will continue to meet or exceed international regulatory standards Let me touch on efforts on the regulatory front in three areas: strengthening our banks’ ability to absorb losses; enhancing our frameworks for consolidated supervision; and extending scope of regulation to cover all fund management companies. In the area of loss-absorbency, Singapore will fully implement the Basel III capital standards. Singapore-incorporated banks will meet Basel III minimum capital adequacy requirements two years ahead of the Basel Committee’s timeline of 1 January 2015. They will then meet, from 1 January 2015, MAS’ capital adequacy requirements that are 2% higher than the Basel III global capital standards. Next, we are stepping up consolidated supervision of financial groups. In banking, MAS has always conducted group wide supervision. We are increasingly focusing on areas such as mitigating intra-group contagion risk, preventing the multiple use of capital within the group, and limiting group concentration risk exposures. For insurance groups, we will be enhancing our supervisory practices. We issued a consultation paper in February this year, with detailed proposals. We will also introduce a new Financial Holding Companies Act.
The Fund has invested considerable efforts in promoting transparency and developing standards and codes in cooperation with the World Bank, the Bank for International Settlements and other organizations. Remarkable progress has been made in this area but we realize that broad implementation of these standards will take time, although this is time well spent as improved practices and comparability will increase the stability of the international financial system. We believe that the next steps should be to harmonize accounting standards at world level. The Nordic-Baltic Constituency encourages all member countries to support the efforts of the International Accounting Standards Board to reach a consensus on accounting standards and principles. Furthermore, we welcome the new steps taken to increase the Fund’s transparency, especially the policy of moving to presumptive publication of all Article IV reports and the required publication of documents in exceptional access cases. Promoting Economic Progress among Low-Income Countries One of the greatest challenges of our time is to win ground in the battle against poverty. All parties must be fully engaged in this campaign. Many initiatives in recent years have borne fruit but there is still a long way to go and the international community must do better in order to achieve the Millennium Development Goals (MDGs). Here, I would like to focus on trade and its importance for development.

All empirical studies confirm that much can be gained by embracing good governance and it is an essential component of crisis prevention efforts. Good governance is equally vital in both the public sector and the corporate world, and its merits are relevant in all countries. Recently, corporate governance issues have been prominent on the world economic agenda as financial markets have been recovering from scandals that came to the fore following a period of excesses in equity markets. In order to increase confidence in the markets, it is imperative that the corporate world adhere to the principles of good governance. Good governance in the public sector is also an essential tool for strengthening institutional capacity, which is fundamental  BIS Review 42/2003  1  for economic and social development. The Fund has an important role to play in this field and we welcome the increased emphasis it has given to the issue of governance. Transparency and International Standards With the world economy having suffered a confidence crisis, it is important to continue to promote greater transparency and accountability. Various studies have demonstrated that transparency and adherence to international standards lead to easier market access and lower borrowing costs. There is much to gain by applying these simple principles. It is also important to continue developing international standards and codes that enhance transparency and facilitate comparison between countries and regions.