samchain/econo-pairs-v1 huggingface dataset:
Chart 5 – Investment intentions* Bank of England Agents’ scores 4 3 2 1 0 -1 -2  2000  2001  2002  Manufacturing  -3  Services  -4  2003  2004  2005  2006  2007  2008  2009  2010  -5 2011  *: Investment intention scores reflect firms’ expected expenditure over the next 12 months. Source: Bank of England  So if the world economy is growing healthily and investment is rebounding, why is UK economic growth expected to be so disappointing? The answer lies in the outlook for public and private consumption. It is not surprising that public sector spending will act as a dampener on the growth of the UK economy as the government rebalances its finances. We experienced a similar phenomenon in the mid-1990s as the economy recovered from the early nineties recession. But in that episode, private consumption was more resilient, increasing at an annual rate of 3% a year in the five years 1993–97. Most forecasters are currently much more downbeat on private consumption, and a similar view underpins the Bank of England’s Inflation Report forecast. An important contributor to the weakness of private consumption – particularly this year – is the squeeze on household incomes from high inflation. Indeed, in money terms, household consumer spending rose by over 5% last year – the strongest nominal consumption growth  6  BIS central bankers’ speeches  since 2000. But the squeeze from rising prices limited the real growth to less than 1%.

Jean-Pierre Roth: The current economic and monetary policy situation Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Centro di Studi Bancari, Vezia, 17 September 2007. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  It is difficult to determine to what extent the turmoil in the US sub-prime mortgage market impacts on the real economy. It has hit Switzerland at a time when our economy is in enviably good shape. Should the situation in the financial markets not deteriorate any further, it is hard to imagine these factors abruptly slowing economic growth. With its decision to let the Libor slide back towards 2.75% in the short term, the SNB has clearly signalled to the markets an easing of the situation. In Switzerland, price stability has been maintained for the past 13 years, economic growth is significantly higher than in the 1990s and our unemployment rate is the lowest of all industrialised countries. It is our goal to preserve this favourable situation. BIS Review 102/2007  1
Fernando Restoy: European reform – challenges for the Spanish banking sector Presentation by Mr Fernando Restoy, Deputy Governor of the Bank of Spain, of Issue no 137 of Papeles de Economía Española “Constructing a Banking Union”, Fundación de las Cajas de Ahorros (FUNCAS), Madrid, 11 November 2013. *  *  *  Good evening. Thank you, José María, for your introduction. I am delighted to be here on the occasion of the publication of Issue no. 137 of Papeles de Economía Española, under the title “Constructing a banking union”. I understand it contains articles of great quality and interest, which is no surprise considering the calibre of the contributing authors. During the seminar this evening, I imagine you will have dealt in depth with the main elements of the Banking Union project. Allow me to add my own thoughts on the significance of this process and its consequences for the banking industry. I believe the history of European integration categorically illustrates how this process has been subject to diverse and complex forces that reiteratedly test its ability to move forward. These destabilising forces usually arise from the interaction between exogenous shocks and internal structural deficiencies. During the most recent bout of instability, this has again been the case: the international financial crisis has revealed substantial structural flaws within the monetary union, allowing marked imbalances to emerge in national economies and making their correction difficult without upsetting the stability of the common monetary area.

Demanding capital thresholds have been set for this component of the exhaustive analysis. Specifically, the reference value has been set at 8% in respect of top-quality capital (CET1) under the definition of the Capital Requirements Directive and Regulation that incorporate the Basel III Accord into European legislation. This 8% threshold is equivalent to adding, to the regulatory minimum of 4.5%, the capital conservation buffer of 2.5% and an additional  2  BIS central bankers’ speeches  1% to reflect the systemic importance of the significant institutions that will be overseen by the single supervisory mechanism. Finally, strict governance arrangements have been set for conducting the analysis, so as to provide for the consistency of the work performed by the national authorities in each jurisdiction. In this way, although the exercise will be carried out in a decentralised fashion, a significant central structure – with the involvement of external advisers – has been set up to ensure the maximum possible degree of uniformity. Evidently, it is a complex exercise posing numerous organisational challenges, and which must be performed with the utmost rigour to meet the objectives set and, above all, to ensure the comparability of the results obtained for each bank in each jurisdiction.
In addition, it also includes the recommendations that, in the Banco de España's view, it would be desirable to implement, to tackle these challenges. Indeed, such an interaction of research and policy is even more pressing in the current juncture, characterised as it is by a highly uncertain context and the need to address important structural challenges, which I will elaborate on next. Let me now comment briefly on the main challenges that lie ahead for the Spanish economy, which are also the backbone of the programme of this conference. As we all know, the Spanish economy was one of those most severely hit by the effects of the pandemic. And the recovery after the most acute phase of the COVID-19 pandemic has been tempered by supply chain disruptions and, in the second half of 2021, by higher energy commodity prices, which were further exacerbated by the Russian invasion of Ukraine in late February this year. Overall, in 2022 Q1, GDP in Spain was still 3.3 pp below its prepandemic level, while in the euro area it stood 0.5 pp above its pre-crisis mark. According to our latest projections, published last June, in the absence of any new shocks or an escalation of the war in Ukraine, the Spanish economy is projected to follow a gradual recovery path – one that could reach pre-pandemic GDP levels in the final stretch of 2023. That said, these projections are surrounded by extraordinarily high uncertainty, in particular related to developments in the war in Ukraine.

A characteristic and important example is the set of institutions, fiscal rules and provisions enshrined in the Treaty on European Union which lay the foundation for the maintenance of price stability and the pursuit of sound fiscal policies. The preservation of price stability in a modern economy with fiat money is the responsibility of central banks. Their monetary policy can ensure control of the price level over the medium and longer term. The effectiveness with which monetary policy can attain and maintain price stability depends on various factors pertaining to the way monetary policy is formulated and conducted. An essential condition for the effective conduct of monetary policy is the central bank’s independence so that it can take decisions on the appropriate policy to achieve its objectives without being subject to any pressure or interference by the government and any other political authorities. There are strong theoretical arguments why the central bank should be independent. But the most convincing reason, which has led many governments to de-politicise monetary policy and grant independence to the central bank as an economic institution, is past experience and the empirical evidence.
Equally, excessive public expenditure - which had ultimately to be financed through higher taxation - imposed burdens on the private sector which weakened its capacity to generate employment and income and wealth. So the emphasis now, more or less everywhere, is on effective price stability as the immediate objective of monetary policy - not simply as an end in itself but as a measure of the balance between aggregate demand and underlying supply in the economy as a whole, in order to moderate rather than aggravate the economic cycle, and so to provide the basis for sustainable growth at around the underlying rate of growth of productive, supply-side, potential. And the emphasis now - again more or less everywhere - in relation to fiscal policy is to limit public sector borrowing, and the outstanding level of public sector debt, to levels that can be sustained into the future, without the need for increasing tax burdens or raising real interest rates on the private sector. These objectives of macro-economic policy - monetary and fiscal policy - will be familiar to you in recent years in this country; they are at the heart of the policies being pursued in Continental Europe by those countries that, in just under a fortnight from now, will agree to move ahead to Monetary Union; and they are the policies endorsed, too, by all the members of the IMF in the Madrid Declaration adopted at the IMF Annual Meeting in 1994 and expanded and updated eighteen months ago.

You may remember that in the quarters that followed the invasion of Ukraine, growth prospects were regularly revised downwards, as our European economy suffered in particular from high energy prices, fear of a shortage in energy sources, and hence general uncertainty - and even worries about how we would get through the winter. Europe reacted swiftly, diversifying its sources of energy supply, and global market prices decreased sharply, especially from the fourth quarter of 2022. In the end, the euro area economy expanded by 3.6% in 2022, still higher than in the US, despite a slowdown in the second half. The likelihood of a recession in 2023 is now very remote, and growth prospects have even been revised upwards, to 1.0% in 20231 (up by 0.5 percentage point compared with December forecasts), before rebounding to 1.6% in 2024 and 2025. Faced with a historic geopolitical and economic shock, Europe has shown remarkable resilience, and greater unity. Euro area inflation further accelerated after the invasion of Ukraine, but the outlook for 2023 and beyond has also recently improved – although with mixed news. On the one hand, the earlier-than-expected easing in energy prices has led to a decrease in headline inflation since October 2022, from 10.6% to 6.9% in March2 – though this level is obviously still far too high. We also expect tensions on food prices, which have soared since 2022, to start fading from the third quarter of 2023, in the wake of the recent sharp decrease on international markets.
Amid the changes in the financial landscape, there have been equally significant developments in the auditing standards both globally and locally. The standards and regulations are becoming increasingly tighter and more stringent. The Institute of Internal Auditors (IIA) for example, has proposed several changes to the Internal Audit Standards, which are expected to take effect in January 2017. The changes to the Standards are aimed at reinforcing the fundamental principles of internal auditing practices, promoting a broad range of value-added internal auditing and fostering improved organisational processes and operations. The direction of changes in the financial reporting standards also places more accountability on the Audit Committees to provide strong oversight on the organisation’s financial reporting and internal controls. The new Companies Bill 2015 (the Bill) was passed by the Dewan Rakyat and is anticipated to come into force by end-2016. The new law is expected to bring major reforms to our corporate landscape and will place greater pressures on the audit function to understand the emerging regulatory requirements and their impact on business operations. In the wake of uncertainties due to the global developments, the change in regulatory standards and technological advancement require businesses and regulators to think beyond conventional norms in order to navigate through these unchartered waters. Turning to the theme today, the importance of an independent and effective internal audit function as a core line of defense with a strong Audit Committee in business cannot be overemphasized.

Muhammad bin Ibrahim: Audit as a partner of change Remarks by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 5th PETRONAS Board Audit Committee (BAC) Forum “Audit as a partner of change”, Kuala Lumpur, 16 August 2016. *  *  *  The theme of today’s forum “Audit as a Partner of Change” is highly relevant and timely, as the events in the global market today, involving failures of large firms, frauds and market manipulation activities, underscores the criticality of the three lines of defenses in organizations. For confidence and trust to be restored in the marketplace, the role of the BAC and internal auditors as the third line of defense will be even more critical than ever. Our role as members of audit committees is much broader than what we may perceive it to be. Organisations such as PETRONAS are widely regarded as amongst the few key flag bearers for the country. Hence, it is incumbent upon the Board and the BAC members to be strong and energetic in upholding the highest standards of professionalism, ethics and integrity in discharging their roles and responsibilities. The people of Malaysia must have confidence and pride that an institution entrusted with much strategic natural resources are run with utmost integrity and professionalism. Before I proceed further on the topic for today, allow me to touch briefly on the current outlook on the global and domestic economy.
Some analysts believe these indirect effects could be even larger than the direct effects. The impact of the trade conflict between the US and China will be felt across Asia – through three key channels: disruptions in supply chains; slowdown in China; and firms holding back their capex plans. The tariffs imposed by the US on China are beginning to affect supply chains in Asia. China’s exports of tariff-hit goods to the US have fallen since the first tranche of tariffs announced last June. This is having knock-on effects on some firms in Southeast Asia which are deeply enmeshed in production networks that are linked to China. These firms are adversely affected as producers switch to alternative suppliers for essential parts and components. While there is talk of some Southeast Asian countries gaining from the diversion of US imports from China, this appears to be the case only for Vietnam. The other Southeast Asian economies have not seen an increase in exports of tariff-hit goods to the US. A slowdown in the Chinese economy is likely to have significant spill-over effects on Asia. Economic indicators have weakened across the board in China. A slower China will mean a slower Asia. China is Southeast Asia’s largest trading partner and a key source of investment and tourism. Heightened uncertainty over trade could significantly hold back firms’ capex plans. Various surveys of capex intentions point to a significant pullback in corporate investment this year.

2 The net job creation figure of 6,900 includes FinTech jobs in the overall economy, but excludes jobs in holding  companies. The employment increase of 7,600 for the financial and insurance sector in 2018, published by MOM, includes holding companies. 11 / 11  BIS central bankers' speeches
In China, a large share of income was saved, either in the form of investment in new production equipment or financial assets. The increased supply of financial savings pushed down global long-term interest rates. Lower interest rates encouraged consumers and businesses in other countries to borrow capital from China and other surplus countries. The foreign debt of countries such as the US and UK accumulated rapidly in the years leading up to the crisis. BIS Review 163/2009  1  Historically low interest rates prompted fund managers in Western countries to seek out new alternatives in their search for high yields. New financial savings products were developed and spread to investors around the world. It was often difficult, or even impossible, for investors to value the risk underlying the products. Yield potentials can also be increased by leveraging securities purchases. As long as prices rise, the return on equity will increase with the degree of leveraging. On the other hand, the risk of being left with debt, and little or no equity capital, increases when prices fall. In the years ahead of the crisis, high debt leveraging still appeared to be an attractive proposition in an environment of low credit risk and a glut of cheap credit. The result was a surge in debt accumulation in the years preceding the crisis. Prices in securities and property markets soared. The build-up of macroeconomic imbalances in the years prior to the crisis increased vulnerabilities and the potential amplitude of a downswing.

This reduces the probability that a negative event will trigger a severe financial crisis. It is not optimal to be fully insured against crises because the insurance premium would be too high. But the financial crisis demonstrated that the imbalances ahead of the crisis were unsustainable and that they could have been reduced through regulatory improvements. The reason that this did not occur may be that the risk had taken on the form of several interwoven imbalances that no single authority had the power to correct. Banking and financial market regulation will be enhanced in Norway and abroad. The Basel Committee on Banking Supervision and the Financial Stability Board (FSB), as mandated by the G20, will soon issue recommendations for strengthening regulation of banks’ capital and liquidity management. In the UK, the regulatory authorities have already drawn up new banking regulation. A natural consequence of the financial crisis is that increased weight is given to ensuring system-wide stability and not only the stability of individual banks. Other important questions are whether systemically important banks should be subject to tighter regulation and how to reduce the procyclicality of bank behaviour. BIS Review 163/2009  3  Recommendations from the Basel Committee and the FSB will be examined by national authorities that will subsequently adopt new regulation. In a world with a global financial market, there are limits to how far a single country go it alone. International coordination is important for new regulations to have the intended effect.
The moral from all this is one that will be all too familiar to you as accountants, though perhaps one that sometimes gets forgotten by consumers of accounting statements, namely that the appropriate way to frame accounts depends on how they will be used and what questions are being asked. The Asset Purchase Facility accounts may tell us the scale of gains or losses on the Asset Purchase Facility portfolio narrowly considered, but will miss the impact on the public finances from higher activity and lower financing costs and fail to tell us anything about it macroeconomic effectiveness. The rise in asset prices and the recovery in confidence since the start of the Quantitative Easing program have been significant. We cannot identify precisely how much of this is a direct result of Quantitative Easing, and hence the scale of the boost to tax revenues. I have no doubt that this issue will continue to be debated for years to come, and that some sceptics may remain unconvinced. But even a sceptic should acknowledge that the net accounting gain or loss on the Asset Purchase  3  4  Of course that is not true of holdings of corporate assets. BIS Review 126/2009  Facility provides an incomplete measure of the impact of Quantitative Easing on the economy and on the public finances. Thank you.

But, I caution you, this is only the first step in your careers as Accountants. Remember, “it is not what you learned, but how you use what you learned, that counts”. I came across a definition of an Accountant the other day. It said, “an accountant is someone who solves a problem that you did not know you had, in a way that you don’t understand”! BIS Review 49/2010  1  I hope that tonight’s Graduates do not end up being one of these Accountants, who creates a problem first and then pretends to solve it. And, worse still, they end up charging the client for something that was not there in the first place! It’s almost like being a lawyer! The recent global financial crisis started from a liquidity shortfall in the United States. This liquidity shortfall resulted from many loans (especially for housing) going into default, and there were insufficient assets to cover these loans. As a result, many large banks and financial institutions went bankrupt. And, if it were not for the quick and substantial intervention by some major Governments and Central Banks, the global economy would have collapsed. Among others, the Accountants have been blamed for the “financial crisis”, as a result of their “creative accounting” techniques, which contributed to inflating the values of the assets which were used as collateral for the many risky loans that were issued.