samchain/econo-pairs-v1 huggingface dataset:
2  BIS Review 46/2003  Growth and welfare in the long run A monetary policy that leads to price stability creates favourable conditions for economic activities, consumption, trade and investment. But monetary policy in itself cannot generate growth. Other economic policy decisions can, however, especially those that affect people's willingness to work and invest in new businesses. Between 1975 and 1995 Sweden lost its previously so prominent position in the world. These years were also characterised by substantial wage increases and high inflation. Average inflation during this period was 8 per cent per year. We also lagged behind our Nordic neighbours. Had we experienced the same growth as Norway, Denmark and Finland during these years, the standard of living in Sweden today would be about 20 per cent higher. Partly as a result of the economic policies of the 1970s and 1980s, Sweden found itself in serious economic crisis at the beginning of the 1990s. This led to large deficits in both the central government budget and the current account, as well as to unemployment that quadrupled in the space of a few years. It was the largely the lessons drawn from this crisis that formed the basis for the changes in economy policy at the beginning of the 1990s. It was then that price stability was introduced as the objective of monetary policy. As regards fiscal policy, an expenditure ceiling and surplus target for central government expenditure were introduced, while cutbacks were also implemented.

Important issues on the political agenda in the future will be how the Nordic welfare model should be renewed to make it both economically and socially sustainable. Will we once again be able to serve as a model for other countries during the change that the whole of Europe now faces? Regardless of the chosen model, our demographic situation will require measures that result in a higher average number of hours worked, a larger number of workers e.g. pensioners, and an increase in immigration. This assumes that we want to keep or enhance our welfare system. 1  4  Swedish Association of Local Authorities, "Aktuellt om äldreomsorgen" (Current trends in geriatric care), October 2003. BIS Review 46/2003  Productivity growth can help When the long-term growth rate receives little or no contribution from the labour supply, dependency on labour productivity increases. Compared with other countries, Sweden has thus far performed well in terms of productivity growth. During the 1990s productivity has risen by 2 per cent per year or slightly more. This is a clear improvement on the 1980s when productivity growth was around 1 per cent per year, and even more so compared with the 1970s when the trend was actually negative. So it is productivity rather than the labour supply that has fuelled growth in recent years. This also applies to the other Nordic countries, al-though the labour supply has made a bigger contribution than in Sweden. The particularly steep rise in labour productivity during the 1990s was due to several factors.
Shortly afterwards, the SNB decided once again to increase banks’ sight deposits substantially, to CHF 120 billion; this step was followed by a further – final – increase, this time to CHF 200 billion. 2  BIS central bankers’ speeches  CHF 432.2 billion at the end of 2012 (cf. chart 3), proving beyond doubt that the SNB is willing to accept balance sheet risks in order to enforce its monetary policy. Last year, the SNB’s shareholders, the Confederation and the cantons all learned that these risks can have real consequences. For the year 2013, for the first time in its history, the SNB was unable to pay any dividends or distribute any profit, as the fall in the gold price and exchange raterelated losses had led to a very negative annual result. As you might expect, this decision was not greeted with rapturous applause. However, the critical point here is that the principles of the SNB’s profit distribution agreement were not called into question. People generally recognised and accepted the fact that a larger balance sheet goes hand in hand with higher potential loss. Despite having successfully enforced the minimum exchange rate of CHF 1.20 per euro for several years, in January 2015 the SNB concluded that the measure had become untenable and was therefore no longer justified from a monetary policy point of view. What led to this far-reaching reassessment? Let us briefly re-wind to 2014.

3 Second, the extent of recent Swiss franc appreciation presents Switzerland’s economy with exceptional challenges which should certainly not be underestimated. But one thing is clear: entrepreneurial thinking is remains important. We have the utmost respect for this entrepreneurialism and for the employees who are being called upon to support these adjustments. Inflation outlook Let me now turn to the inflation outlook. The SNB’s mandate is to ensure price stability in the medium term, while taking due account of economic developments. We remain committed to maintaining price stability and the decision to exit the minimum exchange rate has not altered our mandate in any way. Last year, the inflation rate – as measured by the consumer price index (CPI) – hovered around zero. This year, inflation will decline well into negative territory. This is first and foremost due to two factors: Swiss franc appreciation since the discontinuation of the minimum exchange rate and the sharp fall in oil prices. Last year, oil prices fell by some 40% in Swiss francs. According to an economist’s rule of thumb, this should translate to a decline in CPI inflation of almost 1 percentage point. The low inflation we are witnessing is thus in large part attributable to the collapse in oil prices. The important thing to remember here is that the effects of both the Swiss franc appreciation and the oil price drop are temporary. They will not jeopardise price stability. 3  Cf. Bäuerle, G. and E. Steiner (2013): “How do individual sectors respond to macroeconomic shocks?
So let me conclude with a few remarks on the prospects for the global economy, bearing in mind the potential economic aftershock from Asia’s financial disturbances. In fact those prospects are less bleak overall than you might suppose. The last few years have seen world growth at around 4%, against a longer-term average rate of just under 3½ % - with the improvement extending across both the industrial and the developing countries as a whole and with stabilisation now in the transition economies. Meanwhile, inflation has declined almost everywhere. The latest IMF projections suggest world growth of just over 3% this year - more than 1% less than was projected as recently as last October. The slowdown - and downward revisions are heavily concentrated on the Asian countries themselves, notably Japan, which, because of the massive size of its economy has a large impact on world growth. Elsewhere among the major industrial countries weaker demand from Asia is expected to be offset by relatively strong domestic demand, so that overall output growth is not much affected - indeed it is expected to pick up on the continent. A troublesome feature of these projected developments - coupled with recent exchange rate movements - is that they imply large external payments imbalances which will need to be carefully managed if they are not to lead to protectionist pressures and exchange market volatility.

I anticipate this could play out in three dimensions: •  First, there will be a need to facilitate the further development of the RMB banking market so that offshore RMB liquidity can be efficiently allocated, which would enable banks in need of RMB to easily obtain it from banks with surplus liquidity. We can already see the market moving in this direction as banks begin to diversify and expand their RMB assets progressively. Meanwhile, the introduction of a crossborder collateral management arrangement opens an efficient channel for financial institutions to widen their liquidity sources and obtain offshore RMB liquidity from Hong Kong, using even non-RMB papers for repos. •  Second, there will also be a need to facilitate the development of RMB capital markets. On this front, Hong Kong’s dim sum bond market has shown encouraging development. Already, multilateral companies and international financial institutions such as the World Bank and the Asian Development Bank have tapped the dim sum bond market. For the market to develop further, there will be a need to continue to broaden the participation of both issuers and investors. Additionally, the tenor and variety of debt instruments will need to increase to meet the financing requirements of different issuers while satisfying the appetites of different investors. There has been repeated RMB sovereign bond issuance by the Ministry of Finance and more regular issuance in due course will help to gradually build a benchmark yield curve.
Rather, I would ask those interested in the payments innovation to read and respond to the consultation and the proposed model – if they have not already done so. In the next phase of the work, which will lead to a decision on whether or not to proceed to launch a Digital Pound, the Bank will work with the private sector on further experimentation, proof of concepts and to develop the technical blueprint. The digital pound is envisaged as a general purpose retail digital currency for use by households and firms in everyday transactions. The Bank is often asked why it is focussing on developing a retail rather than a wholesale digital currency, given the potential for the new technologies I have been discussing to transform wholesale financial transactions and the desirability of settling such transactions in the highest quality settlement asset – i.e. central bank money. There is, bluntly, a misunderstanding here of the Bank’s position. We recognise very clearly the potential transformative effect on wholesale financial markets of tokenisation of financial assets, atomic settlement, smart contracts and other emerging technologies[19]. Indeed, the Bill now in Parliament will enable us, with the FCA, to set up a sandbox in which developers can explore ideas like collapsing trading and settlement into an instantaneous smart contract. And we want for financial stability reasons, wholesale transactions to settle in central bank money to the maximum extent possible.

The fact that the current crisis – a public health and economic one – has not escalated into a financial crisis is because, since 2009, our prudential framework has strengthened banks’ resilience. And so, yes, France and Europe must remain committed to ensuring that the implementation of the Basel III Accord is fair, reasonable and definitive. It would be foolish to claim that Basel III will prevent lending to SMEs, when outstanding loans to SMEs in fact increased by 20% at end-November. We shall also use other tools to safeguard financial stability: the HCSF’s adjusted recommendation on real estate loans will be published this month, following our balanced and efficient decision in December. Our first “pilot exercises” or climate stress tests will be published in April. In insurance, the Solvency II normative framework has demonstrated that it is sufficiently flexible to deal with periods of tension. The review of this framework has already made progress, which needs to be continued, on two improvements that are in our view essential: i/ removing obstacles that are unjustified from a prudential point of view and that could penalise long-term investment; ii/ strengthening the countercyclical tools to better withstand a protracted low rate environment. Page 4 of 4  4/ That leaves the South, and the hope that its light inspires leads me to conclude by wishing our financial industry robust economic health. Given that it provides work for more than a million people, a strong financial industry is vital for employment.
The global economy has experienced multiple shocks in recent years, with its effects reverberating across the globe. Global growth has continuously underperformed expectations and is expected to remain moderate going forward. The divergence in monetary policy in advanced and emerging economies as well as the unexpected policy adjustments in several economies have also culminated in a global environment of heightened volatility and uncertainties. One of the most significant developments we have experienced thus far is the sharp volatility in commodity prices which has created destabilising implications on commodity-driven countries. Amid a confluence of shocks, ranging from weaker-than-expected growth prospects to geopolitical uncertainty and moderation in China’s economic growth, oil prices declined by more than 50% in a span of 6 months in 2014. The volatility in oil prices has also been heightened by unanticipated economic and geo-political developments. The events unfolding in the United Kingdom and consequent effect to the European region have also contributed to the increased volatility in oil prices. Oil prices rallied to above USD50 per barrel from an average of USD33 per barrel in the first quarter of the year, and today, oil prices have settled back to around USD48 per barrel. The oil price is likely to remain volatile over the next few years due to oversupply and recordhigh oil inventories against slow demand especially in China. LNG prices are also expected to remain low for a protracted period of time.

The fundamentals of an internal audit function involve identifying risks that could threaten the viability of the company and keep it from achieving its goals, ensuring management fully understands these risks, and proactively recommending improvements to minimise these risks. Internal auditors are essentially the eyes and ears of the Audit Committee and the overall Board. The failure of audit functions can result in devastating consequences as seen in recent times. The case of the British Petroleum (BP) oil rig explosion in 2010 is one that reinforces the important role of the internal audit function. Occupational safety is widely regarded as a critical success factor for a company that undertakes oil exploration. The BP oil rig was awarded as the industry model for safety in 2009. However, in 2010, the oil rig exploded in the Gulf of Mexico, causing one of the worst man-made disasters in history. The U.S investigation commission attributed the disaster to the “failure of individuals involved to identify risks they faced and to properly evaluate, communicate and address them”. This indirectly highlighted the shortcomings of the internal audit function as a contributory source of failure in the lines of defence in the company. Some level of scepticism to consider the remote possibility that the safety measures in place may not work in the event of disaster, could have avoided the risk event from occurring. Another example is the LIBOR manipulation scandal involving several banks which culminated in substantial fines imposed by the UK Financial Services Authority (FSA).
For example, the real growth of assets in the banking system in 2006, was 5% as compared to a nominal growth of 19%. Similarly, the real growth of profits of the banking sector in 2006 was 12% compared to a nominal growth of 26%. In essence, the real value of short term profits recorded by the banking sector is only half of the nominal growth. Eventually, there will be pressures for higher wages which will, together with rising non-performing loans, erode profits and threaten the stability of the banking system. Banks and financial institutions should therefore take a longer term view and be more cautious in expanding their loan portfolios towards consumption oriented credit and promoting consumerism. The Impact of expansion of consumption credit Expanding credit to less productive areas specially consumption, would reduce current as well as potential savings and add to inflationary pressures in a situation where there is limited availability of goods and services and resources. Such lending would also lead to high credit risks as short term consumption credit is not backed by realizable collaterals although banks make high profits on interest income. Banks and financial institutions re-arrange their credit portfolios in a manner that support the growth and investment drive. Arranging funding sources without relying on CBSL funds CBSL wishes to see market liquidity “broadly in balance” as it will enable the Bank to conduct its monetary policy more effectively.

It is our job to ensure that companies and households can make transactions and calculations using a currency with stable purchasing power. During the time Estonia has been a member of the European Union, the well-being of the people of Estonia has improved. EU membership has meant our economic environment has been more stable and deserving of confidence. In the past ten years, economic growth in Estonia has surpassed average economic growth rates in the European Union, so that Estonian GDP in purchasing power terms has advanced from 55% of the EU average in 2003 to 71% in 2012. The incomes of residents of Estonia have also increased, with real wages up more than 40% in the past decade. EU membership has brought both opportunities and risks. It is the job of those setting national policy to make sure that risks are minimised and that we are best able to profit from opportunities and I am sure that the analysis provided here today by my colleagues will help in guiding the decisions behind that policy. The presentations we will hear today have been prepared thanks largely to the initiative of the European Commission Representation in Estonia to celebrate the tenth anniversary of Estonia’s accession to NATO and the European Union. In summary we can say that in ten years we have made Estonia and the space where Estonian people operate much larger. BIS central bankers’ speeches  1
Nonetheless, I wish to state that efforts are underway to make IFRS a mandatory requirement for financial institutions. It is important for this provision to become a legal requirement in order to enhance the credibility of financial statements that are being produced by institutions governed by the various laws. I wish to state here that as much as it is important to follow international standards, these need to be reviewed for their relevance and practical application locally. It is also important to look at their relevance to small and medium enterprises where compliance may place additional burdens on operations. Ladies and Gentlemen, as we discuss the harmonization of various laws, I would like to bring up the issue of money laundering. The Prohibition and Prevention of the Money Laundering Act (PPMLA), enacted in 2001 requires all persons, whether corporate or unincorporated, to comply with its provisions. Although the Act does not impose specific obligations on accountants, they are expected to comply with its provisions. It has been noted from the recent court cases on abuse of office and corruption that professional entities such as law and accounting firms have been used as a channel to launder some of the proceeds of crime. As we are all aware, one of the duties of accountants is to know the sources and application of the resources in their organization. Therefore I don’t think it is unfair to say that in most organisations, where money is being laundered, an accountant is involved.

It seems that one trend is towards disintermediation and a more important role of capital markets, gaining ground to banks, in a global financial system that will probably end up being smaller and more attuned to the size of the global economy. Another trend points to a reduction of financial linkages between national financial systems, as BIS banking statistics, for example, are starting to show. Here, the role of Central Banks’ policies and operations, as well as regulators is crucial, as they must walk a fine line in promoting domestic financial stability without falling into the nets of protectionism, something that would be indeed damaging for growth and prosperity. As we all know, the risk of fragmentation and re-nationalisation of the financial system has materialized at the European level, in the unique institutional context of European Monetary Union; and the solutions to overcome this situation are changing the foundations of the euro. Each of the three sessions which make up the programme will focus on a particular perspective on how the new trends are shaping the global financial system. The crisis and the policy response – in the areas of financial regulation and monetary policy – are generating new patterns of funding, new players and changes in capital flows across global markets. Those issues will be reviewed in the initial session. As I mentioned before, the euro area has to deal with a severe crisis which has led to the fragmentation of the European financial system.
May I take this opportunity to thank our fellow regulators for their support in the setting up of the Academy and in providing guidance on its future work through the Board of Directors, which includes representatives from the Insurance Authority, the Securities and Futures Commission, the Mandatory Provident Fund Schemes Authority alongside the Hong Kong Monetary Authority. 6. Ladies and gentlemen, today the AoF will also confer Fellowship upon 10 distinguished leaders in recognition of their outstanding achievements and contributions to Hong Kong in the field of finance. May I take this opportunity to congratulate the Fellows and to express our deep appreciation of their remarkable achievements and contributions to Hong Kong over the years. 7. Before I conclude, let me express our sincere gratitude to the members of the Experts Group, Preparatory Committee, Exchange Fund Advisory Committee and the Financial Secretary, who is also the Honorary President of the Academy, for their support and 1/2  BIS central bankers' speeches  contributions that have made it possible for us to launch the AoF within a very short period of time. Lastly, the Managing Director of the International Monetary Fund, Ms Christine Lagarde, has asked me to convey her apologies for not being able to officiate at today’s ceremony as planned. Although not being able to join the occasion in person, she will deliver a video message to us later on. Once again, I thank all of you for joining this ceremony today. Thank you for your kind attention. 2/2  BIS central bankers' speeches

Conversely, banks whose reserves fall short of their thresholds have an incentive to borrow reserves up to their thresholds at an interest rate below 0.5%, and to deposit these reserves at 0.5% at the SNB. Such a trade, depicted on Slide 7, is beneficial for both types of banks – the bank lending the reserves earns the positive interbank interest rate on its excess reserves, while the bank borrowing the reserves earns the difference between the SNB policy rate and the interbank interest rate. Reserve tiering thus creates an incentive for interbank trading, and thereby supports activity in the interbank money market; this, in turn, ensures a robust basis for the calculation of SARON. 10 To frame this slightly differently: If we did not apply reserve tiering and, instead, remunerated all reserves at the same interest rate, market participants would have little incentive to trade with each other and activity in the Swiss franc money market would decrease drastically as a result. There are two reasons for this. First, most market participants are still flush with reserves. Second, all institutions that have access to the repo market can hold reserves at the SNB. Taken together, there would be little incentive for market participants to attract reserves by engaging in repo transactions, and hence interbank activity would be low. Why does the SNB use reserve absorption? Let us now take a closer look at the second new element of our implementation approach – reserve absorption. Why do we absorb reserves and how do we perform this task?