samchain/econo-pairs-v1 huggingface dataset:
Notes: Charts a and b show percentage difference between the 90th and 10th deciles approximated by log differences; Charts c and d show ratio of productivity at 90th to 10th percentile using the difference in the log levels. UK data only available from 2002, UK index  31  All speeches are available online at www.bankofengland.co.uk/speeches  31  base year = 2002. Data have been aggregated from a detailed industry level. To the extent that industry classifications in the UK and the other countries shown are slightly different this may affect the comparability of the series. Chart 21: Management practices and labour productivity Density Management score  0.6 0.5  Labour productivity  0.4 0.3  0.2 0.1  0 -4 Z score  -2  0  2  4  Source: BvD, World Management Survey and Bank calculations. Notes: The productivity kernel is based on around 280,000 firm-year observations on labour productivity (in logs) spanning the 20022013 period (source: BVD). The management kernel is based on around 1500 interviews with firm managers from the WMS database (as described in Bloom and Van Reenen, 2007, 2010). Covering the 2002-2014 period. The raw data are converted to Z-scores by removing the sample mean from each observation and dividing the demeaned values by the sample standard deviation.

Since the authorities had decided on how much each bank could increase its credit book every single month, there was really no need to appraise credit applications in a particularly serious manner. Mortgage credits took most of the available credit volume and the remainder was allocated to safe projects. Credit losses in the banking system were only a fraction of a percentage point of the credit stock each year. As a consequence, the ability to appraise credit risk had slowly dwindled out of the banks. So, unfortunately, was the case for the supervisors. When credit controls were finally removed the volume of credit virtually exploded. All banks wanted to increase their market shares and there was plenty of pent-up demand. Many loans were given to customers who, as it appeared later, were far from creditworthy and should not have passed a proper credit appraisal. The regulations had been abolished at the wrong time and without realising what an extended period of regulation had done to the ability of banks and supervisors to handle credit risk. What can be learnt from this? Quite obviously, deregulating does not mean the abolishing of all rules according to which banks should behave. There are good and well documented reasons for regulating banks. Deregulation means the adoption of a new legal structure that is consistent with a competitive market economy. The dilemma of regulation is to balance between having too little and too much. Too much will stifle the banks, too little will lead to unsound risk taking.
The downswing in the economies was very rapid and severe, as a number of factors combined: •  The countries’ competitiveness had been undermined by the large wage increases, at the same time as the strong demand in the domestic markets had led to a waning interest in production for export. •  “Bubbles” of overproduction and high prices, primarily in the property sector, led to a more or less complete stop in construction. •  The global crisis meant that demand for the countries’ export goods declined. •  The global crisis led to foreign investors being neither willing nor able to inject capital to the Baltic countries. At the same time, foreign depositors made large withdrawals from the banks. The crisis led to GDP in the Baltic countries falling by up to 20 per cent during 2009 alone, and budget deficits soared, as did the outflow of currency, which put pressure on the foreign currency reserves. Real wages fell, unemployment rose, property prices collapsed and the number of borrowers experiencing problems repaying their loans increased rapidly. However, the outcomes in the different countries differed somewhat from one another. How has the Riksbank assessed developments in the Baltic countries and what action has it taken? As many of the major Swedish banks have such large commitments in these countries, the Riksbank has long been closely following developments in the region.

There is a debate regarding the fixed exchange rates in the Baltic countries. The Riksbank has no reason to question the Latvian government’s wish to retain its fixed exchange rate. The main argument for our stance is that the Latvians themselves wish to maintain a fixed exchange rate to be able to ultimately apply to adopt the euro. They are prepared to make far-reaching sacrifices in the form of wage reductions, budget cutbacks and the ensuing unemployment, to attain the cost reductions that will restore competitiveness. I consider that the possibilities for the Latvian government to obtain popular support for such painful measures would be greatly undermined if other countries were to force an unwanted solution on Latvia. Nor is devaluation an easy path to take. There are considerable risks that it will not be possible to control the magnitude of the exchange rate changes and that there may be large distortion of the economy. I also want to refute the argument that the Riksbank is supporting fixed exchange rates in these countries because the Swedish banks would suffer large losses in the event of devaluation. Devaluation or not, economic restraint is required over a long period of time to restore balance to the economies. This implies that the banks’ loan losses will be around the  4  BIS Review 11/2010  same size in both alternative scenarios, but will probably have a slightly different distribution over time. What has the Riksbank learned?
Thanks to our policy, banks could count on an ongoing access to foreign currency balances. These measures can all be seen as an expansion of our regular open market operations with banks. In consonance with this tradition, our non-standard policy was first and foremost aimed at expanding that form of credit in volume and maturity. In July this year, we started to 2  BIS Review 150/2009  purchase securities outright as a vehicle for introducing further credit support. We intervened directly in the longer-maturity segments of financial markets by buying covered bonds issued by banks. When presenting this decision, I stressed that we were very much in the continuity of our open market operations, because we still had in front of us both the signature of the commercial bank issuing the bonds and the underlying asset itself. Let me focus more closely on covered bonds for a moment, as they are important for the euro area – and for Spain. Covered bonds are an attractive source of funding for banks because they have long-term maturities. They help control and rebalance the maturity mismatch between assets and liabilities in banks’ balance sheets. But they are attractive instruments of finance for investors as well. Unlike asset-backed securities, covered bonds do not involve a transfer of credit risk from the issuer to the investor. Credit risk stays with the originator, preserving the incentives for prudent evaluation and monitoring.

The ECB has also made its liquidity provision facilities more accessible to the banking sector, in terms both of cost and volume, and it has relaxed the requirements made of assets pledged as collateral, in order to smooth financing to households, firms and the self-employed. All these measures have been effective in alleviating the financial tensions generated by the crisis. These tensions took the form of a strong rise in sovereign and corporate debt yields, which were then largely reversed. The ECB’s action has also helped keep bank lending flows 5  to companies notably robust in recent months and contributed to their cost holding at low levels. Also crucial for these dynamics have been the government-implemented public guarantee programmes for bank lending. The ECB measures have further provided considerable room for manoeuvre for national authorities. In this second phase of the crisis, in which the recovery in economic activity is, as I said, incomplete, fragile and uneven across sectors in countries, actual inflation and inflation expectations are holding at very low levels. And it is to be expected in the medium term that the weakness of demand will continue exerting downward pressure on prices. Against this background, on the ECB Governing Council we have made it clear that a high degree of monetary accommodation is needed to support the recovery and safeguard our price stability objective. Specifically, we have reiterated our commitment to do what it takes to support the euro area economy in these extremely difficult circumstances.
Analyzed in terms of the ratio to national income, the ratio of the current account deficit was 6.4 percent by the end of 2005. The said ratio rose to 6.9 percent in the first quarter of 2006. Certainly, high rates of current account deficit are not peculiar to Turkey and can also be observed in other transition economies that grow at similar high rates. For instance, the ratio of current account deficit to gross domestic product is 11.8 percent in Bulgaria, 8.7 percent in Romania, 7.9 percent in Hungary and 7.2 percent in the Slovak Republic, as of 2005 1 . Higher rates of global and financial integration enable countries to sustain higher rates of current account deficit, to the extent that the robustness of their macroeconomic fundamentals allows. Due to the impact of these conditions, a current account deficit on a higher plateau has also been sustained in Turkey in recent years. 1  IMF, World Economic Outlook, April 2006  BIS Review 89/2006  9  The recent high increase observed in the current account deficit in Turkey is not the result of the increase in consumption, but comes from the increase in investments that boosts the production capacity. Crude oil prices, which have been following a high and volatile course in international markets and maintaining their upward trend in recent years, stand as another factor explaining the widening of the current account deficit.

In this framework, the relationship between the real sector and the financial sector should be reinforced in order to provide the private sector with the financing required for creating employment, the investment environment should be improved, permanent stability should be established in the macroeconomic environment and the capacity of growth to create employment should be enhanced. Furthermore, training policies should be implemented in order to increase the qualified labor force that would meet the labor demand, employment taxes and other burdens on employment should be reduced gradually in order to register the unregistered employment, and regional markets should be formed for the unqualified labor force created by the contraction in the agricultural sector. In this scope, the framework drawn up by the Ninth Development Plan in consistence with the European Union Employment Strategy is a road map for what should be done. In the last part of my speech, I would like to say a few words about the issue of current account deficit, which has frequently been discussed in recent years, and highlight certain points I consider to be significant about Turkey’s current account deficit. As you all follow closely, the current account deficit has widened rapidly in recent years as a consequence of the high growth performance observed since 2001. The current account deficit, which was USD 23.2 billion in 2005, rose to USD 28.7 billion by June 2006 in annual terms.
The forecast for domestic cost pressures this year has been revised down somewhat all the same compared with the assessment in December on the basis of new data for 2004. Resource utilisation in the Swedish economy was low last year. In particular, the demand for labour is still limited even though some indicators of labour shortages show an upward tendency. Indicators from manufacturing also suggest that capacity utilisation has picked up recently. The Riksbank’s overall assessment is that resource utilisation has risen – albeit from a low level – and will continue to increase as more and more spare resources are put to use. The inflation outlook As I mentioned, both domestic and imported inflation were low in the past year. Domestic inflation was expected to be low at this point in time and the rate of price increases for domestically produced goods in recent months has also been broadly in line with the Bank’s previous forecast. In spite of this, the forecasts for domestic inflation this year and next year have been revised down. One reason is that the downward pressure on prices in the retail food trade is anticipated to be greater than previously assumed. How big the effects will be is difficult to say, though, as is their significance for the general inflation rate in the longer term. Over a longer horizon, domestic inflation is expected as before to rise gradually as the cyclical upswing continues and resource utilisation picks up.

We try to fulfil this objective by setting interest rates at a level that enables the general level of demand to grow in line with what the economy is able to sustain in the long run without giving rise to inflation, and that ensures that economic agents have confidence in the Bank to meet the inflation target. So we only have an indirect influence on the general level of demand and employment. And the poorer than expected employment conditions in the past two years have not been due to developments in demand. On the contrary, demand has proved surprisingly strong. Nonetheless it can of course be maintained that employment could have been somewhat higher if the Riksbank had kept interest rates lower, something that would have been possible given what we now know about inflation. It is difficult to object to this assertion, which of course is why the Riksbank’s critics keep coming back to it. But an assessment of what we could or could not have done must be based on what we knew when the decisions were made, not on what we know now. One way to try to approach this issue is to compare our assessments and actions with other players’ forecasts and opinions on policy at the time in question.
Greater and more elastic supply of ultralow-risk assets through these channels likely helped smooth out the effects of the expansion of government money market funds that I noted earlier. Evidence of the efficacy of policy transmission: views from Duffie and Krishnamurthy Recently, numerous academic papers have explored the functioning of money markets in the post-crisis environment, and have sought to investigate—both theoretically and empirically—how structural shifts like those I have discussed will affect the Federal Reserve’s approach to policy implementation. Darrell Duffie and Arvind Krishnamurthy presented a particularly notable empirical and theoretical study at last year’s Jackson Hole conference.26 Darrell and Arvind’s central empirical observation was that money rates have become more dispersed. (Figure 9), which shows a selection of overnight money market rates, illustrates some of this dispersion. Darrell and Arvind use a broad selection of market rates, assembled from various sources and adjusted in a number of ways to make them comparable to each other, to construct what they call a “dispersion index” of money market rates, shown in (Figure 10). This series is calculated as a weighted mean absolute deviation across these rates. This metric shows that, according to their measure, dispersion across money markets has risen since late 2015, around the time the FOMC began the process of policy normalization and money market funds started to change their business models in anticipation of the new SEC rules. Based on these data and on theoretical modeling, Darrell and Arvind conclude that monetary transmission may be less efficient than it was before the crisis.

News conference  Berne, 13 June 2019 Andréa M. Maechler  Introductory remarks by Andréa M. Maechler  I would like to start by outlining developments in the financial and foreign exchange markets. I will then make a few comments regarding the SNB policy rate and the replacement of Libor. Finally, I will provide some background information on the SNB’s recent decision to join the Network for Greening the Financial System. Financial and foreign exchange markets  In Q1 2019, the risk markets – especially the equity markets – recovered from the downturn in Q4 2018. This was partly due to the Federal Reserve signalling its willingness to be ‘patient’ on further interest rate hikes, and partly to the fact that economic data for Q1 2019 painted a more benign picture than the markets had expected at the end of 2018. In April, equity market indices briefly rose to new highs in several countries. In May and early June, many of these indices declined in response to a weaker economic and inflation outlook and, in particular, the abrupt escalation of the trade dispute between the US and major trading partners like China and Mexico. In aggregate, the major equity markets in North America and Europe have gained over 5% since the last news conference in December 2018. By contrast, over the last six months, yields on government bonds have fallen significantly overall in most advanced economies.
Reflecting the Federal Reserve’s historical interest in the mitigation of settlement risk, and in anticipation of the emergence of real time retail payments in the United States, we are currently exploring an expansion in operating hours of the National Settlement Service to support the final and irrevocable settlement of interbank positions in central bank money. We are pursuing this interest in three phases. In 2015, we expanded the NSS operating window modestly, opening an hour earlier at 7:30am and closing a half hour later at 5:30p.m. Subsequently, we announced our readiness to open NSS as early as 9:00 p.m. on the prior calendar date, consistent with the operating window of the Fedwire Funds Service, if requested. Finally, we are currently evaluating prospects for weekend settlement hours, perhaps encompassing a 24x7 operating window for NSS, for which we are validating demand prior to finalizing our direction. It is critical to consider these matters in advance of the advent of real time retail payments to anticipate the needs of customers and to respond to the interests of policy makers. The Federal Reserve’s Strategies for Improving the Payment System also aspire to achieve greater end-to-end efficiency in cross-border payments, an historical pain point for end users. In support of this interest, and following an exhaustive season of consultation with industry leaders, we are currently in the midst of a multi-year effort to adopt the ISO 20022 payment message formats for the Fedwire Funds Service.

As a final reflection, and to the surprise of no one in this room, we are experiencing an unprecedented period of innovation in financial services, with nascent technologies such as distributed ledger garnering substantial attention. These emerging technologies possess the potential to revolutionize financial services, making them faster, more efficient, and more secure. Notwithstanding this promise, challenges remain in their application to critical financial market infrastructures whose operational integrity represent a non-negotiable pre-requisite for our financial system. As we enhance existing services or develop new ones, our consideration of new technologies must strike an appropriate balance to ensure the risks are thoroughly 4/5  BIS central bankers' speeches  understood before their transformative potential is realized. In pursuing this suite of initiatives straddling the wholesale services, we seek to advance both the interests of customers and policy makers during this era of unprecedented challenge and change. Standing before you today convicts me that our success as stewards of this business depends absolutely upon our active engagement with the depository institutions and end users to which we are operationally accountable. Across this sphere and all others, either intentionally we are progressing or inevitably we are regressing; there is no idleness. Thank you for your generous attention today. I’d be pleased to respond to a few questions. 5/5  BIS central bankers' speeches
Among them: the setting-up of an European Monetary Fund, which would take over the current functions of the European Stabilization Mechanism, eventually adding the role of common backstop for the Single Resolution Fund; the establishment of an European Minister of Finance, who would also be Vice-President of the European Commission and Chairman of the Eurogroup; and the creation of a common stabilisation tool for investment, which should not preclude the future development of a genuine European budgetary capacity for economic stabilisation purposes. Those are proposals that deserve careful consideration. Moreover, the crisis has made it clear that the European budgetary framework is very complex, which highlights the need to simplify it. Recent proposals, which seek to reduce the current excessive number of rules, by focusing on the public debt to GDP ratio, as a medium-term anchor, and to the expenditure rule, as an operational tool, seem promising. In any event, reinforcing the oversight and control of fiscal rules is necessary to ensure their fulfilment. The aim should be that the budgetary governance framework is able to encourage countries to generate room for manoeuvre during expansionary phases, so that the stabilising capacity of fiscal policy may increase in the euro area, as a whole, at times of crisis. 8/9  Summing up: much work remains to be done in the coming months and years. We should make good use of the current benign environment to progress in our European integration agenda.

Several times over that period, it appeared that growth was breaking out on the upside and forecasts were raised, but each time such hopes were disappointed. We are again at a similar junction. Over the past two quarters, the pace of economic growth has picked up. In particular, real GDP rose at a  1  Agria Sbordone, Thomas Klitgaard, Jonathan McCarthy and Joseph Tracy assisted in preparing this speech. BIS central bankers’ speeches  1  3.5 percent annual rate last quarter, and is widely expected to grow at around a 2½ to 3 percent annual rate through the end of 2015. This time, however, I believe that we are less likely to be disappointed. That is because several of the various “headwinds” that have impeded U.S. economic activity in recent years have subsided. This allows the improving underlying fundamentals to exert themselves more forcefully. For example, fiscal restraint, which had a significant impact on economic growth last year, has abated, and is likely to disappear altogether next year. Credit availability has also improved, reflecting healthier bank balance sheets and improving job and income prospects for potential borrowers. In addition, the excess supply of housing that built up during the boom of the previous decade has been worked off. This lessening of headwinds has allowed supportive financial market conditions spurred, in part, by very accommodative monetary policy to shine through. As a result, I expect that both consumption and business investment spending will strengthen over the next few quarters.