samchain/econo-pairs-v1 huggingface dataset:
Madam Governor, I hope that I may have persuaded some of you at least that British reservations about monetary union are not just plain obstinacy! Out of the first wave of the euro we may be, but we remain very much an active and, I hope, constructive partner in the process of European monetary integration in a wider sense - which is why I prefer to think of Britain in Europe - which I took as the title for my talk. BIS Review 23/1998

7 In turn, labour utilization can be broken down into the employment rate, the average number of weekly hours worked and the share of the population in the 15-64 age bracket. This decomposition facilitates the identification of appropriate measures for improving growth prospects and, therefore, for narrowing the income gap. It also helps to demonstrate that living standards can only be raised in a sustainable manner though a combination of a greater mobilization of human resources and higher productivity levels. Given the similarities of the EU and euro area averages, I will focus on the income gap relative to the EU. In 2008 this gap was attributable to both lower productivity and labour utilization in Malta. Lower productivity can be the result of either a smaller capital stock, both physical and human, or an inferior level of technology, or some combination of the two. Malta’s labour productivity has been declining over time, dropping from around 90% of the EU average in 2003 to 87% in 2008. On the other hand, labour utilization has improved, increasing from around 88% to 91% of the EU average over the same period. Malta’s lower labour utilization rate is entirely attributable to a low employment rate, as both the average working week and the share of persons of working age in the total population are higher in Malta than in the EU. Since 2003, in fact, Malta’s employment rate declined from around 87% to 84% of the EU average.
Second, in Switzerland - as, incidentally, also in Japan - the so-called BalassaSammelson effect probably also plays a role. It rests on the fact that the productivity trend in the internationally active part of our economy proved to be much more vigorous than in the less competitive domestically-oriented sectors. It remains to be seen whether, and if so, to what extent, the deregulation of various formerly protected areas of our economy will cause this effect to disappear. The upside trend of our exchange rate development, however, is not really a problem. This is evidenced by the remarkably strong performance of the export sector since 1973 as well as by the favourable trend of our terms of trade which showed an average improvement of 0.8% per year. On the contrary: the appreciation is a clear sign of the confidence placed in our currency. It has a positive effect on prosperity since the purchasing power of a given income in Swiss francs increases in the wake of falling import prices. By contrast, the individual periods of massive and prolonged deviations from the trend proved to be a serious handicap for macro-economic development. No doubt, such shocks are a major stability risk for our open economy even if, fortunately, they are a rare occurrence. Conclusions for monetary policy Let me now turn to monetary policy, focusing first on recent developments followed by some long-term considerations. The pattern of the 3-month Libor rate illustrates how we have proceeded since the euro was launched.

Without this exchange rate support, we would undoubtedly have had to impose bigger changes in interest rates. Prior to the launch of the euro, we made it abundantly clear that in the event of a massive exchange rate distortion, which would have posed a serious threat to internal stability, we would be ready to take action in the foreign exchange market. We have not had to make use of this measure of last resort at all. CHF Exchange Rates 1.85 1.80 1.75 1.70 1.65 1.60 1.55 1.50 EUR/ CHF 1.45 USD/ CHF 1.40 1.35 1.99  3.99  5.99  7.99  9.99  11.99  1.00  3.00  5.00  7.00  9.00  11.00  1.01  Finally, not even the marked decline of the USD in the past months has led to any undesirable tremors. The effect, registered fairly regularly in the past, that a weakening of the USD is reinforced by an appreciation of the SFR vis-à-vis the DM, has been almost absent. It remains to be seen whether this undoubtedly destabilising "coffee cup effect" has disappeared for good with the advent of the euro. Do we want to maintain our own currency even in 10 or 20 years' time? That is certainly a good question. In economic respects, it seems advisable to remain noncommittal for the time being. Not only on the financial markets do available options have a positive value. They should not be given away lightly.
Yet, since 2013, the cumulative shortfall relative to our inflation target is noticeable. This raises the question of whether changes in the functioning of developed economies may have impaired the Phillips curve, which I will take today as the relationship between the rate of changes of prices and the unemployment rate i. I find it prudent to choose the observed unemployment rate as a measure of slack, rather than model-dependent and uncertain estimates of the output gap. Page 3 sur 9  In the Euro area, two factors explain most of the gap between the observed level of inflation and our target. The first one is the double dip recession caused by the Great Recession and the sovereign debt crisis. The second factor is the strong decrease of the price of oil after 2014 that lowered the inflation rate both directly, through the energy component of consumption prices, and indirectly by decreasing production costs of services and non-energy goods. Food prices have also been less dynamic on average since 2014. Combined, these factors contribute to a 1 pp decrease in the annual inflation rate. They were partially mitigated by unconventional monetary policy. Absent this policy, in-house computations show that annual inflation would have been close to 0.3% lower between 2014 and 2019, in line with ECB estimates.

Good quality data is necessary to quantity ASEAN’s economic and insurance exposure to natural disasters. Moreover, countries are facing increasingly complex threats that compound the negative impacts of disaster and climate shocks, ranging from supply chain disruptions, to population migration and adaptation issues, to the risk of pandemics. Good data and analytical tools will allow policy makers to identify disaster risk zones, and to quantify the risks as well as the potential fiscal impact. This will in turn, empower governments, regulators and industry to make more informed decisions on disaster risk management, from infrastructure planning, to the use of disaster financing strategies and the development of solutions. 16. To this end, ADRFI will establish a new ASEAN Data and Analytics Platform, to construct a high resolution and objective natural catastrophe database for ASEAN. This platform will use remote sensing technologies such as satellite imagery, and advanced extraction techniques, to produce top down economic exposure data. Such data include building attributes like age and type of construction, as well as building values, will be fused with bottom-up insurance exposure and loss data, to form a holistic and more accurate picture of risk. 17. You may already be familiar with the Natural Catastrophe Data Analytics Platform (or 3/4  BIS central bankers' speeches  NatCatDAX), also led by ICRM, that is already utilising these new methodologies to bridge the data gap in Asia.
The second observation is that by encouraging the use of responsible liquidity management, source countries can reduce the probability of a sudden rush for the exit. The FSB’s recent proposals to reduce structural vulnerabilities from asset managers are an excellent example of this. Recommendations to enhance reporting to authorities, undertake more stress testing and to extend the suite of liquidity management tools available to fund managers will all help better align investors’ expectations of liquidity with reality, and hence ensure their flows to the rest of the world are less flighty and more sustainable. Conclusion  Thus far I have focussed on the idea that acting in our own local interest to build up domestic resilience helps protect us from global forces that we cannot control on our own. Let me end with a word on the benefits and limitations of working together. 15  Details of the modelling and assumptions used are set out in Technical Appendix 2: Model of monetary-macroprudential policy coordination with market-based finance. 7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  There are many ways in which co-operation on macro-prudential policies could be deepened further. Options which could warrant further investigation range from formalising the exchange of information, to frameworks for reciprocity for tools beyond the countercyclical capital buffer, to common stress test scenarios and risk assessment that are used across the world.

Our own forecast for the interest rate has the advantage that it is produced together with the forecasts for GDP, inflation, employment and so on. Moreover, market expectations can vary substantially over time, which can lead to the information content in the macro forecasts as a whole declining. The evaluators also consider that the Riksbank’s schedule for the different stages in the monetary policy process does not correspond to how the forecasting and policy-making work is carried out since the new repo rate path was introduced. In their view, the changes have meant that, in practice, the actual interest rate decision has been brought forward. They therefore recommend that the Riksbank should announce the monetary policy decision and  2  BIS central bankers’ speeches  interest rate path earlier, namely directly after the meeting of the Executive Board that is held a couple of days after the second monetary policy group meeting. However, we consider this proposal to be difficult to implement. Although the analyses and forecasts are largely complete by the second monetary policy group meeting, the monetary policy decision is made at the monetary policy meeting and not before then. Any reservations against the decision are put forward at this meeting, too, and not earlier. In conclusion, let me once again thank Professors Goodhart and Rochet for their valuable contribution to our continued work on both monetary policy and financial stability.
So far, with robust cushions, Thailand has fared well from external shocks compared to other Emerging Market economies. This does not mean we can be complacent. 6  BIS central bankers’ speeches  Our country is in need of reforms to address long-term structural problems, similar to having a more powerful engine, enabling us to reach our destination faster. Fortunately, though, our economy is currently equipped with strong buffers, similar to a robust suspension system in a car, smoothing our ride through bumpy roads. Ladies and Gentlemen, Let me assure you that the Bank of Thailand will do our part to ensure a stable and resilient macroeconomic landscape. We will accommodate changes, especially those in the financial system, which will put Thailand on a stronger footing and in a more competitive position. I am confident that Thailand will ride forward with the much more powerful engine it deserves. Thank you very much for your attention. BIS central bankers’ speeches  7

18  This is even called the Greenspan’s conundrum, after the name of the former Chairman of the US Federal Reserve. 19  FOMC (Federal Open Market Committee): the decision-making authority on interest rates in the Management Board of the US Federal Reserve. 20  Hannoun H. – ibidem. 21  Tytell I., Wei S-J. “Does Financial Globalization Induce Better Macroeconomic Policies?”, IMF Working Paper 04/84, May 2004. 22  The DIT strategy is applied in most developed countries outside the euro area and the USA. However, in the case of the euro area, one may talk of the de facto DIT strategy, and in the case of the USA – the current Chairman, Fed Ben Bernanke, is a zealous DIT enthusiast, so its implementation in the USA soon is not out of question. BIS Review 32/2006  7  Admittedly, the impact of the DIT strategy on lowering inflation is a subject matter of discussion 23 ; however, empirical evidence exists that implementation of the DIT strategy improves macroeconomic outcomes (lower costs of stabilising inflation, decreased influence of price shocks and output shocks on inflation, thereby — decreased effect of past inflation on the current inflation, which reduces inflation persistence) 24 . Empirical research also suggests that the DIT strategy facilitates stabilisation of long-term inflation expectations 25 .
At the same time, in the context of the forthcoming establishment of a Single Resolution Mechanism in Europe, national Governments may consider it warranted to make some adjustments to the current institutional settings. Indeed, the new European resolution framework will bring a transfer of competences to the Single Resolution Board and, more importantly, a smaller role for taxpayers’ money as a consequence of the bail-in requirements specified in the BRRD and the availability of a resolution fund, which will be fully funded by private contributions from the industry. Indeed, if the bail-in clauses in the BRRD had been enforceable in 2012 and the SRM had been established – including the availability of a fully funded Single Resolution Fund – the banking crisis in Spain could have been fully resolved with very limited contribution from the Government. Then, since taxpayers’ money is likely to be required only in relatively rare situations, this will strengthen the case for delegating resolution actions and decisions to an independent body, such as the central bank or an ad-hoc agency, as already occurs in many jurisdictions. Frankly, I believe that – provided the public budget is not significantly involved – banking resolution should be subject to an institutional setting similar to that of banking supervision, in which delegation to an independent prudential authority has long been successful in most jurisdictions.

Moreover, this board will manage a common resolution fund – funded by the industry – that over time would become a common backstop to cover resolution costs for all significant banks in all participating countries. Arguably, the envisaged system is relatively complex. Major resolution actions may involve not only the Single Resolution Board but also the European Central Bank, as a supervisor, the national resolution authorities, the European Commission and, finally, the Council. Given the limited time-span in which decisions must often be taken, swift interaction among those agencies in a resolution process will be required. Indeed, the coordination of the SRB and the ECB is crucial for the success of the SRM. Experience in most countries shows that the supervisor should be fully involved in decisions to trigger resolutions and in the design of resolution plans. Indeed, as of now, in many European countries the resolution authority is embedded in the supervisory agency, albeit in some cases with specific decision making processes. Although the draft SRM regulation envisages a framework for cooperation between the resolution board and the supervisor, more concrete arrangements are needed to ensure satisfactory coordination.
at  available  Hardin, G (1968), “The Tragedy of the Commons”, Science, New Series, Vol. 162, No. 3859, pages 1243–1248. Johnson, N, Zhao, G, Hunsader, E, Meng, J, Ravindar, A, Carran, S and Tivnan, B (2012), “Financial black swans driven by ultrafast machine ecology”, arXiv Working Paper. Layard, R (2005), “Happiness: Lessons from A New Science”, Allen Lane. Lazear, E P and Rosen, S (1981), “Rank-order Tournaments as Optimum Labor Contracts”, Journal of Political Economy 89 (5), pages 841–864. Mackenzie, D (2011), “How to Make Money in Microseconds”, London Review of Books. Mehran, H and Mollineaux, L (2012), “Corporate Governance of Financial Institutions”, Federal Reserve Bank of New York Staff Reports, No. 539. McLean, B and Nocera, J (2010), “All the Devils are Here: The Hidden History of the Financial Crisis”, Portfolio. Menkveld, A J (2012), “High Frequency Trading and the New-Market Makers”, EFA 2011 Paper; AFA 2012 Paper. Philippon, T and Reshef, A (2009), “Wages and Human Capital in the US Financial Industry: 1909–2006”, National Bureau of Economic Research, Working Paper 14644. Ridley, M (1993), “The Red Queen: Sex and the Evolution of Human Nature”, Harper Collins. Science News (1983), “Elephant seals rise from near extinction”, Science News, Vol. 123, Issue 9. Veblen, T (1899), “The Theory of the Leisure Class: An Economic Study of Institutions”, Macmillan and Company, New York. BIS central bankers’ speeches  11  Chart 1: Return on equity for global banks  Source: Capital IQ, published accounts and Bank calculations.

In fact, the average inflation around the world increased from 3.5 percent in 2006 to 4.8 percent in 2007 and to 5.5 percent in January 2008. In this environment Turkey was able to reduce inflation by 1.3 percentage points in 2007. In fact, this was the sharpest drop among 60 major developed and emerging countries. The disinflation process is even more pronounced in core inflation, which excludes energy and food prices. It stood at 4.36% as of February 2008. The favorable outlook in core inflation indicators despite the surge in energy and food prices has allowed the Central Bank to cut policy rates since September 2007. The cumulative rate cut reached to 225 basis points as of February 2008 bringing the overnight borrowing rate to 15.25% from 17.50%. The timing of further easing depends on developments in global markets, demand conditions, fiscal policy performance and other factors affecting the medium term inflation outlook. According to the forecasts of our January 2008 Inflation Report, the year-end inflation may stay above the target in 2008, but within uncertainty band, due to factors outside the control of monetary policy such as energy and food prices. The mid-point of our forecast for 2008 is 5.5%, whereas the year-end target is 4%. However, inflation is forecasted to converge to the target in 2009 and come down to 1.8-5.5% range with 70% probability at the end of 2009.
Under the auspices of the IMF and the Bank for International Settlements, work is in progress on drafting rules and principles for the operations of financial institutions. It is dealing with such tangible matters as accounting, increased transparency and, not least, principles for managing risks. It is hoped that more uniform rules and greater transparency in accounting, capital adequacy and credit assessments, will improve financial market conditions and ultimately lower the risk of financial crises. In addition, countries must be alert in the general conduct of economic policy so that lending to them is not considered to be unduly risky. Other important matters include a sound banking system and effective supervision of the financial sector. In Sweden, the events in the early 1990s have led, for instance, to the regular publication of a so-called Stability Report on the situation in the financial sector. This has been followed by many similar reports at the international level; the IMF, for example, now presents regular assessments, so far for more than forty countries. Before leaving the issue of free capital movements, I want to note that compared with the earlier question of trade, the problems here are not primarily political. As I see it, there is a strong will to do something about financial market instability and much work has been done internationally to mitigate the risks. At the same time, it is difficult to see how the risks could be eliminated entirely without this leading to serious disturbances in and high costs for the world economy.

There are clear needs for developing other channels of financial intermediation in the longer term, in order to promote diversification and ensure financial stability and sustainable growth. However while the capital markets on the Mainland are still in their nascent stage and face some difficulties in development, the banking system will remain the most important channel of financial intermediation in the foreseeable future. Thus, those engaged in the banking sector will continue, for a long period of time, to play an important role in ensuring the effective intermediation of funds. Given the rapidly changing macroeconomic environment, the banking sector professionals face a difficult task in achieving this mission. The changes involved in this broad picture include supervisory policies for the banking sector, relationship between the regulatory authority and banks, and governance arrangements of individual banks. In line with the government’s reform and open policies and under the supervision of the China Banking Regulatory Commission, Mainland banks have become increasingly commercialized. Banking professionals have progressed from their former mode of following the authorities’ policy instructions to a more active role in assessment of loan applications before making credit decisions. This is not an easy change. It involves both time and considerable adjustment in the thinking. Besides, good tools are a must for a good job: bank employees have to increase their knowledge of the banking business in a market economy and enhance their professional standards.