samchain/econo-pairs-v1 huggingface dataset:
The high-risk projects with high expected returns, which we would like to see giving a boost to potential growth, are more difficult to finance than in other parts of the world. This is mainly because of Europe’s bias towards bank and debt financing as opposed to equity[10], and the persistent fragmentation of our financial systems, not to mention high administrative burdens[11]. And the reallocation of labour is hampered by rigidities in national labour markets as well as obstacles to cross-border labour mobility, such as the lack of transferability of social rights, language barriers and cultural differences. And even when our firms have sufficient access to capital, they do not seem to be innovative enough and also do not fully exploit new technologies and working methods[12]. There are also several other reasons for the secular decline in Europe’s growth. Consider the demographic “handicap”. Over the next 15 years, the working age population will actually shrink substantially or at best plateau out in almost all euro area countries. Worse yet, in that same period, the most innovative segment of the population[13] will contract even more. Let me give you some data on this: according to the European Commission’s ageing working group[14], the population between 26 and 50 – which several studies identify as being the most innovative – will shrink by 12% in Germany, 2% in France, 11% in Italy and by a whopping 29% in Spain.

To give an example, the original idea of applying the socalled country of origin principle should be reconsidered. This would mean that the regulation of the exporting country is applied. The benefits from such a change are straightforward: first, it becomes easier for a service provider that no longer has to deal with the regulations of 28 countries when exporting across the Union. Second, it would incentivise countries to put in place efficient and well-functioning legislation. In addition, the Single Market for services should be expanded to additional sectors: there is, for instance, no good economic reason for excluding health care. As I said earlier, reforms are also about improving economic governance. When the first European Semester was launched in January 2011, it marked a sea change in the economic governance of the euro area. With this new tool, Europe recognised that ex ante coordination of economic policies – and not only fiscal policies – at European level was necessary. Later in the same year, the Macroeconomic Imbalance Procedure (MIP) strengthened the European Semester further. For the euro area, the corrective arm of the MIP even foresees sanctions in case of non-compliance. The European Semester and the MIP are powerful tools that no doubt have made the euro area stronger. Yet – five years later – we have to admit that the sun does not shine everywhere. The implementation record for country-specific recommendations (CSRs) was not very high from the start and has declined further recently.
The connotation that people attach to the term “Nullzins” will likely be different from, say, “geldpolitischer Impuls” – although both terms in essence describe the same thing. Worse, monetary policy can quickly become overburdened if national fiscal and economic policies fail to internalise the effects they have on the common currency. The temptation to freeride is always present in a monetary union. It is easy to see that if fiscal policy is loosened during an expansion, or tightened during a recession, the burden on the central bank to stabilise the economy increases mechanically. Even today, euro area growth still relies too much on monetary policy support. According to ECB staff estimates, the contribution of our easing measures to annual euro area GDP growth was half a percentage point in 2017 and will still be around one-third of a percentage point in 2018. And monetary policy can do little to lift the long-term growth rate of our region. All of this means that our currency union needs further reform – both at Member State and euro area level. I believe there is wide agreement on this. Where we still lack agreement, however, is on how these reforms should look in practice. I have described elsewhere the requirements of reform from the perspective of the single monetary policy. 1 As the central bank of the euro area, we have a stake in the success of the current discussion.

It means that we should move beyond the north-south divide which has too often shaped past discussions on EMU. Economic fragmentation is receding on our continent, thanks to a broad cyclical recovery, the ECB’s actions and the bold reforms initiated in several countries. We should be careful not to allow 2/3  BIS central bankers' speeches  political fragmentation to jeopardise these achievements. Ultimately, what matters is that we strike the right balance between solidarity and responsibility and that we embrace a vision which secures the integrity and resilience of the euro area. We all know that this is not easy. But failure to do so would leave the ECB alone at the forefront of macroeconomic stabilisation in the euro area. This is a risk not worth taking. Thank you. 1 See Cœuré, B. (2018), “The euro area’s three lines of defence”, speech at the conference “Deepening of EMU”,  Ljubljana, 2 February. 3/3  BIS central bankers' speeches
As we well know, the key issue here is the fulfilment of the Maastricht criteria. Most new member states, Estonia included, will obviously have no great difficulties in meeting the sovereign debt and budget deficit criteria. The remaining two criteria low inflation and exchange rate stability - are connected with some specific problems. The fulfilment of the inflation criteria might not in reality be as difficult as is feared - and achievable in not so distant future. However, in the context of rapid accession, the meeting of the inflation criteria becomes a main issue. This is due to the interaction of the so-called real and nominal convergence. Together with the rapid growth of productivity and earnings, prices are going to rise quicker in the new member states. Considering great price gaps in applicant countries v?s a v?s present member states, one can assume that price equalisation will take time. Thus we can conclude that inflation rates in the new member states will for several years stay higher than the mean rate of the three lowest inflation economies in the European Union plus 1.5 per cent. We have estimated that for Estonia the “optimum” pace for streamlining of prices would be ca 2 to 3 per cent points per year. In our opinion this difference reflects the quicker productivity increase trend in Estonia. In conclusion, a few comments on the main economic policy issues that the European Union faces.

I think that we should in Estonia seriously and comprehensively analyse factors that influence employment, including absolute or relative taxation of the workforce and costs related to hiring and layoffs. Thirdly, the balanced growth. Reforms are not an objective per se, we undertake them with the assumption that they will lead to a higher economic growth rate, higher income and improved living standard. Leaving aside the turbulent years of economic reforms immediately after the 1992 monetary reform which lasted until 1995, the average annual economic growth rate in Estonia has been above 5%. Between 1995 and 2001 the average salary increased from 2086 kroons to 5721 kroons. During the same time period real wages increased by one-third. We believe that our mean economic growth rate will continue to be about 6% per annum. The quality of the economic growth in Estonia is consolidated by growing productivity - in 1995-2001 the GDP per capita (in fixed prices) increased by almost 40%. It is also demonstrated by the remarkable interest of the private sector and its readiness to invest. Structural changes in the economy can also be regarded as quality indicators - changes in the distribution between the industrial, agricultural and service sectors. Still, in the forthcoming years we must keep a watchful eye on the external equilibrium of our economy, the current account deficit and its financing, changes in the productivity and competitiveness.
The Singapore Diversity Action Committee found that the SGX-listed companies saw 10.2% of board seats held by women in 2015, a notable increase from 7.6% in the previous year; with large companies leading the growth. However, if we compare to other centres like the UK and Hong Kong, the women’s representation on boards is 26.1% and a slightly higher 11.5% respectively. 5. The FWA Gender Survey, results for which will be discussed in depth later, corroborates these findings. While we are heartened that the women participation numbers are healthy at the lower levels, we need to remain focused on encouraging the contribution of women at all levels, and especially at the more senior positions. 6. Singapore’s greatest asset is its people, and developing talent must be a top priority. In MAS, we place great emphasis on talent development, progression and retention in the industry. You may know that we have recently formed the Financial Sector Tripartite Committee (FSTC), which I co-chair with Mr Patrick Tay, Assistant Secretary-General, National Trades Union Congress (NTUC). FSTC brings together the industry associations, government and labour movement, to foster a financial sector workforce that is versatile and well-equipped to seize the opportunities and adapt to the changing needs of the financial services industry. Our overall objective is to build a financial sector that not only reinforces Singapore’s position as a major international financial centre, but most importantly, one that provides good jobs for Singaporeans. 7. Allow me to elaborate on our approach. 8.

Despite the heterogeneity of these assets, valuation uncertainty still represents a potentially material source of concentration risk. The second area of model risk relates to rating uncertainty, as private assets are not publicly rated. Around 40% of the credit risky assets in insurers’ MA portfolios are only internally rated as at YE2020 [see Chart 5]. For annuity writers, the MA is a material regulatory benefit that allows future investment profits to be booked upfront, thereby increasing capital resources. The MA further reduces capital requirements which are calculated under stressed conditions. Under the current rules, the asset’s rating is the only measure of risk used to determine the MA, for a given currency, sector, and term. There is, therefore, an implicit reliance on the rating in capturing all of the retained risks of any asset – another form of concentration risk. Whilst Supervisory Statement SS3/17[13] sets out our supervisory expectations in the use of internal credit assessments for illiquid unrated assets for MA purposes, ratings are by no means the only credit risk indicator in our view. This is an area where we view the MA reform as an opportunity to improve the risk sensitivity of the regime. How best to do that is something we are continuing to review in the light of feedback received to DP2/22. In terms of concentration to specific illiquid asset classes, earlier this year[14] I raised the question of whether firms’ investment choices might be excessively influenced by the regulatory construct, by seeking the most MA-efficient assets.
This is especially the case when an important innovation occurs and market participants don’t fully appreciate the powerful feedback loops that first sustain a boom and then contribute to a bust when the process runs in reverse. This means that we as regulators must continually evaluate the financial system and monitor the landscape for new developments and innovations that, if taken too far, could lead to excess and put the system at risk. Second, when there are potential excesses that could threaten financial stability, we should look to temper them. For example, in the run-up to the financial crisis, macroprudential tools—such as requiring larger down payments or more closely evaluating the incomes of borrowers—could have been implemented to limit the demand for housing. If such an approach were successful, home prices would not have risen so dramatically, and the subsequent bust would have been less severe. Another approach would have required financial intermediaries to build stronger capital and liquidity buffers as protection against a housing bust and an economic downturn. Prior to the financial crisis, the conventional wisdom was that asset bubbles could not be identified in real time—rather, they could only be cleaned up after they burst. While there are significant challenges to identifying asset bubbles, it is clear that cleaning up only after they burst does not always work out well in practice. Third, we need to carefully monitor the incentives that govern the behavior of borrowers, savers, and financial intermediaries.

During the crisis, some examples of bad incentives that sustained the boom included: 2/7  BIS central bankers' speeches  1. Compensation practices at financial firms that rewarded volume and short-term performance over longer-term, sustainable returns; 2. The conflict of interest inherent in the willingness of the credit rating agencies to designate tranches of subprime mortgages triple-A in exchange for fees; 3. The ability of Fannie Mae and Freddie Mac to use their implicit government support to take on large amounts of mortgage risk with very little capital backing; and, 4. The ability of AIG to use its triple-A rating to provide credit protection to banks and securities firms against complex mortgage obligations with little direct capital support or an adequate liquidity backstop. Culmination of the crisis Once the housing bust got underway, stress on the financial system increased sharply as asset prices fell and bank earnings plunged. In the spring of 2008, such pressures led to a forced sale of Bear Stearns to JPMorgan Chase. Later in the year, the government placed Fannie Mae and Freddie Mac into conservatorship. In September, Lehman Brothers failed. And, a day later, AIG was rescued in order to protect the rest of the financial system against further losses and even broader contagion. With confidence in financial markets and financial intermediaries badly frayed, the Federal Reserve and the U.S. government intervened and provided a range of liquidity backstops, debt guarantees, and capital infusions to forestall a complete collapse of the financial system and the economy.
Those operations could be backed by either narrow or “wider” collateral, which comprises high quality, but less liquid collateral, including private sector securities.10 The LTRs effectively reduced the quantity of lending needed via the routine weekly OMOs. But during the crisis, the demand for liquidity rose significantly, owing to the combination of a reduction in the supply of longer-term interbank finance, and a reduction in the liquidity of various asset-backed securities. The Bank responded by expanding the range of collateral it would accept in its operations in order to provide sufficient sterling liquidity to the UK banking system. As a result, the stock of LTRs rose from £ to £ by early 2009 (the blue area in Chart 2).11 The Bank also widened the ranges around the commercial banks’ targets, so that they could hold additional reserves (within the maintenance period) without penalty. The Bank was concerned that the banks would collectively not increase their targets enough from one maintenance period to the next. Widening the ranges around these targets, permitting a larger liquidity injection at the Bank’s discretion, also addressed that problem. The temporary expansion of LTR lending during the crisis was very successful in its main objective of providing liquidity to the banking system. But it also raised a number of important operational policy questions for the Bank: (i)  It was very difficult to decide exactly how large these lending operations should be.

Finally, by offering to borrow and lend overnight automatically, the Bank would relinquish day-to-day control over its balance sheet and the degree of risk associated with that. To summarise, there are different models for implementing the policy rate, each of which has its own merits and disadvantages. These reflect both monetary policy and financial stability considerations. A deeper exposition of the arguments can be found in Clews, Salmon and Weeken (2010).8 The Bank has carefully considered the differing systems and expects to return to a reserves averaging system in due course. Presumptively, that would be after increasing Bank Rate and before asset sales began – although the timing and sequencing will depend on the circumstances at the time. In the next section of this paper we explore more deeply some of the financial stability aspects of the Bank’s operations. The Sterling Monetary Framework: providing liquidity insurance Banks inherently engage in “maturity transformation” – borrowing on a short-term basis but lending on a long-term basis (eg taking deposits which can be withdrawn at short notice, and lending for mortgages). As a result, banks take liquidity risk – and even a well-run bank could suffer an unexpected shortage of liquidity. As part of their liquidity management, banks hold stocks of liquid assets that can be used to generate cash or make payments directly. Some assets are expected to retain their liquidity in all but the most extreme circumstances.
The absence of a sufficiently thorough system of banking supervision and the lack of transparency not only became problematic before the crisis, but also caused confidence problems later on. Fourth, the quality of the assets of the banking system is vital for the soundness of macroeconomic policy. In allocating savings to investment use, the banks should be extremely careful about the risks that must be taken for a variety of reasons. There are five main types of risk that the banking system and of course the appropriate authorities have to deal with: interest risk; foreign exchange risk; maturity risk; loan risk; and market risk. A sound financial system is the best assurance of efficient monetary and fiscal policies. In my view, all four of these factors contributed to the change of foreign perceptions and sentiment and produced a cutback in normal financing (in fact, 95 percent of external flows to emerging market countries come from the private marketplace). This cutback, in turn, weakened the external reserve positions of these countries. Then the combination of weak reserves and a weak financial sector brought on a liquidity crisis. We are now in a position to draw some lessons from the East Asian crisis. First, policy implementation must pursue sound macroeconomic policies in order not to lose the confidence of the markets. And second, four main principles must constantly be kept in mind: •  The currency should not be allowed to appreciate, except as part of a bold anti-inflation program.

The last point that I want to make is that I disagree with those economists who speak of the difficulty of anticipating the East Asian crisis, since these countries had assembled all the ingredients of a perfect crisis recipe: •  An appreciated exchange rate;  •  A high and worsening ratio of short-term debt to usable foreign reserves;  •  Untransparent off-balance-sheet items in the banking sector;  •  A widening current account deficit;  •  Steep growth of domestic credits;  •  And a continuous decline, during recent years, in emerging markets’ borrowing spreads without matching improvement in their economic fundamentals. If someone should combine all these elements, it is conceivable that they might succeed in creating a crisis. But the world’s financial centers turned away from the existence of this perfect crisis recipe and turned toward the Turkish economy, for which, ignoring the developments in East Asia, they predicted a crisis during the last couple of years. The Turkish economy does not satisfy the perfect crisis recipe described above. Of course we have high inflation, a high nominal budget deficit, and high short-term domestic debt, but on the other hand Turkey’s exchange rate policy, current account situation, the nature of its short-term external debt, and other fundamentals do not indicate an alarming situation. The East Asian crisis should have greatly improved the ability of economists to predict an episode. I would be glad to see some evidence of this improvement. BIS Review 50/1998
When equities were included in the investment portfolio in 1998, the strategic equity share was set at 40 percent, and the equity share in the actual portfolio had reached this level by June of the same year. 1/7  BIS central bankers' speeches  In June 2007, it was decided to increase the strategic equity share further to 60 percent. The implementation of this strategic change took place during a demanding period. Financial market uncertainty was elevated. Although equity markets declined sharply in autumn 2008 and winter 2009, the new strategic equity share was maintained. The increase in the equity share was been completed by June 2009, and Norges Bank had purchased NOK 1000 billion in equities for the fund over this two-year period. The fund’s average ownership stake in global listed companies had increased from 0.4 percent to 1 percent. A large share of the equities held by the fund today was purchased during these two years. In 2010, the GPFG’s investment universe was expanded to include unlisted real estate. Since then, the fund’s strategic benchmark index has been composed of 60 percent equities and up to 5 percent real estate, with the remainder in bonds. As real estate investments involve some equity risk, the equity share in the strategic benchmark index, in an index composed solely of equities and bonds, is now slightly higher than the allocation defined in 2007. The question of the fund’s strategic equity share is once again on the agenda.

With the fund’s current size and equity allocation, this would have resulted in a fall in the value of the equity portfolio of NOK 1700 billion. This is equivalent to 65 percent of GDP for mainland Norway. The financial crisis triggered a deep decline in equity markets, but was followed by a relatively rapid rebound. We cannot ignore the possibility that the return on the fund will be low for many years. In the 1970s, the real return on US government bonds was negative for five years in a row. In equity markets, a long period of high ERPs after the Second World War was followed by a long period of low ERPs in the 1970s. A good understanding and broad-based acceptance of the risk of substantial falls in the fund’s value are, as mentioned, essential to be able to maintain the investment strategy. Experience from the financial crisis suggests that the governance model for the fund is capable of coping with periods of large falls in value. We should, however, remember that the value of the fund in krone terms did not fall to any great extent during the financial crisis because of substantial transfers of petroleum revenues and a substantial depreciation of the krone. A future test of the governance model may prove more demanding. A FUTURE PERSPECTIVE ON WEALTH An assessment of the fund’s equity share should not be exclusively based on an analysis of expected financial market return and risk.