samchain/econo-pairs-v1 huggingface dataset:
Second, a forward-looking element of the new framework is the concept of intra-group financial support, which could reduce the current legal uncertainty that surrounds asset transferability within groups. In today’s regulatory environment, group liquidity management may in some cases be suboptimal, making the survival of a group more difficult as a result of – for instance – supervisory ring-fencing measures. At the same time, some of these restrictions are in fact justified, since they serve to protect domestic creditors and shareholders from unfavourable transfers. This implies that the conditions for intra-group loans, guarantees and transfers of assets for collateral could be set out in group financial support agreements between parent banks and bank subsidiaries. However, progress in this area is extremely challenging, since group interest is not a well-defined legal concept, while national laws focus on protecting local creditors. Here I think the critical issue is whether we manage to include adequate safeguards in the framework to ensure that the financial stability of the transferring country is not exposed to undue risk as a result of the support provided according to the agreement. This means that host countries supervisors have to be involved in any solution implementation. Third, I also consider the involvement of the European Banking Authority (EBA) as a very promising element of the EU plans. The EBA could play two equally important roles in the future regime. As a standard-setter, the EBA drafts binding technical standards and nonbinding guidelines.

It is another matter that things may not go quite as quickly and become as widespread as the greatest optimists foresaw just a year or so ago. People in Sweden do not suddenly stop going to shops just because websites make it possible to buy clothes, shoes, cars and food, for example, on the internet. Alternatives in the form of mail order firms, newspaper advertisements and the telephone have been available for many years, yet many people still prefer to do their shopping in the traditional way. But it does seem very probable that computers in various forms will render many production and purchasing processes increasingly efficient as time goes by. The effects of the new technology will occur in various parts of society. It is easy to think of a number of uses. And as the innovations become cheaper and cheaper, there will be growing incentives to  2  BIS Review 90/2001  apply them in many economic activities. The price of computers, for example, has fallen in the past four decades by around 20 per cent a year. In literal terms, that means that a computer which costs 10,000 kronor today would have cost almost 50 million kronor in the early 1960s. So prices have fallen dramatically. Our own history clearly shows that the combination of major technical breakthroughs and a sizeable price fall can lay the foundation for outstanding economic growth.
Since 2012, the FOMC has clearly and consistently communicated its resolute commitment to its 2 percent longer-run inflation goal and the importance of well-anchored inflation expectations consistent with that goal.5 This provides a "North Star" for our policy decisions and has helped keep longer-term inflation expectations well anchored.6 According to our most recent Survey of Consumer Expectations, three-year-ahead inflation expectations are now where they were before the sharp increase in inflation that started in 2021, and one-year-ahead expectations have been trending down since the middle of last year.7  Economic Outlook Declines in commodity and goods prices will not be enough to bring inflation to 2 percent on a sustained basis. We need all the gears turning at the right pace to restore balance between demand and supply in the entire economy. We still have some way to go to achieve that goal. And it will likely entail a period of subdued growth and some softening of labor market conditions. As a result, I expect real GDP growth to come in around 1 percent for 2023. And I anticipate the unemployment rate to edge up over the next year to between 4 and 4-1/2 percent. As tighter policy actions continue to work to restore balance to supply and demand, I expect PCE inflation to fall to 3 percent in 2023, before moving closer to our 2 percent longer-run goal in the next few years.

2  See Chapter 3 of the 2021 Annual Report of Bank of Spain, 2022, and Cardoso, M., C. Ferreira, J. Leiva, G. Nuño, A. Ortiz, T. Rodrigo, and S. Vazquez, “The Heterogeneous Impact of Inflation on Households' Balance Sheets", Banco de España Working Paper, forthcoming, 2022. 3 Further information can be found in Borrallo, F., L. Cuadro-Sáez and J. J. Pérez, “Rising food commodity prices and their pass-through to euro area consumer prices”, Banco de España, Analytical Articles, 2022. 1  In the current context, however, this central scenario is surrounded by significant uncertainty. Let me describe where I see the main sources of uncertainty, in particular in relation to future inflation dynamics. First, the potential emergence of second-round effects. Second-round effects occur when an increase in inflation is transmitted to wage increases and the latter, in turn, are transmitted to prices –as firms attempt to preserve or even increase their profit margins–, potentially leading to a price-wage spiral. This has not been the case so far in the euro area and, according to the latest ECB projections, significant price-wage spirals are not expected over the forecast horizon.4 Growth in unit labour costs is expected to significantly contribute to domestic inflation in 2023, but less so in 2024 owing to both the moderation in wage growth and the pick-up in productivity growth. Nevertheless, high and persistent inflation increases the risk of second-round effects materialising via higher wages and profit margins.
3  Pier Carlo Padoan, A Shared European Policy Strategy for Growth, Jobs, and Stability, February 2016. BIS central bankers’ speeches  3  Member States would be free to join, and the Convergence Fund would be allocated to financing common goods such as European infrastructure investment or refugee settlement. In a second stage, this budget could become a stabilisation instrument, centralising a welldefined set of policy instruments, such as a European layer of unemployment insurance. The third and final stage of fiscal integration would only be achieved if agreement can be found both on financing (direct revenue-raising capacity and common debt issuance) and on the desirable level of business cycle synchronization. This perspective would be a powerful incentive for national discipline and commitment as shown during the march to the Euro. How to set up a legitimate institution with a genuine administrative capacity? Further integration and democratic accountability should progress together, as discussed in my recent article with Jens Weidmann. We need to enable the European economic administration to be more efficient, while establishing strong enough political legitimacy to ensure balance between liability and control. These institutional changes obviously require a new Treaty. First, we need a legitimacy-enhancing appointment process. The Finance Minister could thus be appointed for a five-year period by the European Council acting by qualified majority on a proposal from the president of the EU Commission.

This proposal, subject to formal opinions from the Fiscal and Competitiveness Councils, would then have to be adopted at simple majority by the Eurogroup, and further to be endorsed by the European Parliament. Second, the Finance Minister would be responsible for supervising the implementation of the collective strategy, using adequate instruments to provide symmetric incentives. Negative incentives would of course include the effective implementation of existing sanction mechanisms. They could be broadened in contractual procedures, already put forward in the 2013 Franco-German contribution on EMU, or in Chancellor Merkel’s 2 “binding reform contracts” proposal, and including positive incentives. One of them would be the access to a euro area ”Convergence Fund”, through which Member States could benefit from common funding. In addition, conditioning the participation in economic governance on compliant implementation could provide strong incentives. Third, the Finance Minister would be responsible for implementing centralized crisis management. A Finance Minister for the euro area would naturally be in charge of overseeing European Stability Mechanism operations. Last, while moving towards further integration, the Minister could be given the authority for managing a euro area Convergence Fund, evolving towards a Euro budget. We are touching here on the issue of a common fiscal capacity, promoted recently by Pier Carlo Padoan 3. As successfully done in the past, it could be built in three stages. In the first stage,  2  Angela Merkel’s first parliamentary speech of the third term, 18th December 2013.
In short, the following is needed: •  An insolvency regime which ensures that banks can be effectively closed at a low cost to the deposit guarantee system  •  An effective depositor protection with a quick pay-out to depositors and a credible financing  •  The ability to take special measures, such as guarantees, to avoid the failure of a bank threatening the financial system in its entirety  •  A broad tool box to be able to enforce, also in those exceptional cases, the principle that the state will not bear the losses of shareholders and creditors, where it should be possible to tie conditions to any guarantee issued and with the option of temporary nationalisation as a last resort. But drawing up a broad structure is perhaps the easiest part. After that, it is necessary to find a concrete legal framework. In the end, this responsibility falls on our governments. A few countries seem to have much of this in place already. And some have come quite far in this work and devote quite a lot of resources to the project. Those that have not I think are well advised to get started. It is just never a good idea to set up the fire brigade first when the city is on fire. 10  BIS Review 62/2008  But it is a delicate task trying to find an efficient and legally secure system which will also work cross border.

As a central banker responsible for ensuring financial stability and the proper financing of the economy, I welcome this diversification of the sources of financing for the real economy. 3. The impact of new players in the financial intermediation ecosystem is likely to differ Among these new players, tech companies are the most important. The model of these companies is based on the breakdown of the activities of traditional universal banking into a range of distinct core functions, such as payment routing, provision of financing, risk sharing and capital allocation. The impact of these new players on financial intermediation will most likely differ depending on whether one considers start-ups or Bigtechs. The role of start-ups will probably be determined by the following alternative, as they do not have sufficient resources to “supplant” the established players: cooperate or even go under the control of an established player or compete in niche segments, such as crowd-funding, online lending or payments. The impact of Bigtechs on financial intermediation may be very different, as they have substantial financial resources, a strong brand image, a global customer base and privileged access to cutting-edge technologies. 4. Can they nevertheless eliminate bank intermediation, if we take a long term view? This question brings me to my prognosis to conclude my speech.
To that end, it is of key importance to move unstable offshore krónur out of the hands of those who cannot hold them and do not want them and into the hands of investors prepared to commit capital in Iceland for a long period of time. It is also important that the general conditions provided for in the liberalisation strategy be met as fully as possible, for this will reduce the risk of instability when the controls are lifted. These conditions include ample foreign exchange reserves, Treasury access to foreign credit markets, and a sound banking system that can fund its activities in an environment free of capital controls. Great strides have been made in this respect, as can be seen in the Treasury’s foreign bond issue last summer, the Bank’s sizeable foreign exchange reserves, the prepayment of loans from the IMF and our Nordic neighbours, improvements in Iceland’s sovereign credit rating, declines in Iceland’s CDS spread, and the banks’ sound capital position in spite of the court judgments handed down in cases involving exchange rate-linked loans. But it is also important that the Treasury’s net domestic borrowing need be as small as possible once liberalisation begins, as it is probable that financing costs will rise sharply at that point in time. In this context, it is interesting to note that the Treasury’s real domestic financing costs in 2011 were negative by roughly 0.7%. It is therefore vital to adhere closely to the plan to achieve an overall Treasury surplus in 2014.

The total number of listed companies in the euro zone has increased steadily during the 1990s. This development also applied to the 'growth' stock exchanges. For instance, the number of companies listed on the pan-European stock exchange alliance EURO.NM increased by almost 100 per cent in 1999. It is not so strange that Europe cannot measure up to the USA on the financial markets, as the integration process has not come as far here. Whereas the USA has a large, integrated market, Europe has many small ones, which are also covered by different regulations. On the other hand, this means that there is great potential within Europe's financial sector. Intensive work is currently in progress to realise this potential. This includes the EU countries adopting a plan of action for financial services, that should be fully implemented by 2005. During the Stockholm European Council last weekend, the Heads of State and Government adopted the Lamfalussy Committee's proposals for a more effective legislation process in the field of finance in the EU. This was a very important decision. Today it takes an average of three years for the EU to make decisions on new regulations. Such a slow process is evidently a problem in the financial field, where development is otherwise very rapid. A regulatory system that does not correspond to reality can lead to both increased risks in the financial system and lower economic growth, as the finance markets' contribution to the rest of the economy will be lower than it could be.
As has long been recognised, pure discretion does not keep private sector expectations of inflation in line with the desired rate of inflation. If we are to find our way through the minefield between rules, on the one hand, and pure discretion, on the other, we need to think more carefully about the nature of decision-making in a complex world where the central bank and economic agents alike are learning about their environment. Human beings, including central bankers, are not “Laplacean demons”. Given the constraints on their scarce time, observation suggests that people follow simple rules of thumb.11 These rules of thumb are sometimes described as “heuristics”. The easiest way to understand a heuristic is to imagine a cricket match. The fielder is standing in the deep when the batsman hits the ball somewhere in his direction – see Chart 4. How should the fielder try to catch the ball? One view – the rational optimisation view – is that the fielder either knows, or behaves as if he knows, the laws of physics. Then he could compute the trajectory of the ball, run to the point at which he could catch it (A in Chart 4), and wait for the ball to arrive. This theory of decision-making has testable implications. The fielder will run in a straight line (the solid line FA), and will normally be stationary when making the catch. But that is not how fielders  9  Friedman (1968). 10  Laplace (1995 translation). 11  Todd (2001).

The great attraction of an inflation target is that it is a framework that does not have to be changed each time we learn about aspects of the economy such as the velocity of money or the underlying rate of productivity growth, as was the case in the past with frameworks based on targets for money aggregates or nominal GDP growth. It is a framework designed for a world of learning. The empirical evidence suggests that inflation targeting has helped to confer tangible benefits. One test of whether inflation expectations are well-anchored is the volatility of long-term interest rates. Chart 5 shows the standard deviation of ten-year forward interest rates in the United Kingdom since 1992 and compares it with the figure for the United States. In both countries, volatility rose in the early 1990s. But whereas volatility has been broadly stable in the United States since the mid-1990s, it has fallen steadily in the United Kingdom. In a comparative study of OECD countries, Levin et al (2004) found that inflation expectations were better anchored in inflation targeting countries in the sense that movements in actual inflation were less likely to cause inflation expectations to change. The clarity and simplicity of an inflation target mean that a natural heuristic for the private sector is “expected inflation equals the inflation target”. Inflation targeting is a framework for making and communicating decisions. It is not a new theory of the transmission mechanism of monetary policy. It does not reflect a new understanding of the laws of economics.
It is difficult to completely capture a sequence of events where changes in different variables tend to reinforce one another in economic calculations. If the households have also been overly optimistic - irrational - in their expectations, it becomes particularly difficult to capture these effects. It is therefore important for forecasters to make more “qualitative” assessments in addition. Another reason for not trusting solely to formal models based on historical data is that the effects of structural changes that have taken place fairly recently can easily be underestimated. Let me give an example that to some extent captures these problems. During the years from the mid-1980s to the beginning of the 1990s, substantial changes were made in the economic structure and there was a clear correlation between the change in house prices and the change in household borrowing. The decline in house prices during the financial crisis at the beginning of the 1990s was largely due to an unfavourable combination of changes of both a structural and a cyclical nature. In connection with the deregulation of the credit markets during the second half of the 1980s, household borrowing increased substantially and the loans were largely used to buy houses. The fairly high and fluctuating inflation rate contributed to real interest costs after tax often being low, sometimes even negative, which in practice meant that one could at times make a profit from borrowing.

The rapid increase in house prices during the second half of the 1990s is partly due to the decline in interest rates. However, there are also other explanatory factors. Naturally, income growth has also played an important role. Other driving forces behind house price trends include demography and relocation flows that have contributed to a large demand for housing in certain areas of the country, particularly the metropolitan regions. There are also other factors that have had an impact, such as reduced housing subsidies and rising construction costs. There has also been relatively little new building since the crisis years, despite substantial demand for housing. Nevertheless, it now appears that the trend regarding construction has turned. The increase in house prices has in turn contributed to a rise in the value of household wealth, as well as in the collateral for most of their loans. Household debts as a percentage of total assets, which among other things include housing, equity and saving in insurance policies, have therefore shown relatively little increase, despite the fact that the loans have risen in relation to disposable incomes. The fall in interest rates has also meant that the percentage of households’ disposable income used to pay interest expenditure after tax is currently low, despite the increase in indebtedness. Is there reason to be concerned that households have acquired such large debts and house prices have risen so much that it could cause problems in future? To determine this, it is necessary to have some perception of the long-term sustainable levels.
Together we supply instruments of payment. The banks distribute the banknotes and coins we issue. They also hold current accounts connected to the giro system and  2  BIS Review 68/2004  operate charge card systems. The Riksbank supplies accounts in the RIX payment system that the banks can use to make large-value interbank payments. Another reason is that there is a correlation between the other objective of our operations - to maintain price stability. A stable financial system is a necessary condition for successful inflation-targeting. The Riksdag has therefore given the Riksbank has the task of “promoting a safe and efficient payment system”. How does the Riksbank work with financial stability? Our task can be said to consist of two parts - preventing crises and being prepared to manage them should they nevertheless arise. The preventive work involves overseeing the financial markets and the institutions active in them, and also participating in the design of the regulatory framework. Oversight The regular oversight of stability entails both detecting potential risks that can arise in the financial system and assessing the financial institutions’ strength to resist any problems that nevertheless arise. The Riksbank presents its analysis of possible risks and of the banks’ resilience in its Financial Stability Report, published twice a year. The next report will be published in two weeks’ time. The intention is to convey our view of the risks and the banks’ resilience to participants in the financial markets, as well as to others with responsibility for, or interest in, these issues.

But this does not imply that there is some magical threshold defining “acceptable” and “unacceptable” rates of earnings growth. In the short run, the link between earnings growth and inflation is complicated by a whole host of factors, including exchange rate movements, cyclical variations in productivity and profit margins, irregular bonus payments, and one-off adjustments to tax rates and other “wedge” effects. It is true that given the UK’s historical levels of annual productivity growth of around 2% and the inflation target of 22%, it would be a cause for concern to the MPC if average earnings increased by much more – or much less – than 4.5% a year over a prolonged period without there being a corresponding change in trend productivity growth. That is not because the Committee has a view about the appropriate level of pay awards. It is not our job to second-guess what businesses should or should not pay their employees. Nor is it because we think earnings growth causes inflation – inflation is a monetary phenomenon. Rather it is because sustained earnings growth much above or below these rates may indicate that the level of utilisation in the labour market has reached a level inconsistent with the inflation target. The June meeting of the MPC drew particular attention to the rise in headline earnings growth as measured by the Average Earnings Index. But that should be viewed against a background of increasing concern about the tightness of the labour market.