samchain/econo-pairs-v1 huggingface dataset:
When China became a member of the World Trade Organization in 2001, its foreign trade was 30 percent of that of the US. The Chinese economy has since grown at an unprecedented pace. In 2013, China overtook the US as the world’s largest trading nation. Ample labour supply and low cost levels have given China and the other emerging economies of Asia strong competitive advantages in international markets. BIS central bankers’ speeches  1  The global flow of credit over the past 15 years has taken an untraditional direction – from relatively poor countries with strong economic growth to more prosperous, mature economies experiencing lower growth. For a long period, this shift contributed to substantial imbalances in the global economy. Ample supply of credit in western economies pushed down borrowing rates. Facing competition from Asia, it became relatively less profitable for firms in the west to invest in new productive capacity in their home countries. Instead, cheap credit was widely used to finance consumption and housing, particularly in the US and Europe. Banks and financial institutions were, in practice, free to fuel credit growth. In retrospect, it is clear that a vast amount of capital was squandered. Many businesses and a number of countries are struggling with high debt levels. Governments that ran economies on cheap credit are now paying a high price in the form of austerity measures and unemployment. In parts of Europe, unfinished infrastructure and empty buildings are not uncommon sights.

I have also argued that monetary policy was crucial in preventing the dual shock of the financial crisis and the sovereign debt crisis from having even more negative consequences for the euro area as a whole. The ECB’s extremely accommodative monetary policy stance sustained the ongoing economic recovery, while heading off the threat of deflation. I would like to stress, however, it is much harder to sustain economic activity and attain the price stability objective when interest rates reach the zero lower bound. Although the ECB has made ample and imaginative use of non-standard monetary policy measures, inflation in the euro area has not yet risen in a sustained way towards the inflation target. I would like to conclude with a few words about the Maltese economy. Malta weathered the global financial crisis and the euro area sovereign debt crisis well. Malta has been outpacing other members of the euro area since 2012. We are the fastest-growing economy in the euro area, registering extremely rapid growth rates over the past three years. In part, this was because we avoided the problems that dragged down some euro area member states: the banking system remained liquid and well-capitalised throughout, while fiscal discipline ensured that public debt never rose to unsustainable levels. Malta also benefited, of course, from the accommodative monetary policy stance that I have just described.
Estimating the relative contributions of supply and demand in oil and commodity price dynamics is always complex, but combining evidence from several different sources, both effects appear to have been at play. While supply shocks explain an important part of oil prices over the last year, adverse demand shocks have also increased driven by the slowdown at the global level (Figure 2). In that context we have also seen that, while the euro depreciation is contributing to higher import prices in euro, export price inflation in our main trading partners has remained depressed, contributing to weak producer price pressures. This in turn has weighed on the recovery of industrial goods inflation, which is sensitive to global inflation and makes up around a quarter of the consumption basket in the euro area. At the same time, a succession of oil price shocks over recent years has led to a prolonged period of low inflation in the euro area which, at times, has been reflected in declines in measures of inflation expectations. Against that backdrop, we have seen a higher risk that a continued period of low inflation – even if supply-driven – could start to have second-round effects and feed into core inflation. In sum, while in general the forces driving global disinflation are ones that should not, over the medium-term, affect central banks’ ability to deliver price stability, in the euro area the risks were higher that they might not “wash out” over time, and might instead feed into core inflation.

I dare to sustain that nowadays, with the global economic crisis still ongoing and this fight for resources, the above-mentioned issues appear to be highlighted even more now than in 1972. Of course, today, being in recession, particularly we in Europe are in recession, we dislike considering limits to growth, except perhaps putting some limit to money supply growth. Not all the predictions of the Club of Rome came true. Nevertheless, it has initiated not only debates, but also radical changes in human behaviour, many of them still ongoing today – for example the environmental movement that started early in the ‘70s with the first Report to the Club of Rome; or the need to increase the efficiency of energy consumption (just recall how big and low efficient American cars were 40 years ago). But, above all, these debates have changed our way of thinking. Like Albert Einstein used to say, “The world we have created is a product of our thinking; it cannot be changed without changing our thinking”. Related to this issue, one of the central themes addressed by the Report to the Club looking to the future is education. Professor Mircea Maliţa, a Romanian veteran of the Club of Rome, identified the potential of education in his 1979 Report “No Limits to Learning”, which was like a mirror to the first Report. It is him who will reiterate today the topic of education, together with Richard Ernst, who will present an interesting paper, “An Inseparable Pair: Education and Ethics”.
Suppose that price and cost inflation in Norway were allowed to be higher than in the euro countries. The nominal exchange rate would then have to depreciate in order to keep the real exchange rate constant over time. Thus, stabilising inflation at around the level aimed at by the ECB is a means of achieving exchange rate stability against the euro. In a situation with the prospect of increased inflationary pressure and a depreciating exchange rate, an increase in the interest rate may at the same time bring the exchange rate back towards its initial range and reduce inflationary pressure through lower demand and lower imported goods inflation. This in turn will contribute to long-run stability in the exchange rate. Similarly, with an appreciating exchange rate and a low inflation and activity level in the economy, a lower interest rate will contribute to stabilising the exchange rate in both the short run and the long run through a stable inflation level. On the other hand, we can think of situations where we would need to set a high interest rate in order to keep the exchange rate close to the initial range in the short run, creating a deflationary recession in the economy. Normally, a deflationary recession will lead to a weakened krone exchange rate, which means that the high interest rate set to keep the level of the exchange rate unchanged in the short run in itself will induce exchange rate instability in the long run.

Ask not what the economy can do for insurers – ask what insurers can do for the economy Speech given by Anna Sweeney, Executive Director, Insurance Supervision Division Delivered at the Bank of America 25th European Financials CEO Conference 22 September 2020  I am grateful to Alan Sheppard, Megan Bell and Zachary Morris-Dyer for their assistance preparing this speech. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Good morning and thank you to Bank of America for inviting me to speak here today. In a normal year, I would use these remarks to run through our regulatory agenda. But this year it is inevitable that my remarks will focus on the effects of Covid-19: a human tragedy for millions, the worst economic crisis in the UK for several centuries and an unparalleled global challenge. Our economy and the actors within it are continuing to face numerous challenges and a great deal of uncertainty. The aim of the Bank of England – along with colleagues from other public sector institutions – has been to build a bridge across the economic disruption caused by the pandemic. And insurers – as providers of protection, as guarantors of retirement income and as institutional investors - have an important role to play in the recovery from that crisis.
This has been the subject of a number of recent empirical studies, which have tended to find productivity to have been a significant factor. 55  A useful starting point is the distribution of wages across our panel of firms (Chart 26). There is some evidence of a widening dispersion in wages across companies over time. The pattern broadly mirrors productivity, with wages among the top 1% of companies rising, except immediately after the financial crisis. At the same time, pay has largely stagnated among as many as three-quarters of the firms in the distribution. By itself, this does not tell us how closely firm-level pay and productivity have been correlated and what contribution productivity may have played in widening the dispersion of wages. 56  While there is an  established literature on the aggregate relationship between productivity and wages, the relationship between firms’ productivity and average pay levels is less certain. Nevertheless, looking at the distributions of pay and productivity, three points stand out (Chart 27). First, labour productivity can explain around 60% of the variation in average pay across firms, controlling for other firm characteristics. On average, firms with 1% higher productivity have 0.2% higher pay. And firms with 1 percentage point faster productivity growth have 0.5 percentage points faster wage growth (Table 4). Productivity dispersion across companies is an important, if by no means the only, driver of wage dispersion across households. Second, the distribution of pay is materially narrower than for productivity.

It means these assets are often not valued fully by investors and lenders. This raises the cost of capital for these firms to sub-optimally high levels – a market failure. Remedying that market failure, by ensuring intangible assets are consistently and coherently valued, is important if these companies are to grow to reach their full potential. 61  57  For example, Song et al (2015) find that virtually all the rise in earnings dispersion between workers is accounted for by increasing dispersion across the average wages paid by different firms. 58 Andrews et al (2015) and Dabla-Norris et al (2015). 59 HM Government (2013). 60 Aghion et al (2017). 61 Big Innovation Centre (2017b). 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  More broadly, it is possible that current UK corporate governance practices may act as a brake on innovative companies. A recent report by the Big Innovation Centre makes important proposals for re-purposing UK companies to support long-term investment and productivity. 62  The government recently initiated a Patient  Capital Review to explore how best to support the financing of innovative companies as they scale-up. 63  A third category of policy measure focusses on the fortunes, not of innovative frontier companies, but the long tail of low-productivity non-frontier firms. These companies have tended to be focussed on somewhat less historically. Indeed, their large numbers and disparate characteristics may be one reason why this is the case.
The causes of this downturn are very different from those of most recent recessions and, as I have just described, the policy response on this occasion has been much quicker and more decisive. There is also a third factor that needs to be borne in mind when drawing lessons from history. This is the first recession in the UK for nearly 20 years. The structure of our economy has changed significantly since the early 1990s, and even more so since the early 1980s and 1970s. The UK economy has undergone extensive reforms and deregulation, and businesses have been transformed by the implementation of new technology and the effects of globalisation. It is hard to quantify precisely the various ways in which the structure of the economy has changed. The appropriate data are not always available and it may be a long time until the effects are discernible in aggregate economic statistics. Importantly, the significance of some of these structural reforms may not be fully apparent until the economy is subjected to a substantial shock. For example, one consequence of globalisation is that supply chains around the world are far more integrated. This is likely to have played an important role in the speed and synchronisation of the world downturn, as the effects of falling demand in a few countries were translated into lower orders and production in many in a matter of weeks. That increased integration is also likely to affect the speed and nature of the recovery.

The latest economic data on world trade, output and unemployment are unmistakeably grim, but we must continually challenge ourselves about how to interpret these and the economic data to come. They could be telling us something about the causes and size of the downturn, the impact of the policy measures taken so far, or how changes in economic structure are affecting the response of output and employment. Let me now say a little about the role the Monetary Policy Committee is playing in addressing the challenges posed by the global economic downturn. 2. Unconventional policy measures  The MPC responded to the marked deterioration in the economic outlook with an aggressive easing in monetary policy. We reduced Bank Rate from 5% to an historic low of just 0.5% in a matter of months. Moreover, at our policy meeting earlier this month, the Committee agreed to finance £ billion of asset purchases by the issuance of central bank reserves, in order to boost the supply of money and improve the functioning of corporate credit markets. The purchase (and sale) of assets by central banks is nothing new; central banks have always implemented monetary policy by changing the size and composition of their balance sheets. Nor, importantly, has the objective of monetary policy changed, which is to hit the Government’s 2% target for CPI inflation. What is different, however, is the range of assets being purchased by the Bank and the scale of those purchases.
It is also important to alleviate technical and operational barriers which make it too costly for participants to connect. We have streamlined our regular testing procedures and adapted our rulebooks to take account of changing technology while maintaining high standards and safeguards. For example, it is now possible to join CHAPS (the UK high value payment service) using cloud infrastructure. Evolution of our public infrastructure It is one thing to enable access, it is also essential to provide the functionality that attracts users. New functionality can enable the industry to innovate, utilise central bank money in new ways and build new services for their customers. Continuing the road analogy, high-speed motorways had to replace country roads to allow more goods to be shipped and people to connect more quickly and over longer distances. 3/6  BIS central bankers' speeches  I want to bring this to life by outlining the Bank’s current programme to modernise our core payments infrastructure. In 2017, the Bank announced an ambitious vision7, created in close collaboration with industry, to renew the RTGS service. The Blueprint outlined a wide range of proposals intended to provide higher resilience, broader access, wider interoperability, and improved user functionality. In just over a year we will be realising the first key element of that vision: the implementation of enhanced ISO20022 messaging standards8. In April 2023 CHAPS will move to the common international language for payments. Richer and more harmonised data can allow merchants to match payments to invoices and brokers to reconcile trades.

The Central Banking Spring Meetings have included a number of enlightening debates on CBDC. I won’t seek to synthesise that, but instead I will focus on how we can make existing forms of digital money work better for businesses and consumers. And by “we” I mean not just central banks but the payments ecosystem as a whole. Discussions of innovation in payments often focus on retail payments and the whizzy frontends. But I believe that wholesale and high-value payments are at least as important to the global economy, and certainly to central banks in maintaining monetary and financial stability. They are used for example by financial institutions to trade in money markets, by businesses to pay their suppliers and source foreign currency and by the government to issue bonds. High-value 2 1/6  BIS central bankers' speeches  payments form more than 90% of the value of electronic payments transmitted in the UK.2 Due to their value and their importance to financial stability, these payments often settle directly at central banks – over £ settle in the UK RTGS every working day. This means that central banks can have a strong impact on how these wholesale payments perform and evolve. And there is scope for further evolution. For many types of wholesale payments, inefficiencies continue to exist as an inherent part of the process. Market convention for settlement of equity trades still sees them transferred two days after the trade (T+2).
It could be said that since relative R&D expenses have been especially high in our basic industries, it has helped to ‘conserve’ the traditional industrial structure. It has even been claimed that our standard of living lags behind that of other countries because we have locked the factors of production into traditional basic industries. This is wrong of course. The alternative conclusion is that if Swedish business as a whole had been as alert to developments as the basic industries, and invested as much in R&D compared with other countries, Sweden would not have declined into relative poverty. Conclusions - well, can we be best again? Growth is now in the focus of the public debate in Sweden. It is important that we re-establish a relatively high standard of living and cope with the unfavourable consequences of our population trend - not least for the sake of our public finances. Moreover, if we succeed in our work to create high potential growth, the Riksbank would be able to refrain from tightening monetary policy in times of low growth. It is vital that we lay the foundations to enable an increase in the labour supply in the years ahead. First, it is important to create conditions that enable our immigrant population to work.

In 2010, the National Bank of Romania adopted the Strategy for IFRS Implementation by credit institutions starting with the 2012 financial year. For its implementation, the updating of the accounting regulatory framework was completed and steps were taken to ensure  BIS central bankers’ speeches  1  transition towards the new standards. Thus, credit institutions will prepare and present action plans whose implementation will be monitored by the central bank throughout the remainder of this year. Also in the first half of 2011, the financial reporting framework suiting the needs of the supervisory authority was updated. The National Bank of Romania, in its capacity as an authority responsible for prudential supervision of the banking system, has recently prepared and sent for public consultation the bills needed to elicit accounting figures reported by banks so that they match the banks’ prudential objectives. I trust this endeavour aimed at broadening the scope of applicability of such standards, serving as the basis for accounting and for preparing individual financial statements by credit institutions in Romania, should be seen as a sine qua non condition to secure effective supervision of the Romanian banking system. Let me stress that the importance of implementing the International Financial Reporting Standards by credit institutions in Romania is also reflected by the new financing agreements signed with international institutions (the European Commission, the International Monetary Fund, the World Bank).
More recently, though, serious fiscal challenges have surfaced that are closely interrelated with the Island’s ongoing weak economic performance. Persistent deficits in the Commonwealth’s fiscal accounts as well as mounting deficits in the operation of the several major public corporations have substantially raised the Island’s overall level of public debt and led to serious concerns about whether the Island’s fiscal position is sustainable. In light of the fiscal pressures Puerto Rico now faces, the New York Fed is undertaking an update to our earlier report. In this new report, we plan to focus on Puerto Rico’s fiscal health. We will examine the factors leading to the sizeable buildup of public debt on the Island and the key variables that will determine its future trend. In some ways, the data on Puerto Rico’s public debt clearly define the fiscal problems the Island faces. But meeting with a variety of stakeholders, as I have on this visit, will help to inform our analysis and will provide us with concrete evidence of how these issues are playing out across the Puerto Rico economy. The clear challenge going forward will be for the Commonwealth government to continue to make progress on its efforts to raise its economic growth rate while at the same time to take credible steps to constrain the buildup of debt. The demanding choices Puerto Rico makes today will affect its long-run economic prospects and the future livelihood of its residents.

While Puerto Rico has a number of features that make it a potentially  2  The debt figures reported for the U.S. mainland states refer to debt held by the public and exclude debt held by government agencies. Most Puerto Rico debt is held by the public. 4  BIS central bankers’ speeches  strong economy, economic growth on the Island has been weak for almost a decade. To restore growth and raise living standards, it is critically important for policymakers to expand efforts to marshal the Island’s considerable strengths – a bilingual and well-educated adult population, an open economy occupying a central position in the Caribbean, a wide experience as a host to multinational corporations, and close ties to the U.S. mainland economy. While the challenges to restoring growth are clearly complex, I want to highlight some key areas where policies to support efficiency and growth might be strengthened. First, barriers to job creation and active participation in the labor market should be reduced. The current structure of labor market incentives could be examined to ensure that firms do not face significant hurdles in creating jobs and workers are not discouraged from entering the labor force. Second, policymakers should continue their efforts to create a more dynamic business environment, including the elimination of unnecessary costs of setting up and operating a business, particularly with respect to energy costs. Third, economic development efforts should consider a more proactive approach to utilizing the Island’s educated workforce and well-established higher education system.