samchain/econo-pairs-v1 huggingface dataset:
The outcome of these two phenomena is that the Spanish economy has a business sector in which the predominant pattern is one of a large number of small-sized and relatively unproductive firms alongside a relatively small group of large, better positioned corporations, but which also show somewhat lower productivity than their European counterparts. Specifically, the relative productivity of small Spanish firms is 40% lower than that of German, French and Italian companies. This difference progressively diminishes as the 12/18  productivity of large companies is analysed; in any event, however, the negative difference never falls below 10%. Which factors account for these dynamics? According to the economic literature, the various factors that may influence an economy’s productivity growth include most notably the human capital available, the capacity to innovate, access to and allocation of funding, market regulation and the degree of sectoral competition.3 4 Human and technological capital  Turning to human capital, let me first stress the gradual improvement in the Spanish population’s level of educational attainment in recent decades. There will have been further progress in recent years owing to the extension of the formative period for youths during the crisis. Hence, 24% of those aged 60-64 did not complete what now constitutes the first cycle of secondary education, while among those aged 25-29 this figure has dropped to 6%. 3  See Syverson C. (2011): “What determines productivity”, Journal of Economic Literature, 49 (2), pp. 326-365.

6/18  Meeting the guidelines of the preventative arm of the European Stability and Growth Pact should show the temporary fiscal consolidation path to follow in the future after having managed last year to cut the budget deficit to below 3%. At the same time, a review of the composition of public spending and revenue might also contribute decisively to improving the economy’s potential growth. There is room both to increase the efficiency of public spending and steer its composition towards those items exerting greater influence on the accumulation of physical, technological and human capital, and to re-define the structure of the tax basket in order to make it more conducive to growth. The presence of high tax benefits in our tax system, arising from numerous exemptions, allowances and special low rates, which generate substantial revenue-related losses and distort the efficiency and fairness of the tax system, are a good example of the headroom existing here. Secondly, despite the notable correction to date, the negative net international investment position is still at 77.1% of GDP. And the nation’s gross debt amounts to 166.7% of GDP, only slightly below the peak seen during the crisis. To bring down the debt vis-à-vis the rest of the world, Spain will have to run external surpluses over an extended period of time. And that, in turn, requires maintaining the gains in competitiveness, which throughout the recovery have been based on the moderation of labour and financial costs, and which, hereafter, should rest to a greater extent on increases in productivity.
Opening Address SEACEN-BIS High-Level Seminar Veerathai Santiprabhob, Governor of the Bank of Thailand Bangkok, Thailand 15 September, 2018 Governor Subbarao, Deputy Governors of SEACEN central banks, Executive Director Genberg, Members of SEACEN Executive Committee, Executives from the BIS, Distinguished participants and speakers, Ladies and gentlemen, Good morning. I am delighted to welcome all of you to the Bank of Thailand for the SEACEN-BIS High-Level Seminar. The theme of this seminar is Digital Technologies, Financial System and Central Bank Policy. These are very important topics, especially for the members of the SEACEN Executive Committee who will play critical roles in shaping strategic direction of the SEACEN and how its programs evolve over the years. The impact of rapid transformation of technology is powerful and farreaching. Advancement in information technology has given rise to various data technologies and network platforms, changing many facets of our lives and helping uplift productivity for firms and individuals. These developments have led to greater connectivity between nations, cultures, and people and break down the barriers of international trades, supply-chains, and capital flows. At the same time, these digital transformations, along with new landscapes they introduced, bring new forms of risks for firms and individuals and pose challenges for central banks. Firms will face greater operational risks from IT transformation and cyber threat while being at risk of increased competition and disrupted business models.

Of course, safeguarding the soundness and discipline of fiscal policies that largely remain the competence of national governments presents a particular challenge. Ultimately, it must be ensured that twelve national budgets taken together are consistent with sustained stability for the euro area as a whole. In this regard the Stability and Growth Pact provides for a clear allocation of responsibilities between the Commission and the ECOFIN Council. The Commission is responsible for compiling the necessary information and analysis for effective multilateral surveillance, for formulating recommendations for decisions by the Council, and for overseeing the correct application of the Pact. The Council is responsible for taking the final decisions and it thus has the ultimate responsibility for enforcing the Pact. These two principles of surveillance and enforcement form the basic idea of the Stability and Growth Pact and must not be put into question. Having said that and in the light of the ongoing discussions on the future of the EU fiscal framework, let me re-affirm the ECB’s view that the Stability and Growth Pact is appropriate in its present form, but that there is scope for improving its implementation. Specifically, given that the experience with the Pact since 1999 has been mixed at best, there is a need to provide enhanced incentives to comply  BIS Review 71/2004  1  with the commitments under the Pact and to increase peer pressure towards enforcing the rules.
Let us seize the opportunity of a new Parliament and a new Executive to reflect further on how to develop the architecture of our EMU in order to enhance its functioning. In particular, I think there is a case for some form of common governance over structural reforms. This is because the outcome of structural reforms – a continuously high level of productivity and competitiveness – is not merely in a country’s own interest. It is in the interest of the Union as a whole. For example, one could consider embedding the process of undertaking necessary structural reforms in a common framework of convergence towards policies and institutions aligned to best practices. Honourable Members, as EU institutions, the central bank and the Parliament of the European Union are duty bound to maintain a close and fruitful relationship of cooperation. I sincerely hope that in this respect, we can continue in the same spirit as we left off three months ago. I am now looking forward to answering your questions. 4  BIS central bankers’ speeches

And that growth shortfall is in spite of the fact that global growth has strengthened more than expected in the May 2016 MPC forecast. The biggest risk I see to that outlook for demand is around the resolution of the current uncertainty about our eventual trading arrangements and the path that will be followed to reach them. Were that uncertainty to be lifted, I can see a case for why UK whole economy demand could grow more strongly, more in line with, for example, recent manufacturing indicators. Equally, were uncertainty to persist at current levels or even increase further, I could see a case for demand growth, and in particular investment growth, being weaker. The reaction of the supply side of the economy since the referendum is more open to interpretation and given the uncertainties is something informed people can have divergent views on. The combination of weak investment, strong growth in employment, weak wage growth and low productivity growth (Slide 7) lends itself to two potential explanations – and they are neither mutually exclusive nor exhaustive. In either case the sign of the response of key variables is the same, making it difficult to pick between them, but the implications for the outlook for spare capacity and inflation differ.
The Asset Purchase Facility, operated by the Bank for the Government, will purchase up to £ billion worth of commercial paper, corporate bonds and similar securities, with the aim of increasing the liquidity of these instruments, reducing the cost of capital to businesses and stimulating increased debt issuance. As we estimate that illiquidity presently accounts for getting on for half of the 5½ percentage points interest rate spread of investment-grade corporate bonds over government debt, these actions, if successful, could have a powerful impact on the cost and availability of funds to corporate borrowers. The first purchase under this facility was made last Friday. In the first instance, purchases are to be financed by government borrowing. But, subject to the agreement of the Chancellor, this facility can also be used by the Monetary Policy Committee to undertake further easing of monetary policy in pursuit of the inflation target. That is likely to prove useful now that Bank Rate is nearing its floor. In that case, purchases would be financed by the creation of so-called central bank money – effectively IOUs drawn on the Bank of England. At such point, we might also want to expand the range of assets purchased under the scheme to include government debt. The purpose of these actions would be twofold: to push down the yields on a wider range of assets than usual; and to increase the supply of broad money (bank deposits plus banks' own reserves) in the economy. Both should help to boost nominal spending.

Narrow mandate and independence as foundation In general, regulatory policy comprises all measures which a government puts in place to create appropriate framework conditions for the longer-term development of the economy. If, in doing so, the government follows sensible principles, it creates conditions in which the economy can optimally develop its potential and the prosperity of the population increases over time. An essential component of good framework conditions, and of good regulatory policy, is price stability. In the absence of price stability, the smooth functioning of an economy is inconceivable. Inflation as well as deflation hinder the steering role of prices in ensuring that labour and capital are used as productively as possible. Inflation also reduces household purchasing power and especially impacts the more vulnerable sections of society. In order to ensure price stability in the long term, two principles of regulatory policy are key: - First, price stability must be the fundamental guiding principle of monetary policy - and second, a central bank must be independent from politics. Both of these principles are today reflected in the legislation of many countries. In Switzerland, the independence of the central bank is enshrined in the Federal Constitution. This means that the SNB may neither accept nor seek instruction from politics or other quarters. The Constitution also states that the SNB shall pursue a monetary policy serving the interests of the country as a whole.
With economic indicators below expectations since April, long-term yields fell back to their mid-2001 level. The expectations reflected in the futures markets concerning the development of money market rates – and therefore also monetary policy – have undergone a marked downward adjustment, notably for the US dollar, but also for the euro and the Swiss franc. Hopes of a vigorous and rapid economic recovery have given way to a more realistic assessment. The SNB as asset manager In the context of its statutory mandate, the National Bank manages sizeable assets (table 1). In May 2002, their market value exceeded Sfr 100 billion. The free assets (Sfr 21 billion) are to be withdrawn from the National Bank and allocated to other purposes. Mr Blattner will provide details on the management of the free assets. The monetary assets (Sfr 86 billion) serve monetary purposes. Claims from repo business (Sfr 16 billion) reflect our money market activities on the assets side of the balance sheet, while Swiss franc securities (Sfr 5 billion) are available for absorption repos if necessary. Foreign exchange reserves (Sfr 41 billion) are at the centre of our activity as asset managers. At the end of 1997, the leeway  BIS Review 39/2002  1  previously granted solely for money market investments was legally extended. This provided a possibility to spread fixed-interest investments more evenly across various maturities and currencies and to widen the range of instruments.

Our domestic Islamic financial system is one of the most developed, with its diversity of players and financial products and services in Islamic banking, takaful and the Islamic capital market. Today, we are witnessing the establishment of another dedicated Islamic banking subsidiary that will contribute towards further strengthening the Islamic financial institutional infrastructure in Malaysia the launch of Affin Islamic Bank Berhad as an Islamic banking subsidiary of Affin Bank Berhad. With the domestic Islamic financial infrastructure in place, the emphasis is now to become more internationally integrated with the international Islamic financial system, thus increasing our economic and financial linkages with other parts of the world. Our efforts are to position Malaysia as an international Islamic financial centre and thus facilitate this international integration process. In this regard, the establishment of an Islamic subsidiary also increases the opportunity for entering into strategic partnerships with foreign interests, thereby increasing the potential for greater interface with more extensive markets beyond our domestic borders. On the domestic front, while tremendous progress has been achieved, much more needs to be done. The Islamic financial industry needs to allocate more resources toward investment in research and development to create more innovative products. Consumer awareness and consumer education also needs to be enhanced to support the growth of the Islamic financial industry.
Risk-weighted assets were calculated, to put it simply, by first giving the banks’ different assets risk weights of between 0 and 100 per cent, depending on how risky they were assessed to be. For instance, the banks’ mortgages were given a risk weight of 50 per cent. A bank’s risk-weighted assets were then calculated by multiplying the value of the respective type of asset by the respective risk weight. Basel I meant that the banks should have capital exceeding eight per cent of the bank's risk-weighted assets. This requirement still applies, although the content of both the banks’ capital and their risk-weighted assets have changed over time. Basel II and III entailed more risk-sensitive capital requirements and increased model risks At the beginning of the 1980s, several countries deregulated parts of their credit markets. As a result, the banking systems in many countries rapidly became more complex and even more internationally interlinked than before. New types of more complex financial instrument were introduced. Moreover, new and more advanced methods for measuring risk and risk management were developed and refined by most of the banks. Many agents, including the Basel Committee, assessed that Basel I needed to be reworked to become more risk-sensitive and to better reflect developments in the banks and in society. The banks were keen on pushing this question as they wanted to use their own methods for calculating capital requirements. In 2004, the so-called Basel II Accord was published.

Still, the main features of the agreement are relatively clear at this point, and the Basel Committee is now working on the final details. However, I do not intend to focus on the details today, as they are many, but instead on the fundamental blocks on which Basel III is built. The reforms of banking regulation that lie ahead will strengthen global financial stability and this will be good and important for Sweden, which is a small and open economy. Moreover, it is largely Swedish authorities that determine how, more exactly, Basel III will affect the Swedish banking system. But I shall begin by providing some perspective on banking regulation in general and the work of the Basel Committee in particular. And let me point out that what I will talk about today is neither the first nor the last amendment to the regulatory framework for banking operations to see the light of day. The work on developing and revising the bank regulations is a continuous operation and should be so. I usually 1 [12]  * I would like to thank Tomas Edlund for his help with this speech. compare this task with cycling; if you stop pedalling then sooner or later you will fall off. One reason for this is that society is developing and changing over time. New values gain ground and new experiences are added to old. This is a general feature of standards and rules in society and it also applies to banking regulation. To be a little more specific.
3 See the ECB’s euro area bank lending survey, October 2017, and the ECB’s Survey on the Access to Finance of  Enterprises in the euro area, October 2016 to March 2017. 4 See the box entitled, “Assessing labour market slack”, Economic Bulletin, Issue 3, ECB, 2017. 3/3  BIS central bankers' speeches

However, after more than nine months, I think it is already possible to draw first conclusions in three main areas: -  First, the close co-operation between central banks on the one hand and between the supervisory authorities and central banks on the other hand seems, in my opinion, to be a determining factor for efficient crisis management. This point was indeed underscored during the recent work carried out by the Financial Stability Forum. I must say in this respect that the French model of banking supervision, in which banking supervisors have close ties with the central bank, has once again proven its worth in the current context. The necessity of this proximity has also been  BIS Review 78/2008  3  increased by the new accounting and prudential standards which have proven to be pro-cyclical and in which liquidity and solvency are intertwined. In this context, when in a financial crisis, it is crucial to cross-check, at every moment, information on the evolution of banks balance sheet and data on money market functioning in order to assess the risks to financial stability. Such an assessment enables to adapt, as far as needed, the refinancing policy of the central bank, in order to alleviate tensions in the market; those tension being a threat both to financial stability and to the effectiveness of the transmission of monetary policy.
Between early July and early August alone, the Swiss franc appreciated by roughly 20%.1 With interest rates close to zero and inflation forecasts signaling deflationary risks, the minimum exchange rate helped us avoid a dangerous tightening of monetary conditions, in a situation where we had exhausted the options available under conventional monetary policy. It also provided the foreign exchange market with clear guidance at a time of enormous uncertainty. The rationale for the introduction of the minimum exchange rate is internationally acknowledged. As I have seen over the last two years, particularly central banks and the IMF understand the difficult situation facing Switzerland in 2011. They also recognize that we set the minimum exchange rate at a level where the Swiss franc remains highly valued even today. Over the last few years, exchange rate tensions between the major economies have flared up. In this context, some observers have criticized central banks for influencing exchange rates, either directly through foreign currency purchases, or indirectly through additional monetary easing measures such as the purchase of securities. It is claimed that these types of asset purchases generate spillover effects or constitute a beggar-thy-neighbor policy.2 In recent weeks, it has been suggested that capital flows have again become highly volatile  1  Based on daily data. 2  There are several event studies which show that asset purchases by the Federal Reserve and the Bank of England weakened their domestic currencies.

Furthermore, the SNB has put in place two safety nets to cushion any losses on its loan to StabFund. First, with the 10% of equity capital from the UBS, and second, with a payment of up to 100 million UBS shares in the event that StabFund needs to be liquidated at a loss. The volatile price movements and severe illiquidity of the markets go to show just how important it was to have unburdened UBS of these risks when we did.
But the battle is broader – it is our political challenge, collectively, as Europeans – and it is longer term: it will be the challenge of your generation. I hope each and every one of you can contribute successfully to the fight. Thank you for your attention. References: i  I would like to thank Chahinez Benmissi, Jean Boissinot, Adrian Penalver, Bérengère Rudelle and Giulia Sestieri for their help in preparing this speech. ii For a general discussion of the topic, see GARNIER O., LHUISSIER S., and PENALVER A., “Taux d’intérêt bas, quelle responsabilité de la politique monétaire ? “, Risques No. 120, December 2019. iii WICKSELL K., Interest and Prices, 1898. iv RACHEL L.; SMITH T., “Are Low Real Interest Rates Here to Stay?”, International Journal of Central Banking, September 2017. v Excluding energy and food. vi See notably: Panel on “Behavioral Economics and Economic Policy in the Past and Future” Federal Reserve Bank of Boston Conference: “Implications of Behavioral Economics for Economic Policy” Boston, Massachusetts, speech by Janet L. Yellen, President and CEO, Federal Reserve Bank of San Francisco. https://www.frbsf.org/our-district/files/0928.pdf Or DUCA I; KENNY G.; REUTER A., “How do inflation expectations impact consumer behaviour?”, ECB Paper, August 2016. vii International Monetary Fund, Word Economic and Market Developments, Gita Gopinath, October 2019. viii See notably ROSTAGNO et al. (2019), A tale of Two Decades: the ECB’s Monetary Policy at 20; HARTMANN and SMETS (2018).

In other words, we always assess the risks in conjunction with the expected benefit. One example of a poorly compensated risk, from the point of view of a Swiss franc investor, is the USD currency risk on bonds. Our experience has been that expected earnings on bonds in other currencies, such as euros or sterling, are comparable, while currency risks are significantly lower. Consequently, and also because another important reserve currency was available in the form of the euro, we have substantially reduced our share of USD investments over the past few years. Along with the expansion in the range of permissible bond classes and the addition of shares, the risk/return profile of our foreign exchange reserves has improved substantially. This has helped to ensure that results on foreign exchange reserves have remained positive for the past ten years. Naturally, part of the background to this development has been the favourable interest rate environment that has prevailed since the mid1990s. Our analysis of the overall risk for all investments shows that the traditional risk factors such as the gold price and the dollar exchange rate continue to dominate. Gold poses the most substantial contribution to risk. By way of illustration: The gold price in terms of Swiss francs has fluctuated by over 10% in about half of the years that have elapsed since 1980. In terms of the SNB's annual result, this means that gold can be expected to contribute more than +/- CHF 3 billion to the result every second year.