samchain/econo-pairs-v1 huggingface dataset:
Events since will have done nothing to lessen this problem, as successively larger waves of institutions have been supported by the authorities. More recently, the Bank and FSA have been engaged in some practical work with banks, running stress-tests through their models on common scenarios. When asked to assess the consequences of a macro stress-test, the like of which we are currently experiencing, some banks have found it problematic. In defence, they have suggested that such an exercise was only conducted annually as part of their Basel II preparations and as such new stress tests would take months to conduct. This too was revealing. If even the most obvious stress-test took many weeks to prepare and assess, how could these tests meaningfully be used to manage risk? The short answer, I think, is that stress-testing was not being meaningfully used to manage risk. Rather, it was being used to manage regulation. Stress-testing was not so much regulatory arbitrage as regulatory camouflage. Prescribing some solutions Each of these market failures has been exposed by events over the past 18 months. When risks materialised outside of calibrated distributions, risk models provided little guidance in identifying, pricing and hence managing them. This failure is not of purely academic interest. The breakdown of risk models is itself likely to have contributed importantly to crisis dynamics. Why? First, the potential losses arising from under-pricing of risk are large.

Our target is not only to adapt our business lines and redesign our processes, but also to play a role in the development and support of our ecosystem, through a participatory approach. Ladies and gentlemen, To conclude, I would say that we may have taken some time to grasp the scale of the digital revolution, but the numerous initiatives and interactions, such as this meeting, leave us with the hope that the backlog will be quickly cleared and that this revolution will effectively contribute to sustainable and inclusive development in our countries. In this respect, we are pleased to note the willingness of international organizations, including the IMF, main interlocutor of central banks, to upgrade their means and human resources with a view to providing support to their member countries. As such, I suggest, if you deem it suitable, that we request the Fund to institutionalize such a meeting in our region, at the frequency most appropriate to us. Hence, we would be able to continue the debates and exchanges, assess the progress made, ultimately unite our efforts, and capitalize on our mutual experiences in order to better address the current and future challenges of digital transformation. Thank you. 10
At the same time, EMU and the single market are linked at another level; as an American colleague recently remarked, “If EMU would help to secure the single market’s survival, it’s worth all the other risks.” Another important long-term consideration is the structure of Europe’s business sector. I believe we are now experiencing a formative phase. European manufacturing and services companies are being rapidly restructured, with effects that are likely to be considerable. Many forces are contributing to this process; the globalisation of production is one and another is the single market. But there can be hardly any doubt that EMU is also playing a part, particularly for the financial sector. Participation in the euro area would give Sweden and Swedish companies access to a larger capital market that is expanding rapidly. Assessing what being outside the monetary union entails in this phase is not easy. Personally I believe the effects are negative. I also think they may turn out to be considerable. A related matter is the location of companies. Representatives of large Swedish groups, as well as the Federation of Swedish Industries, for example, frequently state that euro participation would result in higher investment in Sweden by both Swedish and foreign companies. This argument has also been heard recently in connection with some of the relocations of large companies. Decreased exchange risks would be one of the reasons.

Another, it is sometimes suggested, would be that the economic framework for firms would be perceived as more secure and stable if Sweden adopted the single currency. Once again, the strength of these arguments is difficult to assess, partly because they have evident political purposes. But opinions of this type may clearly have effects if they are current among central decision-makers in the business sector. Political arguments favour participation This brings me, finally, to the political arguments for and against adopting the single currency. The Calmfors report discussed the implications of participation for Swedish policy and its legitimacy, as well as the consequences for Sweden’s voice in Europe and the world. On the first point I shall simply say that I agree about the importance of any decision to participate having a high degree of legitimacy. This in turn calls for an animated discussion of the EMU issue. Having said that, I shall now concentrate on the other aspect. The report considered that if Sweden participated in the monetary union, we would be in a better position to influence EU decisions. The more countries that participated, the greater would be the strength of this argument. The Riksbank agreed but found the argument unduly cautious as regards the political advantages. We saw major political benefits from participation and considered that an outsider position would clearly weaken Sweden’s voice in the European debate and decision-making process. As I see it, since the report was presented and the Riksbank submitted its opinion, the political argument has gained appreciable weight.
Those who have operated for decades with a regime of low inflation, interest rates set by a strong independent central bank, and a strong and appreciating currency, may rightly think they have little to fear from the disciplines implied by EMU. Others will find EMU more bracing, particularly those whose inflation record has been poor, whose currency has undergone successive devaluations, and whose fiscal position is less than robust. For those countries, the EMU mission is potentially dangerous. Joining EMU would for them be to embark on a stiff mountain ascent, in weather which might be colder and less forgiving than one is used to. In those circumstances, the Boy Scout ensures that he is well prepared. He equips himself with waterproofs in the event of rain, with thick pullovers for the cold, with stout boots and, probably, a Swiss army knife in case it should prove necessary, at some point on the journey, to extract a stone from a horse’s hoof. He would also, I think, wish to ensure that he was fit, and had undertaken some strenuous rambles BIS Review 1/1997  -2-  in the foothills before making an assault on the mountain range. At this point you may be tired of hearing about Boy Scouts, and be ready to accuse me of the typical British trick of hiding behind down-home metaphors, and reducing topics of high seriousness to wry jokes. So let me be entirely clear about what I mean. We fully appreciate the great potential advantages of EMU for Europe’s economies.

I am thinking particularly of the injunction to smile and whistle through all difficulties. Certainly I am sometimes tempted, when asked to explain the state of opinion in London, to take refuge in a cheery smile, and to begin to whistle a mournful tune (not easy to do at the same time, you will find). Fortunately, it is not my responsibility to discuss the politics of EMU in the United Kingdom. Another good reason for me not to do so is that I would like to keep my job. As a humble central banker, a mere technician, it is more appropriate for me to focus on the economic dimension of EMU and to say something, also, about the financial market implications which concern us, particularly given the Bank of England’s position at the heart of the City of London. In both these areas - economic and financial - the Boy Scout motto is particularly apposite today. Let me explain why. At the Bank of England we have always held the view that Economic and Monetary Union is a momentous enterprise, with huge consequences for European economies. The act of irrevocably fixing exchange rates, between economies which have in many cases been managed separately for centuries, is not a step to be undertaken lightly. It is an exciting venture, almost too exciting for some, perhaps.
Neither has the Riksbank's outlook for the Swedish economy changed very much over the summer. However, new statistics indicate slightly stronger growth during the first half of this year compared with June. This means that the outlook for the Swedish economy now appears somewhat brighter than at that time. The repo rate cuts totalling 0.75 percentage points have also contributed to this. However, compared with August when we had our last Executive Board monetary policy meeting, we have not changed our assessment markedly. The Riksbank's assessment is now that continued stable growth in incomes, wealth and employment will contribute to smooth and relatively robust growth in household consumption. During 2004 and 2005 an increase in investment is also expected, although there are no signs of a turnaround yet. Some upturn in exports is now expected to occur in much the same way as usually happens during economic upturns. However, as a similar upturn is expected in imports, the net export contribution to GDP growth will be limited. Public consumption is expected to grow by approximately 1 per cent per year over the coming years. The improved economic activity will lead to slightly higher resource utilisation than forecast in the June Inflation Report, which in turn means that wages in the private sector are expected to rise at a marginally higher rate during 2004 and 2005. As a result, domestic cost pressure will also be slightly higher during these years.

The Riksbank's forecast, like that of other analysts, was that the international recovery would be slower and more prolonged. There were several reasons for this, including geopolitical unease and increased caution among households and firms in the wake of the stock market fall. The conditions for a clear recovery in the euro area were perceived as poorer than we had earlier believed, which made a recovery in other countries, including Sweden, more difficult. The more negative economic outlook, with inflation prospects below the target of 2 per cent, meant that we decided to cut the repo rate during the summer by a total of 0.75 percentage points. The rate is currently at 2.75 per cent. Minor changes in outlook for economic activity So far, international developments have been largely in line with our assessments from the summer. The expansionary policy now appears to be taking effect in certain areas, particularly the United States, where signs of a recovery are becoming more apparent and the risks of a setback appear more slight. The Asian economies are also developing relatively strongly. On the other hand, the prospects for the euro area still appear to be gloomy. In time, the expected upturn in the United States is expected to support a gradual upturn in Europe. All in all, the Riksbank's assessment is that GDP growth in the OECD area will be 1.9 per cent this year, 2.8 per cent in 2004 and 2.6 per cent in 2005.
3  See Chancellor of the Exchequer: A Plan for Jobs 2020 See speech by Jon Cunliffe (2020): Financial System Resilience: Lessons from a real stress 5 See letter from FSB Chair Randal Quarles to G20 Finance Ministers and Central Bank Governors: July 2020 4  3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  Since central banks acted, markets have opened up again, allowing companies to raise finance. Britain’s companies issued more than £ of new bonds since March. A second response was also needed. The seizure of corporate debt markets meant that larger companies that normally enjoy market access were suddenly faced with uncertainty about access to that finance when it was most needed. They turned, as a precaution, to banks to bolster their cash positions. What followed was not a run on the banks driven by fear about the banks, but a run to the banks driven by fear on the part of businesses about their own access to finance. In a complete contrast to what happened in the 2008 financial crisis, bank lending shot up. Net of repayments, banks lent £ in March – more than 30 times their normal monthly net lending flow as large companies drew on committed credit lines. That threatened to overwhelm the capacity banks have to lend to the wider population of businesses. The Covid Corporate Financing Facility (CCFF), owned by the Treasury and operated by the Bank of England, was designed to alleviate that pressure.

I have to tell you that is not true, it was always envisaged that both banks would achieve their capital enhancements by  2  BIS central bankers’ speeches  restructuring their balance sheets without reducing their lending to the UK economy. Moreover, both of those institutions have come a long way from their original business plans, and are consequently much safer thanks to FSA and now PRA pressure. These banks have agreed to do what we have asked and we will hold them to that. This is a regulator’s promise. As we near the end of a timely but not rushed process, we will be communicating in the next few weeks the headline results of this work. Finally, there is also comment that nobody has yet raised new equity capital, or announced an intention to do so. True, but that is not the only way to increase capital relative to assets. What has not gone unnoticed is the reasonably steady stream of disposals by UK banks, both of businesses and assets. At the end of last week, for instance, the last elements of one of the more infamous assets of the crisis, the so-called HBOS Alt-A US mortgage assets were sold. We are happy to see these disposals happen. I mentioned earlier the steps taken last summer at the time of the introduction of the FLS. The evidence on credit creation in the UK economy is however mixed. Funding costs for banks have fallen, which I think is a necessary pre-condition of stronger lending.
The theoretical model is confirmed: the cumulative wage gap explains a significant part of the deviation of inflation from its target: more than one third of the inflation gap in the first wage adjustment episode and more than one fifth of it in the second adjustment episode (which has not been closed yet). We also present graphical representations for selected countries which have statistically significant coefficients. For the first wage adjustment episode the cumulative wage gap explains more than 60% of the inflation gap in Iceland, about two thirds of the inflation gap in the US and Ireland, more than half the inflation gap in Finland and Switzerland, close to half of the inflation gap in Netherlands. It even explains almost one quarter of the inflation gap in Korea, despite the fact that this country has not closed the first wage adjustment episode yet. For the second wage adjustment episode, the cumulative wage gap, which in most cases has not been closed yet, explains more than 60% of the inflation gap in Slovenia and Slovak Republic, between 40% and 60% of the inflation gap in Greece, Italy, Portugal, and Spain, and between 20% and 40% of the inflation gap in Australia, Canada, Denmark, France, Hungary, Ireland, Netherlands, New Zeeland, Switzerland and United States. We checked the robustness of our results separately, in the standard method, as well as the log-normalized method. The results confirm the strong relation between cumulative real wage gap and inflation gap in the OECD countries.

We will test separately these two assumptions: the shape of the curve and the break in the slopes. In terms of methodology, the analysis covers the OECD countries over the period 19902017, except for the United States where the data covers the period 1989 – 2017. Data sources for wages and inflation are the OECD and the FRED databases (for US), annual data. The reason for this selection is the availability of long-time data series on wages at OECD (they are only available since 1990), while for US the FRED database allows us to start from a known peak year, which was 1989. We used the following date: the average annual wage in 2017 constant prices at 2017 USD PPPs, exchange rate (national currency units/US dollar) and inflation (CPI) – annual growth rate, from the OECD database, and the real median household income in the United States, 2017 CPI-U-RS adjusted dollars, from the FRED database. We transformed the average annual wage into local currency for ensuring comparability with the inflation rate, which reflects changes in local prices. Data sources for the inflation target of central banks are from the respective central banks’ websites. If a central bank targets a corridor rather than a level of the inflation rate, then the midpoint of the target band is considered. The year T0 is the peak year. We define a wage adjustment episode the adjustment in real wages that follows after the peak year.
Accordingly, the New Accord will permit an unprecedented amount of flexibility to accommodate a spectrum of approaches to operational risk. For the most sophisticated institutions, the "advanced measurement approach" – or "AMA" – is really the ultimate expression of the goal of drawing on internal measures. In response to concerns that the proposed "floor" on the AMA stifled innovation, the Committee decided recently to eliminate it. Consequently, banks will be free to experiment with a great variety of methodologies, without undue constraint on their value to the firm. The AMA is meant to be a catalyst for innovation. Calibration of other particular charges and the overall level of capital Of course, a good portion of the consultations have addressed rules and formulae used to determine capital charges for other categories of exposures and transactions. The Committee and its working groups have listened carefully to the views of market participants, academics, and other regulators to ensure that the resulting capital requirements make good economic sense and avoid burdening or disadvantaging banks unfairly. Based on the changes we are making, we expect that the Committee will achieve its goal of not raising in aggregate the capitalization required of the banking industry, though clearly and appropriately those banks that engage in higher risk businesses may see their requirements rise, and vice-versa. QIS 3 To ensure that we’ve gotten it right, the Basel Committee will launch a third Quantitative Impact Study – or "QIS 3" – on October 1, 2002, in conjunction with supervisors around the world.

Both the involvement of supervisors in assessing a bank’s risk management capabilities and the discipline that greater transparency and active markets bring to bear on management can reinforce a bank’s desire to remain adequately capitalized and in control of its exposure to risks. 2. Improve the risk-sensitivity of the capital framework  The New Accord will likewise achieve the second and parallel goal to align regulatory capital requirements more closely with the underlying economic risks that banks face. It will do so by departing from the 1988 Accord’s "one-size-fits-all" methodology that assesses credit risk based more on the type of borrower, offering instead a selection of methods to evaluate credit risk based more on the potential for loss. Under the new standardized approach, for example, banks with smaller loan portfolios or less advanced risk management systems will be better able to incorporate a borrower’s creditworthiness into their capital management by relying on external assessments of credit quality. Larger or more sophisticated institutions, in turn, will be able to rely increasingly on their own assessments under the internal ratings-based approach. Similarly, now that the industry is developing a more refined sense of operational risk – the risk of losses caused by failures in processes – the New Accord will "unbundle" this risk and allow banks to differentiate between, and manage separately, their exposures to credit, market, and operational risks. 2  BIS Review 52/2002  3.
Taken at face value, these patterns are both striking and puzzling. Not only do they sit oddly with Classical growth theory. They are also at odds with the evidence of history, which has been that rates of technological diffusion have been rising rather than falling over time, and with secular trends in international flows of factors of production. At the very time we would have expected it to be firing on all cylinders, the technological diffusion engine globally has been misfiring. This adds to the productivity puzzle. Sectoral Productivity Trends  Some further insight into these puzzles comes from looking at the productivity data in more granular detail. 42  We start by considering sectoral patterns of productivity among UK companies. Sectoral shifts in the economy could plausibly account for some of the fall in productivity growth. There has been a secular shift over time away from manufacturing and towards services, with the employment share in 39  Rodrik (2011). Based on the following equation: 𝑃𝑖𝑡 − 𝑃𝑓𝑡 = 𝑎𝑖 + 𝑏𝑖 ∗ 𝐺𝐴𝑃𝑖 where 𝑃𝑖𝑡 is growth in TFP for country i in year t, Pft is the growth in TFP for the frontier country (US) in year t, GAPi is the gap between the level of TFP in country i and the US as a percentage, ai is a constant capturing the average pace of convergence and bi captures how much of the speed of convergence depends on the TFP gap.

Riley, R, Rosazza Bondibene, C and Young, G (2015), ‘The UK Productivity Puzzle 2008-2013: Evidence From British Businesses’, NIESR Discussion Paper. Rodrik, D (2011), ‘The future of economic convergence’, Harvard Kennedy School Faculty Research Working Paper, RWP 11-033. Billett, I and Schneider, P (2016), ‘Bitesize: Exploring UK sectoral productivity’, Bank Underground blog post, available at https://bankunderground.co.uk/2017/01/19/bitesize-exploring-uk-sectoral-productivity/. Song, J, Price, D, Guvenen, F, Bloom, N and Von Wachter, T (2015), ‘Firming Up Inequality’, NBER Working Paper No. 21199. Stoyanov, A, and Zubanov, N (2012), ‘Productivity spillovers across firms through worker mobility’, American Economic Journal: Applied Economics, p.168-198. Summers, L (2013), IMF Fourteenth Annual Research Conference in Honor of Stanley Fischer, 8 November. Syverson, C (2016), ‘Challenges to Mismeasurement Explanations for The U.S. Productivity Slowdown’, NBER Working Paper No. 21974. Tuuli, S and Batten, B (2015), ‘Back to the future: why we’re optimistis in the secular stagnation debate’, Bank Underground Blog post, July, available at https://bankunderground.co.uk/2015/07/02/supply-sidesecular-stagnation-and-the-future-of-innovation/. Weale, M (2014), ‘The UK productivity puzzle: an international perspective’, Speech to Mile End Group, Queen Mary, University of London, 8 December. 42  All speeches are available online at www.bankofengland.co.uk/speeches  42