samchain/econo-pairs-v1 huggingface dataset:
At the same time, the operations are woven together in a way that means that the different parts of the group become more dependent on one another. Advantages Increased financial integration in Europe involves economic advantages. Integration leads to increased competition. This in turn leads to companies and consumers being able to choose between a greater variety of products and to prices and interest rates being lower. More products make it easier to manage and diversify risks. Lower interest rates mean lower costs for borrowing, which is beneficial for both companies and households. Integration thereby means better conditions for economic growth. BIS Review 38/2007  1  The list of gains that integration brings could be made longer. But the advantages are well known to this assembly and I don’t believe I need to go into this in more detail. It is enough to emphasise that we at the Riksbank welcome increased financial integration. Challenges I will now move on to the challenges we face due to financial integration. As the increased integration means that countries’ financial markets become increasingly woven together, the risk increases that problems will spread between different countries. To counter this, new and greater demands are made to find joint solutions and to cooperate across national borders. Those days are gone when we could work on the basis of a purely national perspective for financial market issues. Now it is a question of finding ways to manage both our interests and those of other countries in a good way.

Svante Öberg: Increased financial integration – future challenges Speech by Mr Svante Öberg, Deputy Governor of the Sveriges Riksbank, at the Conference “Bank & Finance Outlook” (Affärsvärlden), Stockholm, 19 April 2007. *  *  *  Introduction To begin with I would like to thank you for the opportunity to come here and speak about financial integration and the challenges this entails. My main message today is that financial integration is increasing rapidly in Europe, and that this leads to better conditions for economic growth, but that it also means that regulations, supervision and arrangements for crisis management must become more international. I have divided my speech into four parts. I shall begin with a brief description of financial integration in Europe in recent years. After that I shall discuss the advantages of greater integration. Then I will go on to talk about the challenges we face as a result of integration and conclude with some possible solutions to the problems. It is a broad subject and we have very little time, so I will limit myself to the banking sector. Financial integration Traditionally, most countries’ bank markets have been almost exclusively national. When banks have conducted operations abroad, these have primarily focused on large corporations and securities markets. Smaller companies and consumers have in principle been obliged to use the services offered by the domestic banks. However, in recent years the bank markets have undergone major changes. Several European banks now offer their services outside of their national borders.
Resilience is about getting back up again even after being knocked down … and to keep moving forward. Today, I would like to talk about resilience along four dimensions: resilient supply chains; a resilient industry; a resilient workforce; and a resilient planet. Resilient Supply Chains First, how to build resilience in supply chains. There is a view in some quarters that resilience means onshoring and retreating from global value chains. With the border restrictions in the wake of COVID-19, there has indeed been some onshoring of supply chains to secure essential goods and services. But it is not practical for most activities to be onshored and it will be costly and inefficient to 1/7  BIS central bankers' speeches  do so. There’s got to be a better way to increase supply chain resilience. Let me offer three suggestions: make supply chains more diverse, more flexible, and more integrated. Diversified supply chains are more resilient – with multiple sources of raw materials, multiple production locations, and multiple warehouse hubs and distribution channels. The desire to mitigate China concentration risk has led to some diversification of production locations in Asia. Even before COVID-19, firms had started to adopt a “China plus one” sourcing and production strategy as wage costs rose in China and US-China trade tensions intensified. New production locations and value chains have emerged in Vietnam, Taiwan, and to some extent Malaysia. The pandemic has added some impetus to this trend.

There has also been increased treasury and risk management activities carried out in Singapore to meet the needs of global investors and businesses in this time zone. Besides increasing fund flows, more regional and global MNCs have been setting up their corporate treasury centres in Singapore to facilitate capital raising, cash management and risk hedging, as their regional businesses grow. Singapore is a major derivatives trading hub in the region, with three derivatives exchanges oﬀering multi-asset class risk management products. We are also Asia Pacific’s largest FX centre, third largest globally, with average daily trading volume reaching $ billion in 2019, as we intermediate flows between regional teams of buy-side and sell-side players in Singapore and beyond. 10. Looking ahead, Asian financial markets are expected to become even more vibrant as the world economy’s centre of gravity shi s further towards Asia. Market participants in the region should embrace this opportunity to shape the future of Asian markets. While the growth trajectory has been very encouraging, more work needs to be done to develop deep and liquid capital markets in Asia, so that they can play a key role in financing economic growth, alongside continued development in the banking segments. 11. I will highlight a few additional areas of focus for Singapore: In foreign exchange, trading volume of Asian currencies, including that of Asian emerging markets currencies, has risen.
BIS central bankers’ speeches  3  The consolidated profits of Spanish banks in the first half of 2015 also contributed to this strength, amounting to € billion, 37% up on the previous year. The improvement in the consolidated result has also translated into a rise in profitability ratios, both in terms of assets (ROA) and equity (ROE). However, this improvement was mainly underpinned by activity abroad, the weight of which in the total business of Spanish deposit institutions increased compared to domestic business. The return on equity (ROE) has resumed positive levels, around 5%, though we are still some way off average historical levels and it should be noted they are below cost-of-capital estimates. In a setting characterised by the persistence of very low interest rates, one of the main challenges banks face is to maintain adequate profitability levels, especially at a time when the dynamism of banking activity is still limited and the volume of non-performing loans (NPLs) and foreclosures remains high. But we should highlight here the adjustments banks have been making to the volume of NPLs and foreclosures, which have been declining continuously since early 2014. Final remarks The Spanish economy is overcoming the most serious crisis, I would say, without fear of exaggerating, of those it has experienced in recent decades since the 1959 Stabilisation Plan – almost 60 years ago – paved the way for strong development and for reforms that gave momentum to our integration into the international economy.

Hence, if a given European country fails to reach an adequate ability to drive innovation despite having sound public finances, liberal labour market and low taxes, it cannot stand the competition on the part of countries with low manufacturing costs. This may lead to lost markets, falling output and growing unemployment, and in consequence public finance deterioration. It was as early as in late 1980s that a well-known economist, Paul Romer 8 , wrote that a country’s success would be determined by knowledge and ability to drive innovation. When set against labour and capital, knowledge and innovation are infinite, with a number of people able to simultaneously use the same knowledge or innovation. Labour and capital are in turn ascribed to a specific place. By saying that I do not only mean such great innovations as the light bulb, mobile phone or Wal Mart’s business model, which have improved the living standard of millions or billions of people. What I have in mind are also thousands or even millions of small innovations, for instance those aimed to improve the efficiency of a given business process. Today, we can add yet another factor to Romer’s model, namely the relationship capital. Now, it is common knowledge that innovation is fostered by cooperation between experts in various countries, cooperation between manufacturers and customers, local market expertise, cooperation between higher education establishments and businesses. In the long term, successful countries and businesses will be those that knowingly invest in the relationship capital.
The ECB’s balance sheet is now double the size of the Fed’s as a percentage of GDP:  Page 8 sur 14 Moreover, thanks to our social model and its higher automatic stabilizers, the overall 2020 fiscal stimulus in the euro area has been almost as strong as in the United States:  Yes, President Biden’s American Rescue Plan is significantly bigger for 20212022. But according to many American economists, it could create a risk of the economy running above potential, “making monetary policy more difficult to use in the futureiv”, as expressed by Olivier Blanchard – who is not really known as a supporter of austerity. The new infrastructure bill, to be announced today, could have more positive long-lasting effects in two regards: it strengthens supply, including possibly in education; it could reverse the race to ever more tax cuts in advanced economies. With that in mind, for us Europeans, our main issue now is not the scale of our fiscal response but the speed of its execution. Speed, once more, is our collective handicap. Governments now need to implement the recovery plan to which they have agreed and they need to do so urgently. In other words, we in Europe need to walk our talk. On a structural level, three major crises in the past ten years – 2008-2009, 2011, 2020 – have shown the need to complete the Economic Union in addition to the successful Monetary Union, starting with a permanent fiscal capacity.

These are conditions in which it would be very easy for the financial markets, businesses and households to jump to the mistaken conclusion that monetary stimulus will soon begin to be withdrawn. Given the slack in the economy, the Committee is not in a rush. Assuming anchored inflation expectations, an orthodox central bank would not contemplate beginning to withdraw stimulus until the economy had reached “escape velocity”, which I have defined to mean “the economy growing, and being set to continue to grow, at a pace that gradually absorbs the slack in the labour market and within firms”.4 And at that point the central bank would assess the erosion of slack in the economy and thus the extent to which downward pressures on inflation were dissipating. Since my own policy deliberations have been framed in terms of “escape velocity”, I saw real merit in any MPC Forward Guidance being cast in terms of a threshold for real growth. Manifestly, this could not be a measure of slack in the economy; it would be clear what it was and was not. Once passed, it would prompt a rich assessment of slack and inflationary pressures, drawing on the widest possible range of indicators. The Committee decided on a threshold specified in terms of unemployment. The MPC’s threshold is what it says: a threshold for assessing inflationary pressures, although the Committee must maintain that broader assessment month-by-month, quarter-  2  See Woodford (2012), “Methods of Policy Accommodation at the Interest-Rate Lower Bound,” presented at the Jackson Hole symposium.
With conventional tools having reached their limits, policy makers enhanced their toolkits, developing what were dubbed unconventional monetary policy tools. These took the form of: quantitative easing or asset purchase programmes, designed to lower longer-term interest rates rather than short-term ones; new funding operations; forward guidance; and, in some jurisdictions, negative policy rates. I’m going to leave funding operations such as the TFSME and also lending programmes mostly to one side in my remarks today. That’s not to downplay their importance – they’ve played a key role in aiding the effectiveness of monetary policy and supporting the flow of credit to the private sector. Unconventional tools are not perfect substitutes for policy rates. The effects of many of them were, and indeed remain, uncertain compared to the relatively well-understood effects of rate cuts. And at least as much if not more so than with policy rates, their effects were and are state contingent, with the transmission through to the real economy determined both by the characteristics of the financial system in which they operate and by the economic situation in which they are applied. Nevertheless, from a starting point of a single tool approaching the limits of its usefulness, central banks came out of the great recession and the years which followed with new, much fuller sets of tools, as well as a much better understanding of how to apply them. This expanded toolkit was put to effective use in the MPC’s response to the 2016 referendum result on membership of the EU. 2  2.

These have had the aim of supporting the economy during the outbreak, and in so doing to minimise the potential for longer-term damage or scarring to the economy’s potential. On the monetary side the MPC likewise deployed its full range of monetary tools in March as the pandemic intensified. In March the Committee cut Bank Rate in two steps to a new low of 10 basis points and launched a new Term Funding Scheme with additional incentives for SME lending (TFSME for short). And against a backdrop of accelerating market dysfunction – brought on by the “dash for cash” – the MPC announced an additional £ of gilt and corporate bond purchases, to be carried out at a record pace of £ of gilt purchases per week (Figure 4).3 In June the Committee voted for a further £ of gilt purchases. And in August we gave new forward guidance. The size and pace of the asset purchase programme launched in March reflected its twin objectives – both to provide stimulus to the economy by lowering longer term interest rates, and to counteract any tightening of monetary and financial conditions that might result from the deterioration in gilt market conditions.4 Those twin objectives were successfully met. Orderly functioning was quickly restored to the market – market functioning indicators, which had been flashing increasingly red, rapidly turned back to green as pricing and liquidity metrics like bid-ask spreads returned to normal levels (Figure 5).
Not everyone wants to be steeped in fan charts; modelling and stress testing. Yet the decisions we take impact every UK citizen. How can they rely on us – the dreaded experts? Of course, trust can be built through a track record, but it can also be grounded in familiarity. People trust vi  individuals, places and things that they know. Reflecting the diversity of the people we serve can reduce misperceptions that we are experts making esoteric decisions in an ivory tower for the benefit of others. Moreover, diverse decision-making bodies typically have greater political support and enjoy greater public trust. vii  They also tend to achieve better policy outcomes through better understanding of community needs  and more effective dialogue with the wider population. viii  Better decision making, innovation and adaptability  Homogenous groups that pay insufficient attention to minority views are vulnerable to biases, groupthink and over optimism. They are more likely to be influenced by the way information is presented (framing); and to stick with under-performing projects because of prior investments. ix  3  All speeches are available online at www.bankofengland.co.uk/speeches  3  Diverse groups can overcome these ills as they are more inclined to consider novel ideas and challenge each other, enabling them to infer cause and effect and to solve problems better. Diverse teams are also better able to adapt to changes and are more resilient.

We are encouraging innovative thinking through our Research Hub, where people have collaborated with colleagues across the Bank and externally on over 50 projects. Meanwhile, our Research Away Days and One Bank Flagship Seminar series expose policy and decision makers to different ideas; from sportspersons to philosophers, and economists to psychologists. Our seminars are broadcast externally so that others can benefit from this diverse knowledge. To empower colleagues, we have implemented an ‘author in the room’ policy so that expert staff can attend senior-level meetings and explain their papers in person and challenge conventional wisdom. Our Bank Underground blog, launched in 2015, enables colleagues to share their diverse opinions outside the Bank’s four walls. 400,000 people viewed the blog last year. Over the same period, its followers and subscribers increased by 60%. Our staff are reaping the benefits of these inclusion and transparency initiatives. Two thirds feel encouraged to try new ideas, three quarters believe that their manager acts on people’s suggestions and ideas, and 60% feel comfortable speaking up on important issues. We have improved on all of these measures since just a year ago. xxiii  But we also need to do more. To get the most out of a diverse workforce, we also need to ensure people can bring their best to work and feel supported. Our wellbeing programme promotes mental and physical wellbeing with staff counsellors, discounted gym-memberships, a Cycle to Work scheme, working life seminars and flexible leave options.
The original target date of 2020 was advanced to 2015 this year. Obviously, there are practical difficulties of integration given the diversity in the region and the different levels of development. ASEAN leaders have tasked an Eminent Persons Group to come up with an ASEAN Charter to guide ASEAN's future development. This will mark a new phase of deeper ASEAN integration. Geo-strategic shifts The re-emergence of India and China, and the revitalisation of ASEAN are taking place within a broader geo-strategic context. Let me now examine some of the larger trends. At one level, Asia is slowly but surely coalescing. The entire region is being sewn together by changing patterns of trade, investment and production chains. Increasing economic integration is reflected by the rapid expansion of intra-Asia trade. From 34% in 1980, intra-Asian trade as a share of the region's total trade has grown to more than 50% in 2005. The transformations taking place in Asia are of a depth and scope historically unprecedented. The combined population of Northeast Asia, Southeast Asia and India is well over 3 billion, about half the world's population. Changes of the scale that are currently underway could be profoundly unsettling to international order. Strong growth will give Beijing and New Delhi the resources to pursue wider strategic interests across Asia and beyond. Strategic stability is not to be taken for granted, particularly in Asia where there are many territorial and other unresolved issues left over from historically complicated relationships. Great power competition and rivalry are facts of life.

Young Members of Parliament whom I met were upbeat about India's future. Of course, India's growth trajectory will not be a straight line. Development across states will be uneven. Unlike China, power does not rest with one political party. The intricacies of coalition politics mean that time, patience, skill and political bargaining will be needed to balance different interests, and forge a national consensus on reforms. Investors have cited inadequate infrastructure, rigid regulations and bureaucracy as some of the impediments to India's rapid growth. In addition, India cannot grow into a major economy on services alone. It will have to find ways to expand its manufacturing sector to create jobs for the large numbers of young people entering the labour market each year. India has decided to use Special Economic Zones (SEZs) to spearhead the growth of its manufacturing and export sectors. SEZs will create pockets of growth and prosperity. They will have a powerful demonstration effect on the rest of the economy. Foreign investors will find it easier and more attractive to locate their factories in an SEZ. Singapore and India have agreed to set up an SEZ in India and both sides are now working to implement it. China on the rise Let me now turn to China. I first visited China in 1971 to do business with them. It was during the height of the Cultural Revolution. I saw young Red Guards holding their study sessions in the open.
One possibility is that a bank which has purchased credit protection via a credit derivative may have an incentive to put an ailing company into liquidation in order to obtain a payment from its counterparty rather than participate in a restructuring, the results of which are uncertain. For many banks, such an approach would be incompatible with building banking relationships, but the recent debate as to whether restructuring, rather than failure, constitutes a credit event for the purposes of a credit derivative contract shows the matter is highly topical. At the very least, active markets in credit derivatives and secondary loans might make it more difficult to identify and organise creditors in order to negotiate any debt workout. 2  BIS Review 67/2001  These are, as I have noted, awkward issues. But I am encouraged to see that the INSOL Lenders Group has attempted to address some of them in the course of drawing up its Statement of Principles for a Global Approach to Multi-Creditor Workouts. I am also encouraged that discussions on the Principles involved not only the largest global banks, but also a range of other finance providers, including insurance companies, institutional investors, hedge funds and secondary market debt providers.

Moreover, third-country effects are unlikely to be major, because the European currencies as a whole are already somewhat over-represented in their share of world trade transactions relative to their countries’ weights in world trade -- not as much so as the dollar, but certainly more so than the yen. Finally, changes in trade invoicing practices have a direct economic impact only on the two parties involved in the transaction, and these effects are limited to determining who ultimately bears the exchange rate risk. In fact, because of the wide variety of risk-hedging instruments that are available to traders exposed to exchange rate fluctuations, the impact of exchange rate risk on trade patterns is likely to be secondary. This conjecture is confirmed by a substantial amount of empirical research. In short, the economic impact of the euro in international trade transactions is likely to be limited. The same cannot be said of the euro’s potential role in international financial transactions. Partly because of their sheer magnitude -- some estimates place the volume of international capital transactions at more than 40 times the volume of international trade transactions -- growth in the use of the euro as the currency of choice in global capital markets will have much more significant repercussions for the United States than will increasing use of the euro in global product markets. To a large extent, these repercussions reflect the well-known gains that stem from increasing returns in the use of a currency as a store of value.