samchain/econo-pairs-v1 huggingface dataset:
The wage agreements contained guarantees on the development of prices, wages and earnings, as well as renegotiation clauses, which contributed to a situation in which prices and wages chased each other in an upward spiral. The levels stipulated in the agreements were often minimum levels above which there was considerable wage drift. Several factors have contributed to the improvement in wage formation. In March 1990, the government appointed the so-called Rehnberg Commission. On the basis of the Commission's proposals, stabilisation agreements were signed in most areas of the labour market. These helped to reduce the rate of wage increases from around 10 per cent in 1990 to 3-4 per cent per year in 1992-1993, and to ensure that the agreements no longer contained any flexibility clauses. In March 1997, the social partners in the industrial sector signed a new cooperation agreement, the so-called Industrial Agreement. This covered regulations on the conduct of collective bargaining and established the partners' joint responsibility for wage formation in their part of the labour market. Similar agreements, although not as far-reaching, have followed in other areas. In 2000, the new National Mediation Office began work. This established a third, independent party on the labour market with the task of promoting an effective wage formation process. The National Mediation Office was also given increased powers to take action in connection with collective bargaining. The National Institute of Economic Research was given the task of annually producing reports on the economic conditions for wage formation, the "Wage Formation in Sweden" reports.

That explains why we are always ready to welcome overseas financial institutions to London, why we rigorously avoid discrimination on grounds of nationality in our financial market dealings, and why we have greatly welcomed the decisions by German, French and Swiss banks in particular to concentrate many of their wholesale market activities in London in recent years. Europe needs a broad and deep market like London to rival those in Tokyo and New York. I would not wish, today, to talk at length about the preparations being made in the City for EMU. Partly because this afternoon, in London, we shall be releasing our latest quarterly report on Practical Issues Arising from the Introduction of the Euro, which sets out in some detail the progress that has been made over the last three months, and how we propose to take things forward. In short, we are confident that London will be as well prepared for EMU as BIS Review 1/1997  -5-  any market, when the time comes. As we say in that paper, we are fully involved in preparing the wholesale financial sector of the economy for the euro and, of course, in the extensive work being undertaken at the European Monetary Institute. For the most part that work is proceeding successfully and we are happy with the decisions made. Some are, inevitably, compromises. But that is what building Europe is all about, and we are always ready to seek compromise solutions.
The rapid growth in the trading of credit default swaps and structured credit products has resulted in considerable back-office backlogs (unsigned confirmations and master agreements, delays in trade capture into risk management systems, delayed notification of assignments of positions) that create significant operational risk for market participants. These types of operational problems have arisen more broadly in the OTC derivatives market over time and they have gotten worse with the rapid growth in activity by hedge funds. Efforts underway to automate matching and confirmation of credit default swap transactions should help address these concerns. But we need to see a stronger collective commitment by the principal dealers in these markets to reduce the outstanding backlog of confirms, shorten confirm times and move larger share of transactions in the more standardized instruments to automated platforms. And we’ll act to reinforce that commitment. These considerations are particularly important for the systemically significant financial institutions that stand at the core of the U.S. financial system. These institutions need to have exceptionally high standards in terms of internal controls, capital and risk management and governance. The greater complexity of their risk profile puts more exacting demands on the risk management architecture and requires a higher margin of capital than would be necessary for a business profile with less volatility and more predictability in returns.

At the same time, however, changes in the structure of the financial system and an increase in product complexity could make a crisis more difficult to manage and perhaps more damaging. Consolidation has produced a system in which a smaller number of financial institutions, banks and non-banks, account for a substantially larger share of financial intermediation. Therefore, while the probability of a major crisis induced by the financial failure of a major institution may be lower, the damage associated with such an event could be higher. An event large enough to threaten the solvency or liquidity of one of these core institutions could have more severe impact on the stability of the system than was the case in a less concentrated market. The substantial increase in the role of hedge funds in our financial system also complicates the challenge of risk management. Although hedge funds help improve the efficiency of our system and  BIS Review 28/2005  1  may also contribute to greater stability over time by absorbing risks that other institutions would not absorb, they may also introduce some uncertainty into market dynamics in conditions of stress. The rapid growth in instruments for risk transfer, most recently in the credit world, has produced a large universe of exposures in complex products, whose future value is uncertain and difficult to model.
We have no pre-set course, however; the timing will depend on the data. Moreover, the precise timing of the first rate rise is less important than our expectation that, when rates do begin to rise, those increases are likely to be gradual and limited. Why does the Bank expect this to be the case? In part, because the headwinds facing the economy are likely to take some time to die down. Demand in our major export markets remains muted. Public balance sheet repair is ongoing. And a highly indebted private sector is likely to be particularly sensitive to changes in interest rates. Over the medium term, several dynamics are likely to keep rates lower than in the past. UK rates could be restrained by continued imbalances between global saving and investment, together with potentially lower rates of global productivity growth. Central banks can also be expected to accommodate with lower risk-free rates the higher spreads that are likely to result from new regulatory requirements. All of these factors likely mean that, even when spare capacity is used up, Bank Rate will need to be materially lower than in the past in order to keep the economy operating at its potential and inflation at its target. The Bank is well aware that a prolonged period of historically low interest rates could encourage other risks to develop. In the UK, the biggest risks are associated with the housing market, which is why last spring the Bank took graduated and proportionate actions.

Fixed gross capital formation, outcomes and Riksbank forecasts Percentage 12-month change 12  12  10  10  Outcome RB Oct 02 (IR02:3) RB June 03 (IR03:2)  8  8  6  6  4  4  2  2  0  0  -2  -2  -4 1997  -4 1998  1999  2000  2001  2002  2003  2004  Sources: Statistics Sweden and the Riksbank. Chart 4. Index for electricity in HICP Percentage 12-month change 30  30  25  Sweden  25  20  Euro area  20  15  15  10  10  5  5  0  0  -5  -5  -10 1996  -10 1997  1998  1999  2000  2001  2002  2003  Source: Eurostat. 6  BIS Review 42/2003  Chart 5. Population growth 16-64 years, actual and forecast 2003-2050 1.0  1.0  0.8  0.8  0.6  0.6  0.4  0.4  0.2  0.2  0.0  0.0  -0.2  -0.2 -0.4  -0.4 1990  1995  2000  2005  2010  2015  2020  2025  2030  Source: Statistics Sweden. BIS Review 42/2003  7
Increasing specialization brings real economic benefits, but can also leave workers more exposed to shifts in demand for their services, potentially on short notice. These issues are not going away, especially as emerging market economies take on a larger role in the global economy and automation continues apace. If we are to maintain a more open trade regime, globalization must be socially and politically sustainable. For that to be the case, we have to provide greater support to those who are hurt by trade. Policies should include more assistance with job retraining, help with job search and mobility, and broader unemployment support.8 We also need to do more research into what measures have been effective in economies 5/8  BIS central bankers' speeches  around the world, and we should encourage greater experimentation with new approaches. Getting the balance right between providing assistance and making sure that individuals hurt by trade can get back on their feet and achieve their earning potential will be a challenge, and we need a better understanding of what actually works. More generally, we need to do a better job positioning our workforce to cope with globalization and technological change. Improvements across a range of areas—including not only education and training, but also the business regulatory environment and infrastructure investment—could support greater worker mobility. These measures would also promote higher productivity growth. While the scope and scale of issues differ substantially by country, many of these issues may also be relevant in Brazil.

5 Dix-Carneiro, Rafael (2014) “Trade Liberalization and Labor Market Dynamics,” Econometrica, Vol 82(3), 825–  885; Dix-Carneiro, Rafael (2018) “Trade and Labor Market Adjustment: Recent evidence from Brazil,” Proceedings of the IMF Conference “Meeting Globalization’s Challenges.” 6 Dix-Carneiro, Rafael (2014) “Trade Liberalization and Labor Market Dynamics,” Econometrica, Vol 82(3), 825– 7/8  BIS central bankers' speeches  885; Dix-Carneiro, Rafael (2018) “Trade and Labor Market Adjustment: Recent evidence from Brazil,” Proceedings of the IMF Conference “Meeting Globalization’s Challenges.” 7 This negative consequence of higher trade barriers can be illustrated most starkly by the estimates of the costs  per job saved through protectionist measures. Researchers that have studied this closely estimate that the costs per job saved from protectionist measures in the United States typically run into the hundreds of thousands of dollars per year. To illustrate, consider the case of import restrictions on Chinese tires. The cost of a job saved was estimated at $ per year while the measures were in place, or more than 20 times the average worker’s compensation. Hufbauer and Lowry, “US Tire Tariffs: Saving Few Jobs at High Cost”, Peterson Institute for International Economics, April 2012. 8 The U.S. provides some assistance to workers displaced due to trade through its Trade Adjustment Assistance  (TAA) program. A recent academic paper finds that TAA-trained workers have higher cumulative earnings (after 10 years) than similar workers who didn’t receive the training.
An alternative would be for central banks to issue a new electronic form of central bank money that can be used by households and businesses for payments, also known as a central bank digital currency or CBDC. CBDC presents a number of potential opportunities. It could help respond to some of the changes and challenges I described in the beginning of this presentation – including helping to meet the future payments needs of the digital economy, addressing the consequences of a decline in access to cash, and providing a building block for better cross-border payments. It also may be a safer alternative to new proposed forms of private electronic money like stablecoins. But a CBDC may also have significant implications for how our financial system works – in particular if households and businesses were to move their deposit balances from commercial banks to CBDC. This could in turn affect how we implement monetary policy and support financial stability. The Bank has launched a dialogue on the appropriate design of CBDC and an evaluation of whether the benefits of CBDC outweigh the risks. Our deadline for comments is tomorrow – so if you would like to contribute it is not too late. To conclude – changes in the way we pay and the challenges we’ve seen over the past several months pose two important and interrelated questions for central banks and regulators.

International standards explicitly call on payment systems to settle in central bank money when possible and where that’s not possible, to settle in commercial bank money and to strictly limit any credit and liquidity risk of the instrument being transferred and settled. However stablecoin arrangements propose to transfer new instruments that they will create themselves – and to settle most of their transactions across their own books. With the right regulation, stablecoins may be safe for use in systemic payments chains. But the protections these stablecoins would offer are currently big question marks. Some major stablecoin proposals offer no legal claim for holders. None. This is significantly different from how we currently pay: When my parents pay for their groceries using their debit card, the shop ultimately receives an electronic deposit in the shop’s bank account - a promise from the shop’s bank to redeem the amount deposited in local currency on demand. When – pre-COVID – my parents paid in cash, the shop got banknotes with a central bank promise to “pay the bearer.” Were they to pay in the future with some proposed stablecoins, the shop would just get a bunch of stablecoins. If the shop can’t sell the stablecoin to get local currency or other goods in an amount equivalent to the price of the grocery order, tough luck. Additionally many stablecoins propose backing in instruments that may have market and liquidity risk. While these risks might be acceptable for speculative investment purposes, payments are different.
The euro-area sovereign debt crisis: some thoughts on its origins, its implications, and the challenges ahead  The origins of the euro-area sovereign debt crisis are twofold: the real cost of the overall financial crisis and the excesses of the pre-crisis period have jointly contributed to the gravity of the current situation. While this is not specific to the euro area, the consequences have turned out to be particularly harmful here. Indeed, by not internalizing the policy requirements associated with the participation in a monetary union, several euro-area countries entered the global financial crisis in a particularly vulnerable position. One of these policy requirements is fiscal discipline. Within the Stability and Growth Pact, fiscal discipline was associated with pre-agreed quantitative ceilings for the deficit and debtto-GDP ratios. In practice, many euro-area countries did not take advantage of expansionary periods to reduce the probability of reaching these limits in recessionary phases. BIS central bankers’ speeches  1  Unfortunately, an exceptionally hard recession, by all historical standards, hit the euro area in 2009, as a consequence of the financial turmoil initiated in the US in 2007–2008. The tax revenue went down and the large fiscal stimulus packages that were then required to contain the real consequences of the crisis and to avoid major disruptions in the financing of the economy also resulted in swift increases in public debts across the board.

The fact that both public and private indebtedness had followed an unsustainable pace of growth over the previous decade then makes area-wide adjustments both necessary and painful. Among the factors that contributed to the excess of the pre-crisis period stands in my view the misleading belief that sophisticated financial engineering was able to achieve close-toperfect risk diversification and market completeness led in fact to excessive risk-taking by banks. This is in sharp contrast with the current situation, in which investors have doubts about even the risk-freeness of sovereign bonds of developed economies. Restoring market confidence is a difficult and potentially lengthy task. That said, all actions that are consistent with the commitment of governments to address national fiscal imbalances and structural impediments to real growth are likely to accelerate this process. Besides, it is clear that nominal long-term anchors are also of the essence to reduce uncertainty and facilitate such reforms. The primary mandate and the best possible contribution of the Eurosystem is precisely to ensure price stability in the medium run. Then, to the extent that dysfunctional financial-markets are likely to jeopardize our ability to maintain stable prices in the medium run, the Eurosystem must intervene. This analysis has motivated our decisions in the past and will continue to motivate future ones. This brings me to the second part of my talk today. 2.
Thus it is important to avoid borrowing more than necessary and to emerge as soon as possible from our current state of imbalance. Before I turn to the economic outlook and the Monetary Policy Committee’s most recent interest rate decision, I consider it necessary to say a few words about the nature of the adjustment the Icelandic economy is currently undergoing. First of all, it should be borne in mind that the year 2009 would have been extremely difficult in any case, no matter whether the banks had collapsed or not. This is because of the huge macroeconomic imbalances that developed in the Icelandic economy in 2005-2007 and had to subside in one way or another. Second, the collapse of the banking system called unavoidably for an additional adjustment in the structure of the economy. We can summarise this as follows: The enormous current account deficit had to go, and the financial system and various other bubble-related operations had become far too large and had to be downsized. This involves considerable unemployment, partly because of layoffs in the sectors that have contracted and the lag time before new commercial activities can be established. Tradable sectors must be reinforced. The key to hastening that process is re-establishing an effective financial system. Although the currency may have played a role in creating the problem, the depreciation is also part of the adjustment, and it is accompanied by transitory inflation.

Consequently, it is of vital importance that the selection of these projects is such that the magnitude of their impact on economic activity and public finances is maximised; this would be fostered by structuring the distribution of the funds around a plan of structural reforms designed to strengthen the economy's long-term growth. As for the distribution of the funds between direct grants and loans, it should be noted that direct grants have a greater impact on activity, allowing for an increase in public spending not matched by an increase in debt, which is what occurs with loans. The latter are particularly useful when there is a greater difference between the cost of financing of a country’s public sector and that of the EU. Currently, the difference between the cost of EU 10-year debt and Spanish Treasury debt ranges from 50 to 80 basis points. Thus, there would be a saving of approximately € million for every € millions of EU loans replacing long-term Treasury issues. However, we should not overlook the fact that the NGEU is mainly useful in the medium term. In the short term, the delays in approving the fund and in the implementation of 8  Indeed, the consensus reached by virtually all empirical evidence is that the medium-term public investment multiplier effect would be higher than 1, whereas that of spending on government consumption or benefits would be less than 1.
With the depth and diversity of experience represented on both the Board and staff of Financial Mediation Bureau, I am confident that the new Bureau will be well placed to discharge its responsibility in ensuring a fair and equitable resolution process for consumers. The creation of this Bureau represents an important milestone in the enhancement of the consumer protection infrastructure. Consumers are encouraged to make full use of the avenue available to seek resolution of the issues faced by them. Ladies and gentlemen, I would like to take this opportunity to express our appreciation to the previous Board of Directors of the Banking Mediation Bureau and Insurance Mediation Bureau for their contributions and dedication in giving selflessly of their time and experience in the operation of the bureaus. I would also like to acknowledge the contributions and support by the Association of Banks in Malaysia, Association of Finance Companies in Malaysia, Association of Merchant Banks in Malaysia, Life Insurance Association of Malaysia, Persatuan Insurans Am Malaysia, Association of Islamic Banking Institutions Malaysia, Malaysian Takaful Association, Association of Development Finance institutions of Malaysia, MBF Card Services (M) Sdn. Bhd., American Express and Diners Club (M) Sdn. Bhd. in making this bureau a reality. They have agreed to fund the operational costs of this bureau through levies on individual member companies in order that the services of the bureau can be provided free of charge to members of the public.

Those stylized facts were:   The value of the firm’s assets and its business lines tends to decline with time as the firm’s financial weakness becomes more apparent and market pricing of its assets takes on a “fire sale” character;    The funding capacity of the firm declines as its troubles become more evident, counterparties cut lines and limit maturities and the quality of counterparties declines; and    The value of the firm’s franchise decays as customers migrate to other providers. This three-part program of identifying all problems, replenishing capital and liquidity and recasting the business plan was designed around loan exposures, but continues to be relevant today. The challenges are to adapt such a program to the many financial institutions strongly oriented toward capital markets activities with the resulting volatile balance sheets and income streams and to apply the program timely. Time also plays an important role when a financial firm is subject to an insolvency process. Another stylized fact is that the market value of the assets and business lines often suffer a substantial markdown when a financial institution enters insolvency and may decay further thereafter. The Federal Deposit Insurance Corporation (FDIC), the resolution authority for banks in the United States, routinely experienced losses in resolving banks in the 1980s, when it was required to wait until the bank's book value had reached zero. That led to the provision in FDICIA 1991 that a bank can be declared insolvent when its tangible equity falls below 2 percent of assets.