samchain/econo-pairs-v1 huggingface dataset:
Nothing will replace an appropriate carbon price. Second, we are acting in the very name of our mandate: our consideration for climate change is neither an abuse of our mission, nor a mere militant conviction, and we will act with the same technical credibility and professionalism as we do in our traditional domains. I. Not “too much”: what it is our duty to do In a somewhat “proliferating” environment, let me suggest some clarification, with a two-dimensional quadrant. The vertical axis – the most obvious one – relates to our missions as supervisors and includes both climate-related risks for financial institutions and opportunities – linked to green finance. The horizontal axis relates to our missions as central bankers and includes responsible investment of our nonmonetary portfolio and monetary policy. For many central banks, implementing responsible investment strategies has numerous benefits: central banks can then practice what they preach as supervisors, protect their own balance sheets and contribute to financing the green economy. Since 2019, the Banque de France has been the first Eurosystem central bank to publish a yearly dedicated reportii on our responsible investment policy. And we turn our words into action: the Banque de France is completely exiting coal by 2024. As regards green finance, climate change creates opportunities for investors: the expected transition to a lower-carbon economy is estimated to require around $ trillion of investments a year. I will now focus on the top right of the quadrant: climate-related risks of financial institutions and the greening of monetary policy.

It said “an Economist is someone who did not have enough personality to become an Accountant”. I said to myself, maybe your President thought that by being here tonight among these many distinguished accountants, I could end up having some kind of personality after all. I wish you, the new Members of the Institute, all the very best as you embark on your careers as fully fletched Accountants. Your future is how you make of it. Work hard, be honest and avoid being “overly creative” in the way you keep and look after your clients accounts. Thank you for attention. BIS Review 49/2010  5
First, I want to look back to some of the lessons the Bank drew from the building of CREST twenty years ago. Second, I want to explain how we have applied those lessons to our current strategic review of RTGS. And, third, I want to ask what lies ahead for securities market post-trade infrastructure over the next twenty years. Why was the building of CREST such a success? Ironically for a project designed to do away with paper, the Bank’s work on CREST left behind great slabs of dusty paper files! Reading those files is a fascinating reminder of a remarkably bygone age – but it also throws clear light on the steps the Bank took to ensure CREST succeeded where TAURUS had not. Those steps remain hugely valuable lessons today, and can be summarised under three key headings: first, establish early strategic direction and momentum for change; second, secure close industry engagement; and third, keep it simple, focused and open – both in your project team and in your system design. In the interests of time, and because they relate most closely to our current work on RTGS, I am going to concentrate on the first of these themes in my remarks today – but Table 1 sets out the full set of lessons from our own analysis, and I look forward to hearing more from the  1  “Soft” infrastructure refers to the rules, principles and standards by which markets operate.

Unsurprisingly, a fifth of all trades failed to settle on time. If the case for change was clear, so too was the common purpose shown by the public authorities. As Pen Kent, the Bank’s Executive Director in charge of CREST said at the time, “TAURUS gave the Bank the legitimacy to step in and get on with the job: it needed a market failure to get everyone pointed in the right direction.” The Bank of England, called upon privately to act by the Chairman of the Stock Exchange, had two main goals: first, to reduce the material risks to financial stability posed by such an extended and uncertain settlement process; and, second, to ensure the UK had an efficient and internationally competitive market infrastructure. There is no doubt that the second of these goals weighed particularly heavily with the Bank’s Governors of the day. Not everyone agreed that the Bank should become closely involved, worrying that it could be a costly and reputationally risky distraction from the post-ERM project of repositioning the Bank as an organisation capable of taking on independent responsibility for setting monetary policy for the country as a whole. But the majority view won out, bolstered by the active support of the UK Government, notably HM Treasury, which took responsibility for ensuring that the complex and extensive legislative changes required were delivered in a timely and effective way.
Source: ONS, IMF World Economic Outlook, Consensus Economics  BIS central bankers’ speeches  5  While the impact of the recent Japanese earthquake and tsunami is very tragic and we are likely to see continued political turbulence in Middle East and North Africa, I would expect these developments to have only short-term effects on global growth. The economies of Asia and other emerging markets are likely to continue to provide strong momentum to global growth, and the gradual recovery which is emerging in the United States and continental Europe should continue to gather momentum. As Chart 4 shows, the growth of the UK economy follows quite closely the trade-weighted average of our major trading partners – and the IMF and other economic forecasters are projecting the continuation of relatively strong growth across the world economy this year and next. Business investment should also be a positive force for growth over the next couple of years. The latest CBI Industrial Trends Survey showed the strongest investment intentions in manufacturing industry since 1997 and the Bank of England Agents’ reports also indicate healthy investment intentions (see Chart 5), in both the manufacturing and services sectors. Many companies are dusting off investment plans that they put on hold in 2008 as the economy moved into recession, and the latest GDP figures show a 10% rise in business investment has already taken place over the past year.

But if wage increases start to pick up more than current forecasts suggest in response to persistently high headline inflation, we are likely to see some combination of stronger consumption growth and higher medium term inflation. This scenario, which I see as quite likely, would reinforce the case for raising UK interest rates to head off inflationary pressures. Economic growth and UK monetary policy The UK’s monetary policy framework is focussed on the objective of price stability, which is currently defined in terms of a 2% target for CPI inflation. There are good reasons why we have made the achievement of price stability the centrepiece of monetary policy here in the UK, and why many other countries follow the same approach. While monetary policy can affect the growth rate of the economy in the short term, over the medium to long term, economic growth is driven by supply side factors – enterprise, innovation, investment and skills. Attempts to boost growth solely by loose monetary policy policies – which we experienced in the 1970s and the late 1980s – ended up creating greater economic instability and almost certainly hampered longer-term growth prospects. The best contribution that monetary policy can make to supporting the underlying forces of growth is therefore by fostering a climate of stability – primarily in terms of the level of prices but also by seeking to promote a relatively stable demand climate and by avoiding potentially destabilising lurches in policy.
On the Committee, we always stress that the uncertainty associated with forecasting inflation means that the forecasts – and outturns relative to those forecasts – should be judged in terms of the entire forecast distribution rather than a single point forecast. But even viewed in this way, inflation in recent years has turned out significantly higher than we thought at all likely. Consider, for example, the forecast the Committee made two years ago in February 2009. At that time, the probability the Committee attached to inflation being above 3% in 2010 was less than 5% in each quarter. In the event, CPI inflation was above 3% in every quarter of 2010 and averaged 3.3% (Chart 1). However viewed, there is a prolonged period of unexpectedly high inflation that needs to be explained. That explanation comes in two halves, with the source of the inflation surprise in 2009 different from that in 2010. In 2009, our surprise largely stemmed from the extent to which the increase in import prices associated with sterling’s depreciation was passed through into higher consumer prices. The  2  See the box on page 34–35 of the February Inflation Report. The box explains how a range of estimates suggest that these factors might have added between 6% – 10.5% to the level of prices between 2007 and the end of 2010. My numbers update this analysis for the recent impact of the January 2011 VAT rise and additional increases in energy and import prices.

Yes, it is perfectly possible to explain why inflation has been so high for so long. And yes, there are good reasons why monetary policy did not try to keep inflation closer to target during this period. But just like the Judge looking down on me earlier, to some people, at some point, this may just start to sound like a series of excuses. This risk is heightened by the fact that the MPC has consistently under-predicted inflation during this period. It is much easier to be wise after the event. For many people, the one thing about inflation they know with certainty is by how much their cost of living has increased in recent years. And if they take any signal from that about the path of future inflation, this could have significant implications. Discussions of MPC credibility are often framed in terms of a set of binary arguments. Has the MPC lost its credibility or not? Are inflation expectations anchored or de-anchored? This approach encourages a focus on measures of medium-term inflation expectations. The rate of inflation expected over the next year or so may consistently move around since the MPC does not attempt to bring inflation back to target over very short time horizons. But this  10  In the extreme, the law of one price (LOOP) suggests that, in the absence of transport costs and trade barriers, the price of a given commodity will be the same all over the world.
18 This appreciation puts up the price of Swiss exports abroad or narrows the margins for Swiss exporters – or a combination of both. This will be reflected sooner or later in the export figures. Indeed, in recent months, the recovery of Swiss goods exports has slowed markedly; although this is also related to a slowdown in global economic momentum. The financial crisis and financial market concerns regarding the public finances of a number of industrialised countries have increased demand for the Swiss franc as a safe haven currency. The stability of the euro area is therefore an important factor influencing the Swiss franc and the Swiss economy as a whole. EU citizens clearly have a vested interest in the stability of the euro. The same is very much true for the citizens of Switzerland. I am confident that the EU will ultimately succeed in once again deeply anchoring a culture of economic and financial stability. Earlier this year, European politicians and policymakers began to take decisive action to that end. As we all know, crucial challenges lie ahead. These call for determination, courage and perseverance – not only from policy makers, but also – and most importantly – from the citizens of the EU. I am confident that the EU and the euro area will overcome these challenges. In the past, Europe has always emerged stronger from periods of difficulty.

The extent to which the projects that Spain ultimately submits for European funding under the NGEU satisfy these conditions is a question that we will have to analyse in great detail in the coming quarters and that will directly affect their ultimate impact on aggregate activity. 5  For a review of the empirical evidence on the scale of the fiscal multipliers see, for example, V. Ramey (2019), “Ten Years after the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?”, Journal of Economic Perspectives, Vol. 33(2), pp. 89-114. 16  In short, the macroeconomic forecast underpinning the Draft Budget is subject to downside risks, arising from the possibility that the effects of the pandemic on economic activity may be more negative than projected (as has been the case in recent weeks worldwide), and from the difficulty of absorbing the funds available under the NGEU programme in quality projects in the necessary time frame. The last point I wish to make in this respect is that, to the extent that there are appreciable risks that the pick-up in activity in 2021 may be weaker than forecast, there is also a risk that the budget deficit, the unemployment rate and inflation may deviate from their forecasts in 2021. In the case of the deficit, in response to the ongoing health crisis the European Commission has allowed Member States to temporarily diverge from the paths determined by the European budget rules for the budget deficit, public expenditure and government debt in normal conditions.
In particular, the pace of growth in industrial production appears to have declined somewhat and some survey data have also indicated that there has been a certain degree of moderation. However, survey data remain at high levels and should be underpinned further by positive factors such as high employment growth. There is thus good reason to remain confident that strong growth will be sustained in the euro area. This picture is broadly supported by bond yields in the euro area. These have changed little over recent weeks. They continue to be compatible with market expectations of strong economic growth in the euro area in the medium term and with developments in consumer price inflation, which are in line with the ECB’s definition of price stability. We trust that this assessment will also increasingly be reflected in exchange rates. These have clearly lost touch with economic fundamentals and this is posing risks to the world economy. For the euro area in particular the continued undervaluation of the euro vis-à-vis other major currencies is putting upward pressure on import prices. We shall, therefore, monitor exchange rate developments closely. 1  BIS Review 97/2000  As regards developments in consumer prices, no additional euro area-wide data on the Harmonised Index of Consumer Prices (HICP) have become available since our last meeting. In September 2000 inflation rose to 2.8%, mainly as a result of higher energy prices.

This positive outlook needs to be underpinned by responsible fiscal policy-making and by social partners reacting appropriately to the increase in oil prices. It is crucial that any loosening in fiscal policy be avoided. Similarly, continued wage moderation is important in order both to contribute to further decreases in the level of unemployment and to maintain a favourable outlook for price stability. It will be equally important for structural reform to be intensified further in order to allow current high growth rates of real GDP and employment to be sustained into 2001 and beyond, without generating inflationary pressure. Let me now give the floor to the Vice-President to inform you about two further issues decided by the Governing Council today. I should like to inform you that, in the course of next week, the ECB will release an update of the so-called Balance of Payments Book. This annual publication documents the statistical methodologies applied in EU Member States for the compilation of balance of payments statistics and, as such, improves the transparency of the compilation of euro area statistics. In addition to updated individual country chapters, this version includes two new chapters on the compilation and methodological standards for the euro area balance of payments and international investment position. The Book will be published on the ECB’s website and hard copies will be available at the ECB.
However, of course the Riksbank does not react in a mechanical manner to a measured change in inflation expectations. The Riksbank currently monitors a number of indicators of future inflation developments and, responses to its surveys about inflation expectations are just one of many. By way of conclusion there is reason to call attention to the fact that inflation expectations to an ever greater degree are being guided by the inflation objective and not by our or others’ discussions of the risks of inflation. The signs of this are clear. The expected inflation has crept down markedly and has now been stabilised in the vicinity of the objective for most of the groups currently monitored by the Riksbank. This is a profoundly positive development, which actually facilitates the monetary policy task. (Diagram 4.

Price Developments in Sweden Since 1880)  Price Developements in Sweden Sin ce 1880 In dex: 1880=100 4500  4500  4000  4000  3500  3500  3000  3000  2500  2500  2000  2000  1500  1500  1000  1000  500  500  0  0  1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990  Source: Statistics Sweden  Given what I have just said about the importance of low inflation, we may ask ourselves how inflation could have been allowed to reach such heights in recent decades. Why was there not a tighter policy all along the line to restrain inflation? Developments in other BIS Review 14/1998  -4-  countries of the western world appear about the same. This indicates that there is a common explanation. It is clear that economic thought has shifted in recent decades and the shift in the price level trends that coincided with the Keynesian approach (which was not infrequently a grossly exaggerated interpretation of what Keynes himself had written or said) had a dominant influence on economic policy. The ambition to stabilise the economy and create full employment using economic policy tools grew stronger and stronger. For a long time it was believed that by allowing inflation to rise a little higher, less unemployment could be ‘bought’. Both actual developments up until the 1970s and the theory then prevalent supported this approach.
This reasonably entails the costs of doing business of the same size being higher and the relationships between players being closer. This carries a risk, particularly in times of uncertainty, of affecting the functioning of the market. The inclination to take on risks then declines and with few players and problems with trading situations, the market has occasionally almost come to a standstill. As you know, there are differing opinions as to whether this type of problem can be solved or alleviated with the aid of electronic trading. I do not intend to become involved in that discussion. Part of the positive effects of electronic trading that I mentioned earlier on a more general level will probably be smaller in a market like the Swedish one than on a larger market. Of course, even in terms of direct operating costs, the savings will be less when calculated in kronor. At the same time, it is clear that electronic trading will involve new opportunities. Above all, we hope that it will bring about an increased interest from both Swedish and foreign players in being active and doing business on the Swedish market. How this turns out will undoubtedly depend on the actions of those in the system from the start. If they choose to limit entry or make it more difficult for new players, there is a risk that the socioeconomic gains with the new platform will not be very great. Settlement is important Allow me to conclude with a few words on business settlement.

Cumulatively, these factors can undermine consumer confidence and trust in the industry, with important implications for business growth and persistency. Globally, financial institutions need to get serious about addressing the trust deficit in the financial industry. The hallmark of an industry that engenders trust often goes back to the basics of serving its core purpose, and doing it well. This begins with product innovations that should be aimed at increasing the level of public engagement and interest. The industry must abandon the mindset that “insurance is sold not bought”, and design products that people actually need and want to buy. Such products must also be able to afford protection to the underserved segments of society through affordable and simple product solutions. Such products will be easier to sell, lowering distribution costs and contributing to even lower prices in a virtuous circle that delivers benefits to all parties. The industry also needs to explore new cost-efficient delivery channels. The industry has not done well in this respect. As a catalyst, beginning next year, insurers will be required to offer pure protection products through a direct channel without commissions. The high internet and mobile phone penetration in Malaysia suggests that internet or mobile insurance makes good sense. Other untapped channels include banking agents, retail chains, employers and cooperatives. We expect the industry to fully adopt these channels to diversify delivery of services.