samchain/econo-pairs-v1 huggingface dataset:
The measures needed to respond to these issues can only be effective at the European level. Not everything is working well in Europe and it begs a discussion. Italy, as a founding member of the EU and as the third economy of the euro area, needs to be part of it. What do you think of the proposals for reform made by Macron? I don’t want to comment on what the French President says. He has sparked a debate on the future of Europe, and every country should get involved. If European leaders focus only on domestic politics, this inward-looking attitude can only make Europe weaker. A return to the previous era of globalisation without barriers is unlikely, isn’t it? This is indeed unlikely. And that’s good news, since the reason we are experiencing problems today is that globalisation didn’t deliver on its promises. As Tommaso Padoa-Schioppa once said: “Those people who complain that we won’t get back to the pre-crisis path forget that it was the very path that led to that crisis”. We are currently undergoing a very disorderly transition and there is a temptation to turn to nationalist ideas, when one of the great successes to emerge in the aftermath of the Second World War was the creation of an international order based on trust. Change is needed; for instance, we were naive about opening up international financial flows.

Among the many factors that have influenced the work of the Committee over the years, I thought I would identify five that have shaped what the Committee is today and will continue to guide its activities in the future. The first and most obvious is the evolution from a coordinating and information-sharing group to one that has become a standard setter. Although the 1975 Concordat was the Committee’s first substantive agreement, and its first public document, it was not a standard per se: rather, it was a sensible agreement on how supervisory responsibilities could be divided for banks operating across national boundaries. Its goal was modest: to make sure no bank could escape supervision. It did not try to harmonise supervisory standards. And, of course, it was primarily directed at supervisors, not banks themselves. In subsequent years, the Committee pronounced on international lending and foreign exchange positions. These documents began to set expectations for the way in which banks should manage these risks, but they were not standards in the way we use the word today. It was the first Basel Accord that really marked this new role for the Committee. As in 1974, a severe crisis triggered this step – in that case, the Latin American debt crisis of the early 1980s, which raised the political pressure for banks to increase their capital base and for the regulators to create an international level playing field in this respect.
Regarding output, first-quarter GDP and demand growth figures exceeded March expectations, influenced by improved figures in agriculture and, somewhat less, mining. Overall, our growth outlook is essentially unchanged. We expect the economy to continue to grow below potential for some quarters, due mainly to poor performance of those sectors with closer links with investment. Anyway, it is worth noting that retail trade and personal services have proven more resilient, reflecting a more gradual adjustment on the consumption side. The baseline scenario of this Report sees GDP growing between 1.25 and 2.0 percent this year and between 2 and 3 percent in 2017. This estimate is based on the assumption that the economy will resume near-potential growth towards the end of the projection horizon. Finally, it uses as a working assumption that public expenditure will follow a trajectory consistent with the fiscal rule and the Administration’s announced budgetary consolidation path. The process of growth normalization will be slow. Of particular concern is the behavior of investment, which the baseline scenario estimates will drop for the third year in a row. Indeed, this year several indicators, among which the survey of the Capital Goods Corporation, the levels of imports of capital goods and business confidence, anticipate a further drop in investment. Moreover, the housing sector will have a limited performance after being highly dynamic in 2015, and public investment will follow a trajectory consistent with the objectives of fiscal consolidation.

The world economy continues to be marked by expectations about the Federal Reserve (Fed)’s decision on the trajectory of its monetary policy normalization, and by the risks coming from the Chinese authorities’ efforts to meet the country’s target growth rates. During most of the quarter, the markets’ assessment of these phenomena resulted in a loosening of financial conditions compared with the beginning of the year. Most recently, however, these trends have been partly reversed. Thus, our new baseline scenario assumes that our trading partners will post similar growth rates to those of 2015, but external lending conditions will be tighter and commodity prices will remain below their long-term levels. In this context, we have held the monetary policy rate (MPR) at 3.5 percent annually and we foresee that, within our forecast horizon, further increases will be necessary. Of course, this will be contingent on incoming information about the projected inflation dynamics. Thus, if new indicators point at higher expected inflation, monetary policy will need to be tightened, and vice-versa. In any case, we have maintained a significantly expansionary monetary stance, which will remain so in the scenario we believe to be the most likely. Let me share with you the workings of our baseline scenario and the main risks we perceive, which are depicted in the Reports I am presenting now. Macroeconomic scenario As I said before, in recent months both headline (CPI) and core (CPIEFE) inflation have behaved as expected.
5  Risks can no longer be shared. Companies and households must protect themselves. And in the limit, payments and transactions can’t take place. Economic activity grinds to a halt. These are the amplifiers that turn downturns into disasters; disasters that in the past have cost around 75% of GDP: £ for every person in this country. 6  So the job of macroprudential policy is to protect the real economy from the financial system, by protecting the financial system from the real economy. It is to ensure the system has the capacity to absorb bad economic news, so it doesn’t unduly amplify it. This real economy focus doesn’t for a minute mean that macroprudential policy is any sort of substitute for monetary policy in managing the regular business cycle. In fact, it fundamentally complements monetary policy. It relieves the burden on monetary policy to ‘mop up’ vigorously if and when the financial system amplifies a downturn. And if the 2008 financial crisis proved one thing only, it was the failure of the doctrine that monetary policy had sufficiently powerful floor cleaning equipment to protect the real economy from the full force of such spillages. 7  Focussing on the ultimate aim – the real economy – also reminds us not to intervene in ways that themselves damage the real economy. Building a system that could absorb all shocks would be counterproductive. In the same way, road safety would be dramatically improved by a universal 10mph speed limit.

3) The system is not the sum of its parts My next principle concerns the stress tests themselves – where the stress scenario is applied to the system. It is to beware; the system is not the sum of its parts. Feedback loops within the system mean that the entities in the system can be individually resilient, but still collectively overwhelmed by the stress scenario. These are the feedback loops that helped to turn around $ bn of subprime mortgage-related losses into well over $ trillion of potential write-downs in the global banking sector within a year. 20  There are the obvious feedback loops that arise because entities have direct exposure to each other: think lending from one bank to another. The good news is that the importance of this loop is now negligible. Unsecured interbank lending has contracted and banks are materially less leveraged. 21  And this loop is now incorporated into our annual  banking system stress test, so should it ever re-assert itself, we can ensure resilience keeps up. But we need to go further. At the next level are the feedback loops that link seemingly unrelated entities in the system. These are loops created by firesales of assets into illiquid markets, driving down market prices, forcing others to mark down the value of their holdings. 22  This type of loop will be most aggressive when the fire-seller is funded through short-term debt. As asset prices fall, there is the threat of needing to repay that debt.
In connection with the work on legislation, it was discussed whether the Riksbank should also have objectives regarding GDP growth or employment, for instance. The Government and the Riksdag (parliament) decided that the Riksbank as an authority under parliament was obliged to support general economic policy goals such as sustainable growth and high employment. However, it was pointed out that this support should not come into conflict with the price stability objective. It is thus important to remember that the legislators considered it natural for the Riksbank to take into consideration the real economy, but that this consideration was not described as an objective for the Riksbank’s monetary policy. In my opinion, this was a wise decision and I see no reason to change the  BIS Review 12/2006  3  framework and introduce additional objectives to price stability. The Riksbank’s current method of working closely follows the views of the legislators. Monetary policy takes into consideration other aspects than inflation trends, and it should do so. How do we do this? As you know, the practical monetary policy work is governed by the objective that the increase in the consumer price index should be 2 per cent a year. This is how the Riksbank has chosen to specify the statutory objective of price stability. There is a tolerance interval of ± 1 percentage point around the target.

Also, several thousand experts, including auditors, consultants, appraisers, etc., participated in the exercise and strict quality assurance was enforced both at the level of the national supervisory authorities and by the ECB. The results disclosed yesterday show that European banks have, in the main, a comfortable solvency cushion. A good number of them have been able in recent months to reinforce their solvency levels notably, meaning that the capital measures needed to comply with the requirements arising from the exercise are modest in scope. However, the analysis has shown that some European banks are in a vulnerable solvency position, which they should redress as soon as possible. All told, as important as the solvency assessment the exercise provides is the detailed information furnished on each bank. In particular, the asset quality review offers significant data on the potential shortcomings of the way in which the financial information disclosed by banks reflects the risk they assume. Here it can be seen, once again, that there is no widespread material understatement of risk, in the form of valuation failings or provisioning shortfalls. But there are European banks where the asset review has evidenced shortcomings of some significance. In the case of Spanish banks, the analysis has offered fairly satisfactory results. In particular, the asset quality review situates Spain as the country where fewest failings have been detected in proportion to the sector’s aggregate assets.
Extending a practice with a longer tradition in the field of psychology and in surveys of professional forecasters, economists, and other financial experts, our surveys rely heavily on a probabilistic question format to elicit the likelihood respondents assign to different future events. This approach builds on a large and growing body of research, led by econometrician Charles Manski, that has demonstrated survey respondents’ willingness and ability to answer questions expressed in this way.6 Traditionally, surveys ask respondents to express their answers in one of a few ways: for example, using a Likert scale (specifying whether an event is “very likely,” “likely,” or “not too likely”), selecting the outcome they consider most likely (“Do you expect the unemployment rate to be higher or lower than today?”) or giving a point response (“By what percent do you think prices will increase over the next year?”).7 A problem with the Likert scale is that it does not allow comparisons across respondents, because different respondents may interpret the scales differently. A well-known illustration of the problem was provided by Daniel McFadden, who looked at a health status measure that used a Likert scale ranging from “excellent” to “poor.” While 62 percent of Danish men reported their health to be excellent, only 14 percent of French men did so, despite their enjoying two more years of life expectancy. A problem with questions asking for the outcome considered most likely – that is, questions asking for the modal outcome – is the ambiguous information content of the responses.

BIS central bankers’ speeches  5  information on household inflation expectations at the time; tested alternative wording of potential inflation expectations questions; studied the feasibility of eliciting individual uncertainty about future outcomes for inflation, house prices, and earnings growth; and introduced a panel dimension to the experimental data collection effort in order to study the persistence of inflation expectations and their responsiveness to inflation surprises. The HIEP considered different potential time horizons for its inflation expectations questions. For the short-term expectations, we settled on the one-year-ahead horizon – similar to the Michigan survey. We also examined the feasibility of asking for inflation expectations over a longer time horizon. The Michigan survey asks respondents by what percent per year they “expect prices to go up or down on the average, during the next 5 to 10 years”.17 We replicated this question in our experimental surveys, and found that the Michigan question elicits a mixture of interpretations, with some respondents using a 10-year horizon and others thinking about a 5-year horizon.18 From the results of our cognitive interviews and experimental surveys, we decided in the SCE to elicit medium-term inflation expectations at the one-year two-year-forward horizon.
Of course, such integration has to be brought to fruition in the other segments of the money market, i.e. the repo market and the short-term securities market. Further integration will enhance the efficiency of the euro area financial markets and will be beneficial to borrowers and investors alike. With regard to the capital markets, progress towards integration has been significant, both on the euro-denominated bond market and the equity market. The gross issuance of long-term debt securities denominated in euro amounted to 791 billion euro in 1999, against the equivalent of 902 billion euro for debt securities denominated in US dollars. The pace of euro-denominated issues remained brisk in the first three quarters of 2000 at 498 billion euros. According to the Bank for International Settlements, euro-area private sector borrowers have issued 76% of their debt in euros since 1 January 1999, compared with an average of 50% in the predecessor currencies since during the 1990s. Similarly, private borrowers resident outside the euro area issued more than a fifth of their international debt in euros from the beginning of 1999, roughly a twofold increase over the total share of the legacy currencies before the introduction of the euro. Furthermore, European investors have substantially diversified their bond portfolios since the introduction of the euro, encouraged by the removal of the exchange rate risk. This enables them to achieve higher rates of return for a given level of portfolio risk.

In a context requiring, first, that the funds be used nimbly to shore up the recovery and, second, a lasting impact to encourage the structural transformation, the ongoing assessment of the projects financed using those funds is the most effective answer to squaring these short and long-term objectives and to strengthening the necessary public fund control mechanisms. Ongoing assessment allows for experimentation with new ideas and transformative projects. It also minimises the danger of continuing to channel funds to projects which are attractive a priori, but which do not yield the expected results. Making mistakes can sometimes be a part of long-term success; however, persisting in the error never is. Spain and Europe need Next Generation EU to be a success, on account of it representing a chance to ready ourselves for the future and making the case for further European integration. Indeed, the need for the European funds to help foster our economy’s transformation is also determined by the requirement that the funds be used in conjunction with reforms addressing the structural defects that, according to the evidence, have weighed down growth and hampered our society’s well-being for decades (e.g. those related to low productivity and the poor functioning of our labour market).
This is a major transformation in role of accountants compared to only two decades ago. As the profession grows in technical mastery and sophistication, accountants will contribute significantly to charting a new path for the public sector. A key area that I foresee accountants will wield considerable influence is in performance measurement. This brings me to my final point on Validity of Measurement. Validity of Measurement: Identifying, measuring and assessing outcomes I have so far alluded to initiatives and policies for the transformation of the public sector. However, these would be futile if we do not know how effective they are. In this respect, we must develop identifiable, measurable and practical performance indicators. Our performance indicators should be defined by three key features: Long-term in outlook, integrated with overall strategic objectives and should also focused on impact of social outcomes. Achieving the objectives of national development requires strong coordination across all parts of the government machinery. It is important to eradicate silo mentality and turf protection. Cross collaboration will generate unique and fresh policy perspectives. Collaborative ownership will also increase the probability of policy success. It will also minimize unnecessary and costly overlaps. 3/4  BIS central bankers' speeches  Performance measurement should go beyond budgetary considerations. Our performance as public officials is mainly determined by how well we have served the needs of the public. We must consider public satisfaction and post-completion financial sustainability. Unintended consequences or externalities should also be taken into account, particularly in terms of socioeconomic and environmental impact.

1) Percent 10 9  10  Equities Fixed income  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1 0  0 1999-2009  2010-2019  1) At 30 September 2019. Source: Norges Bank  The rise in equity prices has largely been driven by a fairly small number of companies. US corporate profit margins have increased markedly. The big earners have been the tech giants, which typically operate in markets where there are substantial profits to be gained as the dominant company. Their profits have drawn growing attention from competition authorities and higher taxation is under discussion internationally. Current valuations are based on expectations of sustained profit growth. This entails a downward potential. 6  Developments in the fund’s value over the past decade must also be seen in the context of the decline in global interest rates over time. The interest rate decline reflects the expansionary monetary stance prevailing since the financial crisis. Central bank policy rates were reduced to very low levels in many countries in order to stimulate economic activity. Several central banks have also engaged in substantial asset purchases, which has pushed down long-term interest rates further. NORGES BANK ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  But low interest rates also reflect other driving forces such as population ageing, high saving in emerging economies, growing inequality and a general decline in productivity growth.
In the 1990s he was Head of the Treasury and Chief of Staff for the Ministers of Finance Edmond Alphandéry and Jean Arthuis. During those years he built up considerable European and international experience. He was a member of the European Monetary Committee and held the office of alternate for the Minister of Finance at the OECD, the G7 and the G10. As Head of the Treasury, he also chaired the Paris Club. In 1998 he was appointed Vice-President of the newly established European Central Bank. In 2003 he succeeded Jean-Claude Trichet as Governor of the Banque de France, a post that he still holds following his reappointment in October 2009. He is a member of the Governing Council of the European Central Bank and Chairman, since 2010, of the Baselbased Bank for International Settlements. He is also head of the Prudential Control Authority, one of the two most important regulation and supervision bodies in France. Today, Christian Noyer is one of the most respected and long-serving central bankers. He has extensive experience in monetary policy management, and in banking and financial regulation and supervision. He has been at the forefront of efforts to address and resolve the financial crisis that began in 2007 and the subsequent European sovereign debt crisis. As well as for his profound knowledge of monetary and financial matters, Governor Noyer is known for the extremely courteous and careful way in which he always expresses his opinions and even his most serious disagreements.

I am sure, ladies and gentlemen, that you are going to enjoy and benefit from the quality, both in substance and in form, of the address that Governor Noyer is about to give. Ladies and gentlemen, thank you very much. BIS central bankers’ speeches  1