samchain/econo-pairs-v1 huggingface dataset:
We are now in a period where petroleum wealth is being invested in foreign financial assets via the Government Petroleum Fund. The government is to gradually phase in petroleum revenues into the domestic economy by using approximately the expected real return on the Fund. The fiscal rule was established in 2001. Growth in public expenditure started to accelerate in 1997 after having been low in the mid-1990s. Spending growth has also been fairly strong in recent years, but perhaps somewhat slower than earlier. Since 2000, spending growth has averaged 6.3 per cent, while GDP growth in value terms has been 4.5 per cent. We have limited overall knowledge about real growth in public service production. Reliable measures of productivity and price developments have not been developed. The fiscal rule for the budget implies that the government can use 4 per cent of the Fund over time. This year, a little more than 6 per cent is being used. The deviation partly reflects an unexpected shortfall in tax revenues in recent years. The government budget deficit is the difference between total  6  BIS Review 10/2005  revenues and total expenditure. They each account for about half of total GDP in Norway. Even small deviations from expenditure and revenue projections can have a major impact on the deficit. Exchange rate changes will also lead to fluctuations in the value of the Petroleum Fund. For these reasons alone, the use of petroleum revenues may in periods deviate from the 4 per cent rule.

Budget norms are not new. The norm during the first 25 post-war years – and it was adhered to – was that the annual budgets should show a surplus. The surplus was sufficient to finance an increase in loans to state banks. At the beginning of the oil age in Norway, in the early 1970s, the norm had to be assessed. The relationship between the use of petroleum revenues and changes in industry structure was highlighted. Report no. 25 to the Storting from 1973-1974, “The role of petroleum activities in Norwegian society” stated: “A transfer of production and employees between enterprises and industries can occur as a result of higher domestic cost pressures” … and further … “Inflationary pressures will depend in particular on the extent to which the Norwegian business sector is involved in petroleum activities and the share of revenues that are used domestically”. The implications for economic policy were also clarified: “The risk of excessive inflationary pressures must be given considerable weight when decisions are to be taken here”. The government budget was at that time used to steer the activity level in the economy. The interest rate was to be low – and kept unchanged. Today, with an inflation target, inflationary pressures will be steered using the interest rate, while the value of the krone will fluctuate. Today, this sentence would have to read: “The risk of an exchange rate that is too strong must be given considerable weight when decisions are to be taken here”.
Markets expect quick, bold and “shock-and-awe” decisions on highly complex matters. They are exasperated that something can be agreed by leaders but take months to enter into force. Yet this is a necessary condition of operating in a system of 17 sovereign democracies. Decisions have to be explained, approval processes have to be followed, compromises have sometimes to be made. These dynamics were witnessed even in the US when Congress sent back the TARP in 2008. The net effect on the euro area, however, is that by the time decisions are eventually implemented the expectations of market have moved on. The impact of those decisions is then discounted. These market-democracy dialectics provide a second reason why a more integrated economic and financial union is so essential for EMU. The rationale for the original design of EMU – with centralised monetary policy, but decentralised economic policies – was linked to principles of subsidiarity and democratic accountability. This was consistent with the environment that prevailed 20 years ago. But these same principles now imply more Europe, not less. Subsidiarity is the principle that the centre should perform only those tasks which cannot be performed effectively at the national level. Can we really argue, in the current crisis, that the centre is not the more effective level to exercise, or at least coordinate, certain economic and financial policies? Democratic accountability is the principle that citizens should be able to hold their representatives responsible for decisions.

Countries are expected to anchor fiscal prudence in national rules, creating a much more “vertically integrated” concept of governance. All these measures were unthinkable four years ago. If we look at the conclusions of Euro Summit on 26 October – dismissed by some observers as insufficient – we see even more radical steps envisaged for the future. Euro area countries have committed to adopt balanced budget rules. They have agreed to base their budgets on independent growth forecasts. They have agreed to stick to the recommendations of the Commission when implementing the Stability and Growth Pact. Countries in the Excessive Deficit Procedure – which is currently 14 out of 17 euro area countries – will allow the Commission to examine draft national budgets and monitor budget execution. Although some of the recent governance reforms, like those that formed part of the so-called “Six-pack” proposed by the European Commission, fall short of the “quantum leap” that the ECB had long advocated for the euro area, they still represent significant progress relative to the situation prevailing before the crisis. The creation of the European Financial Stability Facility and future European Stability Mechanism could also not have been imagined in 2007. The euro area has institutionalised the provision of sovereign liquidity and agreed to a Treaty change to ensure its legality. As the new facilities have developed, they have acquired a range of tools.
Because of a relatively small population and a number of structural deficiencies it is very unlikely, that increase in the number of students in CEE-4 that have occurred in recent decade will translate into higher innovation potential in the coming years, unless a dramatic change in policies in CEE-4 is made. This is also confirmed by a dramatically low number of patents registered in the CEE countries and extremely low number of scientific publications. As the ability to generate great ideas in the CEE region is limited, it seems that in the transition period the most important modernization channel in the region was through foreign direct investments. Indeed CEE became a very large recipient of FDI, with FDI stock to GDP ratio topping 40 percent in CEE-4 region. Only NIEs economies managed to attract higher FDI stock in relation to GDP and enjoy higher FDI annual inflows. However, in the global knowledge economy it is important to attract foreign direct investments to sectors that can become globally competitive, in particular to these sectors that export hightechnology, i.e. high value added goods or services. While CEE-4 significantly improved the structure of exports, the high-tech goods account for only 12 percent of manufactured exports, which is the world worst result, lagging even behind Latin American countries. NIEs are world leaders and China is about to take over the  BIS Review 137/2007  3  second post from the United States.

In view of the existence of political barriers to international trade, the flow of capital and goods was equally as possible one hundred years ago as it is today. It goes without saying, however, that as a result of the rapid development of technology, especially in the ICT area, which drastically lowered the cost of the said exchange, the international integration of trade, investment, financial and other services is now more advanced than it has ever been before. In recent years globalization “tail wind”, mainly through increasing competition, productivity and growing imports from low-cost countries, helped to reduce inflation in CEE countries. HICP inflation in the region 2 fell from average 7.7 percent in the years 1997-2000 to 3.8 in 2001-2006. It led to a prolonged period of very low nominal and real interest rates. Nominal interest rates (average for CEE countries with flexible exchange rate regimes) have fallen from 8.8 percent during 2002-2005 to 5.4 during 2006-2007. Real rates decreased from 3.0 to 1.7 in the same period. This in turn helped to accelerate credit growth and fuelled asset bubbles. The amount of loans granted to households increased 3.5 times since 2004 and almost 10 times since 2000. Low deposit rates and economic upturn in CEE after EU accession encouraged both financial institutions and individuals to move toward more risky forms of investment. As a result, real estate prices soared after 2004 and equities listed on stock exchanges reached historical highs.
This helped to stabilise markets and reversed the dash for cash and thus the flows out of money market funds. Second, the Bank activated its Contingent Term Repo Facility on 24th March, committing to lend unlimited amounts of reserves at close to Bank Rate against a broad range of collateral. Taken together, these operations brought money market rates back to more normal levels. The Federal Reserve in the US also launched a specific liquidity facility aimed at easing the stresses in dollar denominated MMFs. Turning the fire hoses on at full blast worked and cured the immediate problem. It is always worth remembering that all of this happened at a time of a global pandemic and a historically unprecedented collapse in economic activity. So, it is hardly surprising that large and rapid actions were necessary. It helped that the situation in respect of both monetary and financial stability called for such actions, so there was no conflict between the two. Moreover, this was an international shock, in at least two important respects. First, by its nature the global pandemic was affecting a very large number of economies and financial markets. Second, money market funds, and particularly dollar denominated funds, provide funding to a wide range of banks internationally and are used for cash management by investors and corporates across the world. For instance it is common for US funds to buy dollar paper issued by European banks, and vice versa. So the transmission of the dash for cash was not constrained by borders or national markets.

quick redemption of a holding in a money market fund should be assured. But there are situations where, say, holding a three month tenor instrument is appropriate because it satisfies treasury management objectives. The critical need is to avoid ambiguity of definition and mismatches between an instrument’s liquidity and its use. Funds that do not meet this requirement should be clearly labelled and treated as part of the investment fund world, serving a different purpose (where there are also issues, but these are not my focus today). You may well say “he really is labouring this point”. Yes I am, because the post financial crisis reforms did not tackle it conclusively. So, what reforms are required to establish money market funds as cash-like without ambiguity? The first thing to say is that no single reform will solve things on its own. We must identify a coherent package of reforms that address the current vulnerabilities in the money market fund sector. It is easiest to describe three broad approaches to illustrate the potential options available that could deliver this objective. These are intentionally somewhat stylistic, to draw out the tradeoffs we face in addressing these issues. First, at one extreme, asset holdings could be limited to government instruments. Given the low risk and liquid nature of these instruments, run risk would be materially reduced.
Indeed, it is most unusual for the UK to experience a period as long as eighteen months or more with no change in the official interest rate, as we have done since March 2009. The period over which Bank Rate has been held constant at 0.5% is now the longest period without a change in the official interest rate since 1951 (prior to which the Bank’s official interest rate had been held at 2% since the 1930s). I do not believe that the current economic conditions justify a continuation of this policy. The longer we keep interest rates at an exceptionally low level, the greater is the risk that Bank Rate would need to rise sharply in the future – creating a serious setback to business and consumer confidence. We should seek to avoid such a sudden lurch in policy. A gradual transition to higher interest rates appears much more likely to provide a stable and predictable approach to policy-making which enables the business community to plan sensibly for the future. As the private sector of the economy “gets back to business” and we get accustomed to a resumption in growth following the financial crisis, so monetary policy also needs to “get back to business”. It is quite right for the MPC to support the economy in recession when there are significant deflationary risks. But, as the economy recovers, a key task for the MPC is to maintain monetary discipline and confidence in a world of low and stable inflation.

For example, the Federal Reserve has new tools, like the authority to pay interest on reserves and reverse repurchase agreements with an expanded set of counterparties, which were not available pre-crisis. 2 The money markets in which the Trading Desk of the Federal Reserve Bank of New York (the Desk) operates have different dynamics than before, in part because of our large-scale asset purchases. We want to take stock of these changes and ask ourselves what the best way of implementing monetary policy is today and in future environments in a manner that is consistent with the Federal Reserve’s normalization principles. 3 To make good choices about the monetary policy implementation framework going forward, it is, of course, useful to learn from the past. Our task is to assess the strength and weaknesses of existing and previous frameworks, particularly through the lens of what happened during the recent global financial crisis, when central banks were called on to innovate in a number of ways. In addition, the varied experience of other central banks prior to the crisis can also provide valuable insights. What have they learned about what worked well, or did not work so well, with their frameworks? The current framework in the United States looks very different than the pre-crisis framework. One way in which it is different is that excess reserves are much higher than they used to be. This shift is due, in large part, to the large-scale asset purchases that the System undertook, starting in December 2008.
Erdem Başçi: Commodity price volatility Speech by Mr Erdem Başçi, Governor of the Central Bank of the Republic of Turkey, at the “G-20 Commodity Price Volatility Conference”, Istanbul, 13 September 2011. *  *  *  Dear Colleagues and Distinguished Guests, Today I will discuss commodity price volatility, a topic which has vital importance for the global economy and thus for policy makers. In my speech, I would first like to discuss the possible sources of commodity price movements and then elaborate on the approach of the Central Bank of Turkey in dealing with commodity price changes in the past few years. Commodity markets cover a wide range of raw materials such as oil, metal and agricultural products. These commodities have different characteristics not only in terms of trade volume, supply and demand structure but also in terms of their exposure to financial market transactions. Understanding the sources of the volatility in prices is essential in order to give appropriate policy response. The challenges posed by high and volatile commodity prices are important worldwide, yet they are more immediate for emerging markets. For instance, the share of food in the typical consumption basket is higher in these economies than in advanced economies. The average weights of food in the consumer price index in emerging market countries and in developed countries are around 30% and 13% respectively. Besides, especially for the net importers of commodities, high and volatile prices pose significant risks on balance of payments and sustainability of growth in developing countries.

But there are reasons to think that we will see a pickup in 2016 and 2017 as set out in the forecast Productivity growth can be divided into two sorts of change: the change in productivity inside individual firms and the changes between firms. The first, the changes within firms, happens as firms increase their efficiency. The second happens as labour and capital are reallocated between firms, from the less productive ones to the more productive. This reallocation between firms in the economy happens through changes in market share as the more productive, higher return firms, grow and the less productive, lower return, firms shrink. And it happens through the deaths of the low return firms and the birth of new ones. After collapsing in the crisis, productivity began to increase again within firms two years ago. We expect that to continue. As the economy grows, spare capacity is used up. The real cost of labour increases relative to the cost of investment. Firms have a greater incentive to find efficiency gains and to switch away from more labour-intensive forms of production. This should boost productivity. In contrast, productivity growth due to the reallocation of resources in the economy remains weak. We can see this in the divergence of rates of returns across firms which remain remarkably and unusually high and the change in capital across sectors which has been particularly low.
Rather, if press reports are to be believed, these cases are to varying degrees about theft, fraud, greed, and corruption. Less covered in the press is trade-based money laundering—that is, using legitimate trade to 2/6  BIS central bankers' speeches  hide illicit sources of funds. The United States is particularly vulnerable to trade-based money laundering because more than half of the world’s trade is denominated in U.S. dollars.9 The Department of Homeland Security and the Drug Enforcement Administration have warned for years that a large amount of illicit narcotic payments occur through low-tech solutions like overor under-invoicing of goods, false documentation, or phantom shipping.10 These methods give illegitimate transfers the appearance of ordinary transactions. FinCEN has warned against the use of “funnel accounts” to facilitate trade-based money laundering of narcotics proceeds, and has provided the industry with a list of red flags associated with such activity. 11 Trade-based money laundering can also be used to evade sanctions regimes, sometimes through money service businesses or general trading companies.12 The extent of financial crime from a global perspective is simply staggering. According to the United Nations Office on Drugs and Crime, the amount of money laundered globally in one year could be as much as $ trillion.13 That’s five percent of global aggregate gross domestic product. If the scale of global financial crime is too large to contemplate, let’s focus instead on segments that are local.

“Safety and soundness”—the guiding principle of microprudential supervision—is a shared objective, even if supervisors and the industry sometimes disagree how the concept applies to particular facts. I think we can agree that your work as first-line risk managers promotes safe and sound operations within your organizations. So let me begin with my thanks for your continuing efforts. Second, there are some things that I would like to get off of my chest. My topic this morning is financial crime—more specifically, crime that converts and corrupts the payment system to achieve its ends. This includes theft, fraud, money laundering, sanctions evasion, bribery, kleptocracy, cyber-terrorism, and electronic sabotage. Combatting financial crime should not be an issue that finds supervisors and industry on opposite sides of the “v.” It is in everyone’s interest—supervisors and their public constituents; the industry and its customers—to keep crime and the proceeds of crime out of the payment system. Of course, no one is perfect. But we must be honest with each other about what we’re doing, what we’re not doing, and how we can improve. Let me highlight just one example to demonstrate why I am so focused on financial crime right now. As I’m sure many of you have read, in February 2016 international criminals used fraudulent wire transfer instructions to steal and launder many millions of dollars from Bangladesh Bank’s account at the New York Fed. Bangladesh Bank is the central bank of Bangladesh.
We need also to take account of the impact of the turmoil in the banking sector which is now leading to a fierce squeeze on credit especially in the housing market but not just there. The increase in bank margins over safe rates have offset the cuts we have made to Bank Rate since last summer and the tightening of other conditions have introduced some quantity restrictions which are not fully captured in price. Our credit conditions survey suggests that this squeeze may intensify in the coming months. Timely sources of data suggest that the economy is already slowing fast. The CIPS survey balances are now pointing to a contraction in activity in manufacturing, construction and services (Chart 4). House prices and transaction numbers are falling rapidly with direct effects on house builders and related services. And while there are winners as well as losers from lower house prices, there are signs that the housing market is affecting consumer confidence. More broadly, there are signs that the tightening of credit conditions is beginning to affect both consumption and investment. Most importantly, the sharp increases in commodity prices are squeezing real take-home pay which is bound to impact on consumption at some point. Conclusion I began this speech by highlighting how the recent events in financial markets have been facilitated by the integration of emerging economies into the global economy. Of course, I could make an even closer link with rising commodity prices.

SPEECH  Price Stability: The Foundation for a Strong Economy July 08, 2022 John C. Williams, President and Chief Executive Officer Remarks at the University of Puerto Rico – Mayagüez, Mayagüez, Puerto Rico As prepared for delivery  It's a pleasure to be here this morning at the University of Puerto Rico's beautiful Mayagüez campus. Thank you for that kind introduction. This visit is part of the New York Fed's broader commitment to serving the diverse economies in the Federal Reserve's Second District, which—in addition to Puerto Rico—includes the U.S. Virgin Islands, New York State, northern New Jersey, and parts of Connecticut. Here in Puerto Rico, we supervise four commercial banking organizations that account for a large part of the deposit and lending activities on the island. We also provide cash services to depository institutions located in Puerto Rico and the U.S. Virgin Islands. To take one example, the New York Fed coordinated an extensive effort to keep cash operations on the island functional following Hurricane Maria, ensuring adequate supply and meeting the demand for much-needed currency. We also study issues that affect the communities here, and our economists monitor economic conditions that inform our work.1 I'll start by saying that I am so pleased that in many respects the Puerto Rican economy has recovered strongly from the hurricanes and the pandemic. Over the course of my visit, I've had the opportunity to hear firsthand from business, government, and community leaders about what is happening on the island.