samchain/econo-pairs-v1 huggingface dataset:
While it is still too early to look at lessons learned about resolving such problems from this round of banking difficulties, we can draw on the lessons of the past. The 1980s and early 1990s offer examples of what can be done to resolve banking problems. For example, the United States suffered oil and agriculture-related regional recessions in the 1980s and a real-estate and leveraged buyout-led recession in the early 1990s. Severe real-estaterelated problems developed around the same time in many European countries, with serious repercussions for some banking systems. Today, banks in most of these countries are much stronger, and until recently, highly profitable. What happened? I would like to suggest five steps that form a common theme in the more successful recoveries. First, banks, often with the assistance of their supervisors, ascertained the true dimensions of their credit problems. The result of the process was realistic assessments of: a total of actual losses in the portfolio that needed to be charged off; the potential additional losses, both in a “most likely” and “worst case” scenario; and the exposures that needed to be considered in “workout” mode. The workout loans were those which had sufficiently severe problems that it was time to stop viewing them as “business as usual”, but to see them as requiring special attention. BIS Review 86/1998  -6-  Second, the workout loans or exposures were assigned to the special expertise of workout specialists.

This complicates the compilation of balance of payments statistics, in particular on factor income and factor expenditures, and on the stock of foreign assets. Official data shows foreign assets at market value where market prices are readily available. Otherwise, assets are recorded at their book value. In an article in the Central Bank’s most recent Monetary Bulletin 1 , an attempt is made to estimate the market value of inward and outward foreign direct investment using methods developed in other countries. This is done by estimating the likely market value of assets that do not have a readily available market price. The result of the calculation is that rather than being negative by 120% of GDP, the international investment position was negative by less than 30% of GDP at the end of quarter III of 2007. The large difference stems not the least from the fact that assets of Icelanders abroad are much larger than those of foreigners in Iceland. The lower figure is not necessarily correct. However, it shows that there is an overriding likelihood that the large negative net international investment position of Iceland is exaggerated in the official statistics which are compiled in accordance with IMF standards. The Icelandic economy is at crossroads. It is quite evident that the expansion of recent years is coming to an end. The forecast issued by the Central Bank on April 10 envisages a contraction of GDP in 2009 and 2010. The Ministry of Finance forecasts a milder and more short-lived contraction.
To be effective in curbing recession risk, that response should have as its objectives, first, speeding-up the process of reskilling by workers (“enabling”) and, second, cushioning the impact of new technologies on displaced companies and their workers (“insuring”). In the face of mounting concern about the societal impact of the rise of the robots, quite a lot has been written recently on the sorts of new insurance mechanism that might be required to smooth this transition. 56  Here, I will focus on two areas where new “enabling institutions” could ease the transition for workers and companies. Both draw on one of the greatest institutional inventions of the past millennium – universities. In 1852, John (later Cardinal) Newman published The Idea of a University, a book that has since assumed classic status as a statement of the principles by which universities should be run and organised. There are many themes to that text. From these, I would highlight two which have particular relevance to the debate about the future role of universities within our societies. First, Newman emphasised universities’ role in providing a liberal education for students, by which he meant access to a range of disciplines. Rigid specialism was to be avoided. The capacity to think was what mattered. Second, the role of the university was to propagate ideas, rather than necessarily generate them. The capacity to diffuse knowledge, rather than generate it, was what mattered. With a twist, both are st  relevant to the Idea of a University in the 21 century.

There are obviously many, but I will focus on four main categories, namely: global integration of financial markets; financial liberalization and increased competition; maintenance of asset quality; innovation and technological change. Global integration of financial markets 13. The trend of global integration of financial markets is clear. The increase in capital flows into the emerging markets has been one of the dominant features of the 1990s. During the period 1990-95, inflows into the Asian economies amounted to $ 360 billion4. The effect of this has been to bind individual economies even more tightly into the global market place. While this has brought major benefits to the recipient economies in terms of encouraging increased investment and development of capital markets, it has also left them more exposed to external shocks and loss of confidence. The macroeconomic instability caused by large-scale inflows and by their subsequent reversal will clearly have an adverse impact on the banking system. The risk of this is less if inflows take the form of more stable longer-term direct investment. To a significant extent, this has been the case for the Asian economies. But for some economies short-term inflows have been relatively large, and there are doubts about their sustainability. 14. Inflows of hot money also create more direct problems for the banks as well as affecting the macroeconomic environment. In particular, they will tend to add to the liquidity of the banking system and encourage expansion of lending.
At the start of the period economic growth was sustained in particular by investments in business sectors such as power-  BIS Review 27/2001  1  intensive industry and fisheries. This gradually changed in character and for a while growth was primarily borne up by private consumption and related expenditure. Last year capital formation increased more than had been expected, however, by an estimated 9% during the year. Private consumption rose somewhat more than real disposable income, and household debt increased by 14½% in real terms, and as a proportion of disposable income from 146% to 163%. The combined impact of all these factors was to put pressure on Iceland's credit system, not least the deposit money banks which have been lending immoderately. In the first half of 1999 the twelve-month rate of lending growth was 35%, although it has since slowed down. DMB lending increased by just over 26% last year, somewhat more than in 1999. Total lending by the credit system rose by 18.4%. The largest growth was in corporate lending, or 23%, while household lending growth was slightly less at 19%. In comparison with 1999, household lending growth increased but corporate lending growth slowed down somewhat. Excluding exchange rate and price indexation adjustments, the total annualised increase in lending by DMBs during the second half of 2000 was just under 14%, compared with 22% during the same period in 1999. Lending growth has clearly slowed down, although it is still too great to be compatible with long-term stability.

Birgir Ísleifur Gunnarsson: Update on Iceland’s economy Address by Birgir Ísleifur Gunnarsson, Chairman of the Board of Governors of the Central Bank of Iceland, at its Annual General Meeting, Reykjavík, 27 March 2001. *  *  *  On behalf of the Board of Governors of the Central Bank of Iceland I welcome you all to the Bank's 40th annual meeting. This year marks the Bank's fortieth anniversary after it was made completely separate from Landsbanki and transformed into an independent institution. The Bank's financial statements for the year 2000 have been ratified today by the Prime Minister. The Bank's annual report has also been published. As usual it includes a survey of the Bank's activities and performance, along with a detailed report on the Bank's monetary policy and actions, the financial system and financial markets, and the main features of economic developments in the course of last year. I shall now address several aspects of economic issues and the present prospects, in particular those most closely connected with the Central Bank's field of activities. Overheating of the economy Iceland has distinguished itself from most other industrialised countries in recent years by the strong economic growth it has enjoyed, or 4-5% per year. The closest comparison in this respect is with the USA, where growth is in fact on a downward path now.
The debate in Sweden is ahead of the international debate There is reason to believe that the experiences we have had in Sweden in recent years mean that we can make useful contributions to the international debate. For quite some time, we have had a discussion on the process of inflation and the conditions for inflation targeting, while this is a relatively new phenomenon in There is also a parallel debate on whether the inflation target should be replaced, for example, with a pricelevel target or a target for nominal GDP. However, I will not address this debate in this speech. 2 See Davies (2017). For the sake of simplicity, I will adopt Davies’ terminology hereafter and refer to the two opinions as the ‘Borio camp’ and the ‘Yellen camp’. Of course, this does not mean that all arguments can be linked to specific statements by Janet Yellen or Claudio Borio. For typical references, see Borio (2017), Borio et al. (2017) and Yellen (2017a, b). 1  2 [20]  most other countries. Almost exactly one year ago, I held a speech where I noted that the long period of below-target inflation had led to a debate in Sweden which had few equivalents abroad. Analysts and observers argued that this development, with inflation persistently below forecast and quite far below the inflation target, indicated that the target was so hard to reach that the Riksbank should abandon the attempt and instead conduct a less expansionary policy aimed at dampening rising household debt and housing prices.

In fact, this is a central axis in the conceptual framework modern monetary policy is based on, from the different notions of the Phillips curve to the Neo Keynesian models of general equilibrium that today sustain our forecasting and analysis. With this in mind, we have attached to our December Monetary Policy Report a special study on the functioning of the labor market. It is based on the analysis of new databases that allow us to understand some of the clues to how this market operates, that were beyond our reach in the recent past. The analysis of the labor market, even if done with the intention of drawing macroeconomic implications, must pay attention to its structure and to the way in which the individual decisions of millions of workers and employers—that differ from each other in more ways than one—determine how the aggregates behave. However, studying this diversity empirically is no easy task, and is often absent from the macroeconomic debate. Most labor market indicators that are regularly reported and discussed in the public scene, including wage indexes, unemployment rates or job creation, are not only highly aggregated, but also represent net movements. This implies that much relevant information, such as differences in the behavior of different groups or changes in the composition of the flows, is not present in the analysis or public debate.
The risk of excluding entire product groups is that prices in these groups may have changed in a more lasting manner. CPIF excluding energy is an often used index in Sweden. The columns in Figure 4 show how energy prices have contributed to CPIF inflation. The contribution from energy prices has at times been fairly large (just over a percentage point). But one can also see that it does not vary as much from month to month if it is expressed as an annual percentage change. A positive contribution in one month tends to be followed by a positive contribution the next month, too. 7 [19]  Figure 4. CPIF inflation and energy prices Annual percentage change. 4.0  105.1  3.5  104.9  3.0  104.7  2.5  104.5  2.0  104.3  1.5  104.1  1.0  103.8  0.5  103.6  0.0  103.4  -0.5  103.2  -1.0  103.0 06 07 08 09 10 11 12 13 14 15 16 17 18 19  CPIF / CPIF excluding energy (index = 100 year 2000), right Contributions to CPIF, oil-related products Contribution to CPIF, electricity Sources: Statistics Sweden and the Riksbank  The solid line in the figure is a different way of showing the same thing. The line shows the ratio between index figures for the CPIF and the CPIF excluding energy.

When energy prices rise faster than other prices, the numerator (CPIF) increases faster than the denominator (the CPIF excluding energy) and the ratio rises. Energy prices rose more slowly than other prices during the period 2012-2016. Since 2016, on the other hand, energy prices have risen faster than other prices in the CPIF. Which properties are desirable for measures of underlying inflation? Which properties are then desirable for measures of underlying inflation? Here are some of those most often discussed in academic literature: 15 The measure of underlying inflation should have the same average as the actual inflation rate. The average for the measure of the underlying inflation should agree with the average of the actual inflation rate. In other words, it is desirable that 15 See, for instance, Clark (2001) for a discussion of this. 8 [19]  measures of underlying inflation neither underestimate nor overestimate the long-term development of inflation, the measure should have the same average as inflation. Policy-makers should thus not be guided by an indicator that can be misleading and can lead to conducting a too tight or too expansionary monetary policy. If the average is the same as for the target variable, it makes communication easier. The measure of underlying inflation should covary with the trend in actual inflation and should have lower volatility. The underlying measure should covary with long-term movements in the target variable.
24  And, perhaps in keeping with changes in workers’ risk appetite, labour market indicators like the unemployment rate have signalled tightness for most of my time on the MPC without translating into pay pressure. 25  The MPC’s November Inflation Report forecast, which is the best collective judgement of the Committee, is that inflation will peak around 3% this year. In the later part of the forecast period, as the impact of externally generated inflation pressure wanes, domestic inflation pressures, particularly pay, rise so that inflation is slightly above the target at the 3 year forecast horizon. The forecast is based on the increase in Bank rate to 0.5% which the Committee agreed at its last meeting and on the market path for interest rates, which implies Bank rate rising to 1% over the next three years. At the November meeting I voted against increasing Bank rate. I did so not because I had a markedly different view to the majority of the right trade-off between output/inflation over the forecast period – or to put it another way, on the limits to tolerance of above-target inflation. In this respect, I share the overall framework of the Committee. Our framework, however, depends crucially on our estimation of the Phillips curve – both the slope and level.

Wage growth last year was the highest since 2011, with a further rise expected this year. The outcome of this year's wage settlement so far suggests that annual wage growth will be slightly higher than we projected in March. Higher wage growth means higher business costs and could lead to higher prices for domestically produced goods. The krone depreciation will generate higher costs for imported goods ahead. Chart 6: Further rate rise likely in June The Committee assesses that a higher policy rate is needed to dampen inflation. Since the publication of our March projections, overall economic activity has been broadly as expected. Excluding energy prices, consumer price inflation has also moved as projected. Higher wage growth and the krone depreciation will contribute to keeping inflation elevated ahead. If the krone remains weaker than projected or pressures in the economy persist, a higher policy rate than envisaged earlier may be needed. The future policy rate path will depend on economic developments, but we will most likely raise the policy rate again in June, at which time we will also present updated forecasts for the Norwegian economy. 2/2  BIS - Central bankers' speeches
By contrast, an environment in which the predictability of interest rate movements and their relation to key macroeconomic developments is well understood supports correct price formation in financial markets, contributes to the efficient allocation of funds, and reduces uncertainty concerning future interest rates. In such an environment, firms can improve their risk management and achieve better incentives to invest. How the ECB addresses its audience Let me turn to how the Governing Council of the ECB explains its monetary policy decisions to the public. Our communications aim to enhance the effectiveness of monetary policy. In this respect, the Governing Council fully subscribes to the basic principles of modern central bank communication described earlier. A high degree of transparency vis-à-vis our monetary policy has helped the public to hold the Governing Council accountable for its policy  2  See Kahnemann, D. (2003), “Maps of Bounded Rationality: Psychology for Behavioural Economics”, American Economic Review, Vol. 93(5), pp. 1449-1475, and Lohmann, S. (2003), “Why do institutions matter? An audience-cost theory of institutional commitment”, Governance, Vol. 16(1), pp. 95-110. 3  See Ehrmann, M. and M. Fratzscher (2007),”Social value of public information: testing the limits to transparency”, ECB Working Paper No. 821, and the literature quoted therein. 2  BIS Review 6/2008  decisions. Communication on monetary policy with a single voice is desirable and has been efficiently applied from the start of monetary union.

i) TeSA aims to identify specific ICT skills in demand and work with training providers to meet these demands. ii) For example, the US-based Byte Academy has recently set up in Singapore, and has come on board IMDA’s Tech Immersion and Placement Programme (TIPP). Byte will offer a series of intensive courses on FinTech and data science to ‘convert’ nonICT professionals to meet the software and programming needs of the industry. 18 I encourage all companies, both start-ups and incumbents, and individuals, to tap on these initiatives and invest in the skills of the future. 19 We cannot talk about expertise without talking about learning. And learning, unlearning and re-learning is what the game is about in the economy that we are creating together. 20 We need to learn more about the things we do not know, and to constantly update our knowledge in familiar areas. In every job, from the CEOs to the fresh entrant from school. 21 We never know where our learning journey will take us, but it usually takes us somewhere better. Take for example Vernon Heng, 32. After university, he worked overseas in a variety of fields, including construction, sales and marketing and supply chain. 3/4  BIS central bankers' speeches  When he decided to return home to Singapore and explore new career options, his brother, a user experience (UX) designer, encouraged him to consider the field. He enrolled in a UX course at General Assembly under IMDA’s TIP Programme, and found himself enjoying every step of the process.
10 But even with those constraints applied we have considerable headroom after the current programme is completed, reflecting a range of considerations. And many of those considerations are within our control - while those constraints are there for good, pragmatic reasons, they are not set in stone, and there would certainly be scope to re-evaluate them based on Bank advice if the MPC judged that even more monetary policy headroom was needed (Figure 8). Figure 8: There is plenty of QE headroom remaining Stylised map of the gilt market1  (1) The area of each block represents the market value of the gilts in that sector of the market. Taking as a given that the MPC has more headroom to buy more gilts, the question then becomes whether we have the scope to impact their pricing. This is a trickier calculation– it depends not just on the quantity of headroom, but on how effective any action might be, which is highly state contingent. But again my starting point is we have plenty of scope to affect prices. While yields on longer-dated gilts are at historically low levels, that doesn‘t mean they couldn’t still go lower. As the March episode illustrates, there may also be occasions when the absence of action – the counterfactual – would mean an increase in those yields. Of course the quantity of QE purchases is not the only policy variable available to the MPC. The pace of purchases, as illustrated by our March intervention, is another.

These challenges have been compounded by deeper forces that have radically altered the balance of saving and investment in the global economy.4 In the process, these have moved equilibrium interest rates into regions that monetary policy finds difficult to reach. Whether called “secular stagnation” or a “global liquidity trap”, the drag on jobs, wages and growth is real. Chart 1 Geopolitical risk doubled, on average, after 9/11  Source: Bank calculations and Caldara and Iacoviello (2016), ibid. Less visible, but more fundamental drivers of economic uncertainty are the powerful forces arising from technology and globalisation. The integration of 40% of humanity into the global economy has re-orientated production, eliminated jobs and may have depressed wages. These dynamics have been accompanied by the implications of technology for the  2  These are distinct from other types of uncertainty familiar to economists, including model uncertainty (uncertainty about the empirical properties of models as descriptions of the world), or to policymakers, such as the long and variable lags involved in the effects of monetary policy. 3  Economists have recently attempted its measurement by examining the frequency of newspaper articles containing terms like “geopolitical tensions”, “terrorist threats”, and “war risks” in a sample of global newspapers. See Caldara, D and Iacoviello, M (2016), “Measuring geopolitical risk”, Federal Reserve Board, mimeo. Political scientists have also constructed similar measures though, it seems, at lower frequency. For an application see for example Berkman, H., B. Jacobsen, and J.