samchain/econo-pairs-v1 huggingface dataset:
3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  Chart 3: Real GDP per capita more than doubled since 1960  Chart 4: Life expectancy at birth up around two decades since 1960  Index 1960 = 1  Years 75  3.0 GDP per capita (constant 2010 $  World life expectancy at birth, total (years) 70 2.5 65 2.0 60 1.5 55  50  1.0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: World Bank  1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: World Bank  Real income growth has been meagre, compounding unequal distribution. The cry for more inclusive growth starts with a crisis of growth itself. To put it mildly, the performance of the advanced economies over the past ten years has consistently disappointed (Chart 5). Chart 5: Global growth serially disappointing Actual GDP growth  2011  2012  2013  2014  2015  2016 Per cent 8.0  Dotted lines = Emerging economies Solid lines = Advanced economies 6.0  4.0  2.0  0.0 2010  2011  2012  2013  2014  2015  2016  Source: IMF World Economic Outlook. Each line shows how forecasts for a particular calendar year have evolved over time. The diamond shows the eventual outturn.

And last, but by no means least, this luncheon and our presence here today reflect the progress of globalization. I am glad to say it is a progress that we have made together. Ladies and Gentlemen, It is also undeniable that Thailand has shown a strong commitment to global economic integration. Thailand’s economy and openness have grown together hand-in-hand. But openness brings forth not only benefits; it also invites challenges. As such, we must embrace globalization with our eyes open for potential risks and pitfalls. Although globalization has brought considerable gains over the last decades, the path traveled has not always been smooth. In fact, it has been strewn with risks, some predictable and some not. Nearly ten years ago, Thailand was in the midst of a financial crisis that had been caused by a number of factors. The most telling one was the premature liberalization of the financial sector. That round of financial liberalization encouraged significant capital inflows and massive over-investment, creating financial vulnerabilities which eventually led to abrupt reversal of flows in the period that followed. I am sure many of you can recall the event vividly. And further back in time, nearly twenty years ago, Thailand was embroiled in a global oil crisis that thrust the world economy into a period of recession and high inflation. During both episodes, the prognosis for globalization seemed grim. Nevertheless, Thailand emerged from these crises with a renewed commitment to global economic integration and internal reform. The situation today is nowhere near as grim.
This is a statistical method that extracts the common component from a large amount of data. Figure 6 shows the results of one such analysis, where around thirty labour market and business tendency indicators have been used to extract a common component for resource utilisation. To be comparable to the traditional, trend-related measures of resource utilisation the indicator has been normalised so that its standard deviation coincides with that of the GDP gap. The figure illustrates two important conditions. Firstly, the aggregate measure of resource utilisation follows the GDP gap very well. Secondly, the labour market gap lags a few quarters behind both the resource utilisation indicator and the GDP gaps. One disadvantage of this measure is that it is not suitable for forecasts of resource utilisation short of making forecasts of all of the indicators included. As the measure coincides so well with the GDP gap, I believe that it provides some support for the argument that GDP forecasts are a good indicator of how resource utilisation will develop in the future, however with some reservations, and I will return to these later. Which measure of resource utilisation is best? My conclusions are firstly, that the various measures of resource utilisation provide a similar picture of the economic cycles. However, the more precise picture varies quite substantially between the measures. Each individual measure offers some extra piece of information in addition to what is contained in the other measures.

This involves households making plans for the future and building up expectations of future economic developments, and also there being no systematic errors in these expectations. It is not unlikely that households’ rationalism is in some cases overestimated in the formal models. If this is the case, the conclusions regarding the effects of, for instance, repo rate rises that are calculated using these models may be incorrect. One such example would be if households did not include in their calculations the fact that interest rates rise when economic activity strengthens and that indebtedness and house prices therefore were being pushed beyond sustainable levels. Something that can give rise to special problems in the forecast context is that changes in indebtedness and property prices have a tendency to reinforce one another over the economic cycle. Low interest rates make it cheaper to finance house purchases, which means that house prices rise. As the value of the collateral for households’ loans mainly consists of houses or tenant-owned apartments, the price increase in itself contributes to making it possible to borrow more money. Sooner or later, interest rates will rise and the question is what happens then. If indebtedness and house price trends during the upturn phase have been based on over-optimism and unrealistic expectations among lenders and borrowers, house prices may fall sharply and households may experience difficulty in meeting their interest payments. Demand in the economy can then fall substantially.
Chart 19: Gender pay gap Oaxaca-Blinder decomposition time series  Per cent Unaccounted for  Accounted for  Gender pay gap  35 30 25 20 15 10 5 0  1997  1999  2001  2003  2005  2007  2009  2011  2013  2015  2017  2019  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive gender pay gap in this chart indicates that women earn less than men. Looked at regionally, although the unconditional gender pay gap is relatively stable over the sample in London, once we allow for compositional effects the picture is more promising. The unexplained (“pay bias”) component of pay has fallen over time in London, reaching 5.5% by the end of the sample. Outside London, the gender pay gap has also been on a downward trend, driven by both explained and unexplained factors. Next we implement the same methodology for the ethnicity pay gaps.10 Chart 20 shows the Oaxaca-Blinder decomposition of the ethnicity pay gap over the full sample. The conditional ethnicity pay gap averages a relatively modest 5% over the sample, smaller than for gender. This is no longer the case once we account for compositional effects. These point to higher, rather than lower pay, for ethnic minorities. Specifically,  10  The share of the ethnic minority population has been increasing over time in our sample from approximately 4% in 1994 to 10% in 2019.

We are setting out a roadmap for mandatory climate-related financial disclosures for all our financial institutions. Next year, we will conduct stress tests for the financial industry under a range of climate scenarios. We are supporting capacity-building among central banks and supervisors in addressing environmental risks, such as through the COP26 Climate Training Alliance initiative. A successful transition to net zero will require collective efforts across governments, businesses, and industry leaders globally. We must act now, and we must act together, to secure a cleaner and greener future. 1 Link  to “NGFS Glasgow Declaration Action”: www.ngfs.net/sites/default/files/ngfsglasgowdeclaration.pdf  2/2  Committed  to  BIS central bankers' speeches
Household wealth and debt Per cent of disposable income 350  350 Financial wealth (excluding tenant-owned apartments and collective insurance schemes) Real wealth  300  300  Debt  250  250  200  200  150  150  100  100  50  50 70  80  90  00  10  Note. The broken line is the Riksbank’s latest forecast (from the Monetary Policy Report, February 2013). Sources: Statistics Sweden and the Riksbank. 10  BIS central bankers’ speeches  Developments on the Swedish housing market thus appear to be much calmer now than before the financial crisis. However, it is of course important to constantly analyse whether developments can pose risks to financial or macroeconomic stability. The development of household indebtedness could lead to problems if housing prices began to fall for some reason or if unemployment began to increase sharply in connection with a downturn. In order to assess to what extent this constitutes a risk we need to analyse the risk of a fall in housing prices and the extent to which the level of debt makes the households vulnerable. In the case of the latter, it is important to determine what assets the households have in addition to their housing. The relatively high level of private saving in Sweden is an advantage here as it has led to a situation in which the households have relatively substantial financial assets (see Figure 9).

In the latest issue of its report “Wage Formation in Sweden”, the National Institute of Economic Research assesses this rate to be around 7 per cent at present, but that it will fall to around 6 per cent in the years immediately ahead (see Wage Formation in Sweden 2012, National Institute of Economic Research). According to a calculation by Lars Svensson of how the deviation between the actual inflation rate and the inflation target affects unemployment, the mid-point of the Riksbank’s estimated interval is at 5.5 per cent (see “Correction of the Riksbank’s estimate of the long-run sustainable unemployment rate”, Appendix 2, minutes of the monetary policy meeting, July 2012). BIS central bankers’ speeches  9  have levelled out. This differs from the situation in Norway where prices continue to increase, and in Denmark, where there has been a significant fall in prices. Figure 8. Real house prices Index, 1995=100 300  300 Norway Finland  270  270  Denmark Sweden  240  240  210  210  180  180  150  150  120  120  90  90 95  97  99  01  03  05  07  09  11  Sources: Statistics Sweden and national sources. Figure 9.
None of us should be slaves to models. We will challenge robustly, and some of our challenges will be less welcome than others, that is the nature of what we do. As Mark Carney said recently, this rigour has a purpose. The dangers of using poorly designed models were made all too clear in the banking sector. So the PRA won’t hesitate to withhold approval of an inadequate or opaque model. But, I want to give a commitment from the PRA, my door will always be open to discuss the challenges, and the same goes for my colleagues. My third area might at first hearing sound rather odd as it is conduct risk or, sadly, misconduct risk. No, I am not making a bid for the FCA – I like Twin Peaks thank you; and the PRA and the FCA work together, and Martin and I put great emphasis on that happening. But as I said earlier we are in many ways in the second phase of the financial crisis, and this phase has at its root conduct of business, towards customers, in financial markets, and in areas of public policy such as financial sanctions and anti-money laundering. At its most serious, this confluence of conduct risk can threaten the safety and soundness of firms. Let me be clear, as a prudential supervisor I do not condone misconduct, and I support Martin and the FCA in what they are doing.

While that could be useful in the longer run, I don’t think that is essential to make this resolution tool work. Moreover, operating on the capital structure of a holding company can cut through some of the complexity, since topco debt is structurally subordinated to the debt and other obligations of the bank operating companies it owns. A final thought before moving on to a possible resolution strategy for a different type of SIFI. What I have been describing is not a matter of designing new instruments with terms that automatically trigger a pre-determined write down or conversion into equity, which would essentially be a putative form of “Tier 3” capital. Today’s topic is rather the toolkit the authorities need, in a statutory resolution regime, to maintain order when all such instruments have converted, all other options are exhausted and liquidation beckons. But whether via contractual terms or under resolution, debt can add to a bank’s loss absorbing capacity. The resolution of deposit-funded international commercial banking groups We should not assume a monolithic approach to resolution. It is not a case of one size fits all. What I have described could work for banking groups that issue plenty of debt. It would not work so easily for groups operating commercial banks around the world that are funded pretty well entirely from insured deposits. If they haven’t issued bonds, then there would be no bond holders to bail in.
The digital economy has delivered huge gains in leisure time, for example, by simplifying certain administrative tasks, and led to the development of free services, without any of these benefits appearing in conventional measures of output. It has also prompted the rise of the informal economy (C to C services), which is particularly tricky to recognise in the accounts. Our conference today will provide an opportunity to look specifically at the case of France, thanks to a presentation by INSEE. 1. Are we witnessing a permanent slowdown in the contribution of technical progress to productivity growth? Assuming that there has been a slowdown in productivity, the second hypothesis is that it stems from a slowdown in innovation and in its contribution to productivity. The great wave of productivity growth during Les Trente Glorieuses in France was fuelled by advances in a large number of domains: technical progress with electricity, the combustion engine, chemicals and telecommunications, but also the emergence of new methods of labour organisation and new 1/3  BIS central bankers' speeches  management practices. Today, what potential contribution can information and communication technologies (ICTs) make to growth? The first ICT wave has been limited in duration and in scale, and has only been felt to a small extent in many countries, including France. This has prompted some economists, such as Robert Gordon, to doubt that technology can make a significant contribution in the future.

Or might there be reasons for Sweden and other countries to specially design our own solutions, over and above those imposed by international regulations? Lending and house prices in Sweden relatively unaffected by the crisis One area where Sweden stands out in comparison with many other countries, is the development of house prices and household indebtedness. As I noted earlier, house prices  1  See, for instance, the report “An assessment of the long-term economic impact of stronger capital and liquidity requirements” by the Basel Committee and the Financial Stability Board (http://www.bis.org/publ/bcbs173.htm). BIS central bankers’ speeches  1  in many countries have fallen heavily after being pushed up in a credit-driven boom over a number of years. In Sweden, too, house prices and lending to households have risen substantially. But here we have not experienced any corresponding fall in housing prices in connection with the crisis; we can just distinguish a minor dent in the curve (Figure 1). Lending to households has also continued to increase rapidly. It has been profitable for the banks to fund the increase in Swedish mortgage borrowing in the international capital markets. Funding in foreign currency has shown an increase trend (Figure 2). This has meant that Swedish households have been able to obtain mortgages at a lower cost and probably to a greater extent than would otherwise have been the case. But this method of funding is not entirely without risk.
As my appearance is part of the parliamentary discussion of the Budget, I shall be analysing the Spanish fiscal policy situation. Allow me, however, to refer also to other policies I consider essential to resume the path of budgetary stability and to emerge from this crisis in the best possible condition. First, though, I would like to briefly assess the international setting and the economic outlook for the euro area which, as is well known, determines monetary policy. Projections from various international institutions (such as the IMF and, more recently, the European Commission and the OECD) suggest we will resume positive growth rates in most countries in 2010 and 2011. But they constantly stress that these estimates are shrouded in greater-than-usual uncertainty, since the take-off of productive activity needs a sound financial basis, which in turn requires that the normal functioning of intermediaries and financial markets be fully restored. In these circumstances, one of the main difficulties governments and central banks face is to identify the right time to disengage the extraordinary measures adopted in the financial, fiscal and monetary fields. A premature withdrawal might undermine the progress made, while maintaining an expansionary policy over an excessive period might give rise to further imbalances that are difficult to reverse and have negative consequences for growth. For the time being, what is needed is to move forward in the design of stimulus-withdrawal strategies, so these may be applied when the right time comes.

On the regulatory side, thc adoption of a risk-focused supervisory framework entails a shift away from a rigid, rules based approach to regulation and towards more “incentive compatible” prudential standards. By “incentive compatible”, I am referring to broad, principles based standards that encourage banks to develop and continuously update their internal risk management systems to ensure that it is commcnsurate with the scope and complexity of its operations. While the benefits are obvious, there are also some consequences for the supervisory side of our business that may not be readily transparent. First, an emphasis an broad prudential standards - while useful rot fostering sound risk management practices - will inevitably create significant challenges for front-line supervisors. This is because they will need to rely much more on sound professional judgment and critical analysis, and less on rules-based compliance criteria, in order to make proper risk assessments. This in turn, will require supervisory staff members to have a fundamental grasp of risk-based supervisory concepts and how it is applied in the field. The challenge for every emerging market supervisory authority is to equip our front line supervisors with the requisite knowledge, skills, and abilities, in order to help make their transition to a risk-based framework as smooth as possible. At the Bank of Thailand, we have placed greater reliance an this risk-based philosophy during the past several years.
Government expenditure as a percentage of GDP, although now at a historical high, is only about 20%. Yet the Government is involved in supporting the free market in a number of limited but key areas. First, it provides infrastructure and facilitation to enable markets to thrive and progress: these range from highly visible projects, such as the new airport and its associated facilities, to the HKMA’s own quiet successes over the last few years in developing an advanced and robust interbank payment and settlement system or in stimulating the development of a local debt market. The Hong Kong method is for such projects to be done, where possible, as partnerships between government and private sector, with a heavy emphasis on private sector involvement. Nevertheless, the role of government is essential in getting them off the ground and in mobilising resources that cannot always be easily provided by the private sector. 18. Secondly, the Government provides regulation and protection. This ranges from the highly visible, and currently much debated, rule of law, which is the ultimate guarantee of contracts between individuals, to the day-to-day regulation of the markets themselves. Much of the activity in this area is also left to the private sector: only a small proportion of contracts are ever disputed in the public courts, and a large part of the regulation of the markets and the professions is self-regulation. Once again, however, government involvement is of key importance.

The crucial part of the monetary base influencing this rise and fall is the aggregate balance that banks maintain in  3  BIS Review 35/1999  their clearing accounts held with the currency board: it is extremely small, and, at the time, made the monetary system susceptible to speculative attack. 12. In their attempts to destabilise the Hong Kong dollar in late 1997 and early 1998, speculators found that, although breaking the link was impossible, driving up interest rates by putting pressure on the Hong Kong dollar was not so difficult a matter. Late in the summer of 1998 they developed their strategy into a pre-concerted, heavily leveraged cross-market assault, which sought to play off the currency board system against the stock and futures markets: according to this strategy, extreme conditions created by a large-scale dumping of Hong Kong dollars would cause the stock market to plummet to a level that would allow them to make large profits from the futures contracts they had taken out. 13. We prevented them from reaping these profits – and in fact caused many of them to incur a loss – by investing a small part of Hong Kong’s official reserves in Hang Seng Index constituent stocks and futures contracts in sufficient quantities to ensure that the strategy failed. We followed this up with technical changes to the currency board system to make it less susceptible to manipulation.