samchain/econo-pairs-v1 huggingface dataset:
“Perspektiver på pengepolitikken (Perspectives on monetary policy)", Norges Bank. •  Storvik, K. (1998) ”Aktuelle økonomiske og pengepolitiske problemstillinger (Current economic and monetary policy issues)”, address at the 43rd Annual General Meeting of FOREX Norway on 28 August 1998. 10  BIS Review 111/2008

This solvency level implies higher voluntary capital buffers than key regulatory requirements, albeit lower than those in other major European countries. The current macro-financial environment will heighten the financial vulnerability of households, firms and the public sector Clearly, the combination of inflationary pressures, tightening financial conditions and higher uncertainty will weigh on households’ consumption decisions and their residential investment. In the case of firms, these adverse factors may also reduce their productive investment and hiring expectations. In short, activity will face additional downward pressures. And these factors are also having significant effects on public sector financing, which I will turn to now. Again, it is important to underscore the private sector’s relatively benign financial position before the pandemic, thanks to households' and firms' considerable debt reduction since the global financial crisis. In fact, in March 2020 their debt as a proportion of GDP stood at 150.4%, slightly below the European average and down by 76 pp on the peak of June 2010. The outbreak of the pandemic and the measures adopted to mitigate its effects, such as the moratoria on financial obligations and the public loan guarantee scheme, underpinned and galvanised credit in 2020, putting that debt at 157.8% of GDP. However, the overall cumulative growth in the stock of loans has been moderate, with bank lending to the resident private sector in Spain increasing by 4.2% since 2019.
With regard to “internal” equity, that is self-financing, the outlook is improving. For SMEs in particular, self-financing is crucial as it is still the method of choice for financing investment, even when companies have access to debt. The decline in French corporate profit margins since 2008 is a source of concern in this respect. However, the issue has been clearly identified and steps have been taken to tackle it, with the Tax Credit for Competitiveness and Employment or CICE, and the Responsibility and Solidarity Pact. These reforms are expected to boost the average corporate profit share from 29.5% in 2014 to over 32% in 2017. In terms of “external” equity, of course, here at Euronext you’re at the heart of the action. As the leading pan-European stock exchange, you have a central role to play in enabling firms to access capital market financing, in the form of debt, of course, but above all in the form of equity. In this respect, I’d like to acknowledge Euronext’s efforts – under the supervision of the AMF with which the Banque de France has an excellent working relationship – to draw investors back to the bourse, and to encourage firms of all sizes and all sectors to tap capital markets. In the first three quarters of 2015, Euronext helped 38 companies carry out an initial public offering, raising a total of EUR 82.9 billion of equity and debt capital in both primary and secondary markets.

But it is a vital part of that transformation, and I am pleased that this conference is giving it the consideration it deserves. Thank you for your attention. 1  4  P. Asdrubali, B. E. Sorensen and O. Yosha, “Channels of interstate risk sharing: United States 1963–1990”, Quarterly Journal of Economics, vol. 111, 1996, Oxford University Press. BIS central bankers’ speeches
In other words, expanding fiscal and monetary policy will be no panacea to Europe’s growth challenge. Longer-term fiscal consolidation is imperative in light of a rapidly aging European population. On the monetary side, there is no indication that policy is too restrictive in light of real interest rates at or near zero for the Eurozone. Indeed, based on a standard Taylor rule framework, the ECB’s monetary policy stance is equally or in the recent past even more expansionary than that of the Federal Reserve. At any rate, neither fiscal nor monetary policy can ultimately address structural impediments to higher growth dynamics in the Euro area. In an effort to augment the EU’s growth potential, the focus must therefore be on breaking down labour market rigidities for additional labour input on the one hand and on accompanying policy measures to increase productivity on the other hand. Despite the subdued nature of the current growth outlook which is adversely affected by a strong Euro and rising oil prices, there are some promising signs that structural change is under way. Both the gradual dismantling of the 35 hour week in France and the shift to part-time and temporary employment in Germany are boosting labour input. In line with this positive albeit hesitant trend of bringing more workers back into the economy, productivity growth rates have begun to recede in Europe. The primary challenge for the European economy is to compensate this natural initial decline in productivity as a result of higher labour input.

In the United States, the largest productivity gains were not realized in the high-tech sector or from the IT investments itself but from the widespread use of information and communication technologies in traditional sectors like wholesale trade, financial intermediation and construction. The new technologies led to a complete reorganization of the value chain thereby enhancing total factor productivity, albeit with a lag. One cannot entirely exclude that this leverage effect will simply occur with a lag in Europe. After all, productivity growth is one of the least well understood phenomena in economics. While I do not want to exclude a productivity lag effect in favour of Europe, I suspect the story is a more complicated and a more challenging one. Structural conditions must be in place in Europe to allow maximum flexibility so that the full potential of the new technologies can be unleashed throughout the real economy. Conclusions The question of why the EU recovery is so slow implies a cyclical answer. The European track record of the last ten years, however, strongly suggests that there is a crucial structural dimension to the problem of weak European growth. The real challenge for the EU is to boost productivity growth and augment its potential growth rate. In the words of Mervyn King: “Raising productivity growth is the key to improving the prosperity of future generations.”4 It is therefore not particularly meaningful to analyze the growth weakness in Europe in purely cyclical terms.
Established beliefs in efficient markets, asset price dynamics, and more, have all been called into question. Amid the flux in the global financial and economic landscape, Singapore also has its own challenges. Resource constraints mean that we have to restructure the economy to depend less on the labour force and more on productivity increases for growth. During this period of transition, important adjustments in domestic resource costs and consumer prices are taking place, alongside the usual cyclical developments confronting the economy. Dealing with the confluence of factors affecting domestic prices has been particularly challenging, for us at the central bank and equally so for consumers and businesses. CPI-All Items inflation, for instance, has been elevated coming out of the recent financial crisis, averaging 4.1% since 2010, much higher than the historical norm of below 2%. MAS Core Inflation, which excludes changes in accommodation and private road transport costs, averaged a lower 2.0% over the same period. Consumer price pressures have picked up more recently. CPI-All Items Inflation reached almost 5% in Q1 this year and households may face higher price increases for specific expenditure items. MAS is monitoring these and other cost indicators closely. Allow me to take this opportunity to highlight some conceptual issues concerning price adjustments in the  1  Phillips, P, Shi, S and Jun, Y (2011), “Testing for Multiple Bubbles”, Working Paper No. 03–2011, Singapore Management University. BIS central bankers’ speeches  1  economy and their implications for monetary policy.

And, finally, in developing early warning indicators for different types of inflationary pressures, and assessing the efficacy of various macroprudential instruments. Partnerships with academia can also play a key role in public insights and understanding of structural issues, challenges and the policy trade-offs. In this regard, I encourage SKBI to be at the forefront of applied financial and economic research that can help shape policy thinking. An American opera soprano and actress turned self-help guru, Dorothy Sarnoff, once said: “Make sure you finished speaking before your audience finished listening”. This morning, I am sure many of you are looking forward to the keynote address by Sir James Mirrlees as much as I am. So allow me now to end my opening address here. Thank you for your kind attention. 4  BIS central bankers’ speeches
Excessive reliance on consumption or non-tradable sectors, such as housing, all financed by borrowing abroad at an overvalued exchange rate would prove only temporarily satisfying. The UK’s current account deficit is at a record level. The perennial trade deficit has been reinforced by the fact that the UK is growing much faster than its main trading partners. More  3  In May 2013, the MPC projected annual growth of 1.7% for 2014Q1, only half of the rate at which it now estimates the economy to have grown over that period. Meanwhile the 2014Q1 outturn for unemployment, at 6.8%, was some 0.8ppt below the MPC’s May 2013 central projection. Despite these upward surprises to activity, annual earnings growth in 2014Q1 was 0.5ppt weaker than expected in May last year. That contributed to annual unit wage costs growth around 1ppt below the MPC’s May 2013 central projection. 4  Private non-financial sector debt is 163% of GDP. Around two thirds of bank loans to individuals and more than half of loans to businesses are at variable interest rates. BIS central bankers’ speeches  3  recently the sharp fall in the returns we earn on our investments abroad has led to a negative 3% swing in our net investment income. This is not an immediate cause for alarm. As the world and particularly Europe recovers, demand for our products and returns on our investments should increase.

With economies and markets always moving between equilibria, it is the journey that matters. By working together we can make that journey as pleasant and as prosperous as possible. The need to work together extends beyond policymakers to all in the City. So I am delighted to take up co-presidency of Heart of the City with you, Lord Mayor. This umbrella group for City charities, co-founded by Eddie George fourteen years ago, is a great example of how cooperation and social responsibility can be at the heart of business, building the social capital necessary for vibrant and inclusive capitalism. Fiona, you are to be commended for the energy and enthusiasm you have brought to your role – as well as the excellent hospitality you have provided tonight. So let me invite everyone here to rise and join me in a toast of good health and prosperity to “The Lord Mayor and the Lord Mayor’s Consort”, Fiona and Nicholas Woolf. References Del’Ariccia, G, Igan, D, Laeven, L, and Tong, H (2012), “Policies for macrofinancial stability: how to deal with credit booms”, IMF Staff Discussion Note 12/06, June. IMF (2014), World Economic Outlook, April. Lim, C, Columba, F, Costa, A, Kongsamut, P, Otani, A, Saiyid, M, Wezel, T and Wu, X (2011), “Macroprudential policy: what instruments and how to use them?” IMF Working Paper No. 11/238, October. 8  BIS central bankers’ speeches
Such doubts can ultimately lead to an expectation of higher inflation and therefore complicate monetary policy. Seen from the perspective of regulatory policy, demands for the SNB to directly finance government tasks are therefore to be clearly rejected. The SNB’s monetary policy must not be driven by profit or loss. These are just by-products of our monetary policy. Our mandate is to conduct a monetary policy that ensures price stability in the medium and long term while taking due account of economic developments. Price stability is the most important contribution the SNB can make to our country. The SNB will therefore continue to advocate a framework for monetary policy based on the principles of regulatory policy. Page 4/5  The challenge of ensuring price stability Ladies and gentlemen, the current global situation highlights the importance of central banks’ focus on price stability. The monetary policy environment has changed considerably due to the pandemic and the war in Ukraine. After years of expansionary monetary policy aimed at preventing inflation from falling too low, the central banks of many countries are today faced with the challenge of fighting inflation that is too high. I will therefore close by saying a few words about the SNB’s current monetary policy. Inflation in Switzerland is lower than abroad. However, in this country, too, it has still increased much more than was generally expected. At 3.5%, it is at its highest level since the 1990s.

The current profit distribution approach is therefore not – as has often been criticised – overly cautious. The loss in the first half of the year underlines that a larger balance sheet is accompanied by larger fluctuations in absolute terms in the annual result, and that substantial profits can be followed by substantial losses. This clearly demonstrates why the government must not make its financing dependent on SNB profits. Which brings me to the problems associated with the SNB directly financing government tasks. The direct financing of government tasks by the SNB creates a situation whereby the fulfilment of these tasks becomes directly dependent on monetary policy. This is because our monetary policy may influence our annual result, and thus also the distribution. For example, tightening our monetary policy can lead to an appreciation of the Swiss franc, which lowers the return on our foreign currency investments after conversion into Swiss francs. Thus by directly linking certain government tasks to the SNB’s distributions, monetary policy decisions take on a political dimension. Political pressure on the conduct of monetary policy will inevitably increase, thereby endangering the SNB’s independence. Furthermore, the direct financing of government tasks blurs the clear focus of monetary policy on price stability. The direct link between government tasks and the SNB’s earnings can lead to unnecessary conflicts of interest in monetary policy decisions. This in turn can give rise to doubts as to whether the SNB is prepared at all times to take the measures necessary to ensure price stability.
But it’s unlikely the effect would endure for a very long time: the only lasting impact would be on inflation. And, in the real world, that’s not what’s happened – inflation has remained broadly close to target even as real interest rates, long as well as short, have trended downwards. This bears out, for me, that the real task for policy is to understand – and then adapt to – economic forces affecting the natural, or equilibrium rate of interest.13 For a variety of reasons, and over a long period of time, this underlying rate has been driven remorselessly downwards. An official interest rate that might once have been considered inflationary is now contractionary; failing to adapt to these changes sufficiently quickly would have depressed output and pushed inflation below target. And sharp falls in the equilibrium interest rates – which have probably not yet fully unwound – can be thought of as a significant driver of the substantial cuts in interest rates undertaken by the MPC in 2008 and 2009. As I say, those forces seem to have been at work for a long time, before as well as since the financial crisis. Over that time they have had differing effects on the performance of risky assets. During the 1990s all asset classes did well – bonds and equities alike. At least in terms of wealth, that will have benefited anyone who happened already to own long-dated assets, mostly older people. But over the last 15 years, equities have done poorly.

From that point on, expected returns on all assets would be lower. Higher saving was often touted as the possible reason for lower interest rates ahead of the crisis. At the time the argument was first made, during the early part of the last decade, the suggested “glut” in saving was often associated with the fast-growing East Asian countries. Some economists, notably Thomas Piketty, have suggested that, because the rich generally save more, widening income inequality may have contributed to the trend. Others have pointed out the importance of demographic factors. Whatever the underlying cause, the important point is that higher desired saving would tend to have a similar impact on the price of all long-dated assets, whatever their risk. That’s why it looks like a good candidate for the co-movement between equities and bonds evident in the early (pre-2001) part of Chart 2. The other determinants of asset prices – the level of, and uncertainty about, future economic growth – tend to have differing effects on the two asset classes. Lower expected growth will reduce investment demand and, by shifting that schedule to the left (Chart 3), will tend to reduce the equilibrium risk-free interest rate. Future profits will be discounted more generously, as before, but now the profits themselves will be lower. So despite a lower interest rate, and a rise in bond prices, equity prices fall on impact (Chart 6(b), which  5  Friedman and Schwartz (1963).
To illustrate why some authors have gone as far as calling this “the credit rating crisis” (Benmelech and Dlugosz, 2009) consider that before the crisis more than half of the structured finance securities rated by Moody’s carried an AAA rating and, during the period 2007-2008, the tranches rated by Moody’s that were downgraded was close to thirty six thousand, where nearly one third of downgraded tranches bore the AAA rating. This is a complex issue, especially due to the prevailing incentives in this sector. A recurrent area of criticism on the incentives side is the simultaneous role of advisor and issuers of ratings. But the spectrum of potential conflict areas could be broader, and thus more efforts must be devoted to understanding in detail the operation and linkages of this industry. Final comments The subprime crisis has opened a debate on the risks of financial innovation. It reminds us that higher levels of sophistication do not guarantee the normal operation of the financial system. A reasonable level of regulation, control and monitoring is required. I think we should move forward in innovation processes, as they are positive, but we must move forward with caution. It is important to implement policy changes gradually to provide an adequate level of information and transparency that will ensure an adequate assessment of the risks involved. It is also crucial to review in detail the incentives and potential conflicts of interest arising from the new tools and processes.

Fiscal adjustment The Spanish economy has made visible progress in the redressing of fiscal balances towards levels that are compatible with the sustainability of public finances. The adjustment has required strong measures both on the revenue and the expenditure sides. From near double digit deficits in the early years of the current decade, the deficit was reduced to 5.9% of GDP in 2014. The commitments with the European authorities involve a further reduction of fiscal imbalances in 2015 and 2016. In this respect, public deficit targets are set to 4.2% and 2.8% for 2015 and 2016, respectively. Despite the additional efforts shown in the most recent budgetary information (up to November 2015), the fulfilment of these targets is not without risks. To tackle these risks it will be important to ensure a strict implementation of the budget, both at the national and the regional levels and, if the need arises, to be ready to take the appropriate corrective measures within the framework of European Union fiscal governance. But the challenges should not cloud the fiscal consolidation effort already made. This can be easily seen in the structural primary balance’s evolution, which turned around from a deficit of 5.2% of GDP in 2010 to an estimated surplus of 0.6% of GDP for 2015, according to the latest European Commission figures. It is worth remembering that the bulk of this adjustment was made through a severe economic recession and under very stressed conditions in a fragmented Eurozone financial market.
The increase in doubtful assets and defaults in US mortgages has set in motion a global process of upward revision of credit risk premiums, which in the climate of economic boom of recent years had sunk to very low, barely discriminatory levels, prompting what was probably excessive investment in potentially high-risk activities. These investments were further driven by the proliferation of new financial intermediaries specialised in the credit risk transfer markets to which I referred earlier. In particular, in the current bout of turbulence a major role has been played by institutions that raise funds by issuing very short-term fixed-income securities and use the proceeds to acquire structured products linked to long-term loans, including US sub-prime mortgages. The liquidity risks associated with such practices have been clearly under-estimated by these specialised institutions. And the consequences have been felt in the money markets because some credit institutions agreed to provide liquidity to these specialised institutions if, upon maturity, the latter did not manage to roll over the funds raised via the issuance of securities. This led to a serious liquidity crisis in the money markets of a good number of industrialised economies, including the euro area. Central banks, and the ECB in particular, reacted rapidly and implemented emergency processes to inject the amounts of liquidity demanded by the market. This prevented the lack of liquidity from compounding the crisis and sent a message of calm and reassurance to the markets.

Passporting rights have been well availed of in this sector, too, and the total number of Notifications for European Insurance Undertakings to carry on business in Malta under the Freedom to Provide Services directive now stands at 204. The other reflection I would like to share with you is inspired by an interview given recently by the CEO of Mediterranean Bank to a local economic magazine, in which Malta was referred to as ‘a secure EU jurisdiction’. In this same context it was stated that ‘Malta’s stability is an important part of its appeal as a banking location’. While such accolades are indeed welcome, they do not come entirely as a surprise. For when Malta’s financial legislation was overhauled in 1994, and when EU legislation was later transposed in anticipation of EU membership, an intended by-product was indeed the incorporation of the highest international standards and best practices into Maltese financial laws and regulations. This was accompanied by a strengthening of the institutional framework for the regulation and oversight of the financial system. In 2002 the Malta Financial Services Authority (MFSA) became the single regulator for financial services when it took over the responsibility for the banking sector from  BIS Review 92/2006  1  the Central Bank of Malta (CBM). The Bank then assumed responsibility for ensuring the stability of the entire financial system. A year later Malta volunteered to undergo a Financial Sector Assessment Programme (FSAP) by the IMF and the World Bank.