samchain/econo-pairs-v1 huggingface dataset:
But there is also a risk that one may thus give too little weight to the possibility that things could actually go better than we believe and thus we may receive a surprise from a different direction. I have worked with forecasting for many years, and there are two things in particular that I have noted, and for which I also believe there is scientific evidence: that it is difficult to predict turning points in the economy, and, once they have happened, it is easy to underestimate the strength of the development that follows. This applies to both downturns and upturns. There is perhaps no reason today to assume that a rapid recovery will be the  6  BIS Review 73/2009  most likely alternative. But it is definitely something that it is worth being prepared for in the slightly longer perspective. A central bank must have good long-term planning. Even if we are busy trying to alleviate the effects of a collapse in economic activity we must ensure that we bear in mind the mediumterm perspective. This may seem self-evident, but I believe it may be important to point it out. Not merely emphasising the short-term perspective is important for maintaining confidence in the inflation target in the long term. There must be a preparedness to act in a situation which could differ from the expected by being both better and worse.

Now the Swedish financial markets were also hard hit and some sub-markets were practically at a standstill. The earlier expectations that the decline in economic activity would be fairly mild were replaced by a much more negative view of future developments, both in Sweden and abroad. The Lehman Brothers crisis was also the prelude to a series of measures to stabilise the Swedish financial markets. At the same time the Riksbank took several rapid and resolute steps down the interest ladder to alleviate the effects of the crisis on economic activity. Still sensitive but liquidity risk has declined The first phase of the crisis can be described as a liquidity and confidence crisis. No one trusted anyone else and very few were willing to lend money and take risks. The price of loans between the banks, interbank rates, also rose sharply. Since the crisis started the central banks have lent large amounts to the banks. For example, the Riksbank has offered loans in Swedish kronor at longer maturities than normal to facilitate the supply of liquidity to the Swedish banks. We have also lent US dollars to Swedish banks and we have made the collateral requirements for the loans somewhat more generous. The government has tried to reduce the banks’ liquidity risks through its guarantee programme, which basically involves banks and other credit institutions being able to sign contracts with the government on guarantees for some of their borrowing.
By shadow banks, I mean the largely unregulated financial entities that take credit risk and/or engage in maturity transformation without access to explicit governmental backstops such as the Federal Reserve’s discount window and or deposit insurance. As we saw in the crisis, without such support, these institutions are vulnerable to runs. When this occurred, the shadow banking sector imploded in a way that imposed significant costs on the regulated sector. The risk is that tighter capital and liquidity requirements for the large financial institutions could push much of the business of credit intermediation and maturity transformation from the regulated sector to the unregulated sector. However, this risk is mitigated by the fact that shadow banks heavily rely on credit support and liquidity lines from the regulated sector. The costs of such facilities will be affected by the new capital and liquidity standards for banks. Thus, the economics of the shadow-banking sector are likely to change in a way that makes such activities less attractive. In addition, by increasing transparency and requiring some risk retention by issuers, Dodd-Frank should make the securitization markets in which shadow banks operate less likely to support poorly underwritten credit. Taken together, these changes mean it is less likely that there will be widespread movement of credit and maturity transformation from the regulated sector to the unregulated sector.

Some technologies may not materialise quickly enough to prevent uncontrollable and irreversible environmental changes from happening, and solutions that do not rely strictly on technology may also be needed. Focusing only on the climate challenge, for instance, reducing energy demand is critical to achieving ambitious mitigation. Therefore, even though technological innovation is crucial given the magnitude of the task upon us, we will also need to learn frugality (for instance by limiting superfluous or conspicuous consumption), as Pope Francis' Encyclical recommand us for example, or – if you prefer – a form of self‐restraint, as emphasised by Professor Dasgupta in his review on the Economics of Biodiversity. Moreover, while technological innovations will still be crucial to decrease our use of energy and resources, they may not always lead to more production and growth. Widespread use of electric bikes for urban transportation, for example, could reduce our dependency on individual cars in urban areas, but by the same token it could also dampen growth prospects in the automobile sector. Likewise, technology makes it possible to organise various meetings online rather than have participants travel thousands of kilometres, but a diffusion of such norms could also translate into less growth. My point here is not be exhaustive, but rather to show that framing the debate in simplistic ways (e.g.
After 1 January it gradually declined again in a few weeks to a level of around USD 1.08. So, we have no reason at all to be dissatisfied with that level. It is about the level at which the euro had stood for more than a year. And now - to take a very short outlook, between 6.15 and 6.30 today - the euro rose from USD 1.08 to USD 1.0865. I hope that answers your question. Question: I have a question concerning your inflation target. Can we draw the conclusion that from now we have some kind of informal bottom on your inflation target? Duisenberg: No, you cannot draw this conclusion. We are sticking to our definition of price stability which says that we regard price stability as being an increase in the rate of inflation of below 2%. And BIS Review 39/1999  2  what I said today is that the present situation and the prospects for the increase in the rate of inflation are such that they seem, for as far as we can look forward, also to remain well below that ceiling of 2%. So, inflation is not a danger, which enabled us to, let me say, to pay more attention to the second area of objectives of the European Central Bank - that is to support the general economic policies of the European Community.

A few examples serve to illustrate the point (Figure 1). A first distinction is between interventions in the boom and bust phases of a credit cycle. Imagine that some information came along to suggest that the banking system, while adequately capitalised currently, will taken as a whole be stretched down the road if credit continues to expand rapidly. Assuming for the moment common information to the market and the authorities, in this case a macroprudential intervention to require banks to build up capital in order to underpin their resilience in the period ahead might add only a shade to the cost of finance, as banks lose a small proportion of their tax shield. And if banks choose to de-lever, shedding risk to achieve the temporarily higher capital requirement, that action in itself might slow the boom. Now imagine a scenario in which information came along to reveal the system was seriously under capitalised right now. Maybe a bubble had gone unnoticed until it burst or some banks or funds unexpectedly fail, revealing inadequacies in the regulatory regime. Once the market came to appreciate that capital levels were too thin, funding costs would rise sharply. In those circumstances, an injection of additional capital, if it could be achieved, could help to bring financing costs back down. Although reliance on relatively expensive equity would be increased, that is dominated by a large fall in the cost of debt finance as failure becomes a more remote possibility.
In Jane Austen’s Emma, the awful Mrs Elton, wife of the parson, dismisses the newlyarrived family in the village with the words: “They came from Birmingham. … One has not great hopes from Birmingham. I always say there is something direful in the sound” But Birmingham - and the manufacturing industries with which it has always been so closely associated - have changed. Nowhere symbolises this metamorphosis better than Villa Park. Since Keynes’ visit, Villa Park has changed from a nineteenth century Coliseum into a magnificent twenty-first century stadium, focussing on quality rather than sheer numbers. Manufacturing industry has also shifted its focus from traditional products valued by weight to high value-added products. But the case for price stability, which Keynes made so forcefully, is unchanged, as is the commitment of the Monetary Policy Committee to meet the inflation target - new or old. BIS Review 5/2004  3

While listing the experiences of unconventional measures among the central banks, we can distinguish between: measures for increasing and changing the composition of the assets in the balance sheet of the central banks in different forms and with high heterogeneity across the countries, and measures for influencing agents’ expectations by strong commitment by the central banks for keeping low interest rate for a longer time horizon. In the public finances domain, the strengthening of fiscal discipline and the need of careful monitoring of fiscal sustainability can be taken as the core preventing arms against fiscal imbalances that highlight this crisis. The fiscal consolidation is already on the list of objectives within the EU and it will require serious efforts and internal adjustments for reaching this goal. In the midstream of the crisis, the need of fiscal adjustment imposed the confronting issue of the adverse impact over recovery and growth dynamics that was really  BIS central bankers’ speeches  1  one of the tight spot in the crisis management. The fiscal stimulus obviously supported the recovery in the countries where there was a room for it, but looking forward, the need for fiscal consolidation should be taken seriously. The financial stability, not only nationwide, but also in international framework, is quite often quoted as a common good. Attention should be paid to the risk distribution among financial institutions, as well as to the aggregate risk level evolution.
BIS Review 63/1997  -2-  Both countries had first to rebuild the whole economy in 1945, in a period when sacrifices were difficult to impose on populations. Germany tackled these disturbances rapidly and efficiently. The monetary reform implemented in 1948, aimed at definitively eradicating inflation, paved the way for monetary stability and economic prosperity. A new currency - the Deutschemark - was introduced, and a strong and independent central bank was founded. France followed a similar strategy with the creation of the “nouveau franc” or “new franc”, whose nominal value was 100 “anciens francs” or “old francs”. This reform contributed to stabilizing the French currency, which did not experience any devaluation for ten years. In 1971, the collapse of the Bretton Woods system and the currency instability which followed convinced European Governments that an exchange rate system had to be set up. The first experience, known as the Snake, was not completely successful, but was the first step towards a common monetary destiny between European countries. As far as economic foundations are concerned, our two economies have been increasingly interlinked for decades. First of all, the various obstacles to foreign trade in Europe have been progressively lifted. Indeed, the Treaty of Rome signed in 1957 aimed at creating a common market. The removal of all sorts of barriers to trade proved nevertheless difficult to achieve. That is why the European authorities felt that another step was indispensable, and signed the Single Act in 1987.

EMU is not just some abstract concept dreamed up by a few people. It is based on solid economic grounds. When the exchange rate stability provided by the Bretton Woods system and by the barriers between national financial markets disappeared in the 1970s, a number of European governments became progressively convinced of the need for a single currency. The Maastricht Treaty is indeed the result of past major initiatives, such as the Werner Report in 1970 and the Delors report in 1989. BIS Review 63/1997  -5-  The removal of all tariff and non-tariff barriers to trade has made Europe the largest market in the world. The EU accounts for 21% of total world trade, against 17% for the US and 10% for Japan. The benefits of the sheer size of the Single Market are plain to see. The allocation of savings and investments is more efficient, competition is stronger, and the greater liquidity of financial markets makes more capital available at lower cost to finance profitable ventures. No doubt the European Monetary System and its Exchange Rate Mechanism have helped curb exchange rate instability and eradicate the inflation culture that prevailed in some countries; yet the current level of economic and business integration calls for the Europeans to take a further step towards monetary integration, for the benefit of all European economic agents and citizens. The benefits of the single currency are clear. It will reduce uncertainty and facilitate production and investment decisions.
Jan F Qvigstad: Managing wealth – the Norwegian experience Speech by Mr Jan F Qvigstad, Deputy Governor of Norges Bank (Central Bank of Norway), at a seminar hosted by FEDEA (Fundación de estudios de economía aplicada), Madrid, 23 March 2011. *  *  *  The seminar was hosted with the assistance of Mr Torgeir Larsen, Norway’s ambassador to Spain. It is difficult to overstate the effects of the financial crisis that started in September 2008. As a financial crisis, it has been one of the most severe on record. The crisis in the real economy was even worse. For the first time since the Second World War, total world output has fallen from one year to the next. The crisis hit all countries and was surprisingly synchronised. This shows the interconnectedness of modern finance. Big banks have important parts of their operations in other countries, often on other continents. Some Spanish banks provide good examples. Though the crisis hit us quite similarly, we have emerged from it in very different ways. The crisis was difficult to foresee, but was it possible – ex ante – to point out the countries that would end up in trouble after a crisis? Norway has escaped this crisis more lightly than many countries. Luck explains a lot, but not everything. We had our own very serious crisis 20 years ago. One central instrument we put in place after that crisis was a fiscal rule.

This is in line with the growth in the activities of the two existing cross border PvP links recorded by us. Since 2010, the combined average daily turnover of the links with Malaysia and Indonesia has doubled, reaching a new record of $ billion last month. This is equivalent to an annual growth of about 23%. Other economies in the region, especially those with significant FX transactions, can similarly be benefited from a reduction in settlement risk and increase in efficiency in the settlement of FX transactions by establishing a PvP link with the USD RTGS system in Hong Kong. 9. The HKMA will continue to watch out for opportunities to collaborate with Asian neighbours to develop infrastructural solutions to meet growing regional demand for more efficient and robust settlement solutions. 10. Lastly, I would like to thank BOT again for the Bank’s commitment and professionalism leading to the successful launch of the PvP link. Based on the solid foundation laid through this project, I keenly look forward to working with BOT in other areas of central bank cooperation to contribute further to regional financial stability and prosperity. 11. Thank you. 2  BIS central bankers’ speeches
However, the moderate growth in the M3 monetary aggregate indicates that this situation has not changed since the last monetary policy assessment. Thus, the monetary analysis shows that we can continue pursuing our expansionary monetary policy for the time being, without incurring additional risks. Since the first quarter of 2003, the year-on-year growth rate for mortgage loans has exceeded 5%. Mortgage loans to households slowed slightly at the end of 2004, but since then their rate of growth has accelerated to a level higher than that recorded in recent years. Mortgage loans to companies, which had declined over the past five years, have also risen again since the beginning of the year. Prices continue to increase in the real estate market, a development to which, in our view, the low mortgage rates have contributed. Well aware that our monetary policy is still expansionary, we are keeping a close eye on developments in the real estate sector. In view of the above-mentioned developments, we have decided to leave the target range for the three-month Libor rate unchanged at 0.25-1.25%. What were the most important factors that led to this decision? There were three of them. First of all, we needed to downgrade our expectations with respect to the development of the economy. However, there are no signs of any cyclical downturn and the economy continues to recover, even if this recovery is somewhat delayed and muted. Second, the lacklustre economic activity is being accompanied by an improvement in the medium-term outlook for inflation.

This means that an increase in the Libor target range appears less urgent. Third, the level of uncertainty has risen. The economic outlook in Europe is more difficult to assess than it was in March. Although the price of oil declined in April and May, it rose again significantly in June, and high prices in the oil market could persist for some time to come. In addition, the decline in the level of long-term interest rates is not very consistent with a recovery in the economy. I will now briefly outline our new forecast for inflation. The graph depicts the current and the previous forecasts. The dashed red curve represents the new forecast, which covers the period from the second quarter of 2005 to the first quarter of 2008. The dash-dotted green curve shows the forecast presented in the last monetary policy assessment. Both forecasts are based on the assumption of a three-month Libor rate of 0.75%. The line representing the new inflation forecast begins slightly above the previous forecast, dropping significantly below it from next year onwards. The decline in inflation rates this year is due to a stabilisation in the price of oil. The lower level of inflation next year is attributable to weaker growth in economic activity. In 2007, inflation will rise rapidly because of the high level of utilisation of resources and the high level of liquidity. This means that, should the three-month Libor rate remain unchanged at 0.75%, inflation would reach 2.4% by the end of the forecasting horizon.
Two were subsidiaries of foreign banks, which have been recapitalised by their respective parents; the two Spanish banks have reinforced their capital by resorting to the markets; four savings bank groups have considered an initial public offering or the raising of capital from investors as a priority option, with a subsidiary alternative of resorting to the FROB (Fund for the Orderly Restructuring of the Banking Sector) if their initial approach did not work out as planned; another savings bank has stated its preference to participate in an integration process with another more capitalised institution; and, lastly, the remaining four savings banks have expressed their preference to reach the required level of capitalisation by means of the FROB taking a stake in their capital. Before 28 April, those institutions that had considered going to the FROB as a priority source submitted their specific recapitalisation plans to the Banco de España. In the meantime, the FROB has formally undertaken, with all institutions that have submitted strategies envisaging the possibility of resorting to it, to provide the necessary funds so that all institutions in the Spanish banking system may comply with the new core capital ratio. At present, the recapitalisation plans submitted by the institutions are being analysed, as a further step in the timetable. By 30 September 2011, these institutions must have completed what was stipulated in their strategies.

Finally, if a sufficiently far-reaching reform of the employment institutional framework is undertaken as to turn employment around, confidence will be restored in the capacity of our country to generate robust growth once again. The favourable assessment of these reforms along with the progressive improvement in economic figures as a result of headway in the adjustment of the imbalances (the reduction in net borrowing, the resumption of moderate inflation, the adjustment of the real estate sector, the lessening of the negative contribution of the construction sector to GDP growth, etc.) will prompt a positive change in the perception of the Spanish economy and in domestic and foreign investors’ confidence. That would lower the risk premium of the Kingdom of  4  BIS central bankers’ speeches  Spain, providing for better financing conditions for our companies and for the public sector, and giving an additional boost to growth which has in fact ceased in the first quarter of this year to bring up the rear among the major euro area countries. To conclude, I have focused today on discussing the most important and pressing tasks needed to improve our economy. Evidently, though, there are many more that will take time, not least of which is doing everything possible to raise the level of educational attainment of our labour force.