samchain/econo-pairs-v1 huggingface dataset:
The meeting of the G7 finance ministers and central bank governors (held in London, 21 February 1998) called for a “profound and broad-ranging debate on the lessons of events in Asia and their implications for strengthening the international monetary system, building on the reforms initiated at Halifax”. The G7 identified five main areas where progress had to be made. This is not the place to take stock of the proposals that have been put forward. Let me just air a few remarks on certain measures, which I consider as particularly important. I would like to discuss the proposals addressing imbalances and structural distortions in the crisis countries before considering those concerning the international financial markets and institutions issues. Efforts to strengthen emerging countries financial systems making them more resilient to external shocks The main effort contributing to the strengthening of emerging market economies’ banking systems is the adoption of the set of Core Principles for Effective Banking Supervision which have been widely endorsed by emerging countries authorities. The IMF in coordination with the Basel Committee on Banking Supervision is designing indicators to assess progress in implementation by emerging countries. The adoption of the implementation of the Core Principles as a criterion giving access to the newly created Contingent Credit Line is a strong incentive for members to adopt them effectively. The design of Deposit Insurance Schemes is another important measure contributing to reduce or eliminate implicit government guarantees limiting moral hazard on the lenders as well as on the borrowers side.

It is clearly the will of the European people. Only to give you an example of the support of the public opinion for a reliable euro: according to a French poll, 95% of the population was in favour of a euro at least as solid, reliable and strong as our previous “franc fort” national currency;  í  thirdly, the process of economic and financial globalisation, the trend of increase in international trade calls in the long run for increased demand worldwide for official reserves and for highly reliable monetary and financial instruments. This explains why the progressive internationalisation of the euro will, in my eyes, be totally non-confrontational but cooperative. The exchange rate relationships of the euro area vis-à-vis key global currencies As regards the exchange rate relationship vis-à-vis major currencies, I think the best for me would be to reiterate the position of the Eurosystem which has been expressed by Wim Duisenberg in the name of the full body of the Council of Governors of the Eurosystem: “In the view of the Governing Council the major economic factor behind the short-term developments observed in the exchange markets is constituted by cyclical differences between the euro area and the United States, which are expected to diminish over the course of this year and thereafter.
It can be said, in simple terms, that the application of quantitative easing entails a focus on the liability side of the balance sheet, while the state of the asset side becomes less important even though this is also reflected in the balance sheet. The express purpose of this shift from price to quantity is usually that "the price" can no longer be affected as the policy rate is zero. It could therefore be said that quantitative easing is a type of monetary policy that is more directly dedicated to dealing with a zero interest rate than credit easing. The latter focuses more directly on reducing the spreads and improving the supply of credit in the economy. It should be emphasised, however, that a zero interest rate is not necessarily a precondition for either quantitative easing or credit easing and it may sometimes be possible to find a use for both methods even when the policy rate is positive. The measures that the Bank of England began to implement at the beginning of March can be characterised as quantitative easing. In its communication, the Bank of England has  12  BIS Review 41/2009  talked about injecting money directly into the economy. This is done by buying government securities and, to a certain extent, securities issued by private players, for example corporate bonds. The latter implies that the strategy also includes elements of credit easing in the sense that the supply of credit to companies is eased.

(a)  About 1% of total consumer credit is obtained from moneylenders. Although this is a small segment, there is a risk that some borrowers may turn to multiple moneylenders out of desperation. They may take on more debt than they can afford, or be faced with extraordinarily high rates and fees. The Ministry of Law has thus formed an Advisory Committee on Moneylending in June to review the moneylending regulatory regime. Measures being considered include limiting the aggregate amount of loans that a borrower can obtain across multiple moneylenders, restricting the fees charged by moneylenders, and capping the interest rates of loans from moneylenders. (b)  The Ministry of Home Affairs has also stepped up efforts to arrest unlicensed moneylending activities. The number of reported unlicensed moneylending and related harassment cases has declined2 following the enhanced police enforcement and the punitive legal measures introduced in the Moneylenders Act in 2010. Thrust two: help the indebted reduce their debts 17 The second thrust is to help borrowers who are already over-extended, to reduce their debts in an orderly manner. We have to address the legacy debt problems, and help the borrowers who got into this over-extended situation before the recently tightened standards. 18 Many individuals who have been helped by CCS can testify that with resolve and determination, it is possible to overcome serious debt problems. Since CCS’ setup, about 870 individuals counselled by CCS have already fully settled their debts. Many others, aided by CCS, are on their road to recovery.
In the long term, according to Paul Krugman, the concept of the competitiveness of an economy merges with that of its productivity: the increase in the standard of living in the United States, Japan or Europe, which, in keeping with Professor Laura d’Andrea Tyson’s  BIS Review 80/2005  1  definition, is the ultimate indicator of a country’s competitiveness, has in fact, excluding all external factors, tracked developments in national productivity over several decades. In addition, the flexibility that enables an economy to specialise in promising sectors determines both developments in its productivity and its competitive position: several recent studies show that labour or product market rigidities may thwart the emergence of an ICT-producing sector and limit the use of these technologies in the other sectors, which holds back productivity growth and the development of exports of products that are in high demand. Second change: the advent of new players in international trade of goods and services and international division of labour. Of course, this is not an unprecedented development – it has occurred several times since the Second World War, with Japan and also with the newly industrialised Asian countries. It has nevertheless taken on a new dimension due to the newcomers’ size and competitive edge, the liberalisation of capital flows and the decrease in transport and communication costs.

In recognition of the crucial role that CLS serves in the foreign exchange market, CLS was designated as a systemically important financial market utility by the U.S. Financial Stability Oversight Council on July 18, 2012. In my words, we can’t imagine the foreign exchange market without CLS. Let me turn to the future and what it holds for CLS and for us. As is true for all us, the path of the future is determined in part by the momentum of our history and in part by the unknowable that lies ahead. Let me talk to the history. First, it seems clear that CLS has much more runway ahead in furthering its core mission – the reduction of FX settlement risk – by expanding its settlement service to include additional currencies and settlement sessions, and to increase participation in the system. •  Today, CLS settles 17 currencies. But there are many more currencies to go, some in regions that are just coming fully onstream in the global financial system. 2  BIS central bankers’ speeches  •  Today, “same day” foreign exchange activity is not settled in CLS. Can CLS find solutions to help reduce settlement risk in this segment of the market? •  Today, CLS has one discrete settlement session that occurs at a defined time during the day. Is it feasible to imagine a world where CLS is truly Continuous in Linking Settlements on a payment-versus-payment basis at most, if not all times during the global business day?
The aim of the policy of gold parity in the 1920s was to bring the krone back to the value prevailing before World War I: “Our monetary regime is enshrined in law. (…) The regime is anchored in our legal system, which we cannot break down. Inherent therein is a moral obligation to restore the monetary  8  For more discussion of the IMF proposal, see Pål Winje (2002): “Gjeldsordning for land (Sovereign debt restructuring)”, Penger og Kreditt 4/2002, Norges Bank. 9  Henrik Bahr (1962): “ Høyesteretts dom i gullklausulsaken (The Supreme Court’s ruling in the gold clause case)”, Lov og Rett, Norsk Juridisk Tidsskrift, No. 5. See also Jan F. Qvigstad (2008): “On keeping promises”, 11 November 2008. BIS Review 123/2010  5  system to its previous condition. (…) This is a question of fundamental importance to the nation through time. The difficulties that arise in connection with the transition to normal, legal conditions are transient. No one can close his eyes to the fact they are very serious. But the life of the people is eternal and this involves a decision of significance across generations.” 10 4. What is a sustainable sovereign debt load? A debt level that is high in one country can be sustainable for another. When Norway experienced payment difficulties in 1816, government debt stood at 6 million speciedaler, or about NOK 700 million at today’s value of the krone, and was probably considerably smaller than annual GDP in the country at that time.

Svein Gjedrem: Business cycles, crises and public finances – will governments be able to honour their debts? Speech by Mr Svein Gjedrem, Governor of the Norges Bank (Central Bank of Norway), at the Norwegian School of Economics and Business Administration, Bergen, 24 September 2010. The text below may differ from the actual presentation. This speech does not contain assessments of the economic situation or current interest rate setting. * 1. *  *  Imbalances and financial crisis  The financial crisis had its origins in an abundant supply of credit, market participants who took steadily higher risk and a lack of oversight on the part of banks, companies and authorities. The global economy entered a severe downturn. The acute crisis in financial markets has been succeeded by substantial labour market and fiscal imbalances in countries around us. Severe shortcomings in the management of public finances in several advanced economies have also been revealed. How public finances are managed in these countries will also be important to Norway. In the period from 1993 to 2008, global output expanded by more than 60 per cent, or an annual rate of just under 4 per cent. At the same time, inflation remained low. This period in the Norwegian economy could be described as two golden decades. But imbalances were building up in Europe and North America. With strong income growth and easy access to loans, the number and size of homes purchased by households grew. House prices surged in many countries.
Prospective startup businesses are going to find it difficult to obtain funding. And larger businesses will unlikely increase investment spending sharply at a time when capacity utilization rates remain unusually depressed (Chart 26). Relatively sluggish growth implies that the output gap will be closed very gradually. This suggests that inflation pressures will stay subdued. The excess supply of housing is putting downward pressure on rents, which represent a large share of the consumer price index (CPI) (Chart 27). In addition, unit labor costs have declined sharply over the past year due to  6  BIS Review 41/2010  the combination of unusually rapid productivity growth and slowing labor compensation growth (Chart 28). Fortunately, longer term inflation expectations remain well anchored. These expectations have not declined and are broadly consistent with my views on the appropriate inflation goal (Chart 29). This is actually a welcome development right now because it will likely help to keep the trend inflation rate from falling too much. Lessons to be learned We have just lived through a period in which rapid increases in asset prices led to a serious misallocation of resources and a severe financial crisis. What do we need to do to minimize the likelihood of avoiding this type of experience in the future? As I noted in a recent speech, we face three major challenges that will determine how smooth this economic expansion turns out to be. 5 First, we need regulatory reform that makes our financial system more stable and resilient.

But recent data on the housing sector indicates that the recovery has stalled (Chart 20). As with consumption, we are unlikely to see the typical surge of housing starts and residential investment that was a key feature of most past recoveries. There is already an unusually large volume of vacant homes for rent and for sale (Chart 21). More are likely to come onto the market in the months ahead due to the large volume of mortgage loans currently in the foreclosure process. For the government sector, large federal budget deficits are a constraint and fiscal policy is slowly shifting from an expansive policy back toward restraint. At the state and local level, the constraints are even more binding, as budgetary gaps will need to be addressed by spending cuts and tax increases (Chart 22). Exports rebounded sharply over the second half of 2009, particularly to the emerging world (Chart 23). However, domestic demand in Europe and Japan – important export markets for the United States – remains very weak. This suggests that the U.S. trade balance is likely to change little over the next year or two, and, thus, will be relatively neutral in terms of its impact on growth. Only business fixed investment is in a position to be a true locomotive of growth. Profits have stayed high relative to investment, and corporate balance sheets are awash with cash (Charts 24 and 25). However, even here, the growth impulse is likely to be weak.
This limits their capacity to pass through increasing costs to end product prices. However, as demand bounces back, this pass-through may occur. And so businesses’ price expectations may also increase. As regards households’ inflation expectations, in August we were able to resume our regular monthly surveys. Today, we have the opportunity to comprehensively assess new survey results, comparing them with pre-pandemic data. Households’ inflation expectations have certainly risen, specifically by one percentage point against March. However, I should stress that their response to the drastic change in the situation this year has turned out to be much less intense than before. This evidences that they are more anchored since inflation has been staying at its record lows over recent years. I would like to emphasise that this stronger anchoring of inflation expectations is exactly what enabled us to promptly shift to accommodative monetary policy, significantly cut the key rate, and act countercyclically. However, what is the reason behind our concerns about the rise in inflation expectations? There is a risk that they may again stay elevated for a certain time, thus impeding a steady anchoring of inflation close to 4% and affecting the flexibility of monetary policy further on. Monetary conditions continue to adjust to the earlier significant key rate reduction. Interest rates in the credit market are going down, with lending amounts having considerably expanded.

In the coming years, the greater global participation in this developmental process, both directly and indirectly, would enhance the potential role that Islamic finance would have in contributing towards greater global financial stability in the international financial system. BIS Review 136/2008  5
In order to eliminate likely negative outcomes, the Central Bank will hold repo auctions with maturities up to 91 days and purchase government securities to prevent funding being concentrated on oneweek maturities. Moreover, depending on the permanence of the liquidity shortage, the effectiveness of long-term repo and government securities purchasing transactions, the TRYdenominated required reserve ratios may be reduced to a limited extent. In the case of an excessive increase in the liquidity surplus in the market due to favorable international market conditions, in order to enhance the effectiveness and flexibility of monetary policy and liquidity management strategy, primarily, Central Bank liquidity bills with maturities up to 91 days and sales of government securities previously purchased from the market will be actively utilized. When deemed necessary, New Turkish Lira deposit buying auctions with standard maturities of 1, 2 and 4 weeks and reverse repo auctions with maturities up to 91 days will also be used actively. Additionally, TRY-denominated required reserve ratios may also be increased. Information on auctions of liquidity bills or government securities purchase/sales will be announced on Reuters’ “CBTL” page at 10:00 a.m. one working day prior to the auction. These auctions will be held at 11:00 a.m. with the value date of the following working day, and the results will be announced no later than at 11:30 a.m. on Reuters’ “CBTM” page.

There were also inadequacies with regard to credit granting. Large loans were made to new customers, new sectors and new geographical areas. This type of lending strategy is not wrong in itself, but it requires that the credit-granter has done his homework and is aware of the possible risks. In some parts of the banking world, they talk about credit-granting according to the church tower principle, i.e. that loans should be primarily made to customers living and active close by. How this principle was applied in connection with investments in Atlanta or Brussels is not easy to see. In addition, the banks contributed to their customers building up a comprehensive credit exposure in foreign currencies, regardless of whether or not they had matching income in their loan currency. As the krona exchange rate was high, some borrowers chose to take out loans in foreign currencies that had a lower nominal interest rate. The risks with this strategy became evident after the krona’s rapid fall of almost 25 per cent in six months, calculated from when the krona was allowed to float in November 1992. When the banks’ borrowers found that their debt amounts had increased by up to 25 per cent, calculated in kronor, many of them were unable to meet their obligations and the banks’ loan losses increased further. These actions by the banks are actually quite remarkable.
Therefore, while the central bank does not have direct power to enforce a fair distribution of income, if the central bank fails to do its job properly and this results in high inflation, it can make the situation worse. Next, the general public also wants the country’s exports to be competitive. Here we are talking about the export of goods and services, inbound tourism included. Again, the competitive edge of business depends on many factors outside the scope of central banking: marketing know-how, research and development, and technology included. And when one looks at competitive advantage of firms at the international level, things like quotas, trade protection and trade negotiations do add complications to the equation. 1  BIS Review 106/2000  But there is one factor that cuts across all considerations and that is inflation. If the inflation rate in a country far exceeds those in its trading partners, it will erode that country’s competitiveness over time. Therefore, the central bank can affect the country’s export competitiveness, and the public can rightly expect the bank to guard against this. Finally, the people invariably want transparency. They want to know how the central bank views the situation, how it acts and how it can be held accountable for its action. They will also want to see whether the central bank is capable of looking ahead into the future. … How can the central bank in an emerging economy like Thailand best deliver to the people all that they expect? My answer is inflation targeting.

The Governing Council therefore supports the implementation of the ambitious objectives described in the evaluation report.” In terms of the broader service to Spanish society we have just mentioned, let me remind you that three CEMFI faculty members currently participate in the Council of Economic Advisors of the Spanish Ministry of Economic Affairs, two have recently been appointed members of the Advisory Committee of the Ministry of Inclusion, Social Security and Migration, one is a member of the Advisory Board of the Spanish Independent Agency for Fiscal Responsibility, and another one is chair of the Scientific Committee of the Spanish State Research Agency. In addition, last December, CEMFI signed an agreement with the Ministry of Inclusion, Social Security and Migration to collaborate in the evaluation of 34 pilot projects to improve the design of poverty reduction policies. CEMFI will participate both in the design and the evaluation of the projects, and researchers will be able to use the data generated by these evaluations for the production of papers publishable in scientific journals. Carrying out these evaluations will allow CEMFI to take a qualitative leap forward, positioning itself as an academic institution of reference in the evaluation of public policies in Spain. I would like to thank Samuel Bentolila and Mónica Martínez-Bravo for leading this important initiative.