samchain/econo-pairs-v1 huggingface dataset:
If the use of fiscal policy in the past has not been optimised – and that is often the case, with fiscal policy often being used for political ends rather than as an economic tool – then it is likely that fiscal policy has not only been ineffective in creating the conditions for sustainable growth, but that the opportunity to use it to support growth has also become significantly narrower. This is indeed the place where many emerging and developed nations now find themselves. Today, we are seeing the limits of debt-fuelled growth. The world seems to need more and more debt to create less and less growth. That cannot go on. Debt has a role in supporting growth but over-dependence on it, and its misuse, has repeatedly resulted in bad outcomes. Therefore, we have to look at alternative means of creating more sustainable growth. One of those alternatives may be greater economic integration, regionally and globally. In fact, economic and financial integration, whether regional or global, has been occurring. As a result, it has become increasingly difficult for individual countries to determine their independent path to prosperity. While not downplaying the importance of keeping our house in order and the need to promote competitive and transparent economies, it is nevertheless  BIS central bankers’ speeches  1  obvious that the fates of economies are increasingly linked to those of others. Integration has its benefits and it has its costs.

So much so, that we actually formed a taskforce to look into that possibility for ASEAN. However, that seminal work reached a very firm conclusion, which was accepted by regional policymakers. The conclusion was that ASEAN was not ready for a currency union, and will not ready for a long time to come. It was therefore not a goal that ASEAN should pursue as other forms of integration provided much more opportunity for increasing regional economic welfare. What should the role of financial integration be within ASEAN? Essentially, it is as a catalyst for economic growth. Finance is the bridge that will facilitate the movement of trade and investment flows across the borders of regional economies. This is recognised and accepted by all ASEAN economies. However, given the reality of the differing stages of financial development, and the risks associated with premature financial openness, the outcome has been the adoption of a flexible approach that enables its members to pace their integration based on their state of readiness. For example, in March 2015, the ASEAN Banking Integration Framework was launched. It adopts a bilateral approach to banking integration. Countries can negotiate reciprocative agreements that would allow Qualified ASEAN Banks to operate in each other’s territory. The Financial Integration Blueprint also recognises the risks of financial integration as well as the need to ensure that all sectors of society benefit from financial integration.
By the end of this year, Bank Negara Malaysia will have completed a compendium of regulatory standards to provide clarity on the Shariah and operational requirements for 14 Islamic finance contracts. This endeavour began in 2013, and incorporates the interpretation of the SAC. The task for the regulators is to come up with similar 3/4  BIS central bankers' speeches  standards in the future – especially as the market ventures into novel and more innovative approaches. This will provide an invaluable resources in helping Islamic financial institutions and their lawyers in structuring Islamic finance products as well as identifying the necessary legal documentation. Individual excellence At the individual level, the promotion of legal certainty will require a strong base of legal and Islamic finance professionals. As the domestic industry and global market for Islamic finance grows, so must our talent pool. Lawyers involved in product structuring, for example, can provide value-added advice to their clients on the parameters of Shariah requirements and legal rules, which helps in the design and developing the documentation of the products. Litigation experts with sound understanding of Shariah requirements can reason better in courts. Certification programs and targeted seminars such as today’s will be important in equipping legal practitioners with a solid understanding of both applied Shariah knowledge and the necessary legal expertise. In conclusion, the world of modern finance is in need of anchoring principles to ensure that intermediation serves rather than enslaves the real economy.

In view of this situation, central banks have responded by further easing monetary conditions. In the case of the European Central Bank (ECB), at our September meeting we resolved to launch a package of measures which included cutting the deposit facility interest rate by 10 basis points (bp) to -0.50%, strengthening forward guidance on interest rates and improving the financing conditions of quarterly targeted longer-term refinancing operations (TLTRO-III). We also decided to resume net purchases under the asset purchase programme at a monthly pace of € billion as from 1 November and without a defined time limit. Our analysis indicates that this package of monetary policy measures provides a substantial monetary stimulus which will help to further ease the conditions of lending to households  2/29  and firms and thus assist the economic recovery of the euro area and, consequently, the sustained convergence of inflation towards our medium-term target. In any event, from the financial stability standpoint, the downward revision of the growth and inflation outlook and the resultant higher expectation that interest rates will remain very low, or will even be negative for a further period pose challenges of at least two types for credit institutions. First, this macroeconomic context will represent a challenge for deposit institutions to recoup levels of profitability more in line with the cost of capital. Indeed, in the last few months market expectations for growth of bank profits have declined.
The Norwegian business sector showed a high degree of willingness and ability to shift to oilrelated activity during the boom. The proximity to the continental shelf was an advantage for many firms. The shift to an oil-driven economy with a high wage capacity has been a comfortable journey. The journey forward, where the oil service industry must downscale and other trade-exposed industries must grow, will be more challenging. After many years of relatively high wage growth in Norway, the domestic cost level must again be brought more closely into line with that of our trading partners. A necessary adjustment of the cost level in Norway can occur by means of lower wage growth in Norway than in other countries and a depreciation of the krone exchange rate. The economic policy pursued will be of importance for how the adjustment takes place. In Norway, monetary policy is geared towards keeping inflation low and stable. The operational target of monetary policy is consumer price inflation of close to 2.5 percent over time. The inflation target provides the economy with a nominal anchor. When inflation expectations are firmly anchored, monetary policy serves as the first line of defence when the economy turns down. Over time, monetary policy can only influence inflation. Monetary policy cannot assume a primary responsibility for delivering the necessary structural changes in the Norwegian economy. But via the exchange rate channel, monetary policy can help facilitate the necessary restructuring process. Without our own national currency the situation would be more challenging.

If productivity and labour force participation do not increase by a considerable margin, the return on fixed investment will fall. Low growth and low real interest rates may be the new norm. The Government Pension Fund Global (GPFG) – further growth depends on future returns Over the past 20 years, Norway has accumulated considerable foreign financial assets. Today, the Government Pension Fund Global (GPFG) is one of the world’s largest sovereign wealth funds. The GPFG represents our collective savings and is to be managed to the benefit of both current and future generations. As an investor, the GPFG makes capital available for economic activity in other countries. The return on that capital will thereby be a result of the value added in those countries. The GPFG is a long-term, responsible investor. The objective of investment management is to achieve the highest possible return at acceptable risk levels. Norges Bank’s work on responsible investing underpins that objective. As a long-term investor, a healthy and sustainable development of investee companies and markets is in our interest. The work on responsible investing has evolved in pace with the increasing size of the GPFG. As from this year, Norges Bank is charged with the task of issuing decisions on observation  6  BIS central bankers’ speeches  or exclusion of companies on the recommendation of the Council on Ethics. In such matters, Norges Bank can also consider using other ownership instruments.
Keynes was focusing on the demand side and on how to get out of the bust, whereas Hayek was focusing on the supply side and on how an economy got into the bust in the first place. While a great deal has been done to understand the reasons behind financial instability, many questions remain unsolved. So the discussion continues and when it comes to crises prevention, two conventional pieces of policy advice seem to emerge. The first line of defense is moral suasion. The central bank could warn market participants in various ways that they are becoming overly optimistic in their expectations about future cash flows, if we are talking for instance about stocks or real estate. The problem with moral suasion is that it is difficult to calm down a market that is rushing to new highs. Talk rather than action is often not enough. Still, if a bubble is starting to build up, it may be worth a try. This is one reason why several central banks have began to publish financial stability reports. In this way one can perhaps broaden the public discussion about what is happening. The second line of defense is prudential regulation. However, the way prudential regulation is done in practice raises two, interrelated problems. The first has to do with the fact that most financial crises stem not from individual banks getting into difficulties and affecting others by contagion.

SPEECH  Higher policy rate will curb inflation Introductory statement by Governor Ida Wolden Bache at press conference following announcement of the policy rate and publication of Monetary Policy Report 3/22 Chart 1 Policy rate raised Norges Bank’s Monetary Policy and Financial Stability Committee decided to raise the policy rate from 1.75% to 2.25% at its meeting on 21 September. The policy rate will most likely be raised further in November. Norges Bank’s task is to keep inflation low and stable. The operational target is inflation of close to 2 percent over time. We are also mandated to help keep employment as high as possible and to promote economic stability over time. We are raising the policy rate with the aim of bringing down inflation. Price stability is important for the economy to function well. It reduces uncertainty and facilitates planning. Those with low incomes and small margins are normally the hardest hit when inflation suddenly surges. The main contribution monetary policy can make to promoting high employment over time is to ensure low and stable inflation. As long as there is confidence that inflation will remain low and stable, the costs of minor deviations from the target of 2 percent are fairly insubstantial. But if households and firms expect inflation to be elevated and high inflation is incorporated into price and wage setting, inflation may take root, and bringing it down again could prove difficult. Chart 2: Inflation is high Consumer price inflation is now rising rapidly both globally and in Norway.
(2017)) and Gourio, Kashyap and Sim (2018) and Caballero and Simsek (2019) find reasons for monetary policy to do so. 9 Adrian and Liang (2018) also find that more research is required to clarify the role monetary policy should have when it comes to counteracting the build-up of financial imbalances. 10 See, for instance, Yellen (2014), Brainard (2017) and Quarles (2019). 11 https://www.norges-bank.no/en/topics/Monetary-policy/Mandate-monetary-policy/ 12 See, for instance, Ingves (2012) and Jansson (2013). For a rebuttal of the criticism that the Riksbank “leaned against the wind” very substantially and was the main reason why the Riksbank increased the interest rate in 2010-2011 in the first place, see, for instance, Jansson (2014). 13 Ingves (2007). See also Nyberg (2005), and Heikensten (2008). Heikensten (2008), writes: “With house prices increasing drastically, risks for the real economy have been perceived to be bigger. On a few occasions in 200405 the Riksbank did for that reason not follow a strict inflation-targeting rule. We “leaned against the wind”, in 8  4 [21]  So what happened and why did we stop “leaning against the wind”? A few years after the financial crisis, it was clear that inflation had not risen in the way the Riksbank had anticipated, but instead was surprisingly low. During the first half of 2013, for example, the average of Swedish forecasters expected inflation to reach around 1.5 per cent in 2014. The outcome was almost one percentage point lower, that is, one and a half percentage points below the target.

The financial collapse in Russia, deepening recession in Japan, the long battle – then sudden defeat last week – in Brazil’s attempt to hold its exchange rate, and fluctuating fears of possible knock-on effects on the major countries’ financial markets all contributed to an increased sense of financial fragility, which has not been easy to contain. We can, I believe, still avert a more general international financial upheaval (and the financial markets’ response to the latest developments in Brazil, as well as the beginnings of a recovery in capital flows to some countries in Asia, are reasonably encouraging in this respect). But, we are nevertheless bound to see a pronounced slowdown of world economic activity. The IMF has cut its latest (December) forecast for world growth to less than 2¼% in 1998/1999. And the risks almost certainly remain on the downside. That’s still not global slump or recession. But large parts of the world economy are in fact in recession and the prospect for the world as a whole turns very much on what happens in the major industrial countries. In essence, what we are seeing is a sharp cutback in capital flows to much of the emerging world and to some of the transition economies, enforcing on those countries a corresponding cutback in domestic demand and creating the need for an urgent improvement in their current accounts.
Since at th  least the middle of the 19 century, the Bank of England has become one of the key institutional safeguards against recession risk and financial crisis. 41  Indeed, today, those roles are defined in statute. Non-state institutions have also played an important role in protecting those facing the adverse side-effects of economic change. This included many religious, philanthropic and charitable organisations and citizen th  movements that emerged from the 18 century onwards, often as a direct response to hardship brought about by technological change. These institutions offered, and many continue to offer, a combination of financial, housing, training and emotional support to those in need. 39  Clark (2009). Figures refer to government command of output as a percentage of GNP in England. Other 19th century legal changes that supported individuals from adverse side-effects of economic change included recognition of limited liability companies and constraints on the ability of courts to sentence debtors to prison. 41 Anson et al (2017), for example, discuss the emergence of the Bank of England as lender of last resort. 40  11  All speeches are available online at www.bankofengland.co.uk/speeches  11  To mention one, the Young Men’s Christian Association (YMCA) was founded in 1844, at around the time of Engels’ pause. It was established explicitly to meet the housing and social needs of young men who had moved from rural towns and villages to find work in factories in the cities.

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.
In 2007 and 2008, the IMF expects emerging countries to account for more than half of world economic growth. The same positive trend is reflected in their financing conditions. Emerging market economies increasingly finance themselves in the form of bonds in local currency at long maturities and fixed interest rates. By doing so, they have escaped the curse of “original sin” – the inability to borrow abroad in their own currencies – that made the crises of the 1990s so costly. Their capital markets have expanded rapidly, both in size and in the range of instruments available. Asian stock market capitalisation, for instance, increased five-fold between 2000 and 2005, as against only a one and a half times increase for the major European and US stock exchanges. Issuance of bonds and syndicated loans from emerging market corporates has also accelerated markedly, and has even exceeded sovereign issuance in some countries. Lastly, risk premia on emerging market assets have fallen significantly, reflecting sound economic fundamentals. For this series of reasons, emerging markets have become an attractive asset  2  BIS Review 140/2007  class for long-term international investors, as shown by their rising share in asset allocations. It is therefore not so surprising that they have so far been relatively immune to the current subprime crisis, and might even be seen as “safe havens”! Let me now turn to some major challenges of financial globalisation. First, the impact on monetary policy.

We have  BIS Review 115/2008  3  experienced many years of extremely good economic growth and low inflation. Now we must be prepared for high inflation, higher interest rates and lower employment possibly leading to a deterioration of the finances of many Swedish households over a couple of years. Monetary policy often comes into focus in this type of situation. The recent debate – is the Riksbank chasing inflation spectres? The Riksbank’s interest rate increases have been much discussed recently. It has been said that the Bank is chasing a non-existent inflation spectre, that the inflation target should be scrapped or reformulated, and that the Riksbank should take more notice of economic activity than inflation. To begin with, inflation is a real problem for many households. Inflation means that everyone gets less for their money. Oil, electricity and food prices have risen substantially. These goods are an important part of household consumption. Together food and energy comprise approximately one quarter of the CPI. The fact that, for instance, oil and food prices have risen so much here in Sweden is largely because these goods have become more expensive in the world market. Should the inflation target be reformulated? Some of the recent criticism has concerned whether the inflation target should apply to some other measure than the CPI. The idea is that monetary policy should stabilise around a measure of inflation that excludes import prices. The Riksbank is in any case unable to affect prices in the world market.
BIS Review 116/2006  7

BIS central bankers’ speeches  1  Economic recovery is particularly well advanced in the US where labour market developments in the first few months of the year were generally positive. The US is on the cusp of full employment for the first time since the onset of the financial crisis in 2008. Economic growth in the euro area is gradually becoming more broad-based, and this is increasingly spilling over into the labour market. The unemployment rate has again fallen slightly in recent months. In China, growth remains robust, thanks to various economic policy measures aimed at stimulating domestic demand. Overall, international growth is principally being driven by domestic demand and the services sector. By contrast, global manufacturing and trade remain subdued. The international financial markets were dominated by turbulence at the start of the year, however positive economic signals since then have helped to ease the situation. Risk premiums and volatility have fallen perceptibly in recent months. At the same time, commodity prices have also recovered from their multi-year lows. We expect the global economic recovery to sustain over the next few quarters. Nevertheless, significant risks remain. Global growth continues to be fragile due to deeply entrenched structural problems. Furthermore, uncertainty emanating from political events could escalate, hampering economic development. The imminent UK referendum on whether to stay in the European Union has already caused volatility on the financial markets to rise. Swiss economic outlook I shall now turn to the economic outlook for Switzerland.