samchain/econo-pairs-v1 huggingface dataset:
It accounted for about 20% of world output in 2010, twice the share of Japan (about 10% of world output), and somewhat less than the United States (about one-quarter of world output). Second, the euro is a stable and credible currency. For over 12 years now, the European Central Bank –together with all national central banks– has been delivering what it is expected to deliver: price stability in the euro area as a whole over the medium-term, with an average annual inflation of less than 2%, but close to 2%. Since we are in Kiel, let me add that in Germany the average yearly inflation has been 1.5%, which is a better result than for any such 12 year period over the last 50 years. BIS central bankers’ speeches  1  We have thereby been safeguarding the euro’s purchasing power. This has been achieved despite several headwinds to the European economy: oil prices went up; the internet bubble burst; violence and wars have raged in some parts of the world; and starting in mid-2007 we had to cope with the most severe global financial crisis in over 60 years. Taken as a whole, the euro area performed soundly also when looking at other macroeconomic indicators, or comparing with other large developed economies.   Adjusted for differences in population growth, per capita GDP growth in the euro area over the last decade has been almost the same as in the United States, at about 1% per year.

The euro area’s trade openness has increased by about 9 percentage points over the first years of the euro, from roughly one-quarter to one-third of output, notably as a result of rapidly growing trade with vibrant economies, such as the new EU Member States or China. The euro area is the world’s largest trading partner, after the European Union itself, accounting for about 14% of global exports and imports in 2010. Economic and Monetary Union has fostered trade. Not only inside the euro area (+50% increase in trade volumes over the first years of the euro), but even more so with the European Union as a whole and the rest of the world (+80% over the same period). The euro area is also very open financially, and increasingly so. Its international assets and liabilities averaged each around 170% of GDP in 2009, compared with roughly 140% of GDP for the US and 90% of GDP for Japan. As financial globalisation unfolded in the last decade, the euro area’s external assets and liabilities have grown in tandem, by roughly 80 percentage points of GDP between 1999 and 2009. The euro area is a vast continent of more than 331 million citizens. By population size, it is comparable with the other large economy of the developed world, namely the United States, with a population of 310 million. In terms of economic output, the euro area is second only to the United States.
One might notice the remarkable difference in the income concentration at the top-level earners in Western Europe and US, meaning the inequality diverged substantially in these two groups in the last almost four decades. This so-called “modern” surge and divergence in inequality leads economists wondering, which forces may be preventing benefits of capitalism being widely distributed. Observing the US – Europe nexus, apparently the level of development does not always matter for how the income distribution could look like. There are policy tools and fundamental values in the society that can affect the distribution curve markedly. For instance, many authors associate the divergence in Western Europe and US with the educational inequalities and less progressive tax system in US. On the other hand, in Western Europe tax progressivity declined moderately, but even more importantly the educational system and wage setting policies are thought to be relatively more 1/3  BIS central bankers' speeches  favorable to low and middle income groups. Hence, equal opportunities to higher quality education, in particular nowadays when technology is rapidly advancing could be one of the remedies for the “illness” of inequality. It could enable young people at the bottom of the income distribution to get access to better-paid jobs, and hence flatten the income distribution curve. In the region-specific context despite the transition, process that in principle leads to increase in inequality, the top 10% of the income distribution has a share of close to 29% of the total income, lower compared to Western Europe.

It obviously underpins the rising populism, that reflects the dissatisfaction with the system that does not create equal opportunities for everyone, a system where reward is not merit based, i.e., system that gradually evolves into a crony capitalism. Against this background, I have no doubts that we have chosen the perfect spotlight for this Constituency meeting. Let me shortly use the historical lenses – what questioned the sustainability of capitalism and led to Marxism was the stagnation of wages and concentration of wealth in the early phases of industrial revolution. It gave ground for rising inequality, and as Thomas Pikketty, the so-called “Modern Marx” reveals in his book “Capital in the Twenty-First Century”, the only exception from this rising trend of global inequality is the period as of 1914 until 1970s, as a historical outlier. Indeed, actual data does indicate rising income inequality since the 1980s onwards almost across the board, although with different intensity. This turning point is very often associated with the end of the so-called “post-war egalitarian regime” around the globe. To bring the point closer, let me refer to the data retrieved from the 2018 World Inequality Report, which reveals that in 1980, the income share of the top 10% in the income distribution in Western Europe, North America, China and India was around 30–35%. By 2016, this percentage rose to around 35–40% in Western Europe, while the increase in the other regions was stronger, reaching 45%-50% of the total income.
So, a balance was struck and the decision to increase the petroleum prices was postponed until February 2012, because we knew that, by that time, the inflation figures would be very low, at less than 3%, and that benign situation would then give us a comfortable cushion to make the price adjustment, without harming the inflation numbers or the inflation outlook. This was then, just one, but a representative case study of holding on to a difficult position in the short term, to realize a long term position, so as to benefit by an even more significant outcome. It was, as Exter may have been happy to acknowledge had he been present, a pragmatic decision of the Government working closely with the Central Bank, cooperating on a complex and delicate issue, to deliver stability and growth in the long term. A “shared vision” and “goal congruence” Mr. Chairman, I am often asked by people as to the exact definition of the economic philosophy behind our country’s economic policies. As is usual in any field of learning, academics and scholars like to categorize a series of policies, according to a general character, or to place them in a framework of a pre-determined school of thought. Where then would our current economic policy framework, fit in? Is there a particular model that Sri Lanka follows? To respond to such questions, let us try to understand what exactly our economic planners are doing, and what they are attempting to achieve.

In some instances, individuals rely absolutely for their future lifetime incomes on the continuity of their insurance cover. To achieve an appropriate level of policyholder protection, insurers must be, and be seen to be, safe and sound. I have said this before but I think it is worth reiterating. The PRA believes the UK industry is in a good position, having had the UK risk-based ICAS regime for around ten years. We are therefore not looking to use Solvency II as an opportunity to raise capital requirements across the board. We do, however, recognise and respect that Solvency II is a maximum-harmonising Directive with a key objective of promoting supervisory co-operation. The PRA is committed to upholding this valued objective and will implement the Directive as intended. We can’t and won’t gold plate. Our approach has been, and will continue to be, proportionate in our supervision. As a judgement-led, risk-based regulator, this principle is already part of the PRA approach. It is not the PRA’s role to make sure no insurer fails. However, we are concerned that any failure is orderly and manageable. We seek this in conjunction with appropriate policy holder protection. For example, when business models become challenged we may seek to secure manageable and orderly wind-down, as has been seen in the past in this sector. In fact, roughly one third of insurers authorised by the PRA are in some form of run-off. More than just a capital regime, Solvency II strengthens the linkage between capital and risk management.
The scale of the systemic changeover is tremendous, roughly on a par with our earlier change to driving on the right-hand side of the road. A fundamental principle for the work is that, as far as possible, all those concerned are to find their own solutions to the problems posed by EMU. The Riksbank is responsible for the changeover in the financial sector. To this end we have set up a body called SIFS (the Swedish acronym for Consultation and Information to the Financial Sector). One result to date is a report, published a few days ago, on the situation as regards the euro in Sweden’s financial sector. Good progress has been made in the preparatory work. Timetables and suitable solutions have been established in a number of fields. The Riksbank considers that the financial BIS Review 14/1997  -5-  sector can manage a changeover to the euro on 1st January 1999. Participation from a later date can facilitate the preparatory work in certain respects and complicate it in others. The worst alternative is a long period of uncertainty; that would entail a costly duplication of systems in many fields. I should like to end with some examples of changes that will occur and be of importance for the financial markets. 1. Monetary policy A single currency presupposes a single monetary policy. In EMU this will be implemented by the ECB. In this context the national central banks will function as “operative arms”, acting on instructions from the ECB.

In early 2009, the effect of the global crisis on world economies deepened, world trade volume fell to historic lows, almost all countries suffered economic contraction, unemployment rates soared; in brief, the world had faced the possibility of an economic depression of such dimensions for the first time since 1929 – as a result of which the fears of a global and prolonged depression peaked. 2  BIS Review 79/2010  In order to recoup the significant contraction in demand that emerged due to the decrease in the private sector’s total investment and consumption expenditures, governments and central banks have prepared historically extensive and comprehensive stimulus packages. The scope of the crisis and the economic contraction became worldwide in a short while, which necessitated the timely implementation of measures in coordination with other countries. Public resources that were allocated to the financial sector and the stimulus packages that were put into effect during the crisis have brought significant burden on public budgets. Research conducted by the International Monetary Fund indicates that the total amount of capital transferred to the financial sector was USD 4 trillion; state purchases to prop up securities markets amounted to USD 6 trillion; state guarantees to financial institutions and the corporate sector became USD 14 trillion; and fiscal measures such as tax rebates and new public spending reached USD 6 trillion. As of the second half of 2009, we entered the fourth and last stage of the crisis.
There is a natural demand for good banking services in all countries and if you, the authorities and policy-makers, set up a reasonable framework for banking, I am convinced that you will soon see applications for new banks or for existing banks to change their structures, activities or mode of operations. In achieving an efficient banking system, the authorities are faced by a number of questions: What is the optimal number of banks? In modernising a banking system you would like to have a “reasonable number” of banks – not too few but not too many. In many countries the lifting of the old and restrictive regulations leads to an influx of a large number of mostly small “family-owned” banks but many of these tend to have overoptimistic plans for their activities and are closed rather soon leading to consolidation of the banking sector. Some depositors and other counterparties could suffer losses from dealing with these banks. Are such events necessary steps in the development or could they be avoided? In my experience, some countries after scrapping their old regulations became ultraliberals and provided licenses for banking on too lenient grounds. They did not properly evaluate the prospects for the banks to conduct profitable business in a competitive environment and they set the requirement for basic minimum capital far too low. But having said that I would warn against doing the opposite – to let the authorities decide how many banks there ought to be and then distribute a fixed number of licenses.

Should you prefer local owners or should you allow foreign owners freely, being open to the possibility that the foreign banks become dominant in your system? Being a free-marketeer I strongly advocate the latter. Your prime aim should be to have a banking system which provides the best services to the society, whether locally owned or foreign owned. Like many other countries your banks could also benefit from the influence of the foreign banks if they have more advanced systems or methods. On the other hand, I would also warn against being too lenient toward foreign applicants to set up or buy into existing local banks – I have seen many countries being too trusting toward foreign owners. These should be submitted to the same scrutiny as local applicants. The scrutiny should include a test of the origin of the money used to found (or buy) the bank. Obviously only known owners should be accepted and thus no beneficial owners who are hidden behind the veils of companies established on some offshore jurisdiction. And when speaking about foreign owners: When banks operating in your country have foreign parents you must ensure that the home supervisor practices consolidated supervision which includes the entities in your country. If this is not the case, it is in your best interest to deny the application for a license. Who should be allowed to own banks in addition to individual persons and financial institutions; should non-financial institutions be allowed and should there be holding companies?
One approach to this problem would be to harmonize the diverse insolvency laws in the various jurisdictions in which globally active firms have significant operations. But achieving this objective will be hard and take many years at a minimum. This is one reason to require additional loss-absorbing capacity for systemically important firms, most (if not all) of which tend to be complex global organizations. Such a surcharge would be a mechanism to reduce the probability of failure for such firms below that of smaller firms. A surcharge for systemically important financial institutions has two motivations. First, it compensates for the distortion created by the fact that a large financial firm may still be resolved differently than smaller firms and that this could conceivably, by being an orderly resolution process, reduce the costs imposed upon creditors. To the extent creditors see this as a benefit, this might enable large banks to retain some funding advantage over smaller firms not likely to be resolved in the same fashion. Second, it recognizes the large costs imposed on the broader financial system by the failure of systemically important banks. Such an approach is being pursued both internationally and in the United States. The recent Governors and Heads of Supervision meeting in Basel, for example, endorsed additional loss-absorbing capacity for systemically important firms. Similarly, the Dodd-Frank Act provides that the Federal Reserve shall establish prudential standards for systemically important financial companies, including capital and liquidity standards that are “more stringent” than for other institutions that do not present systemic risk.

Nonetheless, as my colleague Governor Tarullo noted in a recent speech, 1 more will need to be done to increase the stability of the unregulated sector, and developments in this area will need to be scrutinized carefully in the years ahead. Before closing, let me reiterate the importance to achieve harmonized global standards. As noted earlier, this is important for competitive equity reasons. But more importantly, it is necessary to ensure that banks and other financial firms cannot move their activities to evade regulation. If that were to occur, we would just have a race to the bottom and a less transparent and even more complex financial system. In this respect, it is important that we regulate the U.S. operations of foreign banks in a way that is consistent with how U.S. banks are treated. It is also important that we work for the same type of national treatment abroad, and when there are differences in regulatory regimes, that we find ways of reducing or eliminating the substantive differences over time. Finally, it is important that we clarify the responsibilities of the home and host countries and work to better share information across the regulatory community. This can help ensure that regulatory decisions are made and applied in a consistent and fair manner.
It can be argued that index funds distort the price of the targeted indexes and that, as a result, the indices end up creating rather than measuring performance. •  Last but not least, the impact of risk management techniques on market dynamics is particularly enlightening with regard to the question of asset price overshooting. Value-at-risk calculations have become a crucial element of the standard approach used by market participants to evaluate the risk inherent in their market activities and to set up exposure limits. Of course, central banks and financial institutions should continue to encourage the use of these instruments. But, in times of financial turmoil, the growing use of sophisticated risk management techniques by financial intermediaries might have had the paradoxical effect of amplifying the initial shock, exhausting liquidity and contributing to contagion phenomena. Regardless of the intrinsic qualities of these risk management tools, we see that their growing use may have produced pernicious effects. When market players rely on converging risk evaluations, they tend to take the same decisions at the same time, thus amplifying the initial shock to prices and trading volumes. BIS Review 41/2001  3  All those factors have one consequence in common: they encourage homogenous behaviour and reactions to the detriment of the diversity that is indispensable to the smooth functioning of financial markets. 2.

However, the Basel Committee goes further and describes the role of supervisors in Corporate Governance by adding new parameters as well. These are: •  Supervisors should provide guidance to banks on sound Corporate Governance and the proactive practices that should be in place. •  Supervisors should consider Corporate Governance as one element of depositor protection. •  Supervisors should determine whether the bank has adopted and effectively implemented sound Corporate Governance policies and practices. •  Supervisors should assess the quality of banks’ audit and control functions. •  Supervisors should evaluate the effects of the bank’s group structure. •  Supervisors should bring to the board of directors’ and management’s attention, problems that they detect through their supervisory efforts. According to Basel recommendations, Corporate Governance should be promoted by other stakeholders as well.
These pages will also be registered under the name jy2kcouncil.org in the near future. BIS Review 56/1998  -6-  the four Sponsoring Organizations (almost 600 contacts in over 170 countries), asking for assistance in coordinating the development of their country page. This also provided a further opportunity to raise the awareness of the Year 2000 problem at the most senior levels of financial market authorities and supervisors in countries around the world. Through the effort to develop this web site and other similar efforts by the Joint Year 2000 Council, I believe we can succeed at keeping the awareness of the issue at a very high level within the global financial supervisory community. Efforts to Improve Preparedness Of course, awareness of the Year 2000 problem is only the first step in addressing it. Global efforts to prepare for Year 2000 vary widely, and many countries believe that more coordinated national action will be necessary to tackle the problem as effectively as possible. At our second meeting of the Joint Year 2000 Council, a strong consensus emerged that a national government body in each country could play a helpful role in coordinating preparations for Y2K. While the Council did not have a strong view on what particular form or what specific authority such a body would require in each specific country, the Council members felt strongly that involvement in some fashion by the national government could be beneficial.

Today it would be impossible to predict the precise nature of these disruptions. However, we do know that financial markets have in the past survived many other serious disruptions, including blackouts, snow storms, ice storms, and floods. We will also have a very interesting case at the end of this year with the changeover to monetary union in Europe. We will all be watching carefully to see whether the extent of operational problems related to this event is greater or less than expected. BIS Review 56/1998  - 11 -  I would also like to say at this point that my discussions with other members of the Joint Year 2000 Council and with members of the External Consultative Committee have convinced me that successful efforts to address the Y2K problem will be dependent on the credibility of those calling for action. Those of us — such as members of this Committee as well as others in Congress — who are seriously engaged and concerned need to be able to persuade others of the need to take appropriate actions promptly. It would be unfortunate if general perceptions of the Y2K problem are driven primarily by unofficial commentators whose rhetoric is seen to exceed the facts on which it is based, and therefore easily dismissed. As a central banker and bank supervisor, my major concern must be with the system as a whole.