samchain/econo-pairs-v1 huggingface dataset:
The discretionary component of budget policy, by contrast, can be measured by the variations in the primary balance adjusted to account for cyclical effects. According to the OECD’s figures, the budget balance in the United States, adjusted for the economic cycle, as a percentage of GDP shifted from a break-even situation in 1998, to a 0.9% surplus situation in 2000, and then to a 4.5% deficit in 2003 (and a 3.2% deficit in 2007; Figure 2). The aggregate deficit in the euro area adjusted for the cycle fluctuated between 2.7% in 2002 and 0.7% of GDP in 2007. The budget balance fluctuation range has thus been significantly 23 narrower than in the United States. To summarise, automatic budget stabilisers are more important in the euro area, while in the United States there is greater recourse to discretionary policies. 3.3  Shocks  As with monetary policy, the difference in the shocks hitting the two economies may explain the varying degrees of fiscal activism. In theory, an economy which is hit principally by demand shocks should make greater use of anti-cyclical budget policies than an economy hit mainly by supply shocks. This is a topic on which, as far as I know, no empirical studies have been conducted to date and it is thus a particularly interesting field of research. A hypothesis worth examining is the extent to which the greater frequency of demand shocks in the United States has justified greater fiscal activism in an anti-cyclical direction.

Second, the Committee stands ready to make further asset purchases should the outlook warrant them. Just as with movements in Bank Rate in more normal times, a pause in monetary loosening does not necessarily mean that loosening has come to an end. It will all depend on how the outlook for inflation evolves. Looking further ahead, the Committee at some point will need to reduce the current exceptional degree of monetary stimulus. Some commentators have suggested that the MPC has been less forthcoming than other central banks in explaining its exit strategy. But to a large extent this reflects the fact that we have less to communicate. The Committee has two instruments through which it can withdraw the stimulus, raising Bank Rate and selling assets. Unlike some other central banks which need to create new instruments to drain excess reserves or alter the terms of existing facilities, the structure of the Bank’s operating framework means these two instruments can be used at any time, in any order. And the strategy guiding our policy decisions will be unchanged – monetary policy will continue to be determined by the outlook for inflation relative to target. The most difficult decision will be to decide the timing of the withdrawal, but that is always the case. The aftermath of the financial crisis posed many questions for the theory and practice of monetary policy.
If the world is to meet the goals of the Paris Agreement, carbon emissions must be reduced, which means the combustion of fossil fuels, including oil and gas, must also be reduced. But the world will still need energy. How much and what share will have to be covered by oil and gas are uncertain. That will depend on a number of factors, including climate policy and technological developments. Much remains on the technological front. There is still far to go before carbon capture is truly profitable. Alternative energy sources are not being developed fast enough, even if they are becoming more cost-efficient. At the same time, long-term investments lock in emissions for a long time to come. 3 Source: Norwegian Petroleum Directorate (2019) The Shelf 2019. 10  A stricter climate policy is needed, with expanded carbon pricing measures so that it will be profitable to put into use new solutions. In the EU, there are signs of a more ambitious climate policy. Permit prices have increased, and much is being done to promote investment in alternative energy. NORGES BANK ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  The European Commission also recently launched a plan to introduce a tax on imports based on a product’s carbon footprint.4 The ambition is an equal carbon price for all products whether produced in or outside the EU. Even though the EU accounts for a diminishing share of global CO2 emissions, this could also affect emissions in other parts of the world, including emerging economies.

The climate issue is therefore in large part about how poor countries can achieve solid economic growth without a continued rise in greenhouse gas emissions. With the rise in emissions we have seen, the world will have to prepare for and adapt to a warmer climate. At the same time, climate change impacts are becoming increasingly evident. This may lead to abrupt policy shifts. 4 Von der Leyen, U. (2019): Political Guidelines for the next European Commission 2019–2024. 11  The outlook for future oil demand reflects considerable climate and energy uncertainty. Businesses, banks and investors are paying more attention to this risk. The outlook for offshore activities on the Norwegian shelf has also become more uncertain. NORGES BANK ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  The oil price decline in 2014 brought to light once again the important role of the petroleum sector for the economy. Rather than being in a unique position, the Norwegian economy had to restructure and adjust to lower demand in the oil industry. The oil price collapse marked the beginning of the restructuring that we had long known would come, but it started more abruptly than assumed earlier, for example by the Holden III Commission5 (Chart 12). Chart 12 Business sector less dependent on oil. Oil sector demand. 1) Share of mainland GDP.
Many observers feared then that, if the crisis were allowed to run its course, it could be near catastrophic for the region and extremely dangerous for the European banking system. But I am pleased to say that this potential “catastrophe” was avoided and I would like to devote my remaining time to the question of how this was done – the third aspect of the convergence process I previously mentioned. I believe answering this question may provide lessons for countries that are currently facing similar challenges in the euro area. 3. The reaction of CEE countries to the global financial crisis: what can be learnt? In my view, the return to the convergence path is being achieved thanks to a combination of four main elements. First and foremost, there are domestic policy actions to address macroeconomic imbalances at the national level. The precise policy actions differ across countries, reflecting the different country-specific challenges and policy frameworks in place. But the actions generally require a strong fiscal adjustment and/or measures to maintain confidence in the soundness of the financial sector. Second, the reaction of the international community has been essential. Where funding challenges became more acute, international financial assistance led by the IMF – jointly with the EU in EU Member States,– has been crucial in supporting market confidence and avoiding financial crises. The balance of payments support facility available for EU Member States has been reactivated, while the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank have supported several countries.

Leaving aside differences across countries, a long and challenging process of economic transformation brought countries in the region significant improvements in incomes and living standards. Full membership of the EU – or the prospects of accession – provided an important stimulus for the process of transformation as well as an anchor of stability. In Western Europe, completion of the three stages of EMU led to the establishment of the European Central Bank (ECB) and the introduction of the euro in January 1999. Having started originally with 11 participating countries, the euro area has since expanded to include 17 EU Member States including some previous transition economies, namely Estonia, Slovenia and Slovakia. The changes Europe has seen over these past 20 years are enormous. Equally enormous have been the challenges along the way, not least of course due to the global financial crisis. But there have also been enormous achievements. In my remarks today, I would like to take stock of some of those achievements and focus on three main aspects of the process of economic convergence in Central and Eastern Europe. BIS central bankers’ speeches  1  Three main aspects of the process of economic convergence 1. Nominal and real convergence: what has been achieved? The first aspect of convergence relates to developments in terms of nominal and real convergence between the countries of Central and Eastern Europe and the euro area.
We can see that these restructured loans, coupled with the safety cushion accumulated over previous periods, help protect the banking system and prevent a situation where last year’s crisis could turn into a problem for the financial system in the future. We believe that loan restructuring has already passed its peak. Since the outbreak of the pandemic, banks have restructured approximately 10% of their loan portfolio, which is quite a considerable amount. As estimated by banks themselves, up to one-third of these restructured loans may turn into non-performing ones. Banks consider that this figure may reach 20– 30%. This would imply that non-performing loans could make 2–3% of the entire loan portfolio, 1/7  BIS central bankers' speeches  and banks would need additional provisioning for them. We do not consider that this could entail any systemic risks since loss recognition would be gradual. Judging by the previous crisis period, this process takes about two years, that is, provisions will not be created immediately in any case. Most banks have sufficient revenues to form provisions without the need to use their capital. The sector also has a significant capital cushion maintaining it at six trillion rubles, which is three times more than the potential amount of additional provisions for restructured loans. In other words, we can see no problems in this respect for the banking system as a whole. There is also an unevenness in terms of both capital and income distribution and the process how nonperforming loans will be recognised in banks’ balance sheets.

However, it should be noted that not only large banks are searching new business models largely shifting to ecosystems, but there are also smaller banks striving to find their niches, developing 4/7  BIS central bankers' speeches  innovative products, and extensively deploying advanced technologies. Unfortunately, and I should now discuss problems in this regard, we can see that, sadly though, a part of market participants, comprehending that their previous business models are no longer efficient, are trying to find opportunities not to invest in their future — probably because the owners refuse to accept these risks, and banks thus do not invest in their future and their clients — but are rather attempting to gain more money. There are some banks, and disappointingly, there is quite a number of them, who are seeking to increase their incomes through unfair practices using various abusive schemes or misselling. There were also some banks that, so to say, threw caution to the wind and got involved in illegal operations, for instance, providing online casino services. Last year, we revoked licences from those banks for which this became their core business. Therefore, we will be closely monitoring this situation, including illegal operations as well. Still, today I have to detail this issue of unfair practices. I would like you to know that we do not simply see negative practices, but are also going to respond to them.
Jon Cunliffe: Market liquidity and market-based financing Speech by Sir Jon Cunliffe, Deputy Governor for Financial Stability of the Bank of England, at the British Bankers Association International Banking Conference, London, 22 October 2015. *  *  *  According to Oscar Wilde, there is only one thing in life worse than being talked about and that is not being talked about. Wilde of course was not a banker. And although he retained his notoriety until well after his tragic and unjust end, even he probably never experienced the sustained and hostile public attention which bankers and the banking system worldwide have experienced over the past eight years. So it will probably come as a relief to those of you here at the BBA International Banking Conference that I do not today intend to talk – in the main – about banks and bankers. Rather, I want to talk about market not bank-based finance and about market liquidity. I hope you will not find that worse than being talked about. I will, however, make some important points at the outset about the reform of the regulation of the banking system. That is not just for any of you that would otherwise have withdrawal symptoms.

First, there is increasingly persuasive evidence that emissions, and so climate risks, are systematically underpriced in financial markets. This means that continuing to replicate the structure of the sterling corporate bond market, without taking explicit account of the climate impact of bond issuers, is no longer in fact a truly ‘market neutral’ approach. And second, the remit of the MPC was updated in March this year to clarify that, subject to achieving price stability, the Committee should support the transition to net-zero as part of the government’s economic strategy.11  The CBPS will remain a monetary policy tool, with its overall target stock of assets set by the MPC in order to achieve its primary inflation objective. However, from Q4 this year we intend to modify our approach to the composition of assets we buy, in order to take account of climate considerations. Our approach will be guided by three principles. First, we will look to incentivise companies to take decisive actions which contribute to an orderly transition of the overall UK economy to net-zero. Second, given the relatively small scale of the CBPS in the context of capital markets, we will seek to influence the thinking of other, larger investors, as well as learning from them. Thirdly, our requirements of firms will become more demanding over time, including as improvements in data and metrics allows us more precisely to monitor climate behaviour, and further to sharpen the incentives we set.
In addition, both house prices and debt accumulation are affected by structural changes in capital and credit markets and by changes in lending willingness, demographic trends and migration patterns. It is difficult to determine to what extent house prices have risen as a result of structural changes and wealth gains and to what extent house prices have been pushed up by expectations of a continued high rise in house prices. Developments since the beginning of the 1990s may have engendered expectations that house prices will only continue to rise. This may have increased house purchases for pure investment purposes and induced younger buyers to enter the housing market earlier than otherwise. The pronounced fall in  4  BIS Review 102/2007  saving over the past few years indicates that households take greater chances. The housing market may have been in a state of euphoria. We can influence house prices through the interest rate, but if the interest rate had been increased to a markedly higher level in order to curb house price inflation, the krone would have been significantly stronger and CPI inflation significantly lower. Yet it is low and stable inflation that is the operational target of monetary policy. There is symmetry here as well. Should house prices fall sharply, we will in interest rate setting concentrate on dampening the effects on inflation and overall activity in the economy.

And the continuing efforts of the banking sector also represent challenges of their own: banks filed over 68,000 or 90% of the suspicious transaction reports (STRs) with the JFIU in a year. And that is just the STRs: we all know what that means in terms of the massive amount of data that banks are monitoring, screening and analysing on an ongoing basis. 5. The more difficult part of the answer to my question therefore means looking forward and requires vision and – dare I say it – aspiration – because we know that FATF evaluations represent a snap shot. There are always new and emerging risks, to which the HKMA and banks have stayed vigilant and agile; criminals are also exploiting new technology and innovations to create terrible harm to consumers and the integrity of the financial system. Banks that play a frontline role in combating that harm, not only by applying preventive measures when on-boarding customers, but increasingly through the value of information they are able to extract and feed into the AML/CFT eco-system and the close cooperation with the LEAs and the HKMA in converting STRs and intelligence into actions like arrests and asset recovery. 6. This is the challenge we face so we’ve taken a step back from the FATF evaluation report and asked ourselves some potent questions: is our system working as well as we would like it to be? Are the supervisory tools and techniques we have been using for years still fit-forpurpose? 7.
Real short-term interest rates were reduced around the world, following a nearly decade long secular decline in inflation rates, a slowdown in growth at the turn of this decade and subsequent deflation. As central banks raised their policy rates when the outlook improved and deflation risks had dissipated, both real and nominal long-term interest rates remained anomalously low. Global savings appeared to rise faster than did perceived real investment opportunities, and this development helped to push down real long-term interest rates around the world. At the same time, many emerging market economies built up very large levels of official reserves to reduce external vulnerability and to hold the value of their currencies stable against the dollar. The exchange rate policies in these economies – economies that together accounted for a increasing share of global GDP – made overall global financial conditions more accommodative, even as the United States and other countries tightened their monetary policies. Expected and realized volatility in both debt and equity markets were remarkably low for most of the last half a decade. Term premiums declined and remained low over much of this period. Credit spreads across a wide range of asset classes fell to levels that assumed unusually low levels of future losses. In the United States, credit, and mortgage credit in particular, expanded relative to GDP.

The policymaker’s “loss function” in any particular time period is: 𝐿𝑜𝑠𝑠𝑡 ≡ (𝜋𝑡 − 𝜋 ∗ )2 + 𝜆(𝑦𝑡 − 𝑦𝑡∗ )2 where 𝜋𝑡 is inflation, 𝜋 ∗ is the inflation target, 𝑦𝑡 is output and 𝑦𝑡∗ is ‘trend’ output, so that 𝑦𝑡 − 𝑦𝑡∗ is the output gap, and 𝑡 subscripts denote time periods. 13  The policymaker’s objective is to minimise the discounted sum  of these losses over time. In this formulation, a lambda of zero would imply no weight on the stabilisation of real activity – so-called “inflation nutter” preferences. When lambda is positive, in contrast, the policymaker is willing to strike at least some trade-off between output and inflation stabilisation, as directed by the MPC remit. This objective function is optimised subject to the constraints implied by the aggregate behaviour of the economy, including the relationship between interest rates and activity; and the relationship between activity and inflation – the Phillips curve shown in Figure 1. In essence, these suggest lower interest rates raise activity;  14  and higher activity generates higher inflation. Under this simple framework, in certain circumstances, the optimal policy balances inflation overshoots with shortfalls of activity relative to potential, and vice versa for inflation undershoots. (A derivation appears in the Annex.)
Mr. Heikensten examines economic policy and the fight against inflation in Sweden Speech by the Deputy Governor of the Bank of Sweden, Mr. Lars Heikensten, at the Meeting of Almega-Affiliated Employers’ Associations on 27/5/98. Thank you for the invitation to attend your meeting and talk about economic policy and inflation. Today I shall begin with a brief review of the historical background to the fight against inflation in the Swedish economy. It is worth recalling that more than eight years have passed since it was decided in Sweden that combating inflation would have top priority. This policy has been pursued consistently ever since. After a couple of initial years that were troublesome in many ways, the results have been encouraging and Swedish stabilisation policy now looks good even in a European comparison. This will be followed by a discussion of three policy fields—fiscal policy, labour market and wage formation—that are closely linked to monetary policy, as well as some remarks about competitive conditions in Sweden’s economy. Successful results in these policy fields enlarge the room to manoeuvre in monetary policy. In conclusion I shall consider some topical monetary policy issues, including our current appraisal of inflation and monetary policy’s construction. 1. The fight against inflation and its results High inflation characterised Sweden’s economy for a number of years in the 1970s and 1980s, a period that clearly illustrates an inflation economy’s negative consequences. Repeated attempts were made to rectify the economic imbalances by means of devaluations and fiscal stimuli but development remained unstable.

I therefore wish to thank, from the outset, Celpay for organising this timely conference and to welcome most warmly our foreign participants who I’m sure will bring a rare insight to this conference with their own experiences. It is widely acknowledged that expanding access to financial services for Zambia’s unbanked population remains one of the biggest challenges confronting the financial sector in this country. Findings from the last FinScope Zambia Survey which was conducted in 2009 showed that 62.7% of Zambian adults still remained financially excluded compared to 66.3% reported in 2005. This slight increase in access to financial services, however, fails to match the significant increase in the number of banking and non-banking institutions which over the same period increased from 14 to the current 19 banks and to over 90 in the case of the nonbank sector. The mismatch in growth between the supply side and the demand tells us a story that the physical increase in the number of the traditional financial service providers does not necessarily translate into a corresponding increase in access to financial services among the population. I believe it is this mismatch that calls for the need to examine the role that the non traditional platforms, such the mobile phones, can play in enhancing greater access to financial services.