samchain/econo-pairs-v1 huggingface dataset:
In 2007, for instance, the US current account deficit stood at $ billion, while China’s surplus stood at no less than $ billion. Moreover, the deficits are also large in historical terms. A number of competing explanations have been advanced for this pattern of flows. First, it could simply reflect the juxtaposition of strong demand in the United States, coupled with China’s adoption of an undervalued exchange rate in order to accelerate the development of the traded goods sector and to soak up labour from the rural areas (Dooley, Folkerts-Landau and Garber, 2004). Second, it could reflect a “savings glut” in the surplus countries (Bernanke, 2005), resulting from a lack of an adequate household safety net in China, the accumulation of precautionary holdings of international reserves by several emerging market countries after the Asia crisis, and rational savings of the windfall gains from higher oil prices on the part of oil producers. Finally, it has been suggested that the United States holds a comparative advantage in the creation of “high quality” financial assets from real investments, leading to a direction of savings into the US financial markets (Caballero, Farhi and Gourinchas, 2008). Now while these flows are certainly likely to have added to the growth in credit, on the face of it they could only be a part of the explanation. For instance, the cumulative US current account deficit over the 2000-7 period was $ trillion.

2/4  BIS central bankers' speeches  To help to meet these challenges, we at Banque de France are focusing our activities around two main areas: 1/ Support and implement regulatory frameworks and supervisory practices that promote innovation and the stability of our financial system Most of the current regulatory framework predates the technological breakthroughs that we are now facing. Accordingly, it makes sense to adjust the regulatory framework to these  technological developments, the challenges they present and the attendant risks. The same naturally applies to our supervisory framework and methods. For this reason, we are actively involved in multilateral cooperation work, such as the G7, the G20, the Financial Stability Board and the Committee on Payments and Market Infrastructures, particularly on crypto-assets and enhancing cross-border payments. We are also supporting the European strategies on digital finance and retail payments published by the Commission in the final quarter of 2020 and especially the two flagship initiatives, namely the draft Markets in Crypto-Assets (MiCA) Regulation and the future Digital Operational Resilience Act (DORA) Regulation on operational risks in the financial sector. 2/ Be involved as a participant in the evolution of payment systems However, adapting the regulatory framework will not be enough. At the Banque de France, we believe we also need to be part of the evolution of payment systems by pursuing, at this stage, two goals: facilitate and experiment.
Certainly, in various euro area countries, these measures need to be complemented by efforts to correct past excesses in both the public and private sectors. And these reforms need to be undertaken against the backdrop of a weak and fragile economic recovery, making the whole process more challenging. BIS central bankers’ speeches  1  The first signs of recovery The first signs of recovery are now visible. Chart 1 shows the level of systemic risk across the euro area, as gauged by the Composite Indicator of Systemic Stress. This index has reached the lowest levels since the euro area sovereign debt crisis started. From the macroeconomic perspective, following a contraction that spanned over six quarters, the euro area’s real GDP rose marginally in the second and third quarters of 2013. Although projections still see real GDP shrinking marginally in 2013 as a whole, a modest but positive growth rate of around 1% is expected for 2014. Despite these positive developments, the risks around the outlook for the euro area remain tilted to the downside. Moreover, unemployment in the euro area remains excessively high, especially in the stressed countries. Heterogeneity in the euro area is evident both in terms of economic performance… An underlying characteristic that is observed in the euro area is the uneven performance across countries and the emergence of increased heterogeneity.

Because of this correction, unit labour costs in the stressed economies have plateaued and are now converging with those in the better performing countries (refer to Chart 4). While unit labour costs in Malta have been lower than in other euro area countries, it is crucial to ensure that higher productivity supports wage growth, thereby safeguarding the country’s competitiveness. Conclusion – Malta as a regional hub In the recent past, our economy was able to attract sectors and niche markets, such as financial and business services, and the aviation maintenance sector. Further investment promotion calls for continued efforts to identify new areas of growth, and to develop a labour force with the necessary skills and qualifications. The financial and other service sectors have been crucial for economic stability and growth. Recent expansion in the financial services sector can serve as a springboard for further development in view of new opportunities in the Mediterranean region. Further diversification of the range of financial and other services will provide opportunities for Malta to develop further as a regional hub for various activities. Proficiency in the English language, a sound legal system, the high standards of the legal and accounting professions and the mantle of EU membership offer fertile ground for those who want to do business here. Certainly, a growing financial sector needs to be supported and protected by appropriate legislative and supervisory frameworks to ensure that potential risks are minimized. Malta has managed to host a relatively large financial sector without exposing itself to excessive risks.
That sits oddly with historical trends, which points towards secular rises in societal levels of patience, in part driven by technological trends. But those trends may themselves be on the turn. Just as the printing press may have caused a neurological re-wiring after the 15th century, so too may the Internet in the 21st. But this time technology’s impact may be less benign. 63 We are clearly in the midst of an information revolution, with close to 99% of the entire stock of information ever created having been generated this century. 64 This has had real benefits. But it may also have had cognitive costs. One of those potential costs is shorter attention spans. As information theorist Herbert Simon said, an information-rich society may be attention-poor. 65 The information revolution could lead to patience wearing thin. Some societal trends are consistent with that. The tenure of jobs and relationships is declining. The average tenure of Premiership football managers has fallen by one month per year since 1994. 66 On those trends, it will fall below one season by 2020. And what is true of football is true of finance. Average holding periods of assets have fallen tenfold since 1950. 57  For example, OECD (2014). 58  For example, Attanasio and Blundell (2014), Summers and Balls (2015). 59  Gordon (2012). 60  See OECD Programme for International Student (http://www.oecd.org/pisa/keyfindings/pisa-2012-results.htm). 61  See http://www.nationalnumeracy.org.uk/what-the-research-says/index.html. Literacy and numeracy skills defined as GCSE grade “C” or above. 62  Depending on what happens, for example, to retirement rates.

William C Dudley: The national and regional economy Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the New Jersey Performing Arts Center, Newark, New Jersey, 6 April 2015. *  *  *  Jason Bram, Chelsea Cruz, Tony Davis, Jonathan McCarthy, James Orr, Richard Peach, Paolo Pesenti and Joseph Tracy assisted in preparing these remarks. I am very pleased to be here at the New Jersey Performing Arts Center (NJPAC) and to have this opportunity to speak with the members of the Business Partners Roundtable. In my remarks, I will provide an update to my national outlook for 2015, as well as discuss economic developments in New Jersey. I will also briefly touch on how monetary policy might evolve should my economic outlook be largely realized over the next year. My meeting with you today is part of our continuing efforts to understand what is going on at the grassroots level of our economy. We plan these trips so I can meet with a diverse array of stakeholders in the region. This allows me to get a comprehensive picture of economic conditions in the region and a fuller understanding of the major issues and concerns. This is our first regional trip for 2015 and the third time we have visited northern New Jersey in the past four years.
Many of the economic policy problems Icelanders dealt with in the first 100 years of its monetary independence stemmed precisely from the lack of an independent central bank with full scope for policy action. In essence, Iceland lacked the institutional architecture required to maintain economic stability. And even in 2001, when the Central Bank of Iceland was formally granted independence in order to maintain price stability through inflation-targeting, only half the battle was won. The Bank had neither the authority nor adequate tools to ensure financial stability. But fortunately, this has changed. I stand here as the head of a new Central Bank created by the merger with the Financial Supervisory Authority, which took effect on 1 January 2020 – a Central Bank with explicit authorisations and a vast range of tools at its disposal to ensure both price stability and financial stability through measures focusing on monetary policy, macroprudential policy, and financial supervision. Although barely three months have passed since the merger took effect, it has already demonstrated its value. We, the employees of the new Bank, have been able to respond, swiftly and in a coordinated manner, to the threat posed by the COVID-19 pandemic. The application of the Bank’s policy instruments is in the hands of three committees comprising both internal and external members, which take decisions jointly by majority vote. These committees – the Monetary Policy Committee, the Financial Stability Committee, and the Financial Supervision Committee – have clearly defined objectives, as well as policy instruments to achieve them.

Significant findings from the survey were that 66.3% of the Zambian adult population did not have access to financial services and that only 33.7% used banks, other formal and informal financial services and products (such as those offered by microfinance and savings clubs). Above all, only 15% of the adult population had access to commercial banking services. This low level of financial access therefore constitutes one of Zambia’s main challenges in facilitating economic empowerment of every citizen. Arising from these findings, the Government has since set targets or performance monitoring indicators. One such target is to increase the level of access to financial services to 48% by 2008 and 50% by the end of 2009. Following the earlier survey, a subsequent study called the “Finscope Supply – Side Survey” was conducted in 2007. Some of the key findings were that: a.  bank charges are unaffordable for 90% of the rural adult population in Zambia;  b.  Zambian banks generally have high operating costs and interest rate spreads; and  c.  the physical coverage of financial outlets may not increase at current cost levels. It is therefore, my hope that this Forum will address these and other challenges that slow the pace of financial inclusion in our countries.
The GFC has also undermined the belief that banks can look after themselves in efficient markets and that “de-regulation” and “light touch supervision” must be good as they promote financial innovation and diversity. As a result of these bitter lessons, a series of profound reforms championed by the G20 and the Financial Stability Board, of which the HKMA is a member, have been introduced to make the banking and financial system much more resilient to shocks. An informed banker will tell you that banks nowadays have to comply with a very long list of stringent standards in capital, liquidity, leverage, margining, risk management, derivative trading and reporting, etc. At the same time, there are new and strong measures designed to address misconduct risks, ranging from anti-money laundering and counter terrorist financing, front-running, insider trading, mis-selling of financial products, etc. 13. For those bankers who feel disappointed tonight because they cherish the hope that they would learn some clever tricks to get rid of bank supervisors, I owe them an apology. However, the consolation is that, in my view, banking supervision is not an “all or nothing” game. While it is true that the kind of “cozy” or “light touch” supervision that was prevalent before the GFC is now out of the question, there is still a great deal of space in how we calibrate the “intensity” or “intrusiveness” of banking supervision in order for the process to be effective while not creating an undue burden on banks.

I will highlight today three dimensions to consider, among many others, in case the introduction of CBDC is decided: liquidity configuration, policy rates and access to central bank balance sheet. 1. First potential impact: the launch of CBDCs could affect monetary implementation through a change in the liquidity situation of the banking system. - While the design of the CBDC should ensure that any risk of sudden large shifts from bank deposits to CBDC would be avoided, it could still substitute a limited part of retail deposits, through an increase of what we call in central banking jargon “autonomous factors”, i.e. an item not linked to monetary policy but affecting the liquidity situation of the banking system. - This could in turn imply that the central bank – depending on its preferred liquidity position – provides additional liquidity through refinancing operations and/or asset purchases. In case of collateralized refinancing operations, collateral availability would also need to be checked to accommodate the operations. While it is very much a speculative thought at this stage, liquidity-providing or liquidityabsorbing operations would need to remain available at any time to ensure that central banks can choose to operate in the monetary policy implementation framework they choose, even in the case of the launch of a CBDC. 2. Second: the chosen remuneration scheme, as well as possible limits, are key parameters for the usage of CBDC that also need to be assessed for the monetary policy framework.
These are characteristics that are important to society, but that the individual user does not necessarily prioritise in their choice of payment solution. The question is whether something important will be lost if cash dies out and we do not introduce CBDC? Is central bank money crucial to confidence in the monetary system? Could CBDC provide more than cash can offer, in the form of a greater range of uses and more innovation? Chart 5 Central bank digital currency in Norway Declining cash use is not the only motivation for Norges Bank’s research into CBDC. The precautionary principle is also an important factor. We want to be prepared to be able to introduce a CBDC if the payment system develops in a different direction than we can foresee today. We must take account of changes in the payment solutions offered, including different forms of money. Libra will not be the last initiative of this kind. We must also take structural changes in banks’ payment infrastructure into account. We must think through the effect these changes may have on competition, contingency solutions and national governance and control of the payment system. Norges Bank’s research has now been in progress for almost four years. The prospective introduction of a CBDC is still some way off. The lack of urgency reflects our view so far that there is no acute need to introduce a CBDC. The introduction of a CBDC could have considerable consequences in a number of areas. Our decision must be well-informed.

Interoperability across systems and operators merits continued focus. Big technology companies, or BigTechs, have so far offered services to end-users overlaid on top of traditional payment infrastructures. They can also have an interest in offering their own currency and payment systems. One example is Libra, backed by among others Facebook. Regulation of such systems will be important if we as a society are to secure the benefits of these new solutions while limiting the associated risks. The European Commission recently presented legislative proposals for an EU regulatory framework on crypto-assets as part of its digital finance package. As an EEA country, Norway will also be affected by this framework. Globalisation is about more than BigTechs entering the payments market. Payment infrastructure providers are also undergoing structural changes. Global operators are taking positions in Norway and the Nordic region. Mastercard will be acquiring many of Nets’ services and will be an important provider for Norway’s payment system. Central bank digital currency Structural changes in the payment landscape raise questions around whether there is a need for Norges Bank to implement measures to ensure that payments can continue to be made efficiently and securely in NOK in the future. A central question is whether Norges Bank should provide central bank money to the public in digital as well as physical form. Central bank digital currency – CBDC – will be both a new type of money and a new payment system. CBDC, like cash, is a claim on the central bank.
The new regulatory framework also made it harder for originators to get capital relief insofar as the conditions that must be met in order to qualify for a significant transfer of risk (a necessary condition to free-up capital) are now much more stringent. This was unfortunate in the sense that the contribution of this class of securities in alleviating systemic effects, which should warrant a more reasonable regulatory treatment, was overlooked; in at least two ways. First, ABS sales are, from an aggregate perspective, a better way for banks to deleverage vis-à-vis credit supply restrictions. In fact, if many banks deleverage simultaneously by restricting credit, this will have an aggregate impact on the total supply of credit, which might end up in a credit crunch. In contrast, deleveraging through securitisation does not mechanically induce a credit supply restriction, even if many banks do it simultaneously. In fact, deleveraging through securitisation could provide banks with enough funding and capital to enable them to increase lending, or, it could help transforming zombie banks into active players in the economic recovery. Second, there is considerable home bias in the loan portfolio of banks whereas diversification of assets and reserves across the euro area, something which is achievable through cross-border purchases of ABS, could act as an absorber of asymmetric shocks. 2  BIS central bankers’ speeches  All this suggests that the next regulatory steps could justifiably give a more favourable treatment to ABS.

At the same time, more prudent transformation ratios (say, loans to deposits), coupled with a lower capacity of banks to attract savings would imply, at least in some countries, that the ability of banks to lend would decrease; but their willingness would not necessarily decrease, since they keep the advantaged standpoint to screen and monitor loans. This means that the implied gap might be filled by actors (insurance companies, pension funds) with greater capacity to attract savings although with limited capacity to lend directly. Securitisation of bank loans can be the privileged vehicle through which the gap is filled. Securitisation is also key when one thinks at impediments to capital relief and at tools to decrease the perilous geographical concentration of assets in banks’ balance sheets. In fact, if the right incentives are given, securitisation markets are the best way to more rapidly guarantee that loans are available for capital markets to invest while decreasing the home bias in banks’ balance sheets and ensure that credit is channeled to the best projects at the minimum cost. That is, securitisation could also have a decisive role in the integration and deepening of European financial markets, by allowing the transfer of risk from the originator to investors of any type located in other jurisdictions, in the context of a still very fragmented banking sector, lacking for instance relevant pan-European banks.
In the minutes of the monetary policy meeting in April, several of my colleagues put forward the development of credit and house prices as reasons for not pursuing a more expansionary monetary policy. My view is that if this development represents a threat to financial stability then the situation should be handled using instruments that impose restrictions regarding leverage, amortisation and so on. The repo rate is a blunt and inappropriate instrument. 7 However, the analyses performed by the Riksbank and Finansinspektionen indicate that this development does not pose any threat to financial stability at present. 8 Credit volumes and house prices are not targets for monetary policy. From the monetary policy point of view they are indicators and should only affect monetary policy to the extent that they affect the forecasts for inflation and resource utilisation. There are no signs, and as far as I know no analyses, that show credit volumes and house prices are now affecting the forecasts for future inflation and resource utilisation one way or another. Indicators should only affect monetary policy if they contain information that is relevant to future inflation and resource utilisation. Two speeches by Donald L. Kohn of the Federal Reserve specify three conditions that should be fulfilled before central banks implement “extraordinary measures” to handle  7  Svensson (2010a, b). 8  Finansinspektionen (2010).

The best way to justify why a certain reporate path has been chosen is to compare the consequences of this path for inflation and the real economy with those of the alternatives. What does this mean in concrete terms? Well, it means that one must be able to show that the repo-rate path one prefers gives rise to the forecast for inflation and resource utilisation that best stabilises inflation around the target and resource utilisation around a normal level. It is as simple as that. Figure 2: Forecasts Figure 2 shows the forecasts for CPIF inflation (panel a), the output gap (panel b) and the hours-worked gap (panel c) for the main scenario and for the extended repo-rate path. The curves marked “Expected” show the forecast under the following assumptions: The extended-repo-rate path is announced in April. It is perceived as credible in the sense that the market from and including April expects an unchanged repo-rate path until the end of the fourth quarter of 2010. The curves marked “Unexpected” show the forecast under the following assumptions: The extended repo-rate path is not incorporated in market expectations and the market instead continues to believe in the main scenario’s repo-rate path. The market is taken by surprise in the third and fourth quarters of 2010 when the repo rate is left unchanged. We can see that the effects of an expected extended repo-rate path are greater than those of an unexpected extended repo-rate path.