samchain/econo-pairs-v1 huggingface dataset:
This will preserve the public’s trust in the sustainability of public finances and will support both the recovery and long-term economic growth. The credibility of fiscal consolidation commitments will be strengthened if they are part of national policy frameworks oriented to the medium term. BIS Review 56/2009  3  Turning to structural policies, it is crucial that the focus is now on strengthening the adjustment capacity and flexibility of the euro area economy in line with the principle of an open market economy. This calls for an accelerated implementation of labour market reforms to facilitate appropriate wage-setting and labour mobility across sectors and regions as well as product market reforms to foster competition and speed up restructuring. We are now at your disposal for questions. 4  BIS Review 56/2009

Nonetheless growing digitalization also entails the emergence of new competitors and value propositions that will likely erode their status quo in the industry. Technology certainly holds a significant transformational power enabling promising developments but, per se, technology is by no means the ultimate answer to existing risks in economics and finance, as my colleague Sir Jon Cunliffe recently pointed out 2. Against this light, it makes more sense for central banks to consider the need for a speedy action. This action need to be based on the exploration of a wide set of tools that help to ensure the safeguarding of financial stability as well as the preservation of the critical role of money in the economy. While many responses are indeed possible, there’s no denying that introducing a new form of public money appears to be gaining traction, at least from a more conceptual point of view. In fact, one of the reasons why we, at the Eurosystem, are looking into CBDCs in depth is to evaluate their potential to ensure easy access to central bank money in the digital age as a foundation of our currency. In other words, a digital euro is seen as the best way to secure that public money remains an anchor for the whole payment system and, in achieving this goal, that trust in both private and public money is strengthened while further protecting the currency’s function as a single unit of account. Deploying a digital euro can also be strategically important in order to preserve our monetary autonomy.
2  All speeches are available online at www.bankofengland.co.uk/speeches  2  Part of the case for an international capital standard is that insurance markets have become more global over the past few decades, even if that trend appears to have steadied after the financial crisis (Chart 1). This is most obvious in wholesale general insurance and reinsurance, where the underlying rationale for insurance provision arises from the law of large numbers and the benefits from pooling and diversifying across risks. Recent cross border mergers and acquisitions, and with talk of more to come, suggests the increase in the amount of business written by overseas companies might resume. Chart 1: business written by overseas insurers  Source: OECD and Bank calculations  Mergers and acquisitions are in part a response to the prolonged period of soft conditions in wholesale general insurance and reinsurance markets. For many insurers underwriting returns are now below the levels required to achieve sustained profitability, even in years of ‘normal’ natural catastrophe activity. Our sense is that until this year, many had thought that market conditions would improve cyclically: for example, following a large loss event. They had therefore sought to maintain their market position and wait for better times. The limited increase in market prices following the losses from the 2017 hurricanes in the US and Caribbean has, however, caused a number of boards to look more fundamentally at the sustainability of their current businesses.

Insurance linked securities and new insurers  One response has been to move in the direction of introducing and managing rather than providing risk capital. Insurance-linked securities and other forms of alternative insurance capital, such as sidecars and 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  the like, allow insurers to transfer risks to capital markets. These markets have been growing for some time, forming an increasing share of global reinsurance capital (Chart 2). They seem to have absorbed losses from the 2017 hurricanes without major hiccups. With the continuing search for yield and diversification by institutional investors, growth seems likely to continue. Chart 2: Share of alternative capital in global reinsurance capital  Source: Aon: ILS Alternative Capital Fortifies Its Position September 2018  Last year the government established a tax and regulatory framework for Insurance-Linked Securities in the United Kingdom. It is intended to help cement London’s position at the forefront of global reinsurance business. The PRA has since authorised a number of Insurance Special Purpose Vehicles, which can either be for one transaction or multiple transactions from one or more cedants. We are taking a proportionate approach to their supervision, consistent with the risks posed to our objectives and compliance with Solvency II requirements. We are keen to work with the industry to ensure we capture any learning as we both develop our experience of operating the new regime.
The relationship between economic activity and the labour market Each economic cycle is unique, which became particularly clear during the most recent economic downturn. However, there are some patterns that often recur in economic cycles and forecasters have therefore often used them as a base in their forecasting work. For example, it is normal that changes in activity in the labour market occur with some time lag compared with changes in production. This is mainly because it is expensive for companies to adjust production to a new demand situation and to employ and give notice to staff. Firms may therefore initially choose to wait and see whether the change in demand is temporary. This means that the first thing to happen in an economic downturn is that productivity growth falls. Firms gradually adapt to the new situation by reducing the number of hours worked without reducing the number of employees. However, if the downturn is long-lived, the personnel force is also downsized over time. The time lag between GDP and the number of hours worked is usually one quarter in Sweden, while the time lag between GDP and employment is usually twice as long, that is, six months. A well-known relationship between economic activity and activity in the labour market was formulated by Arthur Okun in the early 1960s. 1 This describes a negative relationship between GDP growth and changes in unemployment, which has become known as “Okun’s law”.

Firstly, it should be said that it is not possible to point to any individual variable that will alone be a determining factor in an interest rate decision. Prior to each interest rate decision we weigh together all of the new information received since the previous decision. But employment is of course an important element; when, for example, we said in February that economic activity was now on firmer ground one of the things we were referring to was the stronger labour market. It was a contributing factor to the marginal adjustment in the repo rate path we made then; with a first repo rate increase coming slightly sooner than implied in the repo rate path from December. Our most recent repo rate decision entails both the repo rate and the repo rate path being held unchanged. A weaker GDP outcome for the fourth quarter could on its own have been a negative signal and made us more doubtful about the timing of the coming interest rate increase. But we also had surprisingly positive information on the labour market, which provided support for the assumption that the economy is moving in the right direction. Our forecasts are based on employment only increasing at a slow rate in the future and on resource utilisation being lower than normal for the greater part of the forecast period. But the situation is that the crisis has hit the export industry particularly hard, while the services sector has escaped relatively lightly.
On one hand, the United States, central and eastern Europe and - until the recent SARS epidemic - East Asia have been showing greater vigour. On the other hand, there has been economic stagnation in Japan, very modest growth in the euro-zone and a very disappointing performance in Latin America. Second, in contrast with the usual pattern in recovery phases, certain variables are showing no signs of improvement. Let me mention two: first, investment, despite the low level of interest rates, perhaps because of overcapacity in certain sectors, but mainly because of an overall lack of confidence in the recovery; and second, employment, which, particularly in the case of the US, continues showing signs of weakness. Third, macroeconomic policies have generally been more expansionary. Interest rates are at historically low levels, both in nominal and real terms, in most countries, and this applies also to the longer segments of the yield curve. Overall, fiscal policies are clearly expansionary, although the room for manoeuvre available to different countries in this regard varies greatly. Fourth, the current-account imbalances among the largest economies were exacerbated during the recession and the early stages of the recovery and their geographical distribution does not bode well for their correction. One particular reason for concern is that the huge US current-account deficit coincides with the role of the US as the only locomotive of the world economy in recent years.

Jean-Pierre Roth: Role of the central banks with respect to the financial market crisis Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Forum Suisse de Politique internationale, Geneva, 23 May 2008. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  The central banks have been working extremely hard to respond appropriately to the turmoil that has beset the financial markets in recent months. Aimed at enhancing the resilience of the markets and safeguarding the stability of the financial system, the measures they have taken have been drastic and innovative at times. As this episode has also shown, a policy of preserving financial stability is not always easy to reconcile with monetary policy. The central banks must therefore tread carefully and avoid compromising their price stability objectives when intervening to defend financial stability. While money market conditions deteriorated over the past nine months, the Swiss National Bank put off interest rate hikes so as not to provoke a tightening of credit conditions in Switzerland. Effective action by banking supervisory authorities is key to ensuring long-term financial stability. However, the central banks also have a role to play in reinforcing the markets during times of need.
This is fundamental for the timely detection of any slippage from stated budgetary objectives and for standing ready to respond appropriately. It should also be noted that in the past few weeks a good number of regional governments announced their budgets for 2013, although it is still early to make a full diagnosis of overall regional government expenditure. These developments remedy some of the weaknesses in the information available for assessing the budgetary adjustment scheduled for 2013. Even so, the fact that the presentation of the various budget documents by the various governments is not formally coordinated makes the work of analysts harder, given that, obviously, what matters from the macroeconomic standpoint or for the analysis of public finances is general government as a whole. The State and Social Security Budget for 2013 Let me now turn to the essential features of the State and Social Security Budget for 2013, beginning with a reference to the budget outturn in 2012. The budget deficit is being reduced this year in very adverse economic and financial circumstances. Indeed, as a result of the risks of possible slippage, a series of supplementary fiscal measures were adopted for the 2012 Budget. Their effects have begun to be perceived only in the second half of the year. Notwithstanding, on the information available, the possibility of slippage can still not be ruled out.

Luis M Linde: Brief review of recent developments in the Spanish economy Testimony by Mr Luis M Linde, Governor of the Bank of Spain, before the Senate Budget Committee in connection with the draft State Budget for 2013, Madrid, 21 November 2012. *  *  *  Ladies and gentlemen, This is the first time I am following the tradition of the Governor of the Banco de España in giving testimony to this House as part of the debate on the State Budget. It is a pleasure to do so. The Budget is being debated this year in a national and international economic context beset by difficulties. Consequently, before analysing fundamental aspects of the Budget, I think it is appropriate to briefly review some of the most significant recent developments in the Spanish economy. I will confine my comments to those developments I consider most important for the debate on this draft law. The international setting and the euro area In the current circumstances, marked by the need to complete a series of difficult adjustments, the Spanish economy’s ability to recover is heavily conditioned by the fragile external setting. On the most recent projections of the main international organisations and most private analysts, the euro area’s gross domestic product – and, therefore, the imports of our main economic partners – will hardly grow next year.
In particular, over time, mandatory reporting to trade repositories (TRs) and access to that data by regulators should facilitate the ability for supervisors and others to assess building risks in the global financial market more quickly and comprehensively. Improving competition and protecting against market abuse are also important. These objectives are being accomplished by the increased use of electronic trading platforms and  BIS central bankers’ speeches  1  improving access to CCPs. This should lead to more competitive markets that will offer participants better liquidity and pricing and a greater degree of transparency. In general, I think that the first two objectives of OTC derivatives reform fit in well with the goals of the broader financial reform effort undertaken in the wake of the financial crisis. I would characterize the goals of the broader effort as:   Reducing the risk of failure of large systemically important financial institutions;    Increasing the robustness of the system when such failures occur; and    Obtaining better information more quickly about what is happening in the financial system so that the identification of incipient problems can be improved and the ultimate interventions – be they macroprudential or firm-specific – can occur earlier and with greater conviction. Implementation of OTC derivatives reform should make the markets more resilient and should reduce the risk that they will be a source of contagion in stressed environments.

This would boost capital stock and total factor productivity and, hence, sustainable economic growth going forward. I believe that the setting up of the Malta Development Bank should help increase the availability of finance to the real economy, while also supporting long-term investment projects. This bank is going to fill in an institutional gap in our financial sector, which recent developments have made ever more evident. In a banking sector, which remains relatively well profitable, compared to their European peers, despite the decline in lending to nonfinancial corporations, we need an institution that can help create an environment where banks feel comfortable to extend credit to innovative firms, namely firms that may  Page 8 of 10  not be able to provide adequate collateral due to the nature of their business, but which are still good business opportunities. Besides the Development Bank, there are other policy measures that should help facilitate the flow of credit. At the Central Bank we will continue to evolve our credit register to provide more information to banks and help reduce credit risk. More broadly we will continue supporting government in its attempts to reduce excessive bureaucracy and further improve the insolvency process. We will also continue to take macroprudential measures to ensure timely policy interventions to safeguard the stability of the financial system. The struggle against bureaucracy is a key element in the broader effort to improve the ease of doing business in this country.
As usual, it is necessary to consider all information, where, in practice, the assessment of effects not covered by models is of great significance. If something cannot be considered to affect the expected value of future inflation and resource utilisation, then monetary policy does not need to react to it.7 Kohn (2006, 2008) mentions three conditions that should be fulfilled before central banks implement “extraordinary measures” to handle possible asset price bubbles, such as the  7  8  See Svensson (2003) for a discussion of monetary policy with extreme outcomes with low probability. BIS Review 22/2010  unsustainable development of housing prices: “First, policymakers must be able to identify bubbles in a timely fashion with reasonable confidence. Second, a somewhat tighter monetary policy must have a high probability that it will help to check at least some of the speculative activity. And third, the expected improvement in future economic performance that would result from the curtailment of the bubble must be sufficiently great.” As these conditions are very seldom fulfilled in practice, it is very seldom that the issue arises, in practice, of allowing asset prices to influence monetary policy.8 It has occasionally been claimed that a central bank should be cautious as regards lowering the interest rate to very low levels, as this would be venturing into unfamiliar waters. I object strongly to “unfamiliar waters” being an argument against cutting the repo rate.

The mean squared gap for the inflation forecast is defined as    0 t  ,t   *  / T  1 , where t  ,t denotes the forecast in quarter t for inflation T  2  in quarter t  ,  * denotes the inflation target, and T denotes the forecast horizon (normally 12 quarters). 4  In the Monetary Policy Reports, the following note is also usually attached to the resource utilisation diagram. “These gaps should not necessarily be interpreted as the Riksbank’s overall assessment of resource utilisation.”  4  BIS Review 22/2010  Figure 1 here or Figures 2.13–2.15 in the Monetary Policy Report summarise the essence of the monetary policy decision. What monetary policy alternative shall we choose? Which repo rate path shall we choose: the one in the main scenario, or a higher or lower repo rate path? My firm opinion is that a large part of the monetary policy decision-making process and discussion should centre on monetary policy alternatives and their advantages and disadvantages. I fear that the decision process will otherwise fix too quickly and too uncritically on one particular alternative instead of carefully and meticulously considering several alternatives, choosing the best one, and very clearly describing why one particular interest rate decision was made and not another.
With a difference of only 0.2 percentage points, the Republic of Macedonia is among the most successful countries in transition. In this context, it is worth emphasizing one more comparison from the past fifteen years. The Republic of Macedonia has avoided the continuous appreciations of several years that during the crisis were followed by depreciations, a cycle to which the countries of the region of Central and Eastern Europe with fluctuating exchange rates had been exposed to. Thus we avoided the illusion of increased productivity – an illusion that these countries had to pay for in the crisis years. Given this background of successful monetary independence and the Denar as a means for building confidence, I believe it is fair to point out that in the past fifteen years, the attracting of savings in Denars and the impartial and rigorous channeling of those savings to the most efficient and most effective economic projects by the commercial banks have also been achieved to the extent possible. This "to the extent possible" is partly a result of the trauma caused by the numerous devaluations of the domestic currency in the not so distant past, when savings became almost worthless. But this past means that in the previous fifteen extremely successful years for the monetary policy, there is an expected, though irrational stigma on the Denar, which however becomes rational because it is rewarded.

As history bears witness, such strategies are as good, but only as good, as the assumptions that are programmed in, be they about economic forecasts, covariances between various events, or whatever. But even if we felt that these particular strategies were foolproof, there are a myriad of other financial transactions which can only really be consummated by a conscious human decision. The home buyer faced with a choice between taking a mortgage from bank A or bank B is unlikely to have a sophisticated and reliable mathematical model with which to compare the offers and determine conclusively his choice. But the culture nowadays, bred at least in part by the technological feasibilities of the IT era, is one which is likely to place the home buyer under much greater pressure to reach a quick decision than his parents would have been a generation ago, or even his brother five years ago, for fear of losing the best offer - if only he could assess which was the best. There is less time to reflect; less time to seek out disinterested advice. There are of course some areas of finance which appear relatively untouched as yet by this revolution. In the realm of corporate finance, in every jurisdiction so far as I am aware, the documents seeking shareholder support for a merger, for example, are still required to be sent by post, and with a reasonable minimum notice period for response.