samchain/econo-pairs-v1 huggingface dataset:
The technological breakthrough, based on the microchip and the computer, that together with the new information techniques has come to be known as the “new economy” is something that is very much alive and will leave its mark on many countries, including Sweden, for a long time to come. The present economic downturn, which to some extent is a hangover after excessively optimistic expectations, will give way to another upswing. That will impart renewed vigour to the technological breakthrough that the global economy is experiencing. However, we do not know either just how deep the ongoing slowdown will be or just when it will bottom out. But it would be hard to argue that this will not happen. The underlying cyclical rhythm with upward and downward phases in economic activity has always been there. Economic history also contains periods of what I would call “growing pains”. Things do not always turn out as well as people often hope, or at least they do not happen as quickly, but neither are they ever quite as bad as we sometimes fear. My conclusion about the technological breakthrough’s impact on corporate profits is maybe not quite as optimistic, at least for share investors. Roughly speaking, historical experience indicates that the true winners are consumers, not shareholders. That conclusion is perhaps even more valid today since the breakthrough is very much a question of information. Better informed consumers tend to lead to stronger competition and depressed profit margins rather than the opposite.

Few innovations played such a central part in Sweden’s industrialisation around the turn of the nineteenth century as electricity and techniques for using it for propulsion. Swedish technicians and companies played a pioneering role here. In the early 1890s electricity was relatively expensive. Its cost per energy equivalent was considerably higher than power generated from coal. Little more than a decade later, however, the relative price had fallen 50 per cent. This paved the way for the electrification and related expansion of such industries as pulp, paper, mining and basic chemicals. The explosive growth of pulp manufacturing was intimately bond up with the harnessing of Norrland’s rivers for hydroelectric power, which pushed the price of electricity down still further. In connection with electrification, trend GDP growth accelerated from approximately 2 per cent a year to between 3 and 4 per cent. Economic growth in Sweden reached one of the highest rates in the world. The leap forward that may result from the new computer and telecom technology cannot, of course, be compared directly with Sweden’s electrification and its economic effect. Many obstacles lie ahead. But an emerging technology clearly possesses an enormous potential. In the first decade of the twentieth century, however, the optimism over all that the new technology could achieve became rather excessive. The euphoria about the huge profits that could be reaped by using hydroelectric power and other forms of electricity to exploit such natural resources as ore and timber became more and more exalted between 1905 and 1907.
Looking back, the convergence process that was triggered, after the ratification of the Maastricht Treaty, was very impressive, in particular in Italy, eventually paving the way for this country to be among the first to adopt the euro. This convergence process has also contributed greatly to macro-economic stability and sound economic policies, both in this and in other European countries, a practice nowadays entrenched in the Treaty, in particular in the so-called Stability and Growth Pact. Where many did not have considered this to be possible, Italy has thus become a member of the stability-oriented family of European nations. Also in this respect, it is a pleasure for the Governing Council to meet here. We are living in a period in which history is made, almost every day. In two weeks time, ten countries will sign the so-called Accession Treaties, making it possible for these countries to become a member of the European Union, in the spring of next year. This enlargement of the European Union to the east  and south of our continent is another historical event, ending the rift that was created after the Second World War. The benefits of this enlargement, both in political as well as economic terms, are clear. However, this does not make it less of a challenge, also for the ECB and the national central banks.

The decentralised set-up of the Eurosystem - with the ECB representing the hub of the system and the national central bank its spokes - has contributed to the acceptance of the euro as the single currency of more than 300 million citizens, as in particular the national central banks are well-equipped, in terms of knowledge of language and national backgrounds, to communicate to the general public. Contrary to the public perception about other European institutions, the Eurosystem is being perceived as relatively close to the heart of the public. I am very pleased to chair tomorrow’s meeting of the Governing Council here in Rome. The fact that the Governing Council meets in Rome is symbolic, in many aspects. First, Rome is regarded as the cradle of the European-Christian civilisation, as we know it nowadays. The Roman Empire was the first attempt to create a unified Europe. Although this period in history has greatly contributed to the development of the European continent, this experience has also made clear that Europe cannot be unified by means of force, with some nations or peoples subordinated to others. Unfortunately, this was a lesson, which Europe had to learn the hard way. It took us almost 2,000 years to realise that the continuous perils of war and oppression had to end.
For example, we hear often that the Hong Kong financial markets provide a perfect hedge, or more modestly, a proxy hedge, for risks in the Mainland of China or the region. There is an element of truth in this. After all, this is one of the roles of an international financial centre. But it does mean that, in Asia, the dynamics of financial contagion can be quite complex. For example, financial crises do not necessarily erupt and manifest themselves at source - somebody sneezes and others get pneumonia. So, it is only prudent that Asian monetary co-operation should be on the agenda of discussions on Asian finance, and I have been urging for greater co-operation for some time. I am therefore glad that there has been increasing attention given to the subject in recent years. But, in terms of actual co-operative initiatives, progress has been slow and the scope rather narrow. To be fair, there is consensus on the need for diversification of financial intermediation channels, for enhancing efficiency and financial stability, and this consensus has been manifested in co-operative efforts to develop the bond markets in Asia. There are three clusters of initiatives:  2  "What is driving Asian exports? ", HKMA, August 2003.

The practical way is to ensure that you are moving up each step you take, in other words making improvements, regardless of whether you are following a spiral or a zigzag path, or whether you can see the top, or the point where allocation of resources is optimal. Appreciation of this concept is essential in understanding developments in the Mainland of China, including those on the financial front. The preponderance of the banking sector in domestic financial intermediation calls for great care in the reform of the banking system, in a manner that does not undermine public confidence in the banking system. This means the continuation of state ownership and financial support, and, for the time being, de facto limited competition from foreign banks, notwithstanding WTO commitments. On the other hand, there is a strong desire to modernise management and move towards the observation of international standards, to facilitate the ongoing commercialisation and the eventual privatisation of the banks. This is a delicate process, particularly when, in terms of the prudential numbers, the banking system is clearly weak and, with the greater freedom of information that comes with modern information technology, depositors’ faith will not remain unwavering forever. The drive for diversification in financial intermediation, evidenced in genuine efforts to develop the debt and equity markets, will further divert funds away from the banking system.
By 2025, the economy had matured, with productivity growth accounting for virtually all of economic growth. BIS central bankers’ speeches  5  2026–2040: Regional integration and technological transformation The fourth phase of Singapore’s economic development saw the fruition of the decades-long quest for regional integration and the rise to prominence of what we refer to today as our offshore economy. This was also the period that saw widespread technological transformation and the emergence of the ideas economy. By 2040, the global centre of economic gravity had shifted decisively to Asia. •  China was by far the largest economy in the world, with per capita incomes approaching that of upper middle income countries. •  India emerged as the third largest economy in the world, with the largest middle class and a global network of indigenous multinationals. •  But perhaps most significant for Singapore was the emergence of Indonesia as the fastest growing economy in the world, following far-reaching economic reforms in the early 2020s. Singapore’s high-end manufacturing and modern services benefitted significantly from trade and investment links with these Asian giants, in addition to the Unites States and the North Euro Area. But the real game-changer was the setting up of two supra-national economic zones. In 2028, Malaysia and Singapore got together to set up the Iskandar-Singapore Economic Zone or ISEZ: one economic system spanning two sovereign countries. •  The experiment succeeded beyond expectations, providing global and regional investors an integrated production and services base that was unmatched in Southeast Asia.

Our domestic assets are too low and a transfer of foreign reserves would have a negative impact on the Bank’s operations: • •  the SNB would be impeded in conducting its monetary operations (interventions, money market operations) the bank’s profitability and liquidity would diminish drastically. Consequently, a transfer in gold of a part of the valuation gain is the obvious solution. A group of experts has been asked to make an estimate of the excess reserve of the bank. 2.2 The proposals The group of experts has come to the conclusion that a capital corresponding to 1300 tonnes of gold could be withdrawn from the SNB’s balance sheet to be used for other purposes than monetary policy. Of these 1300 tonnes, 500 tonnes are to be set aside for financing the Swiss Foundation for Solidarity previously announced. What to do with the remaining 800 tonnes? A first idea would consist in transferring the remaining excess reserves to a public investment fund having more extensive investment possibilities than the SNB. Currently, our asset management policy is basically limited to fixed-income investments. The fund’s regulations should provide for investment in shares in order to achieve a higher long-term yield. But there is usually no limit to the imagination of politicians when money is to be distributed! Other concrete proposals exist. Some would like the excess gold reserves to be earmarked for specific goals such as improving the capitalisation of our social security schemes or for educational purposes.
Where TLAC is issued in a group brings me to the final key dimension of TLAC – distribution. One of the big innovations of TLAC is to go beyond previous capital accords to address the distribution of loss absorbency within groups. This was always going to be necessary for resolution which operates at legal entity, not group level. And it is essential to engender trust and time consistency between authorities cross-border. As it is set out in the principles covering the Term Sheet, host authorities must have confidence that there is sufficient loss absorbing and recapitalisation capacity available to subsidiaries in their jurisdictions with legal certainty at the point of entry into resolution. Internal TLAC – prepositioned loss absorbency down-streamed from the resolution entity to material subgroups, equivalent to 75–90% of the subgroup’s needs – is designed to achieve this, without pushing up overall TLAC requirements for the group as a whole. It also provides a mechanism in an SPE strategy through which by converting the internal TLAC via contractual terms, the key operating subsidiaries can be kept outside resolution and the losses can be transmitted to the top of the group for the resolution to take place in one legal entity, be that a holding company or a parent bank, in one jurisdiction. Again this addresses the concerns that some have expressed about making resolution work cross-border in different legal regimes. So if those are the trees, what is the wood?

Banking by definition means that you give credit and you take deposits. Indeed, many of these institutions don’t do that. But on the other hand it is certainly true that some vehicles have been created to remove risk from banks and thus reduce their regulatory capital requirements, with such vehicles being used in order to escape supervision. That is what we cannot accept any more. We cannot afford another crisis of the magnitude we had. How would you manage that risk? We need to be determined and implement the rules that were agreed at the Pittsburgh G20 summit. But not everything is shadow banking. For example, the World Bank – and above all its sister organisation the International Finance Corporation (IFC) – is doing a lot of financing through Luxembourg. All the international development banks are issuing through Luxembourg because of its efficient legislation. Many corporations which operate worldwide cannot raise funds in each country; it’s more efficient to bundle them. I would say that this is efficient international finance, not shadow banking, and it does not create additional risk for the customer but rather lowers the cost of funding. Another topic for discussion is money market funds, which to some extent can have leverage and so are much closer to being like a bank. And that is also the reason why money market funds are obliged to report to the ECB. Then you have investment funds from entities like investment banks, private equity and other alternative investment funds (AIFs).
I hardly need to remind an inflation conference that CPI inflation has overshot the MPC’s 2% target for over a year now, peaking at 3.1% last autumn. That overshoot has almost entirely reflected the effects of the depreciation. UK non-fuel import prices have risen 7% since the referendum, a direct result of the lower exchange rate. If anything that is a little less than we had been expecting based on past experience, and we revised down our inflation forecast slightly in the last Inflation Report to reflect that. But it has nevertheless been enough to generate a significant overshoot. Why did the MPC not act to prevent that overshoot? After all, the Committee knew it was coming. One reason is that the lags from raising Bank Rate and lowering inflation are long enough that we would have been unlikely to be able to offset the full effect of import prices. But a more substantive reason is that we were faced with a trade-off between growth and inflation. The MPC’s remit gives us two very clear objectives. The first objective, is “to maintain price stability”, defined as an inflation target of 2%. Importantly that target is symmetric: there is no bias towards keeping inflation above or below the target. The second objective is “to support” – subject to the first – “the economic policy of Her Majesty’s Government, including its objectives for growth and employment”. Economic situations like the one the UK has been in create a conflict between these two objectives.

That comes about through a range of channels. For example, greater competition encourages UK firms to operate more efficiently. Access to larger export markets enables them to take more advantage of economies of scale. And the ability to trade allows the UK to specialise in sectors where it has a competitive advantage. To the extent that leaving the single market or the customs union makes it harder to do business with the EU, that will reduce the economy’s productive capacity. (Equally if leaving the EU allows the other economies to trade with and invest more openly in the UK then these same channels are likely to support UK productivity). We don’t know whether these long-run channels are already in operation. But it is possible that they have been contributing to reinforce the continued weakness of productivity growth. 6  In the short run what we do know is that uncertainty about the eventual outcome of the Brexit negotiations, and perhaps the expectation that Brexit will lower economic growth over time, has been depressing business investment. Businesses are waiting for more clarity before embarking on new capital projects, and that reduces their productive capacity relative to what it could have been, as well as hampering resource re-allocation across the economy. We see this most clearly in business surveys. Brexit has consistently ranked at or near the top of the list of 7  the risks identified in the Deloitte survey of Chief Financial Officers.
BIS central bankers’ speeches  7  When I weighed together the figures received since the monetary policy meeting in February, my assessment was that Sweden’s economic prospects had brightened. This may appear strange if one looks at the growth forecast in the Monetary Policy Update and sees that the growth forecast for 2013 and 2014 is slightly weaker than in February. But this is because at the end of February Statistics Sweden revised up the number of hours worked, which leads to a lower productivity trend and a lower growth trend for GDP. This means that the outlook for economic activity and resource utilisation remained largely the same as in February. The same applied to inflation prospects. The actual CPIF inflation rate, that is, the CPI with a fixed mortgage rate, has undershot the inflation target, but one should also look at the reasons for this. The strong appreciation of the krona that followed in the wake of the Lehman crash is one important reason. Low unit labour costs are another reason, but here there is now a turnaround, with labour costs being expected to rise faster during the forecast period than in the past two years. If one looks at the CPI, the most recent figures are moreover in line with the inflation target. In this context, I think that a little too much focus may be given to current inflation in the monetary policy debate, particularly given that it takes time for monetary policy to have an impact on inflation.

4  “Debt and deleveraging: Uneven progress on the path to growth”, McKinsey Global Institute (January 2012). 5  IMF Fiscal Monitor (April 2012), “Balancing Fiscal Policy Risks”. 4  BIS central bankers’ speeches  finances. If one studies Figure 2, there appears to be a connection between good competitiveness and a lower public debt ratio. Figure 2 Relationship between competitiveness and public debt ratio 7  6  Sweden Denmark  5  Finland  Germany  Norway Spain  USA  Ireland  Italy  Portugal  4  Greece  3  2  1  0 20  40  60  80  100  120  140  160  180  Note. The public debt ratio is shown as a percentage of GDP on the horizontal axis. Sources: World Economic Forum 2011 and IMF Fiscal Monitor April 2012. The vertical axis measures the respective country’s competitiveness as defined by the World Economic Forum 2011, 6 while the horizontal axis measures the current level of public debt as a share of GDP. A higher value on the vertical axis means that a country has a better competitiveness. There may, of course, be many factors that affect the public debt ratio, but according to the figure it would appear that countries with good competitiveness also tend to have a lower public debt ratio.
It is the commission’s assessment that in their current form and size, the big banks are clearly systemically important. The commission of experts published its interim report at the end of April. The “too big to fail” issue is to be addressed through a package of key measures encompassing special requirements for systemically important banks in the areas of capital, liquidity and organisational structure. These key measures are compatible with the approach discussed by the Financial Stability Board. Besides those proposed by the commission of experts, other measures being considered at the international level include the breaking-up of big banks, the prohibition of certain activities such as proprietary trading, and the taxation of balance sheets and transactions. The SNB fully supports the proposals put forward by the commission of experts to date. The overall direction is correct. What is important now are the details of the measures. Our position is clear. It is essential that capital requirements be significantly increased and that they rise in line with the degree of systemic importance of a bank. This is the only way to ensure that the banks internalise the risks which, until now, they have been able to pass on to the general public, to some extent. Moreover, progressive capital requirements should create an incentive for banks to reduce their systemic importance, with its associated risk potential.

Since the Federal Reserve leaders’ very first meeting in 1914, in addition to the weighty task of standing up from scratch a fully functioning central bank, they had to prepare for any eventuality concerning the impact of the Great War on the U.S. and the Federal Reserve’s responsibilities.3Against this backdrop, Fed leaders foresaw that it would be useful to establish close banking relationships with foreign central banks to facilitate transactions arising from wartime needs and conditions, including payments for warrelated U.S. exports, financing of wartime government debt, and gold transfers. It was left to Governor Benjamin Strong of the New York Fed to journey to Europe in the spring of 1916 to personally negotiate the early account agreements, allowing him to forge close personal 1/8  BIS central bankers' speeches  relationships with European central bankers, most famously with the Bank of England’s Montagu Norman, or as Strong would come to call him: “my dear Monty.” 4 While these initial discussions in 1916 did not lead immediately to agreements, partly owing to U.S. observance of neutrality, the groundwork had been laid such that by the time the U.S. entered the War in April 1917 the arrangement with the Bank of England could be executed rapidly. The historical records show that the establishment of this first account agreement with the Bank of England involved a minor diplomatic faux pas, known as the British Treasury bills episode.