samchain/econo-pairs-v1 huggingface dataset:
I believe that Asia-9’s experience of growth, or more specifically, intra-regional trade and production, can provide an interesting case study for our South Asian counterparts. The emergence of the Asia-9 economies To bring this perspective even closer to home to this audience, let us look at these developments from India’s perspective. Traditionally, India’s trading partners have been the G3 countries, with the US, the EU and Japan accounting for 52% of India’s total trade with the world in 1990. At that time, India’s trade with Asia-9 accounted for only 8.3% of India’s total trade. Fifteen years later, the structure has changed remarkably. The share of trade with the G3 countries, in terms of India’s total trade, has fallen to 33.9%. During the same period of time, India’s trade with Asia-9 has risen from 8.3% to 23.3% - an almost three-fold rise. From the perspective of Asia-9 themselves, intra-regional trade among themselves has risen from 29.1% of their total trade in 1990 to 41.4% in 2005. More striking, the share of intra-regional trade  BIS Review 7/2006  1  among the Asia-9 economies has outgrown the share of their trade with the G3 countries over the same period, which has in fact fallen from 52.6% to 39.2%. In terms of growth, trade among Asia-9 economies has grown at an average 23% in the past 3 years, exceeding the average 17% growth in trade with G3 countries. What message can we draw from these developments?

Rather peculiarly, the UK economy appears to be writhing in both agony and ecstasy. It is twin-peaked. Short-lived or secular? So which of these twin forces is likely to win out? This is an issue on which a global debate is currently raging. For some, the world is experiencing a fairly conventional recovery – perhaps slower and lower than usual, but with normal service resuming. For others, the world is instead facing a more protracted period of sub-par growth – an era of “secular stagnation” (Summers (2014)). The MPC’s central view, as contained in its August Inflation Report, is a mix of the two views, but with a stronger flavour of the first. It envisages a slower and lower recovery than in the past, but which builds in momentum over time. For example, according to the Inflation Report projections, productivity and real wage growth are expected to enter positive territory during the first half of next year and real interest rates by 2016 (Chart 6). Thereafter, all three are forecast to continue rising. By the end of 2017, productivity growth and real wage growth are back to around 2% and real household deposit rates are in positive territory (Chart 6). The agony index would then be back in line with its historical average. In other words, on the MPC’s central view the sun will come out tomorrow. The experience of past recessions supports this weather forecast.
It is more important than ever that we make concrete headway, notably on harmonising bankruptcy regimes and strengthening the role of ESMA as a supervisory authority. More broadly, I can only express my regret that the reinforcement of the ESAs proposed by the Commission has been blocked by the Council. The Banking Union and Capital Markets Union are the key components for a genuine “Financing Union for Investment and Innovation”: I have put forward this idea as a way of better channelling our abundant resources – our EUR 350 billion private savings surplus – towards the concrete needs of the economy: the energy transition, SMEs or digital innovation. Jean-Claude Juncker’s investment plan was a first successful step towards this. With regard to the ESM, it’s not just about managing crises ex post, but about preventing them from happening in the first place by reinforcing our precautionary tools: the principle of ex ante criteria and the absence of an assistance programme are both welcome elements. However, we need to avoid having ex ante criteria that are so strict that in practice they prevent the ESM from being used preventively, as is the case today. Beyond these institutional reforms, and with the United States and China increasingly asserting their dominance, it is vital that the European Union be given genuine strategic autonomy. Our currency, the euro, already plays a significant role at the international level, and this could be expanded even further [slide 6].

Despite being the world’s second most important currency, it is still used to a far lesser extent than the dollar. It accounts for 20% of global currency reserves compared with 63% for the dollar; by contrast, 36% of the total value of payments (including intraeuro area payments) is settled in euro, compared with 40% for the dollar. This is why the European Commission’s communiqué in December was particularly opportune. The initiatives promoting the role of the euro, notably in the energy sector, need to be examined carefully. Europe has built its monetary sovereignty thanks to the euro; it needs to preserve its sovereignty with regard to trade; and we still have a long way to go to build our economic sovereignty, so that we can meet the challenges of innovation in artificial intelligence or of the energy transition. ** I would like to conclude my speech with this almost prescient quote from Pierre Werner in 1965: “Any economic union involves periods of flagging, of disaffection, of misunderstandings [...]. But we are also aware that, in these situations, we need to hold onto the progress made, [...] to concentrate firmly on the formal commitments already entered into [...], in other words, to persevere.”9 Far from discouraging us, the scale of the challenges and uncertainties facing 5/6  BIS central bankers' speeches  Europe at the start of this year should motivate us to persevere in our ambitions. That is my wish for Europe for 2019. Thank you for your attention.
Moreover, many firms have been able to raise their profit margins in sectors faced with constrained supply and resurgent demand. The energy price shock implies a hit to the domestic economy, which should be absorbed by both firms and workers in order to ensure that it does not lead to a spiral of upward price and wage adjustments. In the baseline of our latest staff projections, headline inflation has been revised down, mainly reflecting a smaller contribution from energy prices than previously expected. We now see inflation averaging 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025. At the same time, underlying price pressures remain strong. Inflation excluding energy and food is expected to average 4.6% in 2023, which is higher than foreseen in the December projections. Subsequently, it is projected to come down to 2.5% in 2024 and 2.2% in 2025, as the upward pressures from past supply shocks and the reopening of the economy fade out and as tighter monetary policy increasingly dampens demand. As inflation is projected to remain too high for too long, the Governing Council last week decided to increase the three key ECB interest rates by 50 basis points, in line with our determination to ensure the timely return of inflation to our 2% medium-term target.

For us at the ECB, this means continuing to make progress on our climate roadmap.2 This week we will publish the first climate-related financial disclosures of the Eurosystem's corporate sector assets held for monetary policy purposes, and of the ECB's own funds and the staff pension fund. We will be joined in the coming weeks by all Eurosystem central banks, which will disclose climate information on their own eurodenominated non-monetary policy portfolios. Besides helping us be more transparent about our climate impact, these disclosures help us track our progress towards supporting, within our mandate, a decarbonisation path in line with the goals of the Paris Agreement and EU climate neutrality objectives. They will show, for example, that our corporate sector portfolio is becoming less carbon intensive, partly thanks to our efforts to tilt purchases towards issuers with a better climate performance. Over time – as more and better-quality data become available – we will improve the level of detail and expand reporting to include other portfolios and asset classes. Better and harmonised climate disclosures for all asset classes would help not only the ECB, but also the entire financial sector, to better account for climate-related risks.3 Thank you for your attention, I now look forward to your questions. 1 Gil-Robles, J.M. (1999), "Speech to the European Council", 3 June. 2 ECB (2021), "ECB presents action plan to include climate change considerations in its  monetary policy strategy", 8 July. 3 https://www.ecb.europa.eu/pub/pdf/other/ecb.ESA_ECB_joint_statement~c1f96d353b. en.pdf. 3/3  BIS - Central bankers' speeches
But to restrain household indebtedness, we would actually need an “extra policy rate”, aimed at households and able to be set at a higher level than the usual policy rate. However, as the Riksbank can only steer the general level of interest rates and a part of the transmission is that households borrow more when interest rates are low, we now have to turn to other policy areas to manage household indebtedness. 5  For a more in-depth description of the development of housing prices in Sweden, see, for example, Financial Stability Report 2015:1, pp. 11–12. BIS central bankers’ speeches  5  ... but assumes measures will be taken on the housing market for success in the longer term One condition for our monetary policy trade-offs to be successful is for measures against indebtedness to be taken elsewhere. If this does not happen, we may encounter major problems later on, both for the economy in general and for monetary policy. Let us assume that no measures are taken. The housing rally could then potentially continue. In the worst case, international confidence in the Swedish housing market would start to collapse. As covered bonds are largely held by foreign investors, we would risk having these investors remove a large part of the banks’ funding, which could have effects not only on financial stability but also on inflation. In that case we could describe a very bad scenario: The banks would encounter funding problems, which in turn would lead to higher lending rates and lower demand.

We are now seeing annual rates of increase in housing prices of between 15 and 20 per cent, at the same time as household indebtedness has started to accelerate upwards again (see Figure 6). 5 There is a connection between the development of housing prices and household indebtedness because housing purchases are largely funded by loans and large parts of households’ debts are made up of mortgages. Monetary policy faces a choice between, on one hand, the development of the exchange rate, inflation and inflation expectations and, on the other, the development of household indebtedness. My assessment is that, at present, it would be difficult to maintain a higher repo rate to manage the risks linked with household indebtedness. The krona would then risk appreciating and demand in Sweden could become too low – inflation may not reach the target as planned and inflation expectations may not become anchored around the target. Figure 6 Housing prices and household indebtedness in Sweden  Sources: Statistics Sweden and Valueguard. The expansionary monetary policy is contributing to stable inflation... Our assessment is that the monetary policy being conducted will allow us to safeguard the credibility of the inflation target, which is vital for achieving price stability. However, household indebtedness risks threatening both price stability and financial stability. You could put it like this: Monetary policy is the policy area that has the best conditions for influencing the exchange rate and inflation.
Companies’ investment remains strikingly and significantly subdued. Business sentiment is weak. And UK growth for the year as a whole, at less than 1.5%, is expected to lie below potential. My personal view, though, is that I would be very cautious about considering a monetary policy loosening, barring some sharp economic downturn. First, despite some Brexit-related volatility quarter-to-quarter, underlying UK growth remains fairly steady, if not spectacular, at a fraction below its cruising altitude. Consumer confidence and spending remain robust, underpinned by a still-strong jobs market and rising real pay. The UK housing market may be bottoming-out. When British consumers have more money in their pockets, it takes a lot to persuade them not to spend it. Nothing so far has dissuaded them. And they are three-quarters of all spending in the economy. Second, the starting position for both the economy and monetary policy need importantly to be borne in mind. As best we can tell, there is little, if any, slack left in the UK economy. That is why pay is picking up at pace. UK inflation, meanwhile, is already at target and the monetary stance remains accommodative, with short-term real interest rates still negative, augmented by almost £ trillion of asset purchases. 30  All speeches are available online at www.bankofengland.co.uk/speeches  30  Third, there is sometimes a tendency in the current environment to extrapolate from international experience, or recent historical experience, to the current stance of UK monetary policy.

To the extent size is a proxy for productivity, this is also as we would expect.18 During expansions, more productive firms hire more, and lose fewer, of their workers than less productive firms (Charts 14a and 14b). Other patterns in the data less obviously fit the facts, however. Despite jobs flows picking up, pay growth has until reasonably recently remained slow and low. Meanwhile, productivity growth has remained 18  For example, Bernard et al (2014) and Wales et al (2018). 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  stubbornly subdued despite a seven-year jobs recovery. So has the jobs ladder broken? Have its rungs been removed? To understand these developments, it is useful to break the decade down into phases. Charts 14a and 14b: Hire and quit rates by firm size Hire rate  Quit rate  7%  2.5%  1.0%  Small firms (< 50 workers) Medium firms (50-499 workers) Large firms (500+ workers)  0.9%  6%  2.0%  0.8% 5%  0.7%  4%  0.6%  1.5%  0.5% 3% 2% 1%  0.4% Small firms (< 50 workers) - LHS  0.3%  Medium firms (50-499 workers) - RHS  0.2%  Large firms (500+ workers) - RHS  0.1%  0%  1.0%  0.5%  0.0%  0.0%  Sources: ONS LFS and Bank of England calculations. Notes: Charts show four-quarter moving average of hire and quit rates.
While the current precept of risk-based supervision, as implemented by many, is still a robust and valid concept, there are many weaknesses when it comes to putting the precept into practice, as shown by the lesson of this crisis. These weaknesses include the inability to deal with complexity arising from such mechanism as securtisation, OTC derivatives, as well as the problem of procyclicality and systemic risk associated with valuation and performance management issues. Nevertheless, risk-base principle remains the key anchor to coherent  BIS Review 131/2009  1  risk management and supervision, even more so given the increasing complexity of the financial market. So, we must remain anchored to its principles. What then needs to be done is to strengthen risk measurement, management, and supervision, so that we can truly capture risk of individual institutions, overtime, and risk arising from interconnectedness of key components of the system, to safeguard financial stability. In short, we need to strengthen both micro- and macro-prudential regulations. The shift in policy paradigm from this crisis has been the increasing acceptance of the concept of macroprudential policy, which takes into account the interconnectedness within the financial systems as well as between the financial system and the real economy, that is, the issue of systemic risk and procyclicality. The proposals by G20, the BCBS, as well as international accounting standards are in line with the risk-based principle.

Indeed, I find it hard to understand how an earnest rating agency might assess sovereign risk without even referring to that country’s level of public debt and international reserves. As a professor, I can safely assume that the “subject is not treated”, hence the conclusion is unsubstantiated. As concerns these assessments, I must say however that things are not in the least that simple. Of course, we could assert that at present our economy is in a better position than those of other countries in the region rated within the “investment grade” range. But those countries have at least adopted austerity measures at domestic level. How do things stand in our country? After two consecutive years of wage increases in a range from 20 percent to 25 percent per year – i.e. more than twice the labour productivity gains – the wage rises envisaged for 2009 ranged between 50 percent and 60 percent, whereas the agreements with the trade unions, whenever struck, do not provide for hikes lower than 35 percent. Such an approach reveals a dangerous decoupling between aspirations and reality. In the current international context and given the already dangerously high level of external deficit, we must not aim at further increases in domestic consumption above labour productivity gains, since there are no more financing sources for something like that. And unless we understand this state of affairs ourselves, rating agencies are going to warn us.
This trajectory is all the more significant when compared with events in other developed economies and, in general, in the euro area as a whole, where export shares fell during the crisis. Our sound export performance has been underpinned both by gains in competitiveness and the pick-up in external demand, as well as by more structural factors, allowing us to expect this potential to continue and become more entrenched in the long run. The structural factors include the geographical diversification of exports of Spanish goods and services to emerging markets and the more export-oriented gearing of our companies, which is reflected in the increase over recent years in the number of Spanish companies competing on international markets. The re-directing of exports towards emerging markets has contributed significantly to these developments, thanks to the substantial dynamism of the demand for imports in those BIS central bankers’ speeches  1  countries. Indeed, their dynamism has compensated for the cyclical weakness in the developed countries, particularly in the euro area. The relative weight of goods exports to emerging countries has increased since 2007, coming to account for 30% of the total. The increases have been across the board, although particular mention may be made of Latin America, China and North Africa. However, the share of the developed countries has fallen on the same scale, owing to the loss in the weight of sales to the euro area, which at end-2013 stood slightly below 50%.

This means that while banks will, where needed, have to hold some capital above the Basel III transaction path for the reason that I  4  BIS central bankers’ speeches  set out earlier, the FSA is allowing those banks that increase lending to a lower Pillar 2 capital buffer to recognise the benefits of such lending. I should add that the FSA has also altered its guidance to banks on the liquid asset buffers they need to maintain. This reflects the Bank of England’s stance on the potential access of banks to liquidity from the Bank, and a wider desire to reduce the incentives for banks to hold excessive liquid asset buffers for precautionary reasons. This action, too, has been endorsed by the FPC, and I hope it will support credit availability. In conclusion, I have tried this morning to set out how we are thinking about and then applying macro-prudential policy, going back to first principles. This is a new field, and as I said earlier, please bear in mind that in the early days of the low inflation monetary policy regime in many countries, it took time to refine the communication. But, beyond that, we also need to fill in what for me is the big gap at present, namely how we explain and calibrate the resilience objective in terms of capital. The FPC will focus on this at its next meeting.
Our welldeveloped social security system also fulfilled its role as an automatic stabiliser. Discretionary fiscal policy, by contrast, played a relatively minor role. One reason for this is that we have a federal system with extensive decision-making powers in the hands of the people. Another is the extensive global integration and openness of the Swiss economy. This means that much of the impact of any fiscal programmes designed to stimulate the economy would have been felt abroad rather than in Switzerland. There are certainly positive sides to the fact that fiscal policy in Switzerland was not used actively, or to a large extent, for crisis management – as is evident if we think of the problems of sovereign debt currently afflicting other countries. Yet we should not forget that monetary policy had to bear the lion’s share of the adjustment burden in its place. As I mentioned before, article 6 of the National Bank Act constitutes the foundation stone of our independence. However, the principle that the SNB should be an independent central bank is actually established at the highest level of all, in article 99 of the Swiss Constitution. This shows the importance attached to the independence of the SNB by the constitutional  2  These findings were taken into account when the European Monetary Union was founded. Under the Maastricht Treaty, a country planning to join the union must have an independent national central bank.

Simulations using the Bank’s main forecasting model suggest that the Bank’s monetary policy measures raised the level of GDP by around 8% relative to trend and lowered unemployment by 4 percentage points at their peak. Without this action, real wages would have been 8% lower, or around £ per worker per year, and 1.5 million more people would have been out of work. In short, monetary policy has been highly effective. 12  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  12  Financial outcomes So monetary policy has been highly effective in doing its job, but what have been the distributional effects on financial outcomes? Has monetary policy robbed savers to pay borrowers? Has the MPC been Robin Hood in reverse? In a word, no. Chart 15: … as have all income quintiles  Chart 14: The poorest have gained the most while all wealth quintiles have gained since 2006-8… Lowest wealth Second lowest wealth Middle wealth Second highest wealth Highest wealth  Total net wealth (% change since 2006-8) 60  Lowest income Second-lowest income Middle income Second-highest income Highest income  % change since 2006 12 10  50 8 40  6 4  30  2  20  0 10  -2 -4  0 2006-8 2008-10 2010-12 2012-14 Source: Wealth and Assets Survey (WAS, ONS) and Bank Calculations. 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Family Resources Survey (FRS) and Bank Calculations. Income deflated by the consumption deflator.