samchain/econo-pairs-v1 huggingface dataset:
These biodiversity losses pose significant risks to economic growth and the financial system For centuries, human societies, economic activities and finance were very much embedded in nature: loan schedules for example were indirectly shaped by the rhythm of the seasons. Nowadays, the vast majority of economic agents act as if  our  economies  were  completely  “disembedded”  from  nature  (Dasgupta, 2021):iii we even call the impacts we have on nature “externalities”. But facts do not cease to exist because they are ignored: our economies are deeply dependent on ecosystems. More than half of global GDP – i.e. 44 trillion USD of economic value generation – is estimated as moderately or highly dependent on ecosystem services (WEF/Herweijer et al., 2020). iv Moreover, the total value of the ecosystem services we consume almost for free may amount to more than annual global GDP (Costanza et al., 2014).v Because financial institutions support the development of economic activity, our financial system is also clearly exposed to biodiversity loss. The joint study group NGFS-INSPIRE thankfully released an insightful report in Marchvi highlighting the financial stability implications of nature-related risks, especially those associated with biodiversity loss. Biodiversity-related risks can be understood as physical and transition risks, which reminds us the schemes used to analyse climate-related risks. Physical risks stem from the dependency of economic activities on ecosystem services and their vulnerability in the case of disruption; transition risks result from the impact of these activities on biodiversity, which makes them vulnerable to transition policies.

The authors found that 42% of amounts in the portfolio held by French financial institutions are issued by companies that display a “high” dependency score (>60%) on one or more ecosystem services; this number amounts to 9% when considering “very high” dependency scores (>80%). The main ecosystem services involved were water supply (surface and ground) and regulating services, such as erosion control, flood and storm protection and climate regulation. Page 9 sur 13  To approximate transition risks, the authors measure the biodiversity impact (or footprint) of companies whose securities are held by French financial institutions through their direct activities or their upstream value chains. To do so, they used the MSA.km² metric. The authors estimate that the terrestrial biodiversity footprint of the equity and bond portfolio of French financial institutions at end-2019, cumulated over time, was comparable to the loss of at least 130,000 km² of undisturbed ecosystems surface. This corresponds to the complete artificialisation of 24% of the surface area of metropolitan France. The annual additional impact on terrestrial biodiversity is equivalent to the loss of 4,800km² of ‘untouched’ nature, which corresponds to 14% of the terrestrial area of the Netherlands. Hence, the indirect impact of the French financial system on biodiversity is also material, which makes them vulnerable in the event of a change in the regulations on biodiversity.
This has led, I believe, to a BIS Review 5/1998  -2-  better awareness—among market agents as well as a wider public—of how monetary policy works. One indication of this is that agents’ expectations about monetary policy have become increasingly congruent with the Riksbank’s monetary policy intentions. In addition, the five-party agreement on the new Riksbank Act is a manifestation of broad political support for the low-inflation policy. It is our ambition, moreover, to continue the process for increased transparency as far as is reasonable and feasible. Criticism of monetary policy Monetary policy has, of course, come in for some criticism. A common issue initially was whether striving for 2 per cent inflation was reasonable and feasible. That discussion seems to have dried up. Inflation is currently around 2 per cent and more and more people understand the advantages of this. Another question has been why the Riksbank does not have the task of promoting other objectives, growth, for example. Here, too, there is a growing awareness, though it does not include everyone. In the long run monetary policy is only capable of influencing inflation and there is absolutely no long-term trade-off between inflation and growth. If anything, high inflation tends to impair real economic development. In the short run, however, the situation is somewhat different. In this perspective, inflation and growth are largely two sides of the same coin, at least as long as inflation expectations are stable around the target.

Just the reverse, I would say, in the light of quite a few years in the vicinity of decision-making in economic policy. Economic outlook in the coming years A suitable starting point for a discussion of the economic future is the October Inflation Report. Our assessment there assumed that international economic activity will tend to slacken but still remain relatively strong. We counted on GDP growth in the OECD area being 3.8% this year, followed in the next two years by 3.0 and 2.7%, respectively. Inflation would remain relatively low, partly in view of strong competition in the international markets. Growth in Sweden was judged to be 4% this year, 3.7% next year and 3.0% in 2002. Domestic demand growth would be relatively high for consumption as well as investment. A damper was expected, however, from an appreciation of the krona. A gradual increase in inflation was predicted, so that two years ahead the rate would be approximately in line with our target. As usual, we identified various risks in our forecast. One was the possibility of the oil price staying at a high level. We also considered that the exchange rate might be weaker than economic fundamentals in Sweden would warrant in the longer run. Another risk was that of higher wage increases. It was conceivable that the wage rise would be even higher than the annual rate of just over 4% we had assumed for the coming two years, due, for example, to far-reaching demands for compensation and parity.
CME Group does not guarantee the accuracy and/or completeness of any market data licensed to Bank of England and shall not have any liability for any errors, omissions, or interruptions therein. There are no third-party beneficiaries of any agreements or arrangements between CME Group and Bank of England. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  Chart 10: Rises in manufacturers’ input prices often followed by below-average rates of inflation  Sources: ONS and Bank calculations. Chart 11: Shortages have had knock-on effects on manufacturers’ delivery times  Sources: IHS Markit/CIPS. But if demand in aggregate is still lower than it was at that time, across the developed world as a whole, how come traded goods prices are significantly higher? And what does the answer tell us about future trends? In some cases there are specific problems with supply. Semiconductor production, for example, has been hampered by a series of weather-related problems in the major producers in Asia and the US6 and also, on occasion, by outbreaks of Covid among factory workers7. More generally, affecting trade in all goods, there have been severe constraints on shipping capacity through the first half of this year. The fact that China began to recover earlier than other countries meant a reduction in effective capacity (containers were fuller in one direction than the other).

19.07.2018  Address on taking up office as a member of the Council of State Pablo Hernández de Cos Governor  Madame Chair of the Council, Council Members, Lawyers, ladies and gentlemen, First I would like to thank Mr. Alberto Aza and Mr. Juan Velarde for having agreed to be my sponsors in the ceremony today. It is a real honour for me to take up office as an ex officio member of the Council of State, the highest-ranking advisory body of the Government and a time-honoured institution in Spain. According to the Spanish Royal Academy dictionary, an “adviser” is someone who gives an opinion on what they consider beneficial or necessary for the advisee. It is indeed an important aspect of the functions of the Banco de España, in accordance with its law on autonomy, to advise the Government on economic and financial matters. From this dual status as a member of the Council of State and as governor of the Banco de España, allow me to take the opportunity here to briefly reflect on what are the main challenges facing the Spanish economy. In the past five years our economy has seen sharp growth in activity and a marked reduction in the unemployment rate, enabling a gradual correction of the imbalances built up before and during the economic crisis.
Even though interest rates have been low for a long time, activity in advanced economies has been slow to recover, reflecting global developments and economic shocks in the wake of the financial crisis. Low policy rates and quantitative easing in other countries have also influenced the Norwegian bond market. Yields on Norwegian long-term government bonds have fallen to a very low level, primarily driven by policy rate setting in other countries and global financial markets rather than economic conditions in Norway. And even though the recent cuts in Norges Bank’s key policy rate have followed in the wake of the fall in oil prices, the current low level is a result of low interest rates abroad. The policy rate is the central bank’s most important monetary policy instrument. Before we turn to global developments, I will therefore briefly describe how the policy rate influences the shortest end of the curve, with a particular focus on the Norwegian context. From policy rates to short-term market rates Banks’ deposits with the central bank are often referred to as reserves and are banks’ most liquid assets. Central banks set the terms for banks’ loans from and deposits with the central bank and control the size of banks’ reserves. The objective of liquidity management is to keep short-term money market rates close to the key policy rate. Chart: Norges Bank interest rates  BIS central bankers’ speeches  1  In Norway, banks’ reserves are managed using a quota system.

It is difficult to judge to what extent the recovery abroad can be attributed to the monetary policy that has been conducted. There is, however, little doubt that it has had a positive effect. Lower interest rates have given firms and households access to cheaper funding. It has also eased the interest burden for heavily indebted borrowers and contributed to growth in disposable income. In addition, the value of households’ financial wealth has increased. This may also have provided a basis for higher demand. Studies conducted so far also suggest that the unconventional measures have had an effect. 13 A study by the Federal Reserve suggests that the Fed’s asset purchase program has reduced unemployment by 1¼ percentage points and increased inflation by ½ percentage point. 14 The Bank of England estimates that the Bank’s purchases of government  12  Jordà, O., M. Schularick and A. M. Taylor (2013): “When Credit Bites Back”, Journal of Money, Credit and Banking (45), 3–28. 13  IMF (2013): “Global impact and challenges of unconventional monetary policies”. IMF Policy Paper, October 2013. 14  Engen, E. M., T. T. Laubach and D. Reifschneider (2015): “The macroeconomic effects of the Federal Reserve’s unconventional monetary policies”, Finance and Economics Discussion Series, Federal Reserve Board, Washington D.C.  BIS central bankers’ speeches  7  bonds from 2011 to 2012 boosted GDP by just over ½ percent. The effect on inflation was also found to be positive.
Those issues are for the Treasury and wider Government.11  Regulators have a role to remove distortions that discourage private investment in growth capital. The Financial Conduct Authority is reviewing whether some of its rules set out in relevant Directives and Regulations could inhibit opportunities for equity issuers and investors.12  11  For example, TheCityUK suggests the government could convert certain loans that SMEs are struggling to repay and which it has guaranteed into tax liabilities or other instruments that would be paid down only when companies had the resources to do so. TCUK report available here. 12 See speech by Christopher Woolard (2020): The role of investment managers in the post Covid-19 recovery 8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  And the Bank of England’s Financial Policy Committee has been asked by the Government to examine whether there are changes to financial regulation that can improve the supply of growth capital.13 Banking regulation will not be where we focus. Banks, with their short-term fixed value liabilities – deposits – are not suited to investing in equity, and least of all equity from unlisted companies that isn’t easily traded. Financial institutions with longer-term liabilities – insurance companies and pension funds – are the natural investors in growth capital. They can absorb changes in its value without wider harm and nor do they need to rely on being able to trade out of their positions quickly.

It seems that strong competition between various producers within the food industry and the construction industry has had a dampening impact on inflation. In addition, productivity growth in retail trade has been high in the past few years. Intensified competition may also have contributed to curbing the rise in prices for banking and insurance services. Several factors point to higher inflation in the period ahead. Capacity utilisation in the Norwegian economy is picking up. This will contribute to a higher rise in prices for domestically produced goods and services. A tighter labour market will probably lead to higher wage growth in the coming years. High energy prices are feeding through to producer input prices. Outlook for the years ahead Growth in disposable income has been high in recent years. Lower interest expenses and relatively high real wage growth have resulted in an increase in household purchasing power. The rise in house prices may also have fuelled growth in private consumption. With high growth in employment and falling unemployment, consumption growth is expected to be high again this year. Since the publication of the June Inflation Report, electricity prices have increased to a further extent than expected. Forward prices for next winter have also increased. Higher electricity prices may in isolation reduce household purchasing power somewhat. On the other hand, growth in household income is high and market expectations indicate a fall in electricity prices later next year. A continued rise in house prices may contribute to holding up consumption growth.
In aggregate, the top ten banks and asset managers total $ trillion and $ trillion in assets respectively. The world’s largest asset manager (Blackrock) is around a third larger than the biggest bank (ICBC). But, on the other side, nine of the top 10 banks are larger than their asset management equivalents. On the face of it, then, the structure of banking and asset management is not too dissimilar. But the risks to these balance sheets are also quite different. As an agency function, asset managers do not bear credit, market and liquidity risk on their portfolios. Currently, Blackrock has over $ trillion of assets under management, but has only $ billion of assets of its own. 5 Fluctuations in asset values do not threaten the insolvency of an asset manager as they would a bank. Asset managers are, to a large extent, insolvency-remote. They are not, however, insolvency-immune. An individual manager or fund does face operational and reputational risk – for example, arising from a Maxwell Pensioners-sized fraud or an Arthur Andersen-shaped reputational hit. We have seen examples of this in the past – the large outflows from Gartmore’s funds following the departure of key staff prior to its acquisition by Henderson; or the outflows from Axa Rosenberg in 2011 following an alleged fraud. Nonetheless, if these are the sources of insolvency, then failure of an asset manager is likely to be different than for banks. Fraud and reputational risk tend be idiosyncratic.

Thus a negative number indicates a reduction in percentage allocation to equities, and may not indicate a reduction in total exposure to equities (if total flows have been large). Reallocation is calculated using data on quarterly flows into (or out of) equities in order to adjust for the impact of revaluation effects. The S&P 500 is smoothed by taking the growth of the 8 quarter average on the 8 quarter average a year earlier. 12  BIS central bankers’ speeches  Chart 7 Asset allocation of UK insurance companies and pensions funds Per cent 100 80  Chart 8 Portfolio share of equity of the UK DB PFs split by funding strength(a) Index; Dec 2005=100 140  Portfolio share of equities 70  120  60  100  50  80  40  20  60  30  0 87 89 91 93 95 97 99 01 03 05 07 09 11 13 UK equities Overseas equities UK corporate bonds UK government bonds Overseas bonds Mutual funds' shares Derivatives Other  40  60 40  Weakest funded (right-hand scale)  20 0  20  Strongest funded (right-hand scale) FTSE All-share, annual average (left-hand scale)  06  07  08  09  10  11  12  10 0  Source: ONS and Bank calculations  Source: Pension Protection Fund and Bank calculations  (a) Bonds includes money market instruments, medium and long term bonds. The split of overseas bonds by issuer is not available.
These are known as subprime or high-risk mortgages. Also, the process of transformation and securitisation of subprime loans consisted not only of packaging them and transforming them into bonds; in addition, the asset-backed securities  BIS Review 133/2008  1  issued were sliced into smaller portions and re-packaged, so the instruments purchased by investors were increasingly complex and opaque and it was very difficult to ascertain their true level of risk despite the excellent credit ratings generally awarded to them by rating agencies. Numerous US and European banks were among those investors. Moreover, they invested in the securities via transactions recorded off their balance sheets through investment vehicles (conduits and SIVs) which enjoyed a regulatory treatment in terms of capital requirements that was much laxer than if they had been consolidated on bank balance sheets. These longterm investments were financed at very short-term through the issuance of securities targeted at money market investment funds or large non-financial corporations, which used them to put their temporary cash surpluses to work. The house price slump in the United States and the marked worsening of defaults on subprime lending, particularly on the loans extended in 2005 and 2006, sowed doubts among investors, which began to ask about the level of risk of the AAA-rated bonds they had bought and which offered higher returns than those on government debt. The complexity of the products made it difficult to determine their actual ultimate exposure to the US subprime segment.

Miguel Fernández Ordóñez: The challenges to the Spanish banking system in the face of the global crisis Speech by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the 50th anniversary of ESADE, Barcelona, 30 October 2008. *  *  *  I have the pleasure of celebrating today with you the 50th anniversary of this institution. Over this half-century, ESADE has earned a reputation as one of the most prestigious business schools in the world. Education and training is the most important factor driving economic and social development. I therefore wish to begin by congratulating you on the work you have done and encouraging you to continue on this path. The crisis besetting the international financial system will henceforth be a mandatory topic of study in your classrooms. The events unfolding continuously since August 2007, and with particular virulence since September this year, make the current crisis the most serious one in living memory. This crisis, like others before it, manifested itself as a loss of confidence by the agents participating in the financial markets. Nevertheless, there are features which make it different: its degree of complexity, its global span and the speed with which the problems spread from one financial system to another are unprecedented. The current situation is further complicated by the notable weakness of the global economy. In these circumstances, the interrelatedness of financial and economic factors further contributes to the deterioration of the situation.
In the US, demand has played an important role: the US economy has more than recovered pre-pandemic levels of activity. So there are grounds for seeing US labour market tightness as a symptom of ‘overheating’ in the broader economy. This case is harder to make in the UK, where aggregate activity has still to regain pre-pandemic levels on the latest vintage of data. As a result, adverse supply effects seem to play a larger role in Britain. That said, vacancy rates have reached historical highs in the UK over the past year, perhaps redolent of strong demand for labour and echoing developments on this side of the Atlantic. But high vacancy rates have been associated with high hiring rates: the labour market has exhibited a high degree of ‘churn’, with many people moving jobs. In part, this may reflect a process through which workers are allocated to more productive activities, after the pandemic – and the UK’s furlough scheme introduced in response to it – had constrained their flexibility to move from one job to another. Behind labour market tightness in the UK lies a decline in participation rates among the working age population, particularly those in the 50-65 age group. The reasons behind this decline remain the subject of debate, but the impact of the pandemic on early retirement and long-term health, as well as underlying demographic developments, all seem to have played a role.

This not only has given a significant impetus to inflation through a combination of direct effects on household utility bills and indirect effects owing to the use of energy as an intermediate input to the production of other goods and services. It is also likely to have implications for price and wage setting dynamics. For energy importers like the countries of Western Europe including the UK, a rise in international energy prices represents a substantial adverse terms of trade shock. [7] Simply put, the price of what they are buying from the rest of the world has risen considerably relative to the price of what they are selling to the rest of the world. To the extent that any implied deterioration in the terms of trade is permanent, there will be a real hit to those countries real income, which must be absorbed by some domestic actor. In other words, in the end, someone in the UK will have to bear the cost of a higher aggregate UK energy bill. The important question for an inflation targeting central bank is how that happens; in  Page 8  particular, how pragmatic and realistic UK firms and households are in accepting the macroeconomic implications of the higher imported energy and goods prices.