samchain/econo-pairs-v1 huggingface dataset:
What applies to pay-outs to executives applies, with equal force, to pay-outs to shareholders. Whether as dividends or buy-backs, these too have been on a steadily rising tide over recent decades: from around 10% of profits in the 1970s, to 60–70% today, as short-term shareholder demands have risen steadily. 52 Yet monies paid-out to shareholders are monies also failing to be re-invested in future value creation by the company. In short – too short – the shareholder-centric model may have become a recipe for depleting long-term company wealth-creation and, thus, societal well-being. 53 Or that, at least, is the contention. So what to do about it? Earlier this week, an interim report was issued on “The Purposeful Company” by the Big Innovation Centre. 54 I should declare an interest here, as I and others at the Bank have been involved in putting together this report. The report serves two  49  Big Innovation Centre (2016). 50  “Say on pay” is a term used to describe a rule in corporate law where a firm’s shareholders have the right to vote on the remuneration of executives. 51  See High Pay Centre (2015) and Economic Policy Institute (2015). 52  Haldane (2015). 53  For example, Asker et al (2014) and Davies et al (2014) show, for the US and UK respectively, that private companies invest more than otherwise-equivalent public companies. 54  Big Innovation Centre (2016). 12  BIS central bankers’ speeches  purposes.

With the completion of the debt restructuring process under CDRC envisaged by July 2002, the asset quality of banking institutions can be expected to improve by approximately 3 percentage points. The consolidation programme for the domestic banking institutions represents a major structural enhancement of the banking system. The successful completion of the consolidation and integration of the banking groups in 2001 has benefited the industry and the banking public. The merged banking groups are now more well capitalised to meet future calls for capital expenditure as well as undertake a wider scope of business activities. The operational business integration process and rationalisation exercise have been an important part of the merger to reduce duplication of resources and to attain higher levels of economies of scale and efficiency in the banking institutions. The year 2001 marked a significant period for the Islamic banking industry. In terms of performance, the industry registered encouraging growth during the year. Total assets of the Islamic banking increased by 25.2%, amounting to RM58.9 billion as at end-2001 representing 8.2% of the overall banking system. In terms of profitability, significant growth was recorded with an increase in pre-tax profits by 69.9% to RM905.9 million during the year. Among the measures implemented in 2001 to further develop and strengthen the regulatory framework of the Islamic banking industry were the adoption of Risk Weighted Capital Ratio (RWCR) framework; the implementation of Rate of Return (ROR) framework; and the implementation of training and awareness programmes.
23  14  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  14  A benefit of our approach is that it allows choices over the asset composition of our balance sheet (eg between OMOs and outright holdings) during QT. At the same time, we retain one of the key benefits of a floor system, which is the capacity to allow for the smooth expansion in assets and reserves in the future, whether for liquidity insurance purposes or for monetary policy goals as directed by the MPC, without interfering with interest rate setting. At least two design challenges remain, however. The first is that we cannot perfectly anticipate how short-term market interest rates will behave in the new system, and will therefore need to be responsive in our operational approach:  -  It is likely that market rates will be a little higher on average relative to Bank Rate than they are now, reflecting the fact that reserves will be in somewhat scarce, rather than ample, supply. As a one-off shift, this is unlikely to be of great significance to the setting of monetary policy. -  Market rates may be slightly more variable too, particularly initially as banks adjust to the new system and learn to identify and bid for the amount of reserves they need.

‘Too large’, and central banks may find themselves accused of usurping the role of financial markets, harming innovation and inducing imprudent behaviour; fuzzying the boundary between monetary and fiscal policy, providing a ‘dangerous temptation for … the political class’1; or giving unmerited financial rewards to reserves holders.2 ‘Too small’, and central banks may be criticised for being asleep at the wheel3 at times of crisis; failing to play their part in ensuring an adequate supply of risk-free assets in the economy to maintain financial stability during peacetime4; or hampering the effectiveness of monetary policy transmission.5  Chart 1: Central bank balance sheets compared  Source: Individual central banks’ published data, IMF  The Bank of England has found itself on both ends of this debate in the past 10-15 years. Before the financial crisis, our balance sheet was modest, at 4% of GDP. Since then, and in direct response to the crisis, that figure has risen to around 30%: a more than seven-fold increase. Other regions have seen similar, or in some cases much larger, expansions (Chart 1). But by the UK’s own standards this is truly exceptional. You have to go back to the end of World War 2 or the early 18th century to find anything even approaching the same highs (Chart 2).
Quite apart from the more general uncertainties, there have inevitably been a series of surprises (or "shocks" in the jargon) - including a persistently stronger than expected exchange rate against the euro, pronounced swings in the oil price, or varying rates of increase in excise duties, for example, any of which can have a significant and persistent impact on the out turn. That's not a matter of selfjustification - it may well be more by luck than judgement; to be honest I'm more interested in the result. But I am concerned that people should understand that operating monetary policy is an inevitably imprecise process, and that they should not expect from it more than it can deliver. But however that may be, the even better news is that since 1992, stable, low, inflation has been accompanied by steadily increasing overall output and employment, and by a progressive fall in the rate of unemployment. Over the same period, to the fourth quarter of last year, GDP growth averaged just under 3% a year which is well above most estimates of our trend rate of 2¼%-2½%. GDP had in fact grown for 37 successive quarters which is the longest period of sustained quarter-by-quarter growth we have enjoyed since quarterly records began in the UK in 1955. Employment has increased steadily from a low point of 25½ mn people in the Spring of 1993 to its current level of 28 mn.

The interest rate differential with other currencies, which had narrowed considerably due to declining interest rates abroad, again expanded significantly following this decision. Even after the ECB’s mild interest rate cut, the Swiss franc/euro interest rate differential remains significantly wider than at the beginning of the year. This has helped to weaken the Swiss franc, pulling it back from the highs recorded shortly after the discontinuation of the minimum exchange rate. Short-term inflation expectations declined substantially immediately after the discontinuation of the minimum exchange rate. Since then, they have stabilised. Surveys indicate that companies expect positive inflation rates over a horizon of two years and more. Despite weak inflation in recent years, inflation expectations six to ten years into the future have barely changed. Companies evidently believe that the negative inflation we are currently experiencing will be temporary. As you can see from our inflation forecast, our forecast models confirm this assumption. Monetary policy outlook Ladies and gentlemen, let me summarise my key points. The depreciation of the euro against other major currencies confirms that the discontinuation of the minimum exchange rate was a necessary step. Diverging monetary policy stances in the major currency areas present small open economies like Switzerland, in particular, with huge challenges as they typically trigger substantial exchange rate fluctuations and hamper economic growth. Switzerland’s economy is thus going through a difficult phase.
This involves households making plans for the future and building up expectations of future economic developments, and also there being no systematic errors in these expectations. It is not unlikely that households’ rationalism is in some cases overestimated in the formal models. If this is the case, the conclusions regarding the effects of, for instance, repo rate rises that are calculated using these models may be incorrect. One such example would be if households did not include in their calculations the fact that interest rates rise when economic activity strengthens and that indebtedness and house prices therefore were being pushed beyond sustainable levels. Something that can give rise to special problems in the forecast context is that changes in indebtedness and property prices have a tendency to reinforce one another over the economic cycle. Low interest rates make it cheaper to finance house purchases, which means that house prices rise. As the value of the collateral for households’ loans mainly consists of houses or tenant-owned apartments, the price increase in itself contributes to making it possible to borrow more money. Sooner or later, interest rates will rise and the question is what happens then. If indebtedness and house price trends during the upturn phase have been based on over-optimism and unrealistic expectations among lenders and borrowers, house prices may fall sharply and households may experience difficulty in meeting their interest payments. Demand in the economy can then fall substantially.

BIS Review 58/2003  1  The oversight of payment and securities settlement systems in practice In future, the National Bank will be taking a risk-oriented approach, i.e. we will deploy our resources in those specific areas in which the risks are particularly high. The National Bank Law stipulates a three-tier oversight process. The first tier is an obligation on the part of operators of payment and securities settlement systems to provide statistical information. The National Bank will use the data it collects to gain an overview of the breadth and importance of the systems and instruments for the clearing and settlement of payments and securities trades that are available in Switzerland. The second tier is a more wide-ranging disclosure obligation that is imposed upon the operators of securities settlement systems and those payment systems which process payments in excess of 25 billion Swiss francs a year. With payment systems of this size and larger, the National Bank will look in greater detail into the extent to which they might jeopardise the stability of the financial system. Finally, the National Bank Law provides for powers on the part of the National Bank to impose minimum requirements on systemically important financial market infrastructures as a third tier of oversight. Detailed implementation provisions for oversight will be laid down in an ordinance to be issued by the National Bank. In early November 2003, the National Bank submitted a consultation draft of this ordinance to interested parties. The draft itself can be found on our website.
We lent amounts to Swedish banks corresponding to just over 9 per cent of GDP, a measure that was intended to ensure that the financial system stabilised to allow us to conduct monetary policy and contribute to production and employment not falling as heavily as in the wake of the financial crisis. The new act means we would need to determine the main purpose of these measures, and the conditions and procedures differ, depending on the purpose. Was what we did mainly monetary policy or financial stability? Are the measures we implemented during the coronavirus pandemic mostly monetary policy or financial stability policy? In our world they are of course both, as our two core activities are two sides of the same coin. As I described earlier, the financial markets are developing rapidly, and needs are thus changing over time. It is difficult to predict how the next crisis will look, or what measures might then be needed. The fact that we have been able to take action during the pandemic is because the current legislation gives us opportunity to do so. Handling the global financial crisis 2008-2009 and the current pandemic, and also future events, requires the right tools and a flexible mandate. This is made more difficult by the proposal for a new Sveriges Riksbank Act. The proposal also limits the Riksbank’s possibilities to both build up and use its foreign exchange reserves. This is problematic, as the Swedish financial system is strongly dependent on short-term market financing, largely in foreign currencies.

6 I would also like to mention that the deposit guarantee, which is managed by the Swedish National Debt Office,  is also important in avoiding bank runs. 7 See, for instance, Söderberg (2018). 4 [35]  One can say that the Riksbank functions as the hub of the Swedish financial system. We can also note that the financial system that has grown up around the world is based on countries or currency areas having state money and state control over the payment system. Quite simply, state institutions are needed to guarantee that the requirements in these points are met. 8  Payment markets are changing – motives for an e-krona Almost all economic activity is linked to some form of payment, so without functioning payment systems the economy would grind to a halt. It is therefore important that the central banks adapt to the technical innovations that are now rapidly changing the payment market. There must be transactional efficiency in Swedish and by that I mean that they should be cheap and easy to use for both domestic and international payments. This is also what households, quite rightly, expect in today’s digital society. By keeping apace with technological developments, we ensure that the safety net I mentioned earlier, which preserves the value of money and ensures it is easy and cheap to use, remains in place.
Kristina Persson: Monetary policy and labour supply Speech by Ms Kristina Persson, Deputy Governor of Sveriges Riksbank, at a meeting arranged by the municipality of Örebro, Örebro castle, 2 April 2003. *  *  *  Thank you for the invitation to participate in this conference and for the opportunity to inform you about current monetary policy and the Riksbank’s objectives. I shall also take up one of the major challenges facing the Swedish economy over the coming years, namely labour supply and what consequences this may have for future growth and welfare in Sweden. Monetary policy focuses on inflation The monetary policy objectives are clearly stated in the Sveriges Riksbank Act - to maintain price stability and to promote a safe and efficient payment system. The Riksbank has specified the first of these objectives in an inflation target. The annual rate of change in consumer prices shall be 2 per cent, with a tolerated deviation interval of ± 1 percentage point. Monetary policy is normally directed at fulfilling this target one to two years ahead. To achieve our objective, we therefore make forecasts of price trends. If the forecasts indicate that inflation will be higher than the target level one to two years ahead, monetary policy must normally be tightened and the interest rate raised. The reverse applies if the forecast shows a lower inflation rate than the target level.

As it emerges from its most severe set-back since the 1930s the economy remains, to quote Churchill from the 1930s, a riddle wrapped inside a mystery inside an enigma.2 Let me give examples of each. First, the riddle. Data on the economy is riddled with uncertainties and beset by revisions. A few weeks ago, we awoke to discover that we as a nation were £ billion better off than we had thought, courtesy of the Office for National Statistics. Alas, my excitement soon gave way to mixed emotions: this windfall was in part the fruits of charitable, drugs and prostitution-related activities, previously under-recorded. What a party that must have been. A further set of systematic revisions to existing estimates of the National Accounts data is planned later this year. It is well-known, and entirely understandable, that these data are subject to revisions which are to some extent predictable. That is why, before the Bank even starts forecasting the future of the economy, we begin by backcasting and nowcasting the past and the present. To give a current example, although the estimate of first quarter GDP growth is 0.8%, the Bank expects the final estimate to be 0.9% given the strength of business surveys. The 90% confidence interval around this estimate is 0.4% to 1.4%. Put differently, we can be 90% confident that annual growth in the UK economy lies somewhere between 5.4% (a raging boom) and 1.4% (an anaemic recovery). Hence the riddle.
And they will need to ensure that they have the capacity to respond effectively to emerging systemic risks. On the question of “how” to do macro-prudential oversight, the main tools that the ESRB will have at its disposal are warnings and recommendations. As we know, the strength of the socalled “soft law” can be quite significant, notwithstanding the lack of direct enforcement power. When risks have been identified and appear to be large, the ESRB will issue precise risk warnings. When appropriate, it will complement warnings with recommendations for remedial action and indications of the risks of inaction. We assume that the addressees will give careful consideration to the measures the ESRB will propose. I am confident that the ESRB will quickly develop its credibility through its work, its warnings and its recommendations. Its authority will draw on the quality of its analysis and its deep understanding of the functioning of the financial sector. Implications for the financial industry I have described the rationale for macro-prudential oversight and the practicalities of establishing the ESRB. What are the implications for the financial industry? BIS Review 156/2010  3  The national supervisory authorities will remain the direct interface for financial firms on micro- as well as macro-prudential issues.

The European Central Bank has therefore been fulfilling its mandate, which is to keep inflation below, but close to, 2% over the medium term. BIS Review 156/2010  1  With all the challenges we have faced since 1999 – the cash changeover, the oil price spikes, the internet bubble, the turbulences in the aftermath of 11th September and, of course, the global financial crisis – maintaining price stability is a notable achievement. What is more, looking ahead, inflation projections and inflation expectations are well anchored in line with price stability. The launch of the ESRB My main topic for today is macroprudential oversight and the new body that the European Council and the European Parliament have decided to create: the European Systemic Risk Board or ESRB. The legislation has been finalised yesterday and the ESRB will soon become reality. I am honoured to speak to you today not only as president of the ECB but also in my future role as Chair of the ESRB. The new European body will be part of the new European System of Financial Supervision and it will be located here in Frankfurt. The city can therefore be proud to host three European authorities: the ECB, the European Insurance and Occupational Pensions Authority (EIOPA) and the ESRB. The function of the ESRB will be to provide macro-prudential oversight of the European Union’s financial system.
Economic policymakers often confront the problem that a future policy setting that is optimal today is not likely to be the policy that it would be optimal to follow tomorrow. Before central bank independence, a problem for monetary policy was that a government promise to deliver low inflation was not credible. Wage and price setters knew that if contracts were based on the assumption that future inflation would be low, the government would not be able to resist the temptation to generate inflation higher than promised because that would temporarily boost employment and output. So the initial promise was not believed. Once expectations of high inflation were embedded into prices and wages, it was at that point rational for the government to tolerate high inflation, because the cost of reducing it would be a deep recession. The idea of giving central banks independent control over monetary policy was to remove this temptation to inflate. 15 Communication is a potential solution to the credibility problem. If policymakers are transparent about the objectives of a policy – and the strategy to be followed in pursuit of those objectives – it will be easier to hold them accountable for their actions. This increases the incentives for policy makers to meet their objectives. Despite all these benefits, it does not always follow that more communication is beneficial. More communication can be costly and self-defeating. First, private participants face costs in collecting and processing information that could mean important messages are lost.

Many government agencies have valuable information that private citizens cannot easily  13  See Plous (1993). 14  Tucker (2009) discusses how this might create a friction that could be countered through the use of so-called macroprudential instruments. 6  BIS Review 36/2010  obtain for themselves. An example is the information collected by the Office for National Statistics on the economy and social trends. Central banks, too, may have information about the shocks hitting the economy, or about how they will be propagated, or indeed about the way in which policy is likely to respond. Provision of information about these issues may help people to reduce their forecast errors and take more informed decisions. As we discussed earlier, complex economic systems may have multiple equilibria. Movements between them depend on expectations and beliefs about others’ beliefs. That is especially so if there are strategic complementarities where the benefits of a strategy depend on the choice of strategies by others. Communication might help to coordinate beliefs so that a good rather than bad equilibrium results. Suppose that private investors begin to doubt the health of a bank which the central bank knows to be fundamentally solvent. A signal from the central bank that the bank is solvent may help to change beliefs, thus ensuring the continued liquidity and hence solvency of the healthy bank. But it may not be clear that the bank is solvent, and in practice there is often no smoke without fire. Communication may help to improve the credibility of public policy.