samchain/econo-pairs-v1 huggingface dataset:
This includes the following main elements: BIS Review 28/1998  ˝  -4-  • Clear responsibilities and objectives for the supervisor set out in a suitable legal framework • Operational independence for the supervisor and the necessary resources to do the job • A proper licensing regime for banks • Sound prudential regulations and requirements that address the main types of risk faced by banks • The means to enforce supervisory requirements and gather information through on-site examination and off-site review • The power to take action against problem banks, including closure • The ability to conduct consolidated supervision and to cooperate and exchange information with other supervisors at home and abroad 15. These may seem like statements of the obvious. But the necessary measures were evidently not fully in place in a number of countries in the region. Reforms are now being implemented, in some cases with the help of the IMF and the World Bank. These include tighter limits on loan growth and on lending to sectors such as property; tightening of the loan classification framework and provisioning requirements; more disclosure of non-performing loans; strengthening of on-site examination to introduce a more risk-based approach; and enhanced legal powers for the supervisors to take prompt action to deal with problem banks. In a number of countries, problem banks and finance companies have been closed down or are being merged and efforts are being made to realize as much value as possible from their bad assets.

This increases the leverage of their customers, exposing the banks to increased credit risk if prices fall. This of course is what has happened in the property market in Hong Kong, although the banks have so far been protected by their prudent lending policies and by the fact that much of their property exposure is related to the residential market. Notwithstanding the good outcome so far, we believe that the Asian crisis has reinforced the need for restraint in the growth in property lending and in other forms of asset-based finance, such as share margin financing and taxi loans. BIS Review 28/1998  ˝  -6-  • The third lesson is that increased disclosure and transparency are necessary to reduce market uncertainty and limit the risk of contagion. The disclosure of bad news can be uncomfortable, but it does serve the useful function of putting pressure on management to run their business prudently and to deal quickly with any problems which may arise. Hong Kong has made considerable progress in recent years in terms of disclosure of information by banks. We intend to build on this during the course of 1998 by recommending new measures such as more disclosure about non-performing loans and more specific guidelines for income recognition by banks. Review of the Hong Kong banking sector 22. We will be building these lessons into our supervisory approach during the course of 1998.
In addition to buoyant growth in other countries, terms-of-trade gains and higher demand in the petroleum industry are important driving forces behind the upturn. Capacity utilisation in the economy has picked up and is now probably higher than its normal level. High oil prices have a different impact in Norway than in oil-importing countries. A rise in oil prices improves our terms of trade. Moreover, as a result of persistently high oil prices and expectations that oil prices will remain high, investment in the petroleum sector may reach record levels this year. The investment intentions survey for the petroleum sector points to very high growth. In our projections, we have assumed that fiscal policy will have a cyclically neutral impact on the economy next year. For 2007, our projections are based on the assumption that fiscal policy will be consistent with the fiscal rule, while fiscal policy for 2008 will provide some stimulus to total demand and output, although somewhat less than a mechanical application of the fiscal rule would imply. High oil prices will particularly be reflected in a sharp rise in the Petroleum Fund’s total capital. After a period of very low consumer price inflation, there are prospects that inflation will again rise at a faster pace. Nevertheless, there are considerable differences in the rise in prices across goods and  4  BIS Review 79/2005  services. On the one hand, Norway is still benefiting from the growing liberalisation of world trade.

The increase in the number of employed has been relatively low throughout the upturn. Employment has shown a smaller rise than in previous cyclical upturns in the 1980s and 1990s. Both official statistics and Norges Bank’s regional network indicate that many enterprises have been reluctant to recruit new employees. There are now some signs of a change in this attitude. Growth in LFS employment has picked up in recent months. A larger share of the contacts in our regional network are considering increasing their workforces and fewer are considering a reduction. In the first quarters of the current upturn productivity growth was high, measured as GDP per personhour. The number of person-hours worked gradually increased substantially, particularly because of the sharp fall in sickness absence through 2004. However, the use of overtime has also increased to a fairly high level. This may indicate that the use of resources is somewhat higher than implied in isolation by the level of employment and unemployment. Nor do wage developments point to any substantial pressures. So far, there are few signs of an acceleration in real wage growth. The use of foreign labour has increased in the year that has passed since the enlargement of the EU. The scope is relatively moderate, but appears nonetheless to have reduced bottleneck tendencies in some industries where demand has increased sharply. Traditionally, many workers from our neighbouring countries have contributed when the labour market in Norway has been tight.
Reforms to increase competition and improve the business environment have been slower, but in several countries we are now seeing movement in the right direction. Governments have improved regulatory frameworks, reformed judicial systems, removed protections from regulated professions and raised the quality of public administration. For comparison, in Japan attempts at structural reform did not start in earnest until around 2001. Even then, the paper I referred to earlier finds that the Japanese reform programme had 35 initiatives out of which only 8 were directly growth-enhancing. In terms of reform, the euro area is therefore clearly on a different trajectory. What role about the role of monetary policy? Monetary policy is clearly not the solution to structural problems. Yet maintaining price stability through a period of adjustment is essential. Otherwise, real debt burdens rise and, in the euro area, rebalancing between countries becomes more difficult. Japan was unable to avoid deflationary pressures, but this is not a scenario that we foresee for the euro area. Inflation expectations are firmly anchored and we see no risks of deflation in the medium-term. We recently cut our main interest rate to ensure that we maintain inflation at below but close to 2% over the medium-term. This objective was the anchor of all our policy actions before the crisis; it has remained the anchor during the current crisis; and it will remain the anchor as the euro area economy proceeds towards recovery. 2.

2  BIS central bankers’ speeches  It has been estimated that a comprehensive and ambitious TTIP would create 400,000 new jobs in the EU and raise EU GDP by € billion a year. The economic gains for the US economy would be around € billion a year. And these benefits would also accrue to the rest of the world by increasing its income by almost € billion a year. Such efforts on a regional level would in turn create momentum to revive the stalled multilateral agreements. Looking within the euro area, the main focus has recently been on the German current account surplus. There are various negative claims made about this, for instance that German competitiveness hinders intra-euro area adjustment and the return of stressed countries to growth. I think we need a more nuanced view. First, at a macroeconomic level Germany is already contributing to euro area rebalancing. Its surplus with the euro area has more than halved since 2007 – falling from 4% of GDP to 2% of GDP – and with stressed countries it has virtually disappeared – falling from 2% of GDP in 2007 to 0.5% of GDP. This is being driven in a large part by higher domestic demand which is structural, not cyclical in nature. Second, at a microeconomic level Germany’s export performance supports both upstream producers and downstream producers in the rest of Europe. Germany is at the centre of the European value chain and is a gateway to global value chains.
At this point, I have to confess that I too was sceptical for similar reasons, also because I have always argued that unsound government fiscal policies would ultimately discredit the efforts of monetary policymakers to fight inflation. However, at the same time, I also believed that, if all countries did their homework and the Maastricht Treaty criteria were met, I could envisage a successful monetary union – although, to be honest, in the first half of the 1990s I did not think it would be possible for 11 European countries to achieve price stability at the start of Monetary Union. In 1998, at my hearing in front of the European Parliament, I said: “The introduction of the euro will reshape the face of Europe. It is the most significant event in the international monetary and financial world since the end of the Second World War. But the euro will  14  Budget balances for 2005, broadly ranging between a 2% of GDP surplus and a 5% deficit, and debt ratios varying from 7% to 108% of GDP, are accompanied by differences in the interest rates on government bonds of around 30 basis points at most. Ten years before, when spreads still included substantial exchange rate risk premia, they exceeded 600 basis points, with budget balances ranging from a 3% of GDP surplus to a 10% deficit, and debt ratios varying from 7% to 133% of GDP (ECB, 2006).

The author-narrator has embarked on an expedition to a South Pacific island with six companions. On the island they experiment with different forms of social organisation. After the group tries despotism, anarchy, democracy, etc., Loe concludes that enlightened despotism has much to recommend it: “Of course it very much depends on who the ruler is and how enlightened he or she is, but at its best this is probably one of the more sensible forms of government.” 16 Martin, one of the other members of the expedition, also thinks that this system might work well. He stresses, however, that the form of despotism must be a truly enlightened one: “Not just moderately enlightened, but ultra-enlightened. The ruler needs to be highly educated, plus be well travelled and have lots and lots of varied interests (…) Just find an exceedingly likeable individual, someone you trust, someone who is warm-hearted and good-natured, and ask him or her to manage things as best they can.” 17 Most people would probably argue that despite certain benefits, enlightened despotism would not be very robust. As you may have noted, a number of assumptions underlie Martin’s conclusion, and these assumptions are not always satisfied. Delegating decisionmaking responsibility to a group may help to guard against situations where the individual’s weaknesses and vested interests come to dominate. It can also provide some insurance  attending the IMF meeting). The business card revealed the date and magnitude of the British devaluation. It was a busy night.
And, it follows, that in such a situation they should do just that, they should not hold back. But we are left with a puzzle in the labour market. Data from HMRC suggest that there were around 1.7mn jobs covered by the furlough scheme in July, and as a reminder it comes to an end later this week. The number of advertised job vacancies was at a record level in August of over 1mn. The number of people unemployed in the three months to July was 186,000 higher than immediately pre-Covid, and the number of inactive people was 634,000 higher. Now, of course, it is possible to reconcile these numbers, but to do so involves a lot of movement of people from furlough, unemployment and inactivity, in ways not so far seen. There are a number of possible outcomes to this puzzle, which have different implications for the labour market. The first is that the furloughed workers will largely be re-absorbed into their old jobs, and so even with a further reduction in unemployment and inactivity, we are left with an excess of job vacancies. If these excess vacancies are associated with shortages of workers in particular sectors, this may push up on wages. This could also happen if furloughed workers do not return to their old jobs, but are not suitable for those jobs and sectors where there are a high number of vacancies. In other words, there is a mismatch in the labour market.

Our view is that the price pressures will be transient – demand will shift back from goods to services, global supply  The hard yards ‐ speech by Andrew Bailey | Bank of England  Page 3  chains are likely to repair themselves, and many commodity prices have demonstrated mean reverting tendencies over time. But, the pressures are very much still with us, and there is still we believe pass-through to retail prices to come, and manufacturers’ output prices are still rising rapidly. Added to that is the uncertainty around how the labour market puzzle resolves itself, and how that will affect employment and earnings. Meanwhile, just to remind, the recovery is weakening. A lot therefore turns on how effectively supply capacity is rebuilt and over what time, and how the labour market evolves. These are truly hard yards. For most of the rest of my time, I am going to turn to the setting of monetary policy. Monetary and fiscal policy have operated independently but consistently – unsurprisingly I would emphasise – to provide the bridge through Covid, supported I should add by the stability of the financial system and macroprudential policy. We have had to rely on asset purchases to do a lot of the work because of the proximity of interest rates to the lower bound. There is plenty of debate around QE, some parts of that debate are better founded than others.
Repairing the single market for capital is a collective endeavour in which the ECB has a role to play – but to be fully effective that role needs to be coordinated with the European Commission, European Supervisory Authorities and market participants themselves. Breaking the feedback loop between bank and sovereign credit should also be a priority. To this effect, steps should be taken towards a unified regime for bank resolution and beyond that, towards establishing a single European banking resolution authority. Finally, the “Financial Compact” should also include the completion of the single euro payment area. Payments are at the very heart of a corporate’s activity and I am not sure that they always get the attention they deserve. Nowadays, more than 50% of the trade of the 27 EU countries takes place within the EU – and that trade is mainly based on cashless payments. With the introduction of the single currency there could no longer be any differentiation between national and cross-border euro payments: they should all be “domestic”. The Single Euro Payments Area project, in short “SEPA”, came to fill this void; its aim is to establish a single market for retail cashless euro payments by overcoming technical, legal and market barriers, so that people can make euro payments throughout Europe as easily, securely and efficiently as within their own countries. Using the SEPA payment instruments, companies can make all euro-denominated payments centrally, from a single account, using the same format.

Benoît Cœuré: Financing the economy of the euro area – the European Central Bank’s role Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the Association Française des Tresoriers d’Entreprises (AFTE), Paris, 11 April 2012. *  *  *  I wish to thank Simone Manganelli for his contributions to the speech. I remain solely responsible for the opinions contained herein. Ladies and gentlemen, It is a pleasure for me to be here at the Association Française des Trésoriers d’Entreprise. The topic I have chosen for my address today is the role that the ECB has played – and will play – in ensuring that the real economy of the euro area continues to receive the funding it needs to function properly and how this is linked to the ultimate objective of maintaining price stability in the medium term. I will focus in particular on the latest round of non-standard measures – the three-year refinancing operations which were conducted in December and February. I will start by describing the risks that the euro area economy was facing in the last quarter of 2011. At that time the banking system had funding difficulties, and we were on the brink of a credit crunch. If a crunch had occurred, it could have had devastating consequences for many firms and households; their access to financing would have been restricted.
This circularity creates powerful feedback loops which may lead to absolute market freeze. Finally, banks form a closely interconnected network. Interbank relationships are key to the smooth functioning of financial intermediation. They have been severely disrupted during the current turmoil. It is important to note – and accept – that counterparty risk between financial intermediaries depends as much on perception as on reality. It was enough for European banks to be perceived as vulnerable, even if that was unjustified, to experience tensions on funding. A case in point is the significant retrenchment by US money market mutual funds from European banks on the basis of their exposure to peripheral sovereign risk. What we have seen in the last three weeks is the simultaneous interaction between these three dynamics: solvency and liquidity; banks and sovereigns; and inside the banking sector itself. All sovereigns have been impacted. This includes, most recently, all triple A countries, even Germany. I draw three conclusions from this analysis First, the essential weakness of Europe does not primarily lie in the fragility of any of its components. Europe’s fragility comes from its difficulty to organize and manage, in times of crisis, the complex interactions occurring at the heart of its financial system. Second, we are facing a financial crisis, not a monetary one. There are huge differences. Confidence in the currency remains as strong as ever. Gross capital inflows in the euro area remain unaffected.

However, even though Norges Bank closely tracks the GPFG’s benchmark index, many big and small choices have to be made every day. The Executive Board is satisfied that the return over time has been higher than the return on the benchmark index against which the GPFG’s performance is measured. For 2021, the GPFG’s investments earned an overall return of 14.5 percent before management costs. The return was 0.74 percentage point higher than the return on the benchmark index defined by the Ministry of Finance. Since the turn of the year, the markets have been affected by Russia’s invasion of Ukraine and higher inflation in many countries. The GPFG’s equity and bond investments both fell in value in the first quarter of the year, and the overall return on investments was a negative 4.9 percent. Norges Bank’s investment management helped to dampen that fall somewhat. The return was 0.66 percentage point higher than the benchmark index for the quarter. The white paper The Government Pension Fund 2022 contains a broad review of the Bank’s active management of the GPFG. The Ministry proposes to maintain the size of the Bank’s permitted deviations from the benchmark index, measured as expected tracking error. This is consistent with Norges Bank’s assessment that the tracking error limit is adequate. On several occasions in 2021, the Executive Board provided the Ministry of Finance with advice and assessments regarding the GPFG’s approach to climate risk. This is also a key topic in this year’s white paper.
On the one hand, the hit to capital could be larger if firms’ risk appetite remains subdued or if the debts accumulated during the crisis act as a drag on investment. For example, in the UK Office for Budget Responsibility’s (OBR) downside  scenario, scarring reduces output by as much as 6%. 20  Baldwin and Freeman (2020). 20  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  20  On the other hand, it is possible investment and the capital stock rebounds faster than in a typical recession – for example, if there is catch-up investment or if firms seize the opportunity created by the Covid crisis to improvement their digital estates and digital skills. This would reduce, but not eliminate, any scarring. The balance of these effects on investment is something I will discuss in a future lecture. (d) Fiscal Policy After the global financial crisis, the major tool of macro-economic demand management was monetary policy, which was loosened significantly in most countries. By contrast, fiscal policy in most countries was loosened only modestly and in some, including the UK, was tightened. This fiscal response added to the burden placed on monetary policy. The fiscal policy response to the Covid crisis has been very different. Although monetary policy has once again been loosened, fiscal policy has played the frontline role in stabilising the economy. Both the  fiscal/monetary mix, and the scale of the all-in supporting policy response, has as a result far exceeded that following the global financial crisis.

5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  Chart 4: Underlying UK inflation relative to target-consistent levels  pp  2 1.5 1 0.5 0 -0.5 -1 -1.5 -2 -2.5  2012  2013  2014  2015  CPI ex VAT Trimmed mean core  2016  2017  2018  Core services CPI ex VAT SPPI  2019  2020  2021  Core CPI ex VAT  Source: ONS and Bank calculations  Chart 5: UK inflation expectations  Source: Bank of England, HMT Survey of Professional Forecasters and Citi/YouGov Household Expectations Survey  6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  On the demand side, a disinflationary drag factor over the past decade has been the persisting effects of the global financial crisis. The recovery from this crisis was significantly slower than expected, with the level of activity in the UK consistently undershooting expectations (Chart 6). This resulted in a larger and more persistent output gap, and hence a larger and longer downdraught on inflation, from the demand side of the economy than was anticipated. The same was true internationally. Chart 6: UK GDP growth and historic forecasts  per cent  6 4 2 0 -2 -4 -6 -8  2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: ONS and Bank of England.