samchain/econo-pairs-v1 huggingface dataset:
Every 10 percentage point increase in a company’s export share of turnover is, on average, associated with a 3% increase in productivity. While causation could operate in either direction, this illustrates the productivity benefits of a corporate sector which is open to trade and exposed to external competition and innovation. Chart 22e classifies firms according to their spending on new products and processes. The differences here are not especially surprising, with average productivity around 20% higher among firms investing in new  52 53  For example, Haldane (2016). Newman et al (2015). 14  All speeches are available online at www.bankofengland.co.uk/speeches  14  products and processes. Nonetheless it is striking, and perhaps surprising, these differences are not larger. Clearly, they do not explain most of the productivity differences across companies. Firm size appears to matter somewhat more to productivity (Chart 22f). For example, for small firms (with fewer than 50 employees) the picture is a nuanced one. In general, their average levels of productivity are materially lower than for larger firms, on average around 7% lower. There is, in particular, a larger lower tail of small companies with low, or even negative, levels of productivity. Nonetheless, some smaller companies do inhabit the high-productivity, upper tail. Moreover, small companies tend to exhibit faster rates of productivity growth than larger firms, even when it is from a lower base. Table 3 looks at average productivity growth rates among firms of different size.

International experience shows that countries’ export growth is driven mainly by new firms – in existing product categories and to existing destinations – with a stronger capacity for growth than existing exporters. 7 As some authors have pointed out, taking advantage of this growth potential requires fostering factor mobility across firms of different productivity levels. This process generates a major portion of the gains from economic openness, such that policies that hinder workers crossing over to other firms or that raise the cost of adjusting the scale of production weaken capacity for innovation. 8 Finally, and in the same token, it is clear that the opportunities that China’s strong growth generates for the region must be well used. For this to take place, not only will greater saving be required, but also more productive investment. In other words, one significant challenge facing the economies of the region – and Chile in particular – is to take advantage of this momentary boom in the terms of trade by promoting saving and investment, thus making sure that it does not simply translate into an unsustainable spending spree. To that end, fiscal policy plays a key role by setting up well evaluated investment programs, while maintaining the incentives that promote the accumulation of scarce physical and human capital among private agents. Policies that distort these incentives inevitable end up lowering the rate of saving and investment.
In this lecture I will try to bring together in an accessible, structured way, summaries of the most important reform initiatives that are in train – at least those that affect prudential supervision – I will try to set out what they are aiming to achieve and how much further there is to go. I will then reflect on how the regulatory jigsaw fits together and the key questions that are being asked of it. Alongside the statutory Financial Policy Committee in the Bank of England (the FPC) and the Financial Conduct Authority (the FCA), the PRA was brought into life on 1 April 2013, as part of a reshaping of the UK’s financial regulation landscape. The PRA is the prudential regulator for deposit takers (banks, building societies and credit unions), insurers and major investment firms. It started with two objectives: (i) promoting the safety and soundness of its authorised firms and (ii) specifically for insurers, to contribute to the securing of an appropriate degree of protection for those who are or may become policyholders. A year later, an additional secondary objective was added: to, so far as is reasonably possible, act in a way which facilitates effective competition in the markets for services provided by PRAauthorised persons in carrying on regulated activities. The PRA’s strategy is to deliver a resilient financial sector by seeking: an appropriate quantity and quality of capital; effective risk management; robust business models and sound governance, including clear accountability of a firm’s management.

Previously, liquidity was also influenced by purchases and sales of foreign exchange to influence the krone exchange rate. This has not occurred for the past 11½ years. Banks as a group cannot directly influence the level of their liquidity in Norges Bank. The level of banks’ liquidity is determined by the central bank’s liquidity supply and any changes in other central bank balance sheet variables. Changes in banks’ demand for central bank reserves lead instead to changes in market interest rates. For example, banks’ demand for more liquidity will be reflected in an increase in money market rates. Liquidity in the banking system  BIS Review 113/2010  7  Norges Bank determines market rates by providing sufficient liquidity to ensure that the shortest money market rates fall to a level close to the rate banks receive on their deposits in Norges Bank. Interest rates cannot fall below this “floor” as no bank will want to provide loans at a rate lower than the rate they can obtain from Norges Bank. Banks’ loans from and deposits in Norges Bank have been substantial and increasing over time. Demand for loans was particularly high during the financial crisis. It would appear that banks have grown accustomed to dealing directly with the central bank instead of redistributing liquidity in the interbank market. We are having to supply more liquidity now than previously in order to hold down money market rates close to the floor.
But you can’t have a meal without food — and you can’t have banking without service, trust, and capital. 6. Yes, technology is replacing some traditional banking channels and processes. But that actually enhances those core principles. So, I don’t think technology will replace banks. Rather, I’ll be making the case today that technology will make banks better — whether it is delivered by an established bank or a new market entrant. A new era established 7. In 2017, the HKMA launched seven initiatives to begin a new era of smart banking. Since then, the competitive landscape for banking in Hong Kong has changed quite a lot. We are proud to be one of the first markets in the region to have fully digital banks — or virtual banks. As we speak, our city has one of the highest numbers of virtual banks in Asia. 8. Today, customers can choose from a wider range of banking providers and platforms. They can choose digital or physical, niche or universal. 9. Not surprisingly, competition is bringing down costs and improving customer experience. For example, traditional banks have been phasing out fees for maintaining low account balances. Many are proactively improving their digital platforms to improve the user experience. 10. We owe this progress to the innovators, entrepreneurs, and bankers in today’s audience. It has been driven by your hard work and determination. 11. As a regulator, we help to facilitate this progress. We ensure a level playing field for all types of financial institutions.

Trade finance is another area of concern. It is often hard for banks to access the trade and customs records of importers or exporters. That can make it difficult for banks to conduct credit assessments – and difficult for companies to get trade finance loans. Although some banks are using their own big data initiatives to assess credit-worthiness, a more general and long-term framework is needed to solve this problem. 23. These examples highlight the need to improve the data landscape in Hong Kong. We want to make sure it doesn’t become a factor that limits our city’s potential for better banking. 24. So, today I’d like to introduce you to a new market development initiative for the next era: the Commercial Data Interchange or, as we call it, CDI. 25. CDI aims to establish a consent-based common standard for data owners to share their digital footprint with banks through data providers. Today, we rely on multiple one-to-one connections between banks and data providers. Under CDI, each bank and data provider will have a single connection to this interoperable platform. That should make data sharing more efficient and scalable. 26. Financial institutions and data providers will be able to easily connect their systems to this infrastructure. That will allow customers to authorise their own service providers – such as 2/4  BIS central bankers' speeches  utilities companies and payment gateways – to provide banks with relevant and authenticated data through this platform.
The chain of events is familiar to all of us: As soon as a small central bank applied its policy instruments in an effort to cool down the economy – such as by raising interest rates – it would open the floodgates to a tidal wave of capital inflows that would cause the economy to flounder. And by the way, in this context nearly all central banks worldwide are considered small, apart from the US Federal Reserve and the European Central Bank. 2/5  BIS central bankers' speeches  It is important to bear in mind that the problem is created not only by foreign exchange market instability; capital inflows can overwhelm the financial system and create credit and asset bubbles like those we saw in Iceland in 1998–2000, and again in 2004–2008. And at some point in time, this capital will want to go back home – sometimes with no advance warning – leaving ruin in its wake. Therefore, it should come as no surprise that, in open economies with independent currencies, currency crises and banking crises usually go hand-in-hand in what are called twin crises. Hélène Rey proposed four options to create scope for monetary policy: 1. Targeted capital controls, to create space for independent monetary policy without disturbances from abroad; 2. International coordination of monetary policy, particularly the policy of the Fed and other large central banks; 3. Steering monetary policy transmission by applying macroprudential tools in order to control credit growth and leverage; 4.

These include the traditional agriculture and fisheries sector, transport and media, management and marketing consultancy services, wholesale, health, maritime, archaeology, restoration, fair trade, tourism, youth services and community care. Our cooperatives are affiliated with the International Cooperatives Alliance (ICA), and so abide by the Seven Basic Principles established by the Alliance mentioned previously. Banks too have been with us for a long time. Indeed one can trace the origins of banking in Malta to the times of the Knights of St John, though more rapid development took place under British rule, helped by the island’s strategic and central position in the British Empire. In 1826, the Anglo-Egyptian Bank started operations here, and through a series of mergers and acquisitions this later became Barclay’s Bank DCO (Dominion, Colonial and Overseas), which soon established an extensive branch network on the island. A number of smaller Maltese-owned banks were also established, and some of these eventually merged to become the National Bank of Malta, which also established a branch network. There followed a period when these two major banks were nationalised, but following the subsequent  BIS central bankers’ speeches  1  liberalisation of the economy they were again privatised, with the Government retaining only a 25% share in Bank of Valletta. More banks began to operate here after Malta joined the European Union, but these were all commercial, joint stock banks. No one, till recently, seems to have thought of setting up a cooperative bank in Malta.
If uncertainty about inflation creates an option value to waiting, then it will reduce investment. And there is growing  8  BIS Review 68/2002  empirical evidence that inflation is a key explanatory variable for cross-country differences in 5 investment to output ratios. (ii)  Redistribution of wealth between debtors and creditors. Unexpected changes in the price level - the standard of value used to define contracts - produce arbitrary redistributions of wealth. As Keynes wrote in his powerful advocacy of price stability in A Tract on Monetary Reform, “We leave saving to the private investor. We leave the responsibility for setting production to the business man. These arrangements have great advantages. But they cannot work properly if the money, which they assume as a stable measuring-rod, is undependable. Unemployment, the precarious life of the worker, the disappointment of expectation, the sudden loss of savings, the profiteer - all proceed, in large measure, from the instability of the standard of value”. Or, as Lenin remarked, the best way to destroy capitalism is to debauch the currency. It is arguable as to whether it is high inflation or serious deflation which results in the greater economic damage. In Europe in the 1920s hyperinflation undermined economic and social arrangements, as it has done more recently in Latin America. But deflation has proved just as unpopular as inflation. In 274 A.D. the Roman Emperor Aurelian tried to restore the integrity of the coinage which had been adulterated by workmen in the Mint.

[catalyst role:] •  in order to avoid DLT silos and jeopardizing market integration achievements, we also attach great importance to standardisation and interoperability both in the payments and in the post-trade domain;  •  we very much welcome the ongoing industry’s efforts in these areas and have already offered our support in facilitating this market-driven process. [oversight role:] •  in our capacity as overseer of market infrastructures, we need to keep abreast of market developments in the FinTech arena and study the appropriateness of our oversight framework with a view to ensuring efficiency and safety.
Economic recovery continuing... If we begin with economic prospects, we can observe that the recovery is continuing, both in Sweden and abroad. For a small economy that is dependent on foreign trade, like Sweden, developments abroad are important, particularly in the euro area, which is our most important export market.1 The euro-area economy has for some time shown positive growth figures once again, but the recovery is progressing slowly and marked by repercussions from the sovereign-debt crisis. Things look rather better in the United States and the United Kingdom, and growth there is expected to be higher. All in all – when foreign countries are aggregated according to the KIX index – it seems we can expect a relatively good recovery in the coming years. At the same time, geopolitical developments over the past six months cast new clouds of doubt over global growth. Here I am mainly thinking of the effects on the euro-area economy of developments in Russia and Ukraine. It is still too early to draw any definite conclusions with regard to the effects on growth prospects in Europe. But there is a risk that developments abroad will be worse than we have previously assumed. Given that international developments are in line with our forecasts, however, we envisage improved economic activity in Sweden. However, the picture is divided. Household consumption has so far held up relatively well in recent years, while exports have developed less well, against the backdrop of the weak developments in the euro area.

We will need a flexible economy that allows to redirect resources rapidly and efficiently from those sectors that are losing appeal to those that are gaining it; a financial system able to weigh the risks and help new ventures thrive; and we must double our efforts to improve our productivity, and so on. The good news is, as I just mentioned, we have an appropriate macroeconomic policy framework to confront changes in the external environment and an economy that, having made significant adjustments, is now free of significant imbalances. This is why I believe that, never forgetting that we are a small and very open economy and therefore ever exposed to external shocks, we can look into the future with confidence. Thank you. 6  BIS central bankers’ speeches
Conclusions Overall, the outlook for the Spanish economy has improved in the recent period. Its degree of vulnerability to potential shocks has progressively diminished as headway has been made in correcting its imbalances, strengthening economic activity and generating employment. Nonetheless, the effects of the crisis have been very serious and condition our economy’s growth capacity in the short and medium term. Accordingly, economic policy measures should be geared to shoring up the foundations of the recovery and to seeing through the correction of imbalances. The cyclical situation in the euro area and in Spain means the maintenance of a demandside policy mix supportive of the recovery is foreseeable. In the case of monetary policy, this is because of the commitments assumed by the ECB, which I referred to earlier. And in the case of budgetary policy, because adhering to the fiscal consolidation path will be compatible with a progressively less contractionary or more neutral contribution by the public sector to growth. In the current economic circumstances, it will continue to be necessary to complement these measures with reforms aimed at enhancing competitiveness and lowering the obstacles to a more rapid absorption of unemployment. Such actions take on particular significance in a situation like the present in which the aggregate level of debt in the economy is still high and further gains in competitiveness come up against a less propitious environment, given the low inflation in the euro area and the envisaged low growth in productivity.

Luis M Linde: Presentation of the Bank of Spain’s Annual Report for 2014 Testimony by Mr Luis M Linde, Governor of the Bank of Spain, before the Parliamentary Committee on Economic Affairs and Competitiveness, Madrid, 24 June 2015. *  *  *  Ladies and gentlemen, I appear before this Committee on the occasion of the presentation of the Banco de España Annual Report for 2014. Let me begin by reviewing developments in the Spanish economy, the factors underpinning its recovery and the economic policy challenges of strengthening recovery. I shall then address aspects relating to the start-up of the Banking Union and the situation of, and outlook for, the Spanish banking system. Economic situation and outlook In mid-2013, the Spanish economy initiated a recovery phase that firmed last year and has continued to do so in 2015 to date. In 2014, GDP grew at a rate of 1.4% while employment did so at 1.2%, the first positive figure since the start of the crisis. In its Quarterly Report to be published tomorrow, the Banco de España will present a new set of macroeconomic projections. According to these, the Spanish economy will grow at a rate of 3.1% on average in 2015, an upward revision of 0.3 pp on the projections published in March. On the basis of this change, activity is performing better than projected three months back.
We also noted an unusually low interest among companies in raising their prices, despite rising costs. Conceivable explanations for this included decreasing inflation expectations and perceived uncertainty over the economic outlook, as reported by the companies in our Business Surveys.2 The unusually low inflation in recent years is something we have shared with many other countries. This may have strengthened the perception that there are forces in motion making it impossible for the Riksbank to reach the inflation target. There has been, not least, an emphasis on the effects of globalisation and digitisation on costs and competition. However, as my colleague in the Executive Board, Martin Flodén, pointed out in a speech last autumn, it is difficult to see why this should have persistent effects on the rate of inflation in particular and why it has not prevented higher inflation in countries like Norway, Canada and Australia.3 In addition, these factors were relevant when Sweden had a higher rate of inflation, just a few years ago. Regardless of the underlying reasons, it would be very unfortunate if long-term inflation expectations were to drift away from the inflation target. We would then start to lose everything we gained by having an inflation target. Inflation prospects are influenced by international developments At the same time, at the start of 2015, the European Central Bank (the ECB) had announced bond purchases in an amount of EUR 60 billion per month to make its monetary policy more expansionary.

Against this background of uncertainty and shocks, and in order to reap all the benefits of the fantastic process of economic and financial globalisation, we are still facing two main challenges: First, we observe persistent financial instability of which the ICT and equity bubble is a striking example. What are the factors behind such developments and which avenues should we explore in order to mitigate financial instability? Second, we had to cope with repeated financial crises in emerging market economies since the early 80s. Our challenge is how to prevent such crises and, if they occur, how to ensure that effective and predictable methods for crisis resolution are available, and enforced. In my view, the new international financial architecture (understood broadly) should provide appropriate policy responses to both types of challenges. Of course, they are interlinked in many ways. For the sake of clarity, I will address these two types of issues separately. •  First, I would like to show that some by-products of financial integration may have had adverse effects on the stability and efficiency of the financial systems;  •  I will then try to put into perspective recent crises in emerging market economies. *  1. Some by-products of financial integration may have had adverse effects on the stability of mature financial systems  1.1.