samchain/econo-pairs-v1 huggingface dataset:
Conclusion It is sometimes argued that the current expansionary monetary policy discourages governments from undertaking the necessary structural reforms in the euro area. But that begs the question: why weren’t these reforms carried out when interest rates were higher? We have to stop searching for reasons why structural reforms are not being addressed. To lift potential growth and strengthen the underpinnings of our Economic and Monetary Union, we need comprehensive, well-sequenced structural reforms in national Member States, as well as at European Union level. And we need them now. European citizens started losing trust in the European Union and its institutions when they started losing sight of their tangible benefits, that is, the impact of the integration process on their jobs and standards of living. Rapidly vanishing trust in turn prevents those steps towards European integration from being taken which are indispensable if we want to meet today's challenges. The burden of breaking this deadlock cannot be borne by the people of Europe: the burden must be borne by the EU and its institutions and by European governments. Indeed, the best way to respond is to identify a sequence of reforms for creating jobs and growth. If carefully designed, such a sequence can gradually recreate trust and lead us to where we want to be: to the point where a discussion on the future of Europe, and the degree of sovereignty which needs to be shared to secure it, is again possible. This is not low-hanging fruit.

The high-risk projects with high expected returns, which we would like to see giving a boost to potential growth, are more difficult to finance than in other parts of the world. This is mainly because of Europe’s bias towards bank and debt financing as opposed to equity[10], and the persistent fragmentation of our financial systems, not to mention high administrative burdens[11]. And the reallocation of labour is hampered by rigidities in national labour markets as well as obstacles to cross-border labour mobility, such as the lack of transferability of social rights, language barriers and cultural differences. And even when our firms have sufficient access to capital, they do not seem to be innovative enough and also do not fully exploit new technologies and working methods[12]. There are also several other reasons for the secular decline in Europe’s growth. Consider the demographic “handicap”. Over the next 15 years, the working age population will actually shrink substantially or at best plateau out in almost all euro area countries. Worse yet, in that same period, the most innovative segment of the population[13] will contract even more. Let me give you some data on this: according to the European Commission’s ageing working group[14], the population between 26 and 50 – which several studies identify as being the most innovative – will shrink by 12% in Germany, 2% in France, 11% in Italy and by a whopping 29% in Spain.
Advanced Eco nomies Emerg ing Eco nomies 0110  0709  07 08  01 09  0 0108  0110  0709  0  0109  0708  0108  0707  0107  -2  1  0707  1  Emergin g Econo mies  01 07  Adv anced Econo mies  -1  Source: Bloomberg, Datastream, CBRT. In the first half of 2009, the global financial markets recovered, albeit modestly relative to the final quarter of 2008 when the impact of the crisis was felt most strongly. This recovery is mainly attributable to measures taken worldwide in order to ensure the proper functioning of financial markets, unconventional monetary and fiscal measures taken by advanced countries and the relatively promising data on global economic activity. The global risk appetite continued to improve, though slowly, as of the year-end and early 2010. Global Risk Appetite and Risk Premium Indicators Currency and Risk Premium Indicators for Emerging Economies*  Global Risk Appetite Indices Credi t Suisse Ris k Appet ite Index  EMBI+ (basis poi nts)  100 0  VIX (right axi s-invert ed)  Currency Ind ex (b ask et - 1 US dol lar and 1 Eu ro) (righ t axi s)  3  8  80 0  6  16 0  14 0  2.5  4  2  60 0  2  12 0  1.5 40 0  0 1  Source: Bloomberg.

A key issue is how emerging markets will be impacted by tighter financing conditions (and the ensuing capital outflows) and to what extent this will have repercussions for euro area foreign demand. Against this background, ensuring the continued resilience of the euro area economy is paramount. Second, there are policy challenges related to our financial markets. The euro area financial system weathered several episodes of stress in the second half of last year. This is a sign that a lot has already been achieved with the establishment of banking union, which, however, is not complete yet. To make our financial system truly safe and sound we need to progress in two main domains, which complement each other. On the one hand, we need to finalise and implement the work we started when establishing the Single Supervisory Mechanism and Single Resolution Mechanism as the initial pillars of banking union. This includes further regulatory work to harmonise our rules for supervisory action and ensure a consistent application of the Bank Recovery and Resolution Directive’s bail-in provisions. On the other hand, we need a common public backstop for the Single Resolution Fund to strengthen its credibility and we need to ensure that confidence in the safety of deposits is equally high in all 2  BIS central bankers’ speeches  euro area Member States by establishing a European Deposit Insurance Scheme.
The tests include cyclical convergence and structural flexibility, the impact on investment, the impact on the financial services industry and the impact more generally on growth, stability and jobs. So the UK will not join EMU at the outset. But financial firms in London, whatever their nationality, see the euro as a key part of their business. With our support at the Bank of England, they have been actively preparing for the introduction of the euro. London thrives on liquid markets, regardless of currency. So the introduction of the euro is a major opportunity for London. BIS Review 11/1998  -2-  From the start, London will act as a link between New York and the euro area by providing a full range of euro services in wholesale financial markets. That includes euro payments and settlement, so that anyone who wishes to do so will be able to trade and settle in euro in London from the first day of EMU. But it also extends to euro banking, foreign exchange and derivatives trading, bond and equity issuance and trading, fund management, financial advice and professional support services as well. The City of London is Europe’s leading financial centre and one of the top three global centres, alongside New York and Tokyo. Here in New York, the financial centre is influenced by the size of the domestic economy. That is true of Tokyo as well. But London’s success has historically been due to its international financial business.

Edwin Schooling Latter will talk more to these issues this afternoon. Having put in place the foundations for a decisive switch in swaps liquidity to SONIA, the next challenge for derivatives markets is to accelerate transition in futures and non-linear products. In preparation for the provision of a robust forward-looking sterling term rate, many banks are now streaming executable SONIA swap prices to regulated trading venues. Having the inter-dealer market able to trade SONIA in a single click is a key building block to helping firms hedge with the smallest friction possible. The Working Group will be considering what more needs to be done to drive transition in these markets over the coming months. 11  www.bankofengland.co.uk/-/media/boe/files/speech/2019/join-the-revolution-why-it-makes-business-sense-to-move-on-from-liborspeech-by-andrew-hauser.pdf 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Progress in sterling markets: cash instruments and lending  If derivatives are well on their way, the big challenge for 2020 is to drive transition in the sterling cash markets – and in particular to hit the market’s target of no new issuance of term LIBOR-linked cash instruments after Q3. We know it can be done. SONIA has quickly become the default reference rate for floating-rate notes and securitisations – accounting for around 85% of new issuance across the two markets in the second half of 2019. But these are predominantly wholesale transactions, involving a relatively small number of experienced counterparties.
This was demonstrated in the real estate crisis at the beginning of the 1990s and again in the most recent financial crisis. In the 1990s, the big banks were able to absorb at least part of the impact of the regional banking crisis on the economy, while during the financial crisis, the domestically focused banks, which were hardly affected, ensured that lending operations in Switzerland continued almost unimpeded. In addition, the following prerequisites must, in my view, be fulfilled, in order that the Swiss banking centre can retain its global importance and reach. The quality of the services offered by the banks, their crisis resilience and their reputations must all be considerably above average. Although, in principle, quality, crisis resilience and reputation are important for any financial centre, they are particularly crucial for Switzerland. On the one hand, our comparatively small country can only afford to host a relatively large international banking centre if this financial centre is extremely stable since, naturally, the resources available for emergency bank rescues are limited. On the other, an irreproachable reputation makes a major contribution to ensuring that the business operations of Swiss banks are not subject to constant political and legal pressure from abroad. And, again, excellence in service quality and products offered is essential if banks from a small country are to export their services successfully and secure significant market shares for themselves in international competition for customers. It is above all the banks themselves who face the challenge of fulfilling these prerequisites.

And protests have become so vocal that the secretary of state for transport has responded by setting up a dedicated task force. LIBOR’s a bit like that bridge. It’s been around since the 1960s. Every company has got to know it inside out, and built it into their daily routines. And it’s popular – very popular: almost 400 trillion dollars of financial instruments, across every part of the global economy, are tied to LIBOR in some way. But just like that bridge, it isn’t safe. Structural change in the financial markets mean that the trading that used to underpin LIBOR – term unsecured lending between banks – has virtually disappeared. In its place lies little more than informed guesswork. And that just isn’t a viable long-term basis for the debt and financial instruments on which all your businesses rely. Sooner or later, a benchmark based on such shaky foundations will collapse. Just like Hammersmith Bridge. Only it won’t be a few thousand disadvantaged families, it could be the entire global financial system that suffers, with unimaginable consequences. We can’t let that happen. And that’s why, for the past six years, we’ve been doing two things: -  First, we’ve been constructing a new bridge.
The level of investment in the US was high during the expansion, which may have resulted in excess capacity in the business sector. The fall in equity prices is having a negative effect on household wealth. In addition, US household saving is low and low interest rates have induced households to accumulate debt. The fall in the value of the dollar may make a contribution, but growth in the business sector is still not self-driven and the depreciation of the dollar is reducing other countries’ exports. The impetus generated by the US economy may be weak for several years ahead. Nor is the rest of the world showing clear signs of an imminent recovery. Japan is dragging down growth in the world economy. The large European economies, in particular Germany, are stagnating. Unemployment is high, but the growth potential appears to be low. Interest rates in the US and Japan have been reduced to such a low level that there is little room for further stimulus. The monetary policy authorities could use more unorthodox measures. For example, the central bank could purchase massive volumes of long-term bonds - as seen in Japan - or other assets. It is uncertain how effective such measures are. Traditional fiscal policy instruments may also prove to be ineffective when budget deficits are rising sharply. This may fuel expectations of future fiscal retrenchment and tax increases. If the world economy continues to stagnate over a longer period, the effects will also spill over to the Norwegian economy.

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.
I understand that, as at December 1999, commercial bank assets in Euroland represented over half of total assets in the bank, debt and equity markets. The corresponding figure in the United States is only 15.8%. It is true that the relatively greater dependence on banks in financial intermediation in the main Euroland countries has served those countries remarkably well for many years. It provided continuity of funding and support for long-term strategies, and therefore insulated them from the scourge of “short-termism”. But the pendulum appears to have swung in the opposite direction over the past 10-15 years. Competitive equity and debt markets have been more efficient at delivering the corporate restructuring and the funding for “new economy” activities in a speedy manner in a world of particularly rapid technological change and a world where international finance is highly mobile. Such efficiency, with globalised markets, coupled with a buoyant economy, is seen to be attracting substantial capital to the US markets, and I understand that one major source from where such capital comes is Euroland. Seen from Asia, this has been another important factor contributing to the weakness of the euro. These sort of images may explain why people talk of a reluctance of foreigners to invest in Euroland, despite the very clear signs that the overall prospects for non-inflationary economic growth are now quite encouraging. You may argue that these images are mistaken and flawed. You may well be right; I am not in a position either to refute or to verify them.

But they have hardly ever been tested in a severe recession or a crisis. So we don’t know how well they would work in such situations. In respect of asset management, new products such as robo-advice are now appearing. These are computer programmes that advise customers on how to invest their money. Depending on their design, they might lead many investors to take the same positions at the same time. Such herding could then enforce current trends, creating bubbles or bursting them. And then there are threats of a more technical kind: cyber risks. Cyber risks affect everyone – banks, fintechs and their customers. Arguably, fintechs are more exposed to cyberattacks and data theft. Their IT platforms are small and interconnected, and they often use public cloud solutions and outsource data storage. That said, fintechs are digital natives and are very aware of the risks. Ladies and gentlemen, it is hard to predict where the fintech journey will take us. It is obvious, however, that the train has left the station and is speeding up. Customers want to extend their digital life to banking; they want banking services anytime and anywhere. Those who can satisfy their needs will become dominant players. There is a chance that fintechs will deeply transform the banking business. It is up to regulators and supervisors to ensure that this does not come at the cost of stability. The issue is, of course, that fintechs often operate outside the regulated banking sector.
On the costs side, the digital transition involves preparing for shifts in jobs and in skills, through enhanced dialogue with social partners. Moreover, it calls for major IT investment aimed at providing services that remain aligned with customer needs, reducing structural costs and improving regulatory compliance. IT systems will need to be – and this is far from simple – more secure so that they provide strong protection against cyber-risks, but at the same time more flexible and open to interconnectivity. Our duty as regulators in this revolution is obviously not to discourage innovation, but to ensure a level playing field with FinTechs – taking into account their lifecycle according to a “proportionality principle” – and still more tomorrow with bigger data platforms, be they GAFAs or their equivalents. This level playing field will have to apply for capital or liquidity requirements, for prudential supervision as well as for data protection: if you play the same game, you have to obey the same rules. 3/9  BIS central bankers' speeches  In addition to adjustments to business models, cross-border bank consolidations in the euro area would also help tackle this efficiency issue. The Banking Union provides both the justification and the framework for such a financial integration – we still lag far behind the American market in this respect. Cross-border consolidations on a sound and safe basis would make banks better able to diversify their risks across the euro area, and channel savings more effectively towards investments across borders.

But let me note first that, those collapses did have significant negative spillover effects within the crypto ecosystem, and second that, in attempting to replicate some of the functions performed by the mainstream financial system, the crypto ecosystem inherits and may amplify the vulnerabilities of that system. For instance, tokenisation increases operational risks, especially cyber risks. It is currently the number one operational risk to financial players, and it has the ability to jeopardise the stability of the entire financial system. The tokenisation of finance creates in particular new points of vulnerability: let me mention bridges between blockchains, or oracles that feed data to blockchains. In addition, the governance issues of public DLT infrastructures, which contribute greatly to the risk of hacking, are still far from being resolved. II/ Impact on our role and activities In response to these transformations, we see our role as twofold: as a financial stability authority to help bring tokenised finance within a regulatory framework which allows its benefits to be reaped but also its risks appropriately mastered to safeguard financial stability and therefore confidence. But we see ourselves as being part of the innovative ecosystem with the objective to act as a facilitator and catalyst, in our operational role of central bank services provider. 1/ Contributing to a confidence prone regulatory framework Fundamentally, what does not change in the financial sector is the need for confidence .
We will seek feedback on these with the industry. 33 I will now turn to the topic of financial scams, a concern of some retail investors. MoneySense runs regular campaigns to remind investors of the need to be on guard against investment scams. I have highlighted here a web page capture of an earlier campaign where MAS had put out an advertisement to resemble a typical online investment scam. The advertisement showed an island property investment. When a consumer navigated to the scam website and indicated interest to invest, he would be told that the island property investment was a scam and he would have lost money if he had invested. He could then learn about how to spot red flags and protect himself when investing. You may be surprised that quite a few people had actually “clicked” to invest into this. Thankfully, there were others who contacted us to alert on this suspicious investment scheme. 34 Some fraudulent websites have also attempted to solicit investments using fabricated information attributed to well-known personalities. Both MAS and the police have issued 4/5  BIS central bankers' speeches  advisories on these scams. 35 To safeguard your monies, you should approach all investment propositions with a healthy scepticism and challenge exaggerated claims. As it is often said, if it sounds too good to be true, it is probably not true. 36 Financial education and advisories issued by the authorities will not stop those who are out to cheat investors.

We will have many opportunities during the course of this work to discuss with the Committee on Finance how we can develop and improve our analyses. BIS central bankers’ speeches  3