samchain/econo-pairs-v1 huggingface dataset:
Also the existence of a deep and liquid financial market that offers a breadth of financial instruments and improves the ability of the economy to absorb shocks is generally lacking. Indeed, a number of empirical studies indicate that financial development, especially greater financial access, is associated with lower macroeconomic volatility. The institutional framework of monetary and financial supervision policy also has an important influence on the extent to which various shocks make their way through the economy. For example, a lack of independence and credibility in monetary policy to anchor long-run inflation expectation is likely to undermine macroeconomic outcomes. In contrast, a credible policy framework and central bank independence provide the necessary preconditions for alleviating the impact of shocks on the economy. Similarly, weak supervisory framework also increases risks to financial imbalance build-up. BIS Review 89/2007  3  Overall, our proposition is that the unique combination of shocks and structural features of the economic system in emerging market give rise to a macroeconomic backdrop that is characterized by significantly higher output and consumption volatility than in developed economies. The Asian financial crisis ten years ago is a good example of this interaction, where large and persistent capital flows interacted with financial system underdevelopment and rigid policy regime resulting in a boom-bust cycle. Against this backdrop, the pursuit of monetary and financial stability in emerging market, therefore, has two key facets.

3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  To date, approaches to measuring and managing the financial implications of climate change for investments have been inadequate. Carbon footprints are not forward-looking, divestments only focus on the most carbon-intensive sectors, green investments are still small scale, and the impact of shareholder engagement is hard to measure. One of the most promising options is to assess the “warming potential” of investment portfolios. For example, GPIF, the world’s largest pension fund, estimates that its assets are currently consistent with a 3.7 degree path. Such a forward looking measure can help asset owners and asset managers understand the transition pathways of their investments and develop strategies to align financial flows with the necessary transition to net zero. Degree warming will reveal who is on the right and wrong side of history. It will provide a signal to governments about where the economy is on the transition path and therefore the effectiveness of their policies. It will empower consumers, giving them more choice in how to invest to support the transition. With our citizens, particularly the young, demanding climate action, it is becoming essential for asset owners to disclose the extent to which their clients’ money is being invested in line with the values of those clients. To this end, for COP26, the TCFD is establishing a subcommittee to consider how to standardise the methodology for measuring the warming potential of assets and expanding its use.
Let me focus on some of the implications of global economic and financial integration for central banks. What does globalization change and what does it not change? What complications does it introduce and what challenges does it ease? This is a vast and complicated topic, but I want to touch on some of the key issues. In passing, let me note Federal Reserve Vice Chairman Don Kohn’s recent assessment of what we know about the impact of globalization on short-run inflation dynamics in the United States and elsewhere. He noted that the evidence so far on these questions is “far from conclusive” but for the most part it suggests that to date the effects have been gradual and limited. There are, however, some important things we know about how economic integration affects the context in which central banks operate. For example, Harvard economist Ken Rogoff and others have pointed out that to the extent that globalization increases the degree of competition, it can reduce the “inflationary bias” or, to put it differently, it can strengthen the anti-inflation credibility of a central bank. By inducing greater price flexibility, competition lowers the short-run gains to output from an unanticipated inflation, and thus permanently reduces the incentives for a central bank to try to exploit those gains. The improved credibility of the central bank’s commitment to keep inflation low and stable should, in turn, allow it to deliver better inflation outcomes with fewer short-run costs to economic growth and employment.

As economies become more open, external developments inevitably affect price and output dynamics. The world may thus be more complex and, in some respects the conduct of monetary policy may be more challenging. The external factors that have in recent years had a dampening impact on domestic inflation could, at some point, fade or reverse. And the forces that have produced this constellation of capital flows and market conditions will evolve in ways we cannot anticipate. This obliges policymakers to devote more care to the process of understanding how change in the world affects the balance of opportunity, risk and uncertainty confronting policymakers. And it probably makes more compelling the importance of preserving confidence in our commitment to keep inflation low and stable, so that we have the flexibility to respond to this changing world. BIS Review 102/2006  3  Ultimately, as Mervyn King, the Governor of the Bank of England, noted recently, inflation is made at home and has to be contained at home. So integration does not, and should not, limit our ability to achieve our objectives. Rather, it forces us to think harder about how our economies are evolving and how developments in the rest of the world affect our markets. Thank you. 4  BIS Review 102/2006
We have the capacity to become a regional breadbasket and this is something we must explore wholeheartedly. It is important to note that there are predictions of a looming worldwide shortage of grain. In Italy, the cost of wheat has increased significantly to the extent that, in protest, people boycotted eating pasta for a day. With our natural resources, this is an agricultural avenue that we ought to explore. However, I must hasten to state that concentrating on agriculture alone also bears a risk as it is prone to the vagaries of weather. So whilst we have been able to reap well in the past, we must also consider diversifying into other economic sectors. Mr. Chairman, I have in mind sectors such as gemstone mining, tourism and manufacturing. The Luangwa region is said to be an area abundant with precious stones. However, we do not appear to have concerted efforts aimed at formalizing the process of explorations in this area. With regard to tourism, the Eastern Province has varied fauna as well as abundant  BIS Review 15/2008  1  wildlife and thus has the potential to become a leading tourism zone. Furthermore, the Eastern Province provides a gateway to the export markets in Malawi and Mozambique. This presents an opportunity for the manufacturing industry to explore what goods and materials are on demand in the two countries. We know for a fact that a great deal of trade is already conducted with the two countries.

The asset-backed nature of Islamic finance makes sukuk ideal for financing of infrastructure projects and would complement ongoing work by Singapore to enhance the bankability of infrastructure projects in the region and involve more capital market participants. 13. In the meantime, it will be important to continue to strengthen key foundations such as global regulatory standards and best practices for Islamic finance, and capacity building and talent development. To facilitate further growth of Islamic finance in Singapore, MAS is working with the industry and other government agencies to provide clarity and certainty in the regulatory and tax treatment for sukuk. For example, some industry players have suggested that pre-approved standardised templates for common sukuk structures could be introduced to expedite issuance. 14. Building Islamic finance expertise has also been highlighted as crucial to supporting the continued growth of the industry. The Singapore Management University’s (SMU) International Islamic Law and Finance Initiative is now in its 6th year, and seeks to carry out research and develop thought leadership in Islamic law and finance, in collaboration with institutions in UK, Malaysia and Indonesia. SMU also offers a Masters in Islamic Law and Finance, and will be graduating its third cohort of students this year. In addition, Islamic finance has also been included as an eligible subject area under MAS’ Finance Scholarship Programme, and industry players could look to tap on this scheme to groom promising talent. Conclusion 15. To conclude, the deepening linkages between Asia and Middle East will continue to present significant opportunities for Islamic finance.
Entities that integrate through “institutional protection systems” should have the attendant banks set up before the end of the year, with their boards of directors appointed and their managerial line perfectly defined. Achieving this, and the fact that, from January, the new institutions arising from integration processes will be operational, rolling over wholesale funding and negotiating on the markets on behalf and on account of the newly created groups, will lend consistency and reliability to the reform. Thereafter, a more technical and silent phase will begin, involving IT and operational adaptation, the elimination of redundant structures and staff adjustments which, as in all mergers, will take months. I am convinced that banks will tackle this process as professionally as they are completing the current phase. –  Fourth and finally, cost structures must be speedily and thoroughly revised. In a Monetary Union, a country must compete in real terms abroad, as must financial intermediaries with one another, as a devaluation entailing an exogenous competitiveness shock is not an option. To overcome the crisis, reduce unemployment and improve the future outlook for the profitability of banking assets, there is no mechanism available other than to raise productivity and efficiency, to reduce labour and structural costs, and, consequently, to lower margins and prices so that all sectors, including banking, may offer better services within the country and sell more abroad. In the coming quarters, banks’ and savings banks’ profit and loss accounts will be subject to different factors of pressure.

In total, in the savings bank sector, there are 13 mergers taking place which affect 94% of assets and will reduce the total number of savings banks or groups of savings banks from 45 to 17. The reform of the legal framework for savings banks, approved on 9 July 2010, has three objectives: first, to facilitate the issuance of top-quality capital; second, to contribute to promoting more professional management and governing bodies; and third, to enhance market discipline. In order to facilitate access to capital markets, the reform sets out two possibilities. First, it provides for the issuance of equity units with voting rights. Second, particularly for those institutions with a business vocation which takes them beyond their traditional markets and businesses, three options are available. The first option is to join an Institutional Protection System (IPS) under the centralised coordination of a commercial bank. The second option is the transfer of the whole loan and deposit business to a commercial bank controlled by the savings bank. And the third option is the conversion of the savings bank into a foundation which manages welfare projects. This foundation is supported by the income from its assets, most notably dividends from the shares of the bank to which it transferred its financial business in exchange for the shareholding. The goal of making the savings banks more professional is to reduce the maximum weight of public-sector stakeholders and to establish a regime regulating incompatibility.
This may serve as another example in this respect. After one year of much talking about them, these subsidiaries have kept doing well. There has been no withdrawing of liquidity from Bulgaria to support the parent institutions in Greece, nor have local residents moved their deposits to other banks. The banks’ shareholders confirmed their long-term commitments to stay and even expand activities in Bulgaria to exploit the opportunities on our market. Generally, the indicators of Greek subsidiaries in Bulgaria are equal or higher than the average of the system as a whole. We as supervisors and guardians of financial stability had to spend much time to dispel all the rumours and fears. These efforts were not in vain. Continuing reforms, letting banks work Governments need to stay firm in their efforts to conduct fiscal consolidation complemented by the necessary structural reforms. Politicians must not be afraid of reforms the needs for which are well understood. Even in the short run, reform-minded politicians get social and political rewards, as long as their message is clear. That has been demonstrated recently in both emerging Europe (with the re-election of a reformist government in Latvia) and also here in Greece (during the local and regional government elections last autumn). Policymakers should not yield under populist pressures. Better financial consumer protection and prudential regulations are certainly needed. But the banking industry should not be overburdened and prevented from fulfilling its traditional functions.

Measures such as bank levies or the taxes on bank transactions, etc., may be very close to crossing that “red line”. The global crisis has not changed the fact that financial development is a powerful driver for economic growth. Let us not make the banks a scapegoat! Thank you for your attention! 4  BIS central bankers’ speeches
Lucas Papademos: The economic outlook and the ECB’s monetary policy some key issues Speech by Mr Lucas Papademos, Vice-President of the European Central Bank, at the Nomura annual Euro Conference “A challenging future for Europe”, Tokyo, 11 November 2004. * * * Introduction The annual Euro Conference in Tokyo, which is now well established, provides a useful forum for examining various policy issues relating to the European economy, also from a global perspective. It is a great pleasure to have the opportunity to address you today and I thank you for the invitation. In my presentation, I would like to focus on two topics: •  First, the state of, and outlook for, the euro area economy and the current stance of the ECB’s monetary policy. Addressing this topic requires me to assess, in particular, the implications of increased oil prices for the euro area economy and the single monetary policy. •  Second, I thought it might be of particular interest to you to also address the challenges posed for monetary policy by large swings in asset prices, especially housing prices. Given the Japanese experience in the 1990s, it is particularly appropriate to re-examine here in Tokyo the impact that large asset price swings can have on macroeconomic stability and the difficult choices for policy-makers confronting strong asset price dynamics. As you all know, these issues are not only of interest for Japan; they are of increasing relevance worldwide.

The estimated impact on output would be, of course, negative, dampening real GDP growth by 0.1 to 0.8 percentage points in the first year; in subsequent years, the average cumulative impact suggested by these models would be roughly neutral (-0.3 to 0.2 percentage points in the second year; -0.1 to 0.4 percentage points in the third year). Needless to say, these estimates are surrounded by a high degree of uncertainty related to the model specifications and other factors, for instance, the assumed initial cyclical position of the economy, the nature of the oil price shock, and the possible existence of non-linearities in the transmission of the oil price shock to the economy. More importantly, these (and other comparable) simulations are based on the assumption that the monetary policy stance is given; that is, the central bank’s interest rates are assumed to be kept constant and not to be adjusted in response to the impact of the oil price shock on inflation. Of course, this assumption is made for the purpose of isolating the “pure” impact of the oil price shock. In reality, monetary policy has an important role to play in influencing the effects of oil price shocks on the economy. Oil price shocks present policy-makers with difficult choices as they simultaneously pose upside risks to inflation and downside risks to growth. In responding to oil price shocks, it is essential to understand that policy-makers cannot offset the real effects of oil price increases.
First, the efforts already made on the fiscal front by euro area countries are already bearing fruit: the primary position of the euro area should be close to balance by the end of 2012, which is a remarkable achievement compared to the other major economic areas (Japan, the United States and the United Kingdom will all run deficits of around 9%, 6% and 5% respectively). At the current juncture, this is clearly an asset for us and an element of confidence both for the markets and economic agents, and needs to be further enhanced. In addition to these efforts at the national level, a stronger framework for common discipline has been put in place, which represents a major step forward towards a more integrated economic union. The legislative package (known as the “six-pack”) which came into force last December considerably reinforces the Stability and Growth Pact: the surveillance powers of the European Commission regarding national budgets have been enhanced, sanctions have become quasi-automatic and the public debt and public spending criteria are being more closely monitored. In addition, the Treaty on Stability, Coordination and Governance puts in place a new “fiscal compact”, notably including the requirement that the annual structural government deficit does not exceed 0.5% of GDP. 2  BIS central bankers’ speeches  At current debt levels, economic agents would respond to loose fiscal policy by delaying their own private spending. The financial markets would continue to impose very punitive interest rates on our countries to compensate for the uncertainty surrounding the fiscal outlook.

–  I have already mentioned the substantially reinforced fiscal and macroeconomic discipline framework: it needs to be recognised that this is a very important step given the transfers of sovereignty that it represents – we are moving towards a stronger economic union;  –  The European Stability Mechanism, whose implementation has been bolstered by the go-ahead given by Germany’s constitutional court and which held its first Board meeting, has a firepower of EUR 500 billion of new money to directly buy government bonds, provide collateral or lend funds. It will also be able to directly lend money to banks in difficulty without increasing the debt of their home countries as soon as the single supervisory mechanism will be in place. It is a powerful crisis resolution tool that Europe has equipped itself with; added to already disbursed bilateral and EFSF loans and to the existing EU facility, the total firepower will near 1000 billion of USD. –  The work on the establishment of the banking union is moving forward rapidly too. The Commission’s report that was submitted a few weeks ago sets out a clear framework: all banks in the euro area will quickly become subject to a single supervisory mechanism under the authority of the ECB. Day-to-day supervision will be performed by the national supervisors, in accordance with the principle of decentralisation that has already proved its effectiveness in the implementation of the single monetary policy within the Eurosystem.
Wage growth is now put at 4.5-5.0 per cent in most sectors. It is reported to be even higher in building and construction. Profitability continues to improve in all industries in region South-West. In many industries, profitability growth is somewhat lower than in the previous round. The exception is import-competing manufacturing where profitability is stable and in the service industry where it is improving further. So far, the buoyant activity level in the region has resulted in an accelerating rise in prices in highly sheltered sectors such as building and construction and services. More generally, enterprises report that prices have risen in the past 12 months. Six of ten companies expect prices to continue rising at the same pace during the next 12 months, while more than 25 per cent of the companies expect prices to rise at a faster pace. For the country as a whole, inflation has edged up since the beginning of the cyclical upturn. The yearon-year rise in the consumer price index (CPI) was 1.9 per cent in August. Energy products such as electricity and oil has accounted for a considerable portion of the rise in prices over the past year. Electricity prices, including grid rent and taxes, were 25 per cent higher in August than one year earlier, while petrol prices were close to 11 per cent higher. Since the beginning of 2001, energy prices have exhibited an average increase of over 7 per cent. Variations in energy prices may also lead to wide monthly variations in consumer price inflation.

In view of the tightening taking place in the Swedish labour market, there may be reason to expect a reduction in the supply of labour from Sweden. Over the past six months, there have been steadily growing signs of labour shortages in the Norwegian economy. Unemployment has shown a marked decline and is now at a low level. Employment is still on the rise, while the labour force as it has been registered in current statistics has remained virtually unchanged in recent months. Seasonally adjusted, registered unemployment stood at 2.4 per cent of the labour force in September. The number of registered unemployed adjusted for seasonal factors was close to 59 000. Unemployment has declined for all occupational groups and has been most pronounced in manufacturing, the construction industry and in the engineering and ICT sectors. There are probably limitations to how much the supply of Norwegian labour can increase in the period ahead. Labour participation rates are high, particularly when taking into account demographic developments. Developments in the labour market are similar to the profile observed ahead of the period of accelerating wage and cost inflation that started in 1998, but wage growth has been fairly moderate since the upturn began. Several factors may have contributed to this.