samchain/econo-pairs-v1 huggingface dataset:
When the latter refused his request for ships in which to explore westward, Columbus turned to the duke of MedinaSedonia, who also refused, then to the count of Medina-Celi, who did likewise, and finally to the king and queen of Spain, who denied Columbus’ first request  1  Niall Ferguson, “Civilisation: The West and the Rest”, Allen Lane, 2011; Ian Morris, “Why the West Rules – for Now”, Farrar, 2010. 2  Jared Diamond, “Guns, Germs and Steel”, Norton, 1997. BIS central bankers’ speeches  1  but eventually granted his renewed appeal. Had Europe been united under one of the first three rules, its colonisation of the Americas might have been stillborn.” The spirit of competition and the decentralised decision-making mechanism that characterised Europe in past centuries explain, for example, why European navigators strove to discover new routes; how the foundations of commercial dominance were laid; and how scientific discoveries, which often originated abroad, were turned into innovations and new production processes. Again, using Diamond’s words: “Once Spain had launched the European colonisation of America, other European states saw the wealth flowing to Spain, and six more joined in colonizing America.

But this is not to say that history is not instructive and no useful lessons can be drawn from it. To understand how to face the challenges ahead of us, it may be useful to understand how similar challenges were faced and overcome in the past, and particularly how some were able to make progress while others lost ground at times when the pace of globalisation accelerated. Much has been written recently on this subject. Niall Ferguson and Ian Morris, for instance, examine the reasons why the West has “ruled” the world – at least until now.1 In essence, they assert that civilizations developed and rose to dominance when they were open to innovations from abroad and were able to develop and use them to their advantage. This applies to both migratory flows and imports of agricultural or manufactured goods, ideas and scientific innovations, in a context of competition. Those who were closed to globalisation declined, even if they had achieved a leading position in economic, technological or military matters. That is the reason why, according to Jared Diamond, a European, rather than a Chinese explorer, discovered America at the end of the fifteenth century, even though China’s economic development was much more advanced and had a much greater army and navy.2 I would like to quote briefly Diamond: “Christopher Columbus, an Italian by birth, switched his allegiance to the duke of Anjou in France, then to the king of Portugal.
Villy Bergström: The labour market and wage formation Speech by Mr Villy Bergström, Deputy Governor of Sveriges Riksbank, at the Association of Swedish Engineering Industries' HR director conference, Rimbo, 22 November 2005. *  *  *  Introduction Thank you for your invitation to come and speak here. Today, I will not be touching upon current economic policy in Sweden or the weakening of the krona exchange rate. I will return to those issues in a couple of days in a different speech. The shift in economic policy at the start of the 1990s has entailed better conditions for wage formation in Sweden. Among other things, the adoption of the inflation target has reduced uncertainty over future price developments. Wage-earners do not have to worry that their wage increases will be eroded by excessively fast price rises, while it is easier for employers to determine their scope for wage costs. The lower uncertainty over inflation is reflected in the fact that inflation expectations since the mid1990s have been firmly anchored around 2 per cent. It is important to remember that the current conditions for wage formation in Sweden – a floating exchange rate and inflation target – are considerably different from our previous regime with a fixed exchange rate. A fixed exchange rate was the norm in Sweden for some 130 years, even though the systems for maintaining it changed.

Between 1975 and 1995, Swedish inflation averaged 8 per cent a year. Real wages rose by only 0.5 per cent a year. Swedish companies’ competitiveness deteriorated and industrial production dropped. Sweden slipped from 4th place in the OECD’s standard-of-living league to 18th place – below the average for OECD countries. We became a relatively poor country in Europe and the industrialised world. Meanwhile, deregulation in the credit market during the 1980s resulted in a sharp expansion in credit, with an accumulation of debt among the general public as a consequence. Demand increased but supply was weak and productivity growth low. The economy overheated, inflation picked up and competitiveness was eroded. In 1990, the international economy began to weaken and prices of assets and property fell. The economic climate deteriorated dramatically and eventually the banking crisis hit the country, with large loan losses as a result. The Riksbank defended the fixed krona exchange rate to the very last, but after large currency flows and extreme rises in interest rates the fixed exchange rate was abandoned on 19 November 1992. The outcome of the performance during the 1970s and 1980s was that we slipped down the standardof-living league, suffered mass unemployment and saw a drop in GDP of 4-5 per cent. It was at this juncture that an explicit inflation target was introduced. The depreciation of the krona in 1992-93 of almost thirty per cent gave the manufacturing industry a powerful boost.
However, these averages hide relatively strong fluctuations over the course of the year. At the beginning of 2003 inflation rose rapidly and during a couple of months it actually exceeded the upper tolerance limit of 3 per cent. However, it had fallen back by May and was once again in line with the 2 per cent target. The downturn continued throughout the remainder of the year, particularly for CPI inflation. The fact that CPI inflation fell more than UND1X inflation was due to the interest rate cuts made earlier in the year. In December, CPI inflation was 1.4 per cent, while UND1X was 1.7 per cent. The upturn at the beginning of the year was mainly due to rising electricity prices caused by supply problems in the hydroelectric power companies’ reservoirs and by unusually high demand resulting from a cold winter. Oil prices also rose and contributed to the higher inflation rate. The high energy prices had an impact on several sub-components of the CPI. For instance, housing costs and various prices linked to transportation activities rose unusually quickly during the spring. When adjusted for energy prices, the path of inflation in 2003 was much more stable and remained within the interval of 1.2-1.9 per cent. Small deviations from target Despite the fact that inflation fluctuated substantially over the year, we can conclude that the average CPI deviation from target level was relatively small in an historical perspective; around half a percentage point, compared with approximately one percentage point during the period 1995-2002.

In parallel, reintermediation by non-banks raises level-playing field questions linked with uneven regulation and supervision across sectors and countries. To discuss these important issues, we are extremely fortunate to gather an exceptional panel today, with: •  Mrs Sheila Bair, Chair of the Systemic Risk Council, former chair of the Federal Deposit Insurance Corporation (FDIC), who is obviously a prominent regulator. Dear Sheila, your work to build a more robust financial system, that serves the economy, is particularly impressive and your views on how to make it even more resilient are very sharp;  •  We also have Mrs Barbara Novick, Vice-chair of Blackrock and the author of impactful articles on asset management and public policy; as well as Mr Alain Papiasse, Deputy Chief Operating Officer (COO) at BNP Paribas, representing the group in North America. Barbara and Alain are two top market practitioners with a comprehensive experience in both asset management and investment banking. So, dear Barbara, dear Alain, I hope you will provide us with “insider” and complementary visions of what it really means to finance the economy. •  And finally let me introduce Mr Thomas Philippon, a distinguished academic from NYU, notably specialized in the evolution of the financial industry. Dear Thomas, your research on the financialization of the economy will provide a unique viewpoint by putting in perspective the links that exist between the financial industry and the economy. Thank you all for being with us today. Let me now give the floor to our panelists.
32 A number of disadvantages of having a nominal growth target have also been put forward. One fairly major problem is that nominal GDP is published with a long time lag and revised substantially and often. The fact that the data revisions are substantial is illustrated in Figure 2, where you can see that outcome adjustments on a quarterly basis can often be around 1 percentage point and in some cases a lot more than this. In the US data the revisions appear to be somewhat smaller, but even here it is a question of substantial differences between preliminary and adjusted figures. This naturally creates major difficulties for a monetary policy that has a target expressed in this way. Another problem is that inflation expectations risk being poorly anchored with a nominal growth target. Inflation will probably vary quite substantially and there is no explicit quantified level of inflation that helps to anchor expectations. There is ultimately a risk that this will prompt a deterioration in the conditions for pricesetting and wage formation. This is an important argument, especially in a country like Sweden, where instability in wage formation was previously a major problem. Finally, some argue that it would be much more difficult to communicate what a target for nominal GDP growth actually entails than it is to communicate a target for inflation.

What I have in mind here is a strategy that is usually termed “lower-for-longer” or “makeup strategy” and which has been advocated by the previous chairman of the Federal Reserve (the US central bank) Janet Yellen. 8 The idea is pretty straightforward. Let us assume that the central bank in a recession has cut its policy rate as far as it considers to be possible. Exactly how low the interest rate can be set is not obvious and the assessments vary from country to country. The Federal Reserve usually regards zero as the lower bound and talks about the “zero lower bound”, while in Sweden and other countries, which have cut their policy rates below zero, we talk about the “effective lower bound”. For the sake of simplicity I will from now on refer to this simply as the “lower bound” for the policy rate. Let us now assume that the central bank would actually have needed to cut the policy rate lower than the lower bound for monetary policy to become sufficiently expansionary. To compensate for not being able to do this, the central bank can instead hold the policy rate at the lower bound for a longer period of time (see Figure 4). 9 Seen in a slightly longer perspective, for instance a ten-year period, this should give roughly the same average policy rate as if one had been able to cut the rate below the lower bound.
Prudential rules, by linking the development of banking loans to the level of banks’ capital and by weighting the loans according to their risks, create a capital constraint that is especially harsh in times of crisis when the weighting increases with the risks and when due to accounting rules, which impose marking to market for certain assets, the capital base is eroded. The second constraint is a liquidity constraint. It is linked to the ability of financial players to access markets to refinance themselves. When banks cannot refinance  BIS Review 57/2010  1  their portfolios, they are forced to shed assets and cut back on new credit. The recent crisis has featured the combination of these two constraints. Let me now turn to the main points I would like to discuss. How can we make our financial systems more resilient on a long term basis? It is clear that the level and quality of pre crisis capital in the banking system has not been adequate relative to the types of losses that have been experienced and that may be expected to materialize in a broader economic downturn. Larger capital and liquidity buffers are necessary, especially for trading activities. The recent reform package of the Basel Committee will lead to a much more robust and resilient banking system in the future, with both a stronger capital and liquidity base.

6  BIS Review 35/2009  Figure 4 Lending interest rates without increase in risks after September (percent) Consumer loan rates at 3 years or more  Commercial loan rates at 30-89 days  Mortgage interest rates  40  40  20  20  5.5  5.5  36  36  17  17  5.0  5.0  32  32  14  14  4.5  4.5  28  28  11  11  4.0  4.0  24  24  8  8  3.5  3.5  5  3.0  20  Jan. 08  May 08  Sep. 08  Jan. 09  Effective  20  5  Jan. 08  May 08  Estimated  Sep. 08  Jan. 09  Jan. 08  May 08  Sep. 08  Jan. 09  Simulated rate without increase in risk after September  Source: Central Bank of Chile. Figure 5 Corporate Bond and Long-Term Interest Rates (percent) 6  6  5  5 4  4  3  3  2  2  1  1  Jan.08  May 08 EE.UU. (1)  Sep.08 Chile (2)  Jan.09  0  Chile corporate (3)  (1) Nominal 10-year interest rates in the U.S. (2) Interest rate on Central Bank's BCU-5. (3) Interest on domestic 5-year corporate bond. Sources: Central Bank of Chile and LVA indices. BIS Review 35/2009  7  3.0
Activity in the Swedish economy slowed in the closing months of last year. The tendency was most evident in export sectors but it looks as though consumption also became more subdued. This is to some extent desirable. Earlier last year, growth in Sweden was so high that a continuation would presumably have pushed inflation up and thereby threatened economic stability. The signals received during January and February also point to domestic activity being somewhat weaker than calculated earlier. The change is not dramatic, however. The growth rate seems to falling back towards the level — between 2 and 2.5 per cent — that the Riksbank identified earlier as being what the economy can achieve in the longer run without generating higher inflation. Turning to price tendencies, some increase has been noted in the rate of underlying domestic inflation (UNDINHX). This indicator excludes changes in interest expenditure, taxes and subsidies, and prices  BIS Review 20/2001  3  of imported goods. The increase is not alarming and it should be borne in mind that in recent years underlying domestic inflation has been exceptionally low. The downward price effects from deregulations, for example, have been greater than we expected initially — and presumably than we can count on in the future. So how will domestic inflationary pressure develop in the future? Will it continue to creep up? Wage agreements that have been concluded to date are admittedly in line with what we allowed for but in an international perspective they are on the high side.

We can only imagine what would be the situation if we still had fifteen different currencies, with so many bilateral exchange rates potentially as volatile as other asset prices currently are. That single thought experiment is enough to show how much Europe benefits from having a single, truly global, currency. Two days ago, we took two very important decisions. First, in an unprecedented move concerted with all major central banks, we decreased our policy rate by 50 basis points. Then, in a separate deliberation, we further adjusted our liquidity provision framework. I will spare you the technicalities. Suffice it to say that, as a result, banks will have regular access, against collateral, to unlimited amount of liquidity at the policy rate i.e. 3.75%; this, at least until the end of January 2009. Let me briefly comment on those two decisions. First, on liquidity provision. Since the crisis broke out, central banks have tried and restore an orderly functioning of money markets. Even when modalities are different, there has been a convergence in objectives and frameworks. Central Banks have stepped up their supply of funds at longer maturities. Some have broadened the range of collateral accepted in their secured lending operations. They expanded the scope of eligible counterparties so as to ensure a wider dissemination of funds. Importantly, major central banks conducted coordinated actions to provide longer-term funds to address dollar funding needs of non-US banks, thereby ensuring an adequate distribution of liquidity across borders.
Although banks have real appetite to lend, households don’t have the appetite to borrow. Credit conditions in the mortgage market are easy and mortgage pricing competitive. The share of new mortgage lending at loan-to-value ratios above 90% is approaching pre-crisis highs as the price of such lending falls relative to that on lower LTV mortgage lending (Chart 5). And yet, mortgage debt is growing no faster than the economy as a whole (Chart 6). Of course, the level of household debt is high (Chart 7). But the share of households with very high debt burdens is in fact very low. In a low mortgage interest rate environment, only around 1% of households face debt servicing costs of more than 40% of their pre-tax income. It would take a large and sudden rise in interest rates – of up to 300bp – to take that fraction of households to around it historic average (Chart 8).

14  All speeches are available online at www.bankofengland.co.uk/news/speeches  14  Chart 17 Map of who holds leveraged loans and in what form Indicative estimated global stock of leveraged  Indicative estimated holdings of leveraged loans by  loans by product type  global investors  Sources: BarclayHedge, Bloomberg Finance L.P., FCA Alternative Investment Fund Managers Directive (AIFMD), Firm public disclosures, LCD, an offering of S&P Global Market Intelligence, Morningstar, National Association of Insurance Commissioners, Securities Industry and Financial Markets Association, Solvency II submissions and Bank calculations. Notes: (a) Estimates of the total stock are based on Bloomberg’s definition of leveraged loans. Given the lack of a consistent definition of leveraged lending, there is uncertainty over the total stock of outstanding leveraged loans. (b) For loans that are distributed to non-bank investors and CLOs, allocation across investors is based on ‘bottom-up’ estimates of holdings from a range of sources. Hence, there is a significant proportion of institutional loans that are unallocated. (c) For hedge fund holdings of leveraged loans and CLOs we scale up holdings reported to UK authorities by non-EEA managed AIFs to reflect the size of the global hedge fund universe. This means these estimates are particularly uncertain. (d) Revolving credit facilities and amortising term loans are allocated to banks given that they are typically the holders of these facilities. This picture is consistent with wider developments in corporate credit. Non-banks account now for 56% of the stock of UK corporate debt.
Peter Praet: Reforms and growth in the euro area Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the Panel intervention “Fixing finance”, The Economist’s Lisbon Summit, Lisbon, 18 February 2014. *  *  *  It is a great pleasure to be in Portugal today, where we are now seeing signs of a stabilisation in the economy. Economic activity is recovering, the unemployment rate is falling – although from very high levels – and the current account is in surplus. While it will take years for the scars left by the crisis on the economy and society to fade, confidence has been steadily improving during the recent months. Real GDP has been growing at positive rates since the second quarter of 2013 and the most recent information from industrial production, sales, and merchandise trade confirm that this trend is continuing. Other euro area countries that have been hit hard by the crisis are also now beginning down the recovery path, while financial markets have started a more benign pricing of sovereign and private credit risk. All this is thanks to the progress that has been made in macroeconomic, structural and financial repair since the onset of the financial crisis. Especially since mid-2010, the start of the sovereign debt crisis, decisive action has been taken at national and European levels.

The first phase began with the bankruptcy filing of Lehman Brothers in September 2008. Here the euro area shared in a global liquidity crunch that was largely imported from abroad. The second phase began in May 2010 with a sovereign crisis that was localised in the euro area, and that was partially exported to the world economy. This second phase was arguably the more pernicious for monetary union. The re-pricing of sovereign risk in the euro area spread from Greece to other vulnerable economies, and from sovereign to private debt and vice versa. In the process, the liquidity crunch morphed into a systemic crisis for the banking sectors of a number of member countries, and for the integrity of monetary union as a whole. The traditional exposure of banks in vulnerable countries to their own sovereign issuers became a quick carrier of  BIS central bankers’ speeches  1  financial contagion as their sovereign bond holdings depreciated and eroded their capital in the eyes of creditors. This adverse sovereign-bank feedback loop interacted with existing vulnerabilities. Countries with persistent competitiveness losses and associated large current account deficits – as was the case of Portugal – were particularly sensitive to a reversal in external financing. This was exacerbated by capital flight to core economies which started to deplete banks’ deposits in the most vulnerable countries.