samchain/econo-pairs-v1 huggingface dataset:
The calculations point that in the case that energy prices remain fixed at their level of the year 2002, the ratio of the current account deficit to national income will be 3.6 points lower in the third quarter of 2006 compared to its current level. As a result of the process of the structural change and the progress obtained in the macroeconomic conditions in recent years, the quality of financing for the current account deficit improved. Long-term capital has been the prevalent resource of capital inflows as of October 2006 with an annual level of 25.3 billion USD. This figure alone meets 3.4 percent of the current account deficit. Foreign direct investment inflow to our country for the same period was in record levels with 21.4 billion USD per annum. What is worth paying attention here is the lack of an interruption in the foreign direct investments flowing in our country even during the fluctuations experienced in the May-June period. This is an indicator of the improvements recorded in the macroeconomic stability and also the confidence for the future of our economy by the foreign investors. Long-term capital inflows and foreign direct investments finance a vast amount of our current account deficit currently. This financing structure is expected to continue parallel to the implementation of the current program decisively. While analyzing the sustainability of the high current account deficits in our country, it should be noted that the structure of our economy is different from the past.

Now, at the end of this exposition, it might be useful for me to tell you what is the assessment that the European Systemic Risk Board has expressed after its last meeting only two days ago:  BIS central bankers’ speeches  3  Since its previous meeting on 22 June 2011, risks to the stability of the EU financial system have increased considerably. Key risks stem from potential further adverse feedback effects between sovereign risks, funding vulnerabilities with the EU banking sector, and a weakening growth outlook both at the global and the EU level. Over the past few months, sovereign stress had moved from smaller economies to some of the larger EU countries. Signs of stress are evident in many European government bond markets, while the high volatility in equity markets indicates that tensions have spread across capital markets around the world. The situation has been aggravated by the progressive drying-up of bank funding markets, and availability of US dollar funding to EU banks had also decreased significantly. In that context, central banks have decided on coordinated US dollar liquidity-providing operations with longer maturities. The high interconnectedness in the EU financial system has led to a rapidly rising risk of significant contagion. This is threatening financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond. Looking ahead, decisive and swift action is required from all authorities.
Our supervisors and actuaries, supported by policy analysts and others across the Bank, are working hard to ensure that the UK industry meets these statutory deadlines and that we can provide you with all of the information you need in advance. The challenge of Solvency II for the industry should not be underestimated. As my colleagues will explain during the sessions today; there is a great deal of work to do, time is short and the responsibility for you to be ready lies squarely with each of your individual regulated firms. I am conscious that there have been claims or rumours in some quarters that the Bank is looking to take the opportunity of Solvency II to raise capital levels across the board. Let me assure you that there is no such intention on the Bank’s part; nor are we looking to subvert in any way what is legally a maximum-harmonising Directive. As always, we will be proportionate and pragmatic in our approach to implementation. I want to say definitively, and I am sure my colleagues will repeat this message throughout today:  BIS central bankers’ speeches  1  we are not “gold plating” the Directive and we are not front-running the requirements of Solvency II. What is different about the UK, compared with most of Europe, is that we have successfully operated a pillar two regime, with a strong modelling component, for the last nine years.

9  A recent paper, by Charlie Bean, Matthias Paustian, Adrian Penalver and Tim Taylor, “Monetary policy after the fall”, Federal Reserve Bank of Kansas City Annual Conference, August 2010, shows that the monetary policy instrument and macroprudential instrument (a lump-sum levy/subsidy on the banking sector) are not perfect substitutes in a sticky-price New Keynesian macroeconomic model with a banking sector. 10  Charlie Bean et al, ibid. BIS central bankers’ speeches  9  The overlap between macroprudential and monetary policy is one rationale for giving the central bank a prominent role in the setting of macroprudential policy. In addition, many central banks already have some of the analytical skills that will be needed for conducting the policy. However, greater analytical capacity will need to be built up. Analytical tools must be developed to guide policy While we know that there is an overlap between macroprudential policy and monetary policy, we lack models that describe the relationship in much detail. It is a difficult task for a number of reasons: (a) in the models currently used by central banks, financial sectors are poorly modelled, so it is difficult to introduce financial instabilities; (b) developments in financial markets are sometimes driven by psychology, which is difficult to replicate in models with rational agents; (c) the risk of a crisis cannot be modelled in the usual way, as it is more like an extra channel in the transmission mechanism; and (d) policymakers want models that can give them guidance on when to act, which is extremely challenging.
6  Lectures on Jurisprudence, B, Report dated 1766, p493. 7  Theory of Moral Sentiments, III,ii,7,p117. 2  BIS Review 102/2006  promise to share his meat and, knowing that, it is what gives the arrow-maker the confidence to stop hunting. It was the “main pillar that upholds the whole edifice. If it is removed, the great, the immense fabric of human society… must in a moment crumble to atoms”. 8 But Smith recognised our own frailty. The temptation to follow our immediate selfinterest could sometimes be overwhelming, and our own ‘selfish passions’ would take precedence over the judgment of the “impartial spectator”. As commercial society evolves, and we exchange with those much more remote from us, our human frailties matter more. We need a mechanism to help us exhibit the “sympathy” that is both desirable and necessary. We need social institutions to bolster our often erratic ability to see things from the perspective of the impartial spectator. These social institutions are not just given to us. We choose to build them as a framework for collective decisions that constrain individual behaviour. We make them, and sometimes we break them. These two points from Smith’s commentary – the importance of institutions and our desire to build them – are closely related to the role of trust in a modern economy. 9 How could we drive, eat or even buy or sell unless we trusted other people? It is surely trust not money that makes the world go round.

Bandid Nijathaworn: The future of monetary policy Remarks by Mr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at “South East Asia Central Banks/Bank for International Settlements (SEACEN/BIS) Seminar on Central Bank Challenges in Emerging Market Economies in the Post-Crisis Era”, Kota Kinabalu, Malaysia, 21 January 2010. *  *  *  First, let me thank SEACEN and the BIS for asking me to lead off the discussion on this important topic. For the SEACEN economies, I think two important questions stand out. The first is what went wrong with monetary policy and what can we learn from it? And the second is what more can we do to improve our understanding of monetary policy so that long-term price stability can be assured while the risk of financial instability is avoided? Although the current global financial crisis has been a dramatic experience for central banks, it also offers an opportunity to reassess both the intellectual underpinning and the practical implementation of monetary policy. As we all know, monetary policy in the last fifteen years did cover almost the whole of a global business cycle, starting from the period of the socalled “great moderation” when there was a perceived end to economic volatility with interest rates remaining low for an extended period, to the current global financial crisis that saw aggressive use of monetary policy by the major central banks to combat economic contractions with near-zero interest rates and the use of unconventional measures.
This is only slightly below the all-time peak of 82 percent in 2009, and significantly above the 57 percent correlation that prevailed from 1995 through 2007. Correlations across asset classes have also been increasing. For example, consider the set of assets comprised of the 10-year U.S. Treasury, U.S. equities, international equities, oil, the VIX, a trade-weighted dollar index and the BAA credit spread. We can construct a variable – called a common factor – to capture as much of the overall movement and co-movements for the series in this set. The more closely the series’ movements are tied together, the greater the explanatory content of the common factor. Currently, the derived common factor accounts for 50 percent of the variation in these financial variables, up from 30 percent in early 2014. Oil, in particular, has become more correlated with other assets. Prior to 2008, oil was virtually uncorrelated with equities and Treasuries. Whereas, in 2016, its correlation with these two asset classes has been more than 45 percent. These effects are transmitted via many linkages, not just through trade and financial markets. Consider, the many different channels of potential Brexit influence – not only the impact on international trade and global interest rates and currencies, but also on bank equity prices and on political uncertainty. Given this interdependency, what should we do about it? Interdependency and linkages do not mean that U.S. monetary policy should subordinate its domestic goals for international ones.

To date, the global financial market fallout from the Brexit vote has been short-lived, and U.S. financial market conditions remain supportive to economic growth. Nevertheless, I believe that the potential aftershocks pose medium-term downside risks to the global economy, and that these risks need to be monitored. With respect to inflation, I think the outlook has not changed much recently. Headline inflation, as anticipated, has climbed a bit this year as earlier energy price declines have fallen out of the year-over-year inflation calculations. In contrast, core inflation has been broadly stable, with the core PCE deflator rising by 1.6 percent over the past four quarters, moderately below our 2 percent objective. The fact that core inflation has been broadly stable over recent months in the face of the earlier declines in energy and non-energy import prices is notable. It makes me somewhat more confident that overall inflation will return to our 2 percent inflation objective over the medium term as long as the economic growth that I expect actually materializes. If the economy were to grow at the pace I discussed earlier, this would likely translate into sufficient job gains to continue to remove any remaining slack in the labor market – which, by my assessment, is already operating quite close to a level that is consistent with what is achievable on a sustainable basis. This would likely lead to further pressure on labor resources, higher wages and, over time, somewhat higher inflation.
But let me state very clearly that the euro area is not a closed club. It is open to any EU Member State that fulfils the convergence criteria on a sustainable basis. IV. Conclusion  The Baltic experience demonstrates that euro membership is not just about economics. The economics alone make only for a partial analysis of the failure or success of an adjustment  BIS central bankers’ speeches  3  programme. The political motivations – such as the determination to join the euro area or to safeguard the political capital invested in EMU – have often been underestimated by markets during the crisis. I firmly believe that both economic and political arguments will ultimately also prevail in countries currently in the middle of an adjustment process that is similarly painful to Latvia’s experience. Thank you very much for your attention. 4  BIS central bankers’ speeches

One can therefore say that there are considerable welfare losses connected with weak competition. How does competition function in Sweden? Competitive conditions have improved during the 1990s and the relative price level has fallen, as can be seen from diagram 2. The factors behind the improved competition situation are increased internationalisation, deregulation, technological developments, EU membership and the more stringent competition laws introduced in 1993. The fall in relative price levels in 1993 is largely due to a weakening of the exchange rate in connection with the floating of the krona in November 1992, when  4  Preliminary statistics from Eurostat for the year 2000. 5  The Swedish Competition Authority, (2000), “Why are Swedish prices so high?”, The Swedish Competition Authority's report series no. 2. BIS Review 25/2002  3  Sweden became a relatively inexpensive country in terms of euro. Sweden has also had a lower inflation rate than other EU countries, which has contributed to keeping down the relative price level. Diagram 2: The difference between the price level in Sweden and the EU average 1991-2000. Percentage points 60  60  50  50  40  40  30  30  20  20  10  10  0  0 1991  1992  1993  1994  1995  1996  1997  1998  1999  2000  Source: Eurostat.
I must stress here that France has a specific advantage: its population is expected to keep on growing fast for some decades thanks to a relatively high fertility rate and a dynamic migration policy; while our German neighbours for instance are on a decreasing trend. Overall, based on European Commission projection trends, we estimate that the expected decline of 1.5% in the working age population in the European Union between 2010 and 2020 could take 1 percentage point off its potential output. But there are ways to offset this evolution. A rise in the participation rates of the young, seniors and women is one of them. Pension and labour market reforms implemented in Europe are certainly a step in the right direction and should be further pursued. BIS central bankers’ speeches  1  Provided that the necessary reforms are implemented and that some changes in working habits are made, we expect that the euro area will be able to cope reasonably well with the expected fall in the population and working age population over the long run, notably in terms of the potential growth rate. Nevertheless, ensuring that public spending dynamics remain sustainable in the face of population ageing will continue to be a challenge, given the current debt situation in Europe. 2. Impact on savings and investment  How are savings likely to evolve, both in terms of levels and structure?

But demographic shifts can also impact the macroeconomic environment more broadly. I will briefly discuss the impact of demographic shifts on potential growth and monetary policy. Then, I will discuss other likely macroeconomic and financial stability outcomes, via the impact of ageing on savings and investment. 1. Direct impact on potential growth and monetary policy  Ageing can weigh on monetary policy notably through its impact on potential output. For a central bank, potential output and output gap developments are of major concern. From a more practical point of view, among many other measures, the Eurosystem uses Taylor-like rules to determine its monetary policy stance. According to these rules, the central bank’s rate should be close to the natural interest rate, i.e. the rate consistent with output at its potential level and stable inflation. The difficulty lies in how to assess the gap between observed and potential output. You see that potential output matters in our reaction function and since demographic developments are a key parameter for potential output, demographics ultimately directly concern monetary policy as well. What are the main consequences of demographics for potential output? The decline in the working age population due to ageing should negatively affect potential output in the long run, through the decrease in the labour force contribution and productivity, all other things being equal.
That uncertainty necessarily adds to the normally substantial degree of uncertainty we face in making monetary policy judgments. And it reinforces the case for preserving confidence in our commitment to keep underlying inflation low over time, and for retaining the capacity to respond with flexibility to the challenges we face in this uncertain world. Thank you. BIS Review 3/2006  5

It is a “currency without a state”, in which a group of fiscally sovereign countries shares a single currency and a single central bank issuing fiat paper money, yet evidently lacks a clear monetary hegemon. So the euro is not just a different version of the gold standard, as Balczerowicz, de Soto and many others argue. Not least because of the fact that unlike any commodity standard, the euro lacks anything resembling an ultimate numéraire. And more importantly, within the eurozone Germany is not a monetary hegemon anymore. Yes, the German mark and the Bundesbank were clear monetary hegemons in Western Europe in the pre-euro era. And remember, it was argued that the euro would become “the German mark for the whole of Europe” in the many public debates that went on in Germany prior to its introduction. Yet it is evident that it could not and cannot function in this way. Yes, monetary unification in Europe does not make much sense without Germany. This is still true. But my definition of a clear hegemon is: it should have the right to set the rules and to force others to behave accordingly, the right to enforce the rules. And it has to have the right even to breach the rules itself and still not allow the others to breach the very same rules. But this is not true for Germany after the introduction of the euro.
This answers to the call that often comes from industry that we should nail down everything in Cooperation Agreements (CoAgs) or work towards some kind of global treaty. I do not think this is necessary to ensure resolution will work effectively. There is a level of detail and complexity in the resolution plans that does not lend itself to a quasi-legal document like a CoAG. But more importantly emphasis on CoAgs misses how the process has evolved. The metaphor originally conceived for resolution plans was living wills. This was powerful, comprehensible by all. It captured the notion that the failure of large banks would not be left to chance in future but instead would be worked through in advance and part of what it would be to be a responsible, regulated entity. But it also gave the impression that each plan would be idiosyncratic, unique to the firm. In fact, as time as gone on it has become clear that for G-SIBs many of the elements of the plans are similar and the identified barriers generic. Indeed discussions in CMGs for individual G-SIBs has translated into minimum requirements for resolvability at the level of the FSB. In the way that we are removing barriers, we are expressly setting out to provide a platform for cooperation to work, ensuring that home and host interests in this process are aligned. The FSB’s TLAC standard is a good example of how the dynamic of resolution planning in CMGs has provided the impetus for the policy changes.

For example, that between the G-SIB, share registrar and the relevant Central Securities Depositories (CSDs) or International CSDs, as resolution authorities we have worked out the plumbing to find a way to distribute the shares already in issue (or new equity) to the bondholders that will take ownership of the firm via the bail-in. Most of this is a matter of building on existing technology and market conventions that are used in liability management exercises and sovereign or other debt restructurings. A difference perhaps is that as regulators we need to ensure shareholder control thresholds are observed and that we are comfortable with any resulting change in control. Equally important is the question of how and when we will carry out valuations for the purpose of the bail-in and how we will comply with listing and disclosure requirements through the process. In the event of a G-SIB failure we are unlikely to be in a position to fix bail-in amounts at the resolution weekend. Rather, come Monday morning, we will announce, first the universe of debt that has been immobilised (and thus the solvency we can put back into the balance sheet of the bank in resolution); and second the independent valuation process that will ensue. Valuation and setting the terms of the bail-in might take several months.
Conclusion From the very beginning of the crisis, the ECB has acted in a decisive manner. It has taken a number of measures unprecedented in nature, scope and timing. The ECB has provided large amounts of liquidity support to banks. By making changes to its operational framework, the ECB made sure that all solvent banks would have sufficient access to funding. When the crisis intensified in September last year, we introduced a number of new measures. Most importantly, we provided banks with unlimited access to liquidity at fixed rates for up to six months. The ECB also expanded its list of assets eligible for use as collateral in the Eurosystem’s credit operations. Moreover, we recently announced further measures, namely to provide longer term refinancing up to one year and to purchase covered bonds of up to EUR 60 bn. Looking now beyond the turmoil on rules, regulation and infrastructures, the current financial turmoil has taught us one key lesson for the future: self-regulation is not sufficient for systemically important markets, institutions and infrastructures. Maintaining financial stability is in the public interest. Therefore, public authorities must take appropriate measures to regulate, supervise and oversee systemically important markets, institutions and infrastructures in order to prevent systemic risks spreading and safeguard the financial stability of the system. For market infrastructures, one lesson for the future is that, despite their remarkable resilience in the current crisis, there is no room for complacency given their crucial role in financial stability.

This Leadership Energy Summit will hear from the experience of successful individuals on the source of their energy in generating outcomes and results that have made a difference. We will also learn about other sources of energy from which we can tap on and strengthen. This is the challenge of the new generation of leaders if they will truly be able to make lasting and meaningful changes in their environment. On this note, let me wish you a highly energised Summit. BIS central bankers’ speeches  3