samchain/econo-pairs-v1 huggingface dataset:
Drawing on available estimates, the median of this indicator for the corporate sector as a whole is expected to fall from 3% pre-COVID-19 to virtually zero in 2020, in any of the macroeconomic scenarios considered by the Banco de España. Large firms are generally expected to suffer less pronounced falls in profitability. In any event, the operating deficit generated by many firms would lead to a deterioration of their financial position, resulting in lower own funds and higher debt to finance their liquidity needs. Thus, in the aforementioned early recovery scenario, the financial position of 55% of firms (with a weight of 51% in employment terms) would worsen in 2020, while in the more adverse scenario, this proportion would rise to 58%. However, despite this strong negative impact, around 40% of firms would continue to generate an operating surplus and to make new investments without a worsening of their financial position. In short, a significant number of firms are very likely to emerge from this crisis with higher debt levels and a diminished demand outlook, at least for some time. In this respect, it is also necessary to review the debt relief, restructuring and insolvency processes for firms, 5  with the aim of establishing pre-emptive, swift and simplified administrative procedures enabling them to pursue their business activity while they are still viable.

Speed of resolution is paramount in these procedures so as to minimise the losses in asset value that would materialise if they were to drag on, especially in a context in which the economic policy response in the short term means that the liabilities of ailing businesses to general government will foreseeably be much higher than in previous crisis periods. The introduction of more appropriate procedures and incentives would also avoid suboptimal levels of business liquidations and destruction of the productive system that would weaken the longterm economic growth and recovery potential. The impact on the financial situation of households As in the case of firms, after the last global financial crisis, the financial situation of households improved significantly, and mortgage lending standards were far more prudent. However, consumer lending has posted high growth rates in recent years and groups of vulnerable households have continued to exist. In any case, this crisis is also having a significant impact on households. It has led to a reduction in the wage income of individuals who have lost their jobs or been furloughed, and in their wealth, given the adjustment to the valuation of most financial assets. Thus, social security registrations, after stripping out workers subject to furlough schemes, that is, the series which might be called “actual registrations”, is estimated to have shown a year-on-year decline of 22% at end-April, with much sharper reductions in some of the services segments hardest hit by the restrictions on movement associated with the state of alert, such as the hospitality sector.
Hence the drop in exports in countries selling raw materials to the world has had a relatively small effect on their output. Their demand has dropped, and so have their prices, but they have not experienced the collapse associated with postponing expenditures on goods of industrial origin. Although selling is tougher, export volumes have adjusted less than the world average, which is expected to fall around 10 percent this year, while the baseline scenario of our latest Monetary Policy Report foresees that the volume of Chilean exports will drop around 2 percent annually in the same period. This has been one of the factors explaining the milder impact of the crisis in Latin America. This crisis has been particularly harsh on industrialized economies, which have seen a steeper fall in demand for their products due to the great fall in demand for durable and investment goods (Figure 13). Final remarks Expansionary macroeconomic and fiscal policies can help boost economic activity when facing a deep drop in demand. However, their effects on confidence are not obvious. Thus, it is essential for measures taken to be sustainable and credible. If they lack credibility, their expansionary effect will be constrained by lack of confidence. Furthermore, it is conceivable that in the presence of deep macroeconomic weakness expansionary policies might exacerbate the loss of confidence. This explains why many countries need to raise their interest rates and make fiscal adjustments in the midst of an economic crisis, because their economic policies and financial systems lack credibility.

As a representative of a country that has had floating exchange rates for over thirty years now, I can only underscore the importance of an exchange rate regime that reflects the realities of the market. During the past three decades, the Swiss franc has been an essential factor in the development of the Swiss economy. However, it was never a reason for our exporters to sit back and relax. On the contrary, the franc put pressure on them to become more efficient and to specialise in those product areas in which we have a real competitive edge. Consumers also profited from the strong Swiss franc in that the prices for imported goods have fallen significantly. A currency that is accurately priced enables the economy to benefit from improvements in its terms of trade triggered by productivity increases. If a country’s currency is undervalued, products are sold on the market at give-away prices, and productive resources are inefficiently allocated. The functioning of a currency system, therefore, plays a pivotal role in the development of a country’s prosperity, and monetary reform, as China is currently expected to tackle, is a very delicate undertaking. Unless new monetary rules and mechanisms can immediately convince the market of the appropriateness of the new regime, a risk of speculative pressure will emerge. Switzerland has experience in this regard as well. We ultimately opted for flexible exchange rates, i.e. a system in which the Swiss franc’s value is continuously in line with market forces.
The basic intention is to stabilise inflation around the target and at the same time avoid unduly large fluctuations in production and employment. Consequently the Riksbank chooses to disregard economic shocks with effects on inflation that can be assumed to be only transitory. Moreover, there may be grounds for heeding the expected course of events beyond the regular target horizon. There may be a case for adjusting the repo rate immediately if there are already strong reasons for expecting a marked increase or decrease in inflation directly after the two-year horizon. Another point to remember is the Riksbank’s function of promoting a safe and efficient payment system; problems in this context may call for interest rate adjustments even though the inflation target is not threatened. Such adjustments may be needed both to prevent potential risks from building up in the payment system and to moderate effects of problems that have already arisen. Departures of this type from the rule of action should, however, be made restrictively. When the clarification was presented at the beginning of 1999, the Executive Board made a point of the fact that deviations from the normal rule are to be stated clearly and justified. The Riksbank’s rule of action and some of the aspects I have mentioned have direct counterparts in current laws and their prefatory documents. The Riksbank Act states that "The objective of the Riksbank’s operations shall be to maintain price stability. In addition, the Riksbank shall promote a safe and efficient payment system."

In my opinion there is support for this in the law and its prefatory documents. However, if a situation were to arise that might justify a departure from the current rule of action, it is important to be particularly explicit about what monetary policy is guided by. Besides enabling the general public and market investors to know how and why the Riksbank acts as it does in such a situation, this makes it possible to exercise democratic control even when the target of 2 per cent inflation has to take second place. 3  6  An influential paper that summarises the traditional view of how monetary policy ought to address asset prices is Bernanke, B. & Gertler, M. (1999), "Monetary Policy and Asset Price Volatility", in New Challanges for Monetary Policy, Proceedings of the Symposium Sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, pp. 77-128. An alternative opinion is presented in Cecchetti, S.G. et al. (2000), "Asset Prices and Central Bank Policy", Geneva Reports on the World Economy No. 2, CEPR, Switzerland. See also Kent, C. & Lowe, P. (1997), "Asset-Price Bubbles and Monetary Policy", Research Discussion Paper 9709, Economic Research Department, Reserve Bank of Australia. BIS Review 30/2001
The profit they derive from their lending activities ultimately result from the interest spread between loans and deposits. It compensates banks for the credit and liquidity risks assumed, for services linked to customer deposits, and for the assessment and monitoring of borrowers. So banks will only grant a loan if doing so makes economic sense. Lending does not automatically generate a profit – each loan is the result of a careful weighing-up of risks and returns. In their calculations, banks take into consideration factors such as current and future interest on loans and deposits, the likelihood of deposit withdrawals and credit defaults, and the liquidity and capital adequacy requirements in force. All these factors constrain the lending – and thus also money creation – activities of commercial banks. Central banks, for their part, take a special interest in the impact of monetary policy on money and credit creation within the banking system. As you know, the SNB steers a short-term interest rate with its monetary policy and thereby influences the level of interest rates. A tightening of monetary policy leads to a rise in interest rates and thus dampens the demand for loans. Moreover, rising interest rates cause the economy to slow, which further reduces demand for loans. Higher interest rates also have a negative impact on the banks’ credit supply. As a rule, rising interest rates increase the likelihood of credit defaults, which means that the quality of banks’ loan portfolios deteriorates in the eyes of market participants.

What this argument suggests is that economists should be cautious about drawing strong conclusions about the future path of productivity growth. The changes in technology are real and evident in many aspects of our home and business lives. But their implications for aggregate productivity growth are much more uncertain. The two uncertainties facing the UK economy at present, namely the imbalances both at home and overseas, suggest that the Monetary Policy Committee may be in for a slightly bumpier ride over the next four years than during its first four. So far, the Monetary Policy Committee has managed to achieve an overall balance in the economy despite the contrasting fortunes of the internationally exposed and more sheltered sectors of the economy. But if these large imbalances are to unwind, then the Committee is likely to face a difficult challenge in trying to maintain a balance between total demand and supply. Controlling inflation in future may prove more difficult than over the past four years, and the longer the imbalances persist the greater the risk that the subsequent adjustments to demand, output and inflation are larger than those experienced recently. Any rebalancing of the economy is likely to be associated with a fall in the real exchange rate. But the magnitude and timing of that are not only uncertain, but also difficult for the MPC to influence. As Sir Samuel Brittan wrote recently about expected changes in exchange rates: "These developments are most likely to happen when they are least expected and least welcome".
Would that be appropriate, and would it be feasible from a political perspective? 6  BIS central bankers’ speeches  I don’t think the answer here is black and white. On the one hand, every central bank has a national mandate. And I don’t think that will change in the foreseeable future. On the other hand, there is already some coordination – at the BIS, at the G7 and at the G20. The latest G20 summit has just ended. Little came of it. Are you disappointed? The summit was clearly overshadowed by events in Syria. I think the fact that the issue of tax avoidance and tax structuring is now being raised at G20 level is a positive development. There was some limited progress in terms of financial regulation. However, I was indeed disappointed by the decisions made in the area of fiscal policy, as the United States and Japan in particular – especially the latter – have no credible medium-term consolidation plans. These are required as a matter of great urgency. You have talked about the reform of the global financial system. Almost exactly five years after Lehman Brothers, where are we exactly? I do think that the global financial system has become more robust. However, it’s quite clear that we are not yet where we should be. Progress is urgently needed on the “too big to fail” issue, which primarily concerns the complexity of these institutions. The second issue is shadow banking. It is true that we have tightened up the regulation of banks.

We will then know what the capital shortfalls are and whether they can be covered. Moreover, the state of the banking sector is a serious problem for the country, but not the only one. Slovenia has inefficient state enterprises, attempts to introduce pension reform have failed twice and it is running a larger budget deficit than EU regulations allow. Many people are also concerned about the heavyweights France and Italy. Some observers fear that both countries are completely incapable of introducing reforms. How frustrated are you and your ECB colleagues that the large countries are not making better use of the time that the ECB, too, is “buying” for them to introduce reforms. Let me say one thing first: we all have a strong interest in an economically strong France. The entire construction of the euro area can only function with a strong France. The latest pension reforms are a step in the right direction but do not go far enough. I also see problems regarding the intended funding through higher taxes and contributions, rather than through specific spending cuts. Besides, the plans also contradict the EU Commission’s country-specific recommendations. The bottom line is that France will need to do more to enhance its competitiveness. The government will need to speed up the pace of reforms. And Italy? Much was achieved through fiscal policy efforts under the former prime minister Mario Monti. It is now important to ensure that these successful achievements are not eroded.
Our plans for the near future include analysis of the usefulness of insurance products — this is the start of important work and we are beginning to systematise this work. Some insurance products, especially in prescribed insurance, are questionable, in our opinion. We already identified instances of inefficient insurance, and we discussed them at the State Duma’s plenary sessions as well. I am talking about the so-called insurance in equity construction. It was only for the sake of appearance, but actually did not protect anybody’s interests. As we have a very large portion of prescribed insurance, the analysis of the usefulness of insurance products for customers with the assessment of required changes in this regard is extensive and systemic work that we are starting to carry out on a continuous basis. The last topic I would like to address — I do not have enough time to provide detailed information, but it is always a matter of special attention for us and deputies particularly focus on it — is financial consumer protection. Retail investors — Russians who have entered the securities market — currently number nearly ten million. And this number might continue to grow. In many countries, the portion of people participating in the securities market is even larger. Currently, people predominantly invest rather small amounts. However, the growth rate is high, and there are a lot of newcomers in the market. It is difficult for them to assess the risks and pitfalls of various financial products, which are often complex.

Stefan Ingves: The role of the central bank after the financial crisis – the challenges ahead Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, to the Swedish Economics Association, Stockholm, 12 June 2013. *  *  *  The last five years have been an extraordinary period for the global economy, with crisis management and major fluctuations in growth and economic development. For politicians and authorities in many countries, it has been – and still is – a complex world that is hard to navigate. Five years after the financial crisis broke out, many countries are still in the process of cleaning up after it. It can be ascertained that financial crises are expensive, timeconsuming processes, and that far too little has been done previously to prevent them from occurring. The financial crisis has made it clear that the monetary policy framework needs to be developed so that it takes greater account of the importance of financial stability. While the crisis was indeed not caused by monetary policy, a lesson nevertheless learned is that price stability does not suffice to ensure financial stability and a stable development in the real economy. The financial crisis has also brought to light deficiencies in financial stability policy, in that microprudential policy does not guarantee financial stability. Hence, financial stability policy must also be developed. It needs a clearer mandate as well as tools for managing systemic risks.
Dimitar Bogov: Towards recovery and sustainable growth in the altered global environment Address by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the 3rd Research Conference “Towards recovery and sustainable growth in the altered global environment”, Skopje, 28–29 April 2014. *  *  *  Ladies and Gentlemen, Your Excellences, Dear guests, It is indeed with great pleasure that I welcome you all to our third Research Conference! Just like in the previous years, we hope to have a fruitful discussion on the main topics from the current surrounding and the economic prospects of the region and the global economy. This year’s conference will be focused on the recovery process in the wake of the long lasting global financial and debt crisis and making a floor for sustainable growth in the altered global environment. Today, we would like to talk with you about consequences from the crisis, the lessons learnt and the impact of the regulatory and institutional changes on the recovery process. To touch upon the issues: Why did it take so long to come to this point and how sound this recovery is? How close are we to the normalization of policies setup and the desirable growth rates? How successful the fiscal consolidation will be and is the financial system more resilient to shocks now?

In this view, it is worth mentioning the positive contribution of the new FDI inflows in tradable sector, which contributed to both higher and more diversified net export and higher employment. In addition, economic recovery was supported by the fiscal stimulus as well as the accommodative monetary policy stance. Since July last year, the main policy rate is at the historical lowest level of 3.25%. Moreover, during the crisis period, a combination of standard and non-standard measures have been undertaken by the central bank aimed to give additional support specifically to the credit growth and accordingly, to the economic growth, while still preserving the price and financial stability in the economy. The outlook for this year is also positive. We expect GDP growth of close to 4%, and therefore we see economy going up on the cycle. What one can learn from our experience is the fact that the implementation of sound structural reforms can definitely move the economy upward – even during the crisis – that is an important message for the macroeconomic policy afterwards. When discussing the recovery from the crisis, we need to point out some related issues that are dealing with the exit of non-standard policy measures and turning towards fiscal consolidation, currently being the topical issues between the policy makers worldwide. The tapering decision by the FED by the end of the last year somehow announced the need of this reversal that will eventually be recognized in other countries, too.
If you study the linguistic complexity of central bank publications, you find they are readily accessible to only between 5-10% of the population.35 Others have made this point in plainer English. A few years ago the Campaign for Plain English, a militant band of grammarians, described the MPC’s Monetary Policy Statement as “worthless, impenetrable waffle” and “gobbledygook”. Reading between the lines, I am not sure they liked it. In response, the Bank has over recent years sought to simplify and diversify its stable of publications, with a view to reaching a wider audience with simpler messaging. The Bank now “layers” the policy messages in its regular reports, including through a simple “one line, one graphic” version of the top-line message. Research suggests this simplification can have a dramatic impact in improving not only the digestibility of messages, but also peoples’ degree of confidence in them.36 As a second example, since 2015 the Bank has published a staff blog, “Bank Underground”, offering shorter, punchier access to Bank analysis, including when it deviates from established Bank policy positions. We fretted at the beginning that the outside world may fail to recognise the separation of Staff opinion from Bank policy. We need not have worried. So far, the blogs have received over one and a half million views. When it comes to building trust among the public, speaking in plain words and sentences is not enough. Trust is built on engagement, a two-way flow of information not a one-way door. Trust-building calls for public conversation, not public lectures.

I tell the Bank’s new entrants I can promise them only one thing: they will be telling their families and friends about this moment in history and, uniquely, they can write its next chapter. As a public servant, this is as good as it gets. Any lengthy career in public policy will inevitably be punctuated by crisis. In my case, crises have provided not just the punctuation marks, but most of the words, sentences and paragraphs too. In public policy, crises are the ultimate learning experience. They are also the moments when the Overton window of opportunity is widest and the opportunity for change greatest. Crises are moments of challenge and opportunity in equal measure. I am very fortunate to have experienced plenty of both. My time of the Bank has been evenly split between its twin statutory functions, monetary and financial stability. These functions, embedded in the Bank’s Royal Charter in 1694, remain its statutory centrepiece today. (The Bank’s third objective, fighting the French, has by contrast tended to be downplayed.) Over the intervening 327 years, both monetary and financial stability have had their fair share of challenges and opportunities. These have perhaps come thicker and faster over the past 27 years than the preceding 300. I want to offer a few retrospective thoughts on the evolution of monetary and financial stability over the past 30 years before turning to central bank communications, a crucial ingredient of both. Bank of England policy frameworks and practices have undergone an astonishing transformation over that period.