natgillin/translations-raw huggingface dataset:
What do these two terms mean?
What do these two terms mean?
Finland, Sweden and Norway all experienced severe banking crises in the early 1990s.
Finland, Sweden and Norway all experienced severe banking crises in the early 1990s.
A robust financial system has solid cushions that reduce the risk of problems spreading from one institution or market to other institutions or markets, or across borders.
A robust financial system has solid cushions that reduce the risk of problems spreading from one institution or market to other institutions or markets, or across borders.
This risk constitutes a systemic risk, which is the risk of failure of the financial system.
This risk constitutes a systemic risk, which is the risk of failure of the financial system.
Disturbances that might develop into a systemic risk can be transmitted through financial institutions and financial markets.
Disturbances that might develop into a systemic risk can be transmitted through financial institutions and financial markets.
Robust institutions and stable markets are thus important.
Robust institutions and stable markets are thus important.
Robust institutions are solid institutions that enjoy general confidence.
Robust institutions are solid institutions that enjoy general confidence.
Stable markets are markets where there are no "excessive" price variations.
Stable markets are markets where there are no "excessive" price variations.
Banks are in a special position.
Banks are in a special position.
They transform short-term deposits into long-term loans.
They transform short-term deposits into long-term loans.
They are responsible for payment settlements, and bank deposits serve as a means of payment.
They are responsible for payment settlements, and bank deposits serve as a means of payment.
Long-term profitability has a decisive influence on financial strength.
Long-term profitability has a decisive influence on financial strength.
Obviously, there are many factors that can influence the future profitability of banks.
Obviously, there are many factors that can influence the future profitability of banks.
The topics you will discuss during these two days are of great importance.
The topics you will discuss during these two days are of great importance.
Financial unrest spreads through payment and settlement systems.
Financial unrest spreads through payment and settlement systems.
These systems can also be a source of risk.
These systems can also be a source of risk.
This occurs when banks credit customers before they have received settlement from the payer bank.
This occurs when banks credit customers before they have received settlement from the payer bank.
Payment and settlement systems must thus be designed to reduce settlement risk.
Payment and settlement systems must thus be designed to reduce settlement risk.
This is an issue high on the agenda of most central banks.
This is an issue high on the agenda of most central banks.
Interdependence of monetary and financial stability
Interdependence of monetary and financial stability
Second, fluctuations in the inflation rate are often accompanied by interest rate variations.
Second, fluctuations in the inflation rate are often accompanied by interest rate variations.
Loans that have been granted against collateral in the form of such assets are even more exposed to losses.
Loans that have been granted against collateral in the form of such assets are even more exposed to losses.
When rising inflation and inflation expectations necessitate a substantial tightening of monetary policy, a crisis may ensue.
When rising inflation and inflation expectations necessitate a substantial tightening of monetary policy, a crisis may ensue.
This was the case in the US in the early 1980s and in the Nordic countries around 1990.
This was the case in the US in the early 1980s and in the Nordic countries around 1990.
Interest rates are the central banks' most "direct" tool for contributing to both monetary and financial stability.
Interest rates are the central banks' most "direct" tool for contributing to both monetary and financial stability.
Unstable institutions and markets constrain the use of interest rates.
Unstable institutions and markets constrain the use of interest rates.
Asset prices are an important link between monetary and financial stability.
Asset prices are an important link between monetary and financial stability.
This can put financial stability at risk.
This can put financial stability at risk.
A surge in asset prices without accompanying pressures on prices for goods and services raises a dilemma for central banks.
A surge in asset prices without accompanying pressures on prices for goods and services raises a dilemma for central banks.
There is no consensus on how to handle this dilemma.
There is no consensus on how to handle this dilemma.
Central banks have avoided targeting specific asset price levels.
Central banks have avoided targeting specific asset price levels.
This means that monetary policy may influence savings and investment decisions more quickly.
This means that monetary policy may influence savings and investment decisions more quickly.
The four largest Nordic countries have chosen different monetary policy regimes:
The four largest Nordic countries have chosen different monetary policy regimes:
Finland is part of the euro area,
Finland is part of the euro area,
Denmark is a member of ERM II,
Denmark is a member of ERM II,
Sveriges Riksbank targets inflation,
Sveriges Riksbank targets inflation,
whereas Norges Bank focuses on long-term exchange rate stability.
whereas Norges Bank focuses on long-term exchange rate stability.
Denmark has for several years run a successful fixed exchange rate regime.
Denmark has for several years run a successful fixed exchange rate regime.
First, ERM membership and Denmark's long-term commitment to a stable exchange rate have enhanced confidence in the current regime.
First, ERM membership and Denmark's long-term commitment to a stable exchange rate have enhanced confidence in the current regime.
Second, fiscal policy has successfully supported the fixed exchange rate.
Second, fiscal policy has successfully supported the fixed exchange rate.
For many other countries with less economic policy discipline, traditional fixed exchange rate regimes have proved fatal.
For many other countries with less economic policy discipline, traditional fixed exchange rate regimes have proved fatal.
Internationally, there is a tendency of a shift away from the traditional fixed exchange rate regime.
Internationally, there is a tendency of a shift away from the traditional fixed exchange rate regime.
Countries that place overriding emphasis on exchange rate stability must bind themselves more firmly to the mast either by establishing a currency board or by abandoning their national currency.
Countries that place overriding emphasis on exchange rate stability must bind themselves more firmly to the mast either by establishing a currency board or by abandoning their national currency.
The growing importance of securities markets
The growing importance of securities markets
Sweden is an example.
Sweden is an example.
Deposit savings have been reduced, whereas savings directly or indirectly in securities markets have increased.
Deposit savings have been reduced, whereas savings directly or indirectly in securities markets have increased.
This affects banks' earnings and funding structure.
This affects banks' earnings and funding structure.
The trend is similar in Norway.
The trend is similar in Norway.
In the euro area, there has been a sharp growth in issues of private securities after the introduction of the single currency.
In the euro area, there has been a sharp growth in issues of private securities after the introduction of the single currency.
This growth was to some extent expected, as the common currency creates a huge investor base for security lending.
This growth was to some extent expected, as the common currency creates a huge investor base for security lending.
Securities are a common form of financing such operations.
Securities are a common form of financing such operations.
A growing number of small, higher risk companies could also make use of this market.
A growing number of small, higher risk companies could also make use of this market.
In general, the euro is having a considerable influence on the development of securities markets in Europe.
In general, the euro is having a considerable influence on the development of securities markets in Europe.
In most European countries, credit has traditionally been channelled through financial intermediaries such as banks.
In most European countries, credit has traditionally been channelled through financial intermediaries such as banks.
Among the Nordic countries, Finland has the largest stock market capitalisation relative to GDP.
Among the Nordic countries, Finland has the largest stock market capitalisation relative to GDP.
This is mainly due to one company, Nokia.
This is mainly due to one company, Nokia.
Sweden also has a comparatively large stock market.
Sweden also has a comparatively large stock market.
Denmark and Sweden have relatively large debt securities markets.
Denmark and Sweden have relatively large debt securities markets.
Companies financed in the securities markets are continuously monitored through a transparent process.
Companies financed in the securities markets are continuously monitored through a transparent process.
In other words: competition for capital contributes to creative destruction.
In other words: competition for capital contributes to creative destruction.
Let me give you a recent example.
Let me give you a recent example.
The Long Term Capital Management crisis in 1998 showed that banks and securities markets can complement one another in crisis situations.
The Long Term Capital Management crisis in 1998 showed that banks and securities markets can complement one another in crisis situations.
During the crisis, the market for securities with credit risk dried up for a short period.
During the crisis, the market for securities with credit risk dried up for a short period.
More frequently, financing through securities markets has been used as a substitute for bank loans in the event of banking problems.
More frequently, financing through securities markets has been used as a substitute for bank loans in the event of banking problems.
Developments in the banking sector
Developments in the banking sector
Having discussed the relationship between banks and securities markets, I would now like to turn to developments within the banking sector.
Having discussed the relationship between banks and securities markets, I would now like to turn to developments within the banking sector.
Competition in the banking markets is increasing.
Competition in the banking markets is increasing.
Banks face competition from other banks and financial institutions.
Banks face competition from other banks and financial institutions.
In addition, new operators are entering the market, either on their own or in co-operation with existing market operators.
In addition, new operators are entering the market, either on their own or in co-operation with existing market operators.
Distribution of financial services on the Internet is one example.
Distribution of financial services on the Internet is one example.
Joint ventures between supermarkets and banks is another.
Joint ventures between supermarkets and banks is another.
Cross-border integration
Cross-border integration
Internationally, consolidation within countries has been predominant.
Internationally, consolidation within countries has been predominant.
However, the development of "national champions" might be a run-up to increased cross-border activity.
However, the development of "national champions" might be a run-up to increased cross-border activity.
The Nordic and Benelux countries are important exceptions to this international trend.
The Nordic and Benelux countries are important exceptions to this international trend.
The five largest Nordic banking groups - MeritaNordbanken and Unibank - which are now part of Nordic Baltic Holding - Handelsbanken, FöreningsSparbanken, Den Danske Bank and SEB - all define the Nordic region as their home market.
The five largest Nordic banking groups - MeritaNordbanken and Unibank - which are now part of Nordic Baltic Holding - Handelsbanken, FöreningsSparbanken, Den Danske Bank and SEB - all define the Nordic region as their home market.
They have established branches, co-operations and merged with or acquired institutions in other Nordic countries.
They have established branches, co-operations and merged with or acquired institutions in other Nordic countries.
Some of them also focus on other countries in Northern Europe, such as the Baltic states, Poland and Germany.
Some of them also focus on other countries in Northern Europe, such as the Baltic states, Poland and Germany.
However, their business strategies vary somewhat.
However, their business strategies vary somewhat.
What is the reason behind this Nordic expansion?
What is the reason behind this Nordic expansion?
It is easy to point to integrated markets, through trade and direct investment.
It is easy to point to integrated markets, through trade and direct investment.
A common history, small cultural differences and similar languages - at least within the Scandinavian countries - are probably of particular importance to Nordic integration.
A common history, small cultural differences and similar languages - at least within the Scandinavian countries - are probably of particular importance to Nordic integration.
There are also more industry-specific explanations.
There are also more industry-specific explanations.
Strategic positioning - perhaps as a defensive measure against competition from non-Nordic institutions - is one explanation.
Strategic positioning - perhaps as a defensive measure against competition from non-Nordic institutions - is one explanation.
I will instead focus on another important issue: production costs and the size of markets.
I will instead focus on another important issue: production costs and the size of markets.
Geographic expansion gives institutions an opportunity to sell existing products to new customers in new markets.
Geographic expansion gives institutions an opportunity to sell existing products to new customers in new markets.
As a result, the institutions can spread their costs over a larger customer base.
As a result, the institutions can spread their costs over a larger customer base.
This raises the question of whether to separate production and distribution.
This raises the question of whether to separate production and distribution.
Different co-operation agreements make it possible for small players to offer a broader product range than they would have been able to on their own.
Different co-operation agreements make it possible for small players to offer a broader product range than they would have been able to on their own.
At the same time, some larger institutions may benefit from offering their products for distribution through other institutions.
At the same time, some larger institutions may benefit from offering their products for distribution through other institutions.
Competition in this segment is perhaps more international than Nordic.
Competition in this segment is perhaps more international than Nordic.
How does cross-border integration change the risk outlook for the financial system?
How does cross-border integration change the risk outlook for the financial system?
Spreading production costs over a larger customer base may improve profits.
Spreading production costs over a larger customer base may improve profits.
In addition, cross-border competition might lead to efficiency gains and a spillover of best practices.
In addition, cross-border competition might lead to efficiency gains and a spillover of best practices.
However, there are also counter-arguments.
However, there are also counter-arguments.
For example, increasing the size of operations may reduce management focus.
For example, increasing the size of operations may reduce management focus.
This could have a negative effect on financial stability.
This could have a negative effect on financial stability.
This is positive from a financial stability point of view.
This is positive from a financial stability point of view.
The Internet as a distribution channel for financial services
The Internet as a distribution channel for financial services
The Internet creates new opportunities for traditional banks.
The Internet creates new opportunities for traditional banks.
For example, banks should be well positioned to become key operators in trading on the Internet.
For example, banks should be well positioned to become key operators in trading on the Internet.
They have a large customer base and strong brand names, and can offer payment transmission services, advertising space and links on their home pages.
They have a large customer base and strong brand names, and can offer payment transmission services, advertising space and links on their home pages.
Internationally, many banks have agreements with Internet or telecommunication companies for the development of Internet banking and marketplaces on the Internet.
Internationally, many banks have agreements with Internet or telecommunication companies for the development of Internet banking and marketplaces on the Internet.
This is probably just the beginning of a trend towards increased co-operation across industry boundaries.
This is probably just the beginning of a trend towards increased co-operation across industry boundaries.
The Internet poses great challenges as well.
The Internet poses great challenges as well.
It is clearly intensifying competition in the industry.
It is clearly intensifying competition in the industry.
The Internet may also change the relative positions of existing market participants.
The Internet may also change the relative positions of existing market participants.
Many Nordic banks have established some form of Internet banking.
Many Nordic banks have established some form of Internet banking.
So far, most services offered on the Internet are relatively simple, for example loan applications, bill payments and account transfers.
So far, most services offered on the Internet are relatively simple, for example loan applications, bill payments and account transfers.
These are probably the most important services for the majority of customers.
These are probably the most important services for the majority of customers.
Several banks also offer trading in shares and fund units on the Internet.
Several banks also offer trading in shares and fund units on the Internet.
I'm sure discussions during this conference will give you an indication of future product developments.
I'm sure discussions during this conference will give you an indication of future product developments.
Nordic countries rank at the top globally in terms of access to the Internet.
Nordic countries rank at the top globally in terms of access to the Internet.
Nordic banks thus have a unique opportunity to serve a substantial share of customers via the Internet.
Nordic banks thus have a unique opportunity to serve a substantial share of customers via the Internet.
This also has relevance to cross-border integration.
This also has relevance to cross-border integration.
Banks that focus on Internet distribution are perhaps particularly interested in markets where there are many Internet users.
Banks that focus on Internet distribution are perhaps particularly interested in markets where there are many Internet users.
In isolation, this may contribute to increasing banks' fixed costs.
In isolation, this may contribute to increasing banks' fixed costs.
As a result, the competitive environment may change.
As a result, the competitive environment may change.
There is a danger of over- investment.
There is a danger of over- investment.
Sunk costs account for a large share of overall costs.
Sunk costs account for a large share of overall costs.
This may lead to marginal pricing as the fight for volume intensifies.
This may lead to marginal pricing as the fight for volume intensifies.
This could have a negative effect on bank profitability.
This could have a negative effect on bank profitability.
Many Nordic banks have a smaller customer base for distributing fixed costs than large foreign competitors.
Many Nordic banks have a smaller customer base for distributing fixed costs than large foreign competitors.
As mentioned, some banks have tried to compensate by entering into co-operation agreements.
As mentioned, some banks have tried to compensate by entering into co-operation agreements.
Substantial investments will probably be required to keep them competitive.
Substantial investments will probably be required to keep them competitive.
Both management and employees will have to devote considerable attention to these aspects.
Both management and employees will have to devote considerable attention to these aspects.
The wrong solution or approach could weaken banks' competitive position, profitability and financial strength.
The wrong solution or approach could weaken banks' competitive position, profitability and financial strength.
This may also have negative implications for financial stability.
This may also have negative implications for financial stability.
However, I don't want to give you the impression it's all doom and gloom.
However, I don't want to give you the impression it's all doom and gloom.
New technologies offer great opportunities for streamlining operations and improving efficiency.
New technologies offer great opportunities for streamlining operations and improving efficiency.
There should also be new business opportunities.
There should also be new business opportunities.
Consequences for the authorities
Consequences for the authorities
Developments in the financial sector also pose challenges for the authorities.
Developments in the financial sector also pose challenges for the authorities.
Let me give you a few examples.
Let me give you a few examples.
The growth of complex financial conglomerates represents considerable challenges for supervision and crisis resolution.
The growth of complex financial conglomerates represents considerable challenges for supervision and crisis resolution.
The international trend towards one national supervisory authority is probably advantageous in this respect.
The international trend towards one national supervisory authority is probably advantageous in this respect.
The Nordic countries have led the way here.
The Nordic countries have led the way here.
The growth of institutions with a significant presence in several countries has increased the need for co-operation between the authorities of different countries.
The growth of institutions with a significant presence in several countries has increased the need for co-operation between the authorities of different countries.
Bilateral and multilateral memorandums of understanding are an important tool in this respect.
Bilateral and multilateral memorandums of understanding are an important tool in this respect.
The Nordic supervisory authorities have recently signed a joint memorandum of understanding.
The Nordic supervisory authorities have recently signed a joint memorandum of understanding.
The activities of central banks are also influenced.
The activities of central banks are also influenced.
In addition, structural changes also influence central banks' role as "lender of last resort".
In addition, structural changes also influence central banks' role as "lender of last resort".
Currently a variety of regulatory initiatives are being discussed.
Currently a variety of regulatory initiatives are being discussed.
Important examples are the EU Financial Services Action Plan, the revision of the Basle capital accord, and the different initiatives gathered under the heading of "New Financial Architecture".
Important examples are the EU Financial Services Action Plan, the revision of the Basle capital accord, and the different initiatives gathered under the heading of "New Financial Architecture".