samchain/econo-pairs-v1 huggingface dataset:
Norges Bank interprets a “significant” change in the exchange rate as a change that fuels expectations of price and cost inflation to the extent that the change in the exchange rate becomes self-reinforcing. 7  BIS Review 14/2000  Monetary policy can counter such a self-reinforcing movement in the exchange rate by contributing to low and stable inflation without recession. In its conduct of monetary policy, Norges Bank therefore places emphasis on fulfilling the fundamental preconditions for exchange rate stability against the euro: monetary policy instruments must be oriented towards bringing inflation down to the level aimed at by the Eurosystem. At the same time, Norges Bank must prevent monetary policy from contributing to a deflationary recession as this may weaken confidence in the krone. The experience of the 1970s and 1980s shows that monetary policy cannot in the long run steer competitiveness or the size of the exposed sector. If we attempt to do so, monetary policy only contributes to instability. Such real economic fundamentals may on the other hand be influenced through fiscal policy and cooperation between the social partners. Norges Bank cannot with open eyes contribute to higher inflation or a deflationary recession. This would contribute to an unstable krone. Hence, there is no conflict between gearing monetary policy instruments towards low and stable inflation and the objective of a stable krone exchange rate over time.

At a premium, businesses can hedge against short-term fluctuations in the krone exchange rate. The fluctuations are not greater than in other countries with a floating exchange rate. In 1996 and in the autumn of 1998, Norges Bank attempted to attenuate movements in the krone exchange rate through exchange market interventions. On both occasions, interventions prompted a game situation between the central bank and market participants, as was also the case during the currency crisis in the autumn of 1992. When a central bank trades its own currency, market operators make a play for profits on the premise that the exchange rate does not reflect market fundamentals. In a world where capital flows freely, this game situation can quickly trigger large capital movements. The experience of the 1990s shows that Norges Bank does not have the instruments to fine-tune the krone exchange rate. Today’s monetary policy The objective of monetary policy is exchange rate stability against European currencies, defined as the euro from 1 January. Norges Bank’s mandate - which is the Exchange Rate Regulation - takes into account that the krone may remain outside its normal range. The Exchange Rate Regulation states that “in the event of significant changes in the exchange rate, monetary policy instruments will be oriented with a view to returning the exchange rate over time to its initial range”. The concept “significant changes” is not quantified and must be given an economic content.
It is as difficult to separate the institutions that support banking union from national fiscal arrangements as it is to separate the creditworthiness of banks and sovereigns. Let me explain. In recent years, doubts about the resilience of major financial institutions have created expectations of sovereign support. The scale of these potential liabilities can in turn generate doubts about public finances undermining the resilience of both banks and sovereigns. When such concerns emerge, the consequences can be dramatic. The banking systems of peripheral European countries experienced outflows of between 10% and 85% of total deposits from elsewhere in the euro area in the three years following June 2010 (chart 4). Bank funding spreads in those countries ballooned by 5 percentage points from the beginning of 2010 to the  18  Borders seem to matter. Trade between countries tends to be much more limited than trade within countries, as shown for Canada and the US by McCallum (1995). There is also evidence for a border effect for financial integration – there is more risk sharing through financial markets within countries than between countries (see e.g. Crucini 1999). Rose and van Wincoop (2001) assess to what extent national currencies are a barrier to trade, and find that trade barriers associated with national borders are halved when countries join a currency union. 19  Mundell (1973). Asdrubali et al (1996) estimate that for the US risk-sharing in private markets is quantitatively important in stabilising output at the state level.

I also implore management to provide support to various sectors of the economy, especially the priority sectors of agriculture, tourism, manufacturing and small-scale mining to effectively contribute to the development of the country. Ladies and Gentlemen, the introduction of the fourteenth bank in the banking sector will obviously come with its own challenges. For us at Bank of Zambia, this entails further strengthening of our supervisory capacity. We welcome this challenge and hope to rise to the  BIS Review 117/2008  1  occasion by providing adequate supervisory infrastructure and an environment conducive to conducting good business. In the past few years, the Bank has embarked on a process of strengthening its supervisory framework through various initiatives. One such initiative is the adoption of an enhanced riskbased approach to supervision (RBS). The enhanced RBS approach will entail more regular interaction with the banks than previously in order to understand and monitor activities and risks on a continuous basis. As part of the adoption of the enhanced RBS, the BoZ has formulated Risk Management Guidelines to banks which will serve as a minimum standard in their design and implementation of risk management frameworks, relative to their size and complexity. Further, in 2006, the Bank issued Corporate Governance Guidelines to all Financial Service Providers. The guidelines set forth a broad framework of fundamental governance principles to guide the actions of directors and managers. This will strengthen governance in institutions and minimize the risk of bank failures as a result of bad governance.
It will be even worse, according to the banks advocating this level playing argument, if their national supervisor imposes capital or liquidity requirements that exceed the international standards. 14. Pillar 2 of the Basel Accord was of course introduced, at least in part, to do just this by enabling supervisors to make adjustments in minimum required levels of capital to reflect individual bank risk profiles, but even here we are met with “level playing field” arguments – complaints that other jurisdictions don’t use Pillar 2 to the same extent – or at all – and so we should not use Pillar 2 aggressively or else we will “damage” or “ham-string” our banks. But if this is the case, then if all banks seek to maximise their profits, by pushing down or “optimising” their capital and liquidity levels and taking on more risk – focused on the Basel standard as the ultimate benchmark – then do we not risk the standard actually encouraging a “race to the bottom”? Is it a race that may lead to higher profits or RoE for banks and their shareholders only in the short term? Is it a race that could create, in the longer term, serious problems for the safety and soundness of the banks concerned and financial vulnerabilities for society as a whole? 15. I don’t profess to know all the answers to the questions I have just raised. No matter what, there is a clear and indisputable need to enhance the resilience and robustness of the global financial system.

This suggests that the probability of such an event occurring would be no more than once in 300 years under even the very conservative assumptions. But the event had occurred within five years of LTCM’s birth. 7. It is natural, and indeed probably inevitable, that, in seeking to predict the probability of an event occurring, we tend to look to past experience. However, as we all dutifully warn investors when selling investment products, “past performance is no guarantee of future performance” and so we must stand ready to admit that there are fundamental limitations in our existing risk management tools. That is, the predictive powers of models are inherently restricted by historical experience. Where we encounter something new, such as innovative products or business model changes resulting in different forms of connectedness and creating different and new transmission channels, the models face significant difficulty in accurately estimating risk. Furthermore, even if one could find better models, any models must inevitably assume market behaviour remains constant to some degree, yet we know too well that uncertainty and panic may and do engender irrational or herd-like behaviour which a model struggles to accommodate. So, if the model’s findings can be “misguided”, too great a reliance on them, or too limited an understanding of what the model actually tells us, may result in a significant misjudgement of risk. 8. All of this prompts the question of how far we should reflect on the efficacy of our methods for assessing, measuring and managing risks in the financial system.
Caleb M Fundanga: The importance of cross border information exchange for Zambia Remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the launch of the Alumniportal Deutschland, Lusaka, 25 November 2008. *  *  *  • Her Excellency the Ambassador of the Germany Embassy in Zambia • Management and staff from the Germany Embassy in Zambia • Fellow alumni • Members of the press • Distinguished invited guests • Ladies and gentlemen Guten Abend meine Damen und Herren. I am truly honoured to officiate at this important Launch of the Alumniportal Deutschland. I am informed that Africa has a rare honour of being the first continent to implement the Alumniportal Deutschland. I am certain that our implementation process will define the failure or success of the whole project. We thus have a huge challenge to ensure that we achieve success and provide a benchmark for others to emulate. However, looking at the many beaming faces present in this room, I have no doubt that we will provide more than just a benchmark for others to follow. I am glad to note that we are all optimistic on the success of this project in Zambia in particular and Africa in general. We have a duty to represent our continent and give it the honour that it so deserves. Your Excellency, the Launch of the Alumniportal could not have come at more opportune time when cross border information exchange has become cardinal in every aspects of life especially trade.

Global investors’ allocations to the region have been rising, alongside Asia’s increasing weight in global indices. The region has become a favourite hunting ground for investors, in search of the next unicorns. Households and institutions in the region have themselves become ample sources of wealth looking for investment opportunities. These pools of capital can be mobilised through our capital markets, to finance the region’s high-growth enterprises. Asia has an abundance of channels through which companies and capital can meet. There are established bourses as well as newer, tech-focused exchanges. There is also a growing number of blockchain-enabled platforms. Example: DBS Bank has launched the DBS Digital Exchange for the tokenisation, trading and custody of digital assets. Singapore’s Value Proposition Singapore is well poised to become one of the leading fund-raising centres in Asia. There are four key dimensions to Singapore’s value proposition: a vibrant ecosystem for private equity and venture capital; the premier Asian hub for solutions in investment risk management; a rapidly growing debt capital market; anda promising equity capital market. First, a vibrant private equity and venture capital ecosystem. The thriving start-up and 1/4  BIS central bankers' speeches  Fintech scene in Singapore and Southeast Asia have drawn active interest from PE/VC players from around the world. PE/VC assets under management in Singapore have doubled over the last five years. They grew by over 50% last year despite the COVID-19 pandemic and recession, testament to the resilience of the ecosystem. Technology and innovation are making private equity and venture capital investments more accessible.
If a borrower defaults on consumer debt, the creditor can have the debtor’s wages garnished. Sale of assets may be necessary to avoid a debt settlement arrangement. This gives lenders strong protection – also those handsomely compensated for the risk by the high interest rates they charge on unsecured household loans. Creditor protection is intended to induce prudence among borrowers, since they know that the debt will have to be repaid. Paradoxically, this may make it just a little too attractive to promote this kind of credit. Mortgage debt normally entails sound collateral for the lender. Nevertheless, in downturns when property prices fall sharply, such debt may be difficult to manage. If many people try to deleverage at the same time by selling their homes, prices and collateral values will fall. If collateral values fall sharply, it becomes difficult to restructure debt. What is the significance of the housing market? Nearly 90 percent of household debt is mortgaged using property as collateral. And debt growth 4/7  BIS central bankers' speeches  largely tracks house prices. So despite the substantial rise in consumer debt in recent years, the big picture continues to be dominated by mortgage debt. As we invest so heavily in housing – primarily using borrowed money – house prices are a key determinant of our net wealth. It is often said that people in Norway own their homes. Reality is slightly more nuanced. Twentythree percent of Norwegian households rent the home in which they live.

Speedy and efficient liquidation of insolvent companies is crucial for the economy’s overall ability to restructure, innovate and grow. This is closely related to creditor protection. Creditors enjoy high standing in Norwegian legislation. High creditor protection makes it relatively easy for creditors to demand liquidation when the conditions are met. As long as the legal system and administrators in bankruptcy function as intended, the creditors may realise their claims on the estate and resources are freed up for society. It is essential that resources – labour, skills and capital – that are tied up in an unprofitable business are freed up for new activities. This also provides adequate, if painful, adjustment in a crisis. The downturn is shortened, and the economy gets back on its feet faster. Household debt is harder to restructure. Norwegian households can settle debt by liquidating their assets, but this usually only takes place after the borrower dies.4 Before that, the rule is that debt follows you to your grave. Norway has a Debt Settlement Act. Very few would voluntarily petition to enter into a debt settlement arrangement. While some of the debt may be forgiven, such an arrangement involves garnishment of wages, down to the minimum for necessities. Many of those who enter into such an arrangement in Norway struggle with debts incurred while self-employed. Recent years have seen a sharp rise in consumer debt. Defaulting on this sort of debt is much more common than defaulting on a residential mortgage. Default does not mean that lenders forfeit their money.
Since monetary policy primarily affects the economy through long-term real interest rates, and therefore through agents’ expectations for the future paths of the policy rate and of inflation, the end result would be more accommodative policy during the downturn than recommended under the IT regime. 2  BIS central bankers’ speeches  A more modest proposal was to keep the IT regime, but increase the targeted level of inflation. The crisis and the bubbly period that preceded it convinced many that the modern macroeconomy is more prone to shocks that previously believed, and therefore the 2% target level that prevailed in mature economies before the crisis was perhaps too low to keep the economy from repeatedly hitting the zero lower bound. My take on this debate is that, at the end of the day, inflation targeting emerged even stronger from the crisis. No major central banks abandoned inflation targeting, and some central banks that were not inflation-targeters adopted elements of the framework. There are several reasons for the resilience of the IT regime: •  Central banks found that inflation targets were actually helpful in explaining the need and the room for unconventional policy measures to the general public. •  Furthermore, inflation targets helped anchor inflation expectations, keeping deflation at bay despite the large output gaps prevalent at the height of the crisis. •  The proposed new monetary policy regimes suffer from a number of practical deficiencies. They are too complex for the general public to understand and follow.

Indeed, the pandemic’s immediate economic impact was unprecedented and the pandemic caused the steepest drop in output in Europe’s post-war history. 1/3  BIS central bankers' speeches  With respect to the National Bank of Romania’s responsibilities, since the outbreak of the COVID-19 pandemic in March 2020, we have taken a series of measures proportionally with the evolving situation. When the pandemic broke out, the NBR initiated a program containing measures aimed at supporting the economy: It lowered the policy rate, but stopped at 1.25% Kept liquidity in the system at moderate levels, but avoiding to flood money market with excessive cash and looking carefully to a relative stability of the exchange rate Acquired a moderate volume of government bonds on the secondary market to stabilize the yields. Once inflation re-emerged, the NBR started a normalization process, with an adequate sequence (spring 2021): Stopped the purchase of government bonds Tightened liquidity control Since autumn − increased policy rate and extended the interest rate corridor On the macroprudential front, we have implemented similar measures adopted at the European level in order to ensure banks preserve their ability to finance the economy in a sustainable manner. The Romanian banking system entered the COVID-19 crisis with significantly improved financial soundness indicators compared to the 2008 financial crisis. The banking sector remains well capitalized, with liquidity ratios well above prudential requirements, and with adequate resources to fight back if NPL ratios will restart growing, as expected all around the world.
3  3 [20]  The period 2011–2014 – inflation falls far below target In conjunction with the global financial crisis, Sweden’s GDP fell heavily, but the recovery was also surprisingly rapid. In 2010, Sweden’s GDP increased by about 6 per cent, approximately as much as it had fallen in the year before. The increase was mainly due to the recovery in world trade and strengthening in global activity, which benefited Swedish exports and investment. Exports were also helped along by the weak krona. In July 2010, the Riksbank started to raise its repo rate from the level of 0.25 per cent to which it had been cut in conjunction with the crisis. CPIF inflation in 2010 amounted to 2 per cent. 7 The Swedish economy developed strongly and resource utilisation increased rapidly. Until the summer of 2011, the recovery seemed to be continuing at a fairly good pace. By this point, the Riksbank had raised the repo rate in stages to 2 per cent. However, during the summer and autumn of 2011, unease increased over developments in public sector debt in the United States and several euro area countries. Growth prospects abroad deteriorated. This also spilled over onto the Swedish economy. Sweden’s GDP slowed down sharply in 2011, fell slightly in 2012 and only showed modest growth in 2013. Inflation started to fall in 2011 and basically fell until 2014, when CPIF inflation amounted to about 0.5 per cent and CPI inflation to just below zero.

This conference series seeks to bring together top  1/2  BIS - Central bankers' speeches  researchers to present their recent work on topics of critical importance for the Spanish economy, and also distinguished policy-makers to discuss their views on these topics. But past successes are simply a good starting point. CEMFI has ambitious plans. It has a plan to implement a strategic vision for the future (underpinned by rigorous external evaluation), it has outstanding leadership (current and incoming) and it has plenty of talent. All these elements have been brought to fruition this year. In fact, the academic year that we are closing today has been full of good news for CEMFI, starting with the successful restructuring of the Master programme, the refurbishing of the new premises in Casado del Alisal 12, and the increase in the size of the faculty from 16 to 19 members, in line with the Board of Trustees' decision to have 25 faculty members by 2025. Even so, we should never forget, that all this – the premises, staff, faculty, strategic plans – are merely instruments. You, the students at CEMFI are the ultimate purpose. Your education and your future. They are at the core of our decisions. Apart from the Master in Economics and Finance, the other major academic programme at CEMFI is the PhD in Economics. In this respect, I would like to mention that 10 students have already defended their PhD theses or will do so in the near future.
However, irrespective of this fact, at this point I would like to stress how important it is that we use all the resources at our disposal to try and contain the effects of systemic crises or lessen the probability that such a crisis will occur, at the very least, even if we are unable to prevent crises altogether. First, systemic crises are enormously costly. Naturally, that alone does not justify state intervention. However, the legitimation for active state intervention can be derived from the fact that systemic risk gives rise to negative externalities, i.e. market failure, if it is not taken into account in the decision-making considerations of market participants. This means that the social costs of systemic crises are higher than the private costs. In the financial sector, this issue is particularly delicate, because of specific characteristics that can give rise to negative systemic externalities of the kind I have just described. 1 I will return to this important topic later in my presentation. Second, based on historic experience, I am convinced that both the magnitude of systemic risk and the probability that systemic crises will occur can actually be reduced through intelligent regulation. Sure, they can also be sharply increased by incorrect regulation or lack of regulation. Yet, improvement can be achieved even if it is not easy to identify the accumulation of systemic risk and even if regulation will never be perfect.

It is important that the measures that are still pending also fulfil the criteria I mentioned before. In addition, there are also many proposals on the table that do not comply with the criteria of this roadmap. Thus, we need to act carefully to make sure that we introduce only effective and reasonable regulation and that we do not unnecessarily over regulate the system. It is also important to recognise that the definition of suitable measures by experts and the authorities represents no more than a first step. What ultimately makes the difference is that steps are taken to ensure they are actually implemented. The democratic legitimation, in particular, is an essential prerequisite for this. At the end of the day, it is politicians who must bear responsibility for the regulatory measures. Supervisory authorities and central banks play an advisory role but cannot make decisions on the introduction of the necessary laws and ordinances. Consequently, an important function of supervisory authorities and central banks is to provide clear justification for the considerations upon which the proposed measures and instruments are based, so that they are comprehensible for the political decision-makers. Here, too, the roadmap I have presented to you can be of assistance. BIS Review 146/2010  7