samchain/econo-pairs-v1 huggingface dataset:
An expanded cooperation can hopefully also contribute to harmonisation of the supervision that goes further than what can be achieved merely through joint regulations. The agreements that I have mentioned earlier are aimed at achieving this. But it is doubtful how well these voluntary agreements will function in an acute crisis situation. To ensure efficient supervision and crisis management the content of the agreements needs to be formalised. An important part in this is finding methods of resolving differences of opinion between authorities. Thirdly, we also need to work to reduce the introduction of national special regulations in the EU’s member states. Of course, there must still continue to be scope for countries to formulate regulations on the basis of their domestic conditions. However, this impairs the prospects of bringing about a true harmonisation. It is therefore important to constantly question the need for national solutions in the regulatory work within the EU. The aim should be to reduce national deviations as far as possible. In the long term, more in-depth structural changes will be necessary. This primarily concerns establishing joint institutions for supervision and crisis management at EU level. It may mean creating a supervisory authority for the 40 or so banks that currently conduct extensive operations in several European countries. It may also be a question of acting to create a joint European deposit guarantee scheme for cross-border banks. Such a system would have several advantages.

The situation would be even more critical if the bank was at the same time a relatively small actor in its own country. In this type of situation the supervisory authority in the home country – which in this case is the one that decides – would probably consider that the need for supervision was not as great as the other countries might consider it to be. There is an evident risk of a conflict of interests between the countries. 2  BIS Review 38/2007  There are elements of similar problems in the Nordea case, too. However, here the problem is rather the opposite – namely that the bank group’s different companies (parent and subsidiaries) would be covered by supervision in several countries. The fact that each cross-border bank group has to obey and report to several supervisory authorities leads to additional costs and administrative duties for the bank. This is an obstacle to continued integration and to the competitiveness of the European bank market. Another problem is that there are no common arrangements for crisis management within the EU. Basically the only EC regulations defining how responsibility should be divided between the countries in the event of a cross-border crisis are regulations for compensating depositors in the case of bank failures. However, these regulations are not primarily intended to ensure efficient crisis management. They should rather be seen as protection for consumers.
The current account mainly consists of the difference between exports and imports of goods and services, that is, net exports. A positive current account means that the economy as a whole produces more than is used. This surplus represents savings used to invest in foreign assets rather than domestic assets. A surplus on the current account thus means a situation where domestic saving exceeds domestic investment. 25  Unfortunately, there are no really long time series for the trade-weighted development of the krona, partly because of problems with breaks in the time series due to the world wars regarding, for instance, the nominal exchange rate and CPI in Germany, which has historically been Sweden’s most important trading partner. 26  The most common explanation for this is what is known as the Balassa-Samuelson effect. Put simply, this effect arises because countries with high growth tend to have high productivity growth in the goods sector, which results in price increases in the service sector, where productivity growth is lower. Thus, countries with high growth typically experience a strengthening of their real exchange rate. For a description of this effect with empirical results, see Lothian and Taylor (2008). BIS Review 3/2010  11  Figure 6 Swedish GDP in relation to abroad Index: 1970=100  Note. The series in the Figure shows the ratio between Sweden’s GDP and the TCW-weighted GDP for countries abroad. The broken line represents the Riksbank’s forecast. Sources: National sources, Statistics Sweden and the Riksbank.

It is this tradeweighted krona rate that the Riksbank tries to analyse and forecast. If one looks at the period with a floating exchange rate (since November 1992), one can draw the conclusion that the nominal and real exchange rates are strongly correlated. This is because exchange rates, which translate prices into a common currency, change quickly, while price levels change slowly. Nominal exchange rates are determined at the trading counters daily, while it takes time to change prices. Figure 4 Nominal and real TCW-weighted exchange rates Index, 18 November 1992=100  Note. Broken lines represent the Riksbank’s forecasts. The real exchange rate has been calculated using Swedish and TCW-weighted CPI. Sources: Statistics Sweden and the Riksbank. How do we compare the impact from the nominal exchange rate on inflation, which I took up earlier, with Figure 4, which shows a strong correlation between the nominal and real exchange rates? According to the earlier example, only around 15 per cent of a nominal exchange rate change “spills over” into domestic inflation. This means that 85 per cent of the nominal exchange rate change does not have any effect on inflation and that the real exchange rate is thus affected by 85 per cent of the change in the nominal exchange rate. There is thus a strong, but not complete, correlation in the short term between the nominal and real exchange rates.
Clearly the wage bill cannot be expanded by major pay rises, since this eventually leads to a higher relative cost of labour and, consequently, less job creation, higher unemployment, loss of household confidence and fresh falls in demand, which would mean still lower growth and more unemployment. Therefore, it is crucial to adapt wages to the specific situation of firms, to their activity, productivity gains, profits, etc. The current wage bargaining system does not take into account the large differences in individual firms’ specific situations, so it is not the most suitable one to prevent the bout of weak demand from generating a sharp fall in employment. Further, the predominance of indexation clauses in collective labour agreements is a problem that becomes particularly harmful when, as in the current circumstances, inflation has risen due to an external shock, like oil prices, at a time of cyclical weakness. It is naive to believe that automatic wage adjustment to reflect past consumer price increases provides any protection to household disposable income. On the contrary, these clauses (which have now been done away with in most European countries) lessen the ability of firms to compete and keep creating jobs, generate inflation (which affects those not protected by similar provisions) and, in short, hinder adaptation to the external shock. In general, these characteristics of the Spanish labour market have meant that employment has so far been the economy’s main adjustment variable in periods of crisis, since it is the quantities (i.e.

The government tried on several occasions in the first decade after WWII to turn Norges Bank into a subordinated agency. If the history of Norges Bank was written in a vacuum with no international references, one might have thought that this was unique for Norway. Not so, similar developments were observed in many countries who previously subscribed to the gold standard. Political control over central banks was tightened in many countries with one notable exception, the Bundesbank in West Germany which was established as the most independent central bank in the post-WWII period (Sejersted, 1994). 3 Norges Bank was in fact not as dependent as believed. The truth may lie somewhere in between. Recent research on the role of Norges Bank during the first decade after WWII (Ecklund, 2008) 4 suggests that Norges Bank maintained a relatively high degree of operational independence in this period. Norges Bank’s independence was gradually restored. In 1986 Norges Bank was granted instrument autonomy and started to set short-term interest rates to sustain the prevailing fixed exchange rate regime. The current inflation targeting regime was introduced in March 2001 and Norges Bank now sets short-term interest rates aimed at keeping inflation around 2.5% over time. Greater independence demands adequate accountability. Along with greater degree of autonomy and independence Norges Bank has become more open and transparent in its monetary policy communication. Increased openness by Norges Bank is not only a way of achieving accountability to its constituents, but is also instrumental to enhance policy effectiveness.
However, discretion needs to be accompanied with political willingness to act when required – this has to be demonstrated over time and supported by a matured, effective governance and accountability framework. In Malaysia, we ensured that the key administrators in the Government fully understand the objective of the macroprudential measures to keep the household indebtedness and the housing speculation in check, prior to the implementation. Fourth, pre-emptive implementation is key to create space for measures to be implemented progressively and incrementally. This is important to ensure orderly adjustments; avoid “overshooting” or over-reaction among affected parties; and minimise unintended deleveraging. Timely calibration, and where required, uplifting or introduction of other measures are critical in this aspect. The effectiveness of macroprudential measures are inherently difficult to assess. It is therefore extremely important that macroprudential measures are well-supported by effective surveillance systems and capability. This provides the agility for authorities to respond to market reactions which can often be unpredictable. Very often, there will be a need to extend or recalibrate the measures to ensure that they remain effective. For example, following the implementation of the LTV ratio limit of 70% on the third and above outstanding housing loan per individual in November 2010, we observed an increasing growth of housing loans undertaken by non-individual (registered business) borrowers, i.e. they used their business entities to buy properties. This was clearly a circumvention of the measures, leading to the introduction of a LTV ratio limit of 60% on housing loans by nonindividuals in December 2011.

The Central Bank, meanwhile, has adopted many measures aimed at providing liquidity to the markets and stimulating the flow of credit to the productive sector, in order to avoid a more severe disinflationary cycle and prevent risks to financial stability, which could raise the economic and social cost of the ongoing shock. Thus, following the June Monetary Policy Meeting, interest rates at different terms posted an important decrease, in line with the intensification of the monetary stimulus through the purchase of assets and the announcement of phase 2 of the Financing Facility Conditional on Increased Lending (FCIC). The decline in long-term interest rates was reversed during the final phase of the discussion of the withdrawal of part of the pension savings, consistent with the fall in the prices of the assets in which they are invested. However, after a set of measures were announced by the Central Bank and the regulators, and the Pension Funds Administrators (AFPs) implemented 3  a portfolio management strategy that mitigated the impacts on local markets, volatility has been reduced and interest rates have fallen again. Stock market valuations, meanwhile, have followed a trajectory below their foreign counterparts (Figure 11). Policy measures designed to confront the current crisis must be able to recognize its distinctive characteristics.
1 Firms became over-confident in their ability to hedge or exit positions if conditions changed, failing to recognise that many participants would be attempting to do the same and that market liquidity would then evaporate. Indeed, given a change in sentiment, the increased integration of financial markets transmits risks just as much as it disperses them. 1  2  See Bank of England Financial Stability Reports July 2006 and April 2007. BIS Review 50/2008  Banks’ funding thus became increasingly vulnerable to a sudden shift in financial market conditions. As covered extensively elsewhere, 2 the crystallisation of this risk in August 2007 led to a sharp decline in liquidity across a wide range of markets (as shown in Chart 3). Funding pressures intensified as asset managers lowered demand for asset-backed securities and complex products more broadly, to lower risks and to guard against pressures from their investors for early redemption. And as banks attempted to fund contingent claims, liquidity in wholesale term markets dried up – adding to the strain. A number of institutions across the globe, such as Northern Rock, IKB and Bear Stearns have succumbed to the pressure, necessitating public sector intervention to support financial stability. Section III: Defences against liquidity risks Banks have a range of defences to a sudden decline in the availability of wholesale funds. Recent developments have highlighted a number of limitations in these defences in addressing the recent system-wide liquidity shock. One potential counter-measure to liquidity pressures is to transform illiquid assets into cash.

Zeti Akhtar Aziz: Islamic finance – constant evolution and emerging opportunities Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Nikkei Islamic Finance Symposium 2008: "Islamic Finance: Constant Evolution and Emerging Opportunities", Tokyo, 23 February 2008. *  *  *  It is my great honour and pleasure to be here in Tokyo to speak at this Islamic Finance Symposium organised by the NIKKEI. This is an important forum that provides the opportunity to foster a greater understanding and appreciation of Islamic finance and its increasing role in the international financial system. We are also very honoured by the presence and participation of Governor Fukui from the Bank of Japan at this Symposium. My remarks today will focus on the evolution and new emerging opportunities in Islamic finance as its growth and development in the global financial system gains further momentum. My presentation will also touch on our experience in the development of an Islamic financial system in Malaysia which operates side by side with the conventional financial system and in which the international dimension has now become increasingly significant. Evolution of Islamic finance Modern Islamic finance was initially developed as an intermediation channel for Muslims to conduct their savings and investment activities in accordance with the Islamic principles. As recent as five years ago, however, Islamic finance has experienced major transformations. Its rapid evolution is particularly evident in five dimensions of its development.
The Funding for Lending Scheme: one year on It was on the day of this lecture last year that the Bank of England announced the first 13 banks and building societies to have signed up to the FLS. There are now over 40 firms participating, representing over 80% of the stock of lending to the UK economy. The total amount of outstanding drawings under the Scheme is over £ and rising. The MPC has been using a wide range of indicators at various stages of the transmission mechanism to help assess the extent to which credit conditions have improved since its launch. Let me run through those. Stage 1: bank funding costs Our first objective was to reduce bank funding costs – and this phase has been remarkably successful. Over the past year, those costs have fallen sharply (Chart 6). Of course, they are likely to have been affected by developments internationally, including Mario Draghi’s “do whatever it takes” remarks in July 2012. But usually sterling funding markets would react by less than euro-denominated markets to European developments. In fact, UK unsecured bond spreads fell further in the UK than in core euro-area countries – indicative of an additional boost from the FLS over and above general market developments.

As such, the rapid rise in headline inflation here has also been propelled predominantly by higher food and energy prices rather than aggregate demand. Inflation at current rates are uncomfortably high, but they are not expected to be persistent given Thailand’s very flexible labor market where extensive reallocations help to keep wage pressure contained while well anchored inflation expectations help to mitigate cost passthrough. 5
28 See, for instance, Blanchard, Dell’Ariccia, and Mauro (2013). Examples of others who have advocated this are Ball (2014), Krugman (2014) and Rosengren (2015). Even Janet Yellen said during her time as chairman of the Federal Reserve that the question of whether the inflation target should be raised was “one of the most important questions facing monetary policy around the world in the future” (Federal Open Market Committee, 2017, p. 14). 13 [24]  pears to be the case when looking at historical data. This could lead to greater uncertainty, which makes it more difficult for households and companies to make economic decisions. 29 Surely, at a sufficiently high level of inflation it will be difficult to claim that inflation is still low and stable. But if there is confidence in a target of 3 or 4 per cent in the same way as for a target of 2 per cent, there is no obvious reason why inflation should vary more. The historically negative covariation between the level and stability of inflation most likely reflects the fact that periods of high inflation have also been periods in which there has been no clear anchor for inflation in the form of an inflation target. Whether an inflation rate of 3 or 4 per cent can still be regarded as low is a question of judgement. Personally, I think one can say it is. I will return to the proposal to raise the inflation target shortly.

http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/treasury-committee/effectiveness-and-impact-ofpost2008-uk-monetary-policy/written/48288.html Yellen, Janet L. (2015), “Inflation dynamics and monetary policy”, speech at The Philip Gamble Memorial Lecture University of Massachusetts, Amherst, 24 September. Yellen, Janet L. (2018), “Comments on monetary policy at the effective lower bound”, Brookings Papers on Economic Activity, 13-14 September. https://www.brookings.edu/wp-content/uploads/2018/09/ES_20180910_YellenELB.pdf  20 [24]  Figure 1. Downward trend in global interest rates 10  United Kingdom United States Germany Sweden  8  10  8  6  6  4  4  2  2  0  0  -2 1985  1990  1995  2000  2005  2010  -2  2015  Note. Per cent, annual data. Government bond yields with 10 year maturity, deflated by CPI. Sources: Macrobond, OECD, Statistics Sweden and the Riksbank  Figure 2. GDP forecasts by different analysts 3  2018  2019  3  2020  2.5  2.5  2  2  1.5  1.5  1  1  0.5  0.5  0  RB  FiD  KI  LO  Nordea  SEB  SHB  SN  Swed  24/10  15/11  10/10  27/11  5/9  13/11  7/11  13/11  8/11  0  Note. Annual percentage change, annual data. RB refers to the Riksbank, MF to the Ministry of Finance, NIER to the National Institute of Economic Research, LO to the Swedish trade union confederation SHB to Handelsbanken, CSE to the Confederation of Swedish enterprise and Swed to Swedbank.
The work conducted under the aegis of the G20, in which the Banque de France played a leading role, has confirmed that a CBDC can bring benefits in this area. However, to fully exploit this potential, central banks will need to coordinate their efforts to ensure that CBDCs in different jurisdictions are interoperable. In its experiments on a wholesale CBDC, the Banque de France tested the main multipleCBDC arrangements identified in the literature. As described in the report published by the Banque de France on 8 November, these experiments showed the different ways in which CBDCs can be made interoperable and highlighted the benefits of a CBDC in a cross-border setting (e.g. more efficient correspondent banking, settlement security). Lastly, choices will need to be made so that the CBDC interacts smoothly with private initiatives such as the EPI project, in order to strengthen the integration of the European payments market. CONCLUSION To conclude, I would like to come back to a question that comes up regularly, about the future role of banks and commercial bank money in a world of stablecoins and central bank digital currencies, and respond with one conviction and one wish. My conviction is that, given the way in which investigations are being conducted into a digital euro, which I have just summed up here, it is unlikely that banks will be erased from a future payments landscape in which stablecoins and central bank digital currency dominate.

Thomas Jordan: The challenges of the global economic crisis – can Switzerland master them? Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, on the occasion of a panel discussion at the Central Bank of the Republic of Austria, Vienna, 1 February 2011. The complete speech can be found in German on the Swiss National Bank’s website. *  *  *  Many countries are facing major economic challenges as a result of the financial and economic crisis. Which of these are of particular importance for Switzerland? And how can we tackle them? Switzerland is currently facing three key challenges. First, the crisis has shown that countries can encounter serious difficulties due to systemically important banks. Switzerland has two systemically important banks, in fact, these big banks are systemically important even at the global level. Thus for our country, in particular, it is essential that the stability of the financial system be sustainably reinforced. Second, the crisis has substantially changed the economic environment in which Switzerland – an economy with an extremely global orientation – operates. On the one hand, our country has to cope with the appreciation of the Swiss franc, particularly against the euro, which has come under pressure because of the sovereign debt crisis affecting certain European countries. On the other hand, the crisis has reinforced the shift in economic power towards the emerging economies.