samchain/econo-pairs-v1 huggingface dataset:
The imbalances and the low interest rates led to an increased demand for financial assets with a higher yield, which contributed to pushing down risk premiums to untenably low levels. Low risk premiums and low interest rates in turn contributed to overheating in the US housing market. Expansionary housing policy in the United States One important factor in triggering the crisis was the adjustment in the US housing market that began in autumn 2005. The housing market has been stimulated by an expansionary housing policy over a long period of time. The aim was that more households would own their own homes. To achieve this, targets were set for how much of the mortgage institutions’ lending would be granted to wage-earners with medium and low incomes. These targets were then gradually raised. The demand for owning one’s own home increased, and thus housing prices and household indebtedness also increased. Moreover, an increasing number of households had gained access to credit as a result of the deregulation of the financial markets. New financial products were created that enabled mortgages to be put together, repackaged and then sold on the financial markets. The idea behind these financial innovations was to spread the risks over more counterparties. Unfortunately the new instruments also reduced the possibility to assess where the risks lay. When the housing market bubble burst and house prices began to fall, the underlying problems rose to the surface.

If one can identify the excesses, why couldn’t the market correct them itself? This could be a question of what economists call market failure. Market participants act in a way that is rational from the point of view of each individual participant, but taken together the outcome is bad for all. As long as investors continue to earn money, the demand for credit can continue to grow, even if the signs of a bubble are strong. On such occasions, intervention by public authorities may lead to a better outcome not just for the economy as a whole, but also for the individual market participants. If one looks at Swedish monetary policy over the past decade, one can actually claim that it has been characterised by some “leaning against the wind”. The published minutes of the monetary policy meetings in Sweden in 2003 and 2004 indicate that rising house prices, high growth in credit and an increased burden of debt among households were put forward by several Executive Board members as arguments in favour of conducting a less expansionary monetary policy. The message is even clearer during the period March 2005 until the end of September 2007, when the Riksbank gave consideration to house prices and growth in lending in its monetary policy decisions. However, the decisions to take into account house prices and credit growth were not made on the basis of the Riksbank including asset prices as a further target variable for monetary policy.
The EMU has limited the risks of exchange rate crises and catalyzed the financial integration of the euro area economy •  The euro has put an end to the potential effects of exchange rate crises and favoured the emergence of a stable environment characterized by historically low interest rates. Thanks to these developments, the euro area countries have not been confronted with difficulties stemming from the uncertainties due to recent geopolitical troubles. •  The introduction of the euro has catalyzed the financial integration of the European economy, which is totally complete as regards the money market. In the first weeks following the introduction of the euro, price differences on national interbank money markets decreased very quickly to stand at less than 5 bp. This level corresponds to the spread bid-ask currently observed on the market. •  A comparable movement has occurred on European bond markets, where returns on government yields have converged. •  The euro area, and more broadly the European Union, now have a consistent financial architecture. The implementation of the Financial Services Action Plan defined at the Lisbon European Council is on the way to completion. Subsequently, the Lamfalussy process should provide a new institutional architecture in the fields of financial supervision and regulation and develop flexible and uniform technical rules. Part 2: The euro plays the role of an international currency and a nominal anchor The available data bear out the increase in the international role of the euro.

Ladies and gentleman Investors continue to show heightened confidence in the Zambian economy reflected in stronger performance in foreign direct investment (FDI). For instance, the 2013 Foreign Private Investment and Investor Perceptions Survey report shows that FDI inflows rose to $ billion in 2012 from $ billion in 2011, the highest in the past 12 years. Similarly, FDI stocks increased to US $ billion from $ billion over the same period. Data for the first two quarters of this year already indicate a strong performance in 2013. It is therefore, my expectation that the banking sector will continue to take advantage of opportunities arising from the conducive macroeconomic environment in the country to create wealth and contribute to the country’s development. We view increased private investment such as FCB as a stimulus for job creation, technological and skills transfer, as well as wealth creation. This investment by FCB is important given the fact that deposit-taking corporations (banks) have recently become among the top three sectors in the country with respect to FDI. FDI inflows to banks were $ million, third to manufacturing and mining at $ million and US $ million in 2012, respectively. Consistently, in terms of FDI stocks, banks were in third place with $ million while manufacturing and mining were second and first at $ billion and $ billion in 2012, respectively.
SPEECH DATE:  28 January 2019  SPEAKER:  First Deputy Governor Kerstin af Jochnick  VENUE:  Swedish Property Federation  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Cautious steps towards higher interest rates* Thank you for the invitation to come and talk about current monetary policy here at the Swedish Property Federation. In December, we increased the repo rate for the first time in over seven years. I can imagine many people asking themselves why we have started to increase the rate now and how we foresee monetary policy further ahead. And households, who are more indebted than ever before – can they cope with higher interest rates? These are questions that I will try to respond to today, based on our latest forecasts and assessments. As I see it, there is good reason to take cautious steps towards higher interest rates, in part because historically speaking, we find ourselves in a special environment. As you know, forecasts are always uncertain, and therefore I intend to conclude by discussing some of the factors that could lead to us deviating from our monetary policy plan. But let me start by outlining why we have decided to start raising the interest rate. Why is it appropriate to start raising the interest rate? To understand why we have now started to increase the interest rate, it may useful to go back in time a little.

To add some context to the option of bond purchases, it is important to note that the Swedish central government debt is small in relation to GDP, compared with, for example, the euro area and the United States. This sets a limit as to what is an appropriate amount of government bond purchases for monetary policy purposes. The Riksbank’s bond purchases for monetary policy purposes corresponds  10  This raises the issue of what the mandate of central banks should look like. In practice, there are a number of different market failures that monetary policy might try to correct. Incomplete information about the aggregate economy and the implications of this for price- and wage-setting, i.e. so-called price and wage rigidities, is a central part of the simplest conceptual framework of central banks. Prior to the global financial crisis of 2008–09, there was over-confidence in the ability of financial markets to correctly price risks. In the wake of the financial crisis, a discussion has emerged as to whether central banks should consider systemic risks that arise due to driving-forces that encourage excessive risk-taking and indebtedness. 11 See Bolton et al. (2020), Carney (2015) and Carney et al. (2019). 12 See Brunnermeier and Koby (2018). 7 [18]  to about 7 per cent of Swedish GDP, while the ECB’s and Fed’s programmes correspond to more than 20 per cent of GDP. The Riksbank, like the ECB, has the opportunity to broaden its asset purchases to include other types of bonds.
Lack of instruments to control an inflationary situation: If there is a continuous surplus in the balance of payments, a currency board has to necessarily monetize the surplus at the cost of building inflationary pressures. But it does not have instruments to contain it and is reduced to the status of a passive spectator. In view of the above shortcomings of a currency board system, Exter recommended that Ceylon should establish a central bank with wide powers. Exter could not be faulted for making this recommendation, since this was the accepted wisdom at that time. The frustration of the newly independent nations regarding their colonial past, the desire to attain economic independence soon to match the political independence and the obvious inflexibility of currency board systems to supply liquidity in a growing trade and payment era would have contributed to the popular belief at that time that the Currency board should be replaced by a central bank. However, about two and a half decades later when Singapore had to make the same choice, “Dr Goh and the Cabinet chose the path of prudence for Singapore and sought to preserve the Currency Board System for its in-built financial discipline” (Prudence at the Helm, 1992, p 15). Many nations since then, after devastating experiences with undisciplined monetary management, chose for currency board systems to institutionalize monetary discipline by legal means. Ironically, this virtue of a currency board system had not been dealt with in the Exter Report, possibly it would not have been foreseen at that time.

In a world with a core of diversified firms that are more similar, for example, cross-firm exams and horizontal analysis increase in value and supervisors might require broader skills. Moving beyond individual firms, there is the potential for microprudential risks to transform into macroprudential ones. If firms expand, diversify and become more similar, each might become safer individually. The industry as a whole, however, might not be any safer or more resilient. If all firms are effectively the same, they could become “systemic as a herd” and susceptible to the same shocks in a way that leaves the aggregate provision of financial services more volatile.9 The propagation mechanisms for an industry with a set of similar firms with a wider range of activities may be very different from one where firm heterogeneity can offset and smooth the impact of shocks. This suggests that supervisors and regulators should be concerned not just with the firm as an entity, but with the industry as a portfolio of firms where aggregate outcomes reflect both each firm’s individual contribution and correlation properties across firms. Finally, supervisors are concerned about the efficient provision of financial services and the ability of the financial industry to support the real economy. If firms’ mix of activities is overly determined by the regulatory environment, firms will have incentives to expand into activities where they do not have a comparative advantage. As a result, the potential gains of specialization would be lost. This could make the provision of financial services less efficient overall.
They were not two remote tail risks that both happened to materialize, or just a bad coincidence. There have been too many examples of other misconduct to list. Wells Fargo is the most recent example, but serious misconduct is not confined to a single jurisdiction or a business model. The evidence, which now stretches over a decade, has only reaffirmed my initial belief that there is an industry-wide problem. In light of these continuing and widespread failures, my colleagues and I recognize the importance of culture—that is the unwritten norms and accepted practices of an organization. The culture of each firm will necessarily be its own. But the pervasiveness of problems—across firms and countries—points to common, industry-wide norms that need attention. An industry-wide problem needs an industry-wide solution. I also think that, when the problem is cultural, any solution must be industry-driven. It is the public sector’s job to establish and enforce rules, but rules face some inherent limits in shaping conduct and behavior. It is natural to adapt to the behaviors that we observe around us. A common illustration of this point is the speed limit. Most drivers move with the flow of traffic. They pay less attention to a number posted on a sign. This is not to deny the necessity and importance of regulation, or to criticize any of the particular rules imposed in response to the financial crisis. But, we also must recognize that it is impossible to create a rule for every situation.

I doubt that rules alone can accomplish this. Telling people to be ethical doesn’t make it so. Seeing others engage in ethical decision-making is, by contrast, quite powerful. With that prologue, let me turn to my first message: Stay in banking. This might be a surprising message in light of my introduction. Nonetheless, banking is important work. Society relies on its financial system to “create substantial value for our society.” 3 As investor and author John Bogle has written: “[Banking and finance] facilitate the optimal allocation of capital among a variety of users; it enables buyers and savers to meet efficiently; it provides remarkable liquidity; it enhances the ability of investors to capitalize on the discounted value of future cash flows, and other investors to acquire the right to those cash flows; it creates financial instruments [. . . ] that enable investors to assume additional risks, or to divest themselves of a variety of risks by transferring those risks to others.”4  To fulfill its potential for creating value for society, the financial system needs talented and dedicated people at the helm. This is especially true for banks, which are indispensable to our economic system. As the philosopher Onora O’Neill has observed, banking requires more than just technical competence.5 Bankers must reproduce their efforts and results with reliability. And, above all, bankers must be honest. They must do what they say and say what they mean. This is necessary for the financial system to be viewed as trustworthy.
Svein Gjedrem: Economic perspectives Annual address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the meeting of the Supervisory Council of Norges Bank, Oslo, 19 February 2004. *  *  *  Introduction There is now growth in the Norwegian economy. Oil prices are high. Capacity utilisation in the mainland economy is at the level prevailing in the mid-1990s. Wage growth is slowing. White-collar workers have lowered their wage demands, and there are prospects of a moderate main settlement this spring - the first in eight years. The value of the krone is on a par with the mid-1990 level. The interest rate level is in line with the level among our trading partners. In that respect, there is equilibrium in the Norwegian economy at present. But it is fragile. The international division of labour is shifting, and when faced with major changes it is a disadvantage for Norwegian business and industry that costs are high. Inflation is very low. Short-term interest rates abroad have been unusually low over the past 2½ years, and there are no prospects of a considerable increase in the near term even if the world economy is expanding. Last year, interest rates abroad acted as a magnet on Norwegian interest rates. We now have the lowest nominal interest rate level recorded in decades. Norwegian households are optimistic and are borrowing and investing in housing and property. This stands in contrast to corporate behaviour.

Constant 2000 prices 1200  1200  1000  1000 Trend Actual  800  800  600  600 1980  1984  1988  1992  1996  2000 2003  Sources: Statistics Norway and Norges Bank  Monetary policy credibility Expectations play an important role in price and wage formation. Expectations concerning inflation and economic stability are of crucial importance for the foreign exchange market. Inflation expectations also influence wage demands and pricing in the business sector. With confidence in monetary policy, expected inflation in the long term will be close to the inflation target. This alone contributes to stabilising inflation. Surveys indicate that enterprises, the social partners and other economic agents expect inflation to be 2½ per cent over time. Financial market participants also expect that inflation will be 2½ per cent ahead, as implied by long-term bond yields. A flexible exchange rate The krone exchange rate is an important channel for monetary policy. The krone fluctuates. This is not surprising because other countries’ currencies also fluctuate. The krone exchange rate is the price of our currency measured in a foreign currency. Developments in other countries are just as important for the krone as developments in the Norwegian economy. Capital flows freely and flows can change rapidly. This can spill over to exchange rates and interest rates as well as output and employment. A structural feature of open economies like the Norwegian economy - with a national currency - is that the exchange rate fluctuates.
These new instruments should directly target the incentives to extend excessive credit. But there are a number of practical questions to answer before they can be implemented. Charles Bean concludes that it is a mistake to look for a single culprit. Just as in Agatha Christie’s Murder on the Orient Express, those with different motives but similar objectives can all contribute to the same outcome. The economics profession was one of those culprits and there are lessons for the discipline. It could incorporate psychology or behavioural economics into the study of financial markets but this may be unnecessary since much of the story can be explained using standard microeconomics. Economists should take more notice  BIS Review 101/2009  1  of history and not treat crises as pathologies that happen in other times or in other places but as a central feature of free-market economies that models should aspire to explain. Finally, macroeconomists have to learn how to put credit markets into their models in a meaningful way and which enable us to model shocks originating in the financial sector rather than just as an amplification mechanism. The Great Moderation, the Great Panic and the Great Contraction The past twenty-four months have been tumultuous for the global economy, for economic policy makers and, indeed, for the discipline of economics.

In the past few years insolvency laws have been amended, in particular in Spain, Italy and Portugal, to better support early rescue of viable firms, to help the deleveraging process and to free up resources for further investment and thus productivity growth. I believe that these reforms, if the effort to implement them continues, will help us to grow out of the current high private sector debt problem. Of course, there are other possibilities and the list of potential reforms is long. I could elaborate further, but my time here is unfortunately limited so I chose to constrain myself to this crucial area of structural reforms. Conclusions Let me now conclude. As I said at the beginning, the euro area can make a much stronger contribution to global growth than it has done so far. The conditions are very favourable for a strong push for reforms; in particular, our monetary policy stance is supportive. Reforms should now focus on boosting productivity and reducing the burden of the high debt stock. Work in this direction has started and is ongoing, but the euro area governments need to continue on this track with more determination and impetus. BIS central bankers’ speeches  3
Zeti Akhtar Aziz: Building a robust Islamic financial system Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 2nd International Conference on Islamic Banking, Kuala Lumpur, 7 February 2006. *  *  *  Let me first of all extend a warm welcome to the participants of this Second International Conference on Islamic Banking: Risk Management, Regulation and Supervision, jointly organized by the Islamic Research and Training Institute (IRTI) of the Islamic Development Bank and the Islamic Financial Services Board (IFSB). This forum has an important role of not only fostering the dissemination of knowledge and exchange of experiences on the subject of risk management, regulation and supervision, in facilitating a better understanding on the issues confronting us, and thus contribute towards advancing forward the development of the industry. Effective risk management capabilities is particularly important in this more challenging global financial environment of heightened uncertainties and increased potential for financial vulnerabilities. And an effective regulation and supervision will ensure the soundness and stability of the system. In the recent decade, the Islamic financial system has experienced remarkable growth and transformation, demonstrating its potential as a competitive form of financial intermediation. Today, Islamic finance represents a multi-billion dollar industry with a comprehensive range of products and services, serving a broad spectrum of consumers and businesses that extends beyond the Muslim world. In developing the Islamic financial system, it is important to focus on the appropriate pre-requisites that will facilitate its efficient evolution.

As we advance forward, changes in the financial landscape will continue to accelerate and the level of complexity and sophistication in the financial markets will further intensify. Islamic banking institutions will need to reinvent themselves to meet the emerging issues, challenges and opportunities. The regulatory and supervisory approach and the methodologies to be applied must continue to evolve in order to remain effective and relevant. In addition, given the global dimension of the Islamic financial products and services, and the increasing interdependence of financial markets, efforts by individual countries to strengthen risk management practices needs to be matched by efforts to enhance the safeguards at the international level. The future prospect of the Islamic banking industry thus depends on the combined cumulative efforts by the industry, regulators, the market participants and the international community. The collective efforts needs to be coordinated to maximise the potential of the industry. Setting shared vision and common goals to be achieved would be an important first step. Of greater importance are the actions that needs to be taken to realise these goals. It will be the actions and initiatives which we take today that will contribute towards achieving the future that we aspire. On this note, I wish you a successful and productive conference. Thank you. 4  BIS Review 8/2006