samchain/econo-pairs-v1 huggingface dataset:
Excluding electricity and petrol prices and adjusting for changes in indirect taxes, price inflation was approximately 2½ per cent, which is in line with the current inflation target. It should be pointed out, however, that our adjustment of the figures may overestimate these effects. We assume, for example, that increases in indirect taxes are passed on in their entirety to the consumer. In practice, changes in indirect taxes are often shared by manufacturers and consumers based on the intensity of the supply-and-demand reaction to price increases. In addition, increases in electricity prices are not only the result of last year’s low precipitation levels in Western Norway and  BIS Review51/2001  3  higher electricity taxes. Other, more permanent conditions may also have contributed. The increase in petrol prices leads to higher prices on other goods such as transport services and we have not adjusted for this. However, adjusting inflation figures for direct effects of one-off factors can also be associated with pitfalls. Higher indirect taxes and an increase in petrol and electricity prices may be a source of accelerating inflation, via spillover effects on other prices and wages. Other countries with inflation targets adjust the consumer price index for temporary and random factors in a variety of ways. In the UK, changes in interest rates have a strong, direct impact on the consumer price index. The Bank of England aims at an inflation target that is adjusted for such effects.

BIS Review51/2001  11  First, monetary policy can well be delegated, because over time there is no real conflict between the objectives of price stability, on the one hand, and economic growth and equitable distribution, on the other. The formulation of objectives and subsequent evaluation of practice make adequate provision for the more short-term considerations. Second, it is possible to formulate fairly precise objectives for monetary policy and establish reporting routines that ensure that those who delegate authority can subsequently evaluate the implementation. Norges Bank provides an account of its actions in the Bank’s Annual Report, and the evaluation of the Ministry of Finance, the Government and the Storting appears in and is based on annual reports to the Storting. Finally, the need for transparency and communication argue in favour of delegation. As previously mentioned, each monetary policy decision must be consistent with previous and future decisions, and be directed towards a clearly defined target. Thank you for your attention. 12  BIS Review 51/2001
As shown in the chart, the risk premium in capital markets on long-term credit to enterprises has increased. In addition, many international enterprises now have a poorer credit rating than earlier This has also affected borrowing in Norwegian companies, which now have to place greater emphasis on their customers’ ability to honour commitments. International financial and capital markets are characterised by uncertainty and unrest. This unrest is not found among economic agents in Norway. As long as oil prices are high, the Norwegian economy is fairly sheltered. Many central banks are now reducing their key rates. As our economy is affected to a lesser extent, the differential between short rates in Norway and abroad may widen. Monetary policy The long-term objective of monetary policy is to provide the Norwegian economy with a nominal anchor – domestic price stability, and thereby the basis for a stable krone. Nominal stability is the best contribution monetary policy can make to economic growth and prosperity. A nominal anchor is also a necessary precondition for stable financial markets and property markets. High inflation and wide swings in the exchange rate impair the function of prices as an information vehicle. This leads to booms followed by busts and an arbitrary redistribution of income and wealth. Inflation therefore poisons the economy. By linking movements in the krone to the euro, we have chosen to follow the same standard for nominal stability in the economy as set by the euro area countries.

At the same time, it is reasonable to assume that spending on other programmes, which are today financed over government budgets, will increase as a share of total GDP. With the current tax level, in conjunction with the challenges that increased trade and globalisation pose to the tax system, there would hardly be scope for increasing taxes. It would therefore be reasonable to assert that the value of the right to tax is lower than the value of commitments taken on by the government when the intention is to develop the welfare state. Without substantial government saving in the years ahead, promises to preserve the welfare state will lose credibility. The government thus has a clear motive for saving. At the same time, the high level of petroleum revenues, as mentioned, provides scope for accumulating substantial government financial wealth. In my view, three points are of importance with regard to government wealth management. First, investment must be based on the reason underlying government saving which, as I understand it, is to distribute petroleum wealth across generations and establish a foundation for maintaining important elements of the welfare state. Second, the manager must seek to achieve a maximum return within duly considered risk limits. Returns and risk must be monitored continuously. The return and the risk limit must reflect the government’s motive for saving. BIS Review 14/2001  9  Third, the management must be organised so that the manager pursues the objectives of the owner and does not develop its own goals.
Since then, global debt has stabilized, growing by only 1% in total, relative to global GDP, over the past 5 years. The aggregate growth rate is not therefore signaling an impending correction. The level, however, may well represent a significant vulnerability given that high levels of debt are associated with deeper and more persistent recessions. Assessing the sustainability of this debt is more difficult. Whether debt is sustainable depends on the difference between the interest rate and the growth rate of the income stream that will be used to repay the debt. The future is not known – in assessing today whether a given level of debt is sustainable, we must rely on our best forecast of future interest rates and growth. The level of debt that is sustainable in an economy is not a constant. It can change over time and indeed has changed enormously over the last 150 years. The ratio of credit to GDP in the late Victorian British economy was under 20% (not including the financial sector). In the mid-twentieth century it was around 60% and by the early 1990s over 100%. It is influenced by many factors including, very importantly, the long run real rate of interest. There is strong evidence that the long run, or trend real rate has come down materially over the past 40 years as a result of slow moving, secular changes in the supply of savings and the demand for investment.

But recent events suggest the market may be very sensitive to changes in expectations of growth or inflation. 20  For UK assets, there has been the additional impact of fluctuations in Brexit news and sentiment. The evaluation of Brexit outcomes seems to have dominated responsiveness to near-term domestic news. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  As always, the risk picture is mixed. From a financial stability perspective, the right response to this picture is to ensure that the financial system is sufficiently resilient to a very severe but plausible correction in values should it occur. A colleague of mine recently asked me why the financial stability side of the Bank was so gloomy, always pointing to risks on the horizon and seeing the glass as half empty at best? My answer was that it was our job to worry about what could plausibly happen - and to ensure that if it did happen, the glass did not suddenly empty entirely. 14  All speeches are available online at www.bankofengland.co.uk/speeches  14
Growing pessimistic sentiment vis-à-vis the economy led to lower capital market yields, declining stock valuations and a weaker US dollar. The general pattern of activities on the financial markets was and still is characterised by a marked parallelism in price fluctuations. On the one hand, this is a reflection of the synchronisation of the current and expected economic development which has been apparent for several quarters and which in turn leads to parallel monetary policy reactions. On the other hand, the widespread globalisation of capital market processes has considerably intensified - at the expense of country-specific differentiations - the impact of the valuation factors effective worldwide. The shock of 11 September The attack of 11 September hit the world economy and the financial markets in a state of instability. It did not trigger any new trends, but magnified developments which were already under way. Business and consumer confidence suffered a severe blow, which further dimmed economic prospects in the US and in Europe. The sudden increase in risk aversion led to drastic corrections on all major stock exchanges and to a veritable flight into the Swiss franc. The record highs the Swiss franc reached on 21 September went in tandem with the stock markets hitting record lows. In response to the rapid and marked appreciation of the Swiss franc, we cut interest rates in an extraordinary move on 24 September. Following this step, and in the course of a broader normalisation of the financial markets, the euro rebounded somewhat vis-à-vis the Swiss franc.

Our currency nevertheless remained strong against the euro. At the end of November, it was quoted at 3.5 % above its average rate during the first eight months of the year. The euro-Swiss franc rate was somewhat more volatile as well. Its volatility in additional currencies now stands at about the same level as previously against the D-mark. On the stock markets, a distinct corrective movement set in even before the end of September. Meanwhile, most stock indices are above the level obtaining on 10 September. Bond yields have increased a little in the last few weeks as well. Both effects can be interpreted as a sign of renewed optimism concerning the economic development in the medium term. In the days after the terror attacks, the resiliency of the financial system was put to a test never before described or even considered in any emergency plan. Payment transactions in US dollars were affected directly. Faced with the possible breakdown of individual banks and parts of the system which are crucial for carrying out transactions, the Federal Reserve - by way of the discount window pumped massive amounts of liquidity into the system. On the basis of a swap agreement, the European Central Bank supplied banks in the euro area directly with dollar liquidity. The National Bank  BIS Review 101/2001  1  was in close touch with the Swiss banks and - should this have been necessary - we would have been in a position to lend support as well.
A snapshot on the  BIS Review 99/2010  3  implementation result currently shows that 80% of the population has some form of savings account. In term of penetration of deposit and loan accounts, Malaysia is currently among the highest in the world with ratio of 3,300 deposit accounts per 1,000 adults and 1,100 loan accounts per 1,000 adults. Malaysia has also been championing the structured advance of Islamic finance around the world. Such a structured advance of Islamic finance is in fact part and parcel of financial inclusion. In this regard, we believe that Malaysia is able to support the work of the FATF and the APG on initiative related to financial inclusion through the sharing of our experience. In addition, given that ML/TF activities often involve predicate offences under the purview of more than one enforcement agencies, there is an increase of collaborative initiative among the law enforcement agencies. This is manifested in the establishment of collaborative platform at management and working levels of relevant agencies. Again, these are aimed at coordinating collective actions at domestic and regional level against ML/TF and other related predicate crimes. Within the platform, several working level task forces have been set-up to facilitate joint investigations and enforcement actions. Expectation on financial institutions to strengthen AML/CFT governance and capability Let me now move to the third and final area for my remarks today, that is on our expectation on how financial institutions should respond to these developments.

We vote at shareholder meetings in line with pre-defined principles and publish our voting results on a regular basis. We also make shareholder proposals and participate in consultations based on the fundamental principles that we apply in the exercise of ownership rights. Norges Bank integrates the considerations relating to corporate governance, the environment and social conditions into the investment process. In some cases, this has resulted in decisions to sell or not to acquire certain shares. Since 2012, the Fund has disposed of holdings in palm oil and mining companies. Because the Fund is a long-term financial investor, we place considerable emphasis on our role as responsible investor. The overriding goal, which is the highest possible return at an acceptable level of risk, remains firmly established. The Strategy Council for the Government Pension Fund Global recently put forward recommendations to strengthen the work on responsible investment. The Council points to the need for clarifying objectives, roles and responsibilities, while highlighting that the aim of the Fund is to maximise returns. The manager of the Fund should thus gear its activity to increasing the Fund’s value. If the Fund is perceived as an instrument for achieving other political objectives, its role as investor will be undermined. This is sound advice. If Norges Bank is assessed using criteria other than return and risk, its mission will become unclear. This might also impact return performance. There must be no doubt as to the objective of investment management.
On the third elements, rapid pace of globalization and change in global trade pattern have raised challenges to our economies and thus, shed lights on the necessity to improve the efficiency of regional production processes. Thus far, many industries in the GMS have stepped up their efforts to move up the value chains of production as well as integrate into regional supply clusters to better utilize the abundant resources. Nowadays, the GMS has shifted its focus from primary products to intermediate and final goods through the employment of advanced technology and high-skilled labour. This allows the GMS to continually expand the production capacity and speed up innovations that would foster the long-term regional economic growth going forward. Ladies and Gentlemen: 10. This journey of transformation is not a bed of roses and it could take some times to bear fruits. Yet, there are opportunities to be seized in pursuit of long-term sustainable development. With promising prospects await, what I expect to see in a very fast-approaching future is the interplay between different facets of development to strengthen the health of the economy and keep it well in balance. These recipes may sound familiar, if not already overheard. The key enablers that I view important to warrant the GMS’s smooth transformation towards strong growth foundation mentioned above include (1) infrastructure (2) in-house technological advancement and (3) sound financial system. 11.

In this regard, private sector’s improvement in technology and innovations, in tandem with other infrastructure development, can become a tailwind to support the GMS to overcome technology stagnation and provide a competitive edge to the private sector. This should also enhance the intra- regional trade and investment capabilities. 13. Last but not least, financial system can act as a blood-vein that nurtures the economy. We might not realize the necessity of having a healthy blood- vein system in our body. But if there is a blockage, one could experience a detrimental malfunction of the brain, and stroke may occur. The same applies to our economy; efficient and accessible financial system will ensure smooth and solid transformation of the economy. At this juncture, financial institutions are a key in keeping the efficacy and health of the financial system in check. On one hand, financial prudence through enhanced risk supervision and management will provide a strong backdrop for improvement in financial system. On the other hand, the favorable financial system should also be underpinned by financial inclusion, which is analogous to having the blood-vein reaches all organs in our bodies. As I previously pointed out, increasing access to financial services will bolster economic dynamism where vast financial opportunities can be better tapped by private sectors. Ladies and gentlemen, 14. To end my remarks today, allow me to reiterate that these key enablers will be necessary to support the areas of transformation for the GMS.
Office premises have a dominant role as investment vehicles and are therefore most important for the commercial property market as a whole. Investment in new commercial properties partly depends on developments in rental rates and the number of vacant premises. Developments in rental rates for office premises in Norwegian cities over the past twenty years appear to have been fairly uniform, with very high rates at the end of the 1980s, followed by a marked negative correction towards the mid-1990s. Rental rates then rose considerably up to the end of the century, followed by another downward correction. Stavanger seems to have experienced a relatively even rise in real terms throughout the period. Rental rates in Trondheim and Bergen seem to have had  BIS Review 41/2006  1  a less pronounced peak at the end of the century than Oslo, while rental rates in Tromsø have been relatively stable since 1992. Last year rental prices for office premises began to pick up in several Norwegian cities. There is considerable variation within the various quality and location segments. The prestigious segment in central business areas shows the highest rise in prices, while rental prices in some less attractive areas have remained virtually unchanged. During the cyclical peak between 1997 and 2001, only 4 per cent of the office premises in Oslo were vacant. More moderate economic growth in 2002 and 2003 contributed to a fairly sharp rise in the vacancy rate. Over the past two years, the rate has fallen again.

It is possible that the e-krona could play a role for Sweden's crisis preparedness. But in any case, the Riksbank needs to clarify its role as provider of money in appropriate forms in a crisis situation. In the same way as the Riksbank is ‘lender of last resort’ for the banking system, we have a responsibility to enable payments in a crisis, to be a ‘money provider of last resort’. Personal reflections Two years of intensive work on the e-krona have now passed and I will be leaving the chairmanship of the steering group as the project enters the next phase. It has been two incredibly educational years, but I think it is still too early for me to decide whether or not I shall support an e-krona for the general public in the future. As has hopefully been clear from my earlier reasoning, this depends on whether it emerges that there are better alternatives to guarantee both the security and efficiency of the payment market. And to answer this, the analysis needs to continue. At the Riksbank, we will work in two parallel tracks: partly, we will develop the pilot version of a simpler form of the e-krona and learn the lessons that may be needed if it turns out that an e-krona is to be issued. And partly we will deepen our analysis of the consequences for Sweden if the payment market should become entirely privatised.
7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Annex  Chart 1: GBP/USD exchange rate in 2016  Chart 2: Trading volumes in GBP/USD on 24 June  1.5  and 7 October  1.45  7 Oct flash event  1.4 1.35 1.3  EU Referendum  1.25  0  1.2  1  2  3  4  5  6  7  8  9  10 11 12 13 14 15 16 17 18 19 20 21 22 23  Hours (BST)  Sydney  Intraday low  Tokyo  1.15  London  Jan  Feb Mar Apr May Jun  Jul  Aug Sep Oct Nov Dec  New York  2016 24-Jun  Sources: Bloomberg and Bank calculations  2-6 Oct avg  07-Oct  Sample periods are (BST): a) 24 June 2016 00:00:02 – 21:59:16 b) 2 October 2016 18:51:07 – 6 October 23:56:06 c) 7 October 2016 00:02:10 – 22:01:24. Note: this measure is presented without scale for confidentiality reasons. Sources: Thomson Reuters and Bank calculations.

Market Functioning Speech given by Chris Salmon, Executive Director, Markets, Bank of England  OMFIF City Lecture, London Tuesday 24 January 2017  I am grateful to Charlotte Barton, Nick Butt, Liam Crowley-Reidy, Nick Govier, Tom Horn, Rebecca Jackson, Sarah John and Nick Mclaren for their assistance in preparing this speech. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Introduction  It is a pleasure to be here this evening. The economic and political events of the past twelve months raise many questions. From my vantage point as the head of the Bank of England’s Markets Directorate, they reemphasise the need for central banks to understand the structure and functioning of core financial markets. That matters both for our role as guardians of financial stability, and to ensure the effectiveness of our own operations to implement monetary policy. Let me illustrate this with reference to developments in two very different markets. i)  The first – the sterling FX market – a large, global, highly liquid, and almost continuously traded, market, with a constantly evolving structure. Here, the challenge is to understand how those developments affect the functioning of the market. My focus will be on the lessons about market functioning from two particular episodes last year: the period immediately following the EU referendum and its ‘flash crash’ a few months later. ii)  The second market – the sterling corporate bond market – is small, local, and thinly traded, with heterogeneous underlying assets.