samchain/econo-pairs-v1 huggingface dataset:
Jarle Bergo: The economic outlook Address by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), to invited foreign embassy representatives, Norges Bank, Oslo, 31 March 2005. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 16 March and on previous speeches. Please note that the text below may differ slightly from the actual presentation. The references and the Charts in pdf-format  can also be found on the website of the Norges Bank. *  *  *  Your Excellencies, ladies and gentlemen. First of all, I would like to thank you for taking the time to attend this event. It provides me with an opportunity to present Norges Bank’s view of the economic outlook. This year marks the centennial of the dissolution of the union between Norway and Sweden. Historically, an important part of nation-building has been the establishment of a monetary system and a central bank. In Norway, the stage was set for the introduction of a national currency in autumn 1814. With the prospect of a union with Sweden, a clause was included in the Constitution saying that Norway would maintain its own bank and its own monetary system. The monetary unit was the specie daler. In 1875, the Storting (Norwegian parliament) decided to join the currency union that Denmark and Sweden had established two years earlier. The specie daler was then replaced by the krone.

The formation of the VBI Community of Practitioners manifests the leadership by Islamic banks in this area with some of its members also being part of the Joint Committee on Climate Change (JCC) that was recently formed in September and chaired by the Bank and Securities Commission. The JCC aims to look at and create greater synergy in development of climate-related solutioning for the capital and financial markets. It should be noted that many VBI offerings of Islamic banks are already meeting contemporary sustainability themes but more will be forthcoming. Those already on offer include green and specialised financial products and services for retail and SME markets, financial solutions for lower income households, custom products for women entrepreneur and SMEs, green solutions that promote environmental sustainability and innovative solutions that promote physical and mental well-being. Takaful operators are also taking steps to explore value-based protection for their customers. A dedicated task force has been formed by the takaful industry to formulate a strategic roadmap to advance VBI in their business offerings and practices. VBI also encourages Islamic financial institutions to play a greater nurturing role in advocating sustainable practices among clients, such as adoption of Malaysian Sustainable Palm Oil Certification, as well as providing necessary funding and technical advisory services. Part of the progress in advancing VBI as a driver for positive change in the Islamic financial services industry has been the Bank’s role in working collaboratively with the VBI Community of Practitioners.
Capital adequacy indicators in Romania and the EU (average) 20  Figure 10. Stress test results for credit institutions (September 2017)  percent  10  19  percent  0  18 -10 17 -20  16 15  -30  14 -40  total capital ratio Tier 1 capital ratio total capital ratio – EU average Tier 1 capital ratio – EU average Source: NBR, EBA  -50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28  Sep. 17  Jun. 17  Mar. 17  Dec. 16  Sep. 16  Jun. 16  Mar. 16  Dec. 15  Sep. 15  Jun. 15  Mar. 15  Dec. 14  13  potential impact on own funds median value of impact impact at system level Source: NBR 8  Figure 11. Value of LCR* (September 2017) percent  percent  Figure 12.

Economic agents therefore need to understand the central bank’s intentions in its interest-rate setting. Otherwise, agents might perceive future interest rate developments as unnecessarily uncertain. Decisions on consumption and investment will then be more difficult to make. This might lead to greater instability both in terms of variables in the real economy and in inflation. As I mentioned earlier, Norges Bank only influences the shortest money market rates. Open communication concerning our future response pattern will probably also allow us to have more influence over somewhat longer-term interest rates and thereby conduct a more effective monetary policy. Many agents outside the Bank place considerable emphasis on Norges Bank’s projections when they make their decisions. The projections are also evaluated by agents outside the Bank and by Norges Bank itself. The interpretation and evaluation of these projections will be more difficult if they are based on an interest rate assumption that is not consistent with the rate Norges Bank considers most realistic. If the forecasts for inflation and output are to reflect the Bank’s best estimates, the underlying interest rate assumption must be a rate the Bank believes to be realistic. 2  Arguments in favour of the publication of an interest rate forecast by the central bank are discussed in more detail in some of the papers presented at the conference hosted by Sveriges Riksbank entitled: “Inflation Targeting: implementation, communication and effectiveness”: http://www.riksbank.com/templates/Page.aspx?id=15814.
It is important to note that, as from this MP Report, for the purposes of the conjunctural analysis of activity and the measurement of the gap, the concepts of “natural resources GDP” and “other GDP” have been replaced by “mining GDP” and “non-mining GDP”. A box in the Report explains the reasons behind this change. There we note that the sectors that we discounted from GDP until now (i.e. mining, fishery, and electricity, gas and water) are actually more volatile and less persistent. It is also shown that, in general, its relationship with the rest of the economy is limited. However, in line with the change that I have just commented, it is concluded that only the exclusion of mining activity has significant effects in the analysis of the dynamics of the aggregate economy, because of its important effects on the variance of growth. In such circumstances, and considering that broad measures are better to work with than narrow ones, 3  we adopted the distinction between mining and non-mining GDP to substitute for natural resources GDP and other GDP. Moreover, this change allows the analysis in the MP Report to be aligned with the publication of the mining and non-mining Imacec2 that we introduced a few months ago. Returning to the recent evolution of activity and demand, the sectoral composition of nonmining GDP shows better figures for sectors linked to consumption than those related to investment, particularly construction.

About our external scenario, incoming data show improved performance of exports across sectors (figure 9). Still, examining numbers of the first half, we foresee that the export volumes will contract during the year. However, by 2018 they should recover thanks to improvements in the world economy, which coupled with better prices increase our estimated 5  trade balance for next year. The low comparison base due to the Escondida mine strike downtime early this year will also result in higher mining exports in 2018. Thus, in 2018, the current account deficit should be lower than we expected in September, close to 1% of GDP, similar to our 2017 projection. At trend prices, the current account deficit remains at 2.6% on average in 2017-2018 (table 1). Aside from the scenario I have just described for domestic activity and spending, the convergence of inflation to the target also considers a mild depreciation of the real exchange rate that will cause it to converge from where it was at the closing of this Report to its longterm equilibrium within the projection horizon. The baseline scenario also contemplates that the prices of foods, particularly fresh fruits and vegetables, will return to their normal patterns, so their annual inflation will be rising over the course of 2018. About monetary policy, the Board estimates that in the baseline scenario the surprises that have pulled inflation down below expectations do not compromise the convergence of inflation to the target.
The picture is, however, complicated by the exaggerated strengthening of sterling since last summer - particularly against the European currencies - which probably reflects uncertainties affecting the Continental countries at least as much as developments in our own economy. This strength of sterling poses, for the time being, a genuine monetary policy dilemma. It will lead to a fall in inflation in the short run - over the rest of this year - as import prices fall. And it makes life very difficult for UK manufacturers exposed to international competition, so that our external trade position is likely to deteriorate - and that may have a BIS Review 29/1997  -2-  longer-lasting effect on inflation. But these effects may not be enough to offset the gradual emergence of inflationary pressure looking forward to next year, stemming from continuing above-trend growth of domestic demand. On that basis we advocated a moderate tightening of policy in order to slow the domestic expansion to a pace that can be sustained in the medium and longer term. Let me be quite clear, for those who insist on over-dramatising these things, we were not calling in the Inflation Report for “an immediate interest rate hike to bring an incipient boom to a juddering halt!” I should like to think that in the present more stable environment that kind of language is anachronistic.

Diverse new sources of growth have now emerged across ASEAN, with the economies now moving beyond their traditional reliance on manufactured exports to expanding the production of resource-based products, and increasingly to the services sector and thus providing greater flexibility to respond to shifts in external demand. There has also been a rebalancing of the sources of growth between domestic and external demand. The role of private consumption has strengthened in the ASEAN economies. ASEAN now possesses a burgeoning consumer market that is valued at more than USD 330 billion. With high savings rate continuing to prevail, there is potential for this trend to be sustained. Consumption demand has also been supported by rising incomes, with GDP per capita having increased to over USD 1,500 compared to USD 1,157 in 2000. In the long-term, these trends are expected to be reinforced by the positive demographic structure in the ASEAN region. ASEAN’s population is not only large but also young with 55% at less than 30 years old and becoming increasingly urbanized. There is also greater involvement of the private sector in the economy following the period of adjustment post-crisis. Private investment which was initially slow to adjust has now shown prospects for a stronger recovery. The potential for greater investment is driven by the rising infrastructure requirements throughout the region that is estimated at USD 160 billion for the period 2006-2010. There has also been growing interest in resource-based industries.
These two shocks in combination with the initial conditions, pushed costs upwards, carrying global inflation to levels not seen in the last 30 or 40 years, and Chilean terms of trade lower. As a result of inflation surprising to the upside, central banks started withdrawing monetary stimuli far more aggressively than previously expected. The Federal Reserve led to an appreciation of US dollar, higher interest rates, higher term premiums, and spreads, negatively affecting financial conditions for emerging markets. Exchange rate has been in a depreciatory trend for a long time, currently stands 23% above the levels before the social outburst in 2019. A significant part of this depreciation has been for idiosyncratic reasons, probably associated to high levels of political and economic uncertainty. In this context it is very likely that exchange rate passthrough to domestic inflation is higher than in normal times. 6  Let me elaborate on these developments in the FX market and local inflation for a few minutes. The global tightening of financial conditions was exacerbated by local uncertainty in Chile. As a result, since the beginning of June 2022 and until the Central Bank announced the FX intervention program, the peso depreciated by more than 25%. This pressure on the FX market had a component of non-compensated flows that led to a spike in volatility levels and frictions in the process of price formation. Given these developments there was a concern about potential spillovers to other markets, especially fixed income, and the effects that this could bring to the real economy.

The global economic crisis, which deeply affected all countries of the region, was accompanied by slowed exports, reduced remittances and other foreign currency inflows, increased uncertainty and slowed credit growth. Although 2010 is expected to be accompanied by a gradual improvement in the world economic environment, many of the factors that negatively affected the Albanian economy will continue to be present even during this year. The stimulating fiscal and monetary policy helped supporting the economic activity during 2009. However, fiscal trajectories and the need for long-term stability suggest that the Albanian economy can not rely for a long time on fiscal stimulus. Against this background, in 2010 a more conservative fiscal policy is necessary and is welcomed by the Bank of Albania. In a medium- and long-term horizon, we are of the opinion that fiscal sustainability should be ensured through a clear and prudent fiscal rule. Under new circumstances, the economic growth should be based more on boosting the private sector of the economy and bank credit plays a key role in this regard. The good financial health of our banking system and the progressive improvement of liquidity conditions and risk premiums in domestic and foreign financial markets are encouraging developments. The easing of monetary conditions and the liquidity injections by the Bank of Albania have supported and will further support this process.
Two such advantages stand out: -  The collective efforts of our banking sector are governed by a natural leadership structure which facilitates and accelerates development processes,  -  and, secondly, the two big players act in some measure as know-how brokers, swiftly incorporating the Year 2000 experiences gained abroad into the process of solving the problem in this country. More generally speaking, our long tradition of practical cooperation between competitors and of close ties between regulators and banks is a distinct plus in the preparatory work. Jointly managed institutions like the Swiss Exchange, our central securities depository, or the Swiss Interbank Clearing System are well-known examples of this spirit of cooperation. 1  BIS Review 46/1999  I am confident that the large-scale interbank tests scheduled to begin in May will provide us with a positive picture of the state of preparations. Assuring liquidity From the viewpoint of a central banker, assuring adequate liquidity must be the prime concern. Based on the nature of their business, banks are inherently vulnerable. Withdrawals and redistribution of deposits can jeopardise the banks’ capacity to pay. Such effects, should they materialise at all, may take place as a millennium shadow before or during entering the next millennium. It is primarily the duty of individual banks to brace themselves for such events. They must undertake careful liquidity planning, comprising both a normal scenario as well as different stress scenarios.

They must have a clear idea where, in what form, and to what extent they can cover their liquidity needs and make the necessary limits and collateral available. In this process, it is crucial that banks interfacing with large customers - enter into agreements with one another, thus creating a high degree of transparency. The goal is to limit the range of unexpected behavioural changes by creating transparency and reaching an understanding. Looking at the issue from this vantage point also makes it clear that a strategy of avoiding transactions is completely contra-productive. Even though it makes sense to avoid settlement dates of forward contracts falling immediately before and after the millennium transition, it is vital that transactions can be carried out and that markets remain liquid. It is at least conceivable that smaller banks or those with a somewhat lower rating will be confronted with an outflow of deposits while the top names in the industry receive an influx of deposits. This generates stress which can only be reduced by efficiently re-channelling funds between banks. It is obvious that the availability of sufficient collateral is crucial. The availability of collateral - just in case - is therefore the central focus of liquidity planning. In the case of Switzerland, the potential re-channelling problem has both an aspect ameliorating the problem and one making it more difficult. What may actually ease the situation is the fact that the cantonal banks, with roughly one-third of the market share, operate with a state guarantee.
No doubt the details will take some time to work out. We might be tempted in Hong Kong to respond that we have demonstrated clearly this last year that we already have the ability to maintain banking stability. The measures being contemplated internationally are designed for repairing and renovating banking systems that have effectively collapsed: some of the measures may indeed be going too far. Therefore, we might conclude that we do not need to consider them for Hong Kong. Such an attitude would, I think, be a mistake. As an international financial centre, Hong Kong must adopt international standards and best practices. We have to move with the times, although that does not of course mean we have to blindly implement everything in an inflexible, straightjacket manner. Hong Kong is, in fact, in a good position to adopt and participate in the various measures now under consideration by the G20, the Financial Stability Board and its Standing Committees, and other international agencies. Our voice may not be so loud or strong as that of the larger economies, but we still have a responsibility to speak up, to seek to ensure that what comes out of the international forums is balanced, and realistic for local and regional conditions. The increasing participation by Asian economies, including Hong Kong, in these international forums is a good sign that the rest of the world is paying attention to, and ready to learn from, the experiences of this region.

At the heart of such thinking must be the view that the banking system exists to provide financial intermediation in support of the larger economy: it cannot be some abstracted, disembodied realm of activity in which intermediaries compete with each other to dream up ever more complicated ways of making a fast profit. But such thinking should not rule out innovation, as long as the objectives are clear: and the main objectives should be to serve activities in the greater economy, to increase the efficiency of the financial system without sacrificing its safety. This leads to my fourth and final observation. We have many examples of such innovation in Hong Kong to draw upon, but there is one that is particularly appropriate on this evening of reminiscences. I refer to the introduction of renminbi business into banks in Hong Kong – a development which seemed revolutionary at the time, but which now seems a very normal activity. It had small beginnings and is a gradual, cautious process: there is, of course, scope for much further growth and development. This innovation has clear practical uses in facilitating economic relations between Hong Kong and the Mainland, in reinforcing Hong Kong's role as an international financial centre, and in supporting the liberalisation of China's financial system. How many of us here, I wonder, recall that the idea of developing renminbi business in Hong Kong was first broached in 2001, during one of the Annual HKAB visits to the Mainland which I had the privilege of joining?
But growth has a price. This is particularly reflected in increased emissions of greenhouse gases as a result of increased human activity. It is still uncertain how serious the impact of gas emissions will be. But once the impact comes into full evidence, it may be too late to take corrective action. There is also the risk that the concentration of greenhouse gases in the atmosphere reaches such a high level that it exceeds critical values that cannot be reversed. We are very pleased to have Dr John Llewellyn, Senior Economic Policy Advisor at Lehman Brothers, here today to enlighten us on how globalisation affects the environment. Changes  BIS Review 27/2008  1  in our environment affect the way we are able to interact: it is important to combine knowledge about nature with knowledge about the functioning of the economy. The last decade or so, we have witnessed increased financial integration and competition across national borders. This is a positive development. Deeper and more mature markets tend to be better equipped to deal with uncertainty and distress. But increased financial integration also raises the potential for more widespread contagion if something goes wrong, as witnessed by the current financial turmoil. Professor Philip Lane, Director of the Institute for International Integration studies at Trinity College Dublin, is one of the foremost experts on financial globalisation, and we are very much looking forward to hearing what he has to say on this subject.

The entrance of new, large emerging economies into the world trading system has strongly influenced economic developments. For some years now, the short-run trade-off between inflation and economic growth has been extraordinarily favourable. Inflation has been low and economic growth high. We have been hit by massive and long-lasting positive supply shocks thanks to globalisation. To accommodate a higher growth potential and to maintain the nominal anchor, central banks worldwide for a long period held short-term interest rates well below what can be regarded as a normal level. History has shown us that low and stable inflation is the best contribution monetary policy can make to growth and macroeconomic stability. A new, globalised world does not change this paradigm. Today, monetary policy aimed at price stability is the norm, and in most countries monetary policy has been delegated to independent central banks. Frederic Mishkin from the Board of Governors of the Federal Reserve System will be joining us this afternoon to speak on advances in monetary policy. We are privileged to have such a prominent group of speakers here today. I am also happy to see that our conference has attracted such a large number of participants from various institutions both in Norway and abroad. This conference is Norges Bank’s gift to Jarle Bergo, as a thank you for all his contributions to the Bank over the past four decades. I hope that both Jarle and the rest of you will enjoy it.