samchain/econo-pairs-v1 huggingface dataset:
The projections in the Inflation Report are based on the assumption that the interest rate moves in line with financial market expectations. This implies that Norges Bank maintains the key interest rate at the current level in the period to summer 2005, with a gradual increase thereafter. It is the Executive Board’s assessment that the projections seem to provide a reasonable balance between the objective of increasing inflation and at the same time avoiding excessive growth in output and employment. The projections imply a sight deposit rate in the interval 1¼ - 2¼ per cent in mid-March 2005. This is conditional on economic developments that are approximately as projected in the strategy period. The interest rate should be assessed regularly on the basis of new information emerging during the strategy period that is of significant importance for the outlook for inflation and output. Particular weight must be given to factors that may delay an increase in inflation. Uncertainty as to the effects of previous monetary policy easing and the unusually low interest rate level imply, on the one hand, that we should exercise caution with regard to further interest rate reductions. On the other hand, the prospect of continued low inflation for a period ahead implies that wide deviations from projected economic developments would be required before interest rates should be increased. The prospect of continued low inflation in Norway also implies that we should lag behind other countries in setting interest rates at a more normal level.

This way of organizing regulation will be an even bigger challenge when new regulation designed to hinder the build-up of systemic risk is introduced, since a host country and the home countries of banks operating in the host country may be in different stages of the business cycle. Output gap in the Nordic countries  This is illustrated in this chart showing output gaps in the Nordic countries. Today most economies are closely integrated with other economies, both through trade and through  8  BIS Review 113/2010  financial markets. Still there may be significant differences both in the timing (and amplitude) of peaks and troughs in the business cycle and in the functioning of financial markets. Asymmetries between countries mean that the appropriate regulatory parameters to dampen systemic risk will not necessarily be the same for all countries at the same time. To be effective, regulatory parameters, for instance those calibrated to ensure the buildup of countercyclical buffers, need to encompass all banks operating in the same jurisdiction, as put forward in the July 2010 BIS proposal. Finally, I will say a few words on crisis resolution. Resolution actions taken in one country in response to a crisis can have effects on banks in other countries that do not choose to introduce the same resolution actions. For instance, issuance of government guarantees in one country can weaken banks in neighboring countries without such guarantees (since government guarantees provide an incentive to move deposits to banks in these countries).
Christian Noyer: Central banks in the financial crisis Speech by Mr Christian Noyer, Governor of the Bank of France, at Paris Europlace, Paris, 3 July 2009. *  *  *  Introduction Ladies and gentlemen, It’s a great pleasure for me to address such a distinguished audience. From the outset, central banks have been major actors in fighting the financial crisis. Overall, their actions have been broadly applauded. In the period to come, however, steering the economy in an environment of high uncertainty will prove particularly challenging. It is therefore timely to reflect upon the past, present and future course of central banks' actions. Today, I would like to address three questions: Is monetary policy responsible for the crisis? How to assess the policy response from the central banks up to now? And, finally, to which extent does the crisis change our vision of their role in the future? Is monetary policy responsible for the crisis? To those who think it is the case, the standard argument goes as follows: in the aftermath of the equity bubble that burst in 2000, interest rates have been kept too low for too long. This created, for investors, both an incentive and a possibility to take excessive risk. The incentive came from the low level of interest rate where the "search for yield" could only be satisfied by moving to riskier assets and increasing leverage. The possibility was created by ample liquidity and the availability of cheap financing.

As the US is the primary supplier of liquid and safe assets, it attracts inflows of capital, a process which accentuates global imbalances. Excess demand for those assets pushes their prices up, which triggers financial bubbles. Financial development in surplus countries would go a long way to solve that problem by reducing the asset shortage, thus the probability of future bubbles. BIS Review 85/2009  1  •  Third, there is no denying that weaknesses and failures in financial markets played a major role in the build up to the crisis. Over the last decade, financial innovation has been organized to "transform" illiquid and risky instruments into (apparently) safe and liquid assets. That unsustainable process has abruptly come to an end with the burst of the credit bubble. During that period, rating agencies, accounting rules, unregulated and off balance sheet entities as well as very poor risk management all contributed, willingly or unwillingly, to fragilize our financial systems. Those weaknesses are at the origin of the crisis. Had they been addressed in due time, most of the problems we are now dealing with could have been avoided. Creating a new regulatory regime and strengthening our supervisory arrangements are at the forefront of efforts conducted at the national and, for the EU, at the European level. Those efforts are closely coordinated worldwide through the G20 process and the newly created Financial Stability Board.
Perhaps due to location and transport links, Denmark is a centre for trade and the location for the Nordic headquarters of a number of international companies. The Norwegian enterprise sector, on the other hand, is heavily influenced by our natural resources. 3  BIS Review 78/2000  3. Monetary and financial stability  I would now like to address the key objectives of most central banks: monetary and financial stability. What do these two terms mean? Monetary stability is interpreted somewhat differently in various countries. The most common definition is price stability - that is to say the stability of the internal value of money. Sometimes it is interpreted as exchange rate stability - in other words the stability of the external value of domestic money. Finland, Sweden and Norway all experienced severe banking crises in the early 1990s. Most people in these countries have a clear idea of what a financial crisis is. In a sense, financial stability is the absence of financial crises. A robust financial system has solid cushions that reduce the risk of problems spreading from one institution or market to other institutions or markets, or across borders. This risk constitutes a systemic risk, which is the risk of failure of the financial system. Disturbances that might develop into a systemic risk can be transmitted through financial institutions and financial markets. Robust institutions and stable markets are thus important. Robust institutions are solid institutions that enjoy general confidence. Stable markets are markets where there are no “excessive” price variations.

A gradual recovery should commence in the second part, with export growth benefiting from a strengthening of global demand and domestic demand being supported by our accommodative monetary policy stance. Furthermore, the improvements in financial markets since July last year and the continued implementation of structural reforms should work their way through to the economy. At the same time, necessary balance sheet adjustments in the public and private sectors, and the associated tight credit conditions, will continue to weigh on economic activity. This assessment is also reflected in the March 2013 ECB staff macroeconomic projections for the euro area, which foresee average annual real GDP growth in a range between –0.9% and –0.1% in 2013 and between 0.0% and 2.0% in 2014. Compared with the December 2012 Eurosystem staff macroeconomic projections, the ranges have been revised slightly  BIS central bankers’ speeches  1  downwards. The revision for 2013 mainly reflects a more negative carry-over effect from the outcome for real GDP in the fourth quarter of 2012, while the projected path of the recovery has remained broadly unchanged. The Governing Council continues to see downside risks surrounding the economic outlook for the euro area. The risks relate to the possibility of weaker than expected domestic demand and exports and to slow or insufficient implementation of structural reforms in the euro area. These factors have the potential to dampen the improvement in confidence and thereby delay the recovery.
The ministers in the individual countries finally adopt the programmes, which then form the basis for the next discussion of the general economic policy guidelines, which are adopted each summer by the heads of state or of government. In between, each country is analysed by the Commission, which is required to give early warning if countries do not fulfil undertakings they have made in their national programmes. The idea behind this structure is the principle of subsidiarity, that is, matters to be decided jointly by the member states are to be limited to those for which a decision at this level is absolutely necessary; everything else is a national concern. The ECB is to guarantee price stability. Monetary policy has to be formed in the light of fiscal policy’s expected development. Similarly, inflation has to be assessed in the light of the existing trade policies and the prevailing structures in labour markets, agriculture and so on. There is no question of coordinating policy in the sense of the ECB undertaking to act in a certain way if policy in other fields is adjusted or realigned — what euro jargon refers to as ex ante coordination. This naturally accentuates the need for clarity in monetary policy. It is reasonable that politicians in Europe are enabled to assess what an adjustment of fiscal policy, for example, would have for consequences for the interest rate.

Mr Heikensten speaks on the euro and European economic policy Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, the Swedish central bank, at Merita-Nordbanken in Malmö, Sweden on 16 June 1999. The single European currency, introduced at the beginning of this year, marks a major change for the economic policies of countries in the euro area. The clearest example is, of course, the transition to a single monetary policy. The proper functioning of the monetary union in the long term presupposes that the new European Central Bank succeeds in making its policy and the euro understood and credible. Important factors in this context are how the new central bank chooses to work, how monetary policy is continuously formed and how it is communicated to the general public and to markets. However, a well-constructed monetary policy and a central bank that acts wisely are not sufficient to ensure that the union functions in the longer run. If growth and employment in the euro area are to be as high as possible without jeopardising price stability, all the components of national economic policies will have to pull together. The fiscal, structural and labour market policies of the individual countries influence both the conditions under which the new central bank is operating and, to the highest degree, Europe’s future prosperity. A framework exists for this joint effort.
One of the most interesting can potentially arise when a particular market is characterised by traders who are structurally short options, have short holding periods, and are leveraged; and where the underlying markets are not highly liquid. That needs a bit of unpacking. Options can, of course, be hedged with an offsetting position in a similar option: a so-called ‘static hedge’. Where, for one reason or another, traders cannot do that, they can attempt to hedge by running a position in the underlying instrument, with the intent that gains or losses on the value of their option positions will be offset by losses or gains on the underlying asset position: a so-called ‘dynamic’ hedge. It’s dynamic hedging that can be interesting. The effects of dynamic hedging of long and short option positions can be quite different. Broadly, dynamically hedging a long option position entails selling the underlying as prices rise, and buying as prices fall. Conversely, those who have sold (or written) options need to buy to balance their hedge when the value of the underlying is rising, adding to the buying pressure. And, if the price of the underlying instrument is falling, they need to sell to balance their hedge, adding to the selling pressure. This is, of course, going on every day in a wide variety of deep and liquid markets without anything particularly odd happening to market dynamics. Things are potentially more interesting when markets are structurally imbalanced, with short-term traders, dynamically hedging, concentrated on one side.

Ex ante, they won’t know for sure which is which. Plausibly, it might not be economical to put controls in place for every single innovation on an assumption of ‘exponential growth’. So when exponential growth occurs, controls can sometimes be left behind. Maybe something like that helps to explain the backlog in credit derivative confirmations, which the FSA cautioned banks about a few months ago. Growth in the market has been relentless. And to the concerns about confirmations have been added concerns, amongst practitioners, about unnotified assignments of credit derivative positions, related in part to the growth of hedge fund participation in the structured credit market. If something really bad were to happen, the system would, perhaps, be less robust than otherwise if dealers were not sure about who their counterparties were, etc. This is the type of challenge where collaboration across the industry is needed; and where individual firms’ incentives are stronger if they can each be confident that their peers are taking broadly the same actions. What I have in mind is the disincentive a firm faces in being tough with a hedge fund client if they doubt their peers will take the same line. Bodies such as ISDA have a role to play here, and I understand are doing so. Collective elements in atomistic markets So, where are the risks? They are all around us all of the time, of course. Some will crystallise. But that need not lead to disorder.
However, the debt ratio has stopped growing as of 2011 and the Riksbank’s forecast for the coming three years is for an unchanged debt ratio. Households have total assets, excluding collective pension insurances, that have grown in line with their debt and they are approximately 510 per cent of disposable incomes, that is, three times as large as their debt. Households’ gross solvency, net assets (own capital) in relation to total assets, is thus approximately 70 per cent. The relationship between household debt and financial and real assets (the latter consisting of own homes, second homes and tenant-owned apartments) has been relatively stable and without a trend for several decades. Households’ increased debt in relation to disposable incomes has thus been accompanied by a corresponding increase in net wealth in relation to disposable income. Households also have collective pension claims of more than 120 per cent of their disposable income.

Bean, C., M. Paustian, A. Penalver and T. Taylor (2011), “Monetary Policy After the Fall”, in Macroeconomic Challenges: The Decade Ahead, pp. 267–328, Federal Reserve Bank of Kansas City. Bernanke, Ben (2010), AER Papers and Proceedings [speech at AEA meeting, January 2010] Bernanke, Ben (2011), ”The Effects of the Great Recession on Central Bank Doctrine and Practice”, speech at the Federal Reserve Bank of Boston 56th Economic Conference, 18 October 2011. Calmfors, Lars (2012), “Riksbanken måste bli tydligare (The Riksbank must be clearer), column in the Swedish newspaper Dagens Nyheter on 13 September. Claussen, Carl Andreas, Magnus Jonsson and Björn Lagerwall (2011), “A macroeconomic analysis of housing prices in Sweden”, in Sveriges Riksbank (2011), pp. 67–95. Englund, Peter (2011), “Swedish house prices in an international perspective”, in Sveriges Riksbank (2011), pp. 23–65. Finansinspektionen (2012),”The Swedish Mortgage Market”, 13 March 2012. Ingves, Stefan (2012), “Stora risker med alltför låg ränta”(major risks with an overly low interest rate), Svenska Dagbladet newspaper, 18 October. Isaksen, Jacob, Paul Lassenius Kramp, Louise Funch Sørensen and Søren Vester Sørensen (2011), ” Household Balance Sheets and Debt – an International Country Study”, Danmarks Nationalbank Monetary Review, 4th Quarter 2011, Part 2, pp. 39–81. Jansson, Per (2012), ”My view on inflation targeting”, speech at Karlstad University, 11 October. National Institute of Economic Research (2012), The Swedish Economy, August 2012. Mishkin, Frederic S. (2011), ”Monetary Policy Strategy: Lessons from the Crisis”, NBER Working Paper No. 16755. 14  BIS central bankers’ speeches  Qvigstad, Jan F. (2005), “When Does an Interest Rate Path ‘Look Good’?
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.

This is especially important just now as there is very considerable uncertainty about the future and the Riksbank’s toolbox is perceived to be limited or even exhausted. Third, because it is important to analyse and discuss whether and if so what central banks, including the Riksbank, can and should do to combat climate change. I will argue that the Riksbank can act with strength and security in an economic crisis, and I will exemplify this in the form of a financial crisis triggered by climaterelated events. The Riksbank’s toolbox has changed but it is not empty. But in order for our measures to have a profound impact, we need to work together with other authorities. Good cooperation with other authorities and in international networks is also key when it comes to the Riksbank’s scope for contributing to climate adaptation. The Riksbank can contribute to a more sustainable future, but only as a complement to other effective climate policy. The Riksbank and other central banks will not be able to replace the need for an effective climate policy that should be focused on setting a price on carbon emissions. Let me begin by focusing on the issue of how the Swedish economy is affected by climate change. The climate and its effect on the economy and the financial system The climate is a particularly complicated system. This means that the economic consequences of climate change are difficult to predict.
Norges Bank concurs with this view. Using the fund to attain policy objectives such as environmental, foreign, regional or industrial policy goals may easily come at the expense of high, long-term returns. The other area I would like to address is the division of responsibilities in the governance model. It must be explicit, with a clear division of roles and responsibilities. The current governance model for the GPFG is based on a delegation of responsibilities and powers from one level to another. A control and supervisory line runs in parallel from the manager upward to the Storting. Regardless of whether the fund remains under the aegis of the Bank or is organised in a separate entity, its governing bodies and management must be held to account. This also requires that the parties at the various levels in the governance hierarchy respect the powers and delegated authority actually conferred on them. A lack of clarity in decision-making responsibility may adversely affect investment management in the long term. The third potential pitfall concerns the composition of the board of a new management entity. The Central Bank Law Commission emphasises that such a board must have expertise in finance and investment management, but also expertise beyond the purely financial. In Norges Bank’s experience, a sound understanding of the GPFG’s role in the Norwegian economy and in economic policy is important for the board in discharging its tasks, and not least important in filling the role of key adviser to the Ministry on matters concerning the mandate and investment strategy.

Zeti Akhtar Aziz: Talent development in Islamic finance over the next decade Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Launching of IBFIM’s Islamic Finance Qualification Framework & Progression Route (IFQFPR) “Talent development in Islamic finance over the next decade”, Kuala Lumpur, 14 December 2011. *  *  *  In a highly dynamic, rapidly changing and challenging environment, talent development for the financial services industry has become an even more important agenda to ensure that its growth and development is supported by the necessary skills and capabilities. This is particularly important for Islamic finance given that it has become the most rapidly growing segment in our financial system. With the increased pace of the internationalisation of Islamic Finance, this growth momentum is also taking place in several other jurisdictions. This current global financial crisis which has highlighted the importance that the growth of the financial sector should correspond with the growth of the economy and for risk management and governance practices to be strengthened to ensure its stability and sustainability has also prompted increased interest in Islamic finance. These are the very principles and foundations inherent in Islamic finance. Talent as a thrust for industry advancement The development of the Malaysian Islamic financial system, has now evolved our Islamic finance industry into a progressive, comprehensive and competitive component of the overall financial sector.