samchain/econo-pairs-v1 huggingface dataset:
The petroleum sector employs only a small part of the total labour force, but brings in substantial revenues. A main question for Norwegian economic policy is therefore how to stabilise the Norwegian economy in the face of high, fluctuating revenues from the petroleum sector. 3. The importance of the petroleum sector  Some figures will illustrate the importance of the petroleum sector in the Norwegian economy. Oil production started in the 1970s and has gradually increased. Given the current estimates for existing resources, production is expected to be at its maximum level between the years 2000 and 2010, and then decrease gradually as the remaining resources are reduced. The level of future oil production is highly uncertain. Employment in the petroleum sector and related industries is only around 4% of total employment. Investment in the petroleum sector has been substantial compared to investment in the rest of the economy, and as a share of GDP. Investment has an import share of about 1/3, which means that investment relating to the petroleum sector has had a substantial effect on industries in mainland Norway. The income from petroleum extraction is of substantial significance to the Norwegian economy and to the public sector in particular. In the 1990s the export value of oil has been around 1/3 of total exports excluding ships and oil rigs. The petroleum sector is an important source of revenues for the government, both through taxes and through direct government ownership. 1  BIS Review 121/1999  Petroleum production. In mill. Sm3 o.e.

Mr Gjedrem reports on the Norwegian economy and monetary policy in Norway  Speech given by Mr Svein Gjedrem, Governor of the Norges Bank, at the Royal Norwegian Embassy, in London on 28 October 1999. * 1. *  *  Introduction  Ambassador, ladies and gentlemen, I am happy to have this opportunity to speak to you about monetary policy in Norway. What happens in the financial community in London is important to the Norwegian economy: the financial markets here provide substantial loans for Norwegian firms, and are at the same time an important recipient of Norwegian financial investments. Short-term capital movements between United Kingdom and Norway are also important. Against this background, I would like to share with you information about the Norwegian economy. My focus will be on explaining distinctive aspects of the Norwegian economy, which is based largely on a limited number of commodities. My hope is that this understanding may help market operators to make informed decisions when dealing with Norwegian markets. 2. Background  Trend GDP growth in the Norwegian mainland economy is about 2–2¼%, and the inflation rate is around 2%. GDP per capita is slightly higher than in most other European countries. The high level of per capita income is partly a result of extensive revenues from oil and gas extraction. These revenues also allow Norway to operate with a substantial current account and government budget surplus. Extraction of North Sea oil started in the 1970s, and the production volume has increased over the years.
Public debt in the major advanced economies is now as high, as a share of GDP, as it was after the Second World War, when high military spending had been financed by borrowing. (See Chart: Government bond yields.) In late autumn 2009, fears arose in financial markets that some countries would be unable to pay their debts. The unrest was triggered when Greece announced that its public finances  BIS Review 123/2010  1  were in poor shape. Government bond yields rose markedly in Greece, Spain, Portugal and subsequently Ireland compared with German bond yields. Sovereign credit ratings were downgraded and the price of insurance against sovereign debt default soared. (See Chart: Credit risk on sovereign debt.) Sovereign debt has been regarded as the safest form of investment in advanced economies since the Second World War. Until recently, sovereign risk premium differentials in Europe have been small. This has changed. It now costs more to insure against a sovereign debt default by Spain and Italy than to insure against default by Latin American countries such as Brazil and Mexico. (See Chart: Bond yields.) States in southern Europe also have to pay higher interest rates than sound private borrowers in the euro area. There are also examples of states paying higher interest rates than the soundest of private borrowers in the same country. In spring 2010, Greece encountered acute payment problems.

There are examples of heavily indebted countries that have stopped the snowballing process before it led to default. The banking crisis in the early 1990s left Sweden with a substantial fiscal deficit. Lower tax revenues, increased social security expenditure and rescue measures for banks brought the deficit close to 11 per cent of GDP in 1993. Sweden’s public debt rose to 80 per cent of GDP. Fiscal consolidation continued for several years and resulted in stabilisation of government debt and provided room for its eventual reduction. The  13  See Michael Hoel and Jan F. Qvigstad (1986): “Statsgjelden – et problem når veksten er lav og renten er høy (Public debt – a problem when growth is low and interest rates high)”, Sosialøkonomen, and Unni Larsen and Bente Støholen (2010): “Public finances – the difficult path back to sustainable levels”, Economic Commentaries 2/2010, Norges Bank. BIS Review 123/2010  7  UK and Finland conducted a similar process in the 1990s. The Nordic countries in crisis at that time learned their lesson and have kept public finances in order during this crisis. The euro area countries are in a special position. They have a common currency and a common monetary policy. Governments raise loans in the area’s single currency. Monetary policy – management of the euro’s value – is a common policy, conducted by the European Central Bank with a view to maintaining price stability. The countries have common guidelines for fiscal policy, but as mentioned earlier, these have not been followed.
Emerging market countries have a much stronger fundamentals, better growth prospect and higher interest rates. These differences in fundamentals have attracted growing and significant capital flows to these parts of the world. Net private capital flows into emerging markets was projected by the Institute of International Finance to rise to USD825 billion by the end of 2010, representing a 42% increase from last year. Many analysts expect the recent Federal Reserve’s policy decision to purchase another USD600 billion of US Treasury bonds under “QE2” will intensify further flows to the region. Economists estimated that between a quarter to half of the QE2 liquidity will flood into emerging markets. The inflows if not managed properly will pose difficulties to Asian and emerging markets. Policymakers would face several predicaments from policy perspectives. The influx of capital inflows, have led to a rapid expansion of liquidity translating into rising prices, leading to concerns on asset bubbles and the possibility of overheating the economy. However, the impact on each economy will differ depending on the size of the inflows and the ability of those markets to manage the flows. The upward pressure on the exchange rates has also been significant as seen by the appreciation of regional currencies at an average of 4% on a real trade-weighted basis since beginning of the year. Understandably, such pace of appreciation has raised some concerns among businesses especially in highly open economies, where movements of exchange rates will certainly impact businesses.

Under this new normal situation, the agility of businesses and the economy to adapt and adjust to the challenging environment is critical. There are a number of possible adjustments which can be done including raising productivity and efficiency. In formulating public policy, policymakers are faced with the challenge to strike a fine balance in handling the capital flows and its impact to the economy. Because of the enormity of the flows, a combination of approaches had been adopted by emerging economies to manage capital flows. Even measures regarded as unorthodox at one time are now being implemented. Most countries  BIS Review 162/2010  1  have allowed greater currency flexibility; and many have ended up accumulating foreign reserves. These inflows were typically sterilised by the central banks to avoid pressure to domestic liquidity and price level. Regional market developments Turning now to the second part of my remarks on key developments in the regional financial markets. The ability of regional economies to weather the recent financial crisis has its root in the aftermath of the 1997–98 crisis. Many had use the past financial crisis period to embark on bold financial reforms and restructure their financial landscape. Of particular importance were the successful efforts and policy initiatives to develop the bond market. As a result of these initiatives, the depth and breadth of regional capital markets have reached a level of maturity which can now absorb and intermediate large and volatile flows without posing risks to financial stability.
José De Gregorio: The Monetary Policy Report and the Financial Stability Report Presentation by Mr José De Gregorio, Governor of the Central Bank of Chile, before the Finance Commission of the Honorable Senate of the Republic, Santiago de Chile, 16 June 2010. *  *  *  Introduction Mr. President of the Finance Commission, Senator Camilo Escalona, senators: I am grateful to this Commission for the invitation to the Board of the Central Bank of Chile to share our views on recent macroeconomic and financial developments and their implications for monetary policy. These are detailed in our Monetary Policy Report (IPoM) of June 2010 and in our Financial Stability Report (IEF) for the first half of 2010. We are presenting our Reports in the midst of a unique scenario for the Central Bank. On the one hand, both the Chilean economy and the global economy have been on a sustained path of recovery since the second half of 2009. This path has not been free of difficulties. The earthquake and tsunami that swept Chile last 27th of February, and which was a major part of our concerns when we visited this Commission in March, had negative effects on the February and March output figures. As we said in that occasion, those disruptions were restricted to the short term, as is evident in the strength of the most recent indicators. This does mean that the hardest hit areas are in a precariousness situation, especially in housing.

It will contribute to strengthening of the role of the National Bank in ensuring price stability and the stability and efficiency of the financial system in the country, as well as strengthening the capacity of the National Bank in meeting the challenges that lie ahead on the road to the accession of the Republic of Macedonia into the EU. Let me discuss briefly the results and significance of the project in relation to the further operation of the National Bank. The first and most important benefit of the project is the set of relevant findings of the experts on the existing gaps, and the recommendations for their overcoming within time frame and resources needed. In this regard, the Needs Analysis Report will be the basis for strategic planning of the National Bank and for setting the future strategy for joining the European System of Central Banks and the Eurosystem. With great pleasure I would point out that in the Report, the NBRM is regarded as a professional, independent, technically efficient and strategically oriented institution, and in some areas of central banking it is noted that it already operates in accordance with EU and ESCB standards. Also I am pleased to say that some recommendations that were given  BIS central bankers’ speeches  1  during the project have already been implemented, which encourages me to confirm our strong commitment for implementing and applying the recommendations given in the Report.
But of course speculative situations cannot be ruled out either in the present ERM or in ERM 2, as is clear from developments in Finland in recent months. The Swedish position has been to avoid making the new exchange rate arrangement mandatory. Basically, we consider it would be better to achieve coordination in Europe with a single inflation target. We find the present construction of Swedish monetary policy satisfactory. But we can get along with the system that has been chosen. Cooperation will not be mandatory, which means that monetary policy can be conducted with an inflation target as well as with a fixed exchange rate with the euro. Still it is clear that there will be strong pressure on us to participate in ERM 2. It is also conceivable that a period of participation in the exchange rate mechanism will prove to be a condition for EMU membership. In any event, as a EU member state we have undertaken to conduct exchange rate policy as “a matter of common interest”. Changeover plan for the financial sector It is the Riksdag (Sweden’s parliament) that decides if Sweden should join EMU. The Riksbank has the task of helping to ensure that Sweden does in fact have a choice when the time comes to decide, so that Sweden is ready to join if a Riksdag majority so requires. The Ministry of Finance and the Riksbank each have an organisation for the euro’s practical introduction.

Reducing unemployment, which is at a very high rate despite the favourable developments in Social Security registrations and the reduction in registered unemployment, remains our major economic policy task. In this connection, wage bargaining must allow for the different situation of different firms and sectors to be taken into account, avoiding as far as possible the return to now-superseded wage indexation practices. Considerable progress has been made in correcting the fiscal imbalance, without forgetting the constraints that such a high level of public debt imposes. In the short and medium run,  6  BIS central bankers’ speeches  perseverance with fiscal consolidation on the basis of a growth-conducive revenue and spending mix that ensures compliance with the Budgetary Stability Law will be unavoidable. I should like to conclude with some thoughts on the challenges posed by long-term growth for the Spanish economy. In Spain, as in most of the countries affected, the crisis has had a large-scale impact on the level of output, as a result of sizeable capital and job destruction. The future growth of the Spanish economy will be influenced by how we manage to overcome these effects, but also by the capacity to raise productivity, whose low pace of growth has continuously affected us. Against this background, it is vital to continue with and deepen reforms that boost investment, lower the obstacles to competition and remove the barriers preventing a suitable reallocation of productive resources towards the firms and sectors with the highest growth potential.
BIS central bankers’ speeches  3  The Nordic-Baltic constituency has pushed for the IMF, alongside its surveillance of individual countries, to also regularly conduct the regional surveillance of countries with closely interlinked economies and financial systems. This is of course particularly relevant for Sweden as our banks have such large commitments in the other Nordic countries and in the Baltic countries. Although, as I mentioned above, our countries have increased their cooperation in the field of financial stability, a recurring and comprehensive regional analysis and examination of these issues would be of great value. Important steps have been taken in this direction and we are looking forward to an even sharper regional focus in the Fund’s ongoing financial surveillance. Capital flows require more analysis… The question of whether capital flows should be deregulated or not was the subject of lively discussion in the 1990s before the outbreak of the Asian crisis. After the crisis, some countries believed that one of its causes was that certain countries were asked to liberalise capital flows too early. The issue has therefore been very sensitive since then. Today, however, most countries agree on the positive effects of free capital flows – that is that they contribute to increased economic growth by enabling resources to be used more efficiently. The issue of free capital flows has now appeared on the IMF’s agenda once again.

BIS Review 22/2008  7  Chart 5: Commodity price developments  US $ per barrel  Index, 2000=100  100 90  Economist food price index (right hand axis)  80  Chart 6: GDP growth probabilities from February 2008 Inflation Report  250  200  70 60  150  50 40  100  30 20  50  10 Brent dollar oil price (left hand axis) 0  1990  0 1993  1996  1999  2002  2005  2008  Chart 7: CPI inflation probabilities from February 2008 Inflation Report  8  BIS Review 22/2008
Policymakers face a trade-off between placing losses on a narrow set of taxpayers today (bail-in) or spreading that risk across a wider set of tax-payers today and in the future (bail-out). If governments are risk-averse and wish to smooth the pain across taxpayers and across time, then bail-out may look attractive on the day. Financial history certainly suggests so. The history of big bank failure is a history of the state blinking before private creditors (Haldane (2011)). Recent crisis experience has written another chapter in this history. Next time may be different. For example, the public backlash against future bail-outs could reinforce government’s resolve to impose losses on creditors. And recent US legislation in principle locks the tax-payer cashbox and throws away the key. Looking forward, the issue is whether this ex-ante rule is ex-post credible. BIS central bankers’ speeches  5  As Chart 6 illustrates, implied levels of support for the US’s biggest banks are much higher than before the crisis. More telling still, the passage of Dodd-Frank appears to have had little impact on levels of implied state support. It is early days for this new resolution regime and credibility may take time to be earned. Nonetheless, at present the market believes the timeconsistency problem for big banks is as acute as ever. Even if it might appear the expedient option on the day of crisis, it is questionable whether bail-out is the optimal response over the medium-term.

I also pay tribute to my predecessors in office in the independent Macedonia, governors Borko Stanoevski, Ljube Trpeski and Petar Goshev and to all management structures of the Bank, both current and former, largely present here tonight. I extend special thanks and recognition to all generations of employees of the National Bank, that dedicated their work life to the institution, and have contributed with maximum commitment and professionalism to the continuous growth and development of the National Bank. This order is your merit, but also a responsibility to continue delivering great results. To continue investing in constant upgrade and to protect the reputation of the institution, thus helping it to come closer to the family of the central banks of the Member States of the European Union. I am convinced that in the next period the National Bank will continue to build and develop itself, and will successfully accomplish its mandate! May we celebrate this great event for many years! 2/2  BIS central bankers' speeches
For this reason, we have adopted a broader-based approach, taking into account all relevant data. We have thus based our monetary policy on two “pillars”. In view of the monetary origins of inflation in the medium term, we have assigned a key role to the monetary aggregate M3, which constitutes the first “pillar” of our monetary policy strategy. This pillar is based on a reference value which we set at 4.5% for the annual growth rate of the broad monetary aggregate M3. This monetary indicator is regarded as being the most compatible with medium-term price stability. Last December, we confirmed this 4.5% growth rate for M3. The concept of a reference value does not imply a commitment on the part of the Eurosystem to automatically correct deviations in monetary growth in the short term. The reference value of M3 is consistent with lasting price stability. Naturally, we also follow the counterparts of M3 closely, that is to say the sources of money creation, and especially lending to the economy and capital flows with the rest of the world. However, trends in monetary aggregates are not in themselves sufficient for assessing the risks to price stability. This is why we need an exhaustive description of the prevailing economic and financial situation. The second pillar of the monetary policy strategy is based on a broad range of variables acting as leading indicators of the outlook for euro area price developments.

Denis Beau: Financial markets - driving innovation and connectivity Opening remarks by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Paris Financial Seminar, co-organised by the Hong Kong Monetary Authority and Paris Europlace, Hong Kong, 16 January 2019. * * * Ladies and Gentlemen, I am very pleased to open this seminar jointly organised by Paris Europlace and the Hong Kong Monetary Authority (HKMA). A new year is usually the time when we regain confidence in the future and in our collective ability to prepare for it. ***  However there are many uncertainties weighing on the global economic outlook. In Europe, there are still many uncertainties about the outcome of Brexit negotiations and the vote over the withdrawal agreement. Caution requires that we all be prepared for a no-deal scenario. Public authorities and most importantly market participants have all prepared serious contingency plans to address and master the cliff-edge risks associated with such a no-deal scenario. As a result, we can expect that those risks will be appropriately managed, without financial stability implications, should such a scenario occur. Outside Europe, global trade tensions are also generating additional uncertainties. Protectionism can indeed be a temptation, but in my view it should not be an option. Let’s be clear: our economies are increasingly integrated, and research conducted at the Banque de France suggests that a rise in protectionism on a large scale (i.e. a generalised trade war scenario) would have a negative impact on global growth.