samchain/econo-pairs-v1 huggingface dataset:
8  BIS Review 69/2010  The global financial crisis has shown that credit cycles and property market bubbles that burst represent one of the greatest challenges to economic policy. The experience of many countries over several decades has shown that house prices and residential mortgage lending usually rise prior to the outbreak of a banking crisis. 1 In Norway, interest rate expenses can be deducted from taxable income, while capital gains on dwellings and the benefit of home ownership are not taxed. Housing is taxed as an asset, but not at its market value. High tax subsidisation of home ownership and a large proportion of floating-rate loans contribute to considerable fluctuations in house prices in Norway. Furthermore, the rise in house prices over the past two decades has been high compared with countries where house price bubbles have now burst. High house prices and substantial household debt add to the economy’s vulnerability. In March, Finanstilsynet (Financial Supervisory Authority of Norway) issued new guidelines for prudent residential mortgage lending. The guidelines may have a somewhat dampening impact on the rise in debt and house prices. The global financial crisis has revealed weaknesses in the financial system. Regulation of financial institutions should seek to limit risk not only in individual banks, but also in the financial system as a whole. Risk is amplified by the interaction between financial institutions. Today, we can see that the crisis was amplified by the very surprise over the extent to which financial markets are interwoven.

But in a systemic sense, private placements, private markets – what goes on beyond or behind the transparency of our public markets – that too can be threatening to stability; and so we need to find a way to bring daylight into those markets and network of exposures without interfering with the efficiency of some private transactions. I am not convinced that we have really even started to think through what that means in practice. We should do so. This signals that the traditional financial stability authorities – including central banks – need to take a greater interest in some aspects of securities regulation than for a long time. So far I have covered the two broad areas where work has been actively underway. Now I shall say something briefly about two areas where, I hope, work lies ahead. Shadow banking First of all, shadow banking. I spoke about it at the beginning of the year, 2 and I and others have been pushing it behind the scenes. Mario Draghi, Chair of the FSB, flagged it in an article in the FT a few weeks ago. As we restructure the banking system, directly and indirectly, we have to keep firmly in our minds the pervasive effect of regulatory arbitrage. The sponsors and the framers of the first Basel Capital Accord – Paul Volcker, Robin Leigh-Pemberton, Bill Taylor, Brian Quinn, and their generation – were not unaware of regulatory arbitrage.
Fahad Bin Abdullah Almubarak: Achievements and developments during the past nine years in Saudi Arabia Speech by H E Dr Fahad Bin Abdullah Almubarak, Governor of the Saudi Arabian Monetary Agency, on the occasion of the 9th Anniversary of Allegiance to the Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz, Riyadh, 27 April 2014. *  *  *  On the 26th of Jumada II, 1435 H, the Saudi people celebrate the occasion of Allegiance anniversary to the Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz Al Saud – may Allah preserve him- in its ninth year, expressing their deepest affection and sincere loyalty to the leader and the country. These sentiments are based on deep-rooted foundations, at the top of which are his characteristics – may Allah preserve him- of wise leadership of the affairs of the state, the national economy and great attention paid to citizens’ different interests. This has resulted in comprehensive developmental achievements that have raced time and exceeded the set goals, since his assumption of the reins of power on 26/6/1426 H, corresponding to 1/8/2005 to the present time. It is difficult to count down the achievements of these past nine blessed years in brief, but I will touch upon some of them with some statistics that are the best evidence of achievement and development.

Other approved decisions are as follows: a decision to allow GCC citizens to exercise the activities of insurance services, transport services, in its different forms, and real estate services, the application of the Same National Treatment on GCC citizens in the field of jointstock companies’ shares ownership and trading and GCC Citizens Real Estate Ownership Regulation in the Member States for residential and investment purposes. Women Right to Obtain a Housing Loan from the Real Estate Development Fund, when she is responsible for her family, has also been approved. The Ministry of Housing has been established and it has received allocations of SAR 250 billion. The Real Estate Development Fund’s maximum real estate loan has been increased to SAR 500 thousand from SAR 300 thousand. The draft Arab Agreement on Combating Cyber Crimes and the draft Arab Agreement on Combating Money Laundering and Terrorist Financing have been approved. Financial Leasing Law, which aims to provide a funding formula for joint-stock companies specialized in financial leasing, has been approved. SAMA has been entrusted with the supervision and control function over financial leasing. Real Estate Mortgage Law has been approved to provide the necessary guarantees, when practicing real estate finance activities, and define the mortgage contract parties’ rights and obligations and provide more flexibility in utilizing real estate assets.
Source: Bloomberg and Norges Bank  Monetary policy had to play a substantial role in the wake of the financial crisis. Fiscal space was already limited in many countries and narrowed further through the crisis. Fiscal policy is still constrained. The public sector has done little to deleverage. At the same time, the interest rate level is low and there is very little margin for further cuts. There is less latitude to counter another downturn in the near future. Monetary policy – lessons from the financial crisis Ten years of historically low interest rates and large-scale asset purchases give cause for reflection. An important question is what responsibilities should rest with a central bank. A related theme is what is meant by the objective of low and stable inflation. Let me take a closer look at these questions. The primary objective of monetary policy is to maintain monetary stability, which ensues from the central bank’s responsibility for the monetary system. Behind traditional currencies stands a central bank assigned with the mission of maintaining confidence in the value of money. This is in stark contrast to the so-called cryptocurrencies. They fail the crucial test that a means of payment must pass. 10 Rachel, L. and T. D. Smith (2015) “Secular drivers of the global real interest rate”, Bank of England Staff Working Paper No. 571. 11  Both too high and too low inflation have undesired consequences, such as arbitrary wealth redistribution, underinvestment and resource misallocation that may leave resources idle.

Since then, the value of the fund has risen to almost three times mainland GDP. The value of the fund is now around NOK 8 000 billion (Chart 16).12 Its assets are invested abroad in equities, bonds and real estate. With the substantial capital accumulated in the fund, Norway has become a major investor in the global capital market. Chart 16 Government Pension Fund Global. In billions of NOK. To 2017 Q3 10000 Government’s net cash flow Return Krone exchange rate  8000  Economic perspectives 15 february 2018  10000 8000  Non−oil budget deficit 1) Value of fund  6000  6000  4000  4000  2000  2000 0  0  –2000  –2000 1998  2001  2004  2007  2010  2013  2016  1) Including discrepancies attributable to accounting differences between the central government accounts and Norges Bank’s financial statements. The cumulative discrepancy varies between NOK 5 billion and NOK 41 billion. Sources: Ministry of Finance and Norges Bank  During periods of substantial oil and gas revenues, large capital transfers have been made to the fund. The government’s total net cash flow from petroleum activities comes to around NOK 5 000 billion. The return on the fund has been solid. The cumulative return amounts to more than NOK 3 800 billion.13 Since 2014, the krone depreciation has also contributed to the considerable increase in the value of the fund in krone terms. This does not, however, affect the fund’s international purchasing power.
This behaviour is in sharp contrast to the intense accumulation of financial assets observed previously and reflects the adjustment of banks’ balance sheets in the context of the general deleveraging process. The decline in the annual growth rates of assets has been most visible in short-term loans and deposits as well as in liquid assets, such as equities and mutual fund shares. The sharp contraction in interbank deposits has mainly reflected the freezing of the interbank market following the onset of the financial turmoil, in the context of which euro area monetary financial institutions (MFIs) withdrew their short-term deposits placed at banks. In addition, euro area banks have scaled down their deposits with other counterparts outside the euro area. As well as downsizing their external assets, banks initially scaled down their investment in marketable assets. By contrast, partly related to “relationship banking”, the growth rates of long-term loans have held up. Banks’ investment in long-term debt securities even accelerated in early 2009; indeed, MFIs stepped up their purchases of government debt securities, reflecting the generous liquidity situation in an environment of heightened risk aversion. While the slowdown in the growth rate of assets in principle limits the earning capacity of banks, other factors contributed in the first half of 2009 to a marked improvement in the profitability of large banking groups in the euro area. Net interest income was the main factor behind this improvement, owing to the positive slope of the yield curve and wider operating margins.

Only little more than 12% are in the form of government securities, whereas the rest, around 6.5%, are invested in investment or private pension funds, accounting for only 0.1% of total financial system assets. Statistics show that only a small number of companies operate in other segments of the financial sector, and their activity in terms of the Domestic Product or of the financial market remains insignificant. Regarding the above, we may logically conclude that the financial market architecture may not be considered complete yet. Financial instruments with long-term maturities are rare, whereas the short-term ones outside the banking system are apathetic and fragmented, in terms of both products and markets. An outcome of such a financial architecture is a kind of added pressure on the banking system, depriving the economy of other financing alternatives, beyond what the banks offer. This vacuum may not be filled with strained efforts by the banking system. It has been broadly accepted that each segment of the financial market plays a complementary rather than substituting role. I could mention a number of examples to illustrate my point, but for the moment I would rather not, as in the next panels these issues will be discussed in greater detail by other 2/4  BIS central bankers' speeches  colleagues and academics during the day. Overall, the above elaboration regards investment-related financial institutions and financial instruments.
Stefan Ingves: The inflation target and monetary policy Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, to the Swedish Economics Association, Stockholm, 4 April 2006. *  *  *  Introduction Discussing monetary policy at the Swedish Economics Association has become something of a tradition. I very much appreciate being invited to initiate this evening’s debate and I hope you will find the discussion stimulating. I would like to take the opportunity to discuss the general foundations for monetary policy. I will mainly focus on how a policy of inflation targeting can and should take into account developments in the real economy. From time to time it is claimed in the general debate that the Riksbank's inflation target needs to be supplemented by various targets for the real economy, such as capacity utilisation or employment. Those who advocate this appear to argue that our inflation target means that the Riksbank focuses solely on price developments. This was true to some extent when the inflation target was still a fairly new concept. The primary objective of monetary policy was then to establish confidence that inflation would really be kept at a low level. The fact that there is a discussion of these issues now, may be because we have not always discussed the various considerations we make as directly as we do now. There has been a gradual development in our reasoning on monetary policy. Monetary policy is no exact science and the Riksbank is a learning organisation.

The gradual shift in the policy towards – within the framework of the price stability objective – also taking into account fluctuations in economic activity meant that this focus on inflation at a particular point in time could be overinterpreted. It is the entire path for inflation and the real economy that is actually important in the monetary policy decisions, not merely the levels at the two-year horizon. Nor is it possible to ignore what happens beyond this horizon. The world will not come to an end in two years’ time. Interest rate and inflation forecasts can be interpreted in the same way as before to the extent that if the forecast for inflation two years ahead is above the target, it will normally mean that the repo rate will need to be adjusted at a faster rate than market expectations assume. The reverse applies, of  3  More exactly, it is assumed that the repo rate will follow implied forward rates, which can be gathered from the yield curve for debt securities with different durations. Implied forward rates do not exactly reflect market expectations of future repo rates as a result of the existence of term premiums and other forms of risk adjustment, but they provide a good approximation. For a more detailed description, see the box “Longer-term forecasts under the assumption that the repo rate evolves in line with implied forward rates” in Inflation Report 2005:2 and Alsterlind, J. & Dillén, H., “Monetary policy expectations and forward premia”, Sveriges Riksbank Economic Review, 2005:2.
The SSM allows us to compare and adapt supervision across 19 countries, to identify best practices and to ensure that they are implemented consistently through effective quality assurance. There are now completely new possibilities for comparative and cross-sectoral analysis than were available at the national level. For our tasks, we can use information and insights from banks with very different business models. This enables us to identify risks and undesirable developments more clearly and at an earlier stage, and to take suitable countermeasures. We can also put work on banks’ internal models, which have a significant influence on a bank’s capital requirements, on a new footing. We will use the opportunity, given the improved level of data and insight, to implement strict rules for the approval and ongoing supervision of internal models. Despite this progress, there is still a lot to do in the further development of supervision. The effectiveness and efficiency of supervision is dependent on the legal framework it applies, although this is not the sole determinant. Soft European standards or diverging national rules impair the SSM’s ability to take action and its effectiveness. And this does not just concern  4  BIS central bankers’ speeches  national rules that affect the quality of banks’ equity. The SSM applies 19 different national legal frameworks and not only when, for example, we examine the professional suitability of managers in large, internationally active banks.

Another effect of a weak exchange rate concerns the prices of imported goods and services, with the risk of a pass-through to consumer prices. In the 1970s and ’80s, currency devaluation was frequently used as an instrument for stimulating the economy. The development of demand was boosted via production for export at the same time as imported goods became more expensive. In time, however, inflation began to move up. Now that Sweden has a flexible exchange rate regime, things work somewhat differently. If the krona weakens and firms and households perceive this as a transient movement, the effect on inflation will not be as strong as before, when a currency write-down was seen as a more permanent measure. This has  2  BIS Review 72/2001  contributed, for example, to an import price pass-through to consumer prices in the 1990s that was smaller than earlier. But the magnitude of the effects on demand and inflation with a flexible exchange rate regime will obviously depend on how much the value of the krona changes. Even with such a regime, a large shift - upwards or downwards - in the value of the krona will have some effect on demand and prices. Since last summer the Swedish krona has weakened by between 10 and 15 per cent relative to a weighted currency basket.
If capital requirements are increased significantly, but only on some activities, banks may re-classify assets to switch their business into forms where the capital requirements are no higher than today. To me that is an argument for thinking about very substantial rises in required bank capital pretty much across the full range of their activities. Of course if this is very costly it will create two problems: it would create big incentives to avoid them and potentially big costs to the wider economy, because of the impact on the price and availability of bank loans. Two issues are important. First, the scale of the impact on bank funding costs from higher capital requirements. Higher funding costs would push up on the cost of bank loans to households and non-financial companies and affect lending and investment, which in turn could require a monetary policy response; those costs will also affect the incentives to avoid (or evade) capital requirements. The second issue is how much more robust the financial sector, and banks in particular, become with different amounts of extra capital. Several estimates of the cost of higher bank capital exist. The Institute for International Finance (IIF) suggest that proposed regulatory reform which could be part of the Basle III system could reduce the path of average annual GDP growth in the US, euro area and Japan by 0.3pp for the next ten years 2. This implies that the level of GDP would ultimately be around 3% lower.

Should Asia continue to grow by an average annual rate of 7% over the next ten years, it is estimated that Asia’s share of the global GDP will increase to 40%. Let me further elaborate on these two developments, namely the strengthening of domestic demand in Asia and the intensification of regional economic and financial integration, that are mutually reinforcing in sustaining Asia’s economic growth prospects. A more recent phenomenon supporting this trend is the strengthening of regional financial cooperation not only to preserve regional financial stability but also to enhance the prospects of the region. Strengthening domestic demand The strengthening of domestic demand is part of the structural changes taking place in Asia to diversify its sources of growth. Growth in most of the Asian economies was previously export-led. While several measures have been taken to promote domestic demand, the favourable demographic structure, the low levels of unemployment, the relatively low level of household debt and the policy flexibility to implement supporting monetary and fiscal policies have contributed to higher consumption. Other measures initiated are the social safety nets in the form of schemes and programmes for unemployment benefits, healthcare, education and retirement that have been put in place to reduce the need for high savings. The consequent increase in consumption demand has not only resulted in a significant expansion of the retail trade sector but Asia is also increasingly becoming an important consumer in the global economy.
Here in the Federal Reserve’s Second District, many households in both our urban and rural communities are vulnerable financially. And since the onset of the pandemic, access to quality, nutritious food has been greatly impeded. After many businesses were forced to shut down in the spring of 2020, food banks were quickly overwhelmed. In addition to an abrupt increase in need, there was also the challenge of distribution. I’m sure many of you remember the long lines to food pantries that stretched through neighborhoods. And many of our schools shifted from providing free lunches to students to offering grab-and-go meals to entire families. Now, we are facing another economic challenge: higher food prices. Transportation and labor costs—along with supply-chain disruptions—are driving up the price of many staples, such as beef, poultry, eggs, peanut butter, and produce. Food is not only becoming far more expensive for families, but also for food banks—which, at the same time, are reporting fewer donations. The result of all of this is that food insecurity is becoming more widespread—and more difficult to resolve. The ripple effects expand across the economy, as food insecurity drives economic inequality, which in turn is a barrier to cultivating a healthy workforce. And a healthy workforce is what we need to keep our economy strong. At the New York Fed—and across the Federal Reserve System—one of our key areas of focus is to better understand the economic drivers and social determinants of health.

We have been hosting a series of events that bring together experts on economic inequality and the needs of low- and moderate-income communities in our District. Today’s event on food insecurity is part of that larger effort. But we recognize it’s not enough to merely study the issue. The role of our Community Development team is to champion promising solutions by connecting people, programs, and proposals with funding. Up to 40 percent of food produced in the United States goes to waste 1/2  BIS central bankers' speeches  each year, so there is a huge opportunity to distribute that unused food to those who need it. You’ll be hearing more about that later today. But first, we’ll start off with a presentation from Professor Tashara Leak. She’ll frame the discussion by talking about how food insecurity affects the health of children—and how that, in turn, shapes their economic prospects as they grow older. Then, we’ll convene a panel of business and government leaders, along with impact investors, who will spotlight some of the innovative work being done to make healthy and affordable food more accessible. Thank you all for joining us. And with that, I’ll turn it over to Professor Leak. 2/2  BIS central bankers' speeches