samchain/econo-pairs-v1 huggingface dataset:
And it is vital that the insurers fully understand the counterparty credit risk they are running, the quality of the collateral they are taking and how to manage the collateral in the event of default. The more recent developments in markets for Exchange Traded Funds (ETFs) are another example of financial innovation and growth in a previously small market. ETFs are in principle a “good” financial innovation – for example, they offer retail investors a cheaper way of getting exposure to the underlying asset (by cutting out the fund manager) and provide a very liquid asset. Nonetheless, the rapid growth in ETF assets under management – which have increased seven-fold since 2003 (Chart 15) – merit attention, given it has been characterised by increasing complexity, opacity and interconnectedness, and as some practices, if left unchecked, could grow to pose risks to the stability of the financial system.12  10  That could come about not only through the low yields on safe assets, but also through an increase in the correlation amongst safe assets, which might prompt reserves managers to seek new diversification opportunities, some of which might be met through financial engineering. 11  These products are discussed in more detail in the box on pages 168–169 of the 2010 Q3 Quarterly Bulletin. 12  The Bank first discussed ETFs in a box on pages 40–41 of the June 2010 Financial Stability Report.

MAS is involved in the discussions on both the capital and liquidity proposals and supports the broad thrust of these initiatives. As MAS’ regulatory framework has generally been regarded as conservative, we are in a good position to comfortably adopt these more stringent standards. However, we are aware that more regulation on its own is not a panacea. It would be undesirable for the regulatory pendulum to swing towards extreme conservatism and for over-prescriptive rules to severely restrict financial innovation. MAS will adopt a balanced approach and will work closely with and consult all stakeholders in implementing the new regulatory standards. Role of industry participants Supervision has to work in concert with effective risk governance in the financial institutions. The Boards and senior management of financial institutions must take ownership and responsibility to manage risks. A report issued by the Senior Supervisors Group 2 in March 2008, on observations on risk management practices highlighted many risk management practices that improved the resilience of financial institutions during a crisis. Let me highlight three areas. First, effective capital planning. Banks need to conduct a thorough and comprehensive assessment of their levels of capital. These have to be “forward-looking”, taking into account the nature and level of the bank’s risk, not only under “normal” business conditions, but also  2  The Senior Supervisors Group comprises senior financial supervisors from seven countries (United States, Canada, France, Germany, Japan, Switzerland, United Kingdom). It is chaired by William L. Rutledge from the Federal Reserve Bank of New York.
In the twoyear horizon, surveys to both experts and businesses continue to forecast that inflation will be above 3% annually at that point, with figures that have also risen in recent months (figure 2). This has also led to more frequent price changes by firms in response to rising demand and costs over the last two years. Regarding activity, data for the second quarter and the beginning of the third suggest that the economy continued its adjustment process after the strong imbalances it accumulated in 2021. In the second quarter activity (excluding mining) fell by 0.5% quarter-on-quarter in its seasonally-adjusted series. This decline extended to July, where this component of activity fell 1.1% with respect to the previous month, also discounting seasonality. By sectors, the decline in trade stood out, and was partially offset by the increase in some services (figure 3). Private consumption continued to decline from its high levels of 2021. In the second quarter, seasonally-adjusted, private consumption fell by 2.4% quarter-on-quarter, somewhat more than expected. The decline was concentrated in goods, especially durables, coinciding with the sharp depreciation of the real exchange rate (RER) and a significant build-up of inventories. In fact, both business expectations as measured by the IMCE and the information gathered in the August Business Perceptions Report (IPN) suggest that in recent months inventories have grown more than expected (figure 4).

However, in a context where inflation has turned out to be higher than expected; where inflationary expectations remain above target; where the peso is weaker than normal; where the global inflationary problem has become more complex and there are doubts as to how policies to address it will affect the global economy and financial markets, we must acknowledge that the risk of experiencing a more persistent inflationary phenomenon is our primary concern. Monetary policy makers will remain attentive to these developments and, as I mentioned a few moments ago, future movements of the MPR will be contingent on them. Urgently resolving the inflationary problem does not imply that we should set aside our medium-term challenges. More than two years into the pandemic and almost three since the social unrest of October 2019, our economy has suffered a string of events that have put the effectiveness of our economic policy framework and the authorities' ability to react to the test. In addition to the inflationary effects, some of the measures adopted to deal with the effects of the pandemic generated significant costs in the local financial market. Withdrawals of pension funds reduced the size of long-term savings and possibly also the economy's capacity to react to external shocks, especially under conditions of high uncertainty. Therefore, the strengthening of financial markets should be an important item on the economic agenda.
All major Swedish banks, clearing organisations, the Swedish National Debt Office and the Riksbank are participants in the Riksbank’s RIX system where weekly turnover corresponds to a little less than Sweden’s GDP. In practice, this means that participants have accounts in the Riksbank’s system in which they regulate debts to each other via transfers between their RIX accounts. A bank's balance in its RIX account forms a risk-free claim on the Riksbank. At some point during the day, the money thus ends up on the Riksbank's balance sheet, which is the meaning of the term ‘central bank money’, as I explained previously. The system has been constructed to manage major payments between the dominant players in the market in a secure manner. Private persons’ payments are lumped together into larger amounts before they pass through the system. It has been optimised to manage a smaller amount of payments of larger amounts with a very high level of security. The mean value of a payment sent through the system is about 35 million kronor. 19 The Riksbank also has regular contact with all participants, who also participate in training sessions, crisis exercises and so on. As the Riksbank and the banks must have personnel on site, opening hours are currently restricted to normal office hours. It is conceivable that the banks would have their own system to regulate payments with each other. But this would increase the counterparty risks in the financial system.

Many other central banks, including the Bank of England and Bank of Canada, have ongoing analysis projects on digital central bank money. 31 Considering how rapidly developments are proceeding, it is probably good to be aware that it will require both resources and cooperation with external players, both authorities and companies, for the Riksbank to act proactively in this matter. The Riksbank will modernise the supply of settlement services I have given several reasons for why the private market cannot be expected to provide a secure and efficient payment system without government interference: economies of scale and network effects lead to concentration in a monopoly system that becomes vulnerable and results in a lack of competition and innovation. At the same time, positive network effects suggest that cooperation and standardisation may be effective solutions. In Sweden, we have a long tradition of cooperation between the banks in the area of payment which has been very positive for Swedish consumers. Bankgirot, Bankomat (ATMs), Bank ID and Swish are a few examples. The Riksbank and other central banks have traditionally provided systems and central bank money to allow financial institutions to be able to regulate their mutual debts in a secure manner. The payment market is now in a state of transformation, among other things due to technological progress, not least via solutions for smart phones. In other words, we are on the way to a market in which end users demand that payments be rapid and constantly available.
On the general insurance side, average motor and household premiums and changes in premiums were not in our assessment affected by the introduction of Solvency II. In both motor and household, rates hardened in 2015 due to greater loss experience, and UK motor insurers were particularly 4  affected by the reduction in the ‘Ogden rate’ . Risk-free market interest rates and corporate bond spreads continue to be the dominant driver of annuity prices – this relationship does not appear to have changed since Solvency II came into effect. The limited impact of Solvency II on pricing should not surprise us, given 5  that the running costs of the new regime represent 0.07% of insurance premiums in the UK, which you could think of (for instance) as 35p on an average motor policy premium last year of £  As we get more experience of operating Solvency II, however, it is right that we make our implementation of the directive work better. That means, for example, reducing unnecessary costs and complications which have no prudential benefit. We are therefore consulting on an extensive package of reforms for the part of the Solvency II framework over which we have discretion. We are making a series of proposals to give firms greater confidence in using the MA. We propose to reduce the amount of time firms (and we) have to spend on discussing and agreeing minor changes to internal models. And we will cut reporting requirements, particularly for smaller firms.

With regard to prices, inflation increased slightly more than expected in 2001. This can be partly explained by unexpected price increases on, for instance, fruit and vegetables; the price of these product groups will probably continue to increase slightly more than expected in the short term. Imported inflation has increased more than expected in both the producer and consumer areas, which could be due to the exchange rate’s effect on prices being slightly higher than assumed. However, price increases have also been broader and higher than expected for other goods and services. My view of the current situation So how do I assess the situation in which we find ourselves today? Firstly, I feel that confidence in the future and willingness to take risks appear to have recovered from the shock of 11 September. But what will happen to inflation? There are three reasons why inflation should fall this year. The first is that growth in demand and utilisation of resources were both lower than expected last year, which subdues price pressure for the near future. The second is that inflation expectations are disposed towards a decline in inflation, according to recent surveys. And the third is that the krona has appreciated slightly, which means a lower risk of imported inflation. On top of this, the effects of last year’s price rises on certain goods and services, including food and energy, will gradually abate. However, there is also a risk that the price rises will not abate on their own.
An easing of monetary policy in many parts of the world as well as in Sweden has been an important factor behind the better tendencies in recent months and the more positive forecasts. Even though the statistics show a stronger economic trend, inflation has been in line with the Riksbank’s forecasts. For this reason the repo rate has been kept unchanged since March. 1  BIS Review 108/1999  In August the 12-month rate of CPI inflation was 0.6% and inflation’s underlying rate, measured by UNDIX, was 1.5%. It is changes in indirect taxes and subsidies, together with house mortgage interest expenditure, that are continuing to result in an underlying rate of inflation that is higher than CPI inflation. Economic prospects from 1999 to 2001 We are now moving into a period of strong growth, externally as well as in Sweden. As regards the international picture, the Riksbank judges that annual growth in the OECD area up to the end of 2001 will amount to not quite 2.5%. It looks as though effects of the Asian crisis are now dying away and that emerging market growth will become stronger in the next two years, above all in the crisis-hit countries in Southeast Asia but to some extent also in Latin America and Eastern Europe. In Japan, too, the earlier risk of negative growth has turned into cautious optimism about an upturn. Prospects for the euro area have likewise improved, with a recovery in manufacturing and stronger consumer confidence.

This shock and the negative effects that it brought upon the economy and the central bank policies have been beyond comprehension. The authorities are feeling the difficulty of performing their task in the zero lower bound or very close to it. In this respect central banks have lost the traditional instruments of monetary policy and are reverting to money as the instrument of monetary policy. The shift has been significant not only in size but also in concept. The leading central banks in developed economies, the ones which set the trends, are under process of reviewing their objectives and monetary policy. Using support of research analysis and conclusions they are eventually rewriting monetary economics by giving central banks new instrument in the form of permanent use of the central bank balance sheet as a tool of monetary expansion. However, while implementation of balance-sheet strategies is easy to implement and deal with for developed countries central banks, same policies might not be easily adaptable and applicable by developing economies. Narrow and shallow capital markets, problems of financial inclusion and financial education, stressed private, public and fiscal balance-sheets and history, remind us of several potential risks that such policies can have for the highly dollarized/euroized economies of South-East Europe. Yet in the presence of current constrains faced by monetary policy we have to react and to find new ways to support the economy.
Target for nominal GDP growth A further proposal is that the central bank should have a target for growth in nominal GDP. Larry Summers, former United States Secretary of the Treasury and an active debater on many economic policy issues, is one of those who have advocated this. 30 Nominal GDP is a measure that reflects both price and volume. Growth in nominal GDP is in principle the same as the sum of the change in prices, in other words inflation, and the growth in output volume, that is, real GDP growth. 31 One advantage sometimes highlighted is that a nominal growth target “automatically” takes into account the real economy as monetary policy in this case puts as much emphasis on growth in the real economy as on inflation. When real GDP growth is low, the central bank conducts an expansionary policy to maintain the nominal growth target – and vice versa when growth is high. As I see it, however, this is not a decisive difference in relation to flexible inflation targeting, which normally takes into account the real economy in a way that stabilises economic activity. In a more long-term perspective, one can view a nominal growth target as meaning that the central bank has an implicit target for inflation, given the growth potential of the economy. For instance, a target for nominal GDP growth of 5 per cent and a growth potential of 3 per cent will implicitly entail an inflation target of 2 per cent.

The market where the intervention takes place will then experience a “positive funding effect”, both because the interest rates on the market concerned become lower in relation to other commercial markets and because the issuers on the market in question have found a “safe” lender. This type of measure therefore requires a more detailed consideration and moreover knowledge of how different commercial markets function and are interlinked with other parts of the economy. Therefore, it is not so surprising that purchases of commercial securities have often been used just when there are serious problems on a particular market and when there is a risk that these problems will have negative effects on the economy as a whole. For example, the Federal Reserve purchased large amounts of mortgage bonds when this market threatened to cease functioning, which could have had serious consequences for credit supply to the household sector. Purchases of commercial paper are thus in principle a different type of measure than purchases of government paper. But they definitely comprise a possible tool to be used if the need arises, even for the Riksbank. Natural for fiscal policy to play a larger role All in all, the Riksbank will thus not be without means to counteract the next economic downturn. But it is hardly possible to claim that the opportunities are as good as they were, say, 15-20 years ago, when the neutral interest rate was still relatively high and there was plenty of scope to cut the repo rate.
This means that, if we looked only at the boost to income and wealth from looser monetary policy, this would significantly understate the well-being benefits to households from the MPC’s monetary actions, by a factor of at least two. 34  For example, Jacoby (2002). Both are shown in Table 1. Log utility is the best fit for happiness across households, but it is also common to use this functional form at the individual level. We also experimented with a variety of other specifications, with higher order terms to capture greater curvature in the utility function, but these were generally not statistically significant. Note that our regressions are based on a pooled cross section of households and so are not pure estimates of the impact on happiness of changes in income and wealth over time. 36 For example, Winkelmann and Winkelmann (1998) and Di Tella et al (2003). 37 There are various ways to calculate the income-equivalence of the lower probability of unemployment, and these numbers would vary depending on the assumptions made. For simplicity, we exploit the results from our analysis, which show the effect on welfare from the lower probability of unemployment on the average household to be around six times larger than the welfare boost from higher labour income. 38 For example, Clark and Oswald (1994). 35  13  All speeches are available online at www.bankofengland.co.uk/speeches  13  Second, these gains from higher employment are felt particularly strongly by younger people who gain most from having a job.

My view is that there is a strong case for making, on a periodic basis, comprehensive and transparent assessments of the distributional impact of monetary policy. This would help people understand the purpose and impact of monetary policy, both on the economy in general and on them as individuals, on “their GDP”. I give some illustrative examples of a “Monetary Policy Scorecard” summarising the impact of monetary actions on particular cohorts. Greater transparency of this type would not, by itself, reduce any distributional effects of policy. But it could help in explaining the impact of these actions, in a localised and personalised way, as a means of improving understanding and trust in central banks. Both have been a casualty of the crisis. Why Distributions Matter  Let me start with a bald statement: all public policy is distributional, be it monetary, fiscal, structural or social. The reason I know this is because redistribution is the way public policy works; it is what policy does for a living. Some policies redistribute resources between agents at a point in time. Others redistribute resources between agents over time. If policy is not working through one of these channels, it is not working. If all policy is distributional, it does not take much of a leap of imagination to see that policymakers may wish to understand and explain its distributional impact. In some policy settings, that already happens – in fiscal policy, social policy, climate change policy, pension policy.
The single currency has provided a valuable anchor during the intensification of the financial turmoil as Malta did not have to carry the risks inherent in a small and vulnerable national currency. The threat posed by the financial crisis was further mitigated by the strength and stability of Malta’s banking system. Our banks benefited from an approach based on traditional intermediation between retail depositors and borrowers. Their funding model, in fact, eschews reliance on wholesale markets. Exposures to asset-backed securities or failed institutions were small, while lending in foreign currency to residents was limited. Throughout the crisis, moreover, capital and liquidity ratios remained well above the regulatory minimum, which helped to retain investor confidence. Malta’s banking system was ranked as the 13th soundest in the world in the World Economic Forum’s Global Competitiveness Report 2009–2010. The health of the domestic banking system is also reflected in its uninterrupted ability to respond to the demand for credit in 2009. The annual rate of increase in bank loans to the private sector, at 8.3%, was only slightly slower than in 2008. 3 This contrasts with the euro area, where private sector credit outstanding has been contracting. It is significant that according to a recent survey, the majority of small and medium-sized enterprises, which form the backbone of the Maltese economy, did not consider access to finance as a main source of concern.

Due to the ongoing weakness in food demand owing to the tourism sector that will persist in 2017 coupled with the measures taken by the Food and Agricultural Products Markets Monitoring and Evaluation Committee (the Food Committee), we expect food inflation to be lower than its historical average in 2017 as well. Accordingly, we revised our assumption for food inflation downwards from 8 percent to 7 percent for end-2017. Our medium-term forecasts are based on an outlook that adjustments to taxes and administered prices will be consistent with the inflation target and automatic pricing mechanisms. For medium-term fiscal policy stance, we use the MTP projections covering the 2017–2019 period. 3. Inflation and the monetary policy outlook Esteemed Guests, Now, I would like to present our inflation and output gap forecasts based on the outlook I have described so far. Given a cautious policy stance that focuses on bringing inflation down, we estimate inflation to approach gradually to the 5-percent target. Inflation is likely to be 7.5 percent in 2016, falling to 6.5 percent in 2017 and stabilizing around 5 percent in 2018. Accordingly, we expect inflation to be, with 70 percent probability, between 7 percent and 8 percent (with a mid-point of 7.5 percent) at end-2016 and between 5 percent and 8 percent (with a mid-point of 6.5 percent) at end-2017 (Chart 17). 8 / 10  BIS central bankers' speeches  The Turkish lira fluctuated following the July Inflation Report, while oil prices increased.