samchain/econo-pairs-v1 huggingface dataset:
17  The risk of interest rates, and thereby bond prices, developing unfavourably and thereby having a direct impact on the results. This risk increases with the length of the average duration of the investments. 4  BIS Review 33/2006  Summary To summarise, the decisions I and my colleagues make regarding the focus of the Riksbank’s financial asset management ensure that the management complies with the Riksbank's statutory tasks as well as providing good earnings. These tasks require us to hold US and European government bonds to enable us to intervene in the foreign exchange market if necessary. However, we must also limit the financial risk in order to protect the capital allocated to cover potential losses in connection with a financial crisis. We try to limit currency risk, which is the entirely dominant financial risk, by choosing a currency allocation that keeps the fluctuations, as measured in Swedish kronor, low. We endeavour to meet the requirement to generate good earnings by taking credit and interest rate risks and making use of diversification effects in order to reduce any negative impact from these risks. By investing in asset types with credit risk, that is, other fixed-income securities than government bonds, we can increase the risk-adjusted earnings on our investments. This is partly because the actual earnings on assets with credit risk can be higher and partly because the earnings on different types of asset do not usually covary perfectly.

Because of the sensitivity of this model, the analysis is supplemented by Value-at-Risk calculations, risk contribution analyses and stress tests. Value-at-Risk is an estimate of potential loss risk and is defined as the largest expected decline in value of an asset, or an asset portfolio, with a specific probability and over a specific period of time. 2  BIS Review 33/2006  As you can see, our largest holding is in euro. This is not surprising, as the relationship between the euro and the krona has remained relatively stable. Historically, the currency risk attributable to our euro holding has thus been less than that attributable to other currencies in the reserve. The dollar, on the other hand, has been one of the highest risk currencies. The fact that we nevertheless have a relatively large dollar exposure is due to its importance as intervention currency. It is reasonable to wonder why we do not choose to convert some of the currency assets into Swedish assets as long as we have a floating exchange rate regime. In this way the currency risk on these assets would disappear completely. In practice, however, this is not so easy as such a conversion would mean that we intervened in the foreign exchange market. In addition, when and if the Government decides that the krona should be part of a fixed exchange rate regime, we would be forced to intervene again to build up the foreign exchange reserve.
When the fixed exchange rate target was abandoned in November 1992, after an unsuccessful attempt to defend the krona – you probably all remember the increase in the marginal rate to 500 per cent – it followed on from yet another cost crisis. At the beginning of 1993, the outlook for the Swedish economy was bleak - we were in the midst of an international economic slowdown, the banking crisis was a fact, interest rates were high and unemployment was soaring. During the period with a fixed exchange rate fiscal policy had borne the entire responsibility for stabilisation policy, while monetary policy had been tied to defending the krona rate. It was evident that fiscal policy had not been sufficiently tightened in connection with the overheating to which credit deregulation contributed. It was high time to break with history – but how should this be done? A new stabilisation policy regime A comprehensive change in regime was implemented in order to take Sweden out of the crisis and to create the conditions for a more stable and more favourable economic development. Central government finances were consolidated and fiscal policy was subjected to regulations regarding an expenditure ceiling and surplus target to attain a long-term balance in public finances. Monetary policy was aimed at safeguarding price stability. The interest rate, which had been a tool for balancing currency flows during the period with an exchange rate target, would now be used to affect demand in the economy with the aim of stabilising price trends.

A possible international slowdown in the coming two years could lead to growth failing to reach the level indicated in the main scenario of the Riksbank’s Inflation Report. Another question that affects the Riksbank’s monetary policy considerations is developments in the property market. Exaggerated increases in asset prices can lead to subsidence in the future. With a larger percentage of debt in relation to income and with shorter periods for fixing interest rates on loans, it is probable that monetary policy would have a stronger and faster impact on household consumption. Moreover, the Riksbank’s tasks include not only safeguarding price stability, but also financial stability. This is a further reason for closely following developments in indebtedness in the economy and price trends in the property market. In the event of economic shocks it might be necessary to weigh price stability, real economic stability and financial stability against one another; it might not be possible to achieve all of the objectives at the same time. 5/7  Future challenges for monetary policy Some factors that have monetary policy significance do not change according to the Swedish business cycle. This includes the effects of globalisation. As I mentioned earlier, globalisation and increased competition from low-cost countries like China and India have contributed to lower inflation by way of import prices, increased competition and greater pressure for structural change. This makes demands not only of monetary policy, but also structural and fiscal policy.
Note that I use the term reasonable scenarios, which means in practice that in practical forecasting work we disregard certain kinds of scenario. Examples of scenarios that we choose to disregard include a decision to abandon the inflation target, the outbreak of war, major natural disasters or an epidemic that infects a large part of the labour force. We ignore such scenarios partly because they are very unlikely and partly because they would entail a radical change in the preconditions for monetary policy. If such a scenario did nevertheless occur, we would have to decide what would be required of monetary policy at the time. The financial crisis can also be seen as a kind of extreme scenario, even though this was not an event that could be regarded as being highly unlikely. Most analysts believed that there was a clear risk that the problems that arose on the financial markets in 2007 could get worse. The problem was that the crisis not only became unusually severe; it also took a course that few of us could predict. The crisis spread throughout the global economy through various international financial links and fundamental functions in the financial system were seriously disrupted. This had dramatic, negative effects on, for example, the possibilities of companies to get funding and on world trade. This was a case of crisis mechanisms that we had very little experience of and that were therefore not included in our forecast models.

Jean-Pierre Danthine: Situation at Swiss banks from a financial stability perspective Introductory remarks by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the media news conference of the Swiss National Bank, Berne, 19 June 2014. *  *  *  As my colleague Thomas Jordan has explained, economic and financial conditions continue to be challenging. Against this background, I would like to examine the situation at Swiss banks from a financial stability perspective, looking first at the big banks and then moving on to a discussion of domestically focused banks. Big banks: strengthening resilience Over the past year, the Swiss big banks have further improved their capital situation. In terms of loss-absorbing capital – defined as Common Equity Tier 1 capital plus high-trigger contingent capital instruments – their risk-weighted capital ratio either already exceeds or is close to the 13% requirement that will apply from 2019. They also meet or are very close to meeting the corresponding leverage ratio requirement of 3.1%. In terms of total capital, both big banks have also substantially improved their ratios. However, they have yet to meet the corresponding requirements applicable from 2019.1 The SNB welcomes the significant progress made by the big banks in improving their capital situation and their compliance with some of the requirements applicable from 2019. The SNB recommends that they continue to improve their resilience and, in particular, their leverage ratios. This is important for two reasons.
We can now see that the economic upswing is continuing to strengthen gradually. Industrial activity has made some progress; export demand is accelerating and firms are relatively optimistic about the future. Capacity utilisation is also continuing to increase. Households’ expectations regarding their own finances and the Swedish economy are once again more optimistic, after a decline at the end of last year. Retail trade sales indicate a good level of consumption. A slightly stronger development in real disposable incomes, partly due to lower inflation, continuing low interest rates and rising asset prices, is expected to benefit consumption in the near future. Given this background, we have found no reason to make more than a few marginal changes to the overall picture of growth we have been outlining since last autumn. We now believe that economic growth will amount to just over 2½ per cent on average over the coming two years, which is a tenth of a percentage point more than our previous estimates. However, the annual outcomes differ slightly more because of the fact that the figures for the current and coming years are affected by changes between the years in the number of working days. This has no major significance for our view of resource utilisation, as both production and demand are affected. The conclusion of our assessment of economic activity is that the economy will approach full resource utilisation at the end of the forecast period.

Caleb M Fundanga: Financial sector challenges and progress in Zambia Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Information Exchange Forum on Sources of Finance, Lusaka, 10 December 2007. *  *  *  • Mr Chairman • Representatives of International Financial Institutions • Chief Executives and representatives of Financial Institutions • Distinguished ladies and gentlemen I am greatly honoured to be given an opportunity to make some remarks at this forum. I wish to extend a warm welcome to all participants gathered here today, particularly those who have travelled from outside the country. I hope that you will not only have fruitful deliberations but also find time to explore the beautiful scenery and experience the warm hospitality that Zambia has to offer. Mr Chairman, Ladies and Gentlemen, this forum is more than timely as Zambia is working tirelessly towards financial deepening, wealth creation and reducing the levels of unemployment. In order to achieve this, affordable financial services should be available to the majority of businesses. In fact, the forum has come at an opportune time when the economy has shown signs of macroeconomic stability and growth. The financial sector in Zambia is considered relatively under developed. In spite of this status, post independence governments have always recognised the importance of the financial sector to national economic development. This is the reason why the activities of the sector had up until 1992 been controlled by the state.
In my view it should only be a very last resort. The aim of the game should be to manage the system so that society can enjoy the gains of a flourishing financial sector – the efficient allocation of resources and transfer of risk – whilst minimising the threats to economic stability. So we need to have effective systems not just for preventing crises but for dealing with bank failures if and when they happen. The collapse of securitisation markets in August 2007 and the failure of Northern Rock revealed gaps in the UK’s arrangements, With the benefit of hindsight, the main problem was not the handling of the initial rescue – although the tripartite’s footwork may have owed more to John Sergeant than Fred Astaire. But I don’t think anyone believes now that the business could have been saved. It was in terminal difficulties and it was right to rescue it and protect depositors. The bigger problem was that, having stepped in, the authorities were hamstrung by the inadequacy of the legal powers to resolve it quickly and cleanly. We have learned from that autumn’s experience. Since then we have found imaginative ways to provide the market with the liquidity it needs (through the Special Liquidity Scheme, long term repos, and now the discount window), we led the world in recapitalising banks in the autumn and we have resolved the banks which could not survive swiftly and effectively both through private sector solutions and through the use of statutory measures.

And there will often be scope for those affected to work out ways to circumvent them, including by moving activities outside the regulatory perimeter. As Federal Reserve Board Governor Jeremy Stein has noted, monetary policy may be a blunt tool for addressing financial stability risks, but it does have the virtue that it “gets in all of the cracks”. 7 So, there may well be times when monetary policy is the only game in town to guard against incipient financial stability risks. In that case, we are back in the world where monetary policy makers need to be prepared to consciously lean against the wind by deliberately undershooting their inflation target in the near term in order to reduce the likelihood of something nastier down the road. This thinking has now been embodied in the Chancellor’s remit for the MPC, which sets our objectives each year. It notes that “circumstances may arise in which attempts to keep inflation at the inflation target could exacerbate the development of imbalances that the FPC may judge to represent a potential risk to financial stability. The FPC’s macroprudential tools are the first line of defence against such risks, but in these circumstances the MPC may wish to allow inflation to deviate from the target temporarily.” The remit also directs the MPC to have regard for the actions of the FPC and vice versa. I opened my remarks tonight by observing that my time at the Bank has neatly fallen into two halves.
Similarly, the number of those aged 19 in higher vocational training (as a percentage of the total of those either enrolled in these programmes or at university) increased from 20% to 25% over the same period. 12  On Eurostat data for 2020, 24% of students in tertiary education in Spain are enrolled in a field related to the natural sciences, mathematics, statistics, information and communication technologies, engineering, manufacturing and construction, compared with 28% in the euro area. In the Global Innovation Index (WIPO, 2022), Spain is ranked 61 out of 109 countries by number of science and engineering graduates. 4  school students, according to the OECD’s PISA database. Improving in this area calls for better trained, more professional teachers able to teach based on best practices. 3 Longer working lives, which will be unavoidable given current demographic trends, increase the need for sufficiently skilled, versatile workers able to switch jobs and lines of work over their working lives, especially in a context in which certain professional skills are rapidly becoming obsolete and the cognitive skills of the older population are increasingly deteriorating.13 Having workers take part in lifelong learning will require combating job instability, lowering the institutional barriers to business growth and helping to ensure that the training on offer at universities and vocational training centres caters to the changing demands of the job market. 4 Education spending in Spain is slightly below that seen in the euro area (on average, 4.2% and 4.7% of GDP, respectively, between 2010 and 2021).

19  Article 26 of the Law on Market Unity provides a specific administrative appeal proceeding for defence of the rights and interests of economic operators by competent authorities. It also provides a procedure for agents to request the National Commission on Markets and Competition to file an appeal for judicial review before the National High Court by means of a streamlined process. Finally, Article 28 allows consumers to inform the Market Unity Secretariat about obstacles and barriers and request a report. 20  Ferraz, Finan and Szerman (2021) and Hebous and Zimmermann (2021). 21  Ilzetzki (2023). 22  García et al. (2022). 6  Against this background, the long-term macroeconomic impact of the Next Generation EU (NGEU) programme will largely depend on how tenders are allocated among different firms. Moreover, this will provide an opportunity to assess the extent to which Spain has improved the level of competition in this area. The fourth factor relates to labour market regulations. The Spanish labour market has traditionally had a high incidence of temporary contracts (a cause of low labour productivity in themselves),23 a wage determination process that takes little account of each firms’ productivity and ineffective passive and active employment policies. Since the pandemic, regulatory changes such as the 2021 labour market reform have been introduced which have reduced the temporary employment ratio. However, a full assessment of these changes will need to consider many different aspects and a broader time frame.
Those charged with managing the major financial institutions need to continue to make the investments necessary to stay abreast of change and to get as close to the frontier as possible. This reality makes it even more important that we in the supervisory community continue to look for ways to address aspects of the existing supervisory regime that impose unnecessary costs and burdens or that pull resources and attention away from potential sources of risk to the financial system. Thank you. 4  BIS Review 54/2006

Specifically, the US and Europe, the two largest markets for Asia’s exports, are still facing steep challenges in the adjustment process and the situation is still rather fluid. For the US, the rather sticky structural constraints such as high unemployment and depressed housing markets suggest that self-sustainable growth momentum remains uncertain when policy supports are withdrawn. In the case of Europe, while some progress has been made in resolving the sovereign debt issue, risks remain on whether certain economies can overcome the challenge without substantial debt restructuring. Looking ahead, external demand from these two markets is likely to remain subdued in the near future. Meanwhile, closer to home, the disastrous earthquake and the ensuing nuclear crisis hitting Japan, a key importer and exporter for many economies in the region, is adding further downside risk to export and production growth in the region. Last but not least, political instability in the Middle East and North Africa (MENA) region will likely keep oil prices elevated for some time. This in turn would drag on global economic growth, add upward pressures on inflation and heighten volatilities in the global financial markets. 4. All these complications are making life difficult for policy makers in the region. While Asia, having learned well the lessons from the Asian financial crisis, has managed to get through the recent global crisis relatively unscathed, we are now entering uncharted waters, and there are both imminent and longer-term policy challenges. 5. First and foremost, it is challenging to manage the large capital flows.
In the United States and United Kingdom, it happened that banknotes issued by private banks were traded at a lower value than was printed on them. The advantage of government issue is that government banknotes are usually considered to be completely safe. This is the main reason why the government, via the central bank, is granted a monopoly on issuing banknotes. Quite simply, it has turned out to be easier for central banks, which are run in the national interest, by what is also best for society in the long term, to build the required confidence than it is for private companies that have profit motives. Substantial costs arise if confidence in the value of money disappears Right up until modern times, the value of banknotes and coins was linked to the value of a precious metal, such as silver or gold. But this link could be problematic as it meant that the supply of money was determined by access to precious metals and not by activity in the economy. 7 When production increased at the same time as the money supply was fixed, deflationary pressures arose. The bestknown example of this is the depression of the 1930s, when the restrictions under the gold standard led to serious deflation. Research has revealed the existence of a relationship between how quickly a land chose to abandon the gold standard and how quickly its economy started to recover.

José De Gregorio: The world economy, foreign exchange tensions, and recent monetary policy making in Chile Keynote address by Mr José De Gregorio, Governor of the Central Bank of Chile, at the Monetary Club of Universidad Finis Terrae, Santiago, 20 May 2011. *  *  *  Abstract This presentation discusses risks and tensions that have emerged in the global economy due to the ongoing process of world economic recovery and its implications on the Chilean economy. It reviews the decoupling of emerging economies from developed ones in terms of growth, the difficulties endured by developed economies to boost their feeble recovery, Europe’s public debt issues, the high commodity prices and symptoms of overheating in some emerging markets. This scenario has pushed emerging economies’ exchange rates to their lowest levels of the past decade. It stands out that, although an important step to change the composition of world demand, it has created tensions and in some cases has prompted the adoption of policies to mitigate exchange rate adjustments. Capital inflows have added pressure to the exchange rate discussion in some emerging economies and might favor an unhealthy increase in lending and incubate financial fragilities. Chile’s last forex intervention is mentioned. The differences in capital flows between Chile and other countries and episodes of substantial flows into emerging economies are described, emphasizing that large capital outflows from Chile have created a negative net balance.