samchain/econo-pairs-v1 huggingface dataset:
It is misleading to look upon the cash flow from petroleum activities as income. The appropriate economic perspective is to see the transfer of the cash flow to the Government Pension Fund as a way of transferring capital from one account to another – from petroleum to foreign securities. By doing so, we diversify risk. We must also strive for an equitable distribution of this wealth across generations. The Norwegian authorities have been successful in ensuring that the bulk of petroleum wealth benefits society as a whole. Both the state’s ownership interests through the State’s Direct Financial Interest in petroleum activities (SDFI) and the tax system have contributed. The companies that extract oil earn a reasonable return on their investments and have incentives to invest, but the economic rent has essentially accrued to the general public. Second, the size of the cash flow from petroleum activities also varies. If petroleum revenues were to be used as they accrue, this would lead to wide fluctuations in demand in the Norwegian economy. Third, the use of petroleum revenues has an impact on competitiveness in Norwegian business and industry. A high level and substantial variations in the use of petroleum revenues would have a negative impact on internationally exposed industries. The establishment of the Government Pension Fund and the spending guidelines for petroleum revenues are intended to meet these challenges. The government earns large net cash flows deriving from the oil companies’ sale of petroleum products in foreign markets.

Limited losses on subprime loans ultimately led to the destruction of millions of jobs throughout the world, and the links between finance and the real economy were cruelly laid bare. ii)  But finance can certainly not be considered “all powerful”: in my opinion, the world of finance only has the political power that State governments choose to give it. •  Granted, the difficulties some countries were facing, notably in the euro area, were exacerbated by financial market pressures – think back to the attacks on Italian debt in the summer of 2011. But if the markets were able to exert this pressure, it was because those countries had, in a sense, put themselves at their mercy by demanding that they finance their ever-expanding public deficits, even during periods of growth. •  In nearly all the crises faced by the euro area since 2009, it is true that market reactions were often brutal and even extreme. But these reactions were frequently based on legitimate fears: for example the sustainability of Greek debt, weaknesses in the institutions of monetary union and divergences in competitiveness between euro area Member States. Again, it was by failing to make the necessary efforts (to ensure budget discipline, preserve competitiveness or finalise the institutions of a European financial union, for example) that these countries put themselves in a position to be rushed or even pressured by the markets and bear the consequences of their overreaction. Governments should not use finance as an alibi or as a scapegoat.
Constantinos Herodotou: Address - Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF) Address by Mr Constantinos Herodotou, Governor of the Central Bank of Cyprus, at the Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF), Nicosia, 10 February 2022. *** It is my pleasure to address the open session of the Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF) today and present the current situation of the Cyprus and European banking sectors as well as the challenges ahead. I will also try to shed some light on the trends and developments in the banking industry. Let me start with an update on the Cyprus banking sector. We are now almost a decade after the peak of the Financial Crisis in Cyprus and looking at our banks' key financials, we observe a significant balance sheet derisking and an improvement in their loss absorption capacity. This is despite the shocks caused by the on-going pandemic. Specifically, the capital position of our banks, measured through the common equity tier 1 ratio rose from 14,2% at the end of 2014 to 17,2% at the end of September 2021. This is well above the EU average of 15,7%. In addition, during the same period a noteworthy clean - up from non-performing loans has taken place, where troubled loans in the banking sector have been reduced from 28,3bln euros in 2014 to 4,3bln euros in October 2021. Nonetheless, the NPL ratio in the Cyprus banking sector is still high, ca.

1/5  BIS - Central bankers' speeches  Under this light, banks' profitability is high on the agenda from a regulatory perspective. The level of Return on Equity of European Banks is shy on their cost of capital and below the respective level of other jurisdictions, like banks in the United States. A low Return on Equity compared to the Cost of Capital is a European structural issue and raises the need for formulating appropriate action plans, both by regulators and banks alike. If we want these actions to have an impact, we must first understand the factors that drive this weak performance. Overcapacity of the banking sector is a dominant factor. According to most indicators there are too many banks in Europe relative to the size of the market. This implies that there is significant scope to benefit from consolidation without exacerbating the problem of "too big to fail" through the creation of mega banks. Moreover, the Banking Union which has ended a prolonged supervisory divergence enhances the capability of reaping these benefits in a more efficient manner. Credit risk is inherent in banking and is considered a major challenge for the European banking sector. For countries that have a high level of legacy non-performing loans like Cyprus, this risk requires particular attention, despite the tangible improvement achieved in the last years. A weaker than expected economic environment may result in deterioration of asset quality.
However, the intensity of the adjustment the Spanish economy is undergoing in a setting of prolonged financial tension further compounds the pressure on the financial system in terms of asset impairment, increased bad debts, narrower banking margins and the gradual reduction in the buffers built up by the  6  BIS Review 124/2009  system. Not all institutions are equally prepared to face these factors. Accordingly, appropriate mechanisms – such as, in the current circumstances, the Fund for the Orderly Restructuring of Banks – are crucial for tackling the necessary restructuring processes, without that entailing a distortion in credit flows that may hamper the economy's path of recovery. To conclude, the Spanish economy is at a decisive crossroads where many challenges must be addressed to prevent the situation leading to a long period of economic weakness and to be able to embark on a new growth path based on a more productive and sustainable pattern. This is not the first time in our recent history that we find ourselves in such a position. We emerged from similar situations in the past with major advances and with vigorous growth once the necessary decision-making machinery had been geared up to undertake far-reaching reforms. This time need be no different. Only through medium-term stability strategies and ambitious and well-structured reforms can we overcome these difficult circumstances, paving the way for a new phase of dynamism and job creation that will further the outstanding trajectory of the Spanish economy in recent decades. BIS Review 124/2009  7

The ECB also provided an opinion on the MiFID II proposal.5 As you know, the MiFID II proposal extends pre- and post-trade transparency requirements from equity instruments (MiFID I) to additional asset classes such as bonds, structured finance products, derivatives admitted to trading or traded on a regulated market, a multilateral trading facility or an organised trading facility and derivatives considered eligible for central clearing. The aim is to enhance price formation and to support the evaluation process of such instruments. The requirements cover pre-trade transparency – i.e. the provision of quotes and market depth to market participants ahead of a trade – and post-trade transparency – i.e. the timely publication of the prices and volumes upon trade execution. These mandatory transparency requirements represent a major change, especially for the fixed income market. For brevity, I will only address the issue of post-trade transparency. As we have known since the publication of the seminal work of the Austrian economist and philosopher Friedrich Hayek, prices reveal information that is dispersed among the numerous individual members of an economy. As a consequence, market outcomes are directly influenced by the time and degree to which prices and volumes are disclosed to the public. In reality, different markets are subject to different transparency regimes and disclosure requirements, which are a consequence of the existing heterogeneity among both financial assets and market participants.
But we need to recognize that this ambition to achieve social justice is no longer sufficient. We cannot be content with an ex-post "repair" of inequalities. xvii We have to create equal opportunities for all ex ante, and this is the second requirement, that of individual autonomy through education. Page 7 of 10  2.2  The major requirement: aspiring to autonomy through education  It is clear that education must be the absolute priority: to offer all citizens the same opportunities for success, regardless of their social background. It is the best way to prepare each and every citizen for the knowledge economy and the technological transformations that he or she will have to face. It is the prerequisite for social mobility, in order to reduce the “longitudinal” inequalities between generations. And hence, it increases growth by raising the “human capital” of a country. In Europe, we have some of the best education and vocational training systems. For example, the effective Finish education model and the quality of German and Swiss teaching. The skill levels of European students are on average higher than those of OECD countries xviii in terms of mathematics and science scores and of understanding written texts. As well as performing better, our education systems are more democratic thanks to higher enrolment rates xix – 90% in Europe compared to 84% in the United States xx – and lower average tuition fees.

xxi But it is clear that there is a significant North-South divide in Europe in terms of education; and France – it must be said – is "southern" and inegalitarian. PISA studies show that France is the G7 country where academic performance of pupils is the most highly determined by their social environment. xxii This observation illustrates what the Nobel Prize winner Jean Tirole described as the “délit d’initié” or rigged system. xxiii This collective failure also contributes to a structural unemployment rate that is still too high in France, i.e. around 7 to 8%. This challenge is common in Southern Europe, and goes hand in hand with another one: at long last developing apprenticeships and vocational training. There are now fewer young people in apprenticeships in France, Italy and Spain combined than in Germany alone... while there are many more young people, and young people unemployed. It is not a paradox, but rather an explanation... and a call for action. The "Avenir Pro" law passed in France  Page 8 of 10  in 2018 must now be implemented, and Italy’s way out of economic stagnation can be achieved by taking the same tack. 2.3  Commitment to the environment and climate  The third requirement of the European model is a firm commitment to the environment and climate. This issue is currently the largest unifying factor among the young as well as older generations throughout the world. The last European elections showed this clearly.
This analysis of policy frameworks would help to focus bilateral surveillance, and provide a better basis for multilateral surveillance, and for integrating the two. It should throw up issues that could be pursued either with individual members or broader groups as appropriate. An annual remit Better guidance for Fund surveillance should be buttressed by strengthened accountability for performance. For this, we need a clearer definition of what the Fund’s surveillance is expected to deliver. A good way of doing this would be to set an annual surveillance remit for the Fund’s Managing Director - an idea endorsed by the IMFC last April. There are a number of overlapping mechanisms for setting priorities and assessing performance which now operate across the broad range of the Fund’s work programme, through the Executive Board. But a surveillance remit would provide a sharper means for holding Fund management and staff to account for their performance on this key aspect of their work. Of course, it would need to work with the grain of the Fund’s overall governance arrangements. This throws up two tricky issues. First, who sets the remit and how? And second, how is the Fund’s performance to be evaluated, and by whom? These issues require detailed consideration, but let me offer a few thoughts.

The capitalist system depends on owners of capital to promote sustainable value creation through market discipline. Is it simply short-term profits that matter? Are there other social or environmental purposes that must be safeguarded? To this end, the Securities Commission’s Malaysian Code for Institutional Investors articulates the stewardship 3/5  BIS central bankers' speeches  role that shareholders ought to play. Ultimately, shareholders need to clarify that – we need more than just the bottom line – immediate profit is not everything. (b) Situation Let us move on to the second element – the “situation”. The system of values creates and maintains various situations. The situation represents the environment or immediate setting in which financial industry professionals operate. This is a broad subject. Today, I wish to focus on two types of situational incentives. Firstly, remuneration structures. And secondly, the attitudes toward speaking up. Remuneration plays a significant role in influencing behaviour, including ethical choices. Admittedly, the task of designing and implementing a remuneration system to encourage professionalism and integrity is not straightforward. However, the intuition is simple and attainable: financial institutions should avoid the folly of rewarding A, while hoping for B. In other words, we cannot hope for or expect ethical behaviour so long as we continue rewarding people for acting otherwise. In this regard, the Bank is currently phasing in requirements consistent with international standards to align remuneration with prudent risk-taking – with a focus on material risk takers.
During that time, the Riksbank was legally responsible for the exchange rate regime, and the reasons therefore for considering ERM participation were quite simply to prevent the regime of floating exchange rates from constituting a formal obstacle to Swedish participation in monetary union, in the event this was to become a possibility. When the government then decided that there was insufficient popular support for Swedish participation in monetary union, the question of changing the exchange rate regime was dropped. In connection with the Riksbank being made formally independent in 1999, new legislation on exchange rate policy was also introduced. Nowadays, it is the government that decides upon the issue of our exchange rate regime, although the Riksbank determines how it is to be implemented. In other words, it is the government that would decide whether and when the krona should join the exchange rate mechanism ERM2. Following that, the ministry of finance and the Riksbank would decide what rate between the krona and euro we assess to be consistent with a stable development of the economy. There are very good reasons to agree upon a common line of action. This is why we are holding discussions already among toplevel officials about an appropriate line of reasoning, the results produced by different estimation methods, etc. If we do not reach agreement, it is likely to be difficult to hold effective discussions with our European partners.

Examples of such factors are, internationally determined raw material prices, changes in taxes and subsidies and interest expenses for housing. An increase in value-added tax would, for instance, temporarily lead to increases in CPI. To counteract such price increases, monetary policy would be forced to dampen the real demand in the economy regardless of the level of resource use in the economy. To avoid such unnecessary fluctuations in production, we disregard from factors which we assess only temporarily affect consumer prices, for example interest expenses, taxes and subsidies. The inflation target regime tested in a strong upswing! Before the economy had adapted to the new inflation target regime and inflationary expectations still remained at too high a level, it was not as evident that monetary policy in the short term could contribute to maintaining the growth of its long-term growth track. In order to bring inflation expectations down, higher interest rates were required and thus lower demand than if inflation expectations had immediately been adapted to the new regime. Although the economy is now approaching balance, all parts of the low inflation regime have still not been tested. During the entire 1990s, the use of resources has been under its long-term growth track. It is first during the few years to come that we will have a real test of how well the new regime has penetrated in Sweden. In earlier speeches, I have developed my ideas around the mode of functioning of the labour market.
It is not, as one might sometimes get the impression in the current debate, a result of the Riksbank systematically putting on the brakes, thus pushing down demand and holding back price increases. If this had been the case, the low inflation would have gone hand in hand with a much weaker growth in the economy. So is this development in inflation a poor result for monetary policy? It is of course possible to have different opinions on this. But from what I have said so far, it should be clear that I believe there are good explanations as to why inflation has been slightly lower than the target. The repo rate has been cut more than it has been raised during this period, and there have been changes in the economy – which have been difficult to forecast and often beneficial – that have dampened inflation.6 To gain further perspective, it may also be valuable to go back to where I started, twenty years ago, just before the inflation target was introduced. As I observed earlier, the high inflation trend at that time was a fundamental problem in the Swedish economy. During the decades preceding the crisis of the 1990s, average inflation was almost in double figures and varied substantially from year to year.

On 6 October, a statement of government policy declared that there was almost total support for the hard currency policy and that the prospects of success were good. We all know what happened. Just over one month later, on 19 November, the Riksbank was forced to give up the fight and the krona was allowed to float, or perhaps I should say sink. As I have understood things with hindsight, there was no clear plan in place as to how monetary policy would be conducted from then on.1 And this was perhaps not so strange – with the exception of a couple of brief periods between the wars, Sweden had had a fixed exchange rate for the past 120 years. So it was probably difficult to think along new lines. The aim also seems to have been that Sweden would return to some form of fixed exchangerate system as soon as possible, and so the idea was to find some way of conducting monetary policy until then. Inflation targeting has worked well, but has been criticised Some countries, New Zealand, Canada and the United Kingdom, had begun to apply a new type of monetary policy known as inflation targeting. This entailed setting a numerical target for inflation, which the central bank then tried to attain by using the policy rate to affect aggregate demand. Sweden also jumped onto this bandwagon and it proved to be a much more enduring solution than most people expected at the time.
The Riksbank rejects issuers with a large climate footprint I believe it is better to instead focus on the issuers, and to make an overall assessment of how they work to promote a sustainable climate. Indicators of this could be, for instance, their greenhouse gas emissions. This is how we are now beginning to give consideration to sustainability in our new risk and investment policy. We will not invest in assets issued by issuers with a large climate footprint when we are choosing other assets than those best corresponding to our policy need. This has some consequences for the holdings in our foreign exchange reserves. The Riksbank has invested around 8 per cent of the foreign exchange reserves in Australian and Canadian central and federal government bonds, as they give relatively high yield and a good diversification of risk, at the same time as being traded on liquid markets. But Australia and Canada are countries that are not known for good climate work. Greenhouse gas emissions per capita are among the highest in the world, but vary considerably between the different states. For instance, greenhouse gas intensity is more than three times higher in production in Alberta than in Ontario and Quebec. As a result of the new investment policy, we sold our holdings of bonds issued by Alberta in the spring. For the same reason, we have recently sold our holdings in bonds issued by the Australian states of Queensland and Western Australia.

How is the Riksbank’s work affected by climate change and how can the Riksbank contribute to greener financial markets? The economy changes The international economic playing field has changed in many ways in recent years. Let me give some examples: •  The geopolitical situation has deteriorated and nationalistic tendencies have become more common. This has led to increased protectionism and new  Many employees have contributed valuable comments on the first draft of this speech. I would like to thank in particular Iida Häkkinen Skans, Björn Lagerwall, Åsa Olli Segendorf, Rebecka Hallerby and Marianne Sterner. *  1 [7]  • •  •  •  trade barriers. After many decades of increased international trade and international capital flows, globalisation has now taken a step back. 1 China has emerged as an increasingly important actor on the world market. This has led, for instance, to increased saving in the world economy and contributed to lower interest rates. 2 Life expectancy has increased and we anticipate spending a longer period in retirement. Population growth is falling in the major economies. As a result, GDP growth and investment needs are lower, but we wish to save more. All of this contributes to lower interest rates. Digitalisation means that we do our shopping in new ways. E-commerce is becoming increasingly common and websites for price comparison are used regularly. Consumption is shifting from goods to services and experiences, often with low marginal costs in production.