samchain/econo-pairs-v1 huggingface dataset:
I see several reasons why this is the right thing to do. I do not believe that the Swedish asset purchases will significantly affect how expansionary monetary policy is when the financial markets are functioning well. In that case, selling bonds does not entail any significant tightening of monetary policy. I do not mean that sales would go unnoticed. On the contrary, I believe that sales would lead to price movements and some disturbance in the market. But that is exactly what we should avoid. The Riksbank should as far as possible avoid interfering in market pricing. The arguments against active sales are strengthened by the fact that the maturities of many of our assets are relatively short. In principle, it would be good if we  45 I have highlighted the risk to the Riksbank's finances (Flodén 2016 and 2018, as well as my contributions at the  monetary policy meetings in December 2017, April 2019 and November 2020) and risks to the functioning of the government bond market (April 2019). I have also pointed out that it is desirable that pricing of risk should normally be left to the market (November 2020 and November 2021). 24 [30]  could rapidly reduce our holdings of private securities, that is, mortgage and corporate bonds. However, these assets have the shortest maturity and almost the entire holding will mature within five years (see Figure 14).46 The strongest argument for active sales concerns government bonds.

Likewise important from the standpoint of the industry’s resilience has been the deleveraging undergone by the Spanish non-financial private sector during this period. From 2010 to 2019 there was a decline of almost 30 pp of GDP in the household debt ratio; and in the case of the non-financial corporations sector, its net debt fell by more than 45 pp of GDP from 2010. 1  In any event, the most appropriate means of illustrating the banking sector’s resilience is through the stress tests we regularly perform as supervisors. In July, the ECB conducted a vulnerability analysis of the banks under its supervision. The aim was to test, prospectively, banks’ resilience to the shock caused by the pandemic. The results of this exercise for Spanish banks are very similar to those obtained at the Banco de España in the Forward Looking Exercise on Spanish Banks (FLESB) stress test exercise, whose final results were published in our autumn Financial Stability Report. In the baseline scenario considered by the Banco de España’s vulnerability exercise, which includes cumulative declines in euro area GDP in 2020, 2021 and 2022 of around 1.6%, the reduction in the solvency of Spanish banks as a whole was estimated at 2 pp for significant institutions with an international presence, at 1 pp for other significant institutions and at 0.8 pp for institutions under the direct supervision of the Banco de España, leaving them at 9.9%, 12% and 18.7% on average, respectively, above the prudential requirements established.
Recall that FOMC statements around the time of the taper tantrum stated that asset purchases would continue “until the outlook for the labor market has improved substantially in the context of price stability,” and it is possible that many market participants took the signal from an impending taper that the FOMC was less committed to the goal of a substantial improvement in the labor market than they had thought. Not only could this have affected some investors’ expectations for the balance sheet going forward, but it could have also affected views on the FOMC’s other policy tool: the overnight interest rate.23 A related possibility is that in the current situation expectations for a very gradual program of increases in the federal funds rate are relatively well entrenched, with liftoff more than a year and a half behind us. In 2013 market participants were focused on policies that would add more 9 / 15  BIS central bankers' speeches  accommodation. Under the “recruitment effect” proposed by former Governor Jeremy Stein and Sam Hanson of Harvard Business School, yield-oriented investors react to lower short-term rates by “reaching for yield” into longer-dated maturities, and reverse this effect when short-term rates rise. These effects can be even larger when balance sheet policies are in active use.24 As a result, a shock to expectations of the central bank’s reaction function can lead to outsized movements in longer-term rates.

In our case, about 46% of women participate in the labor force. Why activity rate of women on the labor market is low? According to a World Bank survey, about half of the inactive women reported that they do not seek employment because of family or caring responsibilities – twice the share of women stating this reason in the EU28. Another economic impact is also visible through the income channel. For example remittances, which are very important source of disposable income in the region including our country, plunged across the board last year. According to the UN study, the decrease was more prominent among women than men; especially among women in rural areas, and among women 35–44 years of age. Although wage data is still not available to see how the COVID crisis has affected this wage gap that existed even in the pre-crisis period, some indicators point out that probably the wage gap has widened throughout this period. For example, in North Macedonia assessment is that the wage gap has hovered throughout the range of 16–20%, which is already large. Apparently, the crisis has hit women and men unevenly, which is a natural consequence of the fact that it did not hit all the sectors equally. It had more pronounced effect on the services, especially services dependent on social interaction, and informal economy where women tend to be presented more. For example, in our country these sectors employ about 27% of all employed women and about 25% of all employed men.
Monetary policy shall also underpin fiscal policy by contributing to stable developments in output and employment. • Norges Bank is responsible for the implementation of monetary policy. Fafo og Makt- og demokratiutredningen 6. september 2002  Norges Bank’s mandate reads as follows: Monetary policy shall be aimed at stability in the Norwegian krone’s national and international value, contributing to stable expectations concerning exchange rate developments. At the same time, monetary policy shall underpin fiscal policy by contributing to stable developments in output and employment. 2  BIS Review 50/2002  Monetary Policy Regulation (2) • Norges Bank's implementation of monetary policy shall, in accordance with the first paragraph, be oriented towards low and stable inflation. The operational target of monetary policy shall be annual consumer price inflation of approximately 2.5 per cent over time. Fafo og Makt- og demokratiutredningen 6. september 2002  Norges Bank’s implementation of monetary policy shall, in accordance with the first paragraph, be oriented towards low and stable inflation. The operational target of monetary policy shall be annual consumer price inflation of approximately 2.5 per cent over time. The first paragraph of the mandate sets forth an objective. The last paragraph specifies what Norges Bank shall do. The first sentence in the mandate refers to the value of the krone. Stability in the national value of the krone implies that inflation must be low and stable. Low and stable inflation fosters economic growth and stability in financial and property markets.

Is there, for example, a risk of a situation arising where Norges Bank tightens monetary policy to achieve the inflation target, while at the same time the central government authorities increase the use of petroleum revenues (more than implied in the fiscal policy guideline) in order to increase employment and reduce unemployment? 2  4  Report 29 (2000-2001) to the Storting: Guidelines for economic policy. BIS Review 50/2002  There are various factors that can prevent the interplay between monetary and fiscal policy from 3 functioning. Interplay functions well when the decision-making bodies are conscious of how one body’s decisions influence the decisions of the other. Unless this fact is recognised, a decision will not produce the result that was planned. The economy may move in a very undesirable direction, with 4 high interest rates, sluggish economic growth and deterioration in the state’s financial position. However, even without continuous coordination, a fairly good result may be achieved if fiscal policy 5 acts as “leader” and monetary policy as “follower”, to use expressions taken from game theory. The authorities determine fiscal policy knowing how monetary policy will react. Today’s flexible inflation targeting establishes a firm framework for monetary policy and provides clear guidelines on how monetary policy is to respond in different situations. The fiscal policy authorities can internalise the monetary policy response pattern. This is only natural, since the mandate for monetary policy was laid down by the Government and the Storting.
In addition, the policy interest rate was lowered by 0.75 percentage points last year, the króna has appreciated by over 16%, the Central Bank has bought more than 350 b.kr. worth of foreign currency, the foreign exchange reserves have grown by over a third in foreign currency terms, and capital controls have been almost completely lifted in three large steps. These are substantial changes in a single year – changes that will presumably take their place in economic history. What lies behind these developments? How could the domestic economy grow by more than 7% in 2016 without overheating and unleashing inflation? Five major factors are presumably of considerable significance whose mechanism it is important to understand in order to assess what comes next and formulate appropriate economic policy responses. First of all, the supply side of the economy is more flexible than before, owing to increased economic integration with the rest of the world. The EEA Agreement plays a large role here, but so do other trade related agreements and 1  general market-driven developments in the global economy. Because of this, when demand pressures start to develop, it is easier than before to mitigate them: by importing labour and other production factors, by using foreign inputs in domestic production chains to a greater degree, or by moving a portion of operations out of the country. Last year, for instance, net migration among foreign nationals was closing in on the previous peak from 2006.

In one example, a PPI policy bundled with a mortgage – cost the customer more than £ over the term of the loan, even though the maximum amount claimable was only £ The FSA reported that this abuse stemmed from “a culture in banks and other firms that focussed on profit over customer outcomes”. Closer to our region, we saw in 2001 the unexpected failure of the Australian HIH Insurance Group, which experienced estimated losses totalling AUD 5.3 billion. This was attributed in part to a culture where the board was “unduly deferential” to management, and staff simply did not question leadership decisions. In fact, instances of failures in professionalism and integrity do not seem to have waned since the global financial crisis. According to the Boston Consulting Group, banks have paid fines amounting to USD 321 billion to regulators around globe since the crisis through the end of 2016. Instances of misconduct range widely – from the well-known rigging of LIBOR and Euribor rates, to the more recently uncovered case of Wells Fargo, where over 2 million fake accounts were 1/5  BIS central bankers' speeches  opened under a senior management who fostered “an atmosphere that prompted low quality sales and improper and unethical behaviour”. Our financial industry is not invulnerable to the ethical challenge. In the 1980s and 90s, we had cases of Malaysian banks that suffered significant losses arising from imprudent lending under ethically questionable decisions by top management.
The second is that the calculation of the rule – or policy reaction function – is extraordinarily complex. Moreover, these two problems interact, in that the complexity of the decision rule is increased enormously when the possibility of learning about the true model is introduced. So although policy rules offer important insights they do not provide a practical guide to decision-making, and it is useful to examine more deeply why that is the case. No economist can point to a particular model, and in honesty say “that is how the world works”. A crucial difference between economic and, say, meteorological analysis is that in economics there are no natural constants, not even for the natural rate of unemployment. Our understanding of the economy is incomplete and constantly evolving, sometimes in small steps, sometimes in big leaps. The stock of knowledge is not static. So any monetary policy rule that is judged to be optimal today is likely to be superseded by a new and improved version tomorrow. In other words, there is no time-invariant policy reaction function which could describe the policy intentions of a central bank. Rather, monetary policy in practice is characterised by a continuous process of learning embedded, in the case of the Bank of England, in the rounds of meetings and forecasts that are the daily life of the Monetary Policy Committee.

To describe monetary policy in terms of a constant rule derived from a known model of the economy is to ignore this process of learning. So how should central banks behave in the light of their ignorance? Two approaches have been suggested. Interestingly, at one end of the spectrum, both Milton Friedman and Robert Lucas argued that policy should be based on a simple rule precisely because of our ignorance. Central banks, in their view, should have limited ambitions and aim simply at steady growth of the money supply – the so-called k% rule under which the money stock rises at a fixed rate, k%, each year. As Friedman (1968) put it, “Steady monetary growth would provide a monetary climate favourable to the operation of those basic forces …… that are the true springs of economic growth. That is the most that we can ask of monetary policy at our present state of knowledge”.9 The principle of adopting a strategy that takes into account limits to our knowledge is a sound one. But advocates of a rigid k% rule argue that we should ignore all other sources of information (estimates of the output gap, for example) and allow any shocks to the velocity of money to feed through to activity or the price level. In practice, experience in both Europe and the US has shown that velocity shocks can be large and few economists now advocate the use of k% rules. So committing to a wholly inflexible rule is likely to be neither desirable nor credible.
BIS central bankers’ speeches  5  Figure 1  World output (*) (index, second quarter 2007=100)  Unemployment rate (*) (percent)  120  120 10  10  110  110  8  8  6  6  4  4  2  2  100  100  90  90  07  08  09  10  08  Jul. 09  Jul. 10  Jul. Emerging economies  Developed economies  (1) Regions weighted at PPP. Developed economies include: Australia, Canada, the Eurozone, Japan, Sweden, Switzerland, the U.K. and the U.S. Emerging economies includes: Argentina, Brazil, Chile, China, Colombia, Hong Kong, India Indonesia, Israel, Malaysia, Mexico, the Philippines, Saudi Arabia, South Korea, Russia, Singapore, Taiwan, Thailand and Venezuela. (2) Regions weighted at PPP. Developed economies include: Canada, the Eurozone, Japan, the U.K. and the U.S. Emerging economies include: Brazil, Mexico, South Korea, Thailand and Taiwan. Sources: Central Bank of Chile based on Bloomberg, OECD and each country's statistics offices, and U.S. Federal Reserve.

In multilateral terms, the appreciation has also been smaller, because of the dollar’s loss in value with respect to other currencies; even some currencies of Chile’s trading partners have shown higher bilateral appreciations than the peso (figure 10). Among the long-lasting elements underlying this appreciation, we may highlight improved terms of trade, a better cyclical position of the Chilean economy compared with developed ones, the accumulated increase in the ratio of public expenditure to GDP and the reduction in our net debtor position relative to the rest of the world. In Chile, net capital flows have been limited. We have seen capital inflows as direct foreign investment and placement of bonds abroad by Chilean firms. But at the same time, these inflows have been offset by outflows due to higher investments abroad by residents, including pension funds. Considering the level of the nominal exchange rate and currency parities prevailing at the statistical closing of this IPoM, the real exchange rate (RER) is around its minimum consistent with its long-term fundamentals. The baseline scenario of this IPoM uses as a working assumption that the peso will post a moderate real depreciation into the long-term. Projections also use the assumption that the monetary stimulus will continue to be gradually withdrawn at a pace comparable to what can be inferred from the various expectations surveys (figure 11). The Board hereby states that this will depend, in any case, on the unfolding of domestic and external macroeconomic conditions.
35 See also the article “The coronavirus is highlighting the need for flexibility in the new Sveriges Riksbank Act” in Sveriges Riksbank (2020b). 16 [35]  With hindsight, we can say that the measures together contributed to being able to avoid a credit crunch and to maintaining the stability of the financial system. 36 Other contributing factors were measures taken by other central banks and other Swedish authorities. At the same time, we avoided a larger and more lasting downturn in the economy, which was positive for inflation prospects, for instance. In other words, there was no conflict of interests between on the one hand maintaining financial stability, and on the other hand supporting the real economy, as well as maintaining price stability. The pandemic showed, as I see it, that the Riksbank needs in certain situation to use a combination of several tools – not just the policy rate – to obtain the desired effect. The tools need to be fit-for-purpose under different conditions and in situations that can be difficult to specify in advance. It must also be possible to use them with a large degree of flexibility. This is particularly important when a combination of measures is needed. 37 The Government has in its proposal for a new Sveriges Riksbank Act proposed several restrictions to practical monetary policy. These include narrowing the definition of what is regarded as monetary policy, compared with the present one, and also restricting the Riksbank's power to use different monetary policy tools.

It may seem as though competition and efficiency will only increase as digitalisation increases. But the payment market is distinguished by positive network effects. This means that when new users connect to a payment solution, there is increased benefit for all participants. This means that the market could ultimately be dominated by one or a couple of large companies that attain  8 It is of course also important to have a stable fiscal policy to ensure there is confidence in the currency. 5 [35]  monopoly status. It is therefore important that the state takes responsibility and regulates the market, but as new products are positive for consumers, the state also needs to implement measures to benefit competition and innovation. 9 These new types of company that have begun competing on the payment market often have as business concept to gather and analyse data, which means they can offer cheap services. This so-called FinTech sector has grown rapidly and is now challenging the banks. In general, increased competition is positive, as it leads to lower prices for companies and customers. However, it is important that the same rules apply to all players on the market, and that the legislation also stays apace of the emergence of new phenomena, which can be difficult to classify and to scrutinise. Sometimes the changes on the payment market occur very quickly. In China, it didn’t take long before companies like Alipay and WeChat Pay had taken a dominant position. This is where network effects come in.
It is in many ways obvious that asset purchases will have an effect at the height of a financial crisis when the markets are functioning poorly. By entering as a buyer, price falls can be limited. This enables the central bank to reduce the risk that expectations of large price falls and rising risk premiums will be self-fulfilling. It is also easy to see the potential problems with such measures, for instance that the central bank has to carry risk that the market no longer wants to or can price and that private agents are not fully affected by the consequences of their risky investments. It is not as self-evident that asset purchases contribute to making monetary policy more expansionary when the financial markets are functioning normally, but the policy rate is limited by its lower bound. In recent years, however, an extensive research literature has emerged, trying to investigate how asset purchases function.1 The literature identifies several mechanisms that the asset purchases can work through, and also finds some empirical support for central banks’ asset purchases having worked well.2 My interpretation of the experiences in Sweden differs somewhat from the general interpretation of the international experiences, however. To facilitate the continued discussion, I divide the asset purchases into two main phases (see Figure 1). The first phase concerns the purchases of government bonds prior to the pandemic. The second phase concerns the purchases of securities decided during and after the pandemic.

For example, housing prices rose rapidly in many other countries, and also in countries where central banks did not purchase mortgage  14 [30]  bonds (see Figure 10).25 A more important explanation for the price increase was probably that demand for housing increased during the pandemic, when many began planning for a future where they could work from home to a greater extent.26  Asset purchases should have been concluded earlier However, whatever measures were behind this development, I believe that we could have responded to this information in autumn 2020. I am thinking in particular of our monetary policy meeting in November 2020, when we decided to extend and prolong the asset purchase programme. The main elements of the change were that the framework for the total purchases of assets under the programme was extended from SEK 500 billion to SEK 700 billion and that purchases would continue until the end of 2021 instead of the end of the first half of 2021. At this time, it was still very uncertain how the pandemic would develop and how it would in turn affect the economy. Although the economy had begun to recover after the closures during the start of the pandemic, the spread of infection had gained new momentum in the run-up to the monetary policy meeting and uncertainty in the financial markets increased again.