samchain/econo-pairs-v1 huggingface dataset:
At the same time, the significance of one particular sector should not be over-emphasised; employment at Ericsson corresponded to approximately one per cent of the total number of employees in Sweden. In recent times, the Swedish economy has been characterised by a clear division into two parts. Employment in manufacturing declined during the greater part of 2001 and this development has continued during spring 2002. On the other hand, employment in the private services sector increased last year, although this rise has been subdued slightly during the spring. A generally weak demand in industry, combined with problems of a more structural nature in the information and telecom sector has led to considerable cutbacks in employment and vacant production capacity within these parts of the economy. At the same time, the expansionary economic policy has been a contributing factor in sustaining the demand for consumer goods and services. This is the explanation for employment remaining at a high total level and even strengthening somewhat during 2001, despite the decline in economic activity. Developments during spring 2002 indicate a slight weakening on the labour market and although growth in the Swedish economy is expected to recover this year, the positive effect on unemployment will probably be delayed until next year. The number of job vacancies has increased during the first four months of the year, while the number of notices of redundancy has declined. However, unlike last year, many of the vacancies are temporary summer jobs.

As inflationary pressure can vary according to demand and changes in the level of resource utilisation, the events caused the Riksbank and other central banks to decide to lower their instrumental rates shortly after the attacks. Now that almost exactly nine months have passed, we can conclude that the impact on the global economy was less than feared, although some sectors, such as the airline industry, were hard hit. Furthermore, we are seeing increasing signs that economic activity is improving both in the USA and Europe. One factor that often contributes to turnarounds in economic activity is companies’ stockbuilding. When stocks are well-filled and sales decline, companies cut back on production so that it becomes even lower than demand. This destocking then pushes economic activity down to begin with. When the cutback in stocks gradually reaches an end, companies can increase production again without waiting for demand to increase. This gives increased strength to the upturn in activity. It is probable that this is the case right now; according to several indicators production has begun to increase and a certain amount of optimism is beginning to spread. The total economic policy is expansionary in many countries, which provides additional fuel to the sequence of events. The economic situation in the USA and Europe This means that demand on Sweden’s most important export markets is increasing. The turnaround has been particularly noticeable in the USA. There, both residential construction and household demand have been upheld during the economic slowdown by stimulation policy.
The market value of households’ financial and housing assets has fallen by over 10% over the past two years. Does this mean that there is some form of hole in households’ balance sheets that will weigh on the recovery as they seek to repair it? 2  This increase reflects purchases of assets. It does not include the returns from these investments. BIS Review 114/2009  3  Any real or perceived need for households to rebuild their balance sheets may play an active role in determining their levels of spending. 3 For example, the cost of financing debt and the uncertainty about future employment prospects may make households reluctant to exceed a certain level of net borrowing. In this case, the deterioration in the financial position of some households may cause them to spend less in order to repay debt or increase savings. The “payback period” I mentioned earlier. This possibility has focussed much recent attention on the state of households’ balance sheets. But standard measures of households’ financial position – such as the ratio of debt to assets – may exaggerate the severity of the problem. That is because these conventional measures suffer from a “missing” asset and a “missing” liability. Let me explain. The “missing” liability is the cost of purchasing a house in the future. This argument is directly related to the redistribution argument I discussed earlier.

A natural place to start would be with the “consumption boom”, which is often presumed to have preceded the bust. But in fact there was no such boom. Between the turn of this century and the onset of the financial crisis, consumer spending increased no faster than it had done, on average, over the past 40 years. 1 Moreover, the fraction of our national output consumed by households did not increase. The kernel of truth in the consumption boom story is that changes in the distribution of our national income meant that this stable growth of aggregate consumer spending was associated with a sharp decline in the household savings ratio. The proportion of income that households set aside fell from close to 10% in 1997 to a little over 2% ten years later. Although there was no spending boom, households were making less provision for the future. Where did all the debt go? But how does the absence of a spending boom fit with the headlines about the rise in debt. The big increase in household debt over the past decade is certainly not a myth. Household  1  Consumption growth was, however, unusually strong in the period 1996-2000. My colleague Andrew Sentance has stressed the importance of analysing trends in consumption over longer periods (eg Sentance 2007). 2  BIS Review 114/2009  debt as a proportion of income increased from 100% to 165% in the 10 years to 2007.
Before turning to the focus of this talk – the measurement of household inflation expectations – I want to provide a quick summary of market-based and professional surveys. The difference in yields between nominal and real government debt can be used to derive a measure of market inflation expectations for the price index used to protect the holders of real government debt from inflation. In the United States, that price index is the consumer price index (CPI). Thus, if the nominal 10-year yield is 3.5 percent and the real 10-year yield is 1 percent, one crude measure of average CPI inflation expected over the next 10 years would be 2.5 percent. Further, if the nominal 5-year yield is 3 percent and the real 5-year yield is 0.2 percent, then a crude measure of average CPI inflation expected over the next 5 years would be 2.8 percent and a crude estimate of the 5- to 10-year forward average CPI inflation would be 2.2 percent. BIS central bankers’ speeches  1  I say crude because such calculations ignore any difference in liquidity between and within the two types of debt, any compensation investors require for the uncertainty of the real value of nominal coupon securities and a variety of other issues, such as the fact that Treasury Inflation-Protected Securities (TIPS) are indexed to the CPI with a time varying lag. There are numerous ways to measure inflation expectations that take into account liquidity differences.

Indeed, since 1998, the median forecast from this SPF question has stayed within a very narrow range. However, the amount of disagreement around this median has increased recently. Much of this increase is related to lower forecasts for the 10-year average. During the past decade many central banks have begun to explore ways to improve through surveys their measurement and understanding of the public’s inflation expectations. At the New York Fed in November last year we had a conference where many different aspects of this research were discussed. In addition to initiating new surveys and gradually moving from traditionally qualitative to more quantitative questions and measures, research is being conducted to analyze the quality and information content of survey-based measures of consumer inflation expectations. In late 2006 at the New York Fed we initiated a major research project to examine a number of issues: First, what is the best way to measure the public’s inflation expectations in terms of inflation concepts and forecast horizon? Second, how do households form and update their expectations of future inflation: to what extent are they based on past inflation experiences and what information sources do they rely on? Third, do people act on their expectations and if so, how? My remarks today will mainly focus on the first set of issues, but I will conclude with some preliminary research on the other two.
Though the current liquidity levels in the Swiss franc money market are still extremely high, and interest rates are fluctuating around zero, conditions on the money markets have slowly started to normalize and extremely negative rates have disappeared. This is reflected in the recent increase of the three-month Libor, which can be ascribed to a normalisation of the rate’s risk premium and should therefore not be seen as a change in monetary policy. Though few loans are currently being concluded on the interbank market, the Libor remains an important benchmark for many credit transactions in the economy. Concluding remarks The period of low interest rates in which we live is the outcome of cyclical and secular circumstances which are unlikely to last forever. Even if we accept the “savings glut” hypothesis, the demographical and regional factors to which it refers could soon lose relevance. While the call for deleveraging should prompt increased savings in advanced economies, the demographic forces in the west are likely to have an opposite effect on the supply of savings. Similarly, the maturing of emerging markets in the east should lead to smaller current account surpluses and to a gradual reduction in the build-up of precautionary reserves by public authorities. It is also clear that the increased risk appetite associated with the “Great Moderation” was, at least to some extent, based on over-optimistic assumptions.

The unemployment rate has decreased close to its record lows, while the number of vacant jobs has approached its record high. To fill the new jobs, we need either an inflow of labour migrants, or a redistribution of the current labour force among regions, industries, and enterprises. This process is objectively slower than the return of the available labour force to work during the period of the recovery growth. A higher competition for specialists between employers is promoting the conditions for an increase in wages. It is essential that a rise in wages is consistent with the growth of labour productivity in the relevant sectors. Otherwise, it will entail higher costs which enterprises will pass on to consumers, and the rise in nominal wages will be ultimately absorbed by inflation. We keep our GDP forecast unchanged for the next year and further on. An additional tightening of monetary policy aimed at returning inflation to the target is coherent with the positive contribution of external demand and investments from the National Wealth Fund made to aggregate demand. GDP will increase by 4–4.5% this year and by 2–3% further on, which is in line with the sustainable growth path. Monetary conditions have changed only slightly after the September meeting. An increase in market rates following the rise in the key rate currently has only a limited effect on them. This is largely associated with the impact of higher inflation expectations.
Yields on government securities are at their lowest-ever levels (Chart 19), as are yields on investment-grade corporate bonds. Borrowing costs for households and smaller businesses have not fallen as far as for governments or larger companies. That explains why, despite monetary easing, overall credit conditions are somewhat tighter than at the start of the year. Nonetheless, the overall monetary stance, in the UK and globally, remains highly accommodative by any historical metric. For example, real interest rates in the UK have fallen into even more deeply negative territory since the Covid crisis (Chart 20). 20  All speeches are available online at www.bankofengland.co.uk/speeches  20  Chart 18: Global financial conditions index Standard deviations from historic average  7 6 5 4 3 2 1 0 -1 -2  1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Sources: Bloomberg Finance L.P., Eikon by Refinitiv and Bank calculations. Notes: Financial conditions indices (FCIs) estimated for 43 economies using principal component analysis. The FCIs summarise information from the following financial series: term spreads, interbank spreads, corporate spreads, sovereign spreads, long-term interest rates, equity price returns, equity return volatility and relative financial market capitalisation. An increase in the index indicates a tightening in conditions. Series shows the average of all country FCIs, weighted according to their shares in world GDP using the IMF’s purchasing power parity (PPP) weights.

For example, Table 1 shows the peak-to-trough fall in a proxy for “social consumption” – spending in pubs, restaurants, cinemas etc – based on Google searches across a range of countries. This is one of the categories of spending likely to have been hit hardest by social distancing measures. It suggests peak-totrough falls of 50-90% in social spending, across a wide range of countries, in the early months of the year. Fast indicators for the UK point to a similarly precipitous fall over the same period. Table 2 looks at the peak-to-trough falls in household spending using CHAPS payments data.4 These lie anywhere between  3  For example, Hacioglu, Känzig and Surico (2020), Carvalho et al (2020), Chetty et al (2020) and Aaronson et al (2020). CHAPS is a sterling same-day payment system that is used to settle high-value wholesale payments as well as time-critical, lowervalue payments like buying or paying a deposit on a property. Further detail on how these data can be used to track the economy can be found below in Chart 8. 4  3  All speeches are available online at www.bankofengland.co.uk/speeches  3  50% and 80% for all spending other than on staples (such as food and rent). Social spending fell as much as 80% while delayable spending, which includes clothing, household goods and cars, fell by around 50%.
According to the Police, the number of financial scams reported in Malaysia has risen to an alarming 1,883 cases between 2015 up to the 1st quarter of 2017, accumulating a total loss of RM379 million. This suggests that greed and ignorance can give way to rational financial decisions for many victims. Based on these observations, a lot more is left to be desired on the state of financial literacy to realise financial well-being for Malaysians. It is acknowledged that improving financial literacy is an intricate and long term journey. Through continuous and effective financial education, consumers would be able to improve their understanding of financial products and services, and develop skills and confidence to make informed financial decisions in their daily life. Financial education would encourage consumers to better manage their finances, plan for the future and manage risks associated to financial matters. While we agree that financial education plays an important role in elevating financial literacy, engaging in financial education alone is insufficient. It is equally important that the acquired knowledge and skills are put into practice and lead to a positive change in behaviour towards a healthy financial lifestyle. To this effect, initiatives to improve financial literacy must be implemented holistically. The ultimate aim is to promote sustainable behavioural changes at all life stages.

We would anticipate some nudges or policy changes by relevant stakeholders in order to influence behavioural change in consumers. Over the recent years, concerted efforts between the private and public sectors have resulted in a number of specific financial education initiatives being implemented. For example, financial education elements are integrated into the school curriculum for Year 1, Year 4 to 6 and Secondary 1 following effective collaboration between the Ministry of Education and Bank Negara Malaysia. I am pleased that financial institutions and the private sector are also playing their roles to strengthen learning in the classroom through extra-curricular activities in their respective signature financial education programmes. Moving forward, more can be done to instil positive financial values among the 5 million school children through greater sharing of responsibility. I would also like to acknowledge FOMCA’s on-going initiatives in financial education over the years. Indeed, FOMCA has been a valuable partner in the education segment. I wish to take this opportunity to welcome FOMCA’s willingness to join hands with the FE Network to elevate financial literacy of our consumers under the national strategy. 3/4  BIS central bankers' speeches  FOMCA, through its affiliates and extensive network nationwide, is well-positioned to contribute on two fronts. The following are my suggestions. Firstly, FOMCA can further expand outreach to educate and create awareness on the importance of financial literacy, particularly to the informal sectors. It is important that our financial education initiatives can be reached to the masses.
Henceforth, the real return on the Government Petroleum Fund shall be used over the central government budget. Central government petroleum revenues shall continue to be transferred to the Government Petroleum Fund and invested abroad. Monetary policy in Norway is oriented towards low and stable inflation. Since March 2001 the inflation target is set at 2½ per cent. When monetary policy is oriented towards stabilising inflation, it also contributes to stabilising aggregate demand and output. The inflation target is the nominal anchor for the Norwegian economy. Low inflation is the objective and the interest rate is the instrument. If it appears that inflation with unchanged interest rates will be higher than 2½ per cent, the interest rate will be increased. If it appears that inflation with unchanged interest rates will be lower than 2½ per cent, the interest rate will be lowered. Low and stable inflation will be a fixed feature of economic developments. This is something that the social partners, businesses, borrowers and investors in property and securities can take as a given. From 1986, changes in the exchange rate or the prospect of changes in the exchange rate had implications for interest rates. A stable krone exchange rate was the nominal anchor. In Norway, this has been reflected in wage determination because labour cost developments among trading partner countries have been an important reference. Exchange rates between major international currencies fluctuate widely. The US dollar has appreciated by more than 30 per cent since 1995.

Holdings of liquid assets have trebled. BIS central bankers’ speeches  3  However, two crucial elements of the capital and liquidity regime are still at the design and agreement stage. The first is an international standard on leverage. Though the risk-weighted capital framework provides a system that it is more sensitive to risk, it is reliant on those risk-weights being correctly calculated and, therefore, vulnerable to so-called model risk. The riskweighted approach will fail if the risk-weights are wrongly calculated, either individually or, collectively. And the evidence of the crisis is that this risk can become more pronounced in boom times when asset prices are rising and the pressure to expand balance sheets with cheap funding is greatest. The result is dangerous concentrations in what appear to be lowrisk assets. It is telling that if a minimum leverage standard been in place prior to the crisis, it would have bound more tightly than risk-weighted measures for a number of banks that met their risk weighted capital ratios but that subsequently failed. The debate about the relative merits of risk weighted capital controls versus un-risk-weighted controls like the leverage ratio has in my view become too hung up on the question of backstops and frontstops – on which constraint should bite first. This is an unhelpful way to look at the issue. Risk-weighted and non-risk- weighted measures protect against different risks. The leverage measure is there to manage model risk, which can be very significant.
Stefan Ingves: The importance of being savvy – lessons on European crisis management Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Fundación Rafael del Pino, Madrid, 15 April 2010. *  *  *  Crisis management is messy, time-consuming and costly. Thank you for inviting me to this renowned institute. My talk today will focus on crisis management. I have seen enough crises to be able to draw a conclusion or two from them. I learned my first lessons from the Swedish banking crisis of the early 1990s. After this I worked at the IMF, assisting in crisis resolutions in many parts of the world. During my time at the IMF, I also benefitted from discussions with a Spanish colleague of mine – Aristóbulo de Juan. His experiences from dealing with the Spanish banking crisis of the 1980s, working at the resolution authority – Fondo de Garantía de Depósitos – proved a valuable source of knowledge and inspiration. As you all know, the IMF is located in Washington. And working there, you not only learn about crisis management, but you also pick up a few local habits. For instance, Washingtonians like to use the word “savvy” – it sort of means being a bit cunning and perceptive. On reflection, being savvy pretty much sums up how you should behave when handling a crisis. Lately, a lot of attention has been given to preventing the crisis we have just experienced from repeating itself.

In addition, this expansion has also fostered the development of complex banking structures and, in some cases, unsustainable business models. The Icelandic banks are illustrative examples in this respect, attracting depositors’ money from the UK and the  2  BIS Review 50/2010  Netherlands and investing these funds in high yield structured products overseas. When their balance sheets had grown to around ten times the size of the Icelandic economy, it was quite clear for anyone to see that, if turmoil broke out, managing the situation was not going to be easy. But to be fair, it was difficult to anticipate the perfect storm in advance. Another lesson from this – and the strenuous and protracted negotiations between Icelandic and, primarily, British politicians that followed – is the need for establishing deposit guarantee schemes that are built up before a crisis occurs. The international expansion of banks and the home country principle have also had other effects on crisis management. Authorities have simply not kept up with developments in the banking system. Contingency arrangements between home and host countries are not highly developed and neither are there any concrete suggestions for how to share the costs of a crisis. While we have achieved economic integration and maintained national sovereignty, we have renounced effective supervision and crisis management. But national sovereignty does not mean that our hands are tied. The remedy is quite simple, at least on paper: we need better and more extensive cooperation between supervisory authorities, central banks and finance ministries in Europe.