samchain/econo-pairs-v1 huggingface dataset:
Norwegian banks have been an important importer of foreign capital. Net capital inflows to banks amounted to about NOK 140 billion in this period, with short-term capital accounting for almost half. Chart 12 Banks’ gross foreign debt Percent of lending  13  BIS Review 67/2000  Since 1995 there has been a shift towards higher foreign funding in the banking sector. Banks have financed the widening difference between customer deposits and lending from foreign sources. Chart 12 shows that a large portion of foreign borrowing has been short-term. In 1998, lending growth slowed and customer deposits increased, and growth in banks’ foreign debt came to a halt. In recent years we have thus recorded exports of long-term capital that are considerably higher than the current account surplus. The substantial net outflow of long-term capital from the private sector may partly reflect a thin Norwegian capital market. The Norwegian bond market is not very developed and the value of equities in the Norwegian market in relation to GDP is very low. Chart 13 Net fixed investment rate and productivity growth in manufacturing Percent  It is also worth noting that according to highly uncertain national accounts figures, fixed investment is now at a very low level and there is little growth in productivity in Norwegian manufacturing. There are few signs at the moment that the “new economy” has reached this segment of the Norwegian business sector.

This would enable us to surprise market participants, and in the short term this might allow interest rate changes to have a greater impact. But enterprises and financial operators would gradually learn from experience and take positions to guard their interests. The long-term results would be weaker confidence in monetary policy, higher interest rates and risk premia, lower investment and an unstable exchange rate. Economic developments Chart 4 Effective exchange rate for EUR Nominal and real. Index 1995=100  There have been substantial fluctuations between the major currencies since the introduction of the euro. In general, the euro has depreciated against other currencies. Some academic papers suggest that the euro is undervalued. For instance, calculations in a working paper published by the IMF indicate  BIS Review 67/2000  6  that the nominal equilibrium exchange rate at the time of the introduction of the euro at the beginning of 1999 was USD 1.26 per euro.3 Forecasts Norwegian krone Market makers’ estimates  Expectations in money and foreign exchange markets seem to suggest that the euro is also considered to be undervalued in relation to the Norwegian krone. Estimates from market-makers indicate that the krone is expected to weaken against the euro over the next three to twelve months. Chart 5 Other exchange rates Index. January 1999=1000  The krone has depreciated against other currencies since the beginning of the year. It has weakened considerably against, for instance, the US dollar and pound sterling, but less against the Swedish krona.
-  Second, advantage should also be taken of the current cyclical conditions to intensify the structural reform agenda and prevent its reversal. In the case of the labour market, the level of temporary employment and repeated contract renewals should be reduced, without undermining job creation, active policies should be focused on the most effective measures to enhance employability and set in place mechanisms that facilitate greater alignment between wage conditions at individual firms and their productivity levels. These factor market reforms must be accompanied by product market reforms that encourage business competence and competition. Productivity gains in the economy also demand improvements in human and technological capital. -  Third, in the financial sphere, the Spanish financial system continues to face various significant challenges. Notably: (i) the need for banks to continue to actively manage their impaired assets, so that the financial system, through its lending activity, may continue to support economic growth; (ii) the need to recover profitability levels, without unduly easing credit standards; (iii) the need for credit institutions to strengthen their capitalisation levels, to adapt to a more demanding regulatory framework; and (iv) the need to address the competitive challenge stemming from the emergence of new technologies, competitors and services in the financial sphere.

13/14  The materialisation of some of the risks to the economy that were discerned six months ago only adds to the importance of the challenges for the medium and long term highlighted in the Report and, as I have tried to stress today, to the need to address these challenges speedily and with sufficient resolve. 14/14
Growth in the third quarter may turn out to be a bit less than we saw in the first half of the year, though we think there is only a slight risk of a double dip. The road to recovery is turning out to be a bit bumpy as relatively weak consumer spending and the ongoing problems in financial markets are keeping growth far less robust than we would like. To date, the manufacturing sector has been a key source of growth during the recovery. After an unusually steep decline from late 2007 to mid-2009, manufacturing output has grown rapidly over the past year, although the level of manufacturing output remains well below the previous peak. A major force behind the growth of manufacturing output has been an unusually pronounced inventory cycle. Production has expanded as firms across a variety of industries have been rebuilding their stocks to bring them into a better balance with sales. Another driver of manufacturing output over the past several quarters has been a pronounced rebound of our exports of manufactured goods. Economic activity abroad has been recovering from its weak levels in 2009, and that global recovery has helped fuel demand for our products, particularly capital goods. The importance of manufacturing in the recovery makes it a timely topic for our regional economic briefing, namely, trends in the manufacturing sector here in the Second District. II.

These productivity gains – the result of innovation and adaptation – have been accompanied by rising average wages in manufacturing. Like the rest of the country, our job losses have been heavily concentrated in lower-skill positions, resulting in a leaner and more skilled manufacturing industry. The manufacturing sector and its structural job-wage dynamics are particularly important in upstate New York. Upstate (especially in its rural areas) manufacturing workers tend to earn higher wages than the average in their region, and the sector employs a larger share of the workforce there than it does nationally. 2  BIS Review 100/2010  Outlook How will the current recovery in manufacturing employment play out? Nationally, the growth in manufacturing output over the past year has occurred in a variety of industries, including autos, machinery, and computers and other electronic equipment. This growth reflects a combination of the restocking of inventories, domestic demand growth (particularly in investment goods), and higher exports. The concentration of these industries in parts of our region meant that those areas were poised to take advantage of this growth. The region has seen some increase in factory jobs in recent months, which undoubtedly reflects the expansion of production that has occurred nationally in these industries. A number of indicators suggest that the inventory cycle may be largely complete – that is, the recent restocking has brought inventories into a better balance with sales. If so, we will lose restocking as an impetus for growth.
To defend the fixed exchange rate, the Riksbank raised the repo rate. During 1990–1991 the major tax reform was implemented, which meant that tax deductions declined significantly. All in all, the real interest rate after tax rose very substantially over a short period of time, which subdued the demand for credit substantially, and property prices took a sharp downturn. The end result of this process was a banking crisis. The banking crisis also led to a dramatic deterioration in public finances. At the same time, there was a currency crisis in Europe. Sweden had abolished currency regulation in 1989 and in 1991 pegged the krona to the ecu, the euro’s predecessor. However, partly as a result of the higher interest rates in Germany, an increasing number of countries in the European Exchange Rate Mechanism, ERM, experienced a depreciation pressure on their currencies. The previous history of devaluations also meant that there was even greater pressure for another Swedish devaluation. In an attempt to defend the fixed exchange rate, the Riksbank raised its policy rate to a massive 500 per cent. Finally, the situation became untenable and the fixed exchange rate was abandoned on 19 November 1992. The route to the 500-per cent interest rate was thus part of a longer sequence of events, with several interacting circumstances. It also provides a clear illustration of what can happen when the confidence in the nominal anchor is lost.

The stronger exchange rate pushes down net exports and thus general demand and GDP. If the international interest rate falls instead, and monetary policy in Sweden is held unchanged, the exchange rate will also strengthen, because the Swedish interest rate is higher than the international rate. The currency will appreciate until the domestic interest rate is the same as the international interest rate, and the stronger exchange rate will lead to reduced net export and GDP. We thus see that a lower international interest rate has a restraining effect on the economy through the exchange rate in roughly the same way as a tightening of monetary policy in Sweden. As I mentioned earlier, this model is a very simplified picture of reality. In practice, the results will of course depend on why the interest rates are changing and also on other factors not included in the simple model. But the conclusion, that a lower international interest rate has a restraining effect on the economy through the exchange rate in roughly the same way as a tightening of monetary policy in Sweden, is valid even in many more complicated models. The effect of lower international interest rates on the Swedish exchange rate and the Swedish economy has been discussed a lot at monetary policy meetings in recent years, although the discussion has revolved around the effects on inflation in Sweden and not the real economy.
The Riksbank has deliberately altered its balance sheet in recent years, but there are also changes in our environment that have affected the balance sheet, leading to its current composition. The way the balance sheet looks, combined with the developments in interest rates and yields on the Riksbank’s assets and liabilities also have decisive significance for the Riksbank’s capacity to make a profit. We need to understand the Riksbank’s balance sheet to be able to understand the connections. How has the balance sheet developed over time? And what do we think will happen to it in the future? How does our current balance sheet affect the Riksbank’s possibilities to make a profit? In conclusion, I intend to comment on the current situation with very low international interest rates, and what will happen if (or rather when) interest rates begin to rise. What will this entail for the Riksbank’s possibilities of making a profit? BIS central bankers’ speeches  1  The Riksbank’s measures are reflected in the balance sheet The Riksbank thus does not have the aim to make a profit, but the bank’s possibilities to make profits are nevertheless very important. They are connected to the Riksbank being able to conduct its monetary policy independent of the government and parliament. The Riksbank needs to be financially independent to do this in a credible manner.

Business cycles have also diverged in other ways. The turnaround abroad, which started in the US in 2000, seems to have been related in particular to overinvestment in the business sector, exaggerated expectations concerning future earnings and equity market bubbles that burst. There have been examples of this in Norway too, and the Norwegian economy has over time been influenced by weak external developments. However, other factors seem to have been more instrumental in generating the turnaround in the Norwegian economy. The high rate of economic expansion is now beginning to ebb away as a result of self-regulating mechanisms and a tightening of monetary policy following overheating in the labour market. Wages and costs rose sharply in Norway but more moderately in other countries, even during the period of strong growth in the second half of the 1990s. In the course of the autumn and winter, it became apparent that developments in the global economy are weaker than we and many others had expected. Many central banks have responded by reducing interest rates further. Interest rates in the US, Europe and Japan are unusually low. Interest rates in the US have not been at such a low level since the 1960s. In the last half of the 1990s, when both Japan and Europe experienced sluggish growth, the US functioned as a global growth engine.
I’m not going to bore you with a lesson on the technical delights and subtleties of monetary policy. Let’s just say that we have a central mandate – price stability – and a main instrument for achieving this – the short-term interest rate. But for the past ten years, since the great financial crisis, we have been using new instruments: quantitative easing (QE), forward guidance i and even negative rates. These non-standard policies have been effective; but they can also create the – mistaken – illusion that monetary policy is omnipotent. Third signal: rarely has Europe appeared so necessary and at the same time so divided. I am a French and European official, I was in Maastricht 28 years ago to launch the euro; every two weeks I take part in meetings of the ECB Governing Council which manages the currency. I stand by this conviction in Europe and in the belief that the joint work carried out by France and Germany is an indispensable driver, even if it is not enough. Nearly 30 years ago, the fall  Page 2 of 10  of the Berlin Wall injected new impetus into the construction of Europe. Today, Europe is turning in on itself, is on the defensive. Yet it is vital that it make itself heard in the face of the threats that it is facing, and that it do so with one voice if it doesn’t want to be inaudible.

John C Williams: The gold beneath our feet Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the GARP Global Risk Forum, Federal Reserve Bank of New York, New York City, 7 November 2019. * * * As prepared for delivery When plans for the New York Fed’s headquarters here at 33 Liberty Street were developed in 1921, the building committee compiled 33 pages of requirements for potential architects.1 I can assure you that our appreciation for bureaucracy has endured the test of time! Joking aside, the focus of many of those requirements was specifications for the building’s gold vault. Beneath our feet lies a triple-tiered vault system with 122 separate compartments for storing gold bars. For those of you who are Harry Potter fans, it’s as close to Gringotts Bank as you’ll find anywhere in the world—although for security reasons I am not allowed to confirm or deny that we have a dragon down there. The whole building was constructed around the vault. Engineers had to excavate 117 feet down to the bedrock for a foundation that could support the weight of the construction. Why am going into so much depth about the gold? There is a reason! But before I explain, I should give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System.
The last easing in the latter part of 2012 was intended to provide an additional cushion against the impact of global economic slowdown and to further bolster domestic demand to sustain growth momentum. These policy decisions were deemed consistent with keeping inflation within the target range, as well as maintaining the overall financial stability. In fact, the first joint meeting between the MPC and the Financial Institutions Policy Committee (FIPC) took place last year, where the two committees shared their perspectives and information, as well as discussed in depth potential sources of systemic risk that could arise from economic and  BIS central bankers’ speeches  1  financial linkages. Regarding capital flow policy and in collaboration with the Ministry of Finance, the BOT continued to relax regulations to promote outward investment and foster more balanced capital movements. A clear lesson from the recent global financial crisis is that a good conduct of monetary policy alone does not necessarily guarantee a sound and stable financial system. As a result, central banks around the world have stepped up efforts to strengthen the supervision of financial institutions, improve risk management, and place a greater emphasis on monitoring systemic risks. Last year, the BOT introduced the Basel III capital regulatory framework with focus on improving capital quality, increasing capital base to provide cushion in the event of a crisis, and strengthening risk management procedures, especially in the realm of credit risks.

A key part of this is to make certain that banks and financial markets perform their functions efficiently, and that their business poses no systemic threat to the financial sector and the economy. Hence, for a long time now, the main focus of bank regulation and supervision have been to ensure that banks manage their exposure to risk effectively. These include exposure to credit risk, market risk, liquidity risk, and operational risk. Much progress has been made in honing the approach for a more accurate assessment and a more effective management of risk, culminating in the Basle II, which is a global standard for bank’s risk management. BIS Review 18/2008  1  But, in spite of what has been achieved, mishaps can and do happen. From time to time, we still read about banks suffering large losses that originate from the under-management of these risks. More often than not, the losses are linked to a breach of internal controls or systems that have been put in place to rein in excessive risk-taking in the first place. Ladies and gentlemen. On the security risk aspect, the growth of electronic banking and real-time funds transfer have made the challenge of risk management even greater, as the nature of security risk to banks has shifted considerably. Clearly, the main concern now is not so much about ensuring property security or preventing theft of physical assets, but about ensuring information security and preventing identity theft.
Where it can be made comprehensible via a succinct piece of analysis in the introduction of a Prospectus, the Authority could require that. What I am suggesting would entail Listing Authorities and securities regulators more generally thinking about themselves somewhat differently and, if I may say so, being somewhat less bound by the traditions of public equity markets. This seems unavoidable given the growth in private offerings of complex securities and the involvement of banks in securities-market intermediation. It might require legislation in some jurisdictions to entitle securities regulators to take into account financial stability9. Prior to the crisis, that had hardly been debated anywhere, but IOSCO’s principles of securities regulation have recently been revised to identify reducing systemic risk as one of the three objectives of securities regulation.10 That innovation is big, but it needs to be incorporated into national regimes and practices. Second, is it always right to make a clear distinction between laws and rules governing “public” issues and private placements? Viewed against the historical objectives of securities regulation – fairness, transparency, and investor protection – the public market v. privatetransaction distinction does indeed seem valid. But we need to debate whether the separation is so neat when the public policy objective of financial stability is taken into account. That is because the creation and private placement of very large amounts of particular types of security can affect the amount of risk being borne by the system as a  8  Confusingly, the language and structures vary considerably across countries.

In some jurisdictions, such as the UK, the securities regulator is the listing authority. In others, such as the US, listing documentation is approved by exchanges, with minimum disclosure requirements set by the securities regulator. This is tied up with whether regimes retain an element of Self-Regulatory Organisations. 9  In the UK, although the FSA was given a “financial stability” objective in 2010, it did not apply to its functions as UK Listing Authority. The proposed objectives of the planned new securities and conduct regulator, the FCA, are intended to apply to the UKLA. 10  IOSCO Objectives and Principles of Securities Regulation (2010). 4  BIS central bankers’ speeches  whole in ways that are opaque to everyone. For example, in the USA, as the SEC has commented, a lot of structured-finance products, including pretty well all CDOs and AssetBacked CP, were issued privately and so were exempt from a panoply of disclosure requirements that apply to “registered” offerings.11 Reducing that opacity, and ensuring the integrity of these market mechanisms, could well be in the interests of investors in private placements themselves. This issue is not easy. On the one hand, it is reasonable for the regulatory regime to make allowance for private transactions amongst “consenting adults”. And the issuance of small amounts of any type of security cannot possibly jeopardise stability.