samchain/econo-pairs-v1 huggingface dataset:
We are encouraging innovative thinking through our Research Hub, where people have collaborated with colleagues across the Bank and externally on over 50 projects. Meanwhile, our Research Away Days and One Bank Flagship Seminar series expose policy and decision makers to different ideas; from sportspersons to philosophers, and economists to psychologists. Our seminars are broadcast externally so that others can benefit from this diverse knowledge. To empower colleagues, we have implemented an ‘author in the room’ policy so that expert staff can attend senior-level meetings and explain their papers in person and challenge conventional wisdom. Our Bank Underground blog, launched in 2015, enables colleagues to share their diverse opinions outside the Bank’s four walls. 400,000 people viewed the blog last year. Over the same period, its followers and subscribers increased by 60%. Our staff are reaping the benefits of these inclusion and transparency initiatives. Two thirds feel encouraged to try new ideas, three quarters believe that their manager acts on people’s suggestions and ideas, and 60% feel comfortable speaking up on important issues. We have improved on all of these measures since just a year ago. xxiii  But we also need to do more. To get the most out of a diverse workforce, we also need to ensure people can bring their best to work and feel supported. Our wellbeing programme promotes mental and physical wellbeing with staff counsellors, discounted gym-memberships, a Cycle to Work scheme, working life seminars and flexible leave options.

xii  x, xi  This is particularly  important in a rapidly changing world, where information is super abundant and certainty is absent. Indeed, almost all decisions in finance are taken under uncertainty. This makes it especially important that decision makers are exposed to a range of views, with open debate that includes perspectives that challenge the prevailing wisdom. For those central banks with regulatory responsibilities, biases in supervision can be countered by considering a variety of perspectives and debating within diverse supervisory teams. xiii  Diversity must be supported by the right structures for its benefits to be realised. For example, research on central bank committee design shows how diverse decision making benefits from:   Having a clearly defined policy objective;    Having relatively small policy committees, with external members;    Publishing policy decisions, and allowing for external scrutiny of decision-making processes. xiv  These features are integral to the MPC, FPC, PRA Board and Court of the Bank of England. In recent years, we have reinforced them by implementing the recommendations of the Warsh review, including publishing transcripts and putting all policy committees on an equal footing with clear remits. More effective communication  Being diverse can help us to craft communications that people can actually understand. The past few decades have seen enormous strides in central bank transparency – minutes are published, interviews given, speeches rendered, blogs posted. Now it is high time that greater emphasis is placed on how central banks communicate.
In this respect, our baseline forecasts take the Medium Term Program as given and thus assume that fiscal discipline will be maintained. A revision in the monetary policy stance may be considered, should the fiscal stance deviate significantly from this framework and consequently have an adverse effect on the medium-term inflation outlook. We will continue to focus on price stability in the formulation of the monetary policy while preserving financial stability as a supplementary objective. To this end, we will carefully assess the impact of the macroprudential measures taken by the CBRT and other institutions on the inflation outlook. We are of the opinion that strengthening the structural reform agenda that would ensure the sustainability of the fiscal discipline and reduce the saving deficit would support the relative improvement of Turkey’s sovereign risk, and thus facilitate price stability and financial stability in the medium term. This will also provide more flexibility for monetary policy and contribute to social welfare by keeping interest rates of long-term government securities at low levels. In this respect, I would like to end my remarks reminding you the  10  BIS central bankers’ speeches  importance of the steps towards implementation of the structural reforms envisaged by the Medium Term Program. Thank you very much for your participation. BIS central bankers’ speeches  11

Indeed, the University of Malta and other specialized institutions provide training and tuition leading to professional qualifications in all these fields. In addition, Malta benefits from a wide network of Double Taxation Agreements, covering some 40 countries, while investment by both the public and private sectors has provided a modern and efficient telecommunications system and airport facilities (the latter now under Austrian management), good hotels and office space and housing of high quality. These attributes, complemented by Malta’s favorable geographical position and climate, make the island a profitable place to do business from. 4  BIS Review 31/2004
This process must be grounded on prudent macroeconomic projections, involve all tiers of general government and translate into a medium-term plan detailing the government receipt and expenditure measures aimed at ensuring a gradual reduction in the imbalances. This would shore up the sustainability of public finances and bolster the credibility of, and confidence in, economic policies. The fiscal consolidation should also go hand-in-hand with an improvement in the quality of public finances, boosting their contribution to the economy’s potential growth. And it must take into account the impact of structural aspects such as population ageing, which will exert upward pressure on public spending on pensions and other expenditure items. At the same time, addressing social imbalances is also essential as increasing inequality could undermine social cohesion and foment social conflict, with adverse repercussions for the security of investments, the incentive to work and opportunities for future generations.25  25  Grossman (1991), Dijkstra, Poelman and Rodríguez-Pose (2020), Persson and Tabellini (1994), Alesina and Rodrik (1994) and Corak (2013). 8  In recent years, the Banco de España has actively contributed to identifying sources of inequality. One factor that crucially affects productivity is educational inequality.

Lenders report that loan spreads have fallen for companies of all sizes, and that credit availability has increased, but the improvement has been less marked for small and medium-sized businesses. We have seen banks take different approaches to SME loans: one bank has scrapped some of its arrangement fees, another is offering guaranteed discounted borrowing costs and another offers a cash back scheme. So one can’t capture the impact of the FLS on the cost of borrowing for businesses in a single simple, headline, interest rate measure. Survey evidence from the Federation of Small Businesses suggests that the pricing of loans for small businesses was more favourable in 2013 Q2 than in mid-2012 – but availability was reportedly poor. So it’s a mixed picture overall for SMEs. Going forward, SME credit conditions should be supported by the extension to the FLS announced in April, which provides additional incentives for participants to increase lending to SMEs both this year and in 2014. A large proportion of FLS participants have indicated their intention to participate in the extended Scheme. It is likely that any person or business who has borrowed from a bank since the middle of last year will have done so at a cheaper rate than they would have done in the absence of the Scheme. If so then the FLS will have had a monetary impulse on the economy. We think that the FLS will continue to bear down on lending rates to households and businesses in the rest of this year and beyond.
9 Another question is whether long-term GDP growth has fallen as a result of the crisis. Experiences from previous financial crises indicate that there frequently is a connection. However, in the report mentioned, the OECD writes that it does not expect any decline in long-term GDP-growth (after 2015) due to the crisis. The OECD states that it will indeed decline, but as a result of demographic developments. At the Riksbank, the crisis has not led us to make any new assessment of the long-term GDP growth used in our models. We expect long-term GDP growth to be just above two per cent per year. Resource utilisation can also be measured in the labour market by, for instance, the employment rate 10 , unemployment, the employment gap and the hours gap. The  8  IMF (2010), World Economic Outlook October 2010. 9  See OECD (2010), OECD Economic Outlook, no. 87, May 2010. 10  The employment rate is defined as the proportion of the population aged 15–74 in employment, expressed as a percentage. 4  BIS Review 130/2010  employment gap and the hours gap have been estimated with the aid of HP trends and are thus subject to the problems entailed by such estimates. In contrast, the employment rate and unemployment are not associated with the same type of technical problems, but here it is instead difficult to know what can be considered to be normal levels for the respective variables.

By potential GDP, I mean the level of GDP that is compatible with a use of the available resources that is sustainable in the long term and that does not push up inflation. Resource utilisation may be either positive or negative. Potential GDP is often measured by using what is known as an HP trend. This is a statistical method used to show the underlying trend in GDP. By simultaneously trying to minimise deviations from actual GDP and to show the most even curve possible, the HP trend provides something in-between the often jagged curve which shows the actual GDP outcomes and a linear trend. An HP trend is a fairly good measure of the underlying longterm development in GDP during normal cyclical fluctuations. One problem with an HP trend as a measure of potential GDP is that its terminal point is normally close to the terminal point of the actual time series. This makes it a poor measure of potential GDP towards the end of the series. Often, it is precisely the terminal point that one is interested in. Another problem with an HP trend is that it is not a good measure if there are structural shifts in potential GDP – and it is natural to believe that such shifts take place in connection with a deep recession. These problems are clearly visible if one compares the most recent calculation of the GDP gap in the September Monetary Policy Update with the estimates made in real time.
Another issue which I have discussed in more detail in earlier speeches is that there is reason to fear that wage formation will not be able to cope with limitations set by the inflation target and productivity growth. How great, for instance, is the risk for the old pattern of wage spirals and increasing inflation being repeated? In this case, the Riksbank may be obliged to carry out a more stringent monetary policy to counteract growing inflationary pressure by subdued demand. My ambition is not to give any answers but rather to point out what we have to take notice of in future. Productivity development An important component of the analytical framework of monetary policy is accordingly to make forecasts of potential growth. The supply of labour and productivity growth are important determining factors for how much we can produce in the long term in our country. A higher potential rate of growth creates, as I said earlier, scope for greater demand without inflationary pressure arising. During the1950s and 1960s and until the beginning of the 1970s, the Swedish economy was characterised by very strong growth and very high productivity growth. Labour productivity grew from 1960-74 on average by as much as 4.3%. At the same time, inflation was low during these years. The gross investment ratio was high and a large part of Sweden’s incomes were invested during this period in expanding the productive capacity of the economy.

19 This was one of the reasons behind my reservation against the purchase decision in February 2015, see my comments at the monetary policy meeting (Riksbank 2015, p. 4-8 and 23-24). 9 [30]  Figure 6. The market already expected lower policy rates than the Riksbank Per cent  Note. Solid lines refers to outcomes. The red broken line refers to the market pricing just before the monetary policy meeting in February 2015, the blue broken line refers to the Riksbank's forecast in the Monetary Policy Report in February 2015. Source: The Riksbank. In Sweden, the signalling instead seems to have functioned in a completely different way. During 2013 and 2014, it became increasingly common for various agents in the Swedish debate to question whether the Riksbank placed sufficient emphasis on bringing inflation up to the 2 per cent target. But the combination of asset purchases and negative policy rate seemed very powerful. In 2015, the picture of the Riksbank's priorities therefore changed rapidly. There was no longer any doubt that the Riksbank was prepared to use all possible means to safeguard the credibility of the inflation target. It has probably been clear from my earlier statements that I have some doubts about whether the purchases of government bonds significantly stimulated the Swedish economy and thereby contributed to raising inflation. But I think this signalling effect was important, and more important than I realised when we started the purchases.
In other words, according to the exercise, the balance sheets published by Spanish banks reflect, on average, the risks arising from their investment with greater rigour than that seen in the other jurisdictions, with fewer valuation flaws or provisioning shortfalls being detected as a result. This is a particularly positive outcome as it arises from the application of a methodology – common to all the banks analysed – based on objective observations and which, unlike the stress test, does not depend on the design of debatable macroeconomic scenarios or working hypotheses. In any event, the stress test also provides positive results for the Spanish banking sector which, in virtually all cases, exceeds fairly comfortably the minimum capital thresholds set. Only one bank evidenced a very small capital shortfall as at 31 December 2013, and this has now been more than covered following the capital increase made by the bank in the first half of 2014, which gives it a solvency level in line with the sector average. Accordingly, Spanish banks may be said to have comfortably passed the test, evidencing both high quality of disclosed financial information and considerable resilience to adverse macroeconomic developments. Naturally, there is no room for complacency, and the results should not be taken as conclusive proof of the unquestionable and generalised health of our banks. The challenges are manifold, and I shall refer to some of them later.

The capital shortfalls identified in the 2012 stress tests were corrected by recapitalisation measures that combined capital increases at some banks, burdensharing mechanisms and the contribution of public funds in eight banking groups that were unable to cover their needs by their own means. More recently, an appreciable number of banks have taken advantage of improved market conditions to issue various capital instruments (for an amount of over € billion since the start of the year). Moreover, banks have generally pursued a policy of containing dividend payouts and returns on deposits, following the recommendations made by the Banco de España. 2. The second main flaw in our financial system was a disproportionate exposure to assets with highly pro-cyclical credit quality and, in particular, to the real estate sector. This vulnerability was corrected through two main channels: by increasing the volume of development risk provisioning required in 2012 and, of course, by establishing SAREB, the external asset management company to which all the real estate exposure of the most vulnerable institutions was transferred. More recently, the level of coverage of credit portfolio risk was reinforced by the review, by the Banco de España, of the criteria for classifying refinanced and restructured loans by risk and, therefore, of the level of provisioning required. All these steps, on top of the traditionally conservative provisioning policies followed in Spain, reduced the latent risk on balance sheets and increased coverage, and are largely responsible for the Spanish banking sector’s generally satisfactory results in the asset quality review. 3.
I am aware of the debate between those who believe that central banks should take financial imbalances into account in their monetary policy decisions and those who do not. A basic structure, where monetary policy focuses on monetary stability and where other policy areas – not least the decisions taken by Finansinspektionen – safeguard financial stability is reasonable. But there will be times when interest rates are low for such a long time that risks build up that mean that 28 See Ministry of Finance (2023). 29  See Stein (2013). 30 See also the discussion in Nessén (2016). 17 [30]  monetary policy should take account of financial imbalances. I do not want to belong to any of these camps that quite categorically believe that "leaning against the wind" is always right or always wrong. However, I believe that it may nevertheless be reasonable and wise to allow monetary policy to take into account the build-up of financial imbalances in certain special situations. Some central banks, such as Norges Bank, have a clear mandate for this.31 The Riksbank considers risks associated with developments on the financial markets as long as the credibility of the inflation target is not threatened, and the fulfilment of the target for price stability and macroeconomic stability in the longer term is improved. But to prevent unbalanced developments in asset prices and indebtedness, a well-functioning regulatory framework and effective supervision are needed in particular.

Silicon Valley Bank was the 20th largest bank in the United States.8 Although the bank was large by Swedish standards – about 70 per cent of Swedbank’s size – it was small in the US market. I see the importance of small and medium-sized banks as a clear lesson from the crisis. As an authority with a financial stability mandate, we cannot ignore such banks. Even if the problems occur in relatively quiet periods, they can have unwanted spillover effects. When the problems became acute in Silicon Valley Bank, the concern spread quickly to other similar banks. The reason was probably that they had similar business models, risk profiles and so on. This led to a loss of confidence in these banks, too. The contagion risks became obvious. One lesson is that we should not only look at the size of individual banks, but also whether certain groups of banks are similar and thus exposed to similar risks. This means that even smaller banks as a group can become important for financial stability.9  8 In terms of total assets, see FDIC https://banks.data.fdic.gov/bankfind-suite/financialreporting. 9 The global standards only apply to larger internationally active banks. The regulations applicable to smaller do-  mestic banks vary from country to country. In the EU, by and large the same regulations apply to all banks, but this is not the case in the United States, for example.
In reality, the problem is further complicated by the fact that inflation must be stabilised. Here I assumed for the sake of simplicity that inflation would entirely follow the business cycle. As the credit cycle and the business cycle develop in different ways, a change in the repo rate intended to affect one cycle will sometimes have an undesired effect on the other. Although a stable credit cycle – one that does not “go wrong” – is ultimately necessary for a stable business cycle, in the short term it may be necessary to make a trade-off between them. This is not without its problems. An ambition to hold the credit cycle in balance may require a slightly higher policy rate. This would also dampen the economic cycle and inflation could undershoot the target. This can be regarded as normal and acceptable for a period of time. But if the period becomes prolonged, it may sooner or later become difficult to gain understanding and support for this policy – despite its purpose being to prevent a much worse development further ahead. This could be a dilemma. 8  One of many examples is Petterson and Hållö (2013). 9  It is not entirely clear how inflation will develop in connection with a recession. One possibility is that the krona would weaken substantially and that imported products would thereby become so much more expensive that one had a higher inflation rate in the short term.

This coincided with monetary policy being increasingly aimed at holding inflation in check. A growing number of countries had introduced explicit or implicit inflation targets and monetary policy had increasingly been delegated to independent central banks. Once inflation expectations had been anchored, it became easier to stabilise the real economy as well. Many felt that an important reason for the favourable developments in the world economy was that these changed enabled monetary policy to be conducted in a better manner than before. 1 Moreover, during the period prior to the crisis financial stability was increasingly being taken for granted. It was assumed that the financial markets were on the whole efficient and functioning smoothly. Financial crises did occur, but most of the countries affected were able to get back on their feet relatively quickly. The successful management of the IT bubble at the turn of the millennium supported the impression that if crises occurred, they could be dealt with relatively simply and efficiently. Japan, where the problems following the crisis at the beginning of the 1990s nevertheless had been long-lasting, was regarded as a special case. Although developments in Japan were regarded as interesting, the lessons perceived were not thought to indicate that anything similar could happen in, for instance, the United States or Europe. In this apparently stable macroeconomic environment, interest in research into the interaction between the financial sector and the real economy gradually declined.