samchain/econo-pairs-v1 huggingface dataset:
The purpose of the measures has been to prevent their own currencies from appreciating in order to prevent inflation from falling and keep it closer to the inflation target than would otherwise have been the case. Foreign exchange market measures can be effective if there is a risk that confidence in the nominal anchor is being undermined by prospects for low inflation and it is not appropriate to lower the policy rate further. However, this type of measure also exposes the central bank’s equity to greater risk. In Norway, foreign exchange market intervention is not applicable in a normal situation. Division of responsibilities and level of ambition for economic policy Let me draw together the strands of my discussion so far. The introduction of the inflation target in 2001 laid the premises for today’s division of responsibilities in the conduct of Norway’s economic policy. Monetary policy pursues the objective of low and stable inflation and is the first line of defence in stabilising the economy. Fiscal policy contributes to stability within the framework of the fiscal rule. This framework has served us well for almost 20 years. The Norwegian economy is currently performing well, while there are some dark clouds on the international horizon. Hopefully, we are only seeing a period of slower growth, but a severe downturn cannot be ruled out. If such a downturn were to occur with policy rates as low as they are now, monetary policy space for major economies would be very limited.

As I have mentioned, there is probably less to gain from lower long-term rates in Norway than in countries that have used unconventional instruments to reduce rates. And the effects of such instruments are now also being called into question internationally. The costs are particularly related to financial stability. Persistently low interest rates can induce investors to take on greater risk in the search for yield, bidding up the price of risky investments and pushing down yields to the level of risk-free interest rates. Prices for securities and other assets can be pushed up higher than future income and risk would suggest. High debt ratios create vulnerabilities, increasing the risk of new crises and future losses. Persistently lower interest rates can also hamper necessary structural changes and reduce the economy’s growth capacity. Debt becomes easy to service, even for unprofitable enterprises. Projects that generate low returns can be debt-financed. Chart: Fiscal impulses The strategy pursued by other countries of stretching the limits of monetary policy must be viewed in the light of monetary policy being practically the only instrument applied. Fiscal policy has made a scant contribution or pulled in the opposite direction. There are probably a number of reasons why this is the case. For some countries with high government debt, the risk of rising interest expenses restricted fiscal room for manoeuvre. At the same time, fiscal policy is managed at national government level.
And within that asset class, most market participants have rebalanced their portfolios towards US Treasuries and government agency bonds. This confirms that the portfolio rebalancing channel has been instrumental in delivering the intended benefits of our quantitative easing. Slide 4 shows the extent of this rebalancing more clearly. Since the start of our asset purchase programme (APP), euro area investors alone accounted for more than half of foreign purchases of US debt securities. History suggests that these shares are highly unusual for the euro area. Only recently has the share started to decline again. Now, according to conventional models of the term structure, such capital flows should play no direct role in determining yields.4 In these models, the term premium reflects the covariance between expected bond returns and the representative investor’s stochastic discount factor. However, the conditions under which the supply of and demand for bonds are entirely neutral on yields are very restrictive and unlikely to hold in practice. Indeed, it is now widely accepted that arbitrageurs are often risk-averse and that many investors have so-called preferred habitats for certain assets or segments of the yield curve.5 Pension funds, for example, typically need to invest a significant portion of their assets in safe long-dated bonds to match the liability side of their balance sheet. With arbitrageurs capital-constrained, changes in the demand from preferred habitat investors can then affect the price of duration risk and hence term premia.

Incidentally, as oil prices moved higher in recent weeks, the inflation risk premia also rose amid an increasing willingness on the part of investors to hedge against inflation in an environment of strongly declining deflation probabilities. This is also consistent with survey-based evidence. For example, a recent survey of 62 fund managers by Bank of America Merrill Lynch revealed that a rise in inflation is thought to be the most underestimated tail risk for global financial markets in 2018. One fund manager in two considers a rise in inflation as a risk to current market prices. Now, whether or not this risk is real, or how much we should worry about it, is an entirely different question. I will pass no judgment on the US. In the euro area, however, we see no such inflation tail risks at the current juncture. Inflation is expected to converge only very gradually to levels closer to 2%. For this reason, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up, and we expect the ECB’s key interest rates to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases. At the same time, we currently see no reason to believe that the distribution of future inflation risks has moved permanently lower. 13 It is true that it is taking longer than usual for inflationary pressure to emerge.
The remaining 55% of debts subject to redemption which make about $ billion can be covered from the current account balance and reduction of international reserves. According to our calculations, operations to close the gap of the balance of payments will require about $ billion next year. The Bank of Russia will carry out transactions aimed at maintaining stability of the balance of payments, i.e. the financial stability, in the stipulated volumes. We believe that the international reserves are sufficient to carry out foreign exchange transactions in such volume. Meanwhile, in the next three years, the reserves level will be significantly above the generally accepted adequacy indicators. There definitely will be no deficit of foreign exchange liquidity given these parameters of the balance of payments and the volume of our operations. We indent to conduct the aforementioned FX repos, extend foreign currency loans and carry out occasional direct FX buy/sell transactions, inter alia, to accumulate and use Government reserve funds. It should be noted that under this scenario the ruble should appreciate considerably next year due to both the compensation of the currently observed exchange rate overshoot or, in other words, excessive depreciation, and the oil price growth stipulated by the scenario. Let me remind you that according to the scenario oil price will be $ This is our baseline scenario. At the same time we are aware of the pessimistic sentiments in the market due to the dynamics of oil contract quotations observed over the last months.

Time lag of the reaction of the banking sector to the change of the Bank of Russia key rate remains large though, according to our estimates, gradually shrinking. This refers to deposit rates as well. As lags shrink, the effectiveness of the interest rate channel of the Bank of Russia monetary transmission mechanism will improve. As for the foreign exchange transmission channel, its impact is complicated due to the high volatility in the foreign exchange market which resulted, inter alia, from the restricted access of Russian banks and companies to external markets. In order to normalise the situation with foreign exchange liquidity, the Bank of Russia has introduced reverse transactions to provide it. Interest rates on these transactions have been decreased to the level of LIBOR rates plus 0.5 pp. The volume of foreign exchange liquidity provision is determined by the demand estimates based on the balance of payments forecast. The next one-year repo auction of 15 December will accept Eurobonds and provide for the possibility of early deal termination by borrowers. In the near future the Bank of Russia also intends to consider the introduction of foreign exchange lending secured by non-marketable assets. Foreign exchange loans, extended by banks to companies with stable income in foreign currency, are supposed to be eligible as collateral. Bank of Russia forecast The current situation requires updating the forecasts and adjusting the policy to ensure financial and price stability enabling the economy to adjust to the new conditions and start developing as quickly as possible.
But the overall economy needed some breathing room to afford a smooth transition. After a number of unsuccessful capital account measures, we resorted to imposing a reserve requirement on capital inflows in December to break the rapid one-way momentum and preserve overall stability. To this end, the measure has succeeded in its task. To be sure, no measure is cost-free. The reserve requirement has imparted a wide-ranging effect on the market and the economy. In response to this, once the appreciation momentum was broken, we have been carefully modifying the coverage of the measure to allow greater flexibility for business operations without compromising the needs to contain excessive volatility. We did this by providing the option to hedge fully for loans and inter-company loans. At the same time, significant relaxations on capital outflow were undertaken earlier this year to bring about a better balance between inflows and outflows. Let me be clear that the reserve requirement was designed to preserve market stability and to afford the real sector, which includes many SME operations, time to adjust to a more volatile market condition. To be clear, the reserve requirement was not designed to maintain a certain exchange-rate level. While the measure was necessary, we recognize its negative long-term effects and the adverse consequences on investor confidence and financial market development. As such, let me emphasize again that the reserve requirement is not a permanent measure; it is temporary. Its need is subject to constant review by the Bank of Thailand as the situation develops.

The real-economy indicator that in my opinion is the most appropriate to focus on is unemployment.22 Monetary policy should thus try to stabilise unemployment around the rate that is assessed as sustainable in the long run. How well are the targets met? Inflation is currently very low. In October, CPI inflation was 0.4 per cent. According to the Riksbank’s forecasts it will be below one per cent as an annual average in both 2012 and 2013. However, CPI inflation is affected by the Riksbank’s repo rate changes and the cuts in recent years have contributed to the low CPI inflation. But CPIF inflation, which gives a better picture of inflationary pressures in periods of large interest rate adjustments, will be around one per cent as an annual average in 2012 and 2013. Thus, inflation is far below the target, whichever measure one uses. According to the National Institute of Economic Research’s assessment of the Swedish economy in August 2012, both CPI and CPIF inflation will be well below the target in both 2013 and 2014, despite the forecasts assuming a much lower reporate path than the Riksbank’s.23 Sweden has the lowest inflation in the European Union. What about developments in the real economy? The outlook is poorer than before for both the world economy and the Swedish economy. Swedish exports have slowed down substantially and growth is now expected to be weaker. Unemployment is very high, 7.8 per cent in September, when seasonally-adjusted, and moreover it is rising (Figure 5).
Without that sense of group interest, we could not have cut employer CPF rates, nor restored our competitiveness in a way that few other countries could do. This collective response continues to be critical. In our current remaking, the key changes are in our mindsets, and the main driver of change is private initiative and enterprise. To succeed, the change must come from the people themselves. In this process, the government can only play an encouraging and facilitating role. The additional challenge for us is that this time, the motivation for remaking ourselves is less obvious. Previously we were catching up from behind, but now we are at developed country standards of living. Why do we need to sacrifice what we already enjoy? Yet if we do not accept the sacrifices and change, not only will we not make progress, but we will even likely lose what we already have. No union leader who has visited Shanghai doubts this. It is the reality that we must get home to every Singaporean. Social consensus and political will Fourth, reform and restructuring is never a purely economic exercise. Success depends critically on social and political factors. Economic reforms are not painless. There will be winners and losers, at least in the short-term. Therefore there must be political support for the changes, a willingness to accept the pain of the transition, and a confidence that those adversely affected will be helped. This depends on a feeling of shared nationhood, of going through thick and thin together.

This mechanism amplified the immediate effect of public spending on aggregate demand. Monetary policy – in charge of credit conditions – was entrusted with the task of alleviating, through a careful policy of accommodation, the impact that government borrowing  BIS central bankers’ speeches  3  would have exerted on the cost of private debt. The central bank was financing the Treasury by creating money. Under these conditions, an increase in public spending could “add demand”– where this would be lacking for the goal of full employment – without taking away resources from other uses. Since then, the theory of economic policy has followed two paths that have led it to invert the ranking of relative potential of tools and to enhance the definition and measurement of the objective. As for the instruments, a different theory of the formation of expectations – no longer extrapolative – has highlighted the strong impact of monetary policy and has weakened the expected effects of fiscal policy. In the models that we use today, agents, when formulating their expectations, are attentive to the sustainability conditions of the choices in the long term. Economic policies deemed unsustainable in the long run are ineffective. For example, an active deficit-financed fiscal policy is limited by fears about the government’s ability to refinance the debt from which that policy originates. These fears may lead to behaviours that weaken the private sector – or, at worst, completely neutralise – the impact of public spending as a means of controlling demand.
The Commission made no specific recommendations for how the challenges related to supervision and regulation of critical ICT service providers and data centres should be followed up. In its consultation response, Norges Bank wrote that the following points deserve particular attention: The significance and management of concentration risk because many critical functions 3/5  BIS central bankers' speeches  rely on a small number of ICT service providers and data centres. The supervisory frameworks for ICT service providers and data centres that are important for key public functions, including the payment system. Whether the contingency arrangements of key ICT service providers and data centres are sufficient. ICT service providers, FMI owners and financial institutions need to address cyber risks. Finanstilsynet and Norges Bank have recently taken the initiative to engage in a dialogue with the industry on whether to introduce a framework for testing cybersecurity in the banking and payment system in Norway. This framework, called TIBER-EU, has been developed by the European Central Bank (ECB). A number of Norway’s neighbours, including Denmark and Sweden, have introduced or are about to introduce the ECB testing framework, ie TIBER-DK and TIBER-SE, respectively. Finanstilsynet and Norges Bank are planning to invite the industry to a dialogue on this testing framework. It can also be used to bolster security linked to key ICT service providers in the banking and payment system.

Significant progress been achieved in particular in the Islamic capital market where the outstanding amount of Islamic private securities amounted to USD79 billion or 54.3% of the total outstanding private securities in the market. The number of Shariah-based unit trust funds have also increased to 136 with a net asset value of over USD5.2 billion while 85% of the listed Malaysian stocks are Shariah-approved counters. The second strategy is to accord greater emphasis on the enabling environment for increased innovation in the Islamic financial industry. The product range in Islamic finance has now expanded into a broad spectrum of innovative instruments, including investment and equity linked products based on musyarakah, mudarabah and ijarah. These products are competitive both in terms of product structure and pricing. The enhanced depth of the Islamic financial markets, in particular, the sukuk market, has increased the attractiveness of the Islamic financial instruments as an asset class for investment. The drive for innovation has been supported by the investment in human capital development. A sufficient pool of the talent and expertise has been key to the development of the Islamic financial hub in Malaysia. The International Centre for Education in Islamic Finance (INCEIF) was established in 2006. INCEIF which has an international faculty and students from more than 40 countries is focused on programmes for Islamic finance professionals and specialists in Islamic finance.
Several factors contributed to the deterioration of the macroeconomic environment in 1982. External interest rates rose, the availability of external credit decreased, and terms of trade worsened in the wake of the escalation of oil prices. This put enormous pressure on the Chilean peso—which had been under a fixed exchange rate scheme since 1979—. This regime broke down dramatically and spread to almost all business sectors, given large FX exposures, and heavily leveraged financial conglomerates. All these factors interacted with one another to become an outright banking crisis. But, whatever the causes of the crisis, unsustainable debt was mostly explained by internal vulnerabilities: inappropriate regulation, weak supervision, and lack of attention to excessive credit growth, leveraged on a fixed exchange rate scheme. Although the first aid took the form of “emergency loans” by the Central Bank to commercial banks, during the following year conditions deteriorated rapidly enough to lead to the intervention of 11 banking institutions. Another 8 were added in 1983, including the two largest banks in the system. In all, the intervened institutions represented 60% of total credit. All directors and executives of these institutions were, removed from their posts, and replaced by provisional administrators. Measures to fight the crisis aimed at the liquidation of non-viable banking entities, improvement of balance sheets of viable entities through the purchase of deteriorated portfolios, and the reduction of financial burden of bank borrowers through debt reprogramming and preferential exchange rates. In 1985, this extended to the recapitalization of the intervened banks, through the so-called “popular capitalism” program.

Moreover, mortgage delinquency rates, even in the most serious category, have started to fall, and data that tracks changes in the proportion of borrowers who are delinquent and then become current versus becoming even more delinquent is encouraging (Charts 9 and 10). Finally, the less serious delinquencies for credit card, auto and student loans have been trending lower, though not the more serious delinquencies (Chart 11). Of course, these recent improvements have come in the context of the stabilization in unemployment and house prices. To ensure that the more favorable trends in household balance sheets continue, the economic environment needs to become more supportive. We should recognize that there is still considerable uncertainty about the level of the saving rate and configuration of household balance sheets that will prevail in the coming years. It is possible that households now perceive the world to be a riskier place than they did before and will want to have more “rainy day” funds. More saving may also be needed to meet higher downpayment requirements for home purchases. Thus, while we may be far along in the adjustment process, it is difficult to judge just how much further we have to go. Turning now to the issue of credit availability, there is no question that credit conditions are still tight.
T1  T2  T3  T4  2004  M2 growth  5.8  6.7  7.0  10.2  29.7  Money outside banks  1.7  3.1  3.2  6.9  14.9  Lek deposits  4.1  3.6  3.8  3.3  14.8  Deficit financing from the Bank of Albania  1.9  1.9  1.9  1.9  7.5  Deficit financing from banks  5.3  2.3  1.7  3.1  12.5  Credit to the economy  0.5  0.5  0.5  0.5  2.0  Borrowing from the Bank of Albania3  1.9  -0.8  -1.4  0.3  -/-  3.2  The demand of the economy for monetary assets  3.2.1  Currency position of the banking system  Net foreign currency assets of the banking system for the next year are forecasted to increase by nearly Lek 8.6 billion or 5.1 percent from the previous year. The increase of NFCA of the banking system will mainly come due to the increase of net foreign currency assets of the Bank of Albania, which will increase by Lek 7.1 billion. This is a 7.2 percent increase of the NFCA as compared to the 2.2 percent increase forecasted for 2003. The forecasted increase of foreign currency reserves of the Bank of Albania during 2004 at the level of Lek 5.4 billion will be the main source of the NFCA increase. Denominated in foreign currency, this increase is USD 45 million.

Table 1: General economic indicators 1996  1997  1998  1999  2000  2001  2002  2003*  Real growth of the GDP (in %)  9.1  -10.3  12.7  8.9  7.7  6.8  4.7  6.0  Number of employees (in thousand)  1,116  1,107  1,085  1,065  1,068  920.5  920  927  Unemployment percentage  12.4  14.9  17.8  18.2  16.8  16.4  15.8  15.2  17.4  42.1  8.7  -1  4.2  3.5  2.1  3.0  M3 aggregate growth  44  28  21  22  12  20  6  9.5  M3 aggregate velocity  1.82  1.72  1.92  1.73  1.64  1.51  1.58  1.66  MoB growth  14  52  -6  19  22  20  10  -3.3  New credit to the economy (Lek billion)  7.4  3.98  5.8  8  24  40.6  62.6  70.6  Inflation percentage (y-o-y)  Lek deposits (Lek million)  72,831  89,495 130,940 158,326 165,261 186,211 193,886 223,500  Budget deficit (in % of the GDP)  -11.4  -13.2  -11.3  -11.9  -9.1  -8.3  -6.2  -4.6  Domestic debt (in % of the GDP)  30.7  36.18  35.12  36.31  41.01  39.42  38.49  39.1  Current account (in % of the GDP)  -11.5  -12.03  -6.12  -7.34  -7.1  -6.1  -8.9  -8.5  Internal debt (in % of the GDP)  29.2  33.2  31.8  29.1  30.2  28.2  24.9  23.7  Average exchange rate lek/usd  104.5  148.9  150.6  137.7  143.7  143.48  140.15  123.1**  146.9  132.58  128.5  132.4  137.9**  Average exchange rate lek/euro  Note:* The GDP calculation is made by INSTAT with a different methodology, only for 1996-2000.