samchain/econo-pairs-v1 huggingface dataset:
House-holds became more interested in borrowing at the same time as the inflation-targeting regime gained increased credibility and the future became  2/5  less uncertain. As it became possible to lower real interest rates, borrowing became cheaper. Low and stable inflation expectations also meant that in the long run households could count on nominal interest rates being lower than before. It is conceivable, moreover, that the low-inflation regime has enabled households to borrow more on account of low interest expenditure. Can there be a setback for consumer demand later on? Thus, neither the high level of debt nor the high house prices are considered to constitute a threat to the banking system. But could households’ inflated balance sheets tend to subdue consumption and growth later on? Is there a risk of households being forced to cut back sharply on consumption when interest rates sooner or later move up? And how will rising interest rates affect house prices? Will the decline in household wealth (in the form of housing) that could result from higher interest rates lead to decreased consumption? These are questions we try to take into account when assessing the economic outlook on which monetary policy is based. There are no simple answers here either; as always, the decisions have to rest on assessments. Most things suggest, however, that the adjustments we can foresee after a future increase in interest rates belong to the normal transmission mechanism and will therefore occur in orderly forms.

Market-based finance has grown rapidly and not been subject to the same regulatory scrutiny as banks. And as monetary  Page 9  policy makers gradually implement QT, financial markets will adjust, perhaps in unexpected ways[26]. This is a key motivation for our upcoming non-bank exploratory stress scenario, and an ongoing area of focus for us and international counterparts. How we work – and the need for diverse policymakers Finally I’ll say a bit about the different ways the two committees work, and how you might fit in. As I said, the MPC is older with more measurable objectives. That is reflected in the kinds of analysis it uses. It has a well-established forecasting process, which takes in new data to update its projections for the economy. Supporting the forecast are many models, some of them fancy ‘general equilibrium’ setups that account for interaction between different parts of the economy[27]. Of course that’s not to say there are no unsettled questions in monetary policy, but there is a good deal more theory and practice around its conduct. The FPC is not quite in the same position. We certainly receive lots of in-depth analysis from Bank staff, often drawing on data and models. But our objective is harder to measure, and we have fewer models that tie everything together. Partly that’s because the ‘science’ of financial stability is still in its early years. We need to focus on worst-case outcomes, so have less data to work with than monetary policymakers.
In many industries, including the airline industry, where price competition is strong, low profitability has led to an increase in prices. High oil prices have also resulted in increased prices, for example for transport services. On the basis of the pay increases agreed upon in this year’s wage settlement, combined with the estimates for wage drift and wage carry-over, annual wage growth is projected at around 3½ per cent this year. Lower-than-projected wage growth may be related to the fact that there were few signs of improvement in labour market conditions prior to this year’s wage settlement. Lower-than-projected consumer price inflation last year may also have contributed. Low wage growth will in turn contribute to curbing the rise in prices for domestically produced goods and services. Prices for imported consumer goods have continued to fall. The decline in prices may reflect high productivity growth in the production of some goods and large investments to increase production capacity, particularly in China. This has led to strong competition and a low rise in prices for internationally traded goods. The shift in imports, for example clothing imports, towards low-cost countries seems to be substantial again this year. Structural changes in world trade have been important for the Norwegian economy, not least for the rise in prices for imported goods and services. The shift in imports towards low-cost countries has come gradually.

These arguments that were compelling at the dawn of central banking are most likely to ensure that modern payment systems continue to have a determined impact upon monetary policy and a positive influence upon the stability of the financial system as whole. Thank you for your attention. BIS central bankers’ speeches  3
This dampens inflationary pressures and the policy rate 3 [24]  is then cut temporarily to increase resource utilisation and inflationary pressures. A more expansionary monetary policy makes resource utilisation begin to rise and adapt to the new, higher level at the same time as inflation returns to the target. The policy rate thus returns to its original level. If conditions change in such a way that it affects what we regard as the normal level of resource utilisation, 𝒚𝒚∗ , the policy rate will be temporarily affected during a transition period. I will not discuss the long-term level of resource utilisation per se today, but instead describe some apparent new trends that have taken place on the labour market after the financial crisis. Although these new trends do not give direct measures of resource utilisation or its long-term level, they may still have implications. Some of the new trends, such as the upturn in labour force participation, may mean that the labour supply increases in the long-term, which can increase the production potential in the economy and the long-term level of resource utilisation. While, for instance, a poorer matching efficiency probably means that the long-term level of resource utilisation falls. A constantly changing labour market Changes in the labour market affect all of us.

All of these elements need to be aligned with the desired culture. Through our supervisory process, we have seen that a number of firms have started this process by developing or refining employee surveys and 360 feedback processes to target issues of behavior and  2  BIS central bankers’ speeches  culture. Some firms are incorporating case study discussions into training programs to highlight ethical dilemmas and decision-making. Some are revamping senior level promotion criteria to reinforce what are the desired characteristics and behaviors of leaders. These efforts are at various stages in terms of their depth, breadth and maturity. Supervisors will need to see how these frameworks evolve, and more importantly, see evidence of how these efforts yield results in the form of more open and routine escalation of issues, consistent application of “should we” versus “could we” in business decisions, rigor in identifying and controlling of conduct risk, and how compliance breaches factor into compensation. Measurement and accountability for progress in developing a healthier culture across the industry is paramount to us as supervisors and central bankers. An important measurement of progress is employees’ assessment of their firm’s culture. To this end, we encourage the industry to harness the various individual efforts that have been initiated at a number of firms in order to develop a comprehensive culture survey. This anonymous survey would be fielded across firms each year by an independent third-party and the results shared with supervisors.
They need to challenge themselves to think through how a crisis might unfold and how they would respond – as there may not be the luxury of time or discretion to prepare when it is occurring. Resolvability also cannot be a static concept – firms’ capabilities may need to be improved or refined, and will need to be in step with the changing nature of their businesses. Therefore it is important that these are kept ‘live’. The more that firms can truly embed these capabilities into their management processes, the more confidence we and they can have that they are ready. The UK is now much better placed to deal with the failure of a UK bank. We have a resolution regime built on robust and coherent principles. As of now the UK banks are on track, as they should be 12 years after the end of the Global Financial Crisis, but it is vital that momentum is sustained. As and when – for it is ultimately not likely to be an ‘if’ – we are called upon to use our powers to address a bank failure, we can be confident that the options available and outcomes arising will be superior to the alternatives and past experience. In the UK through establishing the RAF, we hope to embed the lessons that were so hard learnt to be able to demonstrate that banks are resolvable in a transparent manner.

Lars Nyberg: Will cash replace cards? Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the Cards and Cash Payments Forum, Stockholm, 3 May 2011. *  *  *  I would like to thank Björn Segendorff for his contributions to this speech. Since the latter half of the 19th century, the theory of evolution has gained general acceptance. It is considered to be self-evident that better-adapted species will outcompete those that are less-well adapted. Environmental changes may even lead to some species becoming extinct. There are no longer any sabre-toothed tigers or mammoths because the Ice Age is over. A new species may also be superior to another species in a crucial way. This is why we no longer see Neanderthals walking the streets. Nevertheless, some other amazingly old species are still with us. Crocodiles have been around for 85 million years and the coelacanth, if I am correctly informed, can be traced back 400 million years! An evolutionary process, although of a slightly different kind, is now also taking place on the payment market. Rapid technological development is changing the world around us. New payment methods are arising. Bank cards and credit cards have become a natural part of our everyday lives, as has Internet banking. In Sweden, cheques have been outcompeted and are hardly used at all. The number of paper-based giro payments is falling rapidly and it also appears that the use of cash is declining.
But it has been evolving to something which increasingly goes in the direction of recognising and harnessing the best risk management practices of the industry itself, and encouraging institutions to further improve their own risk management practices. As I have already mentioned, Basel II includes explicit economic incentives for institutions to adopt more sophisticated risk measurement and management systems. And to the extent that it is based on institutions’ own capital evaluation processes, it brings regulatory capital closer to economic capital. Such an approach means that regulation becomes less of a separate cost for institutions, which can use the same systems for both business and regulatory purposes. What’s more, such regulation can have business benefits, because improved risk management also makes good business sense. I think the same philosophy is applicable to regulatory reporting. In my view, regulatory reporting requirements should, to the extent possible, be based on internal data used by managers to run their business, and should encourage the effective collection, generation and use of this information for  BIS Review 47/2006  3  internal risk management purposes. There is clearly a cost in asking for information that is not used within the business. But more than this, it may well be that internal information is of better quality, more reliable and more accurate than information generated for “external purposes”. To the extent that Basel II recognises internal risk management systems, the resulting reporting requirements should naturally be based more on the internal information produced by those systems.

If the national economy goes into recession, if budget deficits soar and public debt rises, this has immediate repercussions for the banks. European banking is not yet sufficiently diversified geographically. More consolidation, more cross-border holdings between banks from different countries, is needed. There is a need for more geographical diversification within the European Union. Smaller, local banks are also necessary to provide financial services to households and firms in a diversified banking landscape. ITALY We have seen very large market movements, following political declarations that unsettled market confidence. After political campaigns, it is normal that more precise government programmes are set out, and we now have to wait for more information about the fiscal plans of the new government. 4/4  BIS central bankers' speeches
The Government has enhanced its efforts in this area by raising the capital of the Fund by Rls 9.0 billion to Rls 92 billion as from 2006. However, the accelerated population growth and the rising demand for housing have urged the creation of other real estate financing mechanisms in addition to the government’s financing mechanism. More finance and contribution by the private sector and reducing reliance on the government will give the private sector an opportunity to play a key role in this area which offers lucrative investment opportunities. Nonetheless, it is fair to say that the private sector in general and the banking sector in particular seek to obtain more guarantees to enter as financers in this vital sector. This demands working effectively by all relevant entities to develop mechanisms for meeting the rising demand in this sector. Dear Brothers, Over the preceding years, the Kingdom of Saudi Arabia has undertaken many economic reform measures, updated and streamlined its laws and regulations, restructured the national economy, approved a number of mega development projects, and joined the World Trade Organization (WTO). It has also made many important decisions aimed at attracting foreign investments and continued opening of the markets which will be reflected on the competitiveness of the national economy. All these positive developments are an incentive for investment in the Kingdom in general and in the housing sector in particular. Dear Brothers, This conference is held at a time when the Kingdom has achieved outstanding development results in all sectors of the economy.

Dear Brothers, A review of the topics addressed on the first day of this conference by the distinguished speakers shows that they touched upon important issues and gave a future vision of housing in the Kingdom, and how to benefit from the experiences of different countries in this area. Today will be an extension of those topics that are directly related to housing finance. In general, I find that the conference broadly covers all aspects of housing finance in the Kingdom. In conclusion, I thank the audience and the organizers of this conference, and wish you all success in your deliberations. 2  BIS Review 14/2007
11  th  In the second half of the 18 century in the UK, ideas began sprouting like morning mushrooms. These ideas emerged seemingly spontaneously and roughly contemporaneously. They were also relatively closely clustered geographically. They included James Hargreaves’ spinning jenny in 1764, Richard Arkwright’s water frame in 1769 and James Watt’s steam engine in 1775. In the fullness of time, these ideas began to revolutionise both industry and work. After a lengthy adoption lag, they spread across sectors and across regions. They migrated from being mere ideas to becoming “GPTs” or General Purpose Technologies. 12  In the process, they generated waves of investment in new  factories, machines, processes and infrastructures. There was, in the jargon, capital-deepening. Neo-Classical theories of economic growth are very clear what would be expected to happen next. 13  When  an outward shift in the economy’s technological frontier is combined with higher levels of physical capital, the fuse is lit on higher productivity among companies, higher wages among workers and, ultimately, higher living standards among societies. So it was during the Golden Era. Chart 2 plots productivity, wages and GDP per head in the UK since the Industrial Revolution. All three plateaued prior to 1750. Since then, all three have moved up in lockstep. Ideas and innovation have borne continuous fruit in higher productivity, pay and living standards. This fruit has been shared roughly equally between owners of companies (profits) and workers in companies (wages).

The dispersion of services sector productivity is more than 50% higher in the UK than in other advanced economies (Chart 20a). It has also widened by materially more in the UK. Even in a world of long and lengthening tails of low-productivity companies, the UK is a striking outlier. One potential explanation for this longer tail of UK companies than elsewhere is poor management practices. Using the database developed by Bloom and Van Reenen (2007), we can plot a normalised distribution of management skills for a subset of UK firms. 51  This suggests (a lack of) management quality is a plausible  candidate explanation for the UK’s long tail of companies, as Bloom and Van Reenen find (Chart 21). Looked at quantitatively, there is a statistically significant link between the quality of firms’ management processes and practices and their productivity. And the effect is large. A one standard deviation improvement in the quality of management raises productivity by, on average, around 10%. This suggests potentially high returns to policies which improve the quality of management within companies. Decomposing the Distribution  We can go further in uncovering some of the characteristics of the companies in the upper and lower tails. Might they simply reflect sharp regional differences in productivity, with frontier companies clustered in some regions and laggards in others? Might it simply reflect some sectors, such as manufacturing, generating higher levels of productivity and sitting in the frontier while others, such as services, occupy the lower tail?
Uncertainty led to capital flight to countries with substantial gold reserves, such as the US. Countries with small reserves had to maintain a high interest rate to prevent substantial gold outflows. In September 1931, the UK decided to abandon the gold standard. Denmark, Sweden and Norway brought gold redemption to a halt in the same month. Norges Bank was put to a severe test in the interwar period. Nicolai Rygg’s lot was to resolve the problems left by the policy conducted during and just after the war. His approach was on a par with international practice at the time. 18 Although he had his critics, not all the criticism levelled against him would necessarily be regarded as equally well founded today. The general view of Rygg has become more balanced. 19 But the perception of Rygg and Norges Bank in the interwar years, that subsequently became ingrained, had an impact on the tasks that were later assigned to the central bank. The pendulum swung towards less independence for Norges Bank, since the Bank was held responsible for the recession. This impression prevailed for such a long time that it also came to influence the current Norges Bank Act.

In Norway, the Ministry of Finance performs an annual evaluation of the conduct of monetary policy in a separate report. Its assessment is partly based on a report by an independent expert group. The Governor of Norges Bank appears at a parliamentary hearing when the Standing Committee on Finance and Economic Affairs works on the report. The discussion concludes with a debate in the Storting. Advisory role With new and clearly defined economic policy tasks, Norges Bank stepped back somewhat as economic policy advisor. For example, the Bank has discontinued its annual assessment of fiscal policy in what was at the time labelled “budget letters”, and we rarely express our views on official reports regarding economic issues. Norges Bank is a consultative body for laws and regulations affecting the stability of the financial system. 43 Moreover, the Bank is obliged under the Act to inform the Ministry when in the opinion of the Bank, there is a need for measures related to monetary, credit or exchange rate policy to be taken by others than the Bank. 40  Helge Syrstad (2003): Sentralbankens uavhengighet [Central bank independence], Fagbokforlaget. 41  In a different context, professor Eivind Smith states another view that may be of importance: “It can be conceivably argued that independence [..] is possible only if the authority to appoint persons to the “independent” body is delegated to bodies other than those the appointees are supposed to be independent of.
The progress we have made in research and practical policy implementation still holds good, and we will continue to conduct a policy of flexible inflation targeting. But it is clear that we need to find a better means of integrating the financial sector and what is happening there into our analyses. Both researchers and policymakers have a lot to think about in the coming period, and there is no doubt that the coming years will be interesting ones. BIS Review 164/2010  9

The arrangement provides banks with Treasury bills. Banks have used these as collateral for loans, sold them or kept them as liquidity reserves. Norges Bank has also expanded its use of its ordinary instruments. We have supplied additional liquidity through our loan facilities and made arrangements for banks to furnish a greater range of securities as collateral for the loans. We have also provided loans with longer-than-usual maturities. The longest maturities have been two- and three-year loans, which have been geared to small banks. Norges Bank has also supplied NOK through currency swaps and offered US dollar loans to Norwegian banks. Norges Bank entered into a swap agreement with the Federal Reserve, authorising a loan of up to USD 15 billion. The measures have been effective. Money market rates, which for a period were above 8 per cent, are now approximately 3 per cent. In this period Norges Bank reduced the key policy rate by 3.75 percentage points to 2 per cent on 25 March. Banks’ lending rates have decreased considerably. Credit flows have improved, but access to credit is still difficult for enterprises. Money market premiums have fallen. In the first quarter of 2009, premiums on three-month interest rates in Norway stood at 1.2 percentage points. Norwegian money market premiums are expected to edge down ahead in line with premiums in global markets. The global downturn led to a marked fall in prices for oil and other commodities through autumn 2008. Oil prices have for a period hovered around USD 40-50 per barrel.