samchain/econo-pairs-v1 huggingface dataset:
That is certainly true in the sense that we are able to raise the interest rate and ensure that inflation comes into line with our target. But the picture as presented is too rosy. If wage formation were to fail or budget policy became excessively expansionary, the restoration of a balanced economy would be costly: growth would be depressed and employment would presumably fall when interest rates are raised, accompanied perhaps by an appreciation of the krona. In this sense, access to a national monetary policy is not a patent remedy. At the same time, it is clear that we – as a member of the monetary union – would lose the option of guaranteeing low inflation even by having recourse to this costly cure. For example, if the labour market organisations were to make unduly high wage settlements or if fiscal policy were to get out of hand, the Riksbank would no longer be in a position to secure low inflation. To me, however, it is by no means clear that the natural conclusion today is to begin arguing that Sweden ought not to aim for euro area participation as soon as there is political support. Compared with a couple of years ago, the economic situation is now more stable in almost every respect. It is not only that the economy has adjusted in various ways to lower inflation; government finances have also improved and during the past year employment has risen rapidly.

While the financial aspects are important, we should inspire our young recruits on the underlying values of the industry and capitalise on the noble objective of providing protection and managing risk for our people. Takaful for example, is built upon the spirit of brotherhood, solidarity and mutual assistance which provides for mutual financial aid and assistance to the participants. Drawing talent that shares the same values will ensure commitment and support talent retention in the industry. When the general public interact with the industry, with highly motivated staff, it will sow confidence and consequently trust. Refrain from making false promises, make clear the terms and conditions up front In building trust, a huge responsibility lies now on intermediaries playing their role, as intermediaries’ behaviour mirrors the image of the insurance and takaful industry. Many consumers are not well versed with insurance and takaful terminology and will rely on the advice rendered and the full disclosure of the policy terms and conditions. This low degree of familiarity with insurance and takaful terms makes it even more crucial for the full disclosure of the terms and conditions governing a policy. An important consideration is the role of intermediaries being the ‘first point of contact’ with the public. Intermediaries create an impression, powerful enough to influence a customer’s decision whether or not to engage in an insurance contract.
Then, I will address resource utilisation’s significance for monetary policy, give an account of the Riksbank’s calculations of potential GDP, discuss the impact of the financial crisis on potential GDP, give an account of different measures of resource utilisation and what they say about resource utilisation at present, and conclude by addressing the need for continued analyses. GDP grows over time, but the rate of growth varies GDP growth since 1950 is illustrated in Figures 1 and 2. What is known as an HP trend is also included in the figures. I will return to these HP trends later. Seen over the entire period from 1950 to 2010, GDP has increased by an average of 2.7 per cent per year. Growth was significantly stronger in the 1950s and 1960s compared with the 1970s and 1980s. There then followed a ten-year period from the mid-1990s with relatively rapid GDP growth and associated relatively rapid productivity growth. In earlier seminars, we have discussed the reasons for the strong productivity growth during this later period. I myself have pointed out a number of possible explanations.1 Globalisation through the expansion of the EU, the opening up of the economies of eastern Europe and China’s rapidly-growing international trade have increased competition, which has been particularly significant for Sweden, with our substantial foreign trade and high proportion of international companies. Furthermore, a number of product markets were deregulated in the 1990s (taxis, domestic flights, postal services, telecommunications, electricity etc.). Sweden also has high proportions of IT production and IT use in production.

At the same time, there are imbalances in the sense that relative wages do not attract applicants for employment to the areas in the labour market where there are shortages. The challenge is to find a solution within the framework of the scope for pay increases created by the growth in productivity and inflationary expectations on a level with the target. Make use of available opportunities Sweden’s opportunities for regaining some lost ground in the prosperity league are good. Our country has a population which has taken to new technology in the field of IT more quickly than in many other countries; computer use is widespread at workplaces and also homes. According to a SIFO survey, 3.5 million Swedes surf the Internet - almost half of the population aged between 12 and 79. No fewer than 2 million Swedes surf every day. Even more remarkable is the fact that almost 20% of the age groups between 50 and 80 are active on the Internet. Together with some other countries, Sweden takes the absolutely leading position with regard to the use of IT, computers and mobile telephones. Young new entrepreneurs are starting successful businesses within the new areas alongside giants such as Ericsson. Pharmaceutical research and biotechnology are other areas where Sweden is well to the fore. Sweden is investing more in research in proportion to GDP than any other country in the world.
In my view, they should not take the current regulatory framework for granted and operate under the assumption that this framework, which was mainly designed before the technological « disruptions » we see currently spreading through the financial system, does not need to evolve. On the contrary, to continue delivering well on their financial stability mandate, through their three classical roles, namely as catalyst, supervisor and service provider, they should aim first at 1/4  BIS central bankers' speeches  promoting the necessary regulatory adjustments so that the ultimate goal of financial stability is well preserved. In other words, we should contribute to providing the market with a sound, adapted and updated regulatory framework, which is, in my opinion, needed to support innovation, and even to foster it. To deliver on such a contribution, an open-minded approach and an in-depth understanding  of innovation is required. To that end, we need to engage with innovators, observe the ecosystem, test and learn. I think it is fair to say that the global central bank and supervisory community is heading in that direction as testified by the recent launch of the BIS innovation Hub. In any case, at the ACPR and the Banque de France, it has been our motto for a while, according to our digitalization strategy. It is indeed in this spirit that we set up in 2016, within the supervisory authority (the ACPR), a dedicated Fintech-Innovation Hub to have a direct contact with innovators and anticipate the effects of innovation trends.

To support my point, I would like first to explain how we at the Banque de France and the ACPR approach this twofold issue (identify the challenges and adapt when necessary our policy framework) (1). I will then illustrate our approach by addressing the case of financial market infrastructures (2). 1. Identify the challenges and be ready to change our policy framework Technological innovation has the power to create new services for consumers but also to reshape financial market structures. I will not elaborate on a phenomenon that everybody can see developing in the financial sector. The whole value chain is being impacted by Fintechs as well as by Bigtechs, which are introducing almost every day new ways to pay, to provide credit, to get insurance and, of course, to invest within capital markets. By doing so, they are  also modifying the financial ecosystem that we supervise and may contribute to an increase or a shift of risks in the financial system. Data and consumer protection issues raised by new technologies, anti-money laundering challenges posed by new usages, operational risks specific to third party providers and cloud outsourcing, including cyber-risks, competition impacts: the list of issues is quite long! I should also mention the systemic threats that large actors can represent if they use their huge consumer base and leverage on worldwide networks effects without sufficient regard for financial stability consequences. Facing these changes, Central Banks and Supervisors need to adopt the right mindset.
The problem we face is that unemployment’s critical level cannot be identified for certain and we do not know when shortages and rapid wage increases will actually arise. Estimating these matters is difficult and the results cannot be taken for granted. It is therefore hard to tell how much scope there is for a temporary phase of economic growth above the long-term trend. The ability to look ahead and formulate monetary policy cautiously is particularly important when an economy is moving further and further along an upward phase. Otherwise there is a risk of price and wage increases accelerating so that the brakes have to be applied more abruptly later on, leading to a situation that is worse than would otherwise have been the case. Thus it is in this phase of rising activity that we can be said to influence the depth of the next slowdown. It was the overheating in the late-1960s, the mid-1970s and the end of the 1980s that set the stage for the subsequent deep troughs. And each recession was worse than its predecessor. Looking back, it is easy to see that economic policy ought to have been tightened much earlier than was the case on those occasions. At the same time, it has tended to be difficult, not least in fiscal policy, to take such measures sufficiently early, particularly as that needs to be done before the problems are clear to everyone.

On other occasions there may be an obstacle in the form of a disruption, such as the Asian crisis the other year. In both cases, monetary policy must be adjusted to the economic laws but also to the conditions that apply for the current phase of the journey. What I mean is that interest rate hikes and cuts are a natural ingredient of a monetary policy for price stability - a policy that ultimately aims for a stable development of production and employment. The favourable economic trend in Sweden in recent years is in fact a good illustration of price stability’s affinity with a stable expansion of output and jobs. Since the upturn after the crisis in the early-1990s, the annual GDP growth rate has averaged around 3%, the number in employment has risen by almost 150,000 persons and the rate of inflation has been more or less around the target. This has called for repo rate increases on some occasions and cuts on others. 1  BIS Review 6/2000  Rapid GDP growth during 1999 So at what speed is the Swedish economy currently travelling? What are the speed limits? And what repo rate is appropriate for a safe journey? According to the latest national accounts, published just before Christmas, the GDP growth rate for the first three quarters of 1999 was over 3.5%. It is still difficult to tell just what happened in the fourth quarter but demand growth seems, if anything, to have accelerated.
We can note that economic activity in the rest of the world, not least in the United States, weakened appreciably in the first half of this year. The Swedish economy has been affected by this, as is evident from Statistics Sweden’s latest quarterly GDP data. The most recent figures for the national accounts are admittedly preliminary but the tendency behind them is clear: GDP growth fell back from an annual rate of 3-4 per cent in recent years to just under 2 per cent in the first half of this year. Thus, the world economic slowdown has helped to bring about a downward adjustment of demand growth in Sweden towards the long-term path without the Riksbank needing to lift the repo rate up to between 6 and 7 per cent, as the central banks in a number of other countries have been obliged to do. How does the krona come into it? But it is not only the interest rate that influences the development of demand and ultimately the rate of inflation. The exchange rate also plays an important part. Among other things, a weak exchange rate tends to stimulate exports and other segments of Swedish production that are exposed to international competition. That could limit the impact of an international economic slowdown. Conversely, an appreciation of the krona can act as a brake and modify the pull from an economic improvement in the rest of the world.

Swedish firms that are dependent on exports have been hit in particular, along with their suppliers. At the same time it should be noted that Swedish households, who account for around 50 per cent of demand, have lowered their consumption. Like their counterparts in the United States, people in Sweden have reduced their expectations about future income and wealth. Infrequent purchases, such as cars and household appliances, have fallen in  4  BIS Review 72/2001  particular. Sweden has been hit by the global slowdown in technological sectors such as IT and telecom; firms are being compelled to undertake structural adjustments and close down some production capacity. But although Sweden is affected more than other countries, on account of the dominance of IT and telecom firms, compared with earlier downturns the situation still looks relatively favourable, at least so far. The important thing now is to look to the future. It is not the most recent economic figures that determine the course of events and it is not entirely clear what conclusions should be drawn with regard to developments in one to two years' time. One thing that is clear, however, is that resource utilisation this year will be slightly lower than economic analysts have been counting on. If it turns out to be true that GDP growth only reaches a figure of just under 2 per cent this year, this will nevertheless be a fairly creditable result for the Swedish economy.
From time to time, we meet with stakeholders across the value-chain to gather practitioners’ views as to what the market needs in order to develop further. We will continue our work in this regard. Private banking One area we know we can improve is private banking. This is a business area that is growing exponentially in the region. According to industry research, Asia-Pacific has accounted for half the growth in global wealth from 2010 onwards. It also has a fifth of the world’s millionaires. And these numbers will get bigger, with global wealth expected to rise 50% by 2016. So, the opportunities for our region are enormous. We must ensure we have a regulatory framework that recognises this, one that is user friendly to private banking clients, yet sufficiently robust to provide appropriate investor protection, as well as being on par with international standards. To achieve this, we’ve recently introduced some refinements to our regulatory arrangements, following consultation with the industry. These measures were announced in June, so I’d just like to very briefly recapitulate four of the key points as follows. First, while we want to ensure appropriate protection to all investors, it is reasonable to treat private banking and retail banking clients differently in the investment process. So the first change is that we have provided an expanded definition for “private banking customers” that caters much better for the operational needs of private banks.

We already have the largest number of overseas asset managers seeking to invest in the financial market in Mainland China through the Qualified Foreign Institutional Investors (QFII) framework. We are also the first springboard for asset managers from the Mainland seeking to grow their overseas footprint. In order to attract business from asset owners, asset managers are increasingly realising they need to demonstrate their commitment to Asia. One of the main and direct ways is by  4  BIS central bankers’ speeches  setting up an office in Hong Kong. This has also cascaded further down the value-chain, with a growing number of service providers also moving here. However, despite these strengths and advantages, we cannot afford to be complacent. We know, for example, that Hong Kong’s asset management industry needs to become more diverse, with more high-value jobs. Of our asset management employee base, the vast majority are currently in sales and marketing, with only 10% in core asset management functions such as fund management, research and trading. This compares to over a quarter in the UK and US. So to capitalise on the opportunities ahead, a top priority must be to develop our asset and wealth management sector. That’s why, in partnership with asset managers here and around the world, the HKMA has been exploring how to improve our international competitiveness, including through a more favourable operating and regulatory environment.
BIS Review 49/2009  3  as well as to the commercial and residential property sectors. Moreover, financial markets – despite recent positive developments in equity markets worldwide – remain vulnerable to swings in investor confidence and risk aversion, which could adversely affect liquidity and asset prices in some markets. Against the background of these very difficult conditions, significant policy measures have been taken by central banks and governments in Europe to improve market liquidity and replenish capital buffers. Governments created schemes for guaranteeing new bank debt, injected capital and, more recently, provided asset relief. These measures were successful in preventing a meltdown of financial systems and they helped to bolster confidence. The Eurosystem provided important input into the design of these measures, in the form of recommendations aimed at ensuring that such measures would help to safeguard financial stability and restore the provision of credit to the private sector, while at the same time maintaining a level playing-field within the Single Market to the maximum extent possible, and also containing their impact on public finances. It is still early to accurately assess the impact of these government measures on the longerterm funding and the recapitalisation of banks as well as their effectiveness in fostering bank lending to the private sector. This is because the evidence is relatively limited, as the implementation of the measures has been gradual over the past few months.

For Norway and other countries that are dependent on exports of oil, gas and other commodities, government revenues and current account surpluses are reduced. This will most likely curb the growth of sovereign wealth funds in the near-term future. BIS Review 58/2009  1  The financial crisis dealt a heavy blow to investors all over the world, as global equity prices plummeted. International stock exchanges lost more of their value in 2008 than in any other single year in recent history. Absolute results, especially with regard to equities, were highly abnormal. An investor such as the Government Pension Fund – Global will possibly earn more in the long term because of wide fluctuations in equity values. Many investors have suffered losses on equities. As a result of this experience, required returns will be higher in the future. For investments in fixed income markets, the picture is more varied. The crisis resulted in large and unexpected fluctuations in various parts of the fixed income market. While government bonds in some countries were regarded as “safe havens”, with a subsequent surge in prices, segments of the fixed income market were hit by higher credit premiums and dwindling liquidity. The crisis presented major challenges for risk management. Historical relationships between risk factors collapsed, and liquidity was greatly reduced in most markets. Market volatility was very high in both equity and fixed income markets, and market movements were on par with the most volatile periods of the past century.
We also work closely with some of the organisations sharing the stage with me today, aiming to get the best result and to minimise the burden on industry. We work extensively with Pay.UK who are working to deliver change across the retail payment schemes through their New Payments Architecture Programme. Together, we are tackling issues such as whether we could build a shared Public Key Infrastructure (PKI) for UK payments. And of course payments globally continue to change apace, so we thrive on our engagement with other central banks on key topics such as standards harmonisation, where our close collaboration is a crucial part of how we can collectively transform the payments landscape. Working together provides the opportunity to learn, share insights and collaborate on common challenges. Conclusion  Just as payment systems are at the heart of the economy, industry engagement must remain at the heart of the Programme. User input enables us to create the platform and capability that industry needs to innovate: the building blocks to transform the payments landscape. But as we mobilise delivery at the Bank, we need industry to mobilise too. We are on track against our plan and we need firms to develop theirs – so the payments industry is ready to transition safely to the new service and maximise the opportunities for innovation and transformation promised. We are developing a strategy to work closely with Direct Participants to provide information, monitor key milestone completion, undertake testing and seek assurance that they are each ready to implement changes.

Unemployment would be materially higher and nominal wage growth materially lower. Ultimately, this reflects what is known as the “neutrality” of monetary policy: in the long run it has no impact on real economic variables (things like real output or relative prices). It can’t boost structural productivity, for example. Nor can it offset the consequences for real incomes of (say) disruptions to supply chains in Asia or Russia’s curtailment of the supply of gas to Europe. Indeed, in the first instance, at least for a period of time, tighter monetary policy lowers GDP and real incomes. I will say more about this shortly. For the time being, a better short-hand description is this: the pandemic and the war have led jointly to higher inflation and lower real incomes; the MPC will ensure the inflationary effects do not persist into the medium term; but the real-income hit exists either way, and will be reversed only to the extent the underlying shocks themselves go away. The second point I want to make is that we are inevitably having to learn, to some degree, about the scale of these “second-round” effects. The MPC has raised interest rates faster than at any time in its history but obviously more gradually than inflation itself. In the main, this is because the direct effects of the jumps in traded goods and energy prices, as violent  Bank of England  Page 6  as they are, are likely to fade before policy could really do much about them.