samchain/econo-pairs-v1 huggingface dataset:
If fiscal policy is systematically too expansionary during booms and when petroleum revenues are higher than expected, Norway will in periods experience pressures in the economy and rising price and cost inflation. This will often give rise to situations where the krone depreciates, thereby undermining the credibility of our monetary policy. There is a price to be paid for this. Market participants will lose confidence in the krone and demand a higher interest rate for maintaining krone positions rather than switching to other currencies. The result is a permanently higher interest rate level in Norway compared with other countries. Intricate relationships Earlier, monetary policy was based on extensive use of interventions – in other words, purchases and sales of foreign exchange in order to defend the krone exchange rate. Denmark has used this instrument with positive results. There are probably many reasons for this in addition to its stable terms of trade. For instance, fiscal policy in Denmark has on numerous occasions made a substantial contribution to exchange rate stability. Over time our experience of large-scale and persistent interventions has been mixed. When the central bank intervenes heavily to defend the krone, market participants may easily move into a game situation and perceive central bank intervention as an interesting opportunity to make a profit. Market operators know that a situation in which the krone is being propped up only because Norges Bank is buying kroner cannot continue. It is then tempting to take reverse positions in the foreign exchange market in relation to the central bank.

Over time, it should also reduce the risk of local and regional crises and their contagion effect on the rest of the world. There is still a long way to go. As far as Norway is concerned, we must act on the assumption that we will continue to live in an unstable world. The financial crises have shown that a small country is vulnerable to international turbulence. The Norwegian economy is fragile and vulnerable. Stability and buffer against financial shocks Norway has also experienced a banking crisis. If nothing else, we learned from it. Laws, regulations and supervision have been tightened. Financial institutions place greater emphasis on risk management. The debt burden of households is lower than in the 1980s, and for a long period the business sector was also more cautious about incurring new debt. BIS Review 20/1999  4  Losses at Norwegian financial institutions have been low since the banking crisis. There is greater uncertainty now as the economy is approaching a turning point. The sharp growth in fixed income business has led to a substantial increase in corporate debt, which has been reflected in the high level of credit growth in recent years. The rise in interest rates has made it more demanding for households and enterprises to service their debt in the short term, but has had a restraining effect on credit growth.
It is important to keep this in mind in any judgement of Rygg – that he took over an estate that had fallen into grave disrepair. The monetary and fiscal policy pursued during World War I had been lax to a degree that was completely unnecessary”. 12 Norges Bank now aimed to raise the value of the Norwegian krone and lower the price of gold by means of so-called “parity policy”. This line of approach was followed by most advanced economies to restore pre-war exchange rates. A system of stable and convertible currencies was regarded as essential to growth in global trade. Rygg moreover regarded restoring the value of the krone to its former gold parity as a moral obligation. 13 The Norwegian government held substantial debt in sterling and US dollars and he felt it was important to settle Norway’s debts in money of the same value as previously. The same applied to small depositors – they were to feel secure that their money would keep its value over time. 14 But the central bank also had a banking crisis to deal with. Funding was supplied, partly by Norges Bank and partly by the Treasury, to keep the banks afloat. It took time to restore confidence in the krone and for parity policy to be effective. It was not until May 1928 that the krone was pegged to gold at par.

34  At that time, little academic research was available on alternatives to a fixed exchange rate regime or money supply targeting. Leading politicians and economists were sceptical about the idea of abandoning the fixed exchange rate regime. Money supply targeting was regarded as out of the question because of instability in the money supply. John Taylor’s works on interest rate rules that could contribute to stabilising inflation and the real economy, through transparency and predictability, were not published until 1993 (Taylor, John B: “Discretion versus Policy Rules in Practice”, Carnegie-Rochester Series on Public Policy 39, 195-214). 35  Storvik, Kjell (1998) “Aktuelle økonomiske og pengepolitiske problemstillinger (Current economic and monetary policy issues)”. Lecture at Forex Norway, 28 August. Norges Bank was prepared for a change in regime, cf . the discussions in Choosing a Monetary Policy Target, Christiansen, A.B. and J.F. Qvigstad (Eds. ), Universitetsforlaget (1997) and Perspektiver på pengepolitikken (Monetary policy perspectives), Qvigstad, J.F. and Ø. Røisland (Eds. ), 2000. A workshop entitled “The Conduct of Monetary Policy in Open Economies” was also held at the Norwegian Academy of Science and Letters in October 2000. 36  Article in the newspaper Aftenposten on 5 January 1999 in connection with the appointment of Svein Gjedrem as governor of Norges Bank, lecture by Svein Gjedrem, Gausdal, 28 January 1999: “Utfordringer i den økonomiske politikken (Challenges to economic policy)” and article by Svein Gjedrem in Aftenposten 4 May 1999: “Utfordringer i pengepolitikken (Challenges to economic policy)”.
Measures of consumers’ propensity to save have surged to historical levels, far above what we saw after the Lehman crash. Some of this reflects “forced saving” because people have been unable to spend and will therefore reverse naturally. But we are also seeing significant precautionary saving, which is a sign that households are preparing for an uncertain future, and uncertainty is likewise a key factor in weak business investment. There are two main sources of uncertainty today. The first source is uncertainty about how the economy will recover from the coronavirus (COVID19), which is evident in the Eurosystem’s latest macroeconomic projections. Our baseline projection sees GDP falling by 8.7% this year, but this is surrounded by a wide range of potential scenarios. In our mild scenario, the drop in GDP would be 5.9% this year, and in our severe scenario it would be 12.6%. In this latter case, output would still be well below its pre-crisis level at the end of 2022. Faced with such an outlook, it is understandable that households are anxious about their future incomes and firms are hesitant about making irreversible decisions. In particular, many citizens fear that, in a slow recovery, some jobs will be lost once government support schemes are phased out. This underlines why it is so important that the recovery is properly managed and that the economy is adequately stimulated. Confidence in government policies is critical to reducing uncertainty, which is itself a form of stimulus.

Moreover, Brookhaven Labs and Cold Spring Harbor Laboratory, as well as a fine array of academic institutions, provide a strong foundation for the island’s tech sector and business sector more broadly. The recent move to create stronger ties between the business community, research labs and SUNY (State University of New York) is a welcome development. It has the potential to help leverage the island’s existing assets to enhance the prospects for economic development. Conclusion To sum up, the incoming data on the U.S. economy has been a bit more upbeat of late, suggesting that the recovery may be getting better established. But, while these developments are certainly encouraging, it is far too soon to conclude that we are out of the woods in terms of generating a strong, sustainable recovery. On the inflation front, the yearover-year rate of consumer price inflation has slowed in recent months, and despite the recent rise of gasoline prices, we expect inflation to moderate further in 2012. Looking ahead, the key challenge for the Long Island economy will be to continue to prepare its residents for the best jobs being created here. Expanding educational access and opportunity and the skills that go along with it will go a long way to broadening participation in the economy to all residents and bolstering Long Island in the future. Thank you for your kind attention. I would be happy to take a few questions. 4  For more information, see the New York Fed’s consumer credit panel. BIS central bankers’ speeches  5
The two main risks are liquidity and solvency risks. I will start with liquidity risk, which arises from the tension between the lesser willingness of lenders to lend and the higher financing needs of firms. The pandemic has increased credit risks perceived by lenders, which together with the higher economic uncertainty, might discourage them from lending. Some lenders might react by demanding a higher risk premium on the interest rate charged on their lending operations, while others may instead decide to cut the amount they are willing to lend. This pattern has been observed in previous crisis episodes and, in particular, during the Great Financial Crisis. For firms, the shock implies a significant fall in their turnover due to the lockdown measures introduced by authorities to prevent the spread of the virus. The turnover reduction together with the existence of fixed costs translates into an increase in firms’ liquidity needs. Firms may cover part of these needs by using their liquid assets or by resorting to the undrawn amounts in their credit lines, but in many cases these buffers will not be large enough considering the size of the shock. Therefore, firms will try to cover their remaining liquidity needs by resorting to fresh borrowing. The result will be an increase in credit demand against the background of a possible contraction in credit supply. The severity in firms’ liquidity risks depends on the amount and composition of liquidity shortfalls and the buffers firms have to cover them.

The enhanced and robust competition in the marketplace would lead to greater consumer benefits in terms of improved business efficiency, product development and service quality. It is envisioned that the achievement of these imperatives will ensure that the Malaysian takaful industry is well-positioned to successfully make the transition from being "good-to-great" and, InsyaAllah, will remain as the global leader for takaful and retakaful. Ladies and Gentlemen, The overarching objective of our regulatory policies is to ensure that the financial system is in a position to serve the public with the best range and quality of products and services, that the interest of the consumer is at all times protected, and that best practices are adopted to ensure the soundness and stability of the system. It must be emphasised, however, that the ultimate responsibility for ensuring this rests on the players in the financial system, in particular, the Senior Management and the Board of Directors. This is particularly important to ensure public confidence in the efficiency and performance of the financial system to contribute to the overall development of the economy. The initiative formulated for the takaful industry in strengthening competition through the creation of new takaful players, is aimed at achieving this overarching objective. The presence of players with the right qualities and calibre in the marketplace is part of the process of ensuring product innovation and service excellence.
From last September the financial turmoil worsened and entered a second phase (intense crisis), the onset of which was marked by certain systemic events, each individually of notable size. Practically all the key financial markets were blocked, and this hit financial institutions hard. The harshness of the situation is evident from a look at the swathe of events which took place in less than two months: -  As a prelude, at the beginning of September the mortgage finance firms, Freddie Mac and Fannie Mae, which accounted for 50% of US mortgage lending, finally had to be bailed out by the Treasury. -  However, the bankruptcy of Lehman Brothers, the largest in the history of the United States, proved to be a turning point, precipitating a series of extremely serious bouts of financial instability. The background to this bankruptcy was that institutional investors had begun to withdraw large sums of money from investment banks, a phenomenon that led to the virtual disappearance of these banks in the course of a few short weeks in September. Merrill Lynch was acquired by Bank of America, while Goldman Sachs and Morgan Stanley became commercial banks. At almost exactly the same time as the Lehman bankruptcy, the financial strains were evident in an extremely serious form in the insurance industry, which had  2  BIS Review 133/2008  already been under considerable pressure on account of the deterioration in highly rated financial products to which it was severely exposed.

Accordingly, a commitment to rationalise costs must be a management priority for banks. The third and final challenge that will exert even more pressure on banks’ income statements in the coming quarters also arises from the weakness of the economic situation. Apart from the global deceleration, which primarily affects consumption and capital investment, we must not forget that the Spanish economy is in the midst of adjustment in the property sector. This adjustment had already begun, gradually, before the summer of 2007, bringing the sector progressively into line with the change in the determinants of residential investment. This gradual rate of adjustment was altered by the international financial crisis, which established a climate of mistrust and uncertainty which, in turn, intensified the slowdown. The consequence for the banking sector has been a rapid growth in doubtful assets ratios since end-2007. This growth has been recorded across-the-board, but especially in construction and property development. Despite the counterweight provided by the existence of the general provision in Spain and the very low starting levels of the doubtful assets ratio, this has led to the need for greater credit write-downs, which have to be taken to the income statement, and that is the third reason why profits will be under pressure in the banking sector. What must we do in this situation? Having reached this point, allow me some reflections on what we should do to address this situation.
These projections are somewhat inferior to those observed in the usual counterparties. In particular, in March the OECD said it expects global growth to grow 3.3% and 3.4% in 2019 and 2020, identical to the latest figures published by Consensus Forecasts and a little below the IMF’s January projections (figure 10). Turning to the terms of trade, most commodities increased their prices after the December Report. In the baseline scenario, prices for copper and oil are expected to be somewhat higher than predicted in December. A copper price of $ per pound is forecast for this year and the next two, which compares with the prices of $ and $ per pound that we assumed in December for 2019 and 2020, respectively. In the case of oil, average Brent-WTI average prices are expected of $ per barrel in 2019 and 2020 (59 dollars for both years, in December) and $ in 2021. With this, and the revisions to the historical numbers, the terms of trade should increase this year by a higher rate than we thought in December, but in terms of levels, they will be similar (figure 11). V. 2019 – 2021 Outlook  Our baseline projection assumes that the boost that the Chilean economy will receive from abroad in the next two years will be milder than it was in the last two. It will be still be positive, however, combining the downward adjustment of world growth and somewhat more favorable financial conditions than were foreseen in December.

But the extent to which continuing constraints on the supply of bank credit are likely to impede the recovery is less clear. On the one hand, banks still face significant challenges, especially in terms of the ease and cost at which they can refinance maturing funding. This is undoubtedly affecting the ability of some small firms to borrow at affordable rates. On the other hand, many companies started this recovery with increased levels of savings and so are in a position to finance increased investment if and when they wish to. And we have seen “creditless” recoveries in the past. For example, the corporate sector in aggregate repaid bank lending in each of the first three years of the 1990s recovery. I’m hopeful – but by no means certain – that strains within the banking system will exert increasingly less drag on the economy going forward. But what of the tailwinds that are pushing against these factors and ensuring that the burgeoning recovery continues? The most significant factor is the highly accommodative stance of monetary policy. As you know, Bank Rate remains at 0.5% and the stock of asset purchases – quantitative easing –  1  This is an annual survey conducted for the Bank by NMG Financial Services Consulting. This year’s survey was conducted between 24 and 30 September 2010 and covered almost 2000 households. Some results from this year’s survey featured in the November 2010 Inflation Report (pages 22–23).
These illustrations demonstrate that when there is a sudden jump in the risk premium embedded in the 3-month LIBOR, the way in which you respond to such a risk premium has important repercussions for the effective monetary policy stance. Let me illustrate this point with the example of John Taylor's acclaimed "Taylor rule" 18 . In generic terms, the Taylor rule is a simple monetary policy rule that prescribes how a central bank should adjust its official rate in a systematic way in response to changes in inflation and macroeconomic activity (usually the output gap). 19 While no central bank is relying solely on the Taylor rule, most central banks are deriving guidance from it in their monetary policy decisions. Assuming that the current turmoil has neither affected inflation nor the output gap the Taylor rule does not suggest a change in the official rate. In other words, the observed decoupling of the LIBOR from the official rates would have to be ignored in the conduct of monetary policy. So far, this is the approach followed by the ECB and the Bank of England. If one assumes that the level of the 3-month LIBOR plays a more important role in the transmission mechanism of monetary policy than a one or two week repo rate, monetary policy makers may want to be flexible in times of turmoil. Adhering too closely to rules might not lead to an optimal monetary policy. As John Taylor has said himself, "operating the rule requires judgment and cannot be done by computer."

This indicates that significant structural rigidities have prevented an appropriate adjustment of wages. Taking all of the above into account, at its last meeting on 6 February 2003, the Governing Council concluded that following the decision to lower the ECB key rates by 50 basis points in December, the monetary policy stance remained appropriate to preserve a favourable outlook for price stability in the medium term. Consequently, the ECB kept its key interest rates unchanged. Their already low level should help to counterbalance the negative effects on economic activity that currently stem from the high degree of worldwide uncertainty and should, therefore, contribute to a sustainable economic recovery in the course of 2003. For the time being, we still assume that the high degree of uncertainty will decline in the course of this year. However, at this juncture it is not possible to assess how the ongoing geopolitical developments will affect the world economy and, in particular, the euro area economy. The Governing Council will continue to monitor closely all factors that may affect the prospects for inflation in the euro area. The euro area outlook will also very much depend on progress in other policy areas. As regards fiscal policy, full adherence to the fiscal policy framework laid down in the Treaty and the Stability and Growth Pact provides a sound basis for limiting the risk of fiscal imbalances occurring and thus contributes significantly to favourable financing conditions for the private sector. At the same time, it preserves an appropriate medium-term orientation for fiscal policy.
But it leads to another and another to the point where the money is simply too good to turn away, no matter how many red flags there are. There may be less pecuniary explanations too. Regardless of the profit potential, our sensitivity to warning signs can fade from lack of practice. For every time we look the other way, it is incrementally easier to ignore the next instance. On the flip side, each time we intervene, the next intervention is easier too. Effective compliance gets better with practice. Like ethics, it needs to be a habit. And don’t think that the bad guys don’t notice a firm’s reputation—or, dare I say, its culture. Word spreads quickly. A law firm or accounting firm or auditing firm can quickly become known for being “creative” in its approach to an internal investigation or issuing a tax or audit opinion. The same goes for corporate reputations for strong and weak compliance programs, or high or low tolerances for risk. Clients may be attracted to firms with reputations aligned with their goals, for good or ill. So, my first word of advice on where to go from here is to safeguard your corporate reputations by developing good habits. Just Because It’s Legal, Doesn’t Make It Right 3/6  BIS central bankers' speeches  That’s very high-level, prudential advice—not legal advice. A second point I’d like to emphasize is to avoid cabined views of what’s permissible or impermissible. Just because something is legal, doesn’t make it right.

In order to further enhance banks’ risk management in property mortgage lending and to strengthen borrowers’ resilience to withstand future interest rate hikes, the HKMA has just issued a set of guidelines to banks, requiring them to adopt an increase of 300 bps instead of 200 bps of interest rate when stress-testing the repayment ability of mortgage applicants. This measure is applicable to all types of mortgages, including residential as well as commercial and industrial property mortgages. The risk of overheating in the commercial and industrial property market also continues to rise. Our experience shows that the quality of commercial and industrial property mortgages will deteriorate more significantly than that of residential property mortgages during market downturns. In view of these circumstances, our guidelines have also required banks to lower the maximum LTV ratio of mortgage loans for commercial and industrial properties, whether or not for self-use, by 10 percentage points from the existing applicable levels. For example, for mortgage applicants with income mainly derived from Hong Kong, the maximum LTV ratio will be lowered from 50% to 40%. If the applicant’s income is mainly derived from outside Hong Kong, the maximum LTV ratio will be lowered from the current 40% to 30%. The HKMA has also required banks to standardise the maximum LTV ratio of mortgage loans for all standalone carpark spaces at 40% and the maximum loan tenor at 15 years.