samchain/econo-pairs-v1 huggingface dataset:
Ladies and gentlemen, there are small risks and big risks. There are risks that affect a single 1/2  BIS central bankers' speeches  bank and risks that affect the entire sector. And then there are risks that stretch across sectors and even countries. In that regard, there is one thing that comes to mind: Brexit. Right now, it is still very unclear how the world will look after the UK has left the EU. Still, banks and supervisors must prepare for any scenario. The worst case would certainly be a “hard Brexit”. In that scenario, the UK would become a “third country” from the viewpoint of the EU. As a result, UK banks might lose their European passport and, with it, access to the Single Market. This would affect many of the 40 UK banking groups that currently operate in the Single Market. They would then have to find another way in. Most likely, they would seek to obtain a banking licence in an EU country to regain the passport. In the euro area, these licences are granted by the ECB. We obviously don’t care whether UK banks move to Frankfurt, Dublin, Paris or some other location in the euro area. What we care about are safe and sound banks. We will therefore resist any supervisory or regulatory race to the bottom. Any bank that moves to the euro area will have to meet our standards – regardless of whether it comes from the UK or any other place.

Hourly labour costs for a Swedish manufacturing worker were on average 8 per cent higher than for a Norwegian manufacturing worker in 1980 measured in common currency. In 2004, however, hourly labour costs for a Swedish manufacturing worker was almost 20 per cent lower2. Competitiveness in Norway’s manufacturing industry is now close to 20 per cent weaker than the average for the past 30 years. Norwegians had to pay close to 138 Norwegian kroner for 100 Swedish kronar in 1970. Today, we only have to pay a little more than 90 Norwegian kroner. The appreciation of the Norwegian krone has made it less expensive to buy goods and services in Sweden. During longer periods, the exchange rate seems to have been influenced by changes in prices for export goods and import goods in the two countries. In the 10 years to 1983, the Norwegian krone showed a particularly strong appreciation against the Swedish krona. This occurred at the same time as Norway experienced far more favourable developments in prices for its export goods relative to import goods than was the case for Sweden. Norway’s terms of trade improved. In the 1970s, the sharp rise in oil prices contributed to this. In practice, the appreciation of the Norwegian krone against the Swedish krona occurred when the Swedish authorities devalued their currency more than the Norwegian authorities. The authorities devalued against a basket of currencies. In Sweden, the Palme government’s devaluation of 16 per cent in October 1982 was particularly strong.
Although I have focused mainly on the financial system of the euro area, we can clearly see that the euro area financial system is an integral part of the global financial system. With this in mind, I should like to express my support for the aims of IOSCO to promote high standards of regulation in order to maintain just, efficient and sound markets. 3  BIS Review 63/1999  Prospects for the development of banking systems in the euro area Turning now to likely developments in the banking system, it is important to note that the euro area financial systems in general and the banking sector in particular have, until now, been relatively national and fragmented with little cross-border retail activity. However, it is envisaged that the euro will add weight to a number of fundamental factors that are increasing the pressure for structural change. With these structural changes I mean not only consolidation, which seems inevitable, but also increased cross-border co-operation and mergers. In short, the euro area banking sector is expected in the future to look and behave more like the banking sector of a single economy. In addition to and reinforced by the introduction of the euro, other factors that are leading to changes in the financial landscape include technological development, globalisation and changes in what consumers and firms expect from the financial system and financial service providers. These factors are reshaping the business of banking as well as the financial system as a whole.

What we will diligently protect is the trust and credibility in our financial system. We will also be paying closer attention to financial institutions’ management of cyber-threats and to new forms of financial stability vulnerabilities as digitisation blurs the boundaries across geography and industries. Recently, we have created an enhanced role of a Chief Cybersecurity Officer as well as appointed a new Chief Data Officer. I believe there is much we can share and learn from other central banks, financial regulators and even law enforcement agencies, such as our European counterparts. Looking ahead Finally, there are other areas that should matter to all of us amidst the ongoing transformations in the banking industry. One is the important issue of financial inclusion. In the quest to innovate and as banks develop the sophistication to sharpen the profile of each customer, we should not overlook the need for financial inclusion – especially access to basic banking and financial services for under-served communities. Another area is in the responsible use of technology tools. Earlier this month, MAS announced the setting up of a regulator-industry grouping to co-create a guide to promote the responsible and ethical use of AI and data analytics by financial institutions. This Committee is known by its acronym FEAT – which stands for Fairness, Ethics, Accountability and Transparency. This gives you a good idea of its mandate. The key is as technology and data analytics usage become more prevalent, the responsible use of these is equally paramount.
The recovery thus seems to be holding, but it should be acknowledged that expectations for economic growth in the area continue to be very moderate in the short and medium term. The ECB continues with an expansionary policy stance. We have reached an all-time low in the interest rates on the main refinancing operations, now at 0.25%; since July, a forward guidance policy has been pursued, conveying to economic agents the ECB’s decision to keep interest rates low for a prolonged period and to maintain generous liquidity provision. Maintaining and stepping up this expansionary monetary policy has naturally had to do with the recent course of inflation, proxied by the consumer price index, which stood in October at 0.7% for the euro area as a whole, a rate substantially off the target of 2%. Against this background, the first signs of the start of a recovery in the Spanish economy have begun to emerge. As you know, in the third quarter of this year Spain posted its first positive quarter-on-quarter rate of change in GDP since mid-2011. In the past two quarters, consumer spending has shown signs of stabilising, and even of picking up slightly. This positive trend should continue over the coming year, although the need for households to carry on reducing their debt will probably check the expansionary behaviour of this demand component.

Luis M Linde: Recent economic developments in the euro area and in Spain, and important financial system projects Address by Mr Luis M Linde, Governor of the Bank of Spain, at the Annual Conference 2013 of the Asociación de Mercados Financieros, Madrid, 25 November 2013. *  *  *  Let me first thank the Asociación de Mercados Financieros, and its Chairman, my good friend Enrique Prados, for kindly inviting me to accompany you today in this Annual Conference. The Association – which draws together a large number of financial market professionals – performs important work in channeling initiatives aimed at contributing to the better working of those markets. Their active collaboration with regulators in devising rules, their participation in public consultations and their educational role are all to be welcomed. My address today will be brief, so as not to outstay my welcome and encroach on your first course. It shall focus on three projects of particular importance for our financial system in the area of market infrastructures. But allow me first to comment on recent economic developments in the euro area and in Spain, developments that point, as we know, to a turn for the better. To the euro area first. After six consecutive quarters of contraction, second-quarter GDP in the area this year posted positive growth of 0.3% in quarter-on-quarter terms; in the third quarter it has held at a positive rate, albeit one of only 0.1%.
Lars Heikensten: Risk management and financial stability Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at the Risk Management Forum, Stockholm, 17 February 2004. *  *  *  Why is the Riksbank interested in risk issues? Firstly, I should like to thank you for the invitation to come and speak at the Risk Management Forum. The Riksbank’s objectives are not limited to price stability; the Sveriges Riksbank Act also requires that we promote a safe and efficient payment system. We therefore have a natural interest in monitoring risks in the financial sector and that these are handled in a responsible, but also efficient, manner. As you know, this has not always been the case. At the end of the 1980s, risks built up in the Swedish banking system that were much greater than most people realised. The Riksbank was as unaware of the situation as others. However, when the crisis was over, we decided that we needed to improve our knowledge of the risks in the financial system and to closely follow their development. Later, we began to publish a twice-yearly report on financial stability, which focuses on the development of risks in the financial system. We were actually pioneers in this work and several central banks have since followed our example. Naturally, our endeavour has not been to ensure that the risks are as small as possible in every aspect.

2  BIS Review 121/2007  inflation expectations from becoming entrenched below the operational target of 2.5 per cent was one of the main reasons the interest rate was lowered to a very low level in 2003 and 2004, when inflation receded and approached zero. Low interest rates have stimulated demand and output and gradually led to the prospect of higher inflation, which we are addressing by increasing the interest rate. Consumer price inflation is still fairly low, but capacity utilisation is now at such a high level that inflation is projected to move up gradually to 2.5 per cent. Higher interest rates will contribute to a gradual decline in capacity utilisation, thereby preventing inflation from becoming too high. In the long term, monetary policy cannot influence real economic variables such as output and employment; it can only influence nominal variables such as inflation, the nominal interest rate and the nominal exchange rate. When monetary policy serves as an anchor for inflation expectations, it allows the interplay between monetary policy and other components of the economy to function. A good result can be achieved if the social partners take the role of "leader" and the central bank the role of "follower". Wage growth can then be determined in the knowledge of the monetary policy response. Flexible inflation targeting provides a fixed framework for monetary policy and gives a clear indication of how the central bank is to respond in different situations.
Nevertheless, I am confident that we will continue to build on our initial success, reopening credit channels to consumers and businesses. Thank you very much for your attention. 6  BIS Review 69/2009

More generally, shadow banking is being replaced with market-based finance that adds diversification, competition and resilience to the system. As for the macroeconomic impacts, it has been apparent for some time that having well-capitalised, liquid banks is a pre-requisite—rather than an impediment—to growth. In those economies where reform has moved the quickest, the recoveries have been the most robust. 3  Indeed, the broader benefits of reforms are now being realised as the global financial system moves from fragility to resilience. Credit is now growing in all major economies. The cost of financing has remained low. Sources of finance are increasingly diversified between banks and markets. And the system is demonstrating an ability to dampen shocks rather than amplify them. The biggest question now is how to best take advantage of these years of hard work. In my remarks today, I will suggest three priorities. 1  “Some current issues in financial reform”, remarks by Mark Carney, Governor of the Bank of Canada, to the IIF, Washington DC, 25 September 2011. See: www.bis.org/review/r110927a.pdf. 2 The FSB conducts thematic and country-specific peer reviews (see http://www.fsb.org/what-we-do/implementationmonitoring/peer_reviews/) and the IMF conducts Article IV consultations and the Financial Sector Assessment Programme (FSAP) (see https://www.imf.org/external/about/econsurv.htm and https://www.imf.org/external/np/fsap/fssa.aspx). 3 Countries like Canada and Australia, with well capitalised and generally well-managed banks that did not require any bail-outs, saw their economies substantially outperform their peers in the wake of the crisis. Of the countries at its epicentre, those that moved most decisively, like the US, have experienced the fastest recoveries.
Indeed, given the scale of the exchange rate shock, it is possible inflation could overshoot this target in the period ahead. In principle, this combination of inflation-above-target and output-below-capacity poses a dilemma for monetary policy. Tighten to counter the first or loosen to cushion the second? In practice, in my personal view, there is no real policy dilemma here and little ambiguity about the appropriate monetary policy response, either in direction (easing) or scale (significant). One reason for saying that is because I do not think the risk of higher inflation becoming entrenched is especially great. Even before the events of the past month, the Phillips curve here in the UK (the relationship between wages/prices and unemployment/output) was as flat as a pancake. In a world of potentially stalling output and rising unemployment, I find it hard to imagine wage and price pressures will intensify greatly in the period ahead. Indeed, it is striking that despite the sharp fall in the exchange rate and the temporary boost this will provide to inflation, there are no indications so far of this having dislodged mediumterm inflation expectations. The most direct measure we have is from financial markets where they have shown few signs of ticking-up (Chart 32). Indeed, at longer maturities inflation expectations have nudged down from already fairly low levels. With household and company measures of inflation expectations also at historically low levels, in my personal view the risk of inflation expectations being dislodged to the downside is greater than on the upside.

Indeed, those in the bottom 20% have seen their wealth fall over this period. By contrast, those in the top quintile have seen their wealth increase by almost 20%. This uneven pattern of gains and losses in wealth has widened what was already a fairly wide wealth divide: in 2010, those in the bottom income quintile had average net wealth of £ compared with £ for those in the top quintile. That means the gains in social well-being since 2008 are likely to have been considerably more modest than the rise in headline wealth would imply: these gains have largely been harvested by the already-asset-rich and not at all by the already-asset-poor. Looking across the income distribution, then, it is clear that recovery has been associated with both the incomes and, more strikingly, the wealth of the least well-off having broadly flat-lined. Recovery has not lifted all boats, especially some of the smaller ones. This pattern may go some further way towards solving the recovery puzzle. Whose recovery? To a significant extent, those already asset-rich. (c)  Age distribution  A third dimension of recovery is how it has affected different age groups. Chart 18 looks at the evolution of nominal average hourly earnings across different age groups. It suggests a significant inter-generational income shift has been underway over recent years. Nominal earnings of those under-30 have risen by a cumulative 6% since 2007, while those over-50 have seen cumulative gains of 22%.
Our interpretation of the mandate is that the external value of the krone – the exchange rate – cannot be fine-tuned. However, low inflation also makes a contribution to exchange rate stability. The Ministry of Finance has not suggested, and Norges Bank has not requested, that house prices should be given particular weight. Macroprudential supervision and systemic risk Even though inflation targeting has served us well, it was not possible to shield Norway’s small, open economy, in an environment of free capital markets, from the liquidity crisis in global financial markets last autumn. As we have observed abroad, when many banks encounter liquidity problems at the same time, triggered by a deterioration in some banks’ financial strength, solvency problems can easily spread to other banks and to other countries. 11 This can occur when banks facing liquidity problems are forced to sell assets in a weak market. The market value of other banks’ assets may then also be reduced. Even otherwise solid banks can then lose their equity capital. Distrust spread among banks in Norway despite our generous and sound deposit guarantee scheme. Deposits were not withdrawn, but funding in foreign money and bond markets dried up. It was not easy for foreign investors to assess the value of banks’ assets. They also wanted to keep liquidity with themselves. Just as a bank deposit insurance scheme dissuades households and firms from withdrawing their deposits when uncertainty increases, new and improved banking regulation can contribute to bolstering confidence among financial institutions.

Mr Erçel reports on developments in the Turkish economy in the light of the recent disinflation efforts  Speech by Mr Gazi Erçel, Governor of the Central Bank of the Republic of Turkey, at the American-Turkish Council, held in Washington on 28 September 1999. *  *  *  Two years ago, in the summer of 1997, the crisis in Asia began to accelerate. One year ago, on 17 August 1998 a crisis erupted in Russia that threatened serious consequences not only for the Russian economy but also for the entire international financial system. By comparison, this year’s summer has been uneventful, except my country, which was struck by an earthquake on 17 August 1999. The earthquake has been devastating both in terms of human life and physical infrastructure. The death toll has risen to over 15,000 with over 25,000 injured. More than 200,000 houses were damaged or destroyed and over half a million people were left homeless. The spontaneous and prompt support from the international community together with domestic resources will cover reconstruction costs and we will recover. I have to emphasize that this tragic event will not derail our macroeconomic strategy, nor shall we allow it to jeopardize the hand-won disinflation achievements realized so far. Since Turkey has a long history of inflation, which is the main cause of macroeconomic imbalances, we have directed our efforts to reducing the inflation for quite some time. A disinflation program was launched at the beginning of 1998.
An important outcome is shown in this chart. The chart compares two different paths for consumption during a recession. The blue line shows the average path, while the yellow line shows the path following a period of high debt growth. The results confirm that high debt growth ahead of a recession leads to a deeper downturn. It also takes longer for the economy to recover. 3/5  BIS central bankers' speeches  Chart: Monetary policy and financial stability When financial imbalances are building up, the probability of a deep recession may increase. This is illustrated in this chart by the blue lines. The uncertainty bands around inflation and the output gap are highly assymetrical. Monetary policy can dampen vulnerabilities by keeping the interest rate somewhat higher than would otherwise have been the case – in other words, by “leaning against the wind”. This policy is illustrated by the red lines. By keeping the interest rate higher, the risk of a deep economic downturn is reduced. The uncertainty bands are more narrow and symmetric. But this policy also entails a short-term cost: capacity utilisation is lower, and inflation may stay below target. The aim of “leaning against the wind” is to achieve an improved path for inflation, output and employment over time. This is in line with our central bank mandate. Flexible inflation targeting with a sufficiently long horizon should take financial stability into account if the situation so allows and so warrants.

Øystein Olsen: The role of central banks – a Norwegian perspective Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Official Monetary and Financial Institutions Forum (OMFIF), London, 1 November 2016. * * * The charts can be found at the Central Bank of Norway’s website. INTRODUCTION Let me begin by thanking the OMFIF for the opportunity to speak to you today about the monetary policy regime in Norway. Like other central banks, the central bank of Norway is facing new challenges in a post-crisis environment of persistently low interest rates and uncertainty. Today I want to focus on how Norges Bank is responding to those challenges. Inflation targeting was formally introduced as a framework for monetary policy in Norway 15 years ago. As in other inflation-targeting countries, our inflation targeting regime has become more flexible over time. The operational target of monetary policy in Norway is annual consumer price inflation of close to 2.5% over time. However, according to the mandate, interest rate setting should seek to achieve a reasonable balance between inflation and capacity utilisation. Monetary policy should also be robust, taking uncertainty into account and seeking to avoid adverse outcomes. I will reurn to this topic in the following. The reasoning behind the policy rate decision taken by Norges Bank’s Executive Board is published in our Monetary Policy Report. The evolution of inflation targeting in Norway reflects the practical experience we have gained since it was introduced. The trade-offs have been challenging at times.