samchain/econo-pairs-v1 huggingface dataset:
16 We must continue to safeguard the inflation target, and learn the major lesson from developments in the 1970s and 1980s, namely to ensure to retain the credibility of the nominal anchor. And we must also learn the major lesson from the financial crisis, namely that financial stability is a condition for low and stable inflation and good economic developments in general. The global dimensions of the financial and debt crises affect the conditions for Swedish monetary policy As I mentioned earlier, the Swedish economy, despite good conditions, has been greatly affected by the financial and debt crises. One question that has arisen once again is how much monetary policy in a small, open economy like Sweden’s can deviate from that conducted in other countries. 17 The correlations between Swedish and international (KIX-weighted) GDP growth and inflation since the 1980s are both above 0.8, which indicates that a very large part of the variation in economic activity in Sweden stems from  14  See, for instance, Aiyar, S. Calomiris, C. W. and Wieladek, T. “Does Macro-Pru Leak? Evidence from a UK Policy Experiment”, NBER Working Paper no. 17822, 2012. 15  In my speech here last year I gave a detailed description of my thoughts on monetary policy and macroprudential policy. 16  See also Billi, R. and Vredin, A., “Monetary policy and financial stability – a simple story”, Economic Review 2014:2, for a description of monetary policy and financial stability that reflects this opinion.

1990s crisis: “Things abroad were quite OK, but Sweden was not OK” I hope that it is clear from what I have described so far that the 1990s crisis was in many ways domestically generated. Inflation was far too high in relation to other countries, and the deregulation of the credit market and the too expansionary economic policy created an overheating that ended in disaster: the banking crisis, a currency crisis and also a public finances crisis. In somewhat simplified terms, I usually describe the crisis of the 1990s like this: “things were quite OK abroad, but Sweden was not OK”. There were thus many lessons to be learned with regard to domestic economic policy and not least monetary policy. Important lesson – increased elements of “norm-based thinking” give credibility to the nominal anchor Perhaps the most important individual lesson learnt from the 1990s crisis was the importance of “norm-based thinking” and long-term game rules for economic policy. 5 This came to mark the thinking behind the new monetary policy regime. 4  See Englund, P., “The Swedish Banking Crisis: Roots and Consequences”, Oxford Review of Economic Policy, no. 3, 1999. 5  This way of thinking had been brought up earlier in the debate in Sweden, particularly by the Swedish Centre for Business and Policy Studies’ Economic Policy Group, but did not have a broad impact on practical economic policy until the 1990s.
Ingimundur Friðriksson: The Central Bank of Iceland and monetary policy Speech by Mr Ingimundur Friðriksson, Governor of the Central Bank of Iceland, at a civic club meeting in Reykjavík, 12 February 2003. *  *  *  In recent years substantial changes have been taking place in central banking in many parts of the world. The main reason is the gradual acceptance of the view that it is natural to anchor central bank monetary policy to a single main objective. Simplified objectives were therefore set for central banks and they were granted greater independence to apply their monetary policy instruments, while more stringent demands were made regarding transparency of monetary policy and central banking activities, and accountability to the government and general public. As a rule, simplification of central bank objectives involved defining a single main objective, i.e. to promote price stability. Central banks were often also assigned a second objective, namely to promote the security of financial systems, or financial stability. Price stability was made the main objective of monetary policy because inflation is above all a monetary phenomenon. There is little point in setting an objective for monetary policy which it cannot attain. Applying monetary policy in order to achieve price stability also contributes to economic stability. This, in turn, provides a basis for the economy to be able to achieve lasting growth and make the most efficient use of its scarce resources. The year 2001 was an eventful one in the history of the Central Bank of Iceland.

Henrique Meirelles: Ten years of floating exchange rates in Brazil Speech by Mr Henrique Meirelles, Governor of the Central Bank of Brazil, to celebrate 10 years of floating exchange rates in Brazil, Central Bank of Brazil, Brasília, 19 January 2009. *  *  *  It is an honor for me to speak to you today, which marks a special date in Brazilian economic history. That is because ten years ago yesterday, January 18, Brazil floated the Real (BRL), breaking with decades of exchange rate manipulation and repression by the government. I will start with some facts and then offer an assessment of the regime so far. First, let me address the global context. Since its inception the floating exchange rate regime has weathered many storms, starting with the bursting of the high tech bubble in 2000, the Argentine crisis in 2001, the September 11th attacks and, recently, the effects of the 2008 global financial crisis. On the other hand, the global environment was on the whole favorable between 2003 and 2007. So, it is fair to say that in its first ten years the floating BRL has faced a pretty diverse external environment, neither persistently challenging nor consistently favorable. Now, let us consider the behavior of the exchange rate itself. The floating BRL has averaged $ against the USD, within a range of $ on the outset, to $ on 22 October 2002. It is nothing but a sheer coincidence that the nominal exchange rate currently stands very close to its 10-year average.
One motivation may be to pass on wealth to children, who otherwise may not inherit until well past the most expensive child-rearing years. Other motivations can include supplementing pension income, repaying debt and making home improvements. The risks in this market though are very different to those on insurer’s other assets. It is a retail product bringing conduct risks that fall under the FCA’s responsibilities. From a prudential perspective, the main risk is long-term stagnation in UK house prices. Economically, the no-negative-equity guarantee is a written option on house prices. Where insurers have recently entered the market and/or are growing their loanbooks rapidly, the average expected maturity of these options is likely to be some decades in the future. Low loan-to-value ratios mean the short-run risks to insurers are limited. They can ride out a property market crash as long as the market subsequently recovers. But loan-to-value ratios increase over time unless house price growth keeps pace with the rate at which interest is accruing. So what you have is a sort of race to the value of the property illustrated by Chart 3. The time it takes for the value of the loan to exceed the value of the property will be governed by: the interest rate charged (higher is more risky), the loan-to-value ratio (higher is more risky), house price inflation (lower is more risky) and the age of the borrowers (younger is more risky). Underwriting standards do appear to have weakened a little over recent years.

On data due diligence, it seems obvious to say that insurers should not enter into bulk purchase transactions without understanding in some depth the nature of the annuity liabilities they are taking on. But this is an area where we see firms taking different approaches and willing to price with different levels of risks. One particular aspect is whether insurers have a full picture of their potential obligations to pensioner spouses and dependents. Insurers need to be clear about their appetite in relation to data risks. Most of the longevity risk on new transactions is currently being reinsured, often outside of the UK. 2  Estimates of BPA market from LCP and Towers Watson market reports 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  One reason is to mitigate the impact of the risk margin. As Sam Woods and I have said before, we recognise that the risk margin on long-dated insurance risks such as longevity is too sensitive to the level of interest rates and therefore too high currently. We are actively looking at further steps available to us within the constraints of Solvency II to address this issue. We expect that a more appropriate level of risk margin – similar to that envisaged when Solvency II was negotiated – would lead to a better balance between longevity risk being retained and reinsured by UK insurers on new business. While significant reinsurance continues, insurers should be paying close attention to counterparty and operational risks.
Ivan Iskrov: Growth and the financial system – lessons from emerging Europe with a focus on Bulgaria Speech by Mr Ivan Iskrov, Governor of the Bulgarian National Bank, at the conference on “Achieving sustainable growth in South East Europe: macroeconomic policies, structural reforms, socio-political support, and a sound financial system”, organised by the Bank of Greece and St Antony’s College (Oxford), Athens, 11 February 2011. *  *  *  Ladies and Gentlemen, It is a pleasure to be here at this conference, organised by the Bank of Greece together with St. Antony’s College, Oxford. Above all, let me thank Governor Provopoulos for the invitation and the opportunity to come here and, together with my distinguished colleagues from South East Europe, to be able to talk before such a reputable audience. As a central banker, certainly the financial industry is of direct interest to me. But although the topic of this panel is “growth and the financial system”, I would also like to go beyond it and touch upon other issues discussed so far today. Politics and politicians do matter The topics of the panels overlap and the four main sessions are arranged in a very logical sequence. I am saying this, because the financial sector does not function in isolation from the rest of the economy and the political stance. A strong financial system cannot co-exist with a fragile economy and political instability (at least not for long). The opposite is also true: weak financial markets and weak institutions hamper the sustainable growth.

At the same time, we can conclude the opposite with regard to the inflation forecasts (OH 2 inflation forecasts 1998-2002), which we have been forced to revise upwards again and again. If we are right that a recovery is now beginning both in Sweden and abroad, we can conclude that the economic downturn was one of the mildest of the post-war period, partly as a result of resolute stabilisation policy. However, the slowdown in Sweden and the rest of the world during 2001 was unexpectedly severe in relation to the forecasts made in 2000. The fact that forecasters miss turning points in the economic cycle is not unique to this particular downturn, but quite a common phenomenon. I will return to the current situation, but first a look back in time. Historical patterns are repeated Is it possible to learn lessons from history? Both yes and no. If one studies economic slowdowns over the past three decades, one can see that they differ considerably both with regard to causes, sequence of events and recovery. There is no simple, cyclical pattern that is automatically repeated. At the same time, it is clear that what we have experienced now has elements in common with 1 previous cycles. In some industrial nations, including the USA, the economic downturns during the 1990s have become milder compared with the downturns during the 1970s and early 1980s. Deep recessions have been unusual and arisen in combination with major structural problems, such as bank crises.
If we include retirement due to disability, the average retirement age is only 60.9 The number of persons on benefits in the working age population has shown a marked rise. Up to the beginning of the 1990s, there were small differences between Norway and its neighbours. Over the past decade, however, the increase has been clearly strongest in Norway. There are two sides to the conclusion as to the question of Dutch disease. On the positive side, we have avoided dramatic changes in industry structure, and we use our resources fairly efficiently. We have managed to insulate the Norwegian economy from oil market fluctuations and gradually managed to keep macroeconomic developments on a fairly steady course. On the negative side, there are signs that labour supply over a life-cycle is falling faster in Norway than in other countries. This may indicate that, with our current income level, we give high priority to increasing our leisure time. However, it may also indicate that we do not, as individuals, pay the true economic costs of leisure time and early retirement. Pension rules, benefits and taxes contribute to this. Similarly, enterprises are perhaps being offered the wrong incentives. On balance, the picture is still fairly positive: so far, petroleum wealth has not led to developments in the mainland economy that are negative in relation to other Nordic countries. However, it must be stressed that it is too early to draw a conclusion; there will probably be a substantial increase in petroleum revenue spending ahead.

Thus, by 2017 a contraction of this component of gross fixed capital formation is expected, while the machinery and equipment component is slightly adjusted upwards, reflecting the actual data to date and also the steady growth in imports of capital goods excluding non-regular transportation. Externally, exports are forecast to contract this year as a result of some supply-side shocks in manufacturing and mining downtime in the first half of the year, which has already been reflected in lower shipments from the sector. However, as these factors are estimated to be transitory, by 2018 these shipments should post a visible recovery. For the purposes of the trade balance, the aforementioned increase in the terms of trade, in particular the higher price of copper, translates into an increase in valued copper exports, which more than offsets the lower volumes of non-mining exports. However, in a context of higher copper prices and lower costs in the mining industry, rents paid abroad increase, so in 2017, the current account has a slightly bigger deficit than was forecast in June (table 2). Inflation has been below expectations, standing at 1.7% annually in July. Although the evolution of core inflation was not very different from projections, the unusual drop in the fruits and vegetables component during these months has taken a little more than half a percentage point off annual inflation. Added to this is the significant appreciation of the peso since June, intensified in recent weeks.
For several years the Bank of England and other UK participants in the international fora argued for a major reform of the international monetary system and the IMF in order to address this issue. The gravity of the present crisis demonstrates the urgency of rectifying both of these deficiencies. In the past year the true scale of the risks taken by financial institutions has become painfully apparent. As losses mount it has become obvious that banks did not have sufficient capital to support their inflated balance sheets. Questions about the adequacy of liquidity have turned into questions about solvency. In response, banks have been trying to raise new capital and shrink their balance sheets. The banking system is in the throes of a difficult and prolonged adjustment to much smaller balance sheets relative to their equity capital – or leverage, as it is known. Leverage ratios of large banks remain at remarkably high levels, and the required adjustment will not happen quickly. I know that bankers around the world realise this. The incentives they face to adjust, in whatever way they can, are now overwhelming. With fresh capital from the private sector difficult to obtain, banks have opted to reduce their lending and that is why the flow of credit to all parts of the economy, here and abroad, has been heavily disrupted. And the credit that is still flowing is available only on materially tighter terms and conditions.

In particular, “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time. "6 A second tangible evolution in our approach is that we made explicit that in seeking maximum employment, we are focused on eliminating shortfalls from that goal. We also emphasized the inclusive nature of our maximum employment goal. This means thinking more broadly than the aggregate rate of unemployment and examining the full range of indicators when it comes to assessing shortfalls from maximum employment. Together, these changes position us to deliver on our dual mandate goals in a world of very low r-star and persistently low inflation. What Does This Mean for Policy? My colleagues at the FOMC and I have talked extensively about the nature of these changes and how we drew our conclusions. But, it’s important to apply these decisions to the current situation. The pandemic has presented us with extraordinary and devastating economic circumstances. The good news is that the economy has started to recover and the unemployment rate has come down. About half of the jobs lost during March and April have been regained. Despite these improvements, we are nowhere near where we want to be: the total number of nonfarm jobs is still 10.7 million below February’s level, and the unemployment rate is nearly 8 percent.
Overall, the composite weighted average Treasury bill yield rate stood at 16.2% in 2005, down from 17.8% recorded in 2004. In contrast, the composite yield rate on Government bonds stood at 23.0%, up from 20.9% registered in 2004. As at May 5, 2006, the composite weighted average Treasury bill yield rate came down sharply to 7.7% while the composite yield rate on Government bonds declined to 11.0%. The sharp reduction in yield rates on Government securities has been due to low inflation expectation coupled with high demand for these securities by the non-bank financial institutions and private sector. Mr Chairman, with respect to developments in the money market, commercial banks lending rates have also been coming down, though not as fast as the decline in inflation and Treasury bills rates. Commercial banks nominal weighted average lending base rate declined from 29.8% in 2004 to 27.6 % in 2005. As at May 5, 2006, the weighted average lending base rates stood at 23.7%. Clearly, there is a need for commercial banks to do more to reduce lending rates in order to influence a substantial expansion of private sector credit. Lower lending rates will contribute to the reduction in the cost of doing business in Zambia. Sustainable lowering of lending rates by commercial banks should occur in the current environment of low inflation. Distinguished Guests, Ladies and Gentlemen, the macroeconomic gains attained in 2005 will be consolidated in 2006. The real GDP growth is projected at 6.0% while inflation is projected at 10.0%.

We must resist the temptation to go into reverse; we shouldn’t agree to stand still: we must forge ahead towards more integration. As a central banker, I am more of an observer than an actor in this area. Monetary policy is only one part of this. But even the harshest critics acknowledge that the ECB is an institution that functions well and has the capacity to take decisions and to avoid catastrophes. The same effectiveness would be required at the political level, even if, admittedly, it is more difficult. And, as I said earlier, the crisis did not reveal the weaknesses of monetary union, but rather the weaknesses of an incomplete monetary union. BIS central bankers’ speeches  3
Improved profitability is, furthermore, one of the requirements for banks to be able to generate capital organically and raise their solvency. 10/17  In recent years the legal risk of Spanish banks associated with litigation has increased significantly. Banks have been involved in a large number of legal proceedings questioning certain contractual conditions of their mortgage exposures. In many cases they have already paid the cost of these proceedings (for example, in relation to floor clauses more than € million was refunded to customers up to January 2019), but there are still many major legal proceedings yet to be resolved. Above and beyond the cost that litigation may entail for banks, a more general implication is the loss of reputation for the banking sector. Banks must make an effort to reverse this perception by providing their customers with necessary information in a clear and transparent manner and affording them access to financial products suited to their needs and financial knowledge. 11/17  All this must not distract banks from persevering in their efforts to improve their efficiency ratios and pursue investments, particularly in new technologies, to enable them to reduce costs in the medium term. It should be kept in mind that in the coming years banks will have to issue considerable volumes of debt with various levels of subordination to meet minimum requirements for own funds and eligible liabilities.

Accountability and transparency are essential counterparts of independence, and the media play a fundamental role in ensuring that they are put into practice, which is why our participation in events such as this one is so important. So I should like to thank the APIE for organising this event and inviting us to participate. This look back reminds us that, more than 10 years ago now, an international financial crisis hit Spain particularly strongly, arriving at a time when the economy was suffering from significant domestic and external macro-financial imbalances. Spain’s banking system was clearly excessively large at the time, over-concentrated on lending funds to real estate and residential construction activities and highly dependent on international wholesale financing. These significant vulnerabilities meant that the cost of the crisis in terms of GDP and – even more importantly for society – unemployment, was very high and much larger than for our main competitors. In fact, Spain’s GDP returned to its pre-crisis level only two years ago. As regards the labour market, the unemployment rate is still five percentage points higher than in 2008 and more than 10 percentage points higher than in countries like the United States and Germany. And that is a reminder of the importance of strengthening mechanisms to analyse and diagnose promptly the risks and vulnerabilities facing the economy and, in particular, the financial system.