samchain/econo-pairs-v1 huggingface dataset:
Stefan Ingves: The Riksbank and monetary policy Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the School of Business, Economics and Law, Göteborg University, Göteborg, 23 May 2006. *  *  *  Let me begin by thanking you for the invitation. It is always a pleasure to have the opportunity to come and talk about monetary policy and our work at the Riksbank - but I shall refrain from commenting on whether it is always a pleasure for the listeners. I hope that you will in any case get a picture of our view of the economy and inflation prospects and of our method of how we conduct monetary policy. I shall begin with a rough outline of what I intend to discuss in my speech and the main conclusions: First, I shall describe my view of the current monetary policy situation. A brief summary of my conclusions is: •  The upswing in the international economy appears to have been slightly stronger than we envisaged in the February Inflation Report. •  With regard to Sweden, the statistics received since the Inflation Report was published indicate that the economy has developed approximately in line with our assessment, although inflation temporarily rose more rapidly than anticipated as a result of developments in energy prices. •  Our earlier monetary policy considerations from February and April still apply to a large extent. Monetary policy will need to be less expansionary in future.

Rigidities, whether in institutions, markets or work practices, that impede progress towards cost  6  The Sustainability of Malta’s Social Security System: A Glimpse at Malta’s Welfare State and Suggestions for a Radical Change of Policy, Today Public Policy Institute, July 2009 and Sustainability Report 2009, European Commission. BIS Review 154/2009  5  competitiveness and higher productivity are incompatible with enduring membership of the currency union. They also render the common objective of raising living standards less likely to be achieved. Needed structural reforms are being implemented, but given the uncertain growth prospects in export markets, the change process needs to be accelerated and given greater focus. The directions for change I have suggested are by no means original because they emerge spontaneously from an analysis of the current state of the economy. They do, however, imply difficult policy choices, not least because they often entail a departure from established practices and the loss of acquired rights. This is undoubtedly a major challenge, but it is also one that cannot be avoided if we want Malta’s boat to be lifted by the rising tide, when it comes, along with those of other countries. 6  BIS Review 154/2009
This brings me to the crux of the matter: can IMF surveillance really make much difference, even if it is reformed in the way I have described? It is important to recognise that surveillance - especially multilateral surveillance - is a very different kind of activity from the monitoring of reform programmes that may be linked to Fund financial assistance packages. Lending programmes have exerted considerable apparent leverage over countries’ behaviour at least in the short term, through so called ‘conditionality’. In recent years the Fund’s lending activities have gone into steep, and possibly irreversible, decline. But leverage of this kind has never been available to force policy change on countries who do not borrow from the Fund, a category which for the past 25 years has included all large industrialised countries. The ‘traction’ of surveillance depends critically on the Fund’s ability to influence the policies that countries choose to pursue. But is it realistic to suppose that the Fund can any have real influence over the countries whose policies matter most? The Fund’s constitution is cast in terms of the obligations that members owe to each other and to the Fund. Such obligations are not without legal content, still less without value. But the effectiveness of  6  BIS Review 103/2006  surveillance cannot rest on the strength or otherwise of any treaty-based sanctions that might be used against members who fail to meet their obligations.

Like many other organisations facing major change in its core business, the Fund will need to be sure that everything it values and rewards is tuned to support its new priorities. Conclusion Over the past fifteen years, the Great Inflation that followed the end of the Bretton Woods system has been replaced by the Great Stability. Globalisation has brought great benefits, but it is creating major challenges for policy makers. How will such issues be handled in future? The Fund certainly has the potential to act as an authoritative medium for international monetary collaboration, providing its surveillance activities are re-focused on external stability and the big global issues. The Managing Director’s current reform agenda is on the right lines. But the Fund’s effectiveness in promoting international monetary stability will depend critically on the organisation’s stature as a trusted and respected source of dispassionate analysis and impartial advice. And it will rest above all on the willingness of its members – large as well as small - to use it as their instrument to improve the quality of their own policy making. BIS Review 103/2006  7  Equipping the Fund with its own version of Hawk-Eye will not be enough. In the end it will be down to them – or more accurately, us.
Wage-earners and employers expected to be bailed out when competitiveness was weakened by the excessively fast wage rises. Under a floating exchange rate, however, relatively higher increases in nominal wages do not have as much significance for competitiveness, if the exchange rate adjusts. We can have higher price and cost growth than our trading partners without seeing our competitiveness deteriorate, if the krona functions as a shock absorber. So, companies do not bear the direct burden of excessive wage increases, since the exchange rate adjusts over time so that profits are maintained in the sectors exposed to competition. Also, a floating exchange rate often dampens cyclical fluctuations. In 2001, the Swedish IT sector – including Ericsson and Telia – was hit by a deep decline. But the decline was partly compensated for by the weaker krona exchange rate, so that profits were sustained in the paper and pulp industry, the iron and steel industry, and in other parts of the manufacturing sector. Under a floating exchange rate, the inflation target is the nominal anchor for price and wage formation, rather than the rate of wage increases abroad. Wage-earners and employers know that the Riksbank has to immediately intervene with interest rate adjustments if inflation deviates clearly from target. So, excessively high wage increments can lead to tighter monetary policy. For an individual company or industry, developments in wage costs in other countries nonetheless have great significance, since the exchange rate in these cases can be taken as given.

Nominal and real wage growth, 1995-2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 BUSINESS SECTOR Blue-collar workers  4.7  5.4  4.7  3.4  2.6  3.3  3.8  3.6  3.1  2.6  White-collar workers  3.5  6.4  4.2  4.7  3.7  4.1  4.5  4.1  3.3  3.2  Blue-collar and white-collar workers  3.3  6.0  4.5  3.7  3.4  3.7  4.4  4.1  3.5  3.3  CPI  2.5  0.5  0.7  -0.3  0.5  0.9  2.4  2.2  1.9  0.4  Blue-collar workers  2.2  4.9  4.1  3.7  2.1  2.4  1.4  1.4  1.2  2.3  White-collar workers  1.0  5.8  3.5  5.0  3.3  3.2  2.0  1.9  1.4  2.8  0.9  5.4  3.9  4.0  2.9  2.8  1.9  1.9  1.5  2.9  WHOLE ECONOMY  REAL WAGE GROWTH  BUSINESS SECTOR  WHOLE ECONOMY Blue-collar and white-collar workers  Sources: National Mediation Office, Statistics Sweden and Sveriges Riksbank. Structural unemployment Developments in the labour market have been weak despite several years’ firm economic growth, historically low interest rates and strong public finances. So far, the growing economy has not managed to create enough jobs.
We believe the State Banks have to contribute more towards building a strong and dynamic banking sector. Therefore, the two large state commercial banks, Bank of Ceylon and People’s Bank, are encouraged to operate with higher levels of capital and conduct private banking on a wider scale. Further, these banks are expected to strengthen their off-shore banking operations and grow and expand towards a stronger regional presence. We have encouraged the National Savings Bank to broad-base their banking activities to contribute to the economy on a larger scale while, the Pradeshiya Sanwardhana Bank (the regional development bank of the country) is encouraged to serve the niche market of microfinance, targeting inclusive growth in the provinces. Meanwhile the other smaller state owned banks are encouraged to merge with the bigger state banks or with one another, and play a more cohesive role, since at present these banks account for just around 1 per cent of the market share. Foreign banks operating in Sri Lanka are expected to demonstrate greater involvement, and make a useful contribution to the economy. Larger foreign banks are expected to further strengthen operations and display greater enthusiasm in private banking, off-shore banking, infrastructure financing and support emerging new economic areas of interest such as the 10  BIS central bankers’ speeches  Strategic Hubs identified in the Government’s development initiative.

You may remember that there was a small Licensed Specialised Bank called Pramuka Bank, which failed in 2002. It was only in 2007 that the deposits of the Pramuka Bank were transferred to a new Savings Bank. In 2009, 8 financial institutions faced liquidity problems, mainly due to the collapse of the parent company of a particular group. Most of those financial institutions are still undergoing restructuring, as agreed with the Central Bank. In 2013, another small NBFI, namely, CIFL faced liquidity problems mainly due to mismanagement and non-commitment to corporate governance. The Central Bank is now in the process of restructuring this company under the consolidation programme. The important message that I want to share with you is that although the NBFI that failed in 2013 accounted for only 0.35 per cent of the assets of our financial sector, the publicity it created resulted in a huge uproar in the financial market and the economy. You can clearly see that transmission of information has become speedier in the recent years and such information is easily and widely accessible now compared to the past. The Managing Director of the IMF, Christine Lagarde also highlighted this fact when she recently spoke on “New Multilateralism for 21st Century”, from which I quote “We are living through a communications revolution, because information travels at lightning speed from limitless points of origin.
2  BIS central bankers’ speeches  As is clear from the hypothetical question, LIBOR is meant to capture a bank’s cost of unsecured borrowing. This means that the reference rate will reflect not only a risk-free component, but also counterparty credit risk related to the specific borrower. This turns out to be important for two reasons. First, the growing popularity and liquidity of LIBOR indexed contracts led to an expanded use of LIBOR to circumstances in which the credit risk of large banks was not clearly relevant. For example, a speculative position about the future of short-term rates is predominately based on one’s view about the path of short-term interest rates, rather than how bank counterparty risk might change and affect borrowing costs. Despite this shortcoming, LIBOR remained popular because the benefit of its deeper market liquidity was viewed as more important than the added complication that LIBOR included an element of counterparty risk.4 Second, variations in LIBOR submissions across the submitting banks at a point in time for a given maturity should mainly reflect differences in the counterparty credit risk, since the riskfree component is common to all submitters. This is important because it means that variations in submissions may be interpreted as reflecting variations in underlying counterparty risk. This is particularly important when the LIBOR submissions process is transparent and the market is under stress, which was the case during the financial crisis.

The FSB report10 was released in July and Governor Powell11 has recently described the Federal Reserve’s plans to support the two primary components of the reform of LIBOR. First, we are considering, in cooperation with the LIBOR administrator and other members of the official sector, ways to broaden the definition of LIBOR to more adequately represent current patterns of bank funding and to anchor it more firmly in observable transactions. Second, we believe it is important for market participants to have access to a range of appropriately created and governed reference rates that best suit their particular business needs. For example, some activities such as interest rate derivatives might be better served with a risk-free or near risk-free reference rate, rather than one that embeds a bank credit risk component. I would like to emphasize three points in support of the FSB recommendations and our own efforts. First, the FSB recommendations make clear that there is not one single path for all jurisdictions to achieve the common objective of more robust and resilient reference rates. Rather, each jurisdiction must take into account its own specific institutional, legal and market practices and arrive at its own best solution. In the U.S., I believe it is important to identify alternative reference rates that are grounded in a strong governance framework as laid out in the IOSCO principles and that are supported by market transactions.
Lim Hng Kiang: Metamorphosis – Singapore as a global capital for Asian risk transfer Official keynote address by Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman of the Monetary Authority of Singapore, at the 14th Singapore International Reinsurance Conference, Singapore, 1 November 2017. * * *  Opening Distinguished guests, ladies and gentlemen, a very good morning to all of you. 2 I am delighted to be here with you today at the 14th Singapore International Reinsurance Conference. 3 This year’s conference is significant because this is the first year the SIRC becomes an annual event. It is a milestone worth commending as the SIRC is now finally able to serve as a platform for annual renewals, much like the Monte Carlo Rendez-Vous and Baden-Baden Meetings of the East. And this is just the beginning. In the longer term, I am confident that the SIRC can be built up into an annual gathering of key global and regional industry practitioners, meeting to discuss key issues facing the industry, and charting out future growth directions. 4 The SIRC’s journey reflects the transformation of the Singapore reinsurance industry over 20 years – from starting out as a domestic market in the early days, to going through market liberalisation in 2000, to being a regional insurance powerhouse in 2010, and now to becoming a global insurance marketplace going into 2020. 5 Singapore is now widely recognised as the leading specialty insurance and reinsurance hub in Asia.

I am very confident that this Conference will be a great platform to catalyze open discussions among market players on the key issues relating to risk management. It will also provide good opportunities for business networking. On this note, it is my pleasure to declare open the International Risks and Risk Management Conference for Insurance Sector 2010. 4  BIS Review 76/2010
These factors were the macro conditions, global imbalances that led to low real interest rates and high asset prices and the Great Moderation that led to a systematic underestimation of risk and a substantial expansion of credit; distorted incentives in financial markets that led to extreme levels of leverage and risk-taking and a lack of due diligence; regulatory and supervisory failures that underestimated or disregarded the fragility of the financial sector; eventually enormous information problems with extremely complex asset-backed securities and huge hidden off-balance-sheet liabilities; and some very specific circumstances, such as the U.S. housing policy to support home ownership for low-income households and related sub-prime mortgages contributing to the U.S. housing boom. Importantly, none of these causes had anything to do with monetary policy, except indirectly in that monetary policy may have contributed to the Great Moderation (Bean 2009, Svensson 2010). So what conclusions can we draw from this about the conduct of monetary policy and any need to modify the framework of flexible inflation targeting? One obvious conclusion is that price stability is not enough to achieve financial stability (Carney 2009, White 2006). Good flexible inflation targeting by itself does not achieve financial stability, if anyone ever thought it did. Another conclusion is that interest-rate policy is not enough to achieve financial stability.

Lars E O Svensson: Monetary policy after the crisis Speech by Mr Lars E O Svensson, Deputy Governor of the Sveriges Riksbank, at the conference “Asia’s role in the post-crisis global economy”, held at Federal Reserve Bank of San Francisco, 29 November 2011. *  *  *  I thank Claes Berg, Hans Dellmo, Hans Dillén, Anil Kashyap, and Bengt Pettersson for helpful discussions and comments. Carl Andreas Claussen of the Riksbank staff contributed to the paper. The views expressed here are my own and are not necessarily shared by the other members of the Riksbank’s Executive Board or the Riksbank’s staff. In the aftermath of the financial crisis of 2008 and 2009 there has been a lively debate about what caused the crisis and how the risks of future crises can be reduced. Some blame loose monetary policy for laying the foundations for the crisis. There is also a lively debate about the future of monetary policy, whether it needs to be modified in the light of the crisis, and what its relation to financial stability should be. Here I will discuss the lessons for monetary policy from the financial crisis, the relation between monetary policy and financial stability, the role of monetary-policy instruments other than the policy rate, and some issues for emerging-markets arising from capital flows and exchange-rate movements.
A reasonable demand is that the forecasts for inflation, resource utilisation and so on do not systematically over- or underestimate the actual outcomes. In other words, the forecasts should not have any bias. If, for example, the forecasts for inflation over a long period of time on average over- or underestimate the actual inflation outcome then this is a sign that there is information that the central bank is missing and that could be used to improve the forecasts. It is, however difficult to determine whether the forecasts are unbiased on the basis of a small number of outcomes, especially if we take into account the uncertainty in the functioning of the economy. How do the central bank's forecasts compare with other forecasts? Another reasonable demand is that the central bank's forecasts are on average not poorer than those of other forecasters. If the central bank's forecasts are systemically poorer than those of other forecasters, then this is obviously an indication that it would have been possible to make better assessments than those made by the central bank. This also means that better information was available which the central bank would have been able to use as a basis for its decision-making. It is important to remember, however, that the preconditions governing forecasting at a central bank differ somewhat compared to those for many other forecasters. For the central bank it is not enough that the forecasts are accurate. This is one very important quality, but there are others.

I will start with the domestically focused banks before moving on to the globally active banks and, in particular, the crisis at Credit Suisse. Domestically focused banks  For the domestically focused banks, the operating environment has changed markedly over the past year. Interest rates have risen significantly and there are signs of a slowdown in the real estate market. Overall, the domestically focused banks have benefited until now from the rise in interest rates. This rise has helped to restore their interest rate margins. The banks have been able to increase their profits and strengthen their capital buffers. At current interest rate levels, domestically focused banks’ profitability is likely to continue to improve. An unexpected upward interest rate shock in the future, however, would likely have a negative impact on these banks. First, in this scenario their interest expenses would increase faster than their interest income. This is because interest rates on many outstanding loans are fixed for several years. By contrast, rates on deposits are likely to react faster to a further interest rate rise. Second, higher interest rates could lead to credit losses in mortgage lending. This constitutes a significant risk for domestically focused banks because mortgages are often their main line of business. Against this backdrop, the results of our stress tests are crucial: Thanks to their capital buffers, most banks should be able to cope with such a scenario.