samchain/econo-pairs-v1 huggingface dataset:
Eva Srejber: The role of monetary policy for growth in Sweden  Speech by Ms Eva Srejber, Second Deputy Governor of Sveriges Riksbank, at the FöreningsSparbanken’s Economics Day, held in Vellinge, on 6 June 2000. *  *  *  I would like to begin by thanking you for the invitation to speak here at FöreningsSparbanken’s Economics Day. In my speech today, I shall try to look beyond the day-to-day monetary policy where the focus on interest rate points and minor differences in assessments of the consumer price index at times entails a risk of a lack of perspective. It can therefore sometimes be justified to remind oneself and others of the role that economic policy can and should play. For me as a decision-maker at the Riksbank, this applies in particular of course to the role of monetary policy and the importance of the stability of the payment system. I would also like to recall the successes achieved in the Swedish economy during the past decade, where fiscal and monetary policy have both made important contributions. The challenge now is to reinforce what has been achieved and at the same time be strong enough to carry out the changes that remain. It is also important to continually evaluate and discuss the design of economic policy as new experiences are obtained. This requires openness, which has been a lodestar for the Riksbank in recent years.

Food price inflation also rose in August, (to 10.6 per cent), reflecting higher input costs related to energy, disruptions of trade in food commodities, and adverse weather conditions. While supply bottlenecks have been easing, these continue to gradually feed through to consumer prices and are putting further upward pressure on inflation, as is recovering demand in the services sector. The depreciation of the euro has also contributed to the rising inflationary pressures, together with the aforementioned supply and demand factors. Governing Council latest meeting decision In response to these developments, in our latest meeting, the Governing Council of the ECB decided to raise the three key ECB interest rates by 75 basis points. This significant step frontloads the transition from the prevailing accommodative level of policy rates towards levels that will enable the timely return of inflation to our two per cent medium-term target. Undeniably, the key current challenge for the ECB as well as other major central banks is raising interest rates to deal with inflation while recession risk is high. However, the risk of high inflation becoming entrenched in inflation expectations is a greater threat. The longer inflation remains elevated, the more harm it will cause to individuals and companies. While monetary policy will act decisively to restore inflation to our target, fiscal policy must be targeted in order not to counteract monetary policy and safeguard the most vulnerable people's incomes. Domestic economic developments Let me now turn to domestic economic developments.
The smaller the geographic area, the lower the potential for agglomeration effects. Some of these agglomeration benefits may themselves arise from having a diverse economic eco-system, as this enables positive spillovers between sectors and skills within an area.48  43  Mundell (1961). For example, Berger, Dell’Ariccia and Obstfeld (2018). Alesina, Tabellini and Trebbi (2017). 46 For example, Alesina, Tabellini and Trebbi (2017), Carlino and DeFina (1996), Cumming (2018), Dow and Montagnoli (2007) and Fratantoni and Schuh (2003). 47 Krugman (1991) and Krugman and Venables (1996). 48 Izraeli and Murphy (2003). 44 45  35  All speeches are available online at www.bankofengland.co.uk/speeches  35  (c)  Factor Mobility  A third sector of factors influencing the choice of optimal policy area concerns the degree of factor mobility. Easy movement of factors between regions can smooth-out differences between regions. For example, people moving from low to high unemployment areas can smooth out regional differences in incomes. In this way, factor mobility can serve as a risk-sharing device between areas, even without policy intervention. The other side of this coin is that, people and money do not always flow in this direction. Factor mobility can sometimes increase, rather than smooth out, differences between regions. For example, people or firms may move to areas which offer strong existing incomes and jobs. If so, this will tend to amplify, not  ameliorate, regional differences. That is the theory.

Other obstacles to investment  The picture is, however, more complex than simply one of firms that underinvest having difficulty in raising external funds for investment. Of the firms in the survey that said they had invested too little, most cited other financial and non-financial obstacles as well. The most important of these was constraints on using internal rather than external funds – ie using profits – for investment rather than for distribution to shareholders or purchasing financial assets (including M&A). Nearly 70% of the firms who said they had underinvested, cited lack of internal funds for investment as an obstacle. Over 60% judged distribution to shareholders and purchasing financial assets as the most important use of internally generated funds. In fact, only a quarter of all firms prioritised using their internally generated funds for investment purposes (Chart 3). Three-quarters of firms put investment behind distribution to shareholders and investment in financial assets when assessing the most important use of internally generated funds. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  Chart 3: Most important uses of internal funds % of businesses 35  Firms with too little investment Firms with appropriate levels of investment All firms  30  25  20  15  10  5  0 Funding investment  Purchasing financial assets (including M&A)  Distributing to shareholders / owners  Keeping as cash balances  Notes: Question 17: ‘When you think about using internal funds what do you generally prioritise?’.
The use of unconventional measures has also changed the nature of part of the liquidity created. Liquidity resulting from repos and currency swaps is temporary: it flows back automatically when the transactions are not renewed. Liquidity created by acquiring foreign exchange and Swiss franc bonds, conversely, is permanent. We expect to keep the foreign exchange and bonds we have purchased on the SNB’s balance sheet for an extended period. As part of the impending normalisation of monetary policy, SNB Bills – introduced a year ago – will therefore play a central role. Liquidity absorption will mainly be conducted through the issuance of SNB Bills. Consequently, part of the balance sheet will in future be funded with interest-bearing debt capital. Moreover, the expansion of the balance sheet will substantially increase the SNB’s credit and currency risks. Strengthening the SNB’s provisions The financial crisis has highlighted how important it is for the SNB to have a solid equity capital buffer. Without it, the SNB would be unable to carry the risks on its currency reserves internally – nor would it be in a position to take the measures to stabilise the financial system that proved essential in the financial crisis. Equity capital, furthermore, is central to the independence and credibility of the SNB. In spite of the extensive crisis measures we have taken, the SNB’s balance sheet is as robust as ever – though its financial stress resistance is heavily dependent on the distribution reserve, which is high at present.

I shall conclude my remarks by commenting on a change in the terms of admission to the Swiss franc repo system. Deployment of monetary policy instruments in the crisis and trends in the SNB balance sheet From October 2008 to March 2009 we carried out a massive reduction in the Libor target range in several steps. The most important instruments for expanding liquidity during this phase were repo transactions and currency swaps. Since the reduction of the repo rate to 5 basis points in December 2008, we have been pursuing a de facto zero interest rate policy. Beginning in October 2008, the heavy foreign demand for Swiss francs was influencing the level of the Libor – and this made it necessary to conduct Swiss franc/euro currency swaps. Swap agreements with other central banks gave more foreign banks access to Swiss francs, thus bringing the Libor down faster. As of March 2009, in order to loosen the monetary reins further when there was no more room for interest rate reductions, we adopted so-called unconventional measures. These took two forms: intervention in the foreign exchange market and purchases of bonds issued by domestic borrowers. In addition we concluded long-term repo transactions with terms of up to 12 months. So far the measures we have taken have achieved the objectives we set ourselves. The three-month Libor has been close to our target range of 25 basis points since the middle of September.
This market not only comprises the 217 million Muslim population but extends to the non-Muslim community and the foreign national community that operates in the region. The region is increasingly becoming an investment destination, including from the Middle Eastern investors. In 2006, Asia Pacific region has surpassed Europe as second largest region for investment from GCC with USD460 billion investment. The recent specific initiative to enhance the securitisation market by Cagamas Berhad, the Malaysian Mortgage Corporation and Hong Kong Mortgage Corporation by establishing a joint venture company to provide a mortgage guarantee programme for both Islamic and conventional mortgages in Malaysia is an example of a collaboration. This could be a catalyst for more similar initiatives in the future. Conventional financial institutions may also enter into alliances with Islamic financial institutions to be co-arrangers, to structure sukuk or other Islamic products based on Shariah compliant assets in this region. The wide ranging availability of such assets and the massive financing needs of the new growth areas in the region such as in China, Indonesia and Vietnam will be attracting funds from surplus economies such as from the Gulf economies. Efforts can also focus on facilitating cross listing of sukuk in multiple jurisdictions. Additionally, the viability of setting up of Asian Sukuk Fund as an extension of Asian Bond Fund can also be explored. Potential issuers may leverage on Malaysia's sukuk platform and the strengths as the world's largest sukuk issuance centre with over $ or 62% of world's sukuk issues.

However, these averages hide relatively strong fluctuations over the course of the year. At the beginning of 2003 inflation rose rapidly and during a couple of months it actually exceeded the upper tolerance limit of 3 per cent. However, it had fallen back by May and was once again in line with the 2 per cent target. The downturn continued throughout the remainder of the year, particularly for CPI inflation. The fact that CPI inflation fell more than UND1X inflation was due to the interest rate cuts made earlier in the year. In December, CPI inflation was 1.4 per cent, while UND1X was 1.7 per cent. The upturn at the beginning of the year was mainly due to rising electricity prices caused by supply problems in the hydroelectric power companies’ reservoirs and by unusually high demand resulting from a cold winter. Oil prices also rose and contributed to the higher inflation rate. The high energy prices had an impact on several sub-components of the CPI. For instance, housing costs and various prices linked to transportation activities rose unusually quickly during the spring. When adjusted for energy prices, the path of inflation in 2003 was much more stable and remained within the interval of 1.2-1.9 per cent. Small deviations from target Despite the fact that inflation fluctuated substantially over the year, we can conclude that the average CPI deviation from target level was relatively small in an historical perspective; around half a percentage point, compared with approximately one percentage point during the period 1995-2002.
Some of these shortfalls are the result of limited investments in resources and technology and the limited ability of individual firms to improve market practice without a commensurate effort by other dealers. Some are a reflection of the complexity of the products and the limited experience firms have had with how these exposures trade in more adverse market conditions. Both require a greater investment of resources and attention by senior managers. We are encouraged by the initial commitments outlined by the major dealers earlier this month to resolve a number of these problems. In cooperation with the other principal supervisors, we will be monitoring progress closely. The third area I’d like to discuss concerns the need to improve stress testing and scenario analyses, which are among the most difficult and consequential parts of the risk management process. What is important, as always, is to bring a forward-looking view to evaluating a firm’s potential exposure across a broad range of economic and market conditions and to capture the risk in the tail of the distribution of possible outcomes.

Among the challenges we see today, even at the most sophisticated institutions, are the following: •  bringing more integration to the assessment of market and credit risk and the interactions between them,  •  capturing, measuring and aggregating credit exposures stemming from activities across all of a firm’s business lines,  •  assessing the value of positions in portfolios of more complex and less liquid products,  •  capturing the potential implications on market liquidity and price movements of the unwinding of common positions across market participants, and  2/3  •  assessing the implications of the exit of a major counterparty, particularly in the more concentrated segments of the market, and the limitations imposed by the size of the institution itself in responding to adverse market conditions. Together, the three areas I’ve discussed—challenges in counterparty risk management with respect to hedge funds, developments in the credit derivatives market and infrastructure and ongoing work to improve stress testing and scenario analysis–represent areas where uncertainty is necessarily high. And assessing the probability of various outcomes and the potential losses associated with those outcomes is very complicated and hard to do well. Doing so requires care, judgment and a portfolio of different approaches. This is particularly important to do well in a context when we have had such a sustained period of relatively low credit losses and low volatility.
They review such issues as whether the model is based on reasonable assumptions, whether the firm is making appropriate use of backtesting, and how the model performs under normal and stressed market conditions. In addition, they are spending significant time on key controls related to the overall use of models, including the model validation process and the new product approval process. Likewise, as banks rely increasingly on their own assessments of credit and operational risk when determining their capital needs, our examiners will have to become well-versed in the changing technical aspects of those models. Some of the conventional, static metrics that we now use - for example, on the credit risk side, those to judge asset quality and to assess the adequacy of credit loss reserves - are likely to be supplanted by more sophisticated quantitative measures. As is the case with credit risk, we are in the process of developing a more integrated framework for assessing the adequacy of banks’ operational risk management and measurement approaches. We are focusing heavily on how banks are managing operational risk from a corporate-wide perspective. We begin by developing a feeling for the "tone at the top" - that is, the board of directors’ and senior management’s commitment to effectively manage its operational risk. Then we assess whether that commitment translates into an effective operational risk management and control structure - including the quality of management reporting, and the degree of integration of operational risk into a bank’s overall risk management approach.

We wanted to build on our strengths as a money market and treasury centre to become the debt hub for Asia. At the same time, in other respects we hoped to emulate Zurich. We could become the premier international asset management centre for Asia. After all, our well-respected regulatory, legal and accounting systems and stable socio-economic conditions had already made Singapore a location of choice for private wealth. After five years of promotion and development, we have achieved some encouraging results. The debt market has grown more than 3-fold since 1998. We have attracted some foreign issuers, and our own corporates have tapped international markets from here. However, we remain largely a market with domestic focus. We therefore need to do more to make our markets deeper, more liquid and internationally established. The prospects are good. Asian countries are now cooperating more closely to develop domestic bond markets. As corporates in our region expand their businesses to take advantage of the recovery, they will need more funding. We also see a clear trend towards more derivative products being structured here as investors look for better yields or protection. All these factors will help us to continue to grow our debt markets in size and sophistication as a major debt hub. In the equity market, the global trend five years ago seemed to be towards cross-border alliances and linkages. This has generally not worked out, except to a limited extent in Europe. Indeed, the last few years have been very difficult for stock markets world-wide.
Pursuant to the Ministry’s mandate, the Bank’s Executive Board prepares a job description and investment mandate for the CEO of Norges Bank’s investment management unit, NBIM. The current governance model is in line with the Santiago Principles, which have been developed for the governance of sovereign wealth funds. The Principles stress that the policy purpose of such a fund should be clearly defined. The Government Pension Fund Act contains an explicit objective that the fund shall support government saving and support long-term considerations in the use of petroleum revenues. In the mandate from the Ministry, this has been specified by providing that Norges Bank shall seek to achieve the highest possible long-term real return with moderate risk. The Santiago Principles also emphasise the importance of a clear division of roles and responsibilities and of avoiding micromanagement of investment activities. This is provided for with regard to the relationship between the Ministry of Finance and Norges Bank as the Ministry does not issue instructions in matters relating to the exercise of ownership rights or individual investments. The Santiago Principles are derived from more general principles of corporate governance. An important purpose of these principles is to mitigate what is called the “principal-agent problem”. This problem arises when a principal delegates a task to an agent who has more information and who may have interests other than those of the principal. Delegated investment management is an often-used example of a situation where the principal-agent problem can arise.

Egil Matsen: Government Pension Fund Global - experiences and organisation Speech by Mr Egil Matsen, Deputy Governor of Norges Bank (Central Bank of Norway), Oslo, 27 October 2017. * * * Accompanying slides  Introduction At a press conference in February 2017, Prime Minister Erna Solberg summarised Norway’s management of its oil and gas revenues as follows: “We have been fortunate, but we have also managed our resources well.”1 Many will probably agree with the Prime Minister’s assessment. In 1990, the Storting (Norwegian parliament) passed the Act relating to the Government Petroleum Fund, an important milestone for the management of Norway’s petroleum revenues. The Act draws a distinction between current oil and gas revenues and the spending of these revenues over the central government budget. This distinction has allowed the accumulation of the savings in what is now called the Government Pension Fund Global (GPFG). Under the Act, all of the government petroleum revenues are to be placed in the GPFG, which can only be used via the central government budget. Under the fiscal rule, the transfers are to follow the long-term expected annual real return of the GPFG. Chart: A large fund – NOK 8 000 billion The first deposit in the fund was NOK 2 billion and was made in May 1996 by Sigbjørn Johnsen, the Minister of Finance at the time. Today, the value of the GPFG is around NOK 8 000 billon, or almost three times annual mainland GDP.
When technological change is disruptive and widespread, the productivity effect is generally insufficient to counteract completely the destruction effect, partly because of the time it takes for the full potential of new technologies to be realised, and partly because of the phenomenon of greater job polarisation – to which I will turn to in a moment. As a consequence, over the medium term, technological change tends to reduce labour’s share of income. Historically, however, technological progress has not led to permanent declines in the labour share because 9  of a third effect – the creation of new tasks for labour. When combined with the productivity effect, this ultimately has counterbalanced the displacement effects of technology, boosting productivity and wages while leaving employment unaffected. 7  Partly there is a lag in reorganising enough of the economy to the advantage of the new general purpose technology for aggregate productivity growth to increase. 8 The following is based on Acemoglu, D and Restrepo, P (2018), ‘Artificial Intelligence, Automation and Work’, NBER Working Paper No. 24196. 9 This creation effect need not be fully exogenous to the technological change, for example because the new technologies allow new jobs to emerge that wouldn’t otherwise be possible – though of course factors like education and skills are important in determining how quickly and smoothly these gains come about. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Could this time be different?

The Future of Work Speech given by Mark Carney, Governor of the Bank of England  2018 Whitaker Lecture, Central Bank of Ireland 14 September 2018  I am grateful to Clare Macallan and Jennifer Nemeth for their assistance in preparing these remarks. I would also like to thank Will Abel, Andy Haldane, Carsten Jung, Rana Sajedi and Greg Thwaites for the background research and analysis they conducted. 1  All speeches are available online at www.bankofengland.co.uk/speeches  It is a pleasure to deliver this lecture in honour of TK Whitaker. Whitaker’s career in public policy spanned a period of profound structural change in the Irish economy. In 1956, when he became Secretary of the Department for Finance, the Irish economy was isolated and uncompetitive. Growth in output per capita was lagging the rest of Europe and the steady tide of emigration was gradually shrinking the population. By the time Whitaker’s career drew to a close, the Celtic Tiger was roaring: Ireland had caught up with even the most prosperous nations in the EU, GDP growth was averaging over 5%, and the population had increased by two-thirds as emigration switched to immigration. The catalyst for this transformation was opening up to foreign trade and investment. Beginning with the 1958 report Economic Development, Whitaker strongly advocated replacing the old strategy of self-sufficiency with a new one of export-led growth, which led in time to Ireland joining the EU. For many, this is the greatest long-term consequence of his work.