samchain/econo-pairs-v1 huggingface dataset:
More recent monetary policy theory is frequently based on a loss function, or a preference function, which includes explicit targets for both inflation and output. Stabilising output is taken into account, thus recognising that monetary policy has an impact on the real economy in the short to medium term. It is the central bank’s task to choose an interest rate path that strikes the best possible balance between low and stable inflation and stable developments in the real economy over time. Ragnar Frisch was pursuing a similar line of thinking. Frisch wanted to construct a quantitative form of a preference function that could be applied in practical policy. Frisch delved into the matter. For example, he devoted considerable time to interviewing politicians to identify the “true” welfare function. His approach involved three phases. As to the first phase, Frisch stated:13 “...the econometrician uses his general knowledge of the political atmosphere in the country ... He will then be able to form a temporary perception of the quantitative form of the preference function”. In the next phase, the preferences are identified by means of a system for interviewing politicians: “This interview system must be designed so that the results, without the politicians necessarily having to understand this, can draw certain conclusions as to the numerical nature of the preference function.” In the third and last phase, the information derived from the interviews is combined with the data on the structure of the economy and the formulated preference function.

BIS Review 100/2007  3  Due to uncertainty as to which financial institutions were exposed to the subprime market, many operators became very cautious about extending loans, and this eventually also led to liquidity problems in the interbank market. On 9 August and in the days ensuing, many central banks offered extra liquidity to safeguard liquidity in the banking system. Norges Bank supplied liquidity to the Norwegian banking system through ordinary market operations on 9 August. In many countries, the money market is still dependent on injections of extra liquidity from the central bank. The banking system’s capacity and willingness to redistribute funds is still moderate. This increases banks’ financing costs. The turbulence in the financial markets has also led to a sharp rise in prices for transferring credit risk, i.e. credit default swaps (CDS), for both banks and other companies. CDS prices for US banks rose for the first time in March and began to rise again at end-June. Developments in CDS prices for European banks lagged behind somewhat, but in the last half of July CDS prices rose sharply for both US and European banks. This also affects Norwegian banks and enterprises, but the increase in CDS prices for DnB NOR was considerably lower than for European banks on average. Kredittilsynet (Financial Supervisory Authority of Norway) announced at the end of August that financial market turbulence seems to have had little impact on Norwegian banks.
Wellfunctioning money markets provide the basis for determining reference rates, which perform a key informational function for the economy as whole. The pricing of a broad array of financial products – particularly in the capital and derivatives markets – is based on reference rates. They are also used in credit and mortgage transactions and many other types of contracts. Reference rates can only be credible and robust in the long run if the underlying market functions well. The crucial importance of sound reference rates for an orderly functioning of financial markets cannot be over-stated. We now turn to a discussion of some of the changes in the landscape of reference rates in Switzerland. The role of SARON – the reference rate for Swiss franc financial markets The Global Financial Crisis greatly accelerated the shift in the interbank money market from the unsecured segment to the repo market. As unsecured activity dwindled, the Swiss franc Libor, for decades the benchmark for Swiss financial markets, lost reliability and robustness. The alternative to Libor is SARON. Today, SARON is the most representative interest rate on the Swiss franc money market. SARON is a secured overnight rate and reflects conditions in the most liquid segment of the Swiss franc money market. Unlike the Libor fixing rate, it is  Page 4/13  calculated on the basis of actual transactions and binding quotes. Approximately 150 financial institutions have direct access to this market. SARON has existed since 2009 and its economic importance has grown significantly in recent years.

Put differently, for money market interest rates to stay close to the SNB’s negative interest rate on sight deposits, the supply of liquidity must exceed the demand for liquidity by a sufficient amount. In a system of bank-specific exemption thresholds, this means that the supply of liquidity by the cash-providing banks – that is, by the banks whose sight deposits exceed their exemption thresholds and which are therefore willing to provide liquidity – must exceed the demand for liquidity on the part of the cash-taking banks – that is, banks which have an unused portion of their exemption threshold and are therefore willing to accept additional sight deposits on their balance sheet. Provided this condition holds, it is possible to reduce the burden on the banking system through exemptions, without jeopardising the monetary policy objective of the negative interest rate on sight deposits. If we take another look at the time series trajectory of money market interest rates depicted in Chart 3, we notice that this condition must have been met in practice, as market interest rates have indeed been close to the negative interest rate on sight deposits ever since that rate was first introduced in 2015. Page 8/13  The exemption thresholds have significantly reduced the burden on the banking system as a whole. When the SNB initially introduced its negative interest rate on sight deposits at the beginning of 2015, around two-thirds of total sight deposits were exempt from negative interest.
First, greater labour market efficiency, through lower temporary employment and improved employability, especially in the case of less skilled workers, could boost economic growth potential. Second, productivity gains thanks to investment in human capital, greater innovation and the elimination of inappropriate barriers to competition would also have beneficial effects on economic progress in the medium term. Before I close I would like to mention, among the structural challenges facing the Spanish economy, those facing the banking sector. Spanish banks do indeed still face challenges, such as reducing their volume of non-productive assets, improving their capital structure and profitability, strengthening their reputation and making optimum use of technological developments.

Although the crises can be explained in terms of shortcomings in the workings of the financial system, the instability has almost invariably stemmed from macroeconomic and structural problems. A reasonable economic policy is, of course, not just a requirement in emerging markets but also a standing order in the industrialised countries. Yet it is barely five years ago that Sweden regained a fairly firm economic foundation after the profound crisis in the early 1990s. There are many parallels between the Swedish crisis and the crisis in Thailand, for instance. An important factor here is, as I mentioned, the exchange rate regime. Experience has shown that exchange rates that are fixed but adjustable may often contribute to problems and currency crises. They presuppose that fiscal policy is capable of countering economic shocks at the same time as they invite speculation. In the debate it is therefore sometimes proposed that the emerging markets ought to set up currency boards (a system whereby all outstanding currency can be converted into some hard currency) or participate in some well-established regional monetary cooperation. These systems do demand just as much of policy but their stronger links are intended to confer greater credibility. There is a risk, however, of financial players being lured into a false sense of security, giving imbalances more time in which to grow. Another feature that fixed exchange rates and currency boards have in  5  BIS Review 52/1999  common is the negative effects they may exert on other countries if they have to be abandoned.
There are examples of heavily indebted countries that have stopped the snowballing process before it led to default. The banking crisis in the early 1990s left Sweden with a substantial fiscal deficit. Lower tax revenues, increased social security expenditure and rescue measures for banks brought the deficit close to 11 per cent of GDP in 1993. Sweden’s public debt rose to 80 per cent of GDP. Fiscal consolidation continued for several years and resulted in stabilisation of government debt and provided room for its eventual reduction. The  13  See Michael Hoel and Jan F. Qvigstad (1986): “Statsgjelden – et problem når veksten er lav og renten er høy (Public debt – a problem when growth is low and interest rates high)”, Sosialøkonomen, and Unni Larsen and Bente Støholen (2010): “Public finances – the difficult path back to sustainable levels”, Economic Commentaries 2/2010, Norges Bank. BIS Review 123/2010  7  UK and Finland conducted a similar process in the 1990s. The Nordic countries in crisis at that time learned their lesson and have kept public finances in order during this crisis. The euro area countries are in a special position. They have a common currency and a common monetary policy. Governments raise loans in the area’s single currency. Monetary policy – management of the euro’s value – is a common policy, conducted by the European Central Bank with a view to maintaining price stability. The countries have common guidelines for fiscal policy, but as mentioned earlier, these have not been followed.

Hamad Al-Sayari: Challenges posed to investment in Saudi banks Speech by His Excellency Hamad Al-Sayari, Governor of the Saudi Arabian Monetary Agency, to the Symposium on Challenges Posed to Investment and Saudi Banks, Riyadh, 2 December 2006. *  *  *  Dear Audience, At the beginning, I would like to welcome all honorable attendance. It gives me a great pleasure today to address you at the outset of the deliberations of this symposium on "Challenges Posed to Investment and Saudi Banks in an Environment of Global Economic Openness" which is convened at a time the Kingdom is witnessing a period of economic growth accompanied with and enhanced by steps of economic reforms in the fields of streamlining of regulations, restructuring of the national economy, and approval of a number of mega development projects as well as the accession to the World Trade Organization which is an important step towards enhancing integration into the world economy, coping with economic developments, and attraction of foreign investments apart from accession to global markets which will be reflected on the competitive capacity of the national economy. Dear Audience, The current Symposium is being held in a promising economic environment in this country. The Kingdom has recorded outstanding economic results. The real gross domestic product rose by 6.5 percent in 2005. This growth rate was reflected on almost all sectors of the economy which is characterized by strong investment. International rating agencies recorded their appreciation and certified the efficiency and strength of the national economy.
The prices of the most volatile items (food and energy) will increase more than core inflation, so headline inflation will converge to the target sooner than the core measure. Thus, the baseline scenario continues to estimate that in the coming months headline inflation 2  will decline to levels near the floor of the tolerance range, and will return to 3% at the end of the year and hover around this figure until the end of the projection horizon, mid-2019 (figure 2). First-quarter data confirmed the strong impact of the Escondida strike on the sector’s output, aggravated by reduced production in other mines (figure 3). Thus, mining activity fell by nearly 14% annually in the period, dragging along power generation and some local activities, according to various respondents to the May Business Perceptions Report (IPN) survey. Moreover, recovering former production levels has taken longer than expected, so the effect in mining output has extended into the second half. After considering these elements, the mining sector is projected to drop this year by nearly 2.5%, compared with the 1.5% increase we expected in March. Other sectors' activity continues to show two trends. On the one hand, the weakness of construction activity and related services; on the other, the more stable performance of private consumption, driven strongly by growth in durable goods.

Among these, I can mention the amendments to the Constitutional Organic Law (LOC) of the Central Bank to perfect the regulations applicable to payment systems established in the country and recognize payment infrastructures in foreign jurisdictions involving local financial institutions. Other points include raising the limits for foreign investment of insurance companies, making it easier for international custodians to settle in Chile, expanding investment alternatives for the Pension Funds and the Unemployment Fund, as well as moving towards a risk-based model of supervision for such funds. About financial inclusion, one noteworthy regulatory change has been the Law that allows nonbank entities to issue prepaid cards (Law No. 20,950—2016), aimed at promoting the development and massification of electronic payments and increasing financial inclusion, along with boosting competition in means of payment. Its implementation requires that the Bank (and the SBIF) issue the rules that will regulate this activity. These, besides regulating the implementation of prepaid cards, will incorporate another series of normative improvements on the payment system in general, which should contribute to favor the development, competition and incorporation of new technologies in the field. A final change worth mentioning is the Law that will create the Financial Market Committee, which will bring about a very significant change in our country’s financial regulation and supervision structure, and whose implementation poses a major challenge for public politics. Despite these significant advances, big challenges await us.
Some observers make the point that, if we look at historical frequencies of cycles and recessions, it is much more likely than not that interest rates may need to return to zero at some point in the future. “Nonconventional policies” may then become part of central banks’ standard toolkit, rather than a unique exception. Second, one legacy of the crisis will be the size of central banks’ balance sheets. A central bank’s balance sheet is the foundation on which it conducts its policies, through its monopoly to create base money. An expanded balance sheet can be seen in two ways. Either as a problem because the central bank leaves too big a “footprint” on money and financial markets; and this could impair their normal functioning. Also, by holding and actively managing a portfolio of public debt, central banks take quasi-fiscal responsibilities that must be avoided. Alternatively the current situation may be seen as an opportunity, at least in times of crisis. Central banks can use their expanded balance sheet to develop a richer set of tools and better address the challenges they are facing. Finally, the pre-crisis, inflation-targeting regime, was closely associated with the “Great Moderation” when inflation was low and output growth stable. This period of sustained growth and limited volatility was considered normal at the time. We know now that it was very exceptional from a historical perspective.

Overall, the June 2013 Eurosystem staff macroeconomic projections for the euro area foresee annual real GDP declining by 0.6% in 2013 and increasing by 1.1% in 2014 thanks to three main drivers: export growth, accommodative monetary policy and low inflation. BIS central bankers’ speeches  1  2. How can we boost growth further in the euro area? A strong fiscal stimulus obviously appears unfeasible, given the necessity to rebalance public finances. I want to stress two things here: •  The euro area has very rapidly and efficiently set to work to cure its fiscal weaknesses and can today boast some of the best results among the major developed economic regions: its public deficit has been reduced from 6.3% of GDP in 2009 to approximately 3% today; by the end of 2013, the euro area should show a positive primary balance;  •  While the commitment to progressively achieve sustainable levels of public debt and deficit has to be achieved; the measures need to be designed in such a way as to limit the negative side-effects on growth. For instance, efforts need to be focused on non-productive spending. In fact, there is only one way to durably raise the growth potential of our economies, and that is by structural reforms that enhance competitiveness. It is clear that the euro area is well equipped to confront the challenges of the 21st century. With 370 million consumers and high purchasing power, it remains the biggest market in the world.
Spain's per capita income today stands 17% below that of the euro area, a gap that is 4 pp narrower than was the case in 1978, but 8 pp wider than in 2005. Behind this persistent negative gap lie two well-known shortcomings in the Spanish economy: low productivity and a low rate of employment, which have moreover historically been negatively correlated. 1  Today, if I may, I will focus on the first of these factors, since productivity is the only failsafe means of improving living standards.1 What's more, our low productivity issues are very closely related to some of the weaknesses of our labour market, which, in turn, condition our ability to converge in terms of the employment rate. Second, it is well worth stressing that the convergence of the Spanish economy should be sustainable over time. With this in mind, it must be acknowledged that some of our economic problems these past few decades have stemmed from a failure to understand the obligations and restrictions that come with forming part of the European integration process and, in particular, of the euro area. This led, for instance, to the build-up of serious financial imbalances after joining the euro, which meant that our economy was particularly hard hit during the global financial crisis. Since the outbreak of that crisis, the Spanish economy has displayed a healthier pattern of growth that has, in fact, partly corrected the imbalances built up over the previous upswing.

Incorporating incentives into personnel management may also improve the efficiency of public spending. 23  García-Louzao, Hospido and Ruggieri (2022) find that the employment stability afforded by a permanent contract in Spain can lead to cumulative wage differences of up to 16% between a worker on this type of contract and another on a temporary contract, over 15 working years. Bertheau et al. (2022) show that job displacements in a collective dismissal lead to a significant reduction (of 16 pp) in Spanish workers’ employability five years later. Part of this reduction can be attributed to the lower investment in active employment policies in Spain. 24  According to Eurobarometer (2023), only 7% of Spaniards say they trust political parties (as against 27% in the EU) and only 47% local and regional public authorities (56% in the EU). Furthermore, trust in the three branches of the state is also low. In 2023, 24% of those surveyed trusted the Government (as against 32% in the EU), 16% Parliament (33% in the EU) and 46% the judiciary (54% in the EU). 7  The correction of imbalances According to the available estimates, the structural budget deficit stood at around 4% of GDP, above the estimate in 2019 (3% of GDP), and the public debt-to-GDP ratio stood in 2022 at 113.2%, almost 22 pp above the euro area average.
4  UNEP Emissions Gap Report 2019 International Energy Association (IEA) Global Energy Review 2020 IPCC Global Warming of 1.5°C Special Report 7 UNEP Emissions Gap Report 2019 5 6  3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  Let me be clear, change needs to happen in the real economy. Consumers, governments, corporates all need to act. But, if the real economy does not make that change and we head down a path of increasing climate instability or disorderly transition, the financial sector will bear that risk. It is, in my view, self-evident that the financial system cannot diversify its way out of this risk. As the pandemic has revealed, the interconnections between the real economy and the financial system run deep. And just like Covid-19, climate change is a far-reaching, system-wide risk that affects the whole economy, from which the financial system is not immune. For the same reason, while individual investors can divest, the financial system as a whole cannot. Indeed, seemingly rational individual actions that delay the transition make our collective future problems much bigger. Given the scale of change required, we will simply not be able to divest our way to net-zero. Rather if financial risk is to be reduced, then the underlying climate risks in the real economy must be managed. And fixing this collective action problem is a shared responsibility across financial institutions and regulators. We need to work together to solve it.

Role of the Bank of England  That brings me to the role of the Bank. Our work is focused on building resiliency to the risks from climate change into the financial system, so that it can steward the real economy to an orderly transition to net-zero. Being resilient means pro-actively managing climate risks and pre-emptively reducing them. This is central to the Bank’s mission. Indeed earlier this year climate change was made one of the Bank’s strategic priorities.8 I became the Executive Sponsor for the Bank’s work on climate change in 2016, at a time when there was only a handful of people at a handful of central banks working on climate-related issues. But since then the scope and depth of our work and that of other central banks has expanded significantly. We are working domestically and internationally with key stakeholders including government, industry, investors, regulators, and climate scientists to further this critical agenda. 8  Bank of England Annual Report 2020 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  Climate action at the Micro-level: Disclosure and Risk Management  So what are we asking financial firms to do? Put simply, they need to make financial decisions that take the risks and opportunities from climate change into account. The first step in achieving that is to have the right information. That is why the Bank has been making the case for some time for consistent, comparable, and comprehensive climate disclosures.