samchain/econo-pairs-v1 huggingface dataset:
High oil and gas production and high prices, combined with high returns, have resulted in the value of the Government Pension Fund rising rapidly in recent years. The Fund is approaching the nominal value of one year’s GDP and may reach two in the course of the next decade. This is based on the assumption that oil prices remain high over the next few years and then fall to about USD 30 per barrel. The government bases its withdrawals from the Pension Fund on an average real return of 4 per cent for financing current expenditure. Given this spending rule, the return may come to finance more than 15 per cent of government expenditure in 10 years. We thus reap considerable benefits from managing our petroleum wealth well. The return represents future income that we forego if we draw on this wealth today. But even with this source of income, more than 80 per cent of expenditure must be covered by other sources. Financing the large pension payments that will have to be disbursed in the coming decades will be very demanding in any event. 2  BIS Review 30/2006  The Pension Fund has a prudent investment strategy, with broad risk diversification, and a real return of 4 per cent is expected in the long term. There are examples of companies and investors that achieve a considerably higher return on capital over time.

The Norwegian authorities have been successful in ensuring that the bulk of the petroleum wealth benefits society as a whole. Both the state’s ownership interests through the State’s Direct Financial Interest in petroleum activities (SDFI) and the tax system have contributed. The companies that extract oil earn a reasonable return on their investments and have incentives to invest, but the economic rent has essentially accrued to the general public. The authorities have so far also been successful in smoothing the use of petroleum revenues over time. This is important for several reasons. First, it is misleading to look upon the cash flow from petroleum activities as income. The appropriate economic perspective is to see the transfer of cash flow to investments abroad as a way of transferring capital from one account to another – from petroleum to foreign securities. By doing so, we diversify risk. Second, the size of the cash flow from petroleum activities varies. If petroleum revenues were to be used as they accrue, this would lead to wide fluctuations in demand in the Norwegian economy. Third, the use of petroleum revenues has an impact on competitiveness in Norwegian business and industry. A high level and substantial variations in the use of petroleum revenues would have a negative impact on internationally exposed industries. The establishment of the Government Pension Fund and the spending guidelines for petroleum revenues are intended to meet these challenges.
Such initiatives are laid down for industry players to capitalise on, to achieve sustainable success and to unleash their potential gains both locally and abroad. In light of this, allow me to share my thoughts on some key focus areas and developments which embed our aspirations on the future direction of the takaful industry. Against a backdrop of growing opportunities and challenges as the business environment becomes more intensified and challenging, capacity and capability building measures for industry players to compete effectively and efficiently will continue to be pursued. These complement our efforts to further strengthen the institutional infrastructure of our takaful industry by increasing the diversity and strength of players in the Islamic financial system. The emergence of AIA AFG Takaful Bhd. in the Islamic financial landscape is therefore timely to further inject the competitive element that would propel the growth of the takaful industry. This is particularly so, as part of Malaysia’s recent liberalisation measures aim to develop a resilient, diversified and efficient financial sector with financial institutions that are in greater state of readiness to compete in a more liberalised and challenging environment. The granting of four new family takaful licenses by Bank Negara in 2009 is also complementary of Bank Negara’s initiatives of promoting the establishment of a core of robust industry players that could heighten competition and spur innovation in the takaful industry.

It is also important for the takaful business, like other financial services providers, to select an efficient and cost-effective distribution channel that is strategically aligned to meet the participants’ reasonable expectation. Strategic alliance in the bancatakaful arrangement has become an important delivery channel with significant improvements in the takaful contributions during the past years, evident by its positive increasing trend for general takaful and by being the leading distribution channel for family takaful, accounting for 50.3 percent of contributions in September 2010. The bancatakaful arrangement between Alliance Bank Malaysia Berhad and American International Assurance Bhd. indeed offers attractive value proposition for both partners. It is our aspiration to see AIA AFG Takaful Bhd. emerge as an effective and progressive takaful operator with strong presence in the domestic financial landscape and be among the anchor players to expand takaful business at the global front. I am confident that AIA AFG Takaful Bhd. should be able to strategise itself by optimising and leveraging on its shareholders’ wide customer base and network, strength, expertise, experience and infrastructure in offering diversified products of high quality and enhanced customer service. Given the strong international network and experience of its foreign insurance partner, AIA AFG Takaful Bhd. is also certainly well positioned to establish its global Takaful centre of excellence for the region in Malaysia, therefore reinforcing Malaysia’s position as an international Islamic financial hub. On this note, I wish AIA AFG Takaful Bhd.
The degree of Central Bank intervention in the foreign exchange market varied over time with balance of payments developments and the view of the Central Bank on the direction of the exchange rate. Under this monetary targeting framework with a crawling exchange rate, achieving price stability proved challenging, as successive governments continued to run high fiscal deficits even after the completion of the accelerated Mahaweli scheme to finance large scale housing and road development programmes. In addition, the three decades of ethnic conflict required successive governments to spend more money on defense expenditure. In order to maintain competitiveness of the rupee, the Central Bank had to let the currency depreciate to, at least partly, compensate for the inflation differential between Sri Lanka and its trading partners under the crawling peg system. Even though this arrangement helped to alleviate the adverse impact on exports to some extent, higher domestic demand created through excessive fiscal deficits led to large current account deficits in the balance of 10  payments, making it difficult to maintain the crawling peg without a sharp depreciation. By the year 2000, Sri Lanka experienced a significant decline in its official international reserves, as a result of the considerable increase in expenditure on imports. The increased demand for foreign exchange placed tremendous pressure on the exchange rate. Within the managed floating exchange rate regime, this naturally resulted in increased pressure on international reserves.

Improved communication also would have played a key role in this achievement. It must be noted that the neighbouring economies struggled with double digit inflation during some parts of the same period. For example, India was unable to tame inflation until 2014. One might argue that international commodity prices were in our favour. However, this was not always true, as global crude oil prices remained, on average, above US dollars 100 per barrel during the period from February 2011 to September 2014. Inflation Targeting as an Alternative: Lessons from Other Countries Therefore, without a formal announcement, the Central Bank of Sri Lanka, similar to many other central banks in the world, has moved to a monetary policy framework governed by expectations and credibility, rather than by monetary aggregates or exchange rates. In the global economy, such a monetary policy framework that emphasised the role of expectations and credibility existed, and it was known as “inflation targeting” that I briefly referred to at the beginning. First adopted by New Zealand in 1990, inflation targeting was chosen as the monetary policy framework in Canada, the United Kingdom, Australia, and Sweden in quick succession. Encouraged by the success of inflation targeting, a number of other advanced economies as well as emerging market economies adopted this framework thereafter. These countries used inflation targeting either to bring down inflation from stubbornly high levels or to maintain inflation at low and stable levels on a sustained basis.
This is largely because some firms in these sectors were already close to the thresholds determining vulnerable status before the shock. 14  For households, an interest rate rise could contribute to some deterioration in their debt repayment capacity. But the effect of moderate rate hikes is not expected to be very significant, partly because of the increase in recent years in the proportion of fixedrate mortgages, which accounted for 24.9% of the outstanding amount at December 2021. Specifically it is estimated that the proportion of households with a high net interest burden28 would rise by 1.2 pp, 2.3 pp and 3.9 pp if interbank rates were raised by 100 bp, 200 bp and 300 bp, respectively. These effects would be most pronounced among indebted households between the 20th and 40th percentiles of the income distribution.29 Low-income households would be most affected by rising energy prices, as energy expenditure accounts for a larger proportion of their consumption,30 they are less likely to be able to absorb these higher prices by reducing their saving and their net interest burden is higher. 28  The net interest burden is considered to be high when the ratio of (debt service expenses - interest income from deposits) to household income is over 40%.

When MAS was set up in 1971 and the then-Minister for Finance Mr Hon Sui Sen became its first Chairman, the World Bank was horrified. They said it was like asking the cat to look after the fish! The track record shows that the cat has been exceedingly well behaved. In last 40 years, government has consistently backed MAS. Never has the government pressured MAS to: ease monetary policy; or give a license to a bank that MAS was not inclined to admit; or refrain from taking action against a financial institution that did not behave. Next, we thank our partners in the financial industry 14. Managing risk is an exercise in partnership. MAS will never know what all the risks are and where they are, as well as the institutions themselves. That is why the boards and management of our financial institutions must be at the forefront of keeping their own institutions safe and sound. That our financial sector has remained so is testimony to our partnership with them in prudent risk management. 15. Our financial industry has been an active partner in crafting regulation. MAS places much importance on consulting the industry before setting new rules or standards. We thank the industry for giving us useful suggestions and feedback, and sensitising us to unintended consequences. And our financial institutions have been a great ally in our efforts to promote Singapore as an international financial centre. 16. The 2008 global financial crisis has given the financial industry a bad name.
Jarle Bergo: Monetary policy and business cycles Speech by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at Kunnskapsparken Bodø, 25 September 2003. The text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 17 September and on previous speeches. The Charts in pdf can also be found on the website of the Norges Bank. *  *  *  The operational target of monetary policy as defined by the Government is inflation of close to 2.5 per cent over time. The inflation target provides economic agents with an anchor for their decisions concerning saving, investment, budgets and wages. The inflation target also provides a framework for monetary policy’s contribution to stabilising output and employment. This intention is also expressed in the Regulation on Monetary Policy. High demand for goods and services and labour shortages normally point to higher inflation. When interest rates are increased, demand falls and inflation is kept at bay. When demand is low and unemployment rises, inflation will tend to slow. Interest rates will then be reduced. Norges Bank sets the interest rate so that future inflation will be equal to the inflation target of 2½ per cent. The interest rate has been reduced since December last year in response to the change in the inflation outlook.

Measures of kurtosis – the fatness of the tails – of UK house price inflation are 6 times larger over the full sample than over the Golden Decade; for UK bond yields 10 times larger; and for UK equity returns 16 times larger. To bring these stylised facts to life, consider the distribution of equity returns in Chart 7. If we assumed the Golden Era distribution was the true one, the three worst monthly returns in history – the bursting of the South Sea bubble in September and October 1720, and Black Monday in October 1987 – would have been respectively 12.7, 6.9 and 6.5-sigma events. All three would have appeared to be once in a lifetime – of the universe – events. Underestimation of risk, whether variances or tail outcomes, has consequences for the risks facing both individual firms and for the system as a whole. As an example of the former, Chart 9 plots some unconditional 90th percentile VaRs for a selection of UK banks, based on their equity returns up until end-July 2007 and then extended to include the present crisis. 3 These unconditional VaRs for UK banks increase, on average, by almost 60% once the sample is extended; and for some banks these risk measures more than double. For the system as a whole, one way of illustrating the consequences of underestimating risk is to translate it into “fair value” insurance premia. For example, consider a financial firm offering insurance against moves in future equity prices by writing put options in mid-2007.
Moreover, the effects of these reforms will emerge slowly and gradually. However, this is the only way to ensure permanent economic welfare. Monetary policy does not have a lasting effect on the long-term growth performance of the economy other than the benefits of establishing and sustaining price stability. The Central Bank will continue to make a concerted effort to achieve price stability as per the duties and responsibilities entrusted by its Law. BIS Review 104/2010  5  I would like to end my remarks by extending my regards to all participating academicians and policy-makers for their valuable contributions to the “World Business Congress of the International Management Development Association”. Also, I would like to thank, once more, the members of Karatay University their contributions to the conference. 6  BIS Review 104/2010

But the difficulties we are encountering in the European Union and in the Monetary Union have not only to do with the weak fiscal foundations of this edifice. They are also related to problems of what we call “governance”. Clearly, we have extremely complex negotiating and decision-making procedures in the European Union and the Monetary Union. And, irrespective of or in addition to macroeconomic imbalances, these problems affect the stability of the markets and the perception of risk regarding the area’s future. Most Britons are sceptical about Monetary Union and its future. Although it is not very politically correct to say so, the truth is that this scepticism is really not too bad for us since it helps those of us who are members of the Monetary Union to see ourselves from outside and to take, perhaps, a more realistic view. Sceptics or not, we can agree that the  BIS central bankers’ speeches  1  fallout from a failure of the Monetary Union would certainly affect the future of the European Union as a whole. The United Kingdom chose not to participate in the Monetary Union and holds firm to this position. Indeed, it would be strange if it were to change its mind in the current circumstances. But it’s clear to me that the United Kingdom has no interest in European Monetary Union failing.
Yet, since 2013, the cumulative shortfall relative to our inflation target is noticeable. This raises the question of whether changes in the functioning of developed economies may have impaired the Phillips curve, which I will take today as the relationship between the rate of changes of prices and the unemployment rate i. I find it prudent to choose the observed unemployment rate as a measure of slack, rather than model-dependent and uncertain estimates of the output gap. Page 3 sur 9  In the Euro area, two factors explain most of the gap between the observed level of inflation and our target. The first one is the double dip recession caused by the Great Recession and the sovereign debt crisis. The second factor is the strong decrease of the price of oil after 2014 that lowered the inflation rate both directly, through the energy component of consumption prices, and indirectly by decreasing production costs of services and non-energy goods. Food prices have also been less dynamic on average since 2014. Combined, these factors contribute to a 1 pp decrease in the annual inflation rate. They were partially mitigated by unconventional monetary policy. Absent this policy, in-house computations show that annual inflation would have been close to 0.3% lower between 2014 and 2019, in line with ECB estimates.

According to recent analysis of the Banque de France, a powerful narrative then emerges by comparing the average contribution of each of these factors between 1999-2007 and 2013-19: In the second period, macroeconomic shocks have turned disinflationary relative to the first decade of the Euro, pushing down inflation despite a partial offset by unconventional monetary policy. Page 4 sur 9  The unexplained or residual part of the inflation decline has averaged about 0.3 percentage points since 2013. Yet this share has been growing, suggesting that we need to pay close attention to its potential causes. Across the euro area in recent years, higher wages have been partly offset by squeezing corporate margins, particularly in market services. Another factor may be the possibility of a downward drift in long-term price expectations that could have followed from the prolonged period of low inflation. Last, but not least, structural changes may have impacted the process of price and wage formation, in the context of increased digitalisation and globalisation of our economies, and diminishing bargaining power of workers. Still, the quantitative weight of these structural factors is less than clear and has not achieved consensus among economists. I.B. The future: the return of inflation? The current debate on a potential return of inflation may be legitimate in the US ii, but not in the Euro area. In the US, the ongoing recovery is much faster than what was observed after previous crises and the output gap is projected to close and become positive in the course of 2021.
This relates first to the completion and implementation of the FSAP and its follow up. The FSAP should give rise to genuine common financial legislation and regulation for market players. The so-called Lamfalussy framework, which allows for flexible technical rules at the EU level complemented by enhanced co-operation as regards national implementation and enforcement, has for good reasons been extended from the securities field to banking, insurance and financial conglomerates. A second area of structural reform in capital markets is the further consolidation and integration of market infrastructure and the further harmonisation of the standards and conventions routinely used by market participants. There is a large variety of remaining obstacles to a fully integrated and efficient euro area market which still needs to be addressed by the relevant actors. A simple but telling example of the benefits that collective action can bring in this regard is the development of the EONIA overnight interest rate index by market participants organised within a trade association. This index has become the generally accepted reference in the euro overnight interest rate swap market, leading in turn to the impressive development of this particular market segment. Turning to labour markets, a number of structural reforms have been undertaken in recent years and efforts are still on-going in several Member States. Although unevenly implemented across countries, the positive impact of past reforms in the labour market has become visible.

Clarity and enforceability of the fiscal framework should also be enhanced. 3. The need for structural reforms  Turning to the aim of a higher long-term sustainable growth rate in the euro area more generally which, as I said, should be our major strategic goal, what we need is both higher productivity growth and higher employment creation. What is needed for these objectives to be achieved are economic reforms that ensure that capital, labour and product market rigidities will be substantially lowered. Structural reforms in capital, labour and product markets and in social security systems are needed to allow an allocation of capital and human resources which would be much closer to the optimum, enhancing the euro area’s growth potential and facilitating the adjustment to economic shocks. The reform priorities in the euro area’s capital, labour and product markets are overarching and very broad. In many cases they need to be translated into concrete policy measures at the European and/or the national level. Starting with capital markets, the pace of reform in this field has been impressive over the last years in anticipation and since the introduction of the euro. This includes policy-induced reform, such as the Financial Services Action Plan (FSAP) or the development of national legal frameworks governing the issuance of mortgage bonds. Reform covers also market-led initiatives, such as the development of electronic trading platforms or consolidation in the clearing and settlement infrastructure. Despite the past achievements the need for continuation and completion of the reforms remains.