samchain/econo-pairs-v1 huggingface dataset:
A natural question in this context is why these driving forces and regulations are of interest to the Riksbank. The Riksbank has two statutory tasks, to maintain price stability and to promote a stable and efficient payment system. Both of these tasks give us reason to take an interest in the securities markets. To begin with, it is evident that the Riksbank’s monetary policy requires an efficient fixed income market so that inflation will be affected by interest rate decisions. With regard to the payment system, the securities markets are becoming increasingly important to the banks, which in turn are central to the functioning of the payment system. In addition, large parts of the securities market infrastructure are directly linked to the payment system in different ways. The Riksbank therefore has every reason to monitor developments in the securities markets and to actively promote the development of regulations that contribute to stability as well as efficiency. Demographic changes One of the fundamental economic driving forces behind developments in the securities markets is demographic changes. The age distribution of the population sets the framework for savings. It is not too far-fetched to assume that people mostly borrow while they are young, save while middle-aged and then live off their savings when they are older. Savings vary over a life cycle. Studies show that household debt is mainly built up during the ages 20 to 40; while people aged 40 to 65 have positive  BIS Review 66/2004  1  net savings.

Guest of Honour Following on the success of the 2012 Forum, it was felt that the momentum gained from that forum should not be lost. This Forum is, therefore, a follow up event from the one held last year. The theme of this year’s event is “Encouraging Local Content and Business Linkages: Role of the Financial Sector” Arising from last year’s event, nine major recommendations were made as follows: i. Set up of a credit guarantee facility;  ii. Establish a credit line to be provided by a wholesale institution such as DBZ coupled with training for financial institutions;  iii. Training for MSMEs/financial education to be an integral part of on-going efforts to support access to finance;  iv. Establish a central collateral registry;  v.  Develop a national MSMEs financing policy;  vi. Initiate legal reforms for speedy settlement of commercial transactions and resolution of disputes;  vii. Develop incentives for financial institutions that service the needs of MSMEs;  BIS central bankers’ speeches  1  viii. Develop a legal framework for consumer protection and data protection; and  ix. Monitoring and regulation of Money lenders. I am happy to report that seven out of the nine proposals made have been progressed with the other two still under discussions. The Government and World Bank are already in negotiations for a financing arrangement that may incorporate a form of guarantee scheme and financial education elements while DBZ has been recapitalized and has disbursed some funding through other financial institutions.
And they have started to assess exposures to transition risks where government policy is already pulling forward the adjustment. This includes exposures to carbon-intensive sectors, consumer loans secured on diesel vehicles, and buy-to-let lending given new energy efficiency requirements. But many banks have some way to go to identify and measure the financial risks from climate change comprehensively. This requires strategic board oversight and more dynamic scenario analysis so actions today can be considered in light of future impacts. Informed by these findings, the PRA published in October a draft supervisory statement for banks, insurers and investments firms which sets out expectations regarding firms’ approaches to managing the financial risks from climate change.8 The supervisory statement gives guidance in four key areas: governance, risk management, scenario analysis, and disclosure. Recognising the need to build capacity and to develop best practice, the PRA is establishing a Climate Financial Risk Forum, jointly with the FCA, to work with firms from across the financial system to advance approaches to managing climate-related financial risks. And the Bank of England is working in close collaboration with central banks and supervisors from around the world as one of the founding members of the Network for Greening the Financial System (NGFS). The NGFS brings together authorities from jurisdictions responsible for almost half the world’s emissions to share analysis and develop policies to climate-related risks and green finance. A4S A4S has long recognised that the business community needs to consider the risks and opportunities presented by climate change.

Let me close by thanking again HRH The Prince of Wales for his vision and leadership, and wishing him and our planet many happy returns. 14  Ibid, citing the Business and Sustainable Development Commission (2016), ‘Valuing the SDG Prize in Food and Agriculture: Unlocking Business Opportunities to Accelerate Sustainable and Inclusive Growth.’ 15 Ibid. 8  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  8
Various measures of underlying inflation are often used to justify the system used. What these measures have in common is that they use the CPI but remove various price components that have historically shown substantial fluctuations. One such measure, UND1X, has been given a particular status. In this measure the effects of changes in indirect taxes and subsidies as well as mortgage interest expenditure have been excluded. In the long term, the difference between the increase in the CPI and the increase in UND1X is slight. However, in the short term, inflation develops slightly more evenly according to UND1X than according to CPI as a whole. The bases for the monetary policy decisions are therefore often easier to explain when the inflation forecasts follow UND1X than when they follow CPI. BIS Review 29/2006  1  The fact that the objective of monetary policy has been given as low, stable inflation is because in the long term, this is the only factor of the economy that monetary policy can influence. Long-term developments in growth and employment are not affected by changes in the interest rate. They are determined by factors such as productivity and the supply of labour and capital, as well as the way the labour market – and the economy as a whole – functions. Monetary policy’s most important contribution is to act to ensure that the macroeconomic environment remains as stable and predictable as possible. At the same time, monetary policy has some effect on short-term fluctuations in production and employment.

This is particularly the case for prices for domestically produced goods influenced by world market prices. The fall in prices for imported consumer goods is not solely attributable to exchange rate developments. Clothing prices have exhibited a falling trend over the past few years. In October 2003, clothing prices were 13.7 per cent lower than in the same month one year earlier, and almost 30 per cent lower than in 1995. In addition to low external price inflation for these goods, lower tariffs for clothing have translated into lower consumer prices. The removal of quota regulations has also led to a shift in clothing imports away from high-cost countries to countries with considerably lower production costs. The same trend has been observed for the audiovisual industry. Since the mid-1990s, prices for audiovisual equipment have fallen markedly. In October, prices for these goods were 8.5 per cent lower than one year earlier. International producers have moved production to low-cost countries, allowing them to reduce prices charged to Norwegian importers. In addition, new technology and intensified international competition have exerted downward pressure on prices. Global economic growth has been considerably weaker than expected. Changes in the economic outlook are clearly reflected in interest rate expectations. In the US, these expectations have been adjusted downwards considerably since summer 2002. At that time, market participants expected the key rate in the US to be increased to about 4 per cent towards the end of 2003.
Measures to strengthen central bank independence should inter alia be seen in this light. How the exchange rate is to be managed within the framework of a policy with an inflation target is an important matter. The countries with inflation targets have different approaches. In all circumstances, it is important to assess how durable an exchange rate change is likely to be. This normally implies a picture of what caused the change. Durable changes influencing the inflation forecast have to be taken into account when the instrumental rates are set. Increased credibility of economic policy in general makes this problem easier to handle. The higher the credibility, the smaller the exchange-rate fluctuations are likely to be. The question of how the target is formulated and interpreted (for example, in relation to the measures describing the underlying inflation process) is worth discussing. Several factors have to be taken into account when the target variable is chosen. First, the capacity of monetary policy exactly to forecast and control inflation in the very short run is small. Second, the economy may be hit by disturbances that could create a conflict between a short-term inflation target and an ambition to stabilise the real development. Third, the outcome of the CPI is not a perfect indicator of the underlying inflation trend. This problem is handled in different ways in countries having a price stabilization objective. The Swedish monetary policy with a price stability objective has been successful and seems well balanced in view of present inflation forecasts.

During the 1970s and 1980s, average inflation was almost in double figures and varied substantially from year to year (see Figure 1). Sweden was a country without a nominal anchor. There was no credible level for inflation that price setting and wage formation could use as benchmark and the economy was stuck in a devaluation cycle. This was a fundamental problem that the Swedish economy was suffering when it entered the 1990s crisis. We came out of the crisis with a whole new monetary policy regime – inflation targeting. This policy was relatively untested internationally and it was far from clear that it would work. Such doubts may seem surprising today, bearing in mind how natural an inflation target is now and how inflation expectations are stably anchored around the target. And this, in turn, reflects the most important contribution from inflation targeting – in my opinion its main merit – that it has functioned as a nominal anchor for the economy for two decades (see Figure 2). The reform of the monetary policy framework was not the only important change in the Swedish economy following the crisis at the beginning of the 1990s. However, the inflation target is definitely one of the most important explanations for inflation being on average around 7 percentage points lower during the two decades following the crisis, compared with the two decades prior to the crisis. In addition, inflation has been much more stable.
However, the anchoring of expectations is not generated by decree, but by the past performance of inflation, by the credibility gained by the authority, and by its decisions being made within a transparent, recognized and predictable framework of analysis and action. This has led many central banks to adopt defined inflation-targeting frameworks and to invest in strengthening the communication of their likely future path. The importance of frameworks for action and credibility of institutions is also valid, keeping due proportions, for the political sphere. From the uncertainty standpoint, the existence of differences and conflicts in policy decisions is not the same as their occurrence under institutionalized mechanisms for processing and resolving these differences. Transferred to the current process underway in Chile, it is true that the drafting of a new Constitution may increase uncertainty as it refers to no less than the higher legal sphere within which the country will operate. However, this uncertainty can be mitigated not only by taking into account the higher cost of not resolving a social/political conflict, but also by providing and respecting the rules of the process that will govern the drafting of the new Constitution. So, uncertainty is neither a lethal threat to the economy nor something that can be eradicated altogether, especially in an ever-changing world. Rather, it is an element of a country’s evolving reality that can be contained on the basis of the systematic building of trust and the development of predictable processes for making decisions, as well as for settling differences and disputes.

These are the so-called “unobservable variables”, meaning that they cannot be measured directly (as can activity in a month or a year, for example) and thus must be estimated using different methodologies. The estimation of structural parameters is relevant for monetary policy decisions, as it provides a reference of where their values should stand over longer terms and therefore serves as a guide Page 5 of 27  for assessing the macroeconomy and calibrating monetary policy accordingly. In 2020, the Bank postponed the review of these parameters because the uncertainty surrounding the unusual nature of the shocks that were affecting the economy —the social crisis and the pandemic— made it more advisable to gather more information to assess the medium-term effects on the economy. The results of these estimates are detailed in three boxes of this Report. As for trend growth, its estimate is revised downward given the persistent slowdown in productivity growth over the last decade. Our estimate for non-mining trend GDP growth is reduced to a range between 2.4 and 3.4 percent for the 2021-2030 period, which compares to the range between 3.25 and 3.75 percent estimated for the 2019-2028 decade. This revision is mainly explained by a lower Total Factor Productivity (TFP) growth projection.1 This assumption is based on the consolidation of a downward trend since the early 1990s, which was only temporarily reversed during the commodity price boom of the second half of the 2000s (Figure 18).
This in turn has led to sharp declines in rates for such loans to households and nonfinancial corporations. As the transmission of monetary policy works with lags, our policy action will progressively feed through to the economy in full. Hence, with all the measures taken, monetary policy has provided ongoing support for households and corporations. The Governing Council will ensure that, once the macroeconomic environment improves, the measures taken can be quickly unwound and the liquidity provided absorbed so that any threat to price stability over the medium to longer term can be effectively countered in a timely fashion. Indeed, as has been stressed many times, the Governing Council will continue to ensure a firm anchoring of medium-term inflation expectations. Such anchoring is indispensable to supporting sustainable growth and employment and contributes to financial stability. Accordingly, we will continue to monitor very closely all developments over the period ahead. Regarding fiscal policies, the latest projections for euro area countries point to continued revisions to budget balance estimates and forecasts. Higher budget deficits and the fiscal impact of financial sector support measures will lead to significantly higher government debtto-GDP ratios. In addition, updated projections by the Economic Policy Committee of the EU show that most countries face a challenging task in dealing with the budgetary costs of an ageing population. Therefore, it is paramount that countries make a strong and credible commitment to a path of consolidation in order to return to sound fiscal positions, respecting fully the provisions of the Stability and Growth Pact.

Percent 6  6  5  5  4  4  3  3  2  2  1  1  0  0  2005  2010  2015  ECONOMIC PERSPECTIVES 18 FEBRUARY 2021  2020  1) Weighted average of money market interest rates for seven trading partners. Source: Refinitiv Datastream  A prevailing view over the past decades has been that fiscal policy should follow simple, robust rules and should to a limited extent be used actively to stabilise the economy. Globally, there are now signs that this view is changing. The pandemic may mark a turning point. In the period ahead, we are likely to see a more active fiscal policy among many of Norway’s trading partners. There are several reasons for this. For one thing, there is a recognition that the room for manoeuvre in monetary policy is limited. After the financial crisis, a number of central banks have assumed considerable responsibility for sustaining activity and smoothing economic fluctuations. At the beginning of last year, policy rates were therefore already at very low levels (Chart 7). At the same time, low policy rates reflect long-term trends, such as an ageing population, a high willingness to save, greater inequality and declining productivity growth. The result is that the level of what we refer to as the neutral interest rate is lower than before, even when economic conditions are in balance. The room for policy rate reductions in downturns is therefore smaller.
Fernando Restoy: The financial sector and the banking union Speech by Mr Fernando Restoy, Deputy Governor of the Bank of Spain, at the Círculo Financiero, organised by La Caixa, Barcelona, 18 May 2015. * 1. *  *  Introduction  Good evening. It is a pleasure to visit Barcelona again and an honour to stand on this rostrum at the Círculo Financiero, which has borne witness to the key debates affecting Catalonian, Spanish and European society over the past forty years. Allow me to thank the organisers and, in particular, Isidro Fainé, for the opportunity to participate in this forum. Following Isidro’s suggestion, I have decided to share with this eminent audience tonight some thoughts on the transformation the Spanish banking system has undergone. I think the current juncture is a most timely one for addressing the subject: in July three years will have elapsed since the signing of the Memorandum of Understanding (MoU), which marked the start of the financial assistance programme, approved by the European authorities, under which a most substantial portion of the reforms to the Spanish banking system were undertaken. Six months have likewise gone by since the Single Supervisory Mechanism commenced operating in the euro area, and the Single Resolution Mechanism has now been set up. These landmarks make for an appropriate setting both for reviewing the scope of what has been achieved and, naturally, for discussing the challenges ahead for Spanish banks in the new economic and institutional environment of which the banking union is a key part.

Thus, as is the case in other developed 4  BIS central bankers’ speeches  countries, commercial banking business margins remain at low levels in what is a stillunfavourable setting marked by the contraction in lending and the low level of interest rates. I shall make some brief comments later on the challenge of profitability. 5. What are the challenges that lie ahead? In recent years the environment in which the banks operate has undergone a significant transformation, owing to the changes in economic conditions and to the shift in attitudes provoked by the crisis, among investors, consumers of banking services and also the financial authorities themselves. As a result, banks are being required to make significant strategic adjustments. From among the numerous challenges facing the industry in the short term, I would like to highlight three: i) those resulting from the far-reaching changes in the regulatory and supervisory framework; ii) those arising from the lower business profitability; iii) and lastly, those associated with restoring banking customer confidence in the wake of the reputational damage suffered during the crisis. i)  Regulation  The first main challenge facing banks is the need to adapt to the new European regulatory and supervisory framework. As I have said, Spanish banks have successfully adapted to the new capital requirements, comfortably meeting the new limits established in the prudential regulations deriving from Basel III which have now been incorporated into Spanish law and are to be gradually phased in.
Some firms proposed lengthening the period of time between examinations, including increasing the asset size limit for community banks to qualify for the 18-month cycle. In response, the agencies supported a change to statutes that govern examination frequency. Subsequent legislation enacted in 2015 permitted qualifying firms under $ billion in total asset size to be subject to an 18-month examination cycle for safety and soundness examinations. The final rule for this legislation was issued at the end of last year and is now in force. I should emphasize that a longer exam cycle does not mean we are neglecting our supervisory responsibilities and we will remain focused on the core drivers of safety and soundness. That is our responsibility as supervisors. While it was some time ago, it is useful to recall the FDIC study of the financial crisis in the 1980s that highlighted how quickly financial health can deteriorate and concluded that delayed recognition via less-frequent examinations contributed to the scale of losses and failures in the 1980s.3 In addition to our review of regulations, supervisors periodically review existing supervisory guidance to evaluate relevance and effectiveness. The Board completed a policy review of the supervision programs for community and regional banking organizations to make sure that these programs and related supervisory guidance appropriately align with current banking practices and risks. As a result of this review, the Board eliminated 78 guidance letters that are no longer relevant.

Svein Gjedrem: The management of petroleum wealth Lecture by Mr Svein Gjedrem, Governor of the Central Bank of Norway, at the Polytechnic Association, Norway, 8 November 2005. The charts can be found on the Central Bank of Norway’s website The lecture does not contain assessments of the economic situation or the monetary stance. *  *  *  The oil age in Norway has spanned 30 years and it appears that it will continue for many years ahead. In this lecture, I will attempt to take stock of how we have managed petroleum wealth thus far. Moreover, I will look at the challenges that still lie ahead. On some scores, our management of petroleum wealth has been very successful. We have managed to define it as national wealth, and have ensured that the bulk of this 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 to this. 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. My theme today concerns the economic challenges linked to petroleum wealth and certain aspects of government wealth management. The most important economic challenges we would be facing were widely recognised early on. As early as in 1974, in Report no. 25 to the Storting “The role of petroleum activities in Norwegian society”, was discussed in depth.