samchain/econo-pairs-v1 huggingface dataset:
A measure of the real exchange rate is the trade-weighted exchange rate index (TWI) in relation to relative price developments between Norway and its trading partners. The real krone exchange rate has fluctuated around a long-term average level over the past 30 years. The krone exchange rate has a tendency to return relatively quickly to its normal level if there are deviations from the long-term 7 average level. Differences in price inflation between Norway and other countries have gradually been evened out by changes in the krone exchange rate. This relationship has been robust even when there have been considerable changes in economic policy. However, the revision of economic policy in spring 2001, with the introduction of a new fiscal guideline and an inflation target for monetary policy, may still have an impact on how quickly differences in price inflation level out in the years ahead. Purchasing power parity can be illustrated by developments during the last 30 years of the German mark's life as a currency. In 1970, a German mark cost about 2 kroner. In 1986/87, it cost about 4 kroner. The exchange rate remained relatively stable in the following years. On the other hand, prices rose about twice as quickly in Norway as in Germany from 1970 to 1986. However, both the exchange rate and prices relative to Germany were stable from the end of the 1980s until the German mark ceased to be a currency. A year and a half ago, the Government and the Storting adopted new guidelines for economic policy.

For the other four indicators, an adjustment period is envisaged, for their fulfillment in a period of five years from the date of accession. As a result of all these activities, by providing the necessary five from nine indicators, in April 2017, the NBRM officially launched the initiative to join this highest data dissemination standard. At that time, we were already sure that we passed the right path and that we came within an ace of attaining our goal – to the moment that we mark with today’s event. Dear ladies and gentlemen, On a global scale, it has long been resolved that quality data dissemination is key to use the benefits of statistics. Therefore, I can say for certain that 28 January 2019 is a date of historical significance for the Macedonian statistical system. But also for the Macedonian economy, because it now has an opportunity to be one of the eighteen economies in the world that have a set of statistical indicators according to the highest international data dissemination standard. Our cooperative journey to the SDDS Plus does not end here. We will have to fight off more challenges. We need to continue to work with the same commitment as so far to deliver the other four indicators. We are already actively working in this field and some of these data, in particular the data on the sectoral financial accounts produced by the NBRM, have been experimentally submitted to Eurostat. I am sure that we will successfully reach our final destination.
11  The distinction between output legitimacy (government for the people ) and input legitimacy (government by the people) was introduced in 1970 by Fritz Scharpf from the Max Planck Institute for the Study of Societies. For its use in the discussion of European affairs, see Scharpf, F. (1999) “Governing in Europe: effective and democratic?” Oxford University Press. 12  Gordon, Robert (2012). “Is US economic growth over? Faltering innovation confronts the six headwinds”, CEPR Policy Insight No 63. See also Cowen, Tyler (2011) The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better” Dutton Books. BIS central bankers’ speeches  9  This means that it gains accrued importance the attention that will have to be given to the other form of political legitimacy referred by Scharpf the input legitimacy (government by the people) – that is, increasing citizens’ participation in European decisions. In some ways this may appear as contradictory with the search for effectiveness linked with the first form of legitimacy that requires now stronger central deciding bodies. To understand the great difficulty in addressing this issue, we have only to think about the analogy we could establish with the political trilemma of the world economy recently enunciated by Dani Rodrik: 13 “we cannot simultaneously pursue democracy, national determination and economic globalization” I will not enter into such complications. I will recall, however, that in this context, we should never forget that Europe is not a Nation or a State.

This may be more difficult to achieve for international tools that require agreement between multiple national policy makers. Macroprudential policy needs to be operational soon It is therefore clear that vulnerabilities are emerging as countries recover from the crisis and it is important that national authorities are soon able to implement macroprudential policies to address those risks. Leading the development of formalised macroprudential policy arrangements are the European Systemic Risk Board, which will hold its inaugural meeting in just two days, and the Financial Stability Oversight Council in the US, which held its first meeting in October 2010. But many other countries are thinking seriously about how to implement and conduct macroprudential policy in their jurisdictions. Governance arrangements for macroprudential policy A vital aspect of the macroprudential policy framework will be the design of the governance arrangements. They will determine how the different elements of the framework are brought together and will influence how macroprudential policy interacts with other policy areas. Governance arrangements should be effective in three broad areas; they must ensure that the macroprudential decision-maker (the “macroprudential agency”) has: (i) a clear mandate;  managed to avoid the fiscal consolidation currently seen in many other EU countries. One reason for Sweden’s robust public finances is that it had to implement a programme of fiscal consolidation in the mid1990s, following the Swedish banking crisis.
[2]  What does this episode remind us about the risks from non-bank leverage? Leverage is an integral part of the economy. It allows households to borrow to buy houses and smooth consumption. It allows companies to invest in projects or to smooth cashflows. It allows banks to finance these activities. In the non-bank financial system, leverage is used: to facilitate trading; to invest in companies and infrastructure; and to arbitrage price discrepancies and so improve the efficiency of financial markets. [3] Leverage is created in different ways. Its most obvious form is to borrow money to buy assets – ‘financial leverage’. But it arises also through ‘synthetic leverage’ using derivative instruments. This allows users to adjust risk profiles through a relatively small initial outlay, with future gains or losses contingent on changes in underlying market prices. Those future gains and losses create financial obligations – a form of contingent ‘hidden’ leverage if you like. It’s clear that leverage is a key function provided by the financial system in support of a thriving and productive economy. But it comes with inherent risks that need to be managed. A common factor across all the uses of leverage I have just described is that it can increase the exposure of the leverage taker to underlying risk factors – whether that be house prices, earnings, interest rates, currencies or asset prices. It follows therefore that leverage can amplify shocks to each of these risk factors.

In a very direct way, policies aimed at promoting the transition towards a carbon-neutral economy are likely to affect the volatility of headline inflation and, more indirectly, climate change and the remedial actions needed to tackle it could affect our ability to achieve price stability through their impact on the so called natural interest rate, which is an important benchmark for inflation-targeting central banks when setting our interest rates. 2/6  It is still not clear the way climate change affects monetary policy and thus more analysis is needed to address the implications of climate risks on the economy and on monetary policy. Therefore, we have to step up our efforts to develop the tools and models needed for such an analysis. And, finally, climate change will affect the risks of the assets held on our balance sheets. Monetary policy implementation exposes us to such risks directly through holdings of assets and indirectly through collateral pledged by counterparties. In this regard, and very much related to my previous comments on the implications of climate change for the financial sector, central banks also have to step up their efforts to incorporate climate change into their risk management models and frameworks. And this, together with climate-related disclosure requirements, can decisively contribute to the correct pricing of climate-related risks by financial markets.
The public sector benefits from the government’s large revenues from petroleum extraction, and although the direct employment effect is small, the impact on the overall economy is significant. These specific features of the Norwegian economy are important concerns behind the framework for economic policy. Fiscal policy is governed by a fiscal rule, designed to insulate public finances from oil price volatility. The government’s large petroleum revenues are channelled into the Government Pension Fund Global and the fund’s capital is invested abroad. The fiscal rule specifies that only the expected real return of the fund, on average over the cycle, is to be spent over public budgets every year. With this set-up, the fund also provides leeway for discretionary fiscal expansion when needed and enables future generations to benefit from Norway’s petroleum revenues. Monetary policy has targeted low and stable inflation since 2001. After an adjustment earlier this year, the operational target of monetary policy is now annual consumer price inflation of close to 2 percent over time. Inflation targeting shall be forward-looking and flexible so that it can contribute to high and stable output and employment and to counteracting the build-up of financial imbalances. Norges Bank sets the key policy rate with a view to stabilising inflation at the target in the medium term. The horizon will depend on the disturbances to which the economy is exposed and the effects on the outlook for inflation and for output and employment. Large and sudden outflows of capital are a potential source of instability for small, open economies.

While the BOT is assuring a stable environment for private real sector, I will urge the private sector to work harder, to improve their management system and corporate governance, to better learn about their markets, to better control and lower their costs, and to invest in training and technology. Only by doing so, will they be able to not only survive, but also ready to grow and take advantage of the world recovery when it comes. Thank you for your attention. BIS Review 81/2001  3
I said that we more often heard the opposite concern from EU officials in the context of Brexit – that having escaped the “shackles” of EU regulation we would embark on a course of weakening financial regulation in a way that makes the financial system less resilient. This, needless to say, would be anathema to the Prudential Regulation Authority and to all of us who have spent the last decade repairing the financial system. So as far as the stringency of financial regulation goes, we at the Bank have a clear view of what would make sense for the UK in a post-Brexit environment: we should keep it calibrated roughly where it is now and have no desire whatsoever to weaken it. And despite inevitable tensions between regulator and regulated, my impression is that at the most senior levels most of the people running banks and insurance companies in the UK today would agree with that position, and that it also has support in the Government and Parliament. We need to keep pace with new developments and continually patch any weak parts of the regulatory system, but overall following 10 years of wrenching reform we should let the new architecture do its job. But what about the style of regulation in a post-Brexit world? Now I am always reluctant to talk about style, for good reason: my oldest child told me the other day how much she admires the persistence with which I prioritise comfort over fashion in my clothing choices.

Ladies and Gentlemen, Since I have been given the floor I now wish to take this opportunity to briefly share with you the Zambian experience with regard to the microfinance market. Despite its land-based wealth, Zambia faces very significant development challenges. The rapid structural adjustment process that took place during the 1990s has had a harsh impact on our people, with the result that poverty is now widespread in our country. Currently, a significant number of the 10 million or so Zambians strive for survival on far less than one US dollar a day and like in many other African countries there are high HIV/AIDS rates and indebtedness which have contributed to persistent low economic performance. Thus, our government’s focus with assistance from cooperating partners has to increasingly be on poverty alleviation via income generation and micro enterprise stimulation, using small business development and microfinance as mechanisms to improve household standards. Following the structural adjustment period, particularly from the early 1990s, affordable and publicly funded rural financial services have collapsed. A private microfinance movement, though still in its infancy, has had to emerge offering modern microfinance services. Today in Zambia we have an interesting blend of microfinance institutions that are private sector, for-profit firms, and non-profit, non-governmental organizations (NGOs). Although expansion is much slower in rural areas, growth is evident along the line of rails and the peri-urban areas of our country.
The total capital ratio remained adequate, above the EU average, but the capital reserve shrank once with the marking to market, because of the fast-paced interest rate rise. Asset quality continued to improve, with the non-performing loan ratio falling to European levels and the NPL coverage by provisions staying at significantly higher levels than the European average; profitability increased. Yet, Romania's banking sector faces a number of vulnerabilities: (i) expectations on a higher risk of default on private sector loans amid worsening macroeconomic conditions, the uncertainty about future developments, and growing debt service due to higher interest rates, (ii) the close link between the banking sector and the government sector, and (iii) the polarization of credit institutions by size. The slowdown in lending, which started in the second semester of 2022, was also due to the rise in financing costs amid the tightening of both monetary policy stance and  2/3  BIS - Central bankers' speeches  credit standards. In the second quarter of 2022, banks tightened credit standards for loans to non-financial corporations and to households, and were expected to continue to do so in the third quarter of 2022. The prolonged energy crisis, the heightened geopolitical tensions and the mounting uncertainty about the economic outlook prompted banks to reassess the level of risk. In respect with challenges raised by climate change and energy efficiency, as of May 2022, the NBR started collecting information on green loans from banks.

The question is whether these netting benefits will prove robust in a major stress – if not, the aggregate leverage ratio for firms in our sample would fall by up to 70 basis points. Second, the growth in synthetic prime brokerage (sometimes the clue is in the name – “double-leverage” is another classic of the genre, and one we have recently issued more guidance on in order to head off unsafe practices). Prime brokers can provide exposure to an asset via repo or synthetically using a total return swap, and the synthetic approach now accounts for around half of the prime brokerage activity undertaken by firms in our sample. The exposure measure does a reasonable job of capturing this activity, by requiring the firm to capitalise the effective notional position. But firms can hedge the position and thus avoid capitalising much of it where they are able to offset two client positions on equal, opposing TRSs. We should keep testing how robust these “internalisations” are likely to be in stressed conditions, to ensure that we have captured the impact of these exposures on firms’ capital positions in the same way we’ve already captured their effect on liquidity – if they came unstuck because of clients withdrawing positions then our rough worst case estimate of the impact on firms’ aggregate leverage ratio is 10 basis points. I make these points on missing leverage not to suggest that we have any short-term intentions to re-litigate these issues at Basel or elsewhere.
With the CPI as the target variable, the central bank encounters problems in the public discussion because shocks of various kinds are liable to result in temporary deviations from the target. If some indicator of underlying inflation is targeted instead, however, it is likely to be relatively unfamiliar to people in general. Neither is it entirely clear how the optimal indicator of underlying inflation should be constructed. Whichever alternative one chooses, it is essential in my opinion that the central bank be prepared to contribute to as open a discussion as possible, so that its ambition of achieving and maintaining price stability is not lost sight of and the public’s ability to hold the central bank responsible for the conduct of monetary policy is not weakened. Another issue is the choice of a targeting horizon for the monetary policy. This relates to the trade-off between output volatility and inflation volatility. As it stands this sentence is correct but very difficult to understand. A short horizon for inflation targeting, say keeping inflation at the target level from quarter to quarter, yields a very stable inflation rate. In order to maintain this target, however, the central bank must make drastic adjustments to the instrumental rate and this causes a high degree of variability in real economic activity. A long target horizon may well imply greater variability in the inflation rate but would allow for more gradual interest rate adjustments and smaller real economic fluctuations.

In our approach the normal target horizon is set at between one and two years. A third issue is the degree of transparency. It is widely agreed that transparency is not merely compatible with an inflation target regime but actually essential if the regime is to function properly. For one thing, the central bank must be accountable for its conduct of monetary policy. This is a question of monetary policy’s basic legitimacy, which is important not least when the central bank operates independently. For another, the actual implementation of monetary policy needs to be as predictable as possible. Would maximum transparency be preferable? Is there really any point at which a line should be drawn or would it be more reasonable to try to identify a certain minimum level of transparency? Should the minutes of monetary policy meetings and the voting be published? Would it even be right to allow the central bank’s monetary policy meetings to be shown on television? For my part, it seems reasonable to publish relatively detailed minutes of monetary policy meetings without revealing exactly who said what at which stage in the discussion. It is, after all, important that discussion during the meetings is open and unprejudiced, so that the participants can listen to their colleagues’ arguments, change their minds in the course of a meeting and accept joint responsibility for the decisions that are made. At the same time, it is important that each individual is responsible for arguing for his or her position.
EU legislation prescribes that it is the highest decision-making body in the central bank that shall decide on the size of the bank’s equity. It is of course important that the decision is made after a preparatory process that is transparent and predictable, with a healthy balance between promoting on the one side the need of the Riksbank to have sufficient equity on each occasion and on the other side the interest of the Swedish government to minimise the Riksbank’s costs for tying up capital. To summarise, we can note that the Riksbank currently only has one source of funding that it determines itself, namely monetary policy liabilities. In other words, the Riksbank can always make payments by increasing liquidity in the banking system. But all other forms of funding are affected in one way or another by things beyond the bank’s control. At present, the repo rate is at zero and this means that the Riksbank does not have any interest expenditure for the monetary policy liabilities. But this is temporary, and as the repo rate is raised, the bank’s interest expenditure will increase. This will also mean that profits decline. The coming years – profits declining, no dividends I have now spent some time on describing the Riksbank’s balance sheet and discussing some of the challenges the bank is facing. But I have not yet said anything about the largest challenge for the bank in the short term. By this I mean the extremely low interest rates, both here in Sweden and abroad.

Since 2010, the banking system has instead had a structural surplus of liquid funds and the Riksbank now borrows these funds from the banking system. The most important explanations for the banking system moving from deficit to surplus are that the dividend payments to the government have not been taken from the assets; the Riksbank has instead borrowed money to pay the dividends, and that the general public’s demand for cash has declined. This change is reflected in the Riksbank’s balance sheet in that we now carry out our monetary policy operations on the liabilities side of the balance sheet. But it makes no difference to our ability to implement monetary policy.4 Regardless of whether the banking system has a deficit or a surplus of liquidity in relation to the Riksbank, our monetary policy system works by means of our determining the conditions for the banks’ deposits and loans with the Riksbank, which determines the shortest interest rate – the overnight rate – so that it comes closer to our policy rate, what is known as the repo rate. The repo rate thus states which level the Riksbank wants for the overnight rate, which is currently zero per cent. The overnight rate in turn affects interest rates charged to the general public and thereby activity and prices in the economy. The Riksbank’s need for funding is increasing The most important fundamental consequence in the changes to the balance sheet between 2004 and 2014 is that the Riksbank now has a larger funding need than before.