samchain/econo-pairs-v1 huggingface dataset:
But in principle, the reasoning with regard to the market for single-family dwellings also applies to the market for collectively owned  1  According to estate agents statistics (maklarstatistik.se) the price per square metre for a tenant-owned apartment has risen by 300 per cent in ten years. 2  BIS Review 56/2007  dwellings. The substantial increase in house prices has gone hand in hand with the increase in household indebtedness. Of all the loans granted to households, 85 per cent have property as collateral. A sharp fall in property prices combined with households experiencing difficulty in paying their loans could therefore cause problems for the banks. A central issue here is whether house prices have been pushed up by exaggerated optimism or by speculation. Despite the rapid upturn in prices, I do not believe that we are currently seeing any general overvaluation of the property market. This is because there are a number of factors that can largely justify the rise in prices 2 . Firstly, interest rates have been historically low in recent years. Since the Riksbank introduced its inflation target, in the mid-1990s, the inflation rate has become lower and has stabilised. A more stable development in inflation also means that the real interest rates – interest rates excluding inflation – have fallen. At the end of 1996, after the crisis years, the real variable mortgage rate was around 7 per cent. Today it is around 2 per cent.

As both demand for premises and rent levels have remained relatively unchanged, it is therefore likely that the price upturns in recent years are due more to a decline in investors’ required rate of return. The required rate of return depends partly on the yields on long-term government bonds, as these function as a risk-free alternative to investment in property. The required rate of return also depends on how much investors demand in compensation for investing in higher risk assets, such as property, that is, what risk premium they demand. Interest on government bonds rose in total during the first quarter of the year. All other things being equal, t his should raise the required rate of return. However, over the past year the required rate of return has fallen. This could either be due to investors expecting rents to rise in future, or that they have demanded a lower risk premium. A lower risk premium is in itself not surprising. The risk premiums on a number of different assets have fallen around the world in recent years. But as for a number of other markets, there may be reason to wonder whether the low risk premium on office premises is reasonable. However, one must remember that property companies have had very strong profit growth in recent years. Unlike the crisis years, property companies currently have much better margins to manage some dampening of prices. I therefore do not believe at present that developments in the commercial property market comprise any threat to financial stability.
When cyclical developments in Norway and abroad again converge, interest rates in Norway will be closer to the level abroad. The krone will then also return to a more normal level. The effects on the krone of the extraordinary situation in the oil market will also pass. References: Frøyland, E. and R. Nymoen (2000): “The output gap in the Norwegian economy – different methodology, same result?” Economic Bulletin 2/2000, Norges Bank Olsen, K., J.F. Qvigstand and Ø. Røisland (2003): “Monetary policy in real time. The role of simple rules”. To be published in BIS papers. Bank for International Settlements

The relations and cooperation of the CBRT in the international scene go well beyond our bilateral dialogue with your esteemed Bank and cover also the financial level (swap agreements signed with certain countries), as well as the educational level (the establishment of an international central banking research facility and regional training centre, the İstanbul School of Central Banking). BIS central bankers’ speeches  1  I would like to thank the Bundesbank for opening a Representative Office in İstanbul, for signing the MoU agreement and for all the support and assistance you have provided us in diverse fields and at various platforms. Closing my remarks, I would like to welcome my friend and colleague, Dr. Andreas Dombret, a member of the Executive Board of the Deutsche Bundesbank, and thank him for his tremendous efforts in bringing this project to life. Now let us celebrate our achievements. Thank you for your attention. 2  BIS central bankers’ speeches
Averting an economic anxiety attack calls for a balanced and flexible approach to the words and actions of businesses and policymakers. Planning for the worst is important, but needs to be accompanied by hope for the best. Encouraging news about the present needs not to be drowned out by fears for the future. Now is not the time for the economics of Chicken Licken.8 That means balance in how the economic outlook is described, acknowledging good news as well as bad, contemplating upside as well as downside scenarios, taking positive signals (as well as some comfort) from the resilience shown so far. This is not boosterism; it is balance, at a time when behavioural biases and pessimistic popular narratives offer an unbalanced lens on the economy. The policy authorities, including the Bank, have a public responsibility to avoid economic catastrophizing. Policymakers, including the MPC, have already demonstrated a willingness to act at speed and scale to mitigate economic risks. They have put in place the UK’s largest-ever economic insurance policy. It is important this insurance policy continues to flex as new risks arise, to build damaged confidence among households and businesses. For its part, the MPC has committed to keeping borrowing costs at current extraordinarily low levels to support jobs and incomes for as long as necessary to return inflation to target. 8  The fictional fowl who, having been hit on the head by an acorn, declared the sky was falling in.

What often then emerges is a “popular narrative”. These narratives have been found to be an important driver of collective behaviour in financial markets and the economy.6 Behavioural biases at times of existential risk, spreading contagiously, can result in pessimistic popular narratives detached from reality. At times of stress, a global game of Chinese Whispers can generate unduly negative expectations. 4  See Haldane (2015) See Gigerenzer (2004) 6 See Akerlof and Shiller (2009) 5  7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7  I think the prevailing popular economic narrative, among businesses and households currently, is unduly negative. It has emphasized recession and risk over recovery and resilience. It has resulted in good economic news (of which there has been plenty) being discounted too readily, and fearfulness about the future being accentuated. Let me give a few simple examples. Chart 5 plots a simple Google search of the relative incidence of two words – “recession” and “recovery”; it is an economic pessimism ratio. Before the Covid crisis, the pessimism ratio was steady. As the crisis struck there was a predictable and sizable spike upwards, by a factor of roughly 8. Since then the ratio has fallen somewhat, as we might expect as the economy has moved from recession to recovery. The dynamics of this sentiment indicator are nonetheless revealing. The drift down in the ratio has been very gradual. It remained elevated well after economic recovery had commenced and recession ceased.
The Financial Sector Master Plan phase II, for 2010–2014, has outlined to the banks the timeline of increased competition, and thus banks have prepared themselves. In line  2  BIS central bankers’ speeches  with this, we have already announced that existing foreign bank branches can open up to 20 branches in Thailand if they choose to become local subsidiaries with capital base in the country. We are also assessing the possibility of allowing new restricted banking license 2012–2013, and possibly new commercial bank license in 2014 if such banks facilitate our regional economic and investment policy. Finally, let me turn to the progress in capital market to complete a picture of the financial sector. Collective action of both public authorities and private sector since the ASEAN crisis has rebalanced our financial market from a predominantly bank-based to a more balanced one with a growing role of capital market. Sizes of the bond and stock markets have noticeably increased. Number of market participants has also been rising with a more variety of financial products. Moreover, since March 2012 the Thai capital market has been upgraded to the Advanced Emerging Market status in the FTSE Global Equity Index Series from Secondary Emerging Market status. More exciting development is expected to continue under the 5-year Capital Market Development Master Plan which was established in 2009.

Production constraints continue to ease, while private sector demand is back on track. The growth momentum in the period ahead is likely to sustain, driven mainly by domestic demand. We expect that economy will grow at 5.7 percent this year and 5.0 percent next year. This episode of rapid growth recovery is that it also witnessed macroeconomic stability. Thailand has a long history of low and stable inflation, averaging around 3 percent over the decades. The unemployment rate in recent years has also been low at around 1 percent. Meanwhile, external position remains solid with moderate short-term external indebtedness. The banking sector has been safe and sound with sustained profitability amidst the ongoing global financial crisis. Despite capital inflows into Thailand, there appears to be no sign of asset price bubble while the degree of leverage in the corporate and household sector is still low. Such promising outlook is reflected in Thailand’s sovereign credit rating which has been stable at investment grade despite intermittent political tension. At this juncture, please allow me to highlight a number of Thailand’s fundamental strengths that underpin this positive outlook. First, our corporate sector remains competitive with accumulated robust savings and profitability. This fact is well evidenced by their healthy balance sheets and their ability to explore investment opportunities overseas. Net profit of most listed companies in the second quarter 2012 turned out be positive despite damages inflicted by the floods.
We try to fulfil this objective by setting interest rates at a level that enables the general level of demand to grow in line with what the economy is able to sustain in the long run without giving rise to inflation, and that ensures that economic agents have confidence in the Bank to meet the inflation target. So we only have an indirect influence on the general level of demand and employment. And the poorer than expected employment conditions in the past two years have not been due to developments in demand. On the contrary, demand has proved surprisingly strong. Nonetheless it can of course be maintained that employment could have been somewhat higher if the Riksbank had kept interest rates lower, something that would have been possible given what we now know about inflation. It is difficult to object to this assertion, which of course is why the Riksbank’s critics keep coming back to it. But an assessment of what we could or could not have done must be based on what we knew when the decisions were made, not on what we know now. One way to try to approach this issue is to compare our assessments and actions with other players’ forecasts and opinions on policy at the time in question.

Earlier this month, the China Securities Regulatory Commission announced three new initiatives to strengthen mutual access between Mainland and Hong Kong financial markets. These are, first, broadening the scope of Stock Connect to include foreign companies with primary listings in Hong Kong and more companies listed on the Shanghai and Shenzhen stock exchanges; second, development of an RMB- securities trading counter in Hong Kong and possible inclusion of RMB securities in Southbound Trading via Stock Connect; and third, the introduction of Mainland government bond futures in Hong Kong. These measures will enrich the investment choices for Mainland investors, attract more foreign companies to list in Hong Kong, and provide more offshore risk management tools to meet global investors’ hedging needs. Apart from the expansion of the Connect Scheme, in July this year, the HKMA’s currency swap agreement with the People’s Bank of China was also increased from RMB500 billion to RMB800 billion and made permanent. Following this change, Hong Kong’s facility is the largest of any jurisdiction and the only one that is not subject to renewal, giving us an effective liquidity back-stop to support the development of the offshore RMB market in Hong Kong. Also in July, the HKMA enhanced the operational flexibility, size and repo rates of its RMB Liquidity Facility. The changes will make it easier for banks to provide services to clients and other offshore centres in different time zones.
One of the strengths of the ESRB is its ability to harness data and conduct analysis across all EU Member States. In its work on the leverage ratio, the ESRB collected new empirical evidence showing banking sector leverage has been pro-cyclical at an aggregate level in almost all Member States. Average risk weights tend to fall in credit booms and rise in downturns. Working with EBA data, the ESRB found that systemically important banks in Europe typically have lower risk weights and leverage ratios than other types of banks. Taken together, theory and evidence demonstrate the importance of a dynamic leverage ratio to a robust macroprudential framework. Another way that the ESRB has led in identifying best practice and influencing the international agenda has been to take a macroprudential perspective on how elements of the financial system can support long-term prosperity. For example, in its examination of Solvency II, the ESRB has considered how long-term investors like insurers can bring diversity and stability to the system. In my view, more can be done to ensure that Solvency II creates the right framework for long-term investment. The ESRB can provide a constructive and objective macroprudential perspective as an input to Parliament’s review in 2018 of aspects of the operation of Solvency II. Openness puts a premium on shared understanding of risks. The ESRB plays a vital role for the EU, enhancing members’ assessment of new and evolving risks. The structure of the financial system has changed significantly since the crisis.

The alternative to a fund would have been to directly regulate production by putting a conservative upper limit on annual extraction. This was attempted in the 1970s and -80s. At that time, we had a production ceiling of 90 million standard cubic metres per year. This approach was abandoned in the 1980s. Today, the government steers exploration activities  BIS Review 81/2008  1  and awards production licenses, but has no explicit production target. Since the mid-1990s, total petroleum production has been around 250 million standard cubic metres per year. The Fund mechanism The Fund is by law fully integrated with the government budget, and the same priorities are imposed on spending from the Fund as on any other government spending. This means that the entire petroleum revenues are transferred to the Fund. An amount equal to the non-oil budget deficit is then transferred to the fiscal budget. The mechanism ensures that the accumulation of capital in the Fund is equal to government net financial savings. There is no corresponding increase in liabilities. Furthermore, legislation prohibits use of Fund money for purposes not prioritised in the regular budget processes. There is no hidden use of oil money, or any use for special purposes. The Fund is strictly and effectively “out of bounds” to special interests.
In this part of the banking sector, there remains substantial overcapacity in the EU which has proved timeconsuming to eradicate. Presently, we are seeing problems in the German banking system caused in part by overcapacity, major costs and different terms of competition for different institutions as a result of a slow restructuring of the banking system. On the other hand, a number of banks in Western Europe have expanded into Central and Eastern Europe and given rise to development and modernisation of the banking systems of the former planned economies. The reasons for this are that Central and Eastern Europe constitute a developable market that could soon be a part of an enlarged EU. At the same time, this has contributed to improved profitability in the parent banks as many countries in Central and Eastern Europe continue to show favourable growth compared with the present EU countries. The banks being acquired are mostly full-service banks, which means that the parent bank gets a larger customer base for its financial services, one of which is mortgages. Another structural trend is a greater concentration of financial activities to certain centres in order to profit from cluster benefits. Companies that produce the same products and services discern benefits from being located close to each other for several reasons. These might, for example, be a skilled labour force, accessibility to the market, suppliers and customers, specialised service companies, market information, market knowledge or infrastructure.

According to the ECB, just under 30 per cent of all bond holdings in euro have been issued by foreign residents. The total stock of euro bonds issued by euro institutions is now EURO 7 400 billion. This market has grown substantially since 1999. The introduction of the euro has consequently affected the interest rate markets. We can see that there has been a dramatic reduction in the yield differentials for 5-year treasury bonds between the countries that have introduced the euro from about 5 to 7 percentage points during the years 1994-1996 to approximately 0.2 to 0.3 percentage points in recent years. In January and February this year, the yield on Swedish 5-year treasury bonds was around 80 points higher than the euro area average. Of course, part of this reduction in the euro area has to do with the consolidation of government finances in the EU countries to meet the convergence criteria, but the risk premium for exchange rate risk between the currencies that has now disappeared has definitely contributed to the reduction. The remaining yield differential can largely be explained by the different credit ratings of countries in the euro area as well as differences in liquidity between various bond issues. The introduction of the euro has also helped increase the width and depth of European capital markets and has at any rate led to almost complete integration of the part of the money market trading that is closely connected to the Eurosystem's monetary policy transactions.
Billi, R. M. and A. Vredin (2014) “Monetary policy and financial stability – a simple story,” Economic Review 2014:2, Sveriges Riksbank. Blanchard, O., G. Dell’Ariccia and P. Mauro (2010), “Rethinking macro policy,” IMF Staff Position Note, SPN/10/03, International Monetary Fund. Broadbent, B. (2016), “Central banks and digital currencies”, speech at the London School of Economics, 2 March 2016, Bank of England. Bryant, R. C., D.W. Henderson and T Becker (2012), Maintaining Financial Stability in an Open Economy: Sweden in the Global Crisis and Beyond,” SNS Förlag, Stockholm. Buiter, W. (2008), “Can central banks go broke?,” Policy Insight, No. 24, Centre for Economic Policy Research. Capie, F., C. Goodhart and N. Schnadt (1994), The Future of Central Banking: The Tercentary Symposiunm of the Bank of England, Cambridge University Press. Capie F. (1998), “Can there be an international lender-of-last resort?,” International Finance, 1:2, pp. 311–325. Cechetti, S.G. (2014), “Towards an international lender of last resort,” BIS Papers, No 79, Bank for International Settlements. Dagens Industri (2015), Inflationsmålets fader sågar Riksbankens agerande [The father of the inflation target blasts the Riksbank’s actions], 30 September. ESRB (2011), “Recommendation of the European Systemic Risk Board (ESRB) of 22 December 2011 on the macroprudential mandate of national authorities” ESRB/2011/3. ESRB (2014), “ESRB Recommendation on the macro-prudential mandate of national authorities – Follow-up Report – Overall assessment,” ESRB/2011/3, 25 June.

We determine the price – the interest rate – of banks’ payments among themselves, we supply the central payment system. And if something goes wrong with RIX, Sweden’s financial lifeblood, it is the Riksbank’s task to manage the situation Monetary policy and financial stability are two sides of the same coin – financial stability affects how monetary policy is spread to the rest of the economy and price stability contributes to a stable financial system. Both monetary policy and various tasks to promote financial stability are part of a central bank’s core operations and I believe that it is in reality not possible to differentiate between these tasks. All this is interconnected since, as I said earlier, the central bank is where the money is. It is also at the central bank where the amount of money can be increased or reduced. Allow me in conclusion to illustrate the importance of preventing financial crises. Over the past 150 years, economic activity, measured in terms of GDP, has not fallen so often but when it has, it has often been in conjunction with a financial crisis. Six out of nine cases of substantial downturns in GDP have occurred in connection with a financial crisis. Of the rest, two coincided with the two world wars. The fact that we were spared financial crises between 1945 and 1990 depends to a high degree on the strict regulation that prevailed on the financial markets, although this regulation led to other types of problem.