samchain/econo-pairs-v1 huggingface dataset:
Accordingly, measured in real terms, it will amount to 26.9 percent of GDP in 2012, up from 26.2 percent of GDP in 2011. The effects of the worsened external scenario will be visible mainly in inventories. The baseline scenario estimates that in 2012 inventories as a percentage of GDP will vary less than they did in 2011, reflecting the inventory adjustments that enterprises will be carrying out because of the uncertainty coming from abroad. Consumption and investment will also be partly affected by the worsened global conditions, but the main determinants will be the aforesaid factors. All these elements combined depict a scenario for 2012 where domestic demand grows less than in 2011, although still faster than output. The baseline scenario foresees the current account of the balance of payments posting a deficit of 3.1 percent of GDP this year, that is, bigger than in 2011, but somewhat smaller than forecast in March. Despite the lower price assumed for copper and the weak domestic demand, the expected adjustment in domestic demand plus the drop in the oil price are behind this smaller deficit (table 3). The Board estimates that y-o-y CPI and core inflation will continue to hover around the target until the end of the projection horizon, this time the second quarter of 2014 (figure 3). This trajectory assumes that wages will be adjusted to reflect productivity and the inflation target.

The Board monitors closely the evolution of the external and internal macroeconomic scenario and its consequences on inflation, and it reaffirms its commitment to conduct monetary policy in a way such that projected inflation stands at 3 percent in the policy horizon. Allow me some final remarks. Concluding remarks As has happened often in the past several years, our presentation of these Reports coincides with increased global financial stress and poses important challenges. The short-term inflationary risks we identified in March have lessened, although for the medium term they are still present. Our immediate challenge, however, is dealing in the best way possible with any effects from the external crisis on our economy. The Board of the Central Bank is willing to adopt whatever measure it deems necessary if more adverse scenarios occur. Events abroad are being monitored with special attention. For the moment, however, we estimate that worst-case scenarios are possible but not the most likely, although they are more likely now than before. In our projections we use as a working assumption that, in the short term, the monetary policy rate will remain stable. A change in scenery will certainly lead to a change in decisions. As I said before, the Board – present in  6  BIS central bankers’ speeches  this session – monitors macroeconomic conditions closely and will act promptly whenever said changes warrant reorienting our monetary policy or using other tools at our disposal. There is the room and the will to do so.
Exchange rate NOK-EUR 7,0  7,0  7,5  7,5  8,0  8,0  8,5  8,5  9,0  9,0  ja n  03  ma  r0  3  ma  i0  3  ju l  03  se  p0  3  no  v0  3  ja n  04  Source: EcoWin  8  BIS Review 11/2004  In the autumn of 2003, the krone showed a tendency to appreciate against the euro. This partly reflected lowered market expectations concerning an interest rate increase abroad and expectations that interest rates might rise earlier in Norway than in other countries. At the same time, the euro appreciated in relation to other currencies. Changes in the krone resulted in an unintended tightening of monetary policy. This trend was reversed in December owing to a reduction in interest rates and low inflation figures. The interest rate reduction was probably of considerable importance as it eliminated the excess return on NOK investments. Today, the krone is at a level that is more consistent with the objective of promoting stability in output and employment. The weaker krone will contribute to a rise in inflation from a level that is too low. Normally, Norges Bank will not intervene in the foreign exchange market in order to influence the exchange rate. Exchange market intervention, whether it be purchases or sales of foreign exchange, is not an appropriate instrument for influencing the krone over a longer period.

A deeper market reduces transaction costs, and it is easier to find counterparties. This has provided companies with greater scope for hedging against foreign exchange risk. The use of instruments that reduce the risk associated with a floating krone is also increasing in Norway. A considerably larger portion of credit in other countries is now channelled via the bond market. Less risk is being accumulated in banking systems. The development of new markets and instruments, for example credit derivatives, has also led to a broader risk spread than earlier. The improved diversification of risk is probably one of the reasons that world financial markets have coped with the stock market decline and the accounting scandals with limited damage to the wider economy. This is probably one reason why the downturn following the stock market decline in 2000 was considerably less pronounced than earlier downturns. The new instruments spread risk, but do not eliminate it. Financial markets have become highly complex. This alone entails an operational risk, which is a challenge to participants and the supervisory authorities. 2  BIS Review 11/2004  A shift in the international division of labour Increased trade promotes growth and lays a basis for prosperity. A number of Asian countries have experienced strong, export-led growth - Japan from the 1950s and several countries in Southeast Asia from the 1960s. Chart 3.
In its meeting in April, the Monetary Policy Committee noted that “labour market data on quantities were signalling a tighter position than the price [earnings] data”. At that time, the Labour Force Survey and claimant count BIS Review 103/1998  –7–  measures of unemployment had both fallen below their previous troughs recorded in the spring of 1990, and were still declining. This position was evident across all categories of unemployment, as can be seen from chart 2 which shows the various measures of joblessness reported in the EPI’s Employment Audit. In addition, employment and total hours worked were rising quite strongly; recruitment intentions were at their highest level for nine years, with the level of vacancies at Jobcentres, and the average duration of these vacancies, both well above their 1988/89 peaks; and survey measures of recruitment difficulties were also at high levels. The underlying rise of the Average Earnings Index had increased to 42% by the beginning of 1997, but was little changed by the end of the year. If I had been asked to deliver the third Annual EPI lecture, rather than the fourth, the main question you might have expected me to grapple with would have been why earnings growth had not at that point risen by more, given the 1.0 million fall in unemployment and the 1.4 million rise in LFS employment since the end of 1992.

I am, therefore, optimistic about the future.” It took the Bank of England almost 70 years to get to that point and introduce an inflation target. The objective of stability is best achieved by an inflation target because it stresses both what monetary policy cannot do – reduce unemployment in the long run – and what it can do – react to shocks in order to minimise undesirable volatility in output and employment. To that end, the pursuit of an explicit and symmetric inflation target is the relevant objective of monetary policy. With an inflation target and, more recently, the new Monetary Policy Committee, both unemployment and inflation have fallen significantly. I hope and believe that, with these new institutional arrangements, although we shall certainly make mistakes in the setting of monetary policy, we should be able to avoid the instabilities of the past 30 years which did so much to damage Britain’s economic standing. We should never forget that – as Milton Friedman pointed out in his 1968 Presidential Address (quoting in turn John Stuart Mill) – monetary policy becomes important for society only when it goes badly wrong. That is the basis for my proposition that a successful monetary policy should be boring, and that successful central bankers should be seen as neither heroes nor villains, but simply as competent referees, allowing the game to flow and staying out of the limelight. In the end, a central bank is doing its job when no one notices that it is there.
Or might there be reasons for Sweden and other countries to specially design our own solutions, over and above those imposed by international regulations? Lending and house prices in Sweden relatively unaffected by the crisis One area where Sweden stands out in comparison with many other countries, is the development of house prices and household indebtedness. As I noted earlier, house prices  1  See, for instance, the report “An assessment of the long-term economic impact of stronger capital and liquidity requirements” by the Basel Committee and the Financial Stability Board (http://www.bis.org/publ/bcbs173.htm). BIS central bankers’ speeches  1  in many countries have fallen heavily after being pushed up in a credit-driven boom over a number of years. In Sweden, too, house prices and lending to households have risen substantially. But here we have not experienced any corresponding fall in housing prices in connection with the crisis; we can just distinguish a minor dent in the curve (Figure 1). Lending to households has also continued to increase rapidly. It has been profitable for the banks to fund the increase in Swedish mortgage borrowing in the international capital markets. Funding in foreign currency has shown an increase trend (Figure 2). This has meant that Swedish households have been able to obtain mortgages at a lower cost and probably to a greater extent than would otherwise have been the case. But this method of funding is not entirely without risk.

With regard to the latter measure, I would like to point out that such initiatives from the banks are of course welcome and praiseworthy. But it is also essential that the banks follow up what is happening and that the authorities monitor to what extent the recommendations are actually followed. Moreover, awareness that rising indebtedness and housing prices could entail problems has gradually increased among both lenders and borrowers. The situation on the housing market is now discussed regularly in the media. I would like to believe that this is at least partly because the Riksbank has long been pointing out the risks involved here. However, it remains to be seen whether these measures and the increased general awareness will be enough to slow down developments and bring us onto a less risky course. Very recently there have been signs that developments in both lending to households and housing prices have entered a calmer phase. We are of course following developments very closely. Continued vigilance necessary Despite the calmer situation, there are nevertheless strong reasons to remain vigilant. If it turns out that this was not a break in the trend, but merely a temporary slowdown, and that housing prices and the build-up of debts among households accelerate again, we and others must be prepared to take action. We therefore cannot just twiddle our thumbs; the Riksbank and others must ensure that we have an effective toolbox of measures that can be quickly and smoothly put into operation. I will return to this shortly.
Given a well-established measure of this kind (with a status equivalent to that of the consumer price index, for instance), financial products ranging from forward traded instruments to loan agreements with terms based on a real-estate index, would enable households, for a reasonable sum, to reduce exposure to the risk of a large fall in property prices. This process is already under way. Banks have made varying progress in their customer orientation. Independent financial consultants have also begun to some extent. Increasingly composite financial products are being constructed and distributed. The range of mutual funds offered by banks includes funds owned by others. So perhaps one can say that the development towards more consumer orientation has already begun but the decisive steps still lie ahead. Re-regulations of the financial system, perhaps accompanied by amended tax regulations, may be needed, of course, to produce the course Merton points out but there is also a need for new structures in the financial system. Another requirement is appreciably more knowledge about how, for example, the systems’ productive components can identify and spread the risks that may have to be taken. Still, I am sure you will agree that this opens up new and truly interesting perspectives for the future in many fields of the life cycle as well as for the development of the financial system. Such a development might also lead to some savings finding their way back to the financial institutions and to markets being dominated by more professional players.

So far, the ECB has consistently adopted the second approach to non-standard policies. In the early phase of the crisis, we re-absorbed the liquidity risk and the market counterparty risk that banks were facing in interbank transactions. In keeping with this second approach, the aim was to repair the functioning of the market, not to add stimulus in a situation in which the policy rate was still positive. OMTs, as their name suggests, will operate through outright transactions, not lending operations. But, in essence, they have the same purpose as the non-standard measures we adopted in 2008 and 2009: to price out a type of catastrophic risk premium that investors demand in conditions of market paralysis. It was break down risk in the early stage of the crisis, the risk that the payments system would seize up completely. It is break- up risk now. 5  The policy intervention works by reducing the supply of long-duration securities considered as risk-free and increasing the supply of zero-duration reserves. To the extent that private investors do not view these assets as perfect substitutes, in order for private investors to be willing to make those portfolio adjustments, the expected return on the long-duration securities has to fall. With less duration risk to hold in the aggregate, the market should require a lower premium to hold that risk.
It has not only expanded the investor base, but reduced the cost of capital and enhanced its liquidity. By operating beyond their domestic borders, financial institutions also provide their services from different geographical locations. There has also been greater use of international financial institutions by corporations, households and funds to increase their ability to diversify their risks. Investments in the domestic economies have also been financed by foreign capital. International firms have also participated in local markets through Islamic based financial structures. With increased liberalization, there is also increased foreign presence in terms of foreign entry into the domestic financial system. This is an area where Malaysia is taking a step forward during the course of this year. The globalisation process has also taken place in terms of participation by firms in international capital markets through cross listings. My remarks today will focus on the strategies on the approach to accelerate the transition of Islamic finance towards being an integral part of the international financial system in terms of both the international financial architecture of the Islamic financial system and the development of a comprehensive domestic financial infrastructure. The establishment of the Islamic Financial Services Board (IFSB) has been an important initiative in the development of the international Islamic financial architecture. It has been established to  BIS Review 51/2004  1  promulgate the international regulatory and supervisory standards for Islamic financial institutions aimed at achieving best practices and to secure soundness and financial stability in Islamic finance.

As a platform to promote greater cooperation among Muslim countries and further promote IIFM, a proposal that can be explored is the creation of an Islamic universal bond, structured similar to the universally-accepted asset-backed Ijarah sukuk. Under this proposal, interested countries and selected organisations could be invited, where each country sells its assets to an SPV, which in turn would lease back the assets to the country. Proceeds could then be transferred to the participating country for the general purpose of socio-economic development. This could be an avenue for countries that have not secured stronger ratings to get more competitive funding. Indeed regional and multilateral entities would be well positioned to explore the viability of this proposal. The role of Shariah is one of the key elements that can spur the innovation process and enhance the global integration of the Islamic financial system. To effectively enhance Shariah governance, the understanding of the mechanics of finance by the Shariah experts is imperative to assist in the deliberation process in deriving a sound Shariah decision. The Shariah decision should then be made transparent. With such disclosure, the ability for others to appreciate the juristic reasoning based on contemporary analysis and logical inference of process could lead to wider acceptance of a Shariah decision, especially if it has implications on cross-border transactions.
In Southeast Asia, some radical Muslim groups tried to turn the region into an Islamic caliphate through terrorist acts, including suicide bombings. This threat remains, despite recent successes by security agencies in foiling attacks in Indonesia and elsewhere. However, the extremists will not succeed in their political and religious goals. More importantly, although terrorist acts may disrupt our economy, its impact pales in comparison to the structural shifts in the international order led by the re-emergence of China and India. China’s reach is now global, in search of friends, influence, markets and resources. India is also seeking to expand its links and influence abroad. The US and Japan will try to co-opt India as a countervailing weight to China. But India, while seeking to balance its relations with all three, will preserve its own independence. Both China and India will compete but they will be careful not to collide. Both desire stability for their continued growth. Japan has adopted a more conciliatory foreign policy under Prime Minister Yasuo Fukuda. He has eschewed controversial issues such as visits to the Yasukuni shrine. He will endeavour to cultivate ties with China and India while staying steadfast with the US. Nonetheless, there are several potential wildcards in the region. First, the road to denuclearising the Korean Peninsula remains long and difficult. Second, cross-strait relations between Taiwan and Beijing are entering a critical phase.

BIS Review 15/2003  5  Next Steps in finalizing the New Accord Most of my remarks today have been centered on implementation of the new framework. I’d like to conclude by spending a few moments discussing where we are in the process to finalize the New Accord. As I mentioned, the Committee has just finished gathering data from the industry through its third impact study. The aim of the study was to collect and to analyze information from banks worldwide regarding the capital impact of the new proposals on their existing portfolios. The results are under review and will help us to determine whether any adjustments will be needed prior to release of the final consultative package. That final consultative paper will be issued by early May. Our goal continues to be to have a final Accord agreed to by the fourth quarter of this year. In closing, I want to emphasize that effective supervision of modern banking organizations will necessarily entail a closer and more cooperative partnership between industry participants and official supervisors. The industry’s participation in the formulation of a more risk-sensitive capital adequacy framework is a good example of this kind of constructive interaction. Indeed, the three pillars of the proposed framework reflect the understanding that regulatory requirements alone are no longer sufficient to address the growing complexity of banks’ activities and the associated risks. Consistent with this notion is the need for effective corporate governance, which plays an increasingly important role in a rapidly evolving banking environment.
13  Ferrucci, Jiménez-Rodríguez and Onorante (2012, , "Food price pass-through in the Euro Area: Non-linearities and the role of the common agricultural policy" International Journal of Central Banking ) find asymmetries between positive and negative shocks in the food inputs, Borrallo, Cuadro and Pérez (2023, forthcoming) confirm these results for the euro area by extending the sample to the present time. In the case of oil, Kilian and Vigfusson (2011, Quantitative Economics, "Are the responses of the U.S. economy asymmetric in energy price increases and decreases?") show that there are no significant asymmetries in the United States. However, Garzón and Hierro (2021, Economic Modelling " Asymmetries in the transmission of oil price shocks to inflation in the Eurozone") find that asymmetries do exist in the euro area. 14  According to the ECB's March forecast, nominal wage growth, as measured by compensation per employee, will increase from 4.6% in 2022 to 5,3% in 2023, before declining to 4,4% in 2024 and 3,6% in 2025. 15  This has happened in a context of a sharp increase in public employment, whose growth has accounted for about half of total employment growth since the end of 2019. 16  The ECB experimental tracker of negotiated wages shows a clear upward shift in wage increases agreed for 2022 and 2023. Contract negotiations during 2022 delivered wage increases around 4,4% and 4,8% for 2022 and 2023 respectively, with higher increases the more recent the agreement is.

And the withdrawal of these measures will push consumer prices upwards in the coming years, especially in 2024.3 In this regard, it is important to stress that, in the current high inflation setting, an appropriate policy mix requires a fiscal stance that, at the aggregate euro area level, is not at odds with the tightening of our monetary policy. This means that government support measures should be temporary, targeted and tailored to preserving incentives to consume less energy, and they should be gradually rolled back as energy prices fall. Otherwise, we are at risk of driving up medium-term inflationary pressures, which would call for a stronger monetary policy response. 2  The ten-year risk-free rate yield on April 7th was 15 bps below the level reached at the cut-off date for the projection exercise on February 15th. However, risk premia have risen, reflecting the increased uncertainty, and so did the average cost of financing in the capital markets for banks and low credit quality non-financial corporations in the euro area. Thus, the average cost of long-term capital market financing for banks has increased by 6 bps, while in the case of low credit quality non-financial corporations the cost has increased by 45 bps.. For investment grade companies, the cost of financing has decreased by 14 pb. On equity markets, the Euro Stoxx 50 index barely changed in the same period, while the banking sector index fell by 8.8%.