samchain/econo-pairs-v1 huggingface dataset:
The fact that we have revised down the international growth forecast also means that we expect a slightly less strained resource utilisation in the global economy. The slightly slower recovery for the global economy will also have repercussions for developments in Sweden. Growth this year is now expected to be lower than last year and almost one half of a percentage point lower than we had reason to assume in December - 1.7 per cent instead of 2.1 per cent. Consequently, we are also anticipating there will be slightly more unutilised resources in the Swedish economy in the coming years than we had previously assumed. Our forecast of resource utilisation in Sweden has also been affected by the revisions Statistics Sweden recently made to the National Accounts. These indicate that productivity growth in the economy was higher than estimated during the greater part of the 1990s. This in turn indicates that the economy's long-term potential growth rate may be slightly higher. To summarise, I can conclude that the pictures of economic activity in Sweden and in the rest of the world are similar to the extent that there appear to be some unutilised resources and that growth will not exceed its long-term potential over the coming years. Developments are currently being restrained by the unease over Iraq. There is also still great uncertainty regarding the size of the adaptations that remain after the earlier rises in share prices and other asset prices.

The objective of the central bank’s control is to stabilise CCM, to avoid a liquidity collapse and to manage the institution for as short a time as possible with a view to finding an orderly solution. Ultimately, the viability of CCM’s future business may be achieved in different ways (for example, through a merger with other credit institutions), with the Banco de España currently not ruling out any options. The response to these options will be swift, but not immediate, and will require the collaboration of authorities, financial institutions, employees and creditors. I would not like to forgo the opportunity of appearing before this Committee without highlighting some of the messages recently conveyed by the Banco de España. Firstly, I would like to reiterate that involving savings banks in the political debate makes it immensely difficult to find flexible and effective solutions. Opinions become distorted, suspicions, demands and expectations of the parties involved grow and solutions become increasingly complicated. We should not forget that past experience in Spain and abroad shows that prudence and discretion are prerequisites for reducing the costs of possible solutions for troubled institutions. Otherwise, we will make the authorities work more difficult and, ultimately, taxpayers will pay a higher price. In finding a solution to the difficulties encountered by CCM, the Banco de España has adhered to its tradition of adopting decisions based solely on the objectives of preserving the stability of our financial system, minimising the cost in terms of public funds and maintaining the availability of sufficient financial services.
One approach to measuring the level of potential output may be to calculate trend output, which entails a smoothing of historical GDP figures. Norges Bank bases its calculations of trend growth on an HP filter (Hodrick Prescott filter), but also takes into account other factors such as structural changes or changes in the number of vacation days. Our assessment of the volatility of trend growth is also a matter of discretionary judgement.5 The output gap measures the deviation in output from the level of potential output. There are various methods for estimating the output gap. Statistics Norway, like Norges Bank, uses the HP filter, but bases its calculations on quarterly figures for GDP. Statistics Norway’s calculations of the output gap are very similar to the calculations made by Norges Bank, with the exception perhaps of the last period, where Statistics Norway did not make adjustments for the increase in vacation days in 2001 and 2002. The OECD calculates the output gap by using the production function method, where trend levels for labour, capital and available technology are inserted into a specified production function. Potential output is then determined by trend growth in factor inputs. The IMF uses a number of methods, but has chosen to calculate the output gap for Norway in approximately the same way as Norges Bank. As you can see from the chart, the different methods of calculation give roughly the same outcome.

To cross-check the projections for potential output and thus the output gap, we also look at alternative indicators of pressures in the economy. The wage gap measures the difference between actual wage growth and the growth that over time is consistent with the inflation target, and is an indicator of labour market tightness. With an estimate of 2 per cent productivity growth, wage growth of 4.5 per cent over time will be consistent with an inflation target of 2.5 per cent. In the chart, the wage gap up to 2000, i.e. before the introduction of the inflation target, is defined as the difference between wage growth in Norway and in other countries. As we see from the chart, there appears to be a close relationship between this wage gap and the output gap as it is measured by Norges Bank. If we look at developments in employment in relation to trend growth (measured as a percent of the population in employable age groups), we get a similar path. 5  2  Norges Bank has chosen, in keeping with ordinary practice, to use a smoothing parameter, ? = 100 in the annual data. BIS Review 6/2004  We also consider credit growth to be an indicator of public demand. Growth in credit which over time deviates from growth in nominal GDP may indicate that the level of activity in the economy is higher or lower than normal.
And in China today the authorities have a model split between the central bank and separate banking, insurance and securities regulators, but are looking afresh at these arrangements. My point here is that, while I personally happen to favour the current UK set-up and think it is working well, the sheer variety of institutional arrangements over the past 100 years in the UK, and internationally today, suggests to me that there is no one institutional set-up which outshines the rest. In sum, nine regulatory agencies  40  came together to form the FSA on 1 June 1998. From the outset, it was  “clear that it was not a takeover by any one [body] but the creation of something new”, and the following years were spent defining the new supervisory approach and encouraging the passage of the Financial Services and Markets Act (FSMA) 2000, which transferred regulatory powers from predecessor agencies to the FSA and granted the FSA its statutory powers. 41  The FSA was a unified regulator for the financial services industry, with responsibility for 29,000 firms . Although the responsibility for supervision now rested in one place, the FSA’s supervisory approach was far from unified to begin with. Michael Foot, Managing Director at the FSA since its inception, described it as “a mishmash”:  the banking supervisors spent a great deal of effort in understanding the strength and weaknesses of a group containing a large bank.

This search for marginal borrowers is a normal function of competitive markets, and does not imply that all resulting loans will turn out to be poor quality. The FPC’s concerns about the rate at which consumer lending is growing have been well-flagged already and, very recently, the PRA published the findings of its review of consumer credit lending, focusing on asset quality and underwriting practices for credit cards, unsecured personal loans and motor finance – and the 47  issues it wants firms to address . I’m aware that, other than in a minority of cases, such lending is not undertaken by societies. The regulatory requirements following the Mortgage Market Review have also rightly put affordability at the heart of mortgage lending decisions but, as with any rules or regulations, complying with the spirit as well as the letter of the law is important. By way of example, I would highlight a recent trend in increasing loan terms: where 25 years might once have been the normal maximum term for a mortgage, now 35 years or even longer seems to be increasingly common. Of course, increasing the term reduces the level of each monthly instalment and makes the loan more affordable in the short term; however, it also increases the total amount of interest paid over the life of the loan quite significantly, and it increases the possibility that the final instalments may have to be met from post-retirement income.
While such action can be tremendously effective under certain conditions, its limitations should be frankly recognized. Thus, through its control of money the Central Bank can assist, but by no means ensure, the achievement of the above objects. A monetary system that is stable and at the same time responsive to the needs of a growing country is a necessary, but not a sufficient condition of orderly economic development.” Sixth: Exter reports on the vital importance of harmonizing between the Government policies and the Central Bank policies. Here, Exter’s comments are unambiguous and far reaching. I quote: “There are, however, many important problems of monetary policy, especially those relating to fiscal policy, on which a central bank must necessarily work in close harmony with the government. On such problems, experience in many countries has shown that a central bank, with a degree of independence of the government proper, can make economic analyses and hold views which are more detached and objective than those of a government department. Many governments have learned to value and to use the sort of independent and objective advice on monetary and other aspects of economic policy which central banks have been able to give. On matters of vital interest to the state, however, it must be recognized that… it would be impossible for the Central Bank to adopt a policy or pursue a course of action contrary to the policy of the Government of the day.

In such a transaction, banks generally purchase the asset to be financed, and then sells it to the customer at a mark-up, to be paid on a deferred basis. 6  IFSB - Islamic Financial Services Board; IDB – Islamic Development Bank; AAOIFI - Accounting and Auditing Organisation for Islamic Financial Institutions; IIFM - International Islamic Financial Market. 7  The Bahrain Monetary Agency was the primary sponsor in establishing the Liquidity Management Centre. 4  BIS Review 147/2008  Financial Services Board Summit, Singapore's plan to set up a facility to provide Shariahcompliant regulatory assets to these financial institutions as part of our efforts to promote the growth of Islamic Finance in Singapore. The sukuk structure is based broadly on the Al-Ijarah structure, or the sale-and-leaseback of an underlying property. Sukuk issued by the facility will be given equal regulatory treatment as Singapore Government Securities, or SGS, and returns will be tied to the risk-free yield of SGS of equivalent tenor. The facility is open to all financial institutions that plan to or are currently carrying on Shariah-compliant financial services in Singapore. We are issuing on a reverse enquiry basis, which means we can size and time the issuance according to the needs of the financial institutions. A number of financial institutions have already expressed interest and we expect the first issue to take place at the start of next year. We invite eligible and interested financial institutions to approach MAS as we work towards a formal launch.
In this regard, the automatic adjustment of wages to inflation through the COLA mechanism, irrespective of the level of productivity, is one of the factors that has been contributing adversely to the cost structure of these enterprises, and consequently to their competitive position. Here I must reiterate that a currency union member country like Malta, whose only sustainable source of long-term growth are its exports, cannot afford to allow nominal wages to grow faster than productivity, which is what has happened during the past decade. The competitive position of these enterprises is also constrained by their ability to introduce more efficient production processes. The proportion of enterprises that did not undertake some form of restructuring last year was one of the highest in Europe. This is probably one reason why Malta has lagged behind its European peers in pursuing the targets set by the Lisbon Innovation Scoreboard, in particular in the areas of entrepreneurship and human resources. 6 Another frequently mentioned cost factor are administrative burdens. This is an endemic problem in Malta, confirmed by a recent survey in which a reduction in such burdens featured as the priority recommendation by executives of foreign-owned companies operating in Malta as a means of enhancing the attractiveness of the island to foreign investors. 7 Finally, with regard to the constraint represented by the small size of the domestic market, Maltese entrepreneurs have no option other than to attempt to break into foreign markets. This is not an easy task.

Such investment will also afford banks a greater guarantee of success when addressing the growing competition from technology firms. Likewise, these investments are needed to mitigate the impact and probability of cyber risks, which we have identified as a growing threat. Fourth, let us not forget that there are also various challenges in the regulatory and institutional arenas, both globally and at the European level. The coming months will be key to ensuring the full adoption of the Basel III accord in Europe. This will enable us to remain at the forefront of the multilateral response to this crisis and to establish, within Europe, the benefits that proper banking regulation has for economies’ capacity to absorb shocks and foster the public’s well-being. Moreover, the COVID-19 crisis has once again reminded us of the pressing need to complete the Banking Union and strengthen the Capital Markets Union. The creation of a common European Deposit Insurance Scheme and the adoption of appropriate panEuropean resolution legislation for large institutions are key steps in this process, paving the way for cross-border mergers and acquisitions and the associated potential efficiency gains, for instance. Thus, further integration of the European financial system would open up greater risk diversification possibilities and facilitate financing for productive activities at a lower cost. Lastly, in the longer term, it will also be important that the banking sector provides an appropriate response to the risks posed by climate change.
Oversight programmes of this type are highly systematic and entail assessing the financial system on the basis of a set of robustness criteria. The Governor of the Riksbank, Stefan Ingves, was by the way one of the architects of the FSAP programme during his time at the IMF. In this context it can be mentioned that before the crisis the United States did not think it needed an FSAP assessment, but such an assessment was conducted in 2010. Another example of an attempt to integrate the macroeconomic analysis and the financial analysis is that since the autumn of 2011 the IMF has published a consolidated surveillance report in which the main messages from all of the surveillance reports are summarised together with recommendations on how to manage the risks.4 To further improve and strengthen the surveillance of the financial sector, the IMF recently presented a more detailed strategy for how to conduct this surveillance in the future. The aims of the strategy are for the IMF to improve its understanding of macro-financial relations, to become better at identifying contagion risks across national borders and to increase its cooperation with other organisations. This is no easy task and the work involved is far from complete. This is something that the IMF will need to develop on an ongoing basis. 4  This report was initially called the Consolidated Multilateral Surveillance Report (CMSR) but was renamed to “Global Policy Agenda” ahead of the 2012 Annual Meeting.

BIS central bankers’ speeches  3  The Nordic-Baltic constituency has pushed for the IMF, alongside its surveillance of individual countries, to also regularly conduct the regional surveillance of countries with closely interlinked economies and financial systems. This is of course particularly relevant for Sweden as our banks have such large commitments in the other Nordic countries and in the Baltic countries. Although, as I mentioned above, our countries have increased their cooperation in the field of financial stability, a recurring and comprehensive regional analysis and examination of these issues would be of great value. Important steps have been taken in this direction and we are looking forward to an even sharper regional focus in the Fund’s ongoing financial surveillance. Capital flows require more analysis… The question of whether capital flows should be deregulated or not was the subject of lively discussion in the 1990s before the outbreak of the Asian crisis. After the crisis, some countries believed that one of its causes was that certain countries were asked to liberalise capital flows too early. The issue has therefore been very sensitive since then. Today, however, most countries agree on the positive effects of free capital flows – that is that they contribute to increased economic growth by enabling resources to be used more efficiently. The issue of free capital flows has now appeared on the IMF’s agenda once again.
The Central Bank will continue to provide Late Liquidity Window Facility such that banks may borrow from the  8  BIS Review 4/2008  Central Bank against collateral, and lend to the Central Bank without any limit within the hours mentioned above. iii)  In case of a temporary or permanent liquidity shortage, the Central Bank will continue to carry out its liquidity management through one-week repo auctions. When there is liquidity shortage in the market, the Central Bank will announce the amount of repo auction for that day on Reuters’ “CBTF” page at 10.00. As long as no extraordinary fluctuations are observed in the market, the Central Bank, while determining the amount of the auctions, will endeavor to maintain the average auction interest rate; a)  At maximum of 1 percentage point above the borrowing rate of the Central Bank announced for the intra-day transactions to reduce fluctuations in O/N interest rates, in cases where the liquidity shortage in the market is envisaged temporary and when the technical interest rate cut explained in paragraph 45 is not applied,  b)  Approximately at the mid point of the O/N borrowing and lending rates of the Central Bank, in cases where the liquidity shortage in the market is envisaged permanent and the technical interest rate cut explained in paragraph 45 is applied.

It is necessary for the communication policy of the Central Bank that the open letters and Inflation Report would be perceived as complementary factors. Role of public sector in inflation targeting strategy It should be reemphasized that the monetary policy should be supported by fiscal policy in order to be able to turn the downward trend in inflation into a long-term and lasting achievement. The fiscal policy can affect inflation through various channels. A particular channel, through which fiscal policy has direct effects on inflation, is the price and tax adjustments in the goods and services produced by the public sector. Making these adjustments in line with a pre-announced schedule or a pre-described rule would diminish  BIS Review 4/2008  3  uncertainties regarding inflation forecasts and thereby contribute to the reputation of inflation targeting regime. The Central Bank sets inflation targets on the basis of the budget projections of public sector. Therefore, while updating the monetary policy stance, the trend of public sector expenditures, which is a very important component of total demand, is closely monitored. Moreover, keeping public sector wage adjustments consistent with the inflation target is very important as the private sector take these adjustments as a benchmark for their own wage adjustments. Due to all these reasons mentioned above, the Central Bank closely monitors the income and fiscal policy implementations, and frequently emphasizes the importance of structural reforms that would enhance the quality of fiscal discipline and predictability of fiscal policies.
The second is strengthening of institutions that support the implementation of financial inclusion strategies such as development financial institutions and credit guarantee corporations. Third is the importance of having a national focus on SME financing and development as a key enabler for inclusive growth. The fourth area focuses on the role of digital financial services, including fintech and big data, in elevating financial inclusion. And lastly, the Forum will turn to the importance of financial education and consumer protection in increasing the responsible take up of financial services and building trust. Beyond these practical areas, there is also much to be gained from engaging in more strategic discussions on how financial integration itself can impact the inclusion agenda. More specifically, if we can better understand where potential risks of exclusion may arise from the process of integration, then we will have a better chance of mitigating such risks – including through measures that may be taken as part of the integration process, rather than a consequence of it. Equally, if we can identify opportunities for improving financial inclusion through the process of integration, then we can do more to ensure that financial integration actually creates these opportunities. We can think about these issues in several ways. Could increased cross-border access further entrench the segmentation of markets given stronger incentives for financial institutions to focus on strategies that only target an expanded market of more sophisticated, higher income customers?

Our international partners, namely AFI, World Bank and UNCDF who are present today have 2/3  BIS central bankers' speeches  given their unwavering support to the various financial inclusion initiatives outlined in WC-FINC’s Strategic Action Plan, and they have affirmed their commitment to provide technical assistance to help ASEAN achieve its financial inclusion targets. I encourage you to use this time to explore new development opportunities, strengthen existing collaborations to take the financial inclusion agenda forward, and perhaps think anew. We also look to your constructive feedback to this Forum which will be important for considering future engagements of a similar nature. With that, I wish you all engaging and productive discussions over the next 4 days. Mostly, I hope that the insights gained will inspire concrete plans for action in our respective countries, and contribute towards generating a clearer vision for raising financial inclusion to a new level across ASEAN. 3/3  BIS central bankers' speeches