samchain/econo-pairs-v1 huggingface dataset:
They each account for 7 to 8 per cent of Swedish exports. However, their importance has declined over time. Statistics from Statistics Sweden for the first half of 2011 show that Swedish exports to China, India and Russia are together now as large as exports to the United States. If Brazil is included in this group of countries then exports to the so-called BRIC countries exceed exports to the United States and also those to the United Kingdom. The rate of increase in trade with the BRIC countries has been high recently. While exports to the BRIC countries have increased by 150 per cent since 2002, exports to the United States have fallen by 17 per cent in the same period.2 This change in the relative significance of different export markets at the macro level is confirmed by micro data. In the company interviews conducted by the Riksbank, the Swedish export companies report that sales are falling in parts of Europe compared with China and Brazil.3 Increased intra-regional trade in Asia The increased importance of the BRIC countries to Swedish exports is a natural consequence of the fact that these countries now constitute a larger part of the global economy. The extent to which the slowdown in Europe and the United States spreads to the emerging economies in the United States and Europe will be a major factor in determining the course of development in the period ahead.

The second is that expectations that monetary policy will remain expansionary in large economies like the Unites States and the euro area, for a longer period than was previously assumed, also have an effect on Swedish monetary policy. Swedish interest rates cannot deviate too much from foreign interest rates without this having an effect on the exchange rate. The exchange rate is of great importance to both inflation and resource utilisation and thus influences what constitutes a well-balanced monetary policy. What then will be the overall effect for Sweden? We were able to note in September that the demand for Swedish exports was growing more slowly than previously expected due to the weaker development of the export markets of importance to Sweden. This weaker development is partly due to the fact that market turbulence resulting from the uncertainty about weak public finances in Europe and the United States is forcing some countries to launch extensive austerity programmes. 8  Bergman, 2010. 9  Central banks can conduct quantitative easing, which entails buying assets with the aim of reducing long interest rates. They can also carry out a twist, as recently announced by the Federal Reserve, which entails selling securities with short maturities and buying securities with long securities in order to push down longer interest rates. BIS central bankers’ speeches  9  Falls on stock markets in Sweden and around the world have also reduced the financial wealth of the households.
Just as problems originating on a particular sector of the economy can escalate into general macroeconomic imbalances, so financial market imbalances in one financial institution or one country can disrupt other financial institutions or countries. Collaboration between home-host supervisors is therefore a must, but I would argue that probably more can be done in this regard. My third message concerns the role of anchors in the design and implementation of macro-prudential policies. Monetary policy is made credible from the clear focus on a transparent measure of price stability (CPI inflation) which in turn increases the accountability of the central bank pursuing it and ultimately its operational flexibility. Financial stability is inherently a more difficult concept, even on a theoretical level, but I think more should be done to quantify the term and unify its understanding. This would allow for more transparent communication and increased public support for the central bank’s action. I will now expand on these issues. 1. Price stability and macro-prudential measures  A panoramic glance at the experience of central and eastern European economies with the latest crisis would indicate a broad range of outcomes. While this might look normal at first view, it is worth remembering that CEE countries share quite a few commonalities in their economic and financial structures. Furthermore, they were hit by the same type of external shock, at exactly the same time. One has thus a fair approximation of a controlled experiment on the role of macroeconomic policies before and during the crisis.

While communication is an advice that is frequently used, we made a good use of that beyond mere courtesy. We acknowledged that financial development was following a certain pattern. Financial institutions like all other businesses adopt marketing strategies and stick to such strategies in all markets. What this means for us is that once new product are developed and tested in other markets, they will follow the same pattern of marketing in other markets as well. In the years that preceded the crisis, financial institutions started the practice of lending in exotic currencies, offering very low interest rates and being without any economic relation with the borrower activity. Being aware of these developments, from previous communication with other central banks in the region, we were alerted to spot the first sign of such behavior in our economy. Therefore at the first signs of such credits, we discussed with the management of our banks and stopped administratively lending in these currencies for all unhedged borrowers. On a systemic level, I do believe the recent experience highlighted some issues that need to be looked more carefully in the future. I will highlight here only three of them.   The policies that facilitated the capital inflows into economies of the region were not followed by actions which could have provided the needed liquidity when these flows reversed or stopped. Countries of the region did not benefit from the swap agreements or similar arrangements that would allow us access to short term liquidity.
An accommodative monetary policy and a strong and well capitalized banking system provided a favorable environment whereby firms and household could continue to finance the consumption and expansion to support domestic demand. The Thai economy was able to navigate through short term sell offs and the sharp reversal of capital flows. The  BIS central bankers’ speeches  1  recent turbulence in fact provided a reality check on the importance of policy consistency and the fundamentals of the economy. Monetary and financial policies in Thailand have strongly relied on prudence and pragmatism. A credible monetary policy framework helped anchor inflation expectation, thereby fostering continued growth and stability. A flexible exchange rate regime also supported the efficient allocation of resources and competitiveness of the economy. A strong external position helped cushion against sharp reversals of capital flows. One can never put a price on the comfort with which a strong international reserves position brings. Imagine if we had to raise domestic interest rates to defend the currency that is weakening because of capital outflows. All of this at a time when the global economy is weak and the domestic economy needs the support of accommodative macroeconomic policies! Financial liberalization and regulatory reform efforts under the Financial Sector Master Plan provided opportunity for Thais, particularly small-scale firms, to have better access to finance. A competitive banking system and a vibrant capital market also helped strengthen investors’ confidence through efficient resource allocation and appropriate pricing of risks.

The common thread of geopolitical tensions is that while they’re difficult to predict, they’re also impossible to ignore. On a backdrop of low r-star and slowing global growth, they drive businesses to be more cautious, more vigilant, and more conservative in their approach. Data Dependent, Not Data-Point Dependent The long-term factors driving low r-star and slowing global growth, as well as the more near-term geopolitical tensions, are afflictions from which we all suffer. So what’s the solution? Where do we as policymakers, researchers, and regulators go from here? At press conferences I’m often asked: if growth slows by X percent, or unemployment increases by Y percent, will that mean that the FOMC is going to do Z at its next meeting? If the Fed had a motto, it would probably be “data dependent.” When asked about this, it’s important to clarify that while I’m data dependent, I’m not data-point dependent. It’s not about being guided by one single data point—GDP or job growth—but by all of the data and information that tell us where the economy is, and where the economy is heading. Importantly, it’s not about looking at things merely as they are—it’s about trying to read how the economy is likely to evolve over the next couple of years, and what risks lie ahead, based on a broad range of evidence. Monetary policy is a long game. The policy decisions we’ve made this year will continue to have a ripple effect years into the future.
In fact, the zero lower bound that was once a theoretical constraint has now been the norm for the last 8 years. Unconventional policy measures, such as quantitative easing were adopted. Next came the introduction of the negative interest rate policy, particularly in the advanced economies. First adopted by the Danish National Bank in 2012, five other central banks have now lowered their key policy rates to negative territory. The outcomes of these unprecedented policy measures remain uncertain, with possibility of unintended consequences and the emergence of yet more risks. Fiscal and monetary policy, two of the most important macroeconomic policy tools, are reaching a point where they have very limited room to influence the desired growth and employment outcomes. This raises a few questions – have we reached a point where macro economy becomes a dismal science? Have we reached a macro-policy trap? What have we missed in the design of these policy tools? These are very important questions. They warrant a deep rethinking of the underlying basis of the discipline, and a re-examination of the many principles that we have been relying on all these while. To apply the same solution over and over again is certainly not a viable option. The international monetary system fosters imbalances and volatility of capital flows and exchange rates Since the departure from the Bretton Woods system, the international monetary system has evolved to reflect on-going changes in global economic developments and economic thoughts.

Compared with other countries, productivity gains have been particularly strong in the banking industry and other service sectors. The business sector has been quick to adapt and change, and to make use of new technology that is available in an international market. This is probably due the modernisation of the functioning of the economy through the 1980s and 1990s, which resulted in more efficient markets. Turbulence in financial markets The financial market turbulence may result in a reversal of some of the positive driving forces in the Norwegian economy. The turbulence was probably triggered by falling house prices in the US. There were reports of an increase in defaults on subprime mortgages from the second half of 2006. Securities portfolios had been developed around these mortgages. Uncertainty arose among bankers and investors who directly or indirectly were exposed to losses on these mortgages. This resulted in a sharp decline in prices for these securities, which then spread to a range of mortgage-backed instruments. In the course of summer 2007, it became clear that the losses had spread to banks, funds and financial establishments in Europe, Asia and the US. The turbulence also spread to other financial market segments. Few knew who was exposed to losses, and financial market participants started to question counterparties’ financial situation, and held on to their money. Many banks have sustained substantial losses on their own investments related to these markets, but have also had to bring back onto their books loans from companies they had established.
While this exercise will require considerable effort on the part of both banks and supervisors, the Committee believes it is essential to have recent and high-quality data in order to facilitate implementation. And the earlier this exercise is conducted, the more time there will be to reflect on the results and consider any necessary recalibration of the Framework. The United States and Germany have conducted QIS4 studies and the former is currently studying the results. On 13 July 2005 we published the necessary package for the QIS5 (Fifth Quantitative Impact Study instructions and Workbook). I believe that with QIS we will have sufficient information to allow us to make a careful analysis of the impact of Basel II, and we have the tools at our disposal to make any necessary changes to the calibration. Accord Implementation Group The second area of implementation I would like to discuss is the work of the Basel Committee’s Accord Implementation Group, or AIG. The AIG is chaired by Nick Le Pan, whom many of you know as the Superintendent of Financial Institutions in Canada and who is also the Vice Chairman of the Basel Committee. As Nick discussed at the IIB’s annual conference here in Washington in March, the AIG plays a critical role in trying to ensure consistency of implementation of Basel II across borders.

In this regard, one of the primary methods the AIG uses to promote cross-border co-operation is to encourage home supervisors of the 50 or 60 largest internationally active banks in Basel Committee member countries to engage in practical outreach to host supervisors and the bank to open clear lines of communication and co-operation. While these outreach efforts were initially considered to be “case studies”, they have since evolved into actual implementation planning. Since one of the most important aspects of this planning is the bank’s own Basel II implementation rollout plan, it is important that internationally active banks not only have such a plan in place, but also that this plan should be communicated within the bank, especially to subsidiaries that are significant in the context of the overall bank or of a particular market. This cross-border work has accelerated over the past year, but the Committee recognises that more must be done in order to foster greater consistency. We will continue to work with groups like the IIB to identify high-priority implementation issues for the industry, and we will also continue to encourage home and host country supervisors to develop detailed, practical implementation plans that are tailored to each bank’s unique circumstances. 2/3  Outreach to non-G10 The third area of implementation that I would like to address is outreach to supervisors outside Basel Committee member countries, especially since the IIB has actively encouraged the Committee to promote consistent standards for cross-border implementation.
Interest rate differentials across regional deposit markets have vanished and the “law of one price” applies to all transactions within a deep and highly liquid pan-European market. Cross-border transactions - for unsecured interbank deposits and repos - now account for over 50% of all money-market cash transactions. EONIA and EURIBOR have within a very short time become the undisputed benchmarks for short-term interest rates. This is reflected for instance in the impressive development of the euro interest-rate swap market, where all but a few transactions are indexed on these benchmarks. This deep integration of the money market has prompted new organisational patterns in the banking sector, with a concentration of euro cash management activities making it possible to take advantage of higher liquidity levels on the secondary market. For instance, according to a survey by the International Securities Market Association in June 2002, the top ten banks in a panel of 77 accounted for 55% of the total reported business on the European repo market. As a result the price discovery mechanism on the money market is smoothened because trade decisions are based on information systems that capture the relevant parameters at euro-area level. The integration of euro-area financial markets has also deepened on the bond market: –  Rapid internationalisation has taken place.

The Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD) provides the go-to framework for companies to disclose key climate-related information.9 This initiative has significant backing, with over a thousand companies showing their support.10  But support alone is not enough, we need action. And the quantity and quality of climate disclosures is not yet good enough. Climate change is a risk we see looking forwards not backwards. Companies with the exact same current carbon footprint today could have very different strategies for the future – one might have a clear path to net-zero, another could be gambling on new technology or policy inaction, and a third might just not have thought about it yet. So to be decision-useful, disclosure has to move from the static to the strategic. To be forward looking. Using scenario analysis to help us better understand the impact of different climate pathways. That naturally raises the question as to whether disclosure should be mandatory. Given the scale of the change required, we think that does need to happen, and soon. And so we, together with other regulators, are exploring a possible pathway to mandatory through the Government-led taskforce on climate disclosure.11 But you do not need to wait to be forced to disclose. You can choose to act now.
It establishes a clear hierarchy of objectives for the single monetary policy, with price stability unambiguously assigned overriding importance. How should this mandate be achieved? The experience of the 1970s and 1980s demonstrated the advantages of central bank independence in the pursuit of price stability. A monetary policy subject to short-term political concerns and influences could not adopt the medium-term orientation required to maintain stable prices credibly. Academic studies of the time consistency problem in monetary policy offered an insight into this issue, while empirical evaluations showing a correlation between central bank independence and greater price stability provided compelling supporting evidence. By the early 1990s, the benefits of central bank independence had become conventional wisdom. An increasing number of central banks achieved greater institutional independence. This worldwide trend was reflected in the Maastricht Treaty, which made the ECB one of the most independent central banks in the world. Assigning responsibility for an important public policy to an independent institution needs to be accompanied by a transparent and accountable policy framework. In a democratic society, a high degree of transparency and accountability in monetary policymaking should bolster both the legitimacy of the central bank and public support for its price stability mandate. At the same time, transparency and accountability impose an external discipline on policymakers which can add to the credibility, and thereby the effectiveness, of monetary policy. The ECB has set high standards in both regards by establishing channels for communication and accountability suited to the specific, and distinctive, institutional and cultural setting in Europe.

Bank of England consolidated balance sheet(a) Chart 1: Liabilities  Chart 2: Assets £ billions 450  £ billions 450 Other assets  Other liabilities  400  Reserve balances Notes in Circulation  400  Loan to APF (QE)  350  Short-term repos  350  300  Long-term repos  300  250  250  200  200  150  150  100  100  50  50 0  0 2007 (a)  2008  2009  2010  2011  2012  2013  2007  2008  2009  2010  2011  2012  2013  Weekly data to 13 February 2013  In addition to controlling the size of our balance sheet and/or the price of money, which may affect the total supply of credit in the economy directly, we can alter the composition of the assets held on the Bank’s balance sheet, or conduct off-balance sheet operations, and so affect the composition of private sector asset holdings. Executed judiciously, we can thus influence the price and/or quantity of particular types of credit in the economy. Finally, by talking about what we might do in the future, the Bank can influence the price and quantity of money and credit for some time to come. The power of communications as an operational tool should not be underestimated and the MPC has always used a range of communication channels to help accomplish its objectives.
Percentage points 30  28  30 21 21  20 10  18  20 5  10 2  2  0  0  0  0 -3  -10  -3  -10 -14  -20  -17  -20  -20 -26  -30 S  DK FIN UK IRL D  F  B  Note. SV=Sweden, DK=Denmark, FIN=Finland, UK=United Kingdom, IRL=Ireland, D=Germany, F=France, B=Belgium, A=Austria, L=Luxembourg, NL=Netherlands, I=Italy, E=Spain, EL=Greece, P=Portugal. A  L  NL  I  E  EL  -30  P  Source: Eurostat. The fact that there exist price differences between countries is partly due to structural factors. One important factor is the income level (richer countries usually have higher prices). Taxes, wages, population density and changes in the exchange rate are also of considerable significance. Sweden has, for instance, higher VAT and unit labour costs, i.e. payroll expense including social security contributions adjusted for productivity, than the EU average. Sweden’s geographical situation and the fact that we are a sparsely-populated country mean that we are also affected by higher transport costs, lower economies of scale and thereby have higher prices. It is estimated that approximately one half of the Swedish price level difference from the EU average 5 can be explained by structural factors. The other half is attributed to a lack of competition. Calculated in krona, this means that a family with two children pays approximately SEK 30,000 more a year for their purchases than they would otherwise.

Some households and corporates could face pressures on their cash flows and hence debt servicing ability if the economy slows more than expected. PROPERTY MARKET AND MACROPRUDENTIAL POLICY Last July, the government took macroprudential measures to cool a property market that was showing early signs of potential over-heating. In less than one year, between Q3 2017 and Q2 2018, private residential prices had surged by 9%, offsetting most of the gradual decline of 12% over the preceding four years since Q3 2013. There was a real possibility that property price increases would once again run ahead of economic fundamentals – as they did in the lead-up to 2013. If a renewed property bubble were to form, it would risk a destabilising correction later that would hurt households, businesses, and the banks. This risk was especially pertinent, given the strong pipeline of private housing supply coming on stream over the next few years. This is why, MND, MOF and MAS decided to act early and decisively to restrain the property market. We have learnt from experience that preventing a bubble from forming is less painful than deflating one that has fully formed. The measures implemented last year have helped to moderate the property market cycle. Since end-Q2 last year, private residential price increases have eased significantly and average transaction volumes have fallen by 30%. Bids for land tenders, in both the en-bloc sale and Government Land Sale markets, have become sober.