samchain/econo-pairs-v1 huggingface dataset:
One of the criteria was that solutions should solve Iceland’s balance of payments problem in a manner that allowed Iceland to lift capital controls without taking undue risk with economic and financial stability; preserved stability in both the short and the long run; limited risk to Government finances, reserve adequacy, and credit ratings; avoided socialisation of private debt or risk; allowed the exchange rate to reflect economic fundamentals, unaffected by nongovernmental legacy issues; honoured international obligations concerning equal treatment under the Icelandic Constitution; and gave preference to measures offering simplicity over complexity, minimal legal risk, and as much finality as possible. The guiding principle and the criteria were used to design the solution for the estates of the old banks. The solution allowed the estates to choose between two options. Under the first option, they would receive exemptions from the capital controls in order to go into composition and make distributions to creditors while offering to fulfil stability criteria that fully mitigate the negative effect on the exchange rate and/or the FX reserves. According to the stability criteria, the estates would pay sufficient stability contributions (through the transfer of króna assets) to mitigate the negative effect, lengthen the maturity of their FX financing of domestic banks, and repay Government and Central Bank support and debt. Under the second option, a tax would have been levied on the estates that fully mitigated the negative balance of payments effect of the resolution.

A rapid build-up or sell-down of positions is therefore not profitable even if prices change. Over many years ahead, the amount of nominal fixed income investments will exceed the amount of real assets. In the long run, it is conceivable that investments in the two classes may be more equally distributed. In the development of the investment strategy that I have presented, weight has been given to exploiting the Fund’s long-term investment horizon and size. The strategy is based on objectives and expectations regarding the Fund’s overall real return over time. Moving forward, Norges Bank’s operational management of the Fund should probably shift towards absolute return and absolute risk. BIS Review 145/2010  7  Transparency and accountability A clear division of responsibility between the Ministry of Finance as owner and Norges Bank as manager is an important component of the Norwegian model. Moreover, it is important that transparency and accountability are prominent features of the model. Management objectives have been clearly defined. Norges Bank and the Fund’s owner have always given weight to transparency with regard to the management of the Fund. The standard was set at an early stage when the Executive Board decided that an exhaustive list of the Fund’s investments should be published at the turn of each year and the first complete list was published in the annual report for 1998. This decision has paved the way for all the subsequent discussions about various individual investments.
Chairperson, it is now my pleasure to invite the Secretary to the Treasury who is also the Chairman of the FSDP Steering Committee to give us a few remarks before we call upon the Guest of Honour, to give us his keynote address and to officially open this forum. BIS Review 131/2009  3

Companies borrowed excessively, especially in foreign currencies without hedging their exposures, encouraged by implicitly pegged exchange rates. But lenders in the developed economies could not escape blame either. They were only too eager to extend credit, based on the political connections of the borrowers, or on faith in an Asian miracle. Banks stampeded into the region. When sentiments turned, they stampeded out again, equally indiscriminately. The sudden massive outflow of funds, especially through banking lines, left countries in a severe liquidity crunch, and was an immediate cause of the crisis. The punishment meted out by the markets was out of proportion to the crime. The damage was not just the 9% shrinkage in the GDP of the crisis countries, but the social dislocation and political turbulence that followed. Indonesia suffered the worst, even though the IMF made a pre-emptive house call early in the crisis, and pronounced Indonesia’s fundamentals to be basically sound.1 The Indonesian government had pursued prudent macro policies and maintained steady economic growth. But companies had borrowed large sums from abroad, and the banking sector was afflicted by related party lending, poor credits, and weak provisioning. This, together with concerns about KKN – corruption, collusion and nepotism – was enough to turn an initial loss of confidence into a full-blown crisis of the body politic, forcing President Suharto to resign and pushing the country to the brink of chaos. The origins of the Asian crisis thus lay in institutional weaknesses and inefficiencies.
This can be seen from our high level of international reserves, the manageable level of external indebtedness and the continued surplus in the current account balance. Together with the greater flexibility of our exchange rate, this has strengthened the capacity of our economy to cope with external shocks and ensure that financing to the private sector is not interrupted. Going forward, continuity in Bank Negara Malaysia’s financial sector policies will be preserved. We will continue to strengthen our prudential regulatory framework in line with global standards, while introducing new developmental initiatives and maintaining a strong focus on the fair treatment of financial consumers. Following transformational measures taken in the past few decades to significantly strengthen the financial system, the banking industry in Malaysia is managing this transition from a position of strength. The capitalisation of the banking system is at its highest level of 16.5%. The combined excess capital of banks above the regulatory minimum level stands at over RM120 billion. The banking system Liquidity Coverage Ratio is also comfortably above 120% against the current regulatory minimum of 70%. This strong position has been an important element to facilitate orderly adjustments in transitioning towards global standards without disruptions to financial intermediation, thus ensuring the smooth flow of financing to the economy. To enhance Malaysia’s growth potential, several initiatives had been identified that will help boost productivity, improve the income-earning potential of Malaysians and expand opportunities in new markets.

I would like to take the opportunity this morning to talk about some of the measures that Bank Negara Malaysia is taking to support growth in the financial services sector, encourage innovation and strengthen resilience. My remarks will touch on the areas of regional financial integration, fintech development, systemic focus on regulation, governance and the role of banks in ensuring an inclusive financial system. Advancing regional financial integration The ASEAN Banking Integration Framework (or ABIF) that was finalised last year was a significant milestone towards greater ASEAN integration. An agreement forged between 10 key economies at different stages of economic and financial systems development is in itself a remarkable achievement. This is in sharp contrast with recent global trends. In the decades leading up to the 2007 financial crisis, global financial integration took unprecedented strides forward as capital markets and banking systems expanded and diversified, increasing the mobility of capital. But of late, there has been a reversal of this trend. A recent study by McKinsey found that following the crisis, banks globally have shed $ billion in assets and operations, of which almost half were foreign-based. Cross-border flows have also declined significantly, remaining at 60% of pre-crisis levels. To some extent, this is expected as markets undergo corrections and new regulations were introduced to address weaknesses in existing models for integration.
Another effect of a weak exchange rate concerns the prices of imported goods and services, with the risk of a pass-through to consumer prices. In the 1970s and ’80s, currency devaluation was frequently used as an instrument for stimulating the economy. The development of demand was boosted via production for export at the same time as imported goods became more expensive. In time, however, inflation began to move up. Now that Sweden has a flexible exchange rate regime, things work somewhat differently. If the krona weakens and firms and households perceive this as a transient movement, the effect on inflation will not be as strong as before, when a currency write-down was seen as a more permanent measure. This has  2  BIS Review 72/2001  contributed, for example, to an import price pass-through to consumer prices in the 1990s that was smaller than earlier. But the magnitude of the effects on demand and inflation with a flexible exchange rate regime will obviously depend on how much the value of the krona changes. Even with such a regime, a large shift - upwards or downwards - in the value of the krona will have some effect on demand and prices. Since last summer the Swedish krona has weakened by between 10 and 15 per cent relative to a weighted currency basket.

That is, whether they can make adequate returns to satisfy shareholders’ expectations. The most obvious reason for the difference between banks’ returns on the one hand and shareholders’ expectations on the other is the disappointing returns that UK banks have made in recent years. Average return on equity for UK banks fell from around 17% in 2006 to 2% in 2015. But there may be another reason, on the other side of the equation. Shareholders’ expectations may not yet have adjusted to the change in the risk and return profile that banks now represent. I want to look in a little detail at both the question of disappointing returns and the question of unrealistic expectations. Banks’ returns First, what is behind the disappointing returns? It is not lending on residential property. Our latest estimates of the return on equity of bank mortgage books seem to be around 20%, on average, beaten only by overdrafts and asset and motor finance. 13 Indeed, UK banks’ underlying return on equity on retail lending overall is currently around 20%. Margins on the flow of UK retail business for the large UK banks are currently lower than margins on the stock because new mortgages are being written at a lower average interest rate than average back-book mortgage rates. So return on equity on new lending is lower.
Per Jansson: My view on inflation targeting Speech by Mr Per Jansson, Deputy Governor of the Sveriges Riksbank, at Karlstad University, Karlstad, 11 October 2012. *  *  *  Twenty years of a floating exchange rate I would like to begin by taking you on a trip back in time, twenty years ago to 11 October 1992. Sweden and a number of other countries were then in the midst of a crisis that in many ways is similar to the one many countries in Europe are now undergoing. The situation was critical. Property and financial companies had gone bankrupt, the entire Swedish banking system was rocked to its foundations, unemployment had begun to soar and public finances were drained. The fixed exchange rate was put under severe pressure and many assumed that Sweden would do what it had done so many times before – adjust the value of the krona to get the wheels in motion once again. Around one month earlier the Finnish central bank had been forced to give up its defence of the exchange rate and let the markka float. One week later, on 16 September, the United Kingdom and Italy decided to give up the fight for sterling and the lira. The Riksbank on the same date had instead raised its repo rate to 500 per cent in an attempt to stop the currency flows and the speculation against the krona.

According to some, it has been difficult to understand the motives behind some of the decisions and it has not been very clear why the decisions reached were preferable to the alternatives. I can have some understanding of this criticism and I will return to this. But first I would like to discuss the question of what is meant by a clear monetary policy. It is not self-evident, as we shall see, and different people appear to mean slightly different things. A theory-based policy is not necessarily clearer The academic literature on monetary policy often describes inflation targeting as the central bank minimising a so-called loss function. This loss function is a weighted sum of a measure of the variability of inflation and the variability of the real economy. The loss function can, somewhat simplified, be written as  measurable. Consequently, it would not be appropriate to specify a fixed goal for employment; rather, the Committee’s policy decisions must be informed by assessments of the maximum level of employment, recognizing that such assessments are necessarily uncertain and subject to revision. The Committee considers a wide range of indicators in making these assessments.” 13  Vredin, Anders, Martin Flodén, Anna Larsson and Morten Ravn (2012), Enkla regler, svåra tider – behöver stabiliseringspolitiken förändras? (Simple rules, difficult times – does stabilisation policy need to be changed?)
  Second, there are reasons to believe that so-called longer-term scarring damage to the economy will be more limited than in some past recessions, but there will most likely be structural change which will influence the future of supply and demand.   Third, it is important to boost supply capacity to raise the sustainable rate of growth in the economy and thereby ease the task of managing the necessarily higher level of public and corporate sector debt.   And fourth, taking all of this together, and consistent with the current setting of monetary policy and the outlook for the economy as set out in the February Monetary Policy Report, it is important to emphasise the role of the forward guidance that the MPC has adopted, and the announcements made a month ago on so-called toolbox issues. The Covid Economy  The economic impact of Covid has in aggregate been very large. We expect that by the end of the first quarter, UK GDP will still be around 12% below its level at the end of 2019, a huge shortfall. The impact has been synchronised across economies – the similarities of this shock far exceed the differences in terms of economic impact. That said, within economies – the UK included – the impact of Covid has been highly uneven across sectors. Those that conduct activity involving large amounts of close human contact have obviously been most seriously affected.

I would add that this has led to other notably uneven and unequal effects, because these sectors tend to have higher proportions of low paid workers, female workers, and there is a concentration by ethnicity as well. This is an issue the Resolution Foundation has done some commendable work on (Cominetti et al, 2021). A common question that we ask about economic shocks is whether it is a demand or supply shock. As monetary policymakers we ask this question with good reason – the identification of shock type matters for  2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  the impact on spare capacity and inflation. So, what is the answer for Covid? The answer appears to us to be both: demand and supply. This is not surprising – shutting large parts of the economy down to protect against infection affects both demand and supply. But this is highly relevant to the task of getting over Covid, and for monetary policy. Let me try to illustrate the nature of the Covid shock through the lens of aggregate demand and supply. The first point to make is that illustrating the shock through a calculation of the output gap alone isn’t very helpful, precisely because it is the net of two shocks. In Chart 1 I have therefore shown the historical path of aggregate demand (GDP) and supply (potential output) over the last twenty years, consistent with past MPC forecasts.
Accordingly, the regulator should review and adapt the rules already in place; the aim must be to remove obstacles limiting the advantages to be had and, at the same time, to mitigate any risks that the new environment may generate. From the regulator’s standpoint, it is important, first, to maintain a level playing field, which basically entails putting into practice the well-known maxim: “same risks, same requirements”. However, this has not proved easy, as a great many of the regulations in place have a sectorial approach. In addition, certain activities are subject to special regulations, because of the possible implications, for instance, for financial stability. This is the case of deposittaking, which leads to banks being subject to strict criteria that shape their activity overall, while other intermediaries that offer similar services, but not deposit-taking, are free from such requirements. Turning to the promotion of innovation, in such a global, competitive and dynamic environment some flexibility in the stages at which ideas are tried out is required. Here, the proportionate application of regulations, within the permitted margins, or the creation of controlled test spaces, known as sandboxes, appear to be suitable measures for promoting innovative projects that seek to harness the potential of new technologies in the financial sector. Further, it is worth paying attention to how this transition process unfolds. As I stated earlier, our starting point in Spain – and largely in the rest of Europe – is that of a heavily banked society.

In order to ensure a level playing field, financial players must be regulated according to what they do and not what they are. Addressing the growing influence of borderless technology on the financial system will also require an international coordination effort. Such are the challenges that the public authorities will have to meet. *  *  *  To discuss these important issues, we are extremely fortunate to have an excellent panel today, including: •  Mrs Sarah Dalhgren, Partner at McKinsey, formerly Head of the Financial Institution Supervision at the Federal Reserve Bank of New York (FRBNY). Dear Sarah, your expertise in supervision, which you demonstrated through most of the financial crisis, will be extremely useful to assess the current situation of financial institutions in the context of financial innovation. •  We also have Mrs Sandie O’Connor, Manager Director and Chief Regulatory Affairs Officer at JPMorgan Chase & Co. Dear Sandie, you are deeply involved in your firm’s regulatory strategy and your views on how financial innovation should affect regulation from the industry’s point of view will be extremely valuable. •  I would also like to introduce Mr Alain Papiasse, Deputy Chief Operating Officer (COO) at BNP Paribas, representing the group in North America. Alain is a top market practitioner with extensive experience in both asset management and investment banking. So, dear Alain, I hope you will provide us with “insider” and complementary views on what the fintech industry can usefully bring to banks.
On the liabilities side, there are banknotes and coins, deposits from the banks and equity. Image 5: Unconventional monetary policy A stylised balance sheet for a central bank Assets  Liabilities  Foreign assets  Banknotes and coins  Domestic assets  Bank deposits  Lending  Equity  The balance sheet totals of the central banks increased dramatically during the autumn of last year and have remained at approximately these levels since then. A major part of this increase was due to the expansion of lending. BIS Review 41/2009  9  Image 6: Central banks’ balance sheets Percentage of GDP 25  25 ECB BOE  20  20  Federal Reserve Riksbanken  15  15  10  10  5  5  0 jan-07  0 apr-07  jul-07  okt-07  jan-08  apr-08  jul-08  okt-08  jan-09  Sources: Bureau of Economic Analysis, Eurostat, Office for National Statistics, SCB and the respective central banks  As I have mentioned, during the second half of 2008 the Riksbank increased its lending to the banks by more than SEK 450 billion. As a result of the increase in lending, the Riksbank’s balance sheet grew during the second half of 2008 from around SEK 200 billion to around SEK 700 billion, that is it more than tripled. What happened was, put briefly, that when the interbank and securities markets stopped working normally, the demand from the banks for loans and for liquidity reserves at the Riksbank increased.

Cumulatively, this rapidly expanding domestic demand has represented an important market for the region. It has also increased the pace of regional integration. While energy prices have remained high, this is not expected to undermine the global growth momentum. Oil price increases thus far have mainly been demand-driven, and therefore, well absorbed compared to historical episodes of oil shocks. However, the tight global supply conditions that prevail have not removed the risks of higher oil prices. The inflationary trends that have emerged, has prompted the monetary authorities in a number of countries to raise interest rates. While the degree has varied across countries, these moves have primarily reflected the need to anchor expectations and limit the second-round effects of rising oil prices. This has therefore continued to allow monetary conditions to remain supportive of growth. In view of the broadly favourable outlook for the global and regional economies, renewed attention has been focused on the prevailing imbalances in the global economy. This is a pertinent issue especially as these imbalances are expected to widen in 2006. It is recognised that reducing the global imbalances is a shared responsibility, across the major regions of the world. Several reasons have been cited as constraints to the process of adjustment. This include the relative lack of strength in domestic demand outside the US; the large gap between saving and investment in major regions of the world; and the fragmented structure of global capital intermediation that hinders surplus regions from financing productive investments within their region.