samchain/econo-pairs-v1 huggingface dataset:
Svein Gjedrem: Petroleum and the Norwegian economy Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the Alfred Berg ABN AMRO’s Nordic Energy Conference, Oslo, 30 August 2005. The speech does not contain assessments of the economic situation or current interest rate setting. Please note that the text below may differ slightly from the actual presentation. The references and the  Charts in pdf-format can also be found on the website of the Norges Bank. *  *  *  Let me start by reminding you of the importance of the petroleum sector to the Norwegian economy. In 2004, it accounted for 20 per cent of total GDP and almost half of Norway’s total exports. Due to spillover effects, investment in the petroleum sector affects the activity level both offshore and in mainland Norway. Oil gives us an economic base that is not available to many other countries. But it also presents us with considerable challenges. Our petroleum resources are part of our national wealth. When oil is extracted and sold, natural assets are transformed into financial wealth. Norway’s national wealth belongs not only to our generation, but also to future generations, and government policy takes this into account. When exercising fiscal discipline, the Norwegian authorities are seeking to ensure that our petroleum wealth is distributed equitably across generations. Second, the size of the cash flow from petroleum activities varies.

The background material for the Act relating to the Petroleum Fund clearly indicates that the Fund shall not be a second central government budget and, by implication, shall not be used for investment or spending that have not received priority in the budget. The chart shows the share of the central government’s annual net cash flow from petroleum activities that has been transferred from the Fund to the fiscal budget. Since 1996, a considerable portion of the petroleum revenues has been retained in the Fund. In 2000 and 2001, there were almost no transfers from the Fund to the fiscal budget while in the past two years the share transferred to the fiscal budget represented about one-third of the cash flow. 1  See Act relating to the Government Petroleum Fund, adopted on 22 June 1990 and amended by Act no. 2 of 16 January 2004. The Petroleum Fund has become large. At the end of the second quarter of 2005, the market value of the Petroleum Fund’s portfolio was nearly NOK 1 200 billion or approximately EUR 150 billion, or roughly 65 per cent of GDP. The Ministry of Finance has defined a clear mandate for Norges Bank’s management of the Petroleum Fund. Norges Bank shall seek to achieve an excess return in relation to a benchmark portfolio by means of active management within a certain risk limit. The chart shows developments in both the average annual net real return and the real return without the contribution from active management.
Effects of EU accession The EU accession has led to even better market access for local producers and has given Estonia as well as the other new Member States a kind of "seal of quality" as an investment destination. Already the prospect of the EU accession enhanced these countries' credibility in the eyes of investors. But since the accession, the inflow of funds has been especially strong, as economic situation in the euro area was combined with higher global liquidity. Furthermore, the geography of investors has broadened. The prospect of adopting the euro in a relatively near future has lowered interest margins in several of the new Member States including Estonia and has given an additional boost to investments. The above factors, including convergence, as a background, one may speculate about the length of the current economic cycle, and where exactly we stand in that cycle at the moment. In short, there are some suggestions that we might have entered unusually long economic cycle and may be coming closer to the peak of the cycle. However, many of the current vulnerabilities of the Baltic economies are also tied in with these effects of the EU accession and rapid convergence. Understanding these risks requires careful analysis. Let me now turn to my second topic - challenges the strong economic and credit growth are offering.

In the current cycle there are more households with an access to credit, also from the lower income deciles, indicating the spread of the effects of the potential slowdown to a wider part of the economy. The second risk factor I would like to point out is the price level of real estate. Real estate prices have recently surged globally, and also in the Baltic countries. The possible factors behind this increase include rapid and relatively widespread income growth, favorable borrowing conditions, and international demand. However, despite these surges, absolute levels of real estate prices remain still about two times lower in Tallinn than in Helsinki, in line with the difference of overall price levels. There are signs that prices are now stabilized in nominal terms and may have slightly decreased in real terms. Nevertheless, relative prices of real estate have increased dramatically. Whereas the ratio of price of a square meter to monthly wages is about one in Helsinki, it exceeds two in Tallinn. The expectations of real estate price convergence fuel credit demand in Baltic countries but imply ever-increasing risks to  BIS Review 81/2006  3  both borrowers and lenders. (It is fair to say, though, that the majority of real estate loans are used for buying homes, not for speculation.) The third factor I wanted to mention - currency mismatch - has caught some attention from international observers. The issue is more nuanced than the classical approach.
Although some banks were recapitalized in 1999, the full regulatory response took several more years. The monetary and fiscal stimulus that was provided helped Japan avoid a deep recession. But expectations about future nominal income growth for both households and businesses ground lower over time. With inflation expectations sinking, inflation-adjusted real interest rates rose, and Japan became mired in deflation. While deflation is ultimately a monetary phenomenon, structural elements were also important. Long-term demographic factors added to the deflationary pressures and structural rigidities, and credit supply problems constrained the reallocation of resources to growth sectors. These structural factors made it substantially more difficult to escape the deflation trap. The Bank of Japan was active during this period. From the late 1990s onwards, it pioneered an extremely broad array of innovative tools – many of which were later adopted, in amended form, by the Fed and other major central banks. These included forward guidance on the future path of the policy rate, quantitative easing through purchases of government securities and private assets including asset-backed securities, equities and real estate investment trusts (REITs), a more quantitative inflation objective, and funding for bank lending. 2  Actual overnight rates; the Bank of Japan did not publish its rate target until 1998. 3  See “Preventing Deflation: Lessons from Japan’s Experience in the 1990s,” Alan Ahearn, Joseph Gagnon, Jane Haltmaier, and Steve Kamin et. al., International Finance Discussion Papers, No 729, June 2002, Board of Governors of the Federal Reserve System.

12  Indeed, even when purchases of additional longer-term securities cease, the enlarged balance sheet will provide substantial ongoing stimulus. It is important to recognize that the Fed could remain in this posture with policy “on hold” for a significant period. BIS central bankers’ speeches  9
Percentage points 0.5 100bps increase in CCyB  So, rather than increasing the burden on monetary  100bps increase in policy rate  0.3  policy, and depressing inflation still further, what to my 0.1  mind would have helped far more ahead of the crisis is an effective prudential policy – in particular, higher  -0.1  capital requirements for banks. And if that’s more  -0.3  obvious after the event than before, let me offer one  -0.5  other pre-crisis comparison, this one between the UK -0.7  and two countries whose experiences of the crisis  Output Inflation  were far less severe than ours, namely Canada and  Credit Crisis spreads prob. Australia. Source: Aikman et al, forthcoming. These countries had significantly smaller and less international banking systems than the UK’s. But policy – and specifically prudential policy – probably mattered too. Even as a share of what turned out to be much less risky assets, Canadian and Australian banks had more loss-absorbing capital (Chart 7), enough to avoid any risk of insolvency. Meanwhile, real short-term interest rates were generally lower than those in the UK (Chart 8). So monetary policy was if anything looser yet, thanks in part to better prudential policy, the crisis was far less severe.

The cost would have been 3½% in foregone output and a rate of inflation more than a percentage point further below target. In a more recent study, Aikman et al. (forthcoming) come to similar conclusions. They find not only that monetary policy has relatively weak effects on financial stability, at least in the UK, but also the converse – that, partly because they’re directed more at mitigating tail risks, rather than affecting the most likely path of the economy, macro-prudential policies do not have very large effects on demand and inflation. Chart 6 is a summary of their results. The impacts of the two policies on growth and inflation are on the left-hand side, with the effects on measures of financial stability on the right. The responses to a change in monetary policy are in white, those to macro-prudential policy in blue. It’s very clear in this paper, at least, that the 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  comparative advantage of monetary policy is in  Chart 6: The impacts of monetary and  stabilising growth and inflation with financial stability  macropru policy  best left to macro-prudential policy10.
Krzysztof Rybiński: SEPA and the payment system in Poland Speech by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the 13th Bank Forum “Regulatory changes in European banking – outcomes for banks and the economy in Poland”, Warsaw, 14 March 2007. *  *  *  Welcome to the session devoted to the SEPA project – Single Euro Payments Area – in the context of the Polish payment system. When you google SEPA, the first website on the results list is the site of the Scottish Environment Protection Agency, but what closely follows is the ECB’s website on SEPA (Single Euro Payments Area). The pagerank of both these sites is 6, which means that they are important in the Internet. Since the introduction of the euro banknotes and coins in 2002, consumers have been able to make cash payments throughout the euro area from a single purse using a single currency. The SEPA project represents the next major step towards closer European integration; it will allow consumers to make cashless payments throughout the euro area from a single account under the same basic conditions, regardless of their location. In 2002, the banking industry took up this challenging project by creating the European Payments Council (EPC). The EPC is defining the new rules and procedures for euro payments.

Furthermore, banks and Financial Institutions in Zambia have in the past lamented the low levels of banking and economic knowledge among graduates from tertiary institutions as well as the borrowing public in general. It is therefore gratifying to note that this evening, we celebrate and showcase the depth of the entrepreneurial talent that is flourishing in our schools of higher learning. It is also heartening to see these young men and women putting up high quality business proposals of a diverse range of projects. This speaks well for the inventiveness of our learning institutions and is a very welcome development indeed. Ladies and Gentlemen, this initiative represents a major milestone in developing linkages between the industry and tertiary institutions which is key in bridging the gap between expectations of employers and those of the labour force. It is also testimony that we have financial institutions and business entities that are willing and committed to promoting private entrepreneurship among young people in our country at the level of start-up businesses. Once again, I commend the sponsors and their partners for this important initiative. I am certain that your efforts will go a long way in contributing to the building of an entrepreneurial society in Zambia. This is a task not only for you but for everybody. I wish to urge in particular, the education system in Zambia to enhance their efforts in promoting positive attitudes towards entrepreneurship in the institutions of higher learning.
Insurance linked securities and new insurers  One response has been to move in the direction of introducing and managing rather than providing risk capital. Insurance-linked securities and other forms of alternative insurance capital, such as sidecars and 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  the like, allow insurers to transfer risks to capital markets. These markets have been growing for some time, forming an increasing share of global reinsurance capital (Chart 2). They seem to have absorbed losses from the 2017 hurricanes without major hiccups. With the continuing search for yield and diversification by institutional investors, growth seems likely to continue. Chart 2: Share of alternative capital in global reinsurance capital  Source: Aon: ILS Alternative Capital Fortifies Its Position September 2018  Last year the government established a tax and regulatory framework for Insurance-Linked Securities in the United Kingdom. It is intended to help cement London’s position at the forefront of global reinsurance business. The PRA has since authorised a number of Insurance Special Purpose Vehicles, which can either be for one transaction or multiple transactions from one or more cedants. We are taking a proportionate approach to their supervision, consistent with the risks posed to our objectives and compliance with Solvency II requirements. We are keen to work with the industry to ensure we capture any learning as we both develop our experience of operating the new regime.

It is therefore to be expected that the impact of low interest rates on profitability will, on average, be greater for these banks than for others with a different business focus. Stabilised interest margins of domestically focused banks I shall therefore concentrate on domestically focused banks in the following remarks. The profitability of these institutions has fallen – in some cases significantly – since the beginning of the low interest rate period, primarily due to declining margins on interest business. The average interest rate margin fell substantially between 2008 and 2014, as this chart illustrates (slide 7). However, the chart also shows that interest rate margins have stabilised since the introduction of negative interest. Furthermore, current business figures from domestically focused banks suggest that they have absorbed the negative interest rate relatively well to date, despite growing pressure on their liability margins. Negative interest has thus so far not caused a further erosion of banks’ profitability. At first sight, this result seems remarkable. How can it be explained? First: Overall, negative interest has hitherto had no material direct cost implications for domestically focused banks. This is due to the fact that the SNB grants an exemption threshold before the negative interest rate is applied. In practice, negative interest is only  Page 6/10  charged on sight deposits that exceed 20 times the minimum reserve requirement. The sight deposits of most domestically focused banks are below or at this threshold.
Maja Kadievska-Vojnovik: Prospects of the Macedonian economy in 2015 Address by Ms Maja Kadievska-Vojnovik, Vice-Governor of the National Bank of the Republic of Macedonia, at the panel discussion on the “Prospects of the Macedonian economy in 2015”, organized by “Finance Think”, Skopje, 22 December 2014. *  *  *  Many thanks to Ana Mitreska, Manager of the Monetary Policy and Research Department, who participated in the preparation for the panel discussion on the “Prospects of the Macedonian economy in 2015”. Macedonian economy is small and open, as evident from the high and growing share of exports and imports in GDP (in the last four years the openness increased by almost 20 percentage points, reaching high 105% of GDP in 2013). Given this feature, it is undoubtedly exposed to global developments, especially developments in Europe, which is our key trading partner to which we export over 70% of the Macedonian products. Economies of this kind, by definition, are economies that absorb the shocks from external environment, with relatively limited opportunities for influence. In fact, the decrease of economic activity in 2009 and in 2012 (about 0.5% in both years) showed that the real sector of the economy cannot remain immune to the adverse demand shocks arising from Europe. Also, an important structural feature of our economy is its high import dependence of the export sector and its high energy dependence.

It is certainly true that financial sector productivity was probably over-stated in the run-up to the crisis. 44  Nonetheless, the subsequent sharp fall in  financial services productivity is plainly not the whole story. Of the 1.7 percentage point fall in the UK’s productivity growth since 2008, less than a third can be accounted for by financial services (Table 2). One sectoral story that could account for this generalised slowing is a reduced rate of factor reallocation between sectors. 45  Consistent with that hypothesis, the dispersion of productivity across industries has  increased significantly over the last 40 years. And the variance in sectoral productivity gaps, relative to pre-crisis trends, also increased sharply after the crisis (Chart 14). Nonetheless, this pickup in the dispersion of productivity across sectors is dwarfed by the increase in productivity dispersion within sectors (Chart 15). This suggests that any obstacles to the movement of resources within the economy have been more important within sectors than across them. With that in mind, it is firm-by-firm data to which we now turn. Firm-level productivity trends  A more granular lens still comes from looking at firm-by-firm productivity data. The OECD has recently undertaken extensive analysis using company-level data to assess global productivity patterns. 46  We draw  on two datasets for the UK that can prospectively shed light on firm-level trends. 43 44 45  See Billet and Schneider (2016) for an interactive tool for examining sectoral productivity trends. Haldane et al (2010).
In particular, the pace of growth in industrial production appears to have declined somewhat and some survey data have also indicated that there has been a certain degree of moderation. However, survey data remain at high levels and should be underpinned further by positive factors such as high employment growth. There is thus good reason to remain confident that strong growth will be sustained in the euro area. This picture is broadly supported by bond yields in the euro area. These have changed little over recent weeks. They continue to be compatible with market expectations of strong economic growth in the euro area in the medium term and with developments in consumer price inflation, which are in line with the ECB’s definition of price stability. We trust that this assessment will also increasingly be reflected in exchange rates. These have clearly lost touch with economic fundamentals and this is posing risks to the world economy. For the euro area in particular the continued undervaluation of the euro vis-à-vis other major currencies is putting upward pressure on import prices. We shall, therefore, monitor exchange rate developments closely. 1  BIS Review 97/2000  As regards developments in consumer prices, no additional euro area-wide data on the Harmonised Index of Consumer Prices (HICP) have become available since our last meeting. In September 2000 inflation rose to 2.8%, mainly as a result of higher energy prices.

Developments in the banking sector  Having discussed the relationship between banks and securities markets, I would now like to turn to developments within the banking sector. Competition in the banking markets is increasing. Banks face competition from other banks and financial institutions. As mentioned, there is also increasing competition from securities markets on both sides of the balance sheet. In addition, new operators are entering the market, either on their own  7  BIS Review 78/2000  or in cooperation with existing market operators. Distribution of financial services on the Internet is one example. Joint ventures between supermarkets and banks is another. Unless the banks adapt to this new environment, their long-term profitability might suffer. The restructuring of the banking industry can be viewed as an attempt to respond to these competitive pressures. 5.1  Cross-border integration  In the last few years we have experienced a wave of mergers and acquisitions in the financial industry. Internationally, consolidation within countries has been predominant. This indicates that reducing costs and strengthening market position are often the preferred strategies. However, the development of “national champions” might be a run-up to increased cross-border activity. The Nordic and Benelux countries are important exceptions to this international trend. The five largest Nordic banking groups - MeritaNordbanken and Unibank - which are now part of Nordic Baltic Holding - Handelsbanken, FöreningsSparbanken, Den Danske Bank and SEB - all define the Nordic region as their home market.