samchain/econo-pairs-v1 huggingface dataset:
Lars Heikensten: The Swedish economy and monetary policy Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at a seminar arranged by the Stockholm Chamber of Commerce and Veckans Affärer, Stockholm, 29 September 2003. *  *  *  Let me begin by thanking you for inviting me to speak at the seminar. As we all know, the Swedish people have voted to remain outside the single European currency. As regards monetary policy this means that we will carry on as before; price stability in Sweden will continue to be the focus of our efforts. We will be continuing to make forecasts of economic activity and inflation as a basis for our monetary policy decisions, and to publish inflation reports and minutes of monetary policy meetings explaining the reasons for these decisions. To some extent the outcome of the referendum must be interpreted as a vote of confidence for the stabilisation policy regime we have had over the past ten years. Important components of this have been a budgetary policy with an expenditure ceiling and surplus target, and a monetary policy with an inflation target. The changes we have made in stabilisation policy can only be described as a success. The budget balance has been turned around from a deficit of 12 per cent of GDP in 1993 to a substantial surplus at the beginning of 2000. Inflation has been stable and has largely been close to 2 per cent.

The gap between actual and potential growth does not appear to be completely closed, while the Riksbank and others perceive that this gap is well and truly closed in the USA. 5  BIS Review 89/2000  There are thus a few pieces of the puzzle remaining before we can feel convinced that Sweden is moving towards a US development: how large is the IT sector in the Swedish economy? How important is the IT sector to the rest of the Swedish economy? What does IT mean to productivity in Sweden? Unfortunately I have to say now that we know too little about this. We know that productivity in Sweden has developed unevenly during the 1990s - a disjointed period disturbed by a bank crisis, currency crisis and problems with public finances. Investment has developed more weakly than in the USA, although it has picked up in recent years. Capital intensity does not, therefore, explain the growth in productivity. What does become more evident, on the other hand, is a break in trend in that part of productivity attributed to technology and more efficient organisation, ie total factor productivity TFP (slide 5). This showed a weak and tentative development up to the mid-1990s, but has really picked up over the last five years. 5.
The expenditure ceiling for central government finances that sets limits for how much public activity can expand has the same effect. Many structural reforms that have improved the conditions for growth in the longer term have also been carried out during the past decades. The financial markets are wholly deregulated and the tax system is reformed so that it produces fewer distortions than before. During the 1990s, a process has been initiated which has strengthened competition in many areas. Transport, communication and energy have been deregulated. At the same time, EU membership and continued internationalisation have exposed the business sector to increased competition. However, there is still a great potential for deregulation. This applies, for instance, to many parts of service production where moreover growth prospects look favourable. A study recently carried out by the Competition Authority confirms that competition has improved during the 1990s, but also points to considerable competition deficiencies in many industries. Besides many industries in the service sector, this also applies, among others, to the construction industry where regulatory frameworks and building norms contribute to excluding competitors from other countries. The study is a follow-up of a study carried out in 1991. Its conclusion was that lack of competition and concomitant high prices was a feature of a number of the industries investigated.

Luis M Linde: International financial integration and fragmentation. Drivers and policy responses Opening remarks by Mr Luis M Linde, Governor of the Bank of Spain, at the Conference on “International financial integration and fragmentation. Drivers and policy responses”, organized by the Reinventing Bretton Woods Committee and the Bank of Spain, Madrid, 12 March 2013. *  *  *  Good morning to all. Buenos dias a todos y bienvenidos a Madrid: It is for me a pleasure to welcome you to Banco de España and to this Seminar on international financial integration. I would like to start by thanking Marc Uzan and the Reinventing Bretton Woods Committee for their fruitful cooperation in organizing an agenda that is indeed very promising. More than five years into the crisis, it is still hard to grasp the real magnitude of the changes that our financial systems are undergoing. In fact, we are still trying to restore the financial channels to support the growth of internal and external demand. While we perform such, so to say, “fire-fighter task”, it is not easy to take a step back and look at how the contours of our economic and financial landscape are evolving. But we can already distinguish some of the characteristics of the new scenario that is taking shape, and that will be our habitat as central bankers, regulators, financial intermediaries or analysts in the years to come.
The credit for this clear paradigm shift, elevating our economy into new heights, goes to our development strategy articulated under the “Mahinda Chintana: Vision for the Future”, which was first introduced in 2005 and then redesigned in 2010, aligning strategies to overcome the challenges in the post-conflict economy. Our dream of transforming Sri Lanka into the “Wonder of Asia” is an important topic that is being broadly discussed among the academia, international agencies and many Heads of Governments. Ladies and gentlemen, I hope most of you can remember our 60th Anniversary Oration Series held in 2010. There, one of the eminent speakers was Dr. Ngozi Okongo-Iweala, then Managing Director of the World Bank and former Finance Minister of Nigeria. She spoke on the topic “Becoming the Wonder of Asia: Accelerating the Inclusive Growth in Sri Lanka”. She had carefully studied the development plan of the Government, the “Mahinda Chintana: Vision for the Future” released in 2010, prepared just one year after the ending of the civil conflict. She was highly impressed about our development plan and explained the actions needed to make our vision a reality. She said, I quote, “It’s bold and ambitious. It’s good to be ambitious. It is the right time for Sri Lanka to think big”. She further said, “The vision is very clear and reminds us of a Japanese proverb ‘A vision without action is a day dream; action without a vision is a nightmare’”.

This kind of flexibility is explicitly provided for in the new SFBC capital regulation. The orders already issued by the SFBC relating to the reform of the capital regulation state that the big banks will not be required to comply with the higher risk-weighted capital ratio and the leverage ratio until 2013. However, if the situation on the capital markets or the individual earnings position of the big banks make it impossible to achieve the objectives by 2013, it may be possible to defer this date. The long time period allowed for implementation is crucial. It will prevent the new regulation from having a procyclical effect. In the short term, priority will clearly be devoted to managing the crisis. In the area of liquidity, the SFBC and the SNB are in the process of drawing up a new regulation. The basic objective is to obtain higher liquidity buffers that better reflect the great complexity of liquidity risks. When calculating liquidity requirements for various crisis scenarios, the authorities use internal model calculations by the banks. In order to ensure the comparability and transparency of the internal calculations, the new regime foresees certain standardisations. The conclusion of the project is scheduled for early 2009. Both regulatory measures – capital regulation and liquidity regulation – are in line with proposals made by the Financial Stability Forum and the G20 action plan. The reforms are also compatible with the strategy of the Basel Committee on Banking Supervision for implementing the lessons from the crisis.
This shock was accompanied by a strong tightening in the euro area’s financial conditions. Financial markets began to discount significant declines in economic activity and an escalation in public and private debt as various governments announced lockdown plans to counter the virus. That pushed interest rates on sovereign and corporate debt markets upwards, a movement which, had it not been curtailed in time, ran the risk of amplifying the fall in aggregate demand and, by extension, in inflation. Faced with these circumstances, on the ECB Governing Council we acted rapidly and forcefully. In particular, we announced on 18 March the launch of the pandemic emergency purchase programme (PEPP), which allows the ECB to purchase public and private sector bonds and other debt instruments. The PEPP had an initial envelope of € billion (6.6% of euro area GDP in 2020) and was scheduled to last until end-2020. It paved the way for a gradual easing of financing conditions which has continued to date. The targeted longerterm refinancing operations (TLTROs) for the banking sector were also very successful. For example, in the June 2020 operation, participating banks received a total of € trillion, a record for Eurosystem refinancing operations.

We will be joined by Agustín Carstens, the General Manager of the Bank for International Settlements, Alejandro Díaz de León, Governor of the Central Bank of Mexico (Banco de México), Liliana Rojas-Suárez, Chair of the Latin-American Committee for Financial Affairs and Director of the Initiative for Latin America of the Centre for Global Development, and Leonardo Villar, Governor of the Central Bank of Colombia (Banco de la República). Clearly, monetary policy has played – and continues to play – a crucial role in this crisis. And this has been so not only in the advanced economies, but also in the emerging ones, and specifically in Latin America. There, the region’s central banks cut their policy interest rates to record lows, and some even set in place asset purchase programmes for the first time in their history. This session of the conference will largely address the experience of the Latin American central banks in monetary policy management during the pandemic. 2  But let me take this opportunity to share with you some brief thoughts on the European Central Bank’s (ECB) monetary policy and its conduct during the pandemic. In many cases, they may also be applied to other countries.1 Firstly, allow me to highlight the importance of the ECB’s swift and forceful monetary policy response. As I said, the outbreak of COVID-19 in Europe in late February and early March 2020 prompted a health crisis that resulted in an economic shock on an unprecedented scale.
Money is then unable to fulfil its three functions and we are, in a way, back in the barter economy. 2 [10]  Money assumes trust Until fairly recently, the trust problem was resolved in two ways. The oldest method is by minting coins in precious metals. The coins then have a value in themselves. In Sweden, the value of metal appears to have been on average 85% of the coin's nominal value until around the 17th century. Trust in coins was also increased when the king, not only in Sweden, but in most countries, promised to accept his own coins as payment for tax collection and so on. In this way, the holder of a coin knew that the money could be used in the future at a particular value and that in a worst case scenario, if the king broke his promise, the coins had a metal value. If we look at the 17th century, an important financial innovation took place here in Stockholm: the first modern banknote was produced. The banknote was made of paper and thus had not metal value. On the other hand, the issuing bank, in this case Stockholms Banco, guaranteed that the holder would always be able to redeem the paper for precious metals. The trust was thus shifted from the precious metals in the coin to the party storing the precious metals. Banknotes assume that there is a broad trust in the issuing bank. The same applies of course to the money we have in our bank accounts.

Jointly with several countries in the region, we were positioned in the group of efficiency enhancers, meaning that reforms must be intensified to increase the growth efficiency and quality. Increasing the technological readiness was one of the identified priorities. Thus, in the last decade, the Macedonian productivity level has been staggering to around 40% of the level of advanced economies, such as German economy. This clearly points that if we want to grow at stronger pace and in a more sustainable, green and inclusive way, we need to continue intensively addressing the structural hurdles for the key long-term determinants of the growth: labour, capital and productivity. Let me focus on productivity. At this point, I think I can bring in the highlight of the latest Transition Report, i.e., innovation and digitalisation of the economies. The adoption of digital technologies can unleash productivity revival and possibly counteract some forces that act as drag on growth, such as adverse demographic and emigration trends that dampen the labour supply. What is the pace of digitalization of the Macedonian Economy? The new EBRD digitalization index points to a progress in both segments that are captured by the index – first, the preconditions for the use of digital technologies (digital infrastructure, skills, regulation, provision of government services), and second, the actual use of digital technologies by individuals and companies. The progress is particularly visible in the area of regulation and provision of government services, where score has more than doubled.
Then I will look at how monetary policy in Sweden is constructed in principle and conclude with some remarks on the current situation. In that Sweden will be outside the euro area initially, our economic policy will be constructed to fulfil the goals that are set up in Sweden. These goals are based in turn on our domestic priorities together with the commitments we have as a member of the European Union. To a large extent, Sweden’s priorities are the same as the EU’s: implement an economic policy constructed for stability and low inflation, thereby creating conditions for a good development of prosperity. Participation or otherwise in the monetary union does not affect the need for a balanced economic policy. Monetary policy aimed at price stability A political majority has stated that membership of the European exchange rate mechanism, ERM, is to be seen as a preliminary step towards participation in the monetary union. Thus there are reasons for supposing that the question of ERM membership will not be topical until the issue of future EMU participation has been resolved. Meanwhile, the Riksbank will continue to operate with a flexible exchange rate regime and an explicit price stability target for monetary policy. Here it should be underscored that experience to date indicates that this regime is working well. From the beginning of 1999 the Riksbank’s present independent position will be formally embedded in law.

This exceeds the typical life span of a bank exposure, as well as the typical 1/4  BIS central bankers' speeches  control and planning horizon of a financial institution. Risk management tools, models and scenarios are not designed to capture the long-term nature of climate-related risks.3 Nonetheless, real impacts are already being felt and we must develop the tools to assess and manage them. Second, climate change is complex—the impacts are uncertain, non-linear and hard-to-predict. Trusted credit models, for example, may prove less useful if the historical patterns of the frequency and severity of weather-related shocks become a poor guide to the distribution of future losses. Asset prices may move sharply, and unpredictably, as consensus views change and future impacts are priced today. Moreover, transition risks may stem from second-order, indirect effects like the impact on supply chains, sectoral shifts or worker productivity, which are inherently difficult to model and predict. Third, we face significant data gaps. Climate change is a global phenomenon, but risks should be assessed locally, which requires new data such as asset-specific, geo-spatial data. Borrower-specific analysis requires data, for example, on asset utilization and climate effects for particular industries at particular locations. Such granular data is currently limited and requires significant resources to acquire and process, but greater transparency about the physical location of assets will allow institutions to better assess exposures to at-risk borrowers or to specific geographic risks. As supervisors, we can consider climate-related risks in terms of both microprudential and macroprudential objectives.
I should say up front that the split between “global” and “domestic” sources of inflation is not, strictly speaking, an entirely clean one4. And I don’t really buy the argument one sometimes hears that monetary policy can’t do anything about the first – “imported” inflation, as it’s sometimes called – purely because it’s unable directly to affect the source of it. As the MPC cannot affect the global supply of oil, for example – this is how the argument goes – then it can’t do anything about an inflation caused by rising oil prices, even if that were to continue for a long time. That’s true, of course. But it’s also true of just about everything that might otherwise affect inflation, including the many domestic influences. Policy has no direct control over those, either. As long as you’ve got a floating exchange rate there’s nothing about being an open economy (and therefore subject to swings in import prices) that prevents monetary policy from controlling overall inflation, at least over the medium term. What being an open economy might mean, in the  Chart 6. Goods price inflation tends to be more volatile and less persistent than services inflation  shorter run, is that inflation is more volatile. That’s because prices of traded goods tend to be more volatile (Chart 6). And it’s here that the distinction is more significant. Take oil prices as an example.

In 2006, a single digit inflation level was attained. Although inflation rose to double digit levels at the end of 2008 owing to the effects of the global economic crisis, we have since seen it return to single digit levels;  iii. The financial sector has also recorded tremendous growth since the commencement of liberal economic and financial policies in the early 1990s; and  iv. Equally, positive developments have been registered in the payment systems. I must caution, though. that sustaining macroeconomic stability remains a key challenge in the face of limited resources, infrastructure and financial inclusion. Ladies and gentlemen, as you participate in this workshop, allow me to underscore the importance, we in Senior Management attach to capacity building programmes for all Bank employees. I am reliably informed that during the workshop you will cover a number of important topics including the following: i.  Self awareness;  ii. Time management;  iii. Action or goals required to achieve a vision;  iv. Emotional intelligence and values;  v.  Power to take action; and  vi. Ability to manage direction successfully. BIS Review 107/2010  1  I am fully aware that some of the topics that you will be dealing with may not be entirely new to you, but I firmly believe that they may be necessary for purposes of reinforcing what you already know. You are all therefore implored to take keen interest in all the topics if you are to realise the full benefit of the workshop.
Yet demandside factors, linked, above all, to the re-opening of the economy after the pandemic and the depreciation of the euro, have also played a role in the increase in inflation. Overall, it is estimated that close to 75% of the increase in euro area inflation in 2022 was caused by the direct and indirect effects of energy and food prices. However, the supply shocks and the depreciation of the euro have been passed through faster than in prior episodes, prompting inflationary pressures to spread. Thus, underlying inflation (i. e. excluding energy and food) reached an all-time high of 5.2% last December. These inflationary pressures have elicited a forceful response from the main central banks, which is causing global financial conditions to tighten significantly. The war has also fuelled uncertainty regarding the security of Europe's energy supply and even made a major escalation in global geopolitical tensions a more likely prospect. These four factors have brought about a considerable slowdown in activity globally and an across-the-board downward revision to the outlook for economic growth, despite the European economy proving more resilient than expected a few months ago, particularly the labour market, where the unemployment rate stands at record-low levels. Overall, the latest European Central Bank (ECB) projections forecast an additional slowdown in activity in the short term. However, assuming the energy market rebalances, uncertainty decreases and household real income improves – as inflation progressively decelerates –, activity is expected to gradually improve in the second half of the year.

Thus, euro area GDP is projected to grow at 0.5% in 2023 (3.4% in 2022), rising to rates close to 2% in 2024 and 2025. In tandem, the inflation projections have been successively revised upwards. After average inflation of 8.4% in 2022, the December 2022 Eurosystem projections forecast a much higher rate for 2023 (6.3%) than expected in September (5.5%) and June (3.5%). Inflation is then expected to fall gradually to an average of 3.4% in 2024 (compared with the September forecast of 2.3%) and of 2.3% in 2025. The upward revision to inflation for 2023 and 2024 is the result of recent inflation data reflecting, as I mentioned earlier, a stronger and more persistent inflationary episode than expected, the fiscal measures adopted to soften the impact of inflation on households and firms (which reduce inflation in the short term but increase it when they are rolled back) and the expectations, in line with the latest information, for stronger wage growth. The aforementioned macroeconomic context has also triggered a deterioration in financial stability. The combination of higher inflation and lower-than-expected economic growth, together with rising interest rates, is adversely affecting households' and firms' ability to pay, especially among the most vulnerable segments, which are characterised by low income levels, dependence on energy and food products and, in some cases, high indebtedness.