samchain/econo-pairs-v1 huggingface dataset:
The bond market instability that may be associated with market expectations about when capital account liberalisation will begin highlights the role of the capital controls in price formation. Domestic investors are in the same position as foreign investors in that awareness of impatient investors with frozen ISK assets erodes their confidence in the króna. It is important to open up an exit route for the most impatient among the impatient investors  8  BIS Review 138/2010  and create a framework within which the others can divert their liquid króna assets into longterm investment. Conclusion Is it possible to lift the capital controls without causing significant exchange rate instability? Yes, it is – if sufficient confidence has been built. At present, confidence is not present to a sufficient degree to support large steps in this direction. On the other hand, it is perfectly appropriate to begin preparatory work. The Icelandic authorities have made excellent progress in building confidence, although there is still much to be done. Investors’ concerns about the Treasury’s ability to fulfil its commitments should dissipate if the authorities adhere to the fiscal consolidation plans in the 2011 national budget and the estimates for the years to come. Soon it should emerge that Iceland is in many respects on a firmer footing than a number of other developed countries, many of which are faced with sizeable pension obligations in addition to large fiscal deficits and a heavy debt burden.

The remaining risk is due primarily to foreign banks’ króna deposits and the old banks’ deposits. However, before the controls on these deposits can be lifted in full, it is necessary to channel as much of this capital as possible into long-term investments and structure the winding-up of the old banks so as not to jeopardise exchange rate stability. Although conditions in the global financial markets are still difficult, they are better overall than they were a year ago, not to mention two years ago. But the fiscal problems faced by Greece, Ireland, Portugal, and Spain have contributed to investor flight to the relative safety of low-yielding markets. The Icelandic Government is faced with the intricate task of demonstrating that Iceland is a better target for investment than other indebted European countries. The progress made under the IMF programme is gradually laying the foundation for enhanced confidence, but the programme will only be successful if we adhere to its objectives. Funds lying in wait in the shelter of low-yielding markets will eventually seek more bountiful shores. When the flight to safety begins to subside and investors begin to seek out better returns, the Icelandic authorities must be ready to direct their attention to Iceland. BIS Review 138/2010  3  The existence of capital controls and their proposed removal represents a problem for both the Monetary Policy Committee and those who trade in the bond market.
The possibilities to provide the financial sector with loans in foreign currency and to be able to meet the increased international commitments have been reinforced by the swap agreements with the ECB and the Federal Reserve and the borrowing through the Swedish National Debt Office. BIS Review 160/2009  15  There are clearer signs that the world economy is beginning to recover, and the financial markets are gradually functioning better. As the financial sector stabilises, the need for extraordinary measures will decline. According to the forecast we made in October, the repo rate will probably need to begin being raised in autumn 2010 (Figure 16). Figure 16 Repo rate and repo rate path Per cent 5.0  5.0 Repo rate path Oktober  4.5  4.5  4.0  4.0  3.5  3.5  3.0  3.0  2.5  2.5  2.0  2.0  1.5  1.5  1.0  1.0  0.5  0.5 0.0  0.0 05  06  07  08  09  10  11  12  Source: The Riksbank. The other question with regard to phasing out the extraordinary measures is when and how we should phase out the loans to the banks. The Riksbank, unlike many other central banks, has not purchased any securities, which makes phasing out the support measures relatively uncomplicated. The dollar loans have already ceased, as it became cheaper for the banks to borrow dollars on the market than through the Riksbank.

The oil price was approxi mately NOK 500 per barrel at the beginning of 2008 Q4 and has varied bet ween NOK 260 and NOK 350 per barrel in 2009 3) Negative return in NOK. Negative return measured in international currency in brackets 4) Fall in housing wealth fro m August 2007 to 2008 Q4 (no minal ter ms) Sources: Ministry of Finance, Ministry of Trade and Industry, Folketrygdfondet and Norges Bank 5  6  BIS Review 53/2009  Return 1998 - 2008 Benchmark portfolio and actual portfolio. Indexed, 31 Dec1997=100 200 Benchmark portfolio Actual portfolio  175  150  125  100 98  99  00  01  02  03  04  05  06  07  08  09 6  Return on equities1998 - 2008 Benchmark portfolio and actual portfolio. Indexed, 31 Dec1997=100 Benchmark portfolio  200  Actual portfolio  175 150 125 100 75 98  99  00  01  02  03  04  05  06  07  08  09 7  BIS Review 53/2009  7  Return on fixed income instruments 1998 - 2008 Benchmark portfolio and actual portfolio. Indexed, 31 Dec1997=100 Benchmark portfolio  200  Actual portfolio  175 150 125 100 75 98  99  00  01  02  03  04  05  06  07  08  09 8  Credit ratings, fixed income portfolio1) Government Pension Fund - Global.
Pongpen Ruengvirayudh: Thailand in 2014 – recent developments and challenges ahead Keynote address by Ms Pongpen Ruengvirayudh, Deputy Governor for Monetary Stability of the Bank of Thailand, at the Thomson Reuters FX Community Forum 2014, Bangkok, 18 February 2014. *  *  *  Distinguished Guests, Ladies and Gentlemen, 1. It is a distinct pleasure to be back here again and I would like to thank Thomson Reuters for the invitation. To the winners of this year’s FX awards, I would like to congratulate you on your notable achievements. And to the rest of the market participants, I would like to express my thanks for your continuing contribution to the development of the Thai foreign exchange market. 2. Much has changed both at home and aboard since I gave an opening address at this event last year. On the external front, the US Federal Reserve’s planned scaling-down of its QE program has sparked turbulence in the emerging markets as investors continue to speculate on the Fed’s exact tapering timeline. On the domestic front, the absence of political solutions continues to subdue public and private spending, with unavoidable repercussions on overall growth outlook. Certainly, the interplay between these recent developments will have profound implications for the Thai economy to some extent going forward. For this reason, I would like to take this opportunity to share with you my views on these important developments and the potential challenges they pose to the Thai economy. 3. Let me start with the developments on the external front.

Its main objective is to manage assets and distribute wealth between generations. It also serves as a buffer against shocks: changes in petroleum revenues are absorbed by the Fund, not by the domestic economy. This reduces the need for structural adjustments and thus promotes exchange rate stability. The Fund invests only in foreign markets. Investments are spread between equities and fixed income instruments, as well as across countries. The net annual inflow to the Fund equals the net fiscal surplus plus the return on the Fund’s capital. In March 2001, a broad majority in the Norwegian parliament (the Storting) adopted a new set of guidelines for fiscal and monetary policy. According to the new guideline for fiscal policy, petroleum revenues are to be phased in approximately in pace with the expected real return on the Government Petroleum Fund. The guideline makes fiscal policy predictable and anchors it in a long-term strategy. It also makes policy robust to changes in oil prices and ensures that petroleum wealth will be of benefit both today and in the future. The guidelines imply that the structural non-oil budget deficit will equal 4 per cent of the total value of the Fund. The non-oil deficit is thus financed by the return on the Fund, ensuring both long-term fiscal balance and a continued phasing in of petroleum revenues. The use of petroleum revenues will accordingly increase as long as the Petroleum Fund is expanding. Fiscal policy will contribute to stimulating aggregate demand in the Norwegian economy every year.
Ongoing price squeeze in the non-durables sector So far we can say that the retail food sector is seeing a price squeeze following the arrival of new foreign players, and the current operators have begun to compete through low-price subsidiaries or jointly owned companies. This price squeeze appears to have been made possible by shrinking profit margins and low unit labour costs. The potential for price reductions is difficult to estimate, but comparisons with other countries as well as between different regions in Sweden indicate that there is scope for lower food prices in Sweden. For some time now the price squeeze has become increasingly noticeable to people in general in so far as we have more low-price shops to choose between and there is a wider range of cheap products in the traditional shops, but also through greater downward pressure on the prices of “ordinary” goods. It is difficult, however, to ascertain how long the price squeeze will continue and when it will have reached its full impact on the recorded CPI. Concluding remarks Globalisation and tougher competition have entailed effects both on price developments and on the labour market in Sweden and requires much in terms of the ability to adapt in the economy and in society on the whole. If the structural changes do not generate new employment quickly enough, the competition risks driving companies out of business and reducing the number of employees without  5  Source: International Tax Comparisons 2004, the Swedish Taxpayers Association.

6  See, e.g., the Swedish Competition Authority 2002a, 2002b and 2000:2. 7  Swedish Competition Authority, in cooperation with the Pensioners’ National Organisation. BIS Review 39/2005  5  this reduction being compensated for in other areas. We can also see how productivity in Sweden has grown stronger than what is usual at this stage of the business cycle. In the current debate there have been claims for some time that the Riksbank is responsible for the fact that employment has not risen faster, by not having lowered the policy rate earlier and by more, which the presently low inflation would have permitted. Like other forecasters, the Riksbank underestimated the effects on inflation of the increasingly strong global competition and productivity growth. It cannot be ruled out that employment could have been somewhat higher today if we had been able to better foresee the developments, but we are talking about small differences and far from the figures that have been mentioned in the debate. It is important to remember that the repo rate is unusually low today, which means that monetary policy is already expansionary and thus not an obstacle to consumption and investment. The main reasons behind the weak employment are rather to be found in supply factors that the Riksbank cannot influence; among other things, the incentives to start businesses and hire staff as well as the willingness of people to accept employment, move and look for new jobs.
In particular, despite the positive factors I have cited, the growth in manufacturing output has been only moderate, with the  BIS central bankers’ speeches  3  overall manufacturing capacity utilization rate still below its pre-recession level. Thus, outside of the energy intensive sectors, there still appears to be little near-term motivation for firms to invest in order to increase their productive capacity. Businesses seem to be waiting for stronger demand before they significantly increase their investment outlays. Thus, we have a second chicken-egg problem. On the trade side, the news is mixed. Although Japanese and European economic activity has picked up recently, the sustainability remains in question. Even as Europe emerges from its recession, growth is likely to be anemic at best over the next year, constrained by continued fiscal consolidation and tight credit conditions as their banks continue to deleverage. In Japan, the consumption tax is scheduled to increase significantly next year, which is likely to constrain domestic demand. Moreover, the recent improvement in Europe and Japan has been offset by slowing in some emerging market economies. In fact, some emerging market economies are under pressure because they are running large current account and trade deficits. Any forced correction among these countries on trade is likely to be a drag on global growth and on U.S. exports over the near term.

Then I would feel comfortable that the time had come to cut the pace of asset purchases. A few other points with respect to monetary policy are worth emphasizing following last week’s FOMC meeting. First, as I have noted in earlier remarks, a decision to reduce the rate of asset purchases is not a tightening of monetary policy. If we are purchasing additional securities we are simply adding accommodation at a slower pace. Second, any decision to cut the pace of asset purchases should not be taken as signaling an early exit from this period of unusually low short-term rates. We have established a threshold of 6.5 percent for the unemployment rate as long as we do not expect inflation to exceed  2  Federal Open Market Committee statement, September 18, 2013. 3  Federal Open Market Committee statement, September 18, 2013. 4  The 8.1 percent unemployment rate refers to the August 2012 unemployment rate that was the latest information available to the Committee at its September 2012 meeting. BIS central bankers’ speeches  5  2½ percent at a one-to-two year horizon and inflation expectations remain well-anchored. It is likely to take a considerable amount of time to reach the 6.5 percent unemployment rate threshold. Moreover, because the 6.5 percent unemployment rate is a threshold, and not a trigger, depending on the economic circumstances, we might wait a long time after we breach the threshold before we begin to raise our federal funds rate target.
However, according to the law, the Riksbank shall also support the objectives of general economic policy without setting aside the inflation target, in order to maintain sustainable growth and high employment. As the Swedish economy is approaching balance in many respects and the long-term inflation expectations accord with the target, the conditions for carrying out monetary policy are more favourable in many ways than before. This does not prevent there being many components of uncertainty now as well. Major structural changes are taking place in the world economy to some extent driven on by information technology. Deregulation, EU membership, and stiffer competition are other factors that can be assumed to have an effect on the economy’s mode of functioning, although it is difficult to say how and over what period. I am planning to take up some factors here in the risk scenario that must be taken into consideration in the ongoing evaluation of monetary policy. One issue concerns the extent to which we, inter alia as a consequence of the development of information technology, will see a higher productivity growth than we had expected and which, all other things being equal, would create scope for higher demand without threatening the inflation target. Another way of putting this question is whether we can expect to be on our way into something that is called “the new economy” in debate.

During the past four-year period, real wages have increased on average by almost 4% per year despite low nominal wage increases. This is to be compared with the fact that real wages only increased by a half per cent per year during the period of high inflation from 1975 to 1995 despite nominal wage increases during these years totalling 8% on average. The development clearly indicates that there has not been a positive correlation between high nominal wage increases and the development of real wages. High credibility for the goals of monetary policy has led to a reduction in inflation expectations. And stable inflation expectations per se reduce the risk for pay negotiations leading to higher wage increases than there is room for. Stable inflation expectations reduce the uncertainty of the parties as to what a nominal wage demand means for the real wage. This can in turn reduce the risk for wage spirals. Increased competition in globalised markets could also contribute to increased flexibility in wage formation. Globalised highly competitive commodity markets probably reduce the ability of businesses to compensate high wages by price increases. At the same time, it is probable that the strongly globalised capital market makes it more difficult for businesses to press down profit margins even in the short run. A conclusion is that businesses’ opposition to wage costs increases that cannot be sustained by productivity increases may have increased. Another change in the Swedish labour market is the tendency towards increased short-term employment.
Boards would now need to have regard to the interests of depositors and policyholders, the long term viability of the institution and to have in place reasonable standards of fair dealings in the oversight of the implementation of the business and risk strategies of the institution. The statutory duties would also include an explicit duty to ensure and oversee the effective design and implementation of a sound control environment. Work has also commenced to update and streamline the current regulatory guidelines on corporate governance for banks, insurers and takaful operators with a view to reduce the duplication across different standards and to sharpen the focus on the overall responsibility of the board for risk and control. Existing prescriptive rules would give way to broader principles of behaviour. The review will also better align the regulatory framework with the current supervisory approach. A thematic review of the remuneration practices in the financial sector is also planned to take into account how it might influence risk-taking behaviours. Also in train is a review of the supervisory process for assessing the suitability of persons that can serve on boards of financial institutions. This review will leverage on the work by the FIDE Forum. Looking further ahead, the Financial Sector Blueprint sets out additional recommendations to further strengthen incentives and enablers for sound governance and risk management standards in anticipation of the growing complexities of our financial landscape. BIS central bankers’ speeches  3  Let me draw my remarks to a close.

This report was originally intended to explain in detail what EU membership and participation in the Economic and Monetary Union (EMU) would entail as regards exchange rate and monetary policy, and to analyse the pros and cons of Iceland’s membership in the EMU. In 1997, the Central Bank of Iceland published a similar report, entitled The Economic and Monetary Union of the European Union – EMU (available in Icelandic). Much has changed since then. During the decade and a half of the EMU’s existence, it experienced success for much of the period, followed by the current severe crisis. Iceland faces a much more decisive assessment of the pros and cons of EMU membership than it did in 1997. As a result, it is timely to issue a new report on this topic. This publication is considerably broader in scope than the earlier one, as it also contains an analysis of the advantages and disadvantages of other options, including an exchange rate peg within a defined fluctuation band, a currency board, or adoption of another currency. Some of these options have been the focus of recent public discussion as alternatives to euro area membership through EU accession or the current flexible exchange rate regime. Consequently, these options should be analysed just as other possible solutions are. The possibility of retaining a flexible exchange rate regime while making relevant changes to the economic policy and financial regulatory framework based on recent experience was discussed in the Central Bank’s 2010 report entitled Monetary policy in Iceland after capital controls.
Hillman A L and O Swank: (2000): Why political culture should be in lexicon of economics, European Journal of Political Economy, Vol. 16, No.1, pp. 1-4. Kornai, J (2000): What the Change of System From Socialism to Capitalism Does and Does Not Mean. Journal of Economic Perspectives, Vol. 14, No. 1. pp. 27-42. Larosière, J de (1999): Transition Economies. Fifth Dubrovnik Conference on Transition Economies, June 1999. Lucas, R E (1993): Making a Miracle. Econometrica, Vol. 61. No. 2, pp. 251-272. Škreb, M (1998): Economic Transition in Croatia: An Insider’s View. SAIS Review. Vol. XVIII, No. 2., pp. 71-88. Wolf, M (2000): Kicking down growth’s ladder. Financial Times, April 12, p. 15. Wyplosz, C (2000): Ten Years of Transformation: Macroeconomic Lessons. The World Bank. Policy Research Working Paper 2288, February. 9  BIS Review 43/2000

Also, all the participants would benefit from getting a view from the Academia on the implications for the Economics of the lack of diversity. Gender, of course, is one important aspect of diversity, but this webinar also brings together studies from authors affiliated to institutions all over the world. This geographical diversity would enrich the discussion and expand the menu of possible action points. The conclusions we may reach over the course of these two days will certainly boost the actions to be carried out by our institutions which should be expected to lead by example 1  not only within the financial sector but also, as a public administration, fulfilling our duty to serve public interest. Banco de España has already committed different internal actions. Among others we have created a group of D&I Ambassadors, representing all the business areas together with HR -of which I am proud to be the Sponsor-. This group has the purpose of enhancing diversity and inclusion consciousness and helping to step up specific measures across the organization.