samchain/econo-pairs-v1 huggingface dataset:
That is a nebulous concept, but one that central bankers have come to think of as intimately tied up with private sector credit creation (essentially bank lending) across borders.15 When cross-currency carry trades drive down risk premia, that pushes up foreign asset prices, and can fuel foreign credit growth, through a process that is akin to an  10  This channel is distinct from the standard channels working through the effect of a lower risk free rate on asset prices, and so on wealth and the availability of credit, eg the so-called “financial accelerator” of Bernanke, Gertler & Gilchrist. On the “risk channel” see, for example, Borio and Zhu (2008), “Capital regulation, risktaking and monetary policy ; a missing link in the transmission?”  11  See Annex 2  12  See “Money and the Economy: Issues in Monetary Analysis (Raffaele Mattiolo Lectures”, Brunner and Meltzer (1987). It was also discussed by Governor King in “Challenges for Monetary Policy: New and Old” (1999), discussing the operation of monetary policy when interest rates are low; and in “No money, no inflation – the role of money in the economy” (2002). 13  See “Quantitative Easing: An Inflation Report”, Bean (2009); and “The State of the Markets”, Tucker (2009). 14  See, for example, “Carry trades and risk”, Burnside (2011); Common Risk Factors in Currency Markets, Lustig et al (2011); Crash-neutral currency carry trades, Jurek (2009). 15  See CGFS (2009), “Global Liquidity – concept, measurement and policy implications”.

For me, the most instructive chart in Reinhart and Rogoff’s already famous book is the one showing that truly big crises are typically preceded by financial liberalisation (Chart 8)23. This reminds me of what was said when the UK’s Secondary Banking crisis followed not so shortly after 1971’s Competition and Credit Control: “we had the competition but forgot about the control”. We should not sacrifice the gains to global trade (and to freedom) from the free flow of capital across borders and the capacity to innovate. But we obviously do need to be better equipped to contain excess and to ensure resilience as economic and financial conditions change. That is what macroprudential policy is about. 22  The term actually seems to originate in a late-70s Bank of England paper to the BIS about risks to stability from the recycling of petro dollars. See “The term ‘macroprudential’: origins and evolution”, Clement (2010). 23  See Figure 3 of Reinhart and Rogoff (2008), “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises”. 8  BIS central bankers’ speeches  One can think about this in a number of ways. And, consistent with my themes this evening, they revolve around risk premia and balance sheets. The Governor of the Riksbank, Stefan Ingves, has suggested that whereas monetary policy sets the path of the (short-term) risk-free rate, macroprudential policy (in its cyclical mode) will work on credit and risk premia.
The Role of Sentiment Other than perception, the ringgit is also driven by sentiments, mostly adverse. These are commonly cited through the various sentiment indices, for example as measured by MasterCard or the Financial Times. Sentiments are shaped over time by analysts and interestingly, there are three factors that consistently drive market sentiment. One of these is the high level of external debt, frequently cited by international rating 3/7  BIS central bankers' speeches  agencies and analysts alike. The discussion on external debt has driven market sentiment negatively as it is being touted as a source of vulnerability. The fact is that some of these analysis ignore the evidence of more granular data and worse, only skim the surface without the discipline to deep dive into the available data; Market sentiments also play out based on the government financial position and the issue of governance. Sentiments can be easily affected if new issues or indicators are published on the Government’s financial position. This is further exacerbated by the perceived governance challenges that give rise to further negativity; Market sentiment is also affected by a string of negative news headlines. While there were a number of news headlines on ringgit this year, about 30% of the articles by foreign and local media were written in a negative light or perspective. This make it difficult to ensure a realistic view of the country and hence on the ringgit. Realities and Facts Let’s examine these perceptions, or rather misperceptions.

With the influence of external factors squashed, the ringgit is now priced more efficiently and increasingly more reflective of Malaysia’s strong fundamentals. Nevertheless, questions remain as to why the ringgit is far from reflecting its fair value. Numerous research pieces by analysts based on real effective exchange rates, have in fact, indicated that the ringgit is one of the most undervalued emerging market currencies. Despite 1/7  BIS central bankers' speeches  strong GDP data for the first three quarters and better-than-expected exports performance in 2017, the ringgit exchange rate movements have remained lethargic, with flows and sentiments still driven by external factors and foreign players. At times it appears as if domestic traders were playing second fiddle in own their market. It is time for our traders to price the ringgit accordingly, and play their rightful role in their home market. The ringgit should reflect economic fundamentals and emerging data. It is time for our local traders to be brave, stand up and be counted. This reminds me of a saying by Abraham Lincoln ‘Whatever you are, be a good one’. Part II – What drives the level of the exchange rate? Granted, the ringgit does, to some extent, reflect Malaysia’s economic fundamentals. The fact that the ringgit’s recent recovery coincided with strong domestic data releases suggests that. Nevertheless, in a global financial market that is driven by short-term developments, the ringgit exchange rate can veer in unexpected directions and reach levels that are far from reflecting economic realities.
Riksbank's asset holdings compared with the outstanding stock on the market SEK billion  Note. The figure shows the Riksbank’s holdings in government bonds, covered bonds, municipal bonds, treasury bills (SSVX) and corporate bonds issued in SEK, compared with the total outstanding stock for each type of security in the Swedish market of as at 31/12/2021. The holding as a share of the outstanding stock has been rounded to the nearest percentage point. Sources: Statistics Sweden and the Riksbank. 15 [19]  Diagram 4. Policy rates and expectations according to forward pricing Per cent  Note. Forward rates describe market-based expectations of the overnight rate, which do not always correspond to the policy rate. Broken lines represent forward rates 5 May 2022. For the euro area, the EONIA overnight rate was replaced by ESTR as the underlying rate in forward contracts on 1 January 2022. The figure therefore shows forward contracts with ESTR as underlying rate. Sources: Sveriges Riksbank. Diagram 5. Sequence of measures to make monetary policy less expansionary  Policy rate  Assets  Reinvestments 1 3 QE  2  QT sales  time  16 [19]  Diagram 6. Perspectives on the Riksbank’s balance sheet Per cent  Note. The Riksbank's balance sheet as a percentage of GDP and financial assets respectively in Sweden. Sources: Statistics Sweden and the Riksbank. Diagram 7. CPIF inflation in Sweden Annual percentage change  Note. Unbroken line refers to outcome, broken line represents the Riksbank’s forecast. Sources: Statistics Sweden and the Riksbank.

However, in view of the risk exposures and the prevailing uncertainties in the economic environment, it is crucial that the big banks build up a sufficient base of loss-absorbing capital as swiftly as possible during this transition period. After adjusting for the not fully loss-absorbing components, the big banks’ remaining capital buffers are still thin in light of the aforementioned risks. Despite some improvement, leverage for both UBS and Credit Suisse is still high by international standards. Taking only fully loss-absorbing capital into account, the average capital ratio of both big banks amounted to less than 2% of total assets. Against this background, both big banks have already made major strides towards expanding their loss-absorbing capital base. To this end, Credit Suisse issued contingent convertible bonds (CoCos), while UBS retained its earnings. These important first steps have already significantly strengthened the big banks’ loss-absorbing capital base. They also show that the big banks should be in a good position to build up the necessary, additional capital buffer. Situation of domestically focused banks Allow me now to discuss the situation of banks with a domestic focus. The capitalisation of domestically focused banks was almost unchanged in comparison to 2009. The short but sharp recession in Switzerland in 2009 did not have any noticeable impact last year either. Write-downs and provisions were at a historical low. In a long-term comparison, profits remained at a high level overall.
In particular, it would be needed in the event that citizens become reluctant to use cash as they go digital. This is not the situation we face today: cash is still the most common way of making retail payments in the euro area. However, its role as a payment instrument is diminishing – in some countries rapidly so – as consumers are increasingly paying electronically:10 as a proportion of all physical retail payments, cash payments decreased from 79% in 2016 to 73% in 2019. This trend has accelerated during the pandemic – with a vast majority of consumers expecting to continue using digital payments as often as they do now, or even to use them more often in the future.11 And because of this trend, we may see a further increase in the uptake of international card schemes and solutions such as payment wallets and apps developed by large technology firms. A digital euro would ensure that even in a situation where there is rapid digitalisation in the world of payments, sovereign money remains at the core of the European payment system. This would contribute to financial inclusion. It would also shield us from the risk that a private or public digital means of payment issued and controlled from outside the euro area could largely displace existing domestic means of payment. Such a development would raise regulatory and financial stability concerns and could even put Europe’s monetary and financial sovereignty at risk. How could a digital euro be introduced?

Firstly, it is a fact that SMEs present higher credit risk than well-structured corporate entities. SMEs may not have proper accounting records, may have severe governance issues which undermine accountability, have poor access to markets, poor skill levels including financial illiteracy by promoters, lack collateral which the lender can rely on in the event of failure, may not even exist in an appropriate legal form and even the assessment of the viability of a project might be difficult. Lending to SMEs can be a lenders nightmare for bankers. But it is also true that banks which are structured to deal with corporates are risk averse and inflexible when they deal with SMEs. Often when they bring inappropriate risk assessment tools, they may focus too much on collateral rather than project viability. They may even regard SME financing as peripheral to their business. Because of their limited knowledge of SMEs, they experience failure which itself reinforces the notion that SMEs are risky. What we want are financing institutions that are structured to respond to the unique characteristics of SMEs. Specialised SME lending institutions are more likely to handle the risk problem presented by SMEs as a challenge to be overcome with appropriate products and credit risk management strategies and not as a basis for inaction or avoiding the sector altogether. In short, lending strategies which ensure success with corporates do not necessarily ensure similar success with SMEs. Appropriate SME financing institutions must at the very least make lending to SMEs the core business.
Knock-on effects from the crisis that originated in Asia were included from an early stage in the Riksbank’s spectrum of risks. Early in 1998, it was judged that they would be countered by other factors, not least a good development of domestic demand. In June, however, when price tendencies proved to be more subdued than expected earlier, the repo rate was lowered by 0.25 percentage points. During the autumn, increasingly clear signs of an international slowdown were accentuated by growing turbulence in financial markets. The Riksbank considered that the effects on the BIS Review 9/1999  –4–  Swedish economy and the path of inflation would be of a magnitude that warranted an easing of the monetary stance. In November the repo rate was accordingly lowered in two steps from 4.10 to 3.60 per cent. In the December Inflation Report the assessment was still that in one to two years time, both CPI and underlying inflation would be below the Riksbank’s price stability target of 2 per cent. On December 16th the repo rate was therefore lowered by another 0.20 percentage points to 3.40 per cent. With this cut, the monetary stance was considered to be well balanced; responsibility for monetary policy’s future formulation was left to the Riksbank’s new Executive Board, which would be taking over in the new year. Since the publication of the December Report, international economic activity can hardly be said to have changed appreciably for the better.

Returns have fluctuated considerably since the Petroleum Fund made its first investments in equity markets in 1998. Since 1998, the first whole year the Petroleum Fund invested in equities, the annual excess return from active management has been close to half a percentage point. The corresponding krone amount is about NOK 18 billion. Petroleum revenues generally involve substantial, but uneven currency inflows into Norway. The currency flows might have resulted in a strong krone and large variations in the exchange rate. The Petroleum Fund acts as a buffer and dampens the wide fluctuations in the krone exchange rate that petroleum revenues might otherwise have generated. An increase in petroleum revenues will result in higher capital outflows from the Petroleum Fund. Operators in the foreign exchange market may at times have a tendency to underestimate the Fund’s function as a stabilisation mechanism. The capital outflows through the Fund contribute to both curbing the appreciation of the krone and maintaining its stability. Since the summer of 2004, the krone exchange rate has appreciated by about 5 per cent, as measured by the trade-weighted exchange rate index (TWI). The chart shows the krone exchange rate and oil spot prices from 1999. The chart indicates that there is no clear relationship between the nominal exchange rate and oil spot prices over time. An appreciation of the krone has accompanied higher oil prices in some periods and lower oil prices in others. The correlation between oil prices and the nominal exchange rate has therefore varied over time.
Tharman Shanmugaratnam: Opportunities in Asia for long-term growth and a look at the role of Singapore’s local banks Speech by Mr Tharman Shanmugaratnam, Chairman of the Monetary Authority of Singapore, at the Official Inauguration of DBS Asia Central, Marina Bay Financial Centre (MBFC) Tower 3, Singapore, 17 October 2012. *  *  *  Mr Peter Seah Lim Huat, Chairman, DBS Bank Limited Mr Piyush Gupta, Chief Executive Officer, DBS Bank Limited Distinguished Guests, 1. It is a real pleasure to be here with you for the official opening of DBS’ new headquarters at the MBFC – DBS Asia Central. 2. Established in 1968 as the Development Bank of Singapore, DBS played a key role in helping to drive Singapore’s industrialization efforts. As Singapore moved to develop into a key financial centre in the Asian timezone, DBS also evolved into a full-fledged financial services group, offering a comprehensive range of products and services. 3. Over the last few decades, DBS has also expanded strongly into Asia, and has established a strong regional footprint. Apart from its key markets in Singapore and Hong Kong, DBS is strengthening its franchise in Southeast Asia (SEA), China, India and Taiwan. Today, with its network spanning 12 markets in Asia, DBS is not only a leading bank in Asia Pacific but also ranked by some as one of the strongest banks in Asia1. Leveraging on opportunities in Asia to anchor long term growth 4. The global economy continues to face many risks and uncertainties.

The current MBFC location has allowed DBS to introduce a number of initiatives, including its multi-market, multi-year strategic occupancy programme, which aims to consolidate relevant teams under one roof to facilitate greater efficiency and productivity, enabling the bank to be even more responsive to customer’s needs. I also understand that DBS’ new HQ is designed to foster a strong sense of community and collaboration amongst DBS’ staff. There are spacious social hubs on each floor connecting the workstations and meeting areas to encourage staff interaction, and all staff get to enjoy 180 degree view of the Marina Bay area (not just senior managers). Importantly, such innovative spatial design is complemented by responsive workplace programmes such as flexi-work hours to promote work-life balance for DBS’ staff. Closing remarks 12. Let me again extend my heartiest congratulations to DBS Bank on the opening of your new headquarters. I wish DBS Bank success as you continue to play an active role in the local and Asian banking scene. BIS central bankers’ speeches  3
In a situation such as the present one, in which the flatness of private spending is largely a result of uncertainty about the future course of the economy, demand-side policies should be acknowledged to be of limited effectiveness in countering the weaknesses of output growth. When agents view the future with some mistrust, measures that are intended to be expansionary and geared to increasing activity in the short term may well prove counter-productive if they are perceived as unsustainable or even harmful in the medium term. From this standpoint, it is vital for monetary policy conduct that the firmness of the central bank’s commitment to price stability be reiterated, as an essential requirement for ensuring a higher level of well-being in the medium term. The ECB’s actions have been consistent with this analysis: it has squared the reduction of interest rates to their lowest levels in recent decades, in step with the sluggish growth, with its drive to keep - through its actions and its communications policy - inflation expectations in line with its own definition of the objective of monetary policy. The medium and long-term view is likewise essential for orienting budgetary policy. In the current economic conditions the Annual Report describes, discretionary measures entailing a significant deterioration in budgetary balances cannot be expected to have generalised expansionary effects on activity. This is because such measures may inhibit private spending and tend to exacerbate the challenges posed by population ageing.

In November 2000, the ECOFIN Council – bringing together the Economics and Finance ministers of the EU Member States – formally adopted the position that unilateral euroisation is not compatible with the Treaty and cannot be a way to bypass the convergence process foreseen by the Treaty for the adoption of the euro. The ECB fully subscribes to this position of the EU Council. Allowing a Member State or a future Member State to take a “short-cut” to the euro, rather than following the official roadmap, could be detrimental to that country and possibly the euro area. Because 1.  a sustainable convergence that is conducive to the maintenance of price stability and the coherence of the euro area may not have been achieved. 2. It would breach the principle of equal treatment. 3. It would not ensure that the country in question pursues the right policies to thrive under the euro. This raises the question of the approach to be taken towards countries, which would in principle qualify for EU membership (Art 49 TEU) but do not formally aspire to join the EU and are thus not candidate countries. This is the category of countries like Iceland. Here, both the rule of law and the principle of equal treatment provide answers. 1. The Treaty does not provide a framework for euro adoption by non-candidate countries.
So growth in capital per employee was slower from the mid 1970s, and new technology was not employed to the same extent as before. Such a dramatic change has to have consequences. This is evident in the bottom curve showing the current account, which was almost always in deficit during the 20 years after 1975 because Sweden’s saving declined even more than investment. It was only during the first half of the 1990s that a surplus was restored, as a result of a weaker krona, higher capital formation and even higher saving. Figure 1. Saving, investment(net) and the current account, as percentage of disposible income 20  15  10  5  0  -5 1950 52 54 56 58 1960 62 64 66 68 1970 72 74 76 78 1980 82 84 86 88 1990 92 94 96 98 2000 02 Saving  Investment (net)  Current account  Source: Associate Professor Lennart Berg, Uppsala University  BIS Review 56/2003  3  In order to illustrate the importance of the lower capital formation, I have compiled productivity data from the period when the marked change took place (see Table 1). In the 1980s, the lower capital growth had been established. Capital per employee - capital intensity - had been more than halved both in industry and in the business sector as a whole. Productivity growth followed this trend and was more than halved from the high growth levels of the 1960s.

Basic industries also outperformed other industry in terms of productivity, with vigorous productivity growth in particular during the second half of the 1980s. In the iron and steel industry, for example, productivity rose sharply between 1977 and 1984, reflecting extensive rationalisation measures especially as regards the manufacture of merchant steel. As I said earlier, Swedish capital formation as a percentage of GDP was halved in the mid 1970s. Thus, factors other than a good supply of cheap real capital have been behind the favourable development of basic industries. Our country has specialised in capital-intensive process industry based on inexpensive energy and a good supply of raw materials, notably wood. Thus, the driving force has mainly been the supply of energy and raw materials rather than cheap real capital. Another important factor is growth in total factor productivity. This is a result of technological progress and essentially measures how much production can rise during a given period without needing to increase labour and capital. Total factor productivity depends in turn on how many resources the country and industry invest in R&D. In 12 of 19 industrial sectors, R&D intensity is higher in Sweden than in the other OECD countries. Relative R&D intensity is particularly high - that is R&D compared with corresponding sectors in other countries - in basic industries, i.e. in the steel and paper industry. Besides a cheap supply of energy and raw materials, the success of basic industries is also due to the relatively sharp focus on R&D compared with other countries.