samchain/econo-pairs-v1 huggingface dataset:
Public demand has also stimulated the economy. Chart: Relative labour costs The Norwegian krone has depreciated markedly in the wake of the fall in oil prices and is now approximately 15 percent weaker than two years ago. The depreciation has led to a marked improvement in Norwegian firms’ cost competitiveness. The main responsibility for developments in relative wages lies with the social partners. If the improvement in competitiveness is to be sustained, Norwegian labour costs must develop more in line with the labour costs of our trading partners. This will make it easier to build up a larger non-oil tradable sector. The krone depreciation has helped start the restructuring process in the Norwegian economy. After a decade of higher growth in imports than mainland exports, export growth has recently outpaced import growth. The tourism industry is one of a number of industries experiencing an upswing. Many export firms have announced plans to increase investments in 2016, which will provide opportunities for an increase in production and market shares. Chart: Unemployment Employment in Norway has been high for many years. Compared with other countries, unemployment has been low. In the competition for labour resources, oil production and oil service companies have drawn the longest straw. The situation has now changed. Unemployment has increased over the past year. Regions with close links to the oil industry, 2  BIS central bankers’ speeches  which have benefitted from the oil boom for many years, are being hit hard. Although employment continued to rise last year, employment growth has slowed.

Total mainland activity increased by 1 percent between 2014 and 2015. This is the lowest pace of economic growth since 2009. Growth may edge down even further this year before gradually picking up again. Growth is being restrained by the marked fall in petroleum investment and weak growth in other business investment, while it is being supported by household consumption, exports of traditional goods and public demand. The depreciation of the krone is also supporting inflation. The rise in prices for imported goods has increased over the past year, and the year-on-year rise in the consumer price index has been just over 3 percent in recent months. Inflation may be dampened ahead by the decline in wage growth and as the effects of the krone depreciation unwind. Chart: Key policy rate The key policy rate was lowered to 0.5 percent at the March monetary policy meeting. According to the Executive Board’s assessment of the outlook in March, the key policy rate may be reduced further in the course of the year. The key policy rate was kept unchanged at the monetary policy meeting in May. There is no crisis in the Norwegian economy, but we are facing restructuring. Restructuring must start in the business sector. Activity in the oil sector will be reduced to a considerably lower level. Other industries must emerge and provide the basis for new jobs. Economic policy can only facilitate this process. Restructuring takes time. Monetary policy is the first line of defence in managing the economy.
We have therefore moved further and further away from capital-intensive production to production that is more dependent on human capital than heavy plant and machinery. Another factor to take into account is the decline in housing construction, which has also contributed to the drop in the figures for capital formation. However, housing construction does not have the same importance for productivity growth as industrial investment, for example. This means that the dramatic decline in capital formation does not have to imply an equivalent fall in productivity growth. Nevertheless, I still have the impression that we are focusing less on capital formation than before. This is indicated by the fact that structural change is currently relatively limited. 4  BIS Review 56/2003  The labour supply Permit me now to discuss the other component that determines a country’s long-term growth capacity besides productivity, namely the labour supply. This is determined by the number of people in work and the number of hours they work. The number of hours worked rose during the years after the crisis at the beginning of the 1990s. This was partly due to greater demand for labour, to a rise in the working age population (20-64 years) and relatively low numbers on sick leave. The trend in the number of hours worked has been broken in recent years, however. This is because the total number of people on sick leave has risen in Sweden since 1997-1998.

Nevertheless, a recovering tourism industry, decreasing unemployment, and EU funding payments all help to boost activity and limit, to some extent, output loss. More specifically the Euro area quarterly economic growth reached 0.8 percent in the second quarter, following a 0.7 percent rise in the first quarter. Even though these growth rates are below the rates expected before the start of the war, the 0.8%, growth is still the strongest performance in three quarters, prompted by the easing of Covid restrictions and the good summer tourism season in southern countries. The impact from war developments is expected to be shown in the data of the fourth quarter of 2022 and the first half of 2023. This outlook is reflected in the latest ECB projections for economic growth, which have been revised down markedly for the remainder of the current year and throughout 2023. The euro area economy is now expected to grow by 3.1 percent in 2022, 0.9 percent in 2023 and 1.9 percent in 2024, compared to the December 2021 projections of 4,2 percent, 2,9 percent and 1,6 percent respectively. Harmonized inflation rose to a high of 9.1 percent in August, up from 8.9 percent in July. For the period January-August as a whole, inflation stood at 7,6  1/6  BIS - Central bankers' speeches  percent.
In the situation that has arisen, why doesn’t the Riksbank lower the repo rate? After all, other central banks have done so. BIS Review 83/1998  -4-  The answer is that our assessment includes all the factors which have a bearing on developments in Sweden and future inflation. To date in 1998, economic development in Sweden has been very good. At present, moreover, it is very difficult to foresee the krona’s future path. As I mentioned earlier, the economic fundamentals point to a definite appreciation. If that is not sufficiently marked, however, export production will be strongly stimulated. It is difficult to tell whether that in turn would alter inflation prospects for the period of twelve to twenty-four months that is relevant for monetary policy. That is something to which we will be returning when the international picture becomes clearer. It is also a consideration that has to be weighed in with the outlook for the domestic economy. A repo rate cut is not topical in Sweden at present. How did it happen? Why is it that the unrest in Southeast Asia and Russia, with some tendencies to spread to Latin America, is beginning to affect the financial system in the industrialised countries? What has gone wrong in the global financial system? There is no simple answer to these questions. But let me briefly mention a couple of factors.

In the work that has begun on a new architecture for the financial system, measures of three kinds have been singled out as particularly important: more transparent accounting for financial institutions as well as for governments and central banks; a greater involvement of private investors in crisis management; and a reinforcement of the financial system. For work on the third category, there are in principle two different approaches or a combination of these. One involves tightening up the supervision of banks and the other the introduction of higher capital standards to raise the proportion of equity capital in the bank sector. My guess is that the future work to create a more functional banking system will be conducted along both these approaches. In the prevailing situation it is important that the international banks do not become unduly cautious. Banks should take risks but their risk-taking should be properly managed. It would be unfortunate if more countries were to start imposing restrictions on capital exports. That would exacerbate the present state of affairs. Similarly, it would be directly counterproductive to introduce some type of turnover tax, as proposed earlier by Professor James Tobin. That was tried out in Sweden in the late 1980s and simply resulted in trading being transferred to other countries. Even if agreements were to be reached between many countries, there would always be countries that refrained from joining the arrangement. Moreover, the poorer liquidity that would accompany turnover taxes might actually impair the workings of some financial markets.
The Bank was left with egg on its face, but neither the City nor the economy were scrambled. That was probably as much by good luck as design. At the time, the macro-monetary and financial stability arms of the Bank rarely crossed or co-ordinated. The monetary policy side dealt with the economy, at a macro level. The financial stability side dealt with financial firms, at a micro level. One had a bird’s eye view, 11 12  Bailey (2020). See King and Plosser (1985), and Leeper (1991). 9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  the other a worm’s eye view. But the bird and the worm rarely socialised. The Bank’s macro-economic brain was largely detached from its micro-supervisory hands. You needed only to visit the Bank’s restaurant building in the early 1990s to spot this difference. On the ground floor was both a wine bar and a pub. If you visited the pub on a Friday you would spot the economists, probably in knitwear. If you visited the wine bar you would see the bank supervisors, probably in tweed. Beer and wine do not mix and nor did the beer and wine-drinkers. It was probably just as well there were no systemic crises at the time requiring these two tribes to co-ordinate their analysis and actions. The bank failures of the 1980s and 1990s contributed to the decision to strip the Bank of responsibility for supervising financial firms, soon after monetary policy independence. The two decisions were linked.

At the same time, inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2%. Broadly in line with this assessment, the December 2013 Eurosystem staff macroeconomic projections for the euro area foresee annual HICP inflation at 1.4% in 2013, at 1.1% in 2014 and at 1.3% in 2015. In comparison with the September 2013 ECB staff macroeconomic projections, the projection for inflation for 2013 has been revised downwards by 0.1 percentage point and for 2014 it has been revised downwards by 0.2 percentage point. The risks to the outlook for price developments are seen to be broadly balanced over the medium term. Upside risks relate to higher commodity prices and stronger than expected increases in administered prices and indirect taxes, while downside risks stem from weaker than expected economic activity. Concerning the staff macroeconomic projections, let me inform you that the Governing Council has decided to publish more details as of December 2013. You will receive this material today after the press conference. Turning to the monetary analysis, data for October confirm the assessment of subdued underlying growth in broad money (M3) and credit. Annual growth in M3 moderated to 1.4% in October, from 2.0% in September. This moderation was partly related to a base effect. Annual growth in M1 remained strong at 6.6%, reflecting a preference for liquidity, although it was below the peak of 8.7% observed in April.
Some have rightly pointed out that the economic fundamentals of Asian EMEs are now much more robust than two decades ago, with improved current account balances and better coverage of short-term external debts by sizable foreign reserves. And currency and maturity mismatch in foreign liabilities are no longer a serious issue. Moreover, the more flexible exchange rate regimes adopted by many Asian economies should give regional currencies more flexibility to adjust according to market forces and may therefore serve as a shock absorber in the case of capital outflows. A number of Asian EMEs, Hong Kong included, have also stepped up their macro-prudential measures in recent years to tackle the spill-over effects of the unconventional monetary policies of the advanced economies. 8. There is, however, no room for complacency. We should also be aware that the external environment has become much more challenging for Asian EMEs compared with the 1990s. The global economy is now much weaker, meaning that EMEs may be less able to look to support from external demand to cushion the effect of tighter domestic liquidity conditions along with US monetary policy normalisation. Concerns over further economic moderation in Mainland China have also weakened market sentiment towards Asian EMEs and the strength of the region’s “pull factor” to attract global capital flows. 9. More importantly, the region is now facing new risk factors that were unseen before.

With regard to the situation in Malta, it bears recalling that a Financial Stability Office was created in our central bank as long ago as 2000 when the Bank was still responsible for banking supervision. The decision to add a macro-prudential dimension to our micro-prudential work was motivated by a realization that potential systemic risks were not being adequately monitored. Our work in this field was given a boost in 2002 when Malta became one of the first countries to undergo an IMF/World Bank Financial Sector Assessment Programme (FSAP). Though the Bank had already built up a small stress testing capacity and had undertaken assessments from a macro-prudential perspective, the FSAP proved a very valuable learning experience and gave our work a new sense of purpose and direction. Since then the Bank has endeavoured to build up expertise in this important field by following closely developments abroad and through exchanges with other national central banks and the ECB. We are even now in the process of restructuring our internal set-up and human  BIS central bankers’ speeches  1  resources to take into account lessons learned during the financial crisis and to be able to participate actively in the newly-established European Systemic Risk Board and its substructures. The financial stability function will be composed of two separate offices, one dealing with surveillance and the assessment of systemic risk, the other focusing more on policy, stress testing and crisis management.
Central responsibility for this lies with lenders communicating effectively with their clients. But to support that the Working Group recently issued a fact sheet with the Association of Corporate Treasurers, the CBI and the authorities. 12 And a number of other collective initiatives are planned in 2020, including events with a wide range of trade associations, and further materials to help support borrowers to transition. If those are the challenges facing the private sector, what more can we in the public sector do to assist? Let me talk about the two further steps we are announcing today. A new compounded SONIA index  Before borrowing firms can transition away from LIBOR-linked loans and bonds, they need to know what rate they will be transitioning to. That rate needs to be fair, verifiable and cost efficient to use. An early desire to minimise change from the status quo led some initially to look for a forward looking SONIA-based term rate to replace LIBOR. As I have mentioned, UK financial markets are deep enough to allow such a rate to be offered in due course.

Both the “standardised” and the more sophisticated “internal ratings-based” approaches will help to align capital requirements more closely with a bank’s actual risks. Both will also help us realise two key goals: to make our capital rules more sensitive to the potential for loss, and to encourage ongoing improvements in banks’ risk management. Understandably, aligning a bank’s capital requirements more closely with its borrowers’ creditworthiness has generated discussion among small business and others who want to ensure that the new rules do not encumber lending to that sector. The Basel Committee has worked hard to avoid creating such burdens. In fact, our studies have identified those characteristics of SME lending that reduce the risk to banks and hence the need for additional capital. In that vein, I’d like to turn now to the rules that will apply to SME lending, which is my second topic. The treatment of SMEs under the New Accord If you’ve followed our work over the years, you’ll know that our proposals have evolved considerably. For instance, after the Committee published drafts of the rules in 1999 and 2001, we heard the message loud and clear from small business that the rules did not fully distinguish between exposures to very large corporations as opposed to SMEs. Likewise, bankers themselves indicated that they typically view lending to large corporations and to smaller enterprises as very different businesses. We have investigated thoroughly the economics of SME lending.
In the medium term, the Bank of Albania will focus its efforts on a number of initiatives, notably on further legal developments and infrastructure improvements. An important step in the medium term is the drafting of the bill “On the payment account". The bill will transpose the European Union Directive “On the Payments Account” and promote transparency by creating a public register to present all commissions applied by institutions, which can be easily compared. At the same time, during this period, the Bank of Albania will engage in a number of infrastructure developments that support financial inclusion, reduce the costs of using these instruments and is estimated to have an impact on the remittance market, mainly from the point of view of remittance receivers and their use. Here we can mention the creation of a national platform for processing payments in real time (instant payment and processing of card payments). The platform creates conditions for the development of innovative and low-cost services and also aims at market segments that create ample volumes by targeting state institution payments as well as daily payments that Albanian citizens make. Last but not least, I would like to thank the Government of Albania for the importance it places on this matter and its continuous support. In particular, I would like to thank the ministries such as the Ministry of Diaspora and the Ministry of Finance and Economy for their support and fruitful cooperation.

Gent Sejko: Address on remittances of the Albania diaspora Welcome address by Mr Gent Sejko, Governor of the Bank of Albania, at the high-level meeting on the remittances of the Albanian diaspora, Tirana, 14 December 2018. * * * Your Excellency, Minister Majko, Dear guests and colleagues, It is a special pleasure to open today’s meeting, which takes place after a year of intensive coordinated effort between our institutions toward the achievement of common objectives in relation to remittances of the diaspora, and other important issues. Today, a year after the Memorandum of Understanding was signed, I have the pleasure of noting that the materialization of these efforts has been reflected in the undertaking of a number of commitments and projects in pursuit of the objectives set out below. The importance of remittances to the Albanian economy, to family welfare and to development in general is highlighted in many communications of the Bank of Albania. In this context, during 2018, the Bank of Albania engaged its resources in developments aimed at creating the necessary prerequisites for an efficient channelling of such incomes into the Albanian economy. International initiatives in the field of remittances underline the importance of reducing the costs and increasing the efficiency of remittance services, thus implying the need to intervene in the retail payment market, in both remittance-sending and remittance-receiving countries.
The reasons I will take up concern wage formation, the credibility of monetary policy, a too high real interest rate, and arbitrary reallocation from borrowers to lenders. I consider these to be serious problems. But at the same time I find some of the recent discussion on the problems with deflation – falling prices – to be exaggerated and focused on the wrong risks. Second, I wish to discuss the ability of monetary policy to prevent inflation from falling too low. Sweden is a small open economy and is affected to a great extent by international developments. This fact sometimes causes commentators to question rather resignedly whether the Riksbank can actually influence inflation. I consider this attitude to be wrong. Monetary policy determines how high average inflation will be. Having said this, I am not claiming that we can control inflation with precision. Monetary policy can prevent inflation from falling way below the target over a long period of time. It is, however, neither desirable nor possible for monetary policy to continuously hold inflation stable very close to the inflation target of 2 per cent. But let me start by commenting on where we are coming from and the current situation. Inflation has been on average 1 per cent in Sweden for the past three years, when measured in terms of the CPIF.1 The Riksbank and other analysts have had forecasts that have shown that inflation would be low over a relatively long period of time, but that it would gradually rise.

Although the repo rate was cut to 0.25 per cent in 2009, it has been higher than this since summer 2010. The problem is rather that it may be desirable in the future to stimulate the economy further, for instance, if the economic recovery comes to a halt. The scope for further cuts in the repo rate may then be limited. The credibility of the inflation target could be impaired Finally, it is a problem if monetary policy and the Riksbank start to lose credibility. The value of money in modern economies is entirely based on expectations. Firmly-anchored inflation expectations and confidence in the central bank’s actions therefore comprise the basis for monetary policy. The inflation-targeting policy has successfully built up this credibility by communicating a clear overall target – a particular inflation rate. It has also become possible to gradually give greater consideration to the stability of economic activity as credibility has accumulated, although the primary target has become somewhat less clear as a result of this flexible inflation-targeting policy. However, monetary policy can hardly maintain its credibility if the inflation rate deviates from the target for too long. One question that has been discussed frequently in the wake of the recent financial crisis is whether central banks should use their policy rates to try to mitigate the credit cycle.14 Monetary policy could possibly contribute to this type of stabilisation for a  would have been if inflation had averaged two per cent during this period.