samchain/econo-pairs-v1 huggingface dataset:
Could that then have some impact on the feasibility of continued price stability in Sweden? Yet another risk is, of course, that the international price of crude oil does not fall back as most observers expect. It is not the oil price as such that is primarily important for the analysis but rather any impact it may have on other prices in the economy, for example wage increases. The discussion in the euro area has, moreover, highlighted the international crude oil price’s interaction with exchange rates. Risks of these types have to be weighed against the probability of a faster correction of existing imbalances in the world economy, for instance the US current account deficit, the level of stock markets and the dollar’s exchange rate. Assessing the likely course of such adjustments is exceptionally difficult. Instead of attempting to predict such a course, which may be impossible, one needs to be alert to signs that it is appearing. Concluding remarks The picture I have painted of the Swedish economy is fairly bright but it is accompanied by a number of clearly identified risks. It looks as though the favourable trend can continue but our economy is now in the cyclical phase that calls for heightened attention. The conceivable risks have to be assessed and weighed up by us on the Executive Board.

However, the indications are that overdue payments pose a huge problem for businesses in general and in particular for VSEs: at end-2014, outstanding payment claims amounted to EUR 600 billion, of which some EUR 420 billion were owed by private sector firms… and the remainder by the public sector. This requirement should of course apply equally to the public sector, both at national and local level. Various surveys and qualitative assessments show that the situation has stopped improving in the past few months, and that payment times are no longer falling, and in some cases may even be increasing again. Long payment times are not just a financial problem for VSEs, they also place a brake on their expansion, as they spend too much time chasing up overdue invoices, time that could better be devoted to growing the business and investing. The government is acutely aware of this issue and, in conjunction with the Observatory for Payment Times, is taking decisive action to resolve it. The Banque de France intends to help reduce these difficulties by drawing attention to all the solutions available to help small businesses. It will work actively with the Observatory for Business Financing, as well as through its day-to-day contacts with credit institutions and financing companies, to help develop financial products that can better reduce this obstacle to VSE growth. The determined efforts that the Banque de France intends to undertake or to participate in, will of course benefit greatly from your input here today at this symposium.
The combination of eliminating the implicit public subsidy and increasing capitalisation will reduce distorted pricing by banks and shift activity to market based finance. Choice and competition – real market forces – are increasing. Recognising that “markets do not always clear” has spurred several initiatives. Reform is improving risk transfer by untangling the complex web of derivatives and creating simple, comparable and transparent securitisations. The Bank is helping to change the plumbing of markets so that they are more resilient to the failure of individual counterparties, and we are working to understand better the dynamics of market liquidity given changes to regulation, trading strategies and the rise of asset management. 6  BIS central bankers’ speeches  The Bank has also overhauled the way we provide liquidity by expanding the range of collateral as well as the number and types of counterparties. And recognising that the instability of markets may mean they occasionally seize up, the Bank now stands ready to act as a Market Maker of Last Resort. And the third lie? In order to help restore trust and fairness, financial reform is re-building real markets. Earlier this year, we published the Fair and Effective Markets Review. It identified multiple root causes of misconduct in FICC markets that contributed to an ethical drift and an abdication of responsibility. A good start has been made in addressing these shortcomings including through changes to compensation regimes, clarifying the responsibilities of senior management and overhauling the structure of some markets to reduce opportunities for abuse.

First, each bank holding company will be asked to evaluate the credit losses that are likely to occur under an adverse economic environment. These losses would then be evaluated relative to the bank holding company’s ability to absorb those losses. Second, if this analysis indicated that the banking organization was likely to fall short of wellcapitalized in the stress environment, the bank holding company would be able to obtain additional capital via mandatory convertible preferred stock purchased by the Treasury. Third, if the stress scenario were actually to occur, generating losses that depleted common equity capital below what is deemed adequate, then the mandatory convertible preferred would be available to be converted into common equity. The government’s mandatory convertible preferred investment is, in some sense, contingent capital that is available to be converted into common equity only as needed. I believe this program is very important if we are to break the adverse dynamic that I outlined early. As I mentioned earlier, many bank holding companies don’t have an incentive to raise sufficient capital to ensure that they can handle a very bad outcome. That is because such capital-raising would severely dilute existing shareholders. This implies that, left to their own devices, banks might end up being undercapitalized in a stress environment. The risk of this outcome makes these banks (and their counterparties) very cautious in terms of their behavior.
Looking at the wider prudential framework let me mention two specific areas where the European Commission is currently reviewing the existing EU regulation. The first area relates to deposit guarantee schemes. Although the deposit guarantee directive of 1994 was useful in setting common minimum requirements for national schemes, the current level of harmonisation is low, with different levels of protection and different structures in place across the EU. This is not only inefficient but may hinder further integration. As many of you will already be aware, the European Commission is currently undertaking a wide-ranging review of Deposit insurance arrangements, and I would encourage it to be ambitious in this respect. The second relates to the work being carried out by the Commission with the aim of ensuring that EU financial services legislation and supervisory practices do not pose barriers to cross-border mergers and acquisitions. Consolidation processes should be market-driven phenomena that respond to market needs, such as economies of scale, IT synergies, the benefits of diversification, access to a larger client base, etc. I think that supervisors do have a crucial but limited role to play in fulfilling their responsibility to ensure that banks are not taken over by shareholders that are not suitable on prudential grounds. But this is as far as we should go. The Supervisory framework Let me now turn to the supervisory framework. I believe that we need to think in terms of a European system of banking supervision. I am not talking about a single European supervisory authority.

This is the first and most important challenge of the Basel Committee in the next few years. As part of this process we will adhere to the published schedule for our fifth quantitative impact study. And I believe that we already have the tools at our disposal to deal with any issues that arise from the QIS5 exercise, or that arise during this period of implementation. To be sure, a key element is not to add further details to Basel II, but rather to focus on achieving a quality implementation of the new Framework. Therefore, I do not anticipate any significant change to the Framework during the period bankers and regulators are tackling initial implementation challenges. But the main challenge is the cross border home host cooperation. On this point I would not underestimate the work and efforts that supervisors are devoting to this issue. One final related point. The staggered implementation, specially the timetable differences with EEUU raises transitional crossborder issues that will need to be managed through greater collaboration between the EU and US supervisors, but I can assure you that both sides are even more committed to this than before, and that our efforts will be redoubled in this respect. Ultimately, I hope that this commitment and effort will promote even more effective implementation. A second related challenge is to enhance the cooperation with non-G10 supervisors.
Lessons from the crisis In the aftermath of crises, corporate governance standards and practices often come under scrutiny. For instance, after the Enron/Worldcom failures, critics pointed to the lack of independence of auditors and Audit Committees, and to deficiencies in accounting standards. After the bursting of the dot.com bubble, attention was drawn to the severe conflicts of interest by brokers and analysts. The recent financial crisis has been no different. Indeed, reviews by international bodies and national agencies have found that weak corporate governance played a role in this crisis. For instance, the OECD report on "The Corporate Governance Lessons from the Financial Crisis"1 noted that "the financial crisis can be, to an important extent, attributed to failures and weaknesses in corporate governance arrangements which did not serve their purpose to safeguard against excessive risk taking in a number of financial services companies." While many of the corporate governance failures that have been uncovered so far affected financial companies, many of the structural weaknesses may also be common to large and complex listed firms. It is therefore relevant for Boards of other companies to reflect on these findings. Let me briefly highlight a few common themes. The first relates to the quality and composition of Boards. Research shows that although having a good balance of directors with a range of skills and experience that are relevant to the business of the firm is an essential foundation for good corporate governance, this was also often the most neglected.

François Villeroy de Galhau: Financial stability in the age of digital industry Introducing speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Paris Europlace International Financial Forum, New York City, 18 April 2016. *  *  *  Ladies and gentlemen, I would like to introduce this third round table by presenting the latest issue of the Banque de France Financial Stability Review entitled “Financial Stability in the Digital Era”. This new edition of the FSR addresses a very topical issue in the financial world, the impact of digitalisation and how to regulate such changes where necessary. I am keen to hear today’s exchange of views. In this FSR, we have gathered contributions from prominent academics, practitioners and policy-makers in order to shed light on the impact of innovation on financial stability. I would like to express my sincere thanks to all the contributors who have provided their views and analyses on such a technical and forward-looking topic. I cannot list all the contributors just now but I would like to give a special mention to Ms Karen Gifford who is with us today. The contributions presented in the FSR are very diverse in nature. The aim of the FSR is to help readers form an opinion; it is not designed to convey the explicit message of the Banque de France. The core aims of our Review are to exchange ideas, explore a given theme from various angles, and juxtapose different analyses and opinions.
In addition, the effect of the leverage ratio is further magnified by dealers’ inability to “net” across similar transactions on a bilateral basis with different counterparties for accounting and capital purposes. Netting is generally allowed so long as the transactions have the same counterparty and settlement date.22 The “same counterparty” requirement could in theory be met via the implementation of a central counterparty (CCP). However, for several money markets that are important to the transmission of monetary policy, no CCP has been implemented to date. For example, there is still no CCP in the United States for the repo market, and there is also no CCP for foreign exchange swaps. The regulatory capital benefit from the implementation of a CCP for the repo market might be reduced by regulatory requirements for some arrangements, such as those associated with the provision of committed liquidity to the CCP. The implementation of a CCP raises other important policy issues that would need to be carefully considered. The fourth and final development: money markets have been impacted by increasingly large shifts in the Treasury’s cash management practices, as well as the cash management of a number of foreign official holders of dollar reserves.

Later in 2013 economic activity should gradually recover, as global demand strengthens and our accommodative monetary policy stance and significantly improved financial market confidence work their way through to the economy. In order to sustain confidence, it is essential for governments to reduce further both fiscal and structural imbalances and to proceed with financial sector restructuring. Today, we have also decided to continue conducting our main refinancing operations (MROs) as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the sixth maintenance period of 2013 on 9 July 2013. This procedure will also remain in use for the Eurosystem’s special-term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as needed, and at least until the end of the second quarter of 2013. The fixed rate in these special-term refinancing operations will be the same as the MRO rate prevailing at the time. The rates in the three-month longer-term refinancing operations, to be allotted until June 2013, will be fixed at the average rate of the MROs over the life of the respective longer-term refinancing operation. Let me now explain our assessment in greater detail, starting with the economic analysis. Following a contraction of 0.2%, quarter on quarter, in the second quarter of 2012, euro area real GDP declined by 0.1% in the third quarter.
BIS central bankers’ speeches  5

But potential measures must be balanced against the risk that the interbank market will cease functioning more quickly if there are signs of financial turmoil in the future. There is also a risk that a temporary extension of the collateral a central bank accepts can reduce the banks’ incentives to hold sufficient amounts of what are normally considered eligible assets. If the central bank takes over some of the functions of the shortest interbank market, there is also a risk that banks which are essentially creditworthy will suffer liquidity problems as the access to short-term financing in the interbank market will disappear. Although there is still the possibility to borrow from the central bank, collateral is required, while the interbank market usually provides loans without collateral. Even though we have not needed to take a stand in these considerations in an emergency situation, we do of course discuss the issues and monitor developments closely. Conclusion The financial turmoil has meant that several central banks have had problems stabilising the overnight rate at the target levels. The uncertainty has also contributed at times to difficulties for some banks in obtaining funding on the interbank market. Several central banks have therefore taken measures beyond the normal to stabilise the overnight rate and to reduce the pressure on the slightly longer interbank rates. In Sweden there has been no reason to take any extraordinary measures. The Swedish interbank market has on the whole functioned smoothly.
This implied that capital accumulation was not associated with technological change and hence TFP growth. Indeed, in the catching-up economies capital flowed disproportionately into the non-tradable/services sector, which was in general experiencing significant productivity losses.2 Specifically, capital accumulation was highest in the construction and real estate sectors, closely followed by retail, transport and leisure. There seem to be two explanations why this happened. First, in some sectors the falling marginal product of capital was counterbalanced by rising profit margins, meaning that total compensation from investing in these sectors remained high.3 This was principally the result of an incomplete single market and a lack of competition – for example, in network industries such as utilities and telecommunications – which allowed  2  See European Commission, 2014, “The drivers of total factor productivity in catching-up economies”, in Quarterly Report on the Euro Area, Vol. 13, Issue 1, April 2014. 3  See European Commission, 2013, “Catching-up processes in the euro area”, in Quarterly Report on the Euro Area, Vol. 12, Issue 1, March 2013. 2  BIS central bankers’ speeches  incumbent firms to charge excessive rents and distorted price signals. The capturing of rents by firms in these sectors may have affected productivity growth not only by channelling resources away from more productive uses, but also by creating a drag on incentives to become more efficient in other sectors.

As the economy continues to adjust to these changes, the situation is still uneven across different sectors. In addition to the above-mentioned oil industry, passenger transportation and international travel still remain below pre-pandemic levels as well. When restrictions were toughened, public catering and entertainment companies faced a decline in the demand for their services. Nonetheless, a lot of industries are demonstrating steadily higher output and sales than before the outbreak of the pandemic. Specifically, there has been a surge in the demand for durable goods (computers, telecommunication devices, and household appliances) and online trade and delivery services. The lockdown period boosted the demand for countryside housing and better housing conditions in general. These uneven trends across both industries and regions are also described in the Regional Economy report released by our regional branches before the quiet period. The situation in the labour market also evidences that the economy has not only recovered, but is generally returning to its pre-pandemic growth path. The number of vacant jobs is at its peaks. High demand for labour resources is demonstrated by companies in construction and transport, a whole range of manufacturing enterprises, and in trade. These are the industries that started to bounce back earlier and were recovering faster and where demand exceeds prepandemic levels. A further expansion of output is possible through a restoration of the inflow of labour migrants, but — first of all — through an increase in labour productivity.
1999-00351 DIR, or Heikensten, L., “The Riksbank’s inflation target – clarifications and evaluation” Sveriges Riksbank Quarterly Review No. 1, 1999. BIS Review 87/2006  3  Ultimately, it is the inflation forecast in relation to the target that decides monetary policy. How quickly the target should be attained is also decided by developments in the rest of the economy. The economic situation Let me go on to say something about the monetary policy situation and the prospects for inflation and economic activity. It is the inflation assessment on which we based the decision to raise the repo rate by 0.25 percentage points at our most recent monetary policy meeting on 29 August that I intend to discuss. An account of the discussion held at the meeting is contained in the separate minutes published last week. We observed in the Inflation Report published in June that economic activity in Sweden had strengthened, largely because of strong international developments, high productivity and expansionary monetary policy. Our assessment was that these factors would also continue to stimulate the economy. GDP growth this year was therefore expected to be high, which was supported by both the national accounts figures for the first quarter and the economic indicators for developments during the second quarter. There were also signals from the labour market that economic activity was continuing to improve, with an increasing demand for labour. We could also note that inflation had begun to increase, after having been strikingly low.

The inflation target and consideration of the real economy The Riksbank has the statutory objective of maintaining a low and stable inflation rate, or of “maintaining price stability” as it is expressed in the Sveriges Riksbank Act. We have specified this task as ensuring that CPI inflation is around 2 per cent a year, with a tolerated deviation interval of +/1 one percentage point. As long as confidence in the inflation target is not threatened – or, as it is usually expressed, as long as the nominal anchor for setting prices and wages is not at risk – we also have the opportunity to take into consideration how the real economy, such as production and employment, develops. Although the latter has not been written into the Act, it was stated in the preliminary work to the new Sveriges Riksbank Act that came into force in 1999 that it was natural that the Riksbank should support the economic policy objectives of sustainable growth and high employment without neglecting the long-term price stability objective. This was considered a natural consequence of the Riksbank being an authority under the Riksdag (the Swedish parliament). It was therefore considered unnecessary to specify any further objective than price stability in the law text. There were probably also some fears that statutory objectives for the real economy could give the wrong impression – that monetary policy could also govern long-term developments in growth and employment, for example.