samchain/econo-pairs-v1 huggingface dataset:
1.8  Conclusion  At this point, no unequivocal conclusion can be drawn concerning Iceland’s optimal currency and exchange rate policy option. All of the possibilities have advantages and disadvantages. Although the assessment of these options is based on a relatively sound economic foundation, there is no simple economic formula stating how these pros and cons should be weighted together so as to yield a clear answer. In addition, it is quite uncertain how these factors will develop in the future. But it should also be noted that this report contains numerous findings indicating that the selection of a currency and exchange rate policy may be less important for economic welfare and stability than might be expected in view of the public discussion on the issue. An example of this is how different countries have fared during the financial crisis (see Chapters 16 and 17) and how likely asset price bubbles are to develop inside and outside a currency union (see Chapter 11). Based on the limited experience to date, it appears that fiscal policy, financial system structure and regulatory framework, and the incentives and opportunities of private agents to borrow are much more important. One of the reasons it is difficult at this point to draw a clear conclusion about which path Iceland should take is the uncertainty about near-term developments in the two most likely scenarios: an improved framework for the króna and removal of the capital controls, or EU membership and eventual adoption of the euro.

In the United States the real earnings trend since 1940 has been virtually constant between 2% and 3%, while - as I just mentioned - the real return on shares shows a trend break after 1982 (Fig. 3).2 Are present share prices fundamentally justifiable? I shall now use a simple model to examine whether the present level of share prices can be justified in fundamental terms.3 Simplifying somewhat, this model equates the value of a share with the present value of the future income the share is expected to generate. A valuation in P/E terms accordingly rests on the assumptions that are made about these future incomes - the future growth of the company’s earnings - and the factor by which these incomes are discounted - the stock market’s expected return. We can insert alternative values for these assumptions to find the combinations that might justify different P/E ratios (Fig. 4). It will be seen that a P/E ratio of 14 can be warranted if the expected real return is 6% and the real growth of earnings averages 2.5%. These figures are all approximately in line with the historical trends.
And so the foundation was laid for a modern investment policy whose aim is to optimise the risk/return relationship for assets. However, this was only possible to the extent allowed by monetary policy, which has always had priority over investment policy considerations. In addition to expanding the SNB’s freedom of action, investment and risk control processes were fundamentally adapted and adjusted to the new requirements from 1997 onwards. As a result, the SNB frequently found itself in the role of central bank pioneer, not only as regards the choice of investment instruments, but also in the area of investment processes. It is with some pride that I can report how, in recent years, we have received enquiries from other central banks about our investment processes. The SNB has also played a pioneering role with regard to transparency. The composition of our investments is, to a large extent, accessible to the public. Indeed, the SNB is one of the few central banks which publishes both its investment allocation and the net result on foreign currency positions on a quarterly basis. Investment policy committed to security, liquidity and return Nowadays, therefore, when investing our currency reserves, we base our decisions on the criteria of security, liquidity and return. The currency reserves of a country serve primarily as a means to prevent and overcome crises. In order to fulfil this function, they must, in essence, be liquid. In the past, the SNB defined liquidity by specifying the term of the bonds.

If we look at Sweden, productivity growth in the business sector has been very weak since 2006, a year or so before the global financial crisis occurred. We have often had to revise down our productivity forecasts as a result of the surprisingly weak development. Productivity has also shown weak development in other developed countries recently, which indicates that it is the result of a joint trend. There are many possible explanations for the decline. Some economists, such as Robert Gordon, say we are in a period of very low productivity growth that will be the new normal for a rather long time. According to this point of view, a large share of the fruits of digitalisation have already been harvested. As early as 2005, for instance, several economies had adapted their business methods and models  3  Roine (2016). 2 [12]  to the internet.
In my view, there are five principles that should be followed. First, create international institutions only when there is a need to do so. International institutions should focus on those areas of global governance where we need to tackle problems collectively – whether on trade, the environment, or large spillover effects of changes in macroeconomic policy. Second, ensure that the commitments countries enter into are clear. The job of institutions is to support those commitments. In many cases, like an umpire, their job will be to uphold them. That will only be possible if the players – countries – are very clear about the agreed rules of the game. Without that, any further design is pointless. Third, provide institutions with the necessary tools to umpire the commitments of nation states. But, just as umpires are accountable for their performance to the whole community of cricket-playing nations through the International Cricket Council, the staff and management of the international institution should be accountable to the whole community of nation states for their performance in upholding the rules. Fourth, recognise that we do not start with a blank sheet of paper. We must accept the constraints of history. Existing institutions have an institutional memory, talented staff and much of the infrastructure that will be needed in the future. But that is not to say reform will be easy – there are far too many vested interests for that to be the case. Fifth, avoid unnecessary duplication.

The test is whether member countries are ready to make genuine commitments to each other. Without that the institutions lack any real purpose. So the subject of my talk today is why we need rules of the game to govern globalisation, and the institutions that are necessary to oversee those rules. 2. Is the post-war settlement still relevant today? At the end of the Second World War, a new global order was put in place by the United States, Britain and their allies. One of those primarily responsible, US Secretary of State Dean Acheson, described his time as being “present at the creation” of a new global order. A range of new international institutions was created – the United Nations, the two Bretton Woods institutions (the IMF and World Bank), the OEEC that implemented the Marshall Plan (and later became the OECD) , NATO, and GATT (which has subsequently been succeeded by the World Trade Organisation). Those institutions are now, for the most part, past their 60th birthdays. And there has been much heartsearching over the past few years as to their role and governance. Unless the spirit of the original founders is rekindled, there is a real danger that the present institutions will wither on the vine leaving us with a more unstable and fragile international environment. As Martin Wolf pointedly wrote, “To defend a liberal world economy is not to defend the International Monetary Fund, the World Bank, the World Trade Organisation or any specific institution.
The residual impact of the one-off factors on annual inflation is set to be entirely gone in one year’s time – in the first quarter of 2020. Now, I will say a few words about the economy and the forecast. Economic growth rates remain close to their potential levels. Unemployment is invariably low and close to its natural rate. Having said that, certain economic activity indicators continue to post a mixed performance. The forecast remains essentially unchanged. Given the state of the global energy market over recent months, we have downgraded the oil price path somewhat in the baseline scenario. The assumption has been updated to reflect faster declining oil prices in the course of 2019 – based on the calculation that the average oil price will total $ per barrel (from the previous estimate of $ a barrel). Moving forward, the average price is set to remain at this level between 2020 and 2021. As before, our approach to oil price assumptions is conservative. The oil price volatility we saw in the fourth quarter (from $ to $ a barrel) is an indication of the validity of this approach. The running fiscal rule will ensure that the impact of changing oil prices on economic growth 2/3  BIS central bankers' speeches  remains limited. We therefore leave our GDP growth forecast unchanged at 1.2-1.7% for 2019, admitting it may rise to 2-3% in 2021 as the Government implements its structural reforms. Changing oil price assumptions have stronger implications for our estimated balance of payments.

Source: QRTs, PRA analysis  10  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  10  Chart 5: The impact of MA on the base balance sheet. Source: PRA analysis, Solvency II Regulations  Chart 6: Credit Spread on Investment Grade Corporate Bonds. Source: Bloomberg data, PRA analysis  11  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  11  Chart 7: Decomposition of Bond Spread. Source: PRA analysis, Solvency II Regulations  Chart 8: FS Components: Non-Financial CQS 3 (BBB-rated). Source: PRA analysis, YE20  12  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  12  Chart 9: FS – Credit Quality Step 2 (A-rated). Source: PRA analysis, YE20  Chart 10: Illustrative A-rated 10 year financial bond. Source: Bloomberg data, PRA analysis  13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13  Chart 11: 2020YE FS as % spread - Illustrative A-rated 10 year financial bond. Source: Bloomberg data, PRA analysis using YE20 FS  14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14
The illustration is from our third Monetary Policy Report in 2012. If monetary policy at that time had given weight only to the low level of inflation, the key policy rate should have been lowered sharply and kept close to zero for some time, as indicated by the red dotted line in the upper left panel. Inflation would then have been predicted to pick up relatively fast, partly owing to a weaker exchange rate. Taking into account our second criterion for an appropriate interest rate path, the key policy rate would have been somewhat higher in the short term, as indicated by the blue dotted line. Inflation would have been predicted to take somewhat longer to rise towards the target, but developments in output and employment would have been more stable. Finally, taking into account considerations of robustness (criterion 3), we reached the interest rate forecast indicated by the black dotted line. [Chart: Decomposition of change in the interest rate path] Our communication of interest rate decisions is aided by a decomposition of changes in the interest rate path. This is a model-based illustration of how the change in the interest rate forecast from one report to the next can be decomposed into contributions from exogenous disturbances. The intention is to communicate the driving forces behind any changes in the interest rate path. The chart illustrates the different forces behind the change in the interest rate path from the last report in 2012 to the last report in 2013.

Major variation between different groups  Cashflow effect on disposable household income of a rate increase of 1 percentage point 7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  All borrower households (DTI ≈ 2.6)  10 per cent most highly indebted (DTI ≈ 8.7)  0  Note. Per cent. Refers to the average for each group. Within each group, the figure in paranthesis refers to the average debt-to-income (DTI) ratio. Source: The Riksbank  This variation among households can also have a bearing on the total effects on consumption. If the most highly indebted households adapt their consumption mostly in the event of a given change in income, the total effect will also be greater. As the interest rate affects housing prices, it can also affect the scope of households to consume by borrowing against their home as collateral. Currently, many households not only have high debts in relation to their disposable income but also in relation to the value of their home. But in order to ascertain how differences among households can affect total consumption, we would need better data on household assets. 15 From this perspective, there is therefore reason to proceed cautiously with rate rises, in light of the uncertainty surrounding how the most highly indebted households will act.
Jarle Bergo: The outlook for the Norwegian economy and the challenges ahead Speech by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at Norges Bank, Bodø, 25 August 2005. Please note that the text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 11 August, Inflation Report 2/05 and on previous speeches. The references and the  Charts in pdf-format can also be found on the website of the Norges Bank. *  *  *  The economic situation The Norwegian economy is in an upturn and is now expanding at a brisk pace. Inflation remains low, but has edged up since last year. The risk of a fall in the level of prices and markedly lower inflation expectations has diminished. At the same time, there appears to be little risk that inflation will rapidly move up to a level that is too high. The reduction in the interest rate through 2003 and into 2004 has resulted in low real interest rates. For a period, the real interest rate has been considerably lower than normal. The low level of interest rates is supporting the high activity level in the Norwegian economy. The economic upturn is broad-based. At the beginning of the recovery, activity was primarily fuelled by private consumption, traditional exports and petroleum investment. In addition, growth in mainland fixed investment has gradually gained considerable momentum.

Over time, a strong krone and weak demand among major trading partner countries will probably have a dampening impact on activity in Norway. Little excess production capacity in OPEC countries, combined with the prospect of lower production in non-OPEC countries, has probably influenced oil prices. At the same time, there are prospects of continued strong demand growth in important oil-importing countries, such as China and some other emerging economies. More on the oil market The IMF has analysed supply and demand in the oil market for the period ahead in the latest issue of “World Economic Outlook”, published in April of this year. Assuming an annual global GDP growth of approximately 3 per cent and an oil price in line with market expectations in February 2005,1 demand for oil is expected to increase by around 2 per cent per year until 2030. Price expectations are higher now, but according to IMF calculations, the demand for oil in the long-term reacts relatively little to price changes. The growth in demand primarily reflects higher demand for fuel for motor vehicles, particularly in non-OECD countries. An increase in per capita income in China will in particular lead to a sharp increase in car use. Output in non-OPEC countries will peak in the not-too-distant future – in 5 years, according to IMF estimates. Higher demand will require higher output in OPEC countries. These countries have substantial oil resources but are currently producing close to capacity. Production capacity must therefore be increased.
Stephen Cecchetti sums it up as follows: “Debt is a two-edged sword. Used wisely and in moderation, it clearly improves welfare. But, when it is used imprudently and in excess, the result can be disaster” (cf. slide 27). 27 I myself have compared lending not with a double-edged sword, but with food. A balanced diet is essential for survival. Excessive and unhealthy eating, however, can become a problem. Judicious borrowing and lending is an essential foundation of a flourishing economy. Excesses on the credit market, by contrast, can lead to crises and, as a result, cause extensive damage to the economy as a whole. It is therefore important that banks, households and companies always exercise sufficient caution and restraint at the ‘credit buffet’. Equally, it is just as important that the SNB carefully analyses developments on the credit market and makes optimal use of the tools at its disposal in order to mitigate any risks to financial stability as far as possible. 26  The overall subdued economic growth in Switzerland over the last two years and lower net immigration are also explanations for the recent restrained momentum on the credit and real estate markets. 27 Cecchetti et al. (2011). The International Monetary Fund (IMF) came to a similar conclusion regarding household debt in its latest financial stability report: Household borrowing promotes growth in the short term. In the medium term, however, too high a level of household debt reduces economic growth (IMF, 2017).

The aim is twofold: First, banks with more equity are better equipped to absorb losses that can arise as a result of excessive lending growth. Second, costs for mortgage lending rise, counteracting the build-up of imbalances in this segment. The buffer is called countercyclical because capital requirements increase when the mortgage market is on the rise. This dampens the upswing and strengthens the safety buffer of banks and of the financial system. The requirements are reduced in a downturn when banks have more capital available to absorb potential losses on loans. This mitigates the likelihood of systemic risk materialising and leading to a downwards spiral of emergency sales and loan defaults. Acting on proposals by the SNB, the Federal Council activated the sectoral CCyB in 2013 and, in 2014, increased it to 2% of risk-weighted mortgage loans for residential property in Switzerland. In addition to the sectoral CCyB, there are two measures in particular which the industry introduced in 2012 in the form of self-regulation. These measures address the demand for loans: First, the obligation that mortgage borrowers have to supply a minimum amount of own funds. Second, the obligation that part of the loan has to be repaid within a set period if the loaned amount constitutes more than two-thirds of the property value. 24  Cf. Smets (2014).
This crisis experience clearly shows that a financial crisis can happen in any markets regardless of the level of market development, size, and region. To date, the economies that have been hard hit by the crisis originated in the US through financial spillover effects include the Euro zone, UK, and some economies in Eastern Europe, Asia, and Latin America. It is confirmed again that, whenever financial imbalances arise, financial  BIS Review 147/2008  3  distress can easily occur and become rampant due to the increasing linkages across the globe. So I believe that the key to our endeavor is to 1) take a careful step of further integration, 2) increase economic and financial resiliency, and 3) be ready to deal with unforeseen risks ahead. We can compare this important decision of embarking on further integration to the situation where we are already in a sea expedition. If we are already in the middle of the ocean, sailing back to the origin or resisting further integration seems likely a bad idea. However, to reach the destination safely and be able to weather the likely stormy sea along the way, we need to plan ahead in navigating the boat and be ready to adjust the speed. Moreover, we need to make sure that the boat is in a good condition. We must therefore be alert and well prepared to deal with the storms and other dangers.

to keep inflation expectations anchored in the proximity of the ECB’s objectives, has been pivotal in determining the successive steps to be taken in terms of monetary easing. In June 2014, the ECB cut its official interest rates, setting the main refinancing operations rate at 0.15%. Also, for the first time, it set the interest rate on the deposit facility in negative territory, at –0.10%. In addition, it announced new long-term refinancing operations maturing in September 2018, with the specific aim of boosting lending. It is worth noting that these operations combine credit-enhancing elements, as they link the granting of liquidity to bank lending, with quantitative easing, through the expected increase in the Eurosystem balance sheet. In September 2014, the ECB adopted new measures. First, it made a fresh cut to interest rates, whereby the MRO rate stood at 0.05%, its technical minimum, and the deposit facility rate became even more negative, reaching –0.20%. Furthermore, the ECB initiated asset purchase programmes. In the fourth quarter of 2014, the ECB launched its third covered bond purchase programme and, subsequently, its ABS purchase programme. By end-March, covered bond purchases had reached almost € billion, with slightly over € billion of these being made by the Banco de España. As to ABS purchases, these stood at € billion at end-March, indicating that this was evidently a less significant component of the programme. In January 2015, the ECB decided to add a third programme, called the “Expanded Asset Purchase Programme”.
We are a country that is, in terms of population and employment, quite significantly dependent on agriculture, about 30 percent of our labor forces is tied to agriculture. So obviously, higher temperatures and higher risk of droughts and floods will severely hit the agricultural sector. Thailand is also highly dependent on tourism, the beach tourism, and so substantial rises in sea levels will hit our country very hard. Therefore, as a country that is very vulnerable to climate change, I think it is beholden upon us to take much stronger initiatives on the climate change and the green front. Page 6 of 9  On Thailand’s development on the green front, I welcome a lot of initiatives that happened in Thailand, especially in the capital markets. We have seen the Stock Exchange of Thailand launching the Thailand Sustainability Index, which is an index composing of green and sustainable listed firms. We have seen our colleagues at the Security Exchange Commission undertaking welcomed initiatives with the Environmental, Social and Governance (ESG) bonds, which are seeing a significant growth in Thailand. I would also like to see that progress on the banking side catching up that of the capital market as the banking side, both in Thailand and globally, still lags in terms of green and climate initiatives that have already been undertaken by capital market participants. Thus, we, at the Bank of Thailand, will do our best to make sure that the banking sector catches up and does play its role as needed.

1 Article 3.3 of the Treaty on the European Union. 2 Article 127.5 of the Treaty on the Functioning of the European Union. 3 The monetary policy strategy review: some preliminary considerations, Speech by Christine Lagarde, President  of the ECB, at the “ECB and Its Watchers XXI”conference, 30 September 2020 4 www.banque-france.fr/sites/default/files/medias/documents/2020.05.25_sep_en_cl.pdf 5  See Blanchard & Summers (2020), Automatic Stabilizers in a Low-Rate Environment, AEA Papers and Proceedings, vol 110, May. 5/5  BIS central bankers' speeches