samchain/econo-pairs-v1 huggingface dataset:
In a broader perspective which also includes impacts on the real sector, three points of view will be moved to the fore. First and foremost, trade relations with Euroland have always been strong, on the export as well as on the import side. Under the new bilateral agreements, our connectedness with the EU may become even stronger in the years to come. Given these structural conditions, it is clear that our economy is highly susceptible to shocks in the SFR/euro exchange rate. In actual fact, this marked dependence is the strongest economic argument of all those wishing to substitute the euro for the Swiss franc as soon as possible. BIS Review 2/2001  3  A second relevant perspective for the real sector is to be seen in the trend towards a real appreciation of the SFR since the transition to floating. Real exchange rate index CHF Export weighted, November 1977=100  130  120  110  100  real appreciation 0.6% p.a. 90  80  70 Jan 73  Jan 76  Jan 79  Jan 82  Jan 85  Jan 88  Jan 91  Jan 94  Jan 97  Jan 00  The rising trend - measured by the index of the real trade-weighted SFR exchange rate - averaged 0.6% per annum. Its main causes seem to be two special features of our economy. One is the extraordinarily high external surplus of approximately 10% of GDP, which generates a steady net demand for SFR.

The rapid progress of information technology in recent years has brought new risk measurement models to aid in the measurement of market risk. The most widely accepted of these is the ”Value-at-Risk” model, called ”VaR” for short. VaR is the maximum loss that can occur in the value of a portfolio having a certain investment horizon under a certain probability. Since it is a simple and clear-cut concept, the VaR model is widely used for measuring market risk. It permits comparison of the market risk of different investment instruments, so that portfolio performance can be evaluated in terms of the risk undertaken. Especially for measuring  market risk to determine capital adequacy, this model has become a necessity in many countries and financial institutions. Another method widely used for measuring market risk is ”Scenario Analysis”. Scenario Analysis is a technique used to see how the value of a portfolio would be affected by various probable changes in market conditions. A last widely used method for measuring risk is the ”Stress Test” method. The Stress Test is used to estimate how the value of a portfolio would be affected by large, unexpected fluctuations in the markets, such as have been observed during the global crisis which is still with us. Though similar to Scenario Analysis, the Stress Test mainly aims to predict the maximum value that would be lost by a portfolio under certain extraordinary market conditions. The success of this method depends on successfully predicting market conditions.
There is more we need to do, I will turn to that in a moment. And we should be clear that resolution will not be some painless magic bullet. No matter how well prepared in advance, the resolution of a major bank, if it happens, would be a painful, protracted, and probably litigious, affair. But we now have made means that we have options today to deal with a failing bank that we simply did not have 10 years ago. The choice is no longer solely between a disruptive insolvency that damages critical economic functions or bailing out the bank’s creditors at taxpayer expense. A large part of a bank’s losses must now be borne by shareholders or creditors. This penny seems to have dropped with investors in the larger banks – the implicit public subsidy that the large “too big to fail” banks enjoyed in the price of their debt has been eroded and rating agencies no longer assume that UK banks will get public support if they get into trouble. 8  It is essential that the resolution regime is fully credible - to those investing in banks but also to counterparties to banks, including CCPs and to the public at large. If investors in bank debt know that they will be bailed in if the bank fails, the pricing of that debt will exert discipline on risk taking.

The firm had derivative portfolios at a number of CCPs across Europe, the US and Asia. All were auctioned, liquidated or transferred to other clearing participants by the CCPs in weeks, not years. And, with only one minor exception, this was achieved without exhausting the margin collateral the CCPs held. 1  I mention this aspect of the Lehman failure because it illustrates the drivers behind two of the key regulatory reforms we have made as a result of the financial crisis. First, incentivising and where appropriate mandating the greater use of central clearing for derivative transactions. And second, putting in place resolution regimes to ensure banks, particularly large, highly interconnected, wholesale market players, can fail without unleashing the disruption that followed the Lehman insolvency. I want to look today at the progress we have made in the post crisis reforms around derivatives and how we address the risks around the concentration of counterparty risk in CCPs – including what the objectives should be for a resolution regime for CCPs themselves. And I want to look also at the progress we have made, and the next steps we need to make, in putting in place an effective resolution regime for large banks internationally and in the UK. 1  The exception was HK Securities Clearing Corp (HKSCC) which made a loss to the CCP of approx. USD 20 mn, including cost and expenses. HKSCC announced it would claim this from LEH’s estate. Source Norman, P., 2011.
This means that China’s share of global output has more than doubled from 6 per cent to 13 per cent. This situation  BIS Review 16/2004  1  has great significance for the world economy today. China has emerged as one of the world’s major importers of commodities, especially regarding crude oil, copper and agricultural products. For example, China’s imports of copper totalled no less than 15 per cent of world trade in copper in 2002, compared with only a couple of per cent in 1990. At the same time, Chinese exports of manufactured goods are increasing rapidly, currently accounting for 6 per cent of world exports compared with 2 per cent in 1990. When we today see an unusually big gap between international price inflation for manufactured goods, which is presently exceptionally slow, and for commodities, which instead is very fast, it is probably somewhat due to what is happening in China. My overall view is that international economic activity will continue to strengthen in the years ahead largely as we expected before. Growth in the OECD area could reach about 3 per cent this year and average around the same in 2005 and 2006. This is marginally higher than we expected and implies slightly better export conditions. International prices of manufactured goods are likely to rise in tandem with the economic recovery. But by how much is uncertain.

In fact, the loans that have already been received have guaranteed foreign exchange reserves sufficient to enable the Treasury to service its debt for the next two years without major foreign currency purchases. However, foreign reserves would fall to a level that is not acceptable. The cost would be a lower exchange rate than otherwise, and it would be inadvisable to relax the capital controls at the same time. Fourth, it is important to take the first steps towards removing the capital controls as soon as possible after the objectives described above have been achieved. The objective is to make the disappearance of the last vestige of controls an event that will hardly be noticed. We learned from the financial collapse that fair weather can turn foul at short notice. Once the storm has passed, however, the skies can also clear more quickly than most people expect. BIS Review 64/2010  3
I hope the sessions ahead will challenge your thinking and present you with many new ideas and perspectives on the prospects of an expanded ASEAN-EU relationship. 2/2

In this context, we expect internal demand to continue weakening over 2008. Indeed, the most recent economic projections released by the Bank of Spain show reduced GDP growth in 2008 and 2009. At the same time as we face a slowdown in growth, we are seeing sharp increases in headline inflation. These have been driven by large energy and food price rises at the global level. The price boom has affected Spain to a larger extent than some other countries, partly due to the higher relative weight of these items in household expenditure. And the Spanish economy may be more vulnerable than other countries to second-round effects due to the widespread existence of indexation mechanisms. I would like to make a few comments about what economic agents should and should not do to face these challenges. On inflation, the key issue is how firms and workers respond to the recent shocks. I would like to make two points: •  First, firms should not view the shocks as permanent. In other words, they should not consolidate price-rises over the longer term. •  Second, workers should understand that inflation cannot be offset by demanding wage increases that are not justified by productivity developments. This would just keep inflation persistently high, as the 1970s experience painfully showed. BIS Review 70/2008  1  From the perspective of GDP growth, if we are to see a quick return to our potential, we need flexibility in supply and demand responses.
The global economy is entering its new cycle at a low phase of the commodity (primarily oil) super cycle. So far, there has been no truth to the predictions that low commodity prices will have a positive impact on global growth thanks to the positive 1 / 11  BIS central bankers' speeches  momentum enjoyed by raw material-importing countries exceeding the negative impact on exporting countries. However, it is important to note the technological progress in the oil industry both in terms of supply (e.g. the development of shale technologies; incidentally, the decreased investment in shale oil in the face of low oil prices has once again begun to grow) and in terms of demand (the development of the electric car and alternative green energy markets). In fact, in the medium term the balance of these factors remains highly uncertain. Therefore, the markets are constantly shifting their expectations about medium-term trends (almost every quarter) and thus the oil market remains relatively volatile. Lastly. The global economy is entering a new cycle with growing cyber-risks capable of threatening both the stability of financial systems and economic growth. Positive developments include the financial technological revolution (fintech and the cost cutting, increased financial service penetration, and the improvements to their quality it entails), and the financial markets’ increased stability in the face of various shocks. This stability has been repeatedly tested over the past year and a half, a period not lacking in political surprises.

There are therefore compelling arguments in favor of a generally positive assessment of the consequences of innovation. Does experience provide support for these arguments, or are these changes too new for us to know? The recent changes in credit markets have been dramatic. We have seen rapid growth of structured credit products, credit default swaps and new types of collateralized debt and loan obligations. Although these instruments are very new, they are the natural extension of earlier innovations in credit markets. Over a long period we have seen innovations ranging from the syndication of bank loans and the direct provision of credit through the capital markets, to the spread of asset-backed securities and products that separate different parts of the payments stream and different dimensions of the risk in a credit obligation into different instruments. These changes have contributed to a substantial reduction in the share of total credit held by banks. They have produced a greater separation or distance between the entity that first arranges a loan and those who end up holding the risk, and more intermediaries in that chain. And they have contributed to a dramatic increase in the number and diversity of creditors to any individual borrower, and a greater capacity to actively trade credit risk. BIS Review 29/2007  1  We are now well into the third decade of experience with the consequences of these earlier innovations, and this history offers some useful lessons for evaluating the probable impact of the latest changes in credit markets.
In the short term monetary policy can influence developments in the real economy. Norges Bank can do this through two channels. First, Norges Bank will proceed gradually when the krone’s value moves outside the initial range and instruments are oriented to returning it to this range. We seek to avoid a situation whereby monetary policy contributes to abrupt shifts in the economy. Second,  13  BIS Review 20/1999  developments in the labour market and product markets influence wage growth and inflation, and thereby the krone exchange rate. Norges Bank takes this into account when evaluating economic developments and when setting interest rates. However, monetary policy is not a suitable instrument for influencing production and employment in the long term. Nor can it be used to influence the size of the internationally exposed sector over time. It is primarily wage and income determination, the use of oil revenues over the government budget, and the adaptability and efficiency of the economy that determines this. Nor is monetary policy an effective tool of incomes policy. Interest rates cannot be used to influence the negotiating climate of the income settlements. This could act as a highly negative constraint on the freedom of manoeuvre. Long-term fiscal policy challenges The fall in oil prices has obvious and immediate implications for monetary policy. But what about long-term balance in the Norwegian economy? What if oil revenues remain low in the longer term as well? Norway’s government finances are sound thanks to the large surpluses of recent years.

Commercial banks operating in the eurozone are willing to borrow around 250 billions Euro from the European Central Bank paying the key policy rate and at the end of the same day to deposit the same money at the European Central Bank being paid the discount rate, which is 1 percentage point less, but the spread between the short-term money market rates and the key policy rate still persists. Magnitude of the commercial banks’ position compared with the European Central Bank shows how huge the uncertainty has been. Only restoration of confidence about solvency and financial stability among commercial banks can most probably solve this problem. The third frontier we are concerned about is connected to the emergency liquidity assistance. Under standard circumstances central banks provide liquidity to commercial banks only. In case of an urgent need a commercial bank may ask the central bank for an emergency credit. What we see in the United States today is an attempt to extend this emergency assistance beyond the banking system and provide liquidity against collateral to non-banking firms. On one hand, one understands the effort of the Federal Reserve to provide funding also to the non-banking sector of the economy when the traditional channels are freezing. On the other hand, the Federal Reserve is effectively printing money against collateral with uncertain value and there are concerns when and how the Federal Reserve will close and null these operations to avoid potential inflationary consequences.
The best way to secure this favourable prospect is to continue with the implementation of the necessary reforms in markets and institutions and with the adoption of best practices on the basis of a free exchange and competition of ideas and social values. References: Aghion, P. and P. Howitt (1998), “Endogeneus growth theory”, Cambridge, Mass. The MIT Press. Aghion, P. and P. Howitt (2005), “Appropriate Growth Policy: A Unifying Framework”, Schumpeter Lecture, Nice, September, revised December. Alesina, A. and F. Giavazzi (2006), The Future of Europe, Reform or Decline, The MIT Press, Cambridge, Mass. Alesina, A. and L. H. Summers (1993), “Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence,” Journal of Money, Credit, and Banking, vol. 25(2), pp. 151–162. Aristotle (ca. 350 BC) Nicomachean Ethics, translation by H. Rackham, Harvard University Press, Cambridge, Mass., Revised edition 1934. Arnone, M., B. J. Laurens, J.-F. Segalotto, and M. Sommer (2007), Central Bank Autonomy: Lessons from Global Trends, IMF Working Paper, WP/07/88. BIS Review 43/2007  9  Bassanini, A. and R. Duval (2006), “Employment patterns in OECD countries: Reassessing the role of policies and institutions”, Social, employment and migration working paper series No 35 (OECD, Paris, June). Baufield, E. (1958), The moral basis of a backward society, New York, Free Press. Blanchard, O. (2004), “The economic future of Europe”, The Journal of Economic Perspectives, vol. 18, pp. 3-26. Blanchard, O. and J. Wolfers (2000), “Shocks and institutions and the rise of European unemployment. The aggregate evidence”, Economic Journal, vol. 110-1, pp. 1-33.

Europe’s “monetary constitution” builds on the experiences of a long historical process of trial-anderror, often with painful economic consequences, which led to the insight that in order to “safeguard the currency” (Bundesbank Act of 1957) and “defend the savings” of the people (Banca d’Italia mandate), the management of the currency should be entrusted to an independent central bank, with the primary objective of maintaining price stability, and which should not be allowed to directly finance the public sector. The extensive empirical evidence collected over many years and for a wide range of countries broadly and unambiguously confirms the beneficial effects of central bank autonomy for inflation performance.6 Chart 9 clearly demonstrates that countries with more independent central banks have enjoyed lower average inflation without experiencing lower average economic growth (Blinder, 1998). Recent studies show that central banks in most countries (not only in advanced economies but also in emerging market and developing countries) have been granted higher degrees of autonomy over the past twenty years (Arnone, 2007). In addition, in the low-inflation environment currently prevailing in industrialised countries, those central banks endowed with a larger degree of independence are succeeding in maintaining price stability, as recent work at the ECB has demonstrated (Moutot et al., 2007).
One example is the Bank of England, which has created new liquidity instruments that are proactively aimed at affecting financial institutions’ risk-taking. These instruments can be described as a cross between typical standing facilities for monetary policy and crisis facilities. The development of new types of liquidity instrument will probably make it even more difficult in the future to draw boundaries between monetary policy measures and measures to promote financial stability, as well as between crisis tools and tools for normal conditions. It thus illustrates the importance of the Sveriges Riksbank Act giving the Riksbank sufficient flexibility to be able to change the Swedish liquidity framework on the basis of Swedish needs, both with regard to monetary policy targets and financial stability aspects. 8 [12]  Regular analysis of financial stability necessary for monetary policy decisions Let me now move on to the link between monetary policy and financial stability in the analytical work. The close relationship applies here too. As I have just described, the Riksbank needs – to fulfil its liquidity supporting role in crisis and to safeguard the stability of the RIX system – to analyse the participants, infrastructures and markets in the financial system, as well as the links within the system, also under normal circumstances. This type of analysis is also needed for our monetary policy decisions, both under normal circumstances and in a crisis.

When the Riksbank's responsibility for financial stability is formulated, it is therefore important to do so in a way that ensures that Swedish interests in affecting and receiving relevant information in the international cooperation, for instance regarding systemic risks and financial regulation, can be taken into account in a good way. Important to have a broad task and flexibility in the use of instruments What I want to illustrate with my speech today is that the Riksbank's tasks on the whole concern contributing to the smooth functioning of the financial system, by safeguarding the supply of liquidity in various ways. In addition to the responsibility for supplying cash, we are the banks’ bank both under normal circumstances and in crisis situations. We give credit to the banks during the day, we use our balance sheet to influence access to liquidity and market rates, and we can enter in as lender of last resort in an emergency situation. The Riksbank, like all other central banks, thus has an important responsibility for financial stability and this is also closely linked to monetary policy. 11 [12]  But while the monetary policy task is clearly stipulated in the law, the responsibility for financial stability is not so clear. This responsibility is also shared with other authorities. It is good that there is now an inquiry that will clarify the Riksbank's responsibility for financial stability in an amended Sveriges Riksbank Act. It is important that the Riksbank's task of promoting financial stability is then given a broad wording.