samchain/econo-pairs-v1 huggingface dataset:
Lars E O Svensson: Monetary policy, debt and unemployment Speech by Prof Lars E O Svensson, Deputy Governor of the Sveriges Riksbank, at a meeting at SNS – Centre for Business and Policy Studies, Stockholm, 14 November 2012. *  *  *  I would like to thank Karolina Ekholm, Kerstin Hallsten, Per Jansson, Christina Nyman, Ulf Söderström and Anders Vredin for valuable discussions and comments. Mikael Apel, Gabriela Guibourg and Staffan Viotti have contributed to this speech. The views expressed are my own, and are not necessarily shared by the other members of the Executive Board or by other employees of the Riksbank. It can scarcely have escaped the attention of those who follow monetary policy in Sweden that the members of the Executive Board have held differing opinions for some time now. Most people have probably also noted that a minority of the Executive Board members – consisting of my colleague Karolina Ekholm and myself, in case anyone was not aware of this – has advocated a more expansionary monetary policy than the one that has been conducted and that the Riksbank intends to conduct in accordance with the repo-rate path advocated by the majority during the coming period. However, I am not as convinced that everyone has a clear idea of exactly what the differences of opinion entail.

While there is some variation in the results, the typical result – which was also obtained in the Riksbank’s own inquiry into the risks in the housing market5 – is that monetary policy has little effect on housing prices. A policy rate that is one percentage point higher, gives housing prices that are only around 3 per cent lower in 2–3 years. This means that one has to adjust the interest rate drastically to be able to affect housing prices and thus indirectly household indebtedness. This in turn has very negative effects in the form of higher unemployment and lower inflation. Reducing housing prices in Sweden (or preventing them from increasing further) by 10 per cent would appear to need such a large increase in the repo rate that GDP would fall by around 6 percentage points and unemployment would increase by roughly 3 percentage points (150,000 people).6 Using monetary policy and increasing the policy rate to push down housing prices thus has very high real economic costs – the insurance premium one has to pay in the form of increased unemployment is thus unreasonably high. As a comparison with the insurance premium of 6 per cent of GDP in the above example, it can be said that during the 1990s crisis GDP fell from the peak prior to the crisis in the third quarter of 1990 to the trough in the first quarter of 1993 by around 5 per cent.
If they seem to be highly elevated in relation to before, or are difficult to justify through established economic arguments, the risk is greater. The risk of problems is also connected to other economic developments. If these are stable, there is a smaller probability that those who have borrowed to buy a house will have made their decision on what later proves to be the wrong grounds. An example can illustrate the latter form of reasoning. Interest rates are currently at an all-time low. This indicates that they will rise, which is an assumption that most households ought to have taken into account. However, many of them may also have been counting on rising income, as this is the normal situation; interest rates usually rise at the point when economic growth and thereby income in society increases. There is of course a risk here. A couple of decades ago we experienced a long period of both low growth and high inflation. If this should be repeated - although it does not at present appear likely - it is quite possible that many households would encounter difficulties. To sum up, one can say that the Riksbank in its normal work process does take into account, as far as is possible, the effects of indebtedness and house prices on inflation via effects on, for instance, consumption and general demand. These effects are taken into consideration in our inflation forecasts.

Taken together it is possible that there now, as at the time of the monetary policy meeting in August, is reason to be somewhat more optimistic about economic growth abroad this year compared with the  BIS Review 51/2004  1  Riksbank’s assessment in May. The high oil price could indeed dampen the upswing somewhat and there have been some less positive signals over the summer from the United States, among other countries. But it appears that this will be countered by growth in other parts of the world, which seemingly will be more robust than forecast in May. In this context it may be worth noting that Sweden’s trade with countries such as China and India is still relatively small, but that the countries outside the OECD area (OECD-19) together account for about 20 per cent of Swedish export markets. This can be compared, for example, with the United States, whose share of Swedish exports is just over 10 per cent. If the performance of these countries is strong, it is of course of great significance for Sweden. Financial market developments during the summer have not entirely been in line with expectations. Equity price developments have been relatively weak. Both short-term and long-term interest rates have accordingly been weaker than we anticipated. The cause of this weaker development in interest rates has been uncertainty, primarily about the strength of the US economic upswing and the effect of the high oil price on global growth.
However, in the latter two cases the ESAs’ powers are subject to the “fiscal clause”, which provides that the ESAs’ powers cannot impinge on the national fiscal responsibilities. 4  BIS central bankers’ speeches  Third: reinforced financial supervision within the euro area So far, I have argued for two pillars of financial stability governance, which are widely consensual, that is, macro and micro-prudential supervision with a true European scope. Taking however into account what we are experiencing with the sovereign debt problems and the needed reform of economic governance, I believe that we must take a further step forward and reinforce substantially financial supervision specifically within the euro area. The tools at the disposal of the EBA and the ESRB, which for most part are of a co-ordinating nature in a decentralised setting, are appropriate for the EU as a whole given the several monetary policy jurisdictions and the less strict framework of economic governance, particularly for the conduct of fiscal policies. However, such tools may fall short of ensuring the necessary degree of supervisory intensity to implement micro and macro-prudential rules in a consistent manner across the euro area with a single monetary policy, single liquidity provision, and single lender of last resort, a perfectly integrated money market, and close interconnectedness among financial institutions, markets and market infrastructures. Moreover, the effectiveness of the economic governance framework requires, as I mentioned before, a “financial stability pillar”.

In order to supply liquidity to companies quickly and with minimum red tape, the Federal Council drew up an aid package, together with the SNB, the Swiss Financial Market Supervisory Authority FINMA, and the banks. Under this programme, the banks grant loans to companies. The Confederation assumes the default risk and the SNB provides the banks with liquidity through a new refinancing facility. Thanks to this facility, banks can refinance these loans favourably at the SNB policy rate of  Page 2/5  –0.75%. All indications are that the supply of credit and liquidity to small and medium-sized enterprises in Switzerland is currently working well. Another feature of the financial centre is that, in carrying out their activities, banks and insurance companies themselves add value and create jobs. The financial sector is an important employer in Switzerland, with around 218,000 full-time positions in 2018. In that year, it generated a nominal gross value added of around CHF 63 billion, or almost 10% of GDP. 1 Its size, however, means that both positive and negative developments in the sector have a particularly strong effect on Switzerland. The SNB, too, is dependent on an efficient and effective financial sector. This is because by granting loans, the commercial banks transmit our monetary policy to the Swiss economy. And by participating in the Swiss franc repo market, insurance companies, too, play a role in Swiss money market pricing. The financial sector thus makes an important contribution to the transmission of our monetary policy.
We would also like to reaffirm our unwavering commitment to the financial inclusion cause and look forward to deepening our cooperation with all stakeholders to fulfil the promise of greater financial inclusion, thereby bringing hope and better opportunities to our communities. Thank you. BIS central bankers’ speeches  3

In those days, even university students in the USA would not find it easy to have access to mainframe computers, let alone doing non-stop programming. But Gates had the opportunity and the advantage of having done lots and lots of programming, probably more than 10,000 hours, when he started Microsoft, which subsequently outperformed all other competitors in the field by huge margins. The question that I have is this: Would Bill Gates still be the same Bill Gates that we now know if he did not have the opportunities that were opened to him in these early years of his adolescence that enabled him to jump start on his programming career ahead of so many other equally clever and talented people in the USA? I don’t quite know the answer, but let me turn to another example of great success in the last century in the musical world – the Beatles. Being a person born in the 1950s, it is not surprising that I am very fond of the Beatles. John Lennon, Paul McCartney, George Harrison and Ringo Starr were clearly very, very talented. Ever since they launched their hugely successful tour of the USA in February 1964, the Beatles had for several decades became the centre of the rock and roll world. But is it true that Beatles became so good and so successful simply because they were music geniuses? BIS Review 174/2010  1  Is it that simple? Let’s look closer at the days before they became the idol of the world.
That is why “This Time is Different” has so often in the past been the pre-crisis refrain [Reinhart and Rogoff, 2008]. In the monetary policy sphere, an institutional solution has been applied to this myopia problem. Specifically, in most countries these days monetary policy decision-making has been delegated to a long-sighted, arms-length agency – typically, an independent central bank. This is now accepted best practice globally [Goodfriend, 2007]. Because it faces a time-consistency dilemma every bit as acute, the self-same logic applies to macro-prudential policy. In other words, one safeguard against financial crisis myopia comes from placing the levers of macro-prudential policy in the hands of an arms-length, independent central bank [Haldane, 2013]. 4  BIS central bankers’ speeches  There is a second reason for doing so. Experience from the past and the present suggests that using the monetary and macro-prudential arms in tandem may have helped stabilise simultaneously the financial sector and wider economy. That calls for monetary/macroprudential co-ordination. Such co-ordination is more likely to be happen if these two arms are attached to a single body and head. Monetary and macro-prudential policy then represent two halves of the same central bank brain. In practice, these arguments have not, so far at least, entirely won the day internationally. A significant number of new macro-prudential frameworks have emerged internationally in the past few years. In some cases, including in the UK, central banks have been handed macroprudential responsibilities.

Muhammad bin Ibrahim: Evolving the next frontier of Islamic finance development through innovation Speech by Mr Muhammad bin Ibrahim, Assistant Governor of the Central Bank of Malaysia, at the Mock Cheque Exchange Ceremony between the International Centre for Education in Islamic Finance (INCEIF) and Bank Islam, Maybank Islamic and Affin Islamic, Kuala Lumpur, 15 June 2010. *  *  *  Thank you for inviting me to witness the mock cheque exchange ceremony for the allocation of zakat contributions from Bank Islam, Maybank Islamic and Affin Islamic to the International Centre for Education in Islamic Finance (INCEIF). This act of giving signifies an exemplary commitment on the part of these Islamic financial institutions to support human capital development in Islamic finance. As a leading provider of advanced education in Islamic finance, INCEIF plays an important role to position Malaysia as a center for innovation and thought leadership in this field. But INCEIF alone would not be able to achieve this objective without the continuous efforts and support by all stakeholders within the industry. Let me make a few remarks on innovation. Few would argue on the role of innovation as the connerstone to sustaining growth and securing competitive advantage for any organization, industry, economy and nation. As we have seen in the more recent decades, innovation has fundamentally transformed the global financial landscape at a very rapid pace.
Although that means that a given amount of growth translates into bigger employment gains, it certainly is not an unmitigated good development. Also, we cannot lose sight of the fact that the economy still faces significant headwinds and there are some meaningful downside risks. In the headwinds department, I would include the  1  This recurring pattern has led some economists to question whether the depth and duration of the Great Recession has distorted the usual patterns of seasonal adjustment. BIS central bankers’ speeches  3  run-up in gasoline prices mentioned earlier because that will sap purchasing power, the continued impediments to a strong recovery of the housing sector, and fiscal drag at the federal and state and local levels. In terms of downside risks, these include the risk that growth abroad disappoints and the risk of further disruptions to the supply of oil and higher oil prices. On the inflation front, the overall rate of increase of consumer prices, as measured by the 12-month change of the consumer price index slowed to 2.9 percent in February from a recent peak of 3.9 percent last September. Despite the recent rise of gasoline prices mentioned above that may interrupt this pattern, we expect this moderation in the growth rate of consumer prices to resume later this year.

The loss of economies of scale from using the incumbent currency is another constraint preventing the move away from the current dollar-based system. As such, the dollar continues to dominate the international reserve system both in terms of reserve assets and international trade and financial settlements. 5. Given these difficulties, the current international monetary system will prevail but it may be prone to occasional instability as we have experienced in the past. In the meantime, we may still want to consider how to enhance the role of emerging market economies such as BRICS in the international monetary system. Such arrangement is arguably an avenue for these emerging market economies to share the privilege of reserve-issuing countries. It  BIS central bankers’ speeches  1  would also be a means of increasing the supply of reserve currencies to serve future demand for reserves along with the growth of the global economy. 6. To facilitate such diversification process, the BRICS need to also play their part by further opening the capital accounts, allowing currency convertibility and deepening and widening their financial markets. Once these conditions are achieved, the inclusion in the SDR basket would increase the demand for BRICS currencies. 7. It is important to stress that by adding BRICS to the international system is not a panacea. A key concern is the fact that the Triffin dilemma1 could still be problematic. In other words, the provision of global liquidity will continue to largely depend on the macroeconomic conditions of the reserve-issuing countries.
In recent years, extraordinary measures by many central banks have pushed down long-term rates. Over a longer time horizon, the factors behind the decline in interest rates are more structural in nature. The savings glut in 1/5  BIS central bankers' speeches  emerging economies, particularly China and oil exporting countries, has been one important factor. Savings have probably also increased in many countries as a result of demographic developments and a more uneven distribution of income. At the same time, investments in many advanced economies have been low, possibly reflecting prospects for low returns on investment in productive capital. In the wake of the financial crisis, conditions of a more cyclical nature have also contributed to the fall in interest rates. While deleveraging has pulled up savings, greater uncertainty may have dampened the willingness to invest. These developments have consequences for monetary policy. The level of the real interest rate that is consistent with balanced developments in the economy is usually referred to as the neutral interest rate. The difference between the actual real interest rate and the neutral real interest rate provides an indication of whether monetary policy is expansionary or contractionary. A real interest rate that is below the neutral rate stimulates economic growth, while a higher real interest rate dampens growth. The neutral interest rate is not directly observable. Central banks must nevertheless form a perception of how expansionary or contractionary monetary policy is.

In the past few decades, international estimates of the neutral real interest rate have fallen and are now at 1 percent or below in many countries (see Rachel et al (2015), Laubach et al (2015), Hamilton et al (2015), Constâncio (2016) and Zhu (2016)). Obviously, international interest rate developments affect Norwegian interest rate setting, particularly through the exchange rate channel. And Norges Bank’s estimate of the neutral interest rate has been gradually revised down in pace with international developments. The Bank’s forecasts are now based on the assumption that a neutral nominal money market rate in Norway will be between 2½ percent and 3½ percent in the coming years. The associated neutral nominal key policy rate is somewhat lower.1 The low level of the neutral interest rate raises a number of issues. Today, I would like to focus on two aspects that have been given weight in recent years in Norges Bank’s assessment of a robust interest rate path. The first is that the effect of changes in the policy rate tends to be more uncertain when the rate is very low. The second relates to the challenge persistently low interest rates pose to financial stability. GREATER UNCERTAINTY ABOUT THE EFFECT OF THE POLICY RATE Monetary policy decisions are made under uncertainty. Central banks operate in an environment of uncertainty regarding the current situation, the driving forces in the economy and the functioning of the economy. Much of this uncertainty is associated with conditions beyond the influence of monetary policy.
Inflation has also rebounded quite strongly, with headline inflation at 3.4% in September, according to the flash estimate, and inflation excluding energy and food at 1.9%. This rebound fuels a lively public debate, but we should be vigilant without being feverish: clearly, there is no such thing as stagflation. This rebound results mainly from several temporary factors, as already stressed by my ECB colleagues Philip Lanei and Isabel Schnabelii. Part of the rebound just offsets exceptionally low prices during the Covid crisis in 2020. Compared to September 2019, consumption prices have only increased by 1.5% on an annual basis, and prices excluding energy and food by 1.0%. A second cause can be attributed to the strong rebound of energy prices, in particular oil and natural gas, the latter having also a direct impact on wholesale electricity prices. It is of course very hard to forecast prices, but futures markets for natural gas are currently pricing a sharp decrease in the second quarter of 2022, once the current high demand related to stock replenishment and the winter season is over. A third cause is the global shift from the consumption of services to the consumption of goods as the global economy reopened while health restrictions or behavioural changes still affect the service sector. With low inventories, severe supply bottlenecks in some key sectors such as shipping or semi-conductors, and shortages, supply-chains are struggling to serve this demand. The resulting increase in the price of raw materials and industrial inputs has been transmitted to manufactured goods prices.

We sometimes read that Central Banks, including the ECB, are presently squeezed by two dilemmas: the first one on their objectives, as Central Banks would have either to accept excessive inflation, or to threaten the recovery. And the second on their instruments as 4/5  BIS central bankers' speeches  they would take the risk of cliff edge effects by exiting their Covid-crisis instruments. These two views are largely wrong according to me, and I tried to explain why in the case of the ECB. Based on the successful conclusion of our strategy review and forward guidance, we can be patient in navigating through a significant but temporary surge of inflation; besides, we have beyond PEPP a broad spectrum of possibilities to further run an accommodative monetary policy, thanks to our quartet of non conventional, or “new conventional” instruments. Thank you for your attention. i Lane (P.R. ), “The monetary policy toolbox and the effective lower bound”, speech, 11 October 2021 ii Schnabel (I. ), “Prospects for inflation : sneezes and breezes”, speech, 7 October 2021 iii See paragraph 8 of ECB’s monetary policy strategy statement  5/5  BIS central bankers' speeches
The latter represent those periods in which there was no primary issuance or spread data because the markets were effectively closed. Chart 1 Market functioning “heat map” based on issuance and spreads data(a)  Sources: Bank of America Merrill Lynch Global Research, Bloomberg, Dealogic, JPMorgan Chase & Co. and Bank calculations. (a) Shading is based on a score that reflects, for unguaranteed debt, both issuance (relative to GDP) and spreads in primary markets and secondary markets, expressed as a number of standard deviations from average, using as much data as was available from January 1998. Updated to end-May 2011; recent months use 2011 Q1 GDP. (b) Insufficient data for UK CMBS secondary markets. Since the nadir in late 2008, most markets have been on a course of gradual healing. The heat map shows how issuance and spreads in these particular markets have recovered. Advanced economy corporate bond spreads have fallen back sharply since their peaks  2  BIS central bankers’ speeches  (Chart 2). Measures of volatility and bid-offer spreads across a range of asset classes have also fallen back since the height of the disruption (Charts 3 and 4). And most international equity indices have picked up markedly since their troughs (Chart 5).

That makes it all the more important to resist every kind of nationalism or isolationism. Both are however on the rise. That worries me a lot. BILD: In the United Kingdom there will even soon be a vote on a complete withdrawal from the EU… Draghi: I cannot and do not wish to believe that the British would vote to leave, because we are stronger together. But if they do, it should be clear to them that they would lose all the benefits of the Single Market. BILD: If you had a spare wish for Chancellor Merkel, what would that be? Draghi: That she continues to fight for Europe. BILD: And one last question. The Bundestag has invited you again: will you go? Draghi: Of course. It will be my pleasure. BIS central bankers’ speeches  3