samchain/econo-pairs-v1 huggingface dataset:
In the July report we describe a potential scenario in Sweden if house prices were to fall at the same time as indebtedness is high.3 Experiences from other countries show that this would probably mean that households increase their savings and reduce their consumption, which would subdue demand in the economy and push up unemployment. The effects on GDP and unemployment may therefore be both substantial and long lasting. Relevant examples here are Spain and Denmark. Experiences also show that the higher households’ debts are, the greater the negative consequences will be of a fall in housing prices.4 At the same time, there would probably be long-lasting difficulties in attaining the inflation target, as the uncertainty over future inflation increases significantly. Conducting a flexible inflation-targeting policy in this context involves taking into account the risk of a crisis occurring by balancing the effects within the normal forecast period against the long-term risks I described. There is of course considerable scope here for different assessments, for instance, to what extent monetary policy affects the probability of a crisis, as well as how a crisis scenario would play out. These are difficult monetary policy deliberations without easy answers. As Sweden is a small country with its own currency and strongly dependent on other countries, it is particularly important that we do not create  2  See, for instance, M. Schularick and A.M. Taylor (2012), “Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870–2008”, American Economic Review 102, pp. 1029–61.

While significant challenges continue to confront several of the advanced economies as they seek to address the structural problems that remain unresolved, Asia must chart its own path in formulating strategies to develop our economies and financial systems. Following the Asian financial crisis, most emerging economies in Asia have strengthened their economic and financial fundamentals, improved their fiscal and external debt positions, and reformed their banking sectors. This has supported our economies through the recent global financial turmoil. With a significantly stronger foundation, Asia has now every potential to meet its growth and development goals in a manner that avoids the pitfalls that will undermine our future prospects. This morning, I would like to focus my remarks on five factors that I believe will serve to anchor sustainable growth and stability in Asia going forward. BIS central bankers’ speeches  1  Supporting sustainable growth and stability in Asia First is that the growth of the financial sector in Asia remains largely anchored in productive, real economic activity. In contrast to developments in recent years, financial innovation in Asia has mostly served to support the legitimate financing, investment and risk management needs of businesses and households. The growth of the financial sector has not significantly outstripped economic growth and new innovations in financial products and services have not taken on the degree of complexity and high leverage observed in the economies that were affected by the crisis.
Immediately after the meeting, the Bank issues a press release and holds a press conference. The press conference is transmitted live on the Internet. The introduction to the press conference is also published on the Internet. Newspaper articles and speeches are published in both Norwegian and English on our web site. Once a year, Norges Bank evaluates the projections made in the Inflation Report. The results are published in an article in Economic Bulletin. The Annual Report contains an assessment of the monetary policy that has been conducted. If actual price inflation deviates significantly from the target, the Bank will account for this in the Annual Report. Norges Bank’s interest rate decisions are a consequence of the response pattern that has been communicated, our analyses and our assessments of the effects of monetary policy. If we have succeeded in communicating our response pattern and thus laid the foundation for a credible monetary policy, the market should not in general be surprised by the Executive Board’s interest rate decisions. A measure of market surprise may be the change in money market rates from the day before to the day after a monetary policy meeting. A small change will indicate that the decision was in line with market expectations. On the other hand, a large change indicates that the market had expected another decision. 6  BIS Review 7/2002  This chart shows the change in deposit rates (red bar) and in three-month money market rates (blue bar) in connection with monetary policy meetings since 1999.

Economic theory can contribute insight into the factors that determine the equilibrium rate, but attempts to quantify the equilibrium interest rate based on theory yield a broad interval for a possible level. Quantification also presents problems, as estimates must be made for unobserved variables such as consumer impatience. An estimate of the equilibrium interest rate in industrialised countries presented in the publication Penger og Kreditt 2/003 indicate an interval of 3-9 per cent. The upper limit in particular seems unreasonable in relation to observed real interest rates, for example. An alternative is to use historical average interest rates on the basis of an assumption that actual real interest rates will vary around the equilibrium interest rate. This method also poses problems. Each historical era will, for example, be affected by the specific characteristics of that era. Credit rationing, for example, has influenced interest rate formation for long periods. In addition, both population and productivity growth have varied over time. Throughout the period 1870-2003, the average for long-term real interest rates in Norway has remained close to the average in the UK and the US: Norway 2.2 per cent, the UK 2.0 per cent and the US 2.8 per cent. The economy has changed substantially in this period. Thus, the average for this period probably provides little indication of what a long-term equilibrium interest rate is today.
Sweden is highly affected by what happens abroad but we have coped much better than many other countries, partly because we have not been hit by problems resulting from an excessive level of debt in either the public or the private sectors. Figure 2 Weak developments abroad have affected Sweden GDP, quarterly changes in per cent, annual rate, seasonally-adjusted data 12  12  9  9  6  6  3  3  0  0  -3  -3  -6  -6 KIX  -9  USA EMU  -12  -9 -12  Sweden  -15  -15 05  07  09  11  13  Note. KIX is an aggregate of countries that are important for Sweden’s international transactions. Sources: Bureau of Economic Analysis, Eurostat, national sources, and Statistics Sweden  2  BIS central bankers’ speeches  After the sharp downturn in 2008–2009, Swedish GDP growth initially recovered quite quickly. Unfortunately, the improvement in the rate of growth stopped short when the financial crisis developed into a debt crisis in Europe, and this has restricted Swedish exports. This has happened directly, as the euro area is Sweden’s largest export market, and indirectly, as the euro area affects industrial activity in other parts of Europe and Asia that in turn are important growth markets for the Swedish manufacturing industry. However, while indicators have long shown that the manufacturing industry is in a weaker than normal state, the financial situation of the households has been relatively strong.

The situation prior to the meetings in both July and September was marked by a low rate of inflation, for example CPIF inflation has been below two per cent since 2011, and a level of resource utilisation in the economy that was deemed to be lower than normal. The forecasts in July and September were that inflation was expected to rise towards two per cent in 2015 and that resource utilisation was expected to increase as growth picked up. The assessment was that the expansionary monetary policy would contribute to this. I personally voted to keep the repo rate at the historically-low level of one per cent at both the July and September meetings. Figure 1 Repo rate remains low Repo rate, per cent 5  5 July September  4  4  3  3  2  2  1  1  0  0 07  09  11  13  15  Note. Outcome data are daily rates and forecasts are quarterly averages. Source: The Riksbank  BIS central bankers’ speeches  1  What were the trade-offs behind my decisions? On the one hand an even lower repo-rate path could, according to the Riksbank’s calculations, lead to inflation reaching the target somewhat sooner and to resource utilisation improving somewhat faster, while on the other hand there were other circumstances to take into account that made the decisions more complicated. For example, there is always uncertainty about exactly how monetary policy will affect the economy during the forecast period.
In my speech today, I will highlight three grounds for optimism that a healthy, business-led recovery can be sustained in the UK while public spending is restrained and the deficit is brought down: the progress of the recovery so far; the resilience of UK businesses through the recession; and the experience of the previous recovery in the mid-1990s, when there was also a significant rebalancing of public finances. However, for a healthy recovery to be sustained, it also needs to build on a platform of low and stable inflation. And this, in my view, has implications for the way in which the MPC should be responding to the current economic situation – an issue I will come back to later in this speech. Progress of the recovery so far Since the second half of 2009, the UK economy has been recovering from recession. This recovery has not been uniform across different sectors of the economy, with manufacturing growing faster than services. There has also been some variability in growth rates from quarter to quarter, with relatively weak growth through last autumn and winter, but much stronger growth over the spring and summer of this year. GDP has risen by 2.8% over the last year, a faster pace than the 2% or so seen in the first year of the previous two recoveries.

They are attracted not just by work opportunities but also by our cosmopolitan lifestyle, by our thriving cultural – and culinary – scene, and by the spectacular country trails and fine beaches that are so close to the bustle of city life. Crowning all of this is Hong Kong’s geographical and historical role as the gateway that connects China and the rest of the world, and the enormous opportunities that this brings. This is, I think, 1/4  BIS central bankers' speeches  the defining feature that firmly positions Hong Kong as the leading IFC in the Asia time zone. Resilience Resilience is the bedrock of an IFC. In the past quarter-century, Hong Kong has been exposed to a series of crises that have severely tested our financial system — the Asian financial crisis, SARS, the global financial crisis, and more recently the triple whammy of social unrest, geopolitical tensions, and COVID-19 pandemic. Through all of these crises our financial system has emerged stronger. Take the monetary system. The Linked Exchange Rate system has remained rock solid throughout these testing times. Indeed, market confidence in the system has only strengthened over time. At the height of the triple whammy that I just mentioned, we saw continued inflows into the Hong Kong dollar, pushing our exchange rate to the strong side of the conversion zone. Speculators betting against the Hong Kong dollar learned a hard lesson.
From the statistical point of view, the financial crisis which turned into a global recession has provided a good opportunity to carry out a stock-taking exercise in the areas of data availability and timeliness. In the case of the Czech National Bank, it was quite a comprehensive exercise since the central bank acts as a monetary authority, integrated supervisor and statistical institution, which brings a lot of synergies. During the period of turbulence banks were required to provide us with additional information regarding, for example, their liquidity positions, exposures vis-à-vis the group of their foreign parent bank and information indicating how active the banks were in their lending activities. This information was even provided on a daily basis for some time. Some data, both standard and those provided as a result of the global financial crisis, are collected mainly for supervisory reasons and other data for monetary purposes, but put together they provide the policy makers with a comprehensive set of information. In addition, the statistical and regulatory  BIS Review 107/2009  1  concepts have interacted more closely since data collection for both purposes started to be carried out in a coordinated way. Integration of supervision in the central bank, which took place more than three years ago, thus also proved successful during this turbulent period. The Czech National Bank is both a user and producer of statistics. Macroeconomic statistics produced by the Czech Statistical Office are very important for the central bank.

Let me also touch upon a very important area of our statistical work – co-operation between statistical authorities, namely between the Czech Statistical Office and the Czech National Bank, not only in the preparation of this conference but on a regular basis. This co-operation is aimed at an effective arrangement of statistical processes in our country and minimizing the burden on respondents. Coordinated data collection and sharing of information are the key points in this respect. As we know, a formal arrangement is always a necessary but not sufficient condition for good results. It has become a standard between these two institutions to meet once a year at an annual summit devoted not only to the assessment of the past twelve months’ work and designing the tasks for the period ahead, but also to informal discussions in a friendly atmosphere. This is also an important feature of statistical work since statistics do not involve only figures, but also people who create and compile them. 2  BIS Review 107/2009  Having finished the description of our co-operation in this way, I would like to wish all participants of the conference the same friendly atmosphere at the conference and at the same time interesting presentations and fruitful discussions in addressing the above mentioned or other statistical issues. Thank you for your attention  BIS Review 107/2009  3
It emphasises on a strong linkage to productive economic activity to generate legitimate income. It also emphasises on accountability, fairness and transparency. All these reflect the fundamental values propagated in Islamic finance that could serve as a stable and resilient form of financial intermediation. When Islamic finance is applied in an appropriate and structured manner, it has a strong prospect to serve as a contributor to a sustainable global economic growth and financial stability. The infrastructure already established in Islamic finance today is ready to serve as an effective intermediary for the conduct of global business including promoting greater intraregional trade not only within Asia but between the various regions of emerging markets. With more than 600 Islamic financial institutions that now operate in more than 75 countries, growing at an annual rate of about 15 per cent, Islamic finance can be a platform to strengthen economic ties between East and West Asia in trade and investments flows. The sukuk market in particular, has evolved as an important avenue for international fund raising and investment activities, generating significant cross-border flows. Sukuk issuances have grown in diversity and sophistication. The diverse sukuk structures of Ijarah, Istisna, Murabahah, Musyarakah and Mudharabah have expanded to form hybrid sukuk which include exchangeable and subordinated sukuks, thus increasing its usability and compatibility to fund various forms of financing. For example, huge amount of funds could be raised, via sukuk, for the purpose of financing large infrastructure projects.

Among his many achievements was the time he steered the country during the 1997 – 98 Asian crisis. His unorthodox policies then have become mainstream now. Under his leadership, Malaysia experienced modernisation and economic prosperity, a development most profound for my generation. That modernisation included the early development of Islamic financial system. From the seeds planted during Tun Mahathir’s time, we are now seeing the maturing of the Islamic financial system in Malaysia that is innovative, competitive and increasingly internationalised. What was once a novelty has become an alternative means of conducting business. We owe this very much to Tun Dr. Mahathir’s foresight and wisdom. Not many people today realised that one of the first actions that Tun Dr. Mahathir took when he came to office in 1981 was to set up a National Steering Committee to implement Islamic banking in Malaysia. The report of this committee on the viability and strategy of the Islamic banking, was the impetus for the creation and robust development of the Islamic financial industry in Malaysia. The rest they say is history. Global economic challenges and Islamic finance The world is transforming and its transformation is way beyond what we had seen before. This is an era of radical change, new rules are being formulated, standards and best practices that were in vogue hardly 5 years are now considered insufficient.
The case of Europe is comparable, and that is why the euro has also depreciated against other currencies, not only the peso. In order for growth of developed countries to improve and the overall world economy to pick up, the domestic demand of countries in a strong cyclical position needs to be redirected to imports, while at the same time those countries with weak domestic demand increase their exports. The second factor advocated to intervene the forex market is the need to hoard international reserves. This, for protection against a further worsening of the external scenario. Over the past several years, the Central Bank has increased its level of reserves significantly. The interventions of 2008 and 2011 increased the reserves by nearly 18 billion dollars, to twice the level of December 2007. Thus, at July this year, our reserves amounted to close to 15% of GDP. Certainly, there are benefits associated with hoarding international reserves. An economy with a higher level of international reserves reduces the probability of sudden changes in its external credit conditions, moderates its effects and provides room for policy makers to take offsetting measures. By the same token, it is important that the level and management of international reserves are such that they can be readily available whenever it is deemed necessary. Still, the gains obtained in the margin are lower the greater the amount accumulated.

In an Appendix to this Report, we forecast that the negative net worth of the Bank will go from 2% to 3.8% of GDP between 2011 and 2013. Such deterioration is explained by the composition of our assets and liabilities. In the current circumstances, expanding our reserves would further worsen our financial position. Although the Bank’s negative net worth has not been an impediment for monetary policy conduct, taking actions that increase such negative value is a cost to be paid by all Chilean citizens. Having said all this about the convenience or not of a forex intervention, undoubtedly the best way for our exporting sector to boost competitiveness in the world markets is through constant improvement of processes, both by investing in technology and developing their human capital. Likewise, it is important to be constantly on the lookout for new markets of  BIS central bankers’ speeches  3  destination and product innovation, to ensure better conditions for their businesses. In any case, there are also internal issues that must be resolved to back our producers’ competitiveness, including any measures that disentangle administrative processes when creating and maintaining a firm and especially, establishing a policy that aims at developing a balanced energy matrix that can reduce energy costs. As we have said before, the cost of electric power in Chile, which is an important input of productive activity, is higher than the OECD member countries’ average. Let me now describe the macroeconomic scenario contained in our Monetary Policy Report.
Instead, they should make it a normal practice to hedge against undesirable outcomes. Ladies and Gentlemen, Monetary and exchange rate policy can at best help safeguard economic stability and smooth out short-term fluctuations and bumps here and there. Price competitiveness may be important, but it is only one side of the story. The other side of competitiveness is product improvement and efficient production techniques. Japanese companies are no stranger to this dimension of competitiveness. After the Plaza Accord in the mid-1980s, when the yen gained roughly 50 per cent in one year against the US dollar, Japanese businesses found ways to improve. Those that succeeded became more resourceful as a result. For the Thai economy to compete and grow robustly into the 21st century, we need to foster investment in infrastructure, physical and institutional, as well as in human resource. This is the only way to improve our productivity while enabling the majority of the Thai people to share the gains from economic growth and global integration. What’s especially important to continued prosperity is the clarity and the implementation of planned public investment over the next 5 years. These plans, as they are, will address the entire spectrum of infrastructure deficiency our economy faces. The public sector’s commitment to invest heavily where it matters most should help boost business sentiment and with it private investment, an important growth engine that had been held back over the past few years.

On the external side, even though export growth in January is especially robust at 33 per cent, the likelihood of seeing a repeat of spectacular export performance is slimmer this year, as global growth is projected to slow down considerably. In fact, export growth in February has already decelerated to 16 percent. Going forward, the risk factors that can weigh on the ability of the Thai economy to expand will likely come from the US recession and high oil and commodity prices. In an increasingly integrated world, the slowdown in US demand can impact on Thailand’s export prospects. Despite the Fed’s aggressive interest rate cuts and innovative measures to forestall the rise in mortgage interest rates, substantial downside risk remains. Most US watchers agree that the US economy may not be able to avoid a recession; indeed, employment, house price and business confidence data all point to a possibility that it is already in a recession. It’s only a matter of how deep and how long this process will last. But while the US economy weakens substantially with worsening prospects, global price pressure is not letting off. Crude oil prices continue to rise as world oil demand strengthens in the face of limited global production capacity. In this tight demand-supply situation, adverse geopolitical events, unfavorable weather condition or further dollar slide can spike up oil prices. This phenomenon is not new. In fact, continued demand pressure coupled with supply constraint and other uncertainties have led countries to find substitutes to fossil fuel.