samchain/econo-pairs-v1 huggingface dataset:
Exchange rate stability will probably be analysed with respect to the period before as well as during participation in ERM II. The relationship between the krona and the euro1 has been relatively stable since the beginning of 1996. Disregarding the exceptionally turbulent period last autumn, during this period the fluctuations around a krona/euro rate of 8.70 have been largely inside a margin of ±2.25%. 1  The synthetic euro up to the turn of 1998. BIS Review 96/1999  2  How is a reasonable exchange rate decided? When, or if, the time approaches for a Swedish decision to join the monetary union, it will thus be necessary to consider the question of participating in ERM II. Since the beginning of this year, the matter of whether and when the krona is to be included in the Exchange Rate Mechanism is something that the government decides, albeit in consultation with the Riksbank. At the same time, the krona’s central rate with the euro in ERM II and the margin for fluctuations are matters for which the Riksbank is accountable. So in practice, the new allocation of responsibilities means that the government and the Riksbank have to reach a consensus on the terms for the krona’s participation in ERM II. But these terms are not decided by Sweden alone. The central rate and the band width will be negotiated between Sweden, the countries in the monetary union and the non-euro countries that are members of ERM II. The negotiators include finance ministries as well as central banks.

USD based price indexes 1  0,8 Dec 93 - 1997  0,6  1998-2002  0,4  0,2 Denmark  Finland  Norway  Sweden  Source: EcoWin / Financial Times SG 240802  4  BIS Review 47/2002  Key interest rates in the Nordic countries 12,0 11,0 10,0  12,0 11,0 10,0  Iceland  9,0 8,0  9,0 8,0  Norway  7,0 6,0 5,0  7,0 6,0 5,0  Denmark  4,0 3,0  Sweden  2,0 1999  2000  Finland (EMU)  2001  4,0 3,0  2,0 2003  2002  SG 240802  Nominal effective exchange rates January 1990=100 130  130 Appreciation  120  Iceland (January 1997=100)  Denmark  110  110 Norway  100 90  120  100 90  Sweden  80  80 Finland  70  70  Depreciation  60  60 90  91  92  93  94  95  96  97  98  99  00  01  02  Source: Bank of England and Central Bank of Iceland SG 240802  BIS Review 47/2002  5  Norway: Effective exchange rate and 12-month interest rate differential against trading partners 4,0  93  3,5  96  3,0  Interest rate differential (12 months) (left-hand scale)  99  2,5  102  2,0  105  Effective exchange rate (right-hand scale)  1,5 1,0 jan.99  108 111  jul.99  jan.00  jul.00  jan.01  jul.01  jan.02  jul.02  Source: Norges Bank SG 240802  Norway: Effective exchange rate 90  90  95  95  100  100  105  105  110 115 1990  Forward exchange rate (UIP)  110 115  1992  1994  1996  1998  2000  2002  2004  Source: Norges Bank SG 240802  6  BIS Review 47/2002
Common for all of the Riksbank's tools is that they in one way or another affect the  36 See P. Gustafsson and T. von Brömsen (2021). 37  See also Committee on the Global Financial System (2019). 38 See also the European Central Bank (2020) and the International Monetary Fund (2020). 17 [35]  balance sheet. In brief, no balance sheet, no central bank, and rate-setting is just empty talk if one is not willing to use the balance sheet. However, changes in the policy rate don’t always have a major impact on the balance sheet, but this is because the financial market participants know that the Riksbank can use its balance sheet if needed, and that the Riksbank does so from time to time. Extensive asset purchases and direct liquidity support more or less always cause the balance sheet to grow substantially. 39 Since the inflation target was formally introduced in 1995, the Riksbank has mainly used these tools on three occasions. The first occasion was during the global financial crisis 2008-2009, when we offered the banks liquidity support, for instance, in the form of loans in SEK at longer maturities, and loans in USD, and also approved a larger number of securities as eligible collateral. These measures secured the liquidity of the financial system, and this facilitated credit granting and reduced various risk premiums that limited the impact of monetary policy.

I would like to discuss the changes in the financial environment and how they affect our different areas of operation, but before I do so I shall talk about the Riksbank's main role in the financial system, namely to provide the Swedish economy with safe money that is easy and efficient to use. The Riksbank provides the economy with money that safe and simple to use Money is needed so that we can buy and sell goods and services. If we are to have confidence in money, and want to use it, it needs to be both safe and easy to use. This requires in turn financial stability, price stability and smoothly-functioning payment systems. Let me describe how the Riksbank tries to create the right conditions. If we start with money being safe, this means that one can rely on money representing a particular value in goods and services, and that it will retain this value until the day one wants to redeem it for goods and services. The pieces of paper that we issue have no value in themselves, but function as a form of evidence that someone has produced something of value. 2 In the academic literature there is, for instance, a branch known as ‘monetary economics’ or in its modern form, ‘new monetarist economics’ 3, which looks into why money arises and under what conditions it retains its value.
The mind of a researcher engaged in scientific inquiry There are certain qualities and prerequisites which a researcher engaged in scientific inquiry should possess. The most important of these is the open mind with which the researcher should commence his inquiry. The researcher is not a propagandist, nor is he a person bent on superimposing his views on others. He should be humble enough to reject even the views he would have held for long, if his inquiry does not support them. In other words, he should conduct his inquiry, not with the objective of establishing the views held by him, but with the objective of subjecting them to a free inquiry. This is known as rational and objective thinking. The Buddha, in a discourse He preached to members of Kalama clan, outlined the nature of rational and objective thinking, though its purpose was to guide them to distinguish good from bad. “Oh, Members of Kalama clan…” the Buddha said. “…Do not rely on an opinion because you have heard it often and you are familiar with it. Do not accept it because it is in accord with tradition or found in the scriptures or logical or conforms to theory. Do not accept it because it is preached by your teachers or by a respected priest” (Anguththara Nikaya). The researcher who plans to engage himself in scientific inquiry should be free from the influence of previous knowledge or the traditions and should not be guided by mere logical considerations.

The mathematics-phobic Diderot, being unable to respond, is said to have fled the Court! These examples suggest that people can sometimes use gimmicks to confuse opponents and win arguments. Such winnings do not prove or disprove any proposition. They do not add knowledge to the extant body of knowledge. They simply help a crafty person to make a temporary escape from an existing difficult situation. Scientific research is different from the employment of gimmicks to gain temporary winnings. It is the method of using human intellect to discover new knowledge and add that wisdom to the existing body of knowledge until it is disproved by a new discovery. Hence, those who are engaged in scientific research have to conform to a set of accepted principles, guidelines and a code of ethics and morality. To follow such a set of rules when playing the game called scientific inquiry is not an easy task. Yet, one has to do so in order to separate science from what is sometimes known as pseudo-science. Why scientific research? Human knowledge is as old as the history of human beings. Human beings have attempted to understand Nature, by using human intellect and experience, so that they could find answers to questions that had been puzzling them constantly. Some of these questions have been beyond direct observation such as “who created the world?” or “what caused rains?”. Hence, it is quite natural for them to hypothesise answers by using both intellect and experience.
The purpose of such a monetary adjustment is not to break the expansionary trend but to achieve growth that is more sustainable. In BIS Review 101/1997  -3-  other words, a shift from an expansionary stance to one that is more neutral is designed to bring the economy onto the growth path that matches its structure -- not to bring growth to a halt. Neither should this be described as a contractive turn; it is rather a move that yields a less expansionary stance. In the public debate the Riksbank’s monetary policy is sometimes described as though repo rate adjustments were a form of “punishment” or “reward”, aimed at measures that have been taken either by the political system or by labour market organisations in connection with wage negotiations. My point here has been that interest rate adjustments are a natural feature of monetary policy’s path over the economic cycle. Of course this does not mean that the construction of monetary policy is not affected by fiscal expansion or contraction, or by low or high wage settlements. What I want to make clear is that adjustments to the instrumental rate in the course of the economic cycle are a natural phenomenon and their purpose is to create conditions for sustained growth and low inflation. If a central bank waits too long before shifting from an expansive to a more neutral monetary stance, problems with bottlenecks are liable to become more widespread and the economy may become overheated.

Besides entailing rising inflation, this causes firms and households to start accustoming themselves to a high level of inflation. Monetary policy may then be forced to adopt a contractive stance in order to bring inflation back to the target rate. So if the central bank waits too long, the interest rate increases may be all the larger. In the meantime, moreover, economic imbalances and tensions may become so great that they lead to economic setbacks. We are familiar with such a course of events from the 1970s and 1980s, and perhaps not least from the early 1990s. Against this background, in situations when capacity is coming under pressure, it is clearly better for a central bank to act at an early stage. Future inflation The assessment in the inflation report, published just over a month ago, is that growth in the Swedish economy will be about 2 per cent in 1997 and around 3 per cent in 1998. In 1999, the rate is expected to go on accelerating to just over 3 per cent. This assessment envisages that, in an expanding world market, export growth remains relatively high. This is accompanied by an accelerating increase in private consumption, while public consumption at least stops falling. Economic growth in Sweden in 1998 and 1999 would then most probably exceed the potential rate, which is estimated to be just over 2 per cent in annual terms. The broad rise in all the major demand components will therefore gradually exert pressure on the available resources.
Conferences like this that bring together the official sector with financial analysts, markets participants and academic economists play an important role in developing the theory and empirical analysis needed to inform those assessments. Thank you very much for your attention. Data Appendix The primary sample includes U.S. owned bank holding companies (BHCs) with assets greater than $ as of 3Q16. This represented approximately 80% of all U.S. owned BHC assets. Where available, estimates are adjusted for mergers since 2000 to include major banking and non-banking (broker-dealer) operations. The FDIC sample represents all FDIC-insured 6/7  BIS central bankers' speeches  depository institutions. 1 The Federal Reserve supervisory program described here applies to bank holding companies, and I use the  term “bank” for ease of exposition. 2 "Consolidated Supervision Framework for Large Financial Institutions,” SR 12–17, December 17, 2012. This  framework applies to institutions that are part of the Federal Reserve’s Large Institution Supervision Coordinating Committee (LISCC) portfolio, including domestic banking organizations with consolidated assets greater than $ billion, large foreign banking organizations with combined assets of U.S. operations greater than $ billion. 3 "Supervision and Regulation,” Federal Reserve Chair Janet Yellen, September 28, 2016. 4 "Amendments to the Capital Plan and Stress Test Rules,” Federal Reserve Board of Governors, January 30,  2017. 5 The cost of capital for banks may depend on the mix of equity and liabilities due to tax effects, conjectural  guarantees, inefficiencies in raising equity, or the opacity of bank risk.

16 The Federal Reserve Bank of New York hosted a conference last October on “Reforming Culture and Behavior  in the Financial Services Industry: Expanding the Dialogue." 7/7  BIS central bankers' speeches
Similarly European resolution authorities setting MREL in the EU will need to consider how to go from MREL in current liability structures to an MREL that ultimately meets the BRRD objectives. The RTS allows transitional MREL to be set until 2020. Work needs to be done to clean up existing liability structures to make them consistent with requirements. This is firm level work which will be addressed as part of the resolution planning process. Let me give you some examples of what I have in mind. •  My first is structured notes. Some respondents to the FSB consultation suggested the blanket exclusion of structured notes from TLAC should be relaxed. We are reflecting on that. But the current situation is that in many cases structured notes have been issued to meet the needs of often quite small pockets of investors. The result is that some firms have many thousands or even tens of thousands of notes outstanding each with different structures and embedded derivatives. Trying to value all these instruments and bail them in would be a barrier to making resolution work. And as such will need to be addressed as part of the resolution planning process for a particular firm. •  My second example is non-equity capital instruments issued out of operating companies. As I described earlier, SPE strategies are built around putting only the top company in a group into resolution and avoiding legal risk and the potential dislocation of systemic functions by keeping operating subsidiaries outside resolution.

The resolution naysayers point to the events of the crisis and the Lehman failure in particular and say that cross-border resolution will never work, national interest will always win out. Clearly the whole enterprise of resolution planning is to face up to this challenge ex ante. The Key Attributes envisaged Cooperation Agreements (CoAgs) among the authorities to describe a common resolution plan for an individual G-SIB. But to work CoAgs need underpinning and this is where TLAC comes in. Not only does TLAC provide countries with confidence that G-SIBs are operating with sufficient resources to be resolved safely. But that confidence is provided in a concrete form. This is the internal TLAC downstreamed in SPE groups from the parent entity to material subsidiaries. This is intended to provide hosts with comfort that in the event of a resolution they will not be exposed as losses would be upstreamed to the holdco, enabling the hosted legal entity to continue to operate. Hosts would therefore not need to take the sort of unilateral actions to ring-fence assets that were so damaging during the crisis and have tended to fragment the international financial system since. In short we need cross border resolution to work through structural changes like TLAC for international banking to work. And we need this to be internalised by the market as well. I mentioned before disclosure for investors. But it is as important for liability holders that are unlikely to be bailed in to understand that too.
In contrast to the enhancement of the interest rate channel, at least in normal times, financial innovation is traditionally expected to have weakened significantly the so-called bank lending channel. Financial innovation gives firms broader access to securities markets and, as such, makes them less dependent on bank funding. Similarly, banks may be more able to issue debt securities and less dependent on the constraint of funding themselves with secured deposits. Moreover, securitisation by banks was expected to alleviate their liquidity constraints and thus to further weaken the credit channel. Indeed, previous research has generally found that banks have used credit market innovations such as loan sales and securitisation to diversify credit risk exposures and increase lending. However, recent research has highlighted the potential for bank capital regulation and market discipline to shape a bank capital channel of monetary transmission. Viewed as an extension of the standard bank-firms agency problem to the relationship between banks and their creditors, this capital channel could reinforce the standard financial accelerator mechanism. This last concern is closely related to the fears of a credit crunch that have been voiced in the last six months. Current events show that the tide of financial innovation may recede and the future of the originate-and-distribute model of banking is a topic of renewed work. What we see now suggests that an unprecedented reintermediation process is underway, which might imply in the end a strengthening of the credit channel.

In addition, there could be a number of policy formulation tasks ahead for the Central Bank which are beyond the scope of my speech today, such as financial system structure – including questions on the extent to which further restrictions should be placed on maturity mismatches in financial institutions’ balance sheets and how the system’s public goods elements can be protected against leveraged speculation. Honoured guests: In closing, I would like to thank the Central Bank’s many collaborators for a successful co-operative relationship over the past year. First among them are the ministries with which the Bank works most closely – in particular, the Ministry of Finance and Economic Affairs, which now is responsible within the ministries for the affairs of the Central Bank. In this context, I wish to thank the two Ministers who have led the Ministry of Finance and Economic Affairs since this arrangement was introduced. I would also like to thank the Parliament of Iceland, particularly the Economics and Commerce Committee, for their cooperation during the year. Thanks are due as well to the Financial Supervisory Authority for growing collaborative relationship. I thank the outgoing Supervisory Council for good cooperation. And last, but certainly not least, I would like to thank the staff of the Central Bank for their hard work and excellent contribution during the year. 6  BIS central bankers’ speeches
It also explains in part why unemployment among young people is – fortunately – much lower in Iceland than in many of our trading partners. When full employment is achieved, productivity growth will become more important, however. If attempts to ease the tension in the labour market are unsuccessful and wages rise far more than is consistent with the inflation target, it will be unavoidable to respond by tightening the monetary stance; i.e., by raising interest rates. Even if inflation rises early on, the Monetary Policy Committee has the tools it needs to bring it back to target over the medium term. Higher interest rates will have a negative effect on GDP growth and employment over time, however. Real wages and the real exchange rate will rise because of the interactions between rising nominal wages and a tighter monetary stance. In addition, firms would probably respond by slowing down recruitment – perhaps even by cutting back on staff. There is the risk that such a turn of events would be most harmful to labourintensive sectors and workers whose position in the labour market is weakest. It is therefore important to find ways to channel the desire to improve standards of living towards measures  BIS central bankers’ speeches  3  that are likely to generate more lasting results without jeopardising stability and the economic recovery that has brought us this far. Honoured guests: The time for decisive steps towards lifting the capital controls is rapidly approaching. Some may think this step comes rather late.

Guest of Honour Following on the success of the 2012 Forum, it was felt that the momentum gained from that forum should not be lost. This Forum is, therefore, a follow up event from the one held last year. The theme of this year’s event is “Encouraging Local Content and Business Linkages: Role of the Financial Sector” Arising from last year’s event, nine major recommendations were made as follows: i. Set up of a credit guarantee facility;  ii. Establish a credit line to be provided by a wholesale institution such as DBZ coupled with training for financial institutions;  iii. Training for MSMEs/financial education to be an integral part of on-going efforts to support access to finance;  iv. Establish a central collateral registry;  v.  Develop a national MSMEs financing policy;  vi. Initiate legal reforms for speedy settlement of commercial transactions and resolution of disputes;  vii. Develop incentives for financial institutions that service the needs of MSMEs;  BIS central bankers’ speeches  1  viii. Develop a legal framework for consumer protection and data protection; and  ix. Monitoring and regulation of Money lenders. I am happy to report that seven out of the nine proposals made have been progressed with the other two still under discussions. The Government and World Bank are already in negotiations for a financing arrangement that may incorporate a form of guarantee scheme and financial education elements while DBZ has been recapitalized and has disbursed some funding through other financial institutions.