samchain/econo-pairs-v1 huggingface dataset:
What the crisis has indeed challenged is the widespread conviction that meeting one particular stability criterion, while necessary in order to achieve the others, is also a sufficient condition  BIS central bankers’ speeches  1  to do so – after all, maintaining price stability, while valuable in itself, has proved insufficient to ward off major financial or macroeconomic instability. As a matter of fact, Andrew Crocket claimed ever since 2003 that the “peace dividend” yielded by the successful war against inflation had not lived up to expectations and therefore the battlefront against financial instability should not be overlooked. Regardless of how this battlefront is approached, it is of the essence to make sure that the tasks entrusted to the central bank are feasible. Otherwise, if the monetary authorities are overburdened with possibly conflicting goals, the major risk is to render them inefficient and unable to deliver a single one of their objectives. This is the very reason why the issue of central bank governance is so intricate and delicate: one needs to reconcile objectives that, under certain circumstances, might even prove incompatible. 2. Integrating or separating price and financial guardianship Given that the conference focuses on central bank and supervisory governance, allow me to touch on the issue of integrating price guardianship and financial guardianship within the central bank. As you probably remember, the idea that the two tasks should be completely separated has gained ground in the 1990s.

There are two factors which could explain this apparent resilience. The first is the atypical buffers for consumption that households have available in the current environment. They are still benefiting from sizeable fiscal policy support to shield them from rising energy prices, amounting to around € billion in 2022 and 2023, and they still have around € billion in excess savings built up during the pandemic. [9] The second factor is the reduced sensitivity of the labour market to slowing growth, which is supporting labour income and households’ employment expectations. Faced with labour shortages, firms are responding to weaker demand first by hoarding labour – that is, by further reducing hours worked rather than by cutting jobs. And now, with energy prices falling and wages rising, household disposable incomes are set to increase. This was reflected – before the recent financial market tensions arose – in our projections for a stronger  recovery this year. So, for inflationary pressures to ease, it is important that our monetary policy works robustly in the restrictive direction. And that process is only starting to take effect now. The first leg of the monetary transmission process – from policy measures to financing and monetary conditions – is already having a substantial impact. The cost of borrowing is increasing steeply, and loan dynamics look to be contracting faster than during previous hiking cycles. Credit growth to firms has dropped markedly since the third quarter of last year.
BIS Review 77/1999  6  Forecast underlying inflation (UND1X) Percentage 12-month change 4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2 95  96  97  98  99  00  01  Sources: Statistics Sweden and the Riksbank  Increased employment is also foreseen and in the June Inflation Report we counted on a reduction of unemployment to below 5 per cent in two years time. Against this background, in the period 1999– 2001 the average annual rate of wage increases is judged to be 3.5–4 per cent. That seems to be consistent with a forecast annual rate of productivity growth of 1.5–2 percent and the same order of inflation expectations among the labour market organisations. I should perhaps underscore that this is a forecast, not a desired rate of wage increases. A lower nominal wage rise would create better conditions for a quicker increase in employment. How wages actually develop and the consequences of this for inflation and monetary policy will depend in large measure on how the labour market turns out to function in the coming upward phase. The Riksbank will be keeping a watchful eye on the available indicators. The estimates of the NAIRU and the output gap suggest that inflationary pressure is rising and that in our forecast period the economy will approach or even reach full capacity utilisation.

1999 and 2000 forecast 10  80  Government debt  75 70  5  65 60 0  55 50 45  -5  40 35  Budget balance  -10  30 25 20  -15 90  91  92  93  94  95  96  97  98  99  00  Source: National Institute of Economic Reasearch  In the June Inflation Report we noted that as a result of measures proposed in the Budget Bill, during 1999 and possibly also in 2000 fiscal policy would probably be more restrictive than the Riksbank had assumed earlier but would still become successively more expansionary. The restrictive economic effect of fiscal policy was accordingly judged to be less marked than in the period 1994 – 97. Our scenario assumed, however, that there would be no further tax cuts next year. We foresee a government financial surplus somewhat above 2 per cent of GDP but have thus assumed that it will be used to repay government debt. In 2001, on the other hand, we assume that any surplus in excess of 2 per cent of GDP will be transferred to households. The Swedish debate about tax cuts and increased spending has become more intense as the government budget moved out of the red and is expected to show continued and growing surpluses in the years ahead. That is hardly surprising. We had exactly the same debate in the 1980s as soon as the budget deficits had been eliminated.
But consumers have to be vigilant, companies and retailers must remain responsible as regards price setting, and competition will play its part in lowering the prices in the short-to-medium term. ·  Second, we must closely monitor the risks of counterfeiting of notes and coins : the communication campaign of the Eurosystem “The euro. Our money” was aimed at familiarising all the European citizens with their new banknotes and coins (and their security features) and, by doing so, it helped them to easily identify the obviously fake banknotes. All institutions concerned, both national and European, are co-operating closely to prevent and fight counterfeiting. The credibility of the Eurosystem and of the single monetary policy, and the successful changeover to the euro are a major achievement. They certainly contribute to the efficient functioning of EMU and to European economic and financial integration, as I will explain now. *  *  *  EMU is a balanced concept fostering economic and financial integration EMU is an economically sound and well-grounded concept The usual criticism … A few years ago, it was necessary to convince a great number of sceptics, in Europe as well as in the rest of the world, that the euro would really be launched. The opinion that the single currency would never exist has of course been disproved by the facts. Nevertheless, objections are still being raised from time to time, on the alleged grounds that the euro area economy is full of major inconsistencies that could endanger and challenge the viability of EMU.

If high productivity growth and low import prices were instead to lead to inflation being well below two per cent, it might be possible to correct the problem quickly by cutting the interest rate. However, this would risk stimulating the economy in a way that would not always be desirable. By bringing inflation back on target at a slower rate, the real economy will develop in a more stable manner. We can thus contribute to stability, although monetary policy cannot affect the long-term growth rate in the economy. It is not stated in the law that the Riksbank should take developments in the real economy into account in addition to the price stability target. On the other hand, it was stated in the preparatory works for the Sveriges Riksbank Act that the Riksbank, without prejudice to the price stability target, should support the goals of general economic policy with a view to maintaining a sustainable level of growth and employment. Not having the ambition of bringing inflation back on target as quickly as possible thus creates flexibility in formulating monetary policy that provides scope to take into account developments in the real economy. At the same time, it is important that this flexibility should not give rise to doubts about maintaining the inflation target in the long term. This is why we have chosen to specify a time horizon, which states that monetary policy should normally be aimed at achieving the inflation target within two years.
A functioning framework for macroprudential policy can improve the conditions for ensuring that the Riksbank attains its two main objectives: price stability and financial stability. 14  An on-going inquiry into capital adequacy rules is to present its report by 15 May. Its task includes appointing an authority to be responsible for countercyclical capital buffers in Sweden. 8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13

A large-scale downgrading of this debt, to below investment-grade status, would entail considerable potential losses for the financial system of the European Union (EU) as a whole, a significant part of which would correspond to indirect losses attributable to the forced selling mentioned above. The role of rating agencies in this process is fundamental. When making their assessments, these institutions need to take into account the long-term outlook for the corporation concerned and avoid excessively pro-cyclical behaviour. Indeed, this time round, rating agencies appear to have been more cautious than in the global financial crisis and, to date, phenomena comparable to those seen in the past have not occurred. In any event, the results of this exercise serve to show the systemic importance of this vulnerability and the need to be prepared to provide a sufficient, internationally coordinated response, depending on how the pandemic develops at international level. The impact on general government  A system-wide scenario analysis of large-scale corporate bond downgrades, ESRB Technical Note, 23 July 2020. 10  15  During the current crisis, the activation of automatic fiscal stabilisers associated with lower tax receipts and increased cyclical expenditure (for instance, on unemployment benefit), along with the effect of the discretionary measures adopted by the authorities to mitigate the impact of the crisis, is leading to very significant increases in budget deficits and public debt in all countries. Initially, there were also tensions in European public debt markets, which led to a sharp rise in sovereign spreads.
This is why it is crucial for central banks to continuously re-think their risk management framework to stand ready, even in the “good times”, to switch to the “crisis mode”, and also to ensure that the decisions taken in the midst of a crisis will not jeopardise their ability to pursue their institutional objectives in the future. 5. Concluding remarks  To conclude, it is crucial for a central bank to fulfil the highest governance standards in organizing its risk management function and applying state-of-the-art tools, in order to ensure that the right decisions are taken in the design of the risk control framework and the implementation of monetary policy and investment operations. By doing so we may also be encouraging other market participants to follow. Therefore, our responsibility is twofold. As you see, the challenges we face may be slightly different from those faced by private institutions. But the lessons learned from the crisis, and the actions to be taken in the near future may not be so different. We are all on the same boat, learning how to sail towards a safe port. Thank you for your attention. BIS central bankers’ speeches  7

This is prospectively very positive. A couple of years ago I asked around London who were the best analysts of banks. Pretty well all those named were current or past equity analysts. A measure of success of our reforms will be that some leading analysts will concentrate on debt rather than equity, on the downside risks: credit analysts. They will be needed. Maybe there are some already. The upshot is that withdrawing the safety net from banks will require the other parts of the financial system to be sound, because they will have to stand on their own feet. It is sometimes pointed out that the insurance industry – other than AIG – did not benefit from state support. But, of course, insurance companies holding bank debt were the direct  BIS central bankers’ speeches  1  beneficiaries of state support for the banking system. Regulators of insurers – including, in this country, prospectively the Bank of England through the Prudential Regulation Authority – will need to take the changed regime for banks into account. We no more want insurance to be part of a “socialised” financial sector than banking. Finally on the “whats”, a world in which bank debt is perceived to carry risk is a world in which, as I have said before, it may be helpful for banks’ management to be remunerated partly through subordinated debt rather than just equity. Management would then have a clear personal incentive to focus on and contain tail risks.
Allocating even more capital to the Norwegian economy would probably lead to a rapid relocation of jobs to other countries, as the krone would tend to appreciate. Effect on industry structure The planned use of petroleum revenues will increase demand for public and private services. The guidelines imply an increase in the use of petroleum revenues over the central government budget of around 3½ per cent of mainland GDP by 2010. This may entail an additional 60 000 person-years in the service sector. As long as there are labour shortages in Norway, a comparable decline in manufacturing employment is likely to occur. Although the phasing in of petroleum revenues is a gradual process, the contest for labour resources will intensify. As a result, monetary policy is likely to remain fairly tight in the years ahead. A high interest rate level may in periods result in a strong krone. This may accelerate the scaling back of manufacturing industry. However, in the long run monetary policy cannot influence overall employment or its distribution across industries. A lower interest rate would have resulted in higher price and cost inflation, which would also have weakened profitability in the manufacturing sector. The end result would have been the same for employment and production, but in addition we would have had to face the costs of high inflation. Even if employment and production in manufacturing are affected, the situation for Norwegian enterprises will not necessarily be negative.

Svein Gjedrem: Economic perspectives Annual address by Mr Svein Gjedrem, Governor of Norges Bank, at the meeting of the Supervisory Council of Norges Bank, Oslo, 14 February 2002. *  *  *  Introduction The world economy is experiencing a slowdown. Growth in the US economy came to a halt last spring. Overinvestment, particularly in IT and telecom equipment, led to low returns on real capital and reduced corporate earnings. Stock markets declined when growth prospects were revised. Terrorism and war added to the uncertainty. These developments had contagion effects on European and Asian economies. Japan is in a deflationary recession. The US economy is flexible and seldom remains in recession for a long period. There are some signs of an early recovery. However, there is a risk of a longer period of stagnation. Companies are highly leveraged and vulnerable. Household saving is at a low level. There is uncertainty associated with household wealth as it is invested in stocks and the housing market. Oil prices have plunged by about 40 per cent since autumn 2000. Prices for other Norwegian export goods have declined since spring 2001. Exports fell in autumn of last year. The global economic downturn and the prospect of low import price inflation induced Norges Bank to reduce its key interest rate in December. In spite of this, the effects of the global downturn on the activity level in Norway have been limited. Private and public consumption and housing investment continue to show strong growth.
This project aims to build a monitoring tool for central banks based on data-streaming technology, which will collect and process millions of messages per hour from multiple trading venues and visualise the results. The prototype is expected to be ready later this year. As you can see, digital innovation brings many new opportunities, and central banks – including the SNB – are positioning themselves to embrace innovation where warranted. But digital innovation also brings with it new sources of risk. Cyber risks The growing reliance on IT systems is increasing operational risks. At times during the pandemic, up to 80% of SNB staff have been working from home. As a result, the amount of digital communication has surged. The SNB’s IT infrastructure has coped very well, offering reliable remote access to our systems and communications. Nonetheless, this surge in the use of remote-access technologies and digital communication has increased exposure to cyber risk. All over the world, the financial sector in particular has been under increased attack from cyber criminals since the start of the COVID-19 pandemic. 12  12  Iñaki Aldasoro, Jon Frost, Leonardo Gambacorta and David Whyte (2021), ‘COVID-19 and cyber risk in the financial sector’, BIS Bulletin No. 37. Page 9/10  Mitigating cyber risks and strengthening resilience is thus of particular importance in the financial sector. While responsibility for protecting against cyber risks lies with individual financial institutions, the SNB does contribute to the cybersecurity of the financial sector within the scope of its mandate.

Experiences of different monetary policy regimes Countries have long endeavoured in different ways to control inflation, often by trying to fix the nominal exchange rate by one means or another. However, during the post-war period it is only in recent years that we have really understood the long-term costs of high inflation. And it was not until then that there was a serious political ambition to deal with the inflation problem. During the 1960s and 1970s many considered that the cost of bringing down inflation was too high in relation to the advantages it would entail. There was also a belief that by accepting slightly higher inflation it would be possible to achieve a sustainable higher level of employment and lower unemployment. However, in time it became increasingly clear – thanks to both practical experiences and results from academic research – that this reasoning was not viable. At the same time, it is important to remember that during the first decades after the war we were living in a completely different type of economy compared with now, not merely with regard to the view of inflation. Most western world countries had strongly-regulated financial systems. This was partly a consequence of the war, and partly due to the view that access to credit should be steered towards certain tasks. At the same time, many countries had fixed exchange rates and regulated capital movements, initially within the Bretton Woods agreement – the system that was generally based on fixed exchange rates.
These are the Hub’s contributions to the central banking community as we pilot global multilateral platforms for cross-border payments involving wholesale CBDCs. 15. More broadly, exploring multilateral connectivity is a massive undertaking, which needs to involve multiple centres of innovation. Each centre can have a role to examine different aspects, different models and technologies for enhancing cross-border payments. At the core of this, the BIS plays a critical role to set direction, forge consensus, and coordinate efforts to maximise synergies. There are two key benefits to central banks collaborating to work on the next generation of cross-border payments and settlements infrastructure in this manner. Firstly, we arrive at the finishing line faster, as we explore the extensive possibilities in parallel, whilst avoiding unintended duplications of work. Secondly, this gives us the best chance of an end-product that is interoperable, and meets the needs of many. This fits into the broader picture of the G20’s cross-border payments roadmap. Ambitious timelines have been set for this roadmap, and the BIS and the central banking community play a key role in making this happen. Conclusion 16. On this note, please allow me to conclude. The central banking community has come some way in our innovation journey. It has been a collaborative and iterative process, where we learn from each other and from the industry. The Summit has showcased the highlights of what we have done together thus far, but there remains much more that we can achieve together. 17.

I thank the BIS for organising this inaugural Innovation Summit, which has expanded our knowledge, raised our ambitions, and rallied us towards seizing more opportunities. I think we have all certainly benefited from the perspectives and deep insights shared by our speakers and panellists over the past three days. Our challenges and our tools may change with technology, but our mission and joint commitment to improve lives will remain. Thank you. 5/5  BIS central bankers' speeches