samchain/econo-pairs-v1 huggingface dataset:
A crucial point is to avoid any tax distortions to the detriment of these products compared to liquid and risk-free investments. It remains all the more essential to fully inform investors about the risks involved when they invest their savings; two examples come to mind today, unit-linked contracts, and managers offering disintermediated financing. 3) My third and last collective wish for 2016 is that of financial stability and sound financial institutions. Since the financial crisis, the regulatory framework and the supervisory and oversight architecture have been considerably strengthened. This was necessary, I believe no one here doubts it. In the banking sector, this involved implementing Basel III / CRD4-CRR, finalising the TLAC, the new anti-shock weapon, and setting up the European banking union, which now includes two effective mechanisms: the single supervisory mechanism, and -since 1 January- the single resolution mechanism. Today, French banks are sounder: their core Tier 1 solvency ratio stood on average at 12% in September 2015, against 6% at end-2007. And contrary to the fears that have often been expressed, including by some of you, the current situation shows that these rules have not impacted lending and growth, in particular thanks to the positive effects of monetary policy. In 2016, the projects still underway should be completed. In particular in order to improve the comparability of internal models – and thus improve their credibility –, not to substantially increase overall capital requirements. To finalise and stabilise Basel III, not to open a new Basel IV.

But more is required; the unemployed and youth cannot afford to wait. In addition to emergency plans, at least four reforms appear obvious since they have worked for our European neighbours: apprenticeships on a widespread level; simplifications, including in the area of labour law; the development of entrepreneurship; and lastly the decentralisation of social dialogue to the company level, i.e. as close as possible to the economic and human reality. Corporate investment depends first and foremost on the willingness and the confidence of thousands of entrepreneurs, but it must naturally be promoted by financing… and therefore by you. BIS central bankers’ speeches  1  2) This brings me to my wish concerning the smooth financing of the economy, against the backdrop of persistently low interest rates. Monetary policy is proving to be effective: in 18 months, since June 2014 and the announcement of non-standard policies, bank lending rates to business have fallen by around 80 basis points in the euro area, and outstanding bank loans have risen from a negative growth of 2.5% in June 2014 to positive growth of 0.9% in November 2015. According to estimates, including the decisions of 3 December 2014, non-standard policies improve the growth outlook for the euro area by 1% between 2015 and 2017, and that of inflation by 0.5 percentage point in 2016 and 0.3 percentage point in 2017. Bank lending must therefore remain accessible. In this respect, French banks have achieved good results.
But one thing is clear: the ECB’s Governing Council will always find ways and means of acting if it needs to. In case we would cease to be confident that inflation is converging to a level that is below, but close to, 2%, it would be our mandate to act. As a result of the weaker economic data, market participants have shifted their expectations for a first interest rate hike from autumn 2019 to, in some cases, well into 2020 – despite the Governing Council’s unchanged outlook that interest rates will remain at their current levels “at least through the summer of 2019”. Do you feel comfortable with that? 3/5  BIS central bankers' speeches  First of all, it shows that our forward guidance is effective. Our forward guidance on key interest rates has both a calendar-based – “at least through the summer of 2019” – and a statecontingent leg – “and in any case for as long as necessary”. The shift in market expectations reflects the state-contingent leg of our forward guidance. Of course there will be a point in time when the calendar-based leg of our forward guidance will be discussed and, if needed, adapted. We have been very careful so far not to validate market expectations. And at your meeting on 7 March – will that still be too early? I can’t say at this stage. Would new net asset purchases also be an option in an emergency?

Both borrowers and lenders need to be careful not to over-stretch themselves. In line with the recent FPC statement, we will be keeping a very close eye on developments, and the Bank has a range of tools that can be used in mitigation of those risks. Stage 4: the flow of credit Annual growth in the stock of lending to households and businesses has remained close to zero since mid-2012, similar to rates seen in the run-up to the launch of the FLS. But it is important to bear in mind that prior to the announcement of the FLS, the Bank judged that UK bank lending was more likely to decline than increase over the following eighteen months. The profile of lending seen to date has been broadly in line with our original expectations: the trend in household net lending has been somewhat stronger than expected before the launch of the FLS and net lending to businesses has been perhaps a little weaker. We were also conscious that the stock of credit depends on both supply and demand. We were sure that the FLS would shift supply but the demand effects were always less certain. The price elasticity for firms in particular is likely to be low. It is possible at the margin that some firms will be better able to repay or refinance loans if their borrowing costs are a bit lower, but this effect is probably small relative to the importance of expected demand for a firm’s products.
But secular stagnation may imply a level much lower than in the past, possibly even negative. In monetary policy, this is the difference between chalk and cheese, success and failure. In this respect, the behaviour of global real interest rates over the past 30 years is remarkable. Chart 13 plots a measure of real interest rates since 1990, in advanced and emerging economies. Both have exhibited the same secular downward trend, falling by around two percentage points per decade. Today, they are around zero. For some advanced countries, the pattern is even more striking. Chart 14 plots the real interest rates expected over the next 30 years in the UK and euro-area. For both, real rates are expected to remain negative for the next three decades. Investors are willing to pay governments for the privilege of lending to them for the next 30 years – a negative rate of time preference. This pattern has no historical precedent. One interpretation is society having become significantly more patient, as in the lead up to the Industrial Revolution: higher global saving relative to investment would lower global real interest rates. If that is the cause, bring out the bunting. By lowering the cost, and raising the return to innovation, investment and growth would be stimulated. 43 Falls in real rates would signal secular innovation. The optimists would have it. But an alternative reading is possible. Low real rates may instead reflect a dearth of profitable investment opportunities relative to desired savings.

63  Carr (2008). 64  See http://www.economist.com/node/15557443  65  Simon (1971). 66  See http://footballperspectives.org/end-season-football-manager-statistics-2013–14. 12  Assessment  (PISA)  2012  results  BIS central bankers’ speeches  The rising incidence of attention deficit disorders, and the rising prominence of Twitter, may be further evidence of shortening attention spans. If so, that would tend to make for shorter-term decision-making. Using Daniel Kahneman’s classification, it may cause the fast-thinking, reflexive, impatient part of the brain to expand its influence. If so, that would tend to raise societal levels of impatience and slow the accumulation of all types of capital. This could harm medium-term growth. Fast thought could make for slow growth. Psychological studies have shown that impatience in children can significantly impair educational attainment and thus future income prospects. 67 Impatience has also been found to reduce creativity among individuals, thereby putting a brake on intellectual capital accumulation. 68 Innovation and research are potential casualties from short-termism. There is evidence suggesting just that. Investment by public companies is often found to be deferred or ignored to meet the short-term needs of shareholders. 69 Research and development spending by UK companies has been falling for a decade. They are towards the bottom of the international research and development league table (Chart 16). If shorttermism is on the rise, this puts at risk skills-building, innovation and future growth. 70 A final ingredient is infrastructure capital. Here again, investment trends are not encouraging.
SPEECH DATE:  10 June 2020  SPEAKER:  Governor Stefan Ingves  VENUE:  Swedish Economics Association  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  The monetary policy toolbox* The spread of the coronavirus came as an unpleasant surprise to us all. It is now clear that the economic consequences of the pandemic threaten to be both serious and protracted. Most analysts have very weak forecasts for economic developments in the coming quarters, and in some scenarios also for a longer period to come. We are in the midst of an unforeseen economic development that needs to be met with various macroeconomic tools, and the Riksbank has an important role to play here, together with the Government, the Riksdag (Swedish parliament) and other authorities. During the initial phase of the crisis, we Executive Board members have already taken a large number of decisions to support the Swedish economy, and thus contribute to meeting the targets for economic policy, and I will comment on what we have done in more detail later on. We can note that many of the measures have major consequences for the Riksbank's balance sheet – something that will be a recurring theme in today’s speech. Today I intend to focus primarily on how the “monetary policy toolbox” needs to look to be able to manage future challenges.

REASONS FOR HIGH SAVING IN NORWAY The Norwegian fiscal rule implies a more cautious spending path than the permanent income rule. The government spends the expected return on its current financial assets, which is significantly lower than total oil and gas wealth. Graph: Oil and gas revenues and government spending The fiscal rule implies that real spending will increase as long as production continues, i.e. until all oil and gas resources are transformed into financial wealth. As the economy grows, spending as a share of mainland GDP will nevertheless fall slowly. This is illustrated in the graph. The graph also illustrates that we have been able to cut through the very large, but temporary income flows at the beginning of the present century. Since 2016, government spending has exceeded the net cash flow from the oil sector. This means that we are running a primary deficit and will continue to do so for the foreseeable future. Currently, the transfer from the fund equals 8 percent of mainland GDP. Eventually, as delayed consumption increases accumulated returns, spending according to the fiscal rule will also surpass the current estimate of the permanent income. The real issue is thus a question of timing. Has this spending profile been too conservative, and the increase in consumption delayed for too long, as Bergsten and Gagnon claim? My brief answer is no. My first argument is that the conclusion to spend the permanent income does not take into account the resource movement effects discussed above.
In this context, the Road Map 2017 reviews developments in the economy and the policy actions that have been pursued during the past year. More  external, monetary and financial sectors during 2016  Section 3: An analysis of the Central Bank’s monetary policy strategy and policies for 2017 and beyond  Section 4: A discussion on the Central Bank’s policies related to the financial sector performance and stability in 2017 and beyond  Section 5: Key policies related to  importantly, it seeks to enunciate  strengthening the broader economy  policies and programmes for the  through the Central Bank’s agency  forthcoming period. and ancillary functions  Accordingly, the outline of the Road   Section 6: Concluding remarks  Map 2017 is as follows:  Central Bank of Sri Lanka – ROAD MAP 2017  7  2. Developments in the Economy in 2016 The Sri Lankan economy achieved a  Inflation continued to remain at low  moderate growth rate of 4 per cent  levels although there were some upward  during the first nine months of 2016.  pressures during 2016. Supply side  Among major sectors, Agricultural  pressures due to adverse weather  activities remained subdued, driven  conditions and revisions to the  mainly by the contraction in the value  government tax policy partly  addition of rice, tea and rubber. Adverse  contributed to the increase in inflation  weather conditions during the second  during the year.

governance and risk management  The Central Bank is ready to receive duly  framework that balances return  completed applications from eligible  objectives with prudent risk  companies, which would be submitted  management and controls, Strategic  to the Monetary Board. Continuous  Asset Allocation (SAA) for the  surveillance and on-site examinations of  international reserves, managed by  Licensed Microfinance Companies  Central Bank, has been developed and a  (LMFCs) will be conducted by the  new Investment Policy Statement has  Central Bank. We expect to maintain a  been drafted in line with it. The  constant dialogue with the LMFCs and  Investment Guidelines have been  increase awareness on regulations. reviewed to reflect the revised  While we are proposing policies and  investment criteria. plans for the financial sector, as the apex  Going forward, we expect to ensure a  financial institution in the economy, we  proper Enterprise Risk Management  also need to ensure the stability,  (ERM) Framework for the Central Bank,  continuity and safety of our own house. which involves setting up a new Risk  In particular, it is important to foster a  Governance Structure and developing  risk culture within the Central Bank as  systems and procedures to monitor  central banks are considered as the  financial and non-financial risks of the  trustee of public assets.
The second important development, less widely discussed, yet which may be of equal significance, is a radical change in the focus of the IMF’s surveillance work. In institutional terms this change in focus is highlighted by the creation of a new Capital Markets Division in the Fund, which prepares a regular Global Financial Stability Report. That document, which has attracted too little international attention so far, is a brave attempt by the Fund’s staff, reinforced by new recruits from the financial markets under Gerd Hausler, late of Dresdner Bank, to focus attention on potential sources of financial instability in institutions and markets. That means, at times, drawing attention to weaknesses in the banking and insurance systems even of G7 countries, which has hitherto been difficult territory for the IMF. Yet it is important for it to do so, not wholly because of the potential benefit for G7 countries themselves, but also to show that developed countries are taking the medicine which they now impose on others. This is because the second major change at the IMF has been the rapid expansion of its work on financial regulation. The Fund is now committed to preparing financial sector assessments (FSAPs) of member countries, and indeed of some non-members too, such as the significant offshore financial centres. These assessments review the effectiveness of regulatory structures, financial regulation and adherence to internationally accepted financial sector core standards and codes.

Lastly, in this very brief review, I would identify significant gaps in the consolidated supervision of some large and diversified financial groups. Banking supervisors have learned from bitter experience that consolidated supervision of a group is essential to understand the totality of its risks, and the interaction between different parts of the group. Yet there are still major international firms without a consolidated supervisor. In Europe, through the Financial Groups Directive (FGD), we are seeking to fill that gap, for the European Union itself, requiring each firm that operates in the EU to be supervised on a consolidated basis globally, or to construct a European entity which can be supervised in this way. Through the FGD we are therefore attempting to mitigate the risks we see from non-consolidation, but it would clearly be better if those risks could be mitigated on a global scale. (iv)  Expanding the role of developing economies  The fourth arena in which I think more could be done relates to the role of developing countries in the international financial architecture. If they are not properly involved there is clearly a risk that standards may be developed which are inappropriate, or too complex to implement in developing countries. How well are their interests represented at present in the key decision making bodies? I have mentioned that the FSF, though originally conceived as a G7 body, quickly chose to add representatives from other significant financial markets, including Hong Kong and Singapore.
There is as yet rather limited empirical research on the risk-taking channel, but some papers on the subject have now begun to appear. The studies are based on data from the eurozone and the United States, as well as other countries. They appear on the whole to support the theory that low policy rates lead to the banks taking greater risks. 5 Well worth more research… My personal view is that the risk-taking channel is definitely an interesting line, well worth further research. Our knowledge of the monetary policy transmission mechanisms is far from complete and the way that monetary policy affects the banks’ risk taking is something we need to learn more about. I also believe it would be useful to broaden the question and try to find out if low interest rates for a long period of time can lead to an increase in risk propensity in society as a whole – among households, companies and other participants in the economy – and not just among banks. So far, research in this field has been even scarcer. 6 As I see it, an increased risk propensity among households could be an equally strong driving force behind a rise in property prices as greater risk taking by the banks. …but not so easy to do in practice It is of course difficult to predict today what the conclusions eventually will be and what implications they may have for monetary policy.

Currently, two of China’s biggest banks, namely Bank of China and ICBC have operations in Malaysia while Malaysia’s two largest banks, Maybank and CIMB have established their presence in China. Our Beijing Representative Office, being inaugurated today, also signifies an important milestone in the cooperation between the People’s Bank of China and Bank Negara Malaysia. Our two central banks have long cooperated in many areas of common interest in particular in the area of financial cooperation. In July of 2005, our currencies transitioned into a more flexible exchange rate regime at the very same moment. This enabled Malaysia to transition to this new regime effectively and efficiently. Bank Negara Malaysia has for more than a decade also participated in the fixed income market in China. We were among the first central banks in the world to be awarded the Qualified Foreign Institutional Investor (QFII) license to invest in China’s fixed income onshore financial markets and to be granted access to the China Interbank Bond Market. Our close central bank cooperation is also reinforced through the various regional platforms, including ASEAN+3, EMEAP and SEACEN. More recently, a series of measures have been undertaken to encourage the use of renminbi in the settlement of our bilateral trade and investment.
When the Debt Office’s dealers make use of the repo facility and borrow bonds, it is done at an overnight interest rate that is 0.40 percentage points below the Riksbank’s repo rate. As the Riksbank’s holdings of government bonds have increased, the short-term market rates for government securities have therefore been pushed down towards –0.90 per cent, i.e. the repo rate minus the cost for the facility (see Figure 4). Via expectations, the low level of these short-term rates has then also pushed down yields on long-term government bonds. 12 In practice, there are hence two levels on the money market in Sweden, one around the repo rate and one around the cost for the National Debt Office's facility. My assessment is that an equally expansionary monetary policy could in principle have been achieved without quantitative easing but with a repo rate somewhere between these two interest rate levels. In recent years, setting a lower repo rate could have been problematic but in a future scenario with more normal interest rate levels, I see no need to try to affect short-term market rates with tools other than the repo rate. 5 [16]  And as regards the formation of expectations and the transmission from shortterm rates to rates on longer maturities, the Riksbank has a long tradition of using transparent communication to signal future monetary policy plans, for example by publishing forecasts of the repo rate’s development.

This pricing indicates, if anything, that the market prefers to hold government bonds rather than central bank reserves and hence that the Riksbank’s bond purchases are reducing the supply of the safest assets. Another indication of this is that the term premiums on government bonds have been very low, and probably negative, in recent years. 20 This suggests that government bonds with long maturities are not being priced with risk premiums in relation to Riksbank certificates or government securities with short maturities. 7 [16]  I have now discussed arguments that could indicate that the Riksbank should continue to maintain a large portfolio even in the future, and I don’t consider these arguments to be particularly strong. But does this mean that the size of the balance sheet has no significance or are there strong arguments indicating that the Riksbank’s balance sheet should be small? Arguments against substantial bond holdings in normal times Maintaining a large balance sheet can be associated with risks, but the nature of these risks depends both on the assets held by the central banks and how these are funded on the liability side. The risks may relate to the central bank’s financial position and ability to conduct monetary policy and simultaneously fund its own operations, as well as to its reputation and possibility to safeguard its independence in monetary policy issues. Plosser (2018) discusses risks to reputation and argues that the central bank must have a narrow mandate to be able to justify continued independence from the political sphere.