samchain/econo-pairs-v1 huggingface dataset:
During the entire crisis, the Riksbank provided the banks with liquidity in Swedish kronor at fixed interest rates and, eventually, at variable interest rates via auctions1. However, the largest demand from the banks’ side was not in kronor but in dollars (the yellow area in the figure). This lending took place during the whole period from October 2008 to November 2009. The amount lent by the Riksbank peaked at USD 30 billion. And this is exactly where the problem lies. Every central bank can create liquidity in its own currency. The Riksbank can thus supply the Swedish financial system with all of the Swedish kronor it will ever need. But we can’t create dollars – only the US central bank can. So when  1  The extensive fixed-interest rate lending implemented during the later part of the crisis (the blue area in Figure 2) was largely motivated by monetary policy objectives. By this point, the Riksbank had already lowered the repo rate as far as was deemed possible (to a quarter of a percentage point), but deemed that further monetary policy stimulation was necessary. BIS central bankers’ speeches  3  the Riksbank is to lend dollars, we first have to obtain them. In principle, this can be done in two ways. The first option is to borrow them. For natural reasons, it is easiest and quickest to borrow from the central bank that actually produces dollars, namely the Federal Reserve. And, naturally, this presumes the Federal Reserve’s cooperation via a swap, for example.

This market deals in maturities of less than one year, but the overwhelming portion of trading deals with securities with maturities of three months or less. Money market funds continue to be major investors. More long-term borrowing is largely conducted in euros through the issuance of covered bonds. Pension funds and insurance companies are the main investors here.2  Obviously, the risks of a bank entering into an acute liquidity crisis become smaller as borrowing becomes more long-term. Consequently, the new regulations in Basel III require a greater proportion of long-term borrowing than most banks have opted for so far. Unfortunately, before the crisis, it was highly advantageous to borrow dollars over the short term, and this was also exactly what the European banks did, including the Swedish ones. Borrowing for longer maturities was much more expensive. And as the new Basel regulations have not entered into force yet, there still exist significant incentives for the banks to borrow dollars over the short term. This applies to the Swedish banks in particular, who are also regarded favourably by the US market due to their strong balance sheets, particularly in comparison with a number of their European competitors. 2  In recent months, a couple of Swedish banks have actually succeeded in issuing covered bonds with maturities of 3–5 years in the United States. It would naturally be desirable to gain access to the market for longer maturities in US dollars, but I feel that the journey there would be both long and rough.
Thus, while the euro area shows a unique institutional setting – in contrast to monetary policy, fiscal policy is far from being single – national governments have agreed to common rules which ensure that the euro area remains an efficient and stability-oriented single economic area. 4  BIS Review 61/2001  Conclusion Let me conclude by saying that the single currency and the establishment of a new European institution responsible for monetary policy in the euro area complemented the process of economic integration that started half a century ago in Europe. This process and the institutional build-up, together with clear and coherent policy goals and an efficient allocation of the respective responsibilities, are transforming the euro area into an increasingly unified economic entity which, in many respects, resembles the US. Although most of the required structural reforms still have to be implemented, it cannot be denied that substantial progress has been made. The introduction of the euro has been and will continue to be a powerful catalyst, contributing to greater competition in the economic and the political sphere, thereby further enhancing the welfare of the citizens in the euro area. Ladies and gentlemen, political leaders throughout Europe have recognised the need for structural changes in both taxation and expenditure policies and regarding the deregulation of product and labour markets.

The first is that these claims are denominated in Sterling, the ‘unit of account’ in the UK, the common measuring stick of economic value that we all accept, that is governed by the Bank of England under the authority of Parliament. The Bank’s Monetary Policy Committee is charged with ensuring the stability of the currency’s value in terms of what it can buy. The second is that the private banks that hold our transactional accounts (i.e. take deposits) and create money by issuing claims on themselves, have to operate within a comprehensive legal and regulatory framework – supervised by the Bank of England and the FCA. This framework itself has been greatly strengthened since the financial crisis. It is designed to ensure that the banks that are authorised to take deposits and issue claims on themselves in return, are robust and can absorb losses. They have access to the lending facilities of the Bank of England to meet any shortages of liquidity. Up to £ of deposits are protected by a statutory deposit guarantee scheme paid for by the banking industry. Banks are also now subject to ‘resolution’ requirements to ensure that in the unlikely event of failure they can be stabilised and subsequently broken up, sold or wound down to the degree necessary while protecting depositors’ ability to make and receive payments – and without requiring taxpayer money. The payment systems through which claims on private banks are exchanged, are likewise supervised by the Bank of England.
Perhaps it is imperative here to emphasize that it is important for Islamic banks to provide all information about their activities and financial statements with full transparency, especially that they bear moral responsibility. This would enhance their credibility, contribute to their good reputation to be accepted on a broader range, and remove any false beliefs concerning their activities. Dear Brothers, A number of central banks and supervisory authorities have recognized the nature of risks confronted by Islamic banks and pursued a supervisory approach based on measurement of risks. Thus, they have developed appropriate mechanisms for banking supervision depending on the type of risks. They have also realized the need for international cooperation to develop standards that could form the basis of a strong structure for Islamic banking. The increasing global interest in Islamic banking, in recent years, is attributable to the rapid growth of this type of activity in terms of size, scope and significance both in Islamic countries and other parts of the world. Islamic banking has spread widely in more than twenty-five countries in Asia and Africa. It has also emerged in many financial centers in Europe and North America to the extent that major international banks and specialized financial institutions have started to offer Shari’a-compliant products to meet the needs of a wide spectrum of customers in their markets and those of Islamic countries.

Dimitar Bogov: Improving education and access for children and youth to financial services Address by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the 3rd Annual Regional Meeting for Europe and Central Asia (ECA), Skopje, 2–3 October 2014. *  *  *  Dear Ministers, Esteemed guests, Dear ladies and gentlemen, It is my honor and privilege to welcome you all here in Skopje, Macedonia to this important event for the region of Europe and Central Asia. The aim of this meeting is to gather together in one place the regional leading policy-makers, financial institutions and experts that are engaged in the issues of children and youth access to financial services, financial inclusion and financial education, employability and entrepreneurship opportunities, to share success stories and challenges. There has been some progress made in these fields because of the existence of international movements such as Child and Youth Finance International that are keen to develop a generation that will be better prepared to prevent future financial crisis by increasing the financial education, access to finance, employability and entrepreneurship skills of children and youth. On a global level, significant progress has been achieved in advancing the mentioned priorities. Important steps have already been made in the area of improving access to financial services in the previous years. Access needs to be complemented by the quality of the financial services. The quality of financial services and the participation in the financial system is equally important for all participants in the system.
In such a scenario, it will be even more important for all institutions with financial stability responsibilities - be it the central bank, supervisory authority or other government agency - to co-ordinate their efforts in the area of system oversight and to share any information which could be relevant to the proper fulfilment of their respective functions. Indeed, whereas until recently the prevailing concern related to the choice of institutional arrangement for the supervision of the financial sector, it is now sometimes argued that it is not the institutional framework which matters most, but rather the existence of adequate mechanisms guaranteeing the exchange of information and policy co-ordination between the entities responsible for overseeing systemic stability and those that monitor the health of individual financial institutions. Beyond that, it is claimed, any institutional set-up can work. Likewise, any one can fail. While this conclusion might be valid from a national point of view, it does little to address the question of whether information exchange and policy co-ordination relating to financial sector developments affecting the EU as a whole would be more appropriately addressed by a supranational EU institution with supervisory responsibilities, or whether such tasks are best handled by the national authorities of member countries. This issue has certainly gained in importance in recent years with the increased recognition of the links between supervision and monetary policy.

Without evidence about what works best, governments end up effectively running a mass experiment on everyone, but without the appropriate controls and therefore without learning as much as they could do to improve their policies. In this regard, the "causal revolution" of the past 30 years has also been characterised by the increasing attention that researchers have devoted to justifying causal interpretation of their research findings. In parallel, the appearance of new data, together with new concepts to be measured and new measurement techniques, have multiplied the opportunities to provide convincing descriptive analysis, even in the absence of experimental data. The influence of these approaches has been immense and has given rise to empirical results capable of shaking the most entrenched beliefs of economists. The truth is that there are still wide disparities in data availability across countries. At one extreme there is Denmark and other Scandinavian countries, with a culture that encourages the use of public data by the research community for the common good. But, in most cases, even if public administrations are repositories of enormous wealth in the form of individual data, the administration that holds the data is not capable of exploiting their full potential. Analysing this data is not their main priority and information is usually scattered among various administrations that do not readily communicate with each other or are very reluctant to share their data, even with external researchers.
Norway had a plentiful supply of labour from new EU member countries and experienced several years of high output growth. At the same time, the inflation target for monetary policy adopted in 2001 provided a sound anchor for inflation expectations. BIS Review 44/2010  3  Autumn 2008 In 2008, the expansionary period was drawing to a close. Costs had risen sharply, credit growth had been strong, the key policy rate had been raised and house prices had started to fall. Petroleum revenue spending over the central government budget had increased, but employment in traditional industries was still high. Despite Norway’s high cost level, merchandise exports and supplies of goods and services to the oil industry held up well due to strong demand. Instead of a gradual slowdown, economic growth came to an abrupt halt in autumn 2008 when the global financial crisis peaked. Demand for Norway’s exports fell markedly. Norwegian banks proved to be sensitive to the credit freeze in global money markets and stopped providing new loans. 1 However, Norwegian banks were not as exposed to loan losses – at home and abroad – as banks in other countries. The economic downturn proved to be milder in Norway than elsewhere, but the banking sector seems also to have performed its craft fairly well. Moreover, government and central bank liquidity provision measures were effective. The liquidity crisis passed quickly and a solvency crisis did not occur in Norway’s banking system.

In periods of high or rapidly rising unemployment, the use of petroleum revenue can be increased, and, inversely, fiscal retrenchment is needed during periods of high economic activity and resource scarcity. 2 It now appears that capacity utilisation in the Norwegian economy may return to a normal level in one and a half to two years – and with a somewhat lower unemployment rate than today. A different path can be met with an interest rate response. Our understanding of the fiscal rule is that the government budget for 2012 or at the latest for 2013 should aim at bringing down petroleum revenue spending to 4 per cent of the capital in the Pension Fund. The scale of petroleum revenue spending – growth in public expenditure – is important for developments in competitiveness, also referred to as the real krone exchange rate, in the long term. But, in the short term, the krone exchange rate can vary widely, and it depreciated in autumn 2008 when capital sought safe havens. This helped Norwegian manufacturing in the first phase of the downturn. Since then, the krone has appreciated considerably. In 2009 and 2010, government petroleum revenue spending shows a substantial increase and foreign investment via the Pension Fund a decrease. This leads to higher commercial demand for the Norwegian krone which directly contributes to its appreciation.
This requires greater positive impact by Islamic finance beyond its shareholders and immediate stakeholders – to also benefit the society; environment; and the broader economy as a whole. Thank you. 1 IFSB Islamic Financial Services Industry Stability Report 2017 – 18 countries out of 35 countries tracked by IFSB. 2 BNM Islamic Finance Handbook December 2016. 3 International Finance Corporation. 4 The World Bank – Feature Story 2016. 5 The World Bank – Feature Story 2016. 6 BNM Islamic Finance Handbook December 2016. 7 Thomson Reuters Business News 25 July 2017. 4/4  BIS central bankers' speeches

But capital ratios have declined and leverage has risen. Immediately prior to the crisis, leverage in the banking system of the industrialised world had increased to astronomical levels. Simple leverage ratios of close to 50 or more could be found in the US, UK, and the continent of Europe, driven in part by the expansion of trading books (Brennan, Haldane and Madouros, 2010). And banks resorted to using more short-term, wholesale funding. The average maturity of wholesale funding issued by banks has declined by two thirds in the UK and by around three quarters in the US over the past thirty years – at the same time as reliance on wholesale funding has increased. As a result, they have run a higher degree of maturity mismatch between their long-dated assets and short-term funding. To cap it all, they held a lower proportion of liquid assets on their balance sheets, so they were more exposed if some of the short-term funding dried up. In less than fifty years, the share of highly liquid assets that UK banks hold has declined from around a third of their assets to less than 2% last year (Bank of England, 2009). Banks tested the limits of where the risk-return trade-off was located, in all parts of their operations. As John Kay wrote about his experience on the board of HBoS, the problems began “on the day it was decided that treasury should be a profit centre in its own right rather than an ancillary activity” (Kay, 2008).
But, in fact, the mean path for inflation was above target at around two years. That underlines the hefty upside risk to inflation that featured in the Committee’s August projections. Indeed, we cannot be remotely complacent about the risks in either direction. This is a delicate balance, and one that is developing from month to month. It is a convenient but in some ways misleading shorthand to characterise the Committee as currently balancing a growth risk against an inflation risk. Given our mandate – and, indeed, given how the economy works – that is better thought of as our having to balance the downside risks to inflation over the medium-term against the upside risks to inflation over the medium-term. So, perhaps contrary to some recent commentary, the MPC remains as focused on medium-term inflation as ever. No shift in the underlying reaction function. No shift in the aversion to inflation (or to deflation). But, of course, the current environment is highly unusual and our reaction function cannot be written down as a fully specified state-contingent rule; and so everyone is discovering that we truly are committed to low inflation in the medium term. The mandate is expressed in terms of stable low inflation because that is what central banks can deliver over the medium term, and because nominal stability is a precondition for sustainable growth. There is not a comfortable medium-term trade off between growth and inflation. Inflation is just the opposite of a free lunch.

If we are to prevent another crisis, action is required on both of the fundamental causes. First, we need to resolve the problems caused by massive capital flows from poor to rich countries. Yet the imbalances are growing again. This problem can be tackled only by international cooperation – most obviously through the G20 – and I hope that the trade union movement will continue to engage with that process. Second, our financial system needs radical reform. Slowly but surely, we must move towards a banking system that does not put both the economy and your members’ livelihoods at risk. In the long run, banks will have to hold much more capital and be much less highly leveraged. Part of the answer is improving the way we regulate banks, and devising policy tools to control the risks taken by the financial system as a whole. The aim should not be to prevent all bank failures. Just as with every other company in the economy, banks that get it wrong must be allowed to fail, without risk to ordinary depositors or taxpayers. In 2008, banks were bailed out not to protect them but to protect the rest of the economy from the banks. That may not seem fair – and it isn’t – when other companies, such as Jaguar, had to stand on their own feet or go to the wall. So banks too must face market discipline. But we need to do more than reform our banking system.
There needs to be a robust revival in consumer demand in order for the increases in the capacity utilization rate to be sustainable over the medium term. Uncertainties regarding aggregate demand and lower capacity utilization continue to suppress fixed capital investments. The current trend in investment demand is far from signaling a robust economic recovery. Subsequent to the recent rate cuts and fiscal measures, we anticipate that domestic demand in Turkey might gain relative stability in the second quarter of 2009 and growth will post positive figures from the last quarter onwards. In other words, the recovery in the Turkish economy might start earlier than that of the global economy. Our expectation is underpinned by two main factors. The first of these is the sound and stable structure of our financial system. The restructuring plans along with regulatory and supervisory reforms, which were put into effect in the aftermath of the 2001 financial crisis at the cost of imposing a heavy burden on the public budget, reinforced the Turkish banking system’s resilience to shocks compared to the banking systems of other countries. Another factor that will facilitate a relatively faster recovery for the Turkish economy is the household indebtedness ratio, which is lower than those of many other emerging economies. Households have been affected relatively less by exchange rate shocks owing to the significantly low share of FX loans in consumer loans.

2  BIS Review 134/2009  I would like to thank everyone, particularly Bahçesehir University and Koç University, who have contributed to the organization of this conference. I hope that it will be a productive conference and I would also like to extend my regards to the contributors of this event, to the participants and all the guests. BIS Review 134/2009  3
Lorenzo Bini Smaghi: Economic policies on the two sides of the Atlantic – (why) are they different? Lecture by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at the Collegio Carlo Alberto, Moncalieri, 7 November 2008. * 1. *  *  Introduction 1  The United States and the euro area are the two main economic and monetary areas in the world and they are reasonably similar in size, with a population of over 300 million (300 million in the United States and 320 million in the euro area) and GDP of around € billion at current prices (at the going rate of exchange of around USD 1.30 to the euro – US GDP is worth around € billion, while euro area GDP is worth around € billion). The economic policies implemented in these two areas act as a reference for the whole world’s economy. They are carefully scrutinised and compared by academics, market players and commentators. In recent years, the two economies have been compared in a largely asymmetrical way, possibly a hangover from an obsolete institutional setup and analytical reference framework. While in the United States economic policies are mainly assessed on the basis of the US economy’s underlying state, in the euro area the assessment is made on the basis not only of European economic fundamentals, but also, and indeed above all, with reference to economic policy decisions made on the other side of the Atlantic.

Furthermore, the level of government welfare services (including unemployment insurance, social security and welfare services, and senior citizens’ assistance insurance) is systematically lower in the United States than in the euro area countries; at present it stands 19 at 12% of GDP in the United States and at 15% of GDP in the euro area. Thirdly, the importance of automatic stabilisers depends also on the taxation system, in terms of its level  16  Cimadomo, J. (2008), Fiscal Policy in Real Time, ECB Working Paper, No 919. 17  See, for instance, Brunila, A., M. Buti and J. in’t Veld (2002), Cyclical Stabilisation Under the Stability and Growth Pact: How Effective are Automatic Stabilisers?, Bank of Finland Research Discussion Paper, No 6; Darby, J. and J. Melitz (2008), “Social spending and automatic stabilizers in the OECD”, Economic Policy, Vol. 23, pp. 715-756. 18  Girouard, N. and C. André (2005), Measuring Cyclically-Adjusted Budget Balances for OECD Countries, OECD Economics Department Working Paper, No 434. 19  Debrun, X., J. Pisani-Ferry and A. Sapir (2008), Government Size and Output Volatility: Should We Forsake Automatic Stabilization?, European Economy – European Commission Economic Paper, No 316. BIS Review 135/2008  7  of taxation and of the overall fiscal drag in the tax system.