samchain/econo-pairs-v1 huggingface dataset:
Ineffective regulation of financial markets led to unrestrained growth in global liquidity, rising indebtedness ratios and formation of systemic risks in financial markets. Lack of transparency in financial transactions blurred the boundaries of who owes what to whom, preventing the proper valuation of risks. Failure of credit rating agencies, inadequacy of risk assessment methods in addressing systemic risks and pro-cyclical accounting standards overtook prudential measures. BIS Review 73/2010  1  To put a long story short, if you look for a snapshot of the roots of this crisis in one simple statement, it is nothing but “households consuming the present value of their future wealth, which they do not actually possess in the first place”. In the aftermath of this crisis, households have increased precautionary savings to cover their debts and clean their balance sheets. This has caused a very sharp negative demand shock, especially in advanced economies. Furthermore, a significant part of the real sector was not able to pay off their debt leading to large-scale write-offs in the financial sector. In response, governments have both increased public spending to offset the fall in domestic demand and bailed out troubled financial institutions to prevent the collapse of the financial system. In other words, they have acted as both “consumer-of-last-resort” and “lender-oflast-resort” at the same time. By doing so governments have prevented a repeat of the Global Depression that we experienced in the 1930s.

A first report will be presented by summer 2021 to the Governing Council,  which will then decide whether to extend the analytical work by carrying out an investigatory phase. In the end, the challenge is to determine whether and in what way a central bank digital euro is necessary. Key areas of analysis include a consideration of ways to prevent a digital euro from leading to excessive conversion of bank deposits into CBDC, which could disrupt bank 3/4  BIS central bankers' speeches  refinancing and banks’ capacity to lend to the real economy, in turn destabilising the financial system and financing of the economy. A report published by the Bank for International Settlements and seven central banks in October 2020 stressed that three foundational  principles must govern any CBDC-related decisions: do not compromise overarching public policy objectives such as monetary and financial stability; organise coexistence with other forms of public and private money; and promote innovation and efficiency in the financial system. If the decision were taken to introduce a central bank digital euro, this currency would also have to help to strengthen the sovereignty and competitiveness of the European payment market, while interacting smoothly with EPI. Finally, we believe there is a form of continuity between a retail CBDC and an interbank CBDC: logically, a retail digital euro should be able to rely on a CBDC for interbank settlement purposes to support optimal circulation.
It is in our own interest to make active efforts to counteract such a development. Monetary policy – a nominal anchor Against the background of an economic downturn and low interest rates among Norway’s trading partners, the conduct of monetary policy in Norway is challenging. A higher key policy  BIS central bankers’ speeches  5  rate might have curbed debt growth and demand pressures in the Norwegian economy. But in an environment of persistently low external interest rates, such a policy would likely have led to a sharp appreciation of the krone, resulting in too low levels of inflation and economic activity. Thus, the crisis in Europe and weak growth in the US are also contributing to keeping interest rates in Norway at a low level. The main objective of monetary policy in Norway is low and stable inflation. This objective provides the economy with a nominal anchor. With firmly anchored inflation expectations, monetary policy can contribute to stable developments in the real economy. Chart 6  The operational target of monetary policy is annual consumer price inflation of close to 2.5 percent over time. Over the past ten years, average inflation has been somewhat below, but close to, 2.5 percent. A credible and firmly anchored monetary policy can contribute to curb the impacts of external shocks. This increases the resilience of the Norwegian economy. More resilient banking sector The financial crisis provided us with some important insights. First, the crisis illustrated that low and stable inflation is not sufficient to secure financial stability.

Øystein Olsen: The economic outlook Speech by Mr Øystein Olsen, Governor of the Norges Bank (Central Bank of Norway), to invited foreign embassy representatives, Norges Bank, Oslo, 4 April 2013. The speech is based on the annual address 2013, Monetary Policy Report 1/13 and previous speeches. Please note that the text below may differ slightly from the actual presentation. *  *  *  Excellencies, Ladies and Gentlemen, First of all, I would like to welcome you to Norges Bank. Five years after the financial crisis started, growth is weak and unemployment high in many countries. The economic situation in Norway stands in contrast to developments abroad. Norway’s economy is still growing and unemployment remains low. There is a tendency to see ourselves as a country apart. Truly, Norway’s oil and gas resources provide an economic base that few other countries enjoy. Income levels are among the highest in the world. At the same time, our increasing dependence on oil and gas increases the vulnerability of the Norwegian economy. The theme of my presentation today is how to enhance the resilience of the Norwegian economy. When the financial crisis washed over the Norwegian banking sector in autumn 2008, we were reminded of how dependent we are on the world around us. Nonetheless, the Norwegian economy weathered the crisis well. After about a year, the downturn in Norway was over.
Indeed, fintech is to take us beyond payments – faster and cheaper delivery of a far wider range of financial services. Increasing outreach and inclusion. Injection of new competition and transformation of the industry. We see this materialising. There are well over 12,000 start-ups disrupting the financial market globally with fintech investments reaching a record high of $ billion in 2019. The International Monetary Fund (IMF) reported that as of April 2019, there were around 200 fintech start-ups in Malaysia in the areas of payments, blockchain, and lending. CPA Australia apprised that over 75 per cent of Malaysian businesses have embraced at least one fintech product or service over the past 12 months, according to a regional survey. While the disruption continues, traditional financial institutions have been responding. Insights from PW C indicate 77% of traditional financial institutions are increasing internal efforts to innovate, 56% have put disruption at the heart of their strategy, and 31% are already purchasing the services of fintech companies. Many are also partnering with fintech companies. For Bank Negara Malaysia, we have also embraced the fintech agenda, setting up our internal Fintech Working Group in 2016, launching our Fintech Sandbox not long after that and finally, organising our very own industry conference – the MyFintech Week in 2019. To be future ready, we are highly committed to support the digital transformation of the financial sector. Earlier this year, we issued the e-KYC policy document to enable digital on-boarding of customers to occur anytime and anywhere.

I urge you to be part of the conversation and engage in the dialogue. I pray that the event will be of great benefit to all participants. 3/3  BIS central bankers' speeches
The interest rate reductions may also result in a sharper rise in house prices, leading to stronger growth in household wealth. Historically, a larger share of household income has, in this situation, been used for consumption. Lower real interest rates make it less profitable for households to invest in financial instruments and they will be more inclined to make purchases - for example of durable consumer goods - now, rather than wait until later. On the other hand, many households probably expect that the interest rate will not remain as low as it is now and will avoid allowing higher consumption to become entrenched. The fall in interest rates may provide an opportunity for households with large loans to make extra debt repayments. We nonetheless expect a fall in the saving ratio. Lower interest rates may also increase the need for allocations to pension funds. Companies account for a substantial share of the allocations to pension funds, and their ability to pay will be reduced as a result. 4  BIS Review 50/2003  In light of these prospects, a large majority of households have a positive view of their own future financial position. According to TNS Gallup’s confidence survey for Q3 2003, confidence in the country’s economy has also improved considerably from a low level earlier this year. Companies are facing a different situation, however. While household income has risen sharply, earnings in the enterprise sector have been low with an associated low level of investment activity.

The low pay increases in this year’s wage settlement may indicate that the social partners are placing more emphasis on the negative effects of large pay increases on future developments in interest rates, the krone exchange rate and  BIS Review 50/2003  5  employment. We expect that in the light of the experience gained in 2002, public entities will exercise more caution in future wage settlements. Expectations of moderate wage growth are supported by the labour market outlook. The monetary policy easing since last December will boost demand, primarily through private consumption and gradually through business investment. The increase in petroleum investment will also contribute to higher demand for Norwegian products and services. As global demand picks up and excess capacity in service industries is reduced, demand for labour may rise in other sectors of the economy. Unemployment is expected to edge down again. The aim of monetary policy in the period ahead is to achieve a higher level of inflation. The key rate has been reduced with a view to bringing inflation back to target at the two-year horizon. Analyses in the October Inflation Report indicate that inflation will move up and stabilise around the inflation target at the two-year horizon. The real economy is projected to be approximately in balance, with an output gap, as we measure it, that is slightly positive.
We have to accept it as we do any other misfortune. Otherwise, we will find ourselves back in the 1970s. I do not mean by this that Icelandic wage-earners must make sacrifices. No, I certainly do not want Icelanders to have to sacrifice; I want them to have it as good as possible at all times. I am merely pointing out the best way to safeguard the nation’s living standards now, when we must adapt to a changed reality in the global markets and in international relations. And it is obvious. We must all participate in the fight against inflation – even those who stand outside the labour unions. We cannot stand by and watch the corporate sector cut its ties to Icelandic reality as regards developments in wages. The question of how much the Central Bank may need to raise interest rates to maintain stability will only be answered in the wage settlements this coming autumn. Honoured guests: Iceland’s economic position has never been better, no matter how it is measured. In spite of everything, households’ purchasing power is growing, even though inflation has risen. In spite of everything, household debt has not risen discernibly as a share of disposable income. In spite of everything, homebuyers with nominal-rate loans are paying negative real interest for the first time in 40 years.

Miguel Fernández Ordóñez: Global rebalancing, asset prices and policy responses Opening remarks by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the Fifth High-Level Seminar of the Eurosystem and Latin American Central Banks, Madrid, 10 December 2010. *  *  *  Good morning and welcome again. More than three years after the global financial system started to show serious signs of instability and two years after being on the verge of a global economic and financial meltdown, the world economy seems to have avoided that risk, backed by a strong and coordinated policy response. Nevertheless, the strengthening has been uneven and the risk of economic and financial instability is still persistent and significant in some regions, like the euro area. Indeed, it is hard to emphasise sufficiently the challenges ahead and how crucial the present juncture is for the future of our Monetary Union. On the contrary, Latin American economies had learned the lessons from the severe financial and economic disruptions they experienced in the not so distant past, and the challenges they currently face are more similar to those that characterised the period of strong growth prior to the financial crisis. These very different sets of present circumstances make today’s exchange of mutual experiences and policy discussion particularly interesting. The title of today’s Seminar was chosen almost a year ago, but it couldn’t be more timely: Global Rebalancing, Asset Prices and Policy Responses.
Let me start by stressing a key point: the Eurosystem's highly accommodative monetary policy is already helping to finance the transition thanks to very low interest rates and abundant liquidity. Green investment will have to be very significant, we are aware of this, – with more than EUR 1,000 billion in public and private investment planned as part of the European Green Deal; xi but never has monetary policy been so favourable for achieving this. The greening of the central bank's actions does not therefore require a further easing of monetary policy, but rather a recalibration of its tools. By next September, we will decide within the Governing Council on the conclusions of our "Strategic Review". To contribute to this debate, I would today like to present our ambitions in the form of a simple triptych: forecast, disclose and incorporate climate risk. 2.1  Forecast, and therefore model  First ambition: to deepen our understanding of the effects of climate change not only on prices but also on growth, both over the business cycle and over much longer time horizons. We are not starting from scratch! Much progress has already been made, notably driven by the NGFS. Our models already incorporate, over a three-year horizon, the effects of tax measures to facilitate the transition, such as the carbon tax. However, changes in the behaviour of economic agents are more difficult to take into account, even though - via expectations - their economic consequences could be felt well before their implementation.

***  This action programme is ambitious: in the fight against global warming, the Eurosystem would thus target the direct effects - better conducting its monetary policy and reducing its own risks - as well as the indirect effects - steering the behaviour of companies and financial institutions, through its disclosure policy, as well as its asset purchase and collateral policies. And this programme is demanding: it requires in-depth work on our macroeconomic models as well as on the climate assessment of assets. But we can make this decision quickly by the end of this year - and then implement it in three to five years. Then the Eurosystem, together with the European Central Bank, under the impetus created by Christine Lagarde, and the Banque de France, will be the pioneers in this global fight. We must do so, in the very name of our mandate. Page 8 sur 8 However, the central banks alone will not be able to do enough. Let us transform this fight into an opportunity, that of a combination of fiscal, monetary and structural policies within the framework of a genuine green policy-mix combining carbon prices, public investment, sector-specific rules and monetary action. “The future is not what will happen to us, but what we are going to do. It calls us, or rather it pulls us to it," said Bergson. There is still time to prove him right.
The high level of wage  1  See box in Inflation Report 2000/4: Effects of an interest rate change. 2  See box in Inflation Report 2002/2: How does the krone exchange rate influence the CPI. growth fuelled expectations of continued high interest rates in Norway relative to other countries and appears to have contributed to the appreciation of the krone. The unexpected high level of wage growth required a tight monetary stance. Norges Bank increased its key rate last summer. The interest rate differential against trading partners widened and the krone appreciated. This appreciation also reflected other factors, such as uncertainty in stock markets and higher demand for NOK-denominated assets, which were perceived as a safe investment in an otherwise turbulent period. In the long run, wages must be commensurate with the value added that is generated by workers. Real wage growth is thus determined over time by developments in labour productivity in all sectors of the economy. If historical productivity growth trends persist, the long-term rate of growth in labour costs that is compatible with the inflation target is 4½%. The outcome of the wage settlements we have observed in recent years is not consistent with this. If monetary policy is to have an impact, it is important that wage growth responds to labour market tightness. Since the mid-1980s, wage growth has been markedly higher in Norway than among trading partners.

The frequency of financial crises must be reduced by fostering solid financial enterprises. Risk systems must be improved. Market access to information on developments in micro and macro performance must be enhanced in order to strengthen market discipline in the financial industry. Better and uniform standards for accounting and statistics are important. Financial safety nets may offer greater security to households and small enterprises, which have difficulty obtaining an adequate overview of the risks in the financial system. At the same time, however, they must not be so favourable that they encourage irresponsible risk2  2  Bordo, M., Eichengreen B., Klingebiel, D. and M. S. Martinez-Peria (2001). Is the crisis problem growing more severe? CEPR  BIS Review 86/2001  taking. Central banks are also faced with the challenge of ensuring financial stability through their analyses and monetary policy. Developments from the 1800s to the present The regulation of financial institutions has undergone considerable changes. In the 1800s and up to World War I, the regulation of banks and other financial institutions was very limited. Norway was one of the most liberal countries. Regulation in other countries such as the US and the UK was more extensive. In Norway, savings banks were subject to separate legislation, because they were to have a more social function than commercial banks. There were no guarantee funds, and the law for savings banks was designed to ensure that they were operated in a manner that safeguarded depositors’ funds.
The wealth management connect will enable Mainland residents to directly invest in offshore wealth management products for the first time. For fund companies, there will be opportunities in product origination by developing products in Hong Kong to tap into the Mainland investor base. Banks can base their sale and distribution operations in Hong Kong to reach out to your Mainland customers. Asset management and treasury operations will also benefit. We are working out the implementation details with the Mainland authorities and I hope to be able to share more details with you soon. Closing 18. To summarise my message today, we see before us the beginning of a huge wave of inflows going into Mainland China’s capital markets, propelled by index inclusion and increasing openness of the markets. And the best and safest spot to hitch a ride of the wave is via Hong Kong and the Connect schemes. 19. Hong Kong’s fundamental strengths as one of the best places to do financial transactions and manage assets are well in place. Capital flows freely into and out of the territory as guaranteed by Article 112 of the Basic Law. The Linked Exchange Rate System, 3/4  BIS central bankers' speeches  underpinned by $ billion foreign exchange reserve, continues to anchor our monetary and financial stability, as it has for the past 36 years. The resource and expertise of the biggest global and Mainland banks in the region are concentrated in Hong Kong.

We are the only place in the world that practises an English and Chinese bilingual common law system that inspires confidence from overseas and Mainland investors alike. We have an ecosystem of topnotch financial institutions and professional services firms that are trusted by asset owners and asset managers to look after their investments. These unique advantages cannot be easily replicated anywhere else in the world. 15. Of course, apart from providing a convenient conduit for overseas investors to enter the onshore equities and bond markets through the Connect schemes, Hong Kong’s stock market has long been a venue for Mainland companies to raise funds and for global investors to get exposure to Mainland enterprises. Today, over 1,100 Mainland enterprises are listed on the Stock Exchange of Hong Kong, with a total market capitalisation of nearly HKD22 trillion and an average daily trading volume of around HKD60 billion. 16. And we are not standing still. We are doubling down on our work to enhance our financial platforms, build more connections with the Mainland’s markets and consolidate our strengths. 17. One exciting example is the two-way cross-boundary wealth management connect scheme for Greater Bay Area residents, announced earlier this month. This new Connect scheme links up Hong Kong’s asset management industry to one of the most economically vibrant and wealthy regions in Mainland China, with a population of 60 million and a per-capita GDP of some $ Guangdong is also home to some 290,000 high net worth families.