samchain/econo-pairs-v1 huggingface dataset:
The figure is interpreted as follows: Each mark represents a particular inflation forecast. The red marks show the Riksbank’s forecasts, while the blue marks show the forecasts made by a number of other forecasters. It is possible to see how high an inflation rate a forecaster has predicted by looking at the vertical axel, while the horizontal axel shows when the forecast was made. The dotted line in the figure shows the actual outcome for CPI inflation in 2009. BIS Review 32/2010  Figure 9 shows the forecasts for GDP growth in 2009 made by various forecasters in 2008 and 2009. In this case, too, it is clear that the forecasts follow a common pattern. Initially, the forecasters tended to overestimate GDP growth in 2009 During the first half of 2008, they estimated on average that growth in 2009 would be approximately 2 per cent. As it appeared  BIS Review 32/2010  13  that the financial turmoil would dampen growth in both Sweden and abroad, the GDP forecasts were gradually revised downwards. After April 2009, many of the forecasts were gathered around the actual outcome for GDP growth, which was –4.9 per cent. However, most of the forecasters revised their forecasts upwards towards the end of the year and were thus surprised by the lower outcome.

In four cases out of six, expectations were already in line with the Riksbank’s reporate path before publication, which can be interpreted as indicating that the market’s ability to predict and understand monetary policy was strong. When there were significant deviations, the market in most cases adjusted its expectations towards the repo-rate path after publication, which also indicates that in general it has not been so difficult to understand the Riksbank’s reasoning. Despite the fact that the economic situation was highly uncertain in February 2009 and that the repo-rate path was significantly lowered, the new repo-rate path was predicted relatively well by the market and the market’s expectations also shifted closer to the new repo-rate path after publication (see Figure 15). From April 2009, however, relatively large differences between the market’s expectations and the Riksbank’s repo-rate path appeared. In advance of the monetary policy meeting in April, the market expected that the forecast for the repo rate over the next year would be lowered again. However, the Riksbank’s new forecast entailed a considerably lower repo rate in 2010 and 2011 than the market had expected. Even so, the Riksbank’s new forecast did not significantly affect market expectations (see Figure 16). BIS Review 32/2010  19  In the period leading up to December, market expectations of the development of the repo rate changed relatively little, even though the Riksbank cut its repo rate forecast further in July and then held to this forecast during the entire autumn.
The SNB therefore continues to monitor events on the foreign exchange markets very closely. Impact of negative interest on the money and capital markets  Let me now turn to the impact of negative interest on sight deposits at the SNB on the Swiss franc money and capital markets. As you know, since the introduction of the negative interest rate in January 2015, key money market rates such as the three-month Libor have hovered, as intended, around –0.75% (cf. chart 4). The negative interest rate has ensured that the traditional interest rate differential with other currencies has been at least partially restored. On the secured money market – the repo market – interest rates have also stabilised at a lower level. This applies in particular to SARON, the reference rate for call money. Activity on the  Page 2/7  Berne, 15 December 2016 Andréa M. Maechler  News conference  repo market remains unaffected by negative interest and the very high level of sight deposits. Banks and insurance companies use the market for their short-term liquidity requirements and the efficient management of their collateral holdings. The introduction of the negative interest rate even resulted in an increase in the trading volume on the repo market (cf. chart 5). One reason for this is that repo trades can be conducted in order to use up exemption thresholds. Yields on Confederation money market debt register claims are below interbank levels (cf. chart 4). This is mainly attributable to relatively high investor demand for safe Swiss franc investments.

For the financial channel, it will be mainly through a spike in risk aversion and drying up of bank credit, quite similar to 2008. Already, we have seen some retraction in the Eurozone banks’ trade finance activities in Asia, but the local and global banks have stepped in to fill the void. Financial market stresses will be felt most keenly in capital flows, currency markets, and interbank funding. There could be larger and more volatile capital flows. We must be prepared for both excessive inflows as well as outflows. This could in turn have either upward pressures or downward pressures on the Singapore Dollar. Interbank funding could tighten further. We are keeping a close watch on market liquidity conditions, especially in the availability of US Dollar funding. Finally, the impact on safety and soundness of financial institutions. Financial institutions operating in Singapore have limited direct exposure to peripheral Europe. But if the crisis spreads to core Europe, the contagion could be larger. MAS is closely monitoring banks’ lending exposures and funding profiles. Given our close links to global financial networks, we will not be unaffected. But our financial system is sound and we should be able to weather the storm. Our local banks – at the core of the financial system – have strong capital and liquidity positions. They have very good asset quality, with non-performing loans ratio at just 1.3%. We have been carrying out periodic industry-wide stress tests.
ICMA (2018), “Green Bond Principles: Voluntary Process Guidelines for Issuing Green Bonds”, June 2018, International Capital Market Association (ICMA). Lagerwall, B. (2019), “Fiscal policy in a monetary policy perspective”, Economic Commentaries no. 5 2019, Sveriges Riksbank. Lane, P. (2019), “Climate Change and the Irish Financial System”, Economic Letter, 1, Central Bank of Ireland. Mauderer, S. (2020), “Central banks have a part to play in the fight against climate change”, Opinion piece, Financial Times, 27 February 2020 Mersch, Y. (2018), “Climate Change and Central Banking”, Workshop discussion: Sustainability is becoming mainstream, Frankfurt, 27 November 2018. 17 [18]  NGFS (2019), “A call for action: Climate change as a source of financial risk”, Network for Greening the Financial System, First comprehensive report, April 2019. Nordhaus, W. (2015), “Climate Clubs: Overcoming Free-Riding in International Climate Policy”, American Economic Review, 105 (4), pp. 1339–70. Olovsson, C (2020), “Global warming from an economic perspective”, Sveriges Riksbank Economic Review, under publication. Rajan, R. (2005), “The Greenspan Era: Lessons for the Future”, speech at the symposium in Jackson Hole, Wyoming, 27 August 2005. Sveriges Riksbank (2019), Financial Stability Report 2019:2. Sveriges Riksbank (2020), “Annual Report for Sveriges Riksbank 2019”, Submission to the Swedish Riksdag 2019/20:RB1. Swedish Economic Research Council (2020), “Swedish Policy for Global Climate”, SNS Economic Policy Report 2020. Wagner, G. (2020), “Carbon Taxes Alone Aren’t Good Climate Policy”, Bloomberg Green. https://gwagner.com/risky-climate-econ-102/ Weitzman, M, (2009a), “On modeling and interpreting the economics of catastrophic climate change”, Review of Economics and Statistics, 91 (1), pp. 1–19.

Yields on both indexed and non-indexed bonds have continued to fall this year, with the yield on government guaranteed indexed bonds now well below 5 percent which some had regarded as the floor. Although money and bond market yields declined in 1997 the lending rates of commercial and saving banks changed little. These rates have now begun to come down. Profitability of deposit institutions The profitability of banks improved during 1997. Current information on profits of the commercial banks shows a substantial increase compared with the preceding year. Their combined return on equity was 9.2% in 1997, compared with 8.2% in 1996 and 5% in the year before that. Nonetheless, profitability varied widely among them, and the different conditions that they faced complicate comparisons. Landsbanki (the National Bank) and Búnaðarbanki (the Agricultural Bank), for example, incurred large irregular expenses related to the final settlement of their pension obligations, which cannot be expected to recur in future. Provisions to reserves for loan losses have fallen sharply among all the banks. At the same time, the six largest savings banks recorded some decline in profitability compared with the previous year, and their return BIS Review 42/1998  -7-  on equity was 8.5%. I should underline, however, that profitability varied widely among individual savings banks.
Page 9 of 10  I believe that the financial services community can and must contribute to change our nation’s mentality. At the interface between our nation’s savings and investment it is best placed to leverage more effectively our current economic success. Thank you. Page 10 of 10

It includes a suite of tools ranging from prudential instruments like loan-tovalue ratios and fiscal measures like stamp duties on property transactions, to supply-side and other administrative measures. Singapore does not target asset prices but keeps a close watch on asset price movements, looking for signs of speculative froth, excessive leverage, or concentration risks. 19. Systemic stability is also a shared responsibility. It requires coordinated efforts across different government regulators and agencies. MAS is fortunate in this regard. As an integrated regulator which supervises the banking and insurance industries, as well as the capital markets, MAS is well placed to take a comprehensive view of risks within the financial system as a whole. As a central bank responsible for macroeconomic stability, MAS is also able to monitor and understand the effects of monetary and liquidity conditions on systemic risks. And MAS works closely with other government entities on issues such as system-wide safety nets – such as the deposit guarantees of 2009 and 2010 – taking a comprehensive whole-of-government approach. Reconciling international standards and domestic discretion 20. The third dimension of rebalancing in regulatory reforms is that between international standards and domestic discretion. We have known for some time that we live in a globalised, interconnected world. But we did not know the extent of our interconnectedness until the crisis hit home. Cross-border bank lending is more than 40 per cent of world GDP. Global finance is really a vast and complex network of connections. Financial shocks are transmitted through this network with speed and virulence.
And the value of stress testing and scenario analysis is even more important in those situations where risk measurement is based on scarce or incomplete data or unproven quantitative tools. The above mentioned examples demonstrate the clear view we have taken in the Committee that the sound and stable functioning of credit institutions requires consideration not only of micro conditions, but also, and very importantly, incorporating a macro, long-term and forward-looking perspective. I think these principles also make good business sense. I believe that risk managers, should incorporate macro perspectives into their risk management models and into the design of the bank’s capital strategy. That is, to analyse how risks may change through the cycle and in stressed economic conditions, and incorporate these elements into the decision-making process. It is often thought that risks increase during times of economic downturn. But this is only partly true. Banks’ risks increase as they take on more business and extend more credit during times of economic expansion. The risks may not crystallise until times of difficulty, but the seeds are sown during the  BIS Review 46/2006  5  good times. It seems to me to be both prudent policy and consistent with risk management objectives to take a long term perspective, using the results to make decisions that gain room for manoeuvre in the good times in order to face up to difficulties that arise in the bad times..

We are also looking into how to better capture risks associated with banks’ trading book positions in credit derivatives and highly structured and complex products. The AIG has established a working group that is following up on the Committee’s July 2005 trading book guidance. This working group, in consultation with the industry, is in the process of identifying possible principles for the implementation of so-called incremental default risk charge for trading book capital, and will be exploring other issues related to the measurement and modelling of risk in the trading book. And work is also going on outside the auspices of the Basel Committee. Many of you are probably aware that the Federal Reserve Bank of New York and the UK Financial Services Authority, in conjunction with other supervisors of major credit derivative dealers, have encouraged the industry to focus greater attention on sound risk management practices and the infrastructure of the credit derivatives markets by improving controls around assignments, reducing confirmation backlogs and increasing the use of electronic matching platforms. Other supervisors are reviewing bank stress testing practices and potential risks arising from banks’ private equity activities and exposures to hedge funds. The Basel Committee supports these efforts, and members will continue to keep each other informed on the results of their reviews. Private sector initiatives The public good of financial stability is not just of interest to supervisors and public authorities, but also to the financial sector.
However, in presence of externally generated and domestically generated shocks the banking system in the countries of the region can be vulnerable to lower profitability, less willingness on the part of the banking group to provide capital, and, ultimately, generate a credit crunch. Among the external shocks were listed rises in euro zone interest rates, adverse shocks to one or more of the countries of origin of the foreign banks, and contagion from an adverse shock elsewhere in the CEE region altering investor perceptions regarding the domestic economy. On the other hand domestic shocks such as declining margins from foreign banks fighting to gain market share, and lowering of credit portfolio induced by a  8  BIS Review 119/2007  weakening economy or an unexpected domestic political event could have large effects in the presence of less adequate risk management in the context of foreign owned banks rapid expansion and increasing euroization of financial assets. 5. Policies to mitigate financial vulnerabilities: constraints and challenges  In some cases supervisory authorities (Serbia, Croatia) have recurred to less market oriented macro prudential measures to contain credit growth. While credit controls create the incentive to route lending through less regulated non-bank intermediaries, the imposition of such credit controls in Bulgaria and Croatia was accompanied by a jump in cross-border loans. Watson (2007) argues that prudential policy needs to allow for the fact that foreign-owned financial institutions, with a majority of assets in most cases, have deep pockets in terms of capital and liquidity.

The flood of closures, almost amounting to a panic, caused a further widening of interest rate spreads. LTCM’s situation deteriorated rapidly; by the end of September the fund had lost almost 90 per cent of its capital in the course of nine months. The U.S. Federal Reserve had initiated a meeting with some of LTCM’s counterparties and on 23 September fourteen banks with claims on the fund agreed to take over LTCM as a joint venture and try to wind up the positions in a more orderly manner. The Federal Reserve’s motivation for initiating a solution to the problem was not the sizeable losses that might have been incurred by many of the banks concerned. Its concern instead was the financial system in general. If the banks that had provided loans were to close their large positions spontaneously in a market that was already illiquid and turbulent, other agents who were not directly involved would be hit. The steep price fall would probably have paralysed  BIS Review 23/1999  6  the financial markets for a time and this might have triggered a vicious circle of declining confidence and further closures—the Fed perceived a large systemic risk. The ultimate consideration was, of course, the potential hazard for the global economy. It is difficult to say what might have happened if the Federal Reserve had not acted. The banks that were involved had a strong interest in achieving a controlled settlement of their commitments and would probably have acted at some stage.
It has also to do with CPI being affected by price changes in components that cannot be related to the state of demand. This has been taken into consideration in the design of the main rule and in clarifications and expansions. There has been an endeavour to design the rules in such a way as to avoid unnecessarily large fluctuations in employment and output. However, there must never be any doubt that monetary policy is always governed by the inflation target, although different strategies to achieve this objective in practice can produce different economic costs in the form of fluctuations in output and employment. The fact that the target horizon is normally stated as 1-2 years is justified by the major fluctuations in output that can result from attempts to influence inflation in a shorter time perspective. Interest rates affect inflation with a time lag through effects on demand or the output gap and attain their greatest effect after 1-2 years. In order to reduce inflation in the short term, the interest rate would therefore have to be greatly increased with major negative effects on growth. If CPI is affected by factors that are unrelated to the demand situation, a monetary policy that strictly complies with the main rule can also lead to unnecessary variations in output and employment.

The first day of our seminar is dedicated to this topic. The second day of the seminar targets mainly the corporate sector. The Small and Medium Enterprises’ access to finance is also important for financial stability. Small and Medium Enterprises constitute the overwhelming majority (99 percent) of businesses at European level, with important contributions both in terms of value added generated by non-financial corporations (57 percent) and employment (67 percent). Increasing access to finance in this sector is among the EU priorities. It is also 3  true that this portfolio accounted for the highest post-crisis NPL ratio in the European Union. At its peak, the average NPL ratio for Small and Medium Enterprises reached around 20 percent at European Union level. In Romania, the ratio was 35 percent, while the NPL ratio for microenterprises accounted for 53 percent. Therefore, the same lesson learnt from the household sector also applies here: the Small and Medium Enterpises’ financial inclusion should unfold in a sustainable way. On the other hand, the experience with macroprudential instruments for companies is extremely limited at the European level. For example, France has recently implemented a measure focusing on highly indebted firms, but it applies only to large companies. Therefore, I think that deepening this area of research is very useful for macroprudential policymakers. In Romania we have also tried to come up with solutions that might improve Small and Medium Enterprises’ financial inclusion.
For Poland entering the eurozone means lower nominal interest rates (the spread on long-term rates remains between 100 and 150 basis points) and higher inflation (due to the catching up process). Together this means a drop in real interest rates, which could induce people and enterprises to substantially increase borrowing, and spend the loans on consumption and investment goods. What could be the consequences of this? First, if borrowing accelerates massively, banks may start granting loans without properly checking their customers’ creditworthiness – this could result in bad debt problems. It is a well known phenomenon (e.g. Demirgüç-Kunt, Detragiache 1998, Gourinchas et al. 2001) that lending booms are often followed by banking sector crises. Fortunately recent research on the potential for lending booms in Poland after euro area accession forecasts a rather moderate increase in lending (Schadler et al. 2005, Brzoza-Brzezina 2005), and shows that the expected credit growth is rather an equilibrium phenomenon – a structural adjustment that should not have negative consequences (Kiss at al. 2006). Nevertheless, even if a serious lending boom during euro area accession seems unlikely, policymakers should remain vigilant and prudent banking sector supervision should be the right answer to such worrying developments. Second, higher domestic demand can fuel inflation pressure and increase imports, thus leading to a higher current account deficit.

Svein Gjedrem: The economic outlook Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), to invited foreign embassy representatives, Norges Bank, Oslo, 18 March 2004. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 11 March and on previous speeches. Please note that the text below may differ slightly from the actual presentation. The Charts in pdf-format can be found on the Norges Bank’s website. *  *  *  Your Excellencies, ladies and gentlemen First of all, I would like to thank you for taking the time to attend this event, which provides me with an opportunity to present Norges Bank’s view of the economic outlook. Growth in the Norwegian economy is rising. Unemployment has stabilised. An economic turnaround has occurred, with a soft landing after a long period of high cost inflation. Monetary policy has contributed to stabilising output and employment - but inflation is low. The interest rate level is in line with the level among our trading partners. Short-term interest rates in other countries have been unusually low over the past 2½ years, and there is little prospect of a sharp increase in the near term even if the world economy is expanding. Activity in the Norwegian economy is expected to pick up in the coming years. The past and ongoing rationalisation in the business sector may enable enterprises to increase production considerably in the short term without strong employment growth.