samchain/econo-pairs-v1 huggingface dataset:
Consider, for instance, the influence that the level of interest rates, which is decided by the central bank, has on variables so closely related to financial stability as the desire of banks and other agents to assume risk, or changes in financial asset prices. Alternatively, bear in mind the effect of the bank prudential requirements on the supply of credit for financing the economy and, therefore, on activity and prices. Therefore, given the evident interaction between the realms of monetary policy and of prudential policy, it is essential that the principle of separation between them should be applied with the appropriate measures of flexibility and pragmatism. In the case of the relationship between prudential oversight and resolution measures, the need for coordination is even more marked. The Regulation governing the creation of the  BIS central bankers’ speeches  3  Single Resolution Mechanism confers on the latter not only the management of orderly resolution processes for ailing institutions, but also the prerogative to initiate the process by declaring an institution non-viable (a competence it shares with the supervisor) and, to this end, it empowers it to gather all the information it needs and to conduct its own inspections. That is to say, without appropriate coordination, there is a risk that vulnerable institutions – which are naturally those that require more attention by the prudential supervisor – may be subjected to the dual scrutiny of the two agencies, and that discrepancies and frictions may emerge that may complicate the task of maintaining financial stability.

I would first like to elaborate on the challenges we face as central bankers, then on our instruments and their effectiveness. I. Let me start with the challenges  a) As you all know, the Eurosystem’s primary objective is to maintain price stability, that is inflation rates below, but close to 2% over the medium term. However in the euro area, like in most advanced economies, inflation remains too low, despite the historically low interest rates: the harmonised index of consumer prices (HICP) indeed returned to negative territory, standing at –0.2% in February 2016, and underlying inflation, i.e. excluding energy and food, is only 0.7%. A certain number of factors are currently contributing to low inflation. Primarily, the euro area is faced with deflationary pressures associated with a series of economic shocks: firstly, the fall in oil prices, as well as the overall decline in commodity prices; secondly, the slowdown in growth in emerging economies and chiefly China; and, lastly, inadequate growth in the euro area with persistently high unemployment, which curbs wage rises and weakens demand and price growth. Moreover, structural factors, such as the ageing population, are also likely to exert downward pressure on the “natural” – or “Wicksellian” – interest rate. This rate can be defined as the interest rate consistent with the full employment of the factors of production. In this case, in order to achieve the right balance between savings and investment, markets rates must come down too.
Just as in Finland, the Swedish price stability target was initially a self-imposed commitment on the part of the central bank, but afterwards it received expressed support from the Swedish parliament and government. I shall now briefly describe developments in Sweden following the introduction of the inflation target. The Riksbank's target of an inflation rate of 2 per cent +/- 1 percentage point would apply, according to a decision by the General Council in January 1993, with effect from 1995. During the interim period from allowing the krona to float free until 1995, inflation and expectations would be brought down from the high levels that had prevailed during the 1980s. Confidence would be regained. The Riksbank decided to publish regular Inflation Reports in order to attain greater understanding for the drawing up of our policy and the bases on which our decisions are made. The importance of transparency was reinforced in conjunction with the Riksbank being made more independent and its objectives being laid down in a special act, as of 1999. Transparency makes it easier for our employers, the Swedish parliament, to evaluate us. The Riksbank now publishes four Inflation Reports a year, where we describe clearly and in detail actual inflation trends, report the bank's assessment of the future path of inflation and draw conclusions for the direction of monetary policy. In Sweden we have also chosen to publish minutes of monetary policy discussions at our meetings and to report how the Executive Board members vote on this issue.

It is also for this reason that we have tolerated a 'deviation interval' since 1995. While inflation has been low, growth in both Sweden and Finland during the inflation targeting period has been good from a historical perspective, and unemployment has fallen gradually from the high levels during the crisis years. There has been a successful consolidation of public finances in both countries and a fall in the central government debt measured as a percentage of GDP. Additionally, fiscal policy in Sweden has become more predictable with the introduction of a rolling nominal ceiling for public expenditure. Moreover, a number of measures have been taken to improve the functioning of the Swedish economy. These include deregulation and changes in the tax and social insurance systems. This has meant that the conditions for a favourable development have improved and confidence in the Swedish economy has increased. At the end of 1996; however, Finland chose a different direction for its exchange rate policy by taking part in the ERM as a preparation for full participation in the EMU from its start in 1999, while Sweden decided in 1997 that it would 'wait and see'. 2  BIS Review 9/2002  However, an unforeseen obstacle over the past decade has been the large fluctuations in the exchange rate.
However, it is important to remember here that the Executive Board consists of six individuals who have their own personal opinions. The majority is not in every respect a united team that shares exactly the same views on all matters. Nor has it consisted of the same individuals throughout this period. From time to time, opinions have been quite divided on a range of issues, but I would say that the main dividing line between the majority and the minority is that the majority has been more concerned about household debt. Many external observers also seem to have interpreted the situation in this way. Another type of criticism is based on this, but claims that the reasoning of the majority on the risks associated with household debt has been too vague. My perception is that what the critics seem to lack are quantifications of how monetary policy is expected to affect the situation. I can understand this criticism to a certain extent too. It would without doubt be desirable if we were able to say, for example, that a somewhat higher interest rate reduces the risk of a dramatic fall in house prices in the future by so many per cent, or that a level of household debt of x per cent is problematic while a level of y per cent is not. Unfortunately, however, neither the Riksbank nor any other central bank – or for that matter the science of economics as such – has reached that point yet.

During the 20 century there was a development towards a greater element of competition and use of alternative operating forms within the public services sector. In the central government sector, state-owned monopolies such as the post office, the telecommunications administration and the state-owned energy company have been opened up to competition. Examples of remaining state-owned monopolies are Apoteksbolaget, Systembolaget, Swedish Railways, Svensk Bilprovning, Svenska Spel and Statens Pensionsverk. The county council/local authority sector has now chosen to expose to competition many of the businesses it runs. This includes waste transport, property maintenance, local bus routes, care of the elderly, cleaning, 6  SNS Economic council (2002), Unlimited competition, SNS-förlag. Exposure to competition is here defined on the basis of concentration and other barriers to competition such as companies' actions, regulations limiting competition, entry and exit barriers. 7  Price comparisons for housing are difficult. Differences in quality and structure between the Swedish and European housing markets makes accurate price comparisons difficult. For instance, there is a large supply of rental apartments in Sweden, while in other countries there are few of these and they are often greatly subsidised. Statistics Sweden estimates that the relative price for housing in Sweden is probably rather exaggerated. 4  BIS Review 25/2002  primary healthcare and dental treatment. Studies by the Swedish Association of Local Authorities show that increased competition in the county council/local authority sector operations have increased efficiency and led to lower costs.
11  In the evaluation of different forecast strategies, it has been shown that it is difficult to outperform what is known as a naïve forecast – that is, using the current actual value as a forecast. See, for example, Meese and Rogoff (1983). However, a number of other studies show more positive results for the possibilities of making forecasts, for example Mark (1995) and Gourinchas and Rey (2007). 12  See Sellin (2007) and Lagerwall and Nessén (2009). 13  It may be noted that, as the rate of inflation in Sweden tends to be about the same as it is among most of Sweden’s trading partners, there is a high degree of similarity in the forecasts for the nominal and real exchange rates. 8  BIS central bankers’ speeches  As I mentioned earlier, the main scenario in the Riksbank’s most recent Monetary Policy Reports is based on a forecast that, in my opinion, expects excessively high policy rates abroad. One of the most important reasons that I expect lower policy rates is the public finance situation prevailing in parts of the world. In the United States, the United Kingdom and large parts of the euro area, there is little to no scope for using fiscal policy to give an extra boost to the recovery. All that remains, therefore, is relatively expansionary monetary policy. Moreover, I see a risk that the desire to avoid stronger exchange rates will lead to lower interest rates in general abroad.

The real exchange rate is the one that is most important to the real economy; the nominal exchange rate should primarily be regarded as an asset price that affects the real exchange rate over the relatively short term. As Figure 5 shows, the nominal and real exchange rates have co-varied closely during the inflation-targeting regime. The explanation for this is that, as I mentioned, exchange rates that are determined freely by the market tend to be volatile. At the same time, most of Sweden’s trading partners have monetary policy frameworks resembling our own, so inflation rate differences are generally fairly minor. The nominal exchange rate can change rapidly, but prices generally move more slowly. All in all, this means that short-term fluctuations in the real exchange rate, to a large extent, are driven by variations in the nominal exchange rate. Movements in the nominal exchange rate were smaller before 1992, when Sweden had a fixed exchange-rate regime, even if the devaluations carried out during the 1970s and 1980s led to relatively large fluctuations. However, even during periods with fixed nominal exchange rates, large fluctuations took place in the real exchange rate. These were driven by  BIS central bankers’ speeches  7  differences in inflation rates between Sweden and the rest of the world. Between 1982 and 1992, the real exchange rate strengthened markedly, with Swedish competitiveness being undermined considerably as a result.
Lars Nyberg: Financial reforms and financial crises - Swedish experiences Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the Central Bank of Sri Lanka, Colombo, 28 March 2006. *  *  *  Let me begin by thanking you for the invitation to come hear and speak today. It is a great honour to be asked to give a speech within the framework of this prestigious lecture series. On many occasions I – and several of my colleagues at the Riksbank – have described the financial crisis in Sweden at the beginning of the 1990s, both here in Colombo and in other contexts. That is because this crisis made a considerable impression on the Swedish economy, resulting in low – and during a number of years negative – growth and high unemployment. However it also made an impression in terms of making us consider what basic conditions were necessary to ensure that a financial system functions smoothly. There were many interacting factors behind the crisis experienced in Sweden. Mistakes made by bank management, by the supervisory authority and by politicians made the situation worse for the real economy. These mistakes were probably due to some extent to the financial markets having been regulated for almost half a century and so this affected the financial agents' way of thinking and perception of reality.

07.05.2019  Challenges for the Spanish economy. Productivity and the business sector Assembly of the Instituto de la Empresa Familiar Pablo Hernández de Cos Governor  Good morning. Let me begin by thanking the Instituto de la Empresa Familiar (IEF) for their kind invitation to take part in their Annual Assembly. Throughout its 25-year history, the IEF has not only played a crucial role in disseminating studies on the reality of and the challenges facing family businesses in our country, but has also fostered debate on many economic aspects of general interest. One recent example is its interesting publication on dual training on its website.1 In my address today I shall, after briefly describing the current economic setting, mainly analyse the principal challenges facing our economy in the medium and long term. I will particularly focus on productivity, the main determinant of economic growth in the long run. In Spain’s case, productivity dynamics have been particularly poor in recent decades. Improving them with a view to the future is, therefore, a prerequisite for achieving sustainable and balanced growth in the long term. The economic situation  After averaging growth of around 3% in the three years from 2015 to 2017, the pace of the Spanish economy eased somewhat last year to annual growth of 2.6%. 1  See the study by Instituto de Empresa Familiar (2018) “Orientación profesional y formación dual. Hacia un modelo integrado para el empleo juvenil”.
After all, each bank fails in its own way, so each case is different, and each decision needs to account for these differences. We need to take all facts into account and assess them case by case, and not against a single yardstick. In short, we must be proportionate. Imagine a bank breaches capital requirements. Then we have to ask how severe that breach is and whether it might just be temporary. If it’s just a marginal breach which could be healed within a reasonable period of time, it might not be proportionate to declare the bank “failing or likely to fail”. We also need to take into account that a bank depends on the markets. So how do they react? A bank in trouble might quickly lose the trust of the markets. This could lead to a bank run, which requires supervisors to act differently. 4/9  BIS central bankers' speeches  So, to sum up: “failing or likely to fail” decisions are not taken automatically but are based on expert judgement. At the same time, they have to be taken case by case and in a proportionate manner. All in all, they are the most difficult decisions a supervisor has to take. And I can assure you that we do not take them lightly. How to resolve a bank Imagine that we have declared a bank failing or likely to fail. What happens next? Well, at that point the resolution authority takes over.

Banks’ sight deposits held at the SNB will be remunerated at the SNB policy rate of 1.75% up to a certain threshold. Sight deposits above this threshold will be remunerated at an interest rate of 1.25%, and thus still at a discount of 0.5 percentage points relative to the SNB policy rate. Inflation forecast  I would like to address the development of inflation. Inflation has declined significantly in recent months, and stood at 2.2% in May. This decrease was above all attributable to lower inflation on imported goods, in particular lower prices for oil products and natural gas. Our new conditional inflation forecast is based on the assumption that the SNB policy rate is 1.75% over the entire forecast horizon (cf. chart 1). Through to the end of 2023, the new forecast is below that of March. The lower oil and gas prices and the stronger Swiss franc are having a dampening effect over the short term. From 2024 onwards, the new forecast is higher than in March, despite today’s increase in the SNB policy rate. The reasons for this are ongoing second-round effects, higher electricity prices and rents, and more persistent inflationary pressure from abroad. The new forecast puts average annual inflation at 2.2% for 2023 and 2024, and 2.1% for 2025 (cf. table). In the forecast period, inflation is likely to be increasingly driven by higher prices of domestic goods and services. Without today’s policy rate increase, the inflation forecast would be even higher over the medium term.
Note: Media references to uncertainty shows the number of media reports citing uncertainty in relation to a range of political/economic terms across four national broadsheet newspapers (the Financial Times, the Daily Telegraph, the Guardian and the Independent). Last observation for June 2017 is an extrapolation based on observations for the month to date. 23  All speeches are available online at www.bankofengland.co.uk/speeches  23  Chart 15: Inflation compensation (5-year, 5-year forward inflation swaps) Per cent  4 3.5 3 2.5 2 1.5 1 0.5 0  Jan-16  Apr-16  Jul-16  Oct-16 UK  US  Jan-17  Apr-17  Euro area  Sources: Bloomberg and Bank of England calculations Notes: UK inflation swaps are based on the retail prices index (RPI), while the US is based on the consumer prices index (CPI) and euro-area series uses the harmonised index of consumer prices (HICP). Chart 16: Worldwide Google searches of ‘deflation’ and ‘reflation’ since 2012 Index, 2012-17 peak = 100 100 90 80 70 60 50 40 30 20 10 0 2012  2013  2014  2015 Deflation  2016  2017  Reflation  Sources: Google Trends and Bank of England calculations.

Blanchflower, D, Costa, R and Machin, S (2017), ‘The Return of Falling Real Wages’, CEP Real Wages Update, London School of Economics Centre for Economic Performance. Bradley, J (2016), ‘Self-employment in an equilibrium model of the labor market’, IZA Journal of Labor Economics, 5:6. Bryson, A (2014), ‘Union wage effects’, article for IZA World of Labor. Chapman, B (2017), ‘UK must combat unfulfilling jobs and commit to ‘good work’ economy, says Matthew Taylor’, article in The Independent. Evans, C (2011), ‘A risk management approach to monetary policy’, speech delivered at the Ball State University Center for Business and Economic Research Outlook Luncheon. Gardiner, L (2016), ‘A-typical year?’, article for the Resolution Foundation. Gregg, P, Fernandez Salgado, M and Machin, S (2014), ‘Real Wages and Unemployment in the Big Squeeze’, Economic Journal, 124 (576), pp. 408-432. Hamilton, B,H (2000), ‘Does Entrepreneurship Pay? An Empirical Analysis of the Returns of Self-Employment’, Journal of Political Economy, Vol. 108, No. 3, pp. 604-631. Hook, L (2015), ‘Year in a word: Gig economy’, article in the Financial Times. Hudson-Sharp, N and Runge, J (2017), ‘International trends in insecure Work’, Report for the TUC. IMF (2017), ‘Understanding the Downward Trend in Labor Income Shares’, IMF World Economic Outlook, April 2017. Lewis, HG (1986), Union Relative Wage Effects: A Survey, University of Chicago Press. Monetary Policy Committee (2017), ‘Monetary Policy Summary and minutes of the Monetary Policy Committee meeting ending on 14 June 2017’, Bank of England. OECD (2017), ‘OECD Employment Outlook 2017’, OECD Publishing, Paris.
What macroprudential policy can do, with the possible support of monetary policy, is to bridge over the problems – try to ensure that the situation does not worsen while waiting for the supply side of the housing market to begin functioning better. To make a slightly drastic comparison, one might say that what macroprudential policy can do is to give first aid on site while awaiting the ambulance. A first aid effort may be necessary to save the patient’s life, but without continued nursing it is still uncertain whether the patient will survive. Low housing construction is of course one of the “fundamentals” explaining why prices have increased so much. But this is no real comfort. A large part of the problem is, as I mentioned earlier, that we appear over the past couple of decades to have been in a process where housing prices and debt only slow down slightly during economic downswings and then continue upwards again when times improve. This makes households – and thus the economy as a whole – gradually more vulnerable, and this is simply not sustainable in the long run. Several policy areas must collaborate To change course, or reprogram the system, I believe a lot of helping hands are needed. One major challenge is to take measures in a way that avoids as far as possible a rapid and dramatic adjustment of debt and housing prices.

However, I believe there is a risk of now leaning back and assuming that all of the problems will be automatically resolved, or perhaps are already resolved. This is not a quick fix. Making decisions in the field of macroprudential policy is no easy task and Finansinspektionen has a difficult workload ahead. Many people have questioned the efficiency and expediency of the policy rate in this context. But, of course, there are a number of questions regarding macroprudential policy as well. An obvious complication is that macroprudential policy is a new field. There is rather limited practical experience of the effects of macroprudential policy measures and nor is academic research able to provide any clear guidance as yet. This means that, at least during a transitional period, there will be considerable uncertainty over the effects of the measures taken. The objective of macroprudential policy – to prevent risks to the financial system as a whole – is moreover clearer on paper than in practice. It is of course not easy to know when the system is sufficiently resilient or if some form of imbalance is building up, which the crisis clearly illustrated. There are no numerical targets here, and determining when a certain deviation has begun to be abnormal is rather difficult.10 Finansinspektionen will probably also need to struggle on occasion with the scepticism of general opinion towards the need for macroprudential measures. There are different reasons for this.