samchain/econo-pairs-v1 huggingface dataset:
When the gold standard was relinquished in 1931 and the krona started to float, as a crisis measure the Riksbank was given the task of maintaining a constant purchasing power for the krona, that is, establishing a constant price level. It all functioned relatively well to the extent that the economic recession of the 1930s was not as severely felt in Sweden as in other countries and the recovery was unusually strong 1 . Economic developments during the inflation-targeting period How has the period with an inflation target worked? Well, looking back on the developments in the past ten years, it is difficult to come to any other conclusion than that the new stabilisation policy regime has lived up to the expectations. The high inflation economy with recurring cost crises, high interest rates and an unstable economic development is a thing of the past. Inflation has instead been low and stable. GDP growth has on average been higher and also more stable than in the 1970s and 1980s, and real wage growth considerably more favourable. Productivity growth has been surprisingly robust – stronger than in the rest of the EU – and there now seems to be broad consensus that the economy’s potential growth rate has been raised. Growth in employment has not been quite as good, but it is nonetheless worth pointing out that the situation today is far better than it was in the mid1990s. It is also interesting to study inflation expectations.

The idea behind the fixed exchange rate policy was to ensure that inflation in Sweden would be in line with our most important trading partners’ inflation rates and that the fixed exchange rate would function as a nominal anchor. Instead, price and wage developments repeatedly came on a collision course with the fixed exchange rate and Sweden suffered cost crises. To rectify this situation, the krona was  BIS Review 111/2006  1  devalued a total of five times during a period of seven years. However, the trend increase in domestic prices and wages continued to rise, so the fundamental problem was still there in the background. The result was modest economic growth, poor productivity growth and more or less stagnant real wages. This performance was markedly weak both compared with earlier periods and in relation to other countries. During the crisis years at the beginning of the 1990s the situation deteriorated even further. Unemployment increased fourfold in the course of a few years and the central government finances deteriorated dramatically. Long-term interest rates rose and the interest rate differential vis-àvis Germany, for example, occasionally came to several percentage points. The fixed exchange rate lost credibility and had to finally be abandoned in November 1992, following large currency outflows and extreme interest rate hikes in an attempt to defend the krona. The nominal anchor that was to hold down inflation and inflation expectations in the economy had loosened. To pin it down again and bring the Swedish economy onto a better track required drastic measures.
Durmuş Yilmaz: Economic governance – the Turkish case Opening remarks by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the Conference on Current Issues in Economic Governance, Ankara, 3 April 2007. *  *  *  Ministers, academicians, bureaucrats, guests, It is an honour for me to address a distinguished audience on such an important issue. The conference will do much service by bringing forward the issue of “economic governance”, which we as the Central Bank have emphasized at numerous occasions. Let me thank Bilkent University for creating such a productive environment. Today, I would like to devote some time to highlighting the importance of principles of good governance in general and economic governance in particular. In the context of economic governance, I would also like to mention some issues on how to create good institutions. Then, I will proceed with the Turkish case and the Central Bank of Turkey. But first of all, I will start by outlining the basic definitions of the concepts I am going to use. Although the concept of governance is not new at all, in recent years it has started to be widely used in economics, especially in the development literature. While governance, or rather good governance, has been introduced as an effective tool to harness globalisation, it is not easy to define in one sentence because of its many interacting elements.

With influence, we have been able to keep abreast of key developments and ensure that our views are heard and heeded. To leverage and build on our reputation, MAS must continue to deepen existing relationships and build new ones. We must engage in active dialogue with our external counterparts, as well as play an active role in regional and international co-operation. Our efforts in key regional fora like ASEAN and the Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP) will help to accelerate the pace of liberalisation and integration of the region’s financial markets. This will benefit the entire region. In the international arena, MAS must continue to play an active role in promoting sound macro-economic policies and a stable global financial system. We are already engaged in and contributing to many diverse fora, covering areas like monetary policy, regulation and supervision, financial stability, corporate governance, anti-money laundering and counter terrorist financing. As a good global citizen, Singapore will continue to work with like-minded jurisdictions to keep the international financial system stable and safe. Singapore fully supports all international and regional collaborative efforts to fight terrorism and crossborder crime. We will work with other countries to establish a reciprocal basis for co-operation in fighting crime like money laundering and terrorism. But in co-operating with others, we must uphold certain principles. This is also an integral part of preserving our reputation. Our co-operation will be provided within a structured framework, in accordance with our domestic laws and with adequate safeguards to prevent abuse.
Put another way, few applied macroeconomic models allow inflation to drift seriously away from the target for a persistent period of time. Many models implicitly assume a minimised probability of tail risks and shocks, and an exaggerated level of central bank credibility. As a consequence they will tend to underestimate the reaction of interest rates necessary to stabilise inflation forecasts at the target. Frankly, it is too early to tell where the terminal rate could be, even if this time could come in the future. 2. Several useful milestones along the way  5  Page 6 sur 14  The preceding section has highlighted that unequivocal rules set once-and-for-all are of low practical use in the current context; they put us at risk of either overreacting (empiricist) or underreacting (academist). Yet we should not give up having any reference points. In my view, the right balance consists of explaining an intermediary step along our path. Beyond this intermediary step, I believe it would be useful for the euro zone to set out a few decision criteria, both on interest rates and on the size of our balance sheet. 2.1 The neutral rate as an intermediary step About the first part of the journey, the ECB will continue the process of normalisation until we reach at least the neutral interest rate. Of course, structural models of r* are notoriously imprecise and volatile but nevertheless help us understand the evolution of the natural rate over long periods of time.

But in conclusion, let me touch a sensitive coordination issue between various monetary policies. Given the financial importance of the dollar, and the need for the Fed to tighten decisively in order to reach its own price stability objective, other Central banks could be exposed to a dilemma. This is not exactly the one put forward by Helene Rey in her famous 2013 paper vi, but a delicate trade- off as a consequence of free capital movements: - Some Central banks already fighting inflationary pressures could be at risk of overtightening to avoid an excessive slippage of their currency. This would be mainly but not exclusively the case for emerging markets, and justifies the fear expressed by 11  Page 12 sur 14  M.Obstfeldvii and others of an excessive global monetary tightening. The IMF judges nevertheless that we are not there yet, and I agree. -Others would see a significant fall of their currency (versus the dollar) if they seek to maintain accommodative domestic monetary conditions. This could explain the recent intervention by Japanese authorities in favour of the yen. As said earlier, I think that the ECB should and can run its own monetary course. Not only today, but as a structural consequence of the significant weight of the euro area in the world economy: I stressed it four years ago in our IMF Bali meetingsviii. Obviously the exchange rate matters for our inflation outlook: we don’t target it, but we look at it closely.
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Lars Nyberg: How do conflicts of interest in universal banking emerge and what are the arguments for a separation of commercial and investment banking? Speech by Mr Lars Nyberg, Deputy Governor of Sveriges Riksbank, at a seminar organised by the Swedish Bankers’ Association, the Swedish Securities Dealers Association and Finansinspektionen (the Swedish financial supervisory authority), Stockholm, 26 August 2004. *  *  *  I would like to begin by thanking the Swedish Bankers’ Association, the Swedish Securities Dealers Association and Finansinspektionen (the Swedish financial supervisory authority) for taking the initiative to organise this seminar. Over the past year, in particular, we have seen the importance of open and thorough discussion of conflicts of interest in the financial sector. I hope that this seminar will contribute to an even deeper analysis of the problems we face. The present discussion has arisen in the wake of a number of international corporate scandals. It is perhaps sufficient to mention names such as Enron, WorldCom and Skandia to indicate how much trouble can be caused by conflicts of interest. In Sweden there are two conflicts of interest in particular that have received attention, although there are many other, possibly equally serious ones. The first is that many sellers of various financial services offered by banks and insurance companies have traditionally been presented as investment advisors rather than salespeople.
When I did it, I read probably five or ten different books, and that gave me a good sort of basis for thinking about investing. But before investing, make sure you have that $ that you need in case an emergency comes up. Audience Member: Thank you. President Dudley: Thank you. Dr. Olajide Oladipo: With two good questions from our students, I think I’m comfortable now to bring the discussion to an end. 15 / 15  BIS central bankers' speeches

Thus far, the global financial crisis has had limited direct effects on Islamic finance. While Islamic finance by its very nature only engages in transactions that have underlying tangible productive activities, the slower overall growth and the increased uncertainties have affected pricing and activity in certain market segments. However, this in part reflects the shift in activity from the financial markets to the Islamic financial institutions. The scope of Islamic financial business has now expanded to more sophisticated financial products in response to the changing global customer base. Such Shariah-compliant products include private equity, project finance, the origination and issuance of sukuk, as well as fund, asset and wealth management products. The sukuk market in particular, has  2  BIS Review 136/2008  become an important avenue for international fund raising and investment activities. This market has expanded by an annual growth rate of 40%. The year 2007 saw an exceptional growth of the global sukuk market which expanded by more than 70%. New issues during the year reached a record high to about $ billion and the outstanding global sukuk market has now surpassed the $ billion mark. Up until August this year, it has held its ground with a total global issuance now exceeding $ billion, and is expected to exceed USD200 billion in 2010. This growth is spurred in part by the growing funding requirements in emerging market economies, in particular, in Asia and the Middle East. This is reinforced by the continued confidence of investors in the Islamic financial instruments.
Some might look at this list, and want a faster, ready-made solution. I can hear them now: “Why not just put this activity in the banking system and borrow a more robust regulatory structure?” I think we should consider that, but bank regulation may not be fit for purpose. History rhymes; it doesn’t repeat—that’s the last time I will use that line. So, at the same time we consider what banks will or should be going forward, we also should consider some more fundamental questions: (i) What is the most practical approach? (ii) What approach gives us the right balance of functional and risk-based regulation? (iii) What approach is the most neutral to technological change? (iv) What approach provides the clarity to the greatest extent possible (recognizing that every model will have its faults)? (v) What approach will last to and through the next cycle of innovation? I mentioned the SEC earlier. The SEC analyzes digital currencies using a test that the Supreme Court formulated almost 90 years ago—that is mind boggling, but for what the SEC does, it is also still very relevant—this is something worth striving for. You might be surprised that I don’t have the answer to what the next 90 years of digital currency regulation will look like, but I hope to have the opportunity to explore this issue with some of you. Thank you. 1 Many thanks to Joseph Torregrossa and Thomas Noone for their assistance with  these remarks.

Let us not forget the fact that the link has served Hong Kong well in the last 14 years by providing an anchor for monetary stability, without which it would not have been possible for Hong Kong to weather numerous shocks during this period and to develop into a leading financial, trade and services centre in the region, with a per capita income higher than many of the developed economies, including the United Kingdom. Even in the latest regional currency turmoil, the link has once again proved its resilience and the Hong Kong dollar has remained very stable against the US dollar. However, questions or doubts have emerged on whether the price for maintaining the link is too high for Hong Kong. 3. This leads me to my next point. Is the price for maintaining the link too high for Hong Kong? The higher interest rates resulting from the defence of the $ under the currency board arrangement are causing some pain, especially on the asset markets and on the finance costs for doing business generally. It is true that, under the currency board mechanism, when the $ is under speculative selling pressure, local interbank interest rates may go up sharply, as they did on 23 October. On 24 October, the major banks raised their best lending rate by 75 b.p. to 9.5% in view of the rising funding costs.
As regards the Federal Reserve, although it is true to say that under the present regime chosen for our monetary policy – namely a currency board with the US dollar as anchor currency – the Fed's monetary policy has a major and direct influence on monetary conditions in Hong Kong, it was certainly not the Fed which determined that Hong Kong should operate a monetary policy of this nature. It was Hong Kong's choice, and we do not require any permission from Washington or New York to continue or discontinue it. With regard to the Legislative Council, while members of LegCo take a keen interest in monetary policy and related issues, and although the HKMA maintains a dialogue with LegCo, more particularly with its Financial Affairs Panel, over matters of common interest, LegCo has no locus under existing laws to determine monetary policy. With regard to the three note-issuing banks, that particular status confers no ability to affect monetary policy. The banks issue notes in response to the public's wishes to exchange deposits into currency, and are required to pay over backing to the Exchange Fund in such manner as the Financial Secretary specifies - which has since 1983 been the equivalent value in US dollars calculated at the fixed rate of 7.80. Within this framework the volume of note issuance itself is neutral in terms of monetary policy.

In the opinion of the Banco de España, the standardised operational risk approach that the Basel Committee has submitted to public consultation should be improved in various respects The review of the standardised approach seeks to provide greater sensitivity to credit risk in the calculation of RWAs and, in turn, to prevent the approach from residing excessively and automatically on the ratings given by external rating agencies. The Basel Committee is striving to design a standardised approach that redresses these shortcomings, and is adjusting certain elements and deciding on their calibration. The position of the Banco de España, like that of other national supervisors, is that this review should not give rise to capital increases, or in any event increases that may prove significant for the banking sector. The use of internal models is also under review, with the internal credit and operational risk models pending finalisation this year. The aim is to reduce the excessive variability of RWAs, and in this connection work is under way in several directions, which may be summarised as follows. First, not all risks are deemed subject to modelling. Such is the case of operational risk. The current proposal is to cease to model this risk. Second, under credit risk, not all portfolios will be equally subject to modelling. Specifically, “low-default portfolios” would be a case in point, as would, for instance, that of banks, or certain segments of that of corporations.
This is illustrated by the blue bars on Chart 4. For the full year 2020, our interventions totalled 110 billion Swiss francs (more than 15% of GDP). This, together with our policy rate at −0.75%, has allowed us to maintain an expansionary policy stance throughout the COVID-19 pandemic. The sharp increase in risk aversion also led to severe strains in offshore US dollar funding markets. Because of the substantial increase in demand for US dollars, non-US banks increased the premium that they were willing to pay in order to secure US dollar funding in the foreign exchange swap market. This led to a significant increase in the US dollar swap basis 1 and a corresponding deterioration in dollar funding conditions, as shown in Chart 5. So, to ease strains in global US dollar funding markets, the SNB participated in a series of coordinated central bank actions, enhancing the provision of US dollar liquidity through the swap line arrangements with the Federal Reserve System. These actions proved effective. The US dollar swap rate quickly reverted to pre-COVID-19 levels. Let me leave you here with a first observation. By promptly fending off the financial crisis as the COVID-19 pandemic was erupting on a global scale, central banks reaffirmed their role as effective crisis managers, both nationally and internationally. Their decisive policy actions alleviated market stress and helped to restore confidence.

I will not attempt to describe this chart; it would take too long and, even if I had the time, I doubt I would have the ability. These were the self-same constraints – time, complexity – which faced investors in these products. Due diligence was the casualty. End-investors in these instruments were no more likely to know the name of the companies in their portfolios than the name of the cow or pig in their exotic hot dog. To illustrate, consider an investor conducting due diligence on a set of financial claims: RMBS, ABS CDOs and CDO2. How many pages of documentation would a diligent investor need to read to understand these products? Table 2 provides the answer. For simpler products, this is just about feasible – for example, around 200 pages, on average, for an RMBS investor. But an investor in a CDO2 would need to read in excess of 1 billion pages to understand fully the ingredients. With a PhD in mathematics under one arm and a Diploma in speed-reading under the other, this task would have tried the patience of even the most diligent investor. With no time to read the small-print, the instruments were instead devoured whole. Food poisoning and a lengthy loss of appetite have been the predictable consequences. Though it had aimed to dampen institutional risk, innovation in financial instruments served to amplify further network fragility. Diversity and stability A final dimension to network robustness concerns the effects of diversity.
And it’s been my experience, having worked both as a regulator for 18 years and similar quantities, in the private sector, especially, 10 years at a major international back, that the loan officers of those institutions knew far more about the risks involved and the people to whom they lent money, than I saw even our best regulators at the Fed capable of doing. So the problem here is something which looked to be a very solid edifice, and indeed, a critical pillar to market competition and free markets, did break down.’ See the preliminary transcript of the 23 October 2008 meeting of the House Oversight and Government Reform Committee on The Role of Federal Regulators in the Financial Crisis.

Protecting the cycle from the banks In my view there is a case for taking this further and adopting the more ambitious goal to use regulatory requirements to smooth out the credit cycle. In other words, preventing the imbalances within financial markets destabilising the real economy. This would involve varying the regulatory requirements to stabilise the supply of credit and the terms on which it was granted – for example by requiring banks to hold more capital when they would otherwise be loosening credit conditions, and allowing banks to run down capital when they would otherwise by restricting access to credit. This approach could offset  BIS Review 21/2009  11  to some degree not just a domestic credit cycle but the impact of developments elsewhere in the global economy which affect the terms on which banks are able to raise funds in financial markets or the he value of their assets. To a limited degree this would allow the authorities to make the banking system a shock absorber. Policymakers would be raising capital requirements to preventing shocks that occur outside the banking system from destabilising the real economy. But I would limit the goal to smoothing the credit cycle and would not be inclined to go further and use it as a general stabiliser of the economy. Weapons in the arsenal So what is the choice of instruments? I see great attractions in “dynamic provisioning”, in other words amending the accounting system to recognise likely future losses.