samchain/econo-pairs-v1 huggingface dataset:
Third, broad SSM membership could diminish the distortions to the single financial market caused by the divergent fiscal positions of sovereigns, as Member States that are part of the SSM will also have access to the Single Resolution Mechanism (SRM). This presupposes, however, that the SRM is set up with strong powers, which I consider essential. At this stage, we expect several non-euro area Member States to join the SSM. The negotiations on the SSM Regulation have satisfactorily addressed most of their concerns. However, some countries seem to require that more clarity on the functioning of the SRM is provided before they reach their final decision, in particular on the issue of a common fiscal backstop and how “out” Member States could contribute to or benefit from it. In my view, this should not be an obstacle to a positive decision because any participant country in the SSM will also participate in the SRM and benefit from it. From the ECB’s perspective, it is essential that the SRM comprises a Single Resolution Authority and single fund financed by ex-ante and risk-based contributions from the banking sector itself. To remove any doubts over resolution financing, the fund should be able to draw on a common backstop if needed – possibly a credit line from the ESM. Any credit would be repaid via additional levies on banks and thus be fiscally neutral in the medium term. This construction raises certain institutional questions which cannot be answered today, not least related to membership of the ESM.

The existence of abundant natural resources can be a mixed blessing. Experience elsewhere suggests that the sudden occurrence of major income flows tends to undermine future production potential. In the long term, it is difficult to ensure an efficient distribution of wealth between and within generations without triggering rent-seeking behaviour among households and firms. In the short term, the volatility in income flows and in terms of trade poses a challenge for monetary and fiscal policy. The mixed blessing of national wealth is not a new problem. Vigilant observers were already aware of this in the 17th century. In modern economic language, the Moroccan ambassador to Spain pointed to the problem of deteriorating competitiveness 300 years ago (see Chart 2). The main long-term challenge to economic policy is how the returns on petroleum wealth can be phased into the economy without a deterioration of our future growth potential. Even with our substantial petroleum reserves, human capital is by far our most important resource. It accounts for over 80 per cent of Norway’s national wealth (present value of future labour). Income from oil and gas is transferred to financial assets through the government budget. These transfers are large in terms of GDP, but still minor compared with our human capital. Oil and gas reserves account for about 7 percent of national wealth today, whereas in 2030 these reserves will be reduced to only 1-2 per cent. To meet these challenges, the Norwegian Government Petroleum Fund was established on 22 June 1990.
Later, reserves were expanded to include bank deposits and securities in various currencies. Originally, Norges Bank had an obligation to redeem notes against precious metals, a promise that was printed on each and every banknote. This redemption guarantee applied in principle right up to the abolishment of the gold standard in 1931. In more recent times, reserves have primarily consisted of foreign government bonds, first in US dollars under the Bretton Woods Agreement up to 1971 and later also in various European currencies and Japanese yen. Norges Bank was charged with managing the Government Petroleum Fund when the first capital transfers were made to the Fund in 1996. This was a natural extension of our responsibility for managing foreign exchange reserves. The aim of the Government Pension Fund Global, as it is now called, is to ensure that the income from our oil and gas resources will also accrue to future generations. The principle underlying the fiscal rule is that the real return on the Fund can be used over time for consumption or investment. This ensures a gradual phasing-in of petroleum revenue spending, while preserving the wealth. The Fund is the nation’s family silver. It is no longer held in Norges Bank’s vault, as it was during the period of the silver and gold standards. The Fund is invested in fixed-income securities, equities and real estate across the world.

The bicentenary is a natural occasion for me to cover the scope of Norges Bank’s tasks, against the backdrop of the challenges facing us today. Low growth and structural changes In 1814, the great powers of Europe dominated world trade. The world’s economic centre of gravity has since shifted westward. Today, in the 21st century, the centre of gravity is moving across the Pacific to Asia. Chart 2: International trade for the US and China When China became a member of the World Trade Organization in 2001, its foreign trade was 30 percent of that of the US. The Chinese economy has since grown at an unprecedented pace. In 2013, China overtook the US as the world’s largest trading nation. An ample supply of labour and low cost levels have given China and the other growth economies of Asia strong competitive advantages in international markets. The global flow of credit over the past 15 years has taken an untraditional direction – from relatively poor countries with strong economic growth to more prosperous, mature economies experiencing lower growth. For a long period, this shift contributed to substantial imbalances in the global economy. An ample supply of credit in western economies pushed down borrowing rates. Facing competition from Asia, it became relatively less profitable for firms in the west to invest in new productive capacity in their home countries. Instead, cheap credit was used to debt-finance consumption and housing, particularly in the US and Europe. Banks and financial institutions had, in practice, free rein to fuel credit growth.
During this year some things have certainly changed. Internally, uncertainty has decreased after experiencing peaks at certain periods. Key asset prices, such as interest rates and the exchange rate, have shown high volatility and, in spite of a reduction, have not returned to previous levels. Externally, persistent higher levels of inflation have prompted a strong reaction by most central banks and uncertainty remains elevated. This driven by factors such as the war in Ukraine and the likelihood of recession in US and Eurozone. These elements add complexity to an already challenging scenario. Yet, despite these difficulties and a weakened capital market, the financial system has proved to be very resilient. 1  I will start this presentation with a macro-outlook, in particular at our continuing efforts to resume balanced growth on the back of a sound macroeconomy, by applying the appropriate monetary and exchange rate policy in times of high uncertainty and external shocks. Then, I would like to share with you the factors that explain the remarkable resiliency of our financial system, and the policies we are developing from the Central Bank to contribute to strengthening and developing the financial markets, in accordance with our mandate of financial stability. 1. Building resilience over the years as a source of strength 50 years ago, Chile was an economy mostly closed to international trade and capital flows, with severe credit constraints and a fairly basic financial system, with banks as the only source of financing for businesses and individuals.

As the monopoly supplier of central bank money, which is the most liquid asset of all, the central bank is able to provide liquidity, either bilaterally (in the event of an idiosyncratic shock), or to the banking system as a whole (in the event of a market-wide shock). In doing so, there are some important constraints. Support from the central bank is not available to prop up a failing institution. The Bank of England will only lend to those commercial banks that are, in its judgment, solvent and viable. This is for two related public policy objectives. First, the central bank needs to guard against moral hazard – that is, our policies should not undermine the commercial banks’ responsibilities to manage their own liquidity prudently. If commercial banks know that we will always bail them out, then they may take too much risk: the bank’s shareholders and management might seek to profit from the extra gains arising from risky lending whilst relying on the authorities when the risks crystallise. Second, and in consequence, the central bank needs to protect its own balance sheet (and hence public money) against the risk of loss. As a result, central bank lending should be collateralised, and subject to haircuts which are prudently calibrated to be sufficient if the counterparty was to default. In a crisis, it can be difficult to judge whether a bank really does have just a temporary liquidity problem or an underlying solvency problem.
3  BIS Review 56/1999  Monetary policy operates on the demand side of the economy, and essentially what we can hope to do – and what we are aiming to do - is to keep overall demand broadly and continuously in line with the underlying supply-side capacity of the economy to meet that demand. How close we come – on average and over time – to meeting the 2½% inflation target is in effect simply a measure of our success in achieving macro-economic stability in this wider sense. We cannot directly affect supply-side capacity – the underlying rate of growth that we can expect to sustain. But, by operating symmetrically – as we have shown that we do – we can provide an environment in which supply-side improvements (for example, more rapid productivity growth which apparently explains the stronger performance of the US economy in the past few years, but which we have yet to see in this country on anything like the same scale) have the best chance of feeding through into faster sustained output growth. And, to the extent that we are successful in maintaining macro-economic stability, that can help to improve our supply-side performance indirectly by lowering real long-term interest rates and encouraging better decision–making in the economy as a whole with less distortion from unnecessary erratic movements, particularly in nominal values. But we can only hope to maintain macro-economic stability for the economy as a whole.

At the Trades Union Congress in Blackpool last September I had emphasised that our inflation objective was symmetrical, and promised that if overall demand threatened to fall significantly below the supply capacity of the economy, with the risk that we would fall short of the inflation target, then we would be just as vigorous in reducing interest rates to stimulate demand as we had been in raising them when the risks to inflation were on the upside. So, in the new situation, the Monetary Policy Committee promptly reversed engines to pump up demand, cutting rates by 2¼% over the next few months to as low as they have been since 1971. (This relatively aggressive response was not incidentally – as is sometimes suggested – a sudden conversion to a more activist philosophy, simply a reflection of the rapid decline in the economic prospect which required a strong response.) Since last autumn the world financial and economic situation has certainly stabilised under the impact of the continuing strength of domestic demand in the US economy and of the beginnings of export-led recovery in a number of emerging markets, particularly in Asia. And world commodity prices, notably the price of oil, have shown signs of strengthening. But global imbalance seems likely to persist for some time, with domestic demand growth still relatively sluggish in Japan, and in the Eurozone taken as a whole. This imbalance, in turn, is a significant influence on the international pattern of interest and exchange rates.
Unit labour cost, 1990-2001 Annual percentage change  12  12 Sweden  10  10  Euro area  8  8  6  6  4  4  2  2  0  0  -2  -2 1990  1991  1992  1993  1994  1995  1996  1997  1998  1999  2000  2001  Source: OECD  8  BIS Review 40/2002  5. The Beveridge Curve, 1980-2002 (January-May)  Unfilled job vacancies/labour force 1,4 1980 1,2 1987 2002 (jan-may)  1,0 1990  2000 0,8 1984 0,6  2001  1999 1998 1997  0,4  1991 1995-1996  0,2  1994  1992 1993  0,0 0,0  2,0  4,0  6,0  8,0  10,0  12,0  14,0  Total unemployment  Source: Statistics Sweden (Labour Force Surveys) and Labour Market Board  6.

Kristina Persson: On the verge of Eurosystem membership - challenges from a Swedish perspective Speech by Ms Kristina Persson, Deputy Governor of Sveriges Riksbank, at a seminar organized by the European Trade Union Confederation (ETUC), Akersruno, 1 July 2002. *  *  *  Introduction Let me begin by thanking you for the invitation to come here and speak. The issue I would like to highlight is how a possible Swedish membership of Stage Three of EMU could affect the Swedish labour market. To put this issue into some kind of perspective, I shall begin by briefly describing the changeover in economic policy, followed by the recent developments on the Swedish labour market. Finally, I shall discuss the changes to the labour market that might become necessary if Sweden joins the Eurosystem. The changeover in economic policy Over the past two decades there has been a pronounced reorientation in Swedish economic policy. For instance, the credit market and foreign exchange market have been deregulated, the tax system has been reformed, parts of the transfer system have been changed and competitive pressure has increased. These changes have contributed to improving the way the Swedish economy functions. Price stability has thus become a statutory objective for monetary policy. As of 1 January 1999, the Riksbank has an obligation confirmed in law to maintain price stability. The Riksbank has chosen to operationalise this objective by means of an inflation target.
Specifically in the preparatory work towards the realization of this project, His Excellency has been most generous with his time and advice. I therefore wish to thank you, Sir, on behalf of the Bank and on my personal behalf, for all you have done in furthering this project and supporting the Bank in all its activities. Please permit me, on behalf of us all, to wish you a peaceful transition as you prepare to hand over the reins of office at the end of a difficult, but by any measure successful administration, which has seen the re-establishment of peace and stability in our dear country. The Vice President has likewise shown understanding and encouragement for our efforts and I wish to extend to him our thanks and appreciation for his support over the years. Your Excellency, Honourable Vice President, Distinguished Ladies and Gentlemen, the development of a capital market including the establishment of a stock exchange in Sierra Leone has been accorded high priority in our activities in recent years. Any programme of financial sector reform, must of necessity include capital market and stock exchange development to ensure completeness of the financial system. With only a money market, there has been limited space for raising long term capital, so vital for sustained economic growth.

The constraints imposed by such a financial infrastructure, and the inadequacies and inefficiencies attendant thereto, provide key justification for the development of the capital market which will play the lead role for mobilizing domestic and foreign investment, as well as engendering low cost, efficient, financial intermediation. While in our financial sector development we have taken steps to improve the payments system, supervision of banks, strengthening their capital base, and enhancing efficiency in general, we have also put strong emphasis on ensuring the emergence of a comprehensive financial sector, that will meet the demands of an emerging market economy such as ours. BIS Review 107/2007  1  In the process of developing the capital market, we have worked with private sector and external development partners, especially the First Initiative and the Commonwealth Secretariat, to put in place a robust legal and regulatory framework that will facilitate the process. Through the Resident Consultant provided by the First Initiative, we have defined the system of regulations that would guide the operations of the capital market, and the stock exchange in particular, in all facets of its operations. We have ensured that these are consistent with acceptable international standards, and I can now confidently say that our stock exchange will operate with adequate safety and protection of the interests of the investing public. No one therefore should entertain any fears in transacting business through our stock market. The process of developing the legal framework has been participatory and transparent.
7  Investments of this kind would enable banks to face up to any major potential competitors –not necessarily financial institutions– that might venture into the credit market with greater guarantees of success. Allow me to end this address with a final reflection on the need to persevere with a European response to this crisis in the financial sphere as well. The response from the prudential authorities, along with the monetary and fiscal policy measures adopted, has so far enabled the initial impact of the shock to be absorbed and prevented the materialisation of a systemic risk in the financial system that would have further exacerbated the crisis and made it more persistent. However, some of the shortcomings that continue to exist have also been revealed. In this respect, the completion of the Banking Union with the approval of a fully mutualised European deposit insurance scheme would make a decisive contribution to ensuring financial stability in the euro area, both over the coming months and in the medium term. Further deepening of the Capital Markets Union project is also essential. Moreover, priority must be given to analysing how appropriate the European resolution and winding-up regulations are for a hypothetical systemic crisis, and the possible role of asset management companies in the event of severe impairment of European financial institutions’ balance sheets. To sum up, if we are to continue to address this crisis effectively, persevering with a European response - in the financial sphere as well - is essential. Thank you very much. 8

It needs to recognise that the improving terms of trade driving those improved prospects for activity is simultaneously weighing on both inflation (through the direct and indirect effects of energy price falls) and inflation persistence (by reducing the intensity of the distributional conflict, as the foreign claim on domestically generated economic surplus falls back). Having said that, some part of the recent positive news to UK employment and activity might have a less benign interpretation as regards inflation prospects. If it were to reflect a new positive demand shock, rather than the unwinding of the deterioration in the terms of trade, then – other things equal – it would strengthen the case for further monetary tightening. In that case, the recent improvement in the prospects for UK employment would challenge the view embodied in the MPC’s February forecast that an easing in the labour market – as reflected in higher unemployment, a lower vacancy-to-unemployment ratio, or less job churn – will ultimately weigh against persistent inflationary pressures. In interpreting the implications of recent data for monetary policy, the MPC will need to exercise its judgement about which of these two underlying stories is more relevant. Concluding remarks In February, the MPC signalled that it had adopted a more ‘data-dependent’ stance. This was consistent with establishing a clear inflection point in the upward path of Bank Rate – but not necessarily a pause, still less a turning point.
It is thus not unusual that the studies available should question the fact that banks with the same risk profile are actually subject in practice to comparable capital requirements when they operate in different jurisdictions. The dissatisfaction arising from the difficulties in achieving an appropriate estimation of asset risk weightings should not lead to conventional solvency ratios being discarded or to their BIS central bankers’ speeches  1  role as essential indicators of the financial strength of banks being questioned. Nor is it easy to justify renouncing the use of the specific information at hand at banks – through the advanced approach – to improve the measurement of the risk of exposures. Indeed, I believe any effective regulatory reform should continue to aspire to have capital requirements discriminate between different types of exposures on the basis of their risk and to avoid excessively simplistic approaches that prevent capital requirements being adapted to each bank’s business model. What’s more, the calculation of the solvency ratios and, in particular, the use of advanced models should be subject to more demanding tests. In this respect, various options – which are not mutually exclusive – have emerged in the ongoing debate to refine the calculation of regulatory capital, and these merit in-depth study. The first approach involves developing more accurate guidelines for the design and parameterisation of acceptable models.

But despite the uncertainties surrounding DLT’s potential, we want to be prepared for a scenario where market players adopt DLT for wholesale payments and securities settlement. We must ensure that, in such a scenario, central bank money would still retain its role as the settlement asset for wholesale transactions. If, for example, market players start to use DLT for securities settlement but face difficulties using TARGET Services[10], they may turn to alternatives like commercial bank money or stablecoins. This would entail a number of risks, such as central bank money having a reduced role in settlement processes, as well as trading and liquidity becoming fragmented. The result would be payments and securities settlement becoming less safe and less efficient, which would undermine financial stability. The use of stablecoins would magnify these risks. As we have seen in recent months, stablecoins are prone to runs. In other words, they are stable in name only. And allowing them to be fully backed with central bank money would effectively outsource the provision of central bank money to private entities, endangering monetary sovereignty. [11] A shift away from central bank settlement systems would also imply that authorities would lose direct access to settlement data. This could slow the speed of intervention in the event of settlement bottlenecks and impair the analysis of financial stability. The Eurosystem is therefore exploring ways in which market participants who adopt DLT could interact with the TARGET Services to settle the euro cash leg of their transactions in central bank money.