samchain/econo-pairs-v1 huggingface dataset:
After it became clear that Russia would not, in practice, be servicing its foreign debt, market participants became highly risk-averse. The unrest spread to European BIS Review 10/1999  –6–  financial markets and Norway. Investors fled to safe-haven countries such as Germany, the US and Switzerland, and the currencies of countries with less liquid and more volatile financial markets depreciated. This included countries such as Norway and Sweden. The Norwegian krone depreciated sharply from around 101 against the ECU index at the beginning of the year to 115 in October, or the weakest rate since the objective of exchange rate stability against the ECU was adopted. 6) Monetary policy in 1998 Norges Bank responded to the sharp depreciation of the krone by raising its key rates in several steps in 1998. These rates were first raised in March, after the krone weakened in the first three months of the year from 101 to about 103.5 against the ECU index. The krone then appreciated slightly and stabilised for a period. Pressure on the krone increased during the summer. Norges Bank responded by raising its key rates on six further occasions. Following the last increase on 25 August, the deposit rate and the overnight lending rate were 8 and 10 per cent, respectively, i.e. 4.5 percentage points higher than at the beginning of 1998. It is difficult to predict the direct short-term effect of changes in interest rates on the exchange rate.

4  Represented by, for example, Bernanke (2005), “The Global Savings Glut and the US Current Account Deficit”. 5  See King (2011), “Global imbalances: the perspective of the Bank of England”. BIS central bankers’ speeches  3  So we need richer stories to make sense of what happened. It is precisely in that spirit that colleagues at the Bank for International Settlements6 have stressed the importance of gross capital flows. As Cecchetti has emphasised, whereas global current account balances (the counterpart of net capital flows) expanded in the twenty years to 2007 from about 1% of world GDP to about 3%, the gross capital outflows of all countries increased from around 3% to over 15% of world GDP (Chart 5). And the aggregate international investment position of all countries7 increased from under 50% to over 150% of annual world GDP. Opening up the possibility that gross capital flows matter transforms the picture. For example, as Borio points out, Europe’s gross capital flows were enormous, accounting for around half of gross inflows into the US in the run up to the crisis. And sufficient of that was invested in US ABS for the US’s mortgage crisis to be transmitted across the Atlantic, including to France and Germany, pretty well instantly in 2007 – and before the solvency of the banking system was in doubt. Even if gross and net flows had been equal, wouldn’t the composition of those flows have made a difference?
But, these efforts should help us to avoid repeating the mistakes of the recent past, and to take a more proactive stance toward mitigating potential future vulnerabilities. Of course, we at the Fed are not alone here. Since the recent financial crisis, central banks worldwide have been engaged in a broad rethinking of how better to fulfill their mandates. I also think there is another area we need to work on, an area where very little has been done to date. We need to collectively devise a better international mechanism for facilitating BIS central bankers’ speeches  3  adjustment when the direction of capital flows changes abruptly. The current regime strikes me as inefficient and often ineffective. Holding large cushions of foreign exchange reserves is expensive, drawing down those reserves is often unattractive because of the potential adverse signal that this sends, and EMEs are loath to turn to the International Monetary Fund for resources to cushion the adjustment process. It seems to me that we could design a better global solution of collective insurance – access to liquid resources in times of stress that were not stigmatized and that could and would be used to facilitate adjustment. This could help reduce market volatility and dampen the size of foreign exchange and other adjustments. This is a topic, in my opinion, that deserves greater attention from central bankers around the world. Let me close with a final thought. The largest problems that countries create for others often emanate from getting policy wrong domestically.

Recession or instability at home is often quickly exported. Equally important, growth and stability abroad makes all our jobs easier. This means that there are externalities in the work we do, so that more effective fulfillment of our domestic mandates helps to bring us to a better place collectively. Ensuring global growth and stability is and will remain our joint and common endeavor. This is what Terry Checki has worked for over his distinguished career. We have been very fortunate for his service and must carry the mantle forward. 4  BIS central bankers’ speeches
Other indicators – such as long-term unemployment, the rate of involuntary part time work, and the job finding rate – also point to more slack in labor markets than that indicated by the unemployment rate alone. In addition, it is hard to imagine a robust labor market without solid growth in wages. With productivity growth of around 1 to 2 percent and an inflation target of around 2 percent, we should be seeing wages and benefits rising at around a 3 to 4 percent rate. But that is clearly not the case. Although some in-demand occupations may be experiencing stronger wage growth, overall compensation growth has been around 2 percent over the past six years. Taken altogether, these and other measures lead me to conclude that there remains significant underutilization of labor resources – and likely somewhat more slack than what is indicated by the unemployment rate alone. So, while good progress has been made, we have yet to achieve our full-employment goal. Too-low inflation The other element of our dual mandate is stable prices. The Fed defines its target as 2 percent inflation over the medium term, with inflation being measured as the rate of change in the Personal Consumption Expenditures (PCE) Price Index. Earlier in the year, the inflation rate had been well below that target, at 1-1/4 percent. It has moved up a little since then, but inflation is still only 1-1/2 percent, still leaving a significant gap from our 2 percent target.

It serves as a networking effort while creating opportunities to exchange views, explore mutually beneficial opportunities, and most importantly, implement positive changes in the financial systems. It is not too far-fetched to envisage the generation of breakthrough thinking for future collaboration that is solution-driven; practical; and innovative. Collective effort is also key to success and the industry should aim to work closely with other key stakeholders. These include government agencies, civil societies and the public to increase awareness and encourage more active participation in supporting further development and offerings of sustainable financial solutions in the market. Strong technical know-how in dealing with the changing dynamics of the financial landscape and the arising risks is also essential for industry players to navigate itself in this journey. To end, I wish to reiterate that “sustainability is indeed a journey, and one that is best navigated collectively”. Sustainable development can be best served by re-connecting finance and element of value creation that is reinforced by bringing benefit to society, environment and prosperity. On that note, I wish all of you a beneficial and productive session today. 1 Around 30 least developed and other vulnerable countries are exposed to debt distress – limiting their ability to  invest in the sustainable development goals (SDGs). 2 Countries home to most people in the world and global growth in real wages is only 1.8% – the lowest since  2008 (Source: United Nation (2019).
Under the chairmanship of Ben Bernanke, all 12 Federal Reserve Bank presidents, together with the sitting governors of the Federal Reserve Board, have input into the decision-making process. There is a formal vote – regardless of who is the Fed chair – that includes only five of the 12 regional Bank presidents plus the governors, but all of the principals seated at the table participate fully in the discussion of what to do. And yet, either because we will effect a change in the chairmanship starting in February or because at the last meeting we took the step of tapering back by a small amount our massive purchase of Treasuries and MBS, great attention is being placed on the voters for 2014, of which I am one. Two comments I recently read have been buzzing around my mind as I think about the many issues that will condition my actions as a voter. 1  “It’s Alright”, words and music by Waylon Jennings, copyright Waylon Jennings Music, 1980. BIS central bankers’ speeches  1  Beer goggles … The first was by Peter Boockvar, who is among the plethora of analysts offering different viewpoints that I regularly read to get a sense of how we are being viewed in the marketplace.

Here is a rather pungent quote from a note he sent out on Jan. 2: “…QE [quantitative easing] puts beer goggles on investors by creating a line of sight where everything looks good…” For those of you unfamiliar with the term “beer goggles”, the Urban Dictionary defines it as “the effect that alcohol … has in rendering a person who one would ordinarily regard as unattractive as … alluring”. This audience might substitute “wine” or “martini” or “margarita” for “beer” to make it more age-appropriate, but the effect is the same: Things often look better when one is under the influence of free-flowing liquidity. This is one reason why William McChesney Martin, the longest-serving Fed chairman in our institution’s 100-year history, famously said that the Fed’s job is to take away the punchbowl just as the party gets going.2 … and the eye of the needle The other eye catcher for me was a cartoon in the Jan. 6 issue of The New Yorker. Sitting in a room are two businessmen who are apparently conversant with the New Testament’s book of Matthew. One says to the other, “We need either bigger needles or smaller camels”. Today, I want to muse aloud about whether QE has indeed put beer goggles on investors and whether we, the Fed, can pass the camel of massive quantitative easing through the eye of the needle of normalizing monetary policy without creating havoc. Free and abundant money changes perspective Boockvar is right.
•  As we have discussed in our publications, such as our Monetary Policy Report, the current events will have dramatic effects on financial and economic activity. A contraction in the economy and a rise in unemployment are expected. •  Financial institutions and the banking sector are exposed to the shocks in liquidity and credit risk. At the same time, the banking sector is an important pillar channeling liquidity and credit support to firms and households. •  The CBC has been providing liquidity facilities to the markets since the Covid-19 first hit our country. •  Nevertheless, we have also stated that although this crisis will last longer than we originally expected, it is a temporary crisis. Moreover, the banking sector is in good shape and solvent to weather the storm. •  When crises hit our countries, systems like CLS acquire one of their most important roles. It is during these times that counterparty, and credit risks increase and a system that allows payments without any settlement risk is of extreme value for financial markets and the economy. Page 3 of 4  Central Bank of Chile July 2020  •  This crisis has created an important challenge to policymakers everywhere. In many countries, we hear that an extraordinary crisis should generate extraordinary responses. In Chile, we have indeed produced such extraordinary responses, both in size and shape.

Page 1 of 4  Central Bank of Chile July 2020  •  Moreover, CLS improves the liquidity management of the financial institutions, particularly the banks that settle directly into the system, using an efficient multilateral net mechanism. •  Additionally, due to the high standards of currency eligibility and the efficiency of the operative process of settlement, when a currency is part of CLS it gives a strong signal of financial development. At the same time, important international players that only traded if the payment is performed through CLS can incorporate the Peso into their portfolios, thus increasing market competition. •  Finally, the CLS settlement of the Peso will improve the transparency of the currency markets’ transactions, incorporating over-the-counter transactions into an infrastructure, according to the international recommendations and principles. IV. Private sector involvement in the CLS system  •  An important part of the risk reduction and liquidity saving benefits is faced by the financial institutions participating in the system and, therefore, passing through to the rest of the financial markets, and ultimately to the users of the financial products, currency derivatives, and foreign exchange (FX) transactions. •  Moreover, as a financial market infrastructure, CLS interacts with other financial institutions, particularly with banks. At CLS, banks play different roles, such as Settlement Member, correspondent or Nostro service provider, and liquidity provider. •  The timely involvement of banks in the process is essential, considering the start of the implementation phase by the end of this year.
The Fund must enhance its surveillance activities and its advice must be acted upon to a greater extent. However, this probably requires changes in the IMF’s governance structure. Countries that are now gaining in economic strength are seeking greater influence, and the IMF must also improve its reputation in these countries. We have to ensure that the Fund has sufficient resources to grant loans to member countries that are particularly hard hit by the financial crisis. The financial resources of the IMF are being discussed at the G20 summit in London. The IMF aims to double its lending capacity and has called on member countries to provide the necessary funding. Several countries have responded positively, among them Norway. The Government has offered to make available a contribution of up to NOK 30 billion to the IMF, subject to approval by the Storting. The US has asked for the NAB 3 to be increased substantially. Even a special one-time allocation of SDRs 4 to strengthen global liquidity may be considered. The Government Pension Fund – Global Let me now turn to the Government Pension Fund – Global. International capital markets have been a boon to Norway. We drew on borrowing opportunities abroad when the petroleum industry was being built up. We did the same in order to expand welfare schemes and to finance the countercyclical policy of the mid-1970s and the early 1990s. National oil and gas resources are now converted into equities and bonds abroad in the Government Pension Fund – Global.

Oil futures prices have fallen and indicate an oil price of around USD 60 per barrel in 2010. Other commodity prices that are important for the Norwegian economy have also fallen sharply. Metal prices are particularly sensitive to cyclical developments. Futures prices for a selection of raw materials indicate unchanged or moderately rising prices in the next few years. Many countries that have been hit by the economic setback will see an improvement in their terms of trade and growth in their disposable income. The current downturn followed a period of very high global and domestic economic growth, supported by favourable trading conditions. Few countries benefited more than Norway from  1  Folketrygdfondet will manage the new Government Bond Fund. 2  The Government has increased the capital of Kommunalbanken Norway (the local government funding agency), it has increased the scope of GIEK (the central government export credit agency) and Innovation Norway, and has offered state loans to Eksportfinans Norway (the credit institution for export financing). 2  BIS Review 42/2009  the economic upturn, which drove up prices for oil, gas and other export commodities. At the same time, an increasing number of cheap consumer goods were imported from new EU countries and from Asia. Norway’s real disposable income increased by more than 40 per cent from 2002 to 2008, more than that of any other western country. But our terms of trade are now deteriorating.
But long-term house price growth is a risk to which insurers are exposed. To conclude, the bulk purchase annuity market has become more competitive. Participating insurers need to understand fully the risks they are taking and price accordingly. The shift into illiquid assets, including equity release mortgage lending, may be a good thing. It is certainly understandable given the higher spreads and matching adjustment currently available. But greater competition might erode both over time. Our priorities are that:   Insurers capture the compensation for the risks to which they are exposed in the Fundamental Spread (and the internal ratings on which it is based) so that the Matching Adjustment is not overstated; and    Insurers hold appropriate capital against these risks. Both are key to ensuring that life insurers remain safe, sound and able to meet the promises they are making to holders of annuities over the coming decades. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  Chart 1  Chart 2  9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Chart 3  Chart 4  10  All speeches are available online at www.bankofengland.co.uk/speeches  10  Chart 5  Chart 6  11  All speeches are available online at www.bankofengland.co.uk/speeches  11  Chart 7  12  All speeches are available online at www.bankofengland.co.uk/speeches  12

It is also the case, I think, that the success of the innovation in monetary policy obscured the need to develop complementary tools to achieve macro-economic objectives in financial stability, what is today known as macro-prudential policy. That meant too much dependence was placed on monetary policy and too little was done to develop macro-prudential policy. I say this because you should interpret the changes to the Bank’s strategy and structure as very intentionally pushing the other way, to ensure that we are One Bank integrating our public policy objectives for one Public Good. I want to spend a bit more time on this whole issue, and in doing so reflect on the first year of the PRA, and then what lies ahead. My experience tells me that we have had to work harder, and still have to do so, to embed the idea that a stable financial system is a necessary condition for economic growth and other economic welfare benefits. Let me give some examples. The most obvious one is that if we want a stronger recovery of bank lending, then we need a well capitalised banking system. If we want the banking system to be able to fund that lending, it needs to be well capitalised. I believe that the last year has seen good news on this front for the UK banking system.
Decomposing the contribution of the financial sector – the productivity “miracle”  To that end, an alternative way of looking at the contribution of the financial sector is through inputs to the production process. This might shed more light on the sources of the rapid growth in finance. Was this expansion accompanied by a rising share of resources employed by finance relative to the rest of the economy? Or did it instead reflect unusually high returns to these factors of production? This section considers these questions in turn. (a)  Growth accounting decomposition  The basic growth accounting framework breaks down the sources of economic growth into the contributions from increases in the inputs to production, capital and labour. This amounts to relating growth in GDP to growth in labour input and in various capital services (from buildings, vehicles, computers and other resources). When these factors have all been accounted for, the remainder is often attributed to technical change – the so-called Solow residual (Solow (1957)). The growth accounting framework assumes an underlying aggregate production function. In its most basic form, the aggregate production function can be written as:  6  BIS Review 95/2010  where Q is output, K and L represent capital and labour units and t appears in f to allow for technical change.

With these measures, therefore, the Riksbank has the possibility of supplying at least SEK 1,400 billion to the banking system to ensure corporate money does not run out and to mitigate the effects on output and employment. Added to this, there is also the possibility to borrow unlimited amounts of money on a weekly basis if necessary. At the same time, it is worth remembering that our measures come on top of the generous and enormous efforts currently being made by the central banks in the world’s major economies. Going forward, it will be extremely important to monitor developments in the economy, both to evaluate the measures we have implemented and to see whether more needs to be done. The Riksbank will follow developments via many information sources. We follow indicators of how the real economy is developing in the very short term and we are working to identify more indicators that can provide additional information about different parts of the economy. Naturally, we will also closely follow the extent to which our programme of corporate lending is being used. As always, we are closely monitoring developments on financial markets and we are talking to market participants, banks and companies. We also have a close dialogue with other authorities and with central banks in other countries. If I may conclude with a personal reflection. As I mentioned earlier, this is the third major crisis in the Swedish economy that I have been involved in dealing with.