samchain/econo-pairs-v1 huggingface dataset:
Globalisation raises the demands on flexibility Globalisation means ”the growing mutual dependence between countries around the world through the increasing volumes and amounts of cross-border transactions in goods, services and capital flows”.1 This process has intensified in recent years, partly reflected in a sharp pick-up in world trade, an even faster increase in direct investment and a very steep rise in global equity and currency trade. Globalisation has given rise to rapid structural change, resulting in jobs being shed in certain sectors or being relocated to countries with lower production costs. Sweden has, for a long time, experienced fast structural change, which contributed to the strong economic performance in the 1990s. Less than 100 years ago, around half of Sweden’s employed worked in agriculture and forestry; today, that figure is only 2 per cent. Over the same period, the proportion of the employed in the services sector has risen from roughly 20 per cent to 75 per cent, at the same time as the proportion in manufacturing increased at first from about 30 per cent to just over 40 per cent and then fell to 20 per cent. Among other things, we saw during the 1960s and 1970s that large parts of Swedish manufacturing, in the shape of the textile and shipbuilding industries, were outsourced from Sweden.

If they are used widely, they could lead to currency substitution and the potential loss of money sovereignty in these countries. With respect to Central Bank Digital Currencies (CBDCs), MAS makes a careful distinction between wholesale CBDCs and retail CBDCs. Both are digital currencies issued by the central bank. For wholesale CBDCs, MAS sees a variety of potential use cases. They can be used in the interbank system on a decentralised ledger to facilitate cross-border payments and transactions. MAS has conducted successful experiments with the industry and other central banks on wholesale CBDCs. This is an interesting development to watch. Most of the impactful use cases are going to be in wholesale CBDCs for, for example, cross-border payments, and cross-border trade finance. For retail CBDCs, MAS is keeping an open mind. We want to make sure we have the technology, governance, and policy structures to launch a retail CBDC, if necessary. But there does not seem to be a compelling case for it yet, given that today’s digital payment system is already effective and efficient in transferring money. The regulatory approach that MAS has taken towards crypto assets or tokens distinguishes the different types of such tokens. If a crypto token is being offered as a security with an expectation of a return, it is regulated under the Securities and Futures Act. If a digital token is being offered as a payment instrument, it is regulated under the Payment Services Act where the focus is on anti-money laundering and technology risk management, and increasingly, customer protection.
But to the extent that we are only ten years old, this test is of course particularly important for a young institution. FT: What was the most difficult moment for you at the ECB in terms of crisis management? Trichet: I would certainly say that these were the first hours at the outset of the financial turmoil. The Executive Board had to make a diagnosis of the situation in a very short time span, assess what kind of problem we had to deal with, and take decisions almost instantaneously. FT: …this is July/August 2007, yes…. Trichet: This was on 9 August 2007. We had a very important decision to take, which was in a way the first important decision that central banks had to take in order to confront these exceptional circumstances. I remember I was keen on thinking, “This is a grave situation that calls for appropriate responses”. And then we had a great number of important decisions to take in the subsequent months, which were largely “firsts”, in terms of supplying liquidity at fixed rates and even in terms of expanding our collateral framework which, from the outset, was already a very comprehensive collateral framework. It has been a big challenge. One of our challenges is that we had to take decisions very rapidly at the level of the Governing Council. And we again proved that, thanks to teleconferencing, in one hour and a half or two hours we could make a full judgment and take a decision.

We believe that community support for our monetary and banking policies, and confidence in our financial system are strong. But we also know that confidence cannot be built on blind public faith in a remote monetary authority carrying out its esoteric policies in a quiet and mysterious way: it must be nurtured through explanation, through informed discussion, through a system that is both accountable and transparent. The safety of our banks and the stability of our currency are everybody’s business, and the Asian financial crisis has brought this fact home to the people of Hong Kong. Economic hardship has prompted more people to ask more questions about the way Hong Kong manages its monetary and banking systems. Energetic policies, such as the operation in August, have also stimulated debate some of it heated - over the rights and wrongs of what we are doing. Quite properly, the Legislative Council has been the focus of much of this debate, not just in its motion debates, but also in the many discussions organised by this panel on a variety of subjects. We have seen more interest in our work from Members during the past year than in any other year since the creation of the HKMA in 1993. I welcome this attention. It gives us the opportunity to enter into productive discussion with those who know and represent the community. It also shows that accountability is alive and well.
Looking at Sweden, I think it is quite clear that the introduction of inflation targeting in connection with the crisis in the early 1990s was one of the most important reasons why the Swedish economy has developed so well since then. However, financial crises can also arise in environments with low and stable inflation. Nominal GDP target scarcely better Can one say that inflation targeting has been an obstacle to the recovery, and in that case are there other ways of conducting monetary policy that might succeed better? Here one can begin by noting that, in general, inflation-targeting countries appear to have managed the crisis better than countries without inflation targets.12 The central banks with inflation targets acted more powerfully, inflation expectations in inflation-targeting countries were better anchored and the risk of deflation was lower. Nevertheless, the slow recovery in countries such as the United Kingdom and the United States has started a discussion as to whether alternatives to inflation targeting would be better. One suggestion that has gained supporters is to replace the inflation target with a target for nominal GDP.13 The main discussion recently has concerned introducing a policy  9  See Reichlin and Baldwin (2013) for a compilation of a number of economists’ views on inflation targeting and its future. 10  See, for example, Bini Smaghi (2013). 11  See Bernanke, Laubach, Mishkin and Posen (1999). 12  See De Carvalho Filho (2011). 13  See, for example, Frankel (2012).

The second question raised today is: What were the reasons for undertaking steps for financial sector reform? The recent financial crisis served as a reminder that the impaired financial system can have a significant impact on the functioning of the overall economy. Moreover, the 2007–08 financial crises was, to a great extent, a result of the failure of public authorities in the United States and Europe to adequately monitor and address systemic risk. By comparison, Asia and other parts of the world where memories of systemic financial crises were still fresh, had adopted more prudent policies and practices, and were less impacted by the subprimetriggered financial shockwaves. In order to make global finance more stable, the 2009 G20 summits in London and Pittsburg listed commitments on financial regulatory reform, pushing the financial regulation to the forefront of the global economic cooperation agenda at the level of political principles, which had until then, been mainly focused on trade and macroeconomic policy. The items on regulation can themselves be divided into two subgroups. On the one hand, the G20 decided to tighten or strengthen the regulatory framework applying to entities or activities that had already been regulated before the crisis.
In line with this, a customer charter has also been issued recently to improve consumer protection and prevent associated malpractices. There has been widespread concern regarding non-bank financial institutions engaging in unethical lending practices, especially in the North and North Central provinces and increased indebtedness of the public. We have been actively engaging with such institutions and other public stakeholders, including government agencies, to curtail such activity and to emphasise that these issues will be dealt with in a firm manner, while enhancing awareness among the public. We strongly believe that public awareness can also prevent such social mishaps and so will continue to undertake awareness programmes to educate the populace about the dangers of engaging in unauthorised investment schemes, while stressing the benefits of investing only in institutions that are authorised by the Central Bank to accept deposits. Further, we expect to develop a supervisory mechanism to assess the risk of primary dealers’ transactions on a regular basis. We are also engaged in active macroprudential surveillance to constantly monitor developments in the broader economy and assess their impact on the overall financial stability of the country. These surveillance efforts have highlighted issues such as excessive lending for non-productive sectors, continued deceleration in the growth of total assets of the non-bank financial sector, and reduced capital buffers and presence of weak finance companies.

Road Map: Monetary and Financial Sector Policies for 2018 and Beyond  Delivered by  Dr. Indrajit Coomaraswamy Governor Central Bank of Sri Lanka 3 January 2018  1. Introduction Your Excellencies, Members of the Monetary Board, Senior Deputy Governor, Deputy Governors and Officials of the Central Bank, Distinguished Invitees, Ladies and Gentlemen, First, let me warmly welcome you to the presentation of this year’s Road Map. Continuing our tradition that was initiated in 2007, today we are pleased to present the eleventh Road Map of the Central Bank of Sri Lanka. It is our belief that sharing our future policy direction and actions would help you to plan your business trajectory with more certainty. I hope this Road Map will enhance the transparency and clarity of our policies, which would help you to achieve your targets more effectively. The successful outcomes in your businesses would ultimately help us to implement our policies more effectively for the benefit of both the economy and people of Sri Lanka. The year 2017 was challenging. We have seen economy-wide effects due to inclement weather conditions. The drought and floods disturbed agriculture activities and agro based industrial activities. Spillover effects of these adverse weather conditions impacted the other sectors of the economy as well. As a result, economic growth is expected to be subdued and lower than we projected at the beginning of the year.
In Europe, only Germany and Switzerland were able to keep inflation more or less at bay. In Norway, the welfare state and support schemes were rapidly expanded partly based on expectations of large future oil revenues. Economic policy was oriented towards building a bridge over what was expected to be a temporary downturn in the world economy. This led to a tug of war for real resources between the business sector and the public sector - between the exposed and sheltered sector. Chart 6  BIS Review 14/2000  4  The cost level in manufacturing industry was driven upwards. At the same time, the slowdown in growth proved to be permanent. The sheltered sector continued to expand, while industries exposed to international competition experienced deteriorating profitability and a relative decline. The recession at the end of the 1980s was followed by a period of low wage growth and gains in competitiveness. This may help to explain why the decline in manufacturing employment came to a halt in the 1990s. However, wage costs increased again in the late 1990s. The relative wage level in manufacturing industry compared with trading partners is now back at the level in the 1970s. Two forces were behind economic developments from the beginning of the 1970s. First, the deterioration in competitiveness was caused by the expansion of the Norwegian welfare state and a transfer of real resources from the exposed sector to the sheltered sector. Second, inflation expectations took root as a result of low administered interest rates and competitive devaluations.

At a premium, businesses can hedge against short-term fluctuations in the krone exchange rate. The fluctuations are not greater than in other countries with a floating exchange rate. In 1996 and in the autumn of 1998, Norges Bank attempted to attenuate movements in the krone exchange rate through exchange market interventions. On both occasions, interventions prompted a game situation between the central bank and market participants, as was also the case during the currency crisis in the autumn of 1992. When a central bank trades its own currency, market operators make a play for profits on the premise that the exchange rate does not reflect market fundamentals. In a world where capital flows freely, this game situation can quickly trigger large capital movements. The experience of the 1990s shows that Norges Bank does not have the instruments to fine-tune the krone exchange rate. Today’s monetary policy The objective of monetary policy is exchange rate stability against European currencies, defined as the euro from 1 January. Norges Bank’s mandate - which is the Exchange Rate Regulation - takes into account that the krone may remain outside its normal range. The Exchange Rate Regulation states that “in the event of significant changes in the exchange rate, monetary policy instruments will be oriented with a view to returning the exchange rate over time to its initial range”. The concept “significant changes” is not quantified and must be given an economic content.
Svein Gjedrem: The financial crisis – the path ahead Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the annual meeting of the Norwegian Savings Banks Association, Oslo, 22 October 2009. The text below may differ slightly from the actual presentation. This lecture does not contain assessments of the economic situation or current interest rate setting. *  *  *  The past two years have been turbulent for banks, their customers and the authorities. The turbulence began to affect Norway in earnest last autumn. Norway has experienced banking crises before, and there is much to be learned from the management of these past crises. One who experienced his fair share of crises was Nicolai Rygg, another central bank governor from this part of Norway and the son of a local shoemaker. The name stems from the Rygg farm in Randaberg. In 1923, Handelsbanken, the fifth largest bank in Norway, was on the brink of collapse. 1 At that time, government interventions were to a greater extent kept out of the public eye and the bank received government support in secret. However, the Government had approved the allocation without informing the Storting. As a result, Prime Minister Abraham Berge and six government ministers were impeached. In his testimony, Rygg stated: “Through both of these years, 1921 and 1922, ceaseless efforts had been made week after week to resolve a wretched situation.

However, in the end, the IMF decided to cooperate with  BIS Review 164/2009  1  Ecuador in its move towards dollarization of the economy, the latter becoming a success as economic performance in Ecuador has been fairly stable since dollarization was introduced. The Ecuadorian case proves that it is difficult to assess the merits and the costs of dollarization. In fact, a successfully executed dollarization is not enough to realize a stable economic environment: this process needs to be followed by sound economic and fiscal policies, otherwise the situation will go from bad to worse. In other words: dollarization is not a magic wand! 3. Effects of dollarization  The case of Ecuador illustrates well how hard it is to formulate general conditions for a successful dollarization. It is not only difficult to assess the pros and cons of dollarization, it is also necessary to analyze the country’s starting position, assess the political and social willingness to abandon the local currency, and to execute a sound economic policy after dollarization, in order to be able to conclude what the effects of dollarization were or are. In the last ten years there has been a steady discussion on the pros and cons of dollarization. Very distinguished economists like Stanley Fischer (who is currently governor of the Bank of Israel), Sebastian Edwards, Rudiger Dornbusch, Jeffrey Sachs and Paul Krugman all made valuable contributions, reaching however different conclusions on the merits of dollarization.
Third possible avenue: Diversify the risk management tools of financial institutions As I mentioned earlier, even the best techniques can have adverse effects when used on a standard basis and by all participants. To some degree, this is perhaps what has happened to value-at-risk based techniques, which have been, for very good reasons, massively adopted by the financial industry. Because they use more or less similar parameters and suffer from the same weaknesses – for example, they did not take market liquidity into account adequately at the time of the 1998 crisis –,  BIS Review 28/2002  5  such tools might tend to give converging signals to those that use them. They thus encourage the mimetic behaviour that I discussed previously. Of course, the fact that some market participants are more sophisticated than the average is a guarantee that standardisation will remain limited, since they will develop techniques that are little used by others. However, supervisors might help, and obviously are already helping to spread the idea that financial institutions should round out their current range of risk management tools to include extensive use of stress testing. This technique offers a better reflection of the varying situations of institutions and of the diverse perceptions that institutions have of exceptional events. The application of stress testing techniques and their results are thus inherently more diversified than those resulting from methods based on the value-at-risk approach. 3.

Some participants will probably address some of these issues during the conference, which are of great interest for central bankers. I also provided you with some examples of possible options monetary and financial authorities may take to help improve the functioning of the financial cycles. There is a lot of merit in embarking upon an overall review of regulatory, accounting and tax rules and regulations, as well as of codes of good conduct and good practices, and finally of structural developments of markets themselves. I am convinced that this review, triggered not only by macro-financial considerations but also by dramatic micro observations, like ENRON, is likely to help identifying possible amendments and improvements that could, protect and enhance not only the integrity but also the behavioural and conceptual diversity which should make an essential characteristic of modern financial markets. I thank you for your attention. 6  BIS Review 28/2001
This will lead to a significant overshoot of the structural deficit planned for the year, which the government would formalize by invoking an “exit clause” from the committed fiscal targets. Although new official projections are not yet available, it seems clear that, despite  Page 2 of 27  the improved outlook for activity, this year’s fiscal impulse will not only exceed the forecast but will be significantly higher than in 2020. Despite the recovery of activity and the extension of fiscal packages, the overall economic sentiment worsened in recent months, with consumer expectations still in pessimistic ground. This could be explained by factors such as the evolution of infections and quarantines, and the heterogeneity observed in the recovery. About the latter, it stands out that the performance of part of services, construction and passenger transportation sectors is still not matching pre-pandemic levels, a milestone that trade and manufacturing achieved six months ago or before. Add to this the aforementioned heterogeneity in the labor market (Figure 6). Differences are observed in the case of business expectations, with smaller firms and hardest-hit sectors lagging behind in the recovery. The Business Perceptions Report (IPN) for May reported that smaller companies were the worst affected by the quarantines in March and April. In addition, the IPN noted that a significant percentage of companies were having second thoughts about their investment plans for this year or had simply decided to shelve them altogether. Uncertainty indicators remain high and well above those prior to the social crisis.

Actually, in the last year, local uncertainty indicators have consistently outweighed those of economies such as the United States or the United Kingdom, as the decline to their pre-pandemic levels has taken longer. This trajectory clearly differs from what used to be the case before the social outbreak, when the level of uncertainty was not only much lower, but also more in line with other countries (Figure 7). The Chilean financial market has reacted to the overall local developments by decoupling itself from global trends. Thus, long-term interest rates have increased by 30 basis points since mid-April to date (BCP10), while their external benchmarks have not changed much. This has been accompanied by a stock market drop of just over 10 percent, a 2 percent depreciation of the Peso and an increase in the sovereign premium (CDS) of 15 basis points, all despite the significant rise in the copper price. This has coincided with a period of heightened political tensions surrounding the third pension savings withdrawal and a wide range of legislative initiatives on fiscal and regulatory matters (Figure 8). On the external front, world growth has been consolidating the positive outlook for this year and next, which has been internalized by the global financial markets. The evolution of the external scenario is closely linked to the progress of vaccinations and business reopening in developed countries, which has resulted in a rebound and strengthening of consumer and business confidence and activity in the lagging sectors (Figure 9).