samchain/econo-pairs-v1 huggingface dataset:
Svein Gjedrem: Business cycles, crises and public finances – will governments be able to honour their debts? Speech by Mr Svein Gjedrem, Governor of the Norges Bank (Central Bank of Norway), at the Norwegian School of Economics and Business Administration, Bergen, 24 September 2010. The text below may differ from the actual presentation. This speech does not contain assessments of the economic situation or current interest rate setting. * 1. *  *  Imbalances and financial crisis  The financial crisis had its origins in an abundant supply of credit, market participants who took steadily higher risk and a lack of oversight on the part of banks, companies and authorities. The global economy entered a severe downturn. The acute crisis in financial markets has been succeeded by substantial labour market and fiscal imbalances in countries around us. Severe shortcomings in the management of public finances in several advanced economies have also been revealed. How public finances are managed in these countries will also be important to Norway. In the period from 1993 to 2008, global output expanded by more than 60 per cent, or an annual rate of just under 4 per cent. At the same time, inflation remained low. This period in the Norwegian economy could be described as two golden decades. But imbalances were building up in Europe and North America. With strong income growth and easy access to loans, the number and size of homes purchased by households grew. House prices surged in many countries.

The building industry and the financial sector expanded more than other segments of the economy. Many governments allowed their expenditure to rise in pace with higher tax revenues. Like the banks, many governments also moved some expenditure off the balance sheet, through public private partnership (PPP) agreements, for example. The bubble was allowed to expand. Households borrowed too much, house prices were too high, banks and the building industry were too big and government expenditure and debt grew too rapidly. The imbalances gradually surfaced. The problems arose initially in the US housing market and spread in earnest when money and capital markets abruptly dried up in September 2008. Once the crisis had become a reality, the authorities responded rapidly. To begin with, they provided support where the financial markets had failed, by providing guarantees, offering liquidity and funding and purchasing securities. Central bank key rates were aggressively cut. The crisis in the 1930s had shown that the cost of failing to implement such measures was very high. (See Chart: Sovereign debt to GDP in the G7.) The rescue packages moved private debt onto government and central bank balance sheets. In addition, tax revenues declined and social security expenditure increased. In the next phase, governments had to counteract falling corporate and household demand for goods and services by increasing public consumption and investment. Many countries entered the crisis with deficits and a relatively high level of debt.
So to summarise... I welcome the amendments to the regulations regarding the banks’ capital requirements being discussed by the Basel Committee. Even if the final pieces of the  10 [12]  puzzle are not yet in place, the changes will most likely lead to more robust banks and an increased confidence and transparency in the banking system. They will also reduce the risks linked to internal models and lead to increased international harmonisation. This in turn will benefit the major Swedish banks, which compete in a global market. However, it is much too early to say yet exactly how the new regulatory framework will affect the real economy in Sweden. The effects will mainly depend on how Sweden's special national requirements change in the future and not on the Basel Committee’s global minimum standards. The time is now right to start a review our special Swedish requirements and this is work I welcome and to which the Riksbank would gladly contribute going forward. Thank you for listening.

Thomas Jordan: Monetary policy and financial markets – what may we expect in 2008? Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the Messe Fonds 2008, Zurich, 31 January 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The problems linked to the US housing and mortgage market dominated international financial markets in 2007. Despite the difficulties on the financial markets in the second half of the year, the global economy was robust last year. For 2008, the outlook for global economic growth has deteriorated and become more uncertain. The turbulence in the financial sector led to a considerable increase in risk premiums in 2007. In the past few years, these premiums had been very low, and even after the recent increase they remain modest by historic standards. Due to the higher level of economic uncertainty in 2008, the process of adjustment in risk premiums looks set to continue in various markets. From the current standpoint, the Swiss National Bank anticipates a somewhat slower pace of growth for Switzerland in 2008, although the economy should remain robust. However, the risks have increased in the recent period. As a result of the oil price hikes, inflation in Switzerland is likely to rise above 2% in the first half of 2008. Despite raised stock exchange volatility, the SNB does not judge that any additional actions are necessary at present.
This produced an acceleration of some Lm7 million in the rate of increase of pension expenditures. Pension reform, which is vital for the long-term sustainability of public finances, should be implemented this year. Everybody has had a say and there is now a comprehensive, balanced set of proposals which answer to the widest possible range of concerns compatibly with having a viable system. It is time to move on to other pressing issues. 9. Property values continue to increase against a background of a rising volume of bank credit that is being channeled into construction and house purchase. Are there grounds for concern? Property values are estimated to have increased by about 9% in 2005. Although this represents a slowdown from previous years, it is still in excess of recent inflation and occurred despite a continuing high vacancy rate. The ready availability of credit contributes to rising property prices. While the volume of bank credit to the construction industry was more or less flat last year, borrowing to finance the construction or purchase of housing went up by 21% to Lm653 million. These numbers, moreover, must be viewed in the context of total household borrowing. Consumer credit, including through credit cards, increased by 13% in 2005 to Lm91 million. This is an area where the banks are marketing their products rather aggressively, encouraging borrowing for consumption rather than for investment purposes.

Exploiting the new market opportunities takes time because institutional structures and  BIS Review 16/2006  1  operating practices need to be adapted. Some of the funds Malta is getting from the EU are being used precisely to strengthen the economy’s export potential. At the same time, it is also true that the EU economy did not grow as rapidly as anticipated in 2005. It expanded by 1.6 per cent, compared with 2.3 per cent in 2004. A higher proportion than ever of consumer demand, moreover, was satisfied by imports from more competitive producers at the expense of established suppliers. Finally, as I have already observed, the persistence of sluggish growth in the Maltese economy cannot be explained exclusively in terms of a cyclical downturn. Delays in implementing effective competitiveness-enhancing reforms were also a factor. As a result, the economy was not fully prepared to exploit the single market. 3. In these circumstances, isn’t this the worst time to be strait-jacketed by the conditions for euro adoption? Wouldn’t a fiscal boost speed up economic growth, now that your already limited monetary policy tools have been put in the shed? Allow me first to correct two misconceptions implicit in your second question. For a start, our monetary policy tools have not been put away but are available for use if needed, as was the case in April last year when the Bank’s central intervention rate was raised by 25 basis points.
Among the measures that have been introduced are: •  first, liberalising the Islamic banking, and takaful and retakaful markets with the issuance of new licences to allow for increased foreign participation;  •  second, allowing foreign equity of up to 49 percent in existing Islamic banks and takaful companies;  •  third, issuance of International Islamic Bank and International Takaful Operator licences under the Islamic Banking Act and the Takaful Act respectively to qualified foreign and Malaysian financial institutions to conduct the full range of Islamic banking business or takaful and retakaful business in international currencies and enjoy tax holiday for 10 years under the Income Tax Act starting from the year of assessment 2007;  •  fourth, granting approval to Malaysian Islamic banks and takaful operators to set up International Currency Business Unit (ICBU) to offer Islamic financial services in international currencies and enjoy similar tax holiday;  •  fifth, provide greater flexibility to the Labuan offshore entities offering Islamic financial services to open operation offices anywhere in Malaysia. The Labuan tax law will continue to be applied to these players. Players, therefore have the option in participating in the MIFC either by being licensed under Bank Negara Malaysia to benefit from the tax holiday for 10 years under the Income Tax Act and fully benefit from the Double Tax Agreement, or alternatively to be licensed under LOFSA and be taxed accordingly under the Labuan Offshore Business Activity Tax Act.

We have tried to avoid this, for instance by not arguing with each other in public. We have also refrained from evaluating colleagues’ arguments and proposals. Before choosing an approach to communication and transparency, we again tried to learn from other central banks. The main issue in the public debate seems to have been the minutes of our meetings. I believe the publication of minutes has advantages. The minutes provide a clear opening for the evaluation of what individual Board members contribute to the monetary policy discussion, besides facilitating the democratic control of and insight into our work. In my opinion, the arrangements we have chosen can promote a better understanding in society in general of the Riksbank’s policy and our deliberations. That is important not least in a small country where the discussion of stabilisation policy is not all that broad. 6  BIS Review 24/2001  Some conclusions Work on monetary policy has been arranged in ways that differ from country to country. This has to do with historical differences that stem from the society in which the policy is constructed. Scandinavian and Anglo-Saxon countries require a greater degree of openness, for example, than countries in Central Europe. The duration and acceptance of low-inflation policies also play a part. A reluctance to change a winning concept was no doubt an important reason why the Bundesbank continued to adhere to money supply targets in its communication for so long even though academic studies showed that in practice its policy was being guided by inflation forecasts.
This calls for an intensification of the cooperation between the authorities and the big banks so as to enhance the transparency and comparability when evaluating the resilience of the Swiss big banks. Within the context of this cooperation, it should also be ensured that the cost/benefit ratio of such an exercise remains adequate. BIS Review 67/2007  3

First, the question of strategic independence of incumbents. If incumbents depend on BigTechs for key infrastructure such as cloud computing, if they rely on the same BigTech to 2/4  BIS central bankers' speeches  distribute their products through their platforms and then compete with BigTechs on certain segments, they see their strategic independence challenged in the same way as hotels and retailers did. This process of commoditization of incumbents may lower credit standards to compensate for higher pressure on margin and exacerbate the funding gap because of lower customer stickiness. Second, the question of cyber-risk. With greater interconnections between technologies and the financial system, cyber-risk is moving from an idiosyncratic risk to a potential source of systemic risk. Whether and how to address the type of issues I just mentioned is a challenging task from a regulatory and supervisory standpoint, as it involves an assessment of both the potential risks and benefits brought to the financial system and the economy more largely, which are by nature uncertain. It may give rise to a significant array of alternative courses of actions to  meet two key imperatives: ensure an adequate level of protection for participants and preserve the potential benefits brought by innovation. Let me illustrate this with crypto-assets. Because of incomplete information, a lack of data and the novelty of these monetary and financial objects, four options to tackle them from a public policy standpoint can be considered and have actually been under consideration to drive action: monitoring, isolating, regulating or banning.
But the problems would most likely be much greater if one were to change an already established inflation target. There is a risk that, for instance, an increase from 2 to 3 per cent could be interpreted as an indication that the target will be raised a little every now and then,  7  The analysis in this section is taken from Flodén, Martin (2012), “A Note on Swedish Inflation and Inflation Expectations”, unpublished paper, Department of Economics, Stockholm University. http://people.su.se/~mflod/files/swedishinflation.pdf  8  See, for instance, the Left Party’s reservation in the Assessment of monetary policy 2010–2011, Riksdag Committee on Finance report 2011/2012:FiU24. 9  See, for instance, Blanchard, Olivier, Giovanni Dell’Ariccia and Paulo Mauro (2010), “Rethinking Macroeconomic Policy”, IMF Staff Position Note February 12, 2010, SPN/10/03. BIS central bankers’ speeches  5  when the situation is perceived as problematic. There is even a risk that the nominal anchor in such a case could come loose. Sooner or later expectations would adjust to the new target, but the adjustment period could prove costly. The central bank might feel forced to conduct a very tight policy to convince the agents in the economy that this was indeed a one-off increase of the target. So far, no government or central bank has made the assessment that an increase in the inflation target would have sufficient advantages to outweigh the potential drawbacks.

(1997), “Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets”, European Economic Review 41, pp. 1111–1146 introduced this type of loss function to analyse so-called flexible inflation targeting. However, the behavioural assumption that the loss function (or very similar variations of it) implies, has a long tradition in analyses of monetary policy (for example, Kydland, Finn E. and Edward C. Prescott (1977), “Rules Rather than Discretion: The Inconsistency of Optimal Plans”, Journal of Political Economy 85, 473–491.) 15  One can also calculate the mean value of these deviations, what is known as the mean squared gap. The mean squared gap for inflation and resource utilisation can then be drawn in as points in a figure; see, for instance, the article “A method for assessing different monetary policy alternatives” in the Material for assessing monetary policy 2011, Sveriges Riksbank. 16  See, for example, Apel, Mikael, Per Jansson and Lars Heikensten (2007), “The role of academics in monetary policy: a study of Swedish inflation targeting”, Sveriges Riksbank Economic Review 2007:1, pp. 21–58. 17  The document “Monetary policy in Sweden 2010”, Sveriges Riksbank, summarises the Riksbank’s monetary policy strategy. It is stated there (p. 5) that monetary policy “in addition to stabilising inflation around the inflation target, also strives to stabilise output and employment around long-term sustainable paths”. However, this does not mean that policy needs to be pegged to specific numerical estimates of these paths; see the continued discussion in this speech.
Per cent 4.0  88  3.5  92  3.0  96  Interest rate differential, (left-hand scale)  2.5 2.0  100  TWI (right-hand scale)  1.5  104 108  1.0 112 Jan 99 Jul 99 Jan 00 Jul 00 Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 1) Trade-weighted effective exchange rate (TWI). A rising value denotes an appreciating rate Source: Norges Bank SG Gausdal 31.01.03  The main explanation for the wide interest rate differential is not that interest rates are high in Norway, but that interest rates are at a historic low abroad. For example, interest rates have not been at such a  low level in the US since the 1960s. Foreign interest rates have been reduced markedly to counter a downturn, while Norway has featured labour shortages, high income and consumption growth and a more normal interest rate. Low volatility in foreign exchange markets has probably amplified the effect of a wide interest rate differential. Furthermore, equity prices have shown a pronounced decline over close to 2½ years and investors have been seeking alternative investment vehicles. The appreciation of the krone in the first half of last year gradually changed the inflation outlook. In isolation, this implied a reduction in interest rates. However, the Norwegian economy was also exposed to high pay increases last spring, which had the opposite effect. In this situation, if monetary policy were to give priority to short-term inflation considerations, we could perhaps have reduced the interest rate last summer.

When we look at future prospects, a good estimate for the output gap can therefore provide a better indication of the outlook for wage and price inflation. Both these simple measures are based on stylised assumptions concerning productivity growth and must therefore be used with caution. Wage gap1) and output gap Per cent 4  4  3  3  Output gap  2  2  1  1  Wage gap  0  0  -1  -1 -2  -2 1) Up to 2000: difference between rise in hourly labour costs in manufacturing in Norway and among trading partners. Thereafter growth in excess of 4.5 per cent. -3 -4 1991  1992  1993  1994  1995  1996  1997  1998  1999  2000  2001  -3 -4  2002  Sources: Statistics Norway, TRCIS/IMF and Norges Bank SG Gausdal 31.01.03  The high level of wage growth in 2002 implied a tight monetary policy. The interest rate differential against trading partners widened. The krone appreciated further. Relationships in the foreign exchange market are unstable, but there are a number of fundamental forces that influence the krone. High oil prices and the phasing in of petroleum revenues into the Norwegian economy are part of the explanation, but the predominant factor is probably the cyclical divergence between Norway and abroad. Krone exchange rate1) and 12-month interest rate differential against trading partners.
To some extent, the turbulence may be viewed as the necessary response to the financial exuberance experienced by the world economy in recent years, a situation that was unsustainable. This period was marked by very low volatility and risk premiums amid very accommodative financing conditions. That contributed to a failure to assess risks correctly, leading to exaggerated asset price rises and excessive levels of leverage. True, we are no doubt currently witnessing an overreaction in certain markets, in which the premiums demanded are not in line with asset quality; but as the turbulence progressively abates, risk premiums will normalise, albeit at higher levels than the excessively low ones recorded before the summer of 2007, and that will bear favourably on financial stability in the medium and long run. This normalisation will contribute to alleviating the sharp growth in credit that has led to high household and corporate debt in many countries. Admittedly, in Spain this debt was largely used to finance housing investment and the expansion of companies' productive capacity, as well as their internationalisation. But this makes it no less necessary now to undertake an adjustment to return these variables to more reasonable levels. This adjustment has begun in Spain with households and corporations generally in a sound financial position. At the same time, the quality of bank balance sheets is high compared with other countries' banking systems.

Acquiring and verifying such data is currently manual, slow, and prone to greenwashing. Technology has the potential to solve this problem. Application Programming Interfaces (APIs) and Internet of Things (IoT) devices can enable more accurate data acquisition while technologies like block chains can help to verify and share data on a trusted basis. MAS has earmarked $ million to support Green FinTech innovations. Together with the industry, MAS has launched Project Greenprint – a technology platform to support the green finance ecosystem. The project will identify use cases where technology can help to mobilise capital for green projects, monitor commitments to emissions reductions, and quantify the impact of abatement efforts. MAS is partnering the industry to build up knowledge and capabilities in sustainable finance. We are attracting centres of excellence to conduct Asia-focused climate research and training. The Singapore Green Finance Centre will focus on industry-applicable green finance research and training across the undergraduate, post-graduate, and executive education levels. The Sustainable Finance Institute Asia will support the implementation of sustainable finance policy initiatives in Asia, beginning with ASEAN. We are working to anchor providers of independent ESG reviews and ratings. Moody’s Corporation is integrating ESG considerations into its credit ratings and risk analytics, building them out of Singapore for the Asia-Pacific. A CLIMATE-RESILIENT RESERVES PORTFOLIO Let me now report on what climate change means for Singapore’s Official Foreign Reserves (OFR). As the guardian of the OFR, MAS seeks to build a climate-resilient reserves portfolio.