samchain/econo-pairs-v1 huggingface dataset:
There are no simple criteria for determining the most appropriate central parity rate. What the Riksbank can do is to use the various models at our disposal and combine their results with expert knowledge and good judgement to try to narrow down a reasonable interval and analyse the consequences of different choices. All models and forecasts at the Riksbank's disposal now suggest that the real exchange rate will appreciate in the coming years. The question is by how much. The different models give a wide range of estimates for the real appreciation, ranging from a few per cent up to 10 per cent from the current level. With the realistic assumption that inflation will be about the same in Sweden as in the euro area in coming years, this implies an interval for the nominal SEK/EUR rate that extends from approximately 8.20 to a little more than 9 kronor. Even if the Riksbank thus participates actively in the preparations for euro introduction it will not, as an independent and non-political institution, be actively involved in the referendum debate. In 1997, The Riksbank's governing board took a decision in favour of early participation in the EMU as a response to the government report on EMU membership chaired by Professor Lars Calmfors. However the present Executive Board has not taken any common position ahead of the referendum, although the personal views of several board members on EMU are well publicised, including my own pro-euro stance.

Kristina Persson: Sweden and the Euro Speech by Ms Kristina Persson, Deputy Governor of the Sveriges Riksbank, at the Swedish Chamber of Commerce for Germany, Frankfurt, 27 November 2002. *  *  *  Ladies and Gentlemen, Let me begin by thanking the Swedish Chamber of Commerce for inviting me to this conference on a subject of immediate importance to Sweden and of course to the Riksbank. This is also a subject in which I have taken a strong interest for many years, as a Member of the Riksdag and also briefly as a Member of the European Parliament. We live in a challenging time for the euro area, facing both the present downturn of the global economy, and the future enlargement to include the new EU members from Central and Eastern Europe. It is also a decisive period for Sweden, as the issue of EMU participation is now coming to the fore. Given that we are approaching a decision on a euro referendum in Sweden the Riksbank will naturally step up its preparations to ensure a smooth and rapid transformation of Sweden and the Riksbank to the Eurosystem. I will here today share with you some views on the development so far of the euro area and on the possible Swedish membership. My presentation will naturally focus on the economic aspects of EMU, but let me nevertheless emphasize that I personally think that the political arguments for European cooperation remain crucial, especially at times when nationalism is on the rise on our continent.
This could further weaken demand, negatively affect growth and inflationary convergence, and require a stronger than expected monetary impulse. On the other hand, the picture of health risks looks more balanced than it did a few months ago. Cumulative experience, the prevention measures and the strengthening of the healthcare systems reduce the probability of repeating the worst episodes of previous months in the event of a resurgence of the virus. Thus, it is possible that the deconfinements will proceed a little faster, allowing activity and employment to rebound sooner, especially if a vaccine is developed more rapidly. In such a case, inflationary convergence would require a somewhat less prolonged monetary impulse. The possibility of more negative risk scenarios, especially associated with the economic wounds inflicted by the pandemic, is still present. The various measures have made it possible to maintain credit flowing in line with working and investment capital needs, breaking the pro-cyclical relationship of credit. Going forward the materialization of investments, productive adjustments in sectors that have been forced to make profound changes in their operation, and increases in activity levels, will require that this financing continue to be available. Therefore, it is essential to ensure a sustained flow of credit, ensuring that the financial system does not see its levels of capitalization and liquidity deteriorate, whether due to regulatory changes and/or a sharper deterioration in the repayment capacity of households and businesses.

Another challenge is that decisions and actions by national authorities are likely to have considerable implications for the financial stability in foreign economies. This is of course particularly true in cases where foreign operations are run through branches, meaning that they are subject to foreign supervision. However, in Europe at least, the consolidating supervisor has an increased influence also on foreign subsidiaries, within the new capital regulation – the Basel II-framework. In the Nordea case – which is now a group with a subsidiary structure – the Swedish consolidating supervisor has a possibility to influence the risk management of the group as a whole but also in the different subsidiaries. Now, Nordea has announced plans to convert its subsidiaries in the Nordic countries into branches. When, and if, this plan eventually becomes a reality, Swedish authorities will have the full  2  BIS Review 83/2007  responsibility for supervising three foreign branches, all of which may be of systemic importance in the different host countries. A third challenge is that the legal distinction between branches and subsidiaries is becoming blurred. Increasingly banking groups are starting to organize themselves along business lines rather than along legal and national lines, concentrating various functions to different centres of competence. There are several examples of this trend. Again Nordea is one illustrative example.
And our goal, in the moment of the transition, was to fully respect the promise made to the people of the euro area namely: “The new currency will be at least as credible and as confidence inspiring as was your own national currency.” In this perspective it was very important to explain in real time our decisions to be as clear as possible on our diagnosis and reasoning with a view to convince observers that the new currency deserved fully this very high level of credibility. Secondly we also had to take into account the fact that we were issuing a new currency for eleven countries, eleven cultures and (soon to become twelve and then later on thirteen and fifteen today) and many languages. In this framework it was indispensable to have extremely clear single terms of reference from the very moment of the collegial decision. Otherwise it would have been unavoidable that various interpretations would have been given through the grid of various cultures and different languages. Had we waited for five of six weeks to give detailed explanations we would have been facing information and communication issues that would have been very difficult to solve. Thirdly, as explained before, and totally independently of the previous two reasons which are specific to the euro area, academic research had, particularly in the 90’s, made important advances in permitting to understand better the decisive role of transparency in establishing and consolidating the credibility of central banks and in helping them to solidly anchor inflation expectations.

Growth is also uneven, with the short-term prospects more favourable for the group of the advanced economies, and paler for the emerging and developing world. The risks in the latter group, which accounts for almost 60% of the global GDP and has contributed with more than 80% of the global growth since 2008, seem to be large and strong enough to constrain the growth of the world as a whole. It is not only the relatively slow global recovery that is worrisome. The fact that downside risks to the baseline growth scenario are prevalent, accentuates the uncertainty and fragility of the growth outlook. What are the main risks that should be pinpointed? First, there is the economic transformation and rebalancing in China, which is moving away from the previous model of export- and investment-led growth based on manufacturing towards a larger reliance on private consumption and services. Second, we are observing a large fall in oil and commodity prices, often reflecting concerns over the subdued global demand. Third, there is the gradual normalisation of Fed policy rates as opposed to the continued quantitative easing in most other advanced economies and the divergent monetary policy in emerging and developing economies. From a medium-to-long term perspective, all these trends could have a positive effect. Still, they also have short-term consequences, which pose significant downward risks for the global economy.
In the speech at the University of Economics and Business, I also mentioned two problems that are and will continue to be relevant: (1) the CNB's large balance sheet and (2) government debt. 3/6  BIS - Central bankers' speeches  Regarding the CNB's large balance sheet, over the last ten years, interest rates were too low, in fact zero for a long time. In addition, in early 2017, interventions led to an increase in the CNB's balance sheet within four months, or rather in the banking sector's liquidity. It increased from CZK 1,300 billion in December 2016 to CZK 2,300 billion in April 2017, i.e. there was an additional CZK 1,000 billion in the balance sheet, or an almost doubling of the balance sheet within four months of 2017. During these interventions, demand for Czech government bonds from non-residents increased. This further expanded the country's borrowing options. Budget constraints were eased. Then, during Covid, in particular at the end of March 2020, interest rates were reduced too close to zero. And fiscal policy was expansive for too long – we created a dangerous entitlement economy in which the state was the rich uncle who helped with almost everything. When an economy such as this one (especially one with a huge surplus of money and incomplete price convergence) was hit by a strong cost shock after the lockdowns, the Czech Republic ended up with the highest core inflation in the EU (from November 2021 to October 2022).

For example, it means that you, the banks, should now raise interest rates on all household deposits, even short-term ones, and share a somewhat larger proportion of your profits with your clients (Michl, 2019a). Let's base our economy on savings, not on debt. A month ago I made a speech at the University of Economics and Business in Prague (Michl, 2023). I would like to follow up on the speech here, recap its main ideas and expand on them in the context of new data on the economy. I started the speech at the University of Economics and Business by saying that I had good news for the public: inflation is finally falling. This is being confirmed. Annual headline inflation peaked in September last year, when it reached 18%. We managed to stop it. In line with our expectations, a gradual downward trend in inflation started in February this year. Inflation fell to 16.7% in February and then to 15%. In April, it stood at 12.7%. The inflation figure for May (11.1%) was published on Monday this week. It should fall to below 10% in annual terms within two months. This is not a victory. In the second half of the year, inflation will still be at a level we must not put up with. We must not get used to it. We must not adapt to it. Interest rates will therefore remain high  1/6  BIS - Central bankers' speeches  for longer.
Hence, if a given European country fails to reach an adequate ability to drive innovation despite having sound public finances, liberal labour market and low taxes, it cannot stand the competition on the part of countries with low manufacturing costs. This may lead to lost markets, falling output and growing unemployment, and in consequence public finance deterioration. It was as early as in late 1980s that a well-known economist, Paul Romer 8 , wrote that a country’s success would be determined by knowledge and ability to drive innovation. When set against labour and capital, knowledge and innovation are infinite, with a number of people able to simultaneously use the same knowledge or innovation. Labour and capital are in turn ascribed to a specific place. By saying that I do not only mean such great innovations as the light bulb, mobile phone or Wal Mart’s business model, which have improved the living standard of millions or billions of people. What I have in mind are also thousands or even millions of small innovations, for instance those aimed to improve the efficiency of a given business process. Today, we can add yet another factor to Romer’s model, namely the relationship capital. Now, it is common knowledge that innovation is fostered by cooperation between experts in various countries, cooperation between manufacturers and customers, local market expertise, cooperation between higher education establishments and businesses. In the long term, successful countries and businesses will be those that knowingly invest in the relationship capital.

I believe that we can say something similar about the arc of progress. Europe moves forward in stops and starts. It often learns lessons the hard way. But its arc bends towards a stronger and more united Europe for all citizens. The common currency 3/4  BIS central bankers' speeches  reflects this continued progress, with support for the euro at its highest level on record at 80%, up from 66% a decade ago.8 This should give us hope as we look to the future. And it should give us confidence that, even when Europe may seem divided or lacking in direction, there is a thread guiding us forwards. Over my career, I have had the privilege to watch this process unfold up close, to share in its highs and lows. I have been lucky enough to see it from three different perspectives – national, European and global. And I am honoured to continue working to take Europe forwards. I am very pleased to see the contributions of the European Central Bank recognised through my acceptance of this prize. Thank you. 1 Common Equity Tier 1. European Banking Authority (2020), “Basel III monitoring exercise – results based on  data as of 31 December 2019”, December. 2 Lagarde, C. (2019), “The future of the euro area economy”, speech at the Frankfurt European Banking  Congress, 22 November.
But I think that, at least in some areas, Basel II will act as a kind of catalyst for action. Under the new framework, internationally active banks will use systems whose recognition and on-going validation will indisputably require vastly increased collaboration among supervisors. Co-operation is a key word, but so too are convergence, communication and confidence. Communication is vital not only between supervisors or between supervisors and the industry but also, and very importantly at this stage, within banking groups so that all units are aware and understand the implementation plan. Additional co-operation and communication among supervisors will enhance confidence, reliance and convergence of supervisory practices. And some reliance and convergence will be necessary if we want to avoid redundant work, inefficiencies in the use of supervisory resources and an excessive burden for the industry. We are placing great emphasis on all these issues in our “Accord Implementation Group”, which is working together with many supervisors on what we call “real” case studies, and which is making good progress. 8. Conclusion  Let me take a few moments to draw some conclusions. What I have tried to do today is to highlight the anticipatory and forward-looking elements of Basel II. But, as with many things, I think that the real value of Basel II will be best evaluated with the benefit of perspective. This brings me back to our author of 2046. It may be that Basel II does not cover all the areas and refinements that are necessary to complete the framework for financial stability.

The first two trends that I have cited relate to the internal efforts firms undertake to identify and measure their risks. The third trend I’d like to highlight concerns the dramatic increase in the use of transactions designed to transfer exposures to risk, especially to credit risk, to outside counterparties and even to investors. Credit risk transfer This past autumn, the Joint Forum released for public comment a study on the current use of credit risk transfer activities among financial service providers, along with a series of recommendations on how to promote sound risk management practices in this area. In recent years, the markets for credit derivatives, credit default swaps, collateralised debt obligations and other products have grown tremendously, providing financial service providers with new mechanisms through which they can reduce their direct exposure to credit risk. Such tools may also help to reduce concentrations of risks in particular firms. BIS Review 8/2005  5  I think that the emergence of these new channels for re-packaging and selling off credit risk serves as another means of looking forward to the future to manage risk. In this sense, the rapidly expanding secondary market for new credit-risk related instruments bears witness to the innovation and the search for new ways of managing risk that is so vital to the continued evolution of the financial sector. However, we must remember to look back at the fundamental risks involved in these practices.
This requires that governments are credibly committed to achieving sound fiscal positions as soon as possible and to fully applying the provisions of the Stability and Growth Pact, which provides sufficient flexibility to deal with adverse economic circumstances. Financial stability and supervision Let me now focus on the financial sector and issues related to its regulation and supervision. The synchronised deceleration in activity in all economies has added to the stresses on the financial system in Europe and the euro area. The weakening of economic activity has impaired the quality of bank loans, which has adversely affected banks’ capital positions. As financial institutions continue to deleverage their balance sheets, they reduce their securities holdings and tighten the credit standards applied to new loans. This feeds back to the real economy and in turn constrains the ability of the private sector to service its debts. Therefore, there are emerging signs of a negative feedback loop between the real economy and the banking sector. Initially, the banking system in Europe faced the financial turmoil with solvency positions generally well above regulatory minimum requirements, following several years of strong profitability. However, as the financial market tensions intensified in the autumn of 2008, banks’ balance sheets came under significant pressure, as the values of structured finance products declined further, securitisation activity came to a virtual standstill, credit losses started to rise and income from fees and commissions as well as trading dropped. As a result, the banking sector has been facing significant challenges.

I would like to take this opportunity to congratulate the citizens of Slovakia on having joined the euro area at the beginning of this year. The continuing enlargement of the euro area shows that Monetary Union is not a “closed shop”; it remains open to newcomers. However, even if the reasons for celebration are manifold, there is no room for complacency, as the challenging economic situation and outlook amply demonstrate. Economic developments and monetary policy For the euro area, 2008 was an exceptional year characterised by severe and increasing financial market tensions as well as by significant and abrupt changes in the economy. Following strong economic growth in the first quarter, economic conditions worsened progressively, especially after the extraordinary intensification of the financial turmoil in September. For the year as a whole, real GDP in the euro area grew modestly, by 0.8%. The latest available information suggests that in the first quarter of 2009 aggregate output recorded a further sizeable decline. We expect economic activity in the euro area to remain weak for the remainder of 2009 and to gradually recover in 2010. Taking into account the effects of the substantial macroeconomic stimulus in progress and the measures taken to restore the functioning of the financial system, the risks to this outlook are assessed to be broadly balanced over the medium term, but uncertainty remains unusually high.
Owing to the amendments to laws adopted by the State Duma, the requirement for the testing of non-qualified investors wishing to purchase complex products will become effective as early as autumn, that is, six months earlier than initially scheduled and discussed. We are now authorised to establish the rules for selling financial products to ensure that market participants do not sell complex products to individuals who are unable to comprehend them, or products involving non-transparent conditions of returns, which makes it impossible to assess the risks of investment. Moreover, the new law allows us to set the rules for selling not only the investment products we discussed, but actually any financial products and services. Already this year, we will stipulate the main rules for the interaction between financial institutions’ employees and consumers and the rules for information disclosure. We will also evaluate how well they are complied with in the course of test purchases. It is no secret that financial institutions’ employees selling products often focus on their KPI, which is the basis for their personal bonuses. This KPI is the amount of products they sell and they might not care about the quality of products they sell to people. Of course, we need to alter this system. The protection of retail investors is an important but by far not the only area where we believe it essential to enhance financial consumer protection.

This amount will also be 1.4 million rubles. We would like to continue the discussion of this topic with deputies. In our opinion, we are fully prepared to generally extend the insurance system to them in the medium term. I will now speak on another type of insurance — OSAGO. Last year, a key reform in OSAGO (compulsory third-party liability motor insurance) was accomplished. It involved the customisation of insurance premiums. This reform was complex and implemented in several stages. We discussed every stage of it with you, at parliament proceedings, and in the course of various panel discussions. Finally, last year, we switched to this scheme of significant 4/6  BIS central bankers' speeches  customisation of insurance premiums. In our opinion, this solution is really the fairest one for people — a good driver should not pay for those whose driving involves risks and causes accidents. This approach is in line with the concept of balanced development in this segment. We can see that the number of complaints regarding OSAGO decreased already by a quarter last year. Moreover, a similar reduction was recorded in complaints about the calculation of the bonus-malus coefficient. This was an acute issue, and we also discussed it here, in the Parliament. Furthermore, although prices for components and imported spare parts were up, insurance rates remained the same, and OSAGO was affordable.