samchain/econo-pairs-v1 huggingface dataset:
We have called the new macro model “Norwegian Economy Model”, or abbreviated “NEMO”. In the work on developing the model, we have benefited greatly from our close cooperation with the IMF and the Federal Reserve Bank of New York. We have also been inspired by and learned from the work of a number of other central banks, for example in the UK, Sweden and Canada. In addition, we have the benefit of a long history of model-building in Norway. NEMO belongs to a class of macroeconomic models that tends to be referred to as DSGE models, which stands for “Dynamic Stochastic General Equilibrium”. The term dynamic means that the entire path from the short term to the long term is modelled. The model is stochastic in the sense that the economy is exposed to random disturbances. Such disturbances can, for example, stem from a change in preferences, technology and market structure. General equilibrium implies that supply equals demand at all times in all markets, but there may be considerable temporary deviations from the long-term growth path. BIS Review 4/2005  5  A prominent feature of this type of model is that the behaviour of different economic agents is modelled explicitly. Each model parameter therefore has its own economic interpretation. Households maximise utility and choose the optimal distribution between work and leisure and between consumption and saving. Firms maximise profit. The authorities have defined specific economic policy objectives.

It is primarily economic agents’ interest rate expectations that influence consumption and investment decisions - and consequently inflation. To be successful, monetary policy must be capable of influencing expectations. Michael Woodford, a leading academician in modern monetary theory, states the following in his book “Interest and Prices”: “For successful monetary policy is not so much a matter of effective control of overnight interest rates as it is of shaping market expectations of the way in which interest rates, inflation, and income are likely to evolve over the coming year and later. (…) It follows that, insofar as it is possible for the central bank to affect expectations, this should be an important tool of stabilization policy.” 4 As long as the central bank’s behaviour is credible and predictable, an inflation target for monetary policy can contribute to anchoring expectations of future inflation. This also contributes to providing a basis for economic agents’ interest rate expectations. In the Inflation Report, Norges Bank provides its assessments of the outlook for economic developments. The chart shows Norges Bank’s projections from Inflation Report 3/04, which was published in November. The projections are conditional on the market’s interest rate expectations. This interest rate path is then assessed by the Executive Board on the basis of the derived projections for inflation and the output gap. Since summer 2004, the Inflation Report has presented the Executive Board’s assessments of monetary policy in the next four-month period.
Credit growth accelerated to 11.3 percent, supportive of economic growth, while banks, fund mobilization via deposits and bills of exchange accelerated to 3.6 percent in August, allowing the ratio of loan to deposits, including bills of exchange, to remain stable. In sum, over the years, better risk management, improved asset quality, greater provisioning coverage, and enhanced regulatory and supervisory framework have significantly improved the overall risk profile of the Thai banking sector. Fourthly, despite much weaker global outlook, Thailand’s economic conditions are expected to be well-supported. GDP growth for the first half of this year stood at 5.7 percent, with inflation contained through appropriate monetary policy and aided by the fiscal package which delayed some utility price increase for around six months. While the expected slower global growth would pose downside risk to domestic growth via a slowdown in exports, Thailand has a considerable policy room, especially fiscal policy, which helps to cushion the impact, by employing macroeconomic and prudential measures to support growth and maintain financial stability. Nevertheless, we cannot afford to be complacent given the severity of the global turmoil. The Bank of Thailand has asked banks to conduct stress-testing to ensure banks are alert to potential impact of downside risks. Recent stress-testing, which covers credit market, and liquidity risks, linked to a macroeconomic impact scenario, confirms the resiliency of the Thai banking sector. On the regulatory front, considerable progress has been made to increase the efficiency, adhere to international best practices, strengthen banks, capital position and enhance risk management practices.

This is a question that has been much discussed in recent years, both between central banks and within the academic world, as house prices have risen rapidly in many countries including Sweden. This debate could in itself be the topic of a speech so let me just briefly say that the position of the Riksbank is that we do not consider it to be reasonable to entirely ignore these risks, even though it might be difficult to take these risks into account in the usual forecasting process. We have therefore acted to reduce these risks and to contribute to a calmer adjustment in house prices. The inflation forecast and future interest rate developments One of the recent changes in our strategy was the assumption regarding the development of the policy rate, which is used as a base for our forecasts. Like most central banks with an inflation target, the Riksbank previously made forecasts under the assumption that the policy rate would not change during the forecast period. Since October last year we instead use an assumption that has gained in popularity among central banks, namely that the policy rate will develop in line with market expectations, as reflected in implied forward rates. The earlier assumption had the advantage that it illustrated in a simple manner when there was reason to change the policy rate.
Our aim is to dampen the pressures in the Norwegian economy and bring inflation down towards the 2 precent target.1 With yesterday’s decision, we have reversed the policy rate cuts made at the beginning of the pandemic. Let me explain the reasons for our decision. Chart: Inflation is above target This chart shows two different measures of inflation in Norway. Headline inflation is shown by the dark blue line. The light blue line shows the rise in consumer prices excluding energy prices and tax changes. This is an indicator of underlying inflation that is intended to capture the longer-term inflation trend. Both curves tell the same story: inflation is high. Inflation has recently increased rapidly and at a markedly faster pace than projected in the June Report. Food prices in particular have pulled up inflation through summer, surprising to the upside. High energy prices are adding to the upward pressure on headline inflation. But prices for a range of other goods and services have also increased more than expected. Chart: Inflation is high in many countries Part of the explanation for the high level of inflation can be found outside Norway’s borders. As you can see from the chart, high inflation is not unique to Norway. In many countries, inflation is even higher than in Norway. There are several reasons why inflation has reached such a high level internationally. 1/3  BIS central bankers' speeches  The impact of the Covid-19 pandemic continues to linger.

Ida Wolden Bache: A somewhat faster rise in the policy rate Speech by Ms Ida Wolden Bache, Governor of Norges Bank (Central Bank of Norway), during "Arendalsuka", on the outlook for the Norwegian economy and the policy rate decision, Arendal, 18 August 2022. * * * Accompanying slides of the speech. Good afternoon everyone and let me first of all thank Sparebanken Sør for allowing us to use this lovely building. This was once the Arendal branch of Norges Bank. The branch was closed in 1989, and at that time inflation in Norway was on its way down from a high level. Today, after a long period of low and stable inflation, inflation is again high. The central bank’s role is to ensure price stability and promote economic stability. The decisions we take affect people’s finances. I was acutely aware of this responsibility, as were the other members of the Monetary Policy and Financial Stability Committee, when we convened yesterday to set the policy rate. Chart: A somewhat faster rise in the policy rate After thorough discussions, we decided to raise the policy rate by 0.5 percentage point to 1.75 percent. The decision was unanimous. This means that we are raising the policy rate somewhat faster than indicated by the policy rate forecast published in June. The policy rate will most likely be raised further in September.
Hamad Al-Sayari: World class banking sector Speech by His Excellency Hamad Al-Sayari, Governor of the Saudi Arabian Monetary Agency, during “The Future Building" Seminar, in cooperation with Euromoney, Riyadh, 9-10 May 2006. *  *  *  Ladies and gentlemen, It is a great pleasure for me to participate in this Symposium and share with my insights on “The Development of Banking Sector” in Saudi Arabia and have a glance over its development and role in supporting the growth of the Saudi economy to be more dynamic and attractive to domestic and foreign investments. At first, let me briefly cover the achievements of the Saudi banking sector since the establishment of SAMA in 1952. According to SAMA’s Charter, two of its most important objectives are to issue and strengthen the Saudi currency and stabilize its internal and external value, and to regulate commercial banks. On the basis of a historic review, we may judge how far these objectives have been achieved. The exchange rate has fluctuated in a very narrow band over the past six decades. This has contributed to attaining the ultimate goal of our monetary policy of achieving price stability. The inflation rate has remained very low and has generally remained, on average, below 1% per annum over the past 20 years. These stable conditions have contributed strongly to sustained growth in the overall economy with average real GDP growth of 3.2% per annum for the last decade.

The monetary reserves and Swiss franc assets combine to make up the monetary assets, which are required for monetary policy. In addition to these assets, the National Bank also manages the proceeds from the sale of the surplus gold reserves. The portfolio of these so-called free assets amounts to slightly more than CHF 20 billion. In the management of the monetary assets, monetary policy objectives and restrictions have priority. In compliance with the primacy of monetary policy, the investments are optimised according to security, liquidity and return. Important in this regard are the concentration on liquid investments, in other words readily marketable investments, and on the greatest possible risk diversification by holding different currencies and investment categories. The National Bank’s leeway for investment has extended considerably since the entry into force of the new National Bank Act in May 2004. Risk diversification options in particular were also increased as a result. The concrete investment structure of the different portfolios and their yields are published quarterly in an updated appendix to the Investment Policy Guidelines of the Swiss National Bank. The current investment structure and the risk/earnings profile of the National Bank’s assets, in particular the foreign currency reserves and free assets, can be summarised as follows: The portfolio adjustments made under the new Act aim to increase diversification in terms of currency and investment category. Within the context of the 2004 strategy, the dollar share was reduced in favour of the pound sterling and the yen.
The Federal Reserve stated after its last meeting that the upside and downside risks to the attainment of sustainable growth for the next few quarters were roughly equal. The risk of inflation becoming undesirably low was therefore deemed to be greater than the risk that inflation would move up from its already low level. This is the predominant concern of monetary policy in the period ahead. Monetary policy in the US may therefore remain expansionary for a fairly long period ahead. BIS Review 46/2003  7  In Japan, expectations of a continued fall in prices have held up the real interest rate in spite of low nominal interest rates. In Japan, the key rate has been close to zero since the end of 2001. This limits the central bank’s scope for stimulating demand. In recent years, “untraditional” monetary policy instruments have also been discussed, such as supplying considerable liquidity through purchases of various types of securities, including long-term paper. The Bank of Japan has to a large extent purchased long-term government bonds and, since last summer, asset-backed securities as well. How to respond to financial bubbles Another subject that is being discussed globally is how monetary policy should respond to financial bubbles. Should we try to prevent the bubble from developing or be content with responding afterwards once the bubble has burst and then make the best out of the situation? And what is actually feasible? Financial stability is often defined as the absence of financial instability.

The interest rate shall in the short and medium term contribute to stable inflation and stable developments in production. At the same time, it shall in the long term also contribute to equilibrium in the market for real capital. Capital accumulation shall over time correspond to saving. To achieve this, the real interest rate must not over time deviate substantially from the return on real capital. Substantial deviations can give rise to undesirable fluctuations in the markets for real capital that have no basis in economic fundamentals. The economic situation varies over time. Monetary policy will set an interest rate that is alternately above and below the neutral rate. Consequently, the interest rate level will probably not deviate substantially from the long-term equilibrium rate over time. By taking a gradualist approach to interest rate setting, it is also possible to assess whether imbalances are developing in capital markets. Interest rate developments from a historical perspective In the long term, the equilibrium real interest rate will be determined by underlying structural relationships in the economy. These relationships will probably only be changed gradually so that changes in nominal rates will primarily reflect changes in expected inflation. In the short term, however, the real interest rate will vary, not least because monetary policy seeks to influence the real interest rate in the short and medium term. Changes in nominal interest rates might therefore reflect changes in both real interest rates and inflation expectations.
This is because the Riksbank only lent money to the banks and did not, like the Fed, the ECB and the Bank of England, purchase bonds and other assets during the crisis.13 If the Riksbank had done so, this could have led to more serious problems when the time came to phase out the support measures. It is of course difficult to estimate the effects of the measures taken by the Riksbank in connection with the crisis as so many other things also had an impact on the course of events, not least fiscal policy and the measures taken by other authorities to preserve  12  The Riksbank also extended the types of collateral that could be approved for loans and provided liquidity assistance to two small banks, Kaupthing and Carnegie. 13  By only lending money, the Riksbank also avoided exposure to a substantial interest rate risk. 6  BIS central bankers’ speeches  financial stability. Nevertheless, it can be noted that the Swedish banks came through the crisis well. Total lending to households and non-financial companies continued to increase throughout the crisis. It can also be noted that the fall in production and employment was less than feared. Domestic demand has been kept up by the expansionary fiscal and monetary policies. Conclusions With hindsight, I think that we can draw two conclusions about the actions taken by the Riksbank in connection with the financial crisis. First, we did not see the crisis coming.

However, with a rate of growth of over 5 per cent and a repo rate of 1.50 per cent, I do not think we can say that monetary policy is tight. It is just gradually becoming slightly less expansionary. There are not four hawks and two doves on the Executive Board at present, only six doves. BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches  BIS central bankers’ speeches  15  16  BIS central bankers’ speeches  BIS central bankers’ speeches  17  18  BIS central bankers’ speeches  BIS central bankers’ speeches  19  20  BIS central bankers’ speeches  BIS central bankers’ speeches  21  22  BIS central bankers’ speeches
Thus, besides the introduction of new financial instruments, it would be also necessary to activate the utilisation of the existing instruments. These improvements would be for the benefit of the economy in general, that is for the benefit of individuals, companies and banks themselves, but also of the central bank and government. Thus, individuals will have more opportunities to invest their savings, companies would have to make better use of new business activities, banks would have to gain higher benefits and the central bank with government would become more efficient in implementing their policies. Allow me now to concentrate myself a little bit on the honoured businessmen guests, who, in spite of the modest financial support offered in the beginning of transition period, have showed a really impressive performance. In my position as Governor of one of the most important institutions in the decision-making of economic policies, I would like to present you, using the opportunity of this event, some suggestions that I sincerely hope you will welcome and well-understand. First of all, I would require more professional performance in the relations between businesses and banks. Without exaggerating, I would say that we are still far away from the best practices and standards, and as a consequence all the economic, political, financial, social segments still leave to be desired. The relations to be established between you and banks should be reciprocal, open and legal cooperative relations.

For this purpose, I would appeal to start thinking from this moment on of future projects in the payment infrastructure. I personally will insist that even in this direction we should focus as a banking system on the European Union directives, so that to orient every step in the future towards the country’s integration in the European Union. Short time ago I was informed about a new initiative of EU, which requires establishing within a certain period of time, a unified payment system within the euro area, including payments with cards. For this purpose, I would suggest that respective specialists from the Association and Bank of Albania be informed as soon as possible about this project and they should come out with their relevant suggestions. Also, I remain persistent in my position that we have to adopt in Albania the most advanced solutions for all the infrastructure projects we are going to implement. I believe that we don’t need to examine and consider old-fashioned models, which besides the initial cost would require all the time new funds for their maintenance and modification. In addition, now when the public administration became a client of the system, I think that there are real opportunities to solve the payments of utility services through the banking system. Returning to the financial markets, I think that in spite of the above-mentioned restrictions there is room for improving competitiveness among banks even under the current conditions.
Before I begin, I’d like to thank the organizers of this conference for putting together today’s informative and timely program, as well as our many speakers and panelists for their participation. In addition, please note that my comments today are my own and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System. Community Bank Business Models: Recent Trends I’ll begin with some observations on recent trends in community bank lending. This perspective is critical because, as New York Fed President Bill Dudley stated in his welcoming remarks, community banks are a vital component of the U.S. banking system. They provide an array of financial services to a wide range of customers and business sectors. This is particularly 1/4  BIS central bankers' speeches  important as many of these sectors are considered “underserved” due to the limited presence of physical banking locations in their locales. As background, the New York Fed is the primary supervisor for 17 community banks and over 100 bank holding companies that operate throughout Upstate New York, in parts of Connecticut and New Jersey, and in the greater New York City area. Our staff in supervision monitors trends and emerging risks in the financial services industry across the Second District, including those associated with community banks. These analyses along with insights we gain directly from interaction with community bankers inform our supervisory programs and allow us to tailor our examination strategy and risk-focus for community banks.

However, given that vulnerabilities on these markets are still high, the resilience of the banking system remains crucial. In January 2022, the Federal Council approved the SNB’s proposal to reactivate the countercyclical capital buffer. This buffer will come into effect at the end of September and will contribute to maintaining banking system resilience. Page 1/1