samchain/econo-pairs-v1 huggingface dataset:
At a meeting of the Association of African Central Banks held in Dakar, Senegal, in August 2010, it was generally recognized that African central banks should adopt policies which should ensure a move towards macro prudential surveillance of the whole financial system and ensure that there are early warning signals and adequate remedial measures to deal with any crisis. Sub regional financial developments Your Excellency, distinguished ladies and gentlemen, as you are aware, the West African Monetary Institute (WAMI) is spearheading efforts to establish the Eco as the single currency, with a West African Central Bank and common monetary and financial policies for the Zone. However, as a result of the recent financial crisis, member states could not meet the macroeconomic convergence criteria which are part of the requirements, and a decision was taken by Heads of State and Government to postpone the launch of the single currency and the establishment of a West African Central Bank to not later than 1st January 2015. In spite of these difficult conditions, the West African Sub region has shown remarkable resilience to the onslaught of the crisis mainly due to the region’s low integration with global financial markets. However, in the post crisis period, indications are that economic growth would continue to remain robust, averaging around 7 percent for countries of the West  2  BIS central bankers’ speeches  African Monetary Zone.

4  BIS central bankers’ speeches    The total deposit base of the banking system increased by 23 percent to Le1.7 trillion as of November 2010.   Total private sector credit increased by 30.4 percent in 2010, lower than the 46.2 percent recorded for 2009, with non-performing loans declining, albeit slightly, to about 16 percent of total loans by November 2010.   Domestic interest rates remained generally stable, with the exception of interest rates on government securities, which rose due to increased borrowing by Government. This development, which is currently being addressed by the Bank of Sierra Leone and the Ministry of Finance and Economic Development could have a rippling effect on commercial banks’ lending rates. Your Excellency, distinguished ladies and gentlemen, in the early part of 2010, I summoned a series of meetings with board members and managing directors of all commercial banks to review various aspects of their operations, including profitability and corporate governance. The aims of these meetings were to ensure that all commercial banks were brought on board the central bank’s plan to reinvigorate the financial sector by creating stronger, more profitable and efficient institutions and to ensure that individual bank practices do not pose risks to the entire banking system as has been the case in other parts of the globe.
Svein Gjedrem: Developments in the Nordic financial industry a central banker’s perspective  Address by Mr Svein Gjedrem, Governor of the Norges Bank, at the Nordic Financial Services Conference, held in Stockholm, on 18 September 2000. * 1. *  *  Introduction  What is the future of the Nordic financial services industry? Who are the winners in the consolidation process? What is the potential of e-business and the Internet? This is just a sample of the important and challenging questions that will be discussed at this conference. Fortunately, it is the task of my fellow speakers - and not mine - to try to answer them. Given their background as significant market participants, I am sure that they will provide us with some valuable insights. Today, most central banks follow structural developments in the financial sector from the sidelines. This has not always been the case. The post-war period was characterised by heavy regulation. The domestic authorities controlled market prices, financial flows and the structure of the financial sector. There was little foreign influence. Gradually, markets were deregulated and became more internationally integrated. The central banks’ main instrument is now the setting of interest rates. The main objectives of central banks have stayed the same: monetary and financial stability. Although deregulation is now completed in the industrialised countries, its full impact on the financial structure remains to be seen. In addition, technological developments, internationalisation and increased focus on shareholder value are creating pressures for structural change.

That there are problems cannot, however, be denied. They have to do, for instance, with the prevailing conditions for world trade and how the resultant gains are to be distributed. Another issue is the free movement of capital, which played an important part in the positive economic trend in the 1990s but has also contributed to a situation where economic unrest spreads more quickly from country to country and is sometimes a major ingredient of financial crises in developing countries. Then there is the question of how the international financial organisations have functioned and the problem of debt in certain poor countries. These are some of the issues I shall now discuss. The globalisation debate Trade is crucial The first issue is about trade. The critics argue that the expansion of world trade to include more countries as well as additional goods and services leads to the poorest countries being marginalised — developing countries are unable to compete with the wealthy nations in this process. Some consider it would be better for the poorest countries to close their borders and build up their own industries. They would then be in a stronger position when perhaps they are ultimately incorporated in the world economy. A similar policy was advocated by some in the 1960s and ’70s and it was implemented in various guises in many countries, for instance in Latin America. But the subsequent course of events provides strong arguments against such an approach; isolationism has not been a good way of generating prosperity.
But the US risk capital market is, of course, considerably more developed and in Sweden the supply of risk capital is associated with specific problems, for instance as regards taxation, that ought to be looked into. The labour market is naturally a major factor, too. Besides being suitably competent, labour must be prepared to transfer rapidly to the sectors and jobs that arise as the new economy takes hold. Even with a good level of education in general and a rising number of university graduates, the supply of people with spearhead competence poses problems both because the output is too small and to some extent because qualified persons move elsewhere. One explanation is the lower return on tertiary education in Sweden compared with, for example, the United States. Compared with their American colleagues, moreover, relatively fewer graduates in Sweden start new businesses and exploit new commercial ideas. Neither does wage formation in Sweden function so well in general that the available job vacancies are filled without friction; in the United States this has played a central part in maintaining high growth and rising employment without strong upward pressure on wages. 3.3 Finally, as regards macroeconomic policy, the Swedish and American economies now have a good deal in common in that in both cases inflation is low. But it is only about five years ago that the sustainability of the Swedish economy was rather uncertain.

We work simultaneously with several different models of inflation, some of which require absolutely no knowledge of, for instance, the output gap or potential growth. Even models that use comparatively insignificant assumptions from economic theory can have satisfactory predictive power. We also use disaggregated data on price and wage tendencies, shortages and so on. In the light of all this information we then try to complete the puzzle of future inflation. Another matter to emphasise in this context is that even when outcome figures for inflation are available, it is not always possible to separate the contributory factors. When forecasting future inflation, we normally start from a notion of the size of the output gap, the level of potential growth and so on. If it then turns out that inflation has been lower than we calculated even though growth followed the expected path, it may seem natural to attribute this to a better trade-off between inflation and growth. But the proper explanation may well prove to be something else, for instance that there was more unutilised capacity than the forecast assumed or that we underestimated potential growth. The impression that earlier relationships have changed does not necessarily mean that we are in the throes of a new economy; we may simply have gained better insights into how the earlier, essential relationships work.
Lars Nyberg: Towards a new European supervisory structure Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at SIFMA's annual meeting, New York, 27 October 2009. *  *  *  Ladies and gentlemen Let me start by saying that I consider it a great honour to have been invited to speak to you today. We work in different parts of the world, but I think that the crisis that we are now struggling to get out of has shown, for good and bad, that the financial system has brought us closer together than ever before. Over the course of last year, there is one sentence that has really burnt into my brain. It was delivered by Mervyn King, the governor of the Bank of England, who has a great talent for one-liners. He concluded on one occasion, somewhat disillusioned after having dealt with the failure of a number of cross-border institutions, that “global banks are international in life but national in death”. And indeed he is right. We have banks and other financial institutions that work all across the globe. But when they get into trouble the instruments for safeguarding financial stability essentially remain fragmented along national borders. This geographical mismatch is something that the regulators will have to deal with, one way or the other. And to put it bluntly, from a policy perspective it basically boils down to a choice between two paths.

However, I would like to point to one very important piece that needs to be put in place to make this system effective, namely a common framework for dealing with troubled cross-border financial institutions. Here, I would like to raise the perspective from the EU to speak more broadly on the need for action at a global level. The reason why I propose that supervisory reforms need to go hand in hand with reforms in the area of crisis management is quite simple. Supervisory and regulatory incentives are largely driven by what will happen once a crisis occurs. Essentially, it all comes down to the questions of who will suffer and who will pay. As is currently the case with crisis management arrangements fragmented along national lines, the answers to these questions are highly uncertain. The best guess is that countries, in the absence of a common framework to tackle the problems, will try to minimize their own losses and costs without giving due consideration to the impact on other countries. And if regulators and supervisors suspect that costs will be pushed unfairly to their side of the border in a crisis, this suspicion will no doubt influence their view of cross-border banking. Basically, what I am saying is that if we cannot find a way to improve and clarify the way we deal with troubled cross-border banks then not very much will be gained by strengthening the harmonisation and co-ordination of regulation and supervision.
While the range of policy is extensive, the key thrusts are strengthening of risk-based microprudential regulation, and emergence of the explicit importance given to macroprudential supervision to tackle the problem of procyclicality and systemic risk. As we can see, there will be a new paradigm and context to international supervisory standard. While the macro orientation is in fact not new, and has always been in the classic tool-kit of central bank in ensuring financial stability, the current explicit articulation and specification of such tool as global standard is. The key macroprudential policy framework that has received wide support to deal with procyclicality problems includes the followings. First, there is a proposal on the build-up of capital buffer in the good times to be run down in the bad times and to prevent excessive credit growth. Second, as being discussed with accounting standard setters, provisioning should be linked with expected loss rather than incurred loss, which is the prevailing practice. Finally, the primarily simple and transparent “leverage ratio” should be applied as a complement to risk-based capital requirement under Basel II. Implementation of many such policies is still subjected to significant work on calibration as well as qualitative issues such as consistency with risk-sensitive capital framework, and international level-playing field. Such problems magnify in the case of emerging markets, which face constraint on data and institutional capacity. Moreover, much of the work done on calibration would tend to serve the need of IRB rather than SA banks that are the core in emerging market.

There is a risk the bank will fail and be unable to repay its debts to depositors. Similarly, when a bank lends money to buy a home or start a business, there is a risk that the borrower will default. 2/7  BIS central bankers' speeches  In the United States, these risks are mitigated through a combination of public laws and internal controls, including deposit insurance and lending guidelines that, since the financial crisis, have become more stringent. Those are simple examples of risks taken by banks, and there are relatively straightforward ways to mitigate those risks. But the more complex banking activity becomes, the more difficult it is to identify and manage risks. And the more connections exist in a global financial system, the more risk can be distributed or amplified, and the greater the opportunity for new systemic risks to emerge.2 Banks can face risks from employees, some of whom are located in offices in financial centers around the world. Some risks are, again, inherent. We are all human, which means we sometimes make honest mistakes. There is also a risk from intentional employee misconduct. For example, a trader may seek personal gain by taking undue risks in investing someone else’s money. An analyst may disclose confidential information without permission. Or, more simply, in an institution that deals with money, some people may decide to take some for themselves. In some of these cases, the bank may be the victim of the crime.
We need to establish whether or not there are actions that central banks can and should take to minimise the likelihood of macroeconomic instability arising from extreme fluctuations in asset prices. Second, how should monetary policy react to structural changes in the economy? 3  BIS Review 65/2000  Monetary policy and asset prices Let me start with the question of monetary policy’s response to movements in asset prices. This depends in turn on how the central bank chooses to use the information contained in asset prices. In a regime that explicitly targets inflation, asset prices are taken into account via the effects on aggregate demand. Rising share prices increase household wealth and that would raise consumption for a given level of income if these increments to wealth are considered to be of a permanent nature. At the same time, consumer confidence boosted by higher share prices could potentially make individuals more prone to spend their increased wealth. An increase in share prices also makes investment more attractive to firms since it increases collateral values and lowers the cost of new capital relative to existing capital. If share prices predict higher expected output growth, this could also lead to more investment. If the asset prices on which households and firms base their consumption and investment decisions prove to be too optimistic, this would create inflationary pressure in the short term. An important question in this context is how sensitive households’ and firms’ consumption and investment responses are to changes in asset prices.

Urban Bäckström: Some reflections on financial and monetary stability  Speech by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, at a seminar in Bangkok hosted by the Bank of Thailand, on 24 August 2000. *  *  *  Your Excellencies, Ladies and Gentlemen, I would like to thank my dear colleague, Governor Sonakul at the Bank of Thailand, for the invitation to visit Bangkok and for the opportunity to address this distinguished audience this evening. In recent years, significant progress has been made in putting the global economy on a path towards sustainable growth. The world economy entered the year 2000 in considerably better shape than many of us would have expected just a year ago. And after recovering to near its long-term average in 1999, global growth is forecast to go on accelerating in 2000. It is especially noteworthy that performance has improved in almost every region of the world. Southeast Asia, Russia and Brazil have all rebounded from their recent crises more strongly than expected. Many of the world’s poorest countries, including some in Africa, are posting respectable growth rates. The US economy is enjoying its longest recorded expansion ever. Growth in continental Europe is picking up - especially in the larger economies where growth had been relatively weak. And there are signs of an incipient recovery in Japan.
Not only has inflation been low, but we have avoided the large swings in output and employment that have characterised previous periods in UK economic history. We have seen employment grow from around 56% of the population at the trough in 1993 to over 60% now and unemployment fall back to levels not seen since the mid-1970s. GDP growth has been between 1% and 4.5% per annum throughout. To someone like me who was in the Treasury in the 70s and 80s when we experienced real booms and busts, the last 10 years have looked like a golden age (Chart 1). Of course we hoped that the reform of economic policy would bring greater stability, but the speed and extent of that success has been unexpected. When the MPC was created in 1997 and given responsibility for meeting the inflation target, it was told that whenever inflation was more than one percentage point away from the target the Governor would have to write a letter to the Chancellor explaining why this had occurred. The Bank’s current chief economist estimated that the Governor would need to write a letter on average one month in every two. 1 Even the current Governor thought that ‘given past experience of inflation volatility it is likely, even allowing for the change in policy regime, to restore the lost art of letter writing to British life’. 2 It is remarkable that not a single letter has needed to be written – yet.

It depends on the importance of imported goods in the consumer price index and on whether lower import prices are passed on to consumers. 5 In the UK in the ten years from 1994 to 2004, the price of imported goods fell on average by one per cent per annum, so the direct effect of this on the consumer price index was quite marked. This shows up in the striking contrast between goods and services consumer price inflation (Chart 3). But the impact of greater competition does not stop with prices. Business tells us that greater competition between companies is encouraging them to protect their profits by cutting costs. This involves control of wage growth and the search for productivity improvements. This has been complemented by greater contestability in the labour market due to both greater migration and the potential for out-sourcing and relocation of production should wage demands become excessive. My view therefore is that the disinflationary pressure from globalisation may well have been more substantial than the direct estimates suggest, and this helps to explain why inflation has fallen throughout the world over the last 15 years from 30% in the early 1990s to about 4% in 2003. 6 This  4  The weight of manufacturing in UK gross value added was 14.7% in 2003. (United Kingdom Economic Accounts, 2006q1).
Over time, such a monetary policy will lead to higher inflation, not higher employment. Unemployment has declined markedly and is now very low. At the same time, wage earners’ share of corporate earnings has declined. Historically, there has been a clearly negative relationship between unemployment and wage shares. Developments in recent years have paved the way for strong growth in employment, also today when the cyclical upturn is in a mature phase. Developments in the past years must be seen against the background of the effects of a number of positive supply-side conditions on the Norwegian economy. High export prices and low import prices have led to a low rate of increase in consumer prices and an increase in household real wage income, but also to high corporate earnings and solid growth in employment. 1  See, inter alia, Rogoff, K. (2003), “Globalization and Global Disinflation,” Federal Reserve Bank of Kansas City Economic Review, Fourth Quarter, 45-78. BIS Review 102/2007  3  At the same time, productivity growth has been unusually high. The effects of this are more complex. In the early phase of the recovery, this delayed a pick-up in employment growth, but also contributed to low inflation. Increased productivity means that demand can remain high without rising inflation. The interest rate was set at a low level to bring inflation back to target. At the same time, this also enabled enterprises to make use of a higher growth potential. Eventually this also resulted in higher demand for labour.

It may be that some of the difference in the rise in clothing prices in the two countries is due to the way prices are measured and interpreted rather than to actual price developments. This is also supported by Eurostat’s price level survey. Eurostat compares different countries’ prices for identical goods and finds that the level of clothing prices in Norway has in fact risen somewhat compared with clothing prices in Sweden in recent years. According to the CPI in the two countries, clothing prices in Norway have fallen by 30 per cent relative to clothing prices in Sweden in the period 1999-2005. The goods measured in Eurostat’s survey are probably not representative of the basket of consumer goods in Norway. The survey nonetheless illustrates the uncertainty surrounding actual developments in clothing prices. Allow me to conclude. Inflation in a country with its own national currency is not something that just drifts in with the wind from abroad. It is monetary policy that over time determines the nominal path. In the short and medium term, we can weigh the variability in inflation against the variability in output and employment. Nevertheless, the overriding objective is to anchor expectations of low and stable inflation. We must never lose sight of this. There is considerable uncertainty surrounding the economic situation and economic developments ahead. Statistical forecasting techniques and macroeconomic models can help us gain further insights into and a better understanding of the driving forces, but can obviously not eliminate risk and uncertainty.