samchain/econo-pairs-v1 huggingface dataset:
Svein Gjedrem: The outlook for the Norwegian economy and monetary policy assessments Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at a presentation of the Monetary Policy Report 1/09 at Goldman Sachs, London, 26 March 2009. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 25 March, Monetary Policy Report 1/09 and on previous speeches. Please note that the text below may differ slightly from the actual presentation. *  *  *  Introduction Norges Bank’s Executive Board decided yesterday to reduce its key policy rate by 0.50 percentage point to 2.00 per cent. The Monetary Policy Report, published yesterday, indicates that the key policy rate should be gradually reduced further to a level of around 1 per cent in the second half of 2009. Financial crisis but active public measures In September 2008, the turbulence in financial markets erupted into a full-blown global crisis. Global economic growth was already slowing, but the situation has deteriorated in the past few months of 2008. The turnaround hit hard, with synchronised effects on virtually all financial and goods and services markets, not only in the US but also in Europe, Asia, Latin America and Oceania. We are now in the deepest downturn in OECD countries in the postwar period. GDP in the OECD area as a whole is expected to fall in 2009 for the first time since the Second World War.

Norwegian money market premiums are expected to edge down ahead in line with premiums in global markets. BIS Review 37/2009  3  The global downturn led to a marked fall in prices for oil and other commodities through autumn 2008. Oil prices have for a period now hovered around USD 45 per barrel. Oil futures prices have fallen and indicate an oil price of around USD 55 per barrel in 2010. Other commodity prices that are important for the Norwegian economy have also fallen sharply. Metal prices are particularly sensitive to cyclical developments. Futures prices for a selection of raw materials indicate unchanged or moderately rising prices in the next few years. Many countries that have been hit by the economic setback will see an improvement in their terms of trade and growth in their disposable income. 4  BIS Review 37/2009  The current downturn followed a period of very high global and domestic economic growth, supported by favorable trading conditions. Few countries benefited more than Norway from the economic upturn, which drove up prices for oil, gas and other export commodities. At the same time, an increasing number of cheap consumer goods were imported from new EU countries and from Asia. Norway’s real disposable income increased by more than 40 per cent from 2002 to 2008, more than that of any other western country. But our terms of trade are now deteriorating.
Of course falls in house prices tend to coincide with a slowdown in the wider economy because they are affected by the same factors – notably falls in real income and employment. But they can also feed back into activity. First they slow housing investment and transaction flow which hits builders and related services like estate agents and conveyancers. The purchases of white goods and furniture tend to go hand in hand with transactions in the housing market. So the slowdown in the number of people moving home is likely to impact on spending on those goods. Falling house prices limit how much households and small businesses can borrow today and that pulls down consumption and investment. Also by reducing their expectations of what they will be able to borrow tomorrow either to compensate for a reduction in income or a need to spend, some households and firms may increase their precautionary savings. Finally, falling house prices redistribute wealth. Those who already own houses and expect to trade down in future and realise a capital gain, are worse off. On the other side, those hoping to trade up or who are not yet on the housing ladder are better off (although the tighter constraints on lending may mean they have to save a bigger deposit to enter the market). The former will tend to reduce their consumption; the latter will tend to do the  4  BIS Review 114/2008  opposite. In a perfect market these two effects might balance out.

Events are still moving quickly, so I hope you will understand why I am not going to attempt a live commentary on events. I hope that the massive and far-reaching measures the US Government has now announced will restore greater calm and confidence in their banking system. Stabilisation of US markets and banks should have a beneficial knock-on effect on wider international markets too. But we will continue to monitor the situation closely, in consultation with our counterparts in the US and elsewhere, in order to judge whether any further measures are needed. Inflation outlook This morning I want to take a wider perspective and discuss how the credit crunch is affecting the wider UK economy and draw some medium-term lessons for economic policy. BIS Review 114/2008  1  And the first point to make is that the turmoil in financial markets has not been the only shock to our economy in the last 12 months. In any other week more attention would have been given to the fact that for the second successive quarter the Governor had to write an open letter to the Chancellor on behalf of the Monetary Policy Committee to explain why inflation was more than a percentage point away from the target of 2%. In fact inflation has risen from 2.1% in December to 4.7% in August and it seems set to peak above 5% soon. The immediate driver of that increase has been the international commodity cycle (Chart 1).
oil prices in the risk scenario stand at $ a barrel in 2018–2019, and fall to this level by the end of 2017. We have updated some internal parameters. They will be published today in the Monetary Policy Report. We have kept those predictions in the scenario with growing oil prices, at $ there have also been some minor revisions but general trends remain unchanged. In essence our estimates have not changed since last December. RBC Media Holding’s QUESTION: Two questions, please. First. You have cited many factors which favour the rate cut, but the significance of constraining factors remains relatively unclear. Do they include uncertain fiscal policy and reshuffles in the Ministry of Economic Development? Could you please repeat what prevents you from reducing the rate more rapidly and why the rate of reduction is 0.25 pp – is this a new norm? And question two. Economists say that the key rate is losing significance in terms of the economy, i.e. businesses are watching it less closely. Do you see any considerable difference between 9.75% and 9.5%? How important is the key rate at this time? ELVIRA NABIULLINA: Indeed, we took into account many positive factors as we made the decision to cut the rate, however inflation risks still persist. We consider them more likely to be medium-term than shortterm risks. Monetary policy takes effect with a lag of six to nine months, therefore when in making a decision we have to bear in mind its effects not only this year, but also in 2018.

On the subject of the fundamental value of the exchange rate. It’s true that this concept is employed by many experts, and so too by us; we have expressed this on several occasions. However, this concept must be treated with great care. My view is that this is a very conditional concept. We at the Bank of Russia have a number of models to measure this basic reading of the exchange rate. It would be fair to say that we estimate this deviation to be much smaller than does the Ministry of Finance. According to other models these deviations appear smaller. But in any case, what exactly is the fundamental rate of exchange? This is the rate of exchange necessitated by the current balance of payments, current account and capital outflow combined. Yet it is anyone’s guess to gauge the exact influence of basic and short-term drivers on this value. This is, as I have previously stated, a very conditional concept. As we see it, in a floating exchange rate environment, as we see it, no matter what deviations are in place, the impact from objective factors will ultimately result in an equilibrium which brings the interests of exporters, importers and borrowers into balance. In our view the issue should be addressed in this way. Second. Our reserve replenishment policy.
Monetary and fiscal policies are being implemented with a high degree of expansiveness, so as to limit any effects of the current international crisis as much as possible. This is, undoubtedly, very good news. Thank you very much. References Ahrend, R., B. Cournède, and R. Price (2008), “Monetary Policy, Market Excesses and Financial Turmoil” OECD Economics Department Working Paper # 597. Becerra, S., L. Ceballos, F. Córdova, and M. Pedersen (2009), “Evolución reciente de las tasas de interés de colocación,” Manuscript, Central Bank of Chile. Brunnermeier, M.K. (2009), “Deciphering the Liquidity and Credit Crunch 2007-08,” Journal of Economic Perspectives 23(1): 77-100. Central Bank of Chile (2009), Monetary Policy Report, January. De Gregorio, J. (2008a), “Estabilidad de precios y estabilidad financiera: algunas reflexiones en la actual crisis financiera global,” Economic Policy Paper # 28, Central Bank of Chile. De Gregorio, J. (2008b), “Monetary Policy and Commodity Prices in Turbulent Times 2008,” in Katuri Nagaswara Rao (ed. ), Global Financial Markets: Managing Turbulence, The Icafai University Press. Diamond, D.W. and R. Rajan (2009), “The Credit Crisis: Conjectures about Causes and Remedies,” NBER Working Paper # 14739. Felton, A. and C. Reinhart (2008), “The First Global Financial Crisis of the 21st Century,” CEPR-Voxeu.org. García, P. and R.O. Valdés (2005), “The Inflation Process in Chile: Changes and Stability,” Manuscript, Central Bank of Chile. Glaeser, E.L., J. Gyourko, and A. Saiz (2008), “Housing Supply and Housing Bubbles,” Journal of Urban Economics 64(2): 198-217. Taylor, J.

In this way, although we will not be spared the effects of the global crisis, we can indeed mitigate their impact. Now, I will start out by presenting a short discussion on the relationship between monetary easing and the origin of the current global crisis. Then, I will discuss the evolution of inflation and output. Next, I will address monetary policy decisions and I will close this presentation with some final remarks. On the origins of the crisis: monetary policy or financial regulation? A lot has been written on the causes of the crisis and, certainly, this is not the time to analyze the myriad of factors which led to it.1 But I certainly do want to talk about the interrelationship  1  Interesting analyses on the origins of the crisis may be found in the articles compiled in section I of Felton and Reinhart (2008). For more recent discussions see Brunnermeier (2009), and Diamond and Rajan (2009). BIS Review 41/2009  1  between the performance of the financial system and the abundant liquidity after the interest rate cut in the United States following the plunge of the high-tech bubble in 2000. Many blame the US expansionary monetary policy as the main cause of the crisis. Such policy would have caused the housing bubble. However, monetary policy easing does not necessarily bring about bubbles in asset prices or even adjustments that may cause such striking effects as the ones we have witnessed in the United States.
The implementation of this PvP link comes at an opportune time in view of the need to better manage the increased settlement risk due to the rapid growth in FX transactions and to assist financial institutions, in particular banks, to comply with the standards recommended by the international standard setting bodies. Driving the rapid growth in FX activities of the regional currencies has been Asia’s expanding share in global trade and investment flows. In the past decade, trade between Asia and the rest of the world had grown tremendously. Asian economies’ export of goods and services, as a percentage of the world total, increased significantly from 29% in 2002 to 38% in 2012, amounting to $ trillion. Asian economies’ total imports also increased significantly in the same period from 32% to 47%. Meanwhile, the investment flows between Asia and other regions have also intensified. Supported by the robust trade performance and increasing capital flows, activities in the regional FX market have increased significantly. According to the latest triennial survey on global FX market activity of the Bank for International Settlements (BIS), the average daily turnover in FX transactions involving Asian currencies increased by 172% from $ billion equivalent in 2001 to $ billion equivalent in 2010. BIS central bankers’ speeches  1  Against this backdrop of rapid growth in global FX activities, the Basel Committee on Banking Supervision issued an updated guidance on management of FX risk in February 2013.

Jaime Caruana: What’s next for Basel? Remarks by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the “Basel II: Reality Check” Conference, sponsored by Financial Times Business and the Banker Magazine, London, 10 November 2004. * * * 1. Introduction and overview  I would like to thank the Banker magazine and the Financial Times Business for inviting me to join this important discussion today on the practical implications of the new capital framework for banking organisations. It is an honour to represent the Basel Committee on Banking Supervision at this event. The organisers have selected a provocative and highly appropriate title for this conference. As I will discuss this morning, the “real” reality checks for Basel II lie just ahead. Basel II’s effectiveness in encouraging improvements in risk management, and in motivating banks to hold adequate levels of capital, will depend principally on the degree to which it reflects the true risks and rewards facing banks. That is the focus for banks and supervisors now as we work toward the implementation of the new framework. Will Basel II be effective in promoting sound risk management? I am confident that the answer is yes on at least two levels. On the microeconomic level, I believe that Basel II will help to increase the rigour and comprehensiveness of an individual bank’s decision-making.
It is seldom possible to demonstrate clear effects of interventions and that could not be done on this occasion, though the depreciation was broken during the day in question. Later in the autumn the krona appreciated again. BIS Review 111/1999  2  It seems to me that two main factors lie behind the krona’s appreciation in the past twelve months. One is a normal rebound from last autumn’s excessive weakening. This happened during the winter and was particularly pronounced because the euro’s introduction at the beginning of the year had made some investors concerned about the krona. The other factor is the increasingly clear picture of a strong economy with a budget surplus, low inflation and high growth. Moreover, the higher growth in Sweden compared with the euro area has influenced appraisals of the respective levels of interest rates. Specific events and statements may have played a part in the timing of the appreciation but it seems to me that the crucial influence has come from more fundamental economic considerations. The discussion of monetary policy has also acquired a new dimension. The procedure with the new Executive Board from the beginning of this year enables Board members to differ from the current majority view of inflation prospects and monetary policy measures. Board members have in fact differed on a number of occasions, as is clear from the published minutes. On two occasions, divergent opinions have also been registered regarding the level of the repo rate.

That is probably not happenstance. It may jeopardise internal cohesion and besides making monetary policy decisions, we have to work together in running an organisation. Then there is the risk that a policy of openness inhibits the internal discussion. (That is the background to the published minutes not reporting exactly what each member said at the meeting.) A third problem and the one that has attracted most attention has to do with our external communication. Before commenting more on the third point, it is perhaps advisable to point out that these problems had already been recognised when the new system was launched. That I mention them here should not be taken to mean that they have caused concern since then. More personification The changes from the beginning of this year were prepared at the Riksbank last autumn. After contacts with the Bundesbank, the Bank of England and others, a structure was drafted for the communication of monetary policy. Eight to ten monetary policy meetings a year would be held at set times. Press notices and inflation reports in connection with these meetings would form the corpus of our joint communications. Divergent opinions would not be revealed before the minutes have been published some time after each meeting. 3  BIS Review 111/1999  This arrangement does impose some restrictions on the outspokenness of Board members.
We have worked closely with our colleagues in the International Accounting Standards Board to avoid conflicts between Pillar 3 and the broader accounting standards. In fact, the Committee views Pillar 3 as a further refinement of the accounting standards that apply to banks’ specific exposures. Because we recognise that we have much to do in this area, we will continue to monitor accounting and market developments in the light of Pillar 3. Our dialogue with accounting standards-setting bodies and the accounting profession will continue to grow in the years to come. Conclusion: Basel Committee & the Global Research Community I hope that this conference will help to identify the policy options that supervisors have in order to address emerging issues in risk management, financial reporting, and transparency so that we can work toward a more stable banking system. We can expect the financial services industry to quantify new aspects of risk while refining the existing measurement and management techniques. Innovation and advances in the banking industry’s quantitative tools will open up many new areas for us to study that may enhance our ability to interpret financial information, to aggregate and report data, and to leverage the power of markets to motivate responsible business behaviour. On that note, on behalf of the Basel Committee, I would like to thank the research community in member agencies, in academic circles, and in the industry for your contributions to our work.

The most challenging recommendations found in the report are those requiring a change in mindset, such as the identified lack of awareness of AML risks in non-bank financial institutions and the wider professional community, resulting in a very low number of suspicious transactions reports  Page | 4  being filed by them. We all have a collective responsibility and nobody can procrastinate in getting our house in order. On a related note, our size will always present diseconomies of scale for large correspondent banks when evaluating their risk-adjusted returns from Maltese business. The risk aversion of these banks is impacting more heavily on the smaller jurisdictions. It is essentially a market failure, a true manifestation of asymmetric information. This does not mean, however, that we should be complacent and fatalist. While banks and authorities continue to search for technical solutions, we are all duty-bound to endeavour to convince these banks that they are dealing with a reputable jurisdiction and that our market players are fit-for-purpose in an age of increasing global financial transparency. These correspondent banks have neither the time nor the interest to understand risky business models or the overly-complex structures of your clients. As practitioners, you are the system’s first line of defence. The more layers of controls in the system, including a thorough understanding of clients and business models, and the less complex their corporate structure, the easier it is for banks to service them. There is indeed purpose in our cause to safeguard what we have achieved so far.
I think it is correct to say that second only to the articles of association, a Board Charter is probably the most important corporate governance policy document which defines the respective roles, responsibilities and authorities of the board and management in setting the direction, the management and control of an organisation. It is a document that is useful to both old and new directors, particularly those who may not be familiar with how a company conducts its business and what is expected of them as directors. In this respect, the charter serves the following functions among many; One-source reference – a board charter is a one-source document which clearly sets out how the board and directors are to perform their roles. As an induction tool – a board charter acts as an induction tool for new directors and senior managers. Standard key board documentation – it contains documentation templates for such things as the board meeting agenda and board paper format. Having said this, I need to place a rider by stating that these charters that you will be examining this morning only set out minimum standards of what the boards are required to do. Some institutions present here may already have charters which are more elaborate than the model charters. That is fine as you will not be required to downgrade your existing charters. But for those institutions which might not have any charters, it may well be useful to consider customising the model charters.

Her findings provide some support for a decrease in volatility around monetary policy meetings, but no strong evidence to suggest that financial market volatility around the publication of new data has changed after Norges Bank began to publish interest rate forecasts. Another study that might provide useful input is Ehrmann and Fratzscher’s (2007) analysis of developments in US market rates in the period between monetary policy meetings under two different communication regimes. I will close by concurring with Blinder and colleagues (2008) when they write that: “… the publication of projected paths for the central bank’s policy rate appears to be the “new frontier” in central bank communication. But it has been practised in so few countries for so few years that we have little empirical knowledge of its effects as yet. As more data accumulates, this should be a high-priority area for future research.” It is reassuring to know that the economist that has begun this important work is Lars Svensson. References Blinder, Alan S., Michael Ehrman, Marcel Fratzscher, Jacob De Haan and David-Jan Jansen (2008): “Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence”, Journal of Economic Literature 46, 910-945. Ehrmann, Michael and Marcel Fratzscher (2007): “Social Value of Public Information – Testing the Limits to Transparency”, European Central Bank Working Paper 821. Holmsen, Amund, Jan F. Qvigstad, Øistein Røisland and Kristin Solberg-Johansen (2008): “Communicating monetary policy intentions: The case of Norges Bank”, Norges Bank Working Paper 2008/20.