samchain/econo-pairs-v1 huggingface dataset:
Nonetheless, we have seen a clear shift in financial market sentiment. This shift is reflected in the fall in European government bond yields. The clearest indication of optimism can be found in equity markets. Chart 6: Government Pension Fund Global With the upswing in equity markets, the value of Norway’s financial wealth is increasing. Close to 60 percent of the capital in the Government Pension Fund Global – Norway’s sovereign wealth fund – is invested in global equity markets. When times are good in the global economy and optimism is on the rise, the return on the Fund increases. Conversely, turbulence and low risk willingness in the market have a negative effect on the Fund’s assets. This is a risk we have to live with to achieve solid returns over time. Because of the Fund’s long-term horizon, short-term risk tolerance is high. We can exploit this by sitting tight and engaging in countercyclical investment. The Fund’s size also allows us to reduce risk by spreading our investments across many countries. Norway has become a global financial investor. Through the Fund’s investments, Norway increasingly takes part in value added generated in other countries. Over the past hundred years, growing global trade and cross-border flows of capital and labour have been important factors driving economic progress. At times, the principles of free trade and capital movements have been set out of play. Walls have been erected between countries in the form of trade barriers and restrictions on capital flows. This has not been successful.

When income growth is high, it is natural that some of the increased wealth will be reflected in a greater preference for leisure. It is nevertheless telling that the number of hours actually worked is considerably lower in Norway than among our main trading partners, despite very low unemployment in Norway. Generous transfer schemes and other aspects of our welfare system induce many to exit the labour force – wholly or partially. In recent years, the high level of labour immigration has compensated for this. Nonetheless, this situation does not seem sustainable. Reforms that provide stronger work incentives are needed and should be implemented in anticipation of an ageing population. The pension reform was an important step in the right direction. Chart 16: Productivity growth has declined What about the other factor that is crucial to growth? Mainland productivity increased markedly in the 1990s, partly owing to a number of structural reforms. The banking sector was rationalised after the crisis. The tax reform set the stage for profitable investments and business sector restructuring. Improved competitiveness and the development of the oil industry facilitated the rapid integration of new technology by firms. Productivity growth remained relatively high up to around 2005. But since then it has declined. The decline has been more pronounced than among our trading partners. BIS central bankers’ speeches  7  Chart 17: Growth in real capital Productivity is closely linked to capital stock per worker. Growth in real total fixed capital formation for mainland Norway fell during the financial crisis.
In particular, the definitions of capital must not be watered down and risk-weighted asset calculations must be done in a consistent manner around the world. An identical portfolio of assets should generate a comparable amount of risk-weighted assets regardless of the country in which the bank’s home office is domiciled. With respect to standards for financial market infrastructures, the Principles for Financial Market Infrastructures, which were published last month, are an important step forward. These principles establish the minimum standard for important FMIs around the world. But the establishment of these standards is just the first step. National authorities now need to ensure that their domestic regulatory regimes embody these principles, and these national regimes have to be credibly assessed for ongoing conformance to the new standards. Global standards for financial market infrastructures are necessary if we are to build a safe global system of central counterparty clearinghouse (CCPs) infrastructures though which to clear standardized over-the-counter derivatives trades around the world. For national regulators to be comfortable with such an arrangement there has to be an appropriate level of information exchange and cooperative oversight, and the Principles explicitly mandate this. Although cross-border information exchange and cooperative oversight are certainly not new – the coordination of currency settlement around the world through CLS is one important example – the model has to be further developed and adopted more broadly across a wider range of important global financial market infrastructures.

Impact of macro conditions on the global hedge fund industry The macro economic environment has left global institutions, including hedge funds, grappling with historically low interest rates, volatile financial markets, and an environment that has grown averse to risk taking. As hedge funds cope with a more demanding operating and economic environment, the industry will have to deal with two key challenges. Firstly, soft returns amidst the volatile environment. The average hedge fund returns across strategies was negative 4.6% in 2011, with most of the losses occurring in 3Q 2011 when global equities declined by around 17%. 3 Whilst hedge fund performance this year-to-date as at end-August 2012 was up 3.8%3, the outlook remains uncertain and I think hedge funds may struggle to provide consistent returns over time. Secondly, a more challenging fund-raising environment. Business and compliance costs have increased due to more stringent manager selection criteria by investors and enhanced global regulatory standards. As a result, funding gestation periods have lengthened and failure rates have increased. Hedge funds now require larger assets under management to breakeven and remain economically viable. Managers without a strong track record will be in for a hard time. Against this backdrop, some consolidation of the global hedge fund industry is to be expected. 1  MAS: Recent Economic Developments in Singapore – Sep 2012  2  IMF: World Economic Outlook, October 2012. 3  Hennessee Hedge Fund Indices.
1 3/4  BIS central bankers' speeches  1 ECB (2018), “Special feature A: Financial development, financial structure and growth: evidence fromEurope”,  Financial integration in Europe. 2 ECB (2016), “Special Feature A: Financial integration and risk sharing in a monetary union”, Financial  integration in Europe. 3 ECB Financial Stability Review, (2019), forthcoming, May. 4 European Commission (2019), “Capital Markets Union: progress on building a Single Market for capital for a  strong Economic and Monetary Union”, European Commission contribution to the European Council. 5 ECB (2018), “Special feature B: Integrating euro area corporate bond markets: benefits and potential financial  stability challenges”, Financial integration in Europe. 6 The ECB’s price-based composite indicator of financial integration shows a pronounced increase during 2017,  while quantity-based integration has stalled since 2015 (see Indicators of financial integration in the euro area). 4/4  BIS central bankers' speeches

In fact the scope for SONIA adoption in markets beyond derivatives is a key issue we want to explore – and will be discussed in the panel sessions later today. We do not underestimate the complexity of reducing the financial system’s Libor dependency. We are at the beginning of the process, and at this early stage the challenges are not all clearly in focus. That is why the engagement, help and support of the wider community of users of sterling interest rate benchmarks – issuers, investors, banks, as well as dealers – will be essential. The Working Group needs your help to identify the impediments to transition as you see them – and, equally, to identify where there are opportunities. That is why you are here today. The way ahead So what happens now? I have argued that, over time, we need to see a broad transition away from sterling Libor towards SONIA. That will require changes in the behaviour of firms that carry some cost. But, where SONIA better matches the risks firms are hedging, there will be long-term benefits. Moreover the financial system will be safer. The Bank has already laid the groundwork for transition by reforming SONIA and creating the risk-free rate working group. We will continue to use our convening power to support the Working Group in driving adoption of SONIA. We will help market participants to understand changes in the environment and how they might be affected.
At the same time, with the integration of prudential supervision into the central bank, the twin peaks model strengthens the capacity to preserve the stability of the financial system by promoting the necessary coordination between the management of the banking sector’s liquidity (a function which corresponds to the central bank) and the monitoring of credit institutions’ solvency soundness (which prudential supervision looks after). The predominance of the twin peaks model in the various national jurisdictions of the EU has scarcely been affected by the emergence of two new supervisory functions: the management of the resolution of non-viable institutions and the adoption of macroprudential policies to prevent the emergence of potential macro-financial imbalances and mitigate their destabilising effects. As a general rule, the orderly resolution function has been allocated within the realm of the prudential supervisor. In the case of macroprudential policy, there is broad consensus that it is the central bank that should exercise leadership of macro-financial stability committees where government representatives and other supervisors may also participate. Hence, in those EU countries where the twin peaks model has been adopted (such as the United Kingdom, France, Italy, the Netherlands and Belgium), the central bank not only acts as the prudential supervisor of all types of financial institutions, but in addition, depending  2  BIS central bankers’ speeches  on the case, and by means of special committees and inserting Chinese walls between the different functions, it also manages or leads resolution and macroprudential policy measures.

Moreover, although the ECB’s supervisory decisions are formally adopted by its Governing Council – which also defines monetary policy – these are prepared and pre-agreed by an independent Supervisory Board, meaning that the Governing Council acts only under the principle of non-objection. Hence, when defining the institutional model of the banking union, the European legislator has set great store by preventing conflicts of interest between micro-and macroprudential supervision and monetary policy, on one hand, and between supervision and bank resolution, on the other. The aim is to mitigate the risk of monetary policy, geared to maintaining price stability, being tainted by considerations relating to financial stability, and to separate as far as possible the policies aimed at preventing solvency crises, which are pursued by the Single Supervisory Mechanism, from those geared to managing such crises, which are the remit of the Single Resolution Mechanism. The appropriate functioning of this model, based on the principle of separation, nevertheless requires the intense cooperation and coordination of the different authorities involved. In the case of the interaction between monetary and prudential policies, the necessary cooperation arises from the complementarity, at least in the medium term, between macroeconomic stability and financial stability and, above all, from the potential impact of the instruments available in one area on the objective pursued in the other.
We will enrol eligible applicants in Deal Fridays, a programme jointly organised by MAS and Enterprise Singapore, where they will gain access to the investor community. 7/8  BIS central bankers' speeches  Conclusion The future of Money, Finance, and the Internet will have far-reaching effects on economies and societies. It is important that public authorities and the financial and technology communities work together to shape that future, so that Money, Finance, and the Internet can be forces for good, helping to expand economic opportunity, enhance social inclusion, foster stability, and protect our planet. Ultimately, Money, Finance and the Internet must serve the people who use them. MAS is committed to partnering you on this exciting journey. Have a great FinTech Festival! 8/8  BIS central bankers' speeches

A short list of the lessons should reflect all these aspects: what we have learned or think we have learned about the causes of the crisis; about the efficiency of the institutional texture and the array of instruments at hand; and, last but not least, about the most appropriate positioning in the event of a crisis. With these criteria in mind, I will refer to nine lessons, of which seven are universally valid and two hold particularly true for emerging economies, such as Romania. In order to root out any possible confusion, I would like to point out from the very beginning what these lessons do NOT deal with. First, they do not address the issue of shorter or longer economic cycles and do not suggest that a crisis means the end of an economic cycle. Second, the lessons do not provide an answer to the question whether we could ever avoid a financial crisis. 1. Low inflation is not a sufficient condition for ensuring financial stability in the long run. Past experience appeared to have confirmed the opinion that inflation is the major source of financial instability. High inflation episodes were usually accompanied by pronounced financial instability and banking sector crises or were followed by recession after the authorities took inadequate measures to curb inflation. The current global financial crisis became manifest after nearly two decades of relatively low, stable inflation. A number of factors caused low inflation to coexist with ample liquidity.
Getting our core job right, and so maintaining financial stability, is far and away the most important thing we can do to support the fight against climate change. Achieving net zero will not be possible unless our societies make considerable investments in developing and disseminating new technologies, and will require major changes across the economy. A stable financial system can support households and businesses through these changes, and channel investment where it needs to go to support the transition. Transitioning to net zero will be a major challenge for our institutions and societies even in a benign economic environment – doing so without confidence in the basic functioning of the financial system would be near impossible. It is therefore vital that firms can withstand risks to their safety and soundness, including those that arise as a consequence of climate change – both ‘physical’ risks like flooding and extreme weather events, and ‘transition’ risks that arise as the economy moves away from carbon-intensive activities. Firms therefore need to understand, at a granular level, how their balance sheets and business models are exposed to both present and future climate risks, so that they can take the right risk management actions today. This includes investing in their data and modelling capabilities, and  Page 3  carefully scrutinising the data they get from third parties. It means ensuring Boards and senior executives see climate risk as a strategic priority. [3] And ultimately, it means ensuring firms hold sufficient financial resources to absorb losses arising from climate change.

In sum, initiatives such as the register of certain crypto-asset service providers are a step forward. But they should not be interpreted as authorisation comparable to that granted to banks, nor do they mean that the Banco de España performs any supervision of their activities. These examples are a sample of the initiatives which are under way. In any event, beyond the difficulties inherent to any work involving international coordination, the task at hand is, for different reasons, particularly complex. First, the buoyancy of this market makes it difficult to provide a regulatory response. Second, the decentralised nature of the initiatives sometimes makes it difficult to identify a contact to whom the measures may be addressed to or who can be designated as a counterparty. This problem is exacerbated by the absence of a clear jurisdictional framework. Third, given the complexity of these assets and their associated risks, it is difficult to identify and coordinate the different relevant (not only financial) regulators and supervisors, even within each country. Finally, there are important information shortcomings, not only in quantitative terms, but also in terms of reliability and consistency. 34  See  President’s  Working  Group  on  Financial  Markets  (2021),  “Report  on  Stablecoins”,  available  at:  https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf. 35  https://www.congress.gov/bill/117th-congress/senate-bill/3970/text?r=7&s=1. 36  CNMV Circular 1/2022 of 10 January 2022.
Over time a policy that quickly subdues inflationary impulses would probably result in more stable inflation, but there would be a risk of substantial fluctuations in the real economy. We have chosen a two-year horizon for monetary policy because this is considered to give sufficient scope in most cases to ensure a good and stable development of the real economy. However, the rate at which it is desirable to bring inflation back on target in an individual case depends on what shocks  2  BIS Review 96/2006  the economy has suffered and how substantial they are. Sometimes the deviations from target can be so large that there is reason to allow inflation to return to target beyond the normal two-year horizon. In these cases, we shall explain this in connection with our decisions. Back when the new Sveriges Riksbank Act came into force in 1999 and a new Executive Board entered office, the Riksbank published a clarification of monetary policy, where it was pointed out that the horizon might need to be longer when the economy was subjected to large shocks 1 . The new element is that we are clearer on the point that the choice of time horizon concerns a desire to alleviate the consequences for the real economy. Another new element since last year is that we make forecasts under the assumption that the repo rate will develop in line with market expectations, as these are reflected in implied forward rates.

When employment increases it is reasonable to assume that cost pressures will also rise. Our assessment is that energy prices will not push up inflation in future, but that rising unit labour costs will contribute increasingly to inflation. Our assessment throughout the year has been that the outlook for inflation and the economy indicates that it is reasonable to assume the repo rate will need to be gradually increased. This will ensure that inflation is close to the target and that developments in the real economy are balanced. Given this, we chose to raise the repo rate by 0.25 percentage points at our monetary policy meeting in August. We have thus raised the repo rate four times so far this year and my assessment is that it is reasonable to assume that further increases will be necessary. However, it is a couple of weeks until my Executive Board colleagues and I meet to discuss the monetary policy stance. In connection with this meeting we will publish a new Inflation Report containing new forecasts for inflation and growth over the coming years. Let me now move on to the more general discussion on how we conduct our monetary policy. In May we published a new document on our monetary policy strategy entitled "Monetary policy in Sweden", which described the Riksbank's objective and strategy. So what does this document contain, and why did we decide to publish it? I intend to discuss these questions now.
Every fortnight, we invite Jean-Claude Juncker, the President of the Eurogroup, and the commissioner Joaquín Almunia to our council. Could there be a better way to understand what's going on in the central bank than to be the witness of the discussion of the Governing Council? I am also invited by the Eurogroup each month. We are able to meet three times a month which is a frequency which has no equivalent to my knowledge. DIE ZEIT: Juncker argues a dialogue of three persons would be deeper than a discussion in the whole ECB-Council? Trichet: Again the Treaty organises a very frequent relationship. DIE ZEIT: As State Secretary of the French Tresor you pursued the idea of a stronger common economic policy in Europe. Now you are even stricter than the former Bundesbank in explaining why the ECB must be independent. Trichet: I apply the Treaty! Read article 108. DIE ZEIT: We have read Article 111 that shares the responsibility for the exchange rate between the ECB and the Finance Minister of the European Union Trichet: The Treaty organises the present responsibilities exactly as they were organised in Germany since the creation of the Bundesbank or in France since the setting up of an independent Banque de France. DIE ZEIT: Wim Duisenberg once said, the Bundesbank is like Cream - the more you whip it the harder it gets. The same is true for the ECB. Trichet: It is a poetic metaphor. But in my view, we should not be influenced in any direction.

However, monetary policy will do its part to ensure the macroeconomic and financial stability that can help in achieving progress in these areas. Moreover, even with respect to macroeconomic stability, monetary policy could use an assist from fiscal policy. It is important that monetary policy and fiscal policy work together and not at cross purposes to be able to bolster the economy when it needs support. Thank you for your kind attention. I would be happy to take a few questions. 1 See New York City’s Return from the Brink, Remarks at the Lotos Club, October 19, 2016. 2 Raj Chetty, Nathaniel Hendren, Patrick Kline and Emmanuel Saez. “Where is the Land of Opportunity? The  Geography of Intergenerational Mobility in the United States.” Quarterly Journal of Economics, Vol. 129, No. 4, 2014. 6/6  BIS central bankers' speeches