samchain/econo-pairs-v1 huggingface dataset:
Mr President, Ladies and Gentlemen, this Anniversary marks 40 years of dynamic transformations and achievements accomplished by the Bank. Some of the challenging issues that the Bank has confronted in the past and likely to do so in the future form part of the selected topics of Papers to be presented and discussed at this Conference. This conference is therefore expected to provide a platform for sharing ideas required for practical solutions aimed at improving the Bank’s deliverables. In doing so, however, we must be cognisant of global trends in central banking. Madam Chairperson, since its establishment in 1964, the Bank of Zambia has played an important role in the economy by formulating and implementing monetary, regulatory and supervisory policies in its quest for price stability. Over this period, progress has been made towards the deepening of financial markets, specifically in the areas of monetary policy management, and the foreign exchange market. In addition, substantial improvements to the legislative and regulatory frameworks for banks and financial institutions have been attained. Ladies and Gentlemen, during the pre-liberalisation period from 1964 to 1991, monetary policy was largely characterised by administrative controls on interest rates and the exchange rate. Although the Banking Act of 1965 was created to enable the implementation of monetary policy, in the preliberalization era monetary policy involved multiple objectives, such as, financing agriculture and parastatal companies, and providing guarantees for export marketing, which at times presented the Bank with conflicting roles as a monetary authority.

Regarding the tighter liquidity requirements (modeled as a 25% increase in the holding of liquid assets, combined with an extension of the maturity of banks’ wholesale liabilities) MAG’s estimations point to a median increase in lending spreads of 14 basis points and a fall in lending volumes of 3.2% after four and a half years. This is estimated to be associated with a median decline in GDP in the order of 0.08% relative to the baseline trend. An IMF study dating as of February 2012, reports similar results to MAG’s research, finding that in the absence of any monetary policy response, a permanent synchronized global increase in capital requirements for all banks by  1  For instance the EBA requirements and the Volcker Rule, within the Dodd-Frank Law in US. 2  Banco Bilbao Vizcaya Argentaria. 4  BIS central bankers’ speeches  1 percentage point would cause a peak reduction in GDP of around 0.5 percentage points, of which around 0.1 percentage point would result from international spillovers. Their findings show somewhat higher losses in EMEs as compared to AEs (0.74 percentage point loss in GDP in EMEs as compared to 0.46 percentage points in AEs) due to higher estimated spillover effects. The third point of transmission relates to development of financial markets EE’s. The development of deep domestic financial markets can improve the economy’s ability to absorb shocks and manage financial risks.
Jan F Qvigstad: Understanding macroprudential regulation Introductory remarks by Mr Jan F Qvigstad, Deputy Governor of Norges Bank (Central Bank of Norway), at the workshop on “Understanding macroprudential regulation”, organised by Norges Bank, Oslo, 29 November 2012. *  *  *  Dear all, It is a pleasure to welcome you to Norges Bank for this workshop on Understanding Macroprudential Regulation. The topic of the workshop is timely; Authorities in all parts of the world are now actively debating macroprudential policy. Academic research provides a necessary foundation, both for the design and the implementation of such regulations. During my years of service here at the central bank, and also some years at the Treasury, I have had my fair share of dealings with banking and financial crises in Norway. In the 1990s, Norway was hit by a severe banking crisis. Three of the four largest banks failed. Required capital injections were more than three and a half per cent of GDP. This is substantially more than the percentage share that euro area banks currently need to recapitalise. Ever since the Norwegian banking crisis in the early 1990s, our banking industry has been regulated more strictly than banks in comparable countries. For instance, bank capital definitions have been tighter, while packaging loans into complex instruments was in practice not permitted until 2007. Financial supervision has also been rather strict.

As a result, the Norwegian financial system only had limited exposure to the subprime mortgage market – notwithstanding some municipalities in the northern part of Norway that got involved, with a less than full understanding of inherent risks. Our banks were therefore relatively unaffected by the recent crisis when it comes to credit risk. The downturn that our economy experienced in 2009 was modest in relation to other countries – but this is of course also due to the composition of our production and exports, with oil accounting for a large share. More than two decades ago, in the early stages of the Norwegian banking crisis, Norges Bank provided a large liquidity loan to a savings bank. The bank, however, soon became insolvent. We learnt how fast illiquidity can turn into insolvency. At the time, the bank was rescued partly by Norges Bank writing off its loan. This incident showed that it was important to clarify the division of responsibilities between the central bank and the fiscal authorities. The Government Bank Insurance Fund was established, which would be able to extend loans and inject capital into distressed banks in the future. The aim was to make sure Norges Bank avoided intruding into the arena of the fiscal authorities. It is not up to an independent central bank to spend taxpayers’ money. When Norwegian banks’ funding dried up in the aftermath of the Lehman Brothers collapse, government bonds were swapped for covered bonds issued by banks.
Under framework conditions of this nature, it will not be very fruitful to provide detailed estimates of the various demand components in the economy. In some cases, the inflation projection itself may lose some of its informational value. In the UK, there is at times greater interest for the uncertainty surrounding the projection, illustrated by the fan charts, and in the minutes of the monetary policy meetings, than in the inflation report and the actual inflation projection. Detailed projections may increase the possibility of checking the consistency of projections over time. They also provide a basis for evaluating whether short-term indicators are in line with the developments expected by the central bank. On the other hand, very detailed projections may suggest that the central bank is more certain about developments than there is actually reason to be. Norway  BIS Review51/2001  9  has a long tradition of making detailed forecasts. Economic agents know from experience that point forecasts are very uncertain and presumably regard them with a healthy scepticism. The analysis and projections in the Inflation Report are conditional on a number of economic variables such as fiscal policy, exchange rates and the interest rate. A different trend in these variables could also result in a different course for both the real economy and nominal developments. The assumptions on which the inflation forecast is based must be reasonable and fairly realistic if the forecasts are to function as a basis for decision-making.

In the Inflation Report 4/2000, we presented our view of how interest rates affect price inflation in Norway. In principle, the more discretion and flexibility the monetary policy objective implies, the more complex and subtle communication must be. Monetary policy requires the continuous exercise of discretion. The exercise of this discretion is limited, however, by Norges Bank's mandate and our interpretation of it. Furthermore, we have contributed to restricting the exercise of discretion by being transparent in our response pattern, our analyses of economic developments and our assessment of the results of the monetary policy that has been conducted. Central bank communication varies from one country to another. The various solutions reflect different objectives and institutional parameters as well as different histories and cultures. Therefore, in my view, we should be cautious about recommending a specific country’s choices and solutions as a norm. The Reserve Bank of New Zealand is required by law to submit a Monetary Policy Statement at least twice a year, and these reports are published quarterly in the form of inflation reports. The reports include an account of an interest rate path that will contribute to keeping inflation consistent with the target. The official Cash Rate, New Zealand’s key interest rate, is reviewed once between reports, at a pre-announced time. Decisions regarding the Cash Rate are published immediately, accompanied by a commentary. The Reserve Bank Governor is responsible for achieving the target, and for making decisions.
Rising asset prices and increased household wealth are also contributing to the growth of private consumption. Moreover, the strong economic activity and good stock market trend should contribute to a favourable development of investment. Diagram 2. GDP growth between 1994 and 2002  2. GDP growth 1994 - 2002  5 4  Average 1994-2002  3 2 1 0 1994  1995  1995  1997  1998  1999  2000p 2001p 2002p  Sources: Statistics Sweden and the Riksbank’s forecast for 2000-2002  The Riksbank foresees GDP growth rates of 4.0% this year, 3.5% in 2001 and 2.6% in 2002. These are high rates compared with the 1970s and 1980s. By itself, the upward revision of GDP growth implies that unutilised resources in the economy are brought into production more quickly. The strong economic activity points to a higher rate of wage increases in the coming years. At the same time, it is possible that changes in the labour market will hold wage increases down. A growing proportion of wage increases is being allocated locally, for example. Moreover, inflation expectations among labour market organisations are still in line with the target. This means that, as we have seen in recent years, a real wage increase can be secured without such a large increase in nominal wages. BIS Review 28/2000  4  Historically high real wage increases in recent years should likewise contribute to a moderate development of wages.

Mr Bäckström: The current situation for monetary policy in Sweden  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, before the Standing Committee on Finance, Stockholm, on 23 March 2000. *  *  *  In my opening remarks to your Committee six months ago I noted that the Swedish economy was developing impressively. Growth was stronger than many had counted on and inflationary pressure was moderate. New jobs were being created and unemployment was falling. Since then the economy has definitely continued to impress. Forecasters have had occasion to revise their assessments of activity successively upwards. GDP growth in 1999 amounted to 3.8% and the number of new jobs totalled almost 90,000 - the highest figure in thirty years. This has been accompanied by surpluses on the current account and government finances. Moreover, the upward revisions refer mainly to growth and employment. Forecast inflation has not been adjusted upwards to the same extent, which is a testimony to the good circle at present in the Swedish economy. Inflation in the past three years Measured in terms of the consumer price index (CPI), inflation has in fact been exceptionally low for three years; the average annual level has been 0.5%. This level for the period as a whole is made up of CPI increases of 0.9% for 1997, 0.4% for 1998 and 0.3% for 1999.
A possible solution to this coordination problem could be to establish a central mechanism entrusted with setting the euro area’s overall fiscal policy stance and responding to tail events, with national authorities focusing on medium-term goals and placing debt sustainability as their primary objective (see slide 7). This fiscal policy tool could be automatic, such as a common unemployment insurance scheme or a more general stabilising instrument dependent on the cyclical position. In any case, risk sharing must be accompanied by an incentive system that prevents negative cross-country externalities and moral hazard, something of utmost importance in a monetary union. Furthermore, I believe that such a central instrument would also be suited to tackling global challenges, such as climate change or the process of digitalisation, and might be a better option than national “golden rules”. These rules exclude specific types of public expenses from deficit calculations, on the grounds that these could be growth-enhancing and thus need to be protected. This option is attracting much attention in current EU debates. In particular, it is argued that in the current context, with countries having to expend a great deal of effort in the fight against climate change, such investments should be excluded from the expenditure target or budget balance in order to safeguard them from EU fiscal rules. However, a golden rule would add an additional layer of complexity to an already intricate system (see 6  slide 7) and would require the definition of the types of spending to which it ought to apply.

2  Second, the original design was not well-equipped to prevent the build-up of domestic macroeconomic imbalances with the potential to generate serious economic and financial instability for the euro area as a whole. The European Semester and the Macroeconomic Imbalances Procedure were established after 2010 to address this issue, but the experience so far seems to be mixed.1 Third, beyond what was stipulated in the no-bail-out clause, the Treaty did not envisage the creation of a crisis management framework. This was partly addressed later through the creation of the ESM in 2012 amid a very serious sovereign debt crisis affecting some of the largest economies of the European Union. Finally, and quite importantly, the Treaty had not envisaged the need for significant aggregate fiscal action to smooth the cycle and assist the common monetary policy. This was evident, for example, during the low inflation period after the euro area sovereign debt crisis, when the degree of coordination of fiscal policies provided for by the fiscal framework fell short of the aggregate stimulus that was needed to complement monetary policy. And, also as a consequence of this lack of pre-established aggregate fiscal tools, during the COVID crisis, an ad-hoc response had to be adopted, in the form of temporary, centralised fiscal instruments. First of all, the general escape clause in the SGP2 was activated, permitting a very expansionary fiscal stance at the country level.
The dosage of the drug may be increased as dependency rises, but eventually a fairly severe anti-dote of austerity may need to be administered to break the growing addiction. It may reasonably be argued, however, that, even if the underlying path of the real exchange rate is determined essentially by structural forces within the economy, monetary policy should be utilised so 1  In fact it is necessary to take into account all one's trading partners and thus arrive at the real trade-weighted or "effective" exchange rate - the REER. For ease of exposition, however, only the term "real exchange rate" is used in this paper. 2  The precise interpretation depends crucially on the set of prices or costs which is used in the calculation, but this aspect is not addressed here. 2  BIS Review 17/2002  far as possible to prevent excessive divergences from trend which may prove damaging to the economy. For example, if a currency is artificially strong for a prolonged period, a particular sector of the economy may become so damaged that it is incapable of recovering when the exchange rate eventually returns to equilibrium. In practice, however, it is extremely difficult to determine, at the time, whether a particular movement in the real rate represents a divergence from the equilibrium path or a fundamental shift in the path itself. At various moments over the past 20-30 years there may have been calls for a weaker HK dollar in order to preserve the local manufacturing sector.

The market for information and statistics There are market based statistics-producers in developed countries. The market agents are ready to pay a price in order to acquire such statistics. The producers of statistics conduct frequent market surveys, analyse results, supply them on line at a price and help market agents to create wealth. Unfortunately, in Sri Lanka, we do not have such market based statistics-producers. The collection and analysis of vital data that are useful to market agents are being done by a few governmental organisations. Like any other product supplied by the government, such data are also supplied as a public good free of charge. Even when the governmental agencies could sell statistics at a price, they do not venture to do so, because they are guided by such principles as “doing utmost benefit” to people as a social service. The country too, therefore, expects free goods from these governmental organisations. But this creates a problem known as “the agent-principal problem” in economics. The agent-principal problem The agent-principal problem is typical to any government service. It says that the agent who is a government bureau or a department or even a university does not have incentive to produce its output at its best. The principal who is the user of the service, on the other hand, is scattered and not in a position to influence the agent to improve quality.
Realised losses related to these investments have, as mentioned above, have been limited. The flipside of large book losses is that this portfolio has a high return, reflecting not only the increase in credit risk but also high liquidity premiums and fears and uncertainty in the market. The return, measured as the difference in the effective interest rate between the actual portfolio and the benchmark portfolio, is now close to two percentage points. History has seen a number of deep financial crises, and market conditions will return to normal in time. The final results of the management of the Fund’s fixed income portfolio since the beginning of the financial crisis cannot be deduced from the quarterly results while the crisis is at its peak. Values are not lost as long as borrowers fulfil their obligations. The Fund is prepared to retain ownership of a large volume of bond holdings until they mature in a few years. Moreover, unless the economic outlook goes from bad to considerably worse, the Fund will record a substantial excess return in the years ahead. Conclusion The Norwegian Pension Fund has been hard hit by the crisis. Norges Bank’s management results in 2008 were weak in both absolute and relative terms. Relative returns were significantly worse than might have been expected based on the investment strategy chosen. In the management of the fixed income portfolio, the crisis in the financial system revealed that risk exposure in the various mandates was not sufficiently independent.

We also focus on topics that influence the development and regulation of companies’ input factors – both regarding human resources such as labour, in particular children’s rights, and natural resources such as access to clean water and clean air. Norges Bank’s Executive Board has established a set of principles and a strategy for the exercise of ownership rights. Openness and transparency are key principles in the management of the Government Pension Fund – Global, and we aim to be as open as possible about our active ownership work. Our active ownership is practised in a number of different ways: through the exercise of voting rights, through dialogue and engagement with individual companies, through collaboration with other investors, through submissions to the regulatory authorities, and through research and public communication. We aim to vote at all general meetings of the companies in which the Fund has shares. We voted on 68 724 items at 7 871 general meetings in 2008. 4  BIS Review 58/2009  The impact of the crisis on the Norwegian Fund The Norwegian Fund has been hard hit by the crisis. In 2008, the total return on the Fund was a negative 23 per cent, the weakest in the Fund’s history. There was a negative return of 41 per cent on the equity portfolio, while the return on the fixed income portfolio was close to zero. The real rate of return after costs has been 1 per cent since 1998. This is well below the assumed long-term return of 4 per cent.
Barba Navaretti G. and Venables A. (2004), Multinational Firms in the World Economy Chapter 3, Princeton University Press. Bank for International Settlements, Consolidated banking statistics, End September 2009. Banking Supervision Committee at the European Central Bank (2010), “Mapping of large European banking groups with a significant cross-border banking activity for the year 2008”, Restricted edition. Buch, C. (2000), “Information or Regulation: What is Driving the International Activities of Commercial Banks?” Kiel Working Paper No. 1011. Brevoort P. and Wolken J. (2008), “Does distance matter in banking?”, Finance and Economics Discussion Series 2008–34, Federal Reserve Board, Washington, D.C. Dunning J. H. (1977), “Trade, location of economic activity and the multinational enterprise: a search for an eclectic approach”, in B. Ohlin, P. O. Hesselborn and P. M. Wijkman (eds. ), The Allocation of Economic Activity, London: Macmillan. Distance Between Cities Places On Map, provided by Google, http://www.distancefromto.net. Goldberg, L. (2002), “When is Foreign Bank Lending to Emerging Markets Volatile?” in Preventing Currency Crises in Emerging Markets, ed. by S. Edwards and J. Frankel, National Bureau of Economic Research and University of Chicago Press, pp. 171–96. BIS Review 82/2010  23  Goldberg L. (2004), “Financial Sector FDI and Host Countries: New and Old Lessons”, Economic Policy Review, Federal Reserve Bank of New York, pp. 1–17. Goldberg L. (2008), Understanding Banking Sector Globalisation, IMF Staff Papers, 2009, vol. 56, issue 1, pp. 171–197. González-Páramo J.M.

In my view this is the only reasonable way of dealing with cross-border problems without rolling back financial integration. Recent development of cross-border banking The structure of the financial services industry has gone through major changes over the past decades. Until some twenty years ago, banks were essentially national entities with  1  In terms of lending the Swedish banks’ market shares account for 80 per cent in Estonia, 53 per cent in Latvia and 60 per cent in Lithuania. 2  National Bank of Greece, Annual Report 2009. BIS Review 82/2010  15  most of their activities limited to their home market. Of course, many banks conducted international operations even earlier than this, but those operations primarily focused on wholesale markets and large corporate clients. Smaller companies and consumers have in principle been obliged to use the services offered by domestic banks. Today, banks run businesses across the globe. And through the existence of foreign-based branches and subsidiaries consumers can choose to buy services from banks that are headquartered in a completely different part of the world. The trend towards more cross-border banking is widespread, but much of the development is driven by large financial institutions in a few countries, notably the US, the UK, France, Germany, Japan and the Netherlands. 3 It has become an especially widespread phenomenon in Europe.