samchain/econo-pairs-v1 huggingface dataset:
That means that falling food prices can have a significant impact on the CPI. In the past two years, developments in consumer food prices have been well below the inflation rate in terms of both the CPI and the measure we use to look at underlying inflation, UND1X, as well as in terms of domestic inflation, UND1X (Chart 3). Food prices are greatly affected by weather conditions, e.g. the fluctuations in inflation around the turn of the year 2001/2002 were largely attributable to the effects on fruit and vegetable prices of the floods in Europe. But temporary factors also play a part, such as mad cow disease, which first caused meat prices to rise and then to fall back in 2003. However, it is reasonable to assume that the recently low, and periodically negative, rate of price increases for food is due in some measure to stiffer competition in the non-durables sector. Increased competition and new trends in the retail food sector For a long time three large food chains have dominated the Swedish non-durables sector, and still do so. All three have integrated their businesses, meaning that their retail network and wholesale activities are part of the same company, thus making them active in both the wholesale and retail markets. As a result, the Swedish non-durables sector is strongly concentrated to a few players; together, they accounted for roughly 90 per cent of the non-durables market in 2004.3 It is not obvious what effects such a concentrated market will have on food prices.

One interesting question to ask is how large the scope is for lower Swedish food prices in the future. Current theory has it that the prices of identical products should be the same regardless of country or region if transportation costs and other trade barriers are excluded. According to the theory, price differences lead to cross-border trade and eventually to equal prices. Food prices in Sweden are substantially higher than the EU average, and large regional differences exist in Sweden. One possible way to investigate the scope for price cuts would be to take as a starting point the difference in Swedish food prices in relation to the prices of other countries and adjust for the other factors that affect the prices and that are different between the countries. Alternatively, one can look at the regional differences in food prices in Sweden. Last year, Eurostat published two price comparisons, the first in cooperation with the OECD in order to measure purchasing power in different countries, while the second investigated price levels in capital cities. According to these surveys, Swedish food prices are 17 per cent above the average for the EU15, and 16 and 19 per cent, respectively, above those in Germany and the UK, while Stockholm’s food price level is some 14 per cent above the average for the EU15, and 17 and 18 per cent, respectively, above the level in Berlin and London. 4  4  Source: Gfk.
On the other hand, it is true that the hedge funds are very quick to take advantage of mispricing and imbalances in companies’ finances or countries’ economies, such as an unsustainable exchange rate – but this is of course difficult to be critical of. When we discuss the effects of hedge funds on the financial markets, I believe it may be useful to compare the crisis at Amaranth, which I described in the beginning, with the crisis at LTCM. The effects on the financial markets were very different. Despite the fact that Amaranth’s losses were much greater than those of LTCM, no authority needed to intervene; Amaranth was able to close its positions of its own accord and in a smooth manner. The large positions were sold (at a substantial discount, one assumes) to JP Morgan and Citadel, another large hedge fund. The situation with LTCM was quite different. A number of events during 1998 (including the Russian debt crisis) had created considerable unease in the financial markets and LTCM had entirely the wrong positions for such a development. When the investors’ assets had fallen from USD 5 billion to USD 1.5 billion in the space of six months, the US central bank intervened. The size of the fund, combined with the fact that so many financial agents were involved, meant that the Federal Reserve saw a threat to financial stability. To avoid an uncontrolled collapse, the Fed called together a group of LTCM’s largest creditors, who took over the fund’s positions.

Lars Nyberg: Are hedge funds dangerous? Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at a meeting at Nordea and the CFA Society of Sweden, Stockholm, 24 November 2006. *  *  *  I shall begin by thanking you for the invitation to come here to Nordea and the CFA Society of Sweden to develop some thoughts on the usefulness and risks with hedge funds. After several years of strong growth, hedge funds are a hot topic among market agents and authorities. Although hedge funds’ percentage of the total capital managed is small, around five per cent, they account for a large part of the liquidity on certain markets. Many people express concern as to what effects hedge funds might have on financial stability and after the much-publicised collapse of the US hedge fund Amaranth in the autumn, the debate on regulation has gained new impetus. As you may perhaps know, Amaranth primarily traded various gas and energy derivatives. After summer 2005, Amaranth held gigantic positions in the gas market – they believed in a price increase. Between August and October 2005 the price of natural gas rose by 50 per cent, partly as a result of the severe hurricanes. The fund earned substantial amounts of money and the fund managers were also expecting this autumn to see high energy prices during the winter. They bought futures for November and March and sold (sold short) contracts for October and April. However, this year did not develop as expected.
The infrastructure must be constructed so that it does not exacerbate any problems that may arise. It needs to be capable of handling external shocks without any danger of collapsing. However, the severe strains that arise from time to time in the payment system tend to be generated not so much by hang-ups in technical and administrative systems as by problems for one or several of the participating banks. Problems for one bank quickly spread to the rest of the payment system and may generate a systemic risk. This risk arises if problems with credit or liquidity prevent bank A from completing its payments to bank B, which thereby has difficulties in paying bank C. Banks B and C are then liable to fail solely because bank A cannot fulfil its commitments. The risk obviously varies with the size of the payments in question; the larger these are, the greater is the potential systemic risk. The occurrence of systemic crisis threatens the whole or parts of the payment system, and if this ceases to function the entire financial system as well as the real economy will be affected. The crisis in Sweden in the early 1990s was associated with large systemic risks. Last autumn the U.S. Federal Reserve perceived considerable systemic risks in the domestic financial market. In neither of these cases, however, was there a full-blown systemic crisis. In the event of a systemic crisis, the payment system needs a large supply of credit.

Our chances of influencing the course of events then lie in contacting the bank’s executives and informing the Financial Supervisory Authority. Our Financial Market Report can no doubt also play an important part in exerting a more continuous influence. In the longer run, the Riksbank can also contribute to stability through international collaboration, as well as by participating in Sweden in legislative work and the structural adjustment of various systems. Undervalued credit risks—a recurrent phenomenon One aspect of the Riksbank’s oversight of financial stability in Sweden has been the analysis of the run-up to the bank crisis here and the possible causes of crises in other parts of the world. The causes and course of the various crises have differed in some respects but they do present many similarities. Many of them were preceded by a period of rapidly rising asset prices and a strong expansion of credit. This period ended with an abrupt reassessment—a jolt that altered risk assessments and led to heavy losses for those involved. Signs of economic problems meant that the supply of credit virtually ceased. It seems that the stronger the credit supply in the first period, the more serious were the effects in the second phase, with decreased production and rising unemployment. BIS Review 23/1999  4  Another factor in many cases has been that the country had a fixed, but adjustable, exchange rate regime that lacked credibility.
There is also great uncertainty about how strong and stable the recovery will be. It is positive that there has been a clear improvement in the situation on the financial markets. This reduces the risk of a serious setback. On the other hand, the situation on these markets has not completely normalised. Central banks around the world will continue to use various measures to help the banks find funding. The extensive fiscal policy stimulation measures that have been and are being implemented in all the major economies have in all likelihood helped to dampen the fall in GDP. But, they are also leading to increases in national debts. This can create anxiety among the households and thus entails a risk that recovery will stop short. Nevertheless, the situation looks brighter today than it did a couple of months ago. This in itself justifies a somewhat tighter monetary policy than that which we regarded as a wellbalanced monetary policy in July. However, there are also factors that can have the opposite effect and thus represent arguments for a more expansionary monetary policy. The development of the krona has been stronger than we expected. Just as it is difficult to explain the earlier weakening of the krona in terms of developments in the Swedish economy, it is difficult to explain the recent appreciation in the krona. The best explanation might be that it is a question of an adjustment towards more normal levels after the exchange rate had strongly deviated from its long-term reasonable rate.

We have to: −  identify potential unfulfilled need for financial services in the medium term so that we can adequately accommodate needs of our consumers and corporate in the real sector. These include financing of small and medium-sized enterprises as well as long-term financing. −  determine problems, obstacles, and bottlenecks within our financial infrastructures as well as tax issues that will constraint us from achieving our full potential;  −  revisit the existing specified scopes of businesses for each types of financial institutions and determine appropriate structures for our financial conglomerates, taking into consideration the increasingly blurring of traditional lines that have previously separated commercial banking, investment banking, and insurance businesses from one another;  −  prioritize our aims and construct appropriate benchmarks to set clear targets of development and measure our performance;  −  and, of course, re-examine the current regulatory structure once the market reform is already underway. Ladies and Gentlemen You may ask how you can be involved? In the next nine months, our staff will conduct background studies, commission additional research papers, and take inputs from relevant stakeholders through market interviews and focus groups. We invite you to actively participate in our public consultation process and encourage you to take initiatives by making public submission on topics which you feel are critical for the development of our desired financial system.
Since student loans are currently receiving a huge amount of attention, and since the New York Fed has been a leader in providing information about the sector, I’d like to spend the rest of my time discussing what I see as the main issues with student debt and what to do about them. 2  BIS central bankers’ speeches  Issues with student debt Student loans seem like a good part of the solution, but over the past decade our reliance on loans for funding higher education has increased and we are learning that they have many problems and implications we had not sufficiently understood or considered. As shown in Chart 1, between 2004 and 2014, the total student debt in the US tripled from $ billion in 2004 to $ trillion in 2014. Expressed in annual terms, this means student debt increased by an average of 13 percent per year. As shown in the chart, among the various types of household debt, student debt is unique. While balances on all forms of household debt – including mortgages, credit cards, auto loans, and home equity lines of credit – declined during and after the Great Recession, student debt has steadily risen. In 2010, student debt surpassed credit cards to become the second largest form of household debt after mortgages whereas prior to 2008, student debt was the smallest form of household debt.

James McAndrews: Student debt and higher education financing – a public finance perspective Remarks by Mr James McAndrews, Executive Vice President and Director of Research of the Federal Reserve Bank of New York, at the National Association of College and University Business Officers, at the Waldorf Astoria, New York City, 5 February 2015. *  *  *  Accompanying slides can be found at the end of the speech. Good afternoon. I’m happy to be here and to have the opportunity to share with you some thoughts on the subject of financing higher education in the United States. The remarks I make reflect my own views, and not those of the Federal Reserve Bank of New York or of the Federal Reserve System. Some of you may be wondering why the research director of a central bank is particularly interested in the way we as a nation pay for college. The answer, of course, is that we are gaining an increasing understanding that how we finance post-secondary education has important effects on a variety of critical economic outcomes, including economic growth and inequality. It’s this realization, combined with the fact that the outstanding student debt balance has now surpassed $ trillion, which has brought increased attention and discussion to the question of education finance. First, I’d like to acknowledge the work and research of Meta Brown, Rajashri Chakrabarti, Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert Van der Klaauw in preparing these remarks.
Still other banks have greatly increased their transaction processing, custody or asset management businesses, in the pursuit of fee income. Looking forward to the next century, I believe we will see major strides in the area that I suggest we call “e-finance”. More banks will venture into the relatively new world of on-line PC banking or will expand electronic bill presentment and paying services. Banks will be motivated to overcome obstacles such as systems incompatibility and consumer privacy concerns, to achieve greater operating efficiencies and to protect their valuable payments franchise. Going forward, on-line purchases and sales of securities by individuals also will continue to increase, producing a growing source of commissions for financial institutions. For most banks, these developments will mean a further increase in the diversity and complexity of risks to which they are exposed, including, but not limited to, credit, market and operational risks. The challenge for these banks will be to develop risk management systems that are rigorous and comprehensive, yet flexible enough to address the newer risks they take on as they expand into less familiar product areas. Today, I would like to highlight these risks and focus on how important it is for banks to integrate their risk management and capital planning processes. Also, I would like to focus on how the changing nature of banking is challenging supervisors to rethink their approach to capital regulation and supervision.

But clearly, banks are exposed to more than just credit and market risk. Operational risk also is a growing concern for the banking industry. The looming issue of Year 2000 remediation is just one example. With the continuing diversification of banking, the fast pace of financial innovation and the growing concentration of crucial payments, settlements and custody businesses, the importance of operational risk is rising, especially at many larger institutions. These institutions find that the probability of a financial loss resulting from a breakdown in internal controls or systems is greater than ever. As banks expand into new lines of business, such as electronic banking, this trend is likely to continue. For instance, consider the risk of a breach in electronic security controls that leads to unauthorized access to confidential customer information. Should this breach be severe and pervasive, it could lead to considerable legal and reputational problems for a bank. Further, the overall rapid pace of technological change in this area means there is a substantial risk of obsolescence. These are just some of the risks that banks must manage, and clearly the list I have set forth is not exhaustive. In particular, consider banks in emerging market countries that are subject to a unique set of risks as a result of the financing and investment cycles in their countries. Those banks that fund their domestic assets with foreign currencies may be particularly susceptible to liquidity risk when sharp fluctuations in exchange rates and market turbulence make it difficult to retain sources of financing.
Should, for instance, financial stability be included as a new objective for monetary policy, together with price stability and macroeconomic stability? 5 Or can the objectives, as before, apply to price stability and macroeconomic stability but with consideration to financial stability included in the prospects for these two quantities in the slightly longer run? 6 Theoretically, there may thus be some differences between different ways of including consideration of financial stability in inflation-targeting. In practice, I do not think the differences are so large – regardless of the underlying reason, the results are in practice that monetary policy is slightly adjusted to counteract potential imbalances on the financial side of the economy. 7 It may be worth pointing this out: a monetary policy that “leans against the wind” in this way does not actually scrap the inflation target and swap it for a target for asset prices or indebtedness. The inflation target is still the foundation. What this means is that in some situations monetary policy can be adapted so that it takes slightly longer for inflation to get back to the target that it would have done otherwise if one had not taken financial stability into account. A necessary condition for being able to give such consideration is that confidence in the inflation target is firmly rooted and does not risk deteriorating because it takes somewhat longer for inflation to attain the target. A monetary policy that leans against the wind thus assumes that inflation expectations are firmly anchored around the target.

An important element of this step was a switch from a forecast with a fixed-interest-rate assumption to an unconditional forecast that includes a reaction-function of the central bank. Our current quarterly projection model is a small-scale model belonging to the first generation. It is thus fairly simple and arguably misses many important links in the economy. Nevertheless, it is already quite close to the state-of-the-art among the inflation-targeting central banks around the world, and intense work is in progress to build a higher-generation model. The good standard of our current forecasting know-how is reflected, among other things, in our ability to start providing technical assistance in the forecasting field to some other central banks in transition and emerging market economies. In line with the transparency philosophy of inflation targeting, the Czech National Bank published a book called “The Czech National Bank’s Forecasting and Policy Analysis System” last year. This book describes not only the core forecasting model itself, but also the whole process of creating the final integrated forecast. The model has also been published in a professional journal, the Czech Journal of Economics and Finance. To conclude, I would like to emphasise that the development of our forecasting and analysis system has been part of a wider evolutionary process that the Czech inflation targeting regime has gone through. During the first years, many of the details were adjusted in response to the changing needs, challenging experience and evolving thinking of the central bank.
With global trade barriers tending to rise over recent years, and with Covid having provided a further impetus towards localisation, it seems unlikely globalisation will remain as powerful a disinflationary force in the future  19  See, for example, the work of Richard Baldwin here and here. 19  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  19  as it has been in recent decades. And it is certainly possible trends in globalisation could even go into reverse in the period ahead, adding inflationary impetus.20 Chart 16: Global Trade and Growth  per cent  20 15 10 5 0 -5 -10 -15  World Trade  2019  2017  2015  2013  2011  2009  2007  2005  2003  2001  1999  1997  1995  1993  1991  1989  1987  1985  1983  -20  World GDP  Source: IMF WEO, World Bank, Bank calculations. On top of these long-standing supply-side forces came the Covid crisis. One of the casualties of this crisis, from a supply-side perspective, is likely to be capital formation. The MPC’s projections assume around a 6½% hit to the capital stock from Covid, and a long-term scar on the UK economy’s supply-side of around 1.75%. This will also serve to tighten supply-side constraints as demand increases. There are very significant uncertainties either side of these scarring estimates.

As trustees of wealth bestowed upon us by Allah, we are entrusted to ensure that waqf meets its intended objectives. If properly developed, managed and utilised, we can harness its potential as a highly effective platform for sustainable economic growth, one that creates sustainable and perpetual benefits for all, especially our future generation. It is time to put strategies and plans into action. 4/4  BIS central bankers' speeches