samchain/econo-pairs-v1 huggingface dataset:
Despite good economic developments especially in recent years, and many believe we are in the midst of an economic boom, wage growth has not increased. Why is this? 5 [16]  Figure 4. Wage increase and unemployment  Wage increase  Annual percentage change and as a share of the labour force 5  5  4  4  3  3  2007  2011  2018  2  1  2  5.5  6  6.5  7 7.5 Unemployment  8  8.5  9  1  Note. Moving averages over 12 months. Sources: Statistics Sweden, the Swedish National Mediation Office and the Riksbank  First of all, we should remember here that we are, after all, talking about a rather short period of time. In other words, it is still slightly too early to draw the conclusion that some form of structural change has taken place on the labour market that will affect developments in the future. But obviously, it is nevertheless interesting to reflect on the causes of the development. It is also worth pointing out the fact that the unusually low wage growth, given the activity in the economy, is not a specifically Swedish phenomenon. The situation is much the same in most other industrialised countries and the underlying reasons are currently the subject of rather intensive discussion.

We can note that economic activity in the rest of the world, not least in the United States, weakened appreciably in the first half of this year. The Swedish economy has been affected by this, as is evident from Statistics Sweden’s latest quarterly GDP data. The most recent figures for the national accounts are admittedly preliminary but the tendency behind them is clear: GDP growth fell back from an annual rate of 3-4 per cent in recent years to just under 2 per cent in the first half of this year. Thus, the world economic slowdown has helped to bring about a downward adjustment of demand growth in Sweden towards the long-term path without the Riksbank needing to lift the repo rate up to between 6 and 7 per cent, as the central banks in a number of other countries have been obliged to do. How does the krona come into it? But it is not only the interest rate that influences the development of demand and ultimately the rate of inflation. The exchange rate also plays an important part. Among other things, a weak exchange rate tends to stimulate exports and other segments of Swedish production that are exposed to international competition. That could limit the impact of an international economic slowdown. Conversely, an appreciation of the krona can act as a brake and modify the pull from an economic improvement in the rest of the world.
The low inflation can largely be explained by the surprisingly strong productivity. Over the past fifteen years Sweden has had higher productivity growth than many other industrial nations, including the United States. Productivity is important for the development of inflation in the slightly shorter term. If productivity rises quickly, wages can increase without the companies’ costs rising. High productivity growth thus leads to low inflationary pressure, all other things being equal. We still know too little about what lies behind the strong productivity growth. There are many indications that globalisation and increased use of information technology play an important role. 2  BIS Review 54/2007  These changes have probably led to many companies meeting tougher competition that has forced them to rationalise. However, IT developments have also given them new tools to make their production more efficient. In other words, there has been an increase in both the driving forces and the opportunities for making production more efficient. We must become better at understanding the driving forces behind productivity growth. For instance, the Riksbank has begun a project to gain greater insight into the relationship between investments in IT, organisation changes, on-the-job training and productivity. At the beginning of May we organised a seminar where a number of organisations and authorities presented their views on the situation. In December we will also be organising a workshop where external researchers will contribute valuable points of view. As a complement to this, we are creating channels for direct contacts with companies.

The minutes from the monetary policy meetings will now include the names of the Executive Board members in relation to the discussion and not merely if they enter a reservation against the majority decision. In this way it will be easier and clearer to examine the motives behind the monetary policy decisions and therefore also to form an impression of future decisions. These and all of the other changes we have made in recent years are intended to create the best possible opportunities to understand, evaluate and debate monetary policy. The debate on monetary policy is important and useful for us. It contributes to developing the way we work. The Riksbank’s openness, which we are now increasing further, enables a qualified public debate, which in turn is a part of how we can ensure accountability in a democracy. Thank you! BIS Review 54/2007  5
The Central Bank has been active in promoting the development of the financial system and financial markets in Iceland and we have sought to adopt the methods of monetary management that have been developed in other advanced industrial countries. In 1998, we modified the instruments and operating procedures of the Central Bank along the lines that had been developed for the future European Central Bank. The Central Bank of Iceland levies a reserve requirement on credit institutions, operates an overnight facility and offers a deposit facility. The main operating instrument of the Bank is the repo rate. Auctions of 14 day repo contracts are conducted once a week. By adjusting our instruments and methods, we created a similar operating environment for Icelandic banks as those that prevail for banks in the Economic and Monetary Union of Europe. I should add that we are in the process of adapting our payments and settlement systems to the norms of our neighbouring countries. This includes, among other things, the establishment of an RTGS system for large-value payments. I mentioned that the main target of the Central Bank is the maintenance of low inflation. That is a long-term target. Our intermediate target is a fixed exchange rate. A more appropriate description of our exchange rate policy is to refer to it as a fixed but adjustable peg. Since 1995 we have operated with a fluctuation band around the central rate of plus/minus 6%.

Mr Gunnarsson touches on a number of topics including developments in the Icelandic economy, the financial system and financial supervision  Presentation by Mr Birgir Ísleifur Gunnarsson, Governor and Chairman of the Board of Governors of the Central Bank of Iceland, to the Iceland Finance Forum held in Íslandsbanki HF on 22 October 1999. *  *  *  Mr Chairman, Ladies and Gentlemen, I am honoured to have the opportunity to address such a distinguished gathering of financial professionals and I congratulate Íslandsbanki for having brought you all together in Reykjavík. In my talk today I will touch on developments in our economy, developments in the financial system, the monetary policy of the Central Bank of Iceland, financial supervision and the implications of developments in Europe. Economic developments A strong upswing has characterised the Icelandic economy in recent years. We are now in the fourth year of more than 5% real growth of the economy. In the early phase of the upswing, growth was driven to an important extent by a strong recovery in foreign direct investment in Iceland, particularly in the so-called power intensive industries. Later on, rising domestic consumption became the driving force of economic growth. From the early part of the decade, inflation was very low. For a number of years it was in fact consistently lower than the average for the OECD countries.
And even if this mechanism has been at work, it’s not clear it has important implications for inflationary pressure over the medium term, which is the focus for monetary policy. It’s reasonable to expect the degree of dispersion  Sources: ONS and Bank calculations. in demand and spare capacity to narrow as and when aggregate spending recovers (those areas most affected by the pandemic are likely to see stronger growth afterwards). To the extent shifts in consumption do persist – some have speculated, for example, that a higher proportion of people will work from home in future, with possible implications for the pattern of spending over the longer term – one would expect the economy to adapt to those over time. But alongside other possibilities that the MPC described in the August Monetary Policy Report, the significant dispersion in demand might be one other thing that’s effectively served to flatten the price Phillips curve (i.e. to temper the response of inflation to shifts in aggregate spending), if only in the shorter term10. Conclusion  The pandemic, and the waves of the restrictions that have accompanied it, have had highly selective effects. They’ve hit some areas of spending much harder than others. The decline in aggregate consumer spending would almost certainly have been more protracted and more widespread – affecting not just activities that involve infection risk but those that do not – but for the furlough schemes. These have helped shield household incomes from the big drop in national income last year.

Normally these things carry on uninterrupted during recessions: output of public services is in general less volatile than private-sector output (Chart 3). But on this occasion, sweeping all before it, the pandemic curtailed many of these more standard activities, even after the full lockdown was ended in the summer. In the third quarter of this year, for example, real healthcare output – as estimated by the ONS – was still more than 20% lower than in 2019Q3. Taken together, measured declines in measured health and education output accounted for a quarter of the near-9% drop in aggregate GDP during the course of that year. Note that there’s been no decline in nominal spending on public services, or the collective incomes of people who work in them. Employment in public services has continued to rise and so have average wages. It’s just that, at least as measured in the national accounts, productivity in that sector has declined and the implicit price of those services – the so-called “deflator” – has risen. The result is an additional wedge, relative to any normal downturn, between (measured) real GDP and household incomes. Chart 3: Drop in GDP partly reflects a steep fall  Chart 4: Households protected from fall in  in measured output of public services. This has  national income  no impact on household incomes  Sources: ONS and Bank calculations. Sources: ONS and Bank calculations.
Other recent official initiatives include:   the creation by the IMF of a new facility – the Flexible Credit Line – aimed at easing liquidity pressures on countries with no fundamental balance of payments difficulties. It has been used, in particular, by Mexico and Poland and has powerfully contributed to restoring confidence. It has marked a decisive step in the evolution of the IMF towards a truly universal provider of international liquidity (and not only for countries facing balance of payments difficulties)  8  BIS Review 76/2010    A new SDR allocation, the biggest ever, for the equivalent of 250 bn USD, which has been enacted by the IMF Executive Board. This will be complemented by a network of voluntary arrangements allowing SDRs to be effectively traded between members. These are, however, revocable and limited sources of liquidity provision. Swap agreements can be (and have been) terminated. Out of the total, only a small part of the SDR allocation will benefit countries which may effectively need to use them. More may be needed to substitute for national foreign exchange reserves as a permanent insurance mechanism. Contingent liquidity The search for new liquidity sources meets with an inescapable moral hazard problem. On the one hand, to be equivalent to reserves going forward, multilateral liquidity must be available ex ante and without condition. On the other, there is a danger that fully unconditional liquidity be used to deal with fundamental “solvency” imbalances. In real life, this is not an easy distinction to make.

For instance, while a fixed-exchange rate regime in certain circumstances tends to support financial stability in a country (or group of countries – to refer to the European context) there might be situations in which such a system could have the opposite effect. To underpin financial stability, economic developments should be sustainable, transparent and predictable. This also applies to political decisions, which affect the financial system directly or indirectly. Completing the circle and reverting to my first observations on the increased global linkages, most countries’ financial systems are influenced by developments outside the domestic economy. Linkages come through different channels: macro economic events having international repercussions, for instance through international markets, or “micro events” such as via banks’ cross-border affiliates. BIS Review 52/2006  1  The FSAP – an attempt to tie together the loose ends Given the various pieces needed to shape and maintain a stable and efficient financial system we need a bird’s-eye view to see that they are all in place and that they do not counteract one another. The approach should also identify weak spots from which the financial system potentially might be destabilised. This need for a bird’s-eye view resulted in the creation of the FSAP. The FSAP is intended to cover the pieces I just mentioned – standards, preconditions and institutional setting and the interplay of these factors in the context of the domestic economy.
Third, Norway’s terms of trade have improved. Sales of Norwegian exports have been high, and we can import more goods in exchange for the goods and services sold by the business sector. Lower import prices have led to low inflation and a strong increase in employees’ real  1  Jon E. Dølvik, T. Fløtten, G. Hernes and J.M. Hippe (2007): Hamskifte – den norske modellen i endring (Fundamental shift – the Norwegian model in flux), p 15, Gyldendal Norsk Forlag A/S. Norwegian only. BIS Review 110/2008  1  wages. High export prices have resulted in solid corporate earnings. Norway’s disposable income increased in real terms by more than 35 per cent in the five years to 2007. Owing to the growth in productivity and improved terms of trade, enterprises have been able to increase their share of value added in spite of higher real wages for employees. At the same time, employment rose sharply and unemployment fell to the lowest levels recorded since the beginning of the 1980s. These factors are now becoming less prominent. It is not likely that developments in Norway's terms of trade will be as positive in the years ahead. Productivity growth seems to be declining – at least cyclical. Wage-earners’ share of value added is rising again, and this restrains labour demand. At the same time, inflation has quickened. High energy and commodity prices are fuelling global inflation. Food and energy prices are also rising in Norway, even though the import share is low.

Within the framework of its supervisory and oversight functions over the insurance sector, SAMA considered many files of insurance companies. By the end of 2013, SAMA licensed 35 insurance and reinsurance companies. Besides, SAMA approved 194 offices to provide insurance related services. SAMA issued a number of regulations and rules to regulate the activities of the financing sector in the Kingdom, improve its services, promote governance and transparency, protect the rights of its beneficiaries and create a competitive environment to contribute to provision of better financing services to meet the needs of the market and beneficiaries at competitive prices. Up to the end of July 2014, SAMA licensed 12 banks and 4 companies to conduct the activity of real estate finance and financial leasing, and 4 companies to carry out other  BIS central bankers’ speeches  1  financing activities. SAMA also granted initial approvals on 11 applications for licensing pending the completion of the legal requirements of the Ministry of Commerce and Industry. At the international level, the Kingdom holds a prominent position. It is an active member of the G20 since its establishment and of several international financial organizations. SAMA represents the Kingdom in a number of international forums and institutions, such as the Bank for International Settlements, the Financial Stability Board, Basel Committee, the International Association of Insurance Supervisors, the Islamic Financial Services Board and the Gulf Monetary Council. Currently, SAMA is participating in more than 25 committees, working groups and sub-committees in international commissions and organizations.
In addition, the effect of the leverage ratio is further magnified by dealers’ inability to “net” across similar transactions on a bilateral basis with different counterparties for accounting and capital purposes. Netting is generally allowed so long as the transactions have the same counterparty and settlement date.22 The “same counterparty” requirement could in theory be met via the implementation of a central counterparty (CCP). However, for several money markets that are important to the transmission of monetary policy, no CCP has been implemented to date. For example, there is still no CCP in the United States for the repo market, and there is also no CCP for foreign exchange swaps. The regulatory capital benefit from the implementation of a CCP for the repo market might be reduced by regulatory requirements for some arrangements, such as those associated with the provision of committed liquidity to the CCP. The implementation of a CCP raises other important policy issues that would need to be carefully considered. The fourth and final development: money markets have been impacted by increasingly large shifts in the Treasury’s cash management practices, as well as the cash management of a number of foreign official holders of dollar reserves.

Interestingly, there is a small amount of trading in the repo market that takes place slightly below the ON RRP offered rate; this largely reflects lending by firms that are not New York Fed counterparties and therefore cannot participate in our operations. Second, within each market, I see periodic, transitory jumps in dispersion. In the unsecured market, these typically occur on month- and quarter-end dates.28 We don’t typically observe this pattern in the customer-to-dealer repo market, but did see a spike in dispersion on June 24, 2016, the day after voters in the United Kingdom chose to leave the European Union.29 This spike might reflect the pricing-in, for a brief moment, of a modest increase in counterparty-level risk related to this development. 7 / 13  BIS central bankers' speeches  These shifts in unsecured market activity around period-end dates are consistent with the incentive provided by the leverage ratio requirement. The frequency of the leverage exposure calculation differs by jurisdiction: the U.S. and UK require a daily or weekly average calculation for on-balance-sheet exposures for their supervised banks, while some other jurisdictions only require a quarter-end calculation or average of the three month ends within the quarter. As discussed earlier, the leverage ratio requirements in the U.S. apply to insured depository institutions, BHCs and IHCs operations of foreign banking organizations.
While some of you might indeed prefer a robo-regulator delivering this speech, this is not something that Regtech is intended or able to deliver at this point, unfortunately. Frankly, I hope that you would still prefer listening to my sharing, rather than from a tall and handsome roboregulator, even if such a robot were a reality today. Joking aside, Regtech does offer a tremendous potential to complete the Smart Banking ecosystem. 11.Before I discuss our plan for Regtech, I would like to reiterate what Regtech means. As I have mentioned, from the perspective of banks, there are two interfaces that they have to address: one between banks and customers, and the other between banks and the HKMA. The general priority of banks under the Smart Banking initiatives so far has been to concentrate on the interface between banks and customers to offer better digital financial services to users. However, some meaningful progress has been made to streamline the interface between banks and their regulators, such as the work under the Banking Made Easy initiative and the Balanced and Responsive Supervision Programme that I explained at this Conference last year. We do see a need to further facilitate banks’ use of technologies for compliance with regulatory requirements of the HKMA and other regulators and for risk management purposes. Regtech, which essentially means the use of innovative technologies by banks to achieve regulatory compliance or better risk management in a more effective and automated manner, is well positioned to further enhance the interface between banks and regulators.

As our knowledge of the size of the threat improves, expectations of how banks should perform this role have also increased. This also means that managing financial crime risk has become a significant compliance undertaking, particularly in the area of transaction monitoring. 17.But the ability for banks to work in a sea of data and fund flows is indeed very challenging. It is not that our systems do not produce results, judging from an average annual growth of 40% in 3/4  BIS central bankers' speeches  the past five years in suspicious transaction reports. Rather, it is the degree of success by which those results contribute to the objectives of our AML system – to deter, disrupt and detect – that are increasingly under scrutiny 18.To improve our work, Regtech solutions are increasingly being recognised as highly applicable in AML. Data analytics and machine learning are seen as having huge potential to complement banks’ processes in AML/CFT surveillance, and improve efficiency and effectiveness of the process. 19.For example, the generation of huge numbers of alerts by transaction monitoring systems, which can sometimes require armies of analysts to process, is a pain point for banks. We note that some banks use machine learning and artificial intelligence to help detect and recognise suspicious behaviours and patterns, as well as to facilitate the closing of low-risk alerts. This helps free up precious analysts resources to focus on investigating high-risk cases, and in turn enhance the overall effectiveness and efficiency of the transaction monitoring process.