samchain/econo-pairs-v1 huggingface dataset:
A higher policy rate may also contribute to strengthening the krone exchange rate, which may curb imported goods inflation further out. Chart 3 Substantial labour shortages, but signs of cooling Activity in the Norwegian economy is high. Employment has risen over the past year, and labour shortages have become pronounced. Unemployment is at historically low levels. We are now seeing clear signs of a slowdown in the Norwegian economy. High inflation and rising interest rates have led to a fall in household consumption. Labour shortages appear to have eased somewhat. High electricity prices are also reducing profits for many firms. We projected a cooling of the economy in the course of autumn this year, but it now appears that the economy has passed a cyclical peak and that the slowdown may prove to be more pronounced. We have revised down our projections for economic activity ahead on the back of higher inflation in Norway and a weaker outlook for our trading partners. As things stand, prices will rise at a notably faster pace than wages this year. Many households will face a squeeze on their finances. Some people will find it difficult to cope with higher borrowing costs on top of the broad rise in prices. But most households have the finances to cover increased expenses. Next year we expect wages to rise at about the same pace as prices. Our projections for wage growth are in line with the expectations of the social partners according to Norges Bank’s Expectations Survey.

The aim of high and stable employment is also given weight in interest rate setting, and weaker economic developments imply that we will not raise the policy rate to the same extent as that implied, in isolation, by the aim of reducing inflation. Chart 6 Inflation will moderate and unemployment will likely edge up Unemployment will likely edge up ahead. We could have chosen to raise the policy rate more gradually. But then we would have run the risk of having to tighten monetary policy more sharply later to tackle the high level of inflation, which would have increased the risk of a severe economic downturn. The future rate path will depend on how the economy evolves, and the projections are more uncertain than normal. If there are prospects that inflation will remain higher for longer than we now project, there may be a need for a higher policy rate. On the other hand, a faster decline in inflation and activity than currently projected may reduce the need for rate increases. The Committee has also taken its decision on the countercyclical capital buffer. The countercyclical capital buffer rate was raised to 2.5 percent, effective from 31 March 2023. The Committee decided unanimously to maintain this requirement. The countercyclical capital buffer requirement increases bank solvency, making banks more resilient to shocks.
4  BIS Review 112/2009  the existence of cars. However, it seems more reasonable to build safer cars, buckle up and drive prudently. Crises will continue to happen, but the proper way to act is to strengthen the financial system and macroeconomic policies, in order to minimize their consequences and probability of occurrence. We must not remain in the notion that a crisis cannot be prevented and thus there is nothing we can do about it. Going back to the car analogy, the fact that accidents will always happen does not mean that we must allow driving at any speed and with no regulation. Quite the contrary, we know that crises are especially severe when they affect the financial system, so it is reasonable to improve regulatory mechanisms, particularly to allow financial innovation while keeping vulnerability under control. Meanwhile, it is necessary to continue devoting efforts to the detection of early alerts, although, as I have already pointed out, unambiguous indicators are impossible to find. But there are symptoms of fragility, very common in emerging economies. High and persistent current-account deficits, misaligned exchange rates, currency mismatches in the financial and corporate sectors, excessive increases in the prices of assets and credit, all signal a potential problem, although they do not result necessarily in a crisis. 8 Therefore, a look at the indicators is not enough, it is important to put them together to detect fragilities.

It is harder and less rewarding for an academic to formulate distortions – of which the real world has plenty – than to use tidy competitive models to explain important stylized facts with a minimum of new ingredients. Scientific advances and models help us think about and interpret the world; they provide us a way to think about specific problems, but their scope is limited. We must avoid the temptation of thinking that a theoretical simplification is a full description of reality. But we must also avoid the other extreme, which totally dismisses what theory teaches because “reality is much more complex”. This is true, but it does not imply that all we have learned is just a theoretical exercise without practical use in reality. Models must be taken realistically, recognizing that they capture at most a small portion of reality. As for the future, the current crisis will certainly provide material for many research studies that will try to figure out what failed and how to avoid making the same mistakes again. Still, I think it will be difficult to develop simple, manageable models that can make substantive progress in having a complete description of reality. Some interesting efforts will most likely be made, but it will not be easy for them to become part of the heart of macroeconomics, since they will be necessarily complex.
Kerstin Hessius: The new economy seen from a central bank perspective  Speech by Ms Kerstin Hessius, Deputy Governor of the Sveriges Riksbank, at a seminar on the IT revolution and the new economy, organised by Skandinaviska Enskilda Banken Institutionell Förvaltning, at Moderna Museet Stockholm, on 12 October 2000. *  *  *  I would like to begin by thanking the organisers for choosing such a stimulating and appropriate environment for this seminar as Moderna Museet. If there is one place where you can see the effect of structural change, it is in art. A country’s economy is constantly subjected to changes, which lead to new structures. However, this is nothing new. Every time an economy has undergone significant structural changes, it has been regarded as a new economy. In many ways today’s “new economy” can be seen as one of many such major structural changes. Nor is there any accepted definition of the “new economy” concept; what I am referring to is primarily an increase in the growth potential of the economy. “Multiplied intellectual capacity” The new information technology and the internet have revolutionised the methods in which we work, shop and communicate today. As someone once said, it is as though IT multiplies intellectual capacity in the same way that the industrial revolution multiplied physical capacity. In addition, the costs of using the new intellectual capacity have fallen drastically over a short period of time, which facilitates a rapid dissemination.

The gap between actual and potential growth does not appear to be completely closed, while the Riksbank and others perceive that this gap is well and truly closed in the USA. 5  BIS Review 89/2000  There are thus a few pieces of the puzzle remaining before we can feel convinced that Sweden is moving towards a US development: how large is the IT sector in the Swedish economy? How important is the IT sector to the rest of the Swedish economy? What does IT mean to productivity in Sweden? Unfortunately I have to say now that we know too little about this. We know that productivity in Sweden has developed unevenly during the 1990s - a disjointed period disturbed by a bank crisis, currency crisis and problems with public finances. Investment has developed more weakly than in the USA, although it has picked up in recent years. Capital intensity does not, therefore, explain the growth in productivity. What does become more evident, on the other hand, is a break in trend in that part of productivity attributed to technology and more efficient organisation, ie total factor productivity TFP (slide 5). This showed a weak and tentative development up to the mid-1990s, but has really picked up over the last five years. 5.
Only 4.2% of investment accounts intermediated by Islamic banks are suitable to finance transformation, such as in supplying growth capital to industries of the future or new business models. 3. We have also yet to make the most out of the full range of Shariah contracts in finance application today. Benevolent contracts, risk sharing contracts and other asset-based contracts have yet to be fully utilised to offer a broader spectrum of funding, investment and protection solutions. This means that we are not realising the full potential of value-based finance to address contemporary economic and social needs. This also points to a continued need to foster appreciation of the fundamental values of Shariah among market participants and its embodiment in financial solutions, services and conduct. Changes to the way Islamic finance operates cannot happen overnight. But what the industry does today will be crucial in bringing to life the fundamental values of Islamic finance, and showing how it is relevant to address contemporary challenges. In my view, to elevate the values of Islamic finance to the next level, the industry must seek to embody and exemplify the value of ihsan, continuously striving for attainment of excellence. A hadith narrated in Sahih Muslim reported that Prophet Muhammad (peace be upon him) said, "Verily, God has enjoined excellence (ihsan) with regard to everything." Manifesting ihsan in Islamic finance, thus, calls upon all stakeholders to steadfastly find ways to transform and deliver the highest standards in all aspects of its business.

With that, I wish everyone a successful forum and hope you continue to have engaging conversations ahead. Thank you. 4/4  BIS - Central bankers' speeches
It is just as important to avoid an inflation rate that is too low, as it is to avoid an inflation rate that is too high. Economic policy in the euro area The introduction of the euro on 1 January 1999 also meant the introduction of a single monetary policy in the eleven member countries. Greece joined as the twelfth country on 1 January 2001. The population of the euro area is a little more than 300 million and the euro area economy accounted for about 16 per cent of world GDP last year.1 Price stability is the primary objective of the single monetary policy in the euro area. The Governing Council of the European Central Bank has defined price stability as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2 per cent. The project will be completed in January and February 2002. On 1 January, euro banknotes and coins will be put into circulation. During a changeover period, national currencies can be used as a means of payment alongside the euro. This period is no longer than two months in any of the member countries. As from the beginning of March, the euro will be the only legal tender in all euro area countries, and all prices will be in euros. The objective of monetary policy in the euro area is price stability in the euro area as a whole.

The second is the belief that the ability of the central bank to act with speed and force to mitigate the effects of financial crises is substantially greater if responsibility for the monetary policy and lender of last resort instruments that are most critical in crises is combined with authority for bank supervision and payment system oversight. The confidence to make quick judgments about liquidity and solvency – judgments that are central to effective decision making in a crisis – is significantly enhanced by our direct involvement in the supervision of the core institutions of the U.S. financial system. Put another way, we are more comfortable managing the moral hazard risks that are inherent in having the capacity to respond to systemic financial crisis if we have a direct role in assessing the appropriate level of capital and the overall risk profile of the institutions that are the most likely sources of systemic financial distress. The rationale for this integrated model is closely related to the belief that our financial system works better without combining in a separate, single entity supervisory authority over banks and non-bank financial institutions and responsibility for market regulation. The special role of banks in the economy, the special nature of the risks in the types of intermediation they provide, and their access to the safety net justifies a different type of supervision and a different relationship to the central bank than would be appropriate for non-bank financial institutions.
To this end, they are useful tools to lean against the wind of excessive credit growth and asset price increases. As we know, monetary policy alone is not adequate to ensure financial stability, and the policy rate can be too blunt a tool to deal with asset price increases because of the adverse effects on the economy. Therefore, combining macroprudential measures with monetary policy offers a useful approach to help contain financial vulnerabilities and overcome the trade-off that arises when inflation development is not consistent with asset price increases or rapid credit growth. To illustrate with a Thai experience, the Bank of Thailand has adopted inflation targeting under a flexible exchange rate regime, and has combined this with macroprudential measures in our monetary policy framework since 2000. So far, the approach has worked well. From our experience, when properly designed, macroprudential measures can complement traditional monetary policy while supporting the functioning of the financial system. To date, we have successfully used macroprudential measures on several occasions. For example, in 2003, rising high-end real estate prices together with strong mortgage lending growth led us to impose a ceiling on the loan-to-value (LTV) ratio for residential property with transaction price exceeding ten million baht. Then, between 2004 and 2005, concern about household debt prompted us to tighten regulation on credit cards and personal loans by limiting credit lines not greater than five times the applicant’s average monthly income. My third comment is to acknowledge that there are practical difficulties in identifying the trigger points for implementing macroprudential measures.

In Asia, economic and financial liberalization is a powerful driving force that is reshaping our financial landscape today. This could potentially open up the gap between risk and our ability to manage it. So what should be our strategy to build trust, but avoid being blinded by our sense of security? The strategy to deal with this is to have Trust that is counter balanced by well informed debate on risk management, supervision, and good governance. So, we need a good dose of well-informed skepticism, as well as financially literate public. Let me turn to the progress on the global efforts to reform regulation. Where are we today? In all of these reforms – be they Basel or FSB – the questions we ask are these. Have we done enough to rebuild “Trust” and secure financial soundness? Is the international standard right for the local context? Are there unintended consequences, i.e. the bad side-effects? Getting it right, with the right balance, and right timing is very difficult. This is especially so when the dust has not settled, and the real economy is still vulnerable. Indeed, five years after the crisis erupted in the US, we are still seeing the spread of impact in Europe, and deleveraging of European banks. From Thailand’s own bitter experience of the 1997 crisis, the combined impact of all the economic and financial sector reforms was hard to gauge beforehand.
This is a challenge for central banks because we have to manage our own contingency stocks based on a view of likely future demand. This is something to which central banks have had to devote more attention over the last two years. What does it mean to meet the public’s demand for banknotes I want to turn now to considering what it means to meet the public’s demand for our banknotes. I take this very seriously, with the principle that the public knows best what it wants in terms of what it requires from its banknotes. I think it is reasonable to say that, in the past, meeting the public’s demand for notes was for most part focused on ensuring that the value of notes demanded was available. At the Bank of England we have outsourced much of our role in note distribution for 27 years and our note distribution schemes have been designed around the objective of meeting public demand for a value of notes. There is nothing at all wrong with this objective; indeed, it is the heart of what we do on note distribution. But increasingly, we are trying to meet two other objectives as well: maintaining a satisfactory physical quality of our notes in circulation, and meeting the public’s demand for different denominations, ie the denominational mix. There are two developments which stand out for me in terms of the physical quality of notes.

Even with only one goal and with only one instrument, in theory Central Bank actions can be organized in different ways. For a long time in the past, monetary policy was conducted through the control of monetary aggregates. This practice, however, proved to be increasingly inefficient as economic systems designed new substitutive mechanisms to create money that had not been supplied by the monetary authority. With advances in information technology and its effects on the productive processes of commercialization and of consumption, this element of endogenous money creation made control of money ineffective, which in turn led Central Bankers to abandon the use of targets for monetary aggregates. It is important to highlight that this does not mean that the evolution of the monetary aggregates will be watched or treated carelessly. They are still closely monitored, but they have ceased to be the policy variable. Another choice available to the Central Bank is to conduct monetary policy through the control of the exchange rate, which implies that the focus of the monetary authority is aimed at managing the exchange rate's trajectory. This option has been also abandoned due to its high costs and to its limited effectiveness when the economy goes through significant changes and shocks. The option that has proven to be most efficient to conduct monetary policy is the inflation targeting regime. This system has explicit targets for the monetary authority, which brings transparency to the targets being pursued and allows for reporting to society the absolute commitment to the control of inflation.
FEN is focused on shaping healthy financial attitudes from a young age, increasing access to tools and resources to help individuals manage their finances, and working across the spectrum of society to help individuals attain financial security, through sound financial planning and by cultivating sensible financial habits. To date, FEN has undertaken about 700 financial education programmes and initiatives, with more than 60 million interactions through its various outreach programmes. All these initiatives are part of a five-year National Strategy for Financial Literacy plan developed in 2019 which, among its aims, is to empower Malaysians to plan ahead to secure a sustainable future. Looking ahead into the future, it is important for us to be agile and to continuously innovate in facing emerging challenges and the fast changing environment. While the pandemic taught us the importance of economic and financial resilience, it also paved the way for a rapid adoption of digital financial services. This is evidenced by the World Bank's finding in their Global Findex 2021 report which revealed that 79% of Malaysian adults use digital payments, of which 42% did so for the first time after the pandemic. 2/4  BIS - Central bankers' speeches  While the rising importance of digital financial services is welcomed, the adoption of such services without sufficient understanding and knowledge could pose risks to consumers. Malaysian consumers are vulnerable to the manipulation of online frauds due to low level of digital financial literacy.

But they are using Regtech much less in their risk management and regulatory compliance activities, despite the many advantages that doing so could bring for them. 8. More generally, banks currently have little engagement with the wider Regtech ecosystem. We found that only 16% of banks are currently taking part in associations and industry 1/3  BIS central bankers' speeches  groups and only 33% of banks are partnering with Regtech firms. So this is an area that definitely needs more work. 9. Our second action is to raise Regtech awareness among banks – in particular their awareness of the benefits, applications and solutions associated with Regtech. 10. Our Regtech Adoption Index told us that a massive 86% of banks consider one of the top public sector activities in this space should be to enhance the engagement between the banking sector and the Regtech ecosystem. 11. And this is where today’s virtual event comes in! It brings together banks, regulators, Regtech providers, industry associations, and representatives from other parts of the Regtech ecosystem. We see this as a perfect opportunity for banks to learn more about the potential benefits of Regtech for their own operations and also for their customers. 12. As part of the efforts to raise awareness, the HKMA has also been publishing a series of Regtech Watch newsletters since November 2019. This series of articles outlines the benefits of Regtech through providing high-level sample use cases for areas like Cyber Risk, Credit Risk, AML/CFT, and also Conduct Management. 13.