samchain/econo-pairs-v1 huggingface dataset:
But the krone exchange rate showed little change, and rapidly found a new range. From 1996 the conditions necessary for exchange-rate stability deteriorated. With a strengthening of central government finances, the minority government was not able to contribute sufficiently to restraining growth in government spending. Wage growth was substantially higher than in other countries. Moreover, petroleum revenues fluctuated widely from year to year and turbulence in international financial markets spilled over to our currency. The krone exchange rate fluctuated in spite of the active use of Norges Bank's instruments. Volatility increased further in 1998. The Norwegian krone fell in value. In response to this the interest rate was raised on several occasions through 1998. The years between 1996 and 1998 showed that it was difficult to use the interest rate to finetune the exchange rate. Norges Bank Governor Kjell Storvik discussed the situation in a speech he gave in August 1998: “Let us be mindful of the well known fact that a lower exchange-rate can amplify inflation expectations and that these expectations can in turn contribute to expectations of a weaker exchange rate, and in themselves amplify the depreciation tendency. Price expectations would then be self-fulfilling. The interest-rate level  5  Translation of an interview published in the Norwegian newspaper Adresseavisen 27 December 1980. 6  A key element in the Keynesian way of thinking in the 1960s and 1970s was that employment could be reduced in the long term merely by accepting higher inflation.

It is therefore important that the authorities do not sow doubt, but on the contrary pursue a longterm and predictable policy. The authorities must be credible and inspire confidence. There must be consistency between the stated objectives of economic policy and what is actually done to achieve these objectives. This is the most important reason why the conduct of monetary policy has been delegated to the central bank in Norway, as is the case in other comparable countries. The question of central bank independence is not new. When Norges Bank was established almost 200 years ago, there was much discussion about where to locate the head office. Trondheim was chosen and one of the arguments in the debate was that locating the central bank far from the seat of government would prevent the central bank from coming under political pressure. It was not until 1896 that the Storting decided that the central bank should be moved to Kristiania (now Oslo). The strongest objection to relocating the central bank from Trondheim to Kristiania was expressed by Director Karl Gether Bomhoff, who was in fact also a friend of Henrik Ibsen from his Dresden period. 11 Bomhoff was a member of the Bank’s board for 35 years, from 1885 to 1920. In 1893, he became the first permanently employed chairman of the board and the first director for the entire central bank.
The cyclical dimension of systemic risk captures the procyclicality of financial agents’ behaviour which, if left unchecked, can amplify the financial cycle and increase its instability – a classical collective action problem. Historical evidence shows that the risk of such instability is particularly elevated in situations that combine rising residential prices and dynamic credit growth.1 Regulators and policymakers around the world have been working hard on regulatory measures that aim directly at containing these risks. The Lehman anniversary and the papers that have been discussed here this afternoon make this conference a good occasion to reflect on these efforts. In particular, I want to talk about the progress we have made here in Switzerland in devising and implementing regulatory answers to mitigating systemic risk, and also about the work we still have ahead of us in this regard. I will address these two issues in turn. For a start, let me give you a quick overview of the global reform agenda. On the global scale, the regulatory reform approach (Basel III) sets minimum capital adequacy requirements that are more stringent in both quantitative and qualitative terms, and introduces a global minimum standard on liquidity buffers. At the same time, importantly, the new framework takes explicit account of systemic risk. First, it imposes a capital surcharge for systemically important institutions in order to address the structural TBTF problem.

This surcharge amounts to additional loss-absorbing capital of between 1.0% and 2.5% of riskweighted assets, with the specific requirement depending on the degree to which an institution is systemically important. Second, it introduces a countercyclical buffer ranging between 0.0% and 2.5% of total risk-weighted assets, to increase the system’s resilience to cyclical systemic risk. This buffer can be temporarily imposed when credit growth is judged  1  Cf. for instance Borio, C. (2012) or Schularick, M. and Taylor, A. (2012). BIS central bankers’ speeches  1  excessive. These new rules are being phased in over several years and will come into full effect in 2019.2 Regulation in Switzerland: Framework and progress so far Switzerland is well advanced in the process of introducing a new regulatory approach in line with this international framework. There was, and still is, an urgent need to proceed faster and to go beyond the global minimum standards. First, the size of Switzerland’s two major banks, Credit Suisse and UBS, relative to GDP is very large by international standards (8:1 in 2007 and 4:1 today). It is worth recalling that, back in October 2008, in order to prevent a breakdown of our financial system, the Swiss authorities had to take measures to strengthen UBS, putting a large amount of public funds – up to USD 60 billion – at considerable risk. Despite the favourable turn of events since then, we have to take all means necessary to avoid such a situation in the future.
Further, the central bank needs to take care that its provision of money-like assets in normal times does not crowd out the private financial system or exacerbate run behavior in stressful times.9  Private provision of money-like assets The private sector plays an important role in the provision of money-like assets. For instance, banks create money-like assets in the form of bank deposits.Similarly, nonbank institutions, such as money market funds (MMFs), can also provide money-like assets. However, private provision of money-like assets can increase the risk of financial instability. In order to provide money-like assets, financial institutions generally engage in maturity and liquidity transformation, transforming longer term assets into callable liabilities that are runnable.10 Thus, although in normal times investors may perceive these privately produced assets as safe and liquid, a sudden shift in investor perceptions can amplify instability in periods of market stress. To the extent that the private sector does not incorporate the social cost of runs on private callable liabilities, too much private money can be created in normal times, generating a role for public sector intervention. The main way the public sector can mitigate the risks associated with the excessive private supply of money-like assets is through regulation and supervision. By reducing the fragility of 2 / 10  BIS central bankers' speeches  financial institutions, regulation reduces the run externalities associated with private money creation. Effective capital regulation and supervision are the main tools for reducing investor concerns about the banking system’s solvency in stressful times.

As always, the views presented here are my own and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System.1  Money-like assets versus safe assets Money-likeness and safety, although closely related, are not completely overlapping concepts.2 Safety refers to an asset’s lack of actual and perceived exposure to risk, including credit risk, counterparty risk, interest-rate risk, and market risk.3 Money-likeness refers to an asset’s lack of information sensitivity, such that, when it is used in transactions, economic agents need not worry about its future value, at least in the short term and in most states of the world.4 Because of this, money-like assets are usually short-term, liquid assets with no credit or counterparty risk, promising a fixed payment in nominal terms.5 In normal states of the world, investors tend not to distinguish too carefully between and among money-like and safe assets. However, in non-normal states of the world, where investors have heightened perceptions of risk—partly because of underlying credit or counterparty issues, but also critically because of uncertainty about the actions of other investors—investors tend to view directly-held liabilities of the official sector as substantially safer than those of the private sector. In these non-normal states of the world, central banks have the unique ability to quickly produce large quantities of assets that are both safe and money-like.
Zeti Akhtar Aziz: Asia’s new development strategy – where now? Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the ASEM Conference "Asia's New Development Strategy: Where Now? ", Kuala Lumpur, 19 October 2009. *  *  *  Introduction The experience of economic development in Asia - home to more than half of the world population and one of the most diverse regions - for more than half a century has been remarkable. Despite being interrupted by turbulence from time to time, Asia has, in general, attained and sustained high growth rates during this period, experienced rapid structural economic transformation and shifted from economies based on agriculture to capitalintensive production of modern goods and services. From a mix of poor and less developed economies after the Second World War, Asia today features five of the twenty largest economies in the world and several of the fastest-growing economies, contributing around one-third of global output and world trade. The objective of economic development is, however, not solely based on trade, finance or even wealth. Economic development is fundamentally about the welfare of people, where growth is but a means to achieve continued improvements in the standards of living. Viewed within this context, Asia has achieved significant progress too. Asia's rapid development has led to a more than four fold increase in average per capita income, lifting more than 500 million people out of poverty and destitution since the 1980s.

According to Eurostat’s flash estimate, euro area annual HICP inflation fell to 2.2% in November 2012, down from 2.5% in October and from 2.6% in the two previous months. On the basis of current futures prices for oil, inflation rates are expected to decline further to below 2% next year. Over the policy-relevant horizon, in an environment of weak economic activity in the euro area and well-anchored long-term inflation expectations, underlying price pressures should remain moderate. This assessment is also reflected in the December 2012 Eurosystem staff macroeconomic projections for the euro area, which foresee annual HICP inflation of 2.5% for 2012, between 1.1% and 2.1% for 2013 and between 0.6% and 2.2% for 2014. Compared with the September 2012 ECB staff macroeconomic projections, the projection range for 2013 has been revised downwards. In the Governing Council’s assessment, risks to the outlook for price developments are seen as broadly balanced, with downside risks stemming from weaker economic activity and upside risks relating to higher administered prices and indirect taxes, as well as higher oil prices. Turning to the monetary analysis, the underlying pace of monetary expansion continues to be subdued, taking into account developments over several months. Most recently, the annual growth rate of M3 increased to 3.9% in October, from 2.6% in September, while M1 growth accelerated to 6.4% from 5.0% over the same period. These developments are partly due to a specific transaction leading to an increase in overnight deposits belonging to the non-monetary financial sector.
Mario Draghi: Structural Reforms, inflation and monetary policy Introductory speech by Mr Mario Draghi, President of the European Central Bank, at the ECB Forum on Central Banking, Sintra, Portugal, 22 May 2015. *  *  *  Accompanying charts can be found at the end of the speech. Summary Structural and cyclical policies – including monetary policy – are heavily independent. Structural reforms increase both potential output and the resilience of the economy to shocks. This makes structural reforms relevant for any central bank, but especially in a monetary union. For members of monetary union resilience is crucial to avoid that shocks lead to consistently higher unemployment, and over time, permanent economic divergence. It therefore has direct implications for price stability, and is no less relevant for the integrity of the euro area. This is why the ECB has frequently called for stronger common governance of structural reforms that would make resilience part of our common DNA. Structural reforms are equally important for their effect on growth. Potential growth is today estimated to be below 1% in the euro area and is projected to remain well below pre-crisis growth rates. This would mean that a significant share of the economic losses in the crisis would become permanent, with structural unemployment staying above 10% and youth unemployment elevated. It would also make it harder to work through the debt overhang still present in some countries.

This means that they have two key effects. First, they lift the path of potential output, either by raising the inputs to production – the supply and quality of labour and the amount of capital per worker – or by ensuring that those inputs are used more efficiently, i.e. by raising total factor productivity (TFP). And second, they make economies more resilient to economic shocks by facilitating price and wage flexibility and the swift reallocation of resources within and across sectors. These two effects are complementary. An economy that rebounds faster after a shock is an economy that grows more over time, as it suffers from lower hysteresis effects. And the same structural reforms will often increase both short-term flexibility and long-term growth. For example, reforms aimed at encouraging reallocation will not only support faster adjustment, but also higher productivity through raising allocative efficiency. 1 Reforms aimed at strengthening competition will not just encourage greater price flexibility, but also higher investment as young firms are able to enter new markets and expand more quickly. 2 A comprehensive package of structural reforms will therefore tend to increase both resilience and growth. These are clearly issues in which any central bank has a keen interest. But this is especially true for the central bank of a monetary union – and even more so in the conditions we face today. Let me explain why.
Causes of the financial market turmoil What have been the underlying main causes of the financial market turmoil? What have been the key weaknesses in the functioning of the financial system that have been revealed? And what are the appropriate further responses of market participants and policy-makers? A full diagnosis of the causes and weaknesses is not yet complete and, indeed, not possible as the  19  8  See ECB (2007b), Box 7, on the propagation of the sub-prime shock to other markets. BIS Review 9/2008  market adjustment is still ongoing. Nevertheless, I would like to highlight four areas that are also pertinent to the issues of financial integration and development we are discussing. •  First, the underlying causes and triggers are to be found in the price dynamics of the US housing market and the excesses and shortcomings (in the practices) in the US sub-prime mortgage market. So, a main determining factor of the financial market turbulence is that same one – property price overvaluation – that characterised previous episodes, as emphasised by Kenneth Rogoff. •  Second, weaknesses in the functioning of the market for structured finance products. These included valuation uncertainties due to the complexity of many products, the imperfect information available about the underlying asset characteristics, inadequate appreciation by investors of the embedded risks, and excessive reliance on the ratings of such products by credit rating agencies.

We need a system where senior people who are responsible for the performance of their firms understand that for a reasonable period of time a meaningful proportion of their remuneration is at risk of being taken away. There is nothing new about this; after all, it is how the traditional partnership system worked. So let me be blunt, the bonus cap is the wrong policy, the debate around it is misguided, and the best thing I can say about allowances is that they are a response to a bad policy. They are not a good solution. I will not win friends in some places for saying this but it dismays me to see a debate which is at times so divorced from the heart of the matter, which is setting appropriate incentives by putting a meaningful amount of pay at risk. Sadly, taking this stance sometimes attracts the criticism of being pro bonuses. This is not true, and I can say from experience that advocating putting bankers’ pay at risk does not naturally improve my popularity in some quarters. But if you don’t believe it from me, here is what the Parliamentary Commission on Banking Standard had to say: “There are distinct advantages to a significant proportion of banking remuneration being in variable rather than fixed form. It is easier to adjust variable remuneration to reflect the health of an individual bank.
And by the end of this year, we will have assessed and approved more than 50 applications for senior management positions within these groups, and considered the suitability of their proposed prudential sub-groups, containing hundreds of entities between them. Ring-fencing also resulted in the Bank helping ring-fenced banks undertake around 20 on-boarding operations to payment systems settling across the books of the Bank, and admitting six banks to the Sterling Monetary Framework. Most of the banks have also needed to undertake a complex legal process – called a ring-fencing transfer scheme – to transfer assets and liabilities between legal entities in their group.4 Each transfer required Court approval. Independent ‘skilled persons’ were required to review the banks’ plans, the PRA and FCA were called to provide their opinions, and objections from the public were invited before the judges could make their decisions. In each case, the Courts were able to approve the transfers going ahead. These transfers took place between April and August this year. Over £ billion of assets were moved between legal entities over a series of implementation weekends. Operational changes, in particular involving IT systems, can be complex, and the impacts when things go wrong can be wide-ranging and difficult to remedy. But in each case the ring-fencing transfer took place smoothly. A knock-on impact of these transfers was that the sort codes of over 1.3 million retail and corporate account holders needed to be changed.

Ravi Menon: How Singapore manages its reserves Keynote speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the National Asset-Liability Management Europe Conference, Singapore, 13 March 2019. * * * Ladies and gentlemen, good morning. Singapore has official foreign reserves (OFR) of almost $ billion. In absolute terms, this is the eleventh highest stock of OFR in the world. As a percentage of GDP and on a per capita basis, it is the third highest in the world. Singapore’s OFR sit on the balance sheet of the Monetary Authority of Singapore (MAS), the central bank and integrated financial regulator. Besides the OFR, there are two other pots of national reserves in Singapore: The Government of Singapore Investment Corporation (GIC), a fund management company, manages on behalf of the Singapore Government a diverse portfolio of foreign assets – well in excess of $ billion. Temasek Holdings, an investment company wholly owned by the Singapore Government, holds equity stakes in a variety of domestic and foreign corporates, amounting to more than $ billion. This morning, let me try to answer three questions: What role do the reserves play? How are the reserves accumulated and managed? How are the OFR managed? Why does Singapore hold reserves? Singapore’s reserves serve three objectives: one, to serve as a buffer against crisis; two, to provide a stream of investment income to help finance part of the annual government budget; and three, to maintain confidence in Singapore’s exchange rate centred monetary policy.
Some said that the development in the last three decades was a miracle and was almost incredible. Instead, I would describe it as a “world-shaking” development. Having encountered enormous difficulties and challenges at every single stage of reform and opening up, China, as the country with largest population in the world, managed to carry out an unprecedented transformation from a planned economy to a market economy. As there was no precedent to learn from, China could only rely on its own efforts and took one step at a time. Hong Kong has played an extremely important and irreplaceable role during the process of China’s reform and opening up. At the initial stage of opening up, China focused on attracting foreign investors to set up manufacturing factories. Hong Kong manufacturers were the first to move their operations to Mainland China. In the past 30 years, Hong Kong has always been the largest source of direct investment in the Mainland. In 2009, Hong Kong invested $ billion in China, accounting for one half of the total foreign investment in the country. In the course of investing in China, not only has Hong Kong injected capital but, more importantly, it has introduced skills in production and management. In the past decade, the Mainland projects in which Hong Kong invested have gone through some significant changes. The focus has been shifted from investment in the manufacturing industry to a range of diversified and multi-dimensional investments that include investment in all kinds of service industries.

May I also again urge governments to implement decisively the structural reform agenda, both within the area of fiscal expenditures and revenues and in labour and product markets. Such action is needed to enhance potential output growth over the medium term. At the same time, the prompt implementation of structural reforms would contribute towards strengthening confidence in the euro area and thereby support economic growth in the short term. We are now at your disposal for questions. 2  BIS Review 64/2002