samchain/econo-pairs-v1 huggingface dataset:
Banks in both the United States and Switzerland have suffered major problems, forcing authorities to make far-reaching interventions to avoid a financial crisis. Once again, we have seen confirmation of how dependent we are on the functioning of financial institutions, and how financial problems in one part of the world can easily spread to other parts. As a consequence, global standards for financial regulation are likely to require a number of changes. 1 Thank you to Magnus Jonsson and Jonas Niemeyer for help in preparing the speech and to Stefania Mammos  for help with data and figures. Thanks also to Björn Andersson, Mikael Apel, Hanna Armelius, Aino Bunge, Charlotta Edler, Mattias Erlandsson, Frida Fallan, Martin Flodén, Rebecka Hallerby, Iida Häkkinen Skans, Jens Iversen, Gustaf Lundgren, Marianne Nessén, Christina Nordh-Berntsson, Åsa Olli Segendorf, Marianne Sterner, Ulf Söderström and Anders Vredin for valuable comments and Elizabeth Nilsson for the translation. 1 [30]  Monetary policy and measures to promote financial stability are interdependent. If the financial system is not stable, price stability is threatened and without monetary stability, financial stability is threatened. When inflation is high at the same time as there are risks in the financial system – which in Sweden is mainly due to the large private debts of households and companies – this can increase the risk of "financial dominance", that is, that consideration of risks in the financial system limits the possibilities for monetary policy to combat inflation and that the credibility of the inflation target is thereby undermined.

Strong and bold entrepreneurial and political leadership is now required to see the necessary changes for the financial system through, as demonstrated today by the G20 leaders in Pittsburgh. Clearly, there are many areas in financial regulation that can and in many cases should be improved. Given what is at stake, there is clearly a need to prioritize. I have briefly laid out to you this evening where I see those priorities. Thank you for your hospitality and patience. BIS Review 115/2009  5
In addition to the complications that follow on from an institution being established in several countries, supervision and risk management are made more difficult by the banking group sometimes choosing to manage the risks on a functional basis and not in accordance with the bank’s forma organisation. For example, a bank with operations in several countries can choose to locate all of its credit management to one country and its liquidity management to another country. In general, this development strengthens financial stability. The capacity to identify, manage and reduce risks has increased. The institutions’ cross-border operations make them less dependent on how the economy of an individual country develops. However, at the same time a number of new possible problems arise, which must be prevented and managed by institutions and authorities. Risks and vulnerabilities may fall between different authorities’ or countries’ fields of responsibility and thereby may go unnoticed. Or, if they are noticed, territorial conflicts may arise, making it more difficult to implement the measures needed. It may also be unclear where the risks will end up. Bank supervision can ensure that the banks have sold certain risks, but it is not clear whether the buyers have the knowledge and financial strength to manage these risks. In the worst case scenario, the risk will return to the bank in a loss situation. The development I have described must be met with increased harmonisation of regulations and supervision, both between sectors and between countries.

If the country is strongly dollarised or has a currency board (Argentina 2001) or another form of fixed exchange rate regime, there is no possibility to take certain measures, such as supply the economy with a large amount of liquidity. Finally, I have seen that in the cases where the financial sector is large in relation to the rest of the economy (Thailand 1997), the negative contagion effects to society as a whole are much greater. How can one prevent financial crises? In my experience, much can be achieved if the authorities and the financial participants together draw up effective preventive measures and plans for good crisis management. One clear and positive conclusion from the crises in the past twenty years is that good crisis management can save large amounts of money and reduce disruptions to society. On the other hand, it has been demonstrated that bad crisis management aggravates crises, partly by spreading uncertainty among the general public and the financial market agents. Good crisis management involves creating good laws, regulations and supervision. I have seen deficiencies in these fields in many countries. The legal framework may be insufficient, including the external conditions for good supervision, such as poor auditing and accounting. In some countries it is even possible to question whether a rule of law prevails there; that is to say, whether the laws are the ultimate guiding principle as to how the country is governed.
The regional network provides figures for the same quarter far earlier. In 2008, the regional network was able to provide clear evidence that mainland output fell markedly in the fourth quarter as early as December of the same year. National accounts figures for the fourth quarter were published more than two months later, on 19 February 2009. Employment in Norway has held up well through the downturn. It appears that unemployment will be considerably lower than expected. Seasonally adjusted registered unemployment was 2.9 per cent in August. Over the past year, the level of unemployment has risen most in the counties of Aust-Agder, Sør-Trøndelag, Østfold and Vestfold and least in Sogn, Akershus and Finnmark. Unemployment is highest in Oslo, at 3.9 per cent in August. Unemployment may be low because firms have chosen to retain their employees. Perhaps firms are opting to keep a certain labour reserve because of recruitment problems and high costs experienced during the previous cyclical turnaround. Higher government expenditure has contributed to holding up public sector employment. Unemployment may move up if global developments deteriorate and have a stronger impact on output in Norway. Between 1000 and 2000 new jobseekers from other countries are still being registered each month, even though work permits were no longer required for nationals from new EU countries as of 1 May for work lasting less than three months. The level of registered work permits, however, seems to have stabilised over the past year.

Norges Bank’s Executive Board decided in June that the key policy rate should be in the interval ¾-1¾ per cent in the period to the publication of the next Monetary Policy Report on 28 October 2009, unless the Norwegian economy is exposed to new major shocks. In the assessment forming the basis for its monetary policy decision of 23 September, the Executive Board placed emphasis on underlying inflation, which is now below the inflation target. The krone has appreciated and will, in conjunction with continued low imported inflation, contribute to keeping inflation below target in the year ahead. This suggests that the key policy rate should be kept low for a period ahead. Growth in the Norwegian economy has picked up at a more rapid pace than was expected a few months ago. High activity in the oil industry and monetary and fiscal policy measures have contributed to supporting demand for goods and services. Employment is stable and it appears that unemployment will be considerably lower than expected, despite the decline in manufacturing and the building and construction industry. Low interest rates are contributing to renewed growth in household consumption. Higher capacity utilisation and low productivity growth may increase upward pressure on costs, pointing towards somewhat higher inflation and suggesting that the key policy rate should be raised earlier than projected in the June Monetary Policy Report. On balance, it was appropriate to keep the key policy rate unchanged at this meeting, although the Executive Board considered the alternative of increasing the key policy rate.
  A thematic review across a number of smaller Lloyd’s managing agents, to assess how distribution channels are changing. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3    Reviews of underwriting and risks around pricing at a number of motor insurers. For example, we will assess how insurers protect themselves against the risk that under-pricing leads them to take on a large number of policies quickly, particularly through price comparison websites. Life insurance risks and supervisory priorities  In the life sector, the search for yield on Solvency II capital is taking insurers in different strategic directions. Some are taking a ‘capital-light’ approach, focused on unit-linked liabilities and asset management. Others are growing their annuity books, particularly by taking on the liabilities of defined-benefit company pension schemes. One of the most direct and notable consequences of Solvency II has been growth in reinsurance of longevity risk. On average, between 2015 and 2016, longevity risk transfer increased by nearly 25% across UK annuity writers. Long-dated insurance risks, such as longevity exposures, attract a high risk margin. We 2  have been clear that we think the Solvency II risk margin is too sensitive to the level of market interest rates . It is therefore too high at current low levels of interest rates, encouraging insurers to transfer longevity risk through reinsurance. The risk margin is our first priority as part of the Solvency II review. We are working in EIOPA to achieve a sensible outcome.

Across the market, reserve releases continue to run at high levels by historical standards.   Insurers may be underestimating risks, particularly on new business. For example, they may be too sanguine about catastrophe risks, such as significant weather events.   Terms and conditions are loosening.   Insurers may be tempted to expand into new lines of business with apparently more attractive returns. But these may fall outside their knowledge and expertise. Over the course of 2017, we will carry out a number of supervisory initiatives to deepen our understanding of how individual insurers are being affected by these conditions. Our overall expectation remains that firms (and their Boards) are the first line of defence and accountable for the risks written on their balance sheets, regardless of distribution channel used. Where insurers participate in delegated underwriting arrangements, we will expect them to retain the ability to understand the impact of business written through these channels on their overall risk profile. Our specific work this year includes:   Reviews of underwriting and exposure management for selected lines of business at a number of large London Market insurers. In the course of these, we will seek to understand how changes in terms and conditions are carried through to planning, reserving and capital assessment. Where these insurers delegate aspects of underwriting through broker facilities, managing general agents or other arrangements, we will also assess whether they have sufficient information and control to manage their risks effectively.
But they also had no conviction about when, or indeed whether for sure, the music had to stop, and so feared individually that stepping away from the dance “too early” would crystallise business risk, as the dance would simply go on without them and their franchise would be undermined as customers migrated to their competitors. These seem pretty close to the circumstances that Federal Reserve Chairman William McChesney Martin had in mind, over 50 years ago, when he talked about Taking Away the Punchbowl just as the party gets going. An intervention of some kind is needed from someone outside the dance. Some commentators argue that the intervention should come via monetary policy. That as well as steering the path of nominal demand in order to maintain low medium-term inflation expectations, monetary policy should seek to tame the credit cycle. As MPC colleagues have already argued publicly, 6 we are very doubtful about that. It is likely that much higher rates would have been needed in the UK to choke off the credit boom, with the likely effect of pushing the economy into quite a prolonged recession, with a persistent and substantial undershoot of our inflation target. The business cycle and the credit cycle were simply not closely aligned. That is not to say that monetary policy should not take into account risks to the inflation outlook that accumulate slowly and with great uncertainty about when and how they will crystallise. But it makes a compelling case that monetary policy is not sufficient on its own.

Rich countries can and will adjust more smoothly to these challenges, but it will be the poor in the developing world who are going to have to bear the heaviest burden. Naturally, changes in energy production and consumption as well as in energy markets structure have a special contribution to global action for coping with climate change. Second, surging energy demand worldwide makes us see the issues of energy security from a new perspective. A frantic search for energy sources by Asia's emerging economies, and the increasing concentration of production in the hands of sometimes unpredictable regimes, has deep ramifications for energy security in the advanced world, including and most notably in the European Union. Here, a forceful united approach is called for, based on integrated and well-functioning markets and European solidarity. Third, high and volatile energy prices constitute a challenge for macroeconomic management. Energy price developments have pushed up inflation in the advanced world with adverse effect on private demand and growth. On the other hand, windfall due to high energy prices poses challenges to fiscal, monetary and exchange rate management in the countries exporting energy. I am happy that the excellent list of speakers allows us to touch upon all these key challenges today. Ladies and gentlemen, before giving the floor to Mr. David Kotok from the Global Interdependence Center, the co-organizer of today's event, I would like to speak briefly about our cooperation with the Global Interdependence Center.
As you are aware, the decline in the copper prices on the world market has negatively affected the operations of the mining sector, leading to downsizing and job losses. Contributions by the mining sector to Government revenue is also expected to decline in the 2009 while foreign exchange in the market has declined. The unprecedented high prices of fertilisers and other agricultural inputs also contributed to the current high food prices. These and several other factors have resulted in the depreciation of the Kwacha against other international currencies as well as high inflation which closed the year at 16.6% from 8.9% in 2007. Hon Minister, the economic outlook may not be rosy now. The challenges may be huge but at the same time not insurmountable. You will agree with me that as a country with vast arable land and water resources as well as a huge market of eight neighbouring countries, we cannot afford to sit and wait for assistance from other countries. We need to work extra hard so that we can feed our children as well as export the surplus to neighbouring countries. We need to look within ourselves and determine how each one of us can help overcome the challenges that we face today. It is therefore my appeal to all of us present here today to show more commitment to the growth and development of our country.

(While these tendencies show progress, in Britain statistics reveal a decrease in the volume of transactions via cards, due to electronic transactions via mobile phone or other means.) The increasing use of electronic services such as home banking is a considerable development. Thus, in the last years, these services were more used and the users’ spectrum expanded, including not only businesses, which where the target group at the start of supplying this service, but also by individuals. At the end of 2014, the number of accounts accessible via internet stood at 145211, from 27368 at the end of 2010, followed by fourfold increase of such transactions conducted via these accounts. The encouragement of the use of payment instruments is reflected in the increase of activity of settlement and clearing systems operated by the Bank of Albania. In 2014, the activity of the Albanian Interbank Payment System (AIPS) grew by about 1.5 times, compared to the beginning of operations of this system in 2004. Also, the Albanian Electronic Clearing House System (AECH) shows a considerable increase. The value of transactions cleared in this system, during 2014, was 10 times higher than the value of transactions cleared in 2005, when this system started to operate. The measures taken by the Bank of Albania in March 2011 contributed to the use of the clearing and settlement systems. The measures consisted in the reduction of commissions applied to the users for transactions in the Albanian lek.
This may, for example, include microfinance bank, custodial or trust bank, Islamic bank, and investment bank. Such entry would depend on the value added generated for the economy, in terms of increased efficiency in services, and expanded access to underserved segments. In the last year of the Plan, 2014, we may also consider entry in terms of full commercial bank license, if this adds value to the economy, through serving Thailand’s international trade and investment interest, including trends in regional integration. We will also work on improving and developing necessary financial infrastructure to support banks and other microfinance service providers in reaching this untapped market. And for the still missing pieces of the jig-saw, SFIs will take the lead. On the third pillar. There are five key areas of financial infrastructure improvement. First, in response to changes in customer needs that are becoming more complex, efforts would be made to enhance the capability and tools for risk management of financial institutions, including credit, market, liquidity, and settlement risks. Secondly, there needs to be improvement in the information system for risk management of financial institutions to help them in strategic planning and service expansion, while of course, ensuring appropriate protection of client confidentiality. Thirdly, financial laws that support risk management of financial institutions in dealing with credit risk and NPL and NPA management would be reviewed.

As the Swedish banks have grown so rapidly in recent decades, mostly by expanding overseas, it would not be out of place to ask whether they have become too large for Sweden. Is there, perhaps, a limit for how large a banking system can be in relation to the total production capacity and fiscal capacity of one country? The risks for society may, quite simply, become too high. Experiences from Iceland and Ireland during the last crisis undeniably suggest this. And the Swedish banks are certainly large. The combined balance sheet totals of the major banks are equivalent to slightly more than four times GDP (Figure 6, left-hand diagram). This multiple is among the highest in Europe, in the same order of magnitude as the United Kingdom and the Netherlands (prior to the crisis, Iceland was in ninth place). However, I think that we should perhaps be cautious in assessing the risks in a banking system merely on the basis of the size of its balance sheets. For example, imagine that Nordea moved its head office from Stockholm to Helsinki, suddenly becoming a Finnish bank. This would take Sweden below the European average (Figure 6, right-hand diagram). Would the level of risk in the Swedish banking system then have decreased considerably? I don’t think so. The risks in a large banking system have many other dimensions than just balance sheet total in relation to GDP. Large banking systems can be associated with low risks and small banking systems can be associated with high risks.
In oilproducing economies, foreign asset accumulation stems from oil royalties reflected in large government budget surpluses, so that their management by public entities is a natural outcome. The funding of commodity SWFs stems from a domestic resource that is most of the time owned, exploited or taxed by the government: in this respect it is genuine sovereign wealth, and the result of public savings. By contrast, foreign reserves and SWF accumulation that is not commodity related might be seen as primarily a diversion of excess private savings. Commodity funds The set-up of stabilisation funds by oil-exporting countries was first motivated by the desire to smooth oil revenues, which are highly volatile, with a view to maximizing the overall rent from oil extraction. To the extent that commodities are non-renewable resources, standard economic theory suggests that part of extraction revenues should be saved in order to smooth the nation’s inter-temporal consumption, very much like an individual saves over the lifecycle for his retirement, but also possibly in order to leave a bequest to his offspring. Commodity SWFs were indeed equally motivated by an attempt to optimise the intertemporal benefits of natural resources beyond the exhaustion horizon, as well as on the grounds of fairness to future generations. As such, oil funds are far from being a new phenomenon: the earliest funds were thus created in the aftermath of the first two oil shocks.

A major one is to jeopardize the central role, as anchor and stabilizer, of the national central bank currency of a country’s financial and monetary system. This risk stems from the possible development of alternative systems whose settlement asset is not solidly linked to the national central bank money. For instance, tokenized financial assets are booming with the risk that transactions involving them settle with other settlement assets than central bank money, including crypto-assets. In the retail payment space, new players such as BigTechs with huge financial resources and benefitting from worldwide network effects, are making inroads into the payments industry and may provide dominant payment solutions with settlement coins with loose links, if any to central bank money. 2. Let me now turn to the consequences from a more macroeconomic perspective that are relevant for the conduct of monetary policy Digitalization affects the measurement of the price index. It exacerbates measurement issues well-known to price indices, such as dealing with frequent product replacements and 1/4  BIS central bankers' speeches  adjusting for product quality, or dealing with changes in the structure of the economy and hence the weight of new technologies in the economy. Digitalization also influences inflation dynamics via firms’ pricing behavior, market power and concentration, as well as firms’ productivity and marginal costs. On the one hand, it reduces search costs and increases price transparency –think of how e-commerce renders price comparison easy- thereby reducing mark-ups.