samchain/econo-pairs-v1 huggingface dataset:
Banking regulation implicitly provides a trade-off between these considerations. The other main activity of banks is payment services, which are services we use virtually every day. Today, most people in Norway receive money as a bank deposit directly into their account. As long as there are payment solutions that give us cheap and simple access to money, the account is an efficient and safe wallet. Chart: Banks provide payment services But how is it that bank deposits can become money that we can use as payment? An important pre-condition is that there is an infrastructure to enable deposits to be efficiently transferred 2/7  BIS central bankers' speeches  between customers and banks. As the bankers’ bank, Norges Bank creates the money banks use to pay each other, so-called central bank reserves, which are the banks’ deposits at the central bank. Transfers of customer deposits between banks can take place without frictions because a corresponding amount of central bank reserves are transferred between banks’ own accounts at Norges Bank, where banks have a common and trusted means of payment and settlement system. This helps ensure that there is no difference between the money created by DNB and money created by Nordea. The money is interchangeable. For us, it is all Norwegian kroner. As such, banks play a key role in delivering services we want from the financial system, albeit subject to a framework designed by the Norwegian authorities. The banking sector is more strictly regulated than most sectors of the economy.

This is the area where the issues probably are the more complex, having to deal with different legal and failure regimes, the recognition of foreign resolution authorities and powers and for regulators and supervisors, the need to strike the right balance between the appropriate degree of transparency for stakeholders and creditors and of discretion for supervisors, to prevent runs or self-fulfilling prophecies. This heavy agenda may keep us quite busy for some times, but it is a cornerstone to our overall objective of preserving global financial stability. Encompassing all these endeavors, solving the tension between globalization, on the one hand, and differences between national or area wide regulatory framework, on the other hand are no small challenge. A healthy debate between academics, regulators and all sectors of the financial industry – who are not the least vocal-, is very much needed. I hope that today’s conference has been helpful in advancing this debate. Beyond debates, availability of data and access to these data by the various stakeholders will be key for making progress. Last but not least, concentration, increasing complexity, and the fact that some players are still very much out of the radar screen – such as hedge funds for instance- should keep everyone on their toes, in particular when assessing interconnectedness. I thank you very much for your attention. 2  BIS central bankers’ speeches
In 2005 the decision was taken to join ERM II with a unilateral commitment to maintain the exchange rate at its central parity. This was supported by a process of fiscal consolidation, driven both by revenue enhancing and expenditure cutting measures; the first stage of pension reform; the liquidation of loss-making State enterprises and the privatization of others; and further liberalization measures, including in telecommunications and the postal and port services. Measures were also taken in pursuit of the Lisbon Agenda objectives, especially to improve labour market participation and to enhance educational attainment levels. Finally, EU accession also saw the adoption of a new framework for product market regulation. The decision to meet the Maastricht criteria at the earliest possible opportunity seemed overly ambitious to some at the time, but a combination of appropriate policies implemented within a clear strategic framework and an improvement in Malta’s external environment led to the desired objective being achieved just three years after EU accession. In July 2007, in fact, the European Commission recommended to the EU Council that Malta be allowed to adopt the euro on the grounds that it had achieved the high degree of sustainable convergence required by the Treaty. Achievements of the past five years The implementation of reforms began to pay dividends after 2004. Also with the help of stronger external demand, growth accelerated to an average annual rate of 3.4% between 2005-2008, compared with 0.5% in the preceding four years.

Michael C Bonello: Malta's experience of EU membership Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, to the European Documentation and Research Centre, at the Conference “Malta in the EU 2004-2009”, Valletta, 15 May 2009. *  *  *  Introduction When I argued the case for membership of the European Union (EU) in November 2002, 1 the underlying premise was that given Malta’s small size and lack of natural resources, wealth could only be created by adding value to imported inputs and transforming them into products for which there was a demand abroad. In a globalizing, increasingly competitive world economy Malta’s only viable option, therefore, was to seek a more secure access to foreign markets. In this context I went on to argue that deeper integration with our major trading partner, with whom two–way trade was already equivalent to around 65% of GDP, represented a logical response to the challenge of creating a modern economy with the capacity to grow in a sustainable manner. I did emphasise, however, that this objective could only be met if we were prepared to question the way we had managed the economy in the past and resolved to make the necessary changes to institutions and mindsets, policies and work practices.
BIS central bankers’ speeches  1  Experience from around the world shows that biggest threat to monetary and financial stability is government that spends beyond its means. 11. A fellow central bank governor told me this story. He had gone to a country in Africa to deliver a speech. This was a country ravaged by hyperinflation brought on by mounting fiscal deficits. His grateful hosts gave him a momento – a beautifully framed currency note denominated in ten million units of the local currency. Ordinarily, he would decline such a gift, to save the trouble of having to declare it back home. But on this occasion, he asked for one more of the framed currency note and paid for it. On reaching home, he sent one of the framed currency notes to his colleague at the Ministry of Finance with a short note saying, “Please put this in a prominent part of your office as I have done. Let it be a constant reminder to us both that if we do not do our jobs properly, this is what will happen to our country.” 12. We at the MAS thank our colleagues in the Ministry of Finance and the broader government. Your fiscal rectitude has allowed us to concentrate on our mission of securing price stability. 13. MAS is independent within the government, not of it. Having a Cabinet Minister as the non-executive Chairman of MAS has insulated MAS from political pressure.

Some background Chart: Oil wealth has brought strong rise in prosperity In order to put the Norwegian economy into some perspective, we can compare Norway with Sweden, our close neighbour and a country with many similar characteristics. The relative income level between the two countries was stable – until 1969, when oil was discovered in the Norwegian part of the North Sea. Since then, Norway’s income has pulled ahead. Chart: Terms of trade and real exchange rate in Norway and other countries Our national income reflects the considerable improvement in Norway’s terms of trade over the past couple of decades compared with other resource-rich countries. Nonetheless, the real exchange rate in Norway has not appreciated as sharply as in these countries. The extraction of oil and natural gas from the sea bed along Norway’s coast has come to play a major role in the economy. The petroleum sector now accounts for 50 percent of our exports and more than 20 percent of GDP. Furthermore, tax payments by oil and gas companies1 and direct government ownership interests in oil and gas fields ensure that economic rent largely accrues to the public sector. Petroleum income makes up 30 percent of government revenues. Chart: Oil and gas exporters  1  Both ordinary income tax and an additional resource rent tax. BIS central bankers’ speeches  1  On the world market, Norway’s most significant role is that of natural gas exporter. Norway was the world’s second largest exporter of natural gas in 20102.
SPEECH DATE:  16 May 2017  SPEAKER:  Governor Stefan Ingves  VENUE:  Swedish Economics Association  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergst org 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn @ riks ban k.se www.riksb ank.s e  Monetary policy challenges – weighing today against tomorrow* I’d like to begin by thanking you for the opportunity to come here to the Swedish Economics Association. As many of you know, this is a tradition, and today’s speech is my twelfth in a row. I have always appreciated the opportunity to come here and discuss both current issues and long-term themes of more fundamental significance for the Riksbank’s operations. Today’s speech is about monetary policy and its challenges in a slightly longer perspective. But before broaching that subject, I would first like to comment on the news item published by the Riksbank this morning. In brief, it states that the Executive Board is considering switching over to a new target variable, the CPIF, this autumn, and introducing a ‘variation band’ to illustrate uncertainty over the development of inflation. Ever since the inflation target was introduced nearly 25 years ago, it has been defined as the annual change in the consumer price index, the CPI. However, in recent years, the CPI has become increasingly difficult to use as guidance for monetary policy.

This is very much the theme of my speech here at the Swedish Economics Association – weighing the effects of monetary policy today against the effects tomorrow and what challenges this creates. But I thought I’d start by discussing the downward trend in global interest rates and what this means for monetary policy, as it is important to realise that the problems we are grappling with in Sweden are very much influenced, and shared, by the world around us. 3 [23]  Downward trend in global interest rates The financial crisis that broke out in the autumn of 2008 was preceded by a seemingly calm and stable period of low inflation and good economic growth. The period is normally referred to as The Great Moderation. This positive development can be attributed to a number of factors. Ever-faster globalisation led to greater movement of goods, services, labour and capital among countries. This, in combination with various deregulations increased competition on labour and goods markets, contributing to higher economic growth. Increasingly independent central banks focused on achieving low and stable inflation are also considered to have contributed to the positive development. In retrospect, we can now see that major financial imbalances had built up in what appeared to be a stable macroeconomic environment. Central bank monetary policy had successfully stabilised inflation. But this did not prevent the break-out of the more serious economic crisis since the 1930s.
The trade-off is subsequently performed between objective fulfilment in terms of inflation and resource utilisation during the forecast period, and the risk of very poor objective fulfilment further ahead due to a financial crisis. A consequence of this approach is that it has to be based on longer time horizons than currently since the build-up of financial imbalances occurs over longer periods of time. Norges Bank has chosen a different approach in which an explicit term is incorporated into the loss function of the monetary authority. The purpose of this term is to capture that, in addition to the price stability and sustainable resource utilisation targets, financial stability should also be accounted for. Whatever approach chosen, in order to give financial stability a greater role in the monetary policy decisions, the use of financial variables as indicators in monetary policy decisionmaking will increase. Measuring financial stability is often difficult To measure the extent of financial stability requires a broad approach which can often resemble detective work. The stability report which we publish twice a year is an example of  BIS central bankers’ speeches  3  the type of comprehensive analysis that is needed. It describes a series of indicators, for example credit growth, risk premiums, and the development on various asset markets. From this year, we have also introduced an annual report of our assessment of Sweden’s financial infrastructure. Taken together these indicators often give a good picture of the financial situation.

I will start to discuss monetary policy and then move on to macroprudential policy. The monetary policy framework is in need of review As I have mentioned, monetary policy of the 1990s and up to the financial crisis was viewed as successful by many. It was considered that this played an important role in both the relatively low and stable inflation, and the relatively stable GDP growth during those years. During the global financial crisis, it came to light, however, that major financial imbalances had been built up despite the seeming stability of many macroeconomic indicators. An important lesson from the financial crisis is therefore that low and stable inflation does not always guarantee financial stability or sustainable economic growth. The huge costs of the financial crisis to the real economy have led central banks around the world to start thinking about the current monetary policy framework. The challenge ahead is to create a framework which continues to safeguard stable prices, but which at the same time is consistent with a sustainable development in the financial system. Financial circumstances therefore need to be accounted for in the monetary policy decision-making. Taking account of financial factors in monetary policy decisions Different approaches can be used to formally take greater account of financial stability in monetary policy decisions. For instance, how much a change in the policy rate affects the probability of a financial crisis can be calculated.
I would say that price stability can be regarded as the bedrock of financial stability, while financial stability is critical to the efficiency of monetary policy. Let me elaborate further on these two points. First, why is price stability the backbone of financial stability ? Financial stability can be achieved on a sustainable basis if financial resources are not misallocated. Past experience, as well as a large number of economic studies provide evidence that inflation brings about distortions in the allocation of resources. For instance, the calculation of returns is biased, due to the fact that the replacement cost of fixed assets is structurally underestimated. This may result in sub-optimal investment decisions, and over-optimistic credit risk assessment. Conversely, in the case of deflation, the solvency of indebted companies may be jeopardized, as the value of cash flows decreases over time, while the face value of debt remains stable. Second, why does financial stability matter for the efficiency of monetary policy? The efficiency of monetary policy relies on the effectiveness of the transmission channels of monetary policy. Central banks have direct control over short-term interest rates only. The impact of monetary policy decisions on prices goes through various channels - acting directly on the anticipations of economic agents, influencing banking credit conditions, the exchange rate and other asset prices. Uncertainty may arise when these channels do not act in a predictable way nor with relatively stable time lags. In this respect, financial instability may affect the transmission channels of monetary policy.

A guiding principle for us is that the body that is given responsibility for macroprudential policy needs a clear mandate with both the right and obligation to take action against risks that arise and appropriate tools that can be used to limit the risks. The discussion of macroprudential policy also comprises the issue of the Riksbank’s balance sheet, and particularly the foreign-exchange reserve. As you know, the inquiry conducted by Harry Flam recently presented its proposals. Here too, the Riksbank is in the process of formulating its stance. The public are entitled to expect that the authorities act to prevent and manage financial crises in the best possible way All of the things I have talked about here are measures that aim to reduce the risk of a financial crisis recurring, or to limit the damage if a financial crisis nevertheless breaks out. The international process that has come to expression in the Basel III Accord is creating better regulations for the banks in all countries. This also benefits us here in Sweden. Over and above this, however, we have to manage the Swedish banking system and its special characteristics. Sweden is a small open economy with its own currency and large banks. We need special regulations. This means that we, like a number of other countries, want to proceed more quickly and impose stricter requirements than those in the Basel III  10  BIS central bankers’ speeches  Accord. However, the measures we have taken so far have already clearly strengthened the Swedish banks.
Simon M Potter: Trends in foreign exchange markets and the challenges ahead Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the 2015 FX Week Conference, New York City, 14 July 2015. *  *  *  I would like to thank Robert Lerman and Jamie Pfeifer for their excellent assistance in the preparation of these remarks and colleagues in the global central bank community for numerous insightful comments and suggestions. Good morning. It’s a pleasure to be here. Let me extend my thanks to FX Week for the invitation to speak at this conference. Before I begin, I would like to note that my comments today reflect my own views and not necessarily those of the Federal Reserve Bank of New York. The ability of households, corporations, and sovereigns across the world to safely and efficiently exchange assets denominated in one currency for assets denominated in another is essential to a healthy and robust global economy. These transactions can occur for myriad reasons – to support the flow of goods, services, and investment across national boundaries, to diversify the savings of retirees, or to hedge risks associated with manufacturing a particular type of product.

8 The resulting loss of the public’s faith and trust in this critical market comes with a cost: Let’s recall that it is ultimately the public that stands to lose from an FX market unable to play its vital role in the global economy. The FX market is considered by many to be relatively lightly regulated, particularly in the FX spot market. Regulatory treatment across jurisdictions varies. 9 Regardless of who regulates in a given region, in the absence of a single centralized and comprehensive global regulator of this highly global market, collaborative efforts between the private and official sectors play an important role. These efforts help us to better understand the roots of the misconduct and the misalignment of incentives that contributed to weaknesses in trading structures and encouraged unethical and illegal activities. And they can also play an important role in elevating best practices in order to promote a sound, effective FX market going forward. In the remainder of my remarks, I’ll discuss three examples of such work. First, the recommendations of the Financial Stability Board’s Foreign Exchange Benchmarks Group. Second, the work of the various foreign exchange committees, including the New York Fedsponsored Foreign Exchange Committee (FXC), to provide more detailed, globally harmonized guidance through an expanded Global Preamble to the existing regional codes of conduct.
Although the lira fluctuates on a daily basis against the euro and other foreign currencies, it is fixed in terms of the basket. The use of a fixed exchange rate in which the euro is the main reference currency, moreover, already requires our interest rates to shadow those of the euro area. In practice, therefore, Malta has already largely relinquished monetary independence, so that entry in the euro area will not represent a major loss in this regard. Overall, therefore, the evidence suggests that neither ERM II nor the irrevocable fixing of the Maltese lira/euro exchange rate at a later stage involve a radical shift in policy regime. And since the Maltese economy already possesses many of the characteristics required for a smooth transition to a complete peg with the euro and full participation in EMU, the adoption of the euro does not only carry with it the prospect of substantial benefits, but is also an objective which can be pursued without fear of serious economic repercussions. Entry in the euro area, however, is not automatic but is subject to the fulfilment of a number of conditions. In this respect, since the legal, institutional and operational preparations are on track, the only significant challenge is represented by the Maastricht criteria. As for the inflation rate and the long-term interest rates, these have generally been within, or close to, the reference values in recent years.

As Hari Vittas, Alternate Executive Director for Malta’s constituency in the IMF aptly put it during a recent IMF Economic Forum, “The potential benefits of monetary integration may be large, but they are not automatic and can easily be wasted in the absence of good policies.”1 On balance, however, the benefits of participation in the euro area should more than outweigh the costs, such that over a sufficiently long time span the growth potential of an economy should be higher than it would have been outside the union. This expectation is supported by the results of recent research. An extensive study by Andrew K Rose of the University of California at Berkeley, for example, concludes that a currency union results in approximately a doubling of trade. Within the euro zone, moreover, it is estimated that trade volumes have increased by 15 per cent, beyond what can be explained by growth and other factors. Recognizing such benefits of EMU, many credit rating agencies foresee an upgrade in the ratings of those new Member States that are among the first to adopt the euro,2 although they generally emphasize that what matters is establishing a track record with respect to the implementation of reforms, especially fiscal consolidation.3  The broader macroeconomic challenge These observations notwithstanding, premature participation in a currency union is nevertheless associated with some potential pitfalls. These result from the loss of monetary and exchange rate policy as a tool for stabilisation purposes.