samchain/econo-pairs-v1 huggingface dataset:
At this point, banks are almost entirely dependent on central bank liquidity facilities, and the interbank markets are more or less non-functional because of the utter lack of confidence. The balance sheets of the world’s largest central banks have grown significantly since the end of last summer, with some expanding many times over. For several years, the Central Bank of Iceland’s rules on liquidity facilities have been largely modelled on those of the ECB. I say largely because for quite a while the Icelandic rules were rather more stringent than those in Europe – that is, the Central Bank of Iceland set stricter requirements concerning eligibility of collateral. Facilities in the Central Bank of Iceland resembled those in the ECB’s jurisdiction; the collateral accepted was similar, and so on. This applied, among other things, to bonds issued by banks. Last year, steps were taken to align the Icelandic rules more closely with those in Europe in order to increase access to liquidity. In 2008, the European Central Bank responded sharply to what it considered excessive borrowing from the ECB by Icelandic banks through subsidiaries in EMU countries. The loans concerned had been taken in compliance with the ECB’s rules on liquidity facilities for financial undertakings in EMU countries, but the ECB demanded that the Icelandic banks repay, quite quickly, a large share of the facilities of which they had availed themselves in good faith. Those repayments were funded at least partially with deposit accumulation in foreign branches.

Some critics have maintained that, in the May 2008 issue of Financial Stability, the Central Bank contradicted its own knowledge of the state of the banks – or even that it did not know any better. This is untrue. The report examined in a transparent manner the financial system’s weaknesses, as well as its strengths. The developments in the global arena since the spring of 2008 rendered the risks mentioned in Financial Stability far more serious than was foreseen. In its monetary policy statement in July 2008, the Board of Governors said inter alia that “Iceland’s commercial banks play an important role in maintaining confidence in the financial system. Under the current global financial market conditions, they must protect their liquidity and capital position, seek all possible ways to reduce their need for foreign credit, and adapt the scope of their operations to dramatically changed circumstances.” Throughout 2008, the Central Bank of Iceland focused increasing attention on the developments and operational outlook at the nation’s financial institutions – particularly its large banks. Among other things, it monitored their liquidity much more closely and frequently than is stipulated in the Bank’s rules on liquidity requirements, and considerably more than had been customary. The Central Bank met with leaders from the large commercial banks and reviewed various aspects of their operations, requesting information on and explanations of the developments in certain areas, such as liquidity, funding, changes in lending and deposits, asset sales, etc.
(2) Up to 25 March 2008. Sources: Central Bank of Chile based on a sample of investment banks (IB), Consensus Forecast and International Monetary Fund. WTI oil price $  2008 (f)  2007  2009 (f)  Jan. MPR 93  Mar.08  Jan. MPR 88  Mar.08  DoE (11 mar) Deutsche Bank (07 mar) JP Morgan Chase (14 mar) Scotiabank (14 mar) Lehman Brothers (29 feb) Barclays (19 mar)  87 80 70 90  82 75 65 --  87  94 85 82 95 86 101  --  86 80 75 95 78 --  Goldman Sachs (04 mar) Merril Lynch (19 mar)  97 76  97 102  --  ---  IB's Mean (1)  83  90  74  83  97  97  --  --  Central Bank of Chile  Actual Mean (2)  72  (1) Excludes Goldman Sachs and Merrill Lynch. (2) Up to 24 March 2008. Sources: Central Bank of Chile based on a sample of investment banks (IB), Consensus Forecast and International Monetary Fund. We are in the presence of a significant relative price shock. The relative price of foodstuff and energy has changed in a number of countries. Given the persistency of these international relative prices changes, domestic prices are adjusting accordingly, giving the appropriate signals for resource reallocation. Chile is an interesting case in this respect.

Incidence in annual CPI inflation (*) (percentage points)  10  10  8  8  6  6  4  4  2  2  0  0 -2  -2 01  02  03  04  Fuels (3,97%) Food ex. fresh fruits and vegetables (23,5%)  05  06  07  08  Fresh fruits and vegetables (3,77%) Other (68,76%)  (*) Between parenthesis CPI basket weights. Sources: Central Bank of Chile and National Statistics Bureau. The upward trend of international prices of foodstuff has not replicated the intensity of 2007 and the weather-related problems of last year were left behind with the change of season. Nevertheless, Chile faces this year a new climatic shock that is already affecting the prices of perishable goods and electricity, associated to the “La Niña” phenomenon. The challenge of monetary policy is to allow the adjustment in relative prices avoiding undesired second-round effects. For this purpose, we have adopted a flexible inflation target framework. The inflation objective is to keep inflation most of the time close to 3% with a tolerance range of plus/minus one percentage point. We implement this framework adapting monetary policy to having an inflation forecast near 3% in about two years. This time horizon gives enough flexibility to allow for the full effects of monetary policy to take place and for transitory inflationary shock to vanish without the need for monetary policy action. It also incorporates the output costs of disinflation.
Lars Heikensten: Euro entry before reforms or reforms before euro entry? Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at the Frankfurt European Banking Congress, Frankfurt, 21 November 2003. *  *  *  The outcome of Sweden’s referendum was an unambiguous “no” to euro adoption. This means business as usual for Swedish monetary policy. Since 1993 we have had an inflation target of 2 per cent, which has gained credibility with the public and the markets. Since the introduction of the inflation target, inflation has averaged 1.7 per cent while average growth has been 3 per cent. This compares well with the Swedish experiences of previous decades. It also compares favourably with the recent performance of the euro area. This relative strength of the Swedish economy was in my opinion an important factor behind the result in the referendum. However, the outcome of the referendum does not mean business as usual in our relations vis-à-vis the rest of Europe. We will not have a seat at some of the negotiating tables in Frankfurt and Brussels that we could have had. Of course, we will try to compensate for this. To some extent, this can be done by keeping our own house in order - by conducting sound economic policies. Also, we will do our utmost to contribute to European policy discussions. Being outside the euro certainly doesn’t mean that we want to be on the margins of the debate on monetary integration in Europe.

Output growth became more job intensive towards the end of the 1990s and the estimates of the natural rate of unemployment (NAIRU) in the euro zone tend to show a decline in structural unemployment from the mid-1990s. However, the high level of average unemployment and the relatively low average employment rate in the euro area, which in 2002 was still around 62%, compared for example to the United States with almost 75%, indicate that much more needs to be done. More specifically, policies should aim at: •  Increasing incentives towards employment. Policies should aim towards reducing labour taxes and non-wage labour costs and increasing the incentive compatibility of benefit systems. •  Allowing for a sufficient degree of wage differentiation to ensure that wages reflect divergent productivity growth and regional/sectoral developments. •  Increasing the efficiency of matching potential workers with job vacancies. This requires continuous investment in education, training and life long learning as well as improved efficiency of public and private employment services. •  Increasing other aspects of labour market flexibility such as labour mobility (across occupations, sectors and regions) and encouraging the increased use of more atypical forms  2  BIS Review 6/2004  of employment such as flexitime, part-time and self-employment in particular, which should play a much more important role in job creation in continental Europe. The need for further labour market reforms should also be seen against the background of population ageing.
The other Nordic countries – Denmark, Finland and Sweden – are comparable in size and structures, but are mainly non-oil economies. 3 Three indicators may be relevant in this context. First, there is no evidence that our productivity growth has been eroded. In fact, Norway has generally managed to sustain high productivity growth compared with most other advanced countries. Second, there is no evidence that labour force participation has been impaired. In fact, labour force participation is now high, after having lagged behind our neighbouring countries up to the mid-1980s. A third indicator is welfare spending. Here, there is evidence that developments have been less favourable. Norway has seen a sharp increase in sickness absence and a steadily higher share of the working-age population is on disability benefit or rehabilitation schemes. Over the past decade, Norway has underperformed on this score compared with the other  1  The expression ”Dutch disease” originates from the Netherlands, where the government rapidly spent large revenues from extraction of gas in the 1960s. 2  The economic literature includes many studies that look at the relationship between income from natural resources and economic growth, see for example Jeffrey D. Sachs and Andrew M. Warner, “The curse of Natural Resources”, European Economic Review 45 (2001) and Thorvaldur Gylfason, “Natural Resources and Economic Growth: From Dependence to Diversification”, Discussion paper No. 4804, CEPR. 3  Denmark has also been producing oil and gas since the early 1970s, but on a smaller scale than Norway.

Governance structure and management model Now, let me turn to the Fund management model. The governance structure is based on a clear division of responsibilities between the political authorities and the operational management. •  The Ministry of Finance is the owner of the Fund. The Ministry defines the mandate and monitors and evaluates performance. •  The management of the Fund is delegated to Norges Bank. The Bank’s task is to implement the investment strategy and exercise ownership rights. Norges Bank also provides professional advice to the Ministry on investment strategies. The Fund’s investment strategy is to maximise financial return with moderate risk. The longterm strategic allocation is defined in terms of a benchmark portfolio, which consists of equities and fixed income instruments. Equities account for 60 per cent of the Fund's strategic benchmark portfolio. The size of the Fund implies that it currently owns about 1 per cent of listed European equities and ½ per cent of listed equities on a global basis. Fixed income instruments account for 40 per cent. 2  BIS Review 81/2008  Furthermore, the Ministry has recently decided that the Fund should prepare the ground for investing in real estate at 5 per cent of the strategic benchmark portfolio. In time, this will reduce the fixed income share to 35 per cent. Norges Bank has built an organisation with emphasis on investment returns and based on three fundamental principles: Accountability, transparency and professional standards.
6  In the original Taylor rule, the policy rate is determined by inflation and the GDP gap. See Taylor, J.B., “Discretion versus policy rules in practice”, Carnegie-Rochester Conference Series on Public Policy, NorthHolland, 1993. 7  See the article “The driving forces behind trends in the economy can be analysed using a production function” in the Monetary Policy Report of October 2010. 8  It is important to make a distinction between labour productivity, which is defined as output per hour, and total factor productivity. 9  This is the logarithm of what is known as a Cobb-Douglas function: the relationship in the text applies to the logarithms of Y, K, H and TFP. BIS central bankers’ speeches  . Consequently,  3  In accordance with the production function, the potential level of production can also be divided up into potential total factor productivity, potential capital stock and potential hours. Deviations from the potential level can be estimated for each of the three factors affecting output – capital, hours worked and TFP. These deviations can then be weighted together to give a total output gap. Calculations of potential GDP This section describes the calculations forming the basis for the GDP and hours gap published in the most recent Monetary Policy Update.10 Figure 4 shows an estimate of actual and potential TFP. Actual TFP is estimated with the Solow residual. The TFP estimate thus captures all change in output that cannot be explained by the development of capital and hours.

Considering this, we wrote, in Monetary Policy in Sweden, that the Riksbank, in addition to achieving low and stable inflation, should also strive to stabilise output and employment around long-term sustainable paths.5 This means that we also strive to hold resource utilisation at a normal level. We usually say that the Riksbank is thereby conducting a flexible inflation-targeting policy. We have also chosen to take a broad approach when it comes to interpreting resource utilisation, instead for only looking at a single measure of resource utilisation. 2  Sveriges Riksbank, Monetary Policy in Sweden, June 2010. 3  My colleague Lars Svensson has a different interpretation of our task, namely that, during the forecast period, we should strive to hold inflation measured in terms of the CPIF (the CPI with a fixed interest rate) as close to two per cent as possible and resource utilisation measured in terms of unemployment as close to an estimate of the long-term sustainable level of unemployment as possible. See, for example Lars E.O. Svensson, “For a better monetary policy: Focus on inflation and unemployment”, 8 March 2011. 4  The figure is based on the ten-year period 1997–2006. This period is not extended further than 2006 so as not to be affected too much by the period after the outbreak of the financial crisis in the autumn of 2008. However, the differences do not become so great even if the years 2007 and 2008 are included. 5  Sveriges Riksbank, Monetary Policy in Sweden, June 2010.
In order to contribute to policy coordination and information sharing, and minimizing potential conflict between fiscal and monetary authorities as a consequence of CBC autonomy, the Constitutional Law mandates participation of the Finance Minister at monetary policy meetings, without voting rights but with the temporary right of suspending a Board decision. Furthermore, the Law states that CBC policy decisions must take into account the government’s general economic policy orientation. Overview of the evolution of MP framework The Chilean experience with IT can be split into two periods. The first one – from 1991 to 1999 – falls short in many aspects of a full-fledged inflation targeting framework. This first phase featured more than one anchor (an ER band, in addition to the inflation target) and low levels of MP transparency and communication. The second phase – from 2000 to the present – features a single inflation target and an active communication strategy for MP. In the context of reporting the annual monetary program to the Congress, the CBC announcement of an annual inflation target arose as a natural response to the legal mandate for price-level stability. In 1991, the first official target – at a 15%-20% annual target range – was publicly announced in September 1990 for the Dec. 1990–Dec. 1991 rate of annual CPI inflation. From 1990 to 1996, targets were set annually as target ranges in September for the subsequent calendar year, and from 1997 to 1999 as target points (figure 6).

In particular, the very favorable world economic conditions that have resulted in important terms of trade gains have been associated this time to fiscal prudence, complementing monetary and exchange-rate policies aimed at achieving and maintaining price stability. Four areas of macroeconomic adjustment: Fiscal, monetary and exchange rate policies, and the financial system The main changes that have taken place are in four key areas: (i) adoption of sustainable and responsible fiscal policies, reflected in declining fiscal deficits in most emerging economies (figure 1); (ii) adoption of floating regimes or hard pegs, moving away from intermediate exchange-rate (ER) regimes; (iii) shift of monetary policy (MP) anchors from ERs or monetary aggregates to an inflationtargeting (IT) anchor, particularly in Latin America; and (iv) these changes have been accompanied by the strengthening of regulation and supervision of financial systems, supporting strong financial development. Shift toward more flexible ER regimes The world shift toward more flexible ER regimes has been pronounced. The evidence shows a significant shift away from intermediate regimes. In 1990, nearly 70% of all countries were pursuing some variant of intermediate ER regimes, a share that dropped to 41% by the end of the 1990s, and further to 30% in 2004 (figure 2)1. Exits from intermediate regimes were more frequently towards floats rather than to hard pegs. The share of floaters increased from 15% in 1990 to 45% in 2004 while, on the other extreme, the share of hard pegs rose from 15% to 26% during the same time span.
Our collaboration has most recently been demonstrated through the establishment of the regulator-industry steering group and working group on regulatory reporting reform, which I am pleased to note the AFM is a member of. We are currently running a Quantitative Impact Study to gather data that will allow us, with government, to formulate effective 4/6  BIS central bankers' speeches  policy proposals. I should emphasise that the scenarios used in the QIS are not policy proposals. The QIS is complemented by a qualitative questionnaire to support our policy thinking, and our future cost-benefit analysis. High quality submissions from a range of respondents, including mutuals, will be key to the PRA’s ability to help develop well-evidenced reform. We welcome participation from all firms who are able to submit responses to the parts of the QIS and questionnaire that are relevant to your business, by the deadline of 20 October 2021. I am pleased that the AFM and some individual mutuals responded to the HM Treasury’s call for evidence on Solvency II. Having mutuals input at this early stage will help inform our policy development. In the deposit-taking sector, a lot of work in relation to mutual deposit takers has been undertaken and benefitted from good engagement between industry and regulator. I am thinking in particular of our simplification of the regime for credit unions. This approach to the removal of unnessary/burdensome regulation is part of the overall work being undertaken by the PRA.

We can see that AFM members are mindful of this as your conference programme covers a number of major strategic issues for your sector – including investment, consumer engagement, artificial intelligence, operational resilience and climate change reporting. Unsurprisingly there is a reasonable degree of overlap between the issues you see as most important to the sector’s future and our supervisory priorities. And it is quite refreshing not to see a major topic on Solvency II reform. This afternoon, I’m afraid I will give you an update on the latter. But first, I will give my perspective on three of the (other) changes and challenges that are priorities for the PRA as a prudential supervisor; and on our and industry responses to those challenges. It was quite a tall order to shortlist three and they are inevitably pretty broad: technology, social factors in relation to diversity and inclusion; and climate change risks. Technology 1/6  BIS central bankers' speeches  Even amongst your current generation of members and policyholders, how their insurance products are sold and serviced has changed remarkably – and remarkably rapidly. The focus of a lot of our supervisory interaction with insurers around technology tends to be on continuity of important business services, operational resilience against the threats posed by systems, process – or people – failure; or cyber vulnerabilities of insurers. However, in our business model analyses, technology features more in our assessment of whether a firm may be sustainable and competitive; and the role of investment costs and returns.
Even so, around a million more people in Britain are out of work than before the crisis. Many, especially the young unemployed, have had their futures blighted. So we cannot just carry on as we are. Unless we reform our economy – rebalance demand, restructure banking, and restore the sustainability of our public finances – we shall not only jeopardise recovery, but also fail the next generation. To my mind, a market economy and its disciplines offer the best way of raising living standards. But a market economy cannot survive on incentives alone. It must align those incentives to the common good. It must command support among the vast majority who do not receive the large rewards that accrue to the successful and the lucky. And it must show a sense of fairness if its efficiency is to yield fruit. There was nothing fair about the financial crisis. It was caused not by problems in the real economy; it came out of the financial sector. But it was the real economy that suffered and the banks that were bailed out. Your members, and indeed the businesses which employ them, are entitled to be angry. But however legitimate, anger will not produce change unless its energy is harnessed to a cool analysis of what happened and why. So I want to discuss the fundamental causes of the crisis before turning to current policy. The fall of the Berlin Wall in 1989 changed both politics and economics.

And even though they may have wanted to counteract inflation, they did not have the independence to do so. Furthermore, spiking oil prices were responded to with pay hikes, creating a vicious cycle of rising wages and prices – a typical wage-price spiral. This is why inflation was not brought under control until central banks had been granted independence and explicitly tasked with safeguarding price stability. In Europe, the German central bank led the battle against inflation, and it can be said that other countries tried to bask in the warmth of German credibility by pegging their exchange rates to the Deutschmark. In the Nordic countries, price stability was not ensured before a consensus was reached in the labour market with the so-called Nordic model. So is this where we are today? The lengths to which the world’s largest central banks have gone in quantitative easing over the past decade is cause for concern. They have truly taken on the task of financing government spending by printing money. It will require a Herculean effort to climb out of this slippery slope. The outlook is for many countries’ financing costs to rise significantly thereafter. By the same token, the labour shortages that have developed in the West could create wage pressures and push inflation higher. Honoured guests: It is vitally important that we Icelanders draw accurate conclusions from our own monetary history in the wake of the 1973 oil shock.