samchain/econo-pairs-v1 huggingface dataset:
Svante Öberg: Public finances and monetary policy Speech by Mr Svante Öberg, First Deputy Governor of the Sveriges Riksbank, at Sveriges akademikers centralorganisation (SACO), Stockholm, 26 April 2010. *  *  *  Public finances are of central importance to stable economic development The financial crisis has made it clear just how important it is for a country to have sound public finances and for confidence in fiscal policy to be maintained. The situation in Greece and several other countries arouses unpleasant memories of the crisis in Sweden in the 1990s. Being forced to pay higher and higher interest rates on a rapidly growing central government debt is not an enviable situation to be in, nor is being forced to increase taxes and reduce public expenditure at the same time as unemployment is rising. When such a situation arises it also becomes much more difficult to use monetary policy to inject new life into the economy because the interest rates in the economy begin to be affected more by the credit rating of the central government than by the central bank policy rate. In this speech I intend to discuss the importance of public finances for stable economic development in the slightly longer term and the implications they have for monetary policy. I will not, on the other hand, comment on the formulation of fiscal policy in the short term.

For OTC derivatives, the redistribution of trading has been less clear-cut in direction, with dealers moving some activities to EU trading venues and others to US venues, the latter having equivalence arrangements with both the EU and the United 2/4  BIS central bankers' speeches  Kingdom. Towards a well-functioning capital markets union in the EU The events of the past year – the pandemic and Brexit – have put renewed emphasis on the need for the EU to have a well-functioning capital markets union. In fact, EU leaders have agreed to finance the recovery from the pandemic by borrowing collectively through financial markets. The issuance of high-quality euro-denominated sovereign bonds under the Next Generation EU (NGEU) recovery fund is a step towards achieving deeper, more complete and liquid capital markets and establishing a European safe asset. As the Commission intends to raise 30% of the € billion recovery fund by issuing green bonds, NGEU is also expected to contribute to further developing sustainable and green finance. In parallel, the Commission has set out 16 specific actions to boost the EU’s capital markets union, which are aligned with many of the ECB’s own priorities.4 These actions aim to deepen and further integrate European capital markets, in order to allow investors, savers, firms and market infrastructures alike to access a full range of services and products, regardless of where they are in the EU.
For example, the unexpectedly strong productivity growth, combined with moderate wage increases, has contributed to inflation being below target in recent years. Wage formation will remain a focal point in the monetary policy analyses, particularly next year when the majority of the collective wage agreements are due to be renegotiated. The level of capacity utilisation and the impact it has on wage formation are also important and topical issues. The OECD calculates what is known as the GDP gap. Their interpretation is that capacity utilisation in the Swedish economy is already higher this year than is compatible with a low and stable inflation rate. However, calculating the GDP gap and similar measures is a very uncertain process. Nor are the measures stable; they change over time. The National Institute of Economic Research (NIER) calculates the labour market gap and equilibrium unemployment. The calculation in the most recent wage formation report shows the labour market gap as being close to zero in 2007 and then becoming slightly positive in 2008 and 2009. Equilibrium unemployment is calculated at 4.5 per cent; it is predicted that this level will be reached next year and that open unemployment will thereafter be slightly below equilibrium level. However, according to the NIER, the social partners have the possibility in the central wage negotiations next year to choose different alternative actions that could either reduce or increase equilibrium unemployment.

We do not concentrate on inflation to the exclusion  BIS Review 93/2006  1  of all else; we also give consideration to real economic and financial developments. We conduct what is known as flexible inflation targeting. It is made fairly clear in the preparatory works to the Sveriges Riksbank Act that the idea is that we shall also give consideration to developments in the real economy as long as the inflation target is not threatened. A long-term perspective I will now move on to talk about the development of the Swedish economy in a long-term perspective. Let me begin by observing that I personally consider monetary policy to have been very successful since the crisis at the beginning of the 1990s. There is a substantial difference between the economic developments over the past 14 years and during the decades prior to this period. Sweden had an inflation rate much higher than that in Germany every year of the 1980s (see Figure 1). The 1980s began with two devaluations of 10 per cent and 16 per cent. For a devaluation to be successful, inflation must be kept down afterwards so the country does not lose competitiveness again. However, this was not successful in the 1980s. After the devaluations, Sweden’s competitiveness declined by around 30 per cent up to the crisis breaking out in 1992 (see Figure 2).
According to our model, a rise in house prices has a strong and prolonged effect on household debt, as it takes time before all dwellings have been traded at the new higher price level. Growth in credit to households can therefore remain high for quite some time, even if the increase in house prices should start to subside. What then is driving house prices? In our empirical model, house prices are determined by household income, banks’ lending rates after tax, the housing stock, unemployment, and an indicator of household expectations of their future financial situation and of the Norwegian economy as a whole. 3 Household income has contributed most to the rise in house prices in the last two years. Interest rates  3  D. H Jacobsen and B.E. Naug (2005): “What drives house prices?”, Norges Bank Economic Bulletin, no. 1/05, pp. 29-42. BIS Review 106/2006  5  have increased since the summer of 2005. Given the lags involved, the cumulative contribution from interest rates to house prices is still positive. Nevertheless, in the period ahead, the normalisation of interest rates in Norway may moderate the rise in house prices. Observations from other countries, such as the UK and Australia, indicate that a rise in the key interest rate by the central bank has been followed by slowdown in house prices. Growth in household debt has been higher than growth in disposable income for several years now.

Speech by Mr William A Ryback, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Macro Prudential Supervision Conference: Challenges for Financial Supervisors, organised by the Korea Financial Supervisory Commission / Financial Supervisory Service and the International Monetary Fund, Seoul, 7 November 2006. *  *  *  Ladies and Gentlemen, I am pleased to be here today to add my thoughts to this important discussion on emerging insights into the macro prudential end of the supervision business. I also am pleased to be back in Seoul one of the most dynamic cities in Asia and to be hosted by my friends in the Korean Bank supervisory community - many of whom I have known for a number of years. It is almost ten years from the financial crises that affected many parts of Asia. This conference then is being held at an opportune time to allow us to reflect on the lessons learned. There has been considerable change over the last decade. Risk management in the regions banking systems’ have become more robust. There has also been a step-change in the standards of supervision. Risk-based supervision has replaced compliance checking. There are also now moves under way to improve regional cooperation on issues like Basel II implementation, in which EMEAP will continue to play a leading role. Clearly, no financial system can be considered stable unless the individual institutions that comprise its whole are themselves healthy.
Cross-border liquidity risk management in the Islamic financial system still remains a significant challenge, with the lack of short-term Shariah compliant instruments in international currencies. The global efforts to strengthen the liquidity arrangements for the international Islamic financial system will be an important breakthrough in facilitating more efficient cross-border liquidity management by Islamic financial institutions, thereby meeting the challenges of the trend of greater internationalisation. Conclusion Let me now conclude. The growing role of the emerging economies as an anchor to global growth in particular, in Asia, represents a major shift in the global economic landscape. In this environment, Islamic finance is well-positioned to assume a much larger role as a competitive form of financial intermediation for supporting economic activity, and as a channel for enhancing greater global connectivity. Efforts to strengthen the foundations for Islamic finance to ensure its continued resilience amid the more challenging environment must remain a priority going forward into the future. Indeed, our commitment to act guided by this foresight will strengthen the prospect for Islamic finance to realize its potential in the region and beyond. 4  BIS central bankers’ speeches

Jörg Asmussen: Exchange of views with the Economic and Monetary Affairs Committee of the European Parliament on financial assistance to Cyprus Introductory statement by Mr Jörg Asmussen, Member of the Executive Board of the European Central Bank, at the European Parliament, Brussels, 8 May 2013. *  *  *  Dear Madam Chair, Honourable Members of Parliament, Thank you for inviting me to this exchange of views on financial assistance to Cyprus. The substance of the decisions, and process of how they were taken, have been debated controversially – also in this House. I am therefore pleased to be given the opportunity to provide the ECB’s views and to participate in a public debate on this matter. Initial conditions in Cyprus  Before discussing the key elements of the EU/IMF adjustment programme, it is very important to understand how Cyprus got itself into such difficult situation in the first place. Why were imbalances of such magnitude allowed to develop? What made the nature of the challenges faced by Cyprus so exceptional? I find these essential questions that I hope we can address during our exchange of views today. Let me focus here on the banking sector. In the 2000s, the Cypriot economy evolved towards a rather unbalanced business model with an inordinate weight for the financial industry. The country aimed to become leading provider of international banking services. Cypriot banks attracted large inflows of foreign deposits. They expanded their balance sheets dramatically over recent years, both domestically and externally.
However, the fall in interest rates of recent years and the longer average debt maturities (currently standing at more than 15  See, for example, Box 1 of the analytical article “Recent developments in financing and bank lending to the nonfinancial private sector. First half of 2022”, Banco de España. 10  eight years) limit the short-term impact. Overall, if the current expectations for rising interest rates are incorporated, the public debt burden in Spain will increase from 2.2% of GDP at end-2021 to 2.6% in 2024. The role of monetary policy in combating inflation should be complemented by an incomes agreement As I have reiterated on numerous occasions, the outlook for our economy is highly influenced by the risk of a price-cost feedback loop, which, if it materialised, would have very adverse effects on external competitiveness, resulting in further losses in terms of jobs and growth. To avoid this, it is essential that economic agents (essentially firms and households, but also general government) internalise the loss of income caused by the rise in the cost of imported commodities. As I mentioned earlier, the pass-through of inflationary pressures to wage settlements has so far been very contained, and profit margins have remained stable.

First, the availability of collateral in secured markets will remain decisive for market functioning, particularly against the backdrop of ongoing central bank asset purchases, even if collateral scarcity is mitigated by the broad fiscal policy response to the COVID-19 pandemic. Second, a high level of excess liquidity may further reduce cash-driven activity in some market segments, potentially raising challenges for setting money market benchmark rates. And third, non-bank financial institutions play an increasingly important role in money markets. Their market activity has a bearing on the formation of some money market rates, including the € Unlike banks, these market participants often do not have access to central bank operations. Were the transmission across money market rates to weaken, or rates to decouple from policy intentions, this could have implications for monetary policy implementation in the future. Understanding the changing forces that affect money market activity is essential for policy makers. To foster an improved understanding of recent trends in money markets, this conference brings together some of the best academics, central bankers and practitioners. I look forward to many insightful discussions over the next two days. Thank you very much for your attention. https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp201123~8d9573b1b1.en.html  5/7  24/11/2020  Shifting tides in euro area money markets: from the global financial crisis to the COVID-19 pandemic  [1] I would like to thank Marie Hoerova for her contributions to this speech.
But independent changes in monetary policy will ultimately be reflected in inflation and, despite a decline in interest rates that’s now gone on for 20 years, inflation has remained pretty close to target, throughout the developed world (Chart 1). This suggests that, rather than causing the decline themselves, central banks have instead been accommodating a deeper downward trend in the “natural” or “equilibrium” rate of interest. That is not a trivial matter: if they had failed to track this trend, policy would have been too tight and inflation and output too low. And although stocks performed well through the early part of that decline, for much of it they’ve not done so. Chart 2 plots the yield – inversely related to the price – on indexed gilts and UK equities. Through the 1990s these two markets tended to move together and, in price terms, generally upwards. Since around 2001, however, their yields have diverged. Equities have significantly underperformed bonds. This suggests that, over that past decade or so, the forces depressing the natural rate of interest have also been increasing the extra premium required of risky assets. What I want to do today is say something about the causes of these trends and (in only the broadest possible terms) their implications for the distribution of wealth and income. None of this will be particularly novel.

Many senior managers and specialists view their student days as a pivotal time in their lives, so the quality of teaching has a major impact on both economy and administration. Universities make a direct contribution to a country's prosperity by maintaining the necessary capabilities and developing and imparting knowledge that is useful for the economy and society. But their indirect contribution is just as important: Universities must enable their graduates to understand and appreciate the significance of the Swiss model for success. This model is based on the pillars of direct democracy, the rule of law, federalism and an awareness of the value of stable institutions. The terms 'markets' and 'competition' are key to understanding basic economic relationships, and are fundamental to ensuring prosperity, as well as to acquiring and applying new scientific knowledge. One of the tasks of a university is to provide its graduates and the general public with a realistic picture of the functioning and importance of markets and competition. Only in this way can the Swiss model for success endure in a world of constant change. 1/1  BIS central bankers' speeches
Meanwhile, smaller foreign banks are expected to develop new strategies to grow, and to increase participation in the domestic economic activity through expansion of the necessary skills and product development thereby enhancing their value addition in the economy. Non-bank financial institution sector One of the objectives of the consolidation plan is to fashion out an NBFI sector that comprises of a smaller number of strong NBFIs, which are fully compliant with the Central Bank’s regulatory framework. On completion of the consolidation, we expect about 20 standalone NBFIs, of which at least 3 would specialise in microfinance business, and each NBFI would own an asset base of over Rs. 20 billion by 2016. Although there has been some criticism that this would lead to an oligopolistic market where lending rates would be high while deposit rates would be low, the post consolidation NBFI sector with the increased quality and quantity of capital is expected to have improved loss absorbency capabilities and enhanced resilience to internal and external shocks, and with such improvements, these NBFIs will be able to attract low cost, long term funds from the market in the form of deposits and debt. Further, in order to be competitive, NBFIs have to improve cost efficiencies, diversify their businesses, be ready to deal with market volatilities, and be able to manage risks in an integrated manner. Finally, following the consolidation, NBFIs are expected to have improved governance and fit and proper management teams capable of running the entities efficiently and competitively.

You may remember that there was a small Licensed Specialised Bank called Pramuka Bank, which failed in 2002. It was only in 2007 that the deposits of the Pramuka Bank were transferred to a new Savings Bank. In 2009, 8 financial institutions faced liquidity problems, mainly due to the collapse of the parent company of a particular group. Most of those financial institutions are still undergoing restructuring, as agreed with the Central Bank. In 2013, another small NBFI, namely, CIFL faced liquidity problems mainly due to mismanagement and non-commitment to corporate governance. The Central Bank is now in the process of restructuring this company under the consolidation programme. The important message that I want to share with you is that although the NBFI that failed in 2013 accounted for only 0.35 per cent of the assets of our financial sector, the publicity it created resulted in a huge uproar in the financial market and the economy. You can clearly see that transmission of information has become speedier in the recent years and such information is easily and widely accessible now compared to the past. The Managing Director of the IMF, Christine Lagarde also highlighted this fact when she recently spoke on “New Multilateralism for 21st Century”, from which I quote “We are living through a communications revolution, because information travels at lightning speed from limitless points of origin.
The region is mostly exposed to the European markets, but to the extent that the US tightening affects European financial markets it may have negative implications for the region through the interest rate or liquidity channel. Having in mind the state of the fiscal finances particularly vulnerable segment seems to be the government sector. The screening of the fiscal position of the countries in the region, shows that without doubts financial crisis took a toll on the fiscal positions of the countries. Against the background of countercyclical fiscal policy headline balances deteriorated sharply and the public debt went on a rising track. The deterioration in the fiscal position and lack of fiscal space (due to low initial space before the crises) emphasized the need for consolidation. Most of the countries of the region recognized it and embarked on the consolidation path. In the 2013-2015 period the budget deficit figures show that nine out of fourteen countries of the region have already reduced the deficit level compared to the 2008-2012 period. The other five countries (Macedonia, Albania, Serbia, Bulgaria and Slovenia) increased the deficit  reflecting idiosyncratic factors, countercyclical policy (Macedonia, Bulgaria), or recognition of implicit liabilities (emergency recapitalization of the country's banks in Slovenia). The same dynamics is more or less mirrored by the government debt data. After the strong initial debt rise, the consolidation phase imposed slower borrowing pace, however in most of the countries the debt continued to rise.

On the contrary, monetary tightening works to constrain the growth of mortgage rates. They have risen far less than inflation. Unsecured consumer lending is rapidly expanding too. Banks often lure people with belowinflation rates — which may seem like an excellent offer. The borrower thinks: I take a loan for repairs and buy all the construction materials today, or else tomorrow they will be more expensive (indeed, prices have grown rapidly in this market) so I will end up overpaying less than if I bought the materials later. This is a typical situation. The same logic works with regard to other goods. And borrowers end up getting ripped off by a loan rate with an additional loan agreement attached, or through tied products forced on them. We are fighting this practice. Fines for misselling need to be raised. Banks should calculate the full cost of credit in such a way as to make all hidden fees visible to borrowers. It is an absolute priority for us protecting individuals’ rights in their interaction with financial providers. Now that inflation is above target, our action may even be tougher than before. It is important that we protect people from unnecessarily paying for openly pushed services they do not need and overspending on fees. I will spare you the details, but will say that we are developing regulatory measures to reduce consumer costs related to interaction with financial institutions. That would present an opportunity to improve people’s well-being, and we should use it.