samchain/econo-pairs-v1 huggingface dataset:
If the bleak prospects for the world economy translate into lower prices for oil and other export goods, this may also lead to a depreciation of the krone. We have already observed that investors sell NOK in periods of turbulence. If the krone depreciates, the interest rate will then have to be set higher to keep inflation at bay unless a slowdown in activity has a dampening impact on inflation. The opening of the labour market to the new EU countries has provided us with access to a reserve of labour. There has been a substantial flow of labour into Norway. Labour migrates to locations where potential earnings are highest. Growing numbers of workers are moving to Norway and establishing residence here. Many workers are only here on short-term assignments and will perhaps move on when the job is done and when there is an economic turnaround. In 2007, Norway’s population increased by about 55 000, with net inward migration coming to 35 000. This is the highest population increase ever registered. Employment has grown rapidly over the past two years, the highest rate recorded over the past few decades. Even though there has been an ample supply of labour, unemployment is low and the number of job vacancies is record high. The labour market is tight. High pay increases have often been awarded in the late phase of an expansion, and been followed by rising inflation.

Fifth, the financial industry will need to step forward and facilitate an orderly transition for households, businesses and governments to adapt to the physical and transition risks of climate change. This involves different players in the financial ecosystem – including banks, insurers and takaful operators, venture capital and private equity firms – to ideate and innovate solutions that would help the economy face the imminent climate-related risks. There is an urgent and critical need to develop sustainable financial solutions, including funding and investment structures with appropriate incentives and support mechanisms, to catalyse greater climate resilience for firms and households. Building climate resilience is no small feat. There is much work to be done with a window to accomplish this work that is rapidly closing. Clear policy at the national level will be critical to enable the financial industry to size up the physical and transition risks, and implement strategies to manage these risks. Sector-specific approaches will also need to converge to limit risks of a disorderly transition. This is a shared responsibility that requires us to come together to support joint and coordinated responses to a clear and present threat to growth and financial stability. To this end, I am pleased to announce that the Bank and the Securities Commission Malaysia are establishing a Joint Committee on Climate Change with industry representation to pursue collaborative actions for building climate resilience in the Malaysian financial sector.
The second entails initial profit margins being sufficiently high to stimulate investment and enable continued rapid growth in the economy. The final assumption concerns the overall, average wage scope for the country as a whole. The definition of a long-term sustainable wage increase may differ between sectors and regions depending on the different conditions for production technology, productivity development and competition. If the economy is not balanced, there may be a short-term deviation in nominal wage developments from the long-term sustainable level. This could be due to a stronger exchange rate, for instance. The inflation target is expressed in terms of CPI, which consists of the prices of both imported and domestically-produced goods and services. If imported inflation, which comprises approximately onethird of CPI, develops weakly as a result of a stronger krona or lower international price pressure, domestic prices may rise more rapidly than 2 per cent over a period of time without causing a threat to the inflation target. There is then temporary scope for nominal wage increases above the level implied by productivity growth. Payroll expense has risen on average by approximately 3.9 per cent a year from the beginning of the 1990s up to 2001, which is slightly more than the "wage norm" implies. At the same time, inflation has been at an average of only 1.8 per cent. An important explanation as to why the increase in payroll expense could be so high without triggering an acceleration in domestic inflation is that productivity has developed strongly.

The total recruitment needs in health and welfare professions are estimated by the Swedish National Labour Market Administration (AMS) to be approximately 527 000 persons up to the year 2015, of which 180 000 are professions requiring university level training and 347 000 are professions requiring upper secondary school level 7 training, such as care personnel. Given the present training dimensions, this entails a deficit of around 22 000 persons a year up to the year 2015. The low wages make new recruitment difficult and the number of applicants with the upper secondary school care programmes as their first choice has  7  Swedish National Labour Market Administration (AMS), Den framtida personalförsörjningen inom vård och omsorg - Tillgång och rekryteringsbehov fram till år 2015 (Future personnel supply in health and welfare - Supply and recruitment needs up to the year 2015), Ura 2002:3. BIS Review 63/2002  5  8  declined nationwide from approximately 12 000 persons in 1990 to around 3000 in 2001. Prior to the present academic year, there were only 11 people who had the care programme as their first choice here in Stockholm county. These groups have market forces behind them. Nurses and teachers are examples of professional groups that have received support from market forces to raise their wages in recent years. The large demand in relation to supply has meant that 9 nurses have increased their wages by an average of 25 per cent over the past five years.
The financial crisis committee, which was appointed by the Government, is currently looking into the design of such a framework – for instance, which tools should be used and by whom. However, some measures belonging to the macroprudential toolbox have nevertheless been implemented and apparently to good effect – here I am thinking of Finansinspektionen's loan-to-value cap. According to the report on the housing market that Finansinspektionen published in March 2012, the loan-to-value cap has had the intended effect and the loan-to-value ratio for new mortgages is now falling for the first time for many years. A short-cut in the reasoning Monetary policy thus has relatively little effect on housing prices and household debt, but relatively large effect on inflation and unemployment. Moreover, there are other, better instruments than the repo rate available. One can therefore claim that the first statement above, that household debt in Sweden today entails sufficiently large risks to need to be addressed, does not have any significance for monetary policy. It is not monetary policy that should be used if household debt needs to be addressed. But let me nevertheless also discuss the first statement. How should we regard household debt in Sweden at present? This is where I perceive that those who advocate a higher repo rate because of household debt tend to take a short cut in their reasoning.

On a domestic-level, financial stability will have to play a more prominent role in monetary policy decisions. This is especially true in the current environment where inflationary pressure is subdued. For EMs that still have a lot of ground to cover in regulating non-bank financial activities,  3  financial stability cannot be addressed by macroprudential measures alone. EMs also need to equip themselves with policy tools to deal with rapidly changing capital flows; these tools encompass macroprudential measures, microprudential measures, capital flow management measures, and at times foreign exchange intervention. On an international level, we need to recognize the changing landscape and the impact of the financial spillovers on small open economies, advanced economies and EMs alike. First, the burden of adjustment needs to be proportionately shared by both the source and recipient countries of capital flows. At present, EMs as recipients of flows are often restricted and reproached in their response to capital flows, while source countries have full flexibility in their conduct of monetary policy. In this regard, we very much welcome IMFs’ work on the Integrated Policy Framework which will allow small open countries to respond to spillovers more effectively taking into account each country’s specific context and circumstances. We would very much hope that source countries of capital flows take into account spillover and spillback effects in their policy deliberation.
In the US by contrast saving is $ trillion – about 17% of GDP. The question is whether those savings are being used most productively. For example, in the case of households, they remain compartmentalised in member states and predominantly locked up in the banking system, which is still healing. Bank deposits, as a share of household financial assets, are three times the US level. And they are heavily concentrated in financial assets like debt instruments that do not encourage risk capital. The objectives of Capital Market Union should be threefold. First to put European savings to better use by deepening and diversifying the sources of finance available to business and offering more investment choices and portfolio diversification to savers. As was recognised in the Giovannini report 20 years ago, there is very good reason to believe that improving the efficiency with which savers are matched to borrowers increases economic performance. The second objective should be to enable greater risk sharing across the EU by creating deeper cross border markets. Cross border investment allows economic risks – upside and downside – to be shared across individual countries. Done in the right way, this can help to smooth out the impact of the economic shocks that hit individual countries – reducing the danger of economies sliding into very deep recessions that can permanently damage their ability to grow.

Today's forum therefore seems to fit in very well with the European spirit now sweeping Hong Kong, and I congratulate the organisers on putting together a very lively and topical programme. It is a particular pleasure to be presenting together with Christian Noyer, Governor of the Banque de France. He has made some very thoughtful remarks on the first question for discussion. I intend to comment on the second question: "Can the euro be a benchmark for Asian monetary co-operation?" But before I address this question, we need to ask another question: how ready is Asia for closer monetary co-operation? We are, I think, all aware of the considerable differences in the political systems, the cultures, the historical backgrounds, and the economic, financial and monetary systems of the countries in this region. I think it is largely accepted that these differences are greater than the differences between the various economies that make up the euro zone. Nevertheless, it is important not to overstate them. Nor should we overlook the regional integration already in progress in the trade, financial and monetary spheres. Let me briefly outline these three forms of integration. About half of total trade in the Asia region is intra-regional trade. Trade integration has been largely market-driven, and the process has stimulated the signing of various free trade agreements, which will, in turn, encourage further trade integration in the region.
Ardian Fullani: The role of banks – bridges to development Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the 7th Hellenic – Albanian Business Forum “The role of banks – bridges to development”, Tirana, 13 November 2013. *  *  *  Good morning ladies and gentlemen! For me it’s a pleasure to participate in this economic forum that brings together representatives of Greek and Albanian entrepreneurs, and also of banks operating in our countries. I am particularly pleased to have with us today the Governor of the Bank of Greece, Mr. Provopoulos, whose participation in this forum shows the attention that him personally, and the Bank of Greece, is paying to support the business sector in general, and more specifically, the economic relationship between Greece and Albania. This approach is the right one. The private business sector is the main contributor in the GDP of the respective countries. The business sector is undergoing some severe difficulties in Greece currently, related with the need to deleverage and restructure in order to improve productivity and become competitive. These are fierce challenges that are associated with huge economic and social costs. I do believe though that these sacrifices of Greek people will pay off in the future, by giving way to a more vibrant and stronger economy, a more competitive business sector. In Albania, the business sector faces challenges too. Albanian businesses must restructure to become more competitive.

Given the subdued inflationary pressures, we have lowered the policy rate to the record level of 3.5%. The path of the credit interest rate has followed this trend, although at a slower pace. Given the weakness of the credit channel in the monetary transmission mechanism, we have tried to strengthen our impact by adopting some countercyclical measures to promote credit growth. In this regard, we have temporarily increased capital requirements for placements of banks abroad and have reduced those for credit in the domestic economy. In addition, we are promoting credit restructuring at an early phase by reducing provisioning requirements if that is the case. Several legal and regulatory measures have been taken in cooperation with other authorities and the banking industry, to improve collateral execution process and facilitate loan write-offs. The results of such measures have been mixed so far, but in the coming months we expect their impact to be noticeable. This is also linked with the commitment of the Government to pay its arrears to the private sector in the next year. Nonetheless, it is important that the banking industry continues to support sound business propositions of borrowers. Banking activity may be driven by profits but is based on relationship with its customers. Now is the time when such relationship is being tested, and good bank management must look beyond the current challenges to keep and strengthen such relationship.
Other, far more drastic measures, such as a strict ban on certain business activities or the introduction of a bank tax – as discussed in other countries – were firmly rejected, partly for cost reasons. Thirdly, the proposed measures are by no means excessive in scope – on the contrary: the increase in capital would reduce the big banks’ ratio of debt, which currently stands at approximately 98%, by only three percentage points: around 95% of the balance sheet total could continue to be financed by borrowed capital! Besides, the Federal Council’s proposal merely implies a return to a level of capital that the big banks exceeded up until 1996 (cf. chart 4). Ladies and gentlemen, let us now take a closer look at the potential negative consequences of the proposed regulation of the big banks. Will stricter regulations push up borrowing costs within Switzerland? Firstly, there are fears that stricter capital adequacy requirements could lead to higher financing costs for the banks. It is argued that this would above all lead to more expensive credit for companies and households. Lending would then decline, acting as a brake on Swiss economic growth. According to economic theory, the one does not necessarily lead to the other, since an increase in capital should not have any effect on a bank’s overall financing costs.5 Owing in part to the preferential tax treatment of borrowed funds, the Modigliani-Miller theorem referred to here, cannot be applied directly in practice, which means that overall financing costs would rise if capital increases.

This package considerably lessens the probability of a big bank crisis and the ensuing need for state support in such a crisis – which would create an intolerable strain in terms of regulatory and fiscal policy – and at the same time restores market discipline. We need to be aware that regulation is never implemented without some cost to those regulated. However, fears about the extent of the potential repercussions are in my view unfounded, not least because consideration has been given to the costs involved during the drafting of the new rules. In particular, the newly introduced convertible capital will contribute to limiting the costs of stricter capital adequacy requirements. What is more, the organisational measures do not constitute excessive interference with the freedom of scope and responsibility enjoyed by a bank’s management. Measures of this kind can only be subsidiary in nature. This means that the regulatory objective is not exceeded. The increased stability brought about by this package will help not only Switzerland but also our entire financial centre to emerge from the latest crisis significantly stronger than before. What happened to UBS may not happen again. The proposed amendments to the regulations will also soon create legal certainty for the banks and allow them to plan concretely, while at the same time promoting the reasonable, long-term development of the financial centre. There is no doubt about the positive long-term consequences for the entire Swiss economy in terms of income and employment.
This kind of contagion can happen on both the asset and liability sides of a bank’s balance sheet. Deposit and lending surpluses in different parts of the world are managed on a global interbank market. The banks’ assets thus largely consist of loans to other banks. The banks’ liabilities largely consist of loans from other banks. The banks are dependent on confidence – illustrated, in its most classic form, by a bank run. Rumours that a bank is facing problems can lead people to want to take their money out, which may give the bank problems – even if it had no problems to start with. So banks have a series of characteristics that distinguish them from normal companies. If a normal company is unable to meet its payments, it will have to file for bankruptcy. If a bank defaults on its payments, the consequences for the financial system – and the real economy – can be enormous. This means that it is difficult to let banks go bankrupt, at least if these banks are large and times are troubled. So other disciplinary mechanisms must be found – such as tougher regulation and thorough supervision. Special legislation covering banks in distress is also needed. Of course, bank regulations are primarily a way of allowing the public sector to safeguard the public interest. But the regulation of banks is also a way of mitigating principal-agent problems between a bank’s management and borrowers on the one hand, and the bank’s owners and lenders on the other.

As for the claim that the decision to enter ERM II was hasty and premature, that suggests recklessness! No, there was no rush. The decision was made after thorough consultations with the EU Commission and the European Central Bank (ECB) in the light of the progress achieved by Malta in fiscal consolidation and structural reforms. Their agreement was contingent on a firm undertaking by the Maltese authorities to continue to implement the Convergence Programme. A related objection is that before adopting the euro Malta should first satisfy tests similar to those set for the British economy by Chancellor Brown. This argument betrays an insufficient familiarity with the Chancellor’s five tests. They are, in fact, not so different from the Maastricht criteria, which Malta, together with the six other new Member States currently in ERM II, is seeking to satisfy. The five tests relate to convergence (like the Maastricht criteria); flexibility of labour, product and capital markets (being addressed in Malta’s Convergence Programme); investment, i.e. whether euro will encourage more inward FDI (the British Treasury’s 2003 report suggests that it does); financial services (this applies to the special case of the City of London); and growth, stability and employment. Malta’s strategy document, published jointly by the Government and the Bank last year, argues that the euro would be beneficial in this respect (and so does the Treasury report). The case for adopting the euro sooner rather than later is set out in the strategy document.
Balance sheet measures turn central banks into financial market players  Let me now turn to balance sheet measures. Here, the central bank enters the financial markets as a major participant. In the case of quantitative easing, or QE, it will often purchase medium and long-term government bonds with the aim of lowering the relevant interest rates. 5 As well as government bonds, some central banks have extended their purchase programmes to include other asset classes, including asset-backed securities, covered bonds and corporate bonds. At the Bank of Japan, the purchase programme also encompasses certain equities 6 and shares in real estate funds. In chart 3, you can see that a QE programme impacts directly on a number of financial markets. This more direct influence of monetary policy on a broader segment of the financial markets is evident in the extent and impact of the QE programmes. Chart 4 shows the impact of the QE programmes by the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan. 7 The chart is based on findings from a total of 24 studies which estimated the impact of each securities purchase programme on capital market rates. The blue bars show the breadth of the estimated impact of each QE programme. The red diamonds indicate the respective median. We can see that the QE programmes across the different currency areas may have reduced the yields on ten-year government bonds by over half a percentage point on average.

But it took a crisis caused by the failure of Lehman Brothers to trigger the coordinated government plan to recapitalise the system. It would be a mistake, however, to think that had Lehman Brothers not failed, a crisis would have been averted. The underlying cause of inadequate capital would eventually have provoked a crisis of one kind or another somewhere else. So where does this leave us? The recapitalisation plan is having a major impact on the restoration of market confidence in banks. Perhaps the single most important diagnostic statistic is the credit default swap premium – an indicator of market concerns about solvency of banks. These premia have fallen markedly since the announcement of the UK plan. From the close of business on 7 October to now the premia on the UK’s five largest banks have more than halved. We are far from the end of the road back to stability, but the plan to recapitalise our banking system, both here and abroad, will I believe come to be seen as the moment in the banking crisis of the past year when we turned the corner. As concerns about the viability of our banks recede, banks should regain the confidence of the market as recipients of funding. There are already some signs of greater activity. But the age of innocence – when banks lent to each other unsecured for three months or longer at only a small premium to expected policy rates – will not quickly, if ever, return.