samchain/econo-pairs-v1 huggingface dataset:
Norges Bank’s most important instruments are its two key rates - the interest rate on banks’ deposits and the overnight lending rate. Experience shows that the central bank’s key rates have a fairly substantial impact on money market rates at the very short end of the market, i.e. overnight and one-week rates. The effect on interest rates on financial instruments with longer maturities is not as direct. Here, expectations concerning the central bank’s course of action and general confidence in monetary policy play a role, as does the level of very short-term rates. Money market rates influence the krone exchange rate directly through the return that can be achieved on krone positions, but also indirectly through the effect on the outlook for the real economy and price and cost inflation in Norway. A higher interest rate will, therefore, normally result in an appreciation. Both the appreciation and the interest rate increase will lower demand. The appreciation will also in itself lead to lower inflation on imports, while lower demand will reduce the general inflation level. Over time both the inflation rate and the activity level will influence the exchange rate. Thus, Norges Bank needs to exercise discretion in monetary policy by considering the effects of interest rate changes not only directly on the exchange rate, but also on the rest of the economy, and to focus on the fundamental conditions for exchange rate stability over time.

Growth is anticipated to be low also next year and approach trend growth in 2001. Demand growth could be higher than expected, which would contribute to maintaining the pressure in the labour market. Employment is still high and near capacity level, while we see a tendency towards higher unemployment in sectors such as the construction and engineering industries. Chart 13 Unemployment rate. Per cent 6  6  5  5  4  4  3  3  2  2  1  1  0  0 80  82  84  86  88  90  92  94  96  98  Source: SSB Legg inn filadresse her  Inflation is expected to remain at around 2% for the next two years, with inflation rates of 2¼% this year, 2% next year and 1¾% in 2001. Chart 14 shows the key technical assumptions underlying Norges Bank’s projections. Short-term interest rates are assumed to move in line with market expectations, as reflected in forward rates in September (Chart 15). According to market expectations, the differential against European rates will narrow from the current level of a little more than 3 percentage points to around 1 percentage point at the end of 2001. The krone exchange rate is assumed to be NOK 8.30 against the euro throughout the projection period. Developments, as indicated by Norges Bank’s analyses, imply that there is little room for further decreases in interest rates.
Groupthink biases A related, but distinct, decision-making defect is confirmation bias or its collective counterpart, groupthink. As with other biases, the institutional structures of the MPC, FPC and PRA contain a number of safeguards. Committee-based decision-making, with individual accountability and with the chair voting last, reduces the risk of a single collective narrative. The degree of dissent across the MPC is also a positive diagnostic. Nonetheless, Committee-based decision-making, especially by consensus, does not remove the risk of conformity risk. Indeed, it could even propagate groupthink if cross-pollination becomes rather too effective. As an illustration, Michael McMahon from Warwick University has undertaken a detailed text-based analysis of MPC minutes to assess the importance of certain “topics” in shaping the MPC’s deliberations. Chart 13 plots the incidence of discussion in the MPC minutes of topics around “banks”. 61 For the decade prior to 2007, banking issues did not get much of a look-in. They typically accounted for only around 2% of MPC discussion time during the Great Moderation. With hindsight, given emerging pressures in the banking sector, this was a collective blind-spot. The Northern Rock crisis of 2007, and the failure of Lehman Brothers in 2008, made visible those pressures. In response, Committee-time devoted to banking issues rose to a peak almost ten times higher than the pre-crisis period. Today, discussion of banking issues has settled at levels below the crisis peaks, but above those in the pre-crisis period. The proportion of MPC discussion around banks bears a striking resemblance to marketbased measures of banking risk (Chart 14).

According to the new regulation, “the operational target of monetary policy shall be annual consumer price inflation of close to 2 percent over time.” It is not possible to quantify precisely an optimal inflation target for the Norwegian economy. A numerical target of 2 percent is, however, consistent with the inflation target of most of Norway´s trading partners. In 2001, when inflation targeting was introduced, the Norwegian economy faced the prospect of gradually increasing oil revenue spending. It was widely expected that the phasing-in of revenues would entail an appreciation of the real exchange rate. At the time, the nominal target was set at 2.5 percent. An expected real appreciation could then occur partly in the form of wider price and cost differentials between Norway and its trading partners. The period of rising oil revenue spending now appears largely to be over. Thus, it is difficult to find compelling arguments for setting an inflation target in Norway today that differs from that of our trading partners. The new regulation is consistent with how monetary policy has been conducted in practice in recent years. The regulation states that: “Inflation targeting shall be forward-looking and flexible so that it can contribute to high and stable output and employment and to counteract the build-up of financial imbalances.” As long as there is confidence that inflation will remain low and stable, monetary policy can contribute to stabilising the economy.
A natural explanation is that demand has been weak and uncertain. Our ordinary Business Survey, which was published last week, confirmed the picture that many companies currently perceive the situation as relatively uncertain and that they are so far cautious in implementing price rises. 2 Although there are some signs that price increases have been held back by an increase in competition, it is nevertheless reasonable to expect faster price increases and higher inflation when economic activity strengthens again and demand increases. In addition to inflationary pressures, developments in housing prices and household debt – and not least the counter-measures needed and their consequences – comprise an important, but difficult to assess, domestic condition for monetary policy. One should bear in mind the fact that experiences from other countries point to a high and growing indebtedness sooner or later having serious socio-economic consequences, but there is no clear limit as to when the situation becomes unsustainable. If one looks at the information available on indebtedness among the households taking on new mortgages, which thus in many respects comprise the purchaser side of the housing market today, I think there is reason for concern. On average, these households take mortgages equivalent to more than 350 per cent of their disposable incomes. The interest rates they pay on these mortgages are very low in an historical and an international perspective. This is partly due to the fact that a very high percentage of new Swedish mortgages are taken at variable interest rates.

One often sees forecasts as mean forecasts. This means in principle that the risk that the economy will develop less well is as great as the chance that it will develop better. A mean forecast for GDP growth abroad, for instance, balances everything that could give rise to lower growth against everything that could give rise to higher growth. Another way of expressing the same thing is that the forecast is a form of middle way of all the different roads the economy could take in the coming period. This way of working with forecasts means that one acts as though one has succeeded in quantifying the possibilities and effects of all of the different potential courses of events. A year or so ago there were frequent discussions of the risk of a split or disintegration of the euro system – what was the probability that this would happen and what effects would it have for Sweden? Today there may be reason to ask these questions with regard to an escalation of the Ukraine conflict or to a substantial fall in housing prices in Sweden. If one considers these difficulties in quantifying various possible sequences of events and probabilities that they will occur, it may not be as simple a matter to make decisions on monetary policy and make forecasts for future interest rates as it is sometimes made out to be.
There have been some unsavoury practices in this space: “flash loans” being used to manipulate prices in the market; bots being used to front-run retail trades. With decentralised governance, who do you approach to recover lost accounts or reverse accidental transfers of money? Existing regulatory frameworks will need to be adapted if DeFi becomes a reality. Regulations crafted to manage risks in a world of intermediaries are ill-suited where intermediaries are replaced by smart contracts. Enforcement is more challenging when control or governance is dispersed across the blockchain. MAS will follow Web 3.0 and DeFi developments closely, deepen our understanding, and seek to harness the benefits while managing the risks. We will work with both the financial industry and the broader ecosystem to find the right balance. It will be a learning journey. Regulatory Sandbox Plus And what better way to learn than by experimenting? We will facilitate experiments for blockchain and DeFi innovation through regulatory sandboxes. Five years ago, MAS launched the FinTech Regulatory Sandbox, to support live experimentation of technology innovations. Two years ago, we enhanced it with Sandbox Express, so that businesses can begin market testing of low risk activities in a pre-defined environment faster. MAS will enhance its regulatory sandbox with Sandbox Plus.We will broaden participation to early adopters of technology, in addition to first movers. We will provide financial grants to first movers of innovation, to support their technology, human capital, and market development.

The Swiss Market Index (SMI) has gained almost 5% since mid-year, recently surpassing the 2007 peak by over 12% (cf. chart 2). In this environment, interest rates recovered slightly from their lows and yield curves also steepened again. However, yields on government bonds issued by countries considered safe by investors have mostly been below mid-year levels of late; around 28% of government debt  Page 1/6  Berne, 12 December 2019 Andréa M. Maechler  News conference  worldwide is still trading at negative yields. In Switzerland, the yield on 10-year Confederation bonds recently stood at −0.5%, approximately the same level as in mid-2019. Overall, uncertainty dominated the financial markets – a fact that was also reflected in foreign exchange market prices. Weaker economic data weighed particularly heavily on the euro, which has depreciated by some 2.5% in trade-weighted terms since the end of June. On the other hand, currencies considered safe havens by the markets were able to appreciate in this environment. The Japanese yen and the Swiss franc have gained slightly since mid-year; the franc thus remains highly valued. The situation on the foreign exchange markets is still fragile (cf. chart 3). Money market developments  Let me now turn to developments in the Swiss franc money market. Thomas Jordan has already mentioned the adjustments we have made to the way we calculate exemption thresholds for the negative interest rate. These changes came into effect on 1 November.
This January, the Bureau launched a Fintech Proof-of-Concept Subsidy Scheme. This scheme provides financial incentives to banks to transform their processes through the use of innovative Regtech solutions. Regtech firms will also benefit as they will have more opportunities to showcase and validate their solutions and gain experience in the Hong Kong market. 17. In addition to offering incentives and opportunities for developing innovative use cases, I would also like to highlight several key infrastructure developments that will make launching Regtech solutions easier. 18. One example of these is that the HKMA is developing the CDI, the Commercial Data Interchange, that will allow SMEs to grant financial institutions access to their data at different commercial establishments, of course with their consent. These will include ecommerce platforms and utilities companies. With more alternative data available to financial institutions, SMEs will stand a better chance of obtaining bank financing and also other customised services that will be made possible by the use of advanced data analytics. 19. I should also mention the HKMA’s collaboration with the Government on the “iAM Smart” platform, which is a one-stop personalised digital services platform available free of charge for everyone in Hong Kong. Financial institutions can now leverage iAM Smart to provide 2/3  BIS central bankers' speeches  customers with Regtech services such as remote onboarding and log-in authentication. The HKMA is now exploring a corporate version of iAM Smart, which will offer another important infrastructure to support Regtech development. 20.

Gent Sejko: Address on remittances of the Albania diaspora Welcome address by Mr Gent Sejko, Governor of the Bank of Albania, at the high-level meeting on the remittances of the Albanian diaspora, Tirana, 14 December 2018. * * * Your Excellency, Minister Majko, Dear guests and colleagues, It is a special pleasure to open today’s meeting, which takes place after a year of intensive coordinated effort between our institutions toward the achievement of common objectives in relation to remittances of the diaspora, and other important issues. Today, a year after the Memorandum of Understanding was signed, I have the pleasure of noting that the materialization of these efforts has been reflected in the undertaking of a number of commitments and projects in pursuit of the objectives set out below. The importance of remittances to the Albanian economy, to family welfare and to development in general is highlighted in many communications of the Bank of Albania. In this context, during 2018, the Bank of Albania engaged its resources in developments aimed at creating the necessary prerequisites for an efficient channelling of such incomes into the Albanian economy. International initiatives in the field of remittances underline the importance of reducing the costs and increasing the efficiency of remittance services, thus implying the need to intervene in the retail payment market, in both remittance-sending and remittance-receiving countries.
On 5 November, the Monetary Policy Committee (MPC) announced its decision to lower the Bank’s interest rates by 0.25 percentage points. This was done in view of the rise in the Bank’s real rate caused by the past few months’ decline in inflation and inflation expectations, which has been more pronounced than previously anticipated. The rise in the real rate was greater than is warranted by the business cycle position and the near-term outlook. In other respects, for the rationale behind the decision, I refer you to the MPC statement and the speech I gave at the Iceland Chamber of Commerce’s monetary policy meeting the following day. Naturally, we are also ready and willing to answer your questions about both this decision and the interest rate outlook. BIS central bankers’ speeches  1  Finally, I would like to mention that the MPC has been examining its monetary policy instruments in the recent term and, although certain changes have been made, this review is still underway. According to the statement from its March meeting, the aim of this review is primarily to ensure that monetary policy instruments are optimally suited to the achievement of monetary policy objectives, given that it is also desirable that monetary policy implementation be as effective, comprehensible, and economical as possible in terms of the Central Bank’s balance sheet. We are ready and willing to answer any questions that you have on this topic. 2  BIS central bankers’ speeches

Ces critiques avaient tort sur l’inopportunité de l’euro mais ils avaient raison s’agissant du diagnostic sur les maux qui affligent l’économie européenne. L’euro, loin d’entraver les réformes structurelles, sera complémentaire de celles-ci. La monnaie unique facilitera les mouvements de biens, de services et de capitaux au sein de la zone euro, mais elle encouragera également la “ fertilisation croisée ” des meilleures pratiques grâce au renforcement de la coordination entre les politiques des États membres dans des domaines tels que : marchés du travail, enseignement et formation, incitations au travail et à la création d’emplois, meilleure efficacité des systèmes de protection sociale etc. - En quatrième lieu, tous les responsables économiques d’Europe doivent être lucides sur la question cruciale de la compétitivité. La politique économique de la période antérieure à l’introduction de l’euro consistait à surveiller la balance commerciale, la balance des paiements, les marchés de change et de taux. Les gouvernements recevaient ainsi en retour des informations constantes sur les principaux indicateurs de l’évolution de l’économie nationale et pouvaient agir en conséquence. Avec l’avènement de l’euro, ces indicateurs ont pour la plupart disparu au niveau national, mais ils subsistent naturellement au niveau de la zone euro. D’où l’importance des dispositions du Traité sur la coordination des politiques budgétaires et des politiques économiques. Néanmoins, les règles de l’économie de marché continuent de s’appliquer à chacune des économies. Les consommateurs créent des emplois lorsqu’ils choisissent les biens et services qu’ils estiment présenter le meilleur rapport qualité/prix.
Growing financial problems during 1998, culminating after Russia’s 3  BIS Review 48/1999  suspension of debt payments and the near failure of an American hedge fund, increased the risk aversion of international investors and prompted a flight to more secure assets. This hit the krona even though the economic fundamentals in Sweden were mostly good. One reason why the general increase in risk premia weakened the krona was probably the persistently high level of external debt. Other countries with large foreign debts were similarly affected. In Sweden’s case, however, some part was also played by domestic factors; the krona tended to weaken, for example, at the time of the general election in September. When the financial market turbulence then subsided around the turn of last year, the krona strengthened once more. This suggested that low inflation and the rapid consolidation of government finances were again playing a relatively larger part in exchange rate movements. The stronger krona also had to do with political signals early this year of Sweden’s adherence to the monetary union. Market players believed that the euro conversion rate for the krona would be stronger than the current market rate and that reinforced the krona’s appreciation. During the discussion about the krona’s depreciation during 1998 there were two arguments that call for some comments. One argument was that the krona weakened relative to the German mark on account of structural problems in Sweden.

As the Swedish banks have grown so rapidly in recent decades, mostly by expanding overseas, it would not be out of place to ask whether they have become too large for Sweden. Is there, perhaps, a limit for how large a banking system can be in relation to the total production capacity and fiscal capacity of one country? The risks for society may, quite simply, become too high. Experiences from Iceland and Ireland during the last crisis undeniably suggest this. And the Swedish banks are certainly large. The combined balance sheet totals of the major banks are equivalent to slightly more than four times GDP (Figure 6, left-hand diagram). This multiple is among the highest in Europe, in the same order of magnitude as the United Kingdom and the Netherlands (prior to the crisis, Iceland was in ninth place). However, I think that we should perhaps be cautious in assessing the risks in a banking system merely on the basis of the size of its balance sheets. For example, imagine that Nordea moved its head office from Stockholm to Helsinki, suddenly becoming a Finnish bank. This would take Sweden below the European average (Figure 6, right-hand diagram). Would the level of risk in the Swedish banking system then have decreased considerably? I don’t think so. The risks in a large banking system have many other dimensions than just balance sheet total in relation to GDP. Large banking systems can be associated with low risks and small banking systems can be associated with high risks.
The crisis nevertheless revealed that the exposure to underlying systematic risk was greater than we perhaps realised at the outset. In the hearing before the Storting (Norwegian parliament) in 2009, directly after the reporting of substantial losses in 2008, I indicated that unless the economic outlook went from bad to considerably worse, active management would deliver substantial excess returns in the coming years. Even though there was probably an underlying fear of a collapse in the financial system, it was fairly clear that the main factor behind the decline was limited market liquidity. Since the second quarter of last year, book values have increased even faster than we dared to hope. Returns have also been good as a result of a restructuring of the portfolio. The Fund continued to pursue active management through the crisis. It has proven important that active management could be pursued. Active management has on the whole delivered good results, contributing an average 0.3 percentage point to the overall annual return. All in all, active management has increased the value of the Fund by several tens of billions of Norwegian kroner. Chart: Key components of the design of the Fund’s investment strategy The Ministry of Finance sets out the investment strategy for the Fund, while Norges Bank as manager provides advice on a regular basis. This past summer, we proposed several important changes to the Fund’s investment strategy 14 . The proposal illustrates the relationship between the various components of the strategy.

Weaknesses in security or operations at any point in the payment chain could threaten stability and trust in the whole system. It is vital to have a holistic view of CHAPS as a network, through which financial or operational risk can be transmitted. Addressing this was particularly important given the increased sophistication of risks faced by the payments system including, for example, cyber-attack. It was therefore agreed to bring the operation of CHAPS in-house. The transfer took place on 13 November 2017, and was smooth with no disruption to the availability of CHAPS for the banks or their customers. I’d like to thank the staff across the Bank, CHAPS Co, the participating banks and other organisations who made it possible. Effective risk management for CHAPS But that was just the first step and the Bank continues to enhance its approach to managing risks in CHAPS. As the systemic risk manager for CHAPS, we seek to ensure that end-to-end flow of payments is safe, secure and stable. We are now increasingly able to draw on the broader set of tools and resources available to the Bank to: identify, assess, mitigate, and respond to the full range of risks to the delivery of the CHAPS system. Our approach is to assign responsibilities for these risks according to where they can be most effectively managed and to coordinate with the owners of these risks (such as Direct Participants and Critical Service Providers) in order to seek assurance that the payment system is operating within our risk tolerance.