samchain/econo-pairs-v1 huggingface dataset:
In its conduct of monetary policy, Norges Bank places emphasis on satisfying the fundamental preconditions for exchange rate stability against the euro: Instruments must be oriented with a view to reducing price and cost inflation to the level aimed at by the European Central Bank (ECB). At the same time, monetary policy must not in itself contribute to deflationary recessions as this may weaken confidence in the krone. The Regulation’s requirement with regard to returning the krone exchange rate to its initial range may - if stretched - imply too strong an element of parity policy. For example, in a scenario with a sharp and prolonged fall in oil prices, the krone exchange rate may remain outside the initial range for a longer period. If Norges Bank responds by raising interest rates in order to force the krone back to its initial range, monetary policy could trigger a recession of a type that will undermine confidence in the krone. Similarly, after an appreciation a situation may arise whereby interest rates must be set at such a low level to return the krone exchange rate to the initial range that this results in higher inflation. The basis for exchange rate stability is weakened in both cases. Hence, Norges Bank cannot with open eyes orient policy instruments in such a way that they fuel inflation or lead to a deflationary recession.

Indeed, the solvency levels of institutions were not impaired by the faster credit growth because of the increase in Tier 1 and Tier 2 capital. The solvency of institutions was strengthened by the statistical fund, which has grown uninterruptedly since it was created in July 2000. The improvement in earnings and ROE was, as mentioned above, due partly to the high growth in the business volumes of Spanish institutions and especially to lending to mortgage borrowers and to construction and property development firms. In particular, the growth of credit to property developers in 2003 was notable, and was not attributable to just a small number of institutions. It should be taken into account that this lending is markedly cyclical and that in past recessions it has shown high default rates. Moreover, the strong credit growth is an additional cause for concern, basically for two reasons. First, because Spanish household indebtedness is already higher than the euro area average. And second, because the growth of credit extended by institutions is not being accompanied by a commensurate increase in deposits. This produces a greater need for recourse to international financial markets, which may raise the average cost of bank liabilities and hinder profitability gains. BIS Review 39/2004  7  It is therefore not enough to have a strong profit and loss account; instituions must also look particularly hard at the sustainability of their current business model based on strong growth in lending volume, and at the possible alternatives to this model.
Luis M Linde: The Spanish economy – situation and outlook Speech by Mr Luis M Linde, Governor of the Bank of Spain, at the XIV Día de los Economistas 2015, organised by the Colegio de Economistas de las Islas Baleares, Las Palmas, 30 November 2015. *  *  *  Let me first thank Mr Onofre Martorell, the dean-president of the Balearic Islands Association of Economists, and Mr D. Valentí Pich, the president of the General Board of Economists’ Associations, for their invitation to this event, and Professor Guillem López Casasnovas, too, for his kind words of introduction. I shall begin by talking about the international and European economic setting, moving on to the Spanish situation and our growth projections. I shall also briefly refer to developments in the external sector, in general, and to tourism, which is so important for our economy and, naturally, for the Balearic Islands, in particular. I shall conclude with some remarks on the Spanish banking system and the challenges the Spanish economy faces. International setting Recent developments in the international environment have been marked by greater uncertainty over global growth (due largely to the slowdown in the emerging economies), the fall in oil and commodities prices, and the increase in volatility on financial markets, linked to expectations about interest rate rises in United States and to the revision of global growth forecasts.

Imports will remain notably buoyant, in line with the strength of final demand. This dynamic activity will provide for continuity in employment creation, to which the moderation in labour costs will prove conducive, and, as I stated earlier, it will allow the unemployment rate to continue falling. Factors of risk The main risks for the Spanish economy from the external environment are associated with the possibility of a sharper-than-expected decline in the emerging economies. Within the Monetary Union, headway in institutional architecture and the agreements reached with Greece have lessened financial tensions in the area. On the domestic front, the main risk is the possible influence of the uncertainty surrounding medium-term economic policy developments on agents’ spending decisions. In particular, these risks are associated with the possibility of a loss of confidence due to the exhaustion of or slippage in the reform process, or to the non-fulfilment of fiscal consolidation commitments, given that these have been the pillars upholding the adjustment of the Spanish economy, the pick-up in competitiveness vis-à-vis the euro area members as a whole and, in short, our economic recovery. The challenges to and strengths of the banking system Turning to the situation of our banking system, I would firstly like to highlight the efforts Spanish banks have made to improve their solvency. These have taken the form not only of enhanced capital ratios, regardless of the solvency ratio used, but also of an increase in the absolute volume of own funds.
This protected species status meant large institutions benefitted – indeed, continue to benefit from an implicit subsidy from the state. This subsidy is big. For the global banking system, it may currently amount to as much as several hundreds of billions of dollars each year. By comparison, that is multiples of the global aid budget. For UK banks, the subsidy amounts to tens of billions of pound each year. That too is multiples of the overseas development budget. These are extraordinarily large, and peculiarly-directed, government transfers to one sector. If banks have been the winner from these transfers, then the wider economy has clearly been the loser. The damage wrought by the pre-crisis debt mountain has been huge and is still rising. The cumulative loss of output relative to trend is already fast approaching one year’s output in the UK. As context, only world wars come with a heftier price tag. The strain is being felt by many homeowners, companies and, increasingly, governments. In the US alone, more than 4 million homeowners have so far lost their properties. Many more households and companies globally can only support their debts at near-zero interest rates. They are zombies, caught in a debt trap. In a way, none of this should have come as a surprise. We know from past crises that debt acts as a dragging anchor on growth for a protracted period.

Let me stress this point: a CBDC would be created with banks, not against them nor in spite of them. I could go even further: in the digital universe, a CBDC can help to preserve the complementarity between central bank money and commercial bank money. Failing this, commercial banks will face a difficult challenge competing with the BigTechs and their unrivalled resources and network effects, and with private stablecoins. With that in mind, let me now turn to the triangle of actions:  The first action in response to the risks posed by private stablecoins is of course regulatory. Our main challenge is to avoid regulatory arbitrage, where players  relocate to other jurisdictions to circumvent regulations. We must ensure that all countries apply strict regulations regarding crypto-assets, and that no stablecoin arrangement enters into operation without having fully met the regulatory expectations. The European Union has been a pioneer in this field, putting forward last September a proposal for a Markets in Crypto-Assets regulation (also known as MiCA). I sincerely hope the EU shall adopt this first harmonised regulatory framework in the coming months. If it modifies the Commission’s proposal, it should only be to strengthen it. Crypto-asset issuers and entities providing additional services, such as transfer or custody, will in particular have to provide a predictable redemption right in sovereign currency for asset holders. They will also be subject to uniform requirements across the EU and act under the watch of supervisory authorities, from whom they will have to obtain prior authorisation.
Irma Rosenberg: Current monetary policy – a difficult balancing act Speech by Ms Irma Rosenberg, First Deputy Governor of the Sveriges Riksbank, at Nordea, Stockholm, 11 March 2008. *  *  *  At the monetary policy meeting on 12 February the Riksbank decided to raise the repo rate by 0.25 percentage points to 4.25 per cent. I entered a reservation against the decision and considered that the repo rate should be left unchanged. However, it was far from a clear stance. I would therefore like to take this opportunity to explain my reasoning more clearly and the considerations monetary policy has to take into account. I will also comment on some of the statistics received since the monetary policy meeting. In this context it feels natural to briefly comment on some of the criticism we have received, namely that the Riksbank has been altogether too silent about how we view economic developments. It is possible that during the autumn, at the beginning of the financial turmoil, we underestimated the need for the Executive Board members to comment on the developments we see around us. It is also possible that we more generally underestimated the need, even in less turbulent times, to discuss our latest assessment and to relate it to the new statistics received since the most recent monetary policy meeting. All this, that is, our published forecasts and new outcomes, is public information and this link can be made by all those who follow our work.

Durmuş Yilmaz: Central banking in emerging economies – the Turkish experience Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the “International Conference on Economics”, Ankara, 12 September 2006. *  *  *  Dear professors, colleagues, and guests, I am very pleased to participate in such a conference covering a broad range of economic issues and attended by many distinguished academicians from different countries. It is also a great pleasure to deliver a speech on the topic of central banking in emerging economies and the Turkish experience. Dear guests, Given the wide range of issues related to central banking in emerging economies and the limited time available, I have decided to limit the extent of my remarks today. I’d like to talk about the challenges we face as today’s central bankers in emerging market countries, mainly in the context of the Turkish experience. However, before embarking on this subject, let me first of all step back and take a look at the evolution of central banking, especially in the recent past. There is no doubt about that throughout the 20th century, central banking has undergone a tremendous transformation both in numerical terms and institutional aspects. At the beginning of the last century, for example, there were just 15 central banks in the world.
The experience accrued during periods of crisis and the changes that have taken place in the financial industry have conditioned the authorities’ preferences over time. For instance, until the end of the last century, the prevalent worldwide model was one of allocation of supervisory responsibilities by sector (banking, insurance and securities  BIS central bankers’ speeches  1  markets). This model typically included a supervisor – normally the central bank – which was charged with ensuring that credit institutions complied with the sectoral regulations on solvency and conduct; a second supervisor, with similar competencies for insurance companies; and a third supervisor, which oversaw the behaviour of securities market participants. This model responded well to an industry structure in which the various types of institutions primarily pursued their activity in a single sector – whether banking, insurance or securities markets – and to the absence of widespread concern over the existence of possible conflicts between the surveillance of institutions’ solvency soundness and the monitoring of their behaviour with customers and investors. In the mid-1990s, this sectoral model began to be replaced in many countries by a single supervisory authority model (following the paradigm of the reform implemented in the United Kingdom in 1997) in which the oversight of banks, markets and insurance companies, in terms of both solvency and conduct, was assigned to a single supervisory agency separate from the central bank.

Banking union The development of the banking union has had an appreciable impact on the organisation of supervision in Europe. In particular, national supervisors have relinquished competencies to European authorities, although solely in the area of prudential oversight and resolution policy for deposit-taking institutions. Competencies relating to oversight of the solvency of other intermediaries – such as insurance companies or investment firms – and of compliance with rules of conduct by all financial institutions remain under the stewardship of the national authorities. These, as is moreover appropriately reflected in the report presented today, actively contribute to the supervisory and resolution functions exercised in respect of significant banking institutions at the European level, and they retain their jurisdiction over less significant institutions. Accordingly, the relinquishing of sovereignty entailed by the banking union has not generally altered the organisation of financial supervision at the national level, although it has required the establishment of new European agencies that have assumed the competencies transferred from national jurisdictions. Indeed, the organisation of the banking union adheres to a model involving a significantly stricter separation of functions than that prevailing in national jurisdictions. Thus, two independent authorities have been created: the Single Supervisory Mechanism, which turns on the ECB, and the Single Resolution Mechanism, which does so on the Board of the same name.
The pattern is clear from similar periods in the past, for example the autumn of 1998 when Russia suspended payments on parts of it s government debt and a major American hedge fund collapsed. What happens is that certain currencies weaken, others, particularly large ones, appreciate, share prices fall, bond rates are unchanged or rise, short-term interest rates decline and the price of gold moves up. Exchange rate shifts of this type are normally transient. The krona has in fact strengthened just recently as markets have become more stable. The IT bubble has burst At the time of our previous meeting in March, economic activity was slowing generally throughout the world but above all in the United States. This tendency had also reached Sweden. Important factors behind the almost simultaneous and marked deterioration of the global picture and perhaps particularly in the United States were, for example, energy price increases, rising interest rates, falling stock markets and the sudden downturn in corporate investment. The prospect of lower profits, a clear slump on the world’s stock exchanges and more pessimistic expectations have led to a marked worsening of investment activity. To illustrate how they believe the American economy will develop, observers have resorted to letters of the alphabet. A V implied a quick recovery, where the favourable outlook for profits meant that the accumulated imbalances would not be a major problem. This alternative rested on a persistently strong belief in a high potential growth rate, with investment in new technology continuing to play an important part.

This has partly been a matter of supply shocks that do not normally have lasting effects on the rate of inflation. There is therefore reason to believe that when the increased price levels drop out of the twelve-month change figures from next spring onwards, inflation will fall back from the relatively high rates at present. The picture of inflation does, however, include other features that probably have to do with the high resource utilisation during the latest upward phase. The fact that domestic inflation has moved up even though economic activity is slowing could point to some underestimation of resource utilisation or to a relationship between growth and inflation in a wide sense that for other reasons is less favourable than assumed earlier. Recovery with prospective inflation in line with the target In the Inflation Report that now lies on the table we have opted for a main scenario where growth in the rest of the world is lower than we foresaw in the previous Report in May. The situation is particularly complicated in that the usual difficulties in determining exactly when activity is likely to turn upwards are compounded by the occurrence of a structural adjustment of saving and investment, above all in the United States, at the same time as economic policy there is undergoing a marked expansionary realignment. A further major complication is the future security policy situation, which is naturally hard to assess with traditional economic tools.
Third, the opportunity cost of staying 21 out of the EU will increase for export-oriented firms. And finally, since the ACP (African, Caribbean and Pacific) countries that are parties to the Cotonou Agreement are an important source of raw materials for the EU itself, the duty-free access of their raw materials should actually benefit Malta which imports all its raw material needs. In the process local firms would, of course, also become subject to competition from countries covered by reciprocal trade agreements with the EU, and inefficient and high-cost producers in Malta could well be driven out of the market. To a great extent, however, this adjustment is already taking place, not least because the removal of import levies is well underway. Thus, while there could be some increased costs, the effects on unemployment should be limited. In any case, both the Government and the EU have mechanisms designed to assist uncompetitive firms. It could also be argued that some job losses are inevitable if we really want to give consumers a better deal while promoting the competitiveness of domestic firms. A short-term increase in unemployment, moreover, could well be reversed. This is not an unrealistic expectation. Investors from non-EU countries will find that they would be in a better position to tap the enlarged EU market by consolidating their activities in the new members than by accessing these markets separately.

Peter Pang: The role of SMEs in Asian development Statement by Mr Peter Pang, Deputy Chief Executive of the Hong Kong Monetary Authority and Head of Delegation, Hong Kong, China, at the 41st Asian Development Bank Annual Meeting, Madrid, 5-6 May 2008. *  *  *  Let me first thank the Government of Spain and the people of Madrid for their warm hospitality. I welcome the successful conclusion of the ADF X negotiations ahead of this meeting, providing timely and critical resources to the ADB to further its work in poverty reduction in Asia. The remarkable development of the region over the past decade has significantly improved the lives of its people. Yet, eradicating poverty remains a huge challenge, and the rapid economic growth has brought about a new set of development issues. We therefore welcome the extensive review of the Bank’s Long-Term Strategic Framework over the past two years to identify the new challenges faced by the region and the launch of Strategy 2020 to guide the Bank’s work in the next decade. I am glad to see that Strategy 2020 correctly puts a greater focus on the sustainability aspects of growth as Asia enters the next stage of development. Among other priorities, I am also happy to note more emphasis being given to private sector development and private sector operations. Enabling the private sector with firms investing, creating jobs and improving productivity is crucial to sustaining the long-term economic growth and expanding opportunities for the poor.
Growth in private consumption has been moderate the last year following many years of high consumption growth in the 1990s. House prices have increased markedly the last decade. Inflation-adjusted house prices are now more than 10 per cent higher than at the highest level in the 1980s. Growth in lending to the household and enterprise sectors remains high. Since 1997, price inflation has been higher in Norway than among our trading partners. Price inflation has accelerated the last year, also when we disregard the increase in petrol prices and indirect taxes since the beginning of this year. The year-on-year rise in overall consumer prices was 3.8 per cent in April 2001. Excluding indirect taxes, electricity and petrol prices, the year-on-year rise in prices was about 2 ½ per cent in April of this year. 8  BIS Review 47/2001  Higher price inflation in Norway is primarily due to a tight labour market that has persisted over many years, fuelling strong growth in wages and labour costs. In the light of higher price and cost inflation in Norway than in other countries, it has been appropriate to maintain higher interest rates in Norway than in most comparable countries. A special feature of wage formation in Norway has been that conditions for exposed industries, including those that do not face international competition, have received considerable emphasis in the negotiations. The last few years, the sheltered sector has had a greater influence on overall wage developments.

However, if energy resources and gold are excluded from the equation, raw material prices in dollar terms are at a similar level to the beginning of 2004. While the price of oil receded from its high-water mark in the wake of Hurricane Katrina to back within the region of USD 60 a barrel, the gold price is trading at a 24-year high of over USD 500 an ounce. A number of factors have contributed to this increase in price. The physical demand for gold has intensified significantly, rising by about 40% this year alone in India, which is the largest market. Increased demand at the central banks of emerging countries and in oil-producing countries is also being reported. Moreover, the currently low real interest rates push down the opportunity costs of interestfree investments, such as gold. Given, too, that the gold market is largely illiquid, even small shifts in demand can trigger serious price effects. In view of the fact that implicit inflation expectations are still firmly anchored – according to inflation-protected bonds and surveys – inflation fears can hardly be considered to be the main driver behind this gold price increase. SNB’s performance Taking into consideration the development of the gold price, the SNB yielded an average annual return of just below 1% on its assets between 1980 and 2005 (end of September). While interest-  BIS Review 86/2005  1  bearing assets posted a higher average yield during this period, the SNB had to settle for overall losses in gold.