samchain/econo-pairs-v1 huggingface dataset:
Stefan Ingves: The central bank’s objectives and means throughout history – a perspective on today’s monetary policy Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, to the Swedish Economic Association, Stockholm School of Economics, Stockholm, 6 May 2015. *  *  *  I would like to thank Hanna Armelius and Björn Lagerwall who helped me with this speech. As you know, we are experiencing very unusual – not to say unique – times with regard to monetary policy. The mind boggles – in September 1992 the policy rate in Sweden was 500 per cent, and now it is below zero. How could this happen? To understand the background, we must go even further back in time. The purpose of my speech today is to describe current monetary policy in an historical perspective. The objectives and means of central banks have changed over time, usually as a result of economic crises. During all periods, monetary policy has rested on some form of nominal anchor. But regardless of how the anchor has been designed, it is a clear lesson from history that when confidence in the anchor has been undermined, major problems have arisen. The Riksbank is no exception in this respect. I hope that by accompanying me on a journey through history you will gain a deeper understanding of current monetary policy. Let’s set off on our journey!

Two were subsidiaries of foreign banks, which have been recapitalised by their respective parents; the two Spanish banks have reinforced their capital by resorting to the markets; four savings bank groups have considered an initial public offering or the raising of capital from investors as a priority option, with a subsidiary alternative of resorting to the FROB (Fund for the Orderly Restructuring of the Banking Sector) if their initial approach did not work out as planned; another savings bank has stated its preference to participate in an integration process with another more capitalised institution; and, lastly, the remaining four savings banks have expressed their preference to reach the required level of capitalisation by means of the FROB taking a stake in their capital. Before 28 April, those institutions that had considered going to the FROB as a priority source submitted their specific recapitalisation plans to the Banco de España. In the meantime, the FROB has formally undertaken, with all institutions that have submitted strategies envisaging the possibility of resorting to it, to provide the necessary funds so that all institutions in the Spanish banking system may comply with the new core capital ratio. At present, the recapitalisation plans submitted by the institutions are being analysed, as a further step in the timetable. By 30 September 2011, these institutions must have completed what was stipulated in their strategies.
An easing of monetary policy in many parts of the world as well as in Sweden has been an important factor behind the better tendencies in recent months and the more positive forecasts. Even though the statistics show a stronger economic trend, inflation has been in line with the Riksbank’s forecasts. For this reason the repo rate has been kept unchanged since March. 1  BIS Review 108/1999  In August the 12-month rate of CPI inflation was 0.6% and inflation’s underlying rate, measured by UNDIX, was 1.5%. It is changes in indirect taxes and subsidies, together with house mortgage interest expenditure, that are continuing to result in an underlying rate of inflation that is higher than CPI inflation. Economic prospects from 1999 to 2001 We are now moving into a period of strong growth, externally as well as in Sweden. As regards the international picture, the Riksbank judges that annual growth in the OECD area up to the end of 2001 will amount to not quite 2.5%. It looks as though effects of the Asian crisis are now dying away and that emerging market growth will become stronger in the next two years, above all in the crisis-hit countries in Southeast Asia but to some extent also in Latin America and Eastern Europe. In Japan, too, the earlier risk of negative growth has turned into cautious optimism about an upturn. Prospects for the euro area have likewise improved, with a recovery in manufacturing and stronger consumer confidence.

Unemployment is therefore decreasing, though it is still above the levels that were customary in earlier decades. So the situation before us today is completely different from what we experienced last autumn. During the past year, Sweden’s economic prospects have changed considerably in the eyes of various observers and the Riksbank has been no exception in that respect. Monetary policy in the past twelve months Last autumn the financial markets became increasingly turbulent in connection with, for example, problems arising from the hedge fund Long Term Capital Management and the suspension of Russian debt payments. The financial crisis was expected to add to the negative real economic effects of the Asian crisis. International observers, including the IMF and the OECD, therefore revised their global growth and inflation forecasts downwards. The Riksbank did the same. Although growth in Sweden’s domestic sectors was relatively good and the exchange rate tendency remained weak, the overall picture did point to slacker growth and lower inflation in the forecast period. In November and December the Riksbank therefore reduced the repo rate from 4.10 to 3.40%. The early months of this year were marked by continued repercussions of the Asian crisis in the world economy, with weaker international demand. In order to prevent this from leading to a dampening of economic developments in Sweden and an even lower rate of inflation, in February and March the Riksbank reduced the repo rate in two more steps to 2.90%. Since then the situation has stabilised.
In short, we have been designated as an honorary member of this entity. My thanks to the Association but, above all, to those who have made this work possible over the years, and to those continuing it and adding to its prestige today. Lastly, allow me to stress another of the grounds for a publication such as that we are presenting today. It is a question of transparency, understood as the possibility of sharing information with society as a whole. As I pointed out in one of my early public appearances as governor of the Banco de España, I consider making high-quality statistical information 4/5  available to researchers as absolutely crucial for sound analyses and research enabling better-founded economic policy decision-making.1 In this respect, we intend in the coming years to pursue various projects that allow these researchers to have access to our statistical information, thereby enabling different avenues of analysis and research of benefit to society as a whole. In conclusion, I would like to reiterate my satisfaction at these initiatives and to thank the efforts and contributions, from both the public and private spheres, of those who have participated in this publication. In some ways, this substantiates the fact that these avenues for sharing information and making it available to society are enormously beneficial for all. Thank you. 1  See my “Welcome address” for the Second Annual Research Conference of Banco de España, 2018, at: https://www.bde.es/f/webbde/GAP/Secciones/SalaPrensa/IntervencionesPublicas/Gobernador/Arc/hdc030918en.pdf. 5/5

And, whatever the periodic outcry whenever something goes wrong - as it will from time to time - the demand for these services does not of course exist in a vacuum; it exists because of the very positive contribution that the business services sectors, including financial services, make to growth and employment and rising living standards in the wider economy. That is true nationally, but it is equally true in a global context. Indeed the unique characteristic of the City is its role as the predominant international financial centre. It accounts for a fifth of all international cross-border lending, for example; for a third of global turnover in foreign exchange and OTC derivatives, and as much as two-thirds of issuance and secondary trading in eurobonds, or of global turnover in international equities, with more foreign firms listed on the LSE than on any other exchange. And London has a near-monopoly in exchange-traded short-term euro interest rate derivatives. I will not labour the point further, Mr Chairman. Despite - or perhaps driven by - a continuous stream of shocks and competitive challenges, the City has in fact gone from strength to strength, most recently coming through the global financial turbulence of the last couple of years as well as the advent of the euro at least as strong as before. It is perhaps worth asking why the City is as strong as it is. Certainly it does have to do partly with history.
Global macroeconomic imbalances, fundamental shortcomings in the risk management of the financial players and gaps in regulatory frameworks and supervision together formed the underlying layers in the current financial and economic crisis – a crisis that many observers regard as the worst since the 1930s. In order to avoid a total breakdown in the financial system, governments, central banks and other authorities around the world have been forced to take a range of massive and unusual measures. Massive and unusual measures on the part of the authorities So, what have the authorities done? The central banks have lent large sums of money to the banks at longer maturities and against other forms of collateral than has normally been the case. This has improved the short-term funding situation for the banks. Several central banks have also provided emergency liquidity assistance to individual institutions. The Federal  BIS Review 41/2009  5  Reserve, the European Central Bank and other central banks have also entered into agreements to provide loans in their own currencies to other central banks to mitigate the effects of the crisis in other countries. The central banks have also cut policy rates rapidly and forcefully, sometimes in coordinated actions, to alleviate the repercussions of the financial crisis on production, employment and inflation. Governments have offered guarantees and capital injections to reduce the risk of further bankruptcies in the banking sector. Deposit guarantee schemes have been extended. Several countries have also adopted fiscal policy stimulation packages to mitigate the effects on the real economy.

Lower tax on productive capital or companies may lead to more companies being established and thereby raise potential output. Similarly, lower tax on labour or increased educational inputs may generate an increased supply of labour and also influence wage formation. These are examples of the numerous ways in which changes in tax and expenditure systems are likely to modify economic opportunities and promote conditions for good growth without the attendant capacity shortages that generate price pressure. Current fiscal policy The trade-off between monetary and fiscal policy — the policy mix, as we economists like to say — has improved considerably in the present decade. The rapid accumulation of government debt has ceased and the stock is now being reduced. While the consolidation of government finances has made the fiscal stance restrictive, it has been possible to lower interest rates and this in turn has stimulated investment, economic activity and employment lately. This is accordingly a considerable improvement compared with the early 1990s, for example, when factors such as very weak government finances led the Riksbank to keep interest rates up at a time when government debt was rising markedly. BIS Review 77/1999  2  Government debt and budget balance Per cent of GDP.
It is not at all certain that a peg would engender the foreign exchange stability that exporters dream of. We have learned from our experience with flexible exchange rates that any explicit foreign exchange target stimulates the appetite of speculators instead of calming the atmosphere. And this would be especially true if our pegging decision were to be taken unilaterally, without the prospect of a full and permanent integration into the euro area. Today, with global markets and global speculation, it would be an illusion to believe that a central bank can defend a specific exchange rate target unless there is strong convergence of economic fundamentals with the economy whose currency it is pegging the domestic currency to. Furthermore, a nominal peg against the euro would do little to stabilise the real value of the Swiss franc – the only thing that matters for the international competitiveness of the Swiss economy – or to stabilise the franc vis-à-vis third currencies, especially the US dollar. Given our exposure to global economic and financial shocks, and their arguably smaller importance for the euro area, pegging the Swiss franc to the euro is not a realistic option. Flexible exchange rates give us the room of manoeuvre we need. 4  BIS Review 46/2006  Conditions for monetary independence Having reviewed the advantages of retaining our national currency and flexible exchange rates, I would now like to turn to the conditions necessary for successful monetary independence. I see three crucial factors here: credibility, transparency and efficiency.

This has led to an increase in short term inflation forecasts by 0.6 points (Table 1). The assumptions about fiscal policy used for medium-term forecasts were based on the outlook presented in the Medium Term Program (MTP). Therefore, the baseline scenario envisages that the ratio of primary expenditures to GDP would gradually be reduced from 2012, the public debt-to-GDP ratio would continue to fall, and the risk premium would remain broadly unchanged. Moreover, tax adjustments and administered prices are assumed to be consistent with inflation targets and automatic pricing mechanisms. Distinguished Members of the Press, As I have already stated, since the publication of the July Inflation Report, emerging economies have faced rapid capital outflows due to the deteriorating risk appetite. In this respect, excessive depreciation in the Turkish lira has become more evident. This development, coupled with the increase in prices of administered goods, has raised the risk of deterioration in pricing behavior. We responded to these developments strongly by increasing our overnight lending rate markedly in our October meeting (Chart 6). We expect monetary tightening to contain inflationary pressures in the period ahead. However, inflation is forecasted to increase significantly in the short term with the contribution from low base effects in unprocessed food prices.
Ksenia Yudaeva: The policy of the Bank of Russia for ensuring financial stability in an environment of economic recovery Speech by Ms Ksenia Yudaeva, Deputy Governor of the Bank of Russia, at the Forum on Financial Stability "The policy of the Bank of Russia for ensuring financial stability in an environment of economic recovery", Moscow, 13 April 2017. * * * Dear colleagues, it is my pleasure to welcome you all to the Forum on Financial Stability, which has by now become a tradition. In the last few quarters we have witnessed the beginnings of fundamental change in both the economy and financial markets. The economy has adapted to balance of payments shocks and started on a path of recovery, and the level of volatility in financial markets has gone down significantly. The relatively calm climate we now find ourselves has led to a decrease in risks that had been building up, but such a climate could nevertheless bring in new risks and lead to the creation of so-called bubbles in certain markets. The Bank of Russia must continue to be on the alert, and ready to adopt the necessary measures as they are called for. And so, through our analysis of the potential for implementing macroprudential instruments and macroprudential stress testing, that is exactly what we are doing now. Myself and a number of my colleagues will be delving deeper into these issues, and I would like to take this opportunity to highlight a few myself.

Today we will summarise our intermediate results and progress we have made so far. From the beginning of 2016 to March of this year, outstanding foreign currency loans went down by almost $ billion. This was partly offset by an increase in outstanding ruble loans, which grew to 514 billion rubles. We can also see a decrease in foreign currency lending, mainly in those industries where companies lack so-called natural hedging. Once again this refers to businesses in the construction and real estate industries, as well as wholesale and retail trade. For exporter companies the situation remains unchanged, and banks continue to make foreign currency loans to them. In 2014–2015, exporters’ external debt presented a significant potential risk to financial stability. The high number of maturing loans was a cause for concern, and we were carefully monitoring the schedule for upcoming repayments. This spike in external debt repayments has since passed. In the first quarter of 2017, the 27 largest companies repaid a combined total of $ 3/6  BIS central bankers' speeches  billion in external debt. They will repay a further $ billion by the end of 2017 (April – December), which is 22% less than the payments made in the same period of the previous year $ billion). Now, given the recovery in economic activity in the world and in Russia, as well as the increase in attractiveness of Russian borrowers, there is the potential risk that these borrowers will accumulate excess foreign currency debt.
BIS Review 55/2002  1  Developments in Iceland from the latter half of 1990´s until the present time resemble in many ways the experience of some of the other Nordic Countries a decade earlier but differ also in important respects. Soon after liberalisation, domestic demand picked up, fuelled by rapidly rising credit in the wake of intensified competition in the financial sector and a sharp increase in credit availability. At that time, Iceland was pursuing a fixed exchange rate policy but not as rigidly fixed as the other Nordic Countries had done a decade earlier. The expansion in the economy at the end of last decade led to a very rapid rise in the current account deficit, climaxing in year 2000. Through the effects of a tightening monetary policy, the exchange rate of the króna gradually appreciated. In the spring of the year 2000, expectations in the market shifted for a variety of reasons, one of them being concerns about the current account deficit. Subsequently the króna began to depreciate and continued to do so more or less uninterrupted but on the whole in an orderly fashion over a period of a year and a half until the end of November last year. By that time, it had fallen by about a third against other currencies. This large depreciation is not without precedent in other countries.

Although developments in Iceland showed many of the same characteristics as those in some of the other Nordic Countries during the post-liberalisation rapid expansion, such as credit expansion, current account deficit, exchange rate depreciation and so on, Iceland escaped the difficulties suffered by banking systems in some of the other countries. Icelandic bank credit grew very rapidly in the late 1990’s and into the year 2000 and a sizable portion of the credit expansion was financed with credit from abroad. The capital adequacy ratios of banks fell for a while but nevertheless remained comfortably above the minimum required and internationally recognised levels. The year 2001 also turned out to be quite favourable for the banks, a development which continued by and large into the current year. Consequently, the capital position of the banks has improved and all the major banking institutions have relatively strong capital adequacy ratios at present. Loan losses have increased, as was to be expected in the wake of the credit expansion, but nowhere on the scale experienced in some of the other Nordic Countries a decade ago and very much less than they did during the downturn in the Icelandic economy around and after 1990. The conclusion to be drawn is, therefore, that the Icelandic banking system weathered the relatively turbulent post-liberalization boom period of 2000 and 2001 pretty well and is well poised to meet new challenges, including continued rationalisation and intensified competition from foreign banking institutions. In the most recent decades, the Icelandic economy has also seen structural shifts.
Price and wage developments repeatedly came on a collision course with the fixed exchange rate and Sweden suffered cost crises. To rectify the situation,  BIS Review8/2007  1  the krona was devalued a total of five times during a period of seven years. But the trend increase in domestic prices and wages continued to rise. The fundamental problem still remained. The result was modest economic growth, poor productivity growth and more or less stagnant growth in real wages. The performance was markedly weak both compared with earlier periods and in relation to other countries. During the crisis years at the beginning of the 1990s the situation got even worse. Unemployment increased fourfold in the course of a few years and the central government finances deteriorated dramatically. Long-term interest rates rose and the interest rate differential towards, for example, Germany occasionally came to several percentage points. The fixed exchange rate lost its credibility and finally had to be abandoned, following large currency outflows and extreme interest rate hikes in attempts to defend the krona. The nominal anchor that was to hold down inflation and inflation expectations in the economy had loosened. To secure it again and bring the Swedish economy onto a better track required drastic measures. The solution was what one might call a stabilization policy change of regime. The tasks of both monetary policy and fiscal policy were fundamentally redefined and we were given a clear allocation of roles in economic policy.

At the same time, the implementation of ambitious and far-reaching structural reforms is urgently required in the euro area to strengthen substantially its competitiveness, flexibility and longer-term growth potential. In particular, countries which have high fiscal and external deficits or which are suffering from a loss of competitiveness should rapidly carry out comprehensive economic reforms. In the case of product markets, policies that enhance competition and innovation should be vigorously pursued to facilitate productivity growth. Regarding the labour market, the priority must be to enhance wage flexibility and incentives to work, and to remove labour market rigidities. We are now at your disposal for questions. BIS central bankers’ speeches  3