samchain/econo-pairs-v1 huggingface dataset:
When wealth declines in Sweden and abroad, households reduce their consumption in order to compensate for the reduction in wealth, which also contributes to a fall in demand. In addition, the financial turbulence during the summer also increased pessimism among the households and companies. This pessimism has in itself had a dampening effect on consumption and investment. The necessary consolidation of public finances in parts of the euro area and in the United States also means that we can expect monetary policy to continue to be expansionary in these parts of the world. In my view, this in itself has an effect on Swedish monetary policy. I believe that Swedish interest rates cannot deviate too much from foreign interest rates without the exchange rate being affected, and the exchange rate is of major importance in determining the ultimate level of inflation. A central bank that conducts inflation targeting is therefore, in my view, dependent on the monetary policy that is pursued internationally. This applies particularly to a small, open economy like the Swedish economy. However, as always in situations where there is great uncertainty it is difficult to make forecasts about the future at the moment. Today I have presented how I reasoned ahead of the repo rate decision that we made in September. Since then there has been a lot of manoeuvring around the management of the European sovereign debt crisis.

We can expect the tightening measures to have a restraining effect on growth over the next few years.1 In a situation where it seems that growth is anyway slowing down this is of course unfortunate. Nevertheless, tightening measures are necessary to reduce concern and increase confidence on the financial markets. However, not everything is gloomy in the global economy. It is expected that growth in Asia and Latin America will remain high, even though it may be dampened by the slowdown in the United States and Europe. It is difficult to assess exactly how much the emerging economies in Asia and Latin America will be affected by the slowdown in the western world. This depends in part on to what extent they manage to reduce their dependence on exports to maintain a high rate of growth. A major challenge for many of these countries is to move from primarily export-driven growth to growth driven more by domestic consumption. How does this affect the Swedish economy? How do these economic developments affect resource utilisation and inflation in a small open economy like Sweden? Their impact will be through two main channels: through trade links with the rest of the world, that is via imports and exports of goods and services, and through the globally-integrated financial markets. Let me begin by discussing the role of the trade channel. 1  According to the theory of expansionary fiscal contractions, an extensive budget consolidation programme can have a positive effect on growth.
BIS central bankers’ speeches  1  pithily summarised by the diarist John Evelyn, who recorded the event 320 years ago in the following terms: “A publick bank... set up by Act of Parliament… for money to carry on the war”. The war in question was against France, and in return for the monies raised the Bank received both income and banking privileges: it was soon the only bank allowed to be constituted as a joint stock company, and had an effective monopoly of the note issue in the London area.2 Its size – partly resulting from its unique joint stock status – meant that, by the first half of the 19th Century, the Bank had become the dominant part of the financial infrastructure. Its notes had become an accepted means of settlement between banks, and as the provider of those notes the Bank acted as banker to other banks. Commercial banks held Bank of England notes in place of gold, relying on the Bank of England’s credibility for ultimate convertibility. Despite the Bank’s founding aim of public service, criticism persisted until after the middle of the 19th Century that it was acting in its own rather than the public interest by protecting its gold reserves at times of financial stress, to the detriment of its customers.

Clearly, these institutions are engaged in substantial activities outside the traditional banking role. It is within these very largest banks, and perhaps a few slightly smaller yet highly complex or interconnected ones, that systemic risk is concentrated. If the enhanced-supervision requirements are not highly graduated and imposed primarily on the very largest banks, it is not difficult to imagine how the costs associated with such supervision could lead mid-tier banks that exceed the $ billion threshold – yet fall well short of megabank status – to seek merger partners in order to achieve sufficient scale by which to help cover the cost of regulation. This would compound the problem rather than alleviate it. With regard to enhanced standards for such important factors as capital and liquidity requirements, leverage limits and risk management, Dodd–Frank instructs regulators to differentiate among these banks. Enhanced supervision can be implemented on a graduated scale, based on the extent of assets beyond $ billion and possibly other factors. Let us do that fully, then, applying these measures along a highly graduated scale, with only minimal added mandates directed at mid-tier banking organizations. However, when it comes to the top 10 or so, I would apply Dodd–Frank extensively and vigorously. I would apply all the elements of heightened supervision – from enhanced standards for capital and liquidity requirements, leverage limits and risk management to the additional measures of living wills and credit-exposure reports, concentration limits, extra public disclosures and short-term debt limits – with full force.
However, from the point of view of financial stability we cannot completely disregard the possibility of capital outflow from the OFZ market if external or internal shocks were to take place. The Bank of Russia conducted a survey of foreign investors regarding their investment strategy in Russian sovereign bonds. The results of the survey show that a significant portion of investors buying OFZ admit that these may be sold prior to maturity. Such risks need to be taken into account and their impact on the economy reduced through clear and predictable policy. This is important because the situation on global markets remains fragile and volatile while uncertainty persists in a number of factors. Such factors include what format a British exit from the European Union will take, at this point still unclear; the possible negative consequences that will result from changing economic and trade policies in the United States; and the aggravation of political risks in Europe. The heightened risk of negative developments in the Chinese economy, given the high degree of debt load in the economy and increase in the number of corporate defaults over the last year, may also prove to be an important factor. However, seeing as total capital inflow is considered to be small, risks to financial stability associated with the possible outflow of this capital remain quite low. The excessive optimism currently experienced in global financial markets may also be a cause for concern.

Therefore, the strengthening of the ruble that we saw in the first quarter of 2017 can in large part be attributed to inflows of foreign currency through foreign trade channels, and in small part to other factors, such as carry trade operations. Statistics show that the total volume of capital inflow is not huge, however in some markets the share held by non-residents has recently increased. Such markets include the OFZ market, information about the share of non-residents in that market is regularly published on our website. According to these statistics, the share of non-residents investing in the OFZ market rose 2 percentage points from October 2016, reaching 29% by 6 April 2017. This is hardly a substantial increase. The yield of OFZ has remained fairly constant since October 2016, despite the fact that the volume of net borrowing by the Ministry of Finance in this period has been quite large. This is indicative of the fact that the main players in this market are Russian banks, and that competition with foreign investors allows the yield of OFZ to be kept from growing, despite increase in supply. In our opinion, based on the experience of recent years, a significant portion of the inflows of 2/6  BIS central bankers' speeches  foreign capital to the OFZ market can be considered to be quite stable. This is connected to the beginning of Russia’s economic recovery and an increase in the level of trust investors have in the policies which are in place.
- In business in Spain, the rise in the 12-month EURIBOR has only marginally passed through to deposit costs and far less than in previous monetary tightening cycles. Certain particularities of the current hiking cycle, such as deposit rates starting out from zero or banks’ comfortable liquidity position, help to explain this. - The 2 percentage point (pp) drop in the cost of equity also tempered the rise in the cost of bank funding, which climbed to 6.6% in December 2022. The cost of equity rose during February and March 2023, mainly due to the  1  Senior debt issuances grew in 2022, in particular those of secured senior debt. However, there was a sharp drop in the volume of subordinated debt issuances (Tier 2 and CoCos), as Spanish institutions had already secured the volumes required under prudential regulations. In 2023, the Spanish banking industry plans to issue € billion in MREL-eligible instruments, somewhat less than the volume issued in 2022. 2  Households’ deposits were again the main source of retail funding, accounting for 70.6% of all private non-financial sector deposits (38.1% of total consolidated assets). 2  higher equity market risk premium, although the increases have been moderate. - As for liquidity, the Spanish banking sector has solid metrics. At March 2023, the liquidity coverage ratio (LCR) stood at 166%, much higher than the required minimum threshold and likewise above pre-pandemic levels. Meanwhile, the net stable funding ratio (NSFR) stood at 130% at December 2022, again above the minimum requirement of 100%.

For example, if banks do not have sufficient solvency levels, they may not be capable of passing changes in money market interest rates through to their customers, or may pass them through excessively. In this respect, financial stability may be said to be a de facto pre-requisite for ensuring price stability. 11  Macroprudential policy can also increase an expansionary monetary policy’s room for manoeuvre if the latter is beginning to induce excessive risk-taking by certain agents or markets. In this case, the activation of macroprudential instruments, which are more selective and can affect certain agents alone, may enable the expansionary monetary policy stance to be maintained, by smothering the increases in risks in specific sectors. This is particularly important in the euro area, where monetary policy is determined at the supranational level by the ECB taking into consideration the area as a whole, whereas macroprudential policy remains under the national remit. But nor must we exclude situations in which the objectives of the two policies may clash. For example, in the expansion prior to the international financial crisis, the relatively expansionary monetary policy stance contributed to the accumulation of macrofinancial disequilibria. Had these macroprudential tools then been in place, they could have been activated to counter some of the monetary policy effects on the risks to the financial system’s stability. In short, we cannot ignore the interaction between these two policies.
Gas production is expected to continue to increase in the years ahead, and will account for a growing proportion of total petroleum production. The long-term forecasts for oil and gas extraction are highly uncertain, and future price movements for oil, market opportunities for gas and production and extraction costs in the petroleum sector are shrouded in uncertainty. 1  BIS Review 105/2000  The revenues from the petroleum sector are of great significance to the Norwegian economy as a whole, and to the public sector in particular. In the 1990s, the export value of oil accounted for roughly one third of total exports excluding ships and oil rigs. Government revenues from petroleum activities are currently extremely high, due to high oil prices coupled with high production volumes. Current projections indicate that petroleum revenues will peak in 2002, and thereafter decline in pace with the production volume and lower oil prices. BIS Review 105/2000  2  Government revenues from petroleum activities have contributed to substantial government budget surpluses in recent years. As can be seen from the chart, considerable surpluses are also expected in the next few years. The amount of petroleum revenues used to finance public expenditure varies from one year to the next. A large portion of the revenues is saved, and is invested in foreign equities and bonds through the Government Petroleum Fund.

The portion used by oil companies in Norway, partly to finance investment, also has an effect on the mainland economy. We can say that oil revenues enter the Norwegian economy through an external and an internal circular flow. The distinction between the external and internal circular flow is important for exchange rate stability. This means, among other things, that short-term changes in oil prices shall not influence the orientation of economic policy. If the distinction between the two circular flows were to break down, and the use of oil revenues were to fluctuate more in step with oil prices, we would have an unstable economy, and hence an unstable exchange rate. The Government Petroleum Fund thus has two objectives. It serves as a buffer for the mainland economy against fluctuations in oil revenues, and it manages a considerable portion of the government’s financial wealth. In addition to capital outflow from the Petroleum Fund, in recent years there have also been considerable capital outflows from various non-oil sectors. As in other Nordic countries, large asset managers such as life insurance companies and securities funds accumulated substantial holdings of foreign equities and bonds in the latter half of the 1990s. These portfolio investments abroad reflect a desire to diversify risk. The substantial net outflow of long-term capital from the private sector may partly reflect a thin Norwegian capital market. The Norwegian bond market is not very developed and the total value of equities in the Norwegian market in relation to GDP is very low.
I note that this forum is for employers and one fundamental aspect about being an employer is that you may not be involved in the day-to-day operational issues of your organisation, hence the need to have professional employees of integrity. This gives comfort as regards reliability of financial reporting, compliance with laws and regulations, effectiveness and efficiency of operations and safeguarding of assets. These issues which give comfort are encompassed within the framework of corporate governance. BIS Review 129/2007  1  Mr Chairman, in the recent past the world has witnessed a number of corporate failures such as Enron, Worldcom and Parmalat brought about largely by fraud on the part of employees. This has brought the discussion of corporate governance to the fore in finance, industry and business. The behaviour of corporations and the people that run these corporations have come under increased scrutiny by stakeholders and the wider public, not least of all, the financial sector in Zambia following the banking failures which we experienced in the late 90’s. The financial sector thus provides a critical example of the need for integrity and professionalism, and the Bank of Zambia has a keen interest in ensuring that these principles are upheld by players in the financial sector. The Bank of Zambia’s interest stems from its mandate to protect depositor’s interests as well as to ensure financial system stability. As the examples of Enron, Worldcom and Parmalat have shown us, poor corporate governance may lead to corporate failures.

Issue of certificate of solvency: The new Companies Act strictly looks at the company’s ability to meet the solvency test at the time of a distribution. Distribution does not only refer to dividends but also to the transfer of property, incurring of debt to or for the benefit of shareholders. An auditor needs to issue a Certificate of Solvency assuring compliance with the solvency criteria. This is something new in the new Companies Act and it is specially relevant to finance and leasing companies which deal in depositors/lenders’ funds with fiduciary responsibilities. Also, before the board of a company resolves to reduce its stated capital (as companies have the option of buying back its own shares), the board shall obtain the auditors certificate of solvency. 3. Determination of fair value: The new Companies Act enables a company to purchase its own shares provided an auditor opines that the consideration given is a fair value (i.e. market value). If a company is to alter the Articles to reflect a removal or an addition of business activity or to carry out a major transaction or an amalgamation, minority shareholders could request the company to purchase their shares. Auditor has to make a fair judgment on this, which is introduced as a facility to minority shareholders. Unlike in the previous Companies Act, the external auditor is given a specific responsibility in making the judgment. There may be several other clauses in the new Companies Act which casts additional responsibility on the external auditor.
Trichet: If I stick to my own understanding of the difficulties we face, I would say we are certainly paying a price for the absence during a long period of time of appropriate balances in the various economies the world over. I’m not mentioning one economy or another in particular, because I think that we have had a phenomenon in the industrialised world which is very complex and which has manifested itself not only in the US but also in a significant number of industrialised economies including the European economies, where you see a permanent tendency to have domestic imbalances between savings and investment, with the mirror image of large external imbalances. I think we have to be aware of that. It seems to me that what we are told presently is – and again it is a message for all industrialised countries in my understanding – that it is not a normal position, that it is a dangerous position to be domestically and externally significantly in imbalance. Reflecting on what you call the “overwhelming force”… I don’t know. I have no memory of colleagues on the other side of the Atlantic telling me that as if there were no limit … All colleagues trust that there are limits, in any case. I would echo that and I would say that there are always limits. There are limits as regards the structural features and the permanent features of the functioning of the various economies.

And I was very satisfied, I have to say, that we had regained control of inflation expectations before the event of mid September, because it permitted us to decrease rates and to accompany the alleviation of inflationary pressure without hesitation. We participated in the collegial decrease of rates which we had organised with the other major central banks in the world. So that is a very important first point. Second point, as regards the present situation, we consider that the decisions we have taken were exactly what was necessary. Taking into account the alleviation of inflationary pressures, we have to be very mindful of the spreads that we are still observing in the money market. I said at my last press conference on 4 December, you remember, we have to concentrate on obtaining from the interest rates effectively practised the intended consequences. The transmission channel is not functioning as usual, but it is functioning. There is no doubt that the decisions that we are taking have an impact, but it's made more complicated, more complex by the present situation, in particular by the fact that we do not have a money market which functions normally. We do all we can, in particular through our supply of liquidity, for this money market to function as well as possible. But we observe these challenges at a global level on both sides of the Atlantic; it is a phenomenon that we are all observing and that we all are trying to counter.
This has been the ECB’s objective since 2003, when it was proposed by the German former chief economist, Otmar Issing. It may appear paradoxical that price stability is not zero, but there are good reasons for this. First, the “Boskin effect”, named after the US commission that showed in 1996 that the price indices used to measure inflation  BIS central bankers’ speeches  1  tended to overstate inflation, by underestimating the substitution towards products whose prices increase less quickly, and product innovation. Therefore, the inflation objective can never be too strictly observed since it is necessary to keep enough leeway to ensure that the economy doesn’t sink into deflation in the event of negative shocks. Also, low inflation facilitates structural adjustments in an economy where there are downward nominal rigidities of certain prices, in particular wages. c) In the euro area, however, like in most advanced economies, inflation remains too low, despite the historically low interest rates: the harmonised index of consumer prices (HICP) indeed returned to negative territory, standing at -0.2% in February 2016, and underlying inflation, i.e. excluding energy and food, is only 0.7%. Does this mean the Eurosystem can no longer achieve its price stability mandate, or will have to change its objective? I don’t think so. Current challenges do not call into question our mandate, but they change the way in which we fulfil it.

For the credibility of monetary policy, this objective must be maintained: this 2% target is a medium-term “anchor”, at a time when there is so much volatility and short-termism affecting the economy. 2) What are, with regard to this objective, the challenges central banks are facing? Today, the Eurosystem is faced with two main challenges: deflationary pressures on the one hand, and the risk of an unanchoring of expectations, on the other. a) First, a certain number of factors are currently contributing to low inflation. Primarily, the euro area is faced with deflationary pressures associated with a series of economic shocks: firstly, the fall in oil prices, from over EUR 80 per barrel in mid-2014 to EUR 34 in early March 2016, or more than 2.5 times lower, as well as the decline in commodity prices; secondly, the slowdown in growth in emerging economies and chiefly China; and, lastly, inadequate growth in the euro area with persistently high unemployment, which curbs wage rises and weakens demand and price growth. Moreover, structural factors, such as the ageing population, are likely to exert downward pressure on the “natural” interest rate, a term coined by the Swedish economist Knut Wicksell over a century ago. This rate can be defined as the interest rate consistent with the full employment of the factors of production. In this case, in order to achieve the right balance between savings and investment, markets rates must come down too.