samchain/econo-pairs-v1 huggingface dataset:
Now the Swedish financial markets were also hard hit and some sub-markets were practically at a standstill. The earlier expectations that the decline in economic activity would be fairly mild were replaced by a much more negative view of future developments, both in Sweden and abroad. The Lehman Brothers crisis was also the prelude to a series of measures to stabilise the Swedish financial markets. At the same time the Riksbank took several rapid and resolute steps down the interest ladder to alleviate the effects of the crisis on economic activity. Still sensitive but liquidity risk has declined The first phase of the crisis can be described as a liquidity and confidence crisis. No one trusted anyone else and very few were willing to lend money and take risks. The price of loans between the banks, interbank rates, also rose sharply. Since the crisis started the central banks have lent large amounts to the banks. For example, the Riksbank has offered loans in Swedish kronor at longer maturities than normal to facilitate the supply of liquidity to the Swedish banks. We have also lent US dollars to Swedish banks and we have made the collateral requirements for the loans somewhat more generous. The government has tried to reduce the banks’ liquidity risks through its guarantee programme, which basically involves banks and other credit institutions being able to sign contracts with the government on guarantees for some of their borrowing.

2/3  BIS central bankers' speeches  Both the Banking Union and the Capital Markets Union are the key components of what we call with Jens Weidmann a genuine “Financing Union for Investment and Innovation”: this idea is a way of better channeling our abundant resources – our EUR 340 billion savings surplus in 2018 – towards the concrete needs of the European economy: the energy transition, SMEs’ equity or digital innovation. This unified branding has the merit of highlighting the purposes of this Union to the general public: investment and innovation, or in other words the financing of the future. III. Some pillars of a European financial sovereignty In the longer run, we should build three key pillars of the future European financial sovereignty. First of all, the EU needs to strengthen its position as rule maker through enhanced equivalence regimes. Brexit has given new momentum to this topic: a comprehensive reassessment of current equivalence regimes is essential given the scope of the relationships between the EU and the UK. Beyond the issue of Brexit, the review of equivalence regimes also provides an opportunity to improve them. There is a need for greater transparency in the procedure for granting equivalences, within a comprehensive institutional framework. The monitoring and control of equivalence decisions could also be improved by granting more power to ESAs, and by providing the European Commission with more gradual options through flexible tools in the case of regulatory divergence: for example, temporary, partial or conditional lifting of equivalences.
The lack of investments in new products and the dependence on a gradually outmoded structure of production helped to impose an adjustment of the entire nation’s material standard. For many years growth in Sweden was weaker than in the world around us. This example shows how a “new economy” at that time resulted in problems for the Swedish economy rather than opportunities. The lack of change, because wage formation did not function properly, led to a weaker economy that was more inflation prone. The period clearly illustrates how globalisation, increased competition and new technology can result in lower growth and higher inflation if changes are not made in time. If the economy is under pressure from strong competition as well as poorly functioning wage formation, there is a risk of economic renewal lagging behind. Concluding remarks As I have said, the new information technology is making rapid progress. As far as we can see today, it will affect production and distribution processes as well as consumer behaviour. That in turn makes the environment more competitive and calls for changes in Sweden’s corporate sector. Put to good use, this transformation can probably create stronger potential growth, lead to higher productivity growth and lower inflation, and favour employment. The favourable changes that have occurred over a number of years in the Swedish economy since the 1980s suggest that such a development is within our grasp. But as I just mentioned, if wage formation does not function properly, firms will be under pressure from two fronts.

FT: What more should they be doing? CN: They should finish the work they have started and reach the goal of convincing all market players that this is done and the financial system is fully repaired. FT: But do you think doing too little is riskier than doing too much? CN: I would say there are two risks. Doing too little is a risk. Doing too much is a risk. If you trigger these Ricardian effects and actually trigger a reduction in the spending propensity of consumers, then of course, the result would be worse. FT: Would you put the emphasis on putting the regulating framework and only discuss other measures if there is time address other issues, as Axel Weber said yesterday? CN: The regulatory framework was identified at the summit in November by G20 heads as a very important thing to give back confidence to all market players and citizens in the financial system and the economy. The heads [of government and states] set out a road map on  BIS Review 29/2009  1  which we have since been working on in various working groups. This holds true. Of course there are things that can only be implemented over the next cycle because I hope there will be things that are designed to be counter-cyclical and to provide for cushions in good times and help the financial system and therefore the health of the economy in the low part of the cycle.
Drivers of central bank balance sheets since the Global Financial Crisis I will start with some brief scene setting points – apologies that they are pretty obvious ones, but they are important. There has been a large and sustained expansion of most central bank balance sheets in the past decade. This has come about in support of both monetary policy and financial stability objectives. These respective drivers of balance sheet growth are closely intertwined – never more so than in the response to the Covid crisis – but distinguishing the causes and consequences is important nonetheless. Starting with financial stability, the Global Financial Crisis revealed banks had previously held insufficient high quality liquid assets, in part due to the inadequacy of the prudential regulation regime at the time. The changes since then, in regulation and in banks’ approach to managing risk, have resulted in a significant increase in the demand for central bank reserves, a large part of banks’ stock of high quality liquid assets. Thus, the level of reserves required by the banking systems in the major economies is persistently higher, though it is not straightforward to determine exactly how much higher. That depends on a number of factors that can change over time. Second, monetary policy has also undergone a major shift over the past decade, towards using central bank balance sheets as a tool to provide monetary stimulus, through the purchase of assets, usually government debt. These two reasons for increasing the size of central bank balance sheets coincided in time – i.e.

Where that requires larger purchases of a broader array of assets, it inevitably raises risk management questions for central banks. So, I think the Covid crisis has demonstrated the need to ensure central banks have as many tools as possible in their box, of which expanded purchases of private sector assets is one, but given the issues it raises I would emphasise state contingency here in terms of when some tools may be more appropriate or necessary, given the severity or particular nature of the circumstances at the time. The MPC has considered its prospective approach to QE unwind in recent years, and in June 2018 set out that the balance sheet would be unwound at a gradual and predictable pace, allowing reserves to fall back to a level demanded by banks through their participation in regular repo operations, and once the Bank Rate had risen to around 1.5%, thus creating more headroom for the future use of Bank Rate both up and down. The MPC keeps this approach under review, though I should make clear that it does not seem like an imminent issue in current conditions. But we are looking at the next decade at this conference, so who knows what will happen. We should keep the options to use all our tools as open as possible, so I would conclude that the appropriate policy mix going forwards over a decade may be more nuanced than  5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  previously thought.
They have undertaken reforms in the areas most important for competitiveness, growth and the sustainability of public finances such as labour markets, products markets, social security, pension systems, etc. These reforms are a prerequisite for dynamic and sustainable growth in the future and they must be vigorously pursued. In addition to this very clear determination at the different national levels to reduce deficits and introduce the necessary reforms, Europe has equipped itself with a new disciplinary framework. The Heads of State signed a new fiscal compact over a year ago that fixes very strict rules and gives very extensive powers to the European Commission to assess the compliance of Member States. This new compact goes hand in hand with the introduction of rules for monitoring macroeconomic imbalances. It is important to understand what these institutional advances represent: in effect, they represent a new Treaty creating very strong commitments for the States via rules that are far better calibrated and far more binding than those in place when European monetary union began. 3. Monetary Union is to be enhanced with a banking union  As well as being a year that saw a considerable strengthening of fiscal and macroeconomic discipline in Europe, 2012 also saw significant progress towards a banking union. Why has a banking union suddenly become such an indispensable and urgent project? Simply because we are now certain that many of the problems we have experienced could have been avoided with a banking union.

In short, we expect firms to have a very clear focus on managing the evolving credit risks within their portfolios and we will supplement that with our own ongoing attention in this area. Finally on this topic, whilst my comments have focused on the short- to medium-term implications of the current outlook, it is important firms focus on the horizon as well. I therefore encourage you to consider how current conditions may impact demand for your services over the longer term and what this may mean for your business model and strategy. This is an area that we will increasingly be asking you about as your supervisor. The PRA’s Supervisory & Regulatory Agenda Let me move on to the second area I promised to touch on – the opportunity we are taking to evolve our supervisory and regulatory regimes to ensure they remain fit for purpose and proportionate. Doing so will help maintain a resilient mutual sector in the UK, which can support its members with sustainable growth and innovation. It will also allow us to manage our resources efficiently whilst focusing on the biggest risks. A starting point is to note that the core of our supervisory approach will remain unchanged; it will continue to be underpinned by three key principles: •  •  •  Firstly, it is judgement based – with supervisors making judgements about the risks that a firm poses to our objectives based on evidence, analysis and direct interaction with firms.
Should this be the case, it may not be necessary to increase the repo rate as rapidly. An alternative scenario in February’s Monetary Policy Report examines this possibility. But let me clearly emphasise that the Riksbank has no target for the level of the exchange rate. Monetary policy is governed by the inflation target, even if the exchange rate is an important determining factor for inflation. Secondly, as I mentioned, commodity prices have increased very steeply over the last year (see Slide 11). To a certain extent, although far from completely, this price rise has been counteracted by the appreciation of the krona. If commodity prices increase as a result of rising demand, this price increase will probably be more permanent than one resulting from supply shocks – that is factors obstructing output. 5 It seems likely that the strong economic development of the emerging economies – with increased demand for intermediate goods as a result – can largely explain the increase of commodity prices over the last year. The very recent unease in North Africa has contributed to rising oil prices and has more of the character of a supply shock. All in all, the increase of commodity prices may have greater contagion effects on prices in the rest of the economy than we have estimated. Thirdly: even if unemployment has decreased over the last year, it is still relatively high. Despite this, a certain degree of labour shortages can already be discerned in several sectors.

Despite the weakened krona, the decrease in exports was extremely severe. It is natural to ask why. One explanation is that a large part of the decline in world trade affected investment goods and durable consumer goods such as cars. The purchase of these goods could easily be postponed when the crisis broke out. Such product groups represent an important part of Sweden’s exports. In could thus be said that Sweden was impacted particularly severely due to the composition of its exports. As I mentioned in my introduction, Sweden is a small, open economy that is highly dependent on exports. During 2009, GDP fell by over 5 per cent, the sharpest decline since the Second World War. Even if the krona was heavily weakened, this was not enough to prevent a major fall in exports. On the other hand, there are many indications that the weakening of the krona contributed strongly towards preventing inflation from becoming excessively low. Unlike abroad, where inflation became negative, inflation in Sweden remained around the target even during the most acute phase of the crisis (see Slide 6). Note that inflation in Sweden here disregards changes in mortgage interest expenditure – it is measured using the CPIF. This approach corresponds better with the way that inflation is measured abroad. 2 Developments in Sweden during the financial crisis differ in several regards from the crisis we experienced during the 1990s, when major problems were present in the Swedish economy before the crisis erupted.
Malaysia’s supportive framework and process for sukuk origination and sukuk listing also facilitates the issuance process of ringgit or nonringgit denominated sukuk in our market. Efforts to deepen the sukuk market have provided significant opportunities for participation in this market, with the size of the Malaysian sovereign and corporate sukuk outstanding growing threefold from a total of RM120 billion in 2005 to RM353 billion as at end-2011. The market has also drawn the interest of foreign participation for their financing and investment activities. Key in the development of Islamic finance in Malaysia has been its progressive internationalisation and the introduction of more innovative Shariah-compliant financial solutions that meet the increasingly more complex and diverse international business requirements. BIS central bankers’ speeches  3  Let me conclude my remarks. In serving the needs of the real economy, Islamic finance offers a comprehensive and competitive solution in meeting funding and investment requirements of businesses. Given its international outreach and dimension, and ability to provide a total financial solution, Islamic finance is now at the frontier in which it presents new opportunities to support the economy and overall financial stability. Today’s dialogue session would serve to provide a greater understanding and appreciation on Islamic finance and its potential for the intermediation of finances for international businesses. 4  BIS central bankers’ speeches

So far we have only succeeded in the first phase. There are still two more phases in the fight against inflation: In the second phase, inflation needs to fall to below 10% in the second half of this year, in line with our forecast. And then, in the third phase, inflation needs to continue to fall to levels close to 2% next year, which will be the best news for the economy. More than before, the new Bank Board is monitoring and discussing money flows in the economy, and above all loans to households, firms and the government. We must look at money. We conduct monetary policy. The term is derived from the word "money", which we label as M1 and define as the quantity of money in the economy. We have added elements of monetarism to New Keynesian economics, the predominant school of thought at the CNB so far. For illustration, broad money (M3) has risen by 31% since January 2020 (pre-Covid). The price level has increased by 33% in the same period. In order to significantly slow inflation, money growth must also be slowed substantially. Our DSGE model created according to the New Keynesian theory ends with the threemonth PRIBOR interest rate (Michl, 2019b). On top of that, in our considerations, the Bank Board must discuss the evolution of longer client interest rates and take into account how the interest rate transmission mechanism works and how changes in shortterm rates will affect long-term rates.
So it was absolutely right to counteract this danger by lowering interest rates and to generally loosen monetary policy in order for us to bring inflation to a level below, but close to, 2%. The ECB has now bought government bonds and other securities amounting to € trillion. Interest rates have been at zero for years. You are offering banks unlimited credit, as long as they can back it with appropriate collateral. The official motivation for taking all these measures was to bring the inflation rate up to just below 2%. That is the ECB’s inflation target. But inflation is currently at 1.5% and the ECB has fallen short of 2% for years. So what is the point of it all? Again, we had to respond to the risk of deflation; and we have come nearer to our aim of maintaining an appropriate level of inflation over the medium term. Our actions have had an effect: lending to households has been boosted just as much as lending to companies. So we have seen an overall rise in the propensity to invest. The negotiated wage agreements also show that our measures are having an impact. Wage growth in the euro area stands at more than 2%, and it is even slightly higher in Germany. That will push up prices. But it is slower than we had thought. Why? The level of economic growth is one factor, but another is the labour market.

Somewhat unexpectedly, it has also turned out that the CCP provides a comprehensive national picture of total outstanding student loan balances and delinquency rates that heretofore did not exist. It was in a Quarterly Report, for example, that we first reported that student loan debt exceeded credit card debt, in early 2010. Our findings helped bring the surge in student debt and delinquencies to the attention of the public. Our research also highlighted its potential implications for consumption growth, showing a strong association between the increase in student loan debt and the decline in mortgage and auto loan origination rates over the past few years. Coming back to the broader issue of data innovation, it is interesting to note that dataset merges have been behind a growing number of important academic studies and research findings in recent years. While showing how the value of datasets can be greatly enhanced by linking them, these studies underscore the need for creative thinking to maintain anonymity and representativeness of the matched sample. We are currently pursuing various ways to enhance the value of the Consumer Credit Panel further by linking to property deed records, employer payroll records, small business credit data, and student college records. The CCP shows how existing data – in this case credit reports – can be re-purposed to serve new public policy and research uses. But sometimes existing data sources just can’t provide the answers we need, and in those cases data innovation requires creating something completely new.
BIS Review 37/2008  9  Strong growth in real income has contributed to the long period of high housing investment and rising house prices. House price inflation peaked amid the housing market euphoria of about a year ago. The housing market is now cooling. In parallel with rising house prices, households have been borrowing more and saving less. Household financial saving was negative in 2006 and 2007. At the same time, Norway has a substantial current account surplus. Most of the current account surplus is matched by government financial and oil sector surpluses – which are redeployed abroad. Adjusted for these outflows, Norway recorded a basic balance of an estimated minus NOK 150 billion in 2007, or close to 10 per cent of mainland GDP. 10  BIS Review 37/2008  The corollary to the deficit on the basic balance is that Norwegian businesses, as well as Norwegian banks, borrow in foreign markets. The recent turbulence in international money markets has affected the price and supply of funding in these markets. Monetary policy assessments Monetary policy in Norway is oriented towards keeping inflation low and stable. The operational target is annual consumer price inflation of close to 2.5 per cent over time. Norges Bank operates a flexible inflation targeting regime. Both variability in inflation and variability in output and employment are given weight in interest-rate setting. Inflation has been expected to pick up for some time.

In addition to a favourable environment for Norwegian exports, Norwegian importers have gained access to new markets in central Europe and Asia which offer substantially cheaper consumer goods. As a result, Norway’s terms of trade have improved appreciably over the last few years. 6  BIS Review 37/2008  A second characteristic of this upturn is that productivity growth has been unusually high, resulting in lower production costs. The business sector has been quick to adapt and change, and to make use of new technology that is available in an international market. Banks and other service sectors, in particular, have outperformed other countries in this respect. This is probably due to the modernisation of the economy through the 1980s and 1990s, which resulted in more efficient markets. A third characteristic has been an ample supply of labour, which has boosted output growth. Over the past two years, an increase in labour force participation and high inward labour migration has provided room for continued high growth. In both 2006 and 2007, the number  BIS Review 37/2008  7  of employed increased by over 3 per cent. The number employed increased by 93 000 persons between 2006 and 2007, the highest increase over the past few decades. The sharp growth in employment has partly been reflected in a decline in unemployment and an increase in the labour supply. This is due to inflows of foreign labour and increased labour participation among the existing population. Labour force participation in the age group 15-74 has never been higher.