samchain/econo-pairs-v1 huggingface dataset:
But during this period, too, there have been substantial fluctuations in the short term. International developments important – even with a floating exchange rate During my years on the Economic Council of Swedish Industry, I have sometimes gained the impression that some analysts have considered that the floating exchange rate means that one can disregard developments in costs and wages in competitor countries when assessing the competitiveness of Swedish companies. But this is wrong. The development of the exchange rate, as shown in Figure 7, has been affected by a number of factors, where competitiveness is only one factor and moreover not always an important one. Competitiveness is affected by differences in payroll expense and increases in payroll expense in Sweden and other countries. It is also affected by differences in productivity and increases in productivity. A rapid increase in productivity in Sweden is therefore particularly beneficial if it is higher than the increase in productivity abroad. Finally, it is important to see  BIS central bankers’ speeches  5  how prices develop in the markets where Swedish companies exposed to international competition sell their goods and services. Wages in Sweden have increased by on average 2.7 per cent a year since 2010. This is shown in Table 1. The increase is in line with that in Germany, but higher than the increase in the euro area as a whole. It is also higher than the aggregate for OECD countries.

Several hundred collective wage agreements will expire in the first part of 2016. It is the social partners who will negotiate and sign new collective agreements. What the Riksbank can do is to inspire confidence in the inflation target, which can in turn provide a starting point for the negotiations. The inflation target and the Industrial Agreement have worked well together since 1997. They can continue to do so. 6  BIS central bankers’ speeches  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches
Examples of such imbalances are highly volatile asset prices, fluctuations in the rate of price increases and a growing household debt ratio. Macroeconomic indicators accordingly play an important part not only in the assessment of future inflation but also in the analysis of payment system stability. Experience has shown that a balanced macroeconomic policy and stable prices reduce the risk of shocks that threaten financial stability. Analyses of these three aspects are presented twice a year in our Financial Market Report. The Riksbank is accountable for oversight and the Financial Supervisory Authority for supervision. This means that the Riksbank is primarily concerned with the development of a system or a market, while the FSA considers the situation in each institution as well as the system’s overall stability. But as the dividing line between these two functions is blurred in practice, it is important that these two authorities cooperate closely. Such cooperation is indeed a hallmark of our interaction, from senior management down to divisional staff. Note, therefore, that while oversight is an important Riksbank function, the direct supervision of Sweden’s financial system is not our concern. Our legislators have assigned the latter role to the Financial Supervisory Authority, which accordingly has the possibility of directly pointing to shortcomings in particular institutions. The Riksbank may nonetheless detect problems at an early stage because they are likely to leave their mark on the payment system, which is the Riksbank’s concern.

The war in Ukraine has not affected trade directly  Although the war in Ukraine has affected Iceland’s terms of trade, the net effect is ambiguous, with the prices of both imports and exports rising. Iceland is an exporter of both metals (mainly aluminium) and food products and thus has both gained and suffered from rising raw material and food prices. Terms of trade have remained favourable, although they have declined from their recent peak. Despite access to abundant domestic renewable energy, imported fossil fuels impact the Icelandic value chain both through the price of imported fuels, various imported goods and generally the cost of transportation, which is high given Iceland’s remoteness from major markets. Fuel is also an important cost item in fisheries. Rising import prices, however, result not only from the war in Ukraine, but can be partly explained by supply-chain disruptions and the container cost crisis triggered by a reallocation of resources in the global economy as it recovered from the pandemic. The cost increases seep into the global value chain and affect inflation globally. Eventually those mismatches are being resolved from the supply side, as firms respond to price signals, and from the demand side, with global tightening of monetary conditions and the withdrawal of fiscal stimulus. Mismatches are being resolved by increased supply and global tightening  The post-pandemic recovery in Iceland has two distinguishing features that set it apart from the recovery in most other OECD economies.
This involves closely monitoring developments and following how the forecasts for growth and inflation develop. At our most recent monetary policy meeting we made the assessment that the financial unrest could slow down growth and inflation somewhat in the future and that the uncertainty had increased. At the same time, economic growth is strong both in Sweden and abroad. To attain the inflation target of 2 per cent and ensure a good development in the economy in the future, we decided to raise the repo rate. We also made the assessment that the interest rate would need to be increased further in around the same way as outlined in June. But the continuing developments in the financial markets are one factor among many that we will take into consideration in our decisions. If monetary policy is to function, interest rate-setting must also function. As I mentioned, we can only steer the shortest interest rate in the market. We do this by setting the repo rate and by daily adjusting the liquidity in the bank system at an interest rate that is very close to the repo rate. The banks can also receive as much liquidity as they need during the day against collateral. In addition, they can also deposit or borrow against collateral overnight with the Riksbank at the deposit or lending rate respectively. If we were to see serious and lasting problems, we have the possibility to take action. How we act depends on what has happened and on the situation at the time.

When it was time for the monetary policy meeting, sufficient information was assumed to have been released “by degrees” with regard to how the Executive Board as a whole were reasoning so that the economic agents would not be surprised by the interest rate decision taken at the meeting. But with the broader definition of signalling – when we in some way communicate what we are intending to do with the repo rate – the publication of our own repo rate forecast of  4  BIS Review 106/2007  course also becomes part of the signalling. At intervals of two months, the general public and the financial markets now receive a detailed description of how a majority of the Executive Board consider that the interest rate should be set in the future. It is thus evident that the need for “signalling by degrees” in speeches between the monetary policy meetings has declined significantly. It was also the most important reason why we earlier this year decided that there would not normally be reason to indicate in speeches and press releases how the repo rate would be set at the next meeting. But there were also some problems with the earlier signalling that lay behind the decision. In certain situations it was probably difficult to determine whether the signal being sent in a speech should be interpreted as an individual member’s opinion or whether it reflected the views of a majority on the Executive Board.
  those two difficulties combine to produce a perception of asymmetry in IMF surveillance. It may be compounded by a more fundamental and natural asymmetry between surplus and deficit countries, when it comes to implementing adjustment measures. And, some would say, there might also be a de facto asymmetry between reserve and non reserve currencies, although, as I shall mention later, the situation is more subtle. These difficulties were apparent during the last part of the 20th century. They led to many discussions about the proper role and organisation of the IMF 1. But what makes the “disciplinary” approach almost impracticable today are the changes that have occurred in the world at the turn of the 21st century. The world today stands in stark contrast with both the Bretton Woods era and the period that followed immediately:   The first – and most obvious – difference is the number of countries that are active participants to the system and have a stake in its functioning. The monetary and financial world is becoming increasingly “multipolar”. While the current system comprises three currency blocs, at least one (the Chinese RMB) and may be other additional systemic currencies will emerge in the future. Greater diversity goes with increased complexity. “Hegemonic” systems are easier to build and manage than multipolar ones where responsibility is more diffuse. So, in the future, one can expect that coordination problems will be more difficult to solve.

Excess saving in some parts of the world would be efficiently allocated to investments in other regions. Risk would also be efficiently shared between agents and countries according to their respective needs and risk appetite. Shocks to GDP and/or consumption would be smoothed over time. And, finally, liquidity would be permanently available for those agents and countries whose solvency was not in doubt. In such a world, balance of payments crisis would not exist. Current account imbalances would not matter as they would reflect savings and investment decisions made by fully informed and non constrained rational agents. This vision may serve as a reference for future reforms: “The vision that underlies most proposals for reform of the international financial system is that the international capital markets should operate at least as well as the better domestic capital markets” (Fisher, 1999). But, of course, we don’t live in such an ideal world. Global capital markets are neither fully integrated nor complete. Complete markets do not exist, either at the national or international level, for a broad array of securities. Moreover financial markets are still naturally fragmented by national borders. Specifically, we can identify five important deviations from the model of perfect international markets: 1. Information asymmetries. These are natural features of all financial markets and they give rise to significant frictions through, in particular, adverse selection and moral hazard which prevent many profitable investments to be properly financed.
We conduct ongoing surveillance of market practices and undertake rigorous enforcement actions to ensure compliance. Disclosure The SFA requires exchanges to develop rules for reliable and unhindered price formation and discovery. First, disclosure must be ongoing. Post-listing, material information likely to affect market prices must be disseminated in a timely and organised manner. For example, a company that makes an acquisition which is likely to have a material impact on its share price must immediately announce it on the website of the Singapore Exchange. Second, disclosure must be accessible to all. Listed companies are prohibited from disclosing material information on an individual or selective basis. These disclosure requirements complement Singapore’s statutory provisions on market manipulation and insider trading. Enforcement …. and its limitations Issuers and investors alike must have confidence that the ground rules are adhered to when they transact in our markets. Constant surveillance and strict enforcement are therefore critical. MAS takes a serious view of any false statement or omission of material information that misleads the market. We will not hesitate to impose stiff penalties on issuers who have made misleading statements in initial public offerings, or IPOs. But no regulator can totally prevent fraud or misconduct. Take for instance our experience with S-chips, or Chinese companies listed on the SGX. Many of them are reputable companies and add breadth to our equity capital market. But some of them are not. Since 2006, accounting irregularities or outright frauds have been discovered in 14 such companies listed on the SGX.

It is the ability of capital markets to efficiently mobilise financial resources that has made possible the large investments needed for the Industrial Revolution of the 18th century, and the risk capital that funded the global Internet Revolution more recently. Like other markets, capital markets are prone to volatility as demand and supply fluctuate. But unlike other markets, turbulence in capital markets can have far wider consequences on the rest of the economy. From the Wall Street Crash of 1929 to the Global Financial Crisis of 2008, we have seen how dislocations in capital markets can have devastating effects on financial stability, economic growth, and the welfare of citizens. Capital markets must therefore be regulated, but in a way that does not unduly undermine their efficiency and effectiveness. This morning, I want to share with you Singapore’s approach to the regulation of capital markets. Why we regulate capital markets We can think of the capital market as an ecosystem comprising four key components:   one, issuers – those who issue securities to raise capital;    two, investors – those who invest in these securities;    three, intermediaries – those who advise issuers or investors and facilitate the trading of securities;    four, infrastructure – the platforms or systems through which securities are traded. Each component of this ecosystem is prone to market failure – hence the need to regulate.
There may be a distance to travel before banking is the right size. BIS central bankers’ speeches  9  Chart 1  Chart 2  Bank assets/GDP in selected countries  Banking concentration in selected countries UK United States Germany Switzerland UK 1921-70  Percent 500 450  MaximumMinimum range  400  Concentration (%) 90 80 70  Average 350  60  300  50  250  40  200  30  150  20  100  10  50  0 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011  0 1870  1890  1910  1930  1950  1970  1990  Source: Jorda, Schularick and Taylor (2011)  Source: Bank of England calculations, Capie, F. and Webber, A.

Regarding the first one, the publication at the beginning of the month of the last contribution to the IPCC 6th assessment report on climate change mitigation reminds us of the need for an urgent transition toward carbon neutrality, which will entail major transition risks for banks. Supervisors have already started to assess the exposure and disclosure of financial institutions to those risks to incentivize them to identify, assess and manage those risks as mainstream ones– and the ACPR played a pioneering role in this respect, with the achievement of the first bottom-up climate risks stress-test last year. From now on climate risks will be progressively integrated into the prudential framework,  starting with pillar 3 and pillar 2 requirements. Banks must step up their efforts to prepare meeting these forthcoming regulatory requirements, including those related to climate stress-tests and banks’ transition plans, which are part of the CRD6 proposal currently in negotiation. As regards the pillar 1 framework, let me note that the integration of climate risks is still a hotly debated topic and I hope the upcoming publication of a discussion paper by the EBA on this issue will allow us to move forward. We shouldn’t jump to conclusions though. There are many methodological and data shortcomings to address before implementing new requirements. In any case, let me emphasise that from my supervisory perspective the pillar 1 should remain risk-based and that we should overcome the green / brown dichotomy by assessing transition risk on the basis of the transition plans instead.
And when Bank Rate eventually starts to return to a more normal level, as one day it will, the Bank would then have no income, in the form of coupon payments on gilts, to cover the payments of interest on reserves at the Bank of England that we had created. The Bank would become insolvent unless it created even more money to finance those interest payments, and that would lead ultimately to uncontrolled inflation. That is a road down which the Bank will not go, and does not need to go. I suspect that the advocates of “helicopter money” and related ideas are really talking about a relaxation of fiscal policy. It would be better to be open about that. Enough of what the Bank of England should not be doing. So what should we be doing? Since the Monetary Policy Committee last published an assessment of the economic outlook, other central banks have been active. The European Central Bank announced its plans for Outright Monetary Transactions, the Bank of Japan expanded the scale of its asset purchases, and the Federal Reserve committed to continue with its asset purchases until the outlook for the labour market improves substantially. Our current programme of asset purchases will be complete by next month. What happens after that will depend upon the outlook, beginning with an appraisal of where we are today. Judging the present state of the UK economy is far from easy.

On the other hand, the turmoil on the financial markets and weaker growth in the world economy were expected to curb growth and inflation in Sweden. This led to our decision to hold the repo rate unchanged at 4.25 per cent, a decision I voted in favour of. We also held to our forecast that the repo rate would remain at this level over the coming year in order to bring inflation back to the target over a period of a couple of years and to enable production and employment to develop in a balanced way. We also emphasised that there was still considerable uncertainty over future developments. Personally, I saw an evident risk that the slowdown in the United States could become more prolonged than was assumed in the forecast. I also saw a risk that the rapid price increases in the world energy and food markets could subdue demand and thereby growth in the rest of the world, which could also further hold back Swedish growth and inflation. There were also clear signs that the Swedish labour market was about to cool down and my view was that the weak productivity growth indicated that companies’ demand for labour could decline. This indicated that there was no great risk that the rate of wage increase would accelerate more than anticipated. This was the combined reason why I did not wish to rule out the possibility of a cut in the policy rate later in the forecast period.
Artificial intelligence and machine learning enable the industry to make much better use of available data than possible previously, by efficiently developing a deep understanding of the unique needs of their customers and risk profiles. Central banks and supervisors must transform alongside the financial sector, in order to maintain effectiveness in fulfilling our mission. 4 . Our central banking and supervisory mission remains unchanged. But given the rapid transformation and the changing landscape, the way we achieve our mission and objectives needs to evolve quickly. Overall, our approach must be to ensure that our toolkits and methods remain relevant and fit for purpose. To do so, we need to be informed by a deep understanding not only of the new players and their products and services, but also of the new technologies – how they work, why they are being adopted, how they better serve customers’ needs, how they are re-shaping financial services and the broader financial sector, and the opportunities and challenges they present. 5 . The technologies that are transforming the financial sector can also be used to 1/5  BIS central bankers' speeches  transform central banking and supervision. Take artificial intelligence, for example. This has been used by banks for credit scoring, and by insurers for underwriting and fraud detection. Supervisors, including MAS, have taken steps to ensure that artificial intelligence (AI) is used by financial institutions in a fair and responsible manner. Predictive analytics can also empower supervisors to be more effective.

Beyond experimentation, such exploration may also require testing of use cases in the market to assess their technical functionality and commercial viability in a production environment. To this end, regulatory sandboxes have come in useful over the past few years. Tailored relaxation of regulatory requirements within well-defined parameters has allowed opportunities afforded by new technologies to be explored, while maintaining the overall soundness of the financial system. But central banks’ role in innovation goes further than this. . Moving on to my second point; beyond embracing and facilitating innovation; central banks can play an important role in leading innovation, by being at the centre of experimentation. 7  The private sector is good at leading innovation, subject to the return on investment providing a clear incentive. When this is the case, they do an excellent job. They drive applied research, apply technology in an agile fashion, and deploy solutions to markets quickly. However, private sector firms are less incentivised to innovate in cases where the return on investment is unclear and the benefits may not accrue primarily to them. 2/5  BIS central bankers' speeches  Hence, when there is a need for innovation to develop essential industry infrastructures that benefit the entire financial system, central banks can step in to provide these public goods. We are able to leverage our unique position in the ecosystem to drive collaboration within the local financial sector community, and act as bridges to facilitate collaboration across borders.