samchain/econo-pairs-v1 huggingface dataset:
Hourly labour costs for a Swedish manufacturing worker were on average 8 per cent higher than for a Norwegian manufacturing worker in 1980 measured in common currency. In 2004, however, hourly labour costs for a Swedish manufacturing worker was almost 20 per cent lower2. Competitiveness in Norway’s manufacturing industry is now close to 20 per cent weaker than the average for the past 30 years. Norwegians had to pay close to 138 Norwegian kroner for 100 Swedish kronar in 1970. Today, we only have to pay a little more than 90 Norwegian kroner. The appreciation of the Norwegian krone has made it less expensive to buy goods and services in Sweden. During longer periods, the exchange rate seems to have been influenced by changes in prices for export goods and import goods in the two countries. In the 10 years to 1983, the Norwegian krone showed a particularly strong appreciation against the Swedish krona. This occurred at the same time as Norway experienced far more favourable developments in prices for its export goods relative to import goods than was the case for Sweden. Norway’s terms of trade improved. In the 1970s, the sharp rise in oil prices contributed to this. In practice, the appreciation of the Norwegian krone against the Swedish krona occurred when the Swedish authorities devalued their currency more than the Norwegian authorities. The authorities devalued against a basket of currencies. In Sweden, the Palme government’s devaluation of 16 per cent in October 1982 was particularly strong.

With floating exchange rates, the exchange rate may adapt to changes in growth prospects and changes in the terms of trade. Since the end of the 1990s the Swedish krona has depreciated against the Norwegian krone. During this period, Norway has experienced a considerable rise in prices for  2  Source: The Technical Reporting Committee on Income Settlements, Report no. 1, 2005, preliminary version. The estimates take account of both actual hourly wages and indirect costs. 3  Aftenposten, October 1982  2  BIS Review 15/2005  export products such as oil and aluminium, partly owing to high demand in China. Sweden, on the other hand, has been influenced by a slower rise in prices for goods such as ICT products. The close trade relations between Norway and Sweden are of benefit to both countries. Even if petroleum exports to Sweden rose sharply in the 1970s, Norway still ran a trade deficit with Sweden. We have needed goods from Sweden to build up our petroleum sector, and increased wealth has enabled us to increase goods imports from Sweden. Norway has thus maintained its import share of traditional goods from Sweden while our export share to Sweden has declined. Weaker business sector competitiveness in Norway in relation to that of Sweden is probably one important factor. Looking ahead, some of the features we have observed over the past 30 years may change. There is an imbalance between the cost level in Norway and in Sweden. The cost differential cannot be sustained in the longer term.
To lay the ground for our discussion, I would like to explain our view of the current situation and the rationale for our recent monetary policy decisions. I will focus in particular on the Outright Monetary Transactions (OMTs) that we formally announced in September. Financial markets and the disruptions of monetary policy transmission Let me begin with the challenges facing the euro area. We expect the economy to remain weak in the near term, also reflecting the adjustment that many countries are undergoing in order to lay the foundations for sustainable future prosperity. For next year, we expect a very gradual recovery. Euro area unemployment remains deplorably high. In this environment, the ECB has responded by lowering its key interest rates. In normal times, such reductions would be passed on relatively evenly to firms and households across the euro area. But this is not what we have seen. In some countries, the reductions were fully passed on. In others, the rates charged on bank loans to the real economy declined only a little, if at all. And in a few countries, some lending rates have actually risen. Why did this divergence happen? Let me explain this in detail because it is so important for understanding our policies. A fundamental concept in central banking is what is known as “monetary policy transmission”. This is the way that changes in a central bank’s main interest rate are passed via the financial system to the real economy.

Clearly, it was not by chance that some countries found themselves in a more difficult situation than others. It was mainly those countries that had implemented inappropriate economic policies in the past. This is also why the first responsibility in this situation is for countries to make determined reforms and convince markets that they are credible. But many were already doing this, only for interest rates to rise even higher. There was an element of fear in markets’ assessments that governments, acting alone, could not remove. Markets were not prepared to wait for the positive effects of reforms to emerge. In our view, to restore the proper transmission of monetary policy, those unfounded fears about the future of the euro area had to be removed. And the only way to do so was to establish a fully credible backstop against disaster scenarios. 2  BIS central bankers’ speeches  We designed the OMTs exactly to fulfil this role and restore monetary policy transmission in two key ways. First, it provides for ex ante unlimited interventions in government bond markets, focusing on bonds with a remaining maturity of up to three years. A lot of comments have been made about this commitment. But we have to understand how markets work. Interventions are designed to send a clear signal to investors that their fears about the euro area are baseless. Second, as a pre-requisite for OMTs, countries must have negotiated with the other euro area governments a European Stability Mechanism (ESM) programme with strict and effective conditionality.
Taken together, this evidence suggests that much of the “productivity miracle” of high ROEs in banking appear to have been the result not of productivity gains on the underlying asset pool, but rather a simple leveraging up of the underlying equity in the business. (b)  Larger trading books  A second strategy pursued by a number of banks in the run-up to crisis was to increase their assets held at fair value, principally through their trading books, relative to their banking books of underlying loans. Among the major global banks, the share of loans to customers in total assets fell from around 35% in 2000 to 29% by 2007 (Chart 29). Over the same period, trading book asset shares almost doubled from 20% to almost 40%. These large trading books were associated with high leverage among the world’s largest banks (Chart 30). What explains this shift in portfolio shares? Regulatory arbitrage appears to have been a significant factor. Trading book assets tended to attract risk weights appropriate for dealing with market but not credit risk. This meant it was capital-efficient for banks to bundle loans into tradable structured credit products for onward sale. Indeed, by securitising assets in this way, it was hypothetically possible for two banks to swap their underlying claims but for both firms to claim capital relief. The system as a whole would then be left holding less capital, even though its underlying exposures were identical. When the crisis came, tellingly losses on structured products were substantial (Chart 31).

Table 1 breaks down the growth rates of finance and whole economy output into three sub-samples – pre-First World War, from the First World War to the early 1970s, and thence to date. The historical trends in GVA for the financial sector are striking. Over the past 160 years, growth in financial intermediation has outstripped whole economy growth by over 2 percentage points per year. Or put differently, growth in financial sector value added has been more than double that of the economy as a whole since 1850. This is unsurprising in some respects. It reflects a trend towards financial deepening which is evident across most developed and developing economies over the past century. This structural trend in finance has been shown to have contributed positively to growth in the whole-economy (Wadhwani (2010)). The sub-sample evidence suggests, however, that this has not been a straight line trend. The pre-First World War period marked a period of very rapid financial deepening, with the emergence of joint stock banks to service the needs of a rapidly growing non-financial economy. Finance grew at almost four times the pace of the real economy during this rapidgrowth period (Table 1). The period which followed, from the First World War right through until the start of the 1970s, reversed this trend. The growth in finance fell somewhat short of that in the rest of the economy. This in part reflected the effects of tight quantitative constraints on, and government regulation of, the financial sector.
Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the Northern Ireland Chamber of Commerce and Industry, Belfast, 9 October 2007. *  *  *  Three weeks ago, thousands of depositors queued on the streets outside branches of Northern Rock to take their money out. Those scenes, broadcast around the world, were shocking. How did they come about and how can we prevent them in future? My focus tonight will be on why the incentives facing banks, investors, and depositors led them to behave as they did. Most of what happened can be understood in terms of those incentives. And, if we are to create a structure for our banking system so that such scenes are not repeated, we must ensure that the temporary measures put in place in recent weeks evolve into permanent reforms in the coming months. But I want to start with the story of how these events came about. It begins in the international capital markets. One of the most remarkable changes in the world economy over the past decade has been the fall in interest rates. Some of that stems from the fall in inflation as central banks have regained control after the Great Inflation of the 1970s and 1980s. But even adjusting for inflation, low-risk borrowers have been able to borrow on world capital markets at very low rates. In the UK, the yields on 10-year inflation-protected government bonds have, in the past year, been close to 1%.

Caleb M Fundanga: Improving the savings culture of Zambians Remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official launch of CETZAM’s “Tusunge” Savings Product, Lusaka, 8 July 2011. *  *  *  The Board Chairperson of CETZAM Financial Services Limited, Mr Frederick Nduna; Members of the Board of CETZAM Financial Services Limited; The Chief Executive Officer of CETZAM Financial Services, Mr Dyson Mandivenga; Chief Executive Officers and Representatives of various organisations present; Distinguished Invited Guests; Members of the Press; Ladies and Gentlemen. Let me begin by thanking the Board of Directors and Management of CETZAM Financial Services Limited (CETZAM) for inviting me to this occasion, which marks the official launch of the “Tusunge” Savings Product. May I commend the Management of CETZAM for their foresight in developing this new savings product, which will go a long way towards inculcating a savings culture and enhancing financial inclusion within our financial sector. As a financial sector regulator, the Bank of Zambia is pleased to be associated with the achievements of the institutions we regulate, particularly where these developments lead to increased access to financial services for the Zambian public. This is what CETZAM is doing this morning. CETZAM’s focus to introduce innovative products is adequate testimony of its commitment to serve the financial needs of the Zambian people. I am informed that one of the key objectives of CETZAM Financial Services Limited is to provide sustainable microfinance services to the economically disadvantaged citizens of Zambia.
(Figure 3). 3. CPI and UND1X inflation Percentage 12-month change 14  14  12  12  10  10  CPI UND1X  8  8  6  6  4  4  2  2  0  0  -2 1990  1992  1994  1996  1998  2000  2002  -2 2004  Sources: Statistics Sweden and the  It is not easy to determine what effect the various changes in economic policy have had individually. However, when taken as a whole they have led to an overall changeover in stabilisation policy. A clearer allocation of roles has been created in economic policy. The task of monetary policy is to attain  BIS Review 9/2004  3  price stability, while fiscal policy is to secure a long-term sustainable development in public finances. The government and the Riksdag (parliament) also have the task of increasing the number of those in regular employment to 80 per cent. This clear allocation of roles is an important reason behind the more successful economic policy over the past ten years. The current monetary policy situation The international recovery is increasingly evident During 2001 there was a downturn in global economic activity, which was partly due to the financial setback following on from the stock market bubble in the second half of the 1990s. Resource utilisation fell and growth in the OECD area as a whole was 1 per cent that year.

However, the Riksbank's most important contribution is not this type of “fine-tuning”, but rather maintaining the inflation target and upholding confidence in price stability. When we achieve this, we can contribute to stabilising real growth in production and employment. But this is not our main objective. Productivity growth - an expansion Last year, employment in the business sector showed an unexpectedly weak increase, while growth was roughly as expected. This was reflected, as I have already mentioned, in the fact that productivity growth was unusually good. The most recent National Accounts figures also indicate a stronger productivity growth last year than we assumed in our December assessment. The question is what this implies about the future; is what we are seeing a sign of higher productivity growth which will continue over a number of years or is it a temporary rise as a result of an improvement in economic activity? Or is the upturn perhaps a chimera and the result of statistical problems connected with, for instance, difficulties in measuring productivity in certain sectors, such as the telecom industry? In the United States, the pattern of a weak growth in employment, combined with a recovery in economic activity has been established for a number of years. According to the National Bureau of Economic Research, NBER, the US economy bottomed out in November 2001.
Domestic demand should be further supported by our monetary policy measures and their favourable impact on financial conditions, as well as by the earlier progress made with fiscal consolidation and structural reforms. Moreover, the renewed fall in oil prices should provide additional support for households’ real disposable income and corporate profitability and, therefore, for private consumption and investment. In addition, the fiscal stance in the euro area is becoming slightly expansionary, reflecting in particular measures in support of refugees. However, the economic recovery in the euro area continues to be dampened by subdued growth prospects in emerging markets, volatile financial markets, the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms. The risks to the euro area growth outlook remain on the downside and relate in particular to the heightened uncertainties regarding developments in the global economy, as well as to  BIS central bankers’ speeches  1  broader geopolitical risks. These risks have the potential to weigh on global growth and foreign demand for euro area exports and on confidence more widely. Euro area annual HICP inflation was 0.2% in December 2015, compared with 0.1% in November. The December outcome was lower than expected, mainly reflecting the renewed sharp decline in oil prices, as well as lower food price and services price inflation.

In the years 2005 and 2006 three key laws were enacted, namely, The Convention on the Suppression of Terrorist Financing Act, The Prevention of Money Laundering Act, and the Financial Transactions Reporting Act. The FTR Act created the institutional body of the FIU within the Central Bank, with regulatory powers and a mandate, inter alia, to formulate policies and guidelines to meet the Financial Action Task Force (FATF) 40 + 9 recommendations. The enactment of the necessary AML/CFT legislation in Sri Lanka, early last year and the establishment of the Financial Intelligence Unit soon after, demonstrates Sri Lanka’s strong commitment to the global efforts to fight financial crime and terrorism. Naturally, therefore, in this effort, the areas of vulnerability have been identified and adequate measures taken to deal effectively with the weaknesses. The stakeholders also need to be adequately equipped to discharge their responsibilities effectively. We therefore, see today’s effort at building capacity and processes, as one of the most important pre-requisites for the implementation of an effective AML/CFT regime, and we commend the World Bank and all others who are involved in this endeavour. My dear friends, Sri Lanka has been ever mindful of its obligations in this regard and has been a pioneer in this field. Long before the advent of the AML and CFT legislation, certain safeguards to insulate our financial system from money launderers and terrorists were in fact put in place by us. This was done through legislation such as the Exchange Control Act, the Banking Act and the Customs Ordinance.
Less controversial seems to be the observation that downward spirals in prices can be magnified by the institutions involved in the selling wave of the crash, thereby generating contagion across markets  2  BIS Review 53/2003  and countries. In particular, the Russian and LTCM crises demonstrate the important role of market liquidity as a potential channel of crisis contagion, as market price falls due to liquidity withdrawals could cause losses for many market participants. To summarise the lessons learnt from past experiences, it seems that volatility is in itself not necessarily a threat to financial stability. Other elements are necessary before serious concerns arise over financial stability. One of the key elements is the risk faced by banks and other financial institutions, because this could be the channel through which the functioning of the financial system as a whole could be jeopardised. This view is supported by the recent episodes of market volatility in late 2002 and early 2003, when the sequence of substantial market readjustment was generally managed in an orderly manner by financial institutions across the globe. B.2  Progressing financial innovation  Let me turn to the second theme - the implications of progressing financial innovation. In fact, the reason why the latest episode of stock market adjustments did not cause systemic problems could be attributed to the contribution of financial innovation to the more even distribution of risks. However, some concerns have emerged regarding the securitisation and credit risk transfer markets, for instance.

Of course, attention will have to be paid to these aspects in terms of the implementation of the new framework as well. C.3  Responses to further integration  Let me talk next about the challenges caused by the third development, progressing financial integration. I will first discuss some of the relevant European issues and then turn to global issues. EU/euro area issues In the EU there is first of all the challenge of increasing the efficiency of the complex regulatory process to meet the pace of innovation sustained by the markets and to increase regulatory convergence across countries in order to support integration and reduce the burden on financial institutions operating in several countries. The so-called Lamfalussy procedure - where some experience has already been gained in securities supervision - will seek to do precisely this, and will also improve the state of affairs in banking and insurance supervision. The deepening market integration experienced in the EU has given rise to the need for enhanced supervisory cooperation and common financial stability surveillance. As regards pure, micro-level supervisory cooperation, cooperation is being gradually stepped up through the “Lamfalussy procedure” and the establishment of the so-called level three committees, where supervisors exchange views - the primary aim being to achieve a consistent implementation of the existing legal framework. We need adequate cooperation between central banks and supervisory authorities as well as a safeguard in relation to crisis prevention.
In principle, by relating new information to our most recent forecast, market players are in a good position to form a picture of policy’s direction and we can see that when we compare their forecasts of the repo rate with our own. However, one should be aware that there is a risk that an unduly simple rule or decision-making model will oblige the central bank itself to disregard other relevant information. Monetary policy is not mechanics. For this reason we have elaborated our view in various respects. We have underscored that there are also grounds for considering the periods before as well as beyond the 1–2 year horizon on which we focus. Strictly speaking, it is a matter of optimising over all future time, including both inflation and output. For a long time now we have also declared that there are transitory factors we should disregard; more recently we noted that there can be grounds for weighing a prompt return to inflation’s targeted rate against the risk of avoidable fluctuations in output. Finally, we have said that departures from our simple rule may be warranted by problems with financial stability. What is important, however, is our ambition to provide a clear explanation and motivation for such departures. Given our ambitions in this field we would risk severe criticism if we were to do so without good arguments. I should also say that if our application of the rule would continuously be modified and altered, much of its communicative and educational value would be lost.

Starting in the autumn of 2008 and continuing into the early months of 2009, demand – in the UK and globally – weakened very sharply. Consumers and firms held back spending plans in the wake of the massive negative confidence shocks associated with the events surrounding the collapse of Lehman Brothers and the knock-on effects on the rest of the financial system. Along with the rest of the MPC, I strongly supported the decision to reduce interest rates from 5% to 0.5% between October 2008 and March 2009, and to inject extra money into the economy through Quantitative Easing. The bulk of this money injection £ of the total £ was agreed by the time of the August 2009 Inflation Report, which was published just under a year ago. Though that Report looked forward to a recovery in the economy, very little economic data available at that time pointed in that direction. Rather, the economic data last summer were telling us how sharply the economy had contracted in late 2008 and the first half of 2009 both at home and abroad, and how sharply unemployment had risen as a result. A strong theme underpinning the analysis of both the May and August Inflation Reports last year was that UK inflation was expected to be pushed significantly below target by a large margin of spare capacity.