samchain/econo-pairs-v1 huggingface dataset:
Compared to the fluctuations in the first part of the period we see here, from 2002 to date, the krone exchange rate has been relatively stable in recent years, but there has been some short-term movements. An appreciation of the krone has in some periods occurred in tandem with higher oil prices and in other periods with lower oil prices. The krone appreciated when the interest rate differential against other countries was high in 2002, but as interest rates in Norway moved down to the level among trading partners, the value of the krone fell back. In recent years, the actual interest rate differential against trading partners has been close to zero. Earlier analyses conducted at Norges Bank have shown that other factors, such as expected volatility among major international currencies and developments in US equity indices, may have been factors behind developments in the krone exchange rate, but the effects vary over time. This reflects among other things shifts in exchange market themes. 1 Shifting themes in exchange markets make it difficult to predict short- and medium-term exchange rate developments. The exchange rate projections in the monetary policy reports are based on the theory of uncovered interest rate parity. According to the theory, the return on financial investments will be the same irrespective of the currency involved. If Norwegian interest rates are higher than external interest rates over a period, the krone exchange rate must depreciate during that period or NOK-denominated investments generate an excess return.

Over the past few years, the Norwegian real exchange rate, whether measured by relative labour costs or by relative consumer prices, has been stronger than the average since 1970, largely due to a stronger nominal exchange rate. The corollary to these developments is the pronounced improvement in Norway’s terms of trade. The strong rise in prices for oil and other Norwegian export products has contributed to the krone appreciation  6  BIS Review 97/2007  over the past few years. The strong real krone exchange rate is therefore a result of Norway’s position as one of the nations that has benefited most from freer global trade and increased cross-border flows of capital, technology and labour. In this respect, the strong krone is a sign that the Norwegian economy is faring well. Thank you for your attention. BIS Review 97/2007  7  8  BIS Review 97/2007  BIS Review 97/2007  9  10  BIS Review 97/2007  BIS Review 97/2007  11  12  BIS Review 97/2007  BIS Review 97/2007  13  14  BIS Review 97/2007  BIS Review 97/2007  15
Within its own remit, each NCB carries out the regular tenders orchestrated by the ECB and grants refinancing within the framework of these periodic auctions of central bank money. The NCBs manage the settlement accounts of credit institutions, hold the standing facilities for overnight credit and deposits, and also monitor minimum reserves. They are in constant contact with the ECB and supply it with all the daily data essential to the conduct of effective monetary policy. •  A rapid integration of the national money markets  It was crucial to enable liquidity to circulate smoothly from one financial centre to another in the euro area so that operators could conduct the necessary arbitrage between the different centres, thus ensuring a single euro interest rate for each maturity. The TARGET system is the key component of this unification. Right from the start of 1999, it enabled credit institutions to effect large-value, crossborder transactions with same-day value all day long, thus allowing the interbank market to function as a single market right away.

European firms were lagging behind US firms in terms of foreign direct investment and they are now catching up. European firms have entered a “globalisation process” whereby they aim to reach a global size through acquisitions. BIS Review 61/2000  6  Conclusion Allow me to conclude. The euro area has adopted a sound macroeconomic policy and has embarked upon a fairly comprehensive programme of structural reforms. These reforms will still take time to be fully completed. But they are well underway and have already boosted economic growth, job creation and corporate restructuring. This move has been triggered by the creation of a monetary union and a vast unified financial market. I am impressed by what has been achieved during the past years and the National Central Banks as well as the ECB are strongly encouraging governments and businesses to foster structural reforms in the future. The euro exchange rate is clearly misaligned relative to euro area fundamentals (robust domestic growth, steady implementation of the single market, abundant domestic savings, healthy external accounts). This is the reason why we consider that the euro has a strong potential for appreciation. The Eurosystem, which is the guardian of the euro on behalf of the people of Europe, knows that our fellow citizens want the single currency to be at least as solid as their previous national currencies. In France, to give but one example, 96% of the population want the euro to be at least as solid as the franc.
So far, the "middle way" seems a statement of the obvious – namely that there are limits to IMF lending and that there is merit, for debtors and creditors, in having clarity about those limits. The other side of this coin is that, on occasions, there will be countries that have run up unsustainable debt burdens, or face severe liquidity pressures, and who have little alternative but to restructure or reschedule their debt. Perhaps this is why the international community has moved significantly in the direction of giving "private sector involvement" a greater role in the resolution of financial crises than was typically the case in the late 1990s. The IMF communiqué in Prague last year, the G7 Finance Ministers statement last month, recent joint work by the Bank of England and Bank of Canada, and, significantly, speeches by the new Managing Director of the IMF, Horst Kohler, have all emphasised the need to move further in the direction of greater private sector involvement. As one example the Report of the G7 Finance Ministers to the Heads of State and Government only last month stated that,  6  BIS Review 71/2001  "While the IMF has an essential role to play, official resources are limited in relation to private financial flows.

Other countries have abandoned the attempt to maintain rigidly fixed exchange rates, and adopted a  BIS Review 71/2001  1  combination of domestic monetary management based on an inflation target and a floating exchange rate. Examples include both developed economies, such as the UK and Canada, and emerging market economies, such as Brazil and South Africa. There are arguments for and against both of these approaches. But what is clear is that both in theory and practice there is now a recognition that pegged (fixed but adjustable) exchange rates do not provide a viable long-term middle course. More interesting, perhaps, is the absence of serious debate on the merits of the third position, namely the willingness to forego freedom of capital movements in order to retain domestic monetary autonomy and stable exchange rates. That is perhaps surprising in the light of the experience of the two major countries in Asia that escaped the financial crisis of 1997-98, namely India and China, which had in common the presence of capital controls. The willingness to impose controls on capital movements, at least temporarily, was certainly evident at the Bretton Woods Conference. Mindful of the weakness of Britain's national balance sheet, Lord Keynes, urged on by the Bank of England, argued that there should be no legally binding obligation to make the sterling balances convertible into dollars.
That has to be the job of the management of the institution - indeed the taking and management of financial risk is the essence of their contribution to society; it’s what they are paid for! Nor is it the job of the supervisor to prevent each and every bank failure. Indeed, if the supervisor were to attempt to do so, it would inevitably involve such rigorous prudential standards and enforcement that it would effectively stifle innovation and competition, at the cost of reducing the efficiency of the financial system in meeting the needs of the wider economy, but ultimately also of weakening its structure - reducing rather than increasing the safety of the system. So effective supervision is a vitally important part of the answer to improving the safety of the banking system but it is not a complete answer. Secondly, national authorities can introduce deposit protection arrangements which can reduce the risks of the panic withdrawal of deposits or some other forms of investments - though here too a balance needs to be struck. Overly generous deposit protection carries the danger that it will damage market discipline, by making the depositor indifferent to where he places his deposit, encouraging him simply to look for the marginally higher return. Thirdly, as I noted earlier, national authorities can do a good deal to strengthen the legal and accounting as well as the corporate governance infrastructure as it applies to the financial system.

Since imbalances persist on the Swiss mortgage and real estate markets, it is important that banks take adequate account of risks when granting mortgages. We are confident that the banks are aware of these risks. We are also confident that they will not use the latitude afforded by this access to capital to pay dividends or buy back shares, but rather to fulfil their economic function. In addition to facilitating lending, the SNB is helping to stabilise the economic situation through its expansionary monetary policy. To ensure appropriate monetary conditions, we must counteract increased upward pressure on the Swiss franc. We have therefore decided to scale up our foreign exchange market inventions – a tried-and-tested instrument – to shield the Swiss economy. Ladies and gentlemen, within the scope of its mandate, the SNB is doing everything it can, in cooperation with the Federal Council and the authorities, to mitigate the economic impact of the coronavirus crisis on the population and on companies. Page 2/2
(Chart 12: Norges Bank’s key policy rate) In order to prevent inflation from becoming too low and to dampen the impact of weaker developments abroad on the Norwegian economy, the key policy rate was reduced to 1.75 percent in December 2011. With high money market premiums and elevated credit premiums, low key rates are not passing through fully to banks’ lending rates. The difference between various lending rates is unusually wide at present. Many households pay a mortgage interest rate of around 4 percent, and rates on corporate loans are between 5 and 6 percent. Monetary policy is the first line of defence in demand management. Norges Bank still has room for manoeuvre in interest rate setting – in both directions. The question nonetheless remains of whether it is desirable to use monetary policy to accelerate the pace of inflation when the countries around us are in a recession. Even if the krone depreciates somewhat, relatively high cost growth in Norway that could quicken the pace of inflation might lead to a further deterioration in competitiveness. This cannot be the way to go. Moreover, low interest rates over a prolonged period tend to amplify an upward spiral in house prices and lending. Imbalances that build up in credit and property markets  6  BIS central bankers’ speeches  can have severe ripple effects further ahead, with a substantial impact on output and employment. Many Americans and Europeans have recently experienced this, as Norwegians did 20 years ago.

We can likely achieve the same risk distribution with substantially fewer securities. This will also reduce operational risk and bring down management costs in the long run. Petroleum revenue spending In the book “Over Evne”1 [Beyond our power] about the history of the Ministry of Finance, the historians Einar Lie and Christian Venneslan describe how the discovery of oil at the end of the 1960s brought bright prospects for the future and considerable eagerness to spend the revenues. Oil would give us a “qualitatively better society”2. But the oil nation stumbled at the start. The current account surplus at the end of the 1960s had been reversed to a deficit of 12 percent of GDP by 1977. The deficit was three times as large as that recorded by Italy and Spain last year. The International Monetary Fund came knocking at Norway’s door. Fiscal policy had to be tightened and many Norwegians experienced a decline in income. Norway was hit by oil price shocks in the following years and economic reforms were implemented in several areas. After a period it became clear that the central government budget would be in surplus and that transfers would be made to the Fund. Norway’s experience from its first 30 years as an oil-producing nation led to the introduction of the fiscal rule, which has been a key element of Norwegian economic policy for the past decade. Report no.
The fact that Sweden has a surplus thus means that saving in Sweden is higher than the level needed to fund Swedish investments. An important reason why saving has been relatively high in Sweden since the mid-1990s is the relatively high level of financial saving in the public sector since the budget consolidation process carried out in connection with the crisis of the 1990s. Another reason is that the Swedish households also increased their saving in connection with this crisis. At the same time, the level of investment in Sweden has been relatively low compared to that in other countries (see Figure 5). This is largely due to relatively low investments in housing.2  2  See for example Chapter 3 in Vredin et al. (2012), Report of the Economic Policy Group 2012, “Simple rules, difficult times: does stabilisation policy need to be changed?”  4  BIS central bankers’ speeches  Figure 5. Total investment as a share of GDP Per cent 30  30 2001-2007  25  2008-2011  25  20  20  15  15  10  10  5  5  0  0  Note. Average value 2001–2007 and 2008–2010. Source: IMF WEO, October 2012. The current account surplus has in fact decreased somewhat in recent years. It was approximately 9 per cent of GDP in 2008 and approximately 7 per cent of GDP in 2011. However, it is still high in historical terms and in comparison with other countries.

Global banks’ misconduct costs have now reached over $ billion – capital that could otherwise have been used to support up to $ trillion of lending to households and businesses. The FSB’s misconduct action plan addresses these issues through: (i)  improvements to financial institutions’ governance and compensation structures to align better risk and reward;  (ii)  new global standards of conduct in fixed income, commodities and currency markets; and  (iii)  reforms to major financial benchmark arrangements to reduce the risks of their manipulation. Authorities cannot and should not try to legislate for every circumstance, watch every transaction, or anticipate every market innovation. So while fines and sanctions have roles in deterring misconduct, they will not, on their own, bring about the cultural change we need. In the view of UK authorities, we must move from an excessive reliance on punitive, ex post fines of firms to greater emphasis on more compelling ex ante incentives for individuals, and ultimately a more solid grounding in improved firm culture. In the UK a significant proportion of variable compensation for senior employees now must be deferred for a period of seven years. This ensures that it can be clawed back over the time scale it generally takes for conduct issues to come to light.
AIG’s failure to pay all of its contractual obligations in full would likely constitute a selective default resulting in a downgrade. That downgrade not only would have triggered potential terminations and collateral calls at AIG’s Financial Products unit (AIG FP), but also would have resulted in substantial value destruction at AIG’s insurance companies. Large annuity distributors likely would have stopped selling AIG products, replacing them with better-rated, more stable competitors. High-end life insurance sales would have decreased significantly,  BIS Review 73/2010  3  and remaining sales would have been vulnerable to adverse selection. Withdrawals and surrenders among existing customers would have increased, depleting cash reserves and creating pressure for asset sales at depressed levels. As a result of a downgrade, many of AIG’s insurance companies may have been unable to write new business, and state and foreign insurance regulators may have begun seizing AIG insurance company assets in their respective jurisdictions. Conditional lending would not have allowed AIG to remain a going concern, but rather would have pushed it into bankruptcy. II. Continuing pressures on AIG  By the end of September 2008, AIG had drawn $ billion from the Fed Facility. While successful in providing AIG with the liquidity it needed to avoid default and bankruptcy in the short term, over the longer term AIG’s borrowings from the Fed Facility were perceived by some to be potentially unsustainable.

Banks sharply curtailed their lending. A full fledged panic had started and was spreading rapidly; the financial system was facing the threat of collapse. In light of the circumstances at the time, a bankruptcy filing by AIG would have had disastrous consequences. Federal Reserve Chairman Bernanke has stated that it could well have “resulted in a 1930’s-style global financial and economic meltdown, with catastrophic implications for production, income, and jobs.” Because of the decisions made that morning, we can never really know. Let us be clear, though, about the risks that the policymakers did know. Policymakers knew that AIG’s largest creditors were other financial firms and that those firms clearly would have been directly impacted by an AIG bankruptcy filing. But the gravest risks were not the direct exposure of other financial firms to AIG. The gravest risks related to the indirect consequences of a bankruptcy of AIG, indirect consequences that would impact millions of Americans. AIG’s role as one of the world’s largest and storied insurance companies meant that its failure likely would have had a contagion effect, causing damage as it spread throughout the insurance industry. Policy holders would be hurt. Municipalities, who were already reeling from a lack of financing options for their building projects, would have seen their financial protection disappear. Workers whose 401(k) plans had purchased $ billion of insurance from AIG against the risk that their stable value funds would decline in value would see that insurance disappear.
Some assets will be stranded – such as those in carbon-intensive sectors – while others – such as those in the renewable energy sector – could enjoy strong tailwinds. The value of global financial assets at risk from climate change has been estimated at $ trillion by the London School of Economics1 and $ trillion by The Economist2. Investors cannot ignore these potential changes in asset values. Second, approaches to sustainable investing have developed significantly in recent years. There is growing evidence that investments incorporating strong ESG considerations can reduce exposure to systemic risks and improve resilience to market shocks. Some recent research has found a strong correlation between market performance and ESG ratings, for both equity and fixed income portfolios.3During the early weeks of the COVID-19 crisis, there was also some evidence that major ESG funds were able to outperform broad indices like the S&P 500. Sustainable investing is becoming mainstream. 1/7  BIS central bankers' speeches  More than $ trillion of assets globally are being managed in ESG investments, up 34% from 2016. 4 Global funds linked to ESG principles more than doubled in 2020 compared to just a year before. 5Global investors plan to further double ESG assets over the next five years. 6 Third, investor preferences will change as wealth is handed over to the next generation. We are on the cusp of the most significant inter-generational transfer of wealth in history. $ trillion of assets is expected to change hands between generations by 2030.

Total ESG assets in the region more than doubled, from about $ billion in 2019 to about $ billion in 2020. 12 Of the record $ billion global inflows into ESG funds last year, Asia attracted about $ billion. 13 But we need to do much more to allocate the capital that is necessary to support Asia’s transition to a sustainable future. As a centre for green finance in Asia, Singapore will play a purposeful role in this effort. We will do this in two ways: as the platform for developing green financing solutions customised for Asia; and 2/7  BIS central bankers' speeches  as the channel through which global capital is directed at meeting Asia’s transition needs. There are three areas where we need to intensify efforts: broaden the range of green financing solutions and markets; improve the consistency and transparency of ESG reporting and disclosure; and build knowledge and capabilities in sustainable finance. BROADEN GREEN FINANCING SOLUTIONS AND MARKETS Let me begin with broadening green financing solutions and markets. I will highlight three strategies that Singapore is focusing on. First, facilitate the issuance of more established green financing instruments, such as green bonds and green loans. Bonds and loans are a familiar and key source of financing for corporates of all sizes. Green, sustainability, and sustainability-linked bonds and loans enable corporates to raise financing as they take up green projects, invest in green assets, or move towards more sustainable business practices.