samchain/econo-pairs-v1 huggingface dataset:
The krona’s role changed in the 1990s In the period since the fixed exchange rate was abandoned the Riksbank has not targeted the level of the krona. For monetary policy the primary consideration is how inflation prospects relate to the 2 per cent inflation target. But in the Riksbank’s assessment of inflation the exchange rate is, of course, an important factor. Through producer and consumer prices for imported goods and services, the exchange rate has a direct effect on inflation that normally is comparatively rapid. Moreover, the exchange rate influences inflationary pressure indirectly and usually with a longer lag via effects on the level of economic activity. All else equal, a weaker exchange rate leads to stronger demand for Swedish goods and services and thereby to rising resource utilisation. The exchange rate can also influence inflation expectations indirectly, with effects in the first place on price setting. Since the Riksbank introduced the inflation target, our view of the exchange rate and inflation has changed by degrees. In the early years with a flexible exchange rate, monetary policy was influenced a good deal in practice by short-run exchange rate fluctuations. The focus then shifted and today it is clearer that what matters for monetary policy is the entire path of the exchange rate and inflation in the coming years. The monetary policy reaction to a shift in the exchange rate depends on the cause of the shift, its perceived duration and the economic situation in general.

Besides these more fundamental explanations with links to the theory of purchasing power parity, there are numerous notions connected more or less closely with the flows in currency markets. The nominal exchange rate is the price of a currency; like prices of other goods, this price is naturally affected from time to time by more or less temporary fluctuations in demand and supply. It is explanations of this type that market players are most prone to put forward for short-run exchange-rate fluctuations. The most general flow-related explanation is probably the short-term interest rate differential. Textbooks teach that international currency flows and nominal exchange rates are susceptible to differences in current and expected monetary policy. Today, when monetary policy throughout the industrialised world is focused on price stability, so that interest rate differentials between countries are tending to decrease, the explanatory power of this variable is presumably weaker. Another factor that has been of major importance for nominal exchange rates from time to time is the state of the government finances. High and growing government debt leads to expectations of a suspension of payments or a monetary policy realignment in a more inflationary direction. That in turn results in a depreciation of the exchange rate. The picture in Sweden Since 1975 the Swedish krona has weakened in nominal terms by as much as 90 per cent. But at least half of this depreciation can be explained by Sweden’s higher inflation. And in this respect there has been a decisive change.
Nor Shamsiah Mohd Yunus: Keynote address - JC3 Flagship Conference Keynote address by Ms Nor Shamsiah Mohd Yunus, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Joint Committee on Climate Change (JC3) Flagship Conference, Kuala Lumpur, 23 June 2021. * * * It is my pleasure to speak at the JC3’s flagship event today. This conference is an important platform for us to share knowledge, best practices and solutions in tackling the threat of climate change. Since the last time we held this event in 2019, the world has been gripped by a health crisis of staggering proportions. It is unlike anything we have experienced in recent memory – with great economic and social costs. Despite unprecedented and massive policy responses to the crisis, the crisis has led to some setbacks to past progress towards sustainable development goals. And the global community is still confronting the harsh consequences of under-investments in health, education, infrastructure and the environment, at the expense of more sustainable and inclusive growth. If anything, the pandemic has been a sobering wake up call to the importance of sustainable development and the urgent need to pay more attention to planetary health. Even as Governments and policymakers have been laser-focused in combatting the Covid-19 pandemic, climate-related events have continued to intensify. These events include displacement and disruptions due to storms, flooding and droughts. For example, between November 2020 and January 2021, a few states in Malaysia experienced severe flooding.

This includes the implementation of mandatory climate-related disclosures by various governments, regulators and independent bodies to hold companies accountable for their impact on the environment. The world is clearly moving more aggressively on building climate resilience in what is being described as the “decisive decade for climate action". Individual countries and firms cannot stand still. Not just because climate change has severe implications at a domestic level – more so for developing countries – but because global climate actions affect us directly through economic and financial linkages. How we respond is crucial. With the growing traction to sustainability, the 1/5  BIS central bankers' speeches  risk of stranded assets is real and significant. The risk of getting left behind and shut out of key markets will affect our economic competitiveness, lead to a drop in growth and worsen existing inequalities. Ultimately, it is at the local level that the effects of climate-change will be mostly felt – through its transmission to food supply, energy and transport, disease and livelihoods. It is therefore in our collective interests and responsibility to act now, and to act together. As the lifeblood of the economy, the response of the financial sector is crucial on several levels – (i) to safeguard the resilience of the financial system through the identification and management of climate-related risks; (ii) to direct financial flows to low-carbon activities; and (iii) to support the transition by economic agents through appropriate financial and risk solutions.
The necessary coordination at national level must therefore be combined with mechanisms to ensure the agreement is able to cater to the existing productivity and activity-related differences across firms and sectors.8 Equally, where the standard of living of certain segments of households is hit particularly hard by rising energy costs, the incomes agreement should naturally seek to mitigate their straitened circumstances. In short, these considerations reveal the need to avoid overly sweeping measures to implement a potential incomes agreement that might prove too rigid for certain groups of agents. Third, any approaches that automatically link wages to past inflation or indexation clauses are also to be avoided9. The aim is precisely to reduce the risk of triggering a wage-price feedback loop. In this regard, workers with collective bargaining agreements registered up to March this year that provide for any form of wage guarantee clause linking the final wage increases agreed in 2022 to developments in inflation are admittedly in the minority. Nonetheless, the figure (30%) is notably higher than it was at the end of 2021, when it stood at 17%. Of even more concern is the fact that this figure rises to 50% of the total when considering the agreements entering into force in 2023, albeit still referring to a small number of agreements in this case. Fourth, any incomes agreement should provide for multi-year wage increase and job protection-related undertakings. This would offer households and businesses some certainty in their spending and investment decisions.

The persistence and intensity of inflationary pressures reflect a combination of various demand and supply factors. Notable among the demand factors are the relatively strong recovery in activity following its collapse in 2020 and the changing consumption patterns as a consequence of the pandemic and the measures adopted to contain it. Among the supply factors, the higher price of energy - with major strains in the gas market - and the disruption to global supply chains stand out. This high global inflation environment was also reflected in expectations of monetary policy normalisation and, in consequence, a moderate tightening of private-sector financing conditions. 1  As at global level, the repercussions of the war for the Spanish economy are highly uncertain. Spain’s direct exposure to the countries at war is low. However, the invasion of Ukraine has also changed the economic environment and represents, at a time when the recovery from the pandemic remains incomplete, a new shock that can be expected to entail adverse consequences in the coming quarters for economic activity and inflationary pressures through various channels. Of these channels, the most important is probably commodity markets, including markets for both energy and non-energy commodities, in particular foodstuffs and metals, of which Russia and Ukraine are both significant global producers and exporters. Spain’s direct exposure to these imports is relatively low; for example, in 2019 only 6% of its total energy purchases from the rest of the world came from Russia.
In a liberalised financial market environment, the central bank contributes to the reduction in lending rates by reducing inflation. The Government also contributes by implementing prudent fiscal policy, thus limiting the incidence of crowding out of the private sector by the Government. As a result, yield rates on Government securities fall. As inflation and yield rates on Government securities decline, lending rates are also expected to decline in the medium to long term as the two provide the relevant opportunity cost of lending to the private sector. Another factor that commercial banks take into consideration in determining lending rates is the default risk arising from the poor credit culture in the economy in general. In resolving the problem of poor credit culture, the Central Bank through the Financial Sector Development Plan, facilitated the establishment of a credit reference bureau which collects information on borrowers to be used by credit providers. Furthermore, in order to increase competition in the financial sector the Bank of Zambia has registered a number of commercial banks and other financial institutions to operate in Zambia. In 2009, the number of registered banks increased from 14 to 17. In addition, the Bank of Zambia is developing a framework to migrate from the use of monetary aggregates as the anchor of inflation expectations to the use of interest rates.

For example, putting some temporary restrictions on cross-border movement of capital could give some but not complete independence of monetary policy. But how do we reconcile independence and co-operation? In my view, we can and should act to enhance co-operation between public authorities, based on at least two elements: Ruling out any currency war, as we clearly stated at the meeting of the International Monetary and Financial Committee in Bali last month. I quote the unanimous communiqué: “[We] will not target our exchange rates for competitive purposes”. Trade multilateralism is at risk, but financial and monetary multilateralism still stands fast. Second, as the G20 Eminent Persons Group (EPG), led by Tharman Shanmugaratnam, rightly stressed in its recent report, we need to put in place a reliable Global Financial Safety Net (GFSN) before the next crisis and co-ordinate its different layers. This should include an “IMF standing liquidity facility”. The GFSN is the best insurance we can get against the risks created by economic divergence and it comes at a limited cost. I know that Governor Kuroda is very committed to this issue too. ** Let me conclude by quoting a Japanese proverb: “A frog in a well knows nothing of the great ocean” [“I no naka no kaeru taikai-o shirazu”]. In these uncertain times, the temptation is to look inwards, but that would be exactly the wrong thing to do.
Our latest Inflation Report forecast published last week - based on constant 6% interest rates, and on reasonable central assumptions about certain other key elements in the forecast - projects continuing overall output growth - of around 3% initially, moderating to around 2½% from around the end of this year - with continuing low inflation - at a rate of around 2% this year but rising back to around the 2½% target in the course of next year, with the risks - on these assumptions - modestly on the upside. But, given the current uncertainties, individual members of the Committee quite naturally prefer their own alternative assumptions about some of the key variables - most notably the likely future path of the exchange rate and the size and duration of the effect of the downward pressure on margins. And these varying assumptions could either raise or lower the rate of inflation two years ahead by up to ½ percentage point. That, Mr Chairman, is all fairly technical stuff. The point to hold on to is that, on a reasonable range of assumptions, the prospect for the economy as a whole over the next couple of years is for continuing steady growth with low inflation, and most of us would happily settle for that. The debate is about just how strong the growth and just how low the rate of inflation.

More encouraging is the principle of better late than never, and the important thing is that Spain initiated the process of bank restructuring, now nearing completion, in 2009, that significant measures to reduce the budget deficit began to be adopted in May 2010 and that an ambitious labour-market reform was introduced in February this year. Spain has proven itself capable of making adjustments and reforms and this is essential to restore long-lasting upswings and sustainable growth. But this reassurance must not lead to complacency. What we have done so far, despite its huge importance, is not sufficient. And some of us have the thankless task of pointing this out. For example, when each financial reform has been approved it has always been argued that the result will be more credit, but although bank restructuring is certainly an absolutely necessary condition, we have always seen that it is not sufficient by itself to make credit flow again. We have to restructure the financial system so that, as in any process of industrial adjustment, the resulting banks can generate a healthy profit and be sufficiently solid to meet demand when the adjustment process is complete. However, credit will not improve until solvent demand increases. Hence the importance of other economic reforms to boost consumer and investor confidence, such as reducing the budget deficit and reforms, such as the labour-market one, to increase the economy’s growth potential.
Thomas Jordan: A new role for central banks? Speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the Zürcher Volkswirtschaftliche Gesellschaft, Zurich, 16 January 2014. *  *  *  The speaker would like to thank Peter Kuster for his valuable support in preparing this speech. I am also indebted to Katrin Assenmacher, Rita Kobel, Thomas Moser, Attilio Zanetti and the SNB’s Language Services. Ladies and gentlemen A country’s prosperity largely depends on how the different agents perceive their role and their responsibility. This is true for both private agents and government institutions. Within the regulatory framework, private agents must continuously reappraise their role and their business model and make adjustments so they can compete in the marketplace in the long term. This is the only way for them to create and secure jobs and income for the population. Given the dramatic changes both in the regulatory framework and in the economic environment in the past few years, this is no easy task. Today, however, I am not going to speak about the future role of others and the challenges they face, but rather look into the mirror, as it were. Should central banks not also have to fundamentally rethink and perhaps redefine their role after the financial and debt crisis? Unlike other private agents in an economy, central banks are obviously bound to their legal mandate.

A policy mix to revive investment I see two key areas where government action both at national and European level should help to revive business investment. First, the regulatory environment should be made more favourable to economic growth. Second, companies need to have access to more diversified sources of financing: the launch of a capital markets union could contribute to achieving this and, at the same time, help overcome the remaining fragmentation of financial markets. Let me briefly elaborate on each of these points. Improving the regulatory environment Business activity would greatly benefit from an improvement in the regulatory environment, in particular as regards product and labour markets. The differences between Member States are quite striking in respect of wage differentiation (across workers and between sectors), employment adjustment rigidities, barriers to entry in product markets and the ease of opening and running businesses. For example, in some Member States contractual disputes between firms take on average little more than a year to resolve, while in other countries they take more than three years. Start-ups in the latter countries have to deal with more red tape than their counterparts elsewhere. Another telling example relates to the regulated professions whose number varies considerably across euro area Member States [from 45 in Estonia, 170 in Italy, 219 in France to 304 in Slovakia, according to European Commission figures]. Such barriers to entry limit competition and employment, creating undue rents for a select few to the detriment of customers. These are just a few examples.
And technology itself, in the understandably confused state of revolution, is awfully difficult to price in financial markets, particularly when the highly uncertain nature of future earnings in respect of technologically intensive companies has to be taken into account, typically in the equity market, not to mention derivatives thereof. There has therefore been an additional, micro dimension of technology induced financial market volatility and this could well be manifested in enormous creation or destruction of wealth possibly to the extent equivalent to a substantial proportion of the GDP. Investors and the regulators of markets and of institutions providing credit will also need to adapt. Conclusion 27. But Hong Kong and its people have been always good at adapting in the past: this is a superflexible and super-adaptable city. There is every evidence now – after a flicker of self-doubt in the late 1990s – that the vigour, the creativity that brought us through the last 50 years is still in full flow. We shall need all of that vigour and creativity if we are really to make the most of the opportunities and ride out the volatilities of the coming decades. As with most things in life, these opportunities and volatilities come tangled together: we cannot just say yes to the opportunities without exposing ourselves to the volatilities. In my speech today, I have explored what I see as the three main opportunities for Hong Kong in the coming few years.

In addition to the requirement for equal charges, the new Regulation envisages requirements with respect to currency conversion charges related to card payments and electronic credit transfers which are expected to increase transparency and to ensure comparability in cases where a payment service user is faced with a choice between currency conversion alternatives f. According to the requirements concerning currency conversion charges related to card payments, payment service providers and the parties providing currency conversion services at an automated teller machine (ATM) or at the point of sale shall provide information prior to the initiation of the payment transaction for the total currency conversion charges expressed as a percentage mark-up over the latest available euro foreign exchange reference rates issued by the European Central Bank. In addition, the payer must also be provided, prior to the initiation of the payment transaction, with information about the amount to be paid to the payee in both the currency used by the payee and in the currency of the payer’s account. With regard to the requirements for currency conversion charges related to electronic credit transfers, payment service providers will be obliged to inform the payer prior to the initiation of the payment transaction about the expected currency conversion charges applied to the credit transfer, the expected amount of the credit transfer in the currency of the payer’s account, as well as about the expected amount which will be transferred to the payee in the currency used by the payee.
We must counter this by creating credible transparency and reacting to any possible alarming rumours swiftly and in a co-ordinated fashion. This is one of the tasks of the Swiss Staff 2000 which involves the Bankers’ Association, the important providers of services like clearing, settlement and the Exchange, banking supervision and the central bank. It seems indispensable that the authorities play an important part both in active and reactive communication. And, secondly, we must diligently carry on our preparatory work, continuously and openly report on the progress made, as well as adjusting the allocation of resources in accordance with the risks involved. At the same time, we must bear in mind that we will be faced with unexpected friction and bottlenecks. While it is true that the millennium transition poses a veritable challenge, I am fully convinced that it is manageable and that we will rise to the occasion. Let us all build on the positive relationship between our ongoing efforts to improve our readiness including a whole variety of contingency plans and the chance to eventually enjoy the pleasure of having been wrong and unnecessarily pessimistic in providing for all kinds of gloomy scenarios. 3  BIS Review 46/1999

Eva Srejber: New EU countries - opportunities and risks Speech by Ms Eva Srejber, First Deputy Governor of the Sveriges Riksbank, to the students of the Blekinge Institute of Technology in Karlskrona, Ronneby, 20 September 2004. *  *  *  It is almost six months now since 10 countries became new EU members, eight of which were central European nations that once were under the control of communist dictatorship. It is said that when Henry Kissinger asked Zhou Enlai, Mao’s right-hand man, to comment on the significance of the French revolution, he replied “too early to say”. As regards the enlargement of the EU, which is one of the biggest events in Europe in our time, it is likely to be many decades before we can take stock of the full consequences, even in the limited area I intend to discuss here today - the economic situation. Nonetheless there is much to say about the dynamics that have been created by the enlargement, changes that were initiated as soon as the EU opened the door to membership in the 1990s and that are now continuing following entry: In the short term the immediate problem for the new member states is to govern their economic policy in the right way, given their objective of not simply becoming members of the EU but also joining the eurozone.