samchain/econo-pairs-v1 huggingface dataset:
But change and development are also linked to new risks that need to be managed by governments and authorities. I have today spoken about some of the changes and the developments that have taken place in the financial system in recent decades, and what consequences they have for the Riksbank’s different fields of operation: payments, monetary policy and financial stability. Changes in the payment market is very rapid. Many of them benefit households and companies as they simplify payments. But changes also create new risks. For the Riksbank, this has entailed developing the systems the banks use to make payments to one another. The new RIX-INST will offer instant payments 24/7. But perhaps of greater interest to ordinary citizens is that we are also working on supplementing cash with ‘digital’ cash – a so-called e-krona. The financial system has become more integrated – and risky. An increasingly rapid integration of the financial markets has led to financial capital being able to move rapidly and more freely between different countries. This has led to monetary policy becoming more dependent on international developments and less independent. National financial market policy has also become more restricted. Avoiding financial crises therefore requires more cooperation at a supranational level, which indicates for instance that Sweden should join the Banking Union. To enable the Riksbank to manage its tasks and deal with the challenges offered by the changes on the financial markets, the monetary policy tools need to be fitfor-purpose and flexible.

The state’s cost for the part of the debt the Riksbank has purchased is thus the policy rate. Economists usually say that the Riksbank’s purchases of government bonds are actually a maturity transformation of the state’s debts from 51 Central bank reserves are electronic central bank money that the banks hold in their accounts with the Riksbank. Central bank reserves are the money the banks have in accounts with the Riksbank overnight, but also the money the banks have invested in Riksbank Certificates with a particular maturity. The total of these investments comprises the banking system’s so-called liquidity surplus towards the Riksbank, which can also be called the banking system’s reserves with the Riksbank or just central bank reserves. 52 See also Vlieghe (2020). 21 [35]  long-term to very short term, as central bank reserves are a state debt with a very short maturity. In other words, the state pays a very short-term interest on the government bonds the Riksbank purchases, and a more long-term interest on the government bonds that private agents hold. In the cases where people are concerned about monetary financing, it is almost always a fear that government bond purchases will lead to rapidly rising inflation, or so called hyperinflation, as was the case in Zimbabwe and Venezuela not so long ago. But the Riksbank's and many other central banks’ government bond purchases have not led to this type of situation. Why is this? One explanation could be that the size of the purchases is important.
The EEA Agreement is basically a mechanism through which EFTA countries like Iceland and Norway were allowed to participate in the EU single market, which includes free movement of capital and provision of financial services. The underlying principles are those of home licensing for operation anywhere in the area and of a level playing field for competition, where size and location are not supposed to matter. It therefore goes against the underlying principles of this framework to consider the size of banks relative to GDP as a metric for concern, as is now so rightly in fashion. This so-called European “Passport” enabled the Icelandic banks to operate throughout the EEA, including through branches in other EEA countries. We now know that there are deep flaws in this framework and that these flaws are important elements in the current euro area crisis. A key issue here is the contradiction between the European Passport rights, on the one hand, and national supervision, national deposit insurance, and national crisis management and resolution regimes, on the other. This is what recent proposals of a banking union are supposed to address. All of these problems are much aggravated when different currencies come into play, and for EEA countries and EU countries outside the euro area, this framework also has embedded in it a potentially huge foreign currency liquidity risk in the banking system that is not covered by a LOLR.

The run up to the financial turbulence of the 1990s During the past twenty years, the financial systems in many countries have been deregulated. For the first time since the outbreak of World War One, capital can again pass more or less freely across national borders. Moreover, major changes in communication and information technology have paved the way for new instruments and methods for risk management. Taken as a whole, this has led to the financial system being more extensive and global today than ever before. This holds even though capital flows relative to GDP were also large at the end of the last century. The rapid financial development and internationalisation are per se a logical consequence of the production of goods and services being globalised, with a massive increase in cross-border trade. They also have to do with growing wealth in many parts of the world. This in turn has increased the need for new financial solutions for businesses and households. The increasing globalisation of production and trade in goods and services generates a demand for a more developed and internationalised financial system so that the opportunities for increased prosperity can be used to the full. Note that this, as always, involves a trade-off between risk and return. It is of course possible to substantially increase stability, in the sense of lowering risk, by measures that result in very low returns. However the solution is not to turn back to a less turbulent, but also less prosperous past regime of capital controls.
In its last meeting in June, the ESRB underlined the threat to financial stability stemming from the interplay between the vulnerabilities of public finances in certain EU Member States and the banking system, with potential contagion effects across the Union and beyond. To ensure the resilience of the EU financial system and limit the potential for adverse spillovers,  BIS central bankers’ speeches  1  the ESRB at the time also stated that backstop plans should exist, starting with resources from private markets and, if necessary, with public funds. As we also said at the time, we are furthermore working on specific issues such as FX lending, complex financial products and mismatches in the funding structure between various currencies. Let me mention that we have our next ESRB General Board meeting next Wednesday. Basel III implementation As regards Basel III, compared with Basel II, the new framework envisages higher minimum capital requirements, better risk capture, stricter definition of eligible capital elements and more transparency. These elements should substantially improve banks’ capital position and loss absorbing capacity, thus enhancing the resilience of the financial sector. The new Basel framework also introduces entirely new concepts, such as a non-risk-based leverage ratio and mandatory liquidity requirements. It has been agreed that these measures will be introduced gradually during a transition period. It is essential that prior to their introduction the potential impacts of these new elements on financial markets are carefully assessed to ensure that these measures do not hinder banks providing funding to the real economy.

But I also want to look at the road ahead: we must not stop here and leave our task halffinished. There is still very important work to be done on a number of regulatory challenges. And with all our reforms and with all our new institutions of economic and financial governance, we must ensure timely implementation so that we can ensure that we have done everything to make a difference as regards the resilience of the global, regional and national financial systems. The ESRB Let me start with some of our accomplishments before moving on to highlight some key areas where we need to make progress. The first accomplishment is the establishment of the European Systemic Risk Board (ESRB) earlier this year. As you know, the ESRB brings together the policy makers such as central banks, supervisors and the Commission, thus fostering a broad-based review of risks and vulnerabilities and a deeper understanding of interlinkages and spillovers between different parts of the financial system. This wide-ranging perspective, which encompasses both micro and macro elements, is an essential feature of the new European supervisory framework and it fills a gap identified at the global level. Although the ESRB does not have direct binding powers, the effectiveness of its “comply or explain” mechanism builds upon the high reputation of the ESRB’s members and the quality of its analysis.
However, this time there is also reason to ask whether we are sufficiently prepared. Is our economy sufficiently robust? The fall in oil prices was triggered by an international financial crisis and slower growth in the world economy. The Norwegian economy is highly exposed to international fluctuations. Is our own financial system and business sector strong enough to cope with this situation? How should monetary and fiscal policy be formulated in such an exposed and oil-dependent economy? These are the issues I would like to address this evening. A turbulent world Even before oil prices started to fall, the warning signals were flashing for everyone to see. The Norwegian economy was overheating in an environment of global economic distress. The signals from Asia were clear. 1  BIS Review 20/1999  The problems first appeared in Thailand a little more than 18 months ago, but spread quickly to Malaysia, the Philippines, Indonesia and South Korea. In most of these countries, a sharp upturn had been stimulated by low interest rates and financed through a considerable accumulation of debt in the business sector. Borrowers became increasingly nervous and withdrew capital. Capital inflows from industrial countries were suddenly reversed to massive capital outflows. Equity and property prices fell sharply and currencies came under pressure. The contagion effect led to a sharp downturn in production and employment. Large population groups that had recently experienced a pronounced increase in living standards slid back into poverty.

I think we’ve been clear in our expectations around AML/BSA: •  That AML/BSA needs to be managed on an enterprise-wide basis;  •  That AML/BSA needs to be a high priority for the board of directors, senior management and line management;  •  That the message on compliance needs to be carried down well into the organization, so that those who are on the front lines making daily decisions understand the importance of compliance and the consequences for failing to meet the requirements; and  •  That AML/BSA shouldn’t be treated as a static exercise – standards and best practices evolve and you are required to keep up with and adhere to the latest requirements. As I know you are also aware, we are seeing keen competition for talent/resources in this area. While we recognize that it may be difficult to identify and retain talent, having a solid recruiting strategy and ongoing training in place, as I mentioned earlier, are important components to addressing the problem. You might wonder why this topic remains on my list – and it’s because in spite of the heavy public attention on the matter, including a range of public enforcement actions, it remains a work in progress for many firms. And, for firms that haven’t yet been faced with MRAs or a public enforcement action, I worry about complacency. So, I raise it again because it seems that another warning shot is warranted. 2.
The falling price level has to do with transitory effects, above all the Riksbank’s marked reduction of the repo rate during 1996. Excluding house mortgage interest costs, the rate of inflation in January 1997 was about 1.5 per cent. The outlook for inflation points to room for a fall in bond rates. Moreover, underlying economic factors suggest that, after the depreciation in recent months, the krona is undervalued and should be capable of appreciating. The present monetary stance appears to be well balanced. After the major changes in the past year, for example in the repo rate, time is needed to assess their effects. Another matter to consider is the recent months’ developments in financial markets. They, too, call for a cautious line in monetary policy. I note that the Swedish economy seems to have made good progress in adjusting to a low inflation regime, with stable, sustained growth. What gives cause for concern, however, is that the recovery of employment appears to be much more sluggish and that unemployment is persistently high. High cost of unemployment  As shown in Diagram 1, registered unemployment in Sweden rose sharply in the early 1990s; from a level between 2 and 3 per cent, it shot up to around 8 per cent. This was accompanied by increased participation in labour market programmes. Total unemployment accordingly reached around 13 per cent, an increase of almost 10 percentage points or up to half a million people. This is the highest level since the 1930s.

I believe that the patient can of course be cured, must continue to take the prescribed medicine and should not be out on the town at night. Many thanks, again, to the Academy and the President for your invitation and to all of you for your attention. BIS central bankers’ speeches  5
At 8 per cent, the vacancy rate is still relatively high, although in some central areas, it has fallen to below 4 per cent. The share of vacant office premises in Bergen has been lower than in Oslo for the past three years. The value of property has increased, both in Norway and in other countries, even though the rise in rental rates has been moderate and the vacancy rate has been high. Investors have been willing to pay more than previously for a krone, a dollar or a euro in future net rental income. The direct return, i.e. annual rental income minus operating costs as a share of the price paid for the property, for office premises in Oslo has fallen to a historically low level. This is probably related to developments in longterm interest rates. An investor will expect a higher return on property, and property as an asset class is probably midway between equities and bonds in terms of both risk and return. Since nominal interest rates are low, many investors prefer to move their low-risk investments from the bond market to alternative vehicles such as property. Developments in the real value of office premises and our estimates of capacity utilisation in the Norwegian economy seem to co-vary in the period 1980-2005. The effect on the value of office premises prior to the banking crisis was much greater than the effect of a similar level of capacity utilisation in the years 1998-2000.

The rise in prices for domestically produced goods and services slowed somewhat towards the end of 2005 and into 2006. The 12-month rise in prices for these products is estimated at 1.6 per cent in April, adjusted for the effects of lower maximum day-care rates. However, several factors point towards rising inflation. Capacity utilisation in the Norwegian economy is increasing, and tighter labour market conditions may result in higher wage growth in the coming years. The rise in oil prices is resulting in higher input costs for producers. As a rule, monetary policy shall not take account of the direct effects on consumer prices resulting from changes in the interest rate level, taxes, excise duties and extraordinary, temporary disturbances. However, there is no certain method for distinguishing extraordinary, temporary disturbances from more long-lasting price changes. The inflation measure CPI-ATE excludes the effects of changes in taxes and energy prices. Norges Bank has given weight to this indicator of underlying inflationary pressures in the economy, but also keeps an eye on other indicators. The 12-month rise in the CPIATE adjusted for the effects of lower maximum day-care rates is estimated at 1.0 per cent in April. BIS Review 41/2006  3  However, the CPI-ATE not only strips out temporary effects of changes in tax changes and fluctuations in energy prices, but also trend changes in these variables. Thus, this indicator is not a perfect measure of underlying inflation.
Look at these two graphs. One shows the share of the US financial sector in GDP going back to 1860. The other shows relative skill-corrected wages in the financial sector and an index of deregulation (where down is more regulation). We can see that there is a peak in all of these measures around the time of the 1929 crisis, followed by a secular decline. Regulation reaches a peak and relative wages bottom out in the 1960s and 70s. Then there is a long climb until just before the current crisis. If this was all we had to go on, it would be difficult to escape a certain prediction of what happens next! The big question is what it might mean for growth and prosperity. So it is important that we strike the right balance, as it is so aptly put in the programme for this event. Thank you very much. 4  BIS central bankers’ speeches

King (2013) “Flow and stock effects of large-scale treasury purchases: Evidence on the importance of local supply” Journal of Financial Economics Volume 108, Issue 2, Pages 425-448 for evidence associated with programmes conducted in the US and Joyce et al. (2010) in the UK. vii See speeches of August 2016 (Handelsblatt conference), September 2016 (annual CERS conference) and April 2017 (conference at Columbia University). viii Stefan Zweig, Visiting the billions (Besuch bei den Milliarden), 1932. ix Stefan Zweig, The World of Yesterday, Memories of a European, 1944.
Ben was among the first to highlight their potential significance for monetary policy. Another example of Ben’s tendency to go against the mainstream is his critique of the use of rational expectations in macroeconomic models. When the rational expectations revolution transformed the field of macroeconomics in the late 1970s, Ben remained sceptical. He criticised the assumption that economic agents form their expectations based on a perfect understanding of how the economy works. These models did not address the question of how economic agents derive this knowledge in the first place. More recently, the literature has begun to develop models with forward-looking agents that have a limited understanding of how the economy works. This research programme is very much in the spirit of Ben’s early criticism. Page 3/4  A final example of Ben’s willingness to challenge the accepted wisdom of the day is his reservations about inflation targeting. When one central bank after another started to adopt inflation targeting in the 1990s, Ben became one of the most prominent critics of this new monetary policy strategy. His concern was that inflation targeting would lead central banks to focus single-mindedly on price stability. In doing so, Ben feared, they might lose sight of their ultimate goal of promoting economic well-being more broadly. Ben is widely recognised as one of the world’s leading macroeconomists. However, his research interests go far beyond that. Ben is a polymath, something that has become rare in modern academia. His writings cross academic boundaries between economics, philosophy, history and religion.

An excellent example of Ben’s interdisciplinary work is his book ‘The Moral Consequences of Economic Growth’, published in 2005. Economists have written countless papers on how to increase growth. But very few have addressed the question of why growth is desirable in the first place, in particular for societies that are already rich. Ben’s book fills this gap. It argues that economic growth improves the moral character of society. People tend to be more generous and tolerant towards each other when the economy grows. Economic stagnation, on the other hand, is associated with repression and bigotry. Ben’s latest book, ‘Religion and the Rise of Capitalism’, was published last year. It describes how religion has shaped economic thinking since the beginning of our discipline. The early economic thinkers of the European Enlightenment, such as Adam Smith, were not committed to religion. Ben argues, however, that their world view was profoundly influenced by developments in religious thinking. There is therefore a close connection between religion and the beginning of modern capitalism. With this I would like to conclude my remarks, since you are surely eager to learn more about this fascinating topic from Ben himself. Ladies and gentlemen, please join me in welcoming Benjamin Friedman with a big round of applause. Page 4/4
Spencer Dale: Tough times, unconventional measures Remarks by Mr Spencer Dale, Executive Director and Chief Economist of the Bank of England, at the Association of British Insurers Economics and Research Conference, London, 27 March 2009. I would like to thank Rohan Churm, Alan Mankikar and Tim Taylor for their considerable help in preparing these remarks. The views expressed are my own and do not necessarily reflect those of other members of the Monetary Policy Committee. *  *  *  The UK economy is in a deep recession. Output in the United Kingdom fell at its fastest rate in nearly thirty years in the final quarter of last year, and a similar fall in output in the first quarter of this year appears likely. We are in the throes of a synchronised global downturn, which has spread far and wide. But the darkest hour is just before the dawn. Although immediate prospects appear bleak, the substantial economic stimulus that is underway means that there are grounds for thinking that economic conditions may start to improve later this year. An important part of that stimulus stems from the extraordinary measures taken by the Monetary Policy Committee over the past six months, including our decision to start using unconventional policy measures. Today, I will describe my view of the economic outlook and outline the factors that I believe will spur a gradual turnaround in our economy.

The causes of this downturn are very different from those of most recent recessions and, as I have just described, the policy response on this occasion has been much quicker and more decisive. There is also a third factor that needs to be borne in mind when drawing lessons from history. This is the first recession in the UK for nearly 20 years. The structure of our economy has changed significantly since the early 1990s, and even more so since the early 1980s and 1970s. The UK economy has undergone extensive reforms and deregulation, and businesses have been transformed by the implementation of new technology and the effects of globalisation. It is hard to quantify precisely the various ways in which the structure of the economy has changed. The appropriate data are not always available and it may be a long time until the effects are discernible in aggregate economic statistics. Importantly, the significance of some of these structural reforms may not be fully apparent until the economy is subjected to a substantial shock. For example, one consequence of globalisation is that supply chains around the world are far more integrated. This is likely to have played an important role in the speed and synchronisation of the world downturn, as the effects of falling demand in a few countries were translated into lower orders and production in many in a matter of weeks. That increased integration is also likely to affect the speed and nature of the recovery.