samchain/econo-pairs-v1 huggingface dataset:
•  Support financial stability. Unsustainably high property prices could create risks of financial stability given the banking system’s loan exposure to property. •  Encourage greater financial prudence. The combination of global low interest rates and high asset prices could lead to some households over-extending themselves financially. 26 How far have these policy objectives been met? •  There are some indications that property market is stabilising. The private property price index has moderated by cumulative 3.3% over the last three quarters. This has alleviated the pressure on headline inflation, as I have explained earlier. •  The banking system is resilient to property market shocks. Stress tests of our banks during last year’s Financial Sector Assessment Programme by the IMF showed they were resilient against various stress scenarios. These stresses included a combination of: domestic interest rates increasing by more than 200 bps; unemployment rate rising above 10%; cumulative decline in equity prices up to 70% over three years; and cumulative decline in residential property prices up to 50% over three years. MAS’ own stress test this year – assuming disorderly unwinding of quantitative easing in US and higher level of USD funding squeeze – shows similar results. •  Household balance sheets are in better shape. Last year I highlighted MAS’ concerns over rising household leverage. Property-related measures have helped to strengthen overall household balance sheets in two ways. First, they have tempered the growth of household debt.

Boris Vuji: Resilience, adaptability, and cooperation Speech by Mr Boris Vuji, Governor of the Croatian National Bank, at the conference "Policymaking in Choppy Waters: Fostering Resilience in Central, Eastern and Southeastern Europe (CESEE)", Dubrovnik, 3 June 2023. *** Dear Prime Minister Andrej Plenkovi, dear Managing Director Kristalina Georgieva, dear ministers, governors, distinguished guests, ladies and gentlemen, good morning to everyone. After a beautiful evening yesterday, that served as a perfect introduction to our gathering, it is my great pleasure to also welcome you to the official part of our conference. As you know, the conference is jointly organized by Croatian National Bank and the International Monetary Fund. This is the third biennial conference that we started in 2017, when the MD of the Fund was my current boss in the Governing Council of the ECB. At that time neither of us knew that today we would be sitting together in the ECB Governing Council. That much about the predictability, which has poorly served us on a much grander scale over the last years. So, I would first like to express my sincere gratitude to our IMF colleagues for excellent cooperation during the preparation of the conference. We are both happy that we have managed to gather top policy makers and speakers at this beautiful location to talk about very topical issues.
This is a reflection of the exceptional nature of the commodity price shock in terms of its magnitude, its persistence and its broad-based character, affecting commodities across the board, including notably energy but also food commodities.4 It has to be taken into account that, although the shock has been global, Europe has been particularly exposed due to its high dependency on the supply of essential inputs – notably gas – from Russia.5 Indeed, given the magnitude and persistence of the shock, indirect effects have penetrated more deeply into the economy, firms have tended to adjust final prices more often6 and this has triggered a more extensive spread of price rises across the different categories of goods and services.7 In addition, the upward effects of energy and food commodity prices could still be significant in 2023. In the case of food commodities, the transmission of increasing costs along the supply chain could take up to a year8. In the case of gas prices, the pass-through from wholesale prices to final retail prices for consumers varies significantly across countries depending on the regulations in place, the types of contracts used in each national retail electricity market and profit margin developments in the face of rising energy input costs.

Additionally, the current ample liquidity available to commercial banks reduces the pressure on them to increase the remuneration of retail deposits. Other factors point to a potentially faster monetary policy transmission compared to past episodes. First, the current hiking cycle comes after the strong negative shock prompted by the pandemic, which adversely impacted firms’ financial situation by increasing their debt levels. This leaves them more vulnerable to interest rate hikes, and their expenditure decisions may be more sensitive to monetary policy changes. Conversely, however, households still have around € billion in excess savings built up during the pandemic and they are benefiting from sizeable fiscal policy support. Second, there has been a shift from bank to bond funding over the last decade, with bond debt increasing from 16% to 24% of non-financial corporations’ total debt.20 This, together with the faster monetary policy pass-through to bond rates than to bank rates, implies faster transmission than in the past. Third, the residential real estate market is a key area to monitor, in particular given that some euro area countries have experienced a significant increase in house prices over the last decade, with signs of overvaluation.21 Housing represents a major part of household wealth and bank assets. Thus, a potential decrease in house prices would weigh negatively on banks’ portfolios, by reducing the value of the collateral provided to banks by households and firms, which might ultimately affect credit developments.
Hamad Al-Sayari: Housing finance in the Kingdom of Saudi Arabia Speech by His Excellency Hamad Al-Sayari, Governor of the Saudi Arabian Monetary Agency, to the “Conference on Housing Finance in the Kingdom”, Riyadh, 17 January 2007. *  *  *  Dear Audience, It gives me a great pleasure to inaugurate the activities of the second day of the “Conference on Housing Finance in the Kingdom”. I would like to thank Euromoney and all other entities organizing this important and vital conference in the Kingdom at a time when we need, more than any time before, to shed more light on the issue of real estate finance, exchange views and benefit from the experiences of other nations in this area. Undoubtedly, this will contribute to developing the proper strategies and mechanisms to overcome the challenges of finance in this significant sector. Dear Audience, As everybody knows, the Saudi economy, in general, and the housing sector, in particular, have witnessed strong growth during the past years. The accelerated population growth rate in our country is considered among the highest growth rates in the world, calling for more financing needs for various development sectors, especially the housing sector. The government of Saudi Arabia, represented by the Real Estate Development Fund, has made, and continues to make, great efforts, under its development plans, in order to provide necessary finance to ensure the provision of appropriate housing for Saudi citizens, especially those of limited income.

Dear Brothers, A review of the topics addressed on the first day of this conference by the distinguished speakers shows that they touched upon important issues and gave a future vision of housing in the Kingdom, and how to benefit from the experiences of different countries in this area. Today will be an extension of those topics that are directly related to housing finance. In general, I find that the conference broadly covers all aspects of housing finance in the Kingdom. In conclusion, I thank the audience and the organizers of this conference, and wish you all success in your deliberations. 2  BIS Review 14/2007
Consequently, the need and the potential for mitigating the accumulation of systemic risk through regulation raises a number of questions with regard to the specific design of such regulation. Where do we start? How do we set priorities? Which principles should we abide by? The number of regulatory solutions that have been proposed are as numerous as the possible triggers of systemic crises. Often, individual solutions focus on one specific cause. In my opinion, there are so many possible causes of a systemic crisis that it is insufficient to focus on just one specific cause when drawing up possible regulatory solutions. It would be an illusion to think that the issue of systemic risk could be totally eliminated in the long-term with such an approach. Consequently, I believe it is important that the problem be approached in a systematic manner, and that comprehensible criteria for a list of measures that is likely to be effective be drawn up. Unless a roadmap is drawn up based on principles which guide us in the handling of the challenges we encounter in regulating systemic risk, there is a danger that decisions on the requisite measures will be made arbitrarily, that solutions lacking substance will be implemented or that nothing at all will be done. From the viewpoint of systemic stability, the result would be suboptimal. I will now talk about the criteria for assessing regulatory measures. Do the measures ensure market discipline?

Thomas J Jordan: Systemic risk and regulation – managing the challenges Speech by Mr Thomas J Jordan, Vice Chairman of the Governing Board of the Swiss National Bank, at the 5th Annual Meeting of the Swiss Finance Institute, Zurich, 3 November 2010. *  *  *  I would like to thank Dr. Claudia Strub, Till Ebner and Dr. Robert Bichsel for their valuable support in drafting this speech. Introduction The handling of systemic risk in financial systems is an immense challenge. First, because it is not always possible to pinpoint the precise sources of systemic risk due to complex interdependences in global financial markets. Second, because before the outbreak of a crisis it is almost impossible to identify which domino will be the first to fall and thereby bear the ultimate responsibility for causing the financial system suddenly to falter and even collapse. Finally, the impact of systemic risk can extend way beyond the system that is initially affected. When the financial system is close to collapse, the costs are enormous, as was clearly apparent in the latest financial and economic crisis. In my presentation today, I will talk to you about where we currently stand in our examination of the background to this latest crisis and how we can best address the diverse challenges in relation to systemic risk in the financial system.
If a situation arises whereby Norges Bank is not able to return the krone to its initial range without such consequences, the Bank will inform the government authorities that measures other than those available to the Bank are required. This may involve recommendations concerning fiscal measures that make it possible to return the krone exchange rate to its initial range and to stabilise it. In the event of pronounced and prolonged shifts in the economy, fiscal policy and wage determination must contribute to restoring balance in the economy. However, if fundamental and permanent changes have taken place in the framework conditions for the Norwegian economy, it may also be appropriate to change the guidelines for monetary policy. According to the Maastricht treaty, the main objective of the ECB is the maintenance of price stability. The ECB has defined price stability as inflation of 2% or lower. BIS Review 92/2000  4  Inflation in Norway cannot remain higher than inflation in the euro area year after year without any consequences for the exchange rate between the Norwegian krone and the euro. If price and cost inflation remains higher than the rate of increase aimed at by the ECB over a long period, the krone will depreciate against the euro sooner or later. Even if instruments are oriented with a view to stability in the krone exchange rate against the euro, cyclical differences will result in inflation differentials between Norway and euro area countries. Business cycles have been desynchronised over the last 15 years.

We have also experienced game situations in which one or more major operators were behind the krone exchange rate fluctuations and at the same time took speculative positions in the capital market in the expectation that Norges Bank would raise its key interest rate to defend the krone. If we focus too narrowly on the exchange rate when setting interest rates, we are liable to end up in game situations. Speculators have little to gain from such game situations if Norges Bank proceeds gradually and avoids abrupt shifts in the setting of interest rates. 5  BIS Review 92/2000  In practice, the interest rate is the only monetary policy instrument available to Norges Bank. The interest rate can influence the exchange rate directly through the differential between domestic and foreign interest rates, and indirectly through inflation expectations. Higher interest rates normally make krone positions more attractive. An increase in the interest rate will therefore result in an appreciation of the krone, and a lower interest rate will weaken the krone. However, this relationship presupposes that the market is confident that monetary policy provides the economy with a nominal anchor. In some situations, interest rate changes may have the opposite effect. A higher interest rate can weaken the krone if it contributes to a deflationary recession, and a lower interest rate can strengthen the krone if it contributes to preventing a deflationary recession.
As Hari Vittas, Alternate Executive Director for Malta’s constituency in the IMF aptly put it during a recent IMF Economic Forum, “The potential benefits of monetary integration may be large, but they are not automatic and can easily be wasted in the absence of good policies.”1 On balance, however, the benefits of participation in the euro area should more than outweigh the costs, such that over a sufficiently long time span the growth potential of an economy should be higher than it would have been outside the union. This expectation is supported by the results of recent research. An extensive study by Andrew K Rose of the University of California at Berkeley, for example, concludes that a currency union results in approximately a doubling of trade. Within the euro zone, moreover, it is estimated that trade volumes have increased by 15 per cent, beyond what can be explained by growth and other factors. Recognizing such benefits of EMU, many credit rating agencies foresee an upgrade in the ratings of those new Member States that are among the first to adopt the euro,2 although they generally emphasize that what matters is establishing a track record with respect to the implementation of reforms, especially fiscal consolidation.3  The broader macroeconomic challenge These observations notwithstanding, premature participation in a currency union is nevertheless associated with some potential pitfalls. These result from the loss of monetary and exchange rate policy as a tool for stabilisation purposes.

Furthermore, the CET is foregone in the case of all those non-EU countries which benefit from preferential access of the EU market, especially in the case of raw materials. This means that imports can be purchased from alternative sources, possibly from the enlarged EU market, or from non-EU countries which enjoy access to the EU market. Finally, the CET is also suspended when the imported raw material is re-exported outside the EU as a finished 19 product . So while the costs of production for some sectors of the economy may increase, and this in turn could have implications for inflation, at least in the short-run, this impact is likely to be minimal in practice. As a member Malta would also assume the EU’s commitments under the non-reciprocal agreements with developing countries. Whereas this could have negative implications for specific sectors, for the economy as a whole these effects are unlikely to be significant or enduring. This is because the proportion of imports from these countries in Malta’s import bill is marginal. Second, the Cotonou Agreement, which is the EU’s most relevant agreement in this regard, will expire in 2008, by which 20 time it is expected to be superseded by Economic Partnership Agreements based on reciprocity. If anything, therefore, the EU network of reciprocal trade agreements will increase. Within a few years importers and consumers should thus have more and not less access to duty-free imports, and any short-run increases in inflation should be more than neutralised.
The Executive Board decided at its meeting in April that the time was not yet ripe for this. But nor could we exclude the possibility that this might be possible further ahead, if the economic situation were to deteriorate more than we were assuming. During our discussion of this type of unconventional measure at our most recent monetary policy meeting I pointed out that the Riksbank is already implementing extensive measures through its lending to the banks. These measures will continue as long as is necessary. I also considered that it was not necessarily the case that we would need to take the same measures as, for instance, the Federal Reserve and the Bank of England. There are several different reasons for this. The companies in these countries are more dependent on market funding, while in Sweden the banks are the most important source of funding. I also said that we had not yet seen the full effect of the radical interest rate cuts we had made, which contributes to an even greater uncertainty in the question of whether further stimulation through unconventional measures is needed. When we meet in July we will present our forecasts for the economy and the repo rate over the coming three years and discuss once again whether there is a need to carry out other measures than those we have already carried out. We must always maintain the best possible level of preparedness to deal with various situations that might arise.

We know from experience that the inflation outlook can change rapidly. During the late spring and summer of last year we were concerned over inflation being too high, even though this was mainly due to rising oil and food prices. Rising unit labour costs were also taken into consideration. Fears that high inflation expectations would become entrenched also formed part of the picture. We then raised the interest rate despite beginning to see signs of weaker economic activity in the future. The assessment was that this was necessary to attain the inflation target a couple of years ahead. When developments turned out differently, we had to quickly change our course. We are of course always prepared for situations like that. We are ready to act as quickly and as forcefully as is necessary, both to attain the inflation target and to carry out our financial stability responsibilities. Unconventional measures There have been many discussions on what the Riksbank could be expected to do if developments turn out weaker than we are now assuming. And our toolbox is not empty because the repo rate is so close to its lower limit. Put simply, the way the repo rate tool works is that the banks either borrow or buy Riksbank Certificates with a maturity of one week from the Riksbank at the price of the repo rate. In addition, there are what is known as daily fine-tuning operations between the Riksbank and the banks at an interest rate very close to the repo rate.
It is the reason I went into public policy. The Bank is not the only body seeking to engage the wider public when discussing economic issues. The Royal Society for the Arts (RSA) has recently proposed setting up Citizen Economics Councils and Reference Panels designed to engage the public in economic policy debates. 50  I strongly support initiatives  of this type. The Bank’s own recent initiatives are seeking to achieve many of the same objectives. (c) Education When it comes to improving education on economics and finance, the public’s views could scarcely be clearer. In surveys, around 80% of UK citizens say they think economics should form a part of the educational curriculum. 51  In the US, it is a remarkable 97%. 52  My own work in schools, and recent research  by the Bank, has confirmed encouragingly high levels of interest and enthusiasm among children and young adults in better understanding the economy. This is a wonderful endowment. If you look more closely at the statistics, it is easy to see why both adults and children feel so strongly. It is also easy to see why we might, unless we are careful, squander that endowment of public enthusiasm about understanding the economy. The risk lies, to some significant degree, in the current structure of the educational system. In many subjects that have an important bearing on everyday decision-making, the educational system ensures broad capture during the early years. The aim is to give almost everyone the everyday essentials of the subject.

Gillian added a crucial qualifier: improved understanding of the public by those in finance was every bit as important as improved public understanding of finance. I think this is bang on and not just in the field of finance. Listening is every bit as important as talking when it comes to public policy. The most important reason for this is the most obvious – as policymakers, we stand to learn something. Indeed, because the voices of non-experts are rarely heard and are likely to convey different information than that available from experts, we potentially stand to learn a lot. This is not just conjecture. Statistical studies, drawn from a great many different environments and involving very different decisions, show it to be the case. Expert opinion is an essential starting point for good decision-making. But only a starting point. The judgements of experts can be improved materially by drawing on the views of non-experts. 46  Doing so is the key to what Philip Tetlock calls “super-forecasting.”  More fundamentally, non-experts are us. By numbers, if not salaries, they represent almost all of society. Non-experts do most of the spending and saving in the economy, shaping its growth. It is their wage and inflation expectations that determine whether central banks meet their inflation targets. And it is their trust that needs to be nurtured, and recaptured, if policy institutions are to maintain their legitimacy. Yet extracting views on the economy from non-experts is not easy.