samchain/econo-pairs-v1 huggingface dataset:
Confidence in the commitment to price stability was gradually built up after parliament in 1830 decided to base the currency on the value of silver. Another important factor was probably the development of the credit system in the 19th century. Banks were established and financial know-how grew after interest controls had been abolished. This made it possible to finance industrial investment and exploit all the new inventions. An increasingly stable form of government no doubt also contributed to the transformation. The constitution was reformed by degrees and served to guarantee stability. Business enterprise benefited from the abolition of trade guilds, the freedom to trade and the introduction of joint stock companies. Another import measure was, of course, the introduction of compulsory education, which led in time to increased human capital. This is not intended to be a complete account of all the factors behind Sweden’s transformation from a poor country into a rapidly growing industrial nation. My point is that, if a number of institutional changes had not been made, the outcome would have been less favourable. These changes provided a stable framework for the process of industrialisation and ensured that our country could benefit from the ongoing globalisation. Realignment of Sweden’s economic policy It may be asked whether the good growth at present can also be attributed to a realignment of Swedish economic policy. There are no doubt those who consider the political decision-makers could have gone further in this direction, just as there are others who think they have gone too far.

To some extent there have been a number of signs of more subdued growth in the rest of the world, above all in the United States. Moreover, new statistics suggest that Swedish households are not quite as optimistic as before. Somewhat weaker car sales may be an indication of more subdued demand for durables. Asset prices also seem to be in a calmer phase. All of this may point to some slowdown in the development of demand. But is it enough? It is still a matter of forward indicators and we have not yet seen any clear outcome in the statistics. Neither does there seem to be any notable fall-off in labour demand. The number of new job vacancies continues to be comparatively high, at least to date. In the absence of a sufficient slowdown in demand, an adjustment to the long-term growth path will need to be achieved with interest rate increases by the Riksbank. It seems to me that it is deliberations of this type that the Riksbank will face at the coming monetary policy meetings. Consideration will also have to be paid, of course, to the inflation risks associated with the high price of oil and the high dollar rate. These were some of the risks we highlighted in the October Inflation Report. This type of discussion about the direction of stabilisation policy basically deals with how, after some favourable years in the late 1990s, we should act so that growth and employment in the Swedish economy can be sustainably high and stable.
So they wanted to keep on consuming and spending beyond the levels that could be supported by the growth of their economies or income. Many people in the developed world thought, rather mistakenly, sovereign debt crisis should be the kind of mishaps that can only occur in the developing economies. At the same time, the capital market seemed to be willing to support this belief as investors were happily buying government bonds of the developed countries at very low interest rates. With what happened in the US and Europe in the last five years, we have come to realise that prosperity and good life have to be earned, through hard work and productivity growth, just like what their parents, grandparents and / great grandparents in the western world great grandparents in the western world did in the past. There is now little doubt that prosperity and good life built on the basis of rising indebtedness is unsustainable and is bound to collapse some time, just like sand castles. Trap of excessive indebtedness: Easy to get into and hard to get out 12. There is another pertinent question on why so many countries do not seem to be able or willing to get out of the trap of high indebtedness or excessive leverage. For one, it is far too tempting to spend, consume now and worry about payment later. That explains why, in addition to public debts, household debts have risen to very high levels all over the world.

However, in over two decades’ time, the ratio will deteriorate significantly to 2:1, which means that there will only be 2 persons in the age group of 15–64 supporting one elderly person. The Government has already made it clear that, while we are having budget surpluses, structural budget deficits will occur within a decade mainly due to changing demographic structure. 20. Ladies and Gentlemen, I have just made a long speech and now I would like to leave you with several key takeaways. First, it is very easy for governments to fall into the trap of going down the path of fiscal unsustainability as a result of the collective irresponsibility syndrome as well as population aging. Second, it is very, very hard and immensely painful to try to get out of a government debt crisis. Third, more likely than not, it is the next generation and the next and the next that will have to shoulder the costs and to suffer the pains for excessive spending and stock piling of debts by the current generation. If we don’t want to mortgage the future of our children and grandchildren, try not to leave with them a pile of debts as in the case of many developed countries. How can we do this : we must take great care in not demanding or condoning policies that would undermine the long-established fiscal prudence and discipline of our Government.
This is a difficult question that requires more detailed analysis, but it is unlikely that it will be easy to reach a general policy conclusion. I am convinced, on the other hand, that many central banks will review their macroeconomic models and more precisely define the role of asset prices in the transmission mechanism. I do not believe, however, that we should exaggerate the ability of monetary policy to prevent crises from arising. Even if excessively expansionary monetary policy can contribute to the build-up of a bubble, it is less clear to what extent monetary policy can entirely prevent this from happening. It is probable that it would require fairly substantial interest rate increases, something that may not be received sympathetically when the reasons for the increases are not crystal clear. But more moderate interest rate increases could, of course, contribute somewhat. If nothing else, it  14  BIS Review 41/2009  would provide a signal from the central bank that it envisages certain development problems. I also believe that risk scenarios with a longer forecast horizon may be an option for clarifying what the risks may be in the longer term. It is conceivable that the price of housing or some other asset may be driven by factors that are difficult to explain or which may be assumed to give rise to inefficient risk allocation and large fluctuations in economic activity and inflation.

The Riksbank has also cut the repo rate to the lowest level it has been at since we introduced an inflation target. How monetary policy can be conducted under the prevailing conditions is a question that I will discuss in more detail later. The financial crisis has of course changed these conditions a great deal. But before we get into that, I would like to say a few words about how monetary policy is supposed to work under normal conditions. How monetary policy works normally Normally, monetary policy aims to keep inflation at a low and stable level and to stabilise the real economy. To achieve this, the Riksbank controls the shortest market rate, that is the overnight rate which is the interest rate on loans between the banks from one day to the next. The overnight rate in turn affects the interest rates charged to the general public, and thereby activity and prices in the economy. We have a system in which we influence the overnight rate by determining the conditions for the banks borrowing and lending with the Riksbank so that it is close to our policy rate, the so-called repo rate. The repo rate expresses the level at which the Riksbank wants the overnight rate to lie. The way in which the monetary policy conducted has an impact on, for example, the banks' lending rates, the development of the real economy and inflation is usually called, somewhat loosely, the transmission mechanism.
According to the latest assessments of the Executive Board, the overall outlook suggests that it would be appropriate to raise the interest rate gradually to about 5 per cent in the course of this year and to a somewhat higher level in the period to summer 2008. At its meeting on 25 April, Norges Bank’s Executive Board decided to leave the key rate unchanged at 4.00 per cent. The Executive Board considered the alternative of increasing the interest rate at that meeting. There is obviously considerable uncertainty surrounding the projections. The projections are based on our assessment of today’s economic situation, the outlook for developments in other countries, the functioning of the economy and the conditions necessary for reaching the inflation target. The chart  BIS Review 47/2007  11  shows that we must be prepared for developments in inflation and output that may differ from the central path. This may also imply that the interest rate may be lower or higher than our current projections. Allow me to summarise: The fall in prices for imported goods and services and the increase in export prices have provided the Norwegian economy with an appreciable income boost. The mainland economy has expanded rapidly in recent years. At the same time, inflation has remained low. Increased efficiency and an ample supply of labour have made a contribution to these developments. There are now limited idle resources. Monetary policy increasingly reflects that many Norwegian enterprises are facing capacity constraints and that inflation will pick up.

Interest rates will continue to be raised gradually ahead so that we can assess the effects of interest rate changes and other new information about economic developments. Thank you for the opportunity to present these assessments before answering questions. 12  BIS Review 47/2007
Spain chose to spend a large portion of the windfalls on luxury and war. More recently the expression “Dutch disease” reminds us that this issue is still relevant. It can certainly be argued that easy money is bad for a country. It is tempting to live comfortably on this income – which actually is not income but drawing on wealth – while it lasts, and forget about and be less concerned about safeguarding other revenue sources. The challenges with large income from natural resources and its negative impact on economic growth have also been pointed out by Jeffrey Sachs and Andrew Warren. 2  1  David Landes (1998): The Wealth and Poverty of Nations, W.W. Norton & Company, Inc., N.Y.  2  See e.g. J.D. Sachs and A.M. Warner (2001): ”The curse of natural resources”, European Economic Review 45, pp. 827 – 838. BIS Review 106/2006  1  Success in managing our petroleum wealth may be particularly dependent on four key factors. First, from a long-term perspective, oil and gas production will take place during a limited time period. When oil is extracted and sold, petroleum wealth is transformed into financial wealth. This wealth belongs not only to our generation, but also to future generations. We must therefore manage the wealth as an asset. Second, the size of the cash flow from petroleum activities varies considerably from year to year. If it were to be spent as it accrues, this would lead to strong cyclical fluctuations in the Norwegian economy.

The household debt burden (household debt as a percentage of disposable income) has increased to a historically high level and is expected to rise further. However, the household interest burden (interest expenses after tax as a percentage of disposable income plus interest expenses) is still low as a result of the low interest rate level. The interest burden is expected to increase to fairly high levels in pace with a normalisation of the interest rate. Still, on the whole, households’ financial position is strong. The rise in the policy rate so far has not been fully reflected in banks’ lending rates. Intensified competition, especially for mortgages, has dampened increases. Banks’ interest margin has declined during the last decade. Falling interest margins have, however, partly been compensated by high lending growth, and banks have so far succeeded in maintaining good results. Pre-tax profits as a percentage of total assets have been solid. Norwegian banks are solid. Due to high growth in lending, capital adequacy ratios for banks as a whole declined slightly in 2005. Nevertheless, capital adequacy ratios are still high. Under Basel II, capital requirements for credit risk are to be calculated using either the standardised approach or more risk-sensitive internal ratings based (IRB) approaches. The five largest Norwegian banks have applied to Kredittilsynet to use the Foundation Internal Ratings Based (FIBR) approach for credit risk. Under Basel II, the required level of capital for banks in Norway will be reduced. The main reason is that mortgages constitute a substantial part of banks’ total assets.
Growth potential and opportunities Over the last three years, the financial advisory industry saw total premiums transacted increase by an average annual growth of 21%. While this is from a low base, the industry is on a sustained growth trajectory, which suggests that financial advisers are adding value and successfully distinguishing themselves from alternative channels for the distribution of insurance offerings. We are pleased to see a further three new financial advisers added to the industry this year. The industry has only begun to scrape the surface in harnessing the potential that exists for financial advisers to make a substantial contribution in helping Malaysian households improve their financial management and prepare for income shocks. This potential is striking. Every year, more than two million life and family takaful policies are sold, 69% of this by tied agents. More than 40% of the Malaysian population still do not have any form of insurance, and a large proportion of those who do are likely to be significantly under-insured. This is supported by a recent study commissioned by Bank Negara Malaysia which found that 79% of more than 1,000 respondents surveyed did not have enough financial buffers to sustain living expenses beyond 3 months. Malaysian of retirement age and older are particularly vulnerable. Based on statistics from the Employees Provident Fund in 2011, more than 70 percent of contributors who were 54 years old at the time had savings of only RM50,000 or less accumulated for retirement. Only 30% of these contributors were still working.

One step in this direction is to harness the ample immovable property of the government which presently may not be rendering an adequate return. It appears that the setting up of special purpose vehicles may be addressing in part this issue. Perhaps, however, we should go a step further by considering the establishment of a development bank which would utilise various assets of government that are presently underutilised as well as other sources of funding, on similar lines that exist in many EU countries, particularly Germany, where development banks at the regional level undertake very successfully a role in promoting the economy and assisting the government in social and environmental projects. Let me turn now to the domestic banking system. On taking on my responsibilities as Governor of the Central Bank of Malta, I actively involved myself in financial stability issues given my concern with financial markets overseas that were characterised by volatile trading conditions and the contagion effects of the sovereign debt crisis. There is no doubt that the impact of the sovereign debt crisis highlights the importance of ensuring a stable domestic financial system. In fact the case of Ireland shows us that imprudent bank policies can have devastating effects on the economy. In contrast, the domestic banking system played a crucial role in preventing a more severe downturn in economic activity after 2008, and in averting a sharper deterioration in public finances, because of prudent behaviour on the part of the banks in both asset and liability management.
All empirical studies confirm that much can be gained by embracing good governance and it is an essential component of crisis prevention efforts. Good governance is equally vital in both the public sector and the corporate world, and its merits are relevant in all countries. Recently, corporate governance issues have been prominent on the world economic agenda as financial markets have been recovering from scandals that came to the fore following a period of excesses in equity markets. In order to increase confidence in the markets, it is imperative that the corporate world adhere to the principles of good governance. Good governance in the public sector is also an essential tool for strengthening institutional capacity, which is fundamental  BIS Review 42/2003  1  for economic and social development. The Fund has an important role to play in this field and we welcome the increased emphasis it has given to the issue of governance. Transparency and International Standards With the world economy having suffered a confidence crisis, it is important to continue to promote greater transparency and accountability. Various studies have demonstrated that transparency and adherence to international standards lead to easier market access and lower borrowing costs. There is much to gain by applying these simple principles. It is also important to continue developing international standards and codes that enhance transparency and facilitate comparison between countries and regions.

However, the multilateral route is a better channel for delivering the dynamic benefits of increased global economic integration. Bilateral agreements can fragment and complicate multilateral negotiations such as the present WTO round. Moreover, small and underdeveloped economies are more likely to be left out and their ability to participate in the global economy is therefore disadvantaged. We encourage the Fund to continue to use surveillance in promoting open world trade. 2  BIS Review 42/2003  Concluding remarks Ladies and gentlemen, improving the world economy is a task that demands the participation of every nation. We must press forward with structural reforms, promoting good governance, increasing transparency, and harmonizing standards. This task must also include efforts to integrate the lowincome countries into the global economy. The current circumstances provide good reasons for addressing these issues. The International Monetary Fund has been at the center of world economic cooperation since its establishment. The Fund should continue to play a crucial role in strengthening the areas I have emphasized through its surveillance and its lending activities. BIS Review 42/2003  3
1  William C Dudley, 2011: “Securing the Recovery and Building for the Future.” Remarks at United States Military Academy at West Point, New York, November 17. 2  Based on the CoreLogic index. BIS central bankers’ speeches  1  Home construction collapsed with new single family starts falling from a peak rate of 1.75 million homes per year to a low of 360,000 in early 2009. After a very slight pick-up, they have been bumping along at about a 425,000 annual rate for over a year. Although the number of mortgages becoming delinquent is off its peak, it remains very elevated and increased in the third quarter of 2011.3 According to the Mortgage Bankers Association of America, at the end of that quarter there were roughly 1.5 million first lien mortgages 90 or more days past due, and 2 million first lien mortgages in some stage of foreclosure. Over time, without an improvement in housing and the labor market, more loans will become seriously delinquent. Moreover, absent more aggressive efforts to find economically efficient alternatives to foreclosure – loans already seriously delinquent and in foreclosure will become real estate owned by the lender, or REO. My staff estimate that the flow of properties into lender REO in 2012 and 2013 could be as high as 1.8 million per year, up from around 1.1 million in 2011 and around 600,000 in 2010. The overhang of properties in the foreclosure/REO pipeline continues to exert downward pressure on house prices and housing activity.

The next steps will be determined more by the newest indicators of economic developments and prospects than they have been in the recent past. At its next meeting, the Monetary Policy Committee will probably assess whether and how the Icesave referendum results and the newly published capital account liberalisation strategy will affect monetary policy in the near future. The strategy divides liberalisation into two main phases, with Phase I dedicated to unwinding offshore króna positions by allowing owners to exit through auctions or by investing in the Icelandic economy. Only when these measures have generated acceptable results can controls on residents’ capital outflows be lifted. If conditions are right, the latter phase could proceed relatively quickly, but if not, it will be executed more gradually. It is difficult to say how long Phase I will take, as its duration will depend on a number of uncertainties, such as access to foreign credit markets. But it is important for near-term monetary policy that Phase I be designed to minimise potential negative effects on the exchange rate and the foreign exchange reserves, at least at first. It is only in Phase II that the interest rate differential with other countries begins to assume much greater importance as regards exchange rate developments. In the recent past, monetary policy has been an element in the larger economic policy formulated by the Icelandic authorities in co-operation with the International Monetary Fund. The key features of that policy have been exchange rate stability, fiscal sustainability, and financial system reconstruction.