samchain/econo-pairs-v1 huggingface dataset:
This can be compared with the 1970s and 1980s, when inflation was approximately 8 per cent and growth was on average 2 per cent. Contributing to this positive development was the fact that  BIS Review 37/2002  1  there was good access to free resources in the economy after the crisis years at the beginning of the 1990s. An important part of the Riksbank’s monetary policy strategy is clarity and openness with regard to the bases for monetary policy decisions. The purpose of this is to create support for the price stability target and understanding of what governs the interest rate decisions among the general public. This is also the reason why we Executive Board members often travel round making speeches. Openness and clarity on our part can contribute to stabilising inflation expectations in society and reduce the risk of unnecessary tension on the financial markets. As monetary policy has an effect with some time lag, interest rate decisions are based on forecasts of price developments one to two years ahead. If the forecasts show a rate higher than the inflation target, the interest rate is raised, and vice versa. In other words, the instrumental rate is adjusted so that the total assessment of inflation 1-2 years ahead, taking into account the risk scenario, is in line with the target. The assessments are described in the Riksbank’s Inflation Reports, which are issued 4 times a year.

Christian Noyer: Publication of Bank of France’s Financial Stability Review “The future of financial regulation” Remarks by Mr Christian Noyer, Governor of the Bank of France, at the publication of Bank of France’s Financial Stability Review “The future of financial regulation”, London, 4 September 2009. *  *  *  It's a pleasure to welcome you here, in London, on the eve of a very important G20 Ministerial meeting and to introduce the latest issue of our Financial Stability Review. It is also a privilege to have such a distinguished panel for this introduction and I want to express my gratitude to all. The Review is about the Future of Financial Regulation. Our hope was to help and contribute to the international discussions and the publication of this Review could not be timelier. The financial crisis has taught us some very hard lessons. While there are many causes to the crisis, including, maybe, macro economic policies, it is also clear that it forces us to reconsider the way we regulate and supervise the financial system. That is what we are doing, and this will take a significant part in tomorrow's discussions between G20 Ministers and Central Bank Governors. At stake is the scope of financial regulation, its nature, and its objectives. The scope of financial regulation We entered this crisis with many unregulated entities playing a major role in the financial system.
Regarding the size of financial institutions, let me go directly to the “too big to fail” institutions. Their contribution to systemic risk is more than proportional to their size. It is not possible for such institutions to be sold, merged or closed down without jeopardizing the economy as a whole. Standard bankruptcy legislation, providing protection from creditors, simply does not work. Given the systemic importance of such institutions, access to creditors is essential. A special resolution framework should be designed in such a way that market participants be confident that it can be activated without generating unacceptable risks for the economy. Finally, the cross-border aspect of financial activity poses some particular challenges arising from the fact that legislation and bankruptcy regimes differ across countries. Moreover, national regulators have, above all, the responsibility to ensure financial stability in their own country. The correct answer here lies with oversight mechanisms being adapted in order to be able to deal with the challenges of globalization, rather than attempting to restrict the functioning of the financial system in order to reflect the limitations in international cooperation. IV. The foreseeable future of the European banking systems: the banking union  Let me quote Tommaso Padoa-Schioppa once more. He wrote that the old way of thinking along the Westphalian concept of nation-states is no longer suited for policy action when dealing with problems that are transnational, such as the financial crisis. For instance, Europe as a whole does not have large external deficits, or a high indebtedness of the household sector.

The prices we can get for the goods we sell have not kept up with the prices we have to pay  Page 4  for the goods we buy. This has made us poorer as a country. The fall in our national real income has manifested itself in a rise in the prices we have to pay for the things we buy as consumers. The developments in energy prices have been particularly stark. The impact of that is very clear in the data so forgive me for spending a bit of time setting that out too. Chart 1: CPI inflation projection with direct energy contribution Based on market interest rate expectations  The purple bars on this chart show that a big part of the rise in consumer price inflation has been caused directly by energy prices. But the chart also shows the almost mechanical flipside of that. In the MPC’s central projection, inflation falls quite sharply over 2023 as last year’s large increases in energy prices drop out of the annual calculation. Page 5  Chart 2a: Typical household energy bill Smaller of Ofgem energy price cap and Energy Price Guarantee  This next chart illustrates what is going on. The blue line on the left-hand chart shows the evolution of the ‘typical’ household energy bill. Nobody actually pays the typical energy price bill, of course, but it has become an industry standard as a measure of what households pay on average.
Barbro Wickman-Parak: New international regulations for banks – a welcome reform Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at a meeting with Tjänstemännens Centralorganisation (TCO), Stockholm, 26 November 2010. *  *  *  Over the past three to four years the world has undergone the largest financial crisis since the Great Depression of the 1930s. The scope of the crisis and its catastrophic economic consequences quickly led to the realisation that something had to be done to avoid this happening again. As soon as the worst phase of the financial crisis was over, extensive work began on correcting the inadequacies in the regulatory systems that had come to light. The reform work is conducted in many forums at both national and international levels. And not least at EU level. But today I shall focus on the reform work in the Basel Committee on Banking Supervision, in which both the Riksbank and Finansinspektionen (the Financial Supervisory Authority) participate. This Committee is the international body that has established frameworks for bank regulation since 1974. In line with internationalisation that has taken place in recent decades, banks in different countries have become increasingly dependent on one another. This also applies to our Swedish banks, which to a great extent fund themselves on the international markets. Both Swedish banks and Sweden in general therefore benefit from banks around the world becoming more resilient.

But the Swedish banks had also become involved in activities that proved to be risky. I refer to their lending in the Baltic countries. These exposures also affected confidence in Swedish banks during the crisis. As we are affected very directly by disruptions on the international financial markets, it is in our interests to have functioning global regulation. We therefore welcome the proposals made by the Basel Committee. Hopefully, the new regulations will contribute to preventing new crises in the financial system, or will at least alleviate their dramatic effects. More capital of better quality provides larger buffers I shall begin by describing the new requirements regarding the banks’ capital. Because this is what a large part of the changes agreed by the Basel Committee concern. One can say that this capital is the money at the bottom of the treasure chest that the financial supervisory authorities require the banks to always hold. The banks have long been obliged to observe special minimum levels regarding the size of their capital. There are two main reasons for this. The first is that the capital is to reduce the costs to the state if the bank fails. Even though Sweden escaped relatively lightly on this occasion, we know from experience that such costs can be very extensive. For instance, the state may be forced to take over bad assets or have to pay money to depositors under the Swedish deposit guarantee scheme.
Now that the MPR is at 5%, it is approaching the range that has historically been thought of as neutral. Still, a high degree of uncertainty surrounds the true neutral interest rate. There are many definitions and methodologies to determine what would be the interest rate consistent with inflation being at the target and the economy operating at full capacity. Although this is not the moment to get involved in a lengthy discussion over the level of the neutral rate, I think some observations are in order. On the one hand, the neutral rate is not a fixed number. It changes with the state of the economy and can even fluctuate in the short run. On the other hand, in an open economy the neutral interest rate depends not only on domestic factors such as the long-term growth rate, but also on external variables. The world is going through a period of low interest rates and in the short term the neutral interest rate is likely to be somewhat below previous estimates (figure 16). BIS central bankers’ speeches  5  I also want to point out that the objective of monetary policy conduct is not to attain a neutral rate, whatever its level is. The monetary policy interest rate (MPR) fluctuates around this neutral rate in order for the monetary impulse to be consistent with achieving the target. Accordingly, just as there are periods during which the MPR is below the neutral level, there are times when it is above.

Copper prices and terms of trade began to decline. Today the picture is quite different: the dollar is weaker than ever and the copper price has remained very high, and is forecast to stay near its present levels for some time (figure 8). Another issue regarding exchange rate’s discussion has to do with the effects of capital flows. Several emerging economies have seen their capital inflows increasing, which has added pressure on their currencies. It is worth noting, however, that this phenomenon is not generalized, because current-account deficits have remained fairly bounded. In the overall group of emerging economies, capital inflows are today close to where they were during mid1990s, and certainly below the levels of 2006–2008. However, outflows from these economies largely exceed those of the 1990s, resulting in a near-zero net balance (figure 9). Chile is not so different, with even negative net balances (figure 10). Besides, the structural conditions of our economy and the policy framework are not those of the 1990s. For instance, interest rates paid on indexed Central Bank instruments are now less than half (figure 11). The opportunity of high short-term returns, that are normally associated with massive flows of this kind of capital, is probably not so obvious anymore in our economy. The possibility that increased capital flows may stimulate unhealthy growth in lending is another cause for concern. The data do not show for the moment that credit is growing fast.
Turning to the identification of the problems posed by part of our banking system, the government and Parliament reacted promptly. As early as 2009 the FROB (Fund for the Orderly Restructuring of the Banking Sector) legislation was approved, allowing the start of the restructuring of an extensive number of savings banks. And, whenever necessary, the government and Parliament have not hesitated to adopt further legislation so as to speed through and conclude this process, as evidenced by the approval of the Savings Bank Law in 2010 and, more recently, the passing of the Royal Decree-Law on the capitalisation of our credit institutions. The fact these regulations have been approved with an acceptable degree of Parliamentary consensus is most positive. In this case, as in that of cutting the deficit, it is expected that savings bank restructuring will be completed how and when the Parliament has decreed. Despite affecting a limited part of the banking system, the restructuring has generated such noise that the doubts as to whether the legislator should have adopted more drastic solutions are understandable. But I  BIS central bankers’ speeches  1  should say that some of the alternatives, such as injecting capital into the savings banks without making this conditional upon their restructuring and resizing, might have entailed more disadvantages than advantages, compared with the option actually chosen by the legislator.

Unlike other countries which found that their major banks had collapsed practically from one day to the next, the problem of the Spanish banking system was confined to a part of the savings bank sector. And I stress “a part”, since some of our savings banks are perfectly sound when set against the commercial banks. However, during the upturn some savings banks had pursued a model centred on high credit growth with high exposure to the real estate development and construction sector. With the arrival of the crisis, the shortcomings of this model became clearly evident. In the new setting, with a rapid deterioration in asset quality, with margins diminishing and with business volume expectations much lower than in the past, it could be seen that it was essential to restructure balance sheets and reduce the sector’s capacity, which had expanded in prior years in parallel with the buoyancy of credit. Patently, too, these institutions were excessively fragmented, which increased their difficulties in raising finance on the wholesale funding markets. Finally, the crisis also brought to light the obstacles arising from the corporate structure of savings banks, which prevented them from raising high-quality capital on the markets and which, frequently, did not provide sufficiently for best-practice governance arrangements. Had capital been injected into the savings banks without making such aid conditional upon what is inevitably a longer, riskier and more complex process of restructuring these institutions, that would have been of no use in resolving our main problems.
These products should offer, over time, the higher returns provided by equity, and they can be less liquid, while also featuring a form of capital protection. However it remains crucial that product innovation continues to be carried out carefully, without undermining the protection of policyholders. In this respect, specific attention should be paid to the pan-European personal pension product (PEPP). The PEPP is an avenue to develop pan-European products and responds to the need for insurers to break away from the dual capital-liquidity guarantee. Yet it also raises several concerns: information on the risks incurred under the different types of guarantee may not be clear enough to consumers; in addition, the guarantee may ultimately depend on the financial company that is offering the PEPP, as there is a difference for instance between insurance companies abiding by Solvency II and asset managers, which have lower capital requirements. This brings me to the issue of regulation. Here too, insurers have to play their part, by actively contributing to the review of the Solvency II Directive’s new regulatory framework. In many respects, Solvency II represents a very significant step forward for the insurance sector. But this does not mean that it’s perfect: we must analyse its impacts closely, particularly its effects on investment behaviour and the financing of the economy, in order to propose the adjustments that prove necessary.

(2011), “The Effects of the Great Recession on Central Bank Doctrine and Practice”, speech delivered at the Federal Reserve Bank of Boston 56th Economic Conference, Boston, Massachusetts, October 18th. 3  For the case of Chile, see Cowan and De Gregorio (2007), and for a review for a broad set of countries, see Magud et al. (2011). 4  For further discussion on exchange rate intervention in emerging market economies see De Gregorio (2010). BIS central bankers’ speeches  5  Blinder, A., and R. Reis (2005), “Understanding the Greenspan Standard”, in The Greenspan Era: Lessons for the Future, Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming. Cowan, K. and J. De Gregorio (2007), “International Borrowing, Capital Controls and the Exchange Rate: Lessons from Chile”, in S. Edwards (ed. ), Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, NBER and The University of Chicago Press. De Gregorio, J. (2010), “Monetary Policy and Financial Stability: An Emerging Markets Perspective”, International Finance, 13:1, pp. 141–156. De Gregorio, J. (2011), “Price and Financial Stability in Modern Central Banking”, speech delivered at LACEA-LAMES Conference, November, Santiago, Chile. Magud, N., C. Reinhart and K. Rogoff (2011), “Capital Controls: Myth and Reality – A Portfolio Balance Approach”, NBER Working Paper N°16805. Ostry, J., A. Ghosh, K. Habermeier, M. Chamon, M. Qureshi and D. Reinhardt (2010), “Capital Inflows: The Role of Controls”, IMF Staff Position Note, SPN/10/04. Tinbergen, J. (1952), On the Theory of Economic Policy, Amsterdam: North-Holland. 6  BIS central bankers’ speeches
One example is Kuwait, which for a period chose large strategic investments instead of diversifying more evenly. To our knowledge, the results were not positive. Another example is the oil fund in the Canadian state of Alberta, where investments up to the end of the 1990s were partly influenced by political considerations and a large share of the capital was invested in local businesses. This resulted in far lower returns than in other comparable Canadian funds. The best pension funds stand out as highly professional investors. Norges Bank has had close contact with the largest funds in the Netherlands and Canada for many years, and we have learned a great deal from them about our own fund management. These funds have broadly diversified portfolios. As an example, I would like to draw your attention to the composition of investment portfolios in the largest European fund, ABP. ABP is the pension fund for public sector employees in the Netherlands. Forty-four per cent of the fund is invested in fixed-income instruments. Investments with more variable returns account for 56 per cent of the portfolio. Fixed income investments are intended to contribute to a relatively stable return on the fund as a whole, while the rest of the portfolio is to achieve high expected returns. To minimise risk, investments are spread across many countries and companies. Investments with variable returns also include what are usually known as “alternative investments” i.e. private equity, real estate, commodities and investment in hedge funds and the like.

When that time comes, having reserves to draw on will be a welcome option. France, Ireland, Australia and New Zealand have all established government reserve funds in recent years in preparation for the age wave 15-20 years ahead. Sweden has restructured its four AP funds. Like the Petroleum Fund and the new State Pension Fund, these funds are not pension funds in the usual sense. Annual allocations to the funds are not dependent on growth in government pension obligations in the period. However, one of the main objectives of these funds is to cover some of the increased pension payments in the future. Allocations to most funds are set at around 1-2 per cent of national income every year until the funds’ capital is to be used from 2020 or 2025. One drawback of some of these funds’ structures, such as the French fund, is that they are not financed through increased government saving, but in reality by borrowing. Fund-based pensions The Norwegian National Insurance Scheme is a pay-as-you-go system, where annual payments are financed by current tax revenues. The pension scheme for public employees is not fund-based either. An international comparison shows that pension obligations in Norway are fund-based to a very limited extent. Some other countries base their pension obligations on funds to a far greater extent. This applies for example to Canada, the Netherlands, the UK and the US.
From a historical perspective, capital flows today are currently not so abundant and no imbalances of income and expenditure are seen that might reveal substantial misalignments. After the recessive period of 2009, slack remains in our economies, and tensions in the near future cannot be ruled out. It is therefore advisable to begin exploring the proper policy responses. In such circumstances, the first line of defense must be an active monetary and fiscal management, within a context of exchange rate flexibility and stable inflationary perspectives. This combination proved very favorable to maintain macroeconomic and financial stability in 2008-2009, and has the necessary elements to also succeed in dealing with a potential period of strong capital inflows and appreciating exchange rate pressures. Additional measures, such as a foreign exchange intervention or controls on capital inflows, cannot be a priori ruled out, and will depend on each economy’s specific circumstances and characteristics. However, in implementing them it is essential that they do not become the cause of macroeconomic imbalances by encouraging massive capital inflows. In fact, distortions often do not originate in excessive appetite by foreigners for domestic assets, but in disturbances resulting from the application of inconsistent policies. On the one hand, exceptional measures cannot be used as a substitute for, say, a more austere fiscal policy or a strengthening of prudential regulation and supervision of banking and non-banking entities.

I was delighted to be asked to chair the CPMI Task Force on Cross-Border Payments which led the Stage 2 work. To help to find solutions to this long-standing problem our assessment involved reviewing previous work undertaken, industry outreach and new analysis to get beneath the skin of what is really happening. It culminated in a 2 3  https://databank.worldbank.org/reports.aspx?source=2&series=BX.TRF.PWKR.DT.GD.ZS&country= See Annex 1 & https://www.fsb.org/2020/04/enhancing-cross-border-payments-stage-1-report-to-the-g20/ 3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  CPMI report published in July 2020, outlining a set of 19 ‘building blocks’ necessary to enhance cross-border payments.4  Stage 3, just published by the FSB, is a roadmap setting out a high level plan on how to take forward the building blocks. I will say more about the roadmap later, but first I want to say more about the ingredients for success – the building blocks. An overview of the building blocks and focus areas  The building blocks took a broad view: rather than addressing an individual area such as payment systems or compliance or regulation, Stage 2 sought to bring together these issues allowing us to really start to address the challenge in a holistic way. The 19 building blocks were grouped into five focus areas, which I will highlight now.5  The building blocks in Focus Area A create a commitment to a joint public and private sector vision to enhance cross-border payments by agreeing a common set of objectives.