samchain/econo-pairs-v1 huggingface dataset:
In 2010, Swedes withdrew around SEK 225 billion and in 2015 they withdrew only SEK 153 billion, which is also a clear decline. Figure 1. Cash in circulation measured as an annual average, excluding the banking sector’s holdings. Sources: The Riksbank and Statistics Sweden. There are also some statistics on the use of cash. We at the Riksbank make a survey every second year, in which households are questioned about their payment habits, which payment services they have access to, their attitudes and so on. The first such survey was made in 2010 and then almost 40 per cent said that they had made their most recent payment in cash. In September this year, the corresponding figure was only 15 per cent. This is a very marked change. Seen together, all indications point to a decline in the use of cash, and therefore a decline in demand for cash in society. Nevertheless, the interviews show that it is rarely a problem if one wants to make a payment in cash. A large majority stated that they never or very rarely have problems paying in cash, which is pleasing. If you want to see the survey responses, you can find them on our website: http://www.riksbank.se/en/Statistics/Payment-statistics/ A further clear sign of the decline in the significance of cash, and one that cannot be ignored, is that a number of bank branches are currently cashless. It is thus not possible to do any business with cash over the counter, although they may have ATMs or CDMs.

With firmly anchored inflation expectations, Norges Bank has also been able to give weight to economic stability when setting the key policy rate. Further light is being shed on the interaction between monetary policy and financial stability. Inflation targeting in Norway has become more flexible. At the same time, we cannot overburden monetary policy. In weighing the various considerations, we will in our  8  “Liquidity in the foreign exchange market for EUR/NOK”, Kathrine Lund, Norges Bank Economic Commentaries 3/2011. 8  BIS central bankers’ speeches  interest rate setting adhere to the primary objective of monetary policy – low and stable inflation. Thank you for your attention. BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches  BIS central bankers’ speeches  15  16  BIS central bankers’ speeches  BIS central bankers’ speeches  17  18  BIS central bankers’ speeches  BIS central bankers’ speeches  19  20  BIS central bankers’ speeches  BIS central bankers’ speeches  21  22  BIS central bankers’ speeches  BIS central bankers’ speeches  23  24  BIS central bankers’ speeches
Governor Boris Vujčić's speech at the FBF Executive Seminar Published: 4/7/2023  Governer Vujčić held a keynote speech at the FBF Executive Seminar "European finance in 2020s: new risks in a volatile world" organized by Florence School of Banking and Finance - The European University Institute on the 29 June 2023 Keynote speech at the Florence School of Banking and Finance Executive Seminar June 29, 2023  Introduction Over the last ten days that I have been on the road I spoke about CBDC to bankers, about the war in Croatia and economic lessons for the Ukraine, important, but heavy topic, and, of course, about monetary policy, interest rates and the balance sheet. So, I am happy to have been given a different topic for the last speech – financial stability. Thorsten told me to speak either about what the entry into the euro area means for the financial stability of Croatia, or about the risks to financial stability. I shall try to combine both and tell you what I have learned about financial stability from Croatian experience over the last 30 years, and how I see things now that we got into the euro area and the banking union. Over the last three decades, the Croatian banking system went through a transformation from a group of mostly bankrupt socialist financial institutions into a set of strictly supervised, overwhelmingly private, internationalised companies with strong corporate governance.

Not all of them disappeared though, for example, Charlemagne capital bought four regional banks and consolidated them into a single bank. Cleaning up the market, by removing inefficient banks, laid foundations for a healthier banking system, resistant to macroeconomic disturbances and improved risk management. Moreover, these two crises made us attentive to emerging risks, such as rapid credit growth or lax risk management practices and generated political support required to provide us with the toolkit needed to prevent future disruptions in the financial sector with large spillovers to the real economy and potentially huge costs to the budget. Since then, we continued cleaning up the system with no threat to either the financial stability or the budget. Navigating the Boom and the Bust The resumption of growth and resolution of weak banks eventually stabilized the banking system, setting the stage for the period of rapid international integration and financial deepening of the 2000's. After the first clean-up at the turn of the century, the number of banks has fallen to slightly above 40, and consolidated institutions started to compete strongly. In their pursuit of higher market shares, banks turned to foreign sources of financing, facilitated by extremely favourable financing conditions and high liquidity at the global level. At the surface, the financial sector supported the story of economic growth and convergence. However, experiences from the 1990s provided an optics needed to spot risks emerging underneath.
In Thailand, Q1 growth has similarly been subdued, expanding 5.3 percent as both private consumption and investment moderated. Part of this pullback may have been a natural reversion to a lower pace of growth after an unusually strong expansion last year. Lingering uncertainty about global demand  BIS central bankers’ speeches  1  may have also caused some export firms to delay planned investment. Consumption may have been held back by farm income in the midst of low global commodity prices, and an accumulation of household debt, which is now at 78 percent of GDP. Set against this weaker-than-expected domestic demand, is relatively resilient exports which expanded more than 8 percent. Given the still weak global demand on the one hand, and already easy financial conditions on the other, monetary policy must carefully weigh the merits of providing growth support against financial stability concerns. Policy interest rate is not the only available tool to address these multiple objectives. Macroprudential measures, in particular, are also part of the policy tool kit. The MPC will continue to exercise its best collective judgement as to what course of action and policy mix are deemed most appropriate to ensure maximum sustainable growth for the Thai economy. Challenges from capital flows and exchange rate volatility Let me now turn my discussion to a topic that has attracted a lot of attention recently, namely the issue of capital flows and exchange rate. The appreciation of the Thai baht this year up to late April has raised some concerns.

Some argue that raising the minimum wage, despite its costs, can potentially promote investment and improves labour productivity. Some prefer to provide direct fiscal incentives for firms to invest. Others see public investment as holding the key. The jury is still out as to how successful these approaches will prove to be in catalyzing an investment up-cycle, and ultimately alleviating the labour market issue. Fortunately, the currently conducive macroeconomic environment is already providing ample incentives for businesses to invest. Financing costs are currently low. Strong baht facilitates imports of capital goods. Firms stand to gain more from AEC integration if they carry out their planned investment in a timely manner. Collective efforts by all will also generate positive externalities, and can go a long way in easing the labour shortage problem for all parties. BIS central bankers’ speeches  3  One fundamental force that may exacerbate the labour shortage problem is the demographic change. Slowly but inexorably, the Thai society is aging, as the total fertility rate is consistently lower than the replacement rate. The number of people aged 65 and above will double in less than 10 years. As projected by NESDB, by 2030 the working-age population will fall from the current rate of 68 percent to just over 60 percent, making Thailand’s old age dependency ratio slightly higher than the Asian average. The government can help manage this demographic transition by speeding up the reform of immigration policy, and simplify registration procedure.
Public sector net lending in Sweden, the euro area and the United States Per cent of GDP 4  4  2  2  0  0  -2  -2  -4  -4  -6  -6  -8  -8  -10  -10  UK Euro area  -12  -12  USA Sweden  -14  -14 99  00  01  02  03  04  05  06  07  08  09  10  11  Source: IMF WEO, October 2012. It is important in this context to remember that the primary aim of the fiscal-policy framework that we have in Sweden is to make public finances sustainable in the long term. Prior to the financial crisis, the greatest threat to the long-term sustainability of public finances appeared to be an ageing population.7 An ageing population increases the demands on the public sector at the same time as the extent to which the sector can be funded by taxes on employment income decreases. However, the experience gained in countries where the need to rescue systemicallyimportant banks has exerted great pressure on public finances has given us a somewhat different perspective. In a country like Sweden, which has a large banking system in relation to the size of the economy, a banking crisis could quickly have a devastating effect on public finances. Given this, the risk of a financial crisis is therefore perhaps the greatest potential risk to the long-term sustainability of public finances.

European Systemic Risk Board (2011), Recommendation of the European Systemic Risk Board of 22 December 2011 on the macroprudential mandate of national authorities (ESRB/2011/3). Financial Crisis Commission, Preventing and managing financial crises, interim report, SOU 2013:6, 23 January 2013 Fiscal Policy Council (2011), Swedish Fiscal Policy, Report of the Fiscal Policy Council 2011. IMF, World Economic Outlook, October 2009. IMF, World Economic Outlook, October 2012. National Institute of Economic Research, “A Longer Term View of General Government Finances – Developments Will Require More Hours Worked”, The Swedish Economy, December 2005. National Institute of Economic Research, Wage Formation Report 2012. Kuttner, Kenneth (2012), “Low Interest Rates and Housing Bubbles: Still No Smoking Gun”, under publication in Douglas Evanoff (ed. ),The Role of Central Banks in Financial Stability: How Has it Changed?, World Scientific (Hackensack, NJ). Kydland, Finn and Prescott Edward (1977), “Rules rather than discretion: The inconsistency of optimal plans”, Journal of Political Economy, vol. 85, pp. 473–490. OECD Economic Outlook, November 2012. Bill 2007/08: 100, “Spring Fiscal policy Bill 2008”. Bill 2012/13: 1, “Budget Bill 2013”. Sveriges Riksbank, Monetary Policy Report, February 2012. Sveriges Riksbank, Monetary Policy Report, July 2012. Sveriges Riksbank, Minutes of the monetary policy meeting, July 2012. Sveriges Riksbank Monetary Policy Update, December 2012. Statistics Sweden, 2012 “Housing construction low for a long time”, SCB Economic Indicator, no. 2012:92. Svensson, Lars E.O. (2012), “The possible unemployment cost of average inflation below a credible target”, Working Paper, available at http://people.su.se/~leosven/papers/ Phillipsa.pdf. 16  BIS central bankers’ speeches  Svensson, Lars E.O.
All these elements may contribute to a strengthening of the decelerating trend in world trade and activity which is already under way. In Spain, this deceleration has already caused some deterioration in the economy’s current-account deficit. The compatibility of strong domestic demand with an ongoing external surplus has unquestionably been one of the most positive features of the current upturn, compared with previous ones. However, some of the factors which favoured the strong performance of the external balance have tended to lose steam recently, as is the case of the higher energy bill during much of 2018 due to oil price rises and the weaker tourism flows from the rest of the world. In the future, persistence of the recently observed moderation in activity on a global scale, particularly in the euro area, or a hypothetical increase in the cost of funding Spanish external debt will pose risks for the performance of the external balance. At the same time, the need to reduce the still-high external debt makes it essential for the Spanish economy to keep running external surpluses in a sustained manner. 1.4  Macroeconomic projections of the Draft Budget  The Draft Budget is based on macroeconomic projections of real GDP growth in Spain of 2.2% in 2019, down 0.4 pp from the 2.6% projected by the government for 2018, while the increase in nominal GDP is estimated at around 3.8%.

1.1  External environment and financial conditions  The forecasts are produced drawing on information that characterises the context of the Spanish economy (in particular regarding the international environment and monetary and financial conditions) (see Table 1). According to these assumptions, the expected course of activity in and imports from the main geographical areas with which Spain trades were revised downwards over the course of 2018. The resulting growth rates for Spain’s export markets in 2019 were estimated at slightly over 3%, a similar rate to that forecast for 2018, but significantly lower than that observed in 2017. The price of oil per barrel is expected to stand below $ on average in 2019, 6% less than in 2018. Finally, I should stress that borrowing conditions for households and firms are expected to remain easy. Allow me to go into greater detail on some of the above. Regarding the international environment, the world economy admittedly ended 2018 maintaining a broadly expansionary course. But the signs of an across-the-board slowdown are evident, albeit more marked in some regions than in others. Largely, this is in response to the partial materialisation of certain focal points of uncertainty, assailing the world economy since early last year. These include most notably the trade tensions between the United States and China, the uncertainty over the terms of the United Kingdom’s withdrawal from the European Union (EU) and some tightening of global financial conditions.
The long-run average of the two inflation measures will be the same, and if the Riksbank aims to stabilise CPIF inflation around 2 per cent then CPI inflation will on average also end up at the target. Deviations between both measures were not expected to be too great or lasting, and if they were to occasionally differ and CPI inflation were far below the target, then this could be dealt with by clear communication from the Riksbank. So it was thought at least. However, even though the “long term” in this case is not so long that we will all be dead, to paraphrase Keynes, it is long enough for the difference between the CPI and CPIF to pose problems. Interest rate developments over the past few years have led to major deviations between the CPI and the CPIF, both upwards and downwards (see Figure 3). The period of cuts which began in December 2011, and which is currently the longest continuous period of  8  See Johansson (2015) for a description of how interest rate changes impact the Swedish CPI and a review of the methods used for measuring costs for owner-occupied housing in different countries. 9  See Palmqvist (2013). 10  See Reserve Bank of Australia (1998) and Reserve Bank of New Zealand (1999). 11  In 2003 the United Kingdom decided to rename HICP CPI.

In other countries, for example the United States and Norway, costs for owner-occupied housing are approximated to the cost for renting a comparable property – and this is far less affected by interest rate changes. In the euro area and the United Kingdom, the target is formulated in terms of the HICP index (harmonised index for consumer prices) which does not include costs for owner-occupied housing, only operating costs.11 As Swedish CPI inflation has this characteristic, the Riksbank has, since the introduction of the inflation target, calculated several different measures of inflation and has also regularly let inflation indices other than the CPI guide interest rate decisions. The price index which has played the biggest role in recent years is the CPIF, or the CPI with a fixed interest rate. Unlike the CPI, the CPIF is not directly affected by changes in mortgage rates. CPIF inflation, with energy prices also discounted at times, has functioned as a “steering” variable in such a way that the Riksbank has normally aimed for it to be close to 2 per cent within the forecasting horizon. Major interest rate changes lead to substantial and long-term effects on the CPI Despite this, the target has been formulated in terms of the CPI. As interest rates sometimes go up and sometimes down, the idea has been that the differences in inflation according to the CPI and the CPIF will level out over time.
Let me sketch some of the initiatives we have embarked on: •  a Financial Sector Technology & Innovation scheme to provide financial support;  •  a multi-agency effort to guide the development of efficient digital payments systems;  •  a technology-enabled regulatory reporting system and smart surveillance;  •  supporting a FinTech ecosystem; and  •  building skills and competencies in technology. First, the Financial Sector Technology & Innovation or “FSTI” scheme. I am happy to announce that MAS will commit $ million over the next five years under the “FSTI” scheme to provide support for the creation of a vibrant ecosystem for innovation. FSTI funds can be used for three purposes: •  innovation centres: to attract FIs to set up their R&D and innovation labs in Singapore. •  institution-level projects: to catalyse the development by FIs of innovative solutions that have the potential to promote growth, efficiency, or competitiveness. •  industry-wide projects: to support the building of industry-wide technology infrastructure that is required for the delivery of new, integrated services. Several FIs have already set up their innovation centres or labs in Singapore, some under the FSTI: •  DBS, Citibank, Credit Suisse, Metlife, UBS,  •  as well as a couple of others that are in the pipeline.

We can expect other events to occur with a greater or lesser degree of probability. Historically, the deviation between actual underlying price inflation and our projections has been within an interval of +/-1 percentage point. When we later report on the implementation of monetary policy, we will place special emphasis on analysing the causes when deviations from the target are more than +/- 1 percentage point. 1  “Box: Effects of a change in interest rates” in Inflation Report 4/2000, Norges Bank. 2  Economic models of the Bank of England, Bank of England (1999). 2  BIS Review 7/2002  Normally, we make projections with a time horizon of about two years. During this period, a number of events will necessitate a revision of the projections. A number of uncertainties will be clarified along the way. New information about how the economy functions may be revealed. As we approach the period for which the projections apply, the uncertainty surrounding the projections will diminish. The chart shows how the projections for the rise in the CPI from 2000 to 2001 have changed from December 1999 to the end of 2001. Through 2000, the estimate was revised upwards by more than 1 percentage point. The most important factor influencing this adjustment was an upward revision of the projections for oil and electricity prices in 2001. We see that from the end of 2000, the deviation of estimated price inflation from actual price inflation, which was 3 per cent, was modest.
16  “The extra-action strategy responds to a perceived speculative boom with tighter monetary policy - and thus lower output and inflation in the near term - with the expectation of significantly mitigating the potential fallout from a possible future bursting of the bubble. Thus, the strategy seeks to trade off the near-certainty of worse macroeconomic performance today for the chance of disproportionally better performance in the future, on the theory that the repercussions of a major market correction could be highly nonlinear. But the extra-action proposal is by no means a bold call for central banks to prick market bubbles.” - Kohn D. “Monetary Policy and Asset Prices” at “Monetary Policy: A Journey from Theory to Practice - An ECB Colloquium held in honor of Otmar Issing”, 16 March 2006. 17  “Interest rate setting must also be assessed in the light of developments in property prices and credit. Wide fluctuations in these variables may in turn constitute a source of instability in demand and output in the somewhat longer run.” – Norgesbank, Inflation Report, March 2006. 18  Trichet J.C. “Asset price bubbles and monetary policy” Speech of the President of the ECB, Mas lecture, Singapore, 8 June 2005. 19  Fukui T. “New Framework for the Conduct of Monetary Policy: Toward Achieving Sustainable Economic Growth with Price Stability”, Summary of a Speech Given by Toshihiko Fukui, Governor of the Bank of Japan, to the Japan Chamber of Commerce and Industry in Tokyo on 16 March 2006.

11  “Norges Bank operates a flexible inflation targeting regime and seeks to achieve an interest rate path that provides a reasonable balance between the objective of bringing inflation up towards 2.5% over time and stabilising developments in output and employment.” - Norgesbank, Inflation Report, March 2006. 12  According to the Federal Reserve Act, the Board of Governors and the Federal Open Market Committee should seek “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”  13  Cukierman A. “Central Bank Independence and Policy Results: Theory and Evidence”, Lecture prepared for the International Conference on: “Stability and Economic Growth: The Role of the Central Bank”, Mexico City, 14-15 November 2005. 2  BIS Review 42/2006  way central banks should respond to asset prices. Fed Chairman Bernanke claims that central bankers should respond to asset prices only insofar as they affect output gap and thus inflation 14 . Another FOMC 15 member Donald Kohn has described this approach as “conventional strategy” and proposed, what he called, an “extraaction” policy 16 . Monetary “extra action” – according to Kohn would be required if there were clear signals of an asset bubble building up – especially a one fuelled by excessively loose monetary policy – and if costs of “extra action” policy were smaller than the costs of further build-up and subsequent collapse of a bubble.