samchain/econo-pairs-v1 huggingface dataset:
Svein Gjedrem: The economic outlook Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), to invited foreign embassy representatives, Norges Bank, Oslo, 2 April 2009. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 25 March, Monetary Policy Report 1/09 and on previous speeches. Please note that the text below may differ slightly from the actual presentation. *  *  *  Excellencies, Ladies and Gentlemen, Since our last meeting about a year ago, the international economic environment has changed dramatically. In my presentation today, I will focus on how the international downturn has influenced the Norwegian economy and the outlook for our economy. The crisis has its core in the financial system, and I will therefore discuss the need for a new international financial architecture. Finally, I will comment on the Government Pension Fund – Global and how the financial crisis has influenced its investments and returns. Sudden global downturn in the real economy In September 2008, the turbulence in financial markets erupted into a full-blown global crisis. On 15 September Lehman Brothers filed for bankruptcy. The next day, money markets seized up. Confidence between banks had been compromised. Liquidity dried up, interest rates rose sharply and equity prices fell. Exchange rate volatility – the daily fluctuations in the exchange rate – showed a marked rise. Bond markets in turn shut down.

Activity in the economy will be boosted by strong growth in government spending. The projections are based on the assumption that Norges Bank’s interest rate changes will translate into lower lending rates for households and businesses. At the same time, owing to tighter credit standards in banks, monetary policy appears to be somewhat less effective than normal. Inflation is projected to fall below 2 per cent in 2010, before gradually moving up towards the target towards the end of the projection period as the output gap gradually closes. There is a risk that the structural changes brought about by the crisis may result in persistently lower productivity growth and perhaps higher unemployment. It appears that inflation will remain considerably lower in the years ahead than we expected in December. Both the objective of stabilising inflation around the target and the objective of ensuring stable developments in the real economy suggest that the interest rate should be low. Financial architecture In many countries, banks’ share of GDP has increased considerably over the past few years. This share is smaller in Norway than in other countries and, as a result, the Norwegian economy has been less exposed to the financial crisis. Although banks in Norway have not been as oversized as in many other countries, banking still contributes to fluctuations in our real economy. 4  BIS Review 42/2009  Banking is procyclical. In upturns, loan losses are low, increasing banks’ profits. Access to equity capital is ample, providing the basis for strong lending growth.
In particular, with the high non-resident investors’ participation in the onshore financial market, we saw significant growth in the ringgit NDF market. More recently, in November 2016, non-resident investors’ holdings reached a record high of 34.7% of Malaysian Government Bonds. While some argue that the ringgit NDF market is used by non-resident investors to hedge their ringgit assets, the reality is far more sobering. It is mostly used for speculative purposes. These speculative activities have shown to have adverse negative spillovers to the onshore financial market due to its volatility. More importantly, the sheer volume of this market, which surpassed over 300% of GDP in 2015, underscores the extent of disconnect between NDF trading and economic reality. Given the size, onshore markets were vulnerable to the arbitrary and unpredictable nature of the offshore market. Besides this vulnerability, there was an even larger long term challenge that we faced. The offshore market was developing and thriving at the expense and detriment of the onshore market and domestic stability. The recent developments following the US presidential election have attested to this fact. Following the results of the presidential election, the ringgit NDF was traded 2/6  BIS central bankers' speeches  as high as 2168 pips away from the onshore market close during the New York trading hours. Such a significant move is obviously driven more by speculative activities and misplaced market sentiment rather than any significant change in the economic fundamentals of the country.

The first series of initiatives announced on 2 December 2016, seeks to provide greater room for the onshore ringgit hedging for both resident and non-residents. The focus was on ensuring better access to the onshore financial market. In particular, residents can now hedge without providing underlying documents up to certain limits, while registered non-resident investors have the flexibility to carry out dynamic hedging. At the same time, the scope of the appointed overseas office framework was widened to provide greater avenues for non-residents to access the onshore financial market. 3/6  BIS central bankers' speeches  The second series of initiatives announced on 13 April 2017, introduced greater flexibility for investors to manage currency and interest rate risks. Registered investors can now conduct full dynamic hedging and resident investors can now conduct short-selling for Malaysian government securities. All these flexibilities are expected to increase the ease of hedging business risks. The aim is to promote a two-way liquidity in the onshore financial market. At the end of the day, we envision that the implementation of these initiatives will make the domestic financial market a market of choice, where prices are determined by the real economy devoid of speculative and damaging activities. In this respect, we have introduced initiative that enables non-resident investors to access and hedge ringgit assets in the domestic markets.
I would be happy to take a few questions. BIS central bankers’ speeches  5

These FTAs will lead to further opening up of the financial sector. Other countries are doing the same. The EU is enlarging its markets through FTAs with East European, African and Latin American economies. North and South America, including the US, aim to conclude a Free Trade Area of the Americas by 2005. Japan and South Korea have mooted the idea of a Northeast Asia FTA, but otherwise, amidst this flurry of activity, Asia has been conspicuously quiet. Our FTA strategy is an insurance policy so that we will not be left out in the cold, should a weakened WTO fail to protect our interests. In every FTA negotiation, our partner will ask for bilateral trade concessions beyond what we have committed in WTO. Our regime for trade in goods is already almost totally open. What many of our FTA partners want is preferential market access in services, in particular in financial services. For the US, this would be a major motivation for their considering an FTA with Singapore. Singapore financial institutions must clearly brace themselves for the greater competition this development would bring. 4. Financial sector reform - a change in mindset  Our response to these challenges must be to press on with liberalising and upgrading in the financial sector. The key shift is in the mindset of the players. We must be keenly aware of the changing environment, and of the urgency to respond. For all the concrete changes over the last two years, changing mindsets will be even harder.
At this stage, risks of an abrupt turn in the cycle with consequences similar to those observed in 2007-08 appear limited in France for several reasons.v To give just a few in addition to macroprudential measures: over 97% of the stock of housing loans are fixed-rate; borrowers’ solvency is assessed in a very cautious way; real-estate is not used as collateral for credit (as they are in many Anglo-Saxon countries), meaning that real-estate price adjustments do not result in an increased repayment burden. We nevertheless have to remain very vigilant, including in other segments of the market. In particular, commercial real estate (CRE) comes to mind, which has been slowing around the world because of the greater recourse to remote work and online business, and because of rising interest rates. The commercial property sector entails both direct and indirect risks for credit institutions: direct through CRE credits, and indirect through CRE assets pledged to them as a collateral for other kinds of credit. Ireland has once more been a pioneer on this  Page 11 sur 11 front by implementing macroprudential leverage limits for investment funds,vi which could pave the way for a more comprehensive macroprudential framework. In France, at this stage, indicators do not show any particular risk accumulation: both non-performing loans- and loan-to-value ratios are tending to decline. But we will definitely keep monitoring risk indicators closely, given the amounts at stake (around EUR 150 billion of direct exposure, and EUR 85 billion of indirect exposure for French banks).

How to ensure that macroprudential policy can help in this context? If we release, we may contribute to the inflation dynamics through the usual credit channel. If we tighten, we can contribute to triggering financial risks. Complementarity with monetary policy remains, but prudence is of the essence, and this could be the time for some macroprudential pause. II. The case of the real-estate sector: how macroprudential tools help mitigate growing risks In France, our macroprudential body is the High Council for Financial Stability (HCSF): it’s chaired by the Finance Minister, but I as Governor have the sole power to propose macroprudential measures to the Council. It’s a subtle institutional balance… but it works. In recent years, we have used actively the countercyclical capital buffer (CCyB): removing it in March 2020, reintroducing it at 0.5 % in April this year, and planning to raise it at 1% next December. As  Page 8 sur 11 the CCyB is always difficult to explain to public opinion, we also decided to rebrand it “credit protection reserve”. Let me now focus on a practical case, on a sector that has often proved critical to financial stability, namely the real estate sector. It is politically most sensitive for citizens. Severe financial crises have often been related to housing boomand-bust cycles: the great financial crisis was a stark example of this. Lessons have been learned and a wide range of macroprudential tools have been implemented since then to mitigate vulnerabilities arising in the residential real estate sector,iii including in France and Ireland.
Jessica Chew Cheng Lian: Corporate governance at the Central Bank of Malaysia Opening speech by Ms Jessica Chew Cheng Lian, Assistant Governor of the Central Bank of Malaysia, at the Third Institute of Chartered Accountants in Australia-The Malaysian Institute of Certified Public Accountants (ICAA-MICPA) Audit Forum, Kuala Lumpur, 27 September 2012. *  *  *  It gives me great pleasure to be here this morning at the 3rd ICAA-MICPA Audit Forum. The theme for the Forum this year is the role of the audit committee within the context of corporate governance in insurance companies. It has been said that an audit committee is like a good insurance policy - it is better to have it and not need it, than to need it and not have it. I am certainly happy to know that we have established strong audit committee practice within our financial industry, and while admittedly, some institutions have moved further than others in improving the effectiveness of the audit committee, it represents without exception a core pillar of governance systems in our financial sector. I say this because as we speak, there are countries that are now debating the requirement for financial institutions to establish separate audit committees. There are a number of reasons why the theme chosen for this forum is particularly relevant in current times. Corporate governance problems have once again come under intense global scrutiny since the outbreak of the global financial crisis.

However, my assessment is that the low inflationary expectations are making it take a longer time before overheating tendencies are expressed in increasing consumer prices. This leads me to make the assessment that prices will not start to rise until the end of the forecast period but that price increases will then be stronger than the majority believes. My assessment is therefore that inflation at the end of the forecast period, in my main scenario, will end up marginally over the forecast that was reported in the last inflation report, which the Executive Board majority did not find reason to revise. My assessments of developments during the next two years differ then only marginally from the majority view. I am more concerned about the price tendency and the risks I see in developments after the forecast horizon. The assessments of the use of resources and future production possibilities are uncertain. Structural changes of the Swedish as well as the international markets make it particularly difficult to draw conclusions about future growth prospects. There is a risk that we go to excess. High, increasing indebtedness calculated as a share of GDP for both households and companies make me concerned for financial imbalances that can be on their way to being created, although our knowledge of what can be assumed to be long-term sustainable development is small. In my view, there is a risk that we overestimate potential output in the coming years and that we therefore accept an excessively high level of demand in the economy.
6  All speeches are available online at www.bankofengland.co.uk/speeches  6  Flows of workers and their bargaining power are, in turn, affected by structural features of the labour market. A rise in job insecurity will reduce flows of workers between jobs and their bargaining strength. A fall in the degree of unionisation and collective bargaining in the labour market, and a rise in the degree of automation and concentration in the company sector, will also reduce workers’ pay power. We discuss each in turn. If these structural forces were reducing workers’ bargaining power, we might expect them to receive a declining share of the income pie – a fall in the “labour share”. Internationally, there is strong evidence of the 8  labour share having fallen across a large number of developed countries. Structural factors, such as rising levels of automation and falling rates of unionisation, are typically found to have been an important contributor to those falls in international labour shares. 9  At face value, the UK appears to have bucked those trends. Chart 12 plots the UK labour share since 1955. Over the past two decades, it has been broadly flat. The UK labour share in 1990 was 50%, largely unchanged from today. In the UK, there appear to be fewer signs of any significant shift in the bargaining power of workers having resulted in them taking away a smaller slice of the income pie. I will discuss some of the reasons for that below.

5  There are various measures of under-employment, including the proportion of the workforce working part-time involuntarily and the gap between actual and desired hours worked. In practice, these two measures exhibit a very similar pattern (Chart 9). They also track the unemployment rate closely. This suggests the incremental information contained in measures of under-employment, relative to measures of unemployment, might be relatively modest. Econometric estimates confirm that impression. Replacing the unemployment gap with a measure of the 6  under-employment gap produces a very similar wage equation (Table 1). And in a pairwise comparison, under-employment is statistically insignificant if the unemployment gap is included. Under-employment is important for pay, but does not appear to much improve the explanation of recent wage dynamics. A third factor determining pay pressures is productivity. It is through gains in productivity that individual firms, and the economy at large, can finance increases in workers’ pay. Econometric estimates confirm that intuition. The productivity of the labour force is a (statistically and economically) significant determinant of pay (Table 1). On average across firms, a 1 percentage point rise in productivity raises aggregate wage growth by around 0.8 percentage points. 4 5 6  Espinosa-Vega and Russell (1997) provide a history and review of the NAIRU concept. For example, Bell & Blanchflower (2018). Specifically, the involuntary part-time share of employment.
If it cannot be helped, he shares part of his riches with his students. - You might find this type of economist too, but only very, very rarely! 3. Economists in government  “Give me a one-handed economist! All my economists say, ‘on the one hand … on the other’.” - You surely know this quote which goes back to the late Harry S. Truman (1884-1972), when he was President of the USA. It is an expression of the impatience that befalls politicians when they call on economists for advice. Another quote by the same man is: “If you can’t stand the heat, get out of the kitchen.” The two quotes describe better than almost anything the challenges an economist has to face when he chooses to work for the government. Politicians are usually confronted with sensitive questions. The replies are decisive for a politician’s success. Frequently time is short and straightforward answers are preferred - as long as they fit the preferences. Politicians have a natural predisposition to seek advice that is compatible with their political needs. Economists acting as civil servants or as government advisers are therefore quite naturally tempted to behave opportunistically. This will not pay since in the long term a serious loss of professional reputation is inevitable. Economists must not let themselves be carried away by a desire to please. Their added value lies in an objective application of their analytical and empirical tools. Economics is, not without justification, sometimes called the “dismal science” (Thomas Carlyle, 18201905). Economics is about tradeoffs.

That said, it was the risk in 2011-12 of the single currency breaking up which prompted the decision to undertake the reform of EU governance, moving towards a new model that  5/7  would transfer to the area as a whole many of the responsibilities for supervising banks and managing bank crises, which we know as the Banking Union. Following this initial momentum, which culminated in the launch of the Single Supervisory Mechanism in late 2014 and the approval of new Directives on capital requirements and resolution, political considerations are hampering further steps in financial union projects; and progress on the reform agenda considered by national governments has been uneven. The reform agenda in Spain In Spain, from 2010 onwards, the reforms carried out have provided for a better adjustment of labour costs to firms’ cyclical position, preventing employment from being the only adjustment factor. The reforms have also been conducive to a greater degree of flexibility in the organisation of work within firms. These factors have played a significant role in improving our economy’s competitiveness, which is at the very root of the recovery. The gains in competitiveness have been clearly reflected in the pick-up in exports. From 2011 to 2016, the share of goods exports in GDP has increased by 2.6 pp, amounting to almost 23%; goods and services exports, including tourism, have climbed by almost 4 pp of GDP, rising last year to 33%.
The forecast for 2004-2006 is that of the National Board of Housing, Building and Planning . Household indebtedness Per cent 160  16  120  12  80  8  40  4  0 1980  0 1982  1984  1986  1988  1990  1992  Debt to income ratio (LHS)  1994  1996  1998  2000  2002  Post-tax interest ratio (RHS)  Sources: Statistics Sweden and the Riksbank  Households’ real and financial assets 45  5000 Real assets (Billion SEK, LHS) Financial assets (Billion SEK, LHS)  4000  40  Debt as percentage of total assets (RHS)  3000  35  2000  30  1000  25  20  0 1988  1990  1992  1997  1999  2001  2003  2004 kv2  Sources: Statistics Sweden and the Riksbank. BIS Review 67/2004  5  The major banks’ profits SEK billion, prices in 2004  Profit before loan losses  dec-04  0 dec-02  0 dec-00  30  dec-98  30  dec-96  60  dec-94  60  dec-92  90  dec-90  90  Loan losses, net  Sources: The banks’ reports and the Riksbank. 6  BIS Review 67/2004

The NEU-CP market in Paris is by far the most active in the euro area, with outstandings of EUR 72 billion in mid-May, and the Banque de France’s most recent involvement since the end of March has been very effective and widely acknowledged by industry professionals. With its new Main Street Lending Program, the Fed recently went a step further by giving itself the possibility to fund the purchases of bank loans to businesses, via a special-purpose vehicle created with a US Treasury Department guarantee. We are not at that stage yet – the euro area has a different institutional framework – but we should not necessarily exclude it in the future if it proves to be a lever needed to maintain the financing of the economy by lightening bank balance sheets. What’s more, the French proposal for a “recovery fund” envisages its partial use for this very purpose. The Covid crisis has once again called upon the Eurosystem’s reactivity and creativity to fulfil its mandate in total independence. To conclude with the words of Jean Monnet, “I have always believed that Europe would be built through crises, and that it would be the sum of their solutions”. Without, of course, wishing for it, this is the situation we find ourselves in. And rest assured, the ECB has risen to this challenge. 5/5  BIS central bankers' speeches