samchain/econo-pairs-v1 huggingface dataset:
There is a tendency for the real exchange rate to return to its longterm average. Changes in the real exchange rate in the short and medium term may also reflect, for example, differences in productivity growth across countries or developments in the terms of trade. Bubbles may develop in the foreign exchange market in the same way as in markets for other assets. However, abrupt changes in the exchange rate are not necessarily a bubble. The exchange rate may move more in the short term than is necessary in the long term. One reason may be that the exchange rate must overshoot its long-term level because market participants weigh the interest rate differential against the possibility of a future depreciation of the krone. The relatively wide interest rate differential between Norway and other countries was an important driving force behind the appreciation of the krone from 2000 to 2002. Themes in the foreign exchange market vary over time. Analyses carried out by Norges Bank indicate that the interest rate differential has a greater impact on the exchange rate the more equity prices fall and the lower the expected variability is between the main currencies. The oil price increased considerably from the end of 2001. In isolation, this probably also contributed to making the Norwegian krone more attractive. Norway’s key rate, the sight deposit rate, has been among the highest in the OECD countries. The fewer countries there are with a wide interest rate differential, the greater the demand will be for NOKdenominated assets.

Some observers have therefore posed the following question: has the functioning of the economy changed so that higher demand does not necessarily translate into higher inflation, but instead results in growing financial imbalances? If so, a conflict may arise between achieving the inflation target in the short term and financial stability. There are several reasons why financial bubbles can develop in periods of low inflation. First, a highly credible monetary policy results in low inflation expectations. Explicit or implicit long-term price and wage contracts will become more common. It will take longer for higher demand to translate into higher inflation. Cyclical changes will have less impact on inflation. Moreover, periods of higher productivity growth may lay the basis for high corporate earnings, heightened optimism and reduced risk awareness. At the same time, with strong productivity growth, inflation remains low. Banks that record low losses and solid results can increase lending without eroding their capital adequacy level. Debt-financed investments may lead to a faster rise in house and property prices. A third factor is that strong international competition may contribute to curbing inflation during a period of strong economic expansion. China, because of its access to an abundance of cheap labour and its substantial production capacity, has contributed to a fall in prices for many manufactured goods. In Norway, we have not experienced situations where there has been a conflict between the objectives of financial stability and price stability.
But we will be keeping that prospect under continuous review and be ready to respond to the evidence that emerges in the real world - in either direction. You will have noticed that, although I disclosed my hand on the first ballot, I have not done so on the second. I will leave you to discover from the minutes of our future Monetary Policy Committee meetings how I vote in the real thing! And that, Mr Chairman, is as clear a steer as you are ever likely to get from a central banker on the likely future interest rate path! BIS Review 18/2000  4

Contrary to some recent proposals i, we shouldn’t, according to me, get rid of the numerical targets which are in the Treaty: they are useful anchors, including the 3% deficit which is – in the case of France – more or less the threshold that would stabilize the public debt ratio at its pre-covid level. But the revised rules, without changing the Treaty, should be based on a long-term debt trajectory and on a single operational target, namely a ceiling on the growth rate of public expenditure as proposed by the European Fiscal Board (EFB), chaired by the Danish economist Pr. Niels Thygesen. First, we can keep the 60% long-term debt anchor. But the 1/20 linear rule of yearly adjustment towards it is too demanding and should be made more country-specific. Second, for the operational target, relying only on the current interest burden, as suggested by some, would be at the same time short-termist and too partial: the levels of the total public deficit and of public debt remains key to assess the sustainability of public debt in the face of unexpected shocks. But interest payments could be included in a net expenditure rule, unlike the EFB proposal which excludes them. At constant taxation rate, a rule based on total government expenditure growth would make it possible to control both the public  deficit and the public debt, since, implicitly, it incorporates a fiscal response to changes in the interest burden.
In addition, foreign direct investors have placed more importance on factors other than just the exchange rate alone. In managing exchange rate policy, no amount of exchange rate manipulation would satisfy the interests of all parties at all times. Indeed, it is a stable and fundamentally sound exchange rate system that will best serve the overall economic interests of the country. This will continue to be the objective of our exchange rate policy. Ladies and Gentlemen, Dr. Yilmaz Akyüz’s lecture today would provide an international perspective on managing financial instability and shocks in a more globalised world and touches on some of the issues I have mentioned. Although the regional financial crisis occurred more than six years ago, the issues it raises are not history. They are still very relevant and important. Emerging economies need to continue to evolve approaches and solutions on how best to manage the vulnerabilities and to promote and preserve stability. In this endeavour, there is potential to not only consider what individual economies can do but also the opportunities for regional arrangements or regional solutions. As the region becomes increasingly more integrated in terms of trade and investment flows, the potential for this will be  2  BIS Review 8/2004  greater. The desired outcome is to achieve stability, which in turn, will contribute to the overall stability of the international monetary system and thus, enhance the prospects for shared global prosperity. BIS Review 8/2004  3

This adjustment also involved the creation of the strategic- and technological-risk Department. Technology. A technological observatory was created intended to act as catalyst for enhancing knowledge and adopting important innovations for the CBC’s fulfillment of its functions. The main objectives of the observatory are: (i) to agree on common principles and contribute, inside the CBC, to the coordination of the treatment of disruptive technologies, (ii) create networks with the external community to enhance know-how and identify opportunities and threats, and (iii) agree on the pillars of innovation to promote and contribute to knowledge in those areas. The pillars of interest that have been defined include: digital currencies of central banks, cryptoassets and financial stability, development of digital payments and technology of distributed records and their applications, technology and data management, cybersecurity and risks for the financial system, among other issues. Employer of excellence. We have been working on strengthening the organizational culture and improving the value proposition for our staff in order to achieve effectiveness in attracting and retaining employees and developing their careers. To strengthen the internal career, we are developing an exercise to improve job description and assessment. Hand in hand with the strategic initiatives just defined, the CBC has continued with its projects linked to the fulfillment of its permanent functions.
Such action would be in line with the recommendations recently made by the European Council for all European countries in the framework of the review of governance in Europe. 4  BIS Review 129/2010  A key element of the Budgetary Stability Law for achieving fiscal discipline is transparency. The dissemination of data relating to the non-financial activity of the State is abundant, detailed and released with a relatively small lag. This is regrettably not the case for regional or local governments, which curtails the ability to control their activity in time and accountability. In my view, these shortcomings must urgently be redressed. At a time such as the present, a lack of transparency may lead to a lack of market confidence that takes the form of a further premium on the cost of financing. Given the circumstances, all available instruments should be used to ensure compliance with the targets set. In particular, authorisation for regional and local governments to issue new debt should be conditional upon compliance with consolidation plans. A spending ceiling might even be considered for these governments, an instrument which has proven enormously useful in strengthening budgetary discipline in the case of the State. Along the same lines, medium-term planning necessitating analysis of the structural dynamics of the various public revenue and spending items and enabling those areas where the scope for rationalisation and adjustment are greater to be detected may prove appropriate, especially when adjustment measures going beyond a temporary correction of imbalances are required.

Markets need to form a view on the probabilities of different paths of future interest rates in order to price a wide range of financial instruments. So they are interested in what central banks say. In recent months both the Federal Reserve and the European Central Bank have found it far from straightforward to convey the likely trajectory of future interest rates. And the Fed announced three weeks ago that Chairman Bernanke had established a subcommittee of the FOMC to examine a number of “communication issues”. There is now a lively debate about how, and to what extent, central banks should try to communicate their intentions with respect to future official interest rates to financial markets and the wider public. At the Bank of England, our approach is to keep it as simple as possible. We don’t say where interest rates will go next for the simple reason that we don’t know. And it would be quite misleading to pretend otherwise. The MPC reaches a new judgment each month, made afresh in the light of all the new information about the prospects for inflation. We don’t decide in advance. So trying to give direct hints on the path of interest rates over the next few months risks deceiving financial markets into believing there are definite plans for the next few months when no such plans exist. But in order to form judgements about the likely path of interest rates over somewhat longer time horizons, markets do require some information from the central bank.
We are clear that we do not wish to see branches undertaking critical retail banking functions (like taking transactional deposits) beyond a minimal level unless there is some good reason and importantly a very high level of assurance on resolution. But the approach also recognises that some activities may be important to global financial stability, so putting a domestic wall around them may be counterproductive. And we recognise that we need to play our part in host supervision of branches by supervising their effects on UK and global financial stability, their effects on the group and by working with the home regulator. More broadly, and reflecting the concentration of global capital markets and trading activities in the UK, we have a responsibility to look at capital market developments and deliver good  BIS central bankers’ speeches  5  supervisory outcomes for the firms involved in order to support global financial stability. Much of this activity takes place in subsidiaries. But given the way trading firms in particular are structured, we often see only part of the risks run in particular books. Booking models are such that the UK may have the global book for some products but only part of the book for other businesses.

It can credibly act as a counterweight against the host supervisors’ natural desire for higher local equity capital to be pre-positioned. At the same time internal TLAC can also help to ensure that there will be sufficient locally held capital to enable an orderly wind down of that entity in the event of stress. This approach recognises the integrated nature of many international groups. It recognises that having a clear agreed resolution strategy, combined with committed cooperation including in-depth sharing of information between the home and host supervisor, is key to understanding the risks that are shared by the parent and subsidiaries of large, complex groups. But it also seeks to ensure that the potential risks of a disorderly resolution are mitigated. In summary there are a number of key components to committed cooperation. a. A credible resolution strategy and equivalence of the home resolution regime, supported by internal TLAC. 6  BIS central bankers’ speeches  b. A high degree of commercial, operational, and financial entanglement between subsidiary and parent. c.  Transparency over the financial position of the parent group, its capacity to support the subsidiary, and the equivalence of the home supervisory regime. d.  Transparency over the intervention framework, including host and home discretion and triggers for action.
Philipp M Hildebrand: Do financial markets promote responsible behaviour? Speech by Dr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, at the 35th ICS-Symposium, University of St Gallen, 21 May 2005. *  *  *  I am honoured to join this distinguished panel. In his opening remarks to this year’s ISC Symposium, Federal Councillor Moritz Leuenberger compared the symposium’s theme – Liberty, Trust and Responsibility – to the Holy Trinity. Let me assure you. I will be less ambitious. In my formal comments, I will take the liberty to reflect not only on financial market but on markets more broadly. The great economist Adam Smith has famously written that “it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” This often-cited reference from the Wealth of Nations can be interpreted as suggesting that markets function best when market participants are not concerned about any particular normative values of responsibility but simply pursue their self-interest. Led by the “invisible hand”, this collective pursuit of self-interest produces the optimal economic outcome. In other words, market participants need not be concerned about responsibility or, to use Adam Smith’s term, benevolence. The “invisible hand” of the market will take care of that. It seems to me such a reading of Adam Smith is too narrow.

The opposite holds, of course, for those who always prefer a higher interest rate. I expect we shall have to learn to live with this type of monetary policy personification. But I hope that in time the discussion that follows our decisions and published minutes will still lead to a wider understanding, among people in general as well as in markets, of the deliberations and choices the Executive Board has to make. For market players I continue to believe that fundamentally it is most important to arrive at their own sound assessments of inflation. Those who do so are likely to be fairly close to the mark in their predictions of the repo rate, at least in the somewhat longer perspective. 3. The current monetary policy situation  Let me now consider the present situation, starting from the Inflation Report the Riksbank presented last week. The assessment in the Inflation Report The signs of a global recovery have been confirmed and also become stronger since the June Report. The Riksbank has accordingly made an upward revision to the forecast for GDP growth in the OECD area, to an annual rate of not quite 2.5% up to the end of 2001. The growth is occurring on a wide front. The Asian and European economies are recovering, from different initial situations, and the slowdown in the United States is expected to be milder than we counted on earlier. Even with the prospect of higher global economic growth, international price pressure is assumed to remain relatively low.
The US is of course the biggest export market in the world but total US imports account for only 3% of global GDP. Many other countries – especially in Emerging Asia – are trading among themselves without a nexus to the US. These trading linkages will grow over time as demand in these economies grows with a rising middle class, urbanisation, and investment in infrastructure. All the same, a prolonged period of trade tensions is not good for the global economy. The more serious casualty is perhaps not trade but investment. Corporates may scale back investment amidst uncertainty. This will reduce the productive capacity for future growth, delay technological upgrading, and compromise productivity growth. This is why the best response to unilateral trade restrictions is to push ahead with further trade liberalisation among other willing parties instead of retaliation and escalation. If countries do not retaliate against tariffs imposed by the US, the cost to their own 1/3  BIS central bankers' speeches  economies is likely to be contained. And a mutually damaging trade war would be averted. And this is what Emerging Asia is doing – liberalising trade within the region and with others. TPP-11 or Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) This will reduce barriers across economies with a GDP of $ trillion, roughly 13.5% of the world economy. It is expected to be ratified early next year. And five to six more countries have expressed interest in joining the CPTPP.

There is agreement, however, that these payments have increased compared with last year's survey and that this trend is likely to continue in future. Wage and salary payments in euros are still not an issue. Employees would not accept wage and salary payments in euros. Furthermore, such a practice would result in substantial administrative complications (social security deductions and taxes in Swiss francs). The selective use of euros in place of the Swiss franc does not create any difficulty with regard to monetary policy. On the one hand, the bulk of payments in Switzerland will probably continue to be effected in Swiss francs also in future. On the other hand, under the current monetary policy strategy, a possible euro-induced decline in the demand for money will not lead to any problems either. Contrary to the previous policy of targeting the money supply, the steering of the interest rate the National Bank pursues today is not dependent on a stable demand for money. The National Bank realises, however, that, as invoicing in euros becomes more widespread, our export industry must bear higher exchange rate risks. BIS Review 73/2002  3
Construction activities over the next few years In line with other economic activity, construction activity declined slightly last year, although this was estimated to be a temporary phenomenon. Large resources have been allocated for infrastructure measures and for the development of the third generation of mobile telephony, which is estimated to lead to increased activity in future. There are numerous indications that residential construction will continue to increase, albeit from a low starting level. The continuing positive development of households’ disposable incomes should lead to an increase in new building and renovation of housing. Subsidies for building rental apartment blocks, support for student accommodation and ecological construction are also expected to stimulate investment in housing. Seen in a slightly longer term perspective, the low rate of new building is insufficient to meet the demand. A shift in the age structure will probably lead to an increase in housing investment as a percentage of GDP. However, even here prices and wages comprise a problem for the industry. The preliminary results show that construction workers received wage increases in excess of 5 per cent last year, while productivity only amounted to 1.4 per cent and unemployment among construction workers was almost 10 per cent. Unemployment in the construction industry varies geographically, however, with a rate of under 3 per cent in Stockholm and over 19 per cent in, for instance, the Gävleborg and Norrbotten regions. Relative productivity in the construction sector appears to be declining. The gap between the percentage employed and the percentage of GDP is increasing.

At the same time, we can conclude the opposite with regard to the inflation forecasts (OH 2 inflation forecasts 1998-2002), which we have been forced to revise upwards again and again. If we are right that a recovery is now beginning both in Sweden and abroad, we can conclude that the economic downturn was one of the mildest of the post-war period, partly as a result of resolute stabilisation policy. However, the slowdown in Sweden and the rest of the world during 2001 was unexpectedly severe in relation to the forecasts made in 2000. The fact that forecasters miss turning points in the economic cycle is not unique to this particular downturn, but quite a common phenomenon. I will return to the current situation, but first a look back in time. Historical patterns are repeated Is it possible to learn lessons from history? Both yes and no. If one studies economic slowdowns over the past three decades, one can see that they differ considerably both with regard to causes, sequence of events and recovery. There is no simple, cyclical pattern that is automatically repeated. At the same time, it is clear that what we have experienced now has elements in common with 1 previous cycles. In some industrial nations, including the USA, the economic downturns during the 1990s have become milder compared with the downturns during the 1970s and early 1980s. Deep recessions have been unusual and arisen in combination with major structural problems, such as bank crises.