samchain/econo-pairs-v1 huggingface dataset:
No one doubts for a moment that the exchange rate of the króna is crucial for the economy, through its major effect on prices and profitability in the traded goods sector. There has been a great deal of discussion this year about the exchange rate and the Central Bank has frequently come under fire. A widespread misunderstanding seems to prevail that the Central Bank can control the exchange rate. People must realise that the Central Bank exerts a limited long-term impact on the exchange rate. The exchange rate depends on various economic factors, including foreign trade, foreign investment in Iceland and investment by Icelanders abroad, and last but not least expectations about future economic developments. For example, there is little doubt that expectations in connection with power-intensive industry have already influenced the exchange rate of the króna, which has certainly firmed as a result of decisions on large-scale investment in aluminium production. Interest rates definitely affect the exchange rate, but experience in Iceland and elsewhere shows that in the long run this impact tends to fade out if monetary policy aims for a rate of inflation close to the prevailing rate among trading partner countries. Likewise, the Central Bank’s foreign exchange market intervention tends to have only a short-lived effect. If the exchange rate is moving with a strong momentum in a certain direction, no central bank can resist this for long.

Thank you for your attention. 1 European Central Bank (2018), A quantitative analysis of the size of IMF resources, IRC task force on IMF  issues. 3/3  BIS central bankers' speeches
Remuneration schemes, for example, should support sustainable business rather than myopic trading. There is one over-arching issue that I would like to highlight: the financial industry has to reconsider its role in the economy. Returning to a role of serving the real economy would be desirable. “Financial engineers” may prefer to create ever more “sophisticated” financial products. But finance has to come back to the basics. Among the basic tasks of the financial industry is the supply of credit to the real economy. This too is a profitable business, the profits from which are justified because they are mirrored by the social value of the intermediation function. Businesses and individuals depend in particular on the steady supply of credit by banks. The ECB and the national central banks of the euro area have taken comprehensive measures during the crisis to help commercial banks and other financial institutions. When the turbulence started in August 2007, the ECB was the first central bank to step in by frontloading liquidity. After the intensification of the crisis in the autumn of 2008, we tackled the paralysis of interbank transactions in the money market. In addition to a swift and substantial reduction of our policy rate, in line with our primary objective of maintaining price stability over the medium term, we decided to implement a set of non-standard measures, which we collectively refer to as “enhanced credit support”. I explained these measures in detail here in Munich in a speech last July. These measures have significantly helped to maintain banks’ liquidity.

But the crisis has also revealed weaknesses in the peer surveillance process and in the implementation of the Stability and Growth Pact. Thus another major lesson of the crisis is the need to strengthen the institutional framework of the economic union. Of course, the deterioration of public budgets has partly been due to a “migration” of risk from the financial sector to the public sector. Public budgets have been called on to absorb the excessive risk that the financial industry had been creating during the booming years that led up to the crisis. Partly, however, the deterioration of public budgets is also due to some short-sighted fiscal and economic decisions in the brighter times that preceded the crisis. Before the crisis, weak public finances had combined in some countries with inattention to domestic competitiveness and a lack of long-term strategies to prepare national economies for competing successfully in the challenging – but rewarding – environment of the internal market. In Greece, in particular, past fiscal irresponsibility and inattentiveness to domestic competitiveness made the national economy extraordinarily vulnerable to a sudden turn in confidence. As I have implied, after the crisis, the main players in the world economy will be judged by a new yardstick. Private players will be held accountable to new and stricter standards of economic integrity and prudent management. And governments, the world over – and in Europe in particular – will have to show self-discipline and trustworthiness to gain respect and preserve confidence.
Banks have responded to the new requirements by increasing interest margins to boost earnings. It can be safely assumed that once they have adapted to the new requirements, interest margins will decrease. The countercyclical capital buffer is not an instrument for managing business cycles. The key policy rate and the buffer are designed to promote different objectives. Monetary policy is geared towards ensuring low and stable inflation and is the first line of defence for managing business cycles. The countercyclical capital buffer is designed to strengthen banks’ capacity to withstand periods of large losses. The simultaneous failure of many banks will paralyse the economy. The payments system and flow of credit for investment will seize up. The downturn could be long-lasting. This is why it is often the case that the authorities ultimately intervene in support of failing banks. This is what transpired during the Christiania crash – and it has occurred many times since then, both in Norway and other countries. It may be necessary to provide support to banks in distress, but it comes with a major drawback: Banks will expect support also in the future, which is a source of moral hazard. In spite of the term, this is not about morals, but about incentives. The banks’ creditors are induced to charge low interest rates on loans to banks. This leads to the underpricing of risk, which may in turn lead to excessive risk-taking in the banking sector. The problem must be nipped in the bud. No bank should be promised life eternal.

Later, reserves were expanded to include bank deposits and securities in various currencies. Originally, Norges Bank had an obligation to redeem notes against precious metals, a promise that was printed on each and every banknote. This redemption guarantee applied in principle right up to the abolishment of the gold standard in 1931. In more recent times, reserves have primarily consisted of foreign government bonds, first in US dollars under the Bretton Woods Agreement up to 1971 and later also in various European currencies and Japanese yen. Norges Bank was charged with managing the Government Petroleum Fund when the first capital transfers were made to the Fund in 1996. This was a natural extension of our responsibility for managing foreign exchange reserves. The aim of the Government Pension Fund Global, as it is now called, is to ensure that the income from our oil and gas resources will also accrue to future generations. The principle underlying the fiscal rule is that the real return on the Fund can be used over time for consumption or investment. This ensures a gradual phasing-in of petroleum revenue spending, while preserving the wealth. The Fund is the nation’s family silver. It is no longer held in Norges Bank’s vault, as it was during the period of the silver and gold standards. The Fund is invested in fixed-income securities, equities and real estate across the world.
Second the growing importance of bonuses in the financial sector can make it harder to interpret statistics on earnings. City bonuses are generally paid at the start of the year. As Chart 10 shows this leads to big peaks and troughs. At times when changes in earnings growth are of great interest, as they have been in recent months, it is difficult to identify the underlying path. The difficulty is partly a technical issue of how to smooth out the monthly variations. Do we spread the bonuses backwards over the last 12 months on the grounds that they are deferred pay conditional on profits in that period (with the consequence that you don’t know the true earnings figure for any month until over a year later)? Do you spread them forward because they will tend to be spent over the coming year? Or do you do a bit of both? To that uncertainty we can add the fact that there several different measures of earnings growth including two – the AWE and AEI – which are telling a somewhat different tale. 7 There is also a more conceptual challenge. Are bonuses to be treated as part of the cost of labour or are they a form of profit sharing? The economic implications may be quite different. In practice they are probably a bit of both; bonuses are much higher when profits are good, but they are unlikely to disappear entirely in tough times (witness the concept of the “guaranteed bonus”).

But estimating how they divide up is not easy. Money and credit The third area in which the development of financial markets is complicating the interpretation of statistics is money and credit. And again that is an area of keen attention at the moment. The question is whether the recent growth of the money supply is telling us something about the prospects for inflation and the economy that we are not getting from other variables – like consumption, interest rates, prices, or inflation expectations. Chart 11 shows monetary growth over 130 years in the UK against consumer inflation. The association is obvious. But even in the days of the gold standard when the Bank had a more direct control of the money supply, money growth and inflation diverged for periods (eg in the late 19th century and in the late 1920s). More recently, the growth of money in the 1970s did act as a leading indication for inflation. But in the early 1980s the relationship appeared to break down despite,  6  “Improving the measurement of banking services in the UK National Accounts", Leonidas Akriditis, ONS Economic and Labour Market Review, May 2007  7  I have used the AWE in this speech, even though it is the more recent and less well established of the two, because it is designed to handle outliers at the top and bottom of the ranges better and the City has a disproportionate number of outliers.
Every year since then, as a savings plan, the government has let a substantial share of current income from oil and gas remain as deposits in the fund. At the end of the first quarter of this year, the fund’s market value stood at NOK 2 763 billion. See chart “The fund’s market value” at the end of the speech. As the fund increased, the need for a plan for the phasing in of oil revenues became evident. In 2001, the Government and the Storting adopted the fiscal rule, which is based on the deposit of government petroleum revenues in the oil fund. An amount equivalent to the expected real return on the fund, or 4 per cent, as an annual average over time, is transferred back to the central government budget to cover current expenditure. The transfers increase as the fund rises in value. Along the way, the name of the fund has been changed from the Government Petroleum Fund to the Government Pension fund Global. There are prospects that new annual transfers to the fund may be made over the next 10 years or so. This implies further growth in the fund, perhaps up to twice the size of today’s  3  See NOU (Official Norwegian Report) 1983:27 “Petroleumsvirksomhetens framtid” [The future of petroleum activity]. 2  BIS Review 78/2010  fund, which corresponds to one and half to two times annual GDP for Norway. Public expenditure accounts for about half of GDP.

This means that we can and do make judgments about the period over which we should return inflation to target in the wake of a cost shock, notably at present. But we are not in a position where individual members could choose to subordinate the achievement of price stability to that of stabilising output. 2  For a more extended discussion, see Tucker P M W (2007) ‘Central Banking and Political Economy: the example of the UK’s Monetary Policy Committee’ speech at Inflation Targeting, Central Bank Independence and Transparency Conference, Cambridge, Bank of England Quarterly Bulletin Q3 2007, pp 445-452. 2  BIS Review 96/2008  At the other end of the spectrum, our month-by-month votes on Bank Rate are individualistic in precisely Blinder’s sense. And, as he says, that has clear implications for how we convey those decisions. The minutes take primacy. That is partly because it is more difficult for us than for some of our peers to release an informative statement immediately after the policy meeting: if you don’t know what you’re going to decide, it is pretty hard to prepare a draft in advance! Each individual member is obviously in a position to summarise their views. But we could not sensibly have nine individual statements without risking what Alan Blinder calls cacophony. Also, such statements would have to be prepared in advance, so there would probably be less listening and engagement at the policy meeting itself.
Trade volume between Turkey and Egypt has also steadily increased from USD 500 million in 2003 to USD 3.2 billion in 2009. It is expected that these figures will reach up to USD 5 billion in the next three-years. One reason for this rapid increase is that both countries have completed the legal ground which secures free trade between countries. The Free Trade Agreement, which has recently been put into effect, does not only provide opportunities for higher trade volumes but also functions as a framework that brings together investors from both countries. Turkey has long provided a significant conduit for the flow of humanitarian and economic assistance to Iraq. Today, the volume of bilateral trade is also rapidly rising. The bilateral trade volume has been increased significantly since 2006 and reached to 6 billions USD in 2009. The high-level official visits between Turkey and Iraq have been providing impetus to the diversification and advancement of our economic cooperation. Moreover, Turkish companies play a leading role in the reconstruction of Iraq. Our trade with Jordan and Lebanon exceeded USD 1 billion in 2009. With the conclusion of the ongoing negotiations on the Free Trade Agreement between Turkey, Lebanon and Jordan, trade relations among our countries are expected to gain volume. Dear guests,  Increasing commercial relations naturally led to an increase in international banking services among our economies. Having a sound financial position, Turkish banks can contribute both to building commercial and financial links within the region.

Average annual growth of almost 7 percent between 2002 and 2007 faltered in 2008 and turned into a contraction in 2009 as the exports and investment flows dried up considerably due to the global crisis. However, all signs now indicate that the economy has rebounded quickly and is headed towards renewed growth and an improving fiscal balance in 2010. The resilience of the Turkish financial system, combined with our flexible and effective liquidity management framework shaped by the experiences of past crises, has turned out to be considerable assets in managing the recent crisis. As a result, growth forecasts of international institutions for the Turkish economy have been revised upwards repeatedly and reached as much as 7.2 percent, the highest among OECD countries. The crisis and slowly emerging global architecture in its aftermath present major opportunities that have once again highlighted the importance of economic cooperation  2  BIS Review 101/2010  and coordination among countries and economies. In the case of the Middle East this is perhaps best embodied in the multiple synergies in financial integration and joint investment opportunities between Turkey and the Arab world. It is a great pleasure to see that the relations within our region have been strengthening on a solid ground. The strong historical, cultural and social ties among our countries constitute a solid basis to further develop multilateral relations.
Fiscal policies might play a bigger stabilisation role without neglecting the constraints associated with current high debt levels and the implications of demographic changes for the public budget. In both cases, structural policies to expand productivity growth will ease the difficulties associated with the fulfilment by both monetary and fiscal authorities of their stabilisation functions. Macroprudential policies can also be used as additional macroeconomic stabilisation mechanisms, in addition to their role in guaranteeing financial stability. And all of this will have to be achieved while keeping a close eye on financial developments and innovations that will have to meet new demands, mainly to do with the insurance of the longevity risk in an ageing, lowinterest-rate world. 16

The Maastricht Treaty, of course, recognised this risk, and the famous convergence criteria were designed precisely as a means of reducing the risk to manageable proportions by requiring that, before they join the euro club, countries should have achieved at least a minimum degree of macro-economic convergence - demonstrating their commitment to macro-economic BIS Review 29/1998  ˝  -3-  discipline through both fiscal consolidation and monetary policy directed at effective price, and exchange rate, stability. And there is no doubt that all European Union member states have made huge progress towards macro-economic stability over the past few years, which you will find documented in the two “convergence reports”. Although the EMI in particular emphasises the ongoing need in a number of countries to persist in determined fiscal consolidation, it is this progress towards nominal convergence that underlies the European Commission recommendation. The nagging doubt is whether this pursuit of macro-economic stability will in fact be maintained - whether the convergence that has certainly been achieved will, in the terms of the Treaty, prove to be sustainable. A particular worry is that macro-economic stability, on its own, has not been enough to prevent the emergence of very high, and very different, levels of unemployment in a number of the major Continental European economies. Unemployment has been for some considerable time, and it remains, much the most urgent and important economic issue confronting us in Europe.
In 1900, about 24 per cent of GDP was generated by manufacturing and other goods production. If the economists of the time had projected developments in these three industries, they would have estimated that primary industries’ share of total GDP would fall to below 5 per cent. Manufacturing and other goods production would increase its share to 30 per cent and service industries to 66 per cent. Value-added in primary industries fell somewhat more than economists in 1905 would have projected and service industries increased somewhat less. They would have been less accurate in their projections for developments in manufacturing. Although manufacturing’s share of total GDP increased up to the beginning of the 1950s, growth in private and public services gradually bypassed manufacturing, and the petroleum sector held an increasingly important position from the 1970s. The expansion of the petroleum sector and the use of petroleum revenues contributed to maintaining high growth in Norway, while other countries experienced a slowdown. Are there lessons to be learned from the pitfalls of projecting or trend-extending economic variables? Lessons to learn First, one lesson to learn is that it very difficult to predict developments in the real economy. If we were to extend the historical growth trend today to predict the future level of income, we would probably also be considerably wide of the mark. Today, we know nothing about the technological innovations that might appear in the future.

In this regard, with the advancement and the willingness of the general public to experiment with new technology, the electronic payment system possesses distinct advantages over the traditional paper-based payment system. While the unbanked and the underbanked may have limited access to financial services due to geographical limitations and cost considerations, the usage of e-payments by the underserved via mobile technology could help transcend these obstacles by delivering financial services efficiently, securely and at a lower cost compared to the traditional brick and mortar branches. Accelerating the migration to e-payments remains a primary agenda for the country. In carrying our mandate to foster a safe, efficient and reliable payment system in Malaysia, a clear roadmap has been formulated to drive the country’s migration to e-payments. As provided in the Central Bank’s Financial Sector Blueprint (2011 to 2020), specific targets have been set to reduce the number of cheques processed per annum from 207 million in 2010 to 100 million by 2020 and to increase the number of point-of-sale (POS) terminals from 7 per thousand inhabitants in 2010 to 25 per thousand inhabitants by 2020. At the same time, targets are also set to increase the per capita e-payment transactions from 43 in 2010 to 200 by 2020 and the per capita debit card transactions from 0.6 in 2010 to 30 by 2020. Continuous infrastructure investments in this country have provided the enabling infrastructure which can be leveraged to serve the needs of the unbanked and the underbanked.