samchain/econo-pairs-v1 huggingface dataset:
If we look at the development over the past ten years, we can see for instance that market capitalisation in relation to GDP has grown from approximately 20 per cent in 1990 to almost 90 per cent in 2000. This means that according to this measure, the euro countries have passed Japan, while the USA is still ahead of them. It is interesting to note that the EU countries  2  BIS Review 85/2001  outside of the euro area are at approximately the same level as the USA, or at just over 150 per cent. However, the stock markets in the euro countries are growing rapidly. Between 1995 and 2000 the value of the listed companies in the euro area grew by 276 per cent. The corresponding figure in the USA was 206 per cent. Looking at the number of new issues and number of listed companies also gives a picture of a strong development in Europe. All in all, there is a clear picture that companies in the euro zone use risk capital to a lesser degree than those in the USA, but that the differences are rapidly declining. The rapid developments have also put greater pressure on structural changes in the infrastructure of the stock markets. Since the introduction of the euro, we have seen several examples of co-operation and mergers between stock exchanges in Europe. Euronext, the merger between the stock exchanges in Paris, Amsterdam and Brussels, is one example.

The 40 or so legislative proposals taken up in the plan should come into force by 2005. In an attempt to hasten this process, the Lamfalussy Committee has illustrated how legislation in the financial field within the EU could be adapted more simply. The Committee also identified a number of areas in the action plan that ought to be given special priority. The Committee's proposals were approved at the EU summit meeting in Stockholm in the spring, and the first proposals for directives are now being discussed. I would like to emphasise the importance of this work. Well-formulated, flexible legislation is necessary to enable the financial sector to provide a positive contribution to economic growth. This is made through enabling payments to be made more cheaply, risks to be distributed better and savings to be  BIS Review 85/2001  3  more easily channelled into profitable investments. The comparison with the USA also indicates that there is great potential to be realised in this respect in Europe. The securities market has particular importance in this context. Firstly, as we have seen, the securities markets have gained greater importance as sources of financing for companies, both with regard to risk capital and borrowed capital. Their significance for savers is growing correspondingly, which is clearly illustrated by the rapid development in households' mutual fund savings. As the markets develop they, and more specifically pricing on them, also take on greater significance with regard to resource allocation in society. In other words, improved measures are extremely important.
In periods, this has given rise to unrest among local authorities and employees, for example in the traditional manufacturing city of Trollhättan. In Norway, many large multinational companies have closed down operations at home and established their main offices and warehouses in the Stockholm or Malmö/Copenhagen area. Both the Norwegian costs level and population density have been of disadvantage to use with regard to these structural developments. Sweden has partly responded to strong international competition by continuing to develop new and improving existing products and processes. The country has also become a Nordic financial centre by being the home country to four large financial conglomerates. As mentioned the Norwegian economy has benefited from good prices for our export products and proximity to petroleum activities provide Norwegian manufacturing with advantages. However, our oil dependence and a lack of diversification in our industry structure are a source of concern as regard long-term developments  Conclusion Monetary policy’s most important contribution is to provide the economy with a nominal anchor. Today, inflation targeting is the norm for small and medium-sized economies. Exchange rates fluctuate, but there are several ways of hedging against fluctuations. After Sweden switched to inflation targeting, the country has experienced solid output growth and low and stable inflation compared with the previous decades. Since 2002, inflation has fallen sharply both in Norway and Sweden. Between December 2002 and March 2004, the key rate was reduced by a total of 5.25 percentage points in Norway.

The high cost level in the Norwegian business sector is adapted to a situation where we are developing the petroleum sector and phasing in the use of petroleum revenues into the mainland economy. After a period, we will be able to cover a smaller share of our imports using current petroleum revenues and by drawing on capital in the Petroleum Fund. The Norwegian cost level will then have to be dampened, also compared with that of Sweden. Competitiveness may in the longer run be brought back to the level prevailing at the end of the 1960s before Norway became an oil nation. During such a period of adaptation, which may start in 5 or 10 or 15 years, a flexible exchange rate, with a fall in the Norwegian krone against the Swedish krona, will have to play an important role. Where do we stand today? Tariff barriers for trade in goods are low. The EU/EEA agreement also provides for increased trade in services. During the 1990s, capital mobility has increased to a level that is higher than 100 year ago. Free capital flows and free trade pave the way for high economic growth and prosperity, but also entail challenges. Competition has increased in many industries. Labour-intensive processes are being transferred to new EU member states such as the Baltic countries. Some multinational companies have streamlined various production processes and distribution and centralised them in the same location. Saab has been acquired by General Motors and Volvo by Ford.
Certainly there are a number of questions and challenges regarding future developments in the banking system and the regulatory framework for it, as has emerged in the recent White Paper on a Future Vision for the Financial System, but further discussion of that topic must await another opportunity. Early this month, Parliament passed legislation lifting restrictions on the remaining stock of offshore krónur, which amounted by that time to 84 b.kr., or just under 3% of GDP. This represented the final step in lifting capital controls on non-residents’ króna-denominated assets. The assets fell into two categories: so-called offshore krónur, on the one hand, and króna-denominated assets held by the failed banks’ estates, on the other. These assets combined amounted to 65% of GDP at the peak. We reduced that percentage to the current level through various measures taken in 2010-2017 — without disturbing the balance of payments or financial stability, without tapping the Bank’s reserves to an inordinate degree, and without significant legal repercussions. This success has been noticed, including internationally. Alongside the final liberalisation of offshore krónur, the special reserve requirement on capital inflows into the bond market and high-yielding deposits was lowered to 0%. This synchronised effort has delivered positive results. The 5  exchange rate of the króna has not been under pressure due to offshore króna outflows, and the Central Bank has not yet needed to use significant reserve assets in order to fulfil its pledge not to allow those outflows to weaken the currency.

It could be argued, too, that this is more likely an underestimation than an overestimation, as there is systemic positive bias in household inflation expectations and the breakeven inflation rate in the market entails risk premiums. The effect that the real rate has on domestic demand and inflation depends on what the equilibrium real rate is considered to be at any given time; that is, the real rate that neither stimulates nor dampens the economy. The equilibrium real rate has probably fallen in Iceland, as it has in most economies in the wake of the financial crisis, but exactly where it lies is highly uncertain. One of the Monetary Policy Committee’s tasks is to attempt to assess it. It is normal that Central Bank interest rate should rise above equilibrium when a positive output gap develops and inflation is above target, but neither is the case at present. That being so, it was appropriate to contain the rise in the real rate by lowering the Bank’s nominal interest rates. 2  BIS central bankers’ speeches  Some will surely ask: Shouldn’t the Bank have lowered interest rates earlier? Hasn’t the monetary stance simply been too tight in the recent past? I don’t think this is the right time to dissect these questions, not least because many things look different in the rear-view mirror. As is said in Njáls saga, “Everything is ambiguous in retrospect.” That said, I think there are solid arguments in favour of a negative response to both questions.
In this regard, the reform in late 2022 of the Code of Good Banking Practice (CGP) focuses precisely on orderly debt restructuring for household segments with a high degree of socio-economic vulnerability. The Banco de España will assess its implementation as more data become available. How different banks and financial systems position themselves against these risks will determine how resilient they are. In this regard, amid such high uncertainty, including that surrounding the degree of monetary policy tightening, Spanish banks must implement a prudent provisioning and capital policy. A policy that earmarks part of the short-term increase in earnings to bolster the sector’s resilience would thus put it in a better position to absorb any potential losses should the worst risk scenarios materialise. From a European standpoint, it should also be noted that a smoother-functioning euro area with improved governance would contribute hugely to making the European financial system less vulnerable. In particular, the creation of a fully mutualised European deposit insurance scheme would boost the confidence of citizens and the markets and contribute to increased risk-sharing in the euro area and, thus, to reducing potential episodes of fragmentation. 9  The values within this range are obtained based on different assumptions regarding the percentage of debt that matures in the short term and is refinanced. The 6.8 pp impact at the upper end of the range assumes the full renewal of the debts maturing in the short term.

8  Further, the longer interest rates remain high, the greater the likelihood of additional upward adjustments to banks’ funding costs and of a deterioration in credit risk quality. With regard to financing, the gradual reduction in, and increased cost of, Eurosystem liquidity facilities and the developments seen in deposits (with depositors seeking better remunerated financial instruments and having used up part of the savings buffers built up during the pandemic) may accelerate the increase in banks’ cost of funding. The continuation and/or heightening of the recent tensions in the global banking sector could also contribute to this increase. As for the future increase in credit risk, our estimates show that a market interest rate increase of 400 bp, somewhat larger than the gain of approximately 365 bp seen in the 3month EURIBOR, could push up non-financial corporations’ median gross debt burden ratio by between 2.9 pp and 6.8 pp9 and the share of corporate debt held by firms under high financial pressure10 by between 6.5 pp and 8.9 pp. In the case of households, it is estimated that a 400 bp rise in the 12-month EURIBOR (slightly less than the 410 bp increase seen since the beginning of 2022) would raise the percentage of indebted households with a high net interest burden11 by 3.5 pp. This increase would tend to be stronger for lower-income indebted households, which are also those most affected by the rise in inflation.
Given the major challenge ahead, I feel we are very fortunate to have with us today some of the world's leading experts on these issues. Experts are abound in this room, and I hope you foster good network and contact with all these world class players, some are on the podium, and some are sitting among the audience. Ladies and gentlemen, It is a pleasure for me to declare the opening of the " Seminar on Market Risk Management Techniques for the BIS Capital Regime" and I wish you every success in your endeavor to meet these challenges. Thank you. BIS Review 87/2001  3

Or: With expanded markets and choice available for high net worth customers, will it make it harder for domestic financial institutions to continue supporting inclusion outcomes that are partly cross-subsidised by high net worth business today? Correspondingly, to what extent will this impact the cost of financial services for the poor, potentially making them even more unaffordable than before? Or: Are there opportunities to bring new technologies and emerging practice into domestic markets and simultaneously create an environment for them to take root and spawn original domestic applications that will create additional multiplier effects? Or: How might easier cross-border access encourage new business partnerships that would enable financial institutions to penetrate untapped customer segments more efficiently and reduce associated information asymmetries? Answers to such questions can be important in how we think about and approach financial integration. Ultimately, behaviour matters, and therefore needs to be explicitly addressed in financial integration strategies. Unless we also turn our attention to the behavioural responses of financial actors in a more financially integrated region, we may find that our best efforts to strengthen the pillars for greater financial inclusion ultimately does not deliver as expected. Financial inclusion and financial integration strategies therefore need to come together through deliberate approaches that are mutually reinforcing.
The krona depreciated by around 15 per cent in a very short space of time during the financial crisis. What effects can this have on Sweden’s economy? The effects of the exchange rate on inflation One of the most important effects of changes in the exchange rate, and particularly important for a central bank with an inflation target, is how inflation is affected. We have seen that the nominal exchange rate of the krona depreciated by around 15 per cent over a short space of time in connection with the financial crisis. One way of trying to estimate how this affects inflation is to study pricing behaviour at company level. Let us assume that a company imports a product into Sweden. To make the example more concrete, let us assume that it imports cheese from France. When the krona weakens against the euro, the importing company has to decide how this will affect the price charged in kronor. Let us assume that the krona depreciates 15 per cent against the euro. The importing company probably has an agreement to buy the cheese for a particular price in euro. This means that the cheese will now cost the importer 15 per cent more in kronor. How much of this cost increase should then be passed on to the consumer price? In the long run, if the krona depreciation continues, the importer can perhaps negotiate a slightly lower purchase price in euro.

12  BIS Review 3/2010  Figure 7 Sweden’s current account and real exchange rate Per cent of GDP and index, 18 November 1992=100  Note. Striped bars and broken lines represent the Riksbank’s forecasts. Sources: Statistics Sweden and the Riksbank. Many indications that krona will continue to appreciate Let me now summarise the Riksbank’s assessment of the more long-term developments in the exchange rate. Our assessment is that the surplus on the current account will decline over the coming years, and this is linked to a stronger real exchange rate. In recent years, growth has been relatively high in Sweden compared with other countries, and our assessment is that this tendency will continue. There are thus good arguments why the real exchange rate should strengthen in the coming period. The real exchange rate can strengthen not merely through an appreciation in the nominal exchange rate, but also by inflation being higher in Sweden than in other countries. However, we have no reason to believe that inflation in Sweden will differ substantially from that of other countries over the coming years. The change in the real and nominal exchange rate could therefore be expected to be roughly the same size (see Figure 3). In addition to the more long-term driving forces that I have taken up, there is a further factor pointing to a stronger krona in the coming period. The severe weakening of the krona as a result of the financial crisis was probably linked to the financial turmoil that arose.
William C Dudley: US monetary policy and its global implications Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Central Bank of the United Arab Emirates, Abu Dhabi, 13 November 2014. *  *  *  It is a pleasure to have the opportunity to speak with you here today. In my remarks, I will assess the outlook for the U.S. economy and the progress that the Federal Reserve has made toward its dual mandate objectives of maximum employment in the context of price stability. I will argue that we are now closer to achieving these objectives. That is the reason why the Federal Open Market Committee (FOMC) ended its latest Treasury and agency MBS asset purchase program last month. But we still have further to go. Although the U.S. labor market has shown substantial improvement, there still is a meaningful gap between where we are and full employment. Also, inflation continues to undershoot the FOMC’s 2 percent objective. This argues for patience with respect to the timing of lift-off of the federal funds rate and the beginning of the normalization of monetary policy. Although patience is appropriate, if all goes well, I anticipate that we will begin to raise short-term rates sometime next year. That would be a welcome development, because it would indicate that the U.S. economy has largely recovered from the damage caused by the housing boom and bust, and the financial crisis.

BIS Review 67/2000  4  Chart 3 Consumer confidence indicator and interest rate differential  Chart 3 illustrates the correlation between changes in the consumer confidence indicator and the differential between long-term and short-term interest rates since 1992. The consumer confidence indicator attempts to chart households’ confidence in and expectations concerning their own financial situation and the nation’s economy, and represents a leading indicator for private consumption. The differential between long-term and short-term interest rates is an indicator of the tightness of monetary policy. A negative differential means that short interest rates are higher than long rates, and may be taken as an indication that monetary policy is contractionary. The correlation between the interest rate differential and the consumer confidence indicator would seem to imply that monetary policy, at least in certain circumstances, has a swifter and stronger effect than previously assumed. The effects of monetary policy are channelled through the real economy and the exchange rate. As already mentioned, traditionally there has been a considerable lag before changes in the real economy have affected price and cost inflation. However, if expectations are reflected in household and enterprise behaviour, prices may be affected more swiftly. If price expectations are affected, the effect on the exchange rate will be intensified, since lower price inflation in isolation implies a stronger exchange rate. It is thus likely that there is a third channel which monetary policy can affect, which we may term the expectation channel.
These are potential reforms to the international monetary and financial system (IMFS) and how small, open and financially integrated economies (SOFIEs) can preserve monetary and financial stability in a world of global financial integration and large and volatile capital flows. Both of these are unfinished business and the road ahead is foggy. The post-war global economic order was initially based on the principles of free trade in goods, current account convertibility, and monetary stability through fixed but adjustable exchange rates vis-à-vis the US dollar. Open capital accounts were the exception, however. At the time, trade integration was seen to be more important for economic progress than financial integration. It worked well for a long while, and some call the period from 1950 to 1970 the golden years. Yet there were inherent flaws in this set-up that contributed to its demise in the early 1970s, not least the well-known Triffin dilemma regarding the conflict between the domestic economic objectives of the country providing the main reserve currency and the required international supply of that currency. In this case it was the US dollar. Then capital accounts were opened up, with strong momentum in the 1980s and early 1990s. Capital controls were increasingly undermined by technology and financial innovation, and strong arguments were being made to the effect that open capital accounts would bring significant benefits. After all, ongoing real economic integration at a global level demanded at least some degree of global financial integration.

The exchange rate has been relatively stable after the adjustment that took place in the first half of last year, and the króna is currently somewhat stronger than historical measures would warrant, although it should be admitted that determinism is probably not the most suitable approach for assessing currency developments. One reason for uncertainty about the exchange rate is the large current account deficit, as well as the fact that it can easily be driven by factors over which we have no control, given how closely Iceland’s financial sector is now integrated with global financial markets. A central bank with a legislative and regulatory remit to target inflation is of course pleased with such inflation developments, but would prefer them to be built on a more solid foundation. Domestic demand growth has declined, but rather more slowly than the Bank had hoped. The current account deficit is large and will also contract more slowly than the Bank would have desired. Demand remains buoyant in the housing market and there are indications that the rate of credit growth may be on the increase again. For these and other reasons, the Bank will remain on the alert and not ease its monetary stance until even clearer signs emerge that a lasting change has been established. Equity prices have soared in Iceland in recent years.