samchain/econo-pairs-v1 huggingface dataset:
ECONOMIC PERSPECTIVES Address by Governor Øystein Olsen to the Supervisory Council of Norges Bank and invited guests on Thursday 13 February 2020  THURSDAY 13 FEBRUARY 2020  Economic perspectives 2020  NORGES BANK ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  FROM OIL AND GAS TO FINANCIAL CAPITAL “We are now moving into the final phase of a period where domestic raw materials and energy sources have provided an essential basis for economic expansion. Hereafter, growth must increasingly rely on the production of finished goods in areas where we do not have a natural advantage.”1 The same could be said about the challenges facing the Norwegian economy today. But this quote is from 50 years ago – from the annual address by central bank governor Erik Brofoss on 16 February 1970. The 50th anniversary of the first oil discovery on the Ekofisk field was commemorated in October last year. Aptly enough, this took place on the same day as the Government Pension Fund Global (GPFG) topped NOK 10 000 billion. In the governor’s address on the economic situation, there was no mention of what was to become Norway’s main revenue source over the next half-century. In hindsight, it can be said that what was to be his last annual address may not have been the most prescient. To be sure, it was still highly uncertain at that time how much oil and gas were actually hidden under the ocean floor 320 kilometres southwest of Stavanger.

The selection of a champion city recognises the enormous potential of cities across Malaysia, where three quarters of our population live, to be the engines of innovation. In our work at Bank Negara on a range of issues – whether it is to improve access to financing, promote financial inclusion or lift economic efficiency through migration to electronic payments – our collaboration with cities and their leaders has been the source of many solutions and breakthroughs in addressing the challenges that we face. This reflects the close and vibrant communities and networks within cities that can be drawn upon much more quickly and effectively to deliver solutions that will benefit the community. As a champion city for remittances, Kota Kinabalu will similarly be able to show the way in generating new solutions for remittances. There are many valuable lessons that we can take from our recent experience with the Greenback project in Johor Bahru. But it will be important for us to receive your ideas and your input to ensure that we are addressing the specific needs and circumstances of people and businesses in Kota Kinabalu. Kota Kinabalu has a sizeable population of foreign workers who contribute to the state of Sabah, while supporting and improving the livelihoods of their families back home.
Rates used are as follows: Short rates: 1694–1717 – Bank of England Discount rate;1717–1823 rate on 6 month East India bonds; 1824–1919 rate on 3 month prime or first class bills; 1919–1996 rate on 4–6 month prime US commercial paper ; 1997–2014 rate on 3month AA US commercial paper to non-financials. Long rates: 1702–1919 – rate on long-term government UK annuities and consols; 1919–1953, yield on long-term US government bond yields; 1954–2014 yield on 10 year US treasuries. 24  BIS central bankers’ speeches  Chart 13: Long run real rates in Advanced and Emerging Economies Percent 6 5 4 3 2 1 0  1990  1993  1996  1999  Emerging Economies  2002  2005  2008  Advanced Economies  2011  2014  -1  'World' Real Rate  Source: King and Low (2014); Bank Calculations. Notes: The “World” real rate (black line) is taken from King and Low (2014) and is based on the average 10-year yield of inflation-linked bonds in the G7 countries (excluding Italy). UK rates have been adjusted to take account of the RPI-CPI wedge. Data availability means that US yields are only included from 1997 so the UK provides most of the historical back-run. Chart 14: Forward real interest rate yield curves Percent  1.0 0.5 0.0 -0.5 -1.0 -1.5  United Kingdom  -2.0  Germany / Euro area 0  5  10  15  20  25  30  -2.5  Horizon (years) Sources: Bloomberg and Bank calculations.

Detailed analysis of trade exchanges confirms high concentration of Albanian exports in certain geographical regions or in certain product groups and their low value added. For stable growth of exports and sound adjustment of the trade deficit, the policy-makers’ attention should focus on increasing the competitiveness of domestic products and expanding the base of exports through accelerated structural reforms. Financial market developments have reflected the low risk premia and inflation, hence enabling better transmission of easing monetary policy signals that started at the beginning of this year. Interbank interest rates have performed in line with the key interest rate, with slight volatility. The primary market yields on government securities have dropped sharply, particularly on longer-term maturities. Over the last months, the interest rate cut was faster on deposits but lower on loans. Interest rates on loans responded more slowly than other market rates due to low lending to economy during the last months. Monetary developments highlight continuation of weak inflationary pressures in the economy. The annual money-supply growth acceleration reflected primarily the private sector’s added demand for financing over the last two months. Also, households’ and businesses’ demand for money remained weak. Private sector credit slowed down sharply, and at the end of May it was 0.2% lower than a year earlier. The weak lending performance  2  BIS central bankers’ speeches  is increasingly reflecting the businesses’ lower demand for loan, alongside the tight lending standards.
Looking at our experience over the last decade, there is a good case for bringing financial stability higher in our priorities. That may imply, in particular, that, when assessing the economic and financial environment, central banks should take a longer term perspective and be more alert to incipient financial imbalances. •  I would note, in passing, that the Eurosystem is well equipped to take such a perspective. Our "two pillar "approach allows us to look permanently at the dynamics of money and credit aggregates, which are essential to detect both long term risks to price stability and potential threats to financial stability. •  But more should be done. It is now broadly accepted that a "macro prudential" approach should be taken when implementing financial supervision. That means looking both at system wide implications of our prudential decisions and their impact on financial imbalances and the real economy. •  Central banks have a major role to play in this process for four reasons: (1) they have an incentive to act, since well functioning financial markets are essential for the transmission of monetary policy; (2) being equipped to permanently look both at financial markets and economic cycles they may have an informational advantage in analyzing their interaction; (3) there independence allows them to produce dispassionate and candid assessments of risks; (4)and, finally, their proximity to the banking system provides them with an intimate knowledge of financial dynamics.

In our view, the key issue here is to reduce a possible large swing in the availability and the price of credit stemming from the tendency of banks to underestimate risks in good times, and then to overestimate them in bad times. On this, our approach has been to ensure that banks’ capital and riskmanagement policy is forward-looking by using a combination of three instruments. The first is stress testing to ensure that bank’s own internal process for assessing the adequacy of capital and overall risk management is alert to possible key risks. Thai banks have begun conducting stress tests as part of the supervisory process since early last year when we first underwent the FSAP assessment. From our experience, we find stress testing to be a useful and effective instrument for helping banks in formulating strategy for capital and risk management in a forward-looking manner. Also importantly, it provides a formal process for a two-way dialogue between banks and supervisors on risk management and on other financial stability issues. The second instrument is the fair value accounting rules or IAS 39, which we have adopted for non-performing loans and for structured products. In our view, these rules can help strengthen market discipline over bank lending and investment. And because fair valuation involves marking to market, its adoption also helps make provisioning for asset impairment more forward-looking. The third instrument is prudential policy to limit excessive procyclicality.
It depends on the structure and the dynamics of the labour market – on the fact that some in the labour force will find it much harder to find employment even when the labour market is tight and on the fact that churn in the labour market will lead to frictional unemployment, even if there are unfilled vacancies, as it takes time for workers who have left jobs to find new ones. If the level of structural or frictional unemployment is reduced the natural rate will decline. Both are influenced by many factors. Structural unemployment, for example, can be (and in the UK almost certainly has been) reduced by changes to social benefits. Frictional unemployment can be reduced if the labour market becomes more efficient at matching unemployed workers to unfilled vacancies. 11  That would also push the natural rate down. Indeed, in its  review of the supply side of the economy in February of this year, the MPC appealed to evidence that secular improvements in the educational attainment of the workforce are likely to have improved the efficiency of the labour market and lowered trend unemployment and, as a result lowered the natural rate assumed in our forecast (Chart 7). Inflation expectations  The same effect of lowering the curve might be occurring, albeit via a very different mechanism, by the impact of inflation expectations on pay growth.

News conference  22 September 2022, 10.00 am  Introductory remarks by Martin Schlegel Against the backdrop of current interest rate movements, I would like to give you a brief assessment of developments on the mortgage and real estate markets. Alongside other factors such as construction activity, income and demographics, interest rates have an impact on the real estate market and on demand for mortgages. In turn, mortgage and real estate markets play a key role for banks and financial stability. After a long period of extremely low interest rates, interest rate levels on the money and capital markets in Switzerland have risen substantially since the beginning of the year. As a consequence, interest rates for fixed mortgages have also increased, while rates for SARON mortgages have remained low. Until now, these interest rate developments have had little effect on growth in the mortgage and real estate markets. Prices for single-family houses and privately owned apartments have continued to rise and mortgage volume has also grown further. One possible reason is that actual interest costs for real estate purchases have increased only slightly due to the shift from fixed-rate mortgages to SARON mortgages. By contrast, there are signs of a slowdown in the residential investment property segment. Available data for apartment buildings indicate a slight reduction in prices in the second quarter. Looking ahead, the tightening of monetary policy should also help to ease the risk situation on the mortgage and real estate markets.
Monetary policy was responding as required, by tightening to bring inflation sustainably back to target in the medium term. The MPC increased interest rates, and announced its intention to start selling UK government bonds – known as gilts – as part of this more general tightening of monetary policy. Subsequently, and following the Government’s fiscal announcements on 23 September, we found ourselves facing an acute stress in the gilt market, which had started in a small corner of the pension world[20]. As gilt yields spiked, some liability-driven investment (LDI) funds found themselves over-leveraged and needing to reduce their borrowing. With insufficient time to raise new capital from their pension fund investors, they faced having to sell gilts into a falling market, further depressing prices and increasing the amount they needed to sell[21]. To stop this self-reinforcing spiral of asset sales the Bank intervened, buying gilts on financial stability grounds. This targeted action over 13 days stabilised the gilt market and in so doing allowed LDI funds to reduce their leverage to sustainable levels. But unlike in the GFC or 2020 ‘dash for cash’, the actions needed for monetary policy and financial stability seemed to point in opposite directions. The MPC had announced its intention to start selling gilts, but to support market functioning and financial stability the Bank needed to buy gilts. This was one of the more limited examples of times when monetary and macroprudential policy weren’t pushing in the same direction.

Speech at the Federal Reserve Bank of St. Louis research symposium on “Restoring Household Financial Stability after the Great Recession: Why Household Balance Sheets Matter”. 1. Stein (2013) 2. Lane (2022) 3. Corradin et al. (2017) 4. Boeckx et al. (2014) 5. Becker and Ivashina (2015); Frazzini and Pedersen (2014) 6. Miranda-Agrippino & Rey (2020) 7. CGFS (2018b) 8. De Nicolo et al. (2010) 9. Schnabel (2021) 10. Cœuré (2013) 11. Bean (2010) 12. Constâncio (2015) 13. CGFS (2018a) 14. Aramonte and Rungcharoenkitkul (2022) 15. For example Allen (2022) 16. Smets (2014) 17. Broadbent (2018) 18. Balls et al. (2018) 19. Bailey (2022a) 20. Breeden (2022)  Page 14  21. Cunliffe (2022) 22. Bailey (2022b) 23. Hauser (2022) 24. Hauser (2023) 25. Cunliffe (2022) 26. Schnabel (2023) 27. Burgess et al. (2013) 28. Aikman et al. (2019a) 29. See Balls et al. (2018) on the importance of measurable objectives for financial stability policymakers 30. For example, Baranova et al. (2019) and Aikman et al. (2019b)  Sarah Breeden Executive Director, Financial Stability Strategy and Risk  ©2023 Bank of England
Furthermore, the statistics should be comparable, but not necessarily  2  See Mervyn King, Governor, Bank of England on the occasion of the tenth anniversary of the central bank's independence: (see Financial Times, Thursday, 3 May). 6  BIS Review 102/2007  identical, across countries. It is positive that others are interested in and debate statistics production.3 With an inflation target for monetary policy, measuring inflation is of particular importance. CPI inflation is used as a reference in the wage negotiations each spring. Many financial contracts are linked to CPI inflation. A number of international studies have concluded that there are considerable measurement errors in official consumer price indices.4 The main criticism is that official indices are not sufficiently adjusted for changes in quality and that they do not capture consumers’ possibilities for shifting consumption away from the goods that show the fastest rise in prices. Many of the studies have concluded that consumer price indices overestimate the actual rise in prices. That is one reason why inflation-targeting countries set the target higher than zero. But there are also studies that point out that consumer price indices can underestimate the rate of increase for some components. Against this backdrop, I will now discuss two particular notional concepts used in estimating the consumer price index in Norway to illustrate the uncertainty; how to impute rent for owner-occupied dwellings and how to measure clothing prices.

Svein Gjedrem: Uncertainty, economic models and monetary policy Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the Centre for Monetary Economics/Norwegian School of Management, Oslo, 17 September 2007. Please note that the text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 15 August, Monetary Policy Report 2/07 and on previous speeches. *  *  *  I welcome the opportunity this time to discuss with you at the Centre for Monetary Economics certain themes that are not related to the most newsworthy economic policy issues. I will discuss the following three themes: •  the role of monetary policy  •  our view of economic models as a basis for interest rate setting  •  and finally, measuring inflation and uncertainty linked to the rate of inflation at a given point in time  Let me start by discussing the role of monetary policy. The primary objective of monetary policy is to ensure that inflation expectations are low and stable. Expectations of low and stable inflation provide a nominal anchor. Economic agents’ inflation expectations influence the decisions they make today. Our experience – and the experience of other countries – shows that without a nominal anchor we cannot achieve stability in employment and output.
Traditional distinctions between regulated and unregulated activities, retail and wholesale, on-shore and off-shore, will blur as conventional models of intermediation are progressively ‘unbundled’. And new networks will emerge to change the way economic agents interact. Some of these developments will be positive. Some may not be. Either way, central banks cannot afford to stand on the sidelines if they are to continue to deliver their mission of monetary and financial stability. 3  See http://www.bankofengland.co.uk/pra/nbsu/Pages/default.aspx and http://www.bankofengland.co.uk/publications/Pages/news/2017/048.aspx respectively. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  Many of the most profound policy questions central banks will have to answer relate to financial stability. Would a financial system based around narrower, more specialist payments, lending or asset management entities be more or less safe than one based around universal banks? If banks themselves increasingly morph into utility providers, acting as platforms for others to sell their wares, what does that mean for the distribution of risks in the system? How does one judge the appropriate positioning of the regulatory perimeter to ensure that risks are appropriately overseen whilst allowing valuable innovation to flourish? Do financial intermediaries and market participants understand the operational and financial risks posed by new models of service provision, communications and technologies, and can they control them effectively? What does the introduction of ever-faster trading and banking systems, and the increasing use of algorithm-based trading and financial advice mean for market dynamics? But FinTech also poses practical opportunities and challenges for central banks’ own operations.

Our first data analysis PoC, undertaken with Privitar, looked at ways to desensitise mortgage data collected by the Bank so they could be shared more widely and used alongside other more aggregated data to draw conclusions about developments in the financial system as a whole. Another PoC, with Enforcd, examined tools allowing the Bank’s legal team to draw out common trends in publically available regulatory enforcement actions in order to inform their own work. The third PoC worked with Experimentus ORB to visualise the performance of internal Bank projects against a range of performance metrics. And our fourth PoC, which we are announcing today will be done with NTT Data and Reportix, will explore ways of storing, 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  organising and combining the Bank’s regulatory and analytical data in a more flexible or ‘multi-dimensional’ way based on the XBRL standard, rather than the current ‘form-centric’ (or tabular) format. Although on the face of it a rather dry and technical issue, improving the storage of data in this way would allow us to make broader connections between data sets, help analyse and visualise trends in new and innovative ways, and make it faster and easier to implement new XRBRL-based taxonomies in the future, without having to reformat all of our databases.
Financial institutions, such as those represented here, with a mandate to promote access to financing for SMEs, can make an important contribution in this field. In any case, it is also necessary to study ways to tackle directly the asymmetric information problems faced by these firms. This in turn requires enhancing the quality and quantity of information available on both the credit track record and the financial situation of companies. In this regard, it is worth mentioning a new regulation recently approved in Spain that obliges banks, under certain conditions, to pre-announce three months in advance should they decide not to roll over existing credit lines or loans at maturity. Also, in those cases banks are obliged to provide relevant information on the credit profile of their customers whose loans are not rolled over. The Banco de España, in response to the mandate conferred to it under this new regulation, is currently working on a Circular, which will specify the relevant information to be  BIS central bankers’ speeches  3  provided to the SMEs in these circumstances, together with a methodology to produce a standardised report on the SME credit assessment. Other actions that could also help mitigate the possible frictions in the credit market during crisis periods include those facilitating debt restructuring by improving the bankruptcy legislation. These measures, if well-designed, could help to smooth the reallocation of resources from non-viable firms to viable and productive firms.

These positive developments, however, should not be taken as conclusive evidence that the task is complete and that all relevant risks have been dispelled. Rather, the consolidation of the recent positive signals in the macroeconomic and financial spheres requires resolve to complete the reforms still pending on various relevant fronts. This should, in my opinion, be  4  BIS central bankers’ speeches  the main priority in seeking to enhance economic growth prospects on a sustainable basis and to mitigate the volatility of the financial and economic cycles. Thank you very much for your attention. BIS central bankers’ speeches  5