samchain/econo-pairs-v1 huggingface dataset:
Normally, an increase in the repo rate leads to a strengthening of the krona. This is partly because Swedish assets appear more attractive than investments in other currencies. A stronger exchange rate affects inflation directly in that imported goods will become cheaper. Inflation is also dampened indirectly in that foreign goods become cheaper than domestically-produced goods. This leads to a rise in imports and a decline in exports. Lower demand for domestic goods contributes to a reduction in resource utilisation and dampens inflationary pressures. In addition, inflation expectations are important to how companies set prices and to wage formation, and thereby to inflation. If everyone trusts that inflation will remain low, the companies do not need to change their prices so often, and employees do not need to increase their wage demands. This makes it easier for the Riksbank to achieve the inflation target. Some of these mechanisms act on inflation fairly quickly, while others take longer to have an effect. Empirical research indicates that a change in the repo rate has its greatest impact on inflation after one to two years. This means that the Riksbank must base its actions on forecasts of what direction inflation will take. Such assessments are made six times a year, prior to the monetary policy meetings, and they function as a basis for the interest rate decisions.

5  Typically, policymakers think about that in terms of the “output gap”, reflecting firms’ capacity utilisation and slack/pressure in the labour market. By contrast, in the academic literature – notably Michael Woodford’s Interest and Prices – the benchmark is to set monetary policy in order to offset the frictions in the economy, so as to obtain the conditions that would prevail if prices, wages etc were fully flexible. Policymakers and academics need to resolve how big the gap is between those two approaches. BIS Review 112/2008  3  that the textbook policymaker knows how the degree of slack in the real economy acts on future inflation (or the slope of the Phillips curve). The two forces sweeping through the world economy test the way policymakers typically apply various elements of this set up in more routine circumstances. For example, how do the commodity price rises and, separately, the credit crunch affect the “equilibrium” short-term real rate? Is the actual short real rate still an adequate proxy measure of monetary conditions? Is the “normal” relationship between economic slack and future inflation intact? The cost shocks, and monetary conditions Although they have fallen by nearly $ since the peak reached in July, oil prices are still up more than 200% since the middle of 2003; and, indeed, around 3% since the beginning of this year.
Ravi Menon: Financial advisory services – putting the customer first Keynote address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Life Insurance Association 50th Anniversary Gala Dinner, Singapore, 26 March 2012. *  *  *  LIA President, Mr Tan Hak Leh Distinguished guests, ladies and gentlemen, good evening. Role of life insurance and financial advisory services Saving for the future, investing for returns, and protecting against risk – these are the fundamentals of managing our finances. Yet so few of us do it well. We are far better at earning an income than investing it and protecting against risk. To make matters worse, many life insurance and investment products are often not easy to understand. Many people are not financially savvy. And many of those who are, do not have the time to review the range of insurance and investment products available, and understand what is best suited for their needs. This is where financial advisory service comes in. Financial advisers can help people identify their insurance and financial planning needs and recommend suitable products. The roles of insurers and financial advisers are intimately intertwined. It must be so. Insurance protects dependants. Investments grow savings and wealth. How can we buy insurance without regard to our broader investment portfolio? Likewise, how can we invest without considering how well we are protected against death or disease? Life insurance and financial advisory services go hand in hand.

First, however, it is important to underscore the advantages that accrue from a global financial system of the type that has been developed in the past decade. The countries which participate in the international capital market tend to have higher per capita growth rates than other countries. The globalisation of production and trade calls for new solutions for payments and financing. It is also a great advantage to have a financial system that is capable of channelling savings to those parts of the world that need them most for investment. However, participation in the international capital market presupposes that a country has an adequate banking system with accounting regulations and other institutions, such as thorough supervision that ensures sound banking practices. This has evidently not been the case in a number of the countries that are now affected by the crisis. Nor should we forget that the banking system in Sweden was not fully prepared at the time when our credit market was deregulated. If loans from the international capital market are channelled to a country where the banking system and other financial institutions are not ready to function in this community, the result may thus be loan losses. But, as you know, it takes two to tango. It may well be asked why banks in the industrialised countries have arranged loans to countries that evidently were not yet sufficiently sound borrowers. Capital has been flowing to emerging markets in a broad stream in recent years.
As a result, house prices are now rising in most areas of the country and homebuilding activity has strengthened. Moreover, there is further scope for gains in homebuilding. After all, the current annualized rate of housing starts – around 900,000 – is considerably below the rate consistent with the country’s underlying demographic trends and the expected long-run rate of household formation. By these metrics, housing starts should ultimately climb back to about a 1.5 million annualized rate. The underlying fundamentals supporting business investment are also good. Profit margins have been high and cash flows strong for some time. Credit availability has been gradually improving. For example, the Federal Reserve’s Senior Loan Officer Opinion Survey indicates that banks are continuing to gradually ease their lending standards for commercial and industrial loans. However, against these improving economic fundamentals, we have two important offsets. The first offset is the unusually high degree of fiscal drag, which the Congressional Budget Office (CBO) estimates at about 1¾ percent of potential GDP in 2013.1 The two most important components of this restraint are the end of the payroll tax holiday and the increase in income tax rates this past January, and, more recently, the government spending cuts resulting from budget sequestration. Another new source of drag for the economy is the sharp rise in long-term interest rates, especially residential mortgage rates – that has occurred since May. So far we don’t have much hard data on how this is affecting the housing sector.

More effective utilisation of technology to improve customer engagements can also increase confidence in the use of financial services. To this end, Bank Negara Malaysia will continue providing an enabling regulatory environment and active facilitation to increase the impact of technology on financial inclusion. This is being driven through several strategic initiatives by the Bank, including the regulatory sandbox, adoption of digital identities for SMEs and piloting the use of psychometric tools for SME credit evaluations. Role of the Financial Industry to drive efforts in SME Financing and Financial Inclusion It has become increasingly important for the financial industry to come forward and address related perceptions on SME financing matters. The industry should actively address issues affecting access to financing by SMEs, by advocating the players to adopt best practices in 2/3  BIS central bankers' speeches  financing activities and lead initiatives to reform inefficient practices. Key strategic recommendations should be made to the Government and regulators to enhance the SME financing ecosystem, particularly in supporting new growth areas and increase contributions by financial institutions to SME sector. In this regard, the financing ecosystem needs to be complemented with comprehensive SME development strategies and initiatives to strengthen SMEs’ capacities and capabilities. This includes efforts towards training and retraining of workers, adoption of technologies in business and operating process, as well as in governance, finance and accounting practices.
The bank’s funding on the other hand largely consists of deposits from the general public and short-term borrowing on the interbank and securities markets. Their funding is thus very liquid. In normal circumstances this is not a problem, as we do not expect all depositors and other lenders to withdraw their money or their funding at the same time. However, this transformation of illiquid lending into liquid funds in accounts makes the banks dependent on the confidence of the funders in the bank's ability to meet its obligations. Suspicions that the bank has financial problems could very quickly lead to a bank run. At the same time, problems that arise in one bank can easily spread to other banks. This contagion can occur in different ways. Firstly, there can be a direct contagion through the exposures the banks have to one another in the payment systems and in connection with foreign exchange and securities trading. Serious chain effects can arise if the customers of a bank that is experiencing problems have their funds tied up at the bank as this makes it difficult for them to make payments to other households and companies. This can lead to liquidity problems that in turn may give rise to loan losses and payment problems for other banks and their customers. 4  BIS Review 135/2009  Secondly, the banks are often exposed to the same sorts of risk. This increases the probability that, for instance, a macroeconomic shock may affect more than one bank.

Another proposal is to set a ceiling for the loan-to-value ratio, that is the size of the loans the banks may offer in relation to the value of the collateral. In addition, there are various proposals that aim to reduce the liquidity risks that have arisen because the banks have become increasingly dependent on short-term funding on the securities markets. The corrective tools also include more or less automatic mechanisms that we can use to reduce the kind of procyclical behaviour in the financial sector that I mentioned before. These are tools that can hinder financial bubbles from developing and reduce incentives to take  BIS Review 135/2009  7  excessive risks. Proposals that have recently been mentioned in the general discussion include allowing the banks' reserves for loan losses to vary in a way that reduces rather than reinforces fluctuations in economic activity, so-called dynamic provisioning. Another proposal with a similar effect is to introduce contracyclical capital buffers, that is, that we should require the banks to maintain larger capital buffers in boom periods when there is a tendency for the provision of credit to expand, but smaller buffers in periods when growth is more limited. Finally, and just as important, there is a need to coordinate the gathering of in-formation and the use of various tools to promote stability between national and international authorities. Work is now underway in Europe to set up a new body, the European Systemic Risk Board.
Øystein Olsen: Navigating normalisation Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Bank of Thailand – OMFIF High-level Seminar, Bangkok, 9 October 2018. * * * First, let me thank you for the opportunity to speak to you today. I am very happy to visit the Bank of Thailand and to participate on this panel. The financial crisis demanded powerful economic policy measures. Monetary policy had to take on substantial responsibility, in Norway as in many other countries. As we are hopefully heading for more normal times, it is important to evaluate our policy framework. Our experience is that a flexible inflation targeting regime has helped dampen the impact on the real economy. In recent years, output and employment volatility has been relatively limited despite large shocks to the Norwegian economy. The exchange rate has played an important role as a shock absorber, especially during the financial crisis and in periods when oil prices have fallen. At the same time, the interest rate level abroad places limitations on the room for manoeuvre in monetary policy in a small open economy like Norway. Our economy and economic policy Before I elaborate on this, I would like to give you some background on my country. Norway is a small country with a little more than five million inhabitants. The economy is open; total imports and exports make up about 2/3 of GDP.

Large exchange rate movements have at times been a source of instability. In Norway, the household, banking and corporate sectors as a whole take on currency risk to a limited extent. Furthermore, government finances are solid, and fiscal policy is not affected to any great extent by short-term exchange rate movements. This allows the exchange rate to play an important role in absorbing shocks to the economy. We have thus been able to reap the benefits of an efficient international capital market without having to deal with its challenges. 1/3  BIS central bankers' speeches  At the same time, in a world of high capital mobility and extensive trade, monetary policy’s room for manoeuvre is constrained by the exchange rate channel. In a small open economy with a floating exchange rate, the domestic interest rate can differ from interest rates abroad. However, an interest rate differential that becomes too wide can lead to considerable exchange rate volatility, which will in turn feed through to inflation, output and employment. Thus, the domestic interest rate cannot be set without regard to the level of external interest rates. The room for manoeuvre in monetary policy is further constrained in periods when external interest rates are close to or below zero. Although the financial crisis in 2008 had a marked impact on Norway, our economy was affected to a lesser extent than most other advanced economies. There are a number of reasons for this. The Norwegian economy was in an upturn when the crisis hit.
This is especially true in life insurance, where policies bought represent a long-term commitment. The industry needs to quickly comprehend changing customers’ preferences and shoulder the responsibility of inculcating responsible consumer behaviour by expanding and deepening the scope of customers’ education and awareness. Through greater understanding of the respective responsibilities, disputes and potential conflicts could be minimised. Balancing profitability with serving the needs of customers for long-term sustainability Industry players that focus on short-term gains will not achieve long-term sustainability. The traditional view that the sole purpose of business is to make money the more the better is no longer a tenable view today. Institutional logic now dictates that companies are more than instruments for generating money; the value that a company creates should be measured not just in terms of short-term profits but also in terms of how it sustains the conditions that allow it to flourish over time. What this means is that industry players today should not be fixated solely on generating profits but rather investing in relationships with their customers. If the industry can meet the needs of its customers, then that relationship will sustain the insurance company or takaful operator even during distressing periods. Regularly benchmark against the best to measure your performance Benchmarking exercises have proven to drive performance improvement by facilitating comparison and performance measurement amongst industry players. It is a yard stick that measures how your company faired in delivering its mandates to its shareholders and customers.

Muhammad bin Ibrahim: Building trust in the insurance industry Speech by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Malaysian Insurance & Takaful Industry Distinguished Partner Awards Dinner 2015 “Building Trust in the Insurance Industry”, Kuala Lumpur, 23 October 2015. *  *  *  It brings me great pleasure to be here tonight at the inaugural Malaysian Insurance and Takaful Industry Distinguished Partner Awards Dinner. Since the Central Bank assumed regulatory role of the industry 27 years ago, the insurance and takaful landscape has transformed significantly. The insurance and takaful penetration rate, measured by the number of policies per population, has increased four-fold from 11% in 1988 to 56% today, and the total paid-up capital of direct insurers has grown twelve-fold from RM635 million to RM8 billion over the same period. Today, the industry has emerged much stronger than when we first started the journey together in 1988. We should take pride in our historical track record the various changes that we had made, the difficult but satisfying journey that we embarked on to realise the full potential of the industry. It is indeed a transformational change that enable the industry to be in the strong position they are now. But at the same time we should not believe that the same thinking and strategy that drove yesterday’s solutions will be as effective tomorrow.
Changes to the target range for the policy instrument - the 3-month Libor - are commented by a press release. They are also discussed after each Quarterly Board Meeting, which are fixed in advance. At our biannual press conferences, we provide our assessment of the economic situation. At these occasions, we inform the public how we judge the risks facing the economy and present our inflation forecasts for the next three years. The forecast should guide the public in monitoring inflationary risks. Given all this, we have taken the extra step to publish the forecasting models that are used to generate our inflation forecasts. The meaning of faith in financial markets Trust is relevant not just for central banks but also for the entire business and financial community. Trustworthy business standards are one of the most important forms of social capital. Trust is paramount to the efficient operation of financial markets, which is a key ingredient of a well-functioning economy. This trust includes confidence in the people who run the companies, and in those who watch them. It also means that the information required to make sound investment decisions is disclosed fully and accurately. The disclosure moreover must be fair. There must be confidence that insiders are not trading on information unavailable to everyone. Only when all these components of trust are in place do we have healthy, efficient financial markets where everyone benefits. What is lost when accounting fraud and the abuse of management power occur?

In the current exceptional circumstances, the imposition of a minimum exchange rate is a measure that has received strong support from economic and political actors in Switzerland and abroad. Both the IMF and the OECD recently confirmed that this was an appropriate response 3 to the risk of economic contraction and deflation in our country. 4 Given the perfect  3  OECD (2012). 4  IMF (2012). 4  BIS central bankers’ speeches  alignment of this exceptional monetary policy measure with the pursuit of the SNB’s price stability mandate, one would imagine that, in the future, the National Bank’s independent status will remain as strongly anchored as in the past. Finally, it is important to consider the risks associated with the SNB’s inflated balance sheet. Our balance sheet has become more volatile, principally because it has grown in size − it is four to five times larger than it was in 2007 – but also because of the volatility of the overall environment. In the course of the last two years, risks have manifested themselves both positively and negatively. In 2010, for example, the SNB experienced its biggest ever loss, but in 2011, it also experienced one of its largest gains. The much increased size of our balance sheet, the unavoidable exchange rate risks associated with our foreign exchange reserves and a dependence on developments in the gold and capital markets, mean that the high volatility of the SNB’s annual results will be a standard feature of the near future.
Benoît Cœuré: Interview with Politico Interview with Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, and Politico, conducted by Mr Pierre Briançon on 23 March 2016, and published on 30 March 2016. *  *  *  The last Governing Council meeting on 10 March seemed to be marked by some ambiguity on negative interest rates. On the one hand, the message was that rates wouldn’t get much lower. On the other, there was the signal that there could be exceptions… The question we are always trying to address is how to design our policy so that it is effective in the situation we face at a given moment. The package announced on 10 March was very potent, both in intensity and in sheer volume. Negative interest rates are not our main instrument, they just support our overall policy. And looking ahead, we’re not short of instruments – our choice is quite large. We will be able to deal with adverse situations if necessary. You indicated that the ECB wasn’t deaf to the banking sector’s concerns about the impact of negative rates on banks’ profitability. Banks’ profitability has improved when you look at the global overall impact of our monetary policy, that is, stronger credit demand and lower risk in the economy. And, as a matter of fact, the interest margin of banks has gone up, not down. Of course, the impact is different depending on banks’ business models and on how negative the rates are.

They went through three crises – the subprime crisis in 2007, the 2009 global economic slowdown and the euro crisis from 2010 on – without a common fiscal backstop (that only came in 2010 with the European Financial Stability Facility) and without the foundations of a banking union. If we were to draw lessons from the experience, I would rather insist on the fact that the euro area was too late and too timid in cleaning up and shoring up its banking system, i.e. stress testing the banks, raising capital and shedding bad loans. That partly explains why our recovery is lagging behind that of the United States. In banking matters, forbearance doesn’t serve a purpose. You can’t buy time. We’re catching up now, but we still have some way to go, and the banking union isn’t complete. Some countries, such as Germany, insist that there should be a limit on euro area banks’ sovereign exposure. Do you agree? There are three dimensions in my view. There is the question of sovereign risk for banks. But we must also consider the consequences for government financing, and the functioning of financial markets, which need risk-free assets as liquidity instruments. If you focus on one aspect of the problem and ignore the others, you run the risk of shifting risk around instead of reducing it. The ECB’s policy is increasingly unpopular in Germany. Do you foresee a moment when it might become an obstacle to your own action? Europe nowadays is a source of irritation for many.