samchain/econo-pairs-v1 huggingface dataset:
This is a question that has been much discussed in recent years, both between central banks and within the academic world, as house prices have risen rapidly in many countries including Sweden. This debate could in itself be the topic of a speech so let me just briefly say that the position of the Riksbank is that we do not consider it to be reasonable to entirely ignore these risks, even though it might be difficult to take these risks into account in the usual forecasting process. We have therefore acted to reduce these risks and to contribute to a calmer adjustment in house prices. The inflation forecast and future interest rate developments One of the recent changes in our strategy was the assumption regarding the development of the policy rate, which is used as a base for our forecasts. Like most central banks with an inflation target, the Riksbank previously made forecasts under the assumption that the policy rate would not change during the forecast period. Since October last year we instead use an assumption that has gained in popularity among central banks, namely that the policy rate will develop in line with market expectations, as reflected in implied forward rates. The earlier assumption had the advantage that it illustrated in a simple manner when there was reason to change the policy rate.

1 The text was published as an op-ed in Expansión on 6 December 2018. 2 See the survey entitled “Europe as seen from Spain and France” (Europa vista desde España y Francia), Elcano  Royal Institute, March 2018. 3 See “The international role of the euro”, ECB interim report, June 2018. 4 See Almunia, Miguel, Pol Antràs, David Lopez-Rodriguez, and Eduardo Morales. 2018. “Venting Out: Exports  during a Domestic Slump”. 2/2  BIS central bankers' speeches
Leading the Change: Climate Action in the Financial Sector Speech given by Sarah Breeden, Executive Director, UK Deposit Takers Supervision Executive Sponsor for Climate change  UK Finance Webinar held during London Climate Action Week 1 July 2020  I am grateful to Zane Jamal and Theresa Löber for their assistance in drafting these remarks 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Good afternoon everyone. I would like to thank UK Finance for inviting me to speak today during London Climate Action Week on what I consider to be the defining issue of our time – climate change. I realise that this may seem an odd claim for a central banker to make in the middle of a global pandemic that has already led to the largest fall in UK growth in over three hundred years.1 But our economy and financial system, with the right support, should eventually recover from Covid-19. In contrast, climate change, left unchecked, will lead to irreversible harm for generations to come. That demands our continued attention even as we deal with the current crisis. We are at the start of a critical decade for climate action where the decisions we take today will shape the future of our planet for decades to come. ‘Action’ being the key word. If the previous decade was marked by a ‘call to action’, then this coming decade must answer it. That means an economy-wide orderly transition to net-zero emissions. We all have a role to play in that.

To that end, and because we expect as much from ourselves as we do of the firms we regulate, we at the Bank recently published our very own first TCFD-aligned climate disclosure report.12  9  Task Force on Climate-related Financial Disclosures (TCFD) As of February 2020, support for the TCFD has grown to over 1,027 organizations, representing a market capitalization of over $ trillion. https://www.fsb-tcfd.org/tcfd-supporters/ 11 The Bank is part of a UK regulators taskforce led by the UK government to examine the most effective way to approach climate disclosure. The taskforce was created as part of the launch of the UK Green Finance Strategy 12 Bank of England climate-related financial disclosure 2020 10  5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  The amount of work involved was significant, as was the focus of our most senior executives, Governors and our Court (Board). We learned a lot that we will build on in future disclosures. In line with views we have heard from firms, we found identifying useful metrics to set targets for risk management the most difficult aspect. But these challenges did not stop us - and they should not stop you. Of course, disclosure by firms and their clients is only one part of the challenge. Firms also need to use this information to understand and manage actively the climate-related risks in their business. Our interaction with banks and insurers has revealed they are in the early stages of developing their climate-related financial risk management capabilities.
We have absolutely no signs of this in France. But, in all countries, banks have been (or will be) exposed to a triple shock: unwanted expansion of their balance sheets through reintermediation; higher cost of capital as a consequence of the decrease in share prices; and, finally, a deterioration in the quality of their assets if the credit cycle turns downward or valuation problems appear for some securities (all this, according to Basel II, would mobilize additional capital). Tighter credit conditions might be desirable. Repricing of risky assets, better risk compensation and more attractive yields may ease some of the restrictions and bring in new investors into the markets. However, quantitative constraints on credit distribution could be very damaging – especially if corporate bond issuances were to stay, as they are now, extremely low. Challenges for central banks The most immediate was to restore the orderly functioning of the interbank market. This has been done by providing liquidity to the market. Actions by Central banks have raised some concerns about so called "moral hazard": would liquidity provision lead to "bailing out speculators"? In fact, we have responded to an exogenous and general increase in demand for Central Bank money and ensured smooth management of liquidity conditions. No more, no less. This is the job of Central Banks. Clearly, as experience in some countries has shown, it is not an easy one and we may have to think, in the future, about our modalities of intervention. I am personally very satisfied with the way we have operated.

There is, of course, a circularity involved, since liquidity depends on valuation, fair value must be based on a market price, and the ability to price an asset itself depends on sufficient liquidity in the market. The difficulty to get out of this circularity in periods of stress is currently creating significant uncertainty. o  Hence a dependence of the whole market on the rating process. In a securitized world, investors heavily rely upon rating agencies to provide information about the risks attached to various instruments. These agencies have been strongly criticized recently. It is not my purpose to enter into any blame game. Suffice it to say that there has been a deep misunderstanding between investors and rating agencies as to the scope and true meaning of ratings. Most investors were not fully aware that rating did not encompass liquidity risk; nor did they realize that ratings for structured products were intrinsically more volatile than for more simple "plain vanilla" securities. The use of identical metrics for rating what are fundamentally different categories of assets certainly did not help and may have contributed to the confusion. o  Finally the turmoil has revealed the fragility of off-balance sheet structures and vehicles which underpinned securitization. Conduits, especially SIVs, were not built to absorb shocks. Their relationships with sponsor banks are sometimes very ambiguous.
In our management of the Fund, we must do more than concentrate on relative return, or the difference between the return on the benchmark index and the return on the Fund. Investment strategy advice to the Ministry of Finance must be based on assessments of absolute returns. For the property investment portfolio, which is currently being built up, detailed knowledge of the value of the underlying assets is essential to be able to judge whether an investment will generate the desired real return over time. Knowledge about underlying values is also necessary in order to maintain an active approach to the benchmark indices – and to make adjustments as required. Conclusion Today, I have focused on changes in the world’s economic geography and the challenges they entail. Large imbalances will necessitate readjustment. The solution to the problems does not lie in restricting world trade. We should recall that the increase in trade and free capital markets has primarily resulted in substantial gains. Emerging economies have in a short space of time assumed a more prominent role in the global economy. Many people have been lifted out of poverty. These developments should be allowed to continue.

When international investors lost confidence in the ability of governments to defend the fixed exchange rate, the countries encountered difficulties. Sharp currency depreciations and major readjustments followed in many countries. Even though economies in this region have fared well in recent years, the experience may have left its mark. A number of Asian countries, China in particular, have chosen to keep their currencies pegged to the US dollar. As long as the Chinese authorities are successful in keeping the exchange rate fairly fixed, competitiveness and a trade surplus will be maintained. However,  3  2  US Bureau of Labor Statistics. International Labor Comparisons. Manufacturing in China. http://www.bls.gov/fls/china.htm  BIS central bankers’ speeches  such a policy is at the expense of deficit countries, which would have preferred to see an adjustment in the yuan exchange rate. China’s exchange rate policy is therefore under strong pressure, especially from the US. But China’s economic strategy is based on its own experience and the experience of others. First, China has chosen to focus on the export of finished manufactured goods rather than domestic consumption as the basis for growth. So far, this has resulted in dynamic developments where growth has been kept high owing to increasing opportunities for people in rural areas to move to new jobs in towns and cities. A stable exchange rate has contributed to predictable operating parameters for a rapidly growing export industry and has held up competitiveness.
As described  10  In addition to improving competition in money markets, by conducting a daily operation with a known, fixed rate, the Fed can reduce uncertainty and absorb day-to-day variations in the supply of and demand for funds and collateral. An eligible lender that cannot earn the IOER rate and that has an unexpectedly large amount of funds to invest would be able to place the funds in the ON RRP facility rather than sell them in the market at an unusually low rate. This should reduce downward pressure on money market rates. 11  See the discussion in the minutes to the June and July FOMC meetings, http://www.federalreserve.gov/monetarypolicy/fomcminutes20140618.htm and http://federalreserve.gov/monetarypolicy/fomcminutes20140730.htm. 12  See the Survey of Primary Dealers and the Survey of Market Participants  BIS central bankers’ speeches  5  earlier, if the magnetic pull of IOER alone is insufficient, ON RRPs should help to form a floor on rates by providing a risk-free, overnight asset to a broad range of non-bank investors. As a result of these forces, the effective funds rate should generally print within the target range. That said, as the Chair noted during her September press conference, the Committee expects that the effective fed funds rate may vary within the target range and could even move outside of it on occasion. For example, the effective rate could move outside the target for a day or two around key financial reporting dates, such as quarter-ends, when some banks’ marginal balance sheet costs are particularly high.

Similar to IOER for banks, ON RRPs provide a risk-free overnight investment directly to a broad range of bank and non-bank counterparties. By reaching financial institutions that are ineligible to earn IOER, an ON RRP facility widens the universe of counterparties that should generally be unwilling to lend at rates below those available from the Fed. Such a facility could also enhance competition in money markets by offering an alternative safe investment and thus  6  Moreover, competition may be imperfect in some money markets currently, allowing spreads to persist longer than they would if markets were more competitive. For example, much money market activity is over-thecounter, potentially leading to search frictions and bargaining. Anecdotal evidence suggests that lenders typically interact directly with a relatively small number of counterparties, perhaps because a portion of the activity is derived from costly relationship lending. Finally, to limit counterparty credit risk, lenders sometimes seek to diversify their lending and apply concentration limits, which are often binding. 7  As I’ll explain, high-frequency variation in balance sheet costs could induce high-frequency changes in the pull of IOER and, in turn, the spread between the IOER and money market rates. We see this transitory dynamic around financial statement reporting dates. On these dates, balance sheet costs for some banks increase, and the fed funds rate and other money market rates fall relative to the IOER rate.
(4)  Banking business and banking transactions have become very complex. Development of offbalance sheet transactions and derivative markets had an enormous impact on the banks’ balance sheet structure, level and variety of risks to which they are exposed. Based on these developments, the importance of derivative instruments in banks’ risk profile has increased. BIS Review 79/2000  2  (B)  Risks arising from globalization  If we evaluate the risks arising from globalization, we realize that there are losers as well as winners in the process of globalization. It is a well-known fact that the process of globalization does not evolve equally worldwide. Some countries obtain great benefit from the process, mainly driven by their rapid integration into the global economy relative to other countries. In other words, the integrated global economy does not guarantee that the benefits of globalization are shared by the all countries involved in the process. More importantly, opportunities provided by the globalization process are not always beneficial, as shown by the recent crises. Hence, the process of globalization always carries social, economic, financial, cultural and even political risks in addition to the risk of contagion. There are several reasons for this situation. Some of them are beyond the control of the countries involved such as external shocks and other unexpected changes in external environment.

I will conclude here my brief address, wishing you fruitful debates and viable, useful solutions by the end of today. To all the foreign guests, may you enjoy your stay in Romania. Thank you. 2/2  BIS central bankers' speeches
The International Energy Agency has called for a 55% reduction in coal-related emissions by 2030 and a full phaseout of unabated coal in power generation by 2040. Early phaseout of coal is especially critical in the Asia Pacific. The region's coal plants account for about a third of APAC's total GHG emissions. More ominously, if they continue to operate as planned, they will exhaust twothirds of the carbon budget that we have remaining to keep the rise in global temperatures from increasing to within 1.5 degrees Celsius. The challenge of phasing out coal is also most acute in the Asia Pacific. Coal accounts for nearly 60% of power generation in the region. Asia's energy demand is projected to increase by two-and-a-half times by 2050, on the back of economic development, population growth, and urbanisation. The Asian Development Bank estimates that around 150 million people in APAC still do not have access to electricity. So this is a huge problem. Asia stands to suffer the most in terms of hundreds of millions of lives due to climate change, and yet the transition is going to affect them the most as well. 1/3  BIS - Central bankers' speeches  Added to the challenge, Asia's coal plants are young, less than 15 years old on average. This makes the economics of phasing out coal more challenging, especially as new coal plants continue to be built to keep pace with energy demand.

The aim with a single point of 11  Our starting point for calibrating internal MREL for ring-fenced bank sub-groups would be 90%, with the possibility that this could be scaled down if there are sufficient readily deployable resources. 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  entry bail-in strategy, as the name suggests, is only to put one entity at the top of the group into resolution, preferably a holding company which is only used for issuing capital instruments to the market and otherwise has no or limited operating liabilities. Write down or conversion of internal MREL instruments via contractual triggers will then allow operating companies lower down the group to be recapitalised automatically without putting them into resolution. But legacy non-equity capital instruments in OpCos without the requisite contractual triggers could cut across this. We do not want these to be spared bearing losses for want of a trigger. And so, we are clear that such instruments should not count as MREL beyond 31 December 2021 and if not matured by then we will work with firms to remove them if they represent a barrier to the resolution strategy. This is part of a larger effort to add to the credibility of resolution by being clear to debt investors and other stakeholders how a bail-in will work in practice.
We will then assess and benchmark the results against overseas peers to identify whether there are firstly, any business areas – such as Investech, Wealthtech, Insurtech and Greentech - where technology is underused, or secondly, any specific technology types, including artificial intelligence and blockchain solutions – that are not receiving sufficient attention. Based on the findings of this exercise, we will consider what support the HKMA can offer to help the banking sector reach the next level of fintech sophistication. If everything goes according to plan, you can expect to see the results in the first half of 2022. 18. In parallel, we will continue to provide guidance on fintech areas that may present opportunities or risk management challenges to the banking industry. This will help banks adopt novel technologies with more confidence and less apprehension that regulators may come knocking! As an example, as part of our two-year Regtech roadmap, we will soon be publishing a “Regtech Adoption Practice Guides” series to address how Regtech solutions can be applied to cloud computing, blockchain and anti-money laundering surveillance. 19. Despite this promise of support, we recognise that banks, especially smaller ones, may still have doubts about going “all in” with fintech given the heavy talent and resource investments required. However, we are confident that by offering support that is targeted, specific to local market circumstances, and where it is needed, banks of all sizes will soon grow to appreciate the case for “going” fintech.

I would like to thank you for your attention, and hand over to my colleague Dewet Moser. He will be discussing the challenges for monetary policy implementation in turbulent times. 4  Figures refer to the World Sovereign Bond Index from Bank of America Merrill Lynch. The index contains over 2,000 government bonds with residual maturities of at least one year and minimum requirements on the size of individual issues. 5  The G7 nominal interest rate is derived from the nominal GDP-weighted yields on ten-year government bonds of the following countries: the US, Japan, Germany, the UK, France, Italy and Canada. BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13
The United States is in one of the longest phases of rising GDP of the post-war period and, last year, the euro area had the highest growth in ten years. However, it takes time for the strong economic activity to affect inflation. Although the recovery has come far after the years of financial crises and low growth, wage increases have been unexpectedly low in many advanced economies. In large economies such as the United States, Canada, Germany, Australia, as well as in Sweden, unemployment is close to or below levels at which wage growth, historically speaking, tends to pick up. In Sweden, we have had a number of years with a combination of low productivity and low expectations of inflation and wages, which partly explains the low wage demands up to now. Even if Sweden has had a strong employment trend in recent years, technological innovations and international competition will entail a transformation in which jobs will disappear and need to be replaced by new ones. These forces, in combination with long-term stagnation in the euro area after the financial crisis, are also leading to employees becoming more cautious with their demands. 3 It is feasible that the upheaval these forces cause at workplaces may also make it difficult for individuals to assess whether they risk becoming unemployed and, if so, what their position might be on the labour market. Low wage expectations are a global phenomenon and can contribute towards those already in employment becoming less interested in looking for a better-paid job.

The internal combustion engine enabled transportation independently of the rail network in the form of motor vehicles and aircraft, and electricity has given us light, warmth and the power of movement. Now, at the start of the 21st century, we have to deal with all the opportunities, but also challenges, brought by the Internet, digitalisation, robotics, biotechnology and artificial intelligence. Experts often disagree over how revolutionary these technologies will turn out to be for the economy in the long run, but we can see how they affect us in our daily lives. * I would like to thank Åsa Olli Segendorf, Anders Vredin, Marianne Sterner, Charlotta Edler och Ann-Leena Mikiver for useful suggestions for this speech  1 [5]  Take, for example, digitalisation, which is impacting sector after sector. How many record shops are there these days? Where’s the nearest video rental store? How often do you find yourself keeping an eye on the time so as not to miss a certain TV or radio programme? Increasing numbers of us subscribe to streaming music and film services, read the news on the Internet instead of in paper newspapers, listen to podcasts and use catch-up TV services and YouTube channels. It’s quite fun being a consumer these days. Also on the other side of the economy, the producing side, can we see markets being reshaped and both the number and nature of jobs being changed. My sector, the financial system, and my workplace, the Riksbank, are also being affected by these changes.