samchain/econo-pairs-v1 huggingface dataset:
Spending was also increased in response to the economic downturn. We can therefore safely affirm that the fiscal rule has been normative for fiscal policy. In the years following 1997, with strong growth in public expenditure, the fiscal rule pointed to a continued increase in the use of petroleum revenues. We had to expect this growth in spending to lead to deteriorating competitiveness in Norwegian manufacturing, either through higher wages or an appreciation of the krone. With stronger wage growth in Norway than abroad, the competitiveness of Norway’s manufacturing industry has weakened by about 15 per cent since the mid-1990s. Competitiveness is about 5 per cent weaker than the average for the past 30 years. The krone exchange rate has been influenced by high oil and gas prices and prices for other Norwegian export goods. Monetary policy has also influenced the path for Norway’s relative costs, but the nominal value of the krone is about the same as 10 years ago. Strong growth in public expenditure and expectations of moderately higher growth in the use of petroleum revenues now seem to have been factored into the cost level. Over the past 30 years manufacturing has been scaled back in waves. The last wave occurred around the turn of the millennium, but a substantial decline also occurred in the period 1977 to 1984 and from 1987 to 1992. Prior to these periods, the manufacturing sector’s competitiveness deteriorated. The usefulness of a fiscal rule is that it gives weight to long-term considerations when addressing day-to-day economic policy challenges.

We are now in a period where petroleum wealth is being invested in foreign financial assets via the Government Petroleum Fund. The government is to gradually phase in petroleum revenues into the domestic economy by using approximately the expected real return on the Fund. The fiscal rule was established in 2001. Growth in public expenditure started to accelerate in 1997 after having been low in the mid-1990s. Spending growth has also been fairly strong in recent years, but perhaps somewhat slower than earlier. Since 2000, spending growth has averaged 6.3 per cent, while GDP growth in value terms has been 4.5 per cent. We have limited overall knowledge about real growth in public service production. Reliable measures of productivity and price developments have not been developed. The fiscal rule for the budget implies that the government can use 4 per cent of the Fund over time. This year, a little more than 6 per cent is being used. The deviation partly reflects an unexpected shortfall in tax revenues in recent years. The government budget deficit is the difference between total  6  BIS Review 10/2005  revenues and total expenditure. They each account for about half of total GDP in Norway. Even small deviations from expenditure and revenue projections can have a major impact on the deficit. Exchange rate changes will also lead to fluctuations in the value of the Petroleum Fund. For these reasons alone, the use of petroleum revenues may in periods deviate from the 4 per cent rule.
Page 6  Undertaking the assessments of access and operating hours is critical The reports encourage central banks and authorities to review the benefits, risks and barriers of expanding access and operating hours and set out a framework to do so. The report on access sets out a holistic framework that central banks and authorities can follow and by providing realworld examples and case studies of jurisdictions that have successfully expanded access. And the report on expanding operating hours encourages authorities to assess the three end-states and reviewing the opportunities, risks and policy implications for each of them. While the reports say “encourage”, I would really urge central banks to undertake such reviews – the more that change, the greater our ability to meet the FSB global targets. With building blocks 10 and 12 being foundational for the roadmap, undertaking the assessments and taking action to expand access and operating hours will also have a direct positive impact across many building blocks. The Bank of England’s Renewed RTGS service I want to bring this to life by outlining what the Bank of England will be doing in response to these two reports and how our RTGS Renewal Programme will support this work. [18] The Bank is in the process of a multi-year project to renew RTGS. While changing our domestic infrastructure, this Programme also has an eye to opportunities to enhance cross-border payments.

Business-to-business crossborder payments grew over 25% over the past two years and reached $ trillion in 2021. [3] A recent study suggested that 87% of global merchant executives see cross-border sales as their biggest growth potential. [4] But despite their importance, many cross-border payments are still slow, expensive and difficult to track. While some wholesale payments are very effective, there are too many cases, for remittance payments in particular, where payments can take up to 10 days and cost more than 10% of the value of the underlying transfer. And this has a very real impact on businesses and individuals. This underlines why enhancing cross-border payments is so critical and why the G20 made it a priority in 2020. To recap briefly, the first step was a Financial Stability Board (FSB), report assessing the frictions and challenges. [5] The Committee on Payments and Market Infrastructures (CPMI) then set out the building blocks that would be instrumental in addressing the challenges. [6]  Page 3  And in October 2020 the FSB coordinating with CPMI and other standard setting bodies, published a roadmap - a high-level plan of the timelines, actions and actors required to progress each building block. [7] The roadmap consists of 19 building blocks that were arranged into 5 focus areas [See Annex PDF]. The first 4 focus areas seek to enhance the existing payments ecosystem by, for example, coordinating regulatory, supervisory and oversight frameworks; improving existing payment infrastructures; and increasing data quality.
A large body of the literature illustrates that the exchange rate pass-through depends on factors such as the monetary policy framework, import composition, trade integration, currency invoicing and the rise of global value chains.5 Broadly speaking, as globalisation has advanced and inflation and inflation volatility have declined, these factors have contributed to progressively reduce the exchange rate pass-through in most developed economies. For example, in the case of the euro area, it has been found that a growing share of local currency pricing has mechanically reduced the pass-through.6 You can see this on slide 2 for the euro area. Today the pass-through to final consumer price inflation may be less than a third of what it was at the beginning of the century. The second reason is more cyclical in nature. It relates to the state of the economy and the response of monetary policy to it. The theory is that exporters will not set their prices as a constant mark-up over costs, but will adjust them to expected changes in their future marginal costs and demand prospects. The implication is that what ultimately matters for the exchange rate pass-through is the type of shock that is hitting the economy. This notion goes back at least to Corsetti and Dedola (2005) but has received more prominence lately following the work of Kristin Forbes and co-authors (2015).7  3 / 14  BIS central bankers' speeches  On the left-hand side of slide 3 you can see initial evidence to support this claim.

For example, since the beginning of April the euro has appreciated by around 13% against the US dollar and 7% in nominal effective terms. Textbook economics would suggest that such sizeable changes ought to lower the prices of imported goods and thereby put downward pressure on producer and consumer prices. 1 / 14  BIS central bankers' speeches  On the left-hand side of slide 1 you can see that there is indeed a strong correlation between annual changes in the euro’s nominal effective exchange rate and annual extra-euro area import price inflation, here shown for consumer goods excluding food, beverages and tobacco. Simple eyeballing would suggest a pass-through of around 40%, at least following depreciations, a point I will return to later. On the right-hand side you can see that the correlation is already much weaker in the case of the pass-through to producer and consumer prices. No discernible pattern emerges over the past seven years or so. Of course, the reduced responsiveness at higher stages of the pricing chain in part reflects the fact that imports only account for a fraction of both producers’ overall input costs and final consumption. But the seemingly stubborn resilience of consumer and producer price inflation to the sharp depreciation of the euro in 2014, and the subsequent appreciation in 2015, is nevertheless surprising.
Reforms to Market Structure We should also keep in place the key structural reforms of financial markets that are making the financial system safer. In my mind, the most important of these include money market mutual fund reform, tri-party repo reform, and the mandate for the centralized clearing of OTC derivatives. In each case, the post-crisis structural reforms have made the system more resilient to the potential insolvency of a major financial institution. As a result, the level of stress placed upon the entire financial system by the failure of a single firm should be considerably lessened. As part of this, we must maintain the capability for robust oversight of key FMUs. Centralized clearing is a beneficial development for financial markets. It reduces the amount of risk in the system by facilitating the netting of exposures to the central clearing party. As a result, centralized clearing makes the financial system more resilient and enables greater efficiency and transparency for trading counterparties. However, the trade-off for these benefits is that more residual risk is now concentrated in the FMUs. Consequently, it is important to retain the protections contained in the regulatory framework provided by Title VIII of the Dodd-Frank Act. We must ensure that FMUs are appropriately supervised and can withstand the failure of one or two of their largest counterparties and continue to operate. Worth Another Look So, what hasn’t worked as well as we might have expected, or might be less crucial in light of the principles that I discussed earlier?

William C Dudley: Principles for financial regulatory reform Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Princeton Club of New York, New York City, 7 April 2017. * * * It is a pleasure to have the opportunity to speak here today on the important topic of financial regulatory reform. As always, what I have to say reflects my views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System.1 A robust financial system is central to our economic well-being. The financial crisis and the Great Recession wreaked havoc on millions of American households and businesses, and much of this damage was due to a flawed regulatory framework. In particular, many large banks and securities firms had inadequate capital and liquidity buffers, and the financial system had a number of important structural weaknesses that made it vulnerable to stress. In response, legislators and regulators made significant changes to strengthen our regulatory framework. Importantly, as we consider further changes, we must avoid throwing the baby out with the bathwater. As I see it, an effective regulatory regime for the financial system must do three things: Ensure that all financial institutions that are systemically important have enough capital and liquidity so that their risk of failure is very low, regardless of the economic environment.
The respective risk is pronounced, especially in view of the fact that most major OTC derivatives dealers are large cross-border banking groups that may be in a position to shift their OTC derivatives business to the most leniently regulated group entities. As the European Commission and the CFTC noted in their recent statement on the “common path forward”, one important open issue in this regard is the material difference in central counterparties’ initial margin coverage between the European Union and the United States, for example in terms of confidence interval, procyclicality buffers and the scope for portfolio margining. I would like to add that different coverage requirements for central counterparties’ financial resources, in terms of the liquidity and credit risk arising from the default of their largest members, are at least equally important. In addition, it would seem helpful to broaden somewhat the attention concerning the global regulatory level playing field beyond the immediate concerns regarding EU-US divergence to all relevant jurisdictions. Conclusion It’s time for me to conclude: Yes, we have come a long way and a lot has been achieved since the Pittsburgh summit. But as highlighted before, additional work will be required: In the area of data and transparency we need to remove barriers to access and provide a mechanism to aggregate data across trade repositories and jurisdictions in order to be able to have a comprehensive overview of the risks in OTC derivatives markets. This is what the G20 leaders had in mind four years ago.

It concludes that the effects of (i) mandatory central clearing of standardised OTC derivatives, (ii) margin requirements for non-centrally cleared OTC derivatives and (iii) bank capital requirements for derivativesrelated exposures will result in overall net benefits for economic growth. I have spoken a lot about many technical issues. Let me therefore conclude by reminding you about the ultimate objective of this reform: to rebuild confidence in the financial system, which has been shattered in the recent years. Not only among market participants but in our societies as a whole, a good deal of trust has been lost. It is our shared responsibility that our societies regain this trust. I wish you, for the rest of today and tomorrow, a successful and fruitful debate and exchange of views. Thank you very much for your attention. BIS central bankers’ speeches  7
So the real exchange rate will continue to fluctuate and from time to time the rate of inflation in Sweden will deviate from the EMU average. There is nothing odd about that. The ECB's inflation target, a rate below 2 per cent, refers to the average rate in the monetary union as a whole, not the rate in a particular region or country. In another major monetary union, the United States, the regional differences in rates of inflation have at times been large. Studies show that differences in annual rates of inflation between American cities have exceeded one percentage point for as much as a decade.1 For economic policy in Europe the challenge ahead lies in ensuring that such regional differences in inflation do in fact mirror necessary changes in the real exchange rate, rather than representing unmotivated wage and price increases, for example. But that is another matter that I shall not be considering today. So the significance of the central rate's level should not be exaggerated. If we were to somehow land at a level that, if it were to be permanent, would not be sustainable in the longer run, an adjustment would subsequently occur. But as that would be painful, it is important to do what we can to arrive at a suitable rate from the start. 1  Cecchetti, S, Nelson, M and Sonora, R (2000): "Price level convergence among United States cities: Lessons for the European Central Bank", Working Paper, Ohio State University.

In contrast to the nominal exchange rate, which is the relative price of different currencies, the real exchange rate is the relative price of groups of goods. More specifically, the real exchange rate is defined as the amount of domestic goods that has to be provided in exchange for a given amount of goods from abroad. The value of the real exchange rate is calculated in practice as a quotient, the denominator being the product of the nominal exchange rate and an appropriate price index for foreign goods and the numerator the corresponding domestic price index. The real exchange rate is commonly regarded as a measure of a country's international competitiveness. The weaker the real exchange rate - the more domestic goods that are needed to balance a given amount of foreign goods - the cheaper it is for firms and consumers abroad to buy Swedish products: our competitiveness is stronger. It follows that the real exchange rate is a measure of purchasing power; the weaker the real exchange rate, the smaller the amount of foreign goods that can be bought for a given amount of domestic goods. This needs to be kept in mind when discussing what are appropriate central and conversion rates. A weak rate can admittedly confer competitive advantages but it also means that people in Sweden are poorer. Sweden's full participation in the monetary union locks only one of the components of the real exchange rate - the nominal exchange rate.
When the property market crashed, Svenska Kredit was unable to meet all of its obligations and consequently went bankrupt. This in turn fuelled the problems for the banks. There are parallels between the Swedish credit insurance companies of that time and the current so-called monolines. These are large insurance companies which are specialised in insuring various types of bond loan. Those who have bought the companies’ insurances have traditionally been municipalities, federal states and other bond issuers with poorer credit ratings. The insurance has meant that the bond loans have received better credit ratings and it has been possible to sell them at better rates. In July 2007 the outstanding volume of bonds insured by monolines amounted to a value of USD 3,300 billion. In recent years these monolines have increasingly been used to insure securities issues with a subprime content. This has meant that they have also begun to experience problems. This risks in turn having repercussions for the securities they have insured and ultimately for those who have invested in them. Of course, there are also some essential differences between the most recent financial turbulence and the Swedish bank crisis. This applies to both the nature and the scope of the crisis. But, as you will note, there are many and striking similarities in the way people have acted.

Of course, it is not desirable that the only possibility is to withdraw the license of an institution whose capital adequacy falls below the eight per cent level. In Sweden, there is every reason to look more closely into the obligations and powers of authority of Finansinspektionen. Another motive for the authorities to act quickly is to be able to quickly pay the deposit guarantee. To be able to make the necessary preparations for this, the authorities therefore need to have access to and control over relevant data files at an early stage when an institution gets into difficulties. This has been a problem in earlier cases of compensation from the Swedish deposit guarantee. If the financial system is threatened, the authorities must also be able to temporarily take control over the bank to maintain vital functions. The banks’ central role in the payment system means that payment defaults by one bank can have substantial domino effects. The consequences for the rest of the financial system may then be difficult to survey. With regard to institutions lacking a long-term survival capacity, it is of course important that they are wound up as quickly and smoothly as possible. There must be several different alternative methods for winding up banks to make it possible to choose the model that is best suited and entails the least cost to society. Of course, it would be best if one could get another bank to take over this institution’s activities.
Confronted with such dramatic developments, the Swiss National Bank (SNB) introduced a minimum exchange rate of CHF 1.20 per euro on 6 September 2011. Against the backdrop of a rapidly deteriorating global economic outlook and policy rates that were already at the zero lower bound, this measure helped to avoid an extreme tightening of monetary policy conditions. By setting a cap on exchange rate appreciation, the SNB provided some relief to businesses and bought them time to adopt measures that would reduce costs and improve productivity. Nonetheless, the Swiss franc remained highly valued. However, the minimum exchange rate of CHF 1.20 per euro was only ever meant to be an exceptional and temporary measure. A few weeks ago, on 15 January, the SNB announced its discontinuation. Publishing such a decision as a surprise announcement for the markets and the public was unavoidable. No pre-emptive guidance is possible for this kind of decision. Any guidance would have invited speculative attacks. Markets reacted accordingly, and the Swiss franc appreciated massively within minutes after the announcement. Although some of the overshooting has since been corrected, our currency is still trading at a significantly overvalued level as we speak. Once again, the reasons for the SNB decision are to be found in international developments. In particular, over the course of 2014 it became increasingly evident that the European Central Bank (ECB) and Fed policies would diverge. In the US, the ongoing recovery rendered the prospect of an exit from the unconventional policies more likely.

These effects could reduce or even counteract the stimulus from negative rates. If deposit rates don’t fall but loan rates do, that will impact banks’ profitability, particular for those who are most reliant on retail deposit funding – in the UK that is small banks and building societies. Banks can offset the impact on profitability by not reducing lending rates, but in doing this they would further reduce the amount of stimulus provided. Some banks, particularly those already under balance sheet pressure, could even be incentivised to reduce lending. That would be a particular concern in the current situation where, while the banking sector as a whole starts from a position of strength, risks to balance sheets are likely to be rising. These considerations led the MPC to note in its August Monetary Policy Report analysis that, given the effects of Covid-related disruption on banks’ balance sheets at present, at a time when they have an important role to play in helping the UK economic recovery, “negative policy rates at this time could be less effective as a tool to stimulate the economy”. That consideration still applies as far as I am concerned. While there might be an appropriate time to use negative rates, that time is not right now, when the economy and the financial system are already grappling with the effects of an unprecedented crisis, as well as the myriad uncertainties the crisis has created. But they are certainly in the toolbox for potential use in future as my assessment of their effectiveness changes.