samchain/econo-pairs-v1 huggingface dataset:
On the other hand, problems remain on the housing market, which are dampening household demand and restraining the recovery. Many households have seen the value of their homes decrease sharply, with homes now being worth less than mortgages in many cases. In such a situation, many households are choosing to strengthen their balance sheets by restraining consumption in favour of saving. Furthermore, house sales entail a serious risk of incurring losses. In turn, this may mean that the unemployed are less willing to move to regions in which there exist job opportunities. The labour market may thus have become less flexible, and long-term unemployment in the United States may have risen as a consequence of the crisis. Happily, in Sweden, the level of GDP seems to have returned to about the same level as prevailed before the crisis erupted. Our overall assessment is that resource utilisation is on the way to becoming normalised. However, I would like to point out that it is very difficult to measure resource utilisation, as this cannot be directly observed. Different measures also provide somewhat different pictures. While a number of measures indicate that resource utilisation has already returned to normal, other measures continue to point to a certain degree of spare capacity. There are many indications that unemployment has the potential to  4  BIS central bankers’ speeches  decrease a bit more before any “bottleneck problems” arise in the labour market (see Slide 9).

The years before the financial crisis – the calm before the storm From about the middle of the 1990s until the outbreak of the financial crisis, economic development both in Sweden and abroad was characterised by positive growth and low inflation. Fluctuations in production and inflation decreased, at the same time as productivity growth in Sweden and elsewhere increased. There are many ways of illustrating this development, but one way would be to examine government bond rates in Sweden, the euro area and the United States (see Slide 1). Certain clear patterns can be detected. These include decreased interest rate levels and a reduction of fluctuation in these over time. In addition, from the mid-1990s, interest rates in various countries developed in a strikingly similar manner. This strong development can be further illustrated by growth in the world economy, which fluctuated between 2 and 5 per cent and averaged almost 4 per cent (see Slide 2). All in all, developments from the mid-1990s until the start of the financial crisis can be compared to a voyage through relatively calm waters, to return to our nautical analogy. But then the storm broke. Sweden’s economy during the financial crisis – what happened? Happily, we can now start talking about the financial crisis as something we have left behind us.
One example is data on the size of  2  BIS Review 19/2007  daily variations in net asset value, VAR, or profit and loss over the previous quarter. This type of information would not reveal proprietary information about trading strategies or otherwise create substantial disincentives to risk taking. Although these would provide some information on the overall risk profile of the fund, they would be lagging indicators, and they would carry the usual risk of providing false comfort in some circumstances and excessive concern in others. Adopting such measures would give the institutions that provide financing and leverage to hedge funds a somewhat greater capacity to judge their direct risk to those funds. But that is not their principal challenge. The institutions already know the positions they are financing, and they can use the usual range of tools to measure the potential exposure, net of collateral, in those positions. And where they do not feel they have adequate information to evaluate the overall risk profile of the fund, they can manage that risk by taking less exposure, by requiring more margin, or by building a greater cushion of protection against overall risk. So the potential gains from a disclosure regime of this type would be limited, at least as compared with the cost of trying to put such a regime in place on the global scale that would be necessary to make it effective.

And yet many of the observations made about liquidity and market conditions over recent years have potential implications for monetary policy. Changes in risk premia, the level of asset prices, credit spreads, and interest rates, and in realized and expected volatility of asset prices – these can all affect the pace at which overall demand grows, and can therefore potentially affect future inflation. In discharging their responsibilities for the maintenance of price stability, central bankers need to be eclectic in looking at a range of different ways of measuring the stance of monetary policy, and its effects on the future path of growth and inflation. No indicators of liquidity or overall financial conditions provide a ready guide to judgments about monetary policy. But all these indicators merit careful attention, and they strengthen the argument against narrow or mechanistic approaches to thinking about the monetary and broader economic outlook. BIS Review 19/2007  3  Ultimately, though, ex ante judgments about leverage, concentrations and liquidity risk will continue to prove elusive. Our principal focus should therefore be not in the search for the capacity to preemptively diffuse conditions of excess leverage or liquidity, but in improving the capacity of the core of the financial system to withstand shocks and on mitigating the impact of those shocks. And, as always, central banks need to stand prepared to make appropriate monetary policy adjustments if changes in financial conditions would otherwise threaten the achievement of the goals of price stability and sustainable economic growth. Thank you.
We do this through issuing guidelines that lay down the minimum standards that institutions should incorporate in their anti-money laundering systems. We then carry out on-site examinations to check that these standards are being adhered to. This year we introduced a two-tier, risk-based approach towards examinations. In cases where AIs may be at higher risk of money laundering, we conduct more in-depth examinations using specialist teams. This may involve sample testing and visits to branches to look at how controls actually work in practice and to ascertain at first hand the knowledge and awareness of staff. In more routine cases, higher level review of anti-money laundering controls is conducted, generally as part of our normal risk-based examinations. We intend to supplement our own examinations with a system of self-assessment by compliance officers of AIs on risk indicators of money laundering within their own institutions and the quality of  BIS Review 47/2002  1  controls. This will be done using a structured self-assessment framework that we aim to release to the industry later this year. This should help the HKMA to conserve its own resources and direct them where they are most needed. But it should also serve to remind AIs that they have the primary responsibility for making sure that their own house is in order. The HKMA guideline Checking that standards are being observed is obviously important. But it is necessary to ensure that the standards themselves remain effective in dealing with risks.

Use of instruments that diminish the risk associated with floating exchange rates is also gaining ground in Norway. The operational target of monetary policy in Norway is low and stable inflation. Developments in the krone exchange rate are nonetheless important when Norges Bank sets the interest rate. There are several reasons for this. First, changes in the krone exchange rate affect prices in krone terms for imported consumer goods and services. Second, exchange rate changes have an impact on competitiveness in Norwegian business and industry and on market opportunities at home and abroad. This affects the level of activity in the economy and, in turn, price and cost developments. In the period between Inflation Report 3/06, presented in November 2006, and Monetary Policy Report 1/07, presented in March this year, the krone appreciated more markedly than we had assumed. As a result, Monetary Policy Report 1/07 was based on the assumption that the krone would be somewhat stronger throughout the projection period. The exchange rate assumption in Inflation Report 3/06 is shown by the broken blue line in the chart on the left, while the broken red line denotes the exchange rate assumption in Monetary Policy Report 1/07. The isolated effect on the interest rate path of a stronger krone is illustrated in a box in Monetary Policy Report 1/07. As shown in the chart on the right, the stronger krone pointed to a somewhat lower path for the interest rate.
Disturbances can be temporary, such as a winter with little rain reducing the water level in reservoirs at the power stations, or more lasting - for instance, a new production technique can affect capital stock and industrial structure. Many of the disturbances that occur affect both the supply and the demand in the economy. According to some calculations, which were presented in the Inflation Report, production capacity during the slowdown could have declined from approximately 3 per cent at the beginning of 2000 to 1 per cent at the end of 2001. At the same time, it is important to emphasise that production capacity cannot be measured in a reliable and simple manner, which means that this type of calculation is characterised by uncertainty. GDP growth in Sweden is estimated to amount to 1.5 per cent this year, 2.7 per cent in 2003 and 2.6 per cent in 2004. An important issue is whether production capacity will increase when the economy picks up. After all, it is the long-term production capacity that determines whether growth is compatible with low inflation and can thereby provide a sustainable positive development in income and welfare in the economy. The most important factors with regard to developments in the near future are the labour supply and productivity. The labour force has increased considerably in recent years, mainly thanks to increased employment in trade and industry. At the same time, a reduction in the average working hours has had a counteractive effect.

Petar Goshev: Alleviating the negative effects of the financial crisis Welcome address by Mr Petar Goshev, Governor of the National Bank of the Republic of Macedonia, at the World Bank event, Skopje, 15 March 2010. *  *  *  Distinguished ladies and gentlemen, It is my honor to give a welcome address at this important World Bank event that it is taking place at a critical transitional stage when it seems that the strongest impact of the severest crisis since the Great Depression is behind us and the global economy is beginning to grow again. Still, although we believe the worst is behind us, the global crisis has had strong negative effects that will continue to be felt in the years to come. Because of that, the efforts of the national authorities and international financial institutions for mitigating the negative effects have to continue. In this regard, the enhanced role of the international financial institutions, including the World Bank, is vital. The economic, social and human implications of the global crisis have further emphasized the World Bank’s mission of eliminating poverty, enhancing growth and providing inclusive and sustainable development. Achieving Millennium Development Goals (MDGs), as a set of priorities for the World Bank, is becoming more challenging.
Lars Nyberg: The ESRB – reflections after 9 months of operation Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at Norges Bank (Central Bank of Norway), Oslo, 27 September 2011. *  *  *  The financial crisis that started in 2007–8 exposed serious weaknesses in the regulatory system. Firstly, it turned out that the banks had too little capital and that the quality of that capital was not good enough. Furthermore, issues of liquidity had largely been neglected by regulators. All this has been addressed by the Basel III compromise, which is to be slowly implemented over the years to come – too slowly in the view of some countries, too quickly according to others. Secondly, the crisis revealed some embarrassing weaknesses in the EU framework for financial stability. The quality of supervision varied substantially between countries and coordination within Europe was insufficient, to say the least. Perhaps even more importantly, the concept of macro-prudential supervision (I will return to this concept in a while) was largely unheard of. To address these issues, the Commission, in late 2008, set up a group (where I had the honour of being a member) led by Jacques de Larosière with the mandate of presenting a roadmap for strengthening the European supervisory framework. The group delivered its report in March 2009. One of the main ideas was the creation of a new institution, which eventually came to be called the European Systemic Risk Board and which is my subject for today.

Countries are expected to anchor fiscal prudence in national rules, creating a much more “vertically integrated” concept of governance. All these measures were unthinkable four years ago. If we look at the conclusions of Euro Summit on 26 October – dismissed by some observers as insufficient – we see even more radical steps envisaged for the future. Euro area countries have committed to adopt balanced budget rules. They have agreed to base their budgets on independent growth forecasts. They have agreed to stick to the recommendations of the Commission when implementing the Stability and Growth Pact. Countries in the Excessive Deficit Procedure – which is currently 14 out of 17 euro area countries – will allow the Commission to examine draft national budgets and monitor budget execution. Although some of the recent governance reforms, like those that formed part of the so-called “Six-pack” proposed by the European Commission, fall short of the “quantum leap” that the ECB had long advocated for the euro area, they still represent significant progress relative to the situation prevailing before the crisis. The creation of the European Financial Stability Facility and future European Stability Mechanism could also not have been imagined in 2007. The euro area has institutionalised the provision of sovereign liquidity and agreed to a Treaty change to ensure its legality. As the new facilities have developed, they have acquired a range of tools.
M R Pridiyathorn Devakula: Commercial Banking and Financial Services - our Vision for Thailand Speech by M R Pridiyathorn Devakula, Governor of the Bank of Thailand, at the Conference on “Modernizing our Financial System: Challenges for the New Millennium”, Bangkok, 23 January 2002. *  *  *  Your Excellencies Distinguished Guests Ladies and Gentlemen, I would like to take this opportunity to welcome all of you to our conference on "Modernizing our Financial System: Challenges for the new Millennium". I would also like to express our deep appreciation for the distinguished speakers who came all the way from Australia, Canada, Hong Kong, and South Africa to share with us their expertise and knowledge on this very important topic. And, of course, to the World Bank, our co-host, for help organizing the conference. Our financial crisis in 1997 and its subsequent impacts highlighted the lesson of critical importance that dynamic and strong domestic financial institutions are vital to sustainability of development and growth. Over the past 20 years, financial sector has been one of the major forces that support our progress and financial services share in our GDP has grown from a mere 3 percent to roughly 8 percent. It is the fifth largest industry in term of value added to our GDP, and currently employing more than 300,000 of our workforce. Nevertheless, despite such favorable development, there are some concerns: -  First, in term of competitiveness of our financial institutions, there is room for improvement.

Norges Bank has been given an operational target for monetary policy, which means that monetary policy instruments shall be used with a view to maintaining low and stable inflation. The inflation target is set at 2½ per cent. Low and stable inflation is probably the best contribution monetary policy can 9 make to financial stability. This is also supported by empirical studies. However, there have been episodes where bubbles have accumulated in the form of sharp increases in asset prices in the property and financial markets while inflation has been low. Developments in Japan in the 1980s and in the US in the 1990s may be examples of this. When the bubbles burst, the result may be an economic downturn. Thus, developments in the financial and property markets may also fuel more unstable inflation. In principle, it might be appropriate to use the interest rate to counter this. In practice, however, it is difficult to assess whether developments in prices for property and financial assets are sustainable. When Norges Bank concludes that the key rate should be changed, the change will in most cases be made gradually. If special emphasis is placed on developments in financial or property markets when the key rate is changed, Norges Bank will provide an assessment of this. It is Norges Bank’s responsibility to present its view on the risks facing the financial system from a macroeconomic perspective. This is the purpose of Financial Stability, a report published twice a year. Second, the international financial infrastructure must be strengthened.
BIS Review 7/2003  1  To respond to these challenges, the Committee has sought to develop a more flexible and forwardlooking capital adequacy framework - one that better reflects the risks facing banks and encourages them to make ongoing improvements in their risk assessment capabilities. The Committee believes that all banks should be subject to a capital adequacy framework comprising minimum capital requirements, supervisory review, and market discipline. As you know, these are the three "pillars" of the New Accord. Each is an essential element for ensuring the safety and soundness of banks worldwide. In contrast, the current Accord only has one pillar - minimum capital requirements. As we all agree, risk management is a dynamic process and one that will continue to evolve. Consequently, the New Accord is designed to accommodate future changes in the way banks measure and manage their risks by giving banks a range of options for calculating capital charges and incentives for using best practices. Banks will be expected to apply the option most appropriate to the complexity of their own operations and risk management capabilities. For credit risk, the range of options begins with the standardized approach and extends to the internal ratings based (IRB) approach. The standardized approach, as you know, is structurally similar to the 1988 Accord, where banks are required to differentiate their exposures into broad categories, such as loans they have made to corporate and sovereign borrowers or banks.

It improves on the 1988 Accord by aligning risk weights with a borrower’s creditworthiness as indicated by an external credit rating. The IRB approach goes further and is one of the most innovative features of the New Accord. It has been constructed to build upon and further encourage investments banks are already making in their internal risk management systems. As you know, these systems have been developed and further refined to promote a bank’s competitiveness and to protect it against loss - and not just to respond to a regulatory mandate. Banks using the IRB approach will be permitted to quantify key measures of a borrower’s creditworthiness in determining the corresponding capital requirement. This will include estimating the likelihood that the borrower will default. Many banks will also be able to provide internal estimates of other key variables, such as the recovery rate if a borrower were to default and the likelihood of a credit line being drawn upon. While banks adopting the IRB approach will have the flexibility to rely on their own estimates of key risk parameters, those estimates will be subject to a set of minimum operational requirements. The aim of these standards is to ensure that these critical inputs have integrity and are the product of a system the bank relies upon to perform its day-to-day operations. Further, through pillars two and three, the new framework builds in additional checks and balances to ensure that banks’ systems will generate accurate and timely credit assessments.
The goal is a situation in which economic slack has disappeared, economic growth is in line with growth in potential output, inflation is at the target, and the external position of the economy is sustainable. Second, we must establish a financial system that serves Icelandic households and domestic business activities and is both efficient and relatively secure. The third challenge is that of re-establishing confidence abroad in Iceland’s institutional framework, economy, and financial system; repairing the connections with foreign financial markets; and ensuring that the Icelandic Government and Icelandic companies have access to foreign credit markets once again. The economic recovery was just about to begin when the 2010 meeting was held. It then gained enough momentum that, in five years’ time, we have returned to pre-crisis GDP levels and have eliminated virtually all of the spare capacity in the economy. At the same time, the unemployment rate has fallen sharply and is now close to its equilibrium value. Structural reforms could reduce the equilibrium unemployment rate still further in the future, however. Inflation is below the inflation target at present, and inflation expectations had subsided to target by the turn of the year. Treasury debt has declined steadily since 2011, and the outlook is for this trend to continue in the years to come. Household and corporate debt levels have also declined markedly. The ratio of household debt to disposable income is now roughly at 2005 levels, and the ratio of corporate debt to GDP is at its lowest since mid-2004.

Instead, it appears that the consensus on wage differentials has been weakened at the same time that opening of the labour market vis-à-vis abroad has put pressure on wage differentials – in some cases, in the direction opposite to that demanded by labour market organisations. As Monetary Policy Committee member Gylfi Zoëga pointed out recently, the greater the sense of cohesion about wage distribution in society, the lower the unemployment rate that is consistent with low and stable inflation. Conversely, the weaker that sense of cohesion, the less individual worker groups will be willing to participate in creating the public good that is price stability, and the higher the equilibrium unemployment rate will have to be. This theory is based partly on the work of Ezio Tarantelli, one of Italy’s leading economists in the second half of the twentieth century, which shows us that our experience is far from unique. If the theory applies to the current situation in Iceland – and a number of factors indicate that it does – increased cohesion in this sense could create the conditions for lower unemployment and lower interest rates, but without losing control of inflation. Whatever the reason, this situation gives rise to the risk of an outcome that is worse for society as a whole, although some groups may gain at others’ expense. In other words, in this situation as in so many others, a cooperative solution is usually better for the whole than a conflict solution.