samchain/econo-pairs-v1 huggingface dataset:
When you businessmen and women have to make a decision on investment, you can now usually avoid having to worry that sudden fluctuations in the inflation rate will overturn your calculations. In most cases, temporary, minor deviations from the target should not change the final results of the calculations. The stability in planning that this creates should lead to more and better quality investments, which in turn should stimulate growth. This is reflected, for instance, in the fact that total factor productivity in the Swedish economy increased strongly once macroeconomic stability was established in the 1990s. Other countries around the world have had the same experience. Macroeconomic stability promotes growth and productivity. What may be given less attention in the public debate is the importance of growth for our capacity to meet the inflation target - despite the fact that this really is a key issue. It is the demand in the economy in relation to production capacity that is the decisive factor as to whether inflationary bottlenecks arise or not. Or, if we instead under-utilise production potential and therefore need to try to increase capacity utilisation. What determines whether there is a risk of overheating is the Swedish economy's capacity utilisation in relation to its potential. I believe that one can say there is a type of inbuilt speed limit for the economy. It is difficult, as a rule, to know where this goes; moreover it changes over time.

The key interest rate has been reduced by 5¼ percentage points and is now approximately the same as among our trading partners. The krone has depreciated over the past year, and is in line with the average for the 1990s. Monetary policy is expansionary. This is reflected in low after-tax real interest rates as shown in the chart. The low interest rate level has reduced household net interest expenses. This has increased household purchasing power considerably. Household demand will probably be the most important driving force in the Norwegian economy in the period ahead. Private consumption has a considerable impact on overall demand and activity and accounts for 60 per cent of mainland GDP. Low inflation and reduced interest expenses will support strong growth in household real income. Even with a moderate wage settlement, real income growth may reach about 5%. In addition, improved labour market conditions will strengthen job security and lead to expectations of higher income growth. Against the background of high real income growth, improved job security and expectations of continued low interest rates ahead, household consumption is expected to exhibit strong growth. Growth in private consumption is projected at 5¼% between 2003 and 2004. Given this path, consumption will grow at a pace that is broadly in line with real income, with little change in the saving ratio. After falling last year, house prices edged up in autumn. At the end of 2003, house price inflation was high.
In normal times, monetary policy impulses are transmitted to the real economy – where goods and services are produced, bought and sold – via the interest rate channel. Reductions in the rate at which banks can borrow from the central bank are supposed to feed through to the complete range of retail interest rates (loan and deposit rates for bank customers) as well as market determined interest rates (e.g. yields on corporate or sovereign bonds) and a wide spectrum of prices of non-fixed income assets. 2  BIS central bankers’ speeches  But during the crisis, the interest rate channel of the monetary policy transmission mechanism was jammed, initially because the interbank market was dysfunctional, then because illiquidity and fear led financial players to be less willing to make use of price differentials between different maturities. In response, the ECB engaged in a sequence of non-standard measures to restore a proper transmission of the monetary policy signals. The first action was to conduct lending operations through a fixed rate tender procedure with full allotment. This means that banks’ demand for liquidity would be fulfilled without any other limit than the constraint coming from the need to post eligible collateral for the loans. In response to the seizing up of term lending, it was also decided to provide more liquidity with longer maturity than the usual one-week and three-month operations.

Second, the perception that the central bank will always “pick up the pieces” might give incentives to excessive risk-taking and high leverage. Even in good times that perception could discourage sound fiscal policies and prudent financial behaviour. In the design of non-standard measures and in its communication, the ECB has taken great care not to give such adverse incentives to either banks or governments. The following elements, among others, serve as proof:   The non-standard measures are temporary in nature. Some of them will expire automatically, if not renewed. On top of that, we have all the necessary instruments to reverse the current situation of abundant liquidity provision.   The mandate of the ECB as stipulated by the Treaty has an unambiguous focus on price stability. In combination with the ECB’s monetary policy strategy it provides a clear guidepost and has proved effective in anchoring inflation expectations over time.   The monetary policy strategy gives a prominent role to the monetary analysis which captures money and credit developments and ensures a symmetric reaction to financial forces.   The design of the tool called Outright Monetary Transactions creates the right incentives for governments to improve their performance with respect to fiscal prudence and structural reforms. I will expand a bit further on this fourth point. OMTs will only be activated in cases where the benefiting country has signed up to strict and effective conditionality attached to an appropriate European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programme.
The fall in terms of trade may nevertheless imply that the krone exchange rate does not return to previous heights. A weaker krone may contribute to underpinning profitability in the export sector. Cost competitiveness in manufacturing has improved in recent quarters. Effects on output, employment and inflation The financial turbulence has weakened the outlook for investment and consumption in many regions of the world. Against the backdrop of losses and structural changes in the financial sector, many large financial institutions will for a long period ahead seek to increase their interest rate margins, reduce lending and risk. Lending standards have been tightened, particularly in the US and the UK, but also in the euro area. Output has fallen in the US, the euro area and the UK, and growth may be negative in the coming quarters. In emerging economies, the cyclical downturn has also come into growing evidence. In several countries, economic growth is being pulled down by both lower market growth in other countries and reduced access to credit. Monetary policy in Norway is oriented towards annual consumer price inflation of close to 2.5 per cent over time. In recent years, inflation has on average been somewhat lower, but fairly close to 2.5 per cent. Low and stable inflation is the most important contribution monetary policy can make to sound economic developments, providing firms and households with an anchor for inflation expectations.

Foreigners were allowed to invest in Sweden without a permit, but these investments might not be financed in the Swedish market. Portfolio investment abroad was regarded as more transient than direct investment and it was therefore more difficult for a Swedish company to obtain permission for this in another country. Companies that earned money abroad were obliged to bring it home to Sweden as soon as possible and convert it to Swedish krona. Swedish banks required permits to establish subsidiaries abroad and were on the whole not allowed to open branches abroad. This was because it was easier to control capital movements between parent and subsidiary than between branches, as the latter were not different legal entities. Prior to 1986, foreign banks were not allowed to establish in Sweden. After this, subsidiaries were permitted and later on also branches. Swedes were in general not permitted to purchase shares in companies outside of Sweden. Those who were already in possession of foreign shares were allowed to exchange them for others or to sell their right to own shares to someone else if they sold their holdings. Private persons were not allowed to take unlimited currency out of the country. Amounts above the regulated limit – which was low – required permission from the Riksbank. It was necessary to show evidence that the money would be used for personal aims and not for investment or other financial purposes. Private persons were not allowed to hold accounts abroad.
The benefits of a monetary union consist in a reduction of transaction costs for changing money, the elimination of internal exchange rate uncertainty, tighter competition thanks to easier price comparisons, the expansion of trade within a region, the prevention of competitive depreciation and speculative attacks on a currency, and growth in the liquidity of the financial markets. Those advantages, in particular, that are associated with an increase in competition and an expansion in the trade of goods and services need time to develop. The costs of adopting a common currency include, first, one-off expenditure in connection with the introduction of notes and coins. In the European Monetary Union, these were estimated to be around 0.5% of gross domestic product. Naturally, these costs are evident from the start and of a merely temporary nature. Potentially the most significant costs of a currency union, however, arise from the loss of the individual countries' independent monetary policies. Particularly at the early stage, these costs are a considerable factor. Depending on the further economic development of the Monetary Union, they might eventually decline over the years. So where is the problem? The loss of autonomy in monetary policy is felt all the more with the growing number of asymmetric shocks. Such shocks are disruptions that affect the economic structure, business activity and inflation of member countries in different ways. Thus, they cannot be combated with a uniform economic policy.

Heng Swee Keat: The first Shariah-compliant ETF in Singapore Congratulatory remarks by Mr Heng Swee Keat, Managing Director of the Monetary Authority of Singapore, at the Launch of Daiwa FTSE Shariah Japan 100 ETF at SGX Centre, Singapore, 27 May 2008. *  *  *  President and CEO, Daiwa Asset Management, Mr Michihito Higuchi Vice-President and Head of Listings, Singapore Exchange, Mr Lawrence Wong Distinguished guests Ladies and gentlemen, good morning. I am pleased to join you at this ceremony to mark the debut of the Daiwa FTSE Shariah Japan 100 Exchange Traded Fund (ETF), the first Shariah-compliant exchange traded fund to be launched in Singapore. The Daiwa FTSE Shariah Japan 100 ETF will provide retail and institutional investors the opportunity to access the Japanese capital markets via a Shariah-compliant product traded on the Singapore Exchange (SGX). ETFs are one of the fastest growing asset classes in the investment funds industry. They aim to track the performance of indices and provide access to a wide variety of markets. As at the end of 2007, global assets managed via ETFs are estimated to have increased by 41% over the previous year to reach about $ billion while the total number of primary listings has increased by 64% to 1,171. There are currently 18 ETFs listed on SGX covering regional markets such as the AsiaPacific and ASEAN, and individual markets such as China, India, South Korea, Taiwan and Japan, as well as alternative investments such as gold and commodities.
According to the latest assessments of the Executive Board, the overall outlook suggests that it would be appropriate to raise the interest rate gradually to about 5 per cent in the course of this year and to a somewhat higher level in the period to summer 2008. At its meeting on 25 April, Norges Bank’s Executive Board decided to leave the key rate unchanged at 4.00 per cent. The Executive Board considered the alternative of increasing the interest rate at that meeting. There is obviously considerable uncertainty surrounding the projections. The projections are based on our assessment of today’s economic situation, the outlook for developments in other countries, the functioning of the economy and the conditions necessary for reaching the inflation target. The chart  BIS Review 47/2007  11  shows that we must be prepared for developments in inflation and output that may differ from the central path. This may also imply that the interest rate may be lower or higher than our current projections. Allow me to summarise: The fall in prices for imported goods and services and the increase in export prices have provided the Norwegian economy with an appreciable income boost. The mainland economy has expanded rapidly in recent years. At the same time, inflation has remained low. Increased efficiency and an ample supply of labour have made a contribution to these developments. There are now limited idle resources. Monetary policy increasingly reflects that many Norwegian enterprises are facing capacity constraints and that inflation will pick up.

Even where we manage to limit the rise in global mean temperatures to 1.5 degrees, physical risks are likely to dominate the potential impacts of transition. And if instead we continue on our current trajectory, losses just from the impact on productivity could be as high as 13% of GDP.8  In addition, many of the leading studies, including those we used in the NGFS, start from past correlations and so find it hard to put an accurate number on the type of low-probability, high impact events that will become more common. As high levels of warming will be unprecedented, we don’t yet fully understand the delicate balance between the climate, living conditions, ecosystems and the economy - for example, the level at which ice melts might accelerate; or methane stores under permafrost might be unlocked. What is clear is that investment is needed now to help adapt to these inevitable changes. And that we should recognise the gaps in our understanding of how large changes to our climate might affect our economies. Challenges in applying scenarios  While these key themes are clear, I know from our own experience, and from the firms we supervise, that applying the scenarios in practice is not straightforward. The models, data and analytical frameworks are new, and the transmission channels are complex and subject to much uncertainty. The results can be sensitive to input assumptions and type of model used.
Mark Twain is supposed to have once said: “I’m all for progress; it’s change I don’t like.” However, change lies in the nature of market liberalism, which neither can nor should be stationary. The structural changes that come in the wake of globalisation mean that less efficient production is replaced by more efficient production, and that sectors that do not hold up in competition are replaced by sectors where the country has comparative advantages, that is to say, is relatively better than its competitors. Structural changes thus consist of two parts: closing down (or moving out) and new establishment of businesses. The Austrian economist Joseph Schumpeter called this creative destruction; old jobs and technologies disappear and new, more productive jobs arise as technology develops and production becomes more specialised. The major challenge in future, in both Sweden and other industrialised nations, will therefore be to create dynamic conditions in which new jobs can arise as the old ones disappear due to rationalisation or are moved abroad. Studies regarding some industrial nations indicate that many jobs lost during the most recent economic slowdown have not yet been replaced by new jobs in the same branch when economic activity picked up again; instead productivity has been higher. However, employment has continued to increase in other sectors, which appears to increase the number of jobs regardless of economic activity. The fact that employees have to change sector leads to greater friction unemployment arising.

All considered, the Board estimates that the balance risk is unbiased for both activity and inflation. Summing up, we now face a scenario where inflation has dropped faster than expected— but will stand at 3% at the end of the projection horizon—and where activity continues to grow slowly. Both domestic and external risks have increased. Let me now turn to the issues we explored in our Financial Stability Report. 5 / 19  BIS central bankers' speeches  The Financial Stability Report Our Financial Stability Report, which we publish in June and December of each year, presents recent macroeconomic and financial developments that might influence the financial stability of the Chilean economy. On the external front, the risks presented in the FS Report are the same of the Monetary Policy Report I just described. Worth mentioning is the uncertainty surrounding how the worsened external financial conditions and the Chinese situation will affect us. In China, private credit is still on the rise, as is the banks’ exposure to the real estate sector, where house prices continue to grow at two-digit rates in the high demand cities. The quality of banks’ portfolios has deteriorated further, in line with the poor behavior of the corporate sector. This situation could worsen further with a rise in financial costs, again if international trade policies move towards protectionism, given the still high dependence of the Chinese economy on its exports.
Our organisation has proved efficient and flexible. Inside the Eurosystem, we have reached the appropriate balance between centralisation and decentralisation. Most recently, we have announced that the maturity of the main refinancing operation settling on 19 December 2007 will be lengthened to two weeks to cover the end of the year, and the operation settling on 28 December 2007 will allow potential further liquidity demands to be satisfied. For France, having banking supervision inside the Central Bank has proved a big advantage and enabled us to react quickly and with flexibility in fast changing circumstances. A broader challenge relates to the policy reaction. To which extent should it be influenced by financial turbulences? Obviously, action by Central Banks has to be fully consistent with their mandate, which, for the Eurosystem, means preserving, first and foremost, price stability. Past episodes of financial turbulences have occurred in an environment of low and stable inflation, with expectations solidly anchored. We live today in a less benign environment. Strong growth in big emerging economies is increasingly putting pressures on the price of oil, food and other commodities. While labour supply in emerging countries will remain abundant, it is not all that clear it will remain cheap and inflation pressures are piling up in many emerging countries. This translates into higher import prices for developed economies. That said, the Governing Council has judged, in its last two meetings, that the ongoing reappraisal of risk in financial markets has led to continued uncertainty.

At the aggregate level, most observers – including the Banque de France – would point to a prolonged period of excessive risk taking in credit markets fueled by liquidity expansion at the world level. This was most apparent in the strong developments of LBOs, mostly financed through leveraged (i.e. with weak covenants) loans. According to this interpretation, we may be witnessing the burst of a credit bubble. But there is also a deeper, more structural, element to the current turmoil. This crisis is the first in a disintermediated credit world. While, previously, loans were originated by banks, kept on their balance-sheet and monitored for the entire life of the loan, the process is to a large extent dissociated today: the loan is originated by a first entity, then bundled together with other loans as a structured product by another entity, then sold to final investors.
First, foundational digital infrastructure – systems that allow different users, different solutions, and different devices to seamlessly interact with one another. Just as physical infrastructure like roads and railways helped to connect and advance the industrial economy, we need digital infrastructures to enable a vibrant digital economy. What are these digital infrastructures? One, a digital identity, so that we can interact with one another digitally, with trust and confidence, knowing who is on the other side of the transaction. In Singapore, we introduced Singpass as a digital identity to facilitate secure, consent-based verification for residents to digitally access more than 700 different government services. 1/3  BIS - Central bankers' speeches  Two, interoperable electronic payments. We need not only digital payment solutions but common payment rails or networks for these different payment solutions to be interoperable. In Singapore, we built PayNow, an instant payment service. Residents can move money to one another's bank account in real-time at zero cost, with just three clicks on their mobile phones, regardless of which bank app they use. Three, a trusted data exchange so that individuals and corporates can access all their relevant data in digital form for purposes of carrying out digital transactions. In Singapore, we established MyInfo, a platform which allows residents to access via their mobile devices more than 100 of their personal particulars and share them with third party service providers through open, secure APIs. Second critical enabler - connectivity and collaboration.

The full potential of FinTech can only be realised if our systems are inter-connected across borders, and there is active public-private collaboration to drive innovation. Let me give two examples. One, cross-border payments connectivity. It is not enough that we can pay one another digitally within our countries. Be it for migrant workers or students or small and medium enterprises, it is the ability to send money across borders cheaper, faster, and more securely that really matters for efficiency and productivity. Singapore has successfully connected its instant payment infrastructure PayNow to Thailand's PromptPay and to India's Unified Payments Interface (UPI). We hope one day we can also connect with countries here in Africa, including Rwanda. Two, platforms for human collaboration. For all the benefits of digital connectivity, face-to-face engagements remain key for innovation. Take for example, the Singapore FinTech Festival - a knowledge platform catering to the global FinTech community, where participants come to learn and do things together. Last year's festival attracted more than 62,000 participants from over 115 countries. I am very happy this collaboration is now expanding its reach in Africa and in Europe – through this inaugural Inclusive FinTech Forum in Kigali, and next week, the second edition of the Point Zero Forum in Zurich. Let me conclude with where I started – everything we do in FinTech must serve a larger purpose. It must help to solve real world problems, so that people are better off.