samchain/econo-pairs-v1 huggingface dataset:
Mr Bäckström elucidates the economic situation in Sweden and describes the consequences it may have for future monetary policy  Speech given by Mr Urban Bäckström, Governor of the Sveriges Riksbank at Föreningssparbanken, Ulricehamn on 1 September 1999. *  *  *  First a word of thanks for the invitation to visit Ulricehamn and talk about something that is close to the heart of a Riksbank governor, namely Sweden’s economic situation. I shall be describing the situation as I see it and saying something about the consequences it may have for future monetary policy. Unexpectedly strong trend The new statistics in recent months show that economic activity is stronger than most forecasters had foreseen as recently as in the spring. The growth of both domestic and external demand has been higher than expected. Relative to the first half of 1998, the GDP growth rate for the first six months of this year is an estimated 3.7%. Most observers are in the process of revising their forecasts upwards, if they have not already done so. In the Inflation Report last June the Riksbank judged that growth this year would reach 2.5%, followed by 3% next year as well as in 2001. When the Executive Board discussed monetary policy on 12 August, however, our assessment was that this year’s growth rate would be 3.5%. We also saw grounds for an upward revision of growth in the next two years, though the prospects for that period are more uncertain.

You  can already refer to our report published in November 2021 for the key findings from our first nine experiments. 3/3  BIS - Central bankers' speeches
So property rights, and courts to enforce contracts and adjudicate competing claims are examples of some of the social institutions required to support a market economy. But there are other, and for my purposes more interesting, social institutions which constrain our collective actions, both now and in the future. In particular, it is on the need to constrain our future collective decisions on which I shall focus this evening. Such constraints are necessary to support the willingness to make transactions. For example, if people believe that there is a high probability that investment made today will be confiscated by the government in the future, they are not likely to make that investment. It would be beneficial if we could constrain ourselves not to confiscate in future. Constitutions can be rewritten, property rights revoked, and revolutions have been known to occur, illustrating the point that, as a society, we can never commit future generations – or even our future selves – to collective decisions. There is no way of enforcing that commitment. But we can try to find ways of making it more or less credible that we will, collectively, act in a way that is conducive to our long-run prosperity. So one of the most important ingredients of a successful market economy is the set of institutions that constrain our future collective behaviour. Such institutions have cultural and political roots, but they have economic effects.

The board is also responsible for the follow-up of recommendations made by the ESRB. A further euro area governance reform relates to the Single Supervisory Mechanism (SSM) which involves the establishment of effective and early intervention mechanisms. The SSM endows the ECB with the ultimate responsibility for specific supervisory tasks related to the financial stability of Euro area banks. The rationale for a single supervisory mechanism comes from the increasing interconnectedness between financial institutions and markets across the euro area. In addition, the proposed banking union does not only provide for the shifting of supervision of banks to the European level, as in SSM, but also brings up for consideration the introduction of an integrated system of bank crisis management and deposit protection. 4  BIS central bankers’ speeches  Various recent reports, such as those authored by Liikanen, Volcker and Vickers, recommend a structural reform of the banking sector. The proposed reforms are designed to limit the likelihood of banking crisis, improve the resolvability of banks and safeguard taxpayer interests. Furthermore, the Liikanen Group concludes “that it is necessary to require legal separation of certain particularly risky financial activities from deposit-taking banks within a banking group.” Conclusion Regardless of the particulars of the eventual governance changes, it is clear that the economic and financial crisis has been the spark for reforms that may reshape economic institutions and financial supervision at both the national and international levels.
In connection with the work on legislation, it was discussed whether the Riksbank should also have objectives regarding GDP growth or employment, for instance. The Government and the Riksdag (parliament) decided that the Riksbank as an authority under parliament was obliged to support general economic policy goals such as sustainable growth and high employment. However, it was pointed out that this support should not come into conflict with the price stability objective. It is thus important to remember that the legislators considered it natural for the Riksbank to take into consideration the real economy, but that this consideration was not described as an objective for the Riksbank’s monetary policy. In my opinion, this was a wise decision and I see no reason to change the  BIS Review 12/2006  3  framework and introduce additional objectives to price stability. The Riksbank’s current method of working closely follows the views of the legislators. Monetary policy takes into consideration other aspects than inflation trends, and it should do so. How do we do this? As you know, the practical monetary policy work is governed by the objective that the increase in the consumer price index should be 2 per cent a year. This is how the Riksbank has chosen to specify the statutory objective of price stability. There is a tolerance interval of ± 1 percentage point around the target.

Let me conclude by saying that I welcome discussions on monetary policy. Monetary policy is to a great extent based on assessments and it is therefore natural that there are differing opinions as to what should be done with the repo rate – both outside of the Riksbank and within the Executive Board. However, it is also important that the discussion is based on a realistic picture of what monetary policy can achieve. Nor should the discussion be simplified by targeting one issue without taking into account all of the risks and other aspects that need to be weighed against one another in monetary policy decisions. We at the Riksbank will do all we can to contribute to this type of discussion climate. 6  BIS Review 12/2006
Technologies under reviewed include biometrics for electronic know-your-customers, machine learning for alternative credit scoring models, and blockchain applications for cross-border payments, supply chain financing, and document authentication. Another way in which productivity is being enhanced is through improving regional financial connectivity. Recent efforts by banks in the region to partner and adopt the Thai QR code standard and blockchain applications for cross-border payments are examples of how financial innovations can help improve regional financial connectivity and facilitate smoother cross-border financial services. Let me now turn to building immunity, which is a significant imperative for the future VUCA world. With the vast amount of data and modern analytical tools available, resilience can be significantly improved. For example, banks can use transactional data to better forecast customers’ credit demand and credit risks. Regulatory agencies can analyze financial connectedness through network analysis to detect risk events and safeguard financial stability. The Bank of Thailand has employed a number of big data analytics to detect early signals of imbalances in the economy and respond pre-emptively should risks arise. Additionally, in this increasingly digital environment, cyber resilience and cyber security must be a top priority and all of us must be prepared to prevent and respond effectively to cyber threats. Adoption of modern technologies like biometrics and blockchains can help safeguard financial information and reduce the number and magnitude of fraudulent activities.

Unemployment in the EU and the euro area has reached historic levels, especially amongst the youth. Economic growth is weak and is mainly concentrated in central countries of the euro area. Our countries have been affected by this situation for objective reasons. Trade relations, movement of capital and workers, and the financial system are channels that pass these problems on to our economies. The form, size and extent of this impact have evolved over the past four years. At present, the situation is reflected in the decrease of domestic demand, decline of economic growth, reduction of available income, loss of confidence and deterioration of optimism; this is, in turn, reflected in higher savings. Consequently, these developments have placed the focus of economic policies towards economic activity and revitalisation of optimism in order to boost investments and consumption. On the other hand, maintaining financial stability becomes a necessity, creating thus a binomial of priorities that condition each other and require a simultaneous solution. The Albanian economy is increasingly facing the challenge of economic growth. Although the Albanian economy enjoys consolidated macroeconomic stability and sound financial foundations, aggregate demand has been weak during the first nine months of 2012. Both domestic and foreign demand suffer from high uncertainty, relatively tight lending standards, and limited space for discretionary and stimulating policies.
Given our country’s climate risk profile and the fact that the bulk of these risks is insured, a climate-related natural disaster is unlikely to threaten the stability of the entire banking system in Switzerland, even if some individual institutions could be affected. 6  According to the National Centre for Climate Services (2018), the number of days with snowfall at altitudes below 800 metres has halved since 1970. For a simulation of the implications of the various modalities for introducing a carbon tax on the Swiss economy, see Marcucci, A. and L. Zhang (2019), ‘Growth impacts of Swiss steering-based climate policies’, Swiss Journal of Economics and Statistics 155(9), pp. 1–13. Page 4/12  Let’s now move on to the second category of climate change risks, transition risks. These include the economic costs and benefits resulting from adjustments to regulations and government policies aimed at decarbonising the economy. Examples are the scrapping of polluting production processes, the growth of investment into researching and developing green technologies, and an unanticipated adoption of new taxes or subsidies. As with any other tax, the introduction of a carbon tax could change the sectoral composition of domestic production in a way that is significant but hard to quantify. That being said, transition risks are above all likely to impact the financial system – through the revaluation of assets. A sudden shift in climate and energy policy could reduce the value of assets in the sectors most affected by the new regulations (e.g. commodities, automotive, heavy industry).

Balance sheet management Within the scope of its mandate, the SNB is also committed to sustainable development in the management of its balance sheet. The SNB differs from other asset managers in several respects. First, we manage foreign exchange reserves. 10 As these reserves perform a monetary policy function, they must remain subordinate to monetary policy goals at all times. These considerations determine the framework of our investment policy. As chart 2 shows, our foreign exchange reserves (represented by the area in blue) have increased substantially since the 2008 global financial crisis. This increase is mainly due to the SNB’s interventions in the foreign exchange market to counter excessive appreciation of the franc and stabilise price developments. The expansion of foreign exchange reserves has also caused an increase – on the liabilities side of the balance sheet – in the volume of sight deposits that banks hold with the SNB (area in red). 9 Cf. the SNB’s Environmental report, which is now called the Sustainability Report. 10 For more information on the specific characteristics of a portfolio composed of foreign exchange reserves (‘policy portfolio’) compared to other portfolios, cf. NGFS (2019), ‘A sustainable and responsible investment guide for central banks’ portfolio management’, October, pp. 7–10. On this subject, cf. also remarks by Matsen, E. (2019), ‘US Senate Democrats’ Special Committee on Climate Crisis’, 17 October, pp. 2–3. Page 7/12  Our reserves could decrease in the future, however.
The reality I think is more complex. As I said at the outset, the growth of credit has been part of the development of the economy for at least the past 120 years. Credit cannot grow faster than the economy forever. But the level of debt and the rate of growth of credit that the economy can sustain is not fixed. It can and has shifted over time. To learn the lessons of the pre-crisis period, we need to explore whether a shift occurred in the sustainable level of debt during the upswing of the last cycle and what we should expect for the future. There are many interrelated factors that might influence the sustainable level of debt in the economy. For example, some relatively slow-moving factors such as demographics, tax policy, housing supply and inflation are likely to play a role. But today I want to highlight two key factors that may have played a particularly important role in shifting the ratio of credit to GDP during the upswing of the last cycle. First, the level of long-run real interest rates and second, credit supply conditions, including credit spreads. Long-term interest rate The long-term real interest rate is crucially important both to the level of debt and to the price of the assets it finances. Structural changes in real interest rates are perhaps the most important factor in driving a shift in the sustainable level of debt.

8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches
Our report discusses a variety of options beyond the implementation of sound practice standards. One possibility is to require higher capital charges for bank exposures to HLIs. Indeed, a primary objective of our current review of the Basle Capital Accord is to determine how to align regulatory capital charges better with the economic risks of different classes of counterparties. We also recognize the critical need to enhance market transparency for the activities of HLIs and other major market participants. The Committee already is working to enhance accounting and disclosure practices at banking institutions worldwide. Extending these efforts to all global players that have the potential to destabilize the financial system, including HLIs, is of particular importance. An international group of central bankers is now studying various approaches to strengthening disclosure in this area. The Committee also considered the advantages and disadvantages of imposing direct regulation on the HLI industry. There are a number of critical obstacles that would have to be overcome before a direct regulatory approach could be implemented. To be effective, any regulation would have to extend to jurisdictions around the world where HLIs are chartered, some of which have more highly developed and more stringent supervisory structures than others. This would require a high level of coordination involving the political, legislative, and judicial bodies of many countries. There is also the difficulty of establishing a regulatory  BIS Review 27/1999  4  regime for HLIs that is not easily circumvented.

32000 4800 1255 3892 2220 3262 1648 1485 25465 6188 9445 16494 15220 52805 333 100  34,630 1,270 18,340 19,510 13,440 18,000 22,010 25,880 2,410 19,300 25,580 23,420 2,650  Log data Staff/pop staff 38 38 55 67 76 83 93 96 98 161 165 202 263 357  8.48 7.13 8.27 7.71 8.09 7.41 7.30 10.15 8.73 9.15 9.71 9.63 10.87  popln staff/pop  18.64 16.94 17.88 17.19 17.48 16.69 16.55 19.38 17.47 17.86 18.22 17.87 18.81  -10.17 -9.80 -9.62 -9.48 -9.39 -9.29 -9.25 -9.23 -8.74 -8.71 -8.51 -8.24 -7.94  gdp  #NUM! #NUM! 1.31 1.11 #NUM! 1.65 1.69 1.07 #NUM! 2.93 2.29 2.58 #NUM!
The 2017 Allianz Risk Barometer, which covers mainly large corporates, as well as a 2016 Zurich study on SMEs revealed that cyber risk is topmost on businesses’ minds. The same study showed that, in Asia Pacific, there are now twice as many SMEs that worry about cybercrime, fire, technological vulnerabilities, health and safety of customers or employees, and corruption compared to four years ago. Yet, in terms of preparedness for dealing with risk events, there is a marked disparity between 1/4  BIS central bankers' speeches  large corporates, and mid-sized and smaller companies. Predictably, larger companies are the ones that tend to have a structured risk mechanism in place, as well as the resources and expertise to deploy risk management tools. Larger companies also tend to have better access to specialist insurance products and the resources to establish a captive. Indeed, 90% of Fortune 1000 companies have a captive insurance company. Smaller and mid-sized companies are a different story. Most do not consider captives as a feasible risk management option. However, this is changing with innovations in captive models, such as group and rental captives and protected cell companies. It is not only possible for smaller companies to engage captives. A more compelling business case is emerging for the use of captives as small and mid-sized businesses evolve. Some of the most significant small business trends in the 21st century include disaggregated business networks, shorter cycles of proprietary knowledge, and rising entrepreneurship powered by a younger digital generation. Take for example, high-growth tech startups.

In addition to this are the owners’ interest in their legal rights and not least society’s interest in the administration of justice functioning in the field of economic crime. 8  BIS Review 30/2008  All of these interests, and probably more, are entirely legitimate and must of course be taken care of in the legislation. But they must be classified according to their relative significance to society. Otherwise it will not be possible to distribute the roles between the different authorities in the best way when managing problem institutions. There is also a risk of wasting valuable time on managing conflicts between different interested parties instead of managing the institution’s problems. In other words, it is necessary to have a bird’s eye view when drawing up regulations. The regulations must be formulated to give the state the right tools I know that the Ministry of Finance is currently working hard on a proposal for public administration of banks in distress. The design of the deposit guarantee and Finansinspektionen’s powers of authority are also being reviewed. We eagerly await these proposals. Even if the work is carried out on parallel tracks, it is important that the final result is coherent. Otherwise it could be difficult to manage a future crisis in the financial system. It is also important that the proposals are not toothless. Running a bank is not a right, rather it entails considerable responsibility towards both society as a whole and the customers who have entrusted their savings to the bank.
Together they make up 80% of the world’s population, use half the world’s energy and produce over 40% of the world’s exports. And over the last five years they have accounted for well over half of total world growth. Implications for policy Taken together, these developments have profound implications for policy-makers. The linkages between one economy and another are now wider, deeper and more complex than ever before. One country’s policy is more likely to have ‘spill over’ effects on other countries. The interpretation of economic developments has become more challenging. And the rapid emergence of new economic superpowers is creating a new generation of policy issues. For example, the addition of large supplies of low cost labour to the world market is affecting global relative prices, especially of manufactured goods and natural resources, as well as intensifying competition in labour and product markets. This seems to be affecting wage and price setting behaviour in developed countries, as well as their terms of trade. Domestic policy-makers have been  2  BIS Review 103/2006  left struggling to comprehend how globalisation is changing the behaviour of their own economies, and thus the likely impact of their own policy actions. From a global perspective, the coexistence, in recent years, of low long-term real interest rates, massive, and rising, US current account deficits and the build up of huge foreign exchange reserves in Asia has been a source of particular puzzlement and some concern to policy-makers.

Today’s world economy is no longer dominated by a small group of like-minded industrialised countries at similar stages of development; tomorrow’s will be even less so. A shared knowledge base will facilitate effective consultation and collaboration on complex and politically charged issues. This is essentially a public good. And while it is possible to envisage alternative arrangements for supplying it, a permanent international institution is likely to offer clear practical advantages. Second, the Fund already exists. It has the reach and experience to respond flexibly to the changing structure of the world economy. It has nearly universal membership, (now totalling 184 sovereign nations), an agreed legal framework, extensive relevant institutional capacity and a reputation built up over sixty years. Given the costs of acquiring such unique capacity from scratch in the modern world, the benefits of starting again would need to be very substantial indeed. This adds up to a strong pragmatic case for working with what we have. So what role should the Fund be playing? Mervyn King, in his speech in Delhi earlier this year, likened the role of the IMF to an umpire in cricket, ‘warning the players not to attack each other verbally and making it clear publicly when they believe the players are not abiding with the spirit of the game’. While I would be the last person to argue with Mervyn, at least about cricket, I initially found this analogy rather unconvincing.