samchain/econo-pairs-v1 huggingface dataset:
Falling interest rates, perhaps combined with greater predictability as to how interest rates and inflation will develop in future, explain a large part of the increased willingness to borrow. One can thus say that households’ growing debt burden is to some extent a natural consequence of the successful inflation-targeting policy pursued over the past decade. As I see it, it is reasonable to assume that we are heading towards a new equilibrium, where households have adapted their borrowing to what they perceive as a lower long-term level for interest rates, although it is not yet possible to say when we will reach this stage. There is still a possibility that households are underestimating the uncertainty of future trends and therefore borrowing more than would correspond to a long-term equilibrium position. In Sweden, as in many other countries, households have primarily borrowed in order to buy accommodation, which has led to house prices rising at roughly the same rate as the borrowing. The question now is whether there is reason to take this development into account in monetary policy decisions. A strictly-applied inflation-targeting model would not take this into account, and there is no mention of it in the monetary policy clarification published in 1999. The general problem is whether low inflation can make various asset prices, such as equity prices or house prices soar way beyond what is reasonable and if so, what monetary policy can do to remedy this.

According to the present analysts’ consensus, growth differential between the two zones is to narrow this year and practically disappear next year. According to the IMF forecasts, growth should reach 3.2% in the US in 2001 compared to 3.0% in the euro zone. 2.2  Structural reforms which are underway in Europe are likely to permit a sustainable non-inflationary growth  The undertaking and speeding up of structural reforms is one of the conditions for a complete success of the euro. In this regard, the Lisbon European Council, held last 23 April, can be viewed as a further BIS Review 52/2000  4  important step towards the necessary medium term strategy for structural reforms in the Union. The labor market has become more flexible in the past few years in Europe. I would like to give a few examples of this evolution. In all countries, the number of people on fixed-term contracts has quickly increased; they counted for a large part of jobs created between 1995 and 1998 and the trend has continued since then. In many countries, fiscal measures (for instance reduction of non-wage costs) have given incentives to hire younger and less-skilled people (France, Italy, Spain and Germany). Another key change is the rapid growth in part-time employment, especially among women. While Europe has long had a strong tradition of economic regulation, it must be acknowledged that deregulation is well underway in most countries.
Further changes are also being discussed along the same line, including shorter working hours. Furthermore, the age structure of the population is becoming less advantageous from a labour perspective (see Chart 5). In a country like Sweden, where the costs of an ageing population have such a strong impact on the public sector, the supply of labour is particularly important. It is only if more people work and pay tax, and fewer make use of transfers, that it will be possible to notably relieve the pressure on the public budgets. And this will be necessary if we are to be able to maintain our current commitments in terms of nursing, health care and pensions. So it is high time that we put the labour supply in particular in the focus of the public debate. We should have learned from the crisis of ten years ago the importance of dealing with problems in time. If this does not happen, they could become seven times worse in a matter of years, when the population trend has become more markedly negative. This could then require greater, more painful changes under less orderly circumstances. Thank you! 4  BIS Review 42/2003  Chart 1.

BIS Review 42/2003  1  The salient features of the economic outlook World economic activity has been broadly in line with our forecast in the June Inflation Report. If anything, current tendencies are somewhat better, as concluded by the Executive Board at its monetary policy meeting in August. Signs of a recovery in the US economy have become increasingly evident, which is pleasing of course. The outlook is different, however, for the euro area. Perhaps there is reason to expect a slightly longer delay in the European revival, even if we have recently seen a number of positive signals of a forward-looking nature. On the other hand, it appears that economic activity in Japan will be stronger than expected. On balance, it currently seems likely that international activity will be roughly in line with the forecasts we made in August. For Sweden, the majority of indicators point to an upturn in economic activity in the autumn. In accordance with our forecast during the summer, there are currently some unutilised resources (see Chart 2). This has mainly been due to a weakening in demand over the past two years. In addition to the relatively favourable capacity level, productivity growth has also been unexpectedly fast given the current economic climate. In the near future, demand is expected to mount due to both solid consumption growth and a small rise in investment.
And if disclosure is an issue at the level of individual firms, you can imagine that in aggregate, for the financial system as a whole, the gaps in the data can be large. It is a major challenge for the authorities to keep pace with financial innovation in the collection of financial statistics. The Asian Crisis revealed the importance of derivatives exposures in assessing a country's financial position but these were not included in BIS statistics on cross-border lending, even though derivatives had been a common feature of financial markets for at least fifteen years. My second question is a concern that some participants in this market may not fully understand, or may have differing understandings of, the transactions into which they have entered; and that uncertainties may remain about how the courts in some countries would treat these agreements. This is always an issue in new markets, until market standards and legal precedents are clear. But some aspects of the credit transfer market make it particularly relevant. Purchasers of asset-backed securities and creditors of firms that securitise assets need to take care to assure themselves that this transfer is legally robust - a true sale. An unexpected consolidation of the assets of a securitisation vehicle with those of the original lender could lead to potential losses for either party. Lawyers do, of course, pay great attention to this issue and I am neither questioning their opinions nor suggesting that this is necessarily a problem. But transactions differ and investors must do their own due diligence.

In other words, with the rise of new FinTech players, activities that are considered banking services need not be provided by traditional banks alone. Technology or e-commerce giants like Alibaba and Tencent have moved into the financial services space, as they seek to strengthen their customer-centric propositions and services. Business disruptions need not be led only by the large firms. Smaller nimble start-ups have also sought to un-bundle the banking value chain by focusing on niche areas such as financial advisory services and consumer finance. There are two underlying factors: (a) One, is the arrival of the smartphones that launched a new era of mobile apps. Banking has moved from physical branches, to the desks, and now to the palm. Recently, I read a report that British psychologists found that young adults use their smartphones roughly one-third of their total waking hours. Simply put, all of us can now do banking anytime, anywhere. And many segments of our populations are increasingly comfortable going digital, be it for banking, or to purchase goods and services. (b) Second, the accessibility afforded by technology has led banks to shift away from a production-consumption model. Traditional banking models are based on making available the range of the services that a customer need. Today, competition centres on the customer experience. One of our local Singapore banks has a tag line on making banking joyful. The notion of delighting a customer opens up a whole field of competitive ideas as to how to generate that positive experience.
Given this, the Executive Board has decided that the total fixed-income investment should have a modified duration of 4.00. This choice is based on a consideration where the price risk 17 is not assessed to offer a threat to the capital. 12  The Riksbank invests in the following institutions: Tennessee Valley Authority and the mortgage institutions Federal Home Loan Bank, Fannie Mae and Freddie Mac. 13  Changes in the slope mean that the yield curve becomes steeper or flatter when the long or short end of the curve moves. Changes in curvature involve the long and short ends moving in the same direction, while the middle segment of the curve moves in the opposite direction or remains unchanged. For a detailed description of the yield curve, see for instance Golub & Tilman (2000). 14  Modified duration is a linear description of the relationship between a bond portfolio's market value and interest rates. 15  Although the yield curve normally slopes upwards, it would be risky to take this for granted. During different period of time, parts of the yield curve have been both horizontal and downward sloping. 16  Reinvestment risk arises when capital is to be invested over several periods, as the reinvestment interest rate during the later periods is not known now. By investing assets with the same duration as the accounting period, one is only exposed to reinvestment risk and the annual result will be known at the beginning of the year (this applies to assets without credit risk).

This capital should be sufficiently large to cover losses that might arise if the Riksbank needed to provide emergency liquidity assistance in connection with a bank crisis. As we, like most other financial institutions, regularly market value our financial assets, we also need to have capital to cover losses that may arise in the day-to-day management of these assets. Finally, we need capital that reflects assets, whose purpose is to generate income to pay the day-to-day running of the bank, that is, wages, property costs, etc 6 . This quick survey of the balance sheet shows that it is consideration of the Riksbank’s various tasks that is the most important explanatory factor behind the focus of our asset management. It is only when we have reasonably ensured that we can carry out these tasks that we take financial risks in order to generate earnings. In the following I shall describe in more detail how this balance is attained. In practice it is a question of the Riksbank’s exposure to three different types of risk; currency risk, interest rate risk and credit risk. Currency risk Currency risk is by far the largest risk in our balance sheet. It arises when the krona appreciates or depreciates in relation to the currencies in the foreign exchange reserve. This means that the Riksbank’s profit and loss account and balance sheet are valued in kronor. An appreciation of the krona reduces the value of our foreign exchange reserve and a depreciation increases it.
Some analysts in other countries have claimed that the market has already downgraded its ratings for the Icelandic banks some way below those issued by international ratings agencies. They claim that the ratings agencies cannot avoid moving into line with these market perceptions sooner or later. In a recent interview with [business paper] Viðskiptablaðið, I mentioned that if the financial institutions act appropriately, the outcome could turn out much more favourable for them. Once all the explanations have been made and the reforms are finished or close to completion, the market will be more likely to move into line with the rating agencies’ outlook, and not vice versa. Since then, Standard & Poor’s has issued sound ratings for Glitnir. Secondary market terms for Icelandic bonds improved as a result. The ratings companies have better knowledge of the Icelandic economy and financial sector that most other institutions that discuss them. I have mentioned a number of issues here which Icelandic financial companies cannot avoid addressing. But in this respect we must not just preach to the banks. We need to take a critical look at ourselves and the other regulatory and supervisory agencies, monitor compliance with regulations and create a solid framework for the financial sector. It must be ensured that the institutions involved in these tasks can compete for capable staff who can soon tackle delicate issues and enjoy the confidence and respect of the markets.

The international debate may now be turning in the opposite direction to that taken by Iceland and others when the banking supervision was separated from the Central Bank in its day. Iceland is a small country with rapidly expanding financial and banking business. It is a cause of some concern that supervisory and regulatory institutions have not grown correspondingly, although they have still performed their functions very well. The Icelandic banks are well aware of and understand the fundamental importance that strong institutions such as the Central Bank and FME have for assessments by ratings agencies and international analysts. The Board of Governors raises this point here for consideration in conceivable reforms of Iceland’s financial institutional framework. But other action is needed as well. In consultation between the Government of Iceland and the Central Bank, it has been decided to increase the Bank’s foreign reserves in coming years and boost its capital position further, probably with foreign borrowing rather than by purchasing foreign currency in the markets. This is of course done on a long-term view and reflects ongoing changes in the external economic environment rather  BIS Review 28/2006  3  than the temporary market unease at present. Also, the Central Bank has recommended to the Ministry of Finance and the Government that special action should be taken to strengthen the foundations of the Icelandic bond market. The Treasury is in an unusually strong position at present and its debts are decreasing from one year to the next.
We must take advantage of these changes, and guard against the risks. Cyber risk is foremost among them, as cyber incidents are growing in number and sophistication in banking. 21. MAS welcomes the innovation and competition from new models. We are doing so while ensuring that we maintain the trust and stability that are the hallmarks of the Singapore banking system. 22. First, we have been working with the industry and other government agencies to put in place the enabling infrastructure to help banks to better harness the benefits of new technologies. 23. In payments, we have built up the national electronics payments infrastructure to provide instant, seamless digital payment services that is more convenient and intuitive to users. FAST allows fast and secure payments for both consumers and businesses. Building on the FAST infrastructure, we were able to introduce further initiatives such as PayNow, which allows real time payment with the convenience and speed of mobile texting for the customers of all major retail banks, including the three local banks and 6 Qualifying Full Banks (QFBs).1 As mentioned, MAS has also announced that it will be working with the industry to open FAST access to non-bank players. 3/6  BIS central bankers' speeches  24. In customer identification, MAS has worked with the Ministry of Finance and GovTech to introduce MyInfo for the financial industry.

So is second-round inflation a risk in our final assessment? The spike in oil and commodity prices adds to already present inflationary pressure. Monetary policy must therefore be pre-emptive, as well as poised. Since last year, domestic demand has been strong. The output gap is projected to close later this year. Capacity utilization has increased and hiring has become more difficult. These indicators point to excess demand that may lead to inflationary pressure. On top of that, a sustained and large supply shock amid strong demand is like adding fuel to the fire. It can unhinge inflation expectations. And price controls can only delay the inevitable price pressure. There is therefore an increase in the risk to second-round inflation which necessitates additional monetary response. A downside risk of high oil prices to global growth, and therefore Thai economic growth, also exists. However, in the central scenario, the balance of risks has clearly shifted to inflation. Our projections point to a significant risk that core inflation may breach the upper end of the band. As such, regaining poise by moving toward the neutral rate will allow us to pre-empt inflation risk. By now, you are probably wondering what the neutral rate is. Let me comment briefly on this mysterious topic. First, on the concept – the monetary policy stance is normal or neutral if aggregate output is at its potential output and the monetary policy is not exerting any pressure on growth and inflation but simply promoting their stability.
It re-distributes income in favor of the rich people who normally save a greater proportion of their income than the poor people. So, a country would get the much needed savings as a result of inflationary redistribution. It makes available funds for investment and through investment, ensures long term sustainable growth. Due to the above reasons, inflation tax has been liberally used by many governments throughout the world. The evils of the use of inflation tax Though inflation tax has been preferred by many, it has been criticized on many grounds. The first criticism is leveled on the ground that, when governments learn of this easy way of funding budgets, they would tend to ignore the more solid and sustainable forms of raising revenue, namely, through taxation. This type of behavior is known in economics as “moral hazard” behavior. The danger of that behavior is that it deprives the society of the opportunity to carry out public expenditure programs based on a solid resource base. It would reduce the government to the same unfortunate position of a student who has passed all his examinations by cheating. Then, one day when he could no longer do so to pass an examination, he would painfully learn that he has no in-built capability to face it on his own strength. The second criticism has been advanced on the ground of the evils of inflation. They could be summarized as follows: •  Inflation causes the market system to fail in its resource allocation function.

Despite the significant distance covered in the fight against inflation, price stability has not been achieved yet and there is still a long way to go. Recent inflation developments also confirm this fact. At this point, I would like to summarize the inflation and monetary policy developments of the recent period. The increase in inflation in the first quarter of the year was an expected development, which has been stated in the Bank’s reports since January. In April and May, the increase in inflation was above the expected level due to unforeseen developments in seasonal pricing behaviors. Compared to March, consumer prices increased by 1.34 percent and 1.88 percent in April and May, respectively. As of May, annual inflation became 9.86 percent, which is obviously above the target path. In May, the direct effects of exchange rate movements on inflation started to be observed through the channels of fuel oil, gold and durable goods. During this period, the upward pressure exerted by the  2  BIS Review 68/2006  depreciation in the New Turkish lira on inflation reached 0.5 points. Adding the exogenous movements in gold and oil prices, the total impact amounts to 0.65 point. In other words, some of the direct effects of exchange rate movements on prices became evident in May. However, these effects are expected to be high in June, too.
A rising China is a formidable competitor for investments and in global markets, but Southeast Asia is better off with a prosperous and modern China, than with a poor and backward China. International trade is not a mercantilist zero sum game. As China’s exports have grown, so have its imports. Southeast Asian exports to China have been expanding rapidly. Between 1999 and 2001, Singapore’s own exports to greater China (i.e. PRC, Hong Kong and Taiwan) grew by an average of 14% p.a., and now exceed our exports to the US. These exports range from integrated circuits, disk drives, scientific measuring instruments, oil and chemical products to food and beverages. In services too, China’s rising affluence offers great opportunities to Southeast Asia. China is one of the fastest-growing sources of tourists to Thailand, Malaysia and Singapore. A growing Chinese middle-class will want high-quality healthcare and education services. And wealthy Chinese – whose numbers are already not insignificant – will need more sophisticated financial services. In manufacturing, China is rapidly expanding into activities previously carried out in Southeast Asia. But that does not mean that Southeast Asia will revert to agriculture and primary production. Attractive as China is to investors, it will not soak up all manufacturing investments, nor will it out-compete all other countries in every industry and every product.

Qualifying high-growth and high value-added financial activities will enjoy a concessionary tax rate of 5%, while a 10% rate will apply to tax-sensitive but mature activities. We have also enhanced incentives for specific activities, such as fund management, trustee and custodian services, insurance and capital market and treasury activities. We also undertook a fundamental review of the Central Provident Fund (CPF) Scheme, which is our social security and pension fund scheme. We refocused the CPF on its core objective of providing for the basic needs of the majority of Singaporeans, in terms of retirement needs, healthcare expenses and home ownership. We are tightening the use of CPF for buying properties, so as to leave more for retirement needs. We are reducing the coverage for high-income Singaporeans, who should be able to plan and provide for their own retirement. We are lowering contribution rates for older workers, who are most vulnerable to losing their jobs. These measures will make our labour market more flexible, and contribute to our economy’s overall resilience and competitiveness. Second, we want to encourage entrepreneurship in order to develop more local and foreign start-ups and emerging enterprises to complement our strong base of MNCs and established local companies. In this rapidly changing, unpredictable environment, the best way to spot and exploit new opportunities is not by centralised direction, but through the drive and entrepreneurship of our people. According to the 2001 Global Entrepreneurship Monitor Report, Singapore ranked 27th out of 29 countries in terms of entrepreneurial activity. We need to do better.