samchain/econo-pairs-v1 huggingface dataset:
The value of the Petroleum Fund, measured as a percentage of GDP, will rise in the years ahead. On the other hand, Norway, like many other countries, is facing substantial fiscal challenges. The expected dependency ratio, i.e. the ratio of persons over the age of 67 to persons aged 20 to 66, will  BIS Review 34/2005  5  rise sharply in the years ahead. The National Insurance Scheme’s spending on old age and disability pensions, based on the current social security rules, is increasing. The return on the Petroleum Fund can only cover a small portion of this increase. According to Ministry of Finance calculations, a funding requirement equivalent to 6 per cent of GDP will still be uncovered in 2060 given an oil price of NOK 230 (2005-kroner), or around USD 35 per barrel. Oil futures 6-7 years ahead are now higher than this. If oil prices remain as high for the foreseeable future, the funding requirement will be somewhat lower. To base decisions on this, however, would be a very risky strategy. Even though Norway’s petroleum wealth is substantial, it is our human resources that account for most of our national wealth. Even a small increase in the “return” on human capital might generate considerable gains. The return on this capital partly depends on our pension schemes and the application of social security rules. These should be designed in such a way that they provide incentives and opportunities to work. Labour market legislation must also promote production and employment.

After a period, the rise in prices for domestically produced goods and services also slowed. Inflation measured by the CPI-ATE reached its lowest level in the first months of 2004. Inflation remained at less than ½% until after the summer before picking up in the autumn. Inflation moved up primarily as a result of a slower decline in prices for imported consumer goods. The depreciation of the krone since the beginning of 2003 has contributed to these developments. In addition, the rise in prices for domestically produced goods and services stabilised, and towards the end of 2004 there was a tendency towards a higher rise in prices for these goods and services. Prices for imported consumer goods fell more than expected at the beginning of 2005, while the tendency towards a more rapid rise in prices for domestically produced goods and services has persisted. So far in 2005, inflation measured by the CPI-ATE has been around ¾ per cent. The other Nordic countries have also experienced falling inflation. Inflation has declined, and is now relatively low in Sweden, Denmark, Finland and Norway. The year-on-year rate of underlying inflation in these countries was around 1 per cent in March. A common feature of the low level of inflation in the Nordic countries seems to be the sluggish trend in prices for imported consumer goods, even though developments have not been entirely the same in all the Nordic countries. BIS Review 34/2005  1  Reliable information about the economic situation is important when setting the interest rate.
Clearly in principle the colder the external frost, the higher we need the internal temperature: the danger is that we overload the domestic boiler, with households becoming reluctant to take on more debt, or pay higher house prices, so that consumer spending growth moderates regardless of the outside temperature. Earlier this year in fact things seemed to be moving in the right direction: global demand appeared to be picking up quite well, and there appeared to be a reasonable prospect that consumption growth would moderate largely of its own accord. There was at that time a question of whether that moderation might need to be encouraged by higher interest rates. With the downward revision - over the summer - to the expected pace of global demand growth, the emphasis of our policy debate has shifted. The questions now are how far we need to try to sustain domestic demand growth by lowering interest rates, in order to maintain overall stability; and how far we can sensibly do so without excessive risk of overloading the domestic boiler. The best outcome for us of course would be if the external frost would continue to melt, with the global economy maintaining its gradual recovery and the euro continuing to strengthen in foreign exchange markets. And that is in fact in my view the most probable outcome. But until things become clearer we are very much on the spot. And perhaps, I thought, 'on the spot' was not a bad answer to the opera's third riddle.

*** To conclude, I hope I convey the obviousness and urgency of the case for macroprudential policy in the current circumstances. But as I said, it is one part of the answer to address the clouds looming on the horizon. Over the past ten years, we have ensured that the financial system has a stronger capacity to withstand shocks. But we need to develop it further: through achieving the implementation of post crisis regulations and deploy international standards as agreed. This also includes evaluating the effectiveness of these new regulations and possibly adjusting some of them. But evaluating is not a catch word for deregulating; through maintaining a supervisory steady hand. In Europe, this would include delivering on the NPL action plan, overseeing the implementation of robust lending standards, etc. ; through developing macroprudential policies; and through relentlessly filling the knowledge gap, to seize, understand and address the risks from market developments (e.g. leverage finance), cyber-risks, new systemic players (e.g. big tech as systemic solution providers or alternative suppliers of or hub to financial services). 4/4  BIS central bankers' speeches
Banks have entered into arrangements with third party service providers or other entities within banking group to perform certain operations or process transactions. These include information systems hosting, applications processing and other middle and back office operations. These outsourcing arrangements can bring cost reductions and productivity benefits. However, they may also expose the bank to reputational, compliance and operational risks. For instance, the service provider might fail to deliver the contracted service, experience security breaches, or fall short of the legal and regulatory standards that the bank is required to comply with for these operations. 22. MAS issued a set of Outsourcing Guidelines in 2004 to promote sound risk management practices among financial institutions for their outsourcing arrangements. The key guiding principle is that MAS expects banks to manage outsourcing arrangements as if the services continue to be conducted in-house. 23. MAS has consulted the industry on the revision of the guidelines. Let me highlight some of the key changes. •  First, the Guidelines will set out MAS’ expectations on the use of cloud computing services by FIs. MAS recognises cloud services can offer various benefits such as scalability and advanced functionalities, and is amenable to banks leveraging on cloud services to fulfil their business and operational needs. MAS expects banks to ensure that their risk management measures are commensurate with the nature, scope and complexity of the cloud deployment models that they adopt. •  Second, there will be a greater emphasis on safeguarding customer information.

Svein Gjedrem: Monetary policy, forecasts and market communication Speech by Mr Svein Gjedrem, Governor of the Norges Bank, at the Norwegian School of Management’s Centre for Monetary Economics, Norsk Hydro, Lysaker, 7 June 2001. *  *  *  The long-term objective of monetary policy is to contribute to low and stable inflation. Price stability is the best contribution monetary policy can make to economic growth and prosperity. A nominal anchor is also a necessary precondition for stable financial markets and property markets. We cannot achieve higher employment in the long run by accepting higher inflation. On the contrary, the experience of our country and that of others in the 1970s, 1980s and 1990s is that periods of high inflation are followed by downturns with high unemployment. High and variable inflation also leads to an arbitrary redistribution of wealth and income. This spring, the Government assigned a new operational mandate for monetary policy to Norges Bank. Norges Bank shall set the key rate with a view to maintaining low and stable inflation. The inflation target is set at 2½ per cent. I will use this occasion to elaborate on our interpretation of the mandate and to discuss how it will affect the conduct of monetary policy. The inflation outlook is presented three times a year in Norges Bank’s Inflation Reports, and forms a basis for the Bank’s interest rate decisions. Further assessments are presented every six weeks in connection with the Executive Board's monetary policy meetings.
Financial institutions should also educate their customers, and provide financial services that are suitable both in terms of business and risk management capability of the customers, followed by dedicated after-sales services. Improvements along these lines will further strengthen growth inclusiveness. Other policies The Bank of Thailand will also seek to strengthen the economy through its other functions. In managing international reserves, the Bank of Thailand advocates further diversification by expanding the investment asset universe, as permitted by the new royal decree. The Bank of Thailand also supports a speedy repayment of outstanding FIDF debt, based on the principles of monetary policy independence and long-term fiscal discipline. While monetary and financial stability certainly provide a favourable backdrop, the economy cannot prosper on the back of these alone. The nation’s competitiveness, in particular, needs to be strengthened and improved further. The private sector should continue to place greater emphasis on innovation and seek to compete on the basis of quality rather than prices. The public sector, meanwhile, must ensure that a sufficient part of budget is set aside for infrastructure investment on a sustained basis, which will help improve the productivity and benefit all parts of the economy in the long run. Joint efforts by all sides are needed to achieve our common goals of macroeconomic stability and economic strength and prosperity. BIS central bankers’ speeches  3

It ties up resources without providing the extra capacity in stress that regulators wanted them to provide, and had assumed they would when determining how to prepare the system to absorb shocks. If a regulatory buffer is instead perceived as similar to a minimum requirement and firms take actions to avoid dipping into it, these actions might be harmful to the real economy and, as last year’s Bank analysis showed, to the banking system. Thus it is essential to have a well-designed regulatory buffer framework which can make fresh resources available when they are most needed. The early Covid stress gives us an opportunity to investigate how the current framework behaves and how practically usable regulatory buffers may be. Given the effectiveness of the fire-fighting I mentioned at the outset, bank capital ratios did not approach their Capital Conservation Buffers, so we cannot probe directly how banks would have behaved had capital ratios fallen inside that regulatory buffer. However, there are at least three approaches we can look at. Approaches to analysing capital buffer usage Approach 1 – What do banks and investors say about buffers? The first approach involves asking banks what constraints they face in practice in dipping into buffers and how they manage their capital positions. In broad terms, they told us that expectations of capital instrument and debt investors and concerns about the actions of credit ratings agencies are a major constraint.
Over the past quarters, it has made public its concerns about developments in the commercial real estate market (i.e. the market where real estate is an asset class for financial investors), trends in debt levels among highly indebted corporations or, more recently, leveraged finance activities (especiallythe debt incurred by companies participating in LBOs, which is frequently sold off by originators to other financial investors). The HCSF has also formally intervened to curb risk-taking: at the end of 2017 it decided to cap bank exposures to large and highly indebted corporations at 5% of their capital. In addition, to limit the negative consequences for banks of increased risk-taking in the event of a financial shock, the HCSF decided in June 2018 to raise the countercylical capital buffer to 0.25% – in other words, to require banks to set aside more capital to cover their risk exposure toward the French economy. As a countercyclical tool, this buffer is designed to be put in place preventively, when credit constraints are low, i.e. when the economic “cost” of such an additional requirement is limited. It forces banks to build up some room for manoeuvre that can then be used to prevent credit rationing if they incur higher-than-expected losses after a shock or turnaround in the financial cycle. Immediately releasing the buffer would allow banks to tap into this capital reserve and 3/7  BIS central bankers' speeches  support the supply of credit, especially to small and medium-sized enterprises which are the most reliant on bank financing.

Exchange rates SEK per EUR and per USD respectively 12  12  SEK/ EUR SEK/ USD  11  11  10  10  9  9  8  8  7  7  6  6  5  5 04  05  06  07  08  09  Source: Reuters EcoWin  16  BIS Review 98/2009  19. Unit labour costs Annual percentage change 7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0 -1  -1 Unit labour costs Labour costs per hour Productivity  -2  -2 -3  -3 94  96  98  00  02  04  06  08  10  Sources: Statistics Sweden and the Riksbank  Note. Broken lines and columns represent the Riksbank’ s forecasts. 20. Inflation expectations Annual percentage change 4.0  4.0 5 years 2 years  3.5  3.5  3.0  3.0  2.5  2.5  2.0  2.0  1.5  1.5  1.0  1.0  0.5  0.5  0.0  0.0 96  98  00  02  04  06  08  10  Sources: The NIER and Prospera Research AB  BIS Review 98/2009  17  21.
As a result, by the late 1990’s the Basel Committee and leading institutions worldwide began discussions on ways for supervision to incorporate more sophisticated and sensitive measures of the risks that banks face. The initiative for these discussions can be attributed above all to William McDonough, who was until recently the President of the Federal Reserve Bank of New York and my immediate predecessor as chairman of the Committee. Bill brought intellectual leadership, demanding standards, and tireless energy to a project whose size and implications became apparent only after bankers and supervisors had taken a long, hard look at how much the art of risk management had advanced in the short years since 1988. Throughout the five years of work on the New Accord, Bill McDonough convinced leaders in the industry, in central banks, and in supervisory agencies that merely updating the rules would be unsatisfactory. Instead, Bill sought to advance the state of the art in risk management across the industry and thereby promote greater stability in the global financial system. This would benefit not just bankers, but also businesses and consumers in all walks of life. It was truly a privilege to work with Bill on an initiative that would represent not just good banking policy, but most importantly good public policy, more broadly defined. Bill has since moved on to new challenges as head of the Public Company Accounting Oversight Board in Washington, but the U.S. delegation to the Basel Committee remains in excellent hands.

The growing complexity of market-based finance and the change in the financial system will make it difficult for central banks to go back completely to the old, comfortable, traditional approach of having very lean balance sheets and just targeting the overnight money market rate. The set of instruments will have to be broadened. Several have been used during the crisis, some of them just for very stressful periods of course, but they are now part of the toolkit. Do you think what you’re saying is shared by other people on the Governing Council? I wouldn’t speculate on that. This view is developing in academia everywhere and has been discussed extensively in [the Kansas City Federal Reserve’s flagship conference in] Jackson Hole in 2016, for instance. So it’s part of the ongoing discussion at the interface between academia and central banking. Do you think the ECB has done enough to justify the impact of its policies on inequality? If we were to do quantitative easing (QE) again, would helicopter money be a better option? Helicopter money has never been a policy option. We are attentive to the question of inequality. I spoke in August last year to the European Economic Association about inequality and monetary policy, and since then further work has been done in the ECB to expand on what I said.
But exit strategies from this support need to be developed and consistently implemented to contain moral hazard, to forestall a rise in long-term real interest rates and crowding out effects, and to insure sustainability of public finances. If this challenge is not met, the current crisis is bound to be exacerbated by a sovereign debt crisis. •  In the area of regulation a broad set of measures is under way and considerable progress has been made. But as signs of stabilisation in the financial system and the  BIS Review 102/2009  3  economy are emerging, reform appetite is waning and there is a risk of missing the opportunity of a paradigm shift in the financial system. •  Especially as the crisis intensified, central banks took immediate and unprecedented action by lowering rates to historically low levels and providing ample liquidity. •  Keeping interest rates too low for too long may well lay the basis for new imbalances and instability. Central banks need to prepare for credible strategies to phase out their support and stand ready to prepare financial markets when they come to unwind their credit support measures. •  In academic circles the financial crisis has revived the debate whether central banks, in the conduct of monetary policy, should pay more attention to financial variables, and specifically, whether inflation targeting strategies do not focus too narrowly on economic developments alone. Relative to this the ECB’s monetary policy strategy has proved to be robust.

The monetary pillar provides for discipline not to ignore risks to price stability stemming from imbalances in money and credit developments. •  Initiatives are now being taken to close the gap in the area of cross-border supervision and between micro- and macro prudential supervision. The envisaged establishment of the European Systemic Risk Board (ESRB) which the ECB will support analytically and logistically marks an important step in this direction. The ESRB will monitor systemic risk and provide risk warnings and recommendations. Effective cooperation and leadership at the European level will be crucial to make the ESRB successful in the pursuit of its mandate. •  Is the current improvement in some financial market segments genuine or driven by governments and central banks? When the crisis took hold and risk aversion spread, leading to de-leveraging and a sharp decline in securitisation public attention focused on executive pay as an area for regulation. In fact improving corporate governance remains a key area for regulation. Bonus systems need to be changed so as to make managers liable for their decisions and provide them with the right incentives to focus on longer-term sustainability of their business models rather than short-term profit. •  But corporate governance is just one area where regulation needs to be improved.
Moving the role of ‘Chief Economist’ towards the director of the ‘Economic Department’, and letting him be more independent of any particular body member (making him responsible to the decision-making body as a whole), can help to solve this problem of information filtering. Openness is a consequence of ‘staff independence’. Allowing staff to be more independent at the same time requires the decision-making body members to take an active approach towards the analysis produced by the staff. Since a perfect understanding of the message contained in the ‘policy documents’ is a prerequisite for proper policy conduct, interaction between the decision-making body members and the staff should be assured at different levels. And finally, a need to deal with uncertainty properly arises as a consequence of the uncertainty surrounding monetary policy practice. Therefore, it is highly desirable to discuss the implied risks at different levels: (i)  First, the risks should be discussed by the staff. (ii)  Second, an evaluation of the risks should be performed interactively by the decision-making body members and the staff (alternative scenarios can be produced on the basis of these discussions). (iii)  Third, the risk and the alternative scenarios should be discussed by the decision-making body members during the policy meeting. It is clear that all the above-mentioned properties can be satisfied when either a Bank Board or a Policy Committee are making the decisions. Over the years it has been proven that both systems can work well.

Term structure models show that, over the past year, a rise in the term premium accounted for a significant portion of the increase in the ten-year OIS rate (Slide 11, left-hand side). The ten-year OIS term premium currently stands at its highest level since 2013 (Slide 11, right-hand side). The rise in the term premium reflects two interrelated developments. One is the fundamental change in the euro area’s inflation environment (the “nominal” term premium). The ten-year inflation risk premium increased sharply after a long period of persistently low inflation (Slide 12, left-hand side). About a year ago, it turned positive for the first time in almost ten years. The other development relates to the uncertainty about the future path of short-term interest rates (the “real” term premium). The increase in inflation uncertainty, together with the retirement of forward guidance on policy rates, has raised uncertainty about future policy rates and hence market volatility (Slide 12, righthand side). As it turns out, the changes in the ten-year OIS term premium can largely explain the gap that has emerged between euro area sovereign yields and the expected future path of short-term interest rates. [20] In other words, changes in the risk-free rate have been the prime market driver, so that the spread of the euro area ten-year GDP-weighted yield over the equivalent OIS rate has remained broadly stable over the past two years (Slide 13, left-hand side).