samchain/econo-pairs-v1 huggingface dataset:
As you can all see, a lot has happened over the past ten years. For instance, we can observe that:   The foreign currency reserve is SEK 325 billion larger. This increase is mainly because we have borrowed the equivalent of SEK 200 billion in foreign currency through the Swedish National Debt Office to strengthen the foreign currency reserve. The Riksbank’s balance sheet 2004 and 2014 SEK billion  Source: The Riksbanken  2  The formal term in the balance sheet is “lending to credit institutions in Sweden related to monetary policy operations denominated in Swedish kronor”. BIS central bankers’ speeches  3    We have once again acquired a securities portfolio in Swedish krona. The Riksbank previously had a portfolio of Swedish securities but then this was phased out more than ten years ago.   The stock of notes and coins has declined, partly due to card payments and electronic payments becoming more common. As a consequence of this, we now have monetary policy liabilities instead of a monetary policy claim. This means that we are now borrowing excess liquidity from the banking system instead of lending money to cover a liquidity deficit. I will return to this issue later on.

Il Sole 24 Ore: The EU plan to help Greece relies on bilateral aid from EMU countries and on the involvement of the International Monetary Fund. The ECB was clearly against the IMF participation. What do you make of the EU plan? Trichet: I was not against the IMF involvement in itself. I was against the involvement of the IMF alone. I have always been in favour of the maximum level of responsibility exerted by the governments of the euro area as is prescribed by the Stability and Growth Pact. The pact is at the very heart of EMU: it calls for member countries to assess and judge the fiscal policies of their peers; this peer’s surveillance can impose sanctions. In the days preceding the EU meetings, I called all governments to live up to their treaty responsibility and to the provisions of the Stability and Growth Pact which is essential for the EMU to function well. From this point of view, the declaration of the euro area Heads of State or Government is appropriate. It is also a good and workable solution. Il Sole 24 Ore: Do you expect it will be used? Trichet: At this moment in time I don’t expect this mechanism to be necessary. Greece should proceed with its recovery program in a very determined way as committed in front of the Eurogroup. Il Sole 24 Ore: Is a default of Greece a distinct possibility as some commentators seems to expect?
Briefly, it is because it is important both to have a credible anchor for price and wage formation and for this anchor to be far enough above zero that the policy rate does not hit its lower bound too frequently. BIS central bankers’ speeches  excessively rapid and powerful appreciation of the exchange rate could be problematic – it can be difficult for a central bank in a small, open economy to allow large interest rate differentials towards the rest of the world. The way forward – what can we expect and what kind of preparedness should we maintain? If it has now become more difficult to conduct monetary policy, what can the Riksbank and other central banks do? Now that Swedish inflation is starting to approach the target, it may be time to lift our gazes and start thinking about the conditions for monetary policy over a slightly longer perspective. How should we consider these in the period ahead – what kind of preparedness should we maintain? I intend to focus on the consequences of the low global real interest rate, as I deem these to be potentially the most sweeping. So far, the influence of large central banks on the monetary policy of smaller countries such as Sweden seems not to be something we need to be too concerned about under normal circumstances, as long as we have a floating exchange rate.

The correction in prices was particularly marked in the case of assets issued by the European banking sector; the above-mentioned global factors were joined by other elements stemming from the euro area, from its banking systems and, indeed, from specific banks. These factors include most notably the following: the low profitability of banking business in Europe, a matter on which I shall focus in view of its significance; the concern over the high volume of non-performing loans in certain European jurisdictions; and the extension and intensification of regulatory requirements, a clear example of which is the new Recovery and Resolution Directive which, ultimately, may translate into an increase in requirements in respect of capital or of the holding of loss-absorbing liabilities. Against this background, it is vital to understand the causes behind the European bank stock market corrections, given that their lower share prices hamper the possibility of tapping the markets for capital to reinforce their solvency levels. In this setting common to European banks, Spanish institutions increased their consolidated assets by 2.5% in 2015, essentially owing to their international activity. As to business in Spain, credit to the resident private sector continued to fall in 2015, albeit at more moderate rates than in 2014, both for households and for non-financial corporations. For the latter the fall in credit progressively eased, with the rate of decline for SMEs (-2.8%) appreciably lower than that for credit to large corporations (-6.4%).
The FSB has identified a similar menu of tools under its Misconduct Action Plan, which its members can draw from. Thus far, however, action to promote good conduct has varied widely across the G20.25 The FSB’s compensation standards have been written into G20 regulatory rules, but not yet fully deployed.26 Although adjusting in-year pay is common, clawing back bonuses later on is not, even though it typically takes several years for evidence of misconduct to emerge. And few jurisdictions have put in place either formal mechanisms to ensure that boards and senior managers are explicitly responsible and accountable for what happens at their regulated firms or regulatory references to stop those with poor conduct records moving from firm to firm. 20  Fair and Effective Markets Review Final Report, HM Treasury, Bank of England and FCA (June 2015). PRA Supervisory Statement | SS28/15 Strengthening individual accountability in banking, May 2017. 22 FX Global Code (2018). 23 FMSB stands for Fixed Income, Currencies and Commodities Markets Standards Board. See Carney (2017), Turning back the tide. 24 Allen, T., (Q3 2018), Strengthening the link between seniority and accountability: the Senior Managers and Certification Regime, Bank of England Quarterly Bulletin 25 FSB (April 2018), Strengthening Governance Frameworks to Mitigate Misconduct Risk: A Toolkit for Firms and Supervisors. 26 FSB, (2017), Implementing the Principles for Sound Compensation Practices and their Implementation Standards, Fifth Progress Report.

Most importantly – and this is the lie – complacency among individuals and institutions, fed by a long period of macroeconomic stability and rising asset prices, made this remorseless borrowing seem sensible.3 When the crisis broke, policymakers quickly dropped the received wisdoms of the Great Moderation and scrambled to re-learn the lessons of the Great Depression.4 Minsky became mainstream.5 Lie II: “Markets Always Clear” A deep-seated faith in markets lay beneath the new era thinking of the Great Moderation. Captured by the myth that finance can regulate and correct itself spontaneously, authorities retreated from their regulatory and supervisory responsibilities.6 The second lie, the belief that “markets always clear,” has two dangerous consequences.7 First, if markets always clear, they can be assumed to be in equilibrium— or said differently “to be always right”. If markets are efficient, then bubbles can neither be identified nor can their potential causes be  2  Raghuram Rajan (2010), “Fault Lines: How Hidden Fractures Still Threaten the World Economy”. This emphasis on the endogenous tendency of financial systems to become unstable is reminiscent of Hyman Minsky’s “financial instability hypothesis” (Minsky (1992)). 4 See for example, Krugman, P, (1999, updated and reissued 2008), The Return of Depression Economics and the crisis of 2008, Penguin.
Hopefully, it will be possible to achieve an equivalent level of openness and clarity in the matter of time-varying regulations. One possibility could be to develop some kind of rule of action based on assessments regarding, for example, credit growth. Such a rule would thus provide information on whether the “regulatory controls” needed to be shifted upwards or downwards. Inspired by the Taylor rule that is well-known within monetary policy, the arguments in the regulation could be formed of the non-time varying regulations ( z ), a measure of actual credit volume in relation to a level deemed sustainable over the long term l t  l t , and the output gap:    4    Dynamic provisioning is, in principle, a rule in which banks make specific and general provisions when times are good for later use in less favourable periods. These provisions are rule-based and are built upon credit stocks and credit flows calibrated by data on average historical loan losses to different sectors. BIS Review 68/2010  11  z t  z z , lt  lt , y t  y t ,... . I would like to emphasise that this is intended as an illustration of a so-far quite loose conception, rather than a concrete proposal. However, it is a useful illustration, not least because it indicates the comprehensive development work that will be required before anything practically applicable can result.

One difficulty is, for example, that the financial sector is often rather underdeveloped in the models used by central banks in their analysis work. At present, fairly intensive efforts are being made in many areas to better include financial variables in the central banks’ forecast models. Another, not unrelated, problem is that property prices and borrowing are occasionally driven by psychological factors – exaggerated optimism and high risk propensity in upturns and the opposite effect in downturns. It is, of course, primarily this kind of development that leaning against the wind is an attempt to counteract. However, such factors are difficult to capture in economic models, as these are often based on the assumption that participants will act in a rational manner. In other words, it is difficult for a model to generate a scenario such as that represented by the unbroken curve in the figure. Even so, we know that such scenarios occur. It is part of human nature to reassure oneself by believing that “this time is different”, which, at the end of the day, is seldom the case. 5 The difficulty in making forecasts that capture and quantify the risks that may be associated with a credit-driven property boom has meant that monetary policies that lean against the wind are often described as the adoption of “extra action” or the increase of the interest rate “over and above” the forecasts for inflation and the real economy by the central bank.
Should that aim have been accomplished, the upward trend in public debt commencing 2008 would have been finally controlled after an increase of 60 points of GDP. The basis of the recovery: the structural reforms Now, I will briefly elaborate on the main reforms which have been the basis of our recovery. These reforms have been oriented towards increasing the flexibility and competitiveness of the economy and addressing previous imbalances. For the sake of brevity, I will concentrate on the labor market reform, the reforms to ensure budgetary discipline and sustainability, and the reforms on the public pension system. Labor market reform The labour market reform has been key in the process of correcting the imbalances of the Spanish economy, where we can mention, first of all, the losses of competitiveness accumulated between 2002 and 2008 and very high unemployment. The reform approved in 2012 made important changes in the institutional framework, including a reduction in the degree of centralisation of the collective bargaining system, an alleviation of dismissal costs and of the complexity of procedures, and a widening of hiring possibilities. 2  BIS central bankers’ speeches  In a nutshell, the reform attempts to avoid repeating the previous pattern under which firms adjusted to an economic slowdown either by dismissing workers or by closing down, providing firms with increased flexibility to link wage negotiations to their particular economic conditions, and the possibility of opting-out from sectoral agreements, giving greater priority to firm-level ones.

Luis M Linde: An outlook on the Spanish economy Speech by Mr Luis M Linde, Governor of the Bank of Spain, at the Official Monetary and Financial Institutions Forum (OMFIF), London, 9 February 2016. *  *  *  I would like to thank OMFIF and Mr. David Marsh for the invitation to participate in this Forum, an initiative that favours public and private sector interactions and the exchange of views on topics of common interest. According to the title of my intervention, I will comment on the current situation of the Spanish economy, with a special focus on developments in employment, the external sector and fiscal adjustment. I shall continue with a brief review of some of the reforms undertaken that have laid the foundations underpinning the recovery. I will continue with some references to the situation of the banking sector and the challenges it is confronted with; and I will conclude with some comments on the growth perspectives of the Spanish economy. Current performance of the Spanish economy The current performance of the Spanish economy shows robust growth, employment creation and a surplus in the external balance. The simultaneous occurrence of these three positive developments has not been very usual in recent decades in the Spanish economy. We should also mention the ongoing deleveraging process, which should be considered necessary and positive. The recovery of the Spanish economy started in the second half of 2013, following the severe contraction that took place in the preceding years.
Although the resulting impact on core goods prices began to fade through the second half of last year it was then supplanted – and superseded – by the effects of the war in Ukraine on the supply and prices of food and energy. And the huge squeeze in real incomes, resulting from these jumps in import prices, has subsequently led to second-round effects on domestic wages and prices. This, to me, sounds the more plausible explanation of the data we’ve seen. What would have been needed to control inflation? It is, of course, possible – with the benefit of hindsight – to imagine a different path for monetary policy over the past that would have kept inflation close to target even in the face of these subsequent shocks. Using the Bank’s economic model, Chart 16 plots the paths of unemployment and nominal wages necessary to keep price inflation roughly at 2% through 2021 and 2022. The simulation suggests that interest rates would have to have risen well into double digits. Another thing it makes clear is that, as I argued in a talk last autumn[16], there is no getting round the impact on real incomes of these jumps in import prices. One way or the other – whether as higher price inflation or lower wage inflation – increases on this scale are bound to result in a period of falling real pay (and also falling real profits for domestic companies).

The geographical distribution of remittance inflows to Sri Lanka during 2005 has been as follows: •  57% from Middle Eastern region  •  18.5% from European Union  •  6.5% from other European countries  •  6.5% from North America  BIS Review 3/2007  3  •  4.5% from Far East-Asian countries  Government policy Successive governments in Sri Lanka have encouraged and promoted Sri Lankans to work abroad, both in skilled and un-skilled categories. The workers are permitted to open tax-free Non-Resident Foreign Currency (NRFC) Accounts which facilitate the receipt and retention of remittances in foreign currencies. Expatriates and workers are also allowed to have Resident Foreign Currency (RFC) accounts after their return to Sri Lanka. Taking the deposits in these accounts as collateral, low interest housing loans have been provided to the remitters and their families. The government has introduced “Sri Lanka Nation Building Bonds” to enable Sri Lankan migrant workers and other expatriates to participate in the Nation Building programme. In addition to government, the Sri Lanka Foreign Employment Bureau, Association of Licensed Foreign Employment Agencies, the Commercial Banks, Specialised Banks, money changers and money transfer systems are key players in the remittance industry in Sri Lanka. The Sri Lanka Foreign Employment Bureau continues to hold awareness programmes to educate remitters to channel funds through formal institutions and also look into the welfare aspects of migrant workers. The banks have now taken the initiative to establish links with migrant workers prior to their departure.
15 Previous fluctuations in inflation, real interest rates and tax rules have created redistributions that have benefited certain generations at the cost of others and that have created an economic middle class of middle-aged and older people with relatively strong economic resources. Increasingly difficult to enter the housing market At the same time, those people outside the owned housing market, the outsiders, have not been able to take advantage of this development, and the high prices have made it increasingly difficult for them to be able to purchase a home at all. Particularly in metropolitan areas, it is difficult to save enough for a down payment without help. Without parents who can contribute to a down payment or stand as co-borrower for a mortgage, it has become more difficult for many firsttime buyers to purchase a home. The development of the housing market has therefore led to great differences in possibilities for people to enter the housing market. Another aspect of the problems on the owned housing market is that the lack of opportunities to purchase a home forces many young people to sublet. Subletting is often expensive and insecure for the subtenant, at the same time as their consumer protection is weak. Difficulties in finding a home also lead to problems in  14 Långtidsutredningen [Long-Term Survey of the Swedish Economy] (2015) and Jahnson, D. and J Lundberg (2013). 15 Långtidsutredningen [Long-Term Survey of the Swedish Economy] (2003). 5 [13]  skills supply.

Loans with homes and other kinds of property as collateral make up about 80 per cent of the major banks’ loans to Swedish households and companies. Loans to households for mortgage purposes make up the very greatest part of this. This exposure has increased over the last decade. Therefore, as I have pointed out on a number of previous occasions, what has happened is that the major banks that are usually described as commercial banks, have, in fact, become ‘mortgage banks’. The increased lending depends, among other factors, on rapidly rising housing prices and historically low interest rates, but also on the number of households and completed homes having increased over the period. 11 The banks fund these mortgages to a high degree on the capital market, in particular with covered bonds, the collateral for which is made up of mortgages. As mortgages have grown, so have the volumes of covered bonds, some of which are issued in foreign currency. Developments on the housing market can thus also affect confidence in the banks and, in a bad situation, their funding could also become both more expensive and more difficult to obtain. The fact that the major banks also own one another’s covered bonds increases the risks still further. Housing policy benefits certain groups Apart from rising housing prices leading to increased indebtedness for households, there are also other aspects of the housing market that are problematic.
Their need to deleverage and reduce borrowing means that if another abrupt adjustment is to be avoided, they cannot risk taking too long to rebalance their economies. In contrast, many of the emerging economies continue to require rapid economic growth and abundant employment opportunities in their export industries to ensure adequate levels of employment for their vast populations. As a result, policymakers in countries like China quite simply see limits to the extent and speed at which they should expand the share of domestic demand in their economies. They do not want to rebalance their economies too quickly. Of course, ex post there must be consistency between these two strategies as demand in the world as a whole must “add up”. The current pattern of demand in the world economy is unsustainable. The political tension generated by the divergent preferences of surplus and deficit countries risks moves towards protectionism, as happened in the 1930s. So there must be scope, in the short term, for a “grand bargain” to adopt a set of policies that would support an agreed path of rebalancing and avert a move towards protectionism. Such a “grand bargain” should be the central objective of the G20’s Framework for Strong, Sustainable and Balanced Growth. It would require a shared analysis, seemingly absent at present, of the relative importance of the “good” and “bad” aspects of the imbalances.

Equity and derivatives exchanges are consolidating globally in the bid to establish greater market share and to expand product offerings. The New York Stock Exchange-EURONEXT cross-Atlantic merger to create the first multi-time-zone exchange, and the recently announced merger between the Chicago Board of Trade and the Chicago Mercantile Exchange could lead to more centralized liquidity pool for derivatives trading in the US and Europe. Asian exchanges can do more - TSE can take greater leading role The consolidation trend has yet to reach Asia and Asian exchanges may face the risk of marginalisation. In order to remain relevant, the Asian exchanges may need to explore ways to deepen collaboration and product differentiation in the face of strong competition. In Asia, the Tokyo Stock Exchange is the largest stock exchange by market capitalization. Since its establishment in 1878, it has grown to be the 2nd largest bourse globally, with a market capitalization of its listed companies exceeding $ trillion, second only to the New York Stock Exchange. It also registers high average daily trading volume for domestic equities of about $ billion for 2005. I understand that the Tokyo Stock Exchange is currently in talks with major exchanges about alliances and I am heartened to hear its efforts to work more closely with the Asian exchanges. For example, the Tokyo Stock Exchange and the Singapore Exchange have been discussing about such strategic cooperation which would benefit both markets and their investors, including the possible trading linkage, and I urge both parties to work together more closely.