samchain/econo-pairs-v1 huggingface dataset:
As economic activity becomes stronger and monetary policy adjusts its sights on the future picture, the Riksbank’s monetary stance will have to gradually move away from its current expansionary position. The timing of such a move has to be assessed in the light of new information and today one cannot say when it will happen. Our present assessment is that the monetary stance is well balanced. There has been some shift in the spectrum of risks but our inflation forecast for the coming years is unchanged. BIS Review 101/1997

However, we must carefully follow and analyse the development in the area where monetary policy is formulated. The risk of incorrect assessments having more serious consequences should, however, be small as changes in this area do not take place overnight. Another component of the risk scenario is how wage formation and the labour market will function in coming years. Negotiations are taking place in an economy undergoing strong growth at the same time, as there are occupations with a shortage of labour where pay has fallen behind. However, changes have taken place in the Swedish labour market that permit some optimism about developments. Above all, this concerns the support for and understanding of the inflation target and the low inflation expectations that have been established. Changes in the forms of wage formation, which have been carried out or are planned work in a positive direction. Finally, globalisation and competition can have increased businesses’ cost consciousness. This may lead to a greater opposition to wage increases and also that businesses in their drive to keep costs down endeavour to introduce forms of employment that increase flexibility in the labour market. In conclusion, it is important for the Riksbank as always to carefully monitor what is taking place in the economy when conducting monetary policy.
In a financial environment that is transitioning towards greater deregulation and towards more market-based rules, it is important that the Islamic financial institutions inculcate a high level of confidence among consumers not only on the Shariah-compliance aspects of the Islamic financial products offered, but also on their business operations. Concerted efforts by the industry to develop standardized documentation and features of Islamic financial contracts would enhance the level of public understanding of the different types and concepts of Islamic financial products. Islamic financial institutions also need to provide consumers with the information that accurately represents the unique features, risks and returns associated with the Islamic products and services. Enhanced financial literacy on Islamic financial products will facilitate the process for consumers to make well-informed and effective decisions on their financial transactions, with a clear understanding and appreciation of the unique characteristics and features of Islamic finance and its real economic value. Indeed, the strengthening of the range of Islamic products and services needs to be accompanied by an improved market understanding of the Islamic financial products. This requires well trained staff  BIS Review 52/2006  1  who are equipped with the required skills and knowledge in Islamic finance that are able to provide quality advice to the customers. Correct terminologies need to be used with an ability to highlight the distinguishing features of the products and services. This is particularly important in a dual financial environment where both conventional and Islamic financial system are operating in parallel.

Once people have gotten used to live digitally – remote working, e-commerce, telemedicine – the economy and society are going to change in a variety of ways. The financial sector is well-plugged into digitalisation. Those financial institutions that adopt deeper end-to-end digitalisation, who are able to use digital platforms for their business operations that today are conducted in person or on paper, are going to have a strong competitive advantage. New opportunities in particular areas of financial services are harder to tell. Impact investing may become a stronger growth opportunity. We have already seen some financial institutions launching impact funds to seek higher returns by investing in companies which are focused on combating the pandemic or providing solutions to deal with the associated health risks. Healthcare and supply chain resilience have taken on added importance, and there seems to be interest among asset managers to invest in these areas. Pandemic risk insurance is another area that might see good growth. There is now a much heightened awareness of pandemic risks. Although pandemic risk insurance has been around for some time, it never really took off. I think you are going to find demand for risk management and insurance solutions to address some of these pandemic-related areas of risk. The financial sector is fundamentally in the business of risk management. Covid-19 represents the materialisation of an extreme kind of risk.
Narrow or broad mandate for central banks? Political influence  Political independence Narrow target definition, few tools  Broad target definition, many tools  17 [20]  Figure 7. Yield spread between different types of bond and government bonds in Sweden Percentage points 2,5  2,5  Municipal bond, 5 year Corporate bond, 5 year Covered bond, 5 year  2,0  2,0  1,5  1,5  1,0  1,0  0,5  0,5  0,0 Jan-19  Jul-19  Jan-20  Jul-20  0,0  Jan-21  Note. Percentage points. Yields on covered bonds, corporate bonds and government bonds are zero coupon rates calculated using the Nelson-Siegel method. Corporate bonds refer to companies with a high credit rating. Municipal bonds are issued by Kommuninvest i Sverige AB. Broken line marks 11 March 2020, same day the WHO declared COVID-19 to be a pandemic. Sources: Bloomberg, Macrobond, Refinitiv and the Riksbank. Figure 8. Borrowing among non-financial corporates Percentage of GDP, quarterly data 80  80  60  60  40  40  20  20  0  0  95  00  05  10  Lending from MFI  15  20  Issued securities  Note. Includes securities borrowing in both Swedish kronor and foreign currency. Sources: Statistics Sweden and the Riksbank  18 [20]  Figure 9.

Regulation must not stifle markets but seek to make them work better. In the financial sector, this means a judicious mix of rules and incentives for stronger capitalisation, more effective risk management, better transparency, and sharper market discipline. This has been central to the approach taken by the Monetary Authority of Singapore – never hesitating to impose high standards of prudence and financial discipline but always careful to do so in a manner that does not undermine enterprise and innovation. 11. Financial innovation – especially in derivative products – has been blamed as a cause of the crisis. This is not quite correct. Innovation has been a feature of finance for decades. The crisis was caused fundamentally by failures in macroeconomic policies and financial supervision. Monetary policy was too easy for too long in too many countries. This led to low interest rates and lax lending standards that precipitated unsustainable housing booms, mainly in the United States but also in other countries. Financial supervision failed to detect and correct the build-up of leverage in the system, especially in the shadow banking sector. Complex financial products obscured the risks in sub-prime lending and transmitted these risks across the financial sector. As Edwin Truman from the Petersen Institute puts it, “Financial engineering contributed to the market dynamics once the crisis got underway, but it was not ‘the cause’ of the crisis.” 12. Regulation should therefore not restrict financial innovation but seek to create conditions in the market that promote effective risk management.
See, for example, Sveriges Riksbank (2020) and Gustafsson and von Brömsen (2021). 2 [19]  We have described the motives for the purchases in many different contexts. 7 But it is still relevant to ask: Why such a focus on covered bonds? And the answer is: To ensure the interest rates charged to households and companies would remain low throughout the crisis. As the major Swedish banks fund a large part of their lending by issuing covered bonds, the Riksbank's purchases have had a direct effect on the banks’ funding costs and, ultimately, also on interest rates charged to households and companies. I believe that our measures during the crisis have essentially functioned as intended: keeping interest rates low and maintaining the supply of credit. The financial system was in this way able to assist in absorbing the macroeconomic shock, rather than posing a further problem – a financial crisis - on top of the health crisis and the economic shock that ensued. As I see it, these measures were entirely necessary to attain our monetary policy objectives: to attain an inflation rate of 2 per cent and to support the development of the economy. But we now find ourselves in a new situation. Current monetary policy – how do we manage the asset portfolio when the repo rate is raised? Inflation is now very high in many places, including Sweden (see Figure 1).

4 [19]  We then expanded our monetary policy measures: On the one hand, we lowered the repo rate below what was previously considered the lower bound of zero, and on the other hand we purchased government bonds (thus using quantitative easing). As the financial markets were functioning normally, the measures had the desired impact on the interest rates charged to households and companies. After some time, inflation began to rise toward the target. Toward the end of 2017, we envisaged policy rate increases and a gradual normalisation of monetary policy.10 The strategy followed the "reinvestment-rate increase-QT" approach, which meant that the Riksbank would first start a reinvestment phase – keeping the holding at a constant level by reinvesting maturing bonds. After that, when monetary policy was to gradually become less expansionary, the repo rate would be raised slowly, while the reinvestment phase would continue. When the repo rate had been raised to a level at an acceptable distance from the lower bound, the reinvestments would be tapered or terminated, so that the holding would decrease when the bonds matured, i.e. what we call QT today. As you can see, the 'exit strategy' in Figure 5 follows this pattern very well. But, as you know, we did not get very far in the process of normalisation. The repo rate was raised twice in December 2018 and December 2019 to zero per cent, and the holding of government bonds remained in principle at the same level as before.
Lars Heikensten: On clarity and flexibility Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, at a Center for Business and Policy Studies (SNS) seminar held in Stockholm on 9 May 2001. *  *  *  Let me begin by saying that I welcome this opportunity for a fundamental discussion on the way monetary policy is formulated. The background to today's discussion consists of a number of contributions to the debate in which it has been asserted in somewhat differing ways that the way we have chosen to formulate monetary policy is not sufficiently flexible. Our critics are of the opinion that by tying ourselves down to an inflation target of 2 per cent we risk allowing unacceptably high domestic inflation. And that we risk strengthening "bubbles" in asset prices. It has also sometimes been intimated, in so many words, that the way we have chosen to formulate policy is one explanation for the very weak exchange rate. Furthermore, in this debate, it has also been suggested that we should adopt less specific inflation targets, similar to those of the European Central Bank (ECB) and its American counterpart – The Federal Reserve. The debate has arisen primarily in three different contexts. How deregulation should be handled, to what extent asset prices should be taken into account, and the role the krona has to play in this analysis. The mainstay of my argument is that there are no simple solutions to any of these problems.

Less clear principles for policy in combination with reduced transparency regarding, for example, the reasons for making decisions, will hardly lead to a policy which will be more successful in the future. Many years' experience in the vicinity of economic policymakers suggests to me that the opposite is  4  BIS Review 38/2001  more probable. Among the most important things one can do in this type of work is to try to build up clear processes which contribute to decision data, based on good economic analyses, being produced in a systematic way. And that this decision data is subjected to as wide an examination as possible. I am convinced that our ambition to be as clear and open as possible has served us well. Starting with a numerical, symmetric objective and a guiding rule, in the way that we have done, we have been forced to think through every question with which we have been confronted in a more precise manner. This has resulted in our gradually increasing our understanding in a way which I think would hardly have been possible otherwise. Certainly it is not yet over, and in this context, future developments will place new demands on us and impose further intensification and exactitudes. There is also a connection between transparency in relation to the outside world on the one hand, and internal work on the other. In getting rid of secrecy we were able to introduce a more realistic debate on monetary policy.
I will begin by highlighting the challenges raised by the accelerated digital transition of our payment system, seen from the perspective of an authority tasked with safeguarding monetary and financial stability (1), before going on to discuss how we at the Banque de France are playing our part in tackling these challenges (2). I/ Challenges Major innovation in the field of payments has clearly accompanied the increasing digitalisation of the ways in which we consume and behave, fuelling the emergence of a dynamic and enhanced new ecosystem. As I see it, this raises three types of challenges for the safety and efficiency of our payment system. A. Ensure that the rise of “decentralised finance” contributes positively to the safety and efficiency of our payment system When I say decentralised finance, I am talking about the new trend towards the tokenisation of financial assets, such as the creation of new tradable assets associated with new rights, for instance utility tokens, and the development of crypto-assets. These offer opportunities to improve our payment systems and solutions, particularly for cross-border payments, but also for securities issuance and settlement systems. They could also help to expand the array of financing tools available to businesses. But they also pose risks that could undermine the efficiency and safety of these systems. These risks must be mitigated and controlled.

But the Czech Republic has a higher GDP per capita than Portugal (or Greece, for that matter, and many other countries in the euro area) and is getting closer and closer to Spain, a solidly developed country according to all measures. The Czech Republic also has a human development index comparable to that of Austria and Italy. In fact, living standards in the Czech Republic have been higher than those in Portugal for at least a quarter of a millennium, since the start of the industrial revolution (with the possible exception of a couple of decades centred on 1990). But once a country enters the euro area, it is almost automatically treated as a developed country, even in the eyes of the markets. Personally, I find that rather confusing. In practice, therefore, we observe that some nominally “emerging” countries (such as Poland, Israel and Singapore) have been dealing with exactly the same issues as the nominally developed ones. At the same time, some nominally developed countries (such as Greece) are dealing with problems typical of developing countries, issues including incomplete land registries and an insufficient basic ability to collect taxes. This confusion in taxonomy complicates our discussion a great deal, especially in the years of the crisis and its aftermath. The question at the beginning of the crisis was: who in Europe will prove to be most vulnerable to shocks? Many believed it would be Central and Eastern European countries.
Thirdly, if we “no longer know where the risk is”, that implies that it has been dispersed beyond the regulated sector. One might think that was a Good Thing. To take an extreme scenario, if risks were widely and evenly distributed across savings institutions internationally, a very nasty shock causing a sharp fall in asset markets would not obviously destabilise the financial system. It would obviously have macroeconomic consequences, by depleting household wealth and raising the cost of capital for firms. Other things being equal, central banks could respond by adopting an easier path for interest rates than otherwise, in order to maintain aggregate demand broadly in line with aggregate supply, with the objective of keeping inflation in line with explicit or implicit targets. Although the original shock may be nasty, the response would be the routine use of the routine instrument: the price of central bank money. There is no question of a so-called Greenspan (or any other kind of) “put” here; the focus would be not asset prices, but the outlook for spending in the economy and so inflation. This is obviously rather different from a similarly nasty shock producing severe disorder in a banking system that was carrying unduly concentrated exposures of some kind. For a central banker, banks matter because their liabilities are used as money, they are at the centre of the payments system, and they carry an associated asset/liability maturity mismatch. 6 Banking system distress is therefore typically characterised by a liquidity run.

David Rule: Managing risk in a soft market Speech by Mr David Rule, Executive Director of Insurance Supervision of the Bank of England, at the General Insurance Research Organisation conference, Dublin, 21 September 2016. *  *  *  Good morning. This is my first speech as the Bank’s Executive Director for Insurance Supervision. Since I took on this role in July, I have been trying to meet with as many chief executives and chairmen of UK insurers as possible. I have been struck by the variety of business models and strategies but one theme has dominated discussions of the risks facing insurers: the current low rate environment. For life insurers, this can create direct solvency pressures to the extent that they are not fully matched against the increasing value of their future liabilities as discount rates fall. That can also be an issue for some general insurers with long tail liabilities. More generally, low investment returns mean earnings on the “float” can no longer cushion a poor underwriting performance. The margin for error in the running of general insurance firms has reduced – firms have to underwrite profitably. On the positive side, this emphasises the importance of underwriting discipline. The soft market But of course the current soft market makes profitable underwriting more difficult to achieve. I am going to focus my remarks today on the wholesale London markets.
First, I will touch on the increasingly complex policy making environment given the openness of our economies. Second, I will posit three issues that we need to grapple with in considering the optimal policy mix towards achieving monetary and financial stability. Our mandates are to preserve monetary and financial stability, which are critical conditions for sustainable growth. In the pursuit of these mandates, a key consideration is the openness of our economies. While the integration of our economies with the global economy and international financial markets has yielded substantial benefits, it has also made our economies more susceptible to external shocks and spillover effects from global developments. Let me briefly touch on some of these external factors: First, global growth momentum is slowing. A key issue is how deep and prolonged the slowdown will be. A key risk is the ongoing trade tension and its impact on global trade, investment and sentiments. For many of our countries that depend heavily on international trade, the impact is already being felt in the slowdown of our exports and growth. Second, major central banks have indicated intentions, or a few have taken steps, to relax their monetary policy to support growth in an environment of low inflation. While this has helped to loosen the global financial conditions, the question is should emerging economies be prepared for another round of surge in capital inflows? This brings me to my third point.

To counteract this impairment of the credit channel, the Governing Council has, alongside other non-conventional measures which don’t need repeating, also launched two targeted lending programmes. These so-called TLTROs I and II allow banks to borrow up to a fixed fraction of their loan portfolio at an interest rate linked to the ECB official rates. Banks that make new loans in excess of their benchmarks receive a lower average cost of funding. This provides a powerful incentive to expand lending and goes some way towards alleviating funding risks when nominal interest rates are negative. In a further step to alleviate the credit channel, the Governing Council decided to include corporate bonds in its asset purchase programme in March 2016. This should directly reduce the cost of corporate borrowing in capital markets. Overall, these measures have been quite effective in easing credit conditions in the Euroarea. The volume of bank lending to non-financial corporations has begun to grow again and bank lending rates have fallen across the Euro-area but most noticeably in those countries where that had tightened the most. 2. Monetary policy can foster long-term growth by supporting structural reforms  The financial crisis in some ways revealed some structural weaknesses in many economies. In some cases there were excessive levels of public debt. 10 In others it were structural  6  R. Riley, C. Rosazza-Bondibene and G. Young, 2015. “The UK productivity puzzle 2008–13: evidence from British businesses,” Bank of England working papers 531, Bank of England.