samchain/econo-pairs-v1 huggingface dataset:
It cannot be stressed too strongly that although the Riksbank’s sights are consistently on the target, inflation will always tend to hover around the bull’s-eye. Looking back, however, it will be seen that ever since the target was instituted, inflation has on average been very close to it. The intention is that this will continue to be the case in the future. More and more signs of a recovery So it is not the transitory price shocks that give the greatest cause for concern. Things are worse if we cannot rule out the possibility that part of an increase in inflation stems from strong activity earlier. Such effects usually show up after some time and tend to persist. During a strong upward phase, firms can begin to pass through rising business costs to consumers in the form of higher prices. Perhaps it is precisely this we have seen recently, at least to some extent. Support for such a conclusion may lie in that fact that, according to the latest statistics, the average wage level in Sweden is rising somewhat faster than is compatible with a 2 per cent inflation target. This may indicate that resource utilisation is in some sense more strained than we counted on earlier. If economic activity in Sweden were to rise only moderately, leading in time to a weakening of inflationary pressure, the risk of inflation would diminish.

In Sweden, economic policy has charged the economy with a good deal of stimuli that can help to generate a broader increase in demand now that the stocks cycle is beginning to have a favourable effect and the prospects for the international economy are brightening. As a result of lower taxes and increased transfers, for example, most things suggest that household purchasing power is rising comparatively strongly this year. Seen over a complete economic cycle, the Riksbank’s instrumental rate is comparatively low. Considering the rate of inflation and the signs that activity is picking up, the real repo rate (the repo rate less the rate of inflation) can be said to be low. Then there is the weak exchange rate, which has subdued effects of the international slowdown and is now helping to stimulate the export-oriented sector. All this amounts to not inconsiderable stimuli to general demand in the Swedish economy, stimuli that look like materialising successively. How heavily should we tread on the accelerator? If inflation, even disregarding the temporary effects, is above the target initially, activity is entering an upward phase and economic policy’s impact on the economy is expansionary, then monetary policy ought to contribute to a somewhat lighter foot on the accelerator. But if most of the unduly high inflation stems from transient increases in the price level and if an economic upturn is not yet assured, it may then indeed be advisable to somewhat defer an upward adjustment of the instrumental rate.
Zeti Akhtar Aziz: Central banking – using leadership energy to build resilience Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Iclif Leadership Energy Asia Summit 2015, Kuala Lumpur, 1 December 2015. *  *  *  Welcome to this year’s Leadership Energy Summit Asia organised by our Iclif Leadership and Governance Centre. This is our third summit in the series on leadership energy. The focus on leadership energy reflects its importance in today’s leadership. The contemporary environment we are living in has become increasingly more challenging – characterised by highly destabilising and tumultuous events. Not only are we living in a world that has become highly unpredictable and unstable but a world that is being more frequently subject to extreme conditions in which we are tested to the limit. How do we survive against the odds manifested in this environment? It is all about having the ability to endure and prevail. It is also about being able to succeed and thrive in such an environment. It is about being resilient. Resilience is key to surviving in this environment. Today we are privileged to hear and be inspired from the experience of personalities who not only survived against such great odds but who have also achieved great success. Let me take this opportunity to express our gratitude to our distinguished speakers who have come from different parts of the world to share their knowledge and experience on this subject.

This is especially true for low value transactions and cross-border remittances, where fees can be as high as 13% of the value of funds transferred.4 These high costs impede not only remittances but also bilateral trade and investment. We therefore need to work on solutions that will promote competition and innovations, making these services more affordable. While a complete solution for cross-border transfers is yet to emerge, significant progress has been made with respect to payment solutions within each GMS country. In Vietnam, OnePay allows customers to make financial transactions on e-commerce websites, as well as deposit funds into their bank accounts without visiting a physical bank branch. Wing in Cambodia, BCEL in Laos and Wave Money in Myanmar all provide instant money payments and transfers through mobile phones to recipients who do not have bank accounts. In Thailand, PromptPay is a modern, faster payment system that provides free transfer services for transactions up to 5,000 baht (or about 150 US dollars), one of the cheapest rates in the world. PromptPay allows individuals and businesses to transfer money between banks and e-wallets using their mobile phone or citizen ID numbers.
Another conclusion from the Swedish case is that international reactions are not necessarily a bad thing; they can be just what is needed to overcome a political deadlock and pave the way for necessary changes. When foreign creditors turned down Swedish banks, we were forced to take resolute measures to resolve the bank crisis. This has not yet happened in Japan, presumably in part because there is not the same dependence on foreign capital; the crisis in Japan has therefore been more protracted and costly. A tax on currency transactions (a so-called Tobin tax) has been proposed in the globalisation debate as a way of curbing capital movements and reducing the risk of international financial crises. A tax would restrain these flows; its effect would depend on the size of the levy. It is by no means certain, however, that it would be just the more speculative flows that are checked; it could equally well be the more stabilising regular currency flows. There is, in fact, little indication — either in theory or in experience from earlier centuries — that an economy with sand in its wheels works better than one that is well-oiled. Just rejecting a Tobin tax won’t do, however, at least not if one considers, as I do, that, notwithstanding the problems, free capital movements are good for the global economy. Other methods must be found to reduce conceivable negative effects. Much is being done in this respect in various international fora where I represent the Riksbank.

This cannot go on for ever, and if there is a sudden turnaround it could have substantial negative effects on the real economy. This applies in particular if a situation were to arise where house prices fall and households’ net wealth shrinks. Once households have reached a situation where they consider that they need to consolidate their balance sheets by reducing their debts, it is difficult to break off this process with the aid of monetary policy. This can be clearly seen in the United States right now, for instance. I do not believe in a wait-and-see strategy that could mean that the repo rate needs to be raised even faster further ahead. A slightly higher interest rate now could make households begin to adjust and contribute to a more subdued development. To me, this is a wellbalanced monetary policy. This is fairly self-evident, but let me nevertheless emphasise: My aim is of course as always to try to attain the Riksbank’s objectives – that inflation and inflation expectations should be firmly anchored around the target and that developments in the real economy should be stable. But to achieve this, I would like to take into account risks that I perceive exist and to put them in a slightly longer perspective than the usual forecast horizon – as I currently see good reason to do this.
In my opinion, this must be the guiding principle as long as it is Swedish taxpayers’ money that would ultimately be at stake in the event that Sweden were to be impacted by a financial crisis. The Ministry of Finance, Finansinspektionen and the Riksbank have signalled that the capital adequacy of the major Swedish banks needs to be increased considerably. According to the plan, capital adequacy is to increase to at least 10 per cent by 2013 and at least 12 per cent by 1 January 2015. 6 The Swedish banks have every chance of meeting these requirements due to their high earning capacities and their low loan losses. The four major banks are systemically important on a national level and, additionally, Nordea is systemically important on a global level. 7 The supplement for systemic importance is included in the capital levels that I have just cited. This is thus a measure linked to risks of a structural character. For the same reasons, there may be a need for Sweden to introduce tougher requirements for the Swedish banks’ liquidity reserves than are advocated by the Basel III regulations. The banks need to become better at themselves managing the liquidity problems to which their activities give rise, particularly as regards liquidity in foreign currency. If the banks match the maturities of assets and liabilities better and maintain sufficient liquidity reserves in foreign currency, they will be less sensitive to shocks on the financial markets.

Part III: The side effects of improved incentives Will higher capital restrict bank lending? Let me now turn to the examination of some of the potential side-effects of the measures described in the preceding section. A legitimate first question is whether improving incentives in the way we have described could have undesired indirect effects such as modifying the banks’ lending behaviour. An argument often heard is that higher equity requirements would force banks to set aside, or hold in reserve, funds that could otherwise be used for lending. Here the main observation is that extremely risky gambles should now be avoided as a result of improved incentives. There has been excessive risk-taking in the past; there should be less of it under the new incentives. Beyond this intended effect, which concerns only the most risky activities, the form of financing used by an institution – in itself – should have no impact on the profit-maximising business model. That is, as far as activities and revenues are concerned, imposing extra capital does not change the perspective of the decision-maker beyond restoring the incentives for balanced risk-taking. The exception is the case of marginally profitable activities, and here only to the extent that the cost of financing is increased (more on this later). Provided that activities are profitable, and bearing in mind that in banking the targeted return on equity is not only highly positive but incomparably higher than in other sectors of the economy, the cost of financing should not be the main determinant of activity.
One step towards effective early intervention is the establishment of the Single Supervisory Mechanism (SSM). This will endow the ECB with the ultimate responsibility for specific supervisory tasks related to the financial stability of banks across the euro area. The need for a single supervisory mechanism arises from the increasing interconnectedness between financial institutions and financial markets across the euro area, such that problems that originate at a national level can quickly spread across national borders and imperil the entire European banking system. A central authority is better placed to spot these risks. However, the SSM framework alone will not be sufficient to successfully address significant threats to financial stability across the euro area, particularly in the light of the possibility of cross-border spill-over effects in the event of bank crises and the link between sovereign debt and bank debt. The European Commission has therefore identified the need for a banking union to strengthen the banking sector and restore confidence in the single currency, and this is projected as part of a longer term vision for economic and fiscal integration. Hence, the idea goes beyond the SSM or single-rule book. As President Van Rompuy points out in his report entitled Towards a genuine Economic and Monetary Union, the components of this integrated financial framework have to include not only bank supervision (as delivered by the SSM), but also bank resolution as well as bank deposit insurance.

The breadth and engagement of the membership gives its standards credibility and creates peer pressure within the industry to promote adherence. 8  Canute, King of Denmark, England and Norway, 995-1035, reputedly set his throne by the sea shore and commanded the incoming tide to halt and not wet his feet and robes. Yet "continuing to rise as usual [the tide] dashed over his feet and legs without respect to his royal person. Then the king leapt backwards, saying: 'Let all men know how empty and worthless is the power of kings, for there is none worthy of the name, but He whom heaven, earth, and sea obey by eternal laws.' 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Second, peer pressure within firms should reinforce standards and, more generally, the commitment to real markets. Most banks have codes of ethics or business principles. These are necessary but not sufficient not least because it isn’t reasonable to expect every trader to absorb their meaning or to translate them readily into live situations. But it is reasonable to expect them to use FMSB guidance to help recognise the differences between a real market and a rigged one. And it is essential that business cultures encourage everyone to call out market abuse when it occurs. Third, buyside pressure for proper behaviour is made easier by clear, practical standards.
Taken together, augmented resolution powers, recovery and resolution planning and better identification of systemic risks can move us substantially forward in dealing with failing systemically important institutions. Thank you for the opportunity to share these views with you. 8  BIS Review 140/2010

Debt restructuring mechanisms need to be more efficient, so as to promptly resolve the insolvency problems some firms are experiencing. Other structural policies could also contribute to shoring up the composition of firms’ debt in order to assign a greater weight to capital. These policies might include the elimination of the preferential tax treatment of debt as opposed to equity and headway in developing equity markets in Europe. Finally, as mentioned on various occasions, all these measures must form part of an ambitious reform agenda aimed at tackling our economy’s structural problems. These include most notably high unemployment, labour market duality and the low productivity of our firms. And, in parallel, we must design a credible strategy for reducing, in a gradual but sustained fashion, our fiscal imbalances. Such a strategy may be implemented once the pandemic is behind us and the economic recovery is firmly entrenched. It would entail significant benefits, by increasing the economy’s reform-led potential growth and by enhancing the credibility surrounding the sustainability of public finances in the medium term. That, in turn, would increase the existing fiscal space available and would boost the expansionary effects of the current fiscal measures. In short, so we may have the fiscal leeway needed to be able to increase support measures to the economy should pandemic-related developments so require, we must resolutely implement the reform agenda, plan the fiscal consolidation process and reform support instruments to make them more flexible and targeted. Thank you very much. 9
There is much to be said both about the actual construction of the processes and what they have achieved to date. Moreover, knowledge of these matters is generally lacking in Sweden. Today, however, I shall be very brief. As I see it, there is a tendency towards an increased coordination of fiscal and structural policies. This takes many forms. The issues are discussed together, both at the highest level and further down among civil servants and experts. It is partly a learning process, an exchange of thoughts about good examples, a communication of ideas and so on. New, more specific knowledge is also being generated. At present, for instance, common principles are being drawn up for the measurement of budget outcomes and capacity utilisation. This is necessary for effective surveillance of compliance with the Stability and Growth Pact. Similar work has begun in the field of pensions. These quotidian efforts should not be underrated. They help to make many problems more understandable and promote a consensus about how they should be handled. Sweden has much to gain from this kind of international collaboration. To exemplify how international discussions can influence matters I can mention that when we at the Ministry of Finance were aiming to alter the economic policy agenda in the late 1980s, we were greatly inspired by the work that had been done under the auspices of the OECD and others.

The central issue, however, is how more pronounced problems or crises for stabilisation policy are to be handled. One approach to this is to relate once again to our own experiences. As I see it, we have had to face problems of two types. One concerns a lack of knowledge about the direction in which the economy is moving. A dramatic example of this is the crisis in 1990, when neither the problem that was looming with the real interest rate nor the crisis in the financial system was identified in time by virtually any Swedish observer. The other problem is political and has to do with the difficulties in keeping policy sufficiently tight over the business cycle, particularly when demand exceeds long-term supply. A good illustration of this problem is the late 1980s. Perhaps one should mention a third problem, namely that automatic stabilisers affect demand regardless of the nature of the preceding shock. If demand in general has weakened on account of, say, a share price fall that has affected household wealth, all will be well; a part of the loss of demand will be compensated automatically. Things will be different if the shock comes from the supply side, for instance as an oil price rise or a change in productivity. There could then be grounds for a discretionary policy move to adjust demand to the change in production capacity; this could be more difficult in the absence of an independent monetary policy.
Norges Bank built up foreign exchange reserves while banks financed household and corporate saving deficits, partly by raising loans abroad. With the decline in oil prices, confidence in the Norwegian economy faltered, capital flowed out of the country and out of banks’ balance sheets. Norges Bank had to step in as lender to the banks. The developments that followed the decline in oil prices in 1986 will not be repeated. In 1986, confidence in the Norwegian economy faltered while inflation was high and rising. Monetary policy measures had to be applied – through a resolute fixed exchange rate regime from summer 1986 – to restore confidence in the national and international value of the Norwegian krone, i.e. to reduce inflation. The Norwegian economy is on a much stronger footing now than it was in 1986. None the less, fluctuations in household saving and corporate saving and investment could pose challenges for both monetary policy and our banks. The outlook ahead The past 15 years have been a golden era for the Norwegian economy. It must also have been a privilege to be in a position to engage in banking activities in Norway in this period. Selling loans has been easy, there have been virtually no losses, and deposits and borrowing have been stable. Banks have in addition been particularly adept at making use of new technologies and being more cost-effective. The combination has led to favourable results. Lending growth will probably have to be reduced and losses may rise.

BIS Review 115/2007  15  Norway has a substantial current account surplus. If oil prices remain high, this might also be the situation in the years ahead. Most of the current account surplus is matched by capital outflows from the state to the Government Pension Fund – Global. Adjusted for these outflows, the surplus has been between NOK 0 and 70 billion in recent years. It is also likely that oil companies invest substantial foreign exchange earnings abroad. In the chart, the term basic balance has been used to mean the current account adjusted for the estimated capital outflows from the state and oil companies. The basic balance has been negative in the past few years and is estimated to fall close to minus NOK 150 billion this year and next. 16  BIS Review 115/2007  The large basic balance deficit reflects a substantial saving deficit among mainland industries and households combined. Developments in banks’ balance sheets and sources of liquidity are influenced by these flows. The saving deficit is to a great extent financed by raising capital abroad, often through banks. Access to and pricing of this funding is influenced by the recent turbulence in international money markets. The situation has similarities with the situation in the mid-1980s. Then, as now, there was a large saving deficit in the private sector of the mainland economy, while high petroleum revenues laid the basis for a current account surplus.
“Measuring the Natural Rate of Interest: International Trends and Determinants,” Journal of International Economics, vol. 108(S1), pages 59–75. Rachel, Lukasz & Smith, Thomas D., 2017. “Are Low Real Interest Rates Here to Stay?” International Journal of Central Banking, vol. 13(3), pages 1-42. World Bank, 2016. “Poverty and Shared Prosperity 2016: Taking on Inequality”. World Bank Group report. 2/2  BIS central bankers' speeches

Today we focus very much on the price increases on some services after the introduction of euro coins and notes, but let us bear in mind that prices on durable goods that are more subject to cross border comparisons, have indeed increased less than the average or even decreased. There are already signs of a convergence of prices on such durables and there is also area-wide euro pricing from some firms, which reflects increased price competition across borders. To conclude, the Monetary union presents an attractive proposition for Sweden, given that we continue to improve the functioning of wage formation and labour markets and that we ensure a solid institutional foundation for fiscal policy to stabilise the economy. The same could in fact be said about the euro area countries: With structural reforms and more solid foundations for fiscal policy, the present EMU-countries would have much better possibilities for employment growth and productivity gains. Monetary Union is putting pressure on both industry and politicians to improve their performance in the years to come. 4  BIS Review 70/2002