samchain/econo-pairs-v1 huggingface dataset:
11 Covered bond mortgage companies fund much of the residential mortgage lending in Norway. But here, the  bank tends to act as the intermediary between the mortgage customer and the mortgage company. Funding takes place either when the loans are extended directly by the mortgage company, or when banks transfer loans they have made to the mortgage company, which issues covered bonds collateralised by the loans. 12 Through information customers leave behind at various activities on a platform, the platform companies can  obtain access to a far richer information set on individual customers than other participants. This can strengthen their competitive position. Regulating use and access to information is being discussed, see Restoy, F. (2021): “Fintech regulation: how to achieve a level playing field”. Occasional Paper No 17, Bank for International Settlements. 13 Norges Bank has published three reports prepared by the working group that is researching CBDC. See  Norges Bank (2021): “Central bank digital currency – third report of the working group”, Norges Bank Paper No 1/2021 (forthcoming in English). See also Norges Bank Paper 2/2020 and 2/2019. 7/7  BIS central bankers' speeches

World trade also declined, after having exhibited strong growth in the last few months of 2013, which had raised hopes of a sustained economic recovery. BIS central bankers’ speeches  1  In the US, GDP declined in the first quarter. However, we consider this to be a transitory phenomenon which can be largely put down to an exceptional cold snap experienced this winter. Growth in the euro area was weak and varied greatly from one country to another. While economic activity continued to pick up in Germany, renewed stagnation in France and Italy gave rise to disappointment. We continue to expect the global economy to firm in the coming quarters. However, the global economic recovery will remain very subdued by historical standards. Compared to the last monetary policy assessment, we now anticipate somewhat slower growth, in both advanced and emerging economies. It is entirely possible, however, that global economic growth will be weaker than we have assumed. The euro area continues to face significant challenges. These include the consolidation of public sector finances as well as the implementation of institutional reforms and reforms to promote growth. In addition, various emerging economies are suffering from structural problems. Should the current geopolitical conflicts worsen, this would also hold back activity in the international economy. Since the major currency areas are in different phases of the monetary policy cycle, there is also a danger of greater volatility in the financial and foreign exchange markets.
At the same time, unemployment continued on a downward path and economic sentiment improved across the board. Some recent signals point to a slowdown, yet they seem to have more to do with temporary influences, growth prospects continuing to look strong. The past year recorded, on average, positive developments in EU candidate and potential candidate countries as well, in spite of GDP dynamics delivering a more mixed picture (from over 7 percent in Turkey to around 2 percent in Serbia and even stagnation in the Former Yugoslav Republic of Macedonia). Nevertheless, the outlook is positive, with recent forecasts pointing to relatively robust growth in the coming years. However, against this relatively rosy background, I should highlight that our economies, even those that belong to the Eurozone, have still much to do in order to become robust and offer good living standards to most of their citizens. Some members of this Club, Romania included, had to go through very painful adjustments during the past decade, as the global crisis found them trapped in a pro-cyclical policy stance and it remains to be seen to what extent they will manage to break free from this pattern in the current good times; some need to fight high inflation, pressures on their currencies or to correct their external imbalances. Nevertheless, the common denominator of all our economies is having to deal with institutional weaknesses and the need to undertake reforms that should make them stronger.

First, the NPL ratio dropped from above 20 percent at end-2014 to almost 6 percent presently, making it the largest adjustment in the EU over a relatively short time period. At the core of this adjustment were conservative requirements for provisioning NPLs, our hands-on supervisory approach, and a fiscal facility that was conducive to the development of the secondary market for NPLs. Second, the share of leu-denominated loans in the total stock of loans has increased from one third prior to the crisis to two thirds nowadays, with the benefit of reducing contagion risk and improving the transmission mechanism of the monetary policy. However, it would be risky to press ahead too fast. In the case of the ECB, while the tapering of its QE has already started, an upward move in the interest rate is not likely to happen soon. As for peer countries such as Poland and Hungary, their macroeconomic conditions do not seem to 2/3  BIS central bankers' speeches  warrant a start of the tightening cycle this year either, with still below-target inflation. As long as real interest rates remain negative all over Europe, straying too far away from our regional peers in terms of policy rate would invite disproportionate appreciation pressures, which – while helpful in terms of inflation – would not be a welcome development, given Romania’s increasingly negative external imbalance.
The relevant horizon will depend on disturbances to which the economy is exposed and how they will affect the path for inflation and the real economy in the period ahead. The primary instrument in monetary policy is Norges Bank’s sight deposit rate. This rate determines the very short interest rates in the money market with maturities from one day upwards, normally up to Norges Bank’s next monetary policy meeting. Longer-term rates are determined by expectations concerning Norges Bank’s use of instruments in the future and by the degree of confidence in monetary policy. It may be useful to distinguish between three channels through which the real interest rate influences inflation: The demand channel: As interest rates increase, household and municipal consumption and investment will tend to slow down. This is because they have less money left over after servicing their debt and because borrowing is more expensive. Corporate finances are weakened and investment may become less attractive. Lower demand leads to lower output and employment. Wage growth may  BIS Review 22/2006  1  slow down. Lower wage growth combined with reduced profit margins will result in decreasing inflation. The exchange rate channel: The effect of interest rate changes may be amplified because the interest rate also affects the krone exchange rate. When interest rates are higher, more people will invest and fewer will borrow in NOK. Higher interest rates will thus normally lead to an appreciation of the krone. Imported goods will then become less expensive and inflation will decelerate.

There is an ongoing debate about the reasons for the decline in long-term real interest rates over the last few years. I will not elaborate on that debate here; it is a subject worthy of a seminar by itself. One particular possibility, pertaining to the discussion of the roles of the real interest rate, is that the fall in long-term interest rates may partly reflect market participants’ assessment that the neutral real interest rate has fallen. During a business cycle, it is the real interest rate’s deviation from the neutral real interest rate – the real interest rate gap – that indicates whether monetary policy is expansionary or contractionary. The neutral real interest rate is difficult to estimate and may change over time. Nevertheless, we have tried. On an uncertain basis we estimate that the neutral real interest rate for Norway may now be close to 2½ per cent, having come down approximately 1½ percentage points since the mid-1990s. Forecasts in the latest Inflation Report indicate that the short term real interest rate in Norway will be close to its neutral level in about four years. According to this, the real interest rate gap (the difference between the neutral rate and the actual rate) has been negative since 2004. There is evidence that monetary policy has had the desired impact both on the real economy and on inflation. Monetary policy at the present phase of the cycle Growth in the Norwegian economy has been high since summer 2003. The expansion has gradually broadened.
See ‘[De]Globalisation and Inflation’, 2017 IMF Michel Camdessus Central Banking Lecture given by Mark Carney, 18 September 2017. 3 See ‘The Global Outlook’, speech by Mark Carney, 12 February 2019. 2  4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  Those at the core of the IMFS need to incorporate spillovers and spill backs, as the Fed has been doing. More broadly, central banks need to develop a better shared understanding of the scale of global risks and their consequences for monetary policy. We cannot all export our way out of these challenges. In a global liquidity trap, there are gains from coordination, and other policies – particularly fiscal – have clear roles to play. And acting earlier and more forcefully will increase their effectiveness. In the medium term, policymakers need to reshuffle the deck. That is, we need to improve the structure of the current IMFS. That requires ensuring that the institutions at the heart of market-based finance, particularly open-ended funds, are resilient throughout the global financial cycle. It requires better surveillance of cross border spillovers to guide macroprudential and, in extremis, capital flow management measures. And it underscores the premium on re-building an adequate global financial safety net. In the longer term, we need to change the game. There should be no illusions that the IMFS can be reformed overnight or that market forces are likely to force a rapid switch of reserve assets.4 But equally blithe acceptance of the status quo is misguided.

That won’t be easy. Transitions between global reserve currencies are rare events given the strong complementarities between the international functions of money, which serve to reinforce the position of the dominant currency. And the most likely candidate for true reserve currency status, the Renminbi (RMB), has a long way to go before it is ready to assume the mantle. The initial building blocks are there. Already, China is the world’s leading trading nation, overtaking the US at the start of this decade.34 And the Renminbi is now more common than sterling in oil future benchmarks, despite having no share in the market prior to 2018.35 The greater use of the Renminbi in international trade is also leading to its growing use in international finance. This has been enabled by reforms to China’s monetary, foreign exchange, and financial systems that have liberalised and improve its financial market infrastructure, making the Renminbi a more reliable store of value.36 The Belt and Road Initiative could foster further take up of the Renminbi in both trade and finance. However, for the Renminbi to become a truly global currency, much more is required. Moreover, history teaches that the transition to a new global reserve currency may not proceed smoothly.
BIS Review 5/2004  5  while the peg was being defended, they were soon lowered to more sustainable levels. The expectations that had been built into forward exchange rates were proved correct. Chart 1: Exchange rates and monetary policy in Brazil, Jan 1998-Dec 1999 50  $  Per cent  0  45 40 35  0.5 Spot exchange rate (rhs)  Overnight interest rate (lhs)  30 25  1 1.5  20 15 10 5  Implied forward exchange rate (rhs)  0 Jan-98 May-98 Sep-98  2 2.5 3  Jan-99 May-99 Sep-99  Source: JP Morgan and Banco Central do Brasil  In the literature on target zones for exchange rates, it is assumed that raising interest rates is a successful method for supporting the exchange rate because of uncovered interest parity. But this ignores the possibility that raising interest rates to defend a fixed exchange-rate regime will simply call into question the durability of the regime itself and raise the probability that the peg or target zone will be abandoned. In such circumstances an increase in interest rates may lead to a fall in the exchange rate. A second example of the same phenomenon is the pressure on sterling during 1992 and its forced departure from the Exchange Rate Mechanism on 16 September of that year.

First, the inability to enforce commitment, because monetary arrangements can always be changed in the absence of an outside enforcer, means that no such  3  Torsten Persson and Guido Tabellini (1999) argue that if it takes sufficient time for a government to tear up contracts designed to eliminate the inflation bias (longer than the duration of nominal contracts) promises not to inflate can be credible. 4  Svensson (2002) takes the same view of McCallum (1995) in his comments on Stokey (2002), thus: “…to my knowledge neither McCallum nor anyone else has presented a model where ‘just do it’ is an equilibrium outcome.”[p4]. 5  “The institutional structure of monetary union forms the basis for public trust in the euro and rests on two pillars: the stabilityoriented monetary constitution enshrined in the Maastricht treaty, and the stability and growth pact. Both pillars are being undermined, leaving European monetary union in a very grave predicament”. (Ernst Welteke, The Times, 4 December 2003). 6  Daron Acemoglu (2003) argues that inefficient policies can occur in a democracy because those in political power cannot commit to maintaining the policies that are required to achieve efficient outcomes. In other words, the Coase theorem does not apply at the level of society as a whole. BIS Review 5/2004  3  arrangement is sacrosanct for all time.
Each industrialist, every merchant, any entrepreneur that creates economic values or obtains them for reselling must have the opportunity to make a definite pre-calculation as to the cost of these assets to him and the price at which he will have to pass them on in order to make both ends meet. /... / Therefore, maintaining the firm value of a monetary unit is an enormous, difficult, and very responsible task in every country. To sum it up, I would like to express my many thanks to all the Estonians: to every corporate manager, state official, banker, and politician who has supported the central bank in performing its difficult task by having faith in it. Without your trust in the past 12 years we would not have reached the point where we are standing now. Once again - thank you very much! BIS Review 26/2004  9

In both cases, he is able to capture the macroeconomic implications of decisions made at the firm level, linking micro and macro questions. I conclude by extending my congratulations to Professor Bloom. BIS central bankers’ speeches  1
A review of how refinancing risk could arise across all of a bank’s business lines is a priority; as is an analysis of how refinancing risk interacts with market risk, credit risk and concentration risk. The Committee of European Banking Supervisors and the Basel Committee, at the global level, are currently reviewing the principles governing liquidity risk management. On a final note, I would like to add that the crisis has highlighted the need to enhance internal control systems and to improve the circulation of information about risks, especially for senior managers. The exceptional case of fraud affecting Société Générale has strengthened our resolve in this matter. In France, this should lead to the amendment of Regulation 97.02 on internal control, with provisions on managing operating risk, along with specific efforts to fight fraud. This reform is connected to moves to ensure greater involvement of banks’ highest governance bodies in monitoring their internal control systems. All these initiatives draw on the lessons learned from the past, but they are also forward-looking. Their purpose is to establish the principles of risk management. These principles do not eliminate all risks, but they enhance the resilience of the system when tensions do emerge. This is the objective of the reforms, which I am sure will contribute to greater financial stability in the long run.

Such approaches were used for more than 80 per cent of the relevant banking assets at 1 January 2008. I would also like to point out that the impact of Basel II on credit institutions’ capital goes beyond the capital requirement calculation stipulated in Pillar 1 (even though it provides more comprehensive coverage than Basel I of new risks, such as securitisation activities). Regarding Pillar 2, the new regulations call for major additional arrangements to refine banks’ risk management and planning for capital cushions. This could lead to additional capital requirements, or other appropriate measures to enhance bank stability by considering risks that are not dealt with or are inadequately dealt with under Pillar 1. By the end of the year, this approach should lead to individual ratios for each institution that the Commission Bancaire sets on the basis of structured dialogue with each institution. BIS Review 82/2008  3  We have also undertaken a series of major actions that are directly in line with the general framework of the recommendations made by the Financial Stability Forum. Many spheres of action have been defined, but I would like to speak about three that I think are priorities, starting with transparency and valuation, followed by adapting the capital requirements set by Basel II for certain instruments, and finally, liquidity risk. First of all, enhancing transparency and financial disclosure was quickly identified as one of the key requirements for ending the crisis.
Thirdly, the crisis made it apparent that the framework for the resolution of failing banks was grossly inadequate. Although steps have been taken to address this question in several countries, a lot of issues remain to be solved, particularly relating to cross-border failures. But this is not for today’s discussion. The EU’s financial trilemma The core of the challenge facing the EU is conceptually quite simple. In Europe, we have built a framework based on the logically inconsistent idea of having one single market controlled by 27 sovereign nations. From a financial stability point of view, this is definitely no recipe for success. On the contrary, it is a source of coordination problems and conflicts of interest among the EU countries. This challenge has been described by Professor Dirk Schoenmaker as the “financial trilemma of Europe”. We have three goals – financial stability, integration, and national sovereignty – but only two of these can be reached. Figure 1  BIS central bankers’ speeches  1  Until the financial crisis, the combination of financial integration and national sovereignty seemed to work well in the EU (Figure 1). Financial crises were not considered to be likely and financial stability came far down on the political agenda. In connection with the financial crisis, however, policy makers have been forced to realise that increased financial stability has to come at the cost of either financial integration or national sovereignty. In principle, there are two options.

It is vital that the politicians now stick to their previous commitments and do whatever else is needed to restore market confidence. To limit potential adverse spill-overs, the ESRB has also discussed how to improve the resilience of the EU financial system. The ESRB has highlighted the importance of the stress tests performed by the EBA, the European Banking Supervisors – not least as a way to improve the transparency of the financial system. The ESRB has therefore called on the competent authorities in the EU and its Member States to contribute to clear and rigorous assessments of the banks involved. It has also called for national private or public back-stops to be put in place to deal with the potential need for bank capital. Last week, the ESRB sharpened this message asking supervisors to coordinate efforts to strengthen bank capital. I find the stress-testing to be a very useful exercise. I also believe that the disclosure of relevant data is an important tool for building market confidence, reducing uncertainty and promoting financial stability. However, there is still room for improvement. No doubt the macro-scenario could have been more conservative and possible contagion between banks and countries could have been handled better. The ESRB will have an important role to play in the construction of future stress tests. Bank funding vulnerabilities In June, the ESRB also pointed out that bank funding vulnerabilities could pose a threat to financial stability.
This argument reverses the conventional reasoning: Monetary policy would then no longer affect inflation by influencing demand and inflation expectations, but by affecting interest expenditure – the higher the interest rate and interest costs, the higher the inflation rate. I find this way of reasoning unconvincing. It would mean that central banks would in future have to act in a completely new way, which is not supported in either economic theory or practical experience. It can also be noted that this argument was not put forward during the period when inflation was low – that is, that the Riksbank would then have needed to raise the interest rate in order to raise household interest costs and ultimately inflation. Temporary break from the low-inflation environment rather than lasting change? Before continuing, I would like to stress that, although much has happened in a short space of time, this does not change the conclusion in my speech a year ago – that fiscal policy and monetary policy need to interact in a better way than has been the case in recent decades. My reasoning then was based on the fact that the policy rate had for a long time been at, or very close to, its effective lower bound – a bound below which it is not possible to reduce the rate further or where the negative side-effects of doing so risk being very large.

This has to do with the fact that the development of the Swedish economy further ahead would be even worse if high inflation were allowed to become entrenched – we know this from experiences both in Sweden and in other countries. The question is not, therefore, whether inflation will return to the target, but how it will happen, and how the Swedish economy will develop during this process. It can be painful, but it can also be relatively smooth. 9 For a more detailed discussion, see Jansson (2020). 8 [15]  How well the Swedish economy in general develops depends on the interaction between different agents. This is an insight that I think has become somewhat neglected, and that was the reason for the speech I held a year ago on the division of roles between fiscal and monetary policy. But it is not just a question of the macroeconomic policy mix. It is about a broader interaction, involving many economic agents. Let me describe how inflation can be brought back to the target in a favourable scenario. In principle, it is the Riksbank’s current forecast that I am describing, but without numbers and in more general terms. The increases in the policy rate that the Riksbank has made, and expects to make, contribute to the fact that inflation will start to decline in 2023.