samchain/econo-pairs-v1 huggingface dataset:
It is also worth noting that other changes are under way in the markets as well as EMU. The most notable is the advances in technology which have enabled electronic trading to start to challenge traditional open outcry. In response, open outcry exchanges are looking to automate and streamline their trading through technology to reduce costs. And it would seem that the exchange-traded futures industry is coming under some pressure from the OTC derivatives market, which appears to be expanding at a more rapid pace. All of these changes will run in parallel with the introduction of the euro, and as far as competition is concerned, success in those areas may well dominate the euro factor. But I said earlier that the outcome of these competitive skirmishes cannot be simply determined in advance by an analysis of existing competitive advantages. It will depend on the efforts of the different players and on the extent to which they are well prepared in advance. Here I found your own survey rather depressing. The assessment was that relatively few market participants in London had made serious preparations for EMU, and seemed unsure of how to proceed. Only 6 per cent of brokers and own account traders had made contingency plans for the introduction of EMU. But this survey was undertaken in April of last year, and I am confident that the responses would be different today.

Chart 6 GDP response to demand and supply shocks (y-axis: percentage change in response to one-standard deviation demand and supply shocks, x-axis: months)  Sources: ECB staff calculations. Notes: The Bayesian SVAR includes monthly interpolated GDP, HICP, ten-year OIS rate, HICP energy and PMI suppliers’ delivery times. The SVAR is estimated using the Minnesota prior with the dummy coefficient prior. Shocks are identified using sign and narrative restriction methods. Technical details on the method can be found in De Santis, R. A. and Van der Veken, W. (2022), “Deflationary Financial Shocks and Inflationary Uncertainty Shocks: An  SVAR Investigation”, Working Paper Series, No 2727, ECB. This leads me to believe that supply factors will remain, overall, the dominant determinant of inflation going forward. The persistence of the shocks When inflation is driven mainly by supply shocks, monetary policy should respond when the shocks are persistent to keep inflation expectations anchored and avoid that inflation becomes entrenched. Understanding the reasons for the persistence of current shocks and whether they may permanently lower potential is also crucial for designing the adequate policy response. There are two alternative explanations for the persistence of the supply shocks we have experienced. The first is that the economy has been hit by a sequence of temporary supply shocks, which have jointly created a persistent effect on inflation. In this case, potential output should remain broadly unchanged. And the lingering effect of the supply shocks on economic activity through real incomes and confidence could result in a negative output gap.
Certainly, higher interest rates would have had no impact on the regulatory problems, distorted incentives and information problems mentioned above  7  I remember this period very vividly, because I was fortunate to have the opportunity to discuss and debate the problems of current monetary policy, deflation and liquidity traps in a group of great economists at Princeton University that included Ben Bernanke (before he left to be a Governor on the Federal Reserve Board), Alan Blinder, Paul Krugman, Chris Sims and Michael Woodford. 8  See Svensson (2003) for a discussion of policy options before and in a liquidity trap. 9  Bernanke (2010) shows that Fed policy rates do not seem excessively low given real-time FOMC forecasts. 10  See Del Negro and Otrok (2007), Jarocinski and Smets (2008), Edge, Kiley, and Laforte (2008), and Iacoviello and Neri (2008). 11  See Nyberg (2010) for similar arguments. 6  BIS Review 16/2010  (although they could have ended the Great Moderation with a deep recession and deflation). 12 However, going beyond the Fed’s actual monetary policy, perhaps it is possible that the Fed’s emphasis on its readiness to relax monetary policy aggressively in the wake of a sharp fall in asset prices, as expressed by Greenspan (2002) for example, may have induced expectations of a floor under future asset prices and contributed to the asset-price boom, the so-called Greenspan put (Miller, Weller and Zhang, 2002).

While financial consumers now have a greater array of choice, the challenge is in choosing the most appropriate financial product commensurate to their needs. Lessons learned from other markets showed that high-profile cases of mis-selling of investment-linked and pension products extols the importance of ensuring consumers are properly adviced on the key features, terms, conditions and suitability of a financial product before they enter into any financial contract. Assisting consumers to make wise financial choices As FAs, you have the responsibility to educate consumers on the importance of financial planning, such as saving for the first home or a child’s future education, or buying insurance protection to safeguard against unexpected losses. FAs can assist consumers in better understanding their current and future financial needs and circumstances. FAs can provide independent and impartial advice which is tailored to the consumers risk appetite and financial needs. Apart from educating their clients on what they should be investing in, FAs also play an important role in educating their clients on what they should not be investing in. As you are the industry’s front-liners and are actively meeting with potential customers on a daily basis, FAs can be relied on as a key source of information to prevent consumers from falling prey to financial scams.
One explanation for the increase may be that Icelandic companies have been undervalued by the markets, for example relative to comparable businesses in other countries, and another that bold and determined investment ventures have driven up their value. But risk and gain often go hand in hand. Sometimes the stakes may be raised too high. It has long been customary to pay a premium for attractive investment options. Such goodwill used to be depreciated in companies’ accounts over a long period and rarely affected their operations. The situation has changed whereby companies now need to make impairment tests of the goodwill they enter on the asset side of their balance sheets. If their original ventures fall flat, the goodwill must be depreciated accordingly. Thus there is a risk, if conditions deteriorate, that this rule could amplify a company’s negative results at the worst possible time. Goodwill totalling more than 500 b.kr. was entered in the financial statements for 2006 of companies listed on Iceland Stock Exchange, and at certain companies, goodwill and other intangibles account for more than half of the total assets on their books. This is a cause for some deliberation. Although the Central Bank’s main function on occasions such as this is to draw particular attention to causes for concern, it should of course take note, like everyone else, of the factors conducive to strengthening the long-term economic outlook. Iceland’s economy is advanced, transparent and vibrant.

Properly structured, this creates investment opportunities for British savers, reinforces trading ties for UK firms and improves access to credit for the real economy  13  14  15  6  See the FSB’s “Policy Framework for Strengthening Oversight and Regulation of Shadow Banking Entities”, http://www.financialstabilityboard.org/publications/r_130829c.htm. Nevertheless, there can sometimes be a case for such action, and the Bank will be considering what it should stand ready to do and in what circumstances. Clearly the Bank should not support any market that would otherwise be unviable. But we have, for example, intervened in the corporate bond market, buying and selling bonds to maintain the market during the crisis until it again became self-sustaining. See http://www.bankofengland.co.uk/publications/Pages/speeches/2013/687.aspx. BIS central bankers’ speeches  across this country. London’s international markets in turn provide a valuable service to the global economy. These benefits, on both sides, will be greatest as part of an open, integrated global financial system. The Bank of England’s task is to ensure that the UK can host a large and expanding financial sector in a way that promotes financial stability. Only then can it be both a global good and a national asset. To those ends, we are working to complete the jobs of making banks more resilient and tackling too big to fail. We are making markets more robust in order to turn the shadow banking system from a source of risk to a pillar of resilience. And we are changing how we backstop private firms’ liquidity management.
36 The EMs considered are Argentina, Brazil, Chile, Colombia, Hungary, India, Indonesia, Mexico, Peru, Philippines, Russia, South Africa and Turkey. 37 Horizon and quantile subscripts are dropped here for simplicity. 23  All speeches are available online at www.bankofengland.co.uk/speeches  23

This is in line with the credit growth rates observed in some euro area members since the mid-1990s. Some recent empirical literature has indicated that the probability of bank failures and banking crises increases with credit booms. Banks may become less cautious in granting loans during the boom, due to the prevailing optimism and good performance at the macroeconomic level. And even if the optimism is justified by the fundamentals, it may go a bit too far, leading to an eventual build-up of financial imbalances. Their subsequent bursting could hit the real economy to such an extent that it would have repercussions for the financial system. Here I come back to the issue of euro adoption, which may be a very relevant factor in this debate for several reasons. First, by providing easier access to external financing for banks, adoption of the euro may amplify a credit boom. Second, it may be associated with a wave of optimism about the future economic prospects of the acceding countries, given the positive net benefits expected from euro area entry. Third, euro adoption requires nominal convergence, including a reduction in nominal interest rates to the euro area level. This may support a credit expansion to some economic sectors. Finally, in a currency union a national credit boom cannot be addressed by monetary policy actions. To take the current euro area members as an example, the ratios of private credit to GDP a decade ago in Ireland, Portugal and Spain ranged between 45 and 75 percent.
Norges Bank’s Executive Board decided at its meeting on 16 March to raise the sight deposit rate by 0.25 percentage point to 2.50 per cent. The current assessment indicates an interest rate path where the interest rate is raised by about 1 percentage point this year, in line with expectations in the market. The sight deposit rate should be in the interval 2¼ – 3¼ per cent in the period to the publication of the next Inflation Report on 29 June 2006, conditional on economic developments that are broadly in line with the projections. Uncertainty surrounding the interest rate reflects the monetary policy response to unexpected disturbances to inflation, output and the exchange rate. We have illustrated the uncertainty surrounding forecasts for the interest rate, inflation and the output gap with fan charts. The width of the fan charts is based on historical disturbances. However, there is no certainty that future disturbances will be of the same nature and scale. The wider the fan charts are, the more uncertain the projections. Conclusion Increased globalization and the ensuing terms of trade improvements have exposed the Norwegian economy to a significant upward income shock. This has magnified the domestic upswing. So far, however, strong growth impulses have not led to major imbalances or strong upward price pressures. This may be seen as an indication that the macroeconomic framework, most notably the fiscal and monetary policy regimes, has been quite successful so far in shielding the Norwegian economy from excessive fluctuations.

Based on the backdrop of the economic development and the outlook for continued high energy prices ahead, a mechanical application of the 4 per cent fiscal rule implies that the use of petroleum revenues will increase by more than NOK 31 billion from 2006 to 2009. With continued solid growth in the Norwegian economy, it would be in line with the fiscal rule if the use of petroleum revenues is lower than the expected real return on the Government Petroleum Fund – Global over a few years. We estimate an approximately unchanged structural non-oil deficit in 2007, and assume that fiscal policy will provide some stimulus to aggregate demand and output in 2008 and 2009, but somewhat less than a mechanical application of the fiscal rule based on our oil price assumption would imply. The authorities conduct fiscal policy knowing how monetary policy will react. Today’s flexible inflation targeting regime, giving weight to both variability in inflation and variability in output and employment, establishes a firm framework for monetary policy and provides clear guidelines on how monetary policy is to respond in different situations. Monetary policy in Norway is oriented towards low and stable inflation, with annual consumer price inflation of close to 2.5 per cent over time. Flexible inflation targeting builds a bridge between the longterm objective of monetary policy, which is to keep inflation on target and provide an anchor for inflation expectations, and the more short-term objective of stability in the real economy.
2/4  BIS central bankers' speeches  In addition to clearing, the extended use of electronic platforms also contributes to the resilience of the European repo market. As mentioned in the last ICMA survey, the segment of the electronic repo trading (via bilateral trading) in particular has benefited from the turmoil observed during H1 2020 because of the dash for cash situation. Nonetheless, support that voice-brokers can punctually bring to clients has been also an important factor during these difficult times. 2. Some points of attention going forward The resilience of the sovereign debt markets during the crisis and their contribution to the absorption of the economic and financial shocks we had to face, should not hide however a few attention point that their development has contributed to intensify or bring back to the forefront, from a financial stability perspective. I would like to highlight two of them, margin calls and the sovereign-bank-corporate nexus. a) European sovereign debt is of course used as collateral to obtain liquidity on the repo market. Episodes of volatility in times of crisis, like during the March 2020 market turmoil, or idiosyncratic events, such as the Gamestop or Archegos ones, can result in significantly increased cash needs, in particular stemming from margin calls across centrally cleared and non-centrally cleared markets. The resilience of the repo market, meaning its liquidity and depth, is thus critical in responding to those margin calls, including for the non-bank financial sector.

Bail-in capacities of French banks for instance have significantly improved over the last decade, reducing the likelihood of a bail out – which would in any case be subject to the rules of the Banking union’s resolution pillar. And finally, the possible negative impact on the financial stability outlook will crucially depend on the strength and sustainability of the recovery underway and the policies which will be implemented to preserve public debt sustainability. So let me stop there for these initial remarks. Thank you for your attention. 1 www.ecb.europa.eu/pub/economic-bulletin/articles/2021/html/ecb.ebart202103_02~6612ab7923.en.html  4/4  BIS central bankers' speeches
For the path of the Swedish economy in the coming years, no other single factor is therefore anything like as important as the total wage trend. The picture of the negotiations that are now beginning is mixed and tensions do exist. Since the previous survey in September, all the interviewed groups’ expectations of the annual wage rise have been revised upwards for all time horizons. Wage expectations are highest among the employee organisations. Moreover, the wage demands that have been presented are higher than before the previous round of negotiations. It is evidently becoming more difficult to find people with the appropriate competence for the jobs that are advertised. This presumably makes the risk of future wage drift greater than in previous years. All this could be a sign that we are approaching a situation where, bit by bit, aggregate wage costs in the Swedish economy start to accelerate, albeit from moderate levels. •  When it comes to judging inflationary pressure in the coming years, a central concept is total resource utilisation. The available amount of unutilised resources is crucial for the domestic generation of inflationary pressure, at least as long as inflation expectations are parked around our 2% target. In the coming years it is highly probable that, for the first time in a long while, our estimates of total resource utilisation - the output gap - will show that the gap has closed and the economy has reached or even moved above the capacity ceiling.

The issue of when this will happen does not have to do with either the actual level of unemployment or the number who were employed when activity last peaked in the late 1980s. It depends instead on how serious any bottleneck problems are becoming and how strong those with jobs consider their bargaining position to be in wage negotiations. Briefly, then, important factors in the assessment of the risks of inflationary tendencies are how well the labour market is functioning and how quickly resource utilisation is rising. Monetary policy contributes to stability In an upward cyclical phase, the move towards a situation where the tensions in markets for goods, services and labour threaten to gain the upper hand and jeopardise price stability is a gradual process. That makes it difficult to tell exactly when the imbalances constitute a genuine problem. Observers and those who decide economic policy have to assemble the pieces of this puzzle. In an economy that is approaching a strained situation in resource utilisation, signs that imbalances are beginning to build up will appear with increasing intensity and frequency. As more and more pieces of the puzzle fall into place, they ultimately provide a basis for action. The whole of this process is complicated by the time lag before monetary measures elicit effects. Our premise is that the full effect of an interest rate adjustment materialises after one to two years. So measures taken today would not have their full effect until some time during 2002.
However, our experience has been that heavy and sustained interventions have little influence on the exchange rate, and hence inflation. Exchange interventions, whether they involve selling or buying currency, are not an appropriate means of influencing the exchange rate over time. If Norges Bank intervenes heavily in the market, a game situation may arise where market participants perceive central bank interventions as an interesting opportunity to make a profit. Market participants know that interventions cannot be sustained. This tempts operators to take positions against the central bank, thereby intensifying the pressure on the krone. Under the European currency crisis in 1997-1998, and probably during the currency turbulence in 1997-1998 as well, these mechanisms appeared to be at work. Norges Bank does not intend to act in a way that prompts such game situations. 6  BIS Review 74/2001  Other countries that conduct monetary policy using an inflation target also use the interest rate as the main instrument, and interventions are used only by way of exception. Over the last year, however, the ECB and Sveriges Riksbank have intervened in the foreign exchange market. The ECB intervened for the first time in September last year. The interventions were undertaken in concert with several central banks, including the Federal Reserve and the Bank of Japan. The ECB intervened again on three occasions in the beginning of November, but this time unilaterally. The ECB subsequently maintained that the interventions had been successful.

The role of the krone exchange rate With the new operational target of monetary policy, Norges Bank will aim to maintain low and stable inflation. We no longer have a specific exchange rate target for the Norwegian krone. Nevertheless, developments in the krone exchange rate are still very important when Norges Bank sets the interest rate. This is due to a number of factors: •  Changes in the krone exchange rate affect prices measured in NOK for imported consumer goods and services. Bearing in mind that imported goods are used in Norwegian production, the rise in prices for imported goods and services combined determines nearly 40 per cent of consumer price inflation. •  Developments in the krone exchange rate have an influence on the earnings of companies that compete with foreign enterprises and that traditionally also negotiate first in the income settlements. •  Changes in the exchange rate affect the competitiveness of Norwegian business and industry as well as demand at home and abroad. Thus, the activity level in the economy is affected. •  As the Norwegian and international money and capital markets become more integrated, changes in the exchange rate will be increasingly important. Changes in the exchange rate generate wealth gains and losses for Norwegian households and companies. 1  See box in Inflation Report 4/2000. ”Effects of a change in interest rates”, December 2000  2  See for example Jan F. Qvigstad. ”Monetary policy in real time”, Working Paper 2001/1, April 2001.