samchain/econo-pairs-v1 huggingface dataset:
Today I therefore intend to talk about what tasks the Riksbank has that contribute to promoting financial stability, and how the Riksbank works with them. I also intend to talk about some of the development trends we see in these areas. They entail challenges for the Riksbank, as for many other central banks, and need to be taken into account when reviewing the Sveriges Riksbank Act. But let me first look back in time a little and reflect on how the central bank tasks have developed in recent decades and ask the more fundamental question of why we actually have central banks. ___________________________  *I would like to thank Christina Nordh-Berntsson and Anders Vredin for help with the text of this speech and for useful suggestions  1 [12]  The central bank tasks – developments in recent decades The central bank's responsibility for price stability, that is, to hold inflation low and stable, was upgraded and clarified in Sweden, as in many other countries, during the 1990s. 1 The responsibility was formulated in new legislation, the central banks also received independence in monetary policy and explicit quantified inflation targets were drawn up. The central banks’ responsibility for financial stability following the deregulation of the financial markets in the 1980s and 1990s, on the other hand, has not been clarified in the same way, although there has been considerable progress in many areas in recent years.

By maintaining a smoothly functioning payment system and an efficient credit market, the Riksbank thus contributed to both general financial stability and to the narrower monetary policy targets of price stability and stable resource utilisation. In other words, it is seldom meaningful – particularly in a crisis or in times of financial unrest – to make a distinction between measures taken for reasons of financial stability and measures taken to improve the impact of monetary policy. The Sveriges Riksbank Act is narrow with regard to the areas of use for different tools, but the preliminary works to the act make it possible to extend the areas of use in a crisis. This meant that the Riksbank could take the necessary measures in the crisis. However, it would be desirable for the actual text of the law in future to provide the Riksbank with a broad and clear task of promoting financial stability and flexibility to take the necessary measures in a crisis. As no two crises are the same, and experiences show that different crisis situations require different measures, I am doubtful about linking the tools available to the Riksbank to specific purposes. Another aspect speaking in favour of flexibility in the use of the various tools is the fact that there is a lot of work under way in the central banking world to develop new liquidity instruments. These often have a monetary policy purpose, but several central banks are now also developing tools that have a clearer link to financial stability.
In the opinion of the SFBC, urgent action was needed to prevent a dramatic worsening of the situation, with potentially very serious consequences for the stability of the entire banking system and for the Swiss economy as a whole. This was the environment in which we, in close collaboration with the SFBC and the Swiss government, prepared the operation that was announced on 16 October last year. It is not necessary here to reiterate the details of a transaction that was copiously commented on by the media and is described in our Annual Report. When planning this operation, we were fully aware of the financial risks inherent in the asset portfolio we were taking over. Yet we were convinced that these risks were adequately compensated for by the conditions under which UBS would participate in any losses and, above all, by the collective benefit derived from the stabilisation of Switzerland’s biggest bank. Our decision was thus based solely on considerations regarding the stability of the financial system. Only in a few years will it be possible to pass definitive judgment on our actions. If, upon completion, the operation proves successful, we might come to wonder whether the support measures were actually necessary. If, by contrast, losses are registered, our conclusion will be that the SNB’s operation helped prevent the worst.

Slide 1  1  4  BIS central bankers’ speeches  Slide 2  Dynamism During the Reform Process Dovernment pushing infrastructure and investment projects  Anti-corruption measures delaying government spending and investment  3  Slide 3  Thailand Profile 1997  2005 2014E  Inflation  5.6%  4.5%  1.9%  Current Account  9.3  -7.6  8.6  NPL  42.9%  10%  2.3%  D/E Ratio of corporate sector  5.1  1.3  1.3  Household Debt  n/a  54%  85%  Public Debt  42%  51%  46%  (Billion USD)  (% of total loan)  (% of GDP) (% of GDP)  Note: 2014 numbers as estimated; NPL as of Q2, 1998  BIS central bankers’ speeches  5  Slide 4  Reform Efforts: National Reform Council  DECENTRALIZATION  EQUALITY  ANTI-CORRUtTION  INTRA-REGIONAL COatLEaENTARITY  Slide 5  State-owned Financial Institutions (SFIs) in Thailand Ministry of Finance tolicy-maker  hwner  Bank of Thailand wegulator  SFIs  6  BIS central bankers’ speeches  Slide 7  15 YeMrs of HnflMtion TMrgeting (HT) % 10 8 6  Headline Inflation 4.4% Pre-HT  2.6% Post-HT  Transparent  Clear target  deliberation  Independence  process  4 2  tolicy  0  Credibility  -2  1985 1990 1995 2000 2005 2010  Monetary policy target for 2015 : Headline inflation 2.5 ± 1.5% (annual average)  BIS central bankers’ speeches  7
On the other hand, the monetary tightening, i.e., the transition towards an environment of higher interest rates could certainly expose some vulnerabilities of the financial systems, and again test their resilience, as the pandemics did. The pace of the financial tightening matters in particular, as history shows that the effects are better manageable if tightening is gradual, well guided. The last year financial market turmoil in the UK and recent developments in the USA and EU clearly underline the need for vigilance. This nexus opens the debate on the so-called "financial dominance", the possible tradeoff between rising costs to curb inflation and effects for financial stability. Against this background, one of the key questions is how well are financial systems prepared to rise to the challenge of rising interest rates. The answer to great extent boils down to the health of the balance sheet of households, companies and banks, i.e., their capacity to absorb shocks. What is very important is that banking systems in the region weathered the pandemics shock well and in many countries, including in NM, emerged with even stronger capacity, which can be observed by higher capital and liquidity buffers and better quality of credit portfolio. Although according to the recent EIB Surveys banks expected deterioration of credit quality, NPL ratios have remained low (below 4%).

Regarding monetary policy – even uncertain forecasts have some value When it comes to monetary policy, we are pleased at Goodhart’s and Rochet’s conclusion that the Riksbank has discharged its fundamental duty – to conduct a policy of flexible inflation targeting – well. As I mentioned earlier, we will return with more in-depth views on the evaluation during the coming consultation process, but I nevertheless intend to take this opportunity to say a few words about some of the recommendations put forward. One recommendation in the monetary policy areas is that we at the Riksbank should in future express a little more “self-doubt” when putting forward our proposed paths for policy rates. We can achieve this either by a greater emphasis on the uncertainty of interest rate forecasts, or by basing them beyond some horizon on some formula that incorporates the market yield curve. The reason given for this recommendation is that there is no real information in interest rate forecasts that extend further than a couple of quarters ahead. We at the Riksbank are well aware of how uncertain interest rate forecasts are in the longer run and we have therefore endeavoured to draw attention to this uncertainty. We have done so, for instance, by publishing uncertainty bands around the interest rate paths and by repeatedly emphasising the fact that the repo rate path is a forecast and not a promise.
Michael C Bonello: Regional economic integration - the options for Malta Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the Annual Dinner of the Institute of Financial Services, St. Julian’s, 7 November 2002. *  *  *  In previous years I used this occasion to focus on issues related to the country’s perennial challenge, which is to converge to the economic standards of its more developed trading partners. Among the appropriate responses to this challenge I emphasised the importance of price and financial stability, fiscal restraint, market-based reforms and a viable exchange rate strategy. These are indeed necessary elements of a strong macroeconomic policy framework conducive to export-led growth. The issue I shall address today is the need to complement these policies with a more secure access to international markets. The reason is simple. Without such access, a small open economy like ours cannot hope to achieve sustained, quality growth in today’s globalized world. A structured, regional approach to building competitiveness In a world economy driven by cross-border flows of foreign direct investment (FDI) seeking the most profitable locations, the challenge of sustaining economic growth must be faced head on by endeavouring to maintain cost competitiveness and gaining access to larger markets. Studies have shown that countries which are more open to trade tend to achieve higher growth rates compared to 1 less open economies at comparable stages of development.

21  It is also relevant to mention that although Malta does not benefit directly from the pre-accession funds which are available to the other accession countries of Eastern Europe, Maltese companies may already bid for contracts awarded to projects financed under one of the funds in question. (Instrument for Structural Policy for Pre-accession) The benefit would probably be lost under a looser form of agreement with the EU. BIS Review 69/2002  5  macroeconomic framework, political stability, high productivity levels, a transparent and simplified regulatory framework, and an assurance that business and productive activities are conducted in line with internationally accepted standards. This would, of course, hold true whether Malta joins the EU or not. Costs of participation in international fora obviated by EU membership While EU membership also entails the administrative burdens associated with participation in EU institutions, it should at the same time help to strengthen Malta’s presence in international fora. As Malta does not have the capacity to be present in every forum, it would be in a stronger position as a member of a large block. One could, of course, argue that this would also be achieved in other scenarios. Experience suggests otherwise however. For example, despite the efforts made to create a coalition of small states in the decision-making bodies of organisations such as the World Trade Organisation, the International Monetary Fund and the World Bank, and despite the fact that the specific problems of small states are universally recognised, these efforts have proved largely futile.
Although much has been done over the past few years to mitigate the structural flaws that make wholesale funding a point of weakness in the global financial system, some important issues and vulnerabilities remain. I will focus my remarks today on some of those vulnerabilities – including the areas of tri-party repo and money market mutual funds markets – and discuss what could be done to make wholesale funding markets more stable.1 I will also consider the larger issue of the appropriate role of wholesale funding in the financial system. How comfortable should we be with a system in which critical financial activities continue to be financed with short-term wholesale funding without the safeguards necessary to reduce the risk of runs and the fire sales of assets that can threaten the stability of the entire financial system? As always, my remarks reflect my own views and not necessarily those of the Federal Reserve System. Wholesale funding as a structural vulnerability As this audience knows, in the two decades before the financial crisis, the global financial system underwent rapid transformation. During this period, there was a shift from bank-based financial intermediation to capital markets-based financial intermediation,2 and an increase in the scale and complexity of securitization activities.

Would an insurance-type payment be appropriate for firms that enjoyed lender of last resort access but did not have insured deposits? How would the Fed’s role, as the lender of last resort, be coordinated with the oversight responsibilities of the primary regulators? Conclusion Which path to go down – limit wholesale funding or backstop it more broadly – would depend in large part on the social value of the capital markets-based activities presently being  18  A lender of last resort finances with an appropriate haircut. 19  This was demonstrated recently by the European Central Bank’s Outright Monetary Transactions program  20  Several of the largest broker-dealers adopted bank holding company status in recent years, but Section 23A rules restrict the capacity of their banking subsidiaries to channel liquidity to their broker-dealer operations. BIS central bankers’ speeches  9  financed in unstable short-term wholesale markets and the utility of short-term wholesale funding for lenders. Of course, the choice might not be as black and white as this. Some activities undertaken by securities firms or other nonbank entities presumably are much more socially useful than others. In this case, legislators might deem that certain classes of securities firms should be granted access to a lender of last resort facility, but restricted in the scope of their permitted activities to those that do clearly create social value. The sheer size of banking functions undertaken outside commercial banking entities – even now, after the crisis – suggests that this issue must not be ignored.
As scholars in Norway begin to respond to these incentives, they in turn will help to set expectations for their peers and students, leading to a virtuous cycle. Today, I am very proud to announce the first of two such bonuses for articles that have been accepted for publication in the best journals after this NFI program was established. The first is for Øyvind Norli, professor at the Norwegian Business School – BI. In 2007, Norli authored a much cited paper: “Sports Sentiment and Stock Returns”, published in the Journal of Finance. Here, Norli documents the effect of mood swings: Stock markets tend to take a serious hit the day after losing what is perceived as an important football match. Interesting as that is, this is not why we have decided to pay him this bonus now. Recently, the Journal of Financial Economics accepted another of his papers: “Geographic Dispersion and Stock Returns”. Norli and his co-author Diego García show that companies which are truly local outperform more geographically dispersed companies by eight percentage points a year – a remarkable effect. The other winner I am equally happy to announce is Richard Priestley, also professor at BI. Priestley has published several papers on exchange rate regimes, many on the relationship between the establishment of the euro and equity pricing across the region. The scope of his bonus-winning paper is even more global.

David Clementi: Debt workouts for corporates, banks and countries: some common themes Speech by Mr David Clementi, Deputy Governor of the Bank of England, to the INSOL International Sixth World Congress held at the Hilton Metropole Hotel in London on 19 July 2001. *  *  *  Introduction I am delighted to have the opportunity to speak at this, the Sixth World Congress of INSOL International. The Bank has a long-standing interest in insolvency arrangements. As the keepers of the London Approach, we have a direct, if informal, role in corporate workouts. This is in part historical, but it is no accident. Development of a satisfactory framework for corporate workouts is integral to the Bank’s core purposes of maintaining financial stability and seeking to ensure the effectiveness of the UK financial system. The Bank is more commonly associated with the Monetary Policy Committee and the pursuit of monetary stability. But financial stability is an important corollary to this; it is difficult to achieve one without the other. The Bank in particular is closely involved with the design of regulation and financial infrastructure, such as payments and settlement systems, to ensure that these are robust and the system is, as a result, better able to withstand a crisis. Our interest in insolvency arrangements is similar. Without a framework that is predictable, equitable and transparent, designed to maximise value for all interested parties, the costs and wider economic disruption from unnecessary corporate liquidations may be enormous.
The Investment Policy Guidelines of the Swiss National Bank, which have just been published for the first time, contain additional information on the investment and risk control process and on the investment universe. They define the principles of investment policy and the investment categories underlying the strategy, and describe the areas of responsibility. The quantitative information already published in the Annual Report will also be published on a quarterly basis in the future, thus providing the public with even more comprehensive information on our investment activities. 2  BIS Review 39/2004  5. Conclusion  The management of the monetary reserves has gained in importance. The National Bank Act requires the National Bank to manage its monetary reserves professionally, subject to the primacy of monetary policy. After the new Act entered into force, we began to further optimise the investment structure. The increased leeway for investment is used for greater diversification. The structure of the National Bank’s investments is thus becoming more efficient overall, yet without compromising monetary policy requirements in terms of the liquidity and security of these investments. We will also take advantage of the extended legal scope with regard to the free assets, i.e. the proceeds from the sale of gold reserves no longer required. Investment Policy Guidelines of the Swiss National Bank (235 kb)  BIS Review 39/2004  3

On the other hand, the experience with models based fully on rational expectations sometimes shows that certain aspects or policy implications are at odds with what is considered reasonable. One example is the forward guidance puzzle, i.e. the unrealistically large responses of inflation, long-term rates and output to the announcement of the future path of interest rates. Therefore, we as macroeconomists want to reconsider the assumption of superrational agents and replace it with something more realistic. The second session on Friday will be devoted to two papers that may challenge our ideas about the economy and the way we think in terms of our usual models. It is always extremely useful to listen to new concepts and visions and to rethink our current approaches. Discussing thoughtprovoking and stimulating papers is the only way to avoid rigidity in ideas and opinions. Rigidity that will – sooner or later – lead to wrong attitudes and decisions. I believe that good policymaking will always benefit from cutting-edge research. I would therefore like to thank the participants of the high-level policy panel, the presenters and commentators in the individual sessions, and all other participants for coming to our event. Ladies and gentlemen, thank you for your attention. I wish you all an interesting conference, fruitful discussions and an enjoyable stay in Prague. 2/2  BIS central bankers' speeches
Finally, and crucially, in the aftermath of the financial crisis, we are working with Fed colleagues and other agencies to help put the nation’s financial system on a firmer footing. Yet, much remains to be done and we are determined to keep at it. I recognize fully that there can be no return to pre-crisis business as usual – whether on the part of the financial sector or on the part of regulators like ourselves. All in all, there is a lot to keep my colleagues busy. National economic conditions Now, let me update you on national economic conditions. Put simply, growth in 2011 has been disappointing. We entered the year with some momentum, spurred by fiscal and monetary policy stimulus. U.S. economic output grew at a 3 percent annual rate from mid-2009 through 2010. While hardly a blistering pace, it was sufficient to reduce the unemployment rate by a half percentage point during 2010. Then, during the first half of 2011, growth slowed so much that the unemployment rate rose back up to 9.1 percent. Growth slowed partly because of temporary factors. As these factors have subsided, growth has picked up. But the consensus expectation for 2.4 percent annualized growth in the third quarter is still disappointing. Looking forward, I regard continued modest growth as the most likely outcome. This sluggishness convinces me that other, more persistent factors must also be holding back growth.

1  4  Regional Indexes of Coincident Economic Indicators  BIS central bankers’ speeches  This has happened without much help from the securities industry (Wall Street), a key driving force behind past local economic recoveries. The strongest job growth has been in professional and business services, leisure and hospitality, and – importantly for the Bronx – education and health services. Although closely linked to the rest of the city, the borough has its own vibrant economy. Some manufacturing takes place here, particularly in food, apparel and textiles. In addition, Hunts Point may be the world’s largest food distribution center. However, the largest sectors – health and education services – account for nearly half of all private jobs in the borough. In education, the Bronx hosts Fordham University and the Albert Einstein College of Medicine, among others. As for health services, numerous facilities include the Montefiore Medical Center, now the borough’s largest employer. I am pleased to report that the Bronx, unlike the nation and the city overall, sustained almost no net job loss during the recession. While national employment remains well below its prerecession peak, the Bronx has added 10,000 jobs since the recession began. Some of this resilience is due to the borough’s concentration in health and education – the only sectors that grew nationally during the recession. Another factor is that Bronx residents largely rent their homes, so they were less vulnerable to the fallout from the housing crisis. This is not to say that all is well here.