samchain/econo-pairs-v1 huggingface dataset:
This is especially the case in the most recent phase of the crisis, when sovereign debt concerns and their interaction with the strength of bank balance sheets have been central. In those euro area countries where government and banking sector balance sheets remain sound and access to external financing has been maintained, the transmission of monetary policy continues in line with historical regularities. But in those countries where the sovereign debt and bank funding markets have virtually seized up, its transmission is threatened. The interest rates on corporate loans and on mortgages, which ultimately affect real economic activity, will be higher in countries where banks are having funding problems. The increase in bond yield spreads experienced by the countries hardest hit by the sovereign debt crisis is likely to be passed through, in large part, to the cost of financing for the private sector. Indeed, the latest data on bank interest rates show that mortgages and corporate loans are significantly more expensive to service in those countries with sovereign debt tensions. For example, while lending rates on loans to non-financial corporations have tended to fall in all euro area countries since October 2008 – following the reduction of ECB policy rates – the fall has been less pronounced in Greece and Portugal. In December 2009, lending rates on loans to non-financial corporations in these two countries were approximately 1 percentage point higher than in Germany.

Current challenges therefore do not call into question the primacy of the ECB’s objective of price stability. On the contrary, it is precisely in this challenging environment that the benefits of price stability for Monetary Union as a whole will be reaped. The credible achievement of price stability reduces overall uncertainty in the macroeconomic environment and thereby keeps risk premia embedded in financial yields lower than would otherwise be the case. In turn, this will foster growth, and thus provide support to those countries facing financing difficulties. At the same time, price stability is a crucial element in restoring stability to financial markets and improving market access for distressed sovereigns and banks. That said, we must be careful not to overburden monetary policy, in both its standard and non-standard incarnations. Obviously, monetary policy cannot take up the slack where fiscal or other authorities fail to live up to their responsibilities. While central banks can, should and do provide liquidity support to financial markets, they cannot provide solvency support. That would represent an encroachment upon the domain of  6  See the analysis presented in Giannone, D., M. Lenza, H. Pill and L. Reichlin (2011). “Non-standard monetary policy measures and monetary developments,” ECB Working Paper No 1290. 7  See the framework developed in Ciccarelli, M., A. Maddaloni and J-L. Peydró (2010). “Trusting the bankers: A new look at the credit channel of monetary policy,” ECB Working Paper No 1228.
Following the terrorist attacks in the USA we saw a further depreciation of the krona (and for some other minor currencies), as well as a weak development in the stock market. Finally, the generally stronger dollar must be mentioned as one of the explanations for the weak krona. Some of the dollar's strength can be attributed to higher productivity in the USA, but most economists still believe the dollar to have been overvalued on the basis of traditional economic theory. The krona has thereby been steered to some extent by factors that are not connected with the economic situation and developments in the real economy. This means that the weak krona does not function fully as a shock absorber against the outside world. Sweden has an undervalued currency despite our economy developing as well as other countries' economies. The monetary policy problem is that a weak krona risks creating inflation via import prices, which in turn can force a tighter monetary policy stance than would otherwise be necessary. There are international examples of how the exchange rate, instead of acting as a shock absorber, has rather worsened the effects of an economic slowdown. Japan and Switzerland have experienced prolonged crisis periods during the 1990s, while their currencies have remained very strong and have thus caused problems for the export industry. One effect of the weakening of the krona that we have now is that the export industry and the competitive import industry should become more competitive in the short term.

Indeed, the financial crisis of 2008 had far-reaching consequences on the public finances of most countries: tax revenues fell due to declining activity; welfare spending rose due to higher unemployment; stimulus plans had to be implemented and, in many countries with the notable exception of France, the cost of rescuing the financial system was huge. Government deficits in numerous countries increased and their debt exploded. As an indication, the ratio of government debt to GDP of most industrialised countries rose by over 20 points between end-2007 and today, which is very significant. If the fiscal positions of these countries had been sound before 2007, the situation would be very different today. But most countries had large deficits and high debt levels before the crisis. Creditors started to question the ability of some countries to meet their commitments. Doubts emerged as to the “sustainability” of their public debt, despite the fact that, for decades, markets had considered government bonds to be risk-free or the safest type of asset. For the past two years, the epicentre of this second episode of the crisis has been in Europe because the first doubts about the sustainability of an OECD country’s public debt focused on a euro area country: Greece. At end-2009, the newly-elected Greek government announced that the government deficit for that year was twice as high as expected, above 12%, and that public debt exceeded 100%. Creditors suddenly lost all confidence and Greece’s borrowing rates soared, making it impossible for it to access market financing.
Ladies and Gentlemen, with these few remarks I hereby declare this workshop officially open. I thank you for your attention. 2  BIS Review 51/2010

In such a scenario, it will be even more important for all institutions with financial stability responsibilities - be it the central bank, supervisory authority or other government agency - to co-ordinate their efforts in the area of system oversight and to share any information which could be relevant to the proper fulfilment of their respective functions. Indeed, whereas until recently the prevailing concern related to the choice of institutional arrangement for the supervision of the financial sector, it is now sometimes argued that it is not the institutional framework which matters most, but rather the existence of adequate mechanisms guaranteeing the exchange of information and policy co-ordination between the entities responsible for overseeing systemic stability and those that monitor the health of individual financial institutions. Beyond that, it is claimed, any institutional set-up can work. Likewise, any one can fail. While this conclusion might be valid from a national point of view, it does little to address the question of whether information exchange and policy co-ordination relating to financial sector developments affecting the EU as a whole would be more appropriately addressed by a supranational EU institution with supervisory responsibilities, or whether such tasks are best handled by the national authorities of member countries. This issue has certainly gained in importance in recent years with the increased recognition of the links between supervision and monetary policy.
Cycles in real activity sometimes reflect behaviour outside the influence of monetary policy. As Lawson (1994) put it, “I find it wholly unconvincing to believe that the credit cycle is caused simply by mistakes in monetary policy. Of course, such mistakes can exacerbate the cycle; but the cycle would be there without them. There is no way in which the monetary authorities can finetune bank lending, any more than they can fine-tune expectations”. That is why the framework introduced in 1997 explicitly recognises that the MPC would not attempt to bring inflation back to the target immediately following a large shock. As a result inflation might deviate from the 2.5% target by more than one percentage point. That would require the Governor to write an  16  BIS Review 68/2002  open letter to the Chancellor. Ed Balls explained in his Oxford lecture in 2001, “Some have assumed it [the requirement to write an open letter] exists for the Chancellor to discipline the MPC if inflation goes outside the target range. In fact the opposite is true. In the face of a supply-shock, such as a big jump in the oil price, which pushed inflation way off target, the MPC could only get inflation back to 2.5 per cent quickly through a draconian interest rate response - at the expense of stability, growth and jobs. Any sensible monetary policymaker would want a more measured and stability-oriented strategy to get inflation back to target.

In this respect, the BNR opinion has been repeatedly expressed in public, namely that such a correction can only be made via a balanced mix of monetary, fiscal and income policies, coupled with faster structural reforms that would lead to higher productivity. What would be the effects of a downgrade for Romania? Let me stress this again, I do not believe in a downgrade. As I have already mentioned, we may see a change in the outlook. If there is a downgrade, its consequences would be rather serious. It would primarily be reflected by the marked increase in external financing costs, but also by deterring FDIs, which would limit the country's rapid growth potential. Why do you think rating agencies are more cautious about Romania than about other countries? It may be because of an insufficient clarity regarding the real economic and financial situation of Romania, which may derive also from the inconsistent signals that sometimes come from inside the country. Thank you very much, Mr. Governor. BIS Review 113/2008  3
During this year some things have certainly changed. Internally, uncertainty has decreased after experiencing peaks at certain periods. Key asset prices, such as interest rates and the exchange rate, have shown high volatility and, in spite of a reduction, have not returned to previous levels. Externally, persistent higher levels of inflation have prompted a strong reaction by most central banks and uncertainty remains elevated. This driven by factors such as the war in Ukraine and the likelihood of recession in US and Eurozone. These elements add complexity to an already challenging scenario. Yet, despite these difficulties and a weakened capital market, the financial system has proved to be very resilient. 1  I will start this presentation with a macro-outlook, in particular at our continuing efforts to resume balanced growth on the back of a sound macroeconomy, by applying the appropriate monetary and exchange rate policy in times of high uncertainty and external shocks. Then, I would like to share with you the factors that explain the remarkable resiliency of our financial system, and the policies we are developing from the Central Bank to contribute to strengthening and developing the financial markets, in accordance with our mandate of financial stability. 1. Building resilience over the years as a source of strength 50 years ago, Chile was an economy mostly closed to international trade and capital flows, with severe credit constraints and a fairly basic financial system, with banks as the only source of financing for businesses and individuals.

And it will continue like this in the years to come, encompassing several areas related to macro-prudential regulation, financial markets infrastructures and payment systems. While some developments need legal changes, it is in the interest of the Central Bank to keep working on promoting greater and safer financial integration and more secure short8  term funds availability, improving both financial infrastructure and large value and retail payments, and exploring new macro-prudential tools. (i)  A greater and safer financial integration of our financial system  In general terms, financial integration can contribute to economic development through a reduction of financial costs for investment, increased competitiveness, the development of capital markets and portfolio diversification. The recent FSAP acknowledges that the Chilean financial market is well integrated into the global financial system: Chilean firms invest in foreign financial assets, and foreigners participate in the local market. However, it is still possible to advance in two main dimensions: a) Promoting the use of the Chilean Peso in cross-border transactions, and b) Increasing robustness of the processes of trading, clearing and settlement of foreign exchange transactions in the local and foreign market. a) Promoting the use of the Chilean Peso in cross-border transactions The internationalization of the Chilean peso can enhance financial stability, by alleviating liquidity concerns during stress episodes and reducing counterparty risks, among other effects, which are quite relevant in the current scenario.
One important feature of the current globalisation wave is the integration of China, India and other emerging economies into the world trade system. This development has been strongest in China, whose share of world exports is growing rapidly. The countries within the Commonwealth of Independent States (CIS) have also increased their exports markedly since the early 1990s. India is at the starting-line. Many of these economies have large labour forces that offer their services at very low wages, and these labour resources are available to companies that compete on world markets. Low labour costs and more efficient transport and communication attract labour-intensive production. Production of goods and services is being transferred from high-cost countries to countries like Estonia, Latvia, Poland, China and India. This shift in the international division of labour is now influencing real wage growth in industrialised countries. The risk that a business will have to wind up operations or move abroad is dampening cost pressures, as bargaining power is being transferred from workers to employers. In a number of European countries, wage growth is also being influenced by increased labour inflows from the EU accession states. As Scandinavian consumers, we are benefiting from falling prices for many imported goods. Lower import prices are also ascribable to a shift in our imports towards a higher share of imports from lowcost countries. The change in clothing prices in Norway may serve as an illustration.

Globalisation has also had an impact on the functioning of international capital markets and has created considerable global imbalances. The US trade deficit increased to over 6 per cent of GDP in 2005, while oil exporting countries and East-Asian countries are running large current account surpluses and building up high levels of international reserves. The increased savings of oil exporters as well as of some emerging countries have pushed down international interest rates. Bond yields have been low, and have stayed low even when short-term interest rates have been raised. However, in recent months bond yields have picked up somewhat. Although the world's central banks have pushed short-term interest rates in recent years to their lowest level for a century, this has not led to a significant rise in inflation. Challenges to monetary policy The Government has defined an inflation target for monetary policy in Norway. Norges Bank’s conduct of monetary policy shall be oriented towards low and stable inflation, with annual consumer price inflation of close to 2.5 per cent over time. Norges Bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment. Since summer 2003, the Norwegian economy has experienced a marked upturn. While it took some time for employment to pick up, this is occurring now. Employment is moving up and unemployment is falling rapidly. Although inflation has increased somewhat, it is still low, even 2½ years after the cyclical change.
Financial institutions – and in particular those with regional aspirations – must develop the capacity and capability to manage risks arising from cross-border operations. Given the greater complexity of business, boards and management will be confronted with more difficult and multi-dimensional challenges in driving strategy and in overseeing operations. This calls for greater emphasis on board and management composition and diversity in terms of skills and experience. Board members with experience in the areas of international banking and finance for instance, would be critical to help the institution in managing the new operating environment including new business models, while guarding against the attendant risks. The growth of the regional financial markets will also accompany such financial integration and cross border banking and investment activity. This could open up new sources of revenues for the financial sector, at the same time, new risks that may require upgraded skills and infrastructure to manage. Policymakers will try to harness the economic and  BIS central bankers’ speeches  5  financial benefits these bring while ensuring that risks will be well managed. For financial institutions, there will be a need to enhance capacity in operations and connectivity – developing the necessary infrastructure, systems, counterparty lines and settlement capability across the region. Risk management also needs to be enhanced correspondingly, capability of assessing market and credit risks which could be challenged by different liquidity conditions and market environments. Financial institutions must also be ready and able to comply with diverse legal and regulatory expectations in each country of operation.

The date on which the current series is to be withdrawn from circulation will also be announced well in advance. 2  BIS central bankers’ speeches
A countercyclical capital buffer will come on top as a capital requirement that can be increased in good times and removed in bad times. The countercyclical buffer is to consist of Common Equity Tier 1 capital and will normally be set between 0 and 2.5 percent of a bank’s riskweighted assets. The countercyclical buffer is intended to counteract the procyclical effects of substantial changes in credit and asset prices. The buffer will help contain the risk of deleveraging in bad times. But an increase in the buffer can also dampen rapid credit growth in good times. The effect will depend on banks’ reaction when the buffer is increased. Norges Bank will have primary responsibility for elaborating the basis for decisions on the countercyclical capital buffer. In drawing up the basis, the Bank will collaborate and exchange relevant information with Finanstilsynet (Financial Supervisory Authority of Norway). The buffer will be set by the Ministry of Finance. Once the regulation is in place, most likely in late summer, Norges Bank will issue concrete advice to the Ministry of Finance on the level of the buffer. Thereafter, the Bank will issue  BIS central bankers’ speeches  3  advice on the buffer four times a year. The criteria on which the Bank’s advice is based were presented in the March Monetary Policy Report. Norges Bank will present analyses and issue advice on the size of the countercyclical capital buffer in conjunction with the decision basis for monetary policy.

Inflation is low in Norway and has recently edged downed further. Underlying inflation is estimated to be in the interval 1–1½ percent. Low external price impulses and an appreciation of the krone in recent years have held the rise in prices for imported goods at a low level. The analyses in the March 2013 Monetary Policy Report indicate that costs in householdoriented industries have risen at slower pace than in the mainland economy as a whole in recent years. This is partly due to relatively high productivity growth. At the same time, high inward labour migration is providing a flexible supply of labour, which is curbing wage growth. Wage growth in Norway is also being influenced by low wage growth in neighbouring countries. Trade-offs in monetary policy Norges Bank’s conduct of monetary policy is oriented towards low and stable inflation. The operational target of monetary policy is annual consumer price inflation of close to 2.5 percent over time. At the same time, monetary policy shall contribute to stabilising developments in output and employment. Since the introduction of the inflation target in 2001, annual consumer price inflation has averaged 1.8 percent, which is somewhat below, but close to, 2.5 percent. In Norges Bank’s assessment, consumer price developments since 2001 have been well within the flexibility provided for under the monetary policy mandate. The monetary policy response pattern can be summarised in three criteria for an appropriate interest rate path.
That requires LDI funds to be resilient enough to prevent forced deleveraging and gilt sales in the event of severe but plausible stresses in gilt yields. Funds should hold enough assets, which can meet collateral demands, to be able to absorb such a shock without having to sell assets. This will avoid feedback loops that threaten financial stability. Importantly, the FPC intends for LDI fund’s resilience to be usable. [9] And after withstanding a stress, LDI funds should be able to continue operating during a period of recapitalisation by pension schemes. This is not just a financial stability issue. It is not in the interests of pension schemes or their corporate sponsors for LDI funds to unwind their hedges in periods of market turbulence, when they are most needed. And neither is it in their interests for LDI funds to sell assets at temporarily depressed prices. So pension schemes have no reason not to invest in LDI funds if they use their resilience to meet margin and collateral calls. To what level should LDI funds self-insure against stresses? The FPC judged that LDI funds should be resilient to a yield shock of, at a minimum, around 250 basis points. And that funds should also hold additional resilience over and above this, based on their own individual risks. How did we arrive at that judgement? We split up LDI funds’ steady state resilience according to three building blocks:[10] Firstly, a baseline resilience component that captures the idiosyncratic risks of assets held by LDI funds.

I intentionally spoke of “a” gold standard and not of “the” gold standard because this standard has taken various different forms over history. Under a pure gold standard, a Swiss franc is equivalent to a certain amount of gold, and therefore, vice versa, the gold price is fixed in terms of Swiss francs. The SNB would be obliged to purchase or sell gold at this price, without any restriction. In other words, there would be an obligation to redeem SNB banknotes in gold. In my view, the are two main arguments against a return to the gold standard. The first argument relates to gold as an anchor of price stability. Our modern economy is diverse and complex. Why, then, should we confine it in a monetary corset that takes as its measure the scarcity of a precious metal that, for the overall system, is relatively unimportant? Price stability is not guaranteed by the gold standard. As we have most clearly seen in the past few years, there is no direct connection between the gold price and the general price level of goods and services. The second argument is that the gold standard reduces the room for manoeuvre in monetary policy. The closer it comes to its pure form, the greater the reduction in the freedom of manoeuvre. Only those who believe that no monetary policy at all is required to react to economic shocks should plead the case of the gold standard.