samchain/econo-pairs-v1 huggingface dataset:
With only one tool, the repo rate, we are trying to attain the inflation target and at the same time attain a balanced development in economic activity. In practice, the repo rate is often adequate as a tool to  BIS central bankers’ speeches  3  give both inflation and economic activity a push in the right direction.1 But in recent years, we have also needed to manage the problem of economic activity being at different levels in different parts of the economy. We cannot use the repo rate to stimulate the corporate sector and limit the build-up of household debt all at the same time. In this situation, it is not evident how monetary policy should manage the balance between inflation, economic activity and the risk of an overly rapid increase in housing prices and household credit. Let me elaborate on my thoughts a little further here. Monetary policy must take financial risks into account The concern over lending to households increasing too rapidly has led to a majority of the members of the Riksbank’s Executive Board voting to hold the repo rate at a higher level than would otherwise have been justified. I have entered reservations against these decisions and advocated a lower repo rate, for reasons I will return to later. Despite my reservations, I share the majority’s concern over the rapid increase in household debt.

Identifying and analysing factors that can give rise to financial imbalances is and will remain an important part of the Riksbank’s work. The Riksbank needs this analysis for several reasons. As I mentioned earlier, the Riksbank has responsibility for promoting a safe and efficient payment system. We must also understand if monetary policy risks contributing to financial imbalances arising. Moreover, a development of the economy that proves to be unsustainable will affect the way in which inflation develops and what type of monetary policy it is appropriate to conduct. The financial stability council will give us a forum where we can and shall openly present our analyses of financial risks and recommendations for supervisory measures. In the recent Monetary Policy Update our forecasts was based on no new macroprudential policy measures being introduced. But how will my view of a suitable monetary policy be affected if such measures are implemented? The answer depends entirely on the measures implemented and their effects. 10  The scenarios shown in Figure 7 should primarily be regarded as an illustration of the different alternatives. The repo-rate path there does not coincide with the one I have advocated at the monetary policy meetings. 11  The Riksbank (2013c). 12  A central element of uncertainty is how the repo rate affects the degree of household indebtedness. The Riksbank’s estimates imply that the debt ratio will increase when the repo rate is cut, but that the increase will be small.
The operational target of monetary policy as defined by the Government is inflation of close to 2.5 per cent over time. The inflation target provides economic agents with an anchor for their decisions concerning saving, investment, budgets and wages. Households, businesses, public entities, employees and employers can base decisions on the assumption that inflation in Norway will be 2½ per cent over time. The responsibility for implementing monetary policy has been delegated to the central bank. This is also the case in comparable countries. The central bank shall exercise professional judgement within the framework of its mandate. Assessments of economic developments and the basis for interest rate decisions are presented to the public. This makes it possible for others to gain insight into the assumptions and analyses underlying interest rate decisions. The operational target is well defined. The Bank’s judgement can therefore be evaluated retrospectively. Norges Bank explains the reasoning behind its judgement in its annual report. The Bank’s reporting requirement is set out in § 75, litra c of the Constitution, which stipulates that the Storting shall supervise Norway’s monetary system. Up to 1950, the annual report was submitted directly to the Storting. Today, in keeping with the Norges Bank Act, it is sent to the Ministry of Finance for submission to the King in Council and communication to the Storting in the Government’s credit report. The law thereby provides a framework that allows the government authorities to follow up the performance of the delegated responsibility for monetary policy.

Chart 6. NOK bonds issued outside Norway Total outstanding. In billions of NOK 100  100  80  80  60  60  40  40  20  20 0  0 2000  2001  2002  2003  Source: Norges Bank  This is reflected in the international market for bonds issued in NOK. Last year, such bond issues amounted to more than NOK 50 billion. Both foreign and Norwegian companies were issuers and a number of small and large foreign investors and Norwegian companies - primarily life insurance companies - were buyers. The relationships in the foreign exchange market are unstable. New shifts in the world economy may reduce interest in the krone. Chart 7. Relative labour costs Deviation from historical average. Per cent 20  20  31 January 2003  15  15  10  10  5  5  0  0 -5  -5  Common currency  -10  -10 -15  -15 1970  1975  1980  1985  1990  1995  2000  Sources: TRCIS/IMF, Ministry of Finance and Norges Bank  As a result of the strong krone and a high wage level, competitiveness in business and industry is close to 15 per cent weaker than the average for the past 30 years. Historically, following such substantial deviations, competitiveness has always returned to the average fairly rapidly.
Second, the temporary improvement in the terms of trade that followed the rise in sterling in 1996 reduced the wedge between the real consumption wage – which is of relevance to employees and which reflects a mix of both domestic and imported inflation components – and the real product wage – which is of relevance to employers and which reflects the prices only of domestically produced goods. That reduction in the wedge is likely to have reduced the pressure on nominal wage growth for any given level of unemployment. So it is quite possible to believe that the NAIRU has fallen even if the natural rate has not. But this is likely to be temporary. As the impact of sterling’s appreciation on wages and prices wears off, the NAIRU will, other things being equal, rise towards the natural rate. But other more BIS Review 103/1998  –5–  lasting changes may reduce the natural rate (and hence the NAIRU). For example, a range of government policies, including changes to the Jobseekers Allowance, the New Deal and the new Working Families Tax Credit, have increased incentives to work. The National Minimum Wage works in the opposite direction. Assessing the impact of these structural factors on the natural rate is no easier than calculating the effect of macroeconomic shocks on the NAIRU. But it is useful to distinguish the two concepts, not least because they can move quite differently in the short run. Enough of this theory, some of which may appear largely semantic.

In its meeting in April, the Monetary Policy Committee noted that “labour market data on quantities were signalling a tighter position than the price [earnings] data”. At that time, the Labour Force Survey and claimant count BIS Review 103/1998  –7–  measures of unemployment had both fallen below their previous troughs recorded in the spring of 1990, and were still declining. This position was evident across all categories of unemployment, as can be seen from chart 2 which shows the various measures of joblessness reported in the EPI’s Employment Audit. In addition, employment and total hours worked were rising quite strongly; recruitment intentions were at their highest level for nine years, with the level of vacancies at Jobcentres, and the average duration of these vacancies, both well above their 1988/89 peaks; and survey measures of recruitment difficulties were also at high levels. The underlying rise of the Average Earnings Index had increased to 42% by the beginning of 1997, but was little changed by the end of the year. If I had been asked to deliver the third Annual EPI lecture, rather than the fourth, the main question you might have expected me to grapple with would have been why earnings growth had not at that point risen by more, given the 1.0 million fall in unemployment and the 1.4 million rise in LFS employment since the end of 1992.
1  A detailed progress report is contained in the FSB Chair’s letter to G20 Leaders ahead of the Brisbane Summit. See FSB (2014b). 2  Table 1 shows that the tightening in definitions of risk-weighted assets and capital under Basel III itself doubled effective capital requirements. The numerical requirements themselves have also more than tripled. Caruana (2012) describes these changes in some detail. 2  BIS central bankers’ speeches  Now, for the first time, global standards have been agreed to place requirements on the liquid asset buffers banks must hold and on the extent of maturity transformation in which they can engage. The rapid contagion during the crisis showed how the system magnified shocks. Two particular fault lines made the system procyclical. First, banks were heavily exposed to movements in market prices and volatility around them, creating a cycle in which falls in prices caused banks to retrench and reduce their positions, leading to further falls in asset prices. That issue has been addressed through strengthening regulatory requirements on trading books – a move that has contributed to the share of banks’ assets accounted for by trading assets almost halving.3 Second, banks and shadow banks were entwined in a dangerous funding spiral. Incredibly low initial margins on repo transactions facilitated the build-up of excessive leverage and maturity mismatches in shadow banks.

Bill Dudley’s recent proposal for certain staff to be paid partly in “performance bonds” is worthy of investigation as a potentially elegant solution.21 Senior manager accountability and new compensation structures will help to rebuild trust in financial institutions. In a diverse financial system, trust must also be rebuilt in markets. That is why in the UK in June, Chancellor George Osborne and I launched the Fair and Effective Markets Review.22 Far from seeking to constrain markets, the Review is seeking to restore true and competitive markets with open access to all and competitive prices. Behaviours that aim to undercut market mechanisms, such as collusion, the misuse of confidential information, or the manipulation of market prices and benchmarks, must be stamped out. The Review has already recommended that further market benchmarks be brought within the scope of UK regulation, alongside a criminal charge for manipulation of such benchmarks. In that respect it complements the FSB work to reform and strengthen benchmarks internationally.23 The Review is now consulting widely before reporting next June. It is asking questions about deficiencies in two major areas: market structure and conduct. The Review is examining where structures exist that encourage excessive concentration, raise potential conflicts of interest or expose benchmarks to the potential for manipulation. And it is considering where voluntary codes of conduct seem inadequate, poorly understood or simply provide individuals with justification to judge their actions by the exact letter of the code rather than by more generally accepted norms.
When wage formation is decentralised, monetary policy will instead influence wage growth via market mechanisms, by stabilising aggregate demand. The existing monetary policy guidelines will function effectively whether wage bargaining is at a centralised, local or individual level. There is a fine balance in the division of roles between fiscal policy, wage formation and monetary policy. This balance will be disturbed if the objective of monetary policy is changed or broadened. Should monetary policy give particular weight to asset prices? House prices in Norway have risen sharply and probably excessively. The level of house prices in Trondheim in central Norway was an eye-opener for the American Nobel Laureate Georg Akerlof, who happens to be of Swedish ancestry. At a family gathering, he was told that a distant relative had bought a house in Trondheim at a price equivalent to more than USD 1 million, providing a source of inspiration for his and Robert Schiller’s book “Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism”. 5  4  OECD Interim Economic Outlook, (March) 2009. 5  Georg Akerlof and Robert Shiller (2009): “Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism”, Princeton University Press. BIS Review 119/2009  5  Self-reinforcing mechanisms in financial markets, which lead to slower credit flows and falling asset prices in downturns and the inverse in upturns, pose a challenge to monetary policy.

Norges Bank, like other central banks in Europe, provided dollar liquidity to banks in periods. Banks’ access to funding at all but the shortest horizons has been very limited during the crisis. A key problem was that banks were heavily reliant on international market funding. When that source of funding seized up the Norwegian authorities had to intervene. Several instruments have been deployed. Loans have been offered at longer maturities than earlier, in some cases up to 2 and 3 years. The arrangement where banks and bank-owned mortgage companies can swap covered bonds (OMF) for government securities was introduced to facilitate banks’ access to medium-term and long-term funding, but also to ease money market conditions so that money market premiums could be reduced. In the mid-1980s Norwegian banks also relied heavily on foreign funding. In spring 1986 – following a sharp fall in oil prices – confidence in the Norwegian economy weakened and liquidity flowed out of the country, as was the case last autumn. Norges Bank had to purchase NOK and sell foreign exchange to maintain a fixed krone exchange rate. The krone liquidity that flowed into the foreign exchange market flowed back into Norges Bank as loans to the banks to avoid a liquidity crisis and a surge in money market rates. Bank lending continued to grow in 1986 and 1987, and in retrospect it might almost seem as though the central bank through its lending operations had played an active part in financing the credit boom.
3  With the commencement of the policy normalization process in December 2015, the Federal Reserve began issuing an implementation note that provides the operational settings of the Federal Reserve's policy tools. This note serves to separate communications about the policy stance from those about policy implementation. It also promotes greater cohesion and transparency in communications about policy implementation by consolidating information that was previously provided in FOMC statements, FOMC minutes, Desk statements, and elsewhere. 4  An estimated historical series for an effective federal funds rate, produced using the new data source and calculation methodology, is available on the New York Fed’s website. This series will be updated at the end of February. 5  Demand for loans of reserves was driven, for example, by reserve requirements imposed on depository institutions. 6  I emphasize “all else equal.” There were many subtleties to the pre-crisis relationship between the operations and money market rates. In particular, money market rates would often move to a new target rate even before operations were conducted, because of the Federal Reserve’s credibility. Of course, that credibility was underpinned by the Federal Reserve’s actual operational capability. For a detailed exposition on pre-crisis monetary policy implementation, see Bernanke, “Implementing Monetary Policy,” March 30, 2005. 7  Of course, the Desk also controlled the level of reserves through permanent open market operations.

One tentative indication that high capacity may be playing an important role is that unsecured rates appear to have settled in about the same position relative to IOR as before liftoff, even though one might have expected the widening in the IORON RRP spread and the lower support from the ZLB to result in some downward shift. The ON RRP also has a per-counterparty cap, which was, and is, $ billion. It seems that the current level of the per-counterparty cap was also adequately large for perceived individual “headroom,” thereby supporting lender bargaining power. Figure 14 shows summary data on how frequently we receive large bids in our operations at the ON RRP and term RRP facilities. As you can see, we rarely see bids of more than $ billion, and combined individual counterparty usage across overnight and term operations has never exceeded $ billion. Recently, we learned a bit about the term RRP operations. We have been conducting these over quarter-ends as a way of providing additional RRP capacity. Additional capacity is available because term RRP operations are subject to a separate overall size limit, and because there is no per-counterparty cap in those operations. Counterparties appear to regard these as close substitutes for ON RRPs, and as shown in Figure 15, we’ve typically seen that overall RRP take-up, across overnight and term RRP, has been fairly stable across quarterends. At this past year-end, there was essentially no take-up at the term RRP operations.
Tightening of monetary policy is on the agenda for most central banks around the world, and, as you know, for the Riksbank as well (see Figure 4). There is also a consensus among central banks that policy rate increases are the most appropriate tool for dealing with unexpectedly high inflation. However, it is far from clear how assets are to be managed. In the international discussion about the holdings of securities, there are a lot of concepts that may appear mysterious and which I would therefore like to try to explain and put into context before I begin to discuss how we at the Riksbank have thought about the management of our assets in the future. From “QE” to “tapering”, reinvestments and “QT” Figure 5 shows a simple outline of how central banks' monetary policy has looked in recent years. As I mentioned earlier, the crisis has affected many countries in the same way. And, as you are probably aware, many central banks are currently struggling with inflation far above the targets. In this way, the illustration can be said to be quite general. We can imagine that the figure starts at the outbreak of the coronavirus pandemic. At that time, many central banks bought assets so that their holdings grew – this is usually referred to as quantitative easing or QE. Purchases were made at a predetermined pace, usually with the aim of achieving a certain level of holding.

Bank of Canada (2022), “Economic progress report: Controlling inflation”, available at Economic progress report: Controlling inflation - Bank of Canada. Bank of England (2021), “Box A: The MPC’s strategy for the mix of monetary policy instruments to deliver tighter policy”, article in the Monetary Policy Report, September, available at the Bank of England Monetary Policy Report August 2021. Bank of England (2022), “Monetary Policy Summary and minutes of the Monetary Policy Committee meeting, published 5 May, available at Bank Rate increased to 1% - May 2022 | Bank of England. Breman, A. (2021), “Monetary policy after corona – we need to think in new ways”, digital speech at Swedbank, available at Breman:Monetary policy after corona – we need to think along new lines | Sveriges Riksbank. Brookings (2021), ”What does the Federal Reserve mean when it talks about tapering?”, available at What does the Federal Reserve mean when it talks about tapering? (brookings.edu). Cunliffe, Sir J. (2022), ”Learning from the Dash for Cash – findings and next steps for margining practices”, speech at FIA & SIFMA Asset Management Derivatives Forum 2022, published on 9 February, available at Learning from the Dash for Cash – findings and next steps for margining practices - speech by Sir Jon Cunliffe | Bank of England. Di Casola (2021), 'What does research say about the effects of central banks' balance sheet measures? ', Economic Commentaries No 2, Sveriges Riksbank, available at What does research say about the effects of central banks' balance sheet measures?(riksbank.se).
BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches

The marketplace has now been liberalised to allow for multilateral financial institutions, multinational and national corporations from other jurisdictions to issue both ringgit and nonringgit denominated sukuk in our sukuk market with increasing foreign investor participation in such issuances The sukuk market in Malaysia has seen wide ranging innovative structures and a greater diversity in the type and maturity of the sukuk. A landmark issuance is the $ million exchangeable sukuk Musyarakah in 2006 by Khazanah, the government’s investment corporation for the purpose of selling a stake in Telekom Malaysia. It marked the first issuance of its kind, incorporating full convertibility features common to conventional equitylinked transactions. A further notable issuance was the pioneering retail exchange-traded sukuk to raise funds for a transportation project that allowed retail investors the opportunity to have direct access to the sukuk and thus a stake in a massive infrastructure development in the country, therefore broadening the range of low-risk investment products available to such investors. In terms of maturity, the ringgit sukuk market has seen issuances of maturities to 30 years which were well received by the financial market. Regular sukuk issuances with different maturities by the Malaysian government has also created a benchmark yield curve for market reference, of which is complimented by the establishment of a number of indices for non-ringgit and ringgit denominated sukuk that serve as benchmarks to track the performance of sukuk. These initiatives have progressively contributed towards creating a vibrant secondary sukuk market in Malaysia, with increased depth and liquidity.