samchain/econo-pairs-v1 huggingface dataset:
Like when we Executive Board members take a decision on what interest rate path is needed for inflation to be close to the target of 2 per cent a couple of years ahead. How much do we need to change it and how quickly? Decisions in times of uncertainty and how we manage this is a recurring theme today. You members of the Committee on Finance will later be asking questions on the basis of the material for assessing monetary policy published by the Riksbank on 16 February.2 Your views on our interest rate decisions of recent years – whether you consider they were wellbalanced given the information at the disposal of the Executive Board at the time the  1  This calculation is based on the SEK/USD exchange rate on the respective auction date. 2  See “Material for assessing monetary policy 2006-2008”. BIS Review 23/2009  1  decision was made – comprise important information for us. I am therefore looking forward to discussing the assessment later, during the actual hearing. But first I would like to talk about how the financial crisis affects the conditions for our policy. I shall also discuss the most recent interest rate decision and our readiness for dealing with unexpected economic developments. The financial crisis affects the conditions for monetary policy For a long time, the global financial crisis only had a fairly limited effect on the Swedish economy.

Arnór Sighvatsson: The logic behind the capital account liberalisation strategy Speech by Mr Arnór Sighvatsson, Deputy Governor of the Central Bank of Iceland, at a meeting of the Iceland Chamber of Commerce, Reykjavík, 15 December 2011. *  *  *  Ladies and gentlemen On 25 March 2011, the Central Bank published a capital account liberalisation strategy allowing for removal of the capital controls in two phases. Phase I would focus on channelling unstable króna assets, particularly those held by non-residents, into the hands of investors willing to take a long-term exposure on the króna. In Phase II, other controls would be lifted. The strategy is relatively terse as regards Phase II, as a number of things could change before it can be launched. As a consequence, Phase II will be drafted in greater detail at a later stage. Therefore, in my presentation today, I will focus on Phase I and attempt to explain why the individual steps within it are being taken in the order specified in the strategy. The main problem the strategy is attempting to solve is lack of confidence: in the domestic economy, the currency, and the Government’s capacity to service its debt. Confidence between individuals and between firms, domestic and foreign alike, is a precious commodity whose true value is only realised when lost. The reason confidence plays such a vital role in the mechanics of the economy is that each party’s confidence depends on the confidence of all the others.
Those who prefer cash also say that to a certain extent it may be a case of old habits dying hard, or that they happened to have cash on them and therefore used it. Those who prefer cards say instead that one of the reasons is that they do not like to walk around with cash. A comparison of the interviewees’ attitudes to cash and cards also reveals that cash is perceived as being more secure, while cards are seen as being somewhat less secure. There is also a clear generational aspect to the choice of means of payment. The youngest age group, those under 25, feel a greater sense of security when using cards than the other age groups and are more than willing to use their cards to pay small sums. Those who are 45 or older pay with cash to a greater extent. The oldest age group, those who are 65 or older, prefer to pay with cash, even when they buy something that costs over SEK 500. This tendency is the same now as it was in the previous survey. What does it cost to pay? Should the trend towards increasing card payments and decreasing cash payments be regarded as positive or negative? One way of attempting to answer this question is to consider the cost to society of various payments. If the payment system is to be efficient, these payments should reasonably cost as little as possible.

The future size of the Petroleum Fund depends on oil price developments. The guideline ensures that we only use the return on wealth that has already been accumulated. This makes policy robust to changes in oil prices and ensures that petroleum wealth will be of benefit both today and in the future. The guideline provides a framework that contributes to making the central government budget an appropriate tool for setting political priorities. It sets a limit on the share of petroleum revenues that the government can use each year and does not distinguish between domestic and foreign spending. This eliminates the waste of resources that two separate budgets would necessarily entail. The government invests petroleum wealth in foreign securities through the Petroleum Fund. Government wealth is thereby more diversified. These investments have no impact on the Norwegian capital market. Both mainland private saving and business fixed investment have been high in recent years. In Norway, credit and capital markets nevertheless feature some weaknesses, with thin securities markets and a narrow investor and ownership base compared with other countries. The reasons, and hence the solutions, can probably be found in the structure of the taxation of dwellings, property and financial assets, in a high level of state ownership of enterprises and in the organisation of pension saving in Norway. Investing even more government capital in Norway would reduce the return on investments in the Norwegian business sector and prompt other investors to invest elsewhere.
Keynes was focusing on the demand side and on how to get out of the bust, whereas Hayek was focusing on the supply side and on how an economy got into the bust in the first place. While a great deal has been done to understand the reasons behind financial instability, many questions remain unsolved. So the discussion continues and when it comes to crises prevention, two conventional pieces of policy advice seem to emerge. The first line of defense is moral suasion. The central bank could warn market participants in various ways that they are becoming overly optimistic in their expectations about future cash flows, if we are talking for instance about stocks or real estate. The problem with moral suasion is that it is difficult to calm down a market that is rushing to new highs. Talk rather than action is often not enough. Still, if a bubble is starting to build up, it may be worth a try. This is one reason why several central banks have began to publish financial stability reports. In this way one can perhaps broaden the public discussion about what is happening. The second line of defense is prudential regulation. However, the way prudential regulation is done in practice raises two, interrelated problems. The first has to do with the fact that most financial crises stem not from individual banks getting into difficulties and affecting others by contagion.

Here I am thinking about variables like the economy’s potential growth rate, the output gap and the NAIRU etc. Why should identifying asset market misalignments, excessive credit growth and a rapid decline in private financial balances be more difficult than forming an opinion about variables such as these? My view about monetary policy in this respect is of course closely bound up with my experience of the Swedish banking crisis, but it is also in line with a central bank’s mandate to achieve long-run price stability. If anything, a financial crisis substantially increases the risk of outright deflation after some time. The central bank could manage this risk in two ways: by at least trying to prevent the bubble from building up by tightening monetary policy at an early stage, and then by loosening monetary policy aggressively if a bubble builds up and bursts anyway. To my mind, both such actions would be in line with focusing on long-run price stability, whether the central bank follows an explicit or an implicit inflation targeting approach. Although I will be leaving my job as governor of the Bank of Sweden towards the end of this year, I have no qualms about forecasting that financial stability will remain on the agenda and be a key challenge for financial authorities for many years to come. 2  BIS Review 68/2002
Presentation of the 2021 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR) Press conference, 31 May 2022  Speech by François Villeroy de Galhau, Governor of the Banque de France Chairman of the ACPR  Press contact: Mark Deen (mark.deen@banque-france.fr). Page 1 of 8 Ladies and Gentlemen, I am very pleased to welcome you to our presentation of the Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority), in the company of Jean-Paul Faugère, Vice-Chairman of the ACPR, Dominique Laboureix, Secretary General of the ACPR, and Alain Ménéménis, President of the Sanctions Committee. Last year was marked by a vigorous recovery of our economy, during which our financial sector proved particularly robust (I). 2022 should now see substantial advances on the regulatory front (II). However, the war in Ukraine is posing new risks to the financial sector, calling for heightened vigilance (III). In all these situations, the women and men of the ACPR have worked tirelessly to ensure that the French financial system remains resilient under all circumstances, providing adequate financing to the economy. I would like to extend my warm thanks to them. ** I. The strength of the French financial sector is more than ever an asset for our economy I shall start with just a short word on the situation for insurers, which Jean-Paul Faugère will go into in greater depth.

The  Page 6 of 8 ACPR recently conducted a study to compare the features of the different products available: fees, returns, type of underlying assets offered on unit-linked contracts. The results, which show that the current offering needs to be simplified and that we need to think of ways to better share the returns, will be discussed this summer with insurers; we will publish the findings by next autumn, along with the measures chosen in our talks with the industry. Insurers deserve fair remuneration for the technical work that goes into marketing and managing life insurance products: but fair also means open, and technical should not also mean opaque. Among the structural challenges facing the financial sector, there of course remains the issue of climate change. After the pioneering pilot exercise conducted by the ACPR in 2021, we now need to make these climate stress tests compulsory – as is already the case for banks supervised under the Single Supervisory Mechanism – and carry them out very regularly both for banks and insurers. Once the methodology has been refined – and only then – we will be able to draw the appropriate conclusions in terms of capital requirements, starting, as is logical, with Pillar 2.iii  III. The financial system and ACPR will need to be mobilised on several fronts to tackle the consequences of the war in Ukraine First, we are paying very close attention to the potential fallout of the RussiaUkraine conflict for financial stability: for the time being it remains limited.
32  Post-COVID-19 challenges (i) The need to reduce the structural deficit and public debt The legacy of the current crisis will be a very high level of public debt. Both in our country and abroad, managing such high levels of public debt will be a major challenge once the pandemic is over. In the short term, there is no sensible alternative to budgetary expansion. However, once the pandemic and its economic effects are under control, the need to redress general government finances must take centre stage, to prevent public debt crisis episodes like those experienced in several euro area countries following the last financial crisis. Reducing public debt is also necessary if we are to restore fiscal policy leeway in the medium term as a stabilisation mechanism for future crises. This is particularly important in the euro area, where monetary policy is decided by the ECB based on the overall economic situation. Indeed, the current crisis shows the importance of having healthy public finances that enable powerful fiscal action to be taken without generating doubts about future sustainability. This is a lesson we cannot forget when the effects of the crisis fade. The timeframe for reducing the public debt that we will have at the end of this crisis will be determined by the changes in the interest rate at which the debt is financed, GDP growth in real terms, the inflation rate and the pace at which the primary deficit eases.

0.5% of annual GDP, to achieve a structural public balance in equilibrium. 9  In this regard, if the ratio between the total tax take and GDP is taken as reference, it stood at approximately 35% last year, around 6 pp lower than that recorded in the euro area as a whole (decreasing to around 3 pp when the arithmetic mean of the various countries is considered). Spain is particularly notable for its low level of consumption taxation, in international comparisons, and for a low revenueraising capacity in respect of environmental taxes. 10  Specifically, the simulation presented on the slide assumes that potential economic growth will stand at slightly above 1%, the GDP deflator will converge towards 2% from the mid-2020s, and average interest rates on debt will rise only moderately from their present levels. 36  Moreover, it should be emphasised that debt reductions would be greater under alternative scenarios in which the potential economic growth rate rises, highlighting the importance of pursuing policies in this respect, which I will now go on to discuss.11 (ii) Policies to foster long-term growth In the strategies to reduce public debt in the medium and long term, the role played by policies to promote sustained growth in activity and employment must be at least as important as that of the multi-year budget plans.
For instance, the Bank of England granted the building society emergency liquidity assistance. And HM Treasury abandoned the limits of its existing deposit guarantee, extending them to cover all deposits in Northern Rock without limitation. The question that many people are probably asking is why so much effort was made for one individual financial institution. Public measures of this type could hardly be appropriate if it had been a question of an ordinary engineering company or retail chain that was in financial straits. It is due to two factors. Firstly, it concerns the special role played by the banks and the bank system as a whole in the economy. Secondly, it concerns the special contagion risks in the financial system. In a central bank context, these are usually called systemic risks. Banks and other intermediaries in the credit market who receive deposits from the general public play a central role in the financial system. They contribute, for instance, to facilitating the mediation of capital by acting as intermediaries between depositors and borrowers. They also create the conditions for more efficient mediation of payments in the economy. The banks’ deposit accounts are of central importance for the use of payment cards, credit cards and credit transfers. Many banks also participate in the system for the settlement of  BIS Review 30/2008  5  large-value payments supplied by the central bank. The banks and their account systems are therefore a vital part of the payment system.

Consumption should also strengthen further over time, in line with developments in real disposable income, as employment conditions continue to improve. This outlook is also reflected in the new ECB staff macroeconomic projections. The projections foresee average annual real GDP growth in a range between 2.1% and 2.9% in 2007 and between 1.9% and 2.9% in 2008. In comparison with the December Eurosystem staff projections, the ranges projected for real GDP growth in 2007 and 2008 have been revised upwards, largely reflecting the strength of GDP growth in the second half of 2006 and the lower energy prices, which, if sustained, would have a positive impact on real disposable income. In the Governing Council’s view, the risks surrounding this favourable outlook for economic growth are broadly balanced over the shorter term. At longer horizons, risks lie mainly on the downside. The main risks relate to the possibility of a renewed increase in oil prices, fears of a rise in protectionist pressures and concerns about possible disorderly developments owing to global imbalances. As regards price developments, according to Eurostat’s flash estimate, annual HICP inflation was 1.8% in February 2007, unchanged from January 2007. The fall in headline inflation rates since the summer of 2006 has been predominantly due to lower energy prices. Looking ahead, last year’s volatility in energy prices will lead to significant base effects, affecting the profile of annual inflation rates this year.
The phrase is included in the article "the Speech during the Shanghai visit" in the Selected Works of Deng Xiaoping, Volume 3. ("视察上海的谈话"，《邓小平文选》第三卷)  2  BIS Review 98/2006  (now equivalent to over 40% of GDP) into the hands of those who need funding to finance consumption, investment and other economic activities. Currently, domestic savings on the Mainland are mostly trapped in the banking system earning fairly low rates of interest and as a result sustaining or even increasing a savings rate that is already far too high. There is a serious lack of diversity in investment opportunities. The ability of the banking system to allocate funds in accordance with the credit-worthiness of the borrower, although improving, is still not quite efficient in view of the relatively low degree of market orientation in credit allocation. Thus, the overall effectiveness of the financial system on the Mainland in the important task of financial intermediation is not high. There is, of course, room – and there are concrete plans – for improvement. But meanwhile the financial intermediation needs are there and have to be satisfied. This is where, quite clearly, the other financial system of the country can come in. As reform and liberalisation of the financial system on the Mainland continue, allowing the greater play of market forces, there is a need to conduct experiments in specific areas of activity in finance, including currency convertibility. The free market environment of Hong Kong provides the ideal laboratory for conducting such experiments.

At this point, the Bank would practically act as an interface between those parties eligible to participate in the euro area’s open-market operations and foreign exchange transactions and the ECB. This function has implications for both the Bank’s institutional set-up and its operational framework. First, the Bank must have the necessary legal power to carry out these tasks. In this regard, the Central Bank of Malta Act already permits the Bank to hold and exchange virtually any financial instrument and foreign asset. Additionally, however, it requires a good understanding of the operational framework governing such transactions, including the financial instruments and legal documentation that apply to transactions with eligible counterparties, the criteria which determine a counterparty’s eligibility to participate in these transactions and those that determine whether a particular asset can be used as collateral. Whereas most of the instruments currently used by the Central Bank are already in line with those of the European System of Central Banks (ESCB), further adjustments are necessary to achieve full compliance. To this end, the Bank has set up a Monetary Operations Committee and a Foreign Reserves Operations Committee to identify the appropriate additional adjustments to the Bank’s operational framework. The ability to interface with the ECB also requires that the systems which each Member State uses for the settlement of cross-border payments and the transfer of assets – in other words, the payment system and the securities settlement system – are somehow linked with those of the other members.
As the financial system changes shape, it seems plausible to think that further change could be necessary. If so, that change would benefit from further research on the costs and benefits of the extended regulatory and central bank safety net. (f) The Macroprudential Policy Framework: As a still-fledgling framework, there are a wide range of questions still surrounding the macroprudential framework. There is no settled, practical approach to defining the breadth of objectives of a macroprudential regime. Should the potential for aggregate demand externalities associated with a debt overhang in the household sector, for instance, fall under the purview of a macroprudential authority? Nor, in the main, is there any settled approach to defining the appropriate set of macroprudential instruments, whether for banks or especially for non-banks, or the optimal strategy for their use to address emerging vulnerabilities. If household debt externalities are within scope, is it better to deal with this risk by restricting mortgage lending directly via loan to income or loan to value limits, or by adding a macroprudential overlay to risk weights on mortgages (Turner (2017))? This lack of a settled approach has some benefits, in making for a diverse range of cross-country experiences. This is giving rise to a period of “learning by doing” among regulators. It does, however, come at some cost. A regime without especially well-defined objectives is likely to suffer greater problems of time-inconsistency. It may also increase uncertainty among outside participants about the likely regulatory policy reaction function.

The shift was towards managing the consequences of greater openness with much more emphasis on the stability of the financial system and its ability otherwise to do harm, both domestically and internationally. What was needed was not just openness, but safe openness. This emphasis was never more evident than during and after the global financial crisis. There was a moment at the height of the financial crisis when it might have been natural to consider forfeiting the commitment to an open financial system in the face of damaging international linkages. That did not happen to our great relief – the G20 nations stood firm to the principles of Bretton Woods and committed to significantly reforming the international financial system and its regulation, by raising global standards for regulating the system and reinforcing the institutional structure. The Covid crisis has been the first big test of those reforms – and it has been a big test. The scorecard to date is encouraging – by no means perfect, but the core of the system has stood up well, which is needless to say a huge relief. In order to preserve this public good of an open world economy and now also an open financial system, has required a commitment to institution building both internationally and domestically. Bretton Woods created the IMF and World Bank, and slightly less directly the GATT and then W TO.