samchain/econo-pairs-v1 huggingface dataset:
I see more advantages than drawbacks in the European approach, since I believe that to achieve good coordination between monetary and macro-prudential policies and ensure sufficient capacity and speed of response, the central bank should play an important role in the design and management of the new macro-prudential instruments and measures. The use of unconventional measures in monetary policy implementation The second change I wish to discuss regarding monetary policy management is the role of what are dubbed unconventional measures. As you will recall, central banks’ immediate reaction to the first signs of the crisis was to deploy all available conventional instruments. Firstly, faced with clogged-up interbank markets, central banks had to directly assume the task of liquidity re-distribution among banks. Also under the heading of conventional measures, most central banks aggressively cut official interest rates to prevent an abrupt and deep decline in activity from triggering a deflationary process. This policy ultimately took intervention interest rates to very low levels. Accordingly, when the worsening of the crisis made it necessary to relax the monetary policy stance even further, most central banks had to look to unconventional instruments. Unconventional measures can be grouped into three major blocks: forward guidance; measures aimed at expanding the central bank balance sheet, and changes in the composition of this balance sheet. The use of forward guidance to steer inflation expectations and interest rates has spread among the main central banks. The ECB resorted to this last summer to anchor interest rate expectations.

(v)  In case of unforeseen excessive liquidity shortage during the day, which would exert excessive pressure on money market interest rates, the CBRT may announce “Intraday Repo Auctions” in addition to the regular ones announced at 11:00 a.m.  (vi)  The primary dealer banks will be able to conduct repo transactions within the framework of open market operations, between 10:00 a.m. –12:00 p.m. and 1:00 p.m.–4:00 p.m.  Technical interest rate cut and the new operational framework In cases where the liquidity shortage in the market increases and/or becomes pronounced to be permanent, the Central Bank will rearrange its operational framework of liquidity management and opt for a technical interest rate cut. Accordingly, (i)  The Central Bank benchmark interest rate will be the interest rates of one-week maturity repo auctions to be held regularly, which are the basic funding instrument. . The repo auction interest rate will match the Central Bank borrowing interest rate applicable to intra-day transactions prior to the period of technical interest cut. For instance, if a decision was made to make a technical interest rate cut on 15 December 2008, the interest rate on repo auctions would be set as 16.25 percent, the rate applicable to intra-day borrowing transactions by the Central Bank. (iv)  With respect to the technical interest rate cut; a.  BIS Review 3/2009  Overnight Interest Rates: The CBT borrowing and lending interest rates will be set 1.25 points below and above the repo interest rate, respectively.
It acts like a stop-gap to constrain the overall size of the balance sheet, especially given the uncertainty involved in the risk models that banks use to calculate their capital needs. But the leverage ratio – precisely because it is a non-risk based measure – cannot be a substitute for risk-based capital requirements and should not be set at too high a level as to become the binding constraint on banks. If it were so, banks may have the perverse incentive to increase their exposure to risky assets so as to earn a higher return on capital. The final calibration and definition of the leverage ratio is expected to be finalised in 2017, with the minimum leverage ratio requirement coming into effect in 2018. Singaporeincorporated banks can comfortably meet the current testing minimum of a 3% leverage ratio. 2  BIS central bankers’ speeches  Making OTC derivatives trading safer The fourth fundamental area of reform is in the OTC derivatives market. The crisis highlighted how the opaque inter-connections across financial institutions engaged in trading complex derivative contracts over-the-counter led to rapid contagion and systemic crisis when liquidity suddenly dried up. Reforms have focused on four areas: standardisation of derivative contracts; central clearing; higher margin requirements for non-centrally cleared trades; and mandatory reporting of all trades. In particular, reporting to trade repositories will provide much-needed transparency on exposures across market participants. MAS has taken steps to implement the trade reporting regime in Singapore.

This has been consistently confirmed by the Central Bank’s latest stress tests aimed at assessing the resilience of domestic banks to the adverse effects of the pandemic. Such tests featured extensively in our Financial Stability Report and in the Interim Report. The resilience of our banks, as the current spread of the pandemic continues to unfold, is truly a testimony that prudence is the best response to the high level of uncertainty created by this shock. As a result of the pandemic, the ECB, national central banks, and the regulatory authorities have all launched a number of measures aimed not only at supporting the economy, but also in part directed at encouraging banks to utilise the capital and liquidity buffers built up in recent years to deal with crisis situations that arise.
Thus, price stability is the main objective of monetary policy in all of these countries and has in fact become the recognized single target for monetary policy in numerous countries. The reason for this emphasis on price stability is that it creates the best conditions for balanced growth and increased welfare. The Icelandic financial market has developed very rapidly over the last ten to fifteen years. It is a small market by definition, but has nevertheless the same institutional set-up as larger industrial countries. Aside from the Central Bank, these include commercial banks, savings banks, securities companies, various investment funds, insurance companies, large and important pension funds and last but not least a stock exchange - linked with the other Nordic exchanges - where the shares of 60 to 70 Icelandic companies are listed and traded on regular basis. Supervision of the activities of all of these institutions is in the hands of a unified financial supervisory authority that has broadly the same legal powers and follows the same methods and standards as supervisory agencies in other European countries. Important rationalisation has taken place in the Icelandic financial system. Until a few years ago, two of the main commercial banks were fully government owned and so were a host of so-called investment credit funds. The funds were unified in a single institution, which was subsequently privatised.

In order to achieve this, financial statements must – in the case of instruments for which it is economically relevant – be sensitive to price signals from markets, which reflect transaction values. I believe that two elements are important in this argument. The first is that financial statements have the crucial merit of providing information. The second is that the rationale of fair value valuation contains within it its own limitations. The concept of "transaction", which is  BIS Review 160/2008  1  fundamental in this context and, as a result, that of "market", should constitute the limits of the scope of application of fair value accounting. Are accounting choices neutral? It goes without saying that the greater sensitivity of balance sheets to market fluctuations resulting from fair value accounting obviously has an impact on financial stability. A central banker may legitimately wonder whether accounting conventions are neutral with respect to the behaviour of financial players and market dynamics. The current crisis and volatility that we have been faced with over the past few months suggest that accounting conventions have an impact in terms of financial incentives and may have had a not insignificant impact on financial players' strategies. One example serves to illustrate this point. It is macroeconomic in nature and relates to risktaking by financial institutions. It is the possibility, in the case of some instruments, of recording as of the first trading day all of the discounted future profits even though the risks remain on the balance sheet.
It was an accident waiting to happen, and happen it did, with a vengeance, at the peak of the international financial crisis in autumn 2008, when there was a wholesale run on the FX financing of internationally active banks. After having done a post mortem on the failed banks, we now know, however, that they also had other ailments that would probably have done them in at a later stage, although the process might have been somewhat less disorderly. The combination of the macroeconomic imbalances, an unsustainable banking system, and the full eruption of the Great Financial Crisis meant that Iceland faced unprecedented challenges in 2008. The financing of the current account deficit became impossible when Iceland experienced a full-scale sudden-stop currency crisis early in the year, when the currency plummeted by 26%. Then, in the first week of October, almost 90% of the banking sector failed. This resulted in a further 26% depreciation of the currency. Although the depreciation would later contribute to the recovery, at that point it exacerbated the crisis through negative balance sheet effects on a private sector that was heavily indebted in foreign currency, both directly and indirectly, through price indexation. The outlook was bleak indeed, and many expected that the sovereign would be forced to default on its obligations. That outcome was avoided, and the economy has performed better than seemed likely that dismal autumn. Part of the reason is the nature of the shocks.

The practical preparations would include ensuring the production of new banknotes and coins, as well as the replacement of the old ones. The latter would entail a considerable logistical operation. For example, a couple of hundred large lorries would be required simply to deliver the necessary coins at the time of  BIS Review 29/2003  1  the introduction. But there is more to it than that. Computer systems would need to be converted, not least at the Riksbank, but also in many other areas of society. The Riksbank would also expend a lot of effort on providing information to the general public about the implications of a changeover. In addition, there would be a number of changes in our own operations, which I will return to later. Participation in ERM2 One important question that would become relevant during the preparatory phase is how best to ensure exchange rate stability against the euro within the scope of the exchange rate mechanism ERM2, the successor to the ERM system. In this regard, there may be reason to say something about history. The Riksbank has previously, mainly over the years 1995-1997, considered the issue of ERM participation and the possibilities for combining this with the inflation target policy that has been conducted for a number of years.
We have permitted that reserves on such loans may temporarily not be increased so that banks can carry out this large-scale, really large-scale, programme, spread losses over time, and enable businesses and households to regain their creditworthiness. But in the short term, I urge banks to do this. Banks must assess the real loan portfolio quality. It is very important that the recognition of losses on non-refundable loans is not overly delayed. I understand that banks will want to drag out this regulatory easing, but “delaying” the recognition of losses can lead to banks not being able to direct resources to lending to effective companies. Having non-performing assets on the balance sheet reduces investor confidence. There are many examples in global practice where there was a delay in recognising bad assets: the “lost decade” in Japan in the 90s, the situation in a number of European countries following the global financial crisis of 2007–2009, and our own experience in 2008–2009. Therefore, we have decided to gradually phase out regulatory easing. We will really phase it out, as Mt Aksakov has urged, carefully. But the phase-out is necessary. And the banks that made use of the easing will have to build up reserves in full for loans to large companies by 1 April next year, and for household loans and loans to SMEs — by 1 July next year within a timeline convenient to them. Banks can also use capital that has been formed to meet capital adequacy buffers but with appropriate restrictions on profit distribution.

In general, the proposals put forward by Mr Aksakov, there are many of them regarding several areas — we will, of course, carefully develop them together with you. Some have been worked out, some require further development, and we will maintain constant dialogue with you. We also understand that we have a fairly consistent, intense, and constructive dialogue with the Association, and we value it very much. In conclusion, I would like to say that yes, every crisis entails losses. Yet, there are not just losses, there are opportunities. It is a platitude, but we can see from the situation in the banking sector that this could be a new impetus and, above all, could kick-start the expansion of digital banking. That should be taken advantage of. On our end, as a regulator, we will do our best to ensure that all banks are on an equal footing in this race. To close, I would like to highlight that the way the banking system is handling the situation really inspires optimism. Rapidly adapting to new conditions, restructuring its work all the while implementing large-scale restructuring programs (I do not recall there being such large-scale restructuring programs in recent history), and at the same time not stopping lending — it really was a very serious challenge. The banks are dealing with it honourably. There are rough edges of course. There are always problems and we are discussing them, but in general, of course, we are coping.
If economic developments are broadly in line with projections, a fiscal stance in line with the fiscal rule could result in a lower interest rate and a weaker krone than projected. The Government has estimated that the annual return on the fund will be around 4 per cent over time. The average real return since the management of the fund began is now 2.7 per cent, up from just 1 per cent a year ago. The figure reflects the recent recovery from the sharpest deterioration in capital markets since World War II. With an unchanged risk profile, the average return will most probably move back towards 4 per cent after a period. The investment strategy of the fund is built on its long-term investment horizon and substantial size. In 2009, we benefited from the long-term investment horizon. The return on the fund was 25.6 per cent in 2009, which is the highest return ever recorded. The fund’s long-term investment horizon enabled it to buy equities and maintain its positions in corporate bonds when other investors were forced to sell assets at low prices during the financial crisis. In June 2007, the Ministry of Finance decided to increase the allocation to equities from 40 to 60 per cent. This was achieved over the two following years when equities for more than NOK 1 trillion were purchased. The long period of phasing in purchases was profitable as the fund was able to exploit falling equity prices during the financial crisis.

According to the Bank’s regional network, reduced use of overtime hours, partial lay-offs and reduced working hours among part-timers have resulted in lower average working hours. Moreover, increased sickness absence has made a contribution. Output growth is expected to increase gradually through 2010, while growth in the number of hours worked shows a relatively small increase. As a result, employment will gradually become more consistent with the level of output, and productivity will rise further through 2010. Compared with previous downturns, productivity growth remains weak. Owing to a fall in labour force participation, labour force figures were lower at the end of 2009 than at the beginning of the year in spite of underlying growth in the working-age population. Some people exit the labour force or choose not to enter the labour force when labour demand falls. Unemployment continued to rise in the latter half of 2009, but at a far slower pace than earlier in the downturn. Registered unemployment is projected to remain at about today’s level to the end of the year. The Technical Reporting Committee on Income  BIS Review 38/2010  3  Settlements estimates annual wage growth at 4.1 per cent in 2009. We expect wage growth to show a further decline in 2010. The uncertainty facing exposed industries is still considerable and wage growth among trading partners is low. A reserve of foreign labour and persons who have temporarily exited the labour force, and who may rapidly return, is probably pulling down wage growth.
At the same time, however, the global scope of the sanitary emergency has favored the sharing of knowledge among those in charge of controlling it, and practices that seem to have worked better in some countries can be adopted. Meanwhile, the simultaneous nature of the economic shock has led every Central Bank and government to promote measures in the same direction, providing greater support to prevent an economic meltdown. Our country is also making great efforts to mitigate the impact of this emergency on the population’s wellbeing. The government has announced a series of measures, at a cost of USD 11.5 billion, aimed at protecting employment and household income, while at the same time ensuring the continuity of businesses. In the CBC, we have taken swift decisions to mitigate the effects of this new scenario. First, over a period of two weeks we lowered the Monetary Policy Rate (MPR) by 125 basis points to its technical minimum of 0.5%. Then we introduced a set of extraordinary measures for a total in the order of USD 19 billion, to ensure adequate access to credit and the normal functioning of financial markets. These measures seek to preserve the correct transmission of monetary policy and facilitate the flow of credit to companies and individuals in need of financing to overcome this complex stage. 1  The package of measures that the Bank has implemented is very significant and should provide meaningful support for businesses and households to withstand this emergency.

In Chile, these needs are particularly important because, in the first weeks of the social crisis, many companies found themselves in a similar situation, which may have consumed a large part of their liquidity cushions and may have been unable to replenish them. To facilitate access to credit for individuals and companies, especially smaller ones, the CBC Board established the Conditional Facility for Increased Lending (FCIC) whereby 4-year loans are granted to banks, with an interest rate equivalent to the MPR and in a magnitude that increases according to the refinancing and credit operations in the most stressed segments. This facility will initially provide resources of about USD 5 billion. A third transmission channel relates to the deterioration of business and consumer expectations and its impact on investment and consumption. Prior to the aggravation of the sanitary emergency, both were already in pessimistic territory and the current situation makes a reversal difficult. A box in this Report presents the results of a survey that the Bank conducted in the second half of March among the participants in the Business Perceptions Report. A major deterioration in their outlook for employment and activity during the next six months was revealed, which must be weighed in the light of the impact on businesses since the social unrest of October 2019.
It would become more a matter of prudential policy, not to say the fundamental structure of the financial system. Conclusion The word “digital” has become so ubiquitous that its meaning isn’t always clear. The word seems to get tacked on to just about anything, no matter how tenuous its connection with computers, simply in order to convey an appealing sense of the modern. A brief search – on the internet, appropriately enough – reveals advertisements for a course in “digital humanities”, opportunities in “digital agriculture” and even something called “digital parenting”, whatever that is. (If it means having to ask your 11-year-old son what’s gone wrong with the computer then I would certainly qualify as a “digital parent”). Whether or not “digital currency” is the right way to describe something like bitcoin, or its central bank counterpart, is also unclear. A better term for the underlying technology, the distributed ledger, might be “decentralised virtual clearinghouse and asset register”. But there’s no denying the technology is novel. Prospectively, it offers an entirely new way of exchanging and holding assets, including money. It’s an irony, therefore, that some of the economic questions it raises have actually been around for a long time, for as long as economics itself. Some admirers of bitcoin see it as a means of bypassing central banks altogether. They are in some ways the descendants of the supporters of “free banking” in the 19th century.

But that’s generally the sort of thing that has to happen: almost always, these currency substitutions occur only once the existing currency has become deeply compromised3. Even then, the thing people naturally reach for is an existing, trusted currency – often the US dollar – rather than some entirely new unit of account. So if it’s neither the “digital” nor the “currency” aspect of bitcoin that matters, what is it that has sparked so much interest? Well perhaps a better name for what we’re talking about, albeit more of a mouthful, is a “decentralised virtual clearinghouse and asset register”. As the Quarterly Bulletin articles explain, the key innovation in bitcoin is its settlement mechanism. Instead of relying on an independent third party to process and record transactions, holders of bitcoin use a decentralised computer system called the “distributed ledger”. The distributed ledger works by encouraging users to verify for themselves, and others, blocks of transactions made over time. As everyone in the system has the right to do this, and everyone can see the results, there is no need for a trusted, centralised clearer. In principle, this technology could be applied to many things, not just the exchange and registering of financial assets. A recent official report in the UK suggested that distributed ledgers might eventually be used for a wide variety of government services, including the collection of taxes, the delivery of benefits – potentially including new “smart” transfers that could target particular groups – the keeping of business registers and other things besides4.