samchain/econo-pairs-v1 huggingface dataset:
After the crisis began, it took a year before governments in Europe and the United States were persuaded that the problems of their banking sectors resulted not from a shortage of liquidity – that was merely the symptom – but from massively over-leveraged balance sheets. Eventually, in October 2008, banks were recapitalised, albeit, especially on the Continent, inadequately so. But the underlying problems of excessive debt have not gone away. As a result, markets are now posing new questions about the solvency of banks, and indeed of governments themselves. What were the causes of the unsustainable build-up of debt in Europe and elsewhere? They lay in the continuing imbalance between those economies running large current account surpluses and those running large current account deficits. Persistent trade surpluses in some countries and deficits in others did not reflect a flow of capital to countries with profitable investment opportunities, but to countries that borrowed to finance consumption or had lost competitiveness. The result was unsustainably high levels of consumption (whether public or private) in the United States, United Kingdom and a range of other advanced economies, and unsustainably low levels of consumption in China and other economies in Asia, and some advanced economies with persistent trade surpluses, such as Germany and  BIS central bankers’ speeches  1  Japan. The burden of debt will go on rising in the former group of countries until these spending patterns adjust and the latter group will find their loans eventually repaid in depreciated currencies, if at all.

Jean-Pierre Roth: The Swiss economy and financial centre – successes and new challenges Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Handelskammer Schweiz-Österreich und Liechtenstein (Foreign Trade Chamber for Switzerland-Austria and Liechtenstein), Vienna, 25 February 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Mid-2003 saw the start of a remarkable, broad-based economic upswing in Switzerland which is still underway, even if business cycle uncertainty has increased in the recent period. A number of factors indicate that the long-term growth outlook, too, has improved for Switzerland. These factors include the increasing globalisation of our economy and the opening up of the labour market to the EU. The Swiss economy is participating in globalisation through increased direct investment as well as growing foreign trade. At the same time, there is more competition on the domestic goods market, although a fair bit still remains to be done in this area to complement the opening up of the labour market to the EU. Globalisation and market opening present companies and economic policymakers with challenges that become particularly acute when setbacks occur – as in the case of the current international financial market turbulence.
The requirement is primarily prudential in nature. It was among other things aimed at reducing the reliance of domestic credit institutions on foreign short-term capital to finance their domestic lending activities which had risen sharply, but has subsequently diminished markedly. Low inflation and macro-economic stability was only achieved in the early part of this decade. Consequently, it is not at all surprising that we have to maintain interest rates that are significantly higher than among our main trading partners. The required difference is variable over time, depending among other things on the credibility of economic policy, relative cyclical positions and so on. The current differential is the widest since capital movements were liberalised and is of course explained to an important extent by the very different cyclical position of the Icelandic economy from that of most of our trading partners, not the least in Europe. It also entails the cost of maintaining an own currency, i.e. a premium for the availability of the exchange rate as an instrument. 1  BIS Review 117/1999  In this connection, I should also note that since the opening up of the capital account of the balance of payments, long-term interest rates, which used to be very high by any comparison, have been on a downward trend despite repeated increases in short term rates. This is not surprising and reflects a narrowing of long term interest rate differentials between Iceland and other countries towards a much lower level than prevailed before capital movements were liberalised.

Two years ago the fiscal budget turned into surplus. That surplus has risen and in the budget proposal for the year 2000, which was submitted to Parliament at the beginning of this month, the envisaged revenue surplus is equal to 2.2% of GDP. In the view of the Central Bank, it is essential that the targeted budget surplus be realised. It is important for the credibility of the overall policy of the government and because it will have dampening effects on domestic demand and thus reduce the current account deficit. The foundations of the Icelandic economy have strengthened in recent years through effective natural resource management and increased diversification, including the expansion of services exports. Iceland has made great strides in economic management as indicated by the stability and favourable economic developments that have characterised the economy for much of this decade. Instrumental in the changes that have taken place has been the liberalisation, and I might say marketisation, of the economy. In our present situation it is of paramount importance to safeguard the stability of the economy and quickly reduce inflation again. The Central Bank will continue to pursue a monetary policy geared to that end. Credit rating The success in economic management did not escape the attention of the rating agencies. The Republic of Iceland was first assigned a rating by Standard & Poor’s and Moody’s in the late 1980s. The initial long-term rating from both agencies was in the middle of the single A category.
7 [35]  There are many reasons why Swedes are choosing to abandon cash. 14 One example is the rapid emergence of the Swish mobile app. Even if we welcome technological developments and the increased competition on the payment market, there is a risk that developments will move too fast. There are many people who have problems in using digital methods of payment, and when fewer and fewer businesses and restaurants accept cash, some people will experience problems. Cash is no longer easy to use. Many shops and restaurants will no longer accept cash, and it is difficult to deposit and withdraw cash, especially if one is dependent on doing so over the counter and not through an ATM. I, and the Riksbank, have long pointed out that the legal position of cash needs to be strengthened. 15 Some form of activities should be obliged to always accept cash, such as the medical sector and pharmacies. Similarly, it should be possible to deposit both banknotes and coins, and to do so over the counter. There is currently around one million people in Sweden who have limited access to digital technology or who have limited capacity to use it. Many elderly people are dependent on help from a person and therefore have no use for services based on using ATMs. This is a large and growing problem that needs to be resolved at a political level. It is also important for Sweden's crisis preparedness that the use of cash does not fall too low.

If cash is needed as a means of payment in a crisis, it must also be possible to use it in normal circumstances. The Riksbank will continue to work to reinforce the position of cash. E-krona can complement cash without major consequences for financial stability and monetary policy In addition, the Riksbank has also been investigating for a few years now whether it would be possible to offer the general public a safe electronic alternative that could function in largely the same way as cash; an e-krona. This could be a means of ensuring that the general public in Sweden, which has had access to central bank money since the 17th century, can continue to do so even in a digital age. 16 The model we have had, where the Riksbank's cash has co-exited with private means of payment, such as deposits in bank accounts, has functioned well. By introducing an e-krona, we can ensure that the function that cash has historically had as anchor for payments can live on in a new technical form. An e-krona can, like cash, contribute to increased competition and robustness on the market by offering an alternative to private sector payment services. If the Riksbank is present in the market with its own supply of money to the general public, it will also be easier for the Riksbank to ensure that basic payment services are made available to all, including the vulnerable groups I mentioned earlier.
Due to the persistent strains in the money market, the swap lines were increased in March and again in May. Currently the SNB is providing a total of 12 billion US dollars of liquidity to its counterparties through bi-weekly auctions of six billion dollars each. These repo transactions will continue to be renewed until conditions  4  BIS Review 71/2008  improve. For Switzerland, the motivation for participating in this coordinated action is twofold. First, our counterparties obtain easier access to dollar liquidity. Second, money markets in different currencies are highly interrelated. Fewer tensions in the dollar market also mean fewer tensions in the Swiss franc market. The Federal Reserve’s swap line is only the most visible result of the intense cooperation between central banks that has taken place since the outbreak of the crisis. In general, international consultation among central banks has proved very useful in managing the financial market crisis. A further important action taken by central banks was the introduction of facilities that allow banks to swap collateral that is less liquid for securities that are highly liquid, such as government bills. In March, the Federal Reserve introduced a Term Securities Lending Facility (TSLF), which allows to lend up to USD 200 billion of Treasury securities to primary dealers in exchange for a broad range of collateral, including asset-backed securities. In April, the Bank of England introduced its “Special Liquidity Scheme”, a new facility which allows banks to temporarily swap their mortgage-backed and other securities for UK Treasury Bills.

Although they have helped to limit tensions in the money market, the situation is still far from normal. Despite all the liquidity measures that have been taken, term premiums in the money market remain elevated. This provides further evidence of the fact that the lack of confidence in the market cannot easily be removed by central bank action alone. Market participants have to undertake the necessary steps themselves to restore market confidence. 7  In October 2007 (unrelated to the financial market crisis), the SNB expanded the list of eligible collateral by around 50%, including in its list securities from issuers domiciled in the European Union and the European Economic Area denominated in Swiss francs and other major currencies. BIS Review 71/2008  5  5. Lessons and consequences for liquidity management operations  What lessons can we learn from the financial market crisis? There are, of course, many lessons to be learned. However, I would like to concentrate on those that are related to central bank liquidity management operations. 8 Liquidity management vs. changes in the stance of monetary policy The first lesson concerns the distinction between liquidity management and monetary policy. The crisis has made clear to financial markets, but also to central banks, that in order to safeguard financial stability during financial market turbulence, central banks do not depend solely on the monetary policy rate, but have a broad arsenal of liquidity management instruments at their disposal.
These essentially include venues used to exchange digital assets against legal currency, and providers of custody solutions for digital assets. To satisfy anti-laundering obligations, these platforms must be registered. But to address risks relating to security, market integrity and price manipulation, an optional label could be granted at the service provider’s request by the AMF after a more in-depth investigation, in order to provide security for the service offered to users. The regulation of venues used to exchange digital assets for legal currency, in France and elsewhere, is a key issue for obvious reasons, as these platforms are the interface between the virtual and real worlds and hence where risk can spread from the former to the latter. As you are doubtless aware, the authorisation and labelling schemes mentioned in the PACTE Bill are optional. But there is an exception when it comes to anti-money laundering and terrorist financing (AML/TF) mechanisms. European regulators have been firm in their resolve not to compromise in any way on this matter. Accordingly, the Fifth European Anti-Money Laundering Directive makes all participants handling digital assets subject to applicable AML/TF provisions. This is consistent with the system in place since 2014 in France, which states that an exchange of crypto-assets in euro requires a payment services provider authorisation, and, accordingly, compliance with AML/TF rules.

They are no longer confined to cards, as we are seeing with the rise of mobile payments. A broader range of participants: I am thinking here about how the payments market has expanded to include competition from big techs and major retailers, which are following a wide range of strategies in this respect. The flipside of this trend is the increasingly global nature of the market, which is raising sovereignty and independence issues, including the question of control of data with respect to the American and Chinese tech giants. Payment is becoming less prominent: nowadays the actual act of paying is becoming less visible, as it is combined seamlessly within the overall transaction process to minimise the impact on the payer. We are seeing this shift in online payments, for example, which are designed to be increasingly fluid through solutions such as one-click buying. Availability of payment services: payment services are becoming more available, ignoring physical borders and time constraints to satisfy customer demand for instant, continuous and uniform payment services, as economic agents become ever more mobile. 2. The development of crypto-assets naturally forms part of these underlying trends affecting payment instruments, combining the search for anonymity, management of non-intermediated peer-to-peer payments and the use of entirely web-based technologies. But crypto-assets are also different because of their financial, monetary and technological features that I mentioned in my introduction.
But what is different is that the current risks to inflation are unusually large. My central view is that these risks should gradually lessen as the temporary effects pushing up on inflation wane and the economic recovery continues. But it is possible that some of the risks will crystallise and policy will need to react. It is quite likely that in hindsight, once we see how the economy evolved and which risks materialised, that the current stance of policy will be criticised for having been too tight or too  BIS Review 122/2010  7  loose. But we cannot set policy with hindsight. All we can do is set policy in such a way that balances the opposing risks to inflation and be ready to change policy decisively in either direction as this balance of risks alters. I do not know when policy will next change or in what direction. But I can assure you that when making this decision, the objectives of policy will be clear and unchanging: inflation, inflation, inflation. References Benito, A, Neiss, K, Price, S and Rachel, Ł (2010), “The impact of the financial crisis on supply”, Bank of England Quarterly Bulletin, Vol. 50, No. 2, pages 104–114. Bils, M (1989), “Pricing in a customer market”, The Quarterly Journal of Economics, Vol. 104 (4), pages 699–718. Campa, J and Goldberg, L (2006), “Distribution margins, imported inputs, and the sensitivity of the CPI to exchange rates”, NBER Working Paper No. 12121. Chamberlin, E (1933), “The theory of monopolistic competition”, Cambridge, Mass.

And our future prosperity will depend on our maintaining an environment of low and stable inflation. One of the most worrying comments I have heard in recent months came at a lunch of senior businessmen I attended. One of the diners suggested that the UK was returning to its old ways “of depreciating the exchange rate and inflating its way out of trouble.” Soon after, a City circular asked “is the MPC turning a blind eye to inflation?” This is dangerous talk. The evils of inflation are well known. The high and volatile rates of inflation of the 1970s and 80s stunted our economic performance. Companies and households were unable to budget and plan efficiently. Resources were misallocated. Longterm contracts were avoided. The value of hard-earned savings was eroded. This dangerous talk has perhaps been partly fuelled by the behaviour of inflation in recent years. CPI inflation has averaged close to 3% over the past four years, significantly higher than the 2% target and for the most part higher than the MPC anticipated. CPI inflation has been above target for 41 out of the past 50 months. Lest we forget, this is a long, long way from the high and volatile inflation of the 1970s and 80s. Even so, it is perhaps understandable that some may have started to question the commitment or competence of the Monetary Policy Committee. Has the MPC gone soft on inflation? Is this a conspiracy with the Government to deflate away some of its debt?
François Villeroy de Galhau: Support for Fintechs and the digital revolution in payments Speech by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), at the Fintech Forum, Paris, 12 October 2020. * * * Mr Minister, Ladies and Gentlemen, I am very happy to welcome you here to the Banque de France’s premises this morning. I would also like to welcome those joining us remotely. We are all aware of just how important new technologies are in ensuring continuity and stability in this crisis. My dear Cédric, you’d clearly be the first to say so. I would also like to welcome Alain Clot, President of France Fintech, and of course Robert Ophèle, Chairman of the AMF, with which we have organised this Forum. Your presence among us, Mr Minister, is proof of public authorities’ commitment to Fintechs. And that is my first message this morning: the Banque de France and the ACPR are also fully committed to supporting Fintechs. I shall then go on to tell you how we intend to act in the digital payment revolution. **  I. The Banque de France and ACPR’s support for Fintechs Let’s start with a question I consider particularly important, and on which there should be no shred of ambiguity between us: why do the Banque de France and ACPR regard Fintechs as important?

Because they are an essential element for the financial sector: they deliver creativity and they understand new needs rapidly. And they bring to the forefront French scientific expertise and technology: artificial intelligence, cryptography, distributed ledger technology, etc. Regardless of how they are integrated into the financial sector – via cooperation or direct competition with established players – they make the industry more dynamic. This is also true with regard to the entry into financial services of the Bigtechs, which are often less keen on competition. I'm not just saying this to please the Fintechs that are here with us today. It is a deeply-held belief and a commitment, on my part and on that of the entire ACPR. But what, I hear you ask, are you doing concretely to help the Fintechs in their development? Let me start by reminding you that the Banque de France is working with Fintechs on two levels: via its mission of providing services to the economy – to businesses and SMEs – and via its mission of safeguarding financial stability. Our role as a central bank and supervisor, is to reconcile confidence and innovation. If you would allow me to borrow a metaphor from the history of the railroads – which were originally a major innovation in the 19th century, but also one that was not without its risks – our role is to prevent the train from derailing and to make sure the passengers aren’t afraid to get on board.
The evolution of the Eurosystem’s monetary policy operations in response to the crisis featured all these activities. Our risk management framework has evolved accordingly, guided by our stable principles. First, the “gusty winds”: during the early stages of the financial crisis, we increased the amount of liquidity we provided to the banking system without tightening the risk control framework, despite the onset of stress in the system. In this respect, our risk management framework followed a through-the-cycle approach – thereby avoiding further distress to the banking system. It also stood in stark contrast to the more pro-cyclical nature of the commercial banking sector’s risk management approach – and was thus part of the central bank’s duty to lean against such potentially self-reinforcing winds. It was possible to avoid tightening the framework without exposing the Eurosystem to undue risks because the pre-crisis framework had been calibrated in a sufficiently prudent manner. In fact, the framework proved to be robust enough to protect the Eurosystem from losses resulting from counterparties defaulting, such as Lehman Brothers or the Icelandic banks – although the complexity of the collateral in some of these cases led to lengthy liquidation processes. This experience certainly merited a careful review of the collateral rules for complex securities and financial innovations. More broadly, it justified taking steps towards reducing the reliance on external credit ratings, in line with the G20 agenda.

In parallel, it will continue to regularly reassess the need for an adjustment of the CCyB. Page 3/3