samchain/econo-pairs-v1 huggingface dataset:
However, the Riksbank can stimulate the economy further in other ways without needing to cut the repo rate to zero. The most important measure concerns ensuring that the real interest rate, that is, the repo rate adjusted for inflation expectations, is sufficiently low. This can be done by influencing inflation expectations, which is made easier as we have a numerical inflation target and we publish forecasts for both the inflation rate and the repo rate. We can, for instance, announce that we are going to hold a low repo rate for a longer period than we assumed at the monetary policy meeting in April and show how the inflation path will then approach 2 per cent more quickly than otherwise. This would raise inflation expectations. A further possibility would be for the Riksbank to contribute to pushing down the rate on government bonds, housing bonds or commercial paper by purchases in these markets. There may also arise a portfolio balance effect if other market participants’ demand for corporate bonds, for instance, were to rise as a result of the Riksbank's purchase of government bonds. However, there is reason to await a more detailed analysis of the need for, and possibilities with, these measures. There are also a number of legal issues surrounding this type of measure that must be taken into account before such measures are implemented. At the most recent monetary policy meeting I did not consider that it was yet time to do anything other than cut the repo rate.

Jean-Pierre Roth: Prospects for the Swiss franc in the heart of the euro area Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Associazione Carlo Cattaneo, Lugano, 9 March 2005. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  The launch of the euro in January 1999 fundamentally transformed the international monetary order. Switzerland, a small country that strongly depends on exports and capital transactions, suddenly found itself surrounded by a market with almost 300 million people sharing a single currency. What were the monetary consequences of this development, and what are the prospects for the Swiss franc, which is traditionally considered a "success product"? The role of the Swiss franc in commercial and financial transactions has certainly diminished. Although the euro is only rarely used as a means of payment in the Swiss market, billing within the euro area is increasingly taking place in the single currency only – a fact to which Swiss companies have to adjust. In the financial markets, the euro now acts as a counterweight to the dollar. The Swiss franc has thus lost some of its significance as a safe-haven currency and has performed more in line with its fundamentals. The introduction of the euro has, however, not affected our monetary autonomy or the Swiss interest rate advantage. The Swiss National Bank has been able to respond with flexibility and determination to the recent economic slowdown.
A more automatic system of activation could solve many of these problems, while at the same time introducing an additional automatic stabiliser for the lending and/or the business cycle. However, given that we do not have much experience to date with the working of this tool, the calibration of an explicit policy rule would be premature and the principle of “guided discretion” seems a second-best option. Assesing how to use the different macroprudential tools Let me now turn to the second issue I wanted to tackle. Systemic risk, unlike inflation or the public deficit, is multidimensional and this is why having different macroprudential tools at the disposal of the macroprudential authority is crucial. However, it is not always obvious how to discriminate among the different macroprudential tools, in particular given the potential interactions between them. A first example is the decision to activate the CCyB as opposed to activating a sectoral CCyB. It is perfectly feasible that some credit segments show exhuberant behaviour in the economy without any evidence of the credit cycle being in an expansionary phase. The activation of the countercyclical capital buffer to address a situation of this type does not seem advisable. If this particular activity is sufficiently profitable (at least in the short term) and that is why it is gaining weight in the overall credit portfolio, the increase in the aggregate cost of financing derived from the activation of the CCyB could be counterproductive.

At present, however, credit underwriting standards are not contemplated in European legislation, although some authorities, including the Banco de España, are empowered to set them. I do believe that consideration should be given to including them in future revisions of the European regulation. In my view, this would offer at least three advantages. First, it would allow harmonisation of the different dimensions of the credit standards. Second, it would enable the different jurisdictions to request reciprocity of the measures adopted, which would duly make them more effective. Last but not least, it would allow the European Central Bank to top up the measures, reducing the potential inaction bias of national authorities. On the use of borrower based tools vs capital instruments, it seems reasonable, in my view, that, if credit is showing high and sustained growth over time but without credit standards being relaxed, the ideal would be to increase entities’ resilience using capital instruments. But, even if credit were to show moderate growth, if the conditions for granting these loans are being relaxed (thus increasing the volume of credit at risk of default), it would probably be more efficient to use the borrower-based tools to guarantee sound credit underwriting standards. In any case, our experience shows that, especially at the end of expansionary credit cycles, high increases in the volume of credit tend to go hand-in-hand with a substantial easing of the conditions for granting the loans. Accordingly, both types of tools should perhaps be used simultaneously. With what gradation?
I will conclude my speech by addressing the thorny question of the choice of a monetary policy regime. After all, is it worthwhile for a country in the vicinity of a large monetary zone the euro zone or the dollar zone - to try to conduct an autonomous monetary policy? Switzerland’s tradition of financial stability Many people outside Switzerland think that financial stability should be added to the list of Swiss specialties like chocolate, watches and banks. Indeed, the fact that Switzerland is the only country that has been able to keep unchanged its set of coins in circulation since the franc was created in 1850 speaks for itself. Even more spectacular is the position of the Swiss franc, which has retained its international purchasing power over time. The Swiss franc has been devalued only once, in 1936, during the Great Depression, following the devaluation of all major currencies. Financial stability has contributed to shape Switzerland’s business environment and, to a certain extent, explains some of the typical features of the Swiss economy. For example, with about 32% of GDP, the Swiss saving rate is among the highest in the world. Some of these savings are channelled abroad via our banking system, and their proceeds guarantee us a very strong balance of payments position. As a matter of fact, Switzerland’s current account is almost endemically positive.

On the contrary, most empirical studies, as you know, show that there is a negative relationship between inflation and output in the long run. Inflation is a tax on financial assets; it distorts investment decisions and increases overall uncertainty. In Switzerland, monetary stability has become part of the country’s culture and has been the guideline of monetary policy for more than 30 years now. After the collapse of the Bretton Woods system in 1973, the Swiss National Bank made it clear that the overriding objective of its policy was to preserve long-term price stability. Convinced that inflation was a monetary phenomenon, it opted for a strategy aiming at a steady growth of the money stock in line with the potential growth rate of the economy. At the time, the Swiss National bank was actually one of the first central banks to adopt a rule-based strategy. Between 1975 and 1999, we implemented a “pragmatic” policy, with monetary targets serving as benchmark and communication devices. Here I would like to emphasize the term “pragmatic”, because it was never the goal of our policy to fulfil monetary targets mechanically. As a small economy with an international currency, we had to face severe exchange rate shocks or money demand instability. In such circumstances, pre-announced monetary targets could not be met. In these particular and difficult periods, however, we never gave up our objective of preserving price stability in the long term. In the late 1990s, day-to-day implementation of monetary targeting turned increasingly difficult because of financial innovations.
In the past decades we have made significant advances in our economic policy framework. These advances allow us to feel at peace in the face of the present scenario, being confident that we have the necessary tools to cushion the effects of a scenario of those characteristics. On the other hand, the evolution of the global economy and the causes and consequences of the Great Recession of 2009 have left important lessons for economic policy makers. It is our responsibility now to incorporate these lessons into the design and management of our macroeconomic policy framework. A first lesson is that price stability is a necessary but not sufficient condition for financial stability. In an adverse, highly volatile external environment like we have seen in recent years, our inflation targeting regime with a flexible exchange rate has performed quite well. BIS central bankers’ speeches  5  During the global crisis, the Chilean financial system displayed great strength. However, the experience of other countries has confirmed the importance of paying special attention to financial developments and the possible creation of vulnerabilities on that front. To that end, it is critical to develop a systemic view of financial risks, aside from the soundness of individual financial institutions. The Financial Stability Report we prepare at the Bank seeks to deliver said overall view. The creation of the Financial Stability Board provides a forum to which we have committed our active participation.

(4) Corporate bonds (except Codelco), securitized bonds with non-banking underlying origin and marketable securities. Source: Central Bank of Chile based on data from Achef, SBIF, and SVS. 12  BIS central bankers’ speeches  Figure 11 Households' banking risk indicators Total borrowing (1) (percent)  Past-due-portfolio indices (2) (percentage of loans)  120  120  1,6  1,6  100  100  1,4  1,4  80  80  1,2  1,2  60  60  1,0  1,0  40  40  0,8  0,8  0,6  0,6  20  20  0,4  0,4 00  06 07 08 09 10 11 Over wage mass Over disposable income (RDI)  03  06  Mortgage  09 Consumer  (1) Preliminary data for third-quarter 2011 disposable income. (2) Dotted lines show effective index average. Source: Central Bank of Chile based on SBIF data. Figure 12 Cost of short-term external financing of resident banks (1) (basis points; months) 250  15  200  12  150  9  100  6  50  3  0  0  Jan.08 Oct.08 Spread Spread  Jul.09  Apr.10  Jan.11 Oct.11 Maturity (2)  (1) Non-related bank loans, at variable rate. Gray area shows interval between percentiles 5 and 95 of each month's sample. (2) Moving quarterly average. Source: Central Bank of Chile. BIS central bankers’ speeches  13
Since the invention of the credit card in the 1950s, almost all payments by households and businesses in advanced economies have been made through one of four routes: cash, cheque, card or bank-to-bank. Most new innovation to date hasn’t changed that. Even when we tap our phone or watch on an ipad to pay – we’re still generally paying by either card or bank-to-bank transfer. But fintechs, and in some cases big technology firms, are now proposing to change this by using cryptoassets known as ‘stablecoins’ for transactions currently processed by retail or wholesale payments systems. The basic idea of a stablecoin is not dissimilar from a pegged currency. Early forms of cryptoassets such as Bitcoin have so far proved too volatile for widespread use in payments. ‘Stablecoins’ aim to address this by pegging themselves to a fiat currency or basket of fiat currencies. Most propose to maintain reserves or backing assets to defend this peg. While some stablecoins proposals are designed as investment products, most seek stability in pursuit of becoming a new way to pay for goods and services or make peer-to-peer transactions. Many propose to integrate into popular social media or online technology platforms. With this backdrop and an estimated 3 billion social media users worldwide, it’s not hard to imagine that some of these proposals could quickly reach significant scale. 9  including open banking reforms in the EU and the introduction of a payments competition regulator in the UK.

International standards explicitly call on payment systems to settle in central bank money when possible and where that’s not possible, to settle in commercial bank money and to strictly limit any credit and liquidity risk of the instrument being transferred and settled. However stablecoin arrangements propose to transfer new instruments that they will create themselves – and to settle most of their transactions across their own books. With the right regulation, stablecoins may be safe for use in systemic payments chains. But the protections these stablecoins would offer are currently big question marks. Some major stablecoin proposals offer no legal claim for holders. None. This is significantly different from how we currently pay: When my parents pay for their groceries using their debit card, the shop ultimately receives an electronic deposit in the shop’s bank account - a promise from the shop’s bank to redeem the amount deposited in local currency on demand. When – pre-COVID – my parents paid in cash, the shop got banknotes with a central bank promise to “pay the bearer.” Were they to pay in the future with some proposed stablecoins, the shop would just get a bunch of stablecoins. If the shop can’t sell the stablecoin to get local currency or other goods in an amount equivalent to the price of the grocery order, tough luck. Additionally many stablecoins propose backing in instruments that may have market and liquidity risk. While these risks might be acceptable for speculative investment purposes, payments are different.
Against this background, the fact that inflation in the euro area remained persistently below the ECB’s target level during the period that ran between the global financial crisis and 2020 made clear that a comprehensive review of our monetary policy strategy (which was last revised in 2003) was appropriate. 2  To understand why inflation in the euro area remained below target for more than a decade, despite the fact that the ECB maintained a rather accommodative monetary policy stance, one must necessarily take into account the secular decline in the natural interest rate and the limitations that such a decline imposes, through the interest rate lower bound, on the conduct of monetary policy. The equilibrium or natural interest rate (r*) is defined as the real interest rate that simultaneously maintains output at its potential level and inflation stable at its target level. This rate, which cannot be observed directly, can only be estimated, with some degree of uncertainty, using econometric techniques. According to available estimates, the natural interest rate appears to have progressively declined in recent decades in advanced economies and, in the case of the euro area, estimates even place it at negative levels.1 This secular drop in r* is attributed, among other factors, to the decline in trend productivity growth, certain demographic developments and widening inequality. All of these are factors that will have changed the balance between the supply of savings and the demand for investment. And, why is this important for monetary policy? Well, the answer is clear.

Finally, an important dimension of flexibility in our monetary policy that we should not overlook is the focus on avoiding financial fragmentation in the euro area, in particular when the impact of the pandemic has been and remains very heterogeneous across countries and sectors. In December last year, we decided to retain this flexibility in the PEPP reinvestment phase, which was extended until the end of 2024. We should now use this  13  flexibility proactively and monitor whether it is sufficient to ensure our monetary policy is appropriately transmitted across the euro area. 4 Conclusions Let me conclude. I am convinced that the ECB’s new monetary policy strategy, which I have briefly sketched in this talk, constitutes a solid basis for the conduct of our monetary policy. This is so, not just looking ahead to the coming decades, but also for coping with the current high-inflation episode. In this respect, I believe that, in a highly uncertain environment, a careful assessment of the implications that current developments have on medium-term inflation expectations is key, and that the optionality and flexibility that we retain should be exercised gradually and predictably. The direction in which we need to head is clear, but we should not draw premature conclusions as to the time frame. The process will be both gradual and data-dependent. Thank you for your attention. 14  References Ajevskis, V. (2018), "The Natural Rate of Interest: Information Derived from a Shadow Rate Model," Working Papers 2018/02, Latvijas Banka.
On the issue of trust, recent episodes of large-scale movement of representatives have cast the industry in an unfavourable light. Such mass recruitment of representatives by one firm gives rise to heightened market conduct risks, with respect to aggressive sales tactics and improper switching. MAS has worked closely with LIA on measures to address these risks and we will be issuing a public consultation soon to promote responsible recruitment practices in the financial advisory industry. Meanwhile, LIA members have agreed that they, as well as their Financial Advisory (FA) subsidiaries will go ahead to adopt a number of these measures. This is a positive step. Briefly, these measures include: (a) Capping a representative’s sales targets and sign-on incentives in the first year after the representative joins the new FA firm. This reduces the pressure on representatives to engage in 4/5  BIS central bankers' speeches  aggressive sales tactics to meet inflated sales targets; (b) Spreading sign-on incentives over a minimum period of 6 years, to create longer- term alignment between the representative and his new FA firm. This will foster better quality aftersales services to customers; (c) Reducing the entitlement to sign-on incentives if the persistency of the policies serviced by the representative at his previous firm falls below industry norms, to deter improper switching; and (d) Requiring the FA firm to undertake enhanced monitoring of its representative’s sales transactions to verify that the sales and advisory process has been properly conducted, which will include customer call-backs conducted by an independent external party.

The second is that we want competition and innovation in financial services – it can increase efficiency, functionality and resilience. Setting out the regulatory approach allows those who want to innovate by providing better products and services to understand the risks that need to be managed as they develop those products. It also ensures that innovation is not simply competing by taking higher risks. This approach has been a key element in the evolution and adoption of innovation in payments in the UK in recent years. Against the background of increasing digitalisation of everyday life, the combination of technological advance and appropriate regulatory frameworks[1] - both to foster competition and to manage risks – has transformed the way we pay. It has also stimulated the growth of the UK Fintech sector which is now the second largest in the world[2]. Contactless’ card payments are now used by close to 90% of people and make up almost a third of all payments in the UK, Nearly a third of UK adults use mobile payment apps such as ApplePay or GooglePay. Seven million consumers and three-quarters of a million SMEs are using Open Banking products. Several digital only challenger banks operate in the UK providing competition and innovation to the UK banking sector. These changes have not only transformed the way people pay but also the type of money they pay with. Two types of money circulate in the UK today.
This is why I have spoken of the danger of fragmentation in payments akin to the Middle Age, with so-called “cryptocurrencies” having limited constituencies and acceptance. 3. But do we agree about the solutions? In principle yes: in order to avoid repeating past mistakes, we would need a collective momentum towards a stable and market oriented multipolar  Page 4 sur 7 International Financial System. A more multipolar IFS would help deal with the modern version of the Triffin dilemma: the supply of USD global safe assets is limited by the fiscal capacity of the US, while demand for them is bound to increase. It could also offer more monetary policy independence to Emerging Markets, by reducing the influence of US financial and real cycles spillovers. That said, the political conditions for such a major shift are not very favourable, to say the least: imagining the US, China and other major emerging economies converging today on a new IFS, while they didn’t for decades, could appear as utopian. Let me be more positive: we need to keep this concept of a more balanced multipolar system on the horizon, at least as a “creative frontier”. And we Europeans need to be active and committed on what depends on us. To move towards a more resilient global system, the euro should play a more important international role. It is a currency in a jurisdiction with solid democratic and stable institutions, including independent central banks and the rule of law.

In the area of equity-release mortgages (ERMs) we have consulted on measures to ensure that investments1 in that asset class, which is growing by more than 10% a year, are appropriately and consistently reflected in the regulatory balance sheet. We want to do this both for prudential reasons and to facilitate competition by establishing a level playing field. Our proposition is a simple one: house price growth above the risk-free rate is a risk to which ERM providers are exposed; it should not therefore be assumed and banked up-front as capital in the form of the Matching Adjustment, even if a reasonable person could expect house prices to increase in that way – instead, that benefit should be earned if and when the house price growth actually materialises. We have received many strong views in response to this suggestion, and are considering them now before reaching a final view. Good cop I will turn now to the other part of our work – areas where, as I see it, there is generally no inherent conflict and we and firms are engaged in a shared endeavour to deal with the challenges we face. You may be relieved to hear that, in my determination to be the Mansion House good cop this year, I will only touch on two examples of this – though each of them is a huge topic. Operational Resilience First, what we call ‘operational resilience’ – the ability of firms to keep going operationally as well as financially.