samchain/econo-pairs-v1 huggingface dataset:
These purchases were funded primarily by increasing the stock of reserve balances in the banking system, which compelled changes in the operating framework the Fed uses to achieve interest rate control.4 With an abundant supply of reserve balances, variations in their supply— the mechanism through which the Fed implemented monetary policy before the crisis—would no longer cause meaningful changes in federal funds rates or other money market rates. Implementation of monetary policy therefore required a new operational approach. The Fed’s current policy implementation framework uses a system of rates that it directly administers to influence the level of short-term interest rates, without needing to actively adjust the supply of reserves. Specifically, the Fed uses the rate of interest paid on excess reserves (IOER) held by depository institutions as its primary tool for keeping the federal funds rate in its target range. It supplements this tool by offering overnight reverse repos (ON RRPs) at a specified offering rate to a broad set of counterparties, including eligible money market funds, government-sponsored enterprises, primary dealers, and banks.5 Together, IOER and ON RRPs set a floor on rates, beneath which bank and nonbank financial institutions with access to these facilities should be unwilling to lend funds.6 This framework has been working very well. Since December 16, 2015, when the FOMC began the process of normalizing the stance of monetary policy, it has raised its federal funds target range four times to a current range of 1 to 1¼ percent.

See the Federal Reserve Bank of New York’s report and accompanying data file, “Projections for the SOMA Portfolio and Net Income (July 2017).” 15 These liabilities include Federal Reserve notes (U.S. dollar paper currency), the U.S. Treasury’s General  Account, deposits held by designated financial market utilities and government-sponsored enterprises, and reverse repos conducted with foreign and international account holders. On average, these line items summed to over $ billion in 2017, on top of more than $ trillion in Federal Reserve notes. Fed liabilities are discussed more thoroughly in Lorie Logan, “Implementing Monetary Policy: Perspective from the Open Market Trading Desk,” remarks before the Money Marketeers of New York University, New York City, May 18, 2017. 16 It is worth noting that the size and structure of Fed’s securities portfolio and the role the portfolio played have  undergone substantial shifts at various times over the course of the Fed’s history, reflecting changes in policy implementation imperatives. See Meryam Bukhari et al, “The SOMA Portfolio through Time,” Federal Reserve Bank of New York Liberty Street Economics (blog), August 12, 2013. 17 Throughout this discussion, I focus on forward guidance and use of the central bank’s balance sheet (through  large-scale purchases of additional assets and reinvestment policies, but not funding for lending programs) as possible tools. U.S. policymakers have shown little appetite to pursue negative nominal interest rates, although that is another unconventional tool used by several central banks in recent years.
As I see it, a few questions about this program remain and are worth addressing. The first question is why do this at all. After all, the Fed has had a large balance sheet for many years now. In my view, the balance sheet expansion was undertaken in response to an extraordinary set of circumstances—a deep recession, short-term interest rates at the zero lower bound, and the economy far away from our dual mandate objectives. Now that these circumstances no longer hold, it seems appropriate to begin to reduce the size of the Fed’s balance sheet. In thinking about the decision to reduce the size of the Fed’s balance sheet, I see two important, opposing factors. One is that a large balance sheet could conceivably make further asset purchases less attractive. This factor suggests that we should use the opportunity to shrink the balance sheet during good economic times so that this tool will be fully available to us in the 4/6  BIS central bankers' speeches  future if necessary. However, on the other side, reducing the size of the balance sheet is another form of monetary tightening, one with which we have little experience. This suggests we should proceed with caution. The FOMC has judged that a gradual, predictable approach to normalization is the best way to appropriately balance these two factors. Another question is how long the normalization process will take.

This judgment is supported by the fact that financial conditions have eased, rather than tightened, even as the Fed has raised its short-term interest rate target range by 75 basis points since last December. For example, equity prices have risen, credit spreads have narrowed modestly, longer-term interest rates have declined, and the dollar has weakened. On balance, these movements have been large relative to the upward drift in short-term interest rates. The easing in financial conditions is important because monetary policy does not directly influence the trajectory of economic growth and inflation. Instead, as I have noted in previous remarks, shortterm interest rate changes are an important factor that affects broad financial market conditions.2 Financial conditions, in turn, influence the demand for goods and services by households and businesses. But, if financial conditions ease even as we are removing monetary policy accommodation, this may have implications for further policy adjustments. All else equal, an easing of financial conditions may warrant a somewhat steeper policy rate path. Conversely, if financial conditions were to tighten unduly, then this might necessitate a shallower rate path to temper that tightening. To be clear, this does not mean that the Fed should mechanically target a particular set of financial conditions. That is because the set of financial conditions appropriate to achieving the Fed’s statutory objectives of maximum employment and price stability will evolve over time as the economic outlook changes. Financial conditions are just a means to an end—the achievement of the Fed’s employment and inflation objectives.
The position of consumers should be strengthened by making it easier for them to obtain information on the financial services they wish to use. They may also need better support from consumer complaints boards in the EU member states, to fight for their rights, where needed. General principles for regulation In this list of measures I would personally like to draw attention to the principle that the regulations necessary for the financial sector should be more general in nature and be based on aspects such as transparency and openness in access to different markets. This creates the right conditions for active competition and for market forces to efficiently adapt to new trends in the supply of and demand for financial services. More general principles for prudential regulation also improves the scope for higher efficiency in the supervision of financial institutions - for the institutions which are obliged today to report to many different authorities, as well as for the authorities themselves who can follow the same principles in all countries. Within the framework of clear rules that promote competition, there should be a general minimum protection for smaller consumers so that they do not risk being victims in the event of financial failures, e.g. in the form of a deposit guarantee for normal bank savings, and codes of conduct for operators on the financial markets to avoid abuse in the form of insider trading, etc.

Lastly and perhaps of most value to SMEs, is the insights that SMEs would gain from a better understanding of their financial deficiencies which lead to rejections of financing applications by financial institutions. This can be deduced from the analysis provided through the Bureau ratings and reports. The credit reports would also serve as a convenient tool for SMEs to carry out a self-evaluation to identify areas that need improvement and initiate adequate remedial actions to increase their competitiveness. SMEs are thereby empowered to improve their own profile, with correspondingly enhanced prospects for the SME sector as a whole. As I mentioned earlier, it is also encouraging to see a considerable turnout by financial institutions at this seminar. This underscores the sustained and growing attention by financial institutions in the SME sector that is critical to provide the enabling environment for the SME sector to thrive. Bank Negara has seen a paradigm change in the way in which financial institutions approach the business of SME financing. Banks have, and continue to invest significantly, in supporting SME financing niches, and the organisational changes that we have seen have been pervasive in many banks. These banks have acquired tremendous insights on effective strategies for successful interfaces with SME customers. In some banks, completely new business cultures for their SME segments have evolved as a result which bodes well for the SME industry.
Rather, there is a market out there where low wages are not the most important form of competitive advantage. We have seen that in the ‘Best of the Black Country Awards’, where last year’s winners were drawn from the manufacturing, services and construction sectors, and where the winners included both new and established companies. Moreover, the Black Country tradition of numerous small firms operating cheek by jowl is exactly the model so successful in Silicon Valley and Bangalore, in science parks and film studios, and in financial centres around the world. Of course, some of the old ways have gone, and many manufacturing companies have perished. Recent years have not been easy for the Black Country, especially as profit margins have been squeezed by greater competition from overseas. But there are – as you yourselves demonstrate – many examples of the regeneration of the Black Country, be they new businesses or older ones re-focussing their activities. And the changes underway here are not restricted to the purely economic. The Black Country has seen successes in education, culture and the media. In education, the University of Wolverhampton – impossible to imagine that there would be one when I was a boy – now has over 23,000 students. The University has put its motto – ‘Innovation and opportunity’ – into practice, through its partnerships with the Wolverhampton Science Park and the TelfordWolverhampton Technology Corridor. In culture, the New Art Gallery in Walsall opened in its internationally acclaimed building in 1999.

And in the Express & Star, you have the most successful regional paper in the country. Sport, too, plays an important role in the life of the Black Country. Next summer twelve schools in the Wolverhampton and Walsall areas will be participating in Chance to Shine – a new campaign to regenerate cricket in state schools, and of which I am proud to be the President. Given that in business the need to work in teams is of the essence, it is sad that competitive team sport in our schools has declined. The aim of Chance to Shine is to give young people from all our communities, boys and girls, a chance to experience – before the world of work – what it is like to be in a team, and  BIS Review 112/2006  1  to learn how to win and how to lose. Last summer Chance to Shine enabled almost 50,000 children to play competitive cricket for the first time. Young people need role models and sport is perhaps the most important source of them. Of the many Black Country sports men and women who have been role models down the years, there is one whom I would like to single out tonight – Vikram Solanki. Born in Rajasthan, Vikram moved to Wolverhampton as a small boy, and became the finest and most exciting batsman to emerge from the area for a long while. Now captain of Worcestershire, one could not think of a better role model to bring communities closer together.
This spurred a surge in household borrowing and private consumption funded by credit. For an extended period the Central Bank’s policy rate hikes primarily impacted the exchange rate and had a more subdued effect on other domestic interest rates, partly because of the glacier bond issues. Fierce competition in the mortgage market between the banks and HFF also undoubtedly delayed the force of the impact that the policy rate increases should have had on mortgage lending rates, including those of the HFF. It should be added that changes in economic aggregates are more difficult to measure in the national accounts during rapid growth episodes, as shown by sizeable revisions to leading preliminary estimates. When the Central Bank raised its policy rate in 2004 and 2005 to counter mounting inflationary pressures, it did so on the basis of available data on macroeconomic conditions that later turned out to give a misleading picture of real developments. Revised statistics published last year showed that the economy expanded by much more in 2004 and 2005 than could be read from data at hand when the Central Bank hiked its policy rate during those two years. When the real outcome was known, it was obvious that the Central Bank should have raised its policy rate by more and faster than it did at the time. Monetary policy faces the challenge that the best available data are always imperfect, but especially so during periods of rapid change.

News conference  Zurich, 17 December 2020 Thomas Jordan  Introductory remarks by Thomas Jordan Ladies and gentlemen It is my pleasure to welcome you to the Swiss National Bank’s news conference. Owing to the coronavirus pandemic, we can unfortunately only meet virtually today. The pandemic is placing a very heavy burden on people across the world, and Switzerland is no different. Our sympathies go in particular to those who have fallen ill themselves or who have lost relatives and friends. In my remarks, I will begin by explaining our monetary policy decision and our assessment of the economic situation. I will then discuss the topic of climate change and the SNB. Fritz Zurbrügg will report on developments in the area of financial stability and the impact of the pandemic on the demand for banknotes. Andréa Maechler will then comment on the situation on the financial markets and will look at the upcoming replacement of the CHF Libor with SARON. We will – as ever – be pleased to take your questions afterwards. Monetary policy decision  The coronavirus pandemic is continuing to have a strong adverse effect on the economy. Against this difficult backdrop, we are maintaining our expansionary monetary policy with a view to stabilising economic activity and price developments. We are keeping the SNB policy rate and interest on sight deposits at the SNB at −0.75%. In light of the highly valued Swiss franc, we remain willing to intervene more strongly in the foreign exchange market.
As a result, companies that can bypass the banks to access capital markets directly are doing so. Indeed, in the first four months of this year, more finance was raised in debt and equity markets than is normally the case in an entire year. Most companies, however, especially smaller and medium-sized enterprises, rely heavily on bank finance. And with current market sentiment it may take further additions to equity capital before the banking system will be able to supply credit at a price and on a scale to finance a sustained recovery. That is likely to take time. It is too soon to reverse the extraordinary policy stimulus that has been injected into the UK economy through monetary policy, the provision of liquidity support to banks, guarantees of bank funding, and fiscal policy. Nevertheless, it is not too early to prepare such “exit strategies” and to explain how they would work. The challenge facing the Monetary Policy Committee is straightforward in principle but difficult in practice. As activity returns to more normal levels, the outlook for inflation will pick up. And it is the outlook for inflation that will guide decisions on the pace and timing of a withdrawal of monetary stimulus. Reaching judgements on the outlook for inflation is never easy, and assessing their implications for policy will always be a matter of balancing risks. In contrast, the choice of instruments is simple.

For a generation or more, businesses and families up and down the country were told, not least by the City, that the disciplines of the market economy were essential, even if painful in the short run, for greater prosperity in the longer term. That belief in the merits of a market economy was embraced and for many years was not misplaced. But out of the blue – in this case the financial sector – came a crisis that did not stem from weaknesses in the real economy. It has wreaked havoc on those same businesses and families. Unemployment, as we saw in today’s figures, is rising sharply. And yet it is the banking system that has received financial support on an almost unimaginable scale. We who work in the financial sector have much to do to regain the trust of those who work outside it. “My word is my bond” are old words, but they were important. “My word is my CDO-squared” will never catch on. There is no support in this country, and no case, for excessively bureaucratic regulation. But change to the structure, regulation and indeed culture of our banking system is necessary. Blaming individuals is no substitute for acknowledging the failure of a system, of a certain type of banking. We have a real opportunity now to put that right, and regain the trust that has been lost.
Much of the work just mentioned was naturally initiated through the ESRB’s regular discussions on risks and vulnerabilities in the financial system. Here, the ESRB benefits immensely from its broad composition of members, as these tasks must be underpinned by a truly holistic assessment of national, sectoral and overarching aspects, including how all the individual components interact. The ECB’s support on the analytical and the statistical side is, of course, particularly important here, but also the inputs from national authorities and other bodies are essential. We have come a long way in terms of issues such as access to and comparability of data, for instance as regards national banking systems, which is a benefit not only within the ESRB membership. And products like the ESRB Risk Dashboard makes a broad set of risk indicators easily accessible for the Members as well as the general public. Furthermore, the risk discussions often generate further assessments that are eventually communicated in one form or the other, such as the reports and recommendations I just mentioned. A main strength in the ESRB’s risk assessments is, in my view, that they capture both a top-down perspective on risks as well as national assessments where the members make self-assessments of the risks at hand and what issues they expect to tackle down the road. These assessments are discussed together with all the other inputs to the risk discussions. Moving forward, one area where I hope the ESRB will make further progress is in developing the processes for making country assessments.

As some of you here have experienced in person, the General Board usually has over 70 members seated around the table, most of them central bank governors or heads of national supervisory authorities. Such a crowd around a meeting table could have been a practical nightmare and an impediment to efficient decision-making. But so far it actually works. We have had candid and open discussions in this composition and we have been fully capable of taking decisions. As I touched upon earlier, we may not always unanimously agree on everything, not even after many iterations between the parties involved and at different levels. Such processes may indeed require a bit of patience, especially when a new process is being established. But in the end the arguments from all sides have been heard and when we need to make decisions in the General Board, ultimately we simply vote. Legally, the ESRB is an independent EU body tasked with macroprudential oversight of the EU financial system and the prevention and mitigation of systemic risk. It is chaired by the President of the ECB. The ESRB has no binding powers but has “soft tools”. To fulfill its mandate, the ESRB identifies, monitors and assesses potential systemic risks and, where appropriate, issues so called warnings, or recommendations to mitigate such risks according to the principle “comply or explain”. This principle simply says that either you do as recommended or you explain why you have chosen not to.
This may well be the true answer or reality, but it is rather disappointing if not frustrating that the wide gap between demand and supply has continued to exist. 3. So the natural question for us would be how we can close that gap and bring about a winwin outcome for project proponents and operators on the one hand and financiers or investors on the other. And in this connection, I should say that Hong Kong is uniquely well positioned to play a pivotal role in facilitating and catalysing investment flows to infrastructure projects in the region. We have well-developed capital markets and a deep pool of professional talents, in addition to Hong Kong being a leading centre in arbitration and dispute resolution, all of which are essential building blocks in support of infrastructure investments and their financing. It was against this background that the HKMA set up the Infrastructure Financing Facilitation Office (IFFO) in July 2016. IFFO has the following mission: (a) provide a platform for the key stakeholders to get to know each other and share experiences; (b) enhance the capacity of the investing and recipient countries in infrastructure financing; and (c) facilitate infrastructure investment and financing flows. 4. IFFO now has 90 stakeholders from Hong Kong, Mainland China and overseas joining as Partners. They include project developers or operators, commercial and investment banks, multilateral development financial institutions, asset owners and managers and professional service firms. In the last two years, IFFO has accomplished a lot.

As long as inflation expectations are unaffected, there is no reason to suppose that the effects on inflation will be permanent. Transitory effects account for inflation target deviations An explicit inflation target has the advantage of enabling us to evaluate how monetary policy is conducted. Consequently the Riksbank cannot implement an asymmetric approach to the inflation target without this being detected. Two curves are presented in the diagram below. One represents CPI inflation and the other is one of the various indicators of underlying inflation, in this case the CPI excluding transitory effects from house mortgage interest costs, changes in indirect taxes and subsidies, and prices of imported goods.1  Actual and underlying inflation 1995 – 1997 12-month change figures, per cent 4  3 CPI 2 "Underlying" inflation 1  0 95  96  97  98  Source: Statistics Sweden and the Riksbank. Note. Underlying inflation is represented here by one of the indicators (UNDINH) used by the Riksbank; it shows the CPI excl. changes in indirect taxes and subsidies, house mortgage interest costs and prices of goods and services that are mainly imported. 1The use of this indicator in the present context does not signify that it is particularly significant or the best approximation of underlying inflation in every case; instead, it happens to be the indicator where all the excluded items had a marked influence on price movements in the period 1995–97.