samchain/econo-pairs-v1 huggingface dataset:
The story of monetary policy in Britain during the intervening period is told by the Mais Lectures. The first Mais Lecture was delivered by my predecessor, Lord Richardson, in 1978, at a point when monetary policy was emerging as the main tool to deal with inflation. Not before time, you might think, since only two years earlier inflation had reached 27%. In 1981 the Chancellor of the Exchequer, Geoffrey Howe, chose as the title of his Mais Lecture: “The Fight Against Inflation”. As he said then, with inflation still in double figures, "squeezing inflation out from an economy which has become accustomed to higher rates over a period of years cannot be an easy or painless task. … the inflationary mentality must be eradicated. … When we have done that we will find that low inflation or even price stability need not be painful". The conquest of inflation was to prove harder than expected. In the decade that followed Geoffrey Howe’s lecture, inflation averaged over 7% a year. Only since 1992 has inflation fallen to levels that could be described as price stability. In retrospect, two Mais Lectures seem to have been of particular significance: those by Nigel Lawson in 1984 and by Tony Blair, then Leader of the Opposition, ten years ago this month. Despite clear differences of view, what stand out from those two lectures are their similarities. Both emphasised the need for a medium-term framework for monetary and fiscal policy.

These currencies might seem insignificant, but they have already been used as means of payment outside their own platforms. A number of private digital currencies have also appeared. Some have gained ground in terms of turnover and use, while others were introduced for purely fraudulent purposes and have rapidly disappeared. The largest and best-known digital currency is Bitcoin, which was launched in 2009. Bitcoin has been the subject of widespread debate, but still has only a minor role in the payment system. Payment by Bitcoin is costly, and the system’s capacity is limited. Bitcoin prices have been highly volatile. A characteristic of private currencies such as bitcoin is the absence of any central institution backing the currency. But this is also a problem, making it difficult to establish the trust necessary for a widespread adoption of these currencies. Cybercrime New technology and new forms of payment are raising fundamental questions related to the security of the payment system. Cybercrime is evolving rapidly, with cyberattacks becoming increasingly advanced and well-organised. 5/9  BIS central bankers' speeches  Central banks are also targeted. In February last year, an attempt was made to steal USD 950 million from the central bank of Bangladesh. Most of the payments were stopped, but in the course of 48 hours, USD 81 million had found its way to a bank in the Philippines. A few days later, more than USD 60 million had disappeared through Philippine casinos. As far as I know, the money trail stopped there.
13 As noted in the Minutes of the February 2021 MPC meeting. 14 The Bank set out some initial thinking on this in a March 2020 Discussion Paper, and together with six other central banks and the Bank for International Settlements published a report in October 2020 identifying the foundational principles necessary for any publicly available CBDCs to help central banks meet their public policy objectives. 10 11 12  6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6    Central banks including the Bank of England are considering what contribution they can make, consistent with their remits, to encourage an earlier and more orderly transition to a carbon-neutral economy. QE as a monetary policy tool I will say more about QE and climate change as part of the potential “future normal” towards the end of my lecture but for now I want to focus on QE in the context of the here and now. The fact that QE only came into use in the UK in March 2009 means that in practice its history, at least in the UK, is a short one. As Figure 2 illustrates, it has been used essentially five times in twelve years. QE1, 2 and 3 came in response to the financial crisis and the euro area crisis that followed; QE4 followed the Brexit referendum; and QE5, which is still ongoing, formed part of the policy response to the Covid crisis last March.

And the threat posed by climate change means we need to give serious consideration to the resilience of our physical and digital infrastructure. The New York Fed has the appearance of an historic institution, but behind the stone façade 1/2  BIS central bankers' speeches  we’re grappling with these issues in the same way that you are. In our economic research, our supervision of financial institutions, the payments systems we operate, in short – in all that we do. Talent, technology, and innovation challenge us every day. They create incredible opportunity, but they also test us by exposing new vulnerabilities. I know that over the next couple of days there will be lots of valuable insights shared by experts about how to handle the challenges posed by big data, cryptocurrency, and climate change. But first, to kick off the conference, it’s my pleasure to introduce John Dugan, Chair of Citigroup. Citigroup has operations in over 150 countries, with about 200 million customer accounts worldwide.2 As head of a global employer with complex, international operations, John is no stranger to the changing nature of risk. John became Chair of Citigroup at the start of this year. Prior to that he was chair of the Financial Institutions Group at the law firm Covington & Burling LLP, where he spent much of his career. He has also held a number of public sector roles, including Comptroller of the Currency during a critical time for our financial system and economy, from 2005–2010.
Michael C Bonello: Pursuing faster growth in a stable macroeconomic environment Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the Annual Dinner of the Institute of Financial Services, St. Julians, 10 November 2005. *  *  *  Prime Minister, Parliamentary Secretary, Excellencies, Ladies & Gentlemen, I should first of all like to thank the President and Council of the Institute of Financial Services for inviting me once again to their annual dinner. Over the past six years I have been able to observe with satisfaction how the Institute has successfully adapted itself to the steady expansion of Malta’s financial services industry, and to the demand this growth has generated for a diversified range of professional expertise. One planned innovation which I consider most appropriate is the Certificate in Mortgage Advice and Practice that is partly based on Maltese law. This annual occasion also affords me a welcome opportunity to share with a distinguished audience of bankers and their corporate guests the Bank’s thinking on a subject of topical interest. In today’s complex global environment several issues spontaneously present themselves as likely candidates for further analysis. For us in Malta, the major policy challenge at this time is to return the economy to a path of higher and sustained growth. The facts speak for themselves.

Moreover, central banks are not usually alone in fulfilling this mandate. In many countries central banks are in close cooperation with independent regulatory agencies. These agencies have the authority of regulation, supervision and oversight of financial markets and institutions. In the context of Turkish financial system, we have two such agencies: Banking Regulation and Supervision Agency and Capital Markets Board. At this point, I should emphasize that price stability and financial stability objectives are complementary in nature. Disruptions in financial markets would eventually affect the real economy through their impact on interest rates, exchange rates or asset prices. Thus, it is not far fetched to regard them as two sides of the same coin. Dear Guests, Financial stability lies at the core of a well-developed financial system. And the smooth operation of payment and settlement systems is a prerequisite for financial stability. The Bank for International Settlements defines the oversight of payment and settlement systems as a task left primarily to central banks with the objective of promoting the smooth functioning of payment systems and protecting the financial system from the possible “domino effects” which may occur when one or more participants in the payment system experience credit or liquidity problems. Central Bank of Turkey has played a leadership role in the development of payment and settlement services in Turkey. Today, the payment system is fully complied with the provisions of the CPSS (Committee on Payment and Settlement Systems) Core Principles for Systemically Important Payments Systems.
Let’s not think of how we can reform, but how we can design. Let’s create a system that can better withstand the unforeseeable and the unpredictable. Conclusion These are difficult, complicated issues. But complexity doesn’t need to get in the way of getting back to principles or impede necessary action. Look no further to what we just accomplished with LIBOR. On January 1st, we are taking a giant leap in moving to a post-LIBOR world. That’s a monumental feat for financial market reform—and it was made possible by a significant, prolonged, and coordinated effort by the private and official sectors across the globe. With Treasury market reform, we must take the same approach of bringing together the best ideas from the public and private sectors. Three episodes of market dysfunction over the past decade are too many. Let’s work together to build a system that is truly resilient and can withstand the challenges of our time—and of the future. Thank you. 1 Recent Disruptions and Potential Reforms in the U.S. Treasury Market: A Staff Progress Report, Inter-Agency  Working Group for Treasury Market Surveillance, November 8, 2021. 2 For a history of the Desk statement on repo operations during that period, see Repo and Reverse Repo  Operations: Statements and Operating Policies. Details on the parameters of the repo operations during this 3/4  BIS central bankers' speeches  period can be found at Historical Repurchase Agreement Operational Details.

This is not a choice. If we don’t act effectively, the repercussions on the U.S. economy—and the global economy—are severe. In each of the past two notable market dislocations, the dysfunctions arose swiftly, and we, too, acted quickly to take steps that were effective in restoring the functioning and confidence in markets. But each event exposed weaknesses. Over time, weaknesses can erode confidence. So now, the challenge before us is this: How do we strengthen the most important market in the world in a way that helps us avoid having to take dramatic steps to cure impairments during the middle of a future crisis? How do we prepare for what we can’t foresee and can’t predict? Think Differently One thing that is clear when examining the causes of these market disruptions is that they were not primarily driven by economic forces, but rather by a failure of the markets to function in the ways they were expected to do in response to those particular circumstances. These sharp market disruptions teach us important lessons. A number of experts in this field— including the IAW G—have been doing excellent work in identifying potential solutions to ensure that similar disruptions don’t happen again. It’s essential that we all continue to work together to increase the resilience of the Treasury market—and this conference is a great opportunity to move that process forward. It’s also clear that we need not start from a position of how things are, but instead, how they should be.
For participants to acknowledge that such actions are questionable would in fact require the activation of slower, more effortful “System 2” thinking. The initial transgression may be small, but the culmination of many small transgressions can result in a set of behaviours which would normally be unacceptable becoming the norm, and an undesirable culture becoming ingrained. This is a version of the old proverb that one bad apple spoils the whole barrel. But the initial argument that it is just the case of “a few bad apples” is no longer credible. Instead it seems that there were deep rooted problems in the nature of FICC markets that resulted in practices that would be unacceptable elsewhere. As the Archbishop of Canterbury put it at a recent panel on ethics and finance at the IMF: “bad business models can corrupt good people.” Perhaps there is something also wrong with the barrel? The characteristics of the Fixed Income Currency and Commodity markets So what are the distinctive characteristics of FICC markets, and how might they have contributed to these problems? First and foremost, the FICC markets are notable for their heterogeneity. That reflects a key role of many FICC markets in providing bespoke instruments, tailored to meet the needs of investors and issuers. For example, while there are just under 2,500 publicly listed equities in the UK, there are over 11,000 different UK corporate bonds. In the US the disparity is even starker, with more than 36,000 bonds compared with just over 5,000 listed stocks.

To facilitate such heterogeneity, many FICC markets have historically been built around a “market-making” trading model, in which participants trade bilaterally with an intermediary, rather than directly with other investors. For example, in corporate bond markets a market maker will build up an inventory of different corporate bonds when there are net sales from end investors, and run it down when there are net purchases. An important advantage of the market-making system is that, when it works effectively, it provides investors with continuous two way markets. Government and corporate borrowers can generally be confident that they will be able to borrow at a time, in a currency, and for a duration that suits them. Similarly, investors can feel confident that they will be able to trade smoothly in and out of sometimes large positions without unduly affecting the market price. 1  http://www.fca.org.uk/your-fca/documents/final-notices/2014/lloyds-bank-plc-bank-of-scotland-plc.pdf  2  http://www.fsa.gov.uk/static/pubs/final/barclays-jun12.pdf  3  I am particularly grateful to Nicholas C. Barberis for this exposition. 4  Daniel Kahneman (2011), Thinking Fast and Slow, Macmillan. BIS central bankers’ speeches  3  The downside of the heterogeneity of many FICC assets is that the market in specific instruments can sometimes be thin, and hence it may be difficult to gauge what a fair price is. Publicly available quotes can be based on a limited number of small transactions, making them more vulnerable to manipulation. Another characteristic of FICC markets is that they tend to be dominated by large professional counterparties.
Before he does so, I would like to share with you my assessment of economic conditions on the mainland and in Puerto Rico. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. National economic conditions The mainland U.S. economy has continued to slowly recover from the after-effects of the housing boom and bust and the financial crisis. But the recovery has been disappointing. Despite a monetary policy that has been extraordinarily accommodative by historical standards, the economy has grown only about 2 percent over the past year. After a brighter start to the year, economic momentum has slowed in the last few months. (This may partly be a payback for the mild winter, which brought forward some spending.) Employment growth remains positive, but has slowed considerably of late as the economy has lost forward momentum, and the unemployment rate remains elevated. The headwinds retarding recovery are well known. Many consumers have been deleveraging in response to the large losses in wealth generated mainly by the collapse in home prices. The supply of credit – particularly mortgage credit – to many families remains constrained, limiting the degree to which many households can fully benefit from low interest rates. Although there have been some positive signs in the housing market recently, housing activity nevertheless remains at very low levels.

They only move the time-consistency issue one step back - the policy rule may be abandoned, the central banker fired, the contract reinterpreted or rewritten.3 The other approach says that real central bankers do not and need not worry about time-inconsistency; they “just do it”, (Bennett McCallum, 1995). Central bankers should simply resist the temptation to deviate from the time-inconsistent policy, and private agents will eventually come to accept that resolve. Attractive as such a solution may appear to central bankers, it fails to answer the challenge posed by the game-theoretic result of Kydland and Prescott. And it fails to explain why it is that some countries in some periods just do it and others do not. Central bankers who have the determination and strength of purpose to “take the punch bowl away just when the party is getting going”, in McChesney Martin’s memorable phrase, clearly have the “right stuff” - so why don’t they “just do it”? 4 A deeper explanation of how this problem can be overcome requires an analysis of what might be called the “technology of collective decisions”. Individual agents can make contracts because they believe that the legal system is external to both parties to the contract. But it is difficult to write contracts that commit future collective behaviour. Collectively, we can either meet our previous commitments or we can ignore them.
For example, we do not have a system where the private sector will share risks across borders, where capital and liquidity are fungible in pan-European financial institutions. A common deposit insurance would help, but it’s important to allow a European bank to be able to operate in the euro area as a single entity. Not all banks would be able to do that, but we need to have a timetable where we say, four or five years from now the banks that qualify in terms of quality and quantity of capital will get a European license. You need to put a very serious, technical, timetable for that, and announce it. That would create a new environment for banking. Is there a challenge to the ECB’s credibility because of the change of stance on the effective lower bound of rates? The story of the lower bound is a very simple one. For all non- standard measures there is not much historical experience, there was very little academic literature until recently. Many central banks thought the zero lower bound is zero, and when we initially decided to go for –0.1, we were not fully sure of the total impact on financial conditions in general and especially on banking. The negative deposit rate, like most non-standard measures – the forward guidance of July 2013, the LTROs starting in 2011, the TLTRO and the APP – delivered more than we expected in terms of their impact on financial conditions.

Irma Rosenberg: Monetary policy with our own interest rate path Speech by Ms Irma Rosenberg, First Deputy Governor of the Sveriges Riksbank, at a lunch meeting arranged by Öhmans, Stockholm, 8 June 2007. *  *  *  Introduction Let me begin by thanking you for the invitation to come here and speak about monetary policy. Today I would like to take the opportunity to talk about some issues that are important to me. I would like to explain why I considered that the repo rate should be kept unchanged at the most recent monetary policy meeting. I shall also comment on some of the views we at the Riksbank have received with regard to our forecast of the interest rate path. But I intend to begin with a few words on the changes in our monetary policy communication which were decided by the Executive Board recently. Changes in the monetary policy communication Since the inflation target was introduced, the Riksbank has tried in different ways to become more open and clear with regard to how monetary policy is conducted. We have gradually published more and more of the background information used for our decisions, in particular the forecasts for inflation and economic developments in general. The decision to publish our own forecast for the repo rate, which we took at the beginning of the year, was a natural continuation of this process. In mid-May we decided to implement some further changes to become even clearer in our monetary policy communication.
Corporate bankruptcy law grew up as it became clear that market forces delivered losers as well as winners and that some orderly means was needed of dealing with the losers. In this way, bankruptcy law supports the market mechanism. The situation is no different in a sovereign context. A well-articulated framework for dealing with sovereign liquidity problems should reduce the inefficiencies and inequities of the current unstructured approach to standstills. It would support the international capital market mechanism. It would be no  7  BIS Review 70/2000  more likely to induce debtors to default than bankruptcy law is to induce corporate debtors to default. In neither case is default a soft option. We would of course hope and expect sovereign standstills to be the exception rather than the rule. But it is better to plan for all contingencies, and to articulate these plans, than have international public policy made on the hoof. In this respect, crisis-fighting shares many similarities with fire-fighting. Fire-prevention is ideal, but will never entirely prevent fires occurring. So it makes sense to have a fire-fighting plan, which everyone understands and abides by, to minimise the damage when fires do occur. Would standstills work? The issue of whether standstills should form a part of the official sector’s toolkit of responses remains under active debate. A number of arguments against the use of standstills have been made by policymakers, academics and the private sector. Let me try and articulate some of the concerns.

During rapid economic expansion, problems with bottlenecks may occur temporarily because new production facilities are not always available just when they are needed to cope with increased demand. Experience in the 1990s suggests, however, that firms have become more flexible, both in the utilisation of existing capital stocks and in the procurement of new technology, machinery and plant when demand rises. This suggests that, if anything, it is not the level of unutilised capital resources that is critical at present. Instead, an analysis of resource utilisation should probably focus on the labour market. Another reason for this is that in a price analysis at macro level, the weightiest item in costs is wages; total wage costs are equivalent to over two-thirds of GDP. The level of unemployment has been reduced but remains high, particularly compared with the post-war period up to the early 1990s. Seen from that angle, some might say that the Swedish economy has plenty of unutilised resources. Experience from other European countries has taught us, however, that after a severe shock, as happened in the early 1990s, unemployment tends to stick at a high level, at least for a while. Estimates of the equilibrium level of unemployment in Sweden suggest that it moved up in the early 1990s and in terms of registered unemployment is somewhere in the interval 4.5 to 7.5%. Considering that the rate of registered unemployment is currently inside this interval, the estimates would suggest that the Swedish economy is now close to full capacity utilisation.