samchain/econo-pairs-v1 huggingface dataset:
Monetary policy decision We have decided to leave the current Libor target range unchanged and to continue aiming for the middle of the range. This decision is based on the following considerations. Our analyses show that, following the slowdown in the global economy, the outlook for inflation has improved, if we disregard the temporary rise that will occur over the next few months as a result of the rise in oil prices. Moreover, the turmoil affecting the international financial markets and the uncertainty with respect to the extent of possible fall-out on the rest of the economy all call for prudence. The risk of a rise in inflation has not been dispelled; of that there can be no doubt, given the rise in oil prices, the weakness of the Swiss franc against the euro, and the high level of capacity utilisation. Nevertheless, we do not consider this to be a matter of urgency and view an adjustment in our policy as unnecessary under the current circumstances. It is evident that we will continue to keep a very close watch on developments in the situation. Inflation forecast graph I will now turn to the final part of my remarks. What is our inflation forecast? The dashed red curve on the graph represents the new forecast. It relates to the period between the fourth quarter of 2007 and the third quarter of 2010, and maps the future development of inflation on the assumption that the 2.75% level remains constant over the forecasting period.

Although the Bronx is the city’s second smallest borough, it has 1.4 million residents – equal to the combined population of three to four average U.S. cities. You host world-class institutions such as the Yankees, the New York Botanical Garden, the Montefiore Medical Center and the Hunts Point Market. You also are home to the largest Dominican population in the city and sizable groups from around the globe. In sum, the Bronx is a major metropolitan area and economic force all on its own. What the New York Fed does By way of introduction, I will briefly review what the New York Fed does and what makes my job so interesting. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee, also known as the FOMC. I serve as Vice-chair of the FOMC – a Federal Reserve committee that meets eight times a year in Washington, D.C., to set interest rates and make other decisions about monetary policy. At FOMC meetings, each Committee member presents a current regional and national outlook. For these assessments, we consult our researchers and add critical information that we learn from our boards of directors, regional councils and community leaders, such as you. At the New York Fed, we continually track conditions in our District and have created tools for that purpose.
This is because making a payment is about more than just exchanging money for goods and services: it is a form of social interaction made possible by money, which has been described as “the most universal and most efficient system of mutual trust ever devised”7. Finally, a digital euro would increase privacy in digital payments thanks to the involvement of the central bank, which – unlike private suppliers of payment services – has no commercial interests related to consumer data. Ensuring privacy is an essential element of modern democracies and part of our European values. Payments must also respect people’s right to privacy in the digital era, and the design of a digital euro would have to respect this principle. This is a core aspect we will look at – indeed, we have already started exploring possible ways of enhancing privacy.8 At the same time, payments in a digital euro – just like any form of payment – would have to respect the rules on countering money laundering, the financing of terrorism and tax evasion. This would enable public authorities to combat any illegal activity more effectively. To summarise, the digital euro would still be a euro, only in digital form. It would both shape and promote the digitalisation of payments, while reducing the associated risks. This would in turn support the ongoing digitalisation and modernisation of the European economy.9  Why might we need a digital euro? A digital euro would be critically important in a number of scenarios, which are analysed in our report.

10 ECB (2020), Study on the payment attitudes of consumers in the euro area (SPACE), forthcoming. 11 ECB (2020), Impact of the pandemic on cash trends (IMPACT), forthcoming, 12 Legal tender status implies that acceptance of euro banknotes and coins for payments is mandatory (unless  explicitly agreed otherwise, for example owing to a lack of change), legally recognised for repayment of a debt, and at face value, without additional fees (in contrast, for example, to credit cards, for which additional payment fees are allowed). See Article 128(1) of the Treaty on the Functioning of the European Union. 13 For example, TARGET Instant Payment Settlement (TIPS), managed by the Eurosystem, allows European  citizens to transfer funds in real time and around the clock, every single day of the year. In the design of a digital euro we will also look into the potential of distributed ledger technology. 14 See Bindseil, U. and Panetta, F., (2020), “Central bank digital currency remuneration in a world with low or  negative nominal interest rates”, VoxEU, October. 15 European Commission (2019), Standard Eurobarometer 92, December. 4/4  BIS central bankers' speeches
The third was when I was asked to head the Markets Group at the Federal Reserve Bank of New York at the beginning of 2007. It was an unexpected opportunity for public service after spending the bulk of my career in the private sector. The Markets Group is the operational arm of the Federal Reserve System. It helps to have an economics background, but it was a very different task managing 300 people who worked in many complex businesses ranging from Treasury auctions to providing services to foreign central banks. And, when the financial crisis began in earnest in August 2007, the learning curve accelerated sharply. BIS Review 71/2010  3  And the fourth was when I had the opportunity to succeed Timothy Geithner as president of the Bank in January 2008. Now it is 3,000 people, not 300 to manage and a much wider set of responsibilities. Some of the most interesting parts of the job have been getting troubled financial institutions onto a stronger footing so that these firms could provide greater credit and support to the U.S. economy. Obviously, working closely with Chairman Ben Bernanke and my Fed colleagues at the Board of Governors and around the other 11 Reserve Banks has also been particularly rewarding. Each time, the opportunities helped me broaden my knowledge and skills. My career benefited as a consequence. In implementing this advice, it also helps to have lots of good luck. In that regard, I have been blessed.

According to a recent report of the United Nations Conference on Trade and Development (UNCTAD), Saudi Arabia emerged as the largest recipient of foreign direct investment (FDI) in the Arab world in 2006, attracting $ billion in FDI, an increase of 51 percent over 2005. The global rating agencies Standards & Poors and Fitch have also raised the sovereign credit ratings of the Kingdom to A+. Also, Saudi Arabia has been upgraded according to the World Bank’s Ease of Doing Business Index from 38th place to 23rd place in 2007. The Government has encouraged the establishment and growth of value-added industries in areas where the Kingdom has competitive advantages, namely, cheaper energy, strategic locations and availability of raw materials. King Abdullah has recently launched four megaeconomic cities in Rabigh, Hail, Al-Madinah and Jazan, which are expected to draw almost  BIS Review 150/2007  1  SR 300 billion in investment and create more than a million jobs. It is worthy to note that these economic zones are located in the less developed cities and in areas away from the existing economically developed regions and are specifically selected to ensure that development and employment opportunities are spread around the Kingdom. An important indicator of progress made in diversifying the economy is provided by the trend in our non-oil exports. Such exports were insignificant in early eighties, but they have been rising sharply in recent years. Since 2000, they have risen continuously.
In summary, even though the framework for financial stability is not as comprehensive as in the case of price stability, significant progress has been made in all of these areas in recent years. There is a fourth lesson that is particularly relevant for this presentation, and it is a lesson that we have learned from periods of bank resilience in times of stress. During the past few years, financial markets have experienced a series of significant shocks. However, the banking system has been able to cope with them successfully. Financial innovation, the existence of deeper financial markets with a great variety and availability of instruments to transfer risks, and the improvement of the capacity of financial institutions to understand and manage their risks are key ingredients in explaining the resilience of the financial system during the period of shocks. And that leads me to my next point: important trends in risk management. 4. Recent trends in risk management  Financial stability is a key precondition for sustained growth. It is crucial, therefore, to find reliable ways of identifying risks to financial stability and, in particular, to banking stability, and to try to manage these risks in the most effective way. Indeed, as experience has repeatedly shown, both inside Asia and elsewhere, having a solid and well-run banking system not only greatly reduces the likelihood of shocks originating inside the banking system but also makes it less likely that shocks arising elsewhere in the economy are amplified through the banking system.

For one thing, credit creation by the banks is continuing to be slow-moving. For another, the growth of the money stocks is considerably influenced by portfolio shifts, which are likely to be reversed once economic activity accelerates and interest rates begin to rise. We shall, however, continue to keep a careful eye on this development. As already stated, there are still certain risks that the economic development will not be sustained. The upswing in Switzerland should not be jeopardised by a premature changeover to a more restrictive monetary policy. We shall therefore continue our expansionary monetary policy and in this way further bolster the economic recovery. We are convinced that we shall have sufficient time to keep inflation within the bounds of price stability by tightening monetary policy at a later point in time. Should a possible marked appreciation of the Swiss franc vis-à-vis the euro threaten to cause an undesirable tightening of monetary conditions, we would again take decisive action. 2  BIS Review 58/2003  Inflation Forecast December 2003 with Libor at 0.25%  2003  2004  2005  2006  Annual average inflation in %  0.6  0.4  1.0  2.3  Inflation forecast of December 2003  New National Bank Law in the making On 3 October, the two Federal Chambers passed the new National Bank Law. We are very happy with the course of the parliamentary debate: only minor amendments were made to the draft of the Federal Council. The deadline for a referendum is 22 January 2004.
But I would make three points in response: First, I would contrast the time taken to agree Basel III and much of the rest of the framework – around 3 years between the start and finish of negotiations – with the best part of 10 years it took to agree its badly flawed predecessor, Basel II. Second, in the light of the transition to the new standards banks in many jurisdictions have already strengthened their capital positions – often it has to be said with some prodding from the supervisors. In the UK, banks are holding £ more capital than prior to the crisis. Globally, there is around $ more capital in the world’s largest banks. Holdings of liquid assets for the major UK banks have trebled and leverage has almost halved. Third, the lengthy transition is designed to ensure that the new standard does not have a procyclical effect, driving banks to deleverage further, to shrink their balance sheets to help meet the new, tougher standards. I should make clear here that I do not buy the argument that if we require banks to hold more capital and liquidity then, inevitably, they will lend less. Indeed, the opposite can be true. As we saw in Japan and see elsewhere, weak banks desperate to do what they can to improve their capital positions – but unwilling to bite the bullet and issue fresh equity – can become zombies of little use to the real economy.

Adding in the related work of the international standard setters – the Basel Committee on Banking Supervision, the International Organization of Securities Commissions, the International Association of Insurance Supervisors, we are talking about literally hundreds of meetings over the past five years, attended by hundreds of experts across a wide range of fields. But only bureaucrats – and possibly international airlines and hotels – are interested in inputs like the number of international meetings… What about the outputs? The outputs have been impressive. Most so, is the international agreement on a new capital and liquidity framework for banks. The so called Basel III capital standard for banks was finalised in 2011. Banks have already begun the transition to the higher standards that will be fully in force by 2019. 2  BIS central bankers’ speeches  And the FSB has begun to take steps towards establishing a global capital standard for systemically important insurers. Alongside capital, the first ever international liquidity standard for banks was agreed at the beginning of this year. It is part of a new liquidity framework that will be finalised by the end of the year. We now also have an agreed definition for an international standard covering bank leverage – the so-called “leverage ratio” – the final standard is due to be set in 2017 after trial running. To critics, the speed of progress on liquidity and capital – key areas of weakness in the crisis – may seem painstakingly slow.
The trade-off has been present in the academic and economic policy debate for many decades and, although opinions differ in terms of acknowledging the difficulties caused by exchange rate volatility, the benefits of a floating exchange rate to safeguard macroeconomic stability are perceived to trump these difficulties. For one thing, over the past decade the credible Chilean policy of flexible exchange rates has brought about a nearly total elimination of currency mismatches in the corporate sector that had hindered monetary policy making for so many years. Structural challenges In a context of good commodity prices and favorable access to credit, the phenomenon of real exchange rate appreciation poses structural challenges to economies in the region. I would like to focus on three issues that have been widely discussed in business, political, and academic circles. 5  Dornbusch, R., (1983), “Real Interest Rates, Home Goods, and Optimal External Borrowing”, Journal of Political Economy 91(1). 6  Calvo, G., A. Izquierdo and E. Talvi, (2003), “Sudden Stops, the Real Exchange Rate and Fiscal Sustainability: Argentina’s Lessons,” NBER Working Paper 9828. BIS central bankers’ speeches  3  First, it is worth emphasizing that part of the appreciation of the real exchange rate reflects the proceeds from the higher prices of our main exports. The resulting increases in expenditure and investment push up the price of services and wages, which is the counterpart of exchange rate appreciation.

Their conclusion is clear: “For debt-intolerant countries, sustaining access to capital markets can be problematic unless debt ratios are quickly brought down to safer levels. To assess how such ‘deleveraging’ might be accomplished, we examine how, historically, emerging market economies with substantial external debts have managed to work them down. To our knowledge, this is a phenomenon that has previously received very little, if any, attention. We analyze episodes of large debt reversals, where countries’ external debt fell by more than 25 percentage points of GNP over a three-year period. Of the twenty-two such reversals that we identify for a broad group of middle-income countries since 1970, two-thirds involved some form of default or restructuring. Only in one case – Swaziland in 1985 – was a country  1  Sources: World Bank, Moody’s and IMF (WEO, April 2012). 2  Reinhart, C., M. Savastano and K. Rogoff, (2003), “Debt Intolerance”, Brookings Papers on Economic Activity 1. BIS central bankers’ speeches  1  able to bring down a high ratio of external debt to GNP solely as a result of rapid output growth.” Thus, in the early 2000s, there were widespread expectations that a default would occur. Overall, the history of Latin America in the 2000s did not go as expected. During the first decade of the twenty-first century, Latin American countries succeeded in lowering their levels of external debt by nearly 20 percent of GDP.
Chart 8 Major UK banks’ unguaranteed term issuance in public markets(a)  Source: Thomson Reuters DataStream  Chart 9 Aggregate SLS repayment profiles  Sources: Bank of England, Dealogic and Bank calculations. (a) 2011 Q2 is up to and including 15 June 2011. Term issuance refers here to securities with original contractual maturity or earliest call date of at least 18 months. This excludes debt issued under HM Treasury’s Credit Guarantee Scheme. (b) It includes subordinated lower Tier 2 and Tier 3 capital instruments with debt features. Despite a number of shocks along the way, markets have been increasing in their resilience over the past two years. For example, UK banks have been able to continue to issue debt in  BIS central bankers’ speeches  5  both public and private markets during 2011, in spite of renewed sovereign debt concerns, the natural disasters in Japan and civil unrest in the Middle East and North Africa.6 Moreover, that issuance has been spread across an increasingly diverse range of instruments including, more recently, UK RMBS (Chart 8). This has helped the UK banks alleviate concerns about the “funding cliff” of official sector refinancing at the end of 2011. For example, it has facilitated the remarkable pre-emptive reduction in the amount outstanding under the Bank’s Special Liquidity Scheme (SLS), from around £ at end-February to just £ at the end of May (Chart 9). Chart 10 Credit Default Swap premia(a)(b)  Sources: Bloomberg, Markit Group Limited and Bank calculations. (a) Five-year senior CDS premia.

And then, when the European chapter of our story is completed and the denar remains our historical symbol of stability, I believe that it will be confirmed once again that as a central bank we have walked down the right path. Since the 2008/2009 Global Financial Crisis and the experiences of the COVID crisis, in a time of accelerated changes on the world stage as a result of globalization, digitalization and financial innovation, the mandate of central banks has been constantly changing and expanding with new functions. All current and new functions and activities  3/4  BIS - Central bankers' speeches  of modern central banks that protect the public interest are already part of our vision, but not as an activity that we forecast for the time future and distant, but as something we are already working on. Among other things, we are particularly dedicated to financial education and inclusion given the importance of increasing knowledge about financial services, especially at a time of rapid fintech development, which would eventually provide easier access to finance for citizens and companies. In support of the fintech development, we drafted the first version of the national strategy, with a view of making our story a regional leader in this area as well. Following the example of the European Central Bank, this year, when we celebrate thirty years of the introduction of the denar as our currency, we initiated activities to consider the introduction of a digital denar.
When choosing between the two investments, the respondent seeking to maximize her payoff should switch investments at most once, and if so, should switch from the one yielding a nominal return to the inflation-protected investment sooner, the higher her inflation expectations.31 We found that the choices in the financially incentivized experiment were indeed meaningfully related to respondents’ inflation expectations, on average. Differences in reported uncertainty were also associated with different choices in the experiment, in the direction predicted by theory. Deviations from expected utility maximization were more likely  29  The observed heterogeneity of expectations is important for policy purposes, since we find that agents with different characteristics act on their inflation beliefs and update their expectations in distinct ways. 30  Armantier et al. (2015). 31  This is an agent’s optimal choice under expected payoff maximization. We also show that the respondent should switch sooner to the inflation-protected investment, the higher her risk aversion and the more uncertainty she expresses in her inflation expectations. BIS central bankers’ speeches  9  to occur for respondents with low education, as well as those with low numerical and financial literacy. We were able to repeat the experiment with the same respondents six months later. We found that individual changes in expectations were significantly associated with changes in how early respondents switched between investments, and that not only the direction but also the magnitude of these changes was consistent with a simple expected utility maximization framework.

In addition to this work, our commitment is reflected in our research on issues of concern to the Island. Our economists monitor and analyze local economic conditions. A complement to our internal research is the outreach that I and other senior bank staff undertake to meet with our stakeholders – the leaders in the business community, members of professional organizations like yourselves, academics, students, elected officials and leaders of nonprofits – to hear firsthand about the issues and problems facing the people in our district. What we learn during these engagements also helps to shape our understanding of the issues facing the Puerto Rico economy and inform our efforts to support it. Earlier on this trip I met with leading business owners from many different sectors of the economy, elected officials and several agency heads. And from what I have learned so far, there are many important initiatives underway to effect change and to address what are clearly large and complex issues. On my last visit to the Island in 2011, I saw examples of expansion and growth. This gave me confidence that Puerto Rico has the capability to be an economic success story. However, my discussions with a range of stakeholders confirmed to me that conditions were not what we want them to be – in particular, growth and expansion were not happening either fast enough or broadly enough.