samchain/econo-pairs-v1 huggingface dataset:
We can note that the real repo rate is presently below zero, and according to the Riksbank’s forecast it is not expected to be above zero until the end of this year. If the forecast proves correct, the real repo rate will have been negative for a two-year period – this is very unusual in an historical perspective. The Riksbank’s assessment is that a long-term normal level for the real repo rate is around 2 per cent. 9 Seen from this perspective, the repo rate path thus indicates a very expansionary monetary policy. We have previously seen that in April the market was expecting a lower nominal repo rate in relation to the Riksbank’s forecast. Figure 6 shows that this also appeared to apply to the real repo rate. Figure 6 The Riksbank’s real repo rate forecast Per cent  Note. See footnote 8 for a description of the calculation of the real repo rate expectations. Sources: Reuters EcoWin, TNS SIFO Prospera and the Riksbank. 8  The real repo rate forecast is calculated as a mean value of the Riksbank’s repo rate forecast for the coming year minus the inflation forecast (CPIF) for the corresponding period. Prospera’s interest rate and inflation expectations are based on surveys carried out on 28 April and 28 April–7 May respectively. Interpolation has been used for the interest rate and inflation expectations to produce the expected repo rate for the coming year and inflation expectations for the corresponding period.

5 I will not go in to it here, but merely note that a majority of us on the Executive Board has regarded the current repo rate as in practice being the lower bound. This zero interest rate problem received much attention in the academic world in connection with the Japanese central bank cutting its policy rate to zero as a result of the economic stagnation in the 1990s. One of the possible solutions if a central bank has cut its policy rate to its lower bound, and wants to cut it further, is to promise a policy rate around zero for a long time to come. Over time this would have a similar effect to cutting the interest rate to below zero and then raising it to above zero. The repo rate path facilitated communication During the financial crisis, lessons from this research became surprisingly topical for a number of countries in addition to Japan. The repo rate path fulfilled a central role here, as it enabled the Riksbank to make clear its intentions for monetary policy during an uncertain situation. When the Riksbank cut the repo rate to 0.25 per cent in July last year, the repo rate path signalled a low repo rate for a long period ahead. I believe this gave us an advantage over many other central banks, who tried to use purely verbal methods to signal that their policy rates would be low for a long time. Credibility plays an important role in monetary policy.
BIS Review 31/2008  1  Modern sovereign wealth funds are not new, in fact the first – the Kuwait Investment Office – was set up here in London in February 1953 – just as Edmund Hillary and Tenzing Norgay were setting out to climb Everest. 2 And the number of funds has been increasing since then like the traffic on the slopes of Everest. The next wave were set up by other oil producers after the price increases in the 70s and 80s for persuasive reasons (Chart 2). First oil is a non-renewable resource so it can make sense for governments to spread the benefits of this endowment across generations by investing part of today’s income in assets that will provide an income tomorrow. That would be so even if the path of oil prices was predictable but in fact it is not. That uncertainty about future income provides a second case for saving today. In the late 1970s, some oil exporters increased spending to match higher incomes and faced a painful adjustment when prices fell back again. Third, even if the rise in income was permanent there would be a case for phasing the growth of domestic spending and investment to prevent supply bottlenecks leading to inflation. Recent growth of SWFs Since the millennium at least 10 new SWFs have been set up and there are reports of plans for more for example in Brazil, Japan and India. This reflects the remarkable shift of emerging-market economies from debtors to creditors.

Therefore, in periods of market stress they are likely to face less pressure than most private investors to reduce the size or increase the liquidity of their investments. They are well placed to play a contrarian role and help to stabilise markets by investing in times of stress. For example, when the global equity market fell sharply between 2000 and 2002, the Norwegian Government Pension Fund was a large buyer of global equities. And a number of sovereign wealth funds have played an important and welcome stabilising role during the current turmoil by providing around $ billion of new capital since November to some of the world’s biggest commercial and investment banks (Table 1). 8 Taking a broader view, the switch of some reserves from government debt into SWFs which invest in a wider range of instruments should help to improve the allocation of resources if these investments are based on commercial criteria. Investing in equities may also help to reinforce and bring to the surface the common interest that EMEs and the advanced economies have in the good performance of the companies involved and the markets they operate in. It may thus help to integrate EMEs into the global financial system and encourage them to participate more in global policy making. From a parochial point of view, the prospective increase in demand for equities relative to bonds could have a positive impact on London and sterling.
Any assessment of the consequences arising from the greater exposure of the Spanish economy to changes in house prices and in interest rates would be incomplete were it not also to allude to the parallel developments reinforcing the economy’s capacity to face potentially adverse shocks in any of these variables. In this respect, it should be underscored that the behaviour seen in recent years in the main indicators of the activity, profitability and solvency of domestic credit institutions is helping mitigate the financial risks bearing on the course of our economy in the medium term. These institutions are therefore well positioned to absorb the potential impact of shocks such as those indicated without seeing their capacity to ensure the financing of economic growth affected. Undoubtedly, the prolongation of the phase of robust demand has contributed to widening the economy's external imbalance, increasing the need to resort to foreign saving to finance private-sector spending. Overall, the external deficit, whether measured by the current account balance or by net borrowing, reached a new all-time high last year. As is known, belonging to a monetary union substantially changes the meaning and consequences of the current account balance. The breaking of the link between the exchange rate and the economy's external imbalance gives greater prominence to how this imbalance is financed. Here, the funds needed to bridge the gap between national investment and saving are being routed essentially via the issuance of securities by banks and, especially, non-bank financial institutions.

Bwalya K E Ng’andu: Workshop on Zambian banknotes Opening remarks by Dr Bwalya K E Ng’andu, Deputy Governor (Operations) of the Bank of Zambia, at the G&D Workshop on Zambian banknotes, Lusaka, 22 November 2011. *  *  *    Mr. Werner Reisch and all resource persons from Giesecke and Devrient GmbH    Acting Director – Banking, Currency and Payment Systems    Ladies and Gentlemen  I wish to welcome you all to this workshop on Zambian banknotes and in particular allow me to welcome Mr. Werner Reisch and his team from Germany. As Bank of Zambia, we appreciate your efforts to organise this workshop and would like to assure you that by the end of the workshop all participants will have been enriched with new information on cash management. I am reliably informed that this workshop will be divided into two sessions, with this session targeting employees from Bank of Zambia and the next session that will take place tomorrow targeting commercial bank employees. Ladies and Gentlemen, As you may be aware G&D is a reputable printing company based in Germany which has been in existence since 1852. The Bank has a long standing business relationship with G&D going as far back as 1996 when the company first installed the ISS 300 money counting machines in our Currency office and subsequently the BDS 400 banknote destruction system in 2000.
Since August, the short- and medium-term outlook for inflation have both improved somewhat, as world oil prices have fallen back very sharply, and sterling has risen. The odds of inflation rising above 3% have lengthened. There are still no real signs of pressure in the labour market. And while it never does to be complacent about pay, in today’s labour market there is quite a difference between asking for higher pay and getting it – even in sectors not exposed to the full blast of global competition. There are, of course, still some risks. But insurance is never costless. In the case of monetary policy, taking out insurance against risks that don’t materialise can inject unnecessary volatility into the economy, with consequences for jobs as well as demand. That is why we have the remit we have. It gives the MPC scope to exercise its judgement. But those are precisely the sort of judgements about which reasonable people can – and probably - should disagree. So it was this month. One judgement about which reasonable people could disagree is how robust the Committee’s treasured credibility might be, if it ever came under real pressure. It is often said that it takes decades to build a high reputation but only a moment to lose it. And there are plenty of business horror stories that seem to prove the point. What moral should a member of the MPC draw?

But if inflation moves away from the target by more than 1 percentage point in either direction I shall expect you to send an open letter to me setting out the reasons why inflation has moved away from target …and the period in which you expect inflation to return to target’ In 1998 Charlie Bean, now (but not then) the Bank’s chief economist, calculated that open letters might be triggered at least 40% of the time, on the basis of past experience 3 . This did not seem unreasonable at the time. But after 114 monthly decisions, inflation has always been within 1 percentage point of the target. And I take the fact that no Governor has yet sent an open letter as further evidence that there has indeed been an unexpected increase in stability. 2  Mais lecture, June 1997. 3  “The new UK monetary arrangements: a view from the literature”, Charles Bean, Economic Journal 1998. 4  BIS Review 116/2006  Where are we now? Are we now entering choppier waters? The world economy continues to grow at an impressive rate, with few signs of sustained inflationary pressure. Globalisation continues apace. But it is not difficult to think of things that could go wrong, ranging from an outbreak of protectionism, to another sharp surge in oil prices in response to geopolitical events, to a sharp correction in housing markets, which in a number of countries are very richly valued.
16  supply of safe European assets, facilitating the general functioning of financial markets and the specific conduct of monetary policy. 17  References Aguilar, P., Ó. Arce, S. Hurtado, J. Martínez-Martín, G. Nuño and C. Thomas (2020). “La respuesta de la política monetaria del BCE frente a la crisis del COVID-19”, Occasional Paper, Banco de España, forthcoming. Andreeva, D. and M. García-Posada (2019). The impact of the ECB´s targeted long-term refinancing operations on banks’ lending policies: the role of competition, Working Paper No. 1903, Banco de España. Arce, Ó., R. Gimeno and S. Mayordomo (2017). Making room for the needy: the creditreallocation effects of the ECB’s corporate QE, Working Paper No 1743, Banco de España, forthcoming in Review of Finance. Arce, Ó., I. Kataryniuk, P. Marín and J. J. Pérez (2020). Thoughts on the design of a European Recovery Fund, Occasional Paper No 2014, Banco de España. Arce, Ó., M. García-Posada, S. Mayordomo and S. Ongena (2018). Adapting lending policies when negative interest rates hit banks’ profits, Working Paper No 1832, Banco de España. Arce, Ó., G. Nuño and C. Thomas (2019). “The Eurosystem’s monetary policy following the end of net asset purchases”, Analytical Articles, Economic Bulletin 1/2019, Banco de España. Bernanke, B. S., M. T. Kiley and J. M. Roberts (2019). “Monetary Policy Strategies for a LowRate Environment”, AEA Papers and Proceedings, No 109, pp. 421-426. Brunnermeier, M. K., and Y. Koby (2018). The Reversal Interest Rate, NBER Working Paper, No 25406. Eggertsson, G. and M. Woodford (2003).

Because of the sensitivity of this model, the analysis is supplemented by Value-at-Risk calculations, risk contribution analyses and stress tests. Value-at-Risk is an estimate of potential loss risk and is defined as the largest expected decline in value of an asset, or an asset portfolio, with a specific probability and over a specific period of time. 2  BIS Review 33/2006  As you can see, our largest holding is in euro. This is not surprising, as the relationship between the euro and the krona has remained relatively stable. Historically, the currency risk attributable to our euro holding has thus been less than that attributable to other currencies in the reserve. The dollar, on the other hand, has been one of the highest risk currencies. The fact that we nevertheless have a relatively large dollar exposure is due to its importance as intervention currency. It is reasonable to wonder why we do not choose to convert some of the currency assets into Swedish assets as long as we have a floating exchange rate regime. In this way the currency risk on these assets would disappear completely. In practice, however, this is not so easy as such a conversion would mean that we intervened in the foreign exchange market. In addition, when and if the Government decides that the krona should be part of a fixed exchange rate regime, we would be forced to intervene again to build up the foreign exchange reserve.
They can be contrasted in two dimensions: the probability that there is some kind of “disequilibrium” that needs to correct; and the probability that any such correction, or adjustment, will produce destabilising spillovers in the financial system. On the first – the probability of adjustment – it is widely agreed by economists that one symptom of global imbalances, the US current account deficit, is unsustainable. It cannot continue indefinitely at the same rate because eventually the US’s external debt-servicing burden would become too great. That there will be adjustment, somehow or other, is therefore viewed by most commentators as near certain. By contrast, while the low risk premia across credit markets are hard to explain, no one can say for certain that they are unsustainable. A number of changes in the environment point towards some sustainable reduction in risk premia: more credible monetary regimes; more flexible labour and product markets, helping economies to adjust to nasty shocks; improved instruments and markets for managing risk; better diversified portfolios. Whether or not that merits the degree of risk premia  1  The importance of communication to monetary policy was explored more fully in Tucker P M W (2006a), “Reflections on operating inflation targeting”, Speech at Chicago Graduate School of Business, May 2006, Bank of England Quarterly Bulletin, Summer 2006, pp 212-224. 2  BIS Review 44/2007  compression seen over recent years is open to question. For some while now, I have encountered few people in the market who regard credit risk as fairly priced.

Fernando Restoy: Challenges for the Spanish banking sector Closing address by Mr Fernando Restoy, Deputy Governor of the Bank of Spain, at the XXI Meeting of the Financial Sector, organised by ABC, Deloitte and Sociedad de Tasación, Madrid, 1 April 2014. *  *  *  Good morning. Thank you, Paco, for your kind words. It’s a great pleasure for me to be with you this year for the closure of the 21st edition of the Financial Sector Meeting organised by ABC, Deloitte and Sociedad de Tasación, in which the Banco de España has traditionally taken part. The conference has had a very full day, in which the country’s main financial institutions have had their say. Allow me to bring some thoughts to the discussion on the main challenges for the banking sector ahead of the changes in the regulatory and supervisory framework and, most particularly, ahead of the banking union. 1. Introduction  Looking back, I believe such significant structural transformations as those currently sweeping the banking industry are almost unprecedented. At present, the banking sector must face a host of highly relevant changes on various fronts.
These two elements are interlocked, thereby taking account of the insights reached in international discussion in this area. The SNB supplies the economy with liquidity first and foremost through money market operations, but also, under certain circumstances, through its function as lender of last resort. Emergency liquidity assistance is only provided if the stability of the system is severely jeopardised. The SNB guards against this situation by helping to ensure a well-functioning liquidity supply. It facilitates and secures the operation of cashless payment systems, regulates and monitors both the payment and the securities settlement systems and works to ensure that these systems are crisis-proof. In addition, it continually oversees and analyses developments in the financial system and collaborates closely with the Swiss Federal Banking Commission (SFBC), the banking supervisory body. Currently, there are three questions that direct the SNB’s use of information on the stability of the financial system when it makes monetary policy decisions. The first question is whether monetary policy – as an instrument for ensuring price stability – can be improved by including information on banking system stability? The second question works the other way round: Can monetary policy influence the stability of the banking industry? And – if the answer to this second question is yes – the third (normative) question is whether monetary policy should be used to increase stability in the banking industry. While the answers to the first two questions are in the affirmative, the response to the third is negative.

If a regional currency is chosen as the anchor, in the same way that the deutschmark was effectively the anchor for exchange rate arrangements leading up to European monetary union, would this be the yen or the renminbi? Alternatively, could Asia move straight to a single currency? It is increasingly argued that, in a world of liberalised markets, the only viable exchange rate system is either a hard peg (like Hong Kong's Currency Board) or a free float. Soft pegs by their nature are vulnerable to self-fulfilling speculative attacks, as was demonstrated in Europe in 1992, Mexico in 1994-5, and Asia in 1997-8. Europe was able to move gradually to a system of fixed exchange rates with capital controls prior to the introduction of a single currency. But the high degree of capital mobility in a number of key Asian economies would make gradual transition in this way more difficult. A further set of technical issues concerns the setting up of, and mandate for, an Asian central bank. This would require agreement on the monetary policy objective, country representation, and decisionmaking process of the central bank. Most important, the institution would need to be designed so that national interests are kept in check in order to deliver efficient monetary policy making at the regional level. The lesson from Europe is that agreement can be reached, but I have to say that the issues are quite daunting.
During 2006 the Bank of Albania started examining the prerequisites and implementation conditions over a mid-term period (year 2009), of a new monetary policy regime. In this context, analyses are carried out about the possibilities of improving the legal infrastructure for the creation of such conditions in compliance with international standards in this area. Also, the possibility of improving the organic law of the Bank of Albania has been considered, coinciding with the prediction of its alteration as a mid-term priority of the National Plan for the Implementation of the SAA. It is forecasted that these alterations will stipulate clearly the competences and procedures for the decision-making process of the Bank of Albania and the transparency of this process, which constitutes also a substantial precondition for the compilation and implementation of an effective monetary policy. In the framework of the legal reforms undertaken by the Ministry of Justice for the amendment and improvement of the Civil Procedure Code, the Bank of Albania has been  12  BIS Review 80/2007  fully committed to cooperating with the banking sector for the completion and accuracy of mandatory execution procedure of executive titles. The Bank of Albania proposals have aimed at improving the legal base on the application of procedures for the execution of acts that constitute executive titles. The main purpose is to cut the time for the execution of those acts, aiming to increase security in the lending activity, thus reducing the credit risk the banks are faced with.

Tarisa Watanagase: Dealing with volatile capital flows Welcome address by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the 42nd SEACEN Governors’ Conference, Bangkok, 28 July 2007. *  *  *  Your Excellency Minister of Finance, Mr. Rodrigo de Rato, Mr. Hervé Hannoun, Fellow Governors, Distinguished Guests, Ladies and Gentlemen, I would like to begin by extending a very warm welcome to all of you to Bangkok. We are pleased to host the 42nd SEACEN Governors’ Conference and the 26th Meeting of SEACEN Board of Governors here in Bangkok. I would also like to express my sincere appreciation to His Excellency Chalongphob Sussangkarn, Finance Minister of Thailand, for his presence here to officially open the Conference. This year’s theme on “Living with Volatilities: Is SEACEN prepared for Rising Fluctuations in Exchange Rate and Capital Flows?” comes at an opportune moment, given a recent volatile and uncertain market conditions. This volatility has posed challenges to central banks in maintaining monetary and financial stability. Let me share with you some of my views on this very important issue. It is traditionally believed that emerging markets are subject to more volatile capital flows than developed countries due to underdevelopment of our financial markets and weak institutions. Thus, putting in place a more flexible exchange rate policy, credible monetary policy and sound domestic financial system could help emerging markets reduce the volatility of capital flows as well as its negative effect on the economic stability.