samchain/econo-pairs-v1 huggingface dataset:
Lars Nyberg: Time to change cash to cards? Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the 9th annual Nordic Card Markets conference, Stockholm, 20 January 2010. *  *  *  More often than not, the Riksbank is associated with the objective of maintaining price stability, which is usually interpreted as attaining a low and stable level of inflation. However, we also have another objective, namely promoting a safe and efficient payment system. What this means in practice is less obvious, but our entire responsibility for financial stability, which has undoubtedly been in focus over the last 12 months, in fact rests on this wording in the current legislation. This task includes promoting the development of safe and efficient payments. This is why we take an interest in cards and cash and it is also why I am here today. The Riksbank’s responsibility for the payment system also includes having the sole right to issue notes and coins. This may seem self-evident today, but it has not always been the case. Up until the early 1900s, the private banks were entitled to issue notes under the supervision of the Riksbank. The view of what the Riksbank should do and what private market players are expected to be responsible for has thus developed over time. Up until only a few years ago, the Riksbank was also responsible for the storage and, partly, the distribution of notes and coins throughout the country.

For sums higher than this it was cheaper to use cards. If we now compare this with the choices that the consumers actually made, the conclusion is that in 2002 it would have been better from the point of view of the Swedish economy if the consumers had made more payments by card and fewer payments in cash. From society’s point of view, it was profitable to pay by card when the sums were higher than SEK 70, but, as was the investigation from 2006 made evident, the “average consumer” nevertheless chose to wait until the sums were higher than SEK 123. Eight years have now passed since the study was conducted and it is much more likely that the costs of using cash have increased rather than decreased. For example, the costs for increasing the security of transportation and ATMs have been substantial. On the other hand, available evidence suggests that a card payment costs somewhat less today. One reason for this is that the shops’ costs for getting a card payment redeemed seem to have fallen due to increased competition between the card acquirers. The level at which it becomes more advantageous to the economy to use cards rather than cash has therefore probably fallen below SEK 70. The survey we conducted last year shows that we use cards to an increasing extent and for smaller and smaller payments. It is not unlikely that today’s “average consumer” would choose to pay by card for an amount below SEK 123.
As a result, when Northern Rock got into trouble and a buyer could not be found, the Government had no alternative but to nationalise it – shareholders were wiped out and subsequently the Government was forced to inject £ billion of capital into the bank. A year later, when faced with the much bigger challenges of RBS and HBOS, the Government likewise had to step in.8 The situation was similar in other countries. While the US had a resolution regime, this only covered the insured deposit-taking entities within a banking group and proved unable to deal with the failure of large, interconnected groups. Similarly, SEC-regulated investment banks were outside of the scope of resolution regimes. While some European countries had bank-  8  4  Existing shareholders were not fully diluted in either RBS or HBOS. In the case of RBS, for example, they retained 16% of RBS’s total share capital (30% of voting shares). BIS central bankers’ speeches  specific insolvency regimes, they too did not have regimes that satisfy modern standards for bank resolution that would have guaranteed the continuity of critical economic functions. The shortcomings in terms of public institutions and powers have now been addressed in the key jurisdictions. We have, of course, yet to see how the new resolution powers operate in practice. But we now have a crucial, far reaching capability that we lacked entirely eight years ago. We need to be clear at this point what we mean by ‘resolution’ powers and authorities.

The impact has been identified and quantified; the bailout of Continental Illinois in 1984 artificially reduced the funding costs of all other banks that were considered ‘too big to fail’ by  4  2  The ‘Lifeboat’ was a Control Committee of the Bank of England and the English and Scottish clearing banks, consisting of senior representatives of each under the chairmanship of the Deputy Governor of the Bank, which first met on 28th December 1973. BIS central bankers’ speeches  more than a quarter of a percentage point (32bps).5 And while fluctuating over time, these ‘implicit subsidies’ remained sizable throughout most of the 1990s and 2000s. And indeed, expectations of bailouts were generally right. Very few banks were allowed to go into insolvency in the global financial crisis. Lehman was very much the exception that proved the rule. The impact of Lehman’s failure revealed that things had not moved on since Continental Illinois; the official machinery in most jurisdictions was completely unable to handle the failure of a large – or in the UK case even a medium-sized – banks in a way that did not pose risks to the financial system. So in most cases banks were bailed out. The risks of contagion, loss of confidence in the system and disruption to the provision of banking to the economy were simply too great. But the costs had grown since the Continental Illinois episode of the 1980s.
09.10.18  Banking business model: challenges and opportunities IX Financial Meeting. “Transformation of the banking industry in a new setting of digital innovation” Margarita Delgado Deputy Governor  Good morning. It is a pleasure to participate in this ninth edition of the Financial Meeting, a classic in our calendar widely acknowledged for its prestige and which gathers together a large number of banking industry leaders. I thank the organisers for their kind invitation to me to speak at the start of the event. And it is a pleasure to follow on from Ramón Quintana, my “brotherin-arms” over the course of intense years of work, first at the Banco de España and then at the European Central Bank. Indeed, in connection with Ramón’s words, and in this my first address as Deputy Governor of the Banco de España, I wish to focus on the banking business model and the need to adapt it to a changing environment. Like all private companies, banks can only survive in a stable fashion over time if they are profitable. And, set against the current transformation of the banking industry, ensuring profitability over time calls for a comprehensive, strategic and individualised reflection on the business model. Allow me to develop this idea of “comprehensive, strategic and individualised”.

It is ironic that only when problems in advanced economies led to contagion elsewhere and large number of central banks entered into such swap agreements with the Federal Reserve, did the IMF agree to such an instrument. This also reconfirms the need for greater voice and representation of emerging markets in important international financial institutions (IFIs) as highlighted in the recent G-20 Summit Declaration. While the reform is underway under the IMF, it is only with hope that other fora, including, the FSF will take the issue into consideration more seriously. Let me elaborate further on the importance of having emerging markets participated in the systemically important international fora. I think you all agree at this advanced economies or emerging markets are all prone to sectoral imbalances, which, if left unchecked, can lead to a full-blown crisis, anywhere, any time, when the bubbles burst. The impact of a crisis in an advanced, systemically important country can be much broader and deeper, creating a larger scale of world-wide externality. Emerging markets, unlike others, have had our share of coping with new challenges brought on by this phenomenon as well as those created by us one decade ago. It is, therefore, not only the responsibility of advanced countries to be in charge of global surveillance but also the responsibility of emerging markets to share our views and experiences of how to reform ourselves to be better prepared for greater uncertainty.
One possible explanation of this resilience in underlying costs and prices is that demand and supply have fallen largely in lockstep, leaving slack in the economy relatively little changed. The design of the furlough scheme, which has supported household incomes and aggregate demand at the same time as labour supply has fallen sharply, would support that interpretation. While output in the UK is likely to have fallen by around 8% during 2020, household incomes are likely to have been broadly flat. An alternative explanation lies in the heterogeneity of Covid’s impact on certain sectors, lowering demand sharply for some, raising it for others. If the price effects of the latter have dominated the former – for example, because of capacity constraints on expanding supply in some sectors – this might explain the relative robustness of aggregate cost and price measures.14 The sectoral pattern of demand and prices during the Covid crisis is consistent with this explanation (Chart 11). We have also seen these price dynamics at work in other markets as demand has recovered, notably in commodity markets. The price of oil has risen by around 65%, and of non-oil commodities by more than 20%, in the last four months. This reflation reflects rising (actual and expected) demand for these  commodities, alongside short-run constraints on supply. The MPC’s judgements on slack are shown in Chart 12, together with estimates of the output gap following the global financial crisis.

While patient behaviour is associated with activity in the pre-frontal cortex, impatient behaviour is associated with a distinct part of the brain – the limbic (or midbrain dopamine) system. 9 Humans have distinct patience and impatience “genes”. When making difficult inter-temporal decisions, we are quite literally in two minds. Impatience is no stranger to economics. It was discussed by Neo-Classical economists, such as Marshall, Fisher and Pigou writing over a century ago. Pigou memorably described the tendency of humans to discount excessively future outcomes as a “defective telescopic faculty”. Today, research has gone one step further: discounting is not just myopic but inconsistent through time. This has been given a somewhat less memorable, if mathematically more accurate, moniker by economists – “hyberbolic discounting”. 10 Hyperbolic discounting describes how people’s preferences alter as distant outcomes become closer to the present. Concretely, imagine a person who prefers $ in ten years’ time to $ in nine years’ time. With hyperbolic preferences, this same person would also favour $ in one year’s time to $ in two year’s time. They exhibit inconsistencies in decision-making across time, or so-called preference reversals. The implications of such behaviour are potentially far-reaching. The patient planner becomes a spontaneous doer when outcomes are within reach. The cautious saver becomes a reckless spender when nest eggs are close to hatching. The long-term investor becomes a short-term speculator if assets can be cashed. As temptation beckons, the devil on one shoulder whispers more seductively than the angel on the other.
Zeti Akhtar Aziz: Expanding ASEAN-EU economic links - the role of the euro Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Euro Conference “Expanding ASEAN-EU Economic Links - The Role of the Euro", Kuala Lumpur, 14 July 2005. *  *  *  Your Excellency Ambassador Thierry Rommel, Head of the EU Commission Delegation in Malaysia, Your Excellencies, Distinguished Guests, Ladies and Gentlemen, Good morning. It is my great pleasure to welcome you to the "Euro Conference: Expanding ASEANEU Economic Links -- The Role of the Euro". Bank Negara Malaysia is indeed honoured to co-host this event and would like to especially thank the European Commission for the opportunity. The purpose of this Conference is to bring together recognised experts to discuss the important issues affecting economic, monetary and financial interests in ASEAN and the EU. I believe that the exchange of ideas and views over the next two days would contribute towards an increased understanding of the developments and issues important to our respective regions. Our agenda is for the further strengthening of the close ASEAN-EU partnership that offers mutually reinforcing benefits to both regions. It is our hope that this Conference would serve as a catalyst to promote greater appreciation of the potential for an expanded ASEAN-EU economic relationship - a relationship in which trade and investment flows between our regions can be enhanced. The ASEAN-EU partnership has developed steadily over time through a number of well-established forums.

For example, regulatory requirements on banks could be raised to lean against a credit boom and lowered in the teeth of a credit downturn. In the public houses for credit, intake would be monitored, opening hours restricted and the Happy Hour abolished. This approach has become known in policy circles as macro-prudential policy. 17 Although the name is new, it is in the time-honoured policy tradition of “removing the punchbowl” from the party as it is getting started – a fitting analogy if the aim is to prevent a debt hangover. Had such a party-pooper been in place over the past decade, today’s debt headache would plausibly have been less acute. 14  Krugman (op.cit). 15  For example, Zingales, L (2008), “Plan B”, Economists’ Voice. 16  See, for example, http://scotland.shelter.org.uk/getadvice/advice_topics/paying_for_a_home/mortgage _arrears/mortgage_to_shared_equity. Bank of England (2009), “The Role of Macro-Prudential Policy”, available at www.bankofengland.co.uk. 17  BIS Review 10/2010  7  Regulation might also be used to lean against the collective tendency of banks to payout high even when profits are low. Among regulators internationally, there are proposals to introduce capital conservation rules, requiring banks to distribute less of their profits in adverse states of the world. By ensuring prudent profit retention on a collective basis, these rules ought to be in the long-term interests of banks and their shareholders, as well as the authorities.
First, it must be understood that the quest for competitiveness can only succeed if it takes the form of a collective effort whose sole purpose is to boost the economy’s value added. Without the latter, higher wages and profits cannot be paid. It cannot be an exercise in which one of the parties attempts to crowd out the other. It is clear, therefore, that a more focused social dialogue is needed that takes a stronger leadership role in identifying the policies and measures needed to improve Malta’s international competitiveness and to ensure their implementation. Second, there is absolutely no guarantee that the standard of living the country has been enjoying so far can be maintained in the face of increasing global competition. The threats that Malta is facing cannot be simply wished away or averted through quick fixes. What is required is a more flexible and  BIS Review 32/2005  3  cost-conscious attitude towards work practices and the setting of generally higher standards of performance across the board. Third, we must accept that subsidies, transfers and services provided for free by Government do not come at zero cost, but must be paid for through resources generated by the economy. Their provision at zero cost often induces excess demand and waste, and imposes unacceptable burdens on the productive sectors of the economy, thereby compromising their competitiveness and the very generation of income through which such benefits must be financed.

These developments cannot fail to have an impact on the Maltese economy given its small size and openness and its position as a price taker in international trade. While exporters are experiencing acute competitive pressures, the magnitude of this challenge from abroad, and the threat it represents for employment levels, has not, however, been adequately reflected in the results of the high-level social dialogue taking place in the country. It is in part for this reason that Malta appears less prepared than its competitors to face international competition. Against this background I shall review some of the more important changes brought about by EU membership and the attendant opportunities for Malta. Subsequently, I shall analyse the current economic performance in terms of the country’s ability to adjust to, and capitalise on, the new operating environment. Finally, I shall outline some policy orientations that could be useful in facing up to this challenge. The consequences of EU membership The main consequences of EU accession for Malta can be broadly categorised under five headings.
The inflation measure CPI-ATE excludes the effects of changes in taxes and energy prices. Norges Bank has given weight to this indicator of underlying inflationary pressures in the economy, but also keeps an eye on other indicators. The 12-month rise in the CPIATE adjusted for the effects of lower maximum day-care rates is estimated at 1.1 per cent in March. However, the CPI-ATE not only strips out temporary effects of changes in tax changes and fluctuations in energy prices, but also trend changes in these variables. Thus, this indicator is not a full-proof measure of underlying inflation. In the last 10-20 years, where energy prices have risen at a faster pace than other consumer prices and the tax level has increased somewhat, the CPI-ATE has tended to underestimate underlying inflation. This is illustrated in the chart, which shows the difference between the year-on-year rise in the CPI and the CPI-ATE over a moving 10-year average. Since 1997, the difference has been about 0.35 percentage point. Even when taking into account trend increases in energy prices, inflation is still moderate. The indicators that provide the best expression of underlying inflationary pressures in the economy may vary over time. Driving forces ahead Monetary policy influences the economy with long and variable lags. This means we must look ahead when setting interest rates. I would therefore like to comment briefly on some international developments that are important to the Norwegian economy and the assumptions concerning developments in Norway on which Norges Bank’s assessments are based.

Jean-Pierre Roth: Recent Swiss experience in monetary policy strategy Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at a seminar on monetary theory and policy, University of Fribourg, Fribourg, 28 November 2007. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  One continually recurring element in the history of the Swiss National Bank has been the application of a clear set of rules that we refer to nowadays as ′strategy′. The SNB′s monetary policy strategy consists of three elements: a definition of price stability, an inflation forecast and a fluctuation range assigned to a short-term interest rate. Experiences with this strategy since its introduction in the year 2000 – judged in terms of both price stability and cyclical developments in the economy – have demonstrated its value. Nevertheless, certain aspects of the strategy have been questioned by academics and by central bankers. These include inflation forecasting under the assumption of a fixed Libor, the choice of the reference interest rate, the role of monetary aggregates and exchange rates in the SNB′s models, and the decision not to publish the minutes of Governing Board meetings. However, these deliberately selected elements in fact serve to reinforce the legitimacy of the SNB′s strategy. BIS Review 139/2007  1
If we do not have financial stability, then monetary policy will not function as it should and the payment system risks failing. If the payment system does not function, this leads to risks for both financial stability and monetary policy. If we do not have price stability, there will be consequences for both financial stability and payments. 1 I would like to thank Hanna Armelius and Magnus Jonsson for their help in writing this speech and Elizabeth  Nilsson for help in translating it into English. I would also like to thank Emma Bylund and Petra Frid for help with data and diagrams and also Meredith Beechey, Frida Fallan, David Farelius, Gabriela Guibourg, Jesper Hansson, Iida Häkkinen Skans, Jens Iversen, Stefan Laséen, Pernilla Meyersson, Cecilia Roos-Isaksson, Åsa Olli Segendorf, Marianne Sterner, Ulf Söderström and Anders Vredin for their valuable comments. 1 [35]  Over the past 10-20 years, technological developments, globalisation and various reforms have changed the financial environment. The financial sector has become an increasingly important part of the economy. New actors and new services have emerged. FinTech companies have contributed new financial innovations. The changes are essentially positive and contribute to a favourable economic development. But the new environment also entails new risks and challenges for society. New challenges in a new financial environment. The Riksbank’s task is to promote a smoothly-functioning financial system and this means maintaining price stability and promoting a safe and efficient payment system. We therefore need to adapt our activities when the financial markets change and develop.

One question that many nevertheless ask in the light of today's relatively large balance sheets, is whether we should expect them to be large in the future. 44 There are many indications that this is the case. A short-term policy rate will always be an important monetary policy tool, but my assessment is that bond purchases will play a bigger role than before. As I said, the balance sheet is very large at present. This means that even if we wanted to reduce it rapidly, it would take a long time before it is back at the levels that applied prior to the global financial crisis 2008-2009. But there are also a number of economic reasons why the central banks’ balance sheets should be large going forward. 45  General low level of interest rates in Sweden and abroad If interest rates continue to be as low as now, the policy rate will hit the lower bound more often. Monetary policy will thus automatically become more dependent on other instruments to be able to affect interest rates and access to credit. Extensive asset purchases will thereby become a more important instrument, but other measures, such as forward guidance, and interventions on the foreign exchange market, could also become relevant. The Riksbank has already been using a form of forward guidance since 2007, in that we have published a policy rate path.