samchain/econo-pairs-v1 huggingface dataset:
The rapid economic development of these economies as they have integrated into the global economic system has created a major engine of growth for the world economy. However, this period of intense globalisation has not been without its downsides. Over my time on the Monetary Policy Committee since October 2006, we have seen how a highly integrated economic and financial system can also generate instabilities and transmit economic shocks rapidly around the world. The debates and the decisions of the MPC while I have been a member of the Committee have been dominated by the impact on the UK of the turbulence created by a global financial crisis, a major world recession and the inflationary impact of movements in globally traded energy and commodity prices. There was very little inkling of the turmoil to come when I joined the Committee in October 2006. My time on the MPC started towards the end of its first decade, which was a period of relatively stable economic conditions – steady growth and low inflation, with unemployment around 5% of the labour force. For me, however, this honeymoon period did not last long. Less than a year after I joined the Committee, over the summer of 2007, we saw the first tremors of the financial crisis. And by the autumn of 2008 it was clear we were heading into a major world recession.

Barbro Wickman-Parak: New international regulations for banks – a welcome reform Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at a meeting with Tjänstemännens Centralorganisation (TCO), Stockholm, 26 November 2010. *  *  *  Over the past three to four years the world has undergone the largest financial crisis since the Great Depression of the 1930s. The scope of the crisis and its catastrophic economic consequences quickly led to the realisation that something had to be done to avoid this happening again. As soon as the worst phase of the financial crisis was over, extensive work began on correcting the inadequacies in the regulatory systems that had come to light. The reform work is conducted in many forums at both national and international levels. And not least at EU level. But today I shall focus on the reform work in the Basel Committee on Banking Supervision, in which both the Riksbank and Finansinspektionen (the Financial Supervisory Authority) participate. This Committee is the international body that has established frameworks for bank regulation since 1974. In line with internationalisation that has taken place in recent decades, banks in different countries have become increasingly dependent on one another. This also applies to our Swedish banks, which to a great extent fund themselves on the international markets. Both Swedish banks and Sweden in general therefore benefit from banks around the world becoming more resilient.
In addition, the Government owns substantial assets that it could sell in order to speed up the reduction of gross debt, including its stake in the banks.6 How Iceland would stand vis-à-vis the other Maastricht criteria, such as those pertaining to inflation, interest rate differential, and ERM II membership (for two years prior to accession) is also largely in the hands of the authorities. Through fiscal restraint, they could also contribute to the convergence of long-term interest rates. The social partners could promote low inflation by exercising restraint in wage settlements. Finally, the shorter end of the interest rate spectrum is determined by the market’s self-fulfilling expectations concerning membership itself and by the decisions of the Central Bank. Although a number of arguments indicate that currency union membership would suit Iceland well, it is not certain that a majority of the electorate will vote in favour of European Union membership in a national referendum. The fact that a number of EU member countries are in  5  Intervention would normally be sterilised in order to prevent undesirable effects on money supply. Hence the impact on the exchange rate is unlikely to be large or lasting. 6  According to current targets, the authorities aim to reduce gross public sector debt to 70% of GDP by 2015. 4  BIS central bankers’ speeches  financial distress, not least those permitted to join the EMU through rather liberal interpretation of the Maastricht criteria, does not increase the likelihood that the referendum would pass.

Under these circumstances the Riksbank has chosen to use currency interventions to underscore that the movements in the krona’s exchange rate have been unduly abrupt and exaggerated. BIS Review 80/1998
One cannot rule out the possibility that we ourselves at some point 24 [35]  will need support in a corresponding manner, and I really hope that one will review the proposals in this aspect so that the Riksbank can continue to play the constructive role we have had for a long time. I also consider it to be of central importance that the Riksbank can cooperate in an efficient manner with the ECB and not be regarded as something of an odd bird in EU contexts. Another problem is how the new proposed act relates to EU legislation. The ECB has pointed this out in a critical comment on the work of the inquiry used as a base for the Government’s proposal. In particular the narrow definition of what is considered to be monetary policy, and which is thus covered by the Riksbank’s independence pursuant to the proposal, has aroused criticism from the ECB. The proposal therefore gives the impression of a general distancing from EU legislation. As IMF has provided criticism of the Committee’s proposal, one also gains the impression that the proposal is on the whole a distancing from international standards regarding central bank tasks. The Riksbank is a part of the European System of Central Banks, ESCB, and covered by EU legislation. As I see it, this cooperation will be made more difficult with a definition of monetary policy that differs from what applies to the other central banks in the EU, and even globally.

Miles D. (2014), “The transition to a new normal for monetary policy”, speech, Bank of England, 27 February 2014. Nilsson, C., J. Söderberg and A. Vredin (2014), “The significance of collective pension saving for the Swedish financial system”, Economic Commentaries, No. 3, Sveriges Riksbank. Rajan, R.G. (2005), “Has Financial Development Made the World Riskier?”, in The Greenspan Era: Lessons for the Future, Federal Reserve Bank of Kansas City Economic Symposium at Jackson Hole. Rey, H. (2015), “Dilemma not trilemma: the global financial cycle and monetary policy independence”, NBER Working Paper, No. 21162. Schoenmaker, D. (2011), “The Financial Trilemma”, Economics Letters 111, pp. 5759. Special edition on the e-krona, Economic Review, No. 3, 2018, Sveriges Riksbank. Swedish Government Official Reports (2019), “Sweden and the banking union”, SOU 2019:52. Sveriges Riksbank (2019), “Consultation response: A new Sveriges Riksbank Act (SOU 2019:46)”, Sveriges Riksbank. Sveriges Riksbank (2020a), “Consultation response: Sweden and the banking union (SOU 1019:52), Sveriges Riksbank. Sveriges Riksbank (2020b), Account of monetary policy 2020, Sveriges Riksbank. Söderberg, G. (2018a), ”Why did the Riksbank receive a banknote monopoly”, Economic Review No. 2, Sveriges Riksbank. Vlieghe, G. (2020), “Monetary policy and the Bank of England’s balance sheet”, speech, Bank of England, 23 April 2020. 27 [35]  Vredin, A., (2018), “Why ‘unconventional’ monetary policy has again become normal”, Forum financier/Revue bancaire et financière 2018/3. Williamson, S. and R. Wright (2010), ”New monetarist economics: methods”, Federal Reserve Bank of Minneapolis, Research Department Staff Report, No. 442. 28 [35]  Figure Figure 1.
In other words, the core of the U.S. banking system should be more stable in the face of a broader range and greater magnitude of shocks. However, the increased size and scope of these entities necessarily exposes them to a wider array of potential shocks and risks and means that the failure of one of them could have a broader impact than in the past and be considerably more difficult to resolve. The implications of such a failure would almost certainly fall outside of the range of experience captured in conventional models. At the same time, despite their size and scale, banks now account for a smaller share of financial intermediation in the United States than was true in the past. Depository institutions now hold about one fifth of all assets held by financial institutions, or less than half of what they did in 1984. This crude comparison understates the importance of banks in the credit origination process and wholesale financial markets, but the broad picture it paints of the increased role of non-bank financial intermediaries is still noteworthy. To put it differently, financial intermediaries that are not subject to consolidated risk-based capital frameworks and the full complement of supervisory constraints applied to banks and bank holding companies, now account for most of the assets of financial institutions in the United States. There has also been substantial convergence in the types of financial transactions bank-centered and non-bank affiliated financial intermediaries perform.

Timothy F Geithner: Changes in the structure of the US financial system and implications for systemic risk Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, to the Federal Reserve Bank of Chicago Conference: Systemic Financial Crises Resolving Large Bank Insolvencies, Chicago, 1 October 2004. *  *  *  My compliments to Michael Moskow for putting together this conference and for bringing together this formidable group of talent on systemic banking crises. There are those who regard this type of enterprise - that of strengthening the regime for managing financial failures - as misdirected. Some think focusing on bank resolution is like devoting resources to redesigning the morgue rather than improving the hospital. Some think that by preparing to deal with crises you make them more likely. I think the wiser judgment is the contrary. In this area at least, if you want peace or stability, it’s better to prepare for war or instability. I think this is particularly important for us in the United States. Although we have a rich history of banking crises in our past, and have watched other countries confront such crises more recently, it’s been some time since we’ve experienced the prospect or the reality of a systemically significant bank failure in this country.
Fraud can occur in a variety of ways: the inappropriate actions of a rogue employee can cause huge losses; hackers can access a bank’s mainframe or databases, which in the past few years, has resulted in increasing losses due to the theft of confidential customers’ information. Depositors affected by ATM or Internet banking fraud also continue to increase. Although fraud is impossible to fully prevent, financial institutions can reduce the probability of fraud occurrence and minimize losses with stronger oversight and tighter controls. This leads me to the Bank of Thailand’s views on the critical elements for fraud prevention. There are three critical elements that all institutions must possess to most effectively combat fraud: Strong corporate governance, up to date systems and processes, and effective internal controls and risk management. The first and most important element is strong corporate governance. Today, more than ever, boards of directors and senior management must provide close monitoring and oversight as the business activities of their institutions are increasingly complex and as the level of sophistication of their customers continues to increase. In almost every case where fraud has resulted in huge losses, ineffective corporate governance was identified as one of the primary causes. Boards and top management must set the “tone at the top” by creating an organizational culture that places high priority on risk management, compliance with policies and regulations, and high standards of ethical behavior at every level.

But there may be scope to widen and deepen the set of financial instruments covered by prudential requirements, to give a richer array of internationally-oriented macro-prudential tools. These would then be better able to lean against global fluctuations in a wider set of asset markets. Conclusion This time was different: never before has the world suffered a genuinely global financial crisis, with every country on the planet falling off the same cliff-edge at the same time. This fall laid bare the inadequacy of our pre-crisis understanding of the complexities of the financial system and its interaction with the wider economy, locally but in particular globally. It demonstrated why the global macro-financial network is not just a complex adaptive system, but a complex system of systems. The crisis also revealed gaps and inadequacies in our existing policy frameworks. Many of those gaps have since been filled. Micro-prudential microscopes have had their lens refocused. Macro-prudential macroscopes have been (re)invented. And global telescopes  BIS central bankers’ speeches  15  have been strengthened and lengthened. Institutional arrangements have also been adapted, better enabling co-ordination between the micro, macro and global arms of policy. So far, so good. Clearly, however, this remains unfinished business. The data necessary to understand and model a macro-financial system of systems is still patchy. The models necessary to make behavioural sense of these complexities remain fledgling. And the policy frameworks necessary to defuse these evolving risks are still embryonic.
This should not necessarily be seen as a failure with regard to the initial ambitions, but is also a result of new trends in the financial system making new demands of the regulatory systems, which it is to be welcomed that the political system embraces. And there has also emerged a partially new view on the purposes of government rules and regulations, which has been a process that has taken some time as it is based on a long tradition of fairly detailed provisions regarding which transactions were allowed or forbidden and who should do what. This has applied at least to financial services primarily aimed at the household sector, which has made it difficult to continuously adapt the financial sector to changing market conditions and has entailed considerable costs for the consumers. Now the emphasis is on ensuring that those who produce the services are clear in showing what they have to offer and what risks may be involved in different financial commitments, which gives the customers greater scope to decide for themselves how they want to make their arrangements. Continued pressure for political initiatives The EU has high ambitions to make the European economies more efficient. At the summit meeting in Lisbon two years ago the heads of state and government adopted a strategy aimed at making the EU the most competitive, knowledge-based economic area in the world by the year 2010! Financial integration plays an important role in realising this strategy.

It is reasonable, however, to assume that the weak demand would gradually predominate and put downward pressure on inflation. Preventing a recession must be regarded as one of the Riksbank's main tasks. BIS central bankers’ speeches  7  The equation would be simpler to solve if there were further tools that could be used to stabilise the credit cycle. This is where the new policy area that has arisen after the crisis – macroprudential policy – comes in. The international discussion of how the credit cycle should be taken into account and incorporated into the analysis and policy has to a large degree centred on how macroprudential policy should be conducted. 10 Decision on responsibility for macroprudential policy Many countries have already made some progress here. In many cases, the central bank has been allocated a central role in macroprudential policy, either as an important participant in some form of macroprudential policy organisation, quite often as chair or it has sole responsibility for macroprudential policy. In the United Kingdom, for instance, macroprudential policy has been allocated to a special committee within the Bank of England, the Financial Policy Committee (FPC). The governor and two other committee members are on both the FPC and the Monetary Policy Committee. In Sweden we are lagging behind somewhat with regard to the development of macroprudential policy. It has been unclear what framework politicians intended to establish. The question has been investigated by, for instance, the financial crisis committee, which presented an interim report at the beginning of this year.
As a result the demand for (broad) money rose alongside its rising supply – “velocity” declined, if you prefer – and the rate of M4 growth consistent with on-target inflation was significantly higher than 2%. These were deposits accumulated not as a “medium of exchange” but as a “store of wealth”. What those years also demonstrate is that commercial banks can supply and create such deposits with any commensurate growth in the balance sheet of the central bank. QE is neither necessary nor sufficient for broad money to expand. To take a more recent example, it’s not clear that the jump in household deposits during the pandemic was the direct and inevitable result of the central bank’s asset purchases at that time. If that were true one would presumably have expected to see something similar after every other previous episode of asset purchases. That’s not the case. For me, the more plausible cause is the combined impact of severe restrictions on spending and, thanks in part to fiscal support (in the shape of the furlough scheme), continuing growth in household income. At least in the first instance the resulting jump in saving had nowhere to go but into household deposits. More generally I think it’s better to understand the impact of QE through the lens of asset prices – what it does to bond yields – than quantities (still less as “printing money”). As with commercial banks, the demand for central bank money can change (sometimes very abruptly).

This is reflected, for example, in the fact that the credit spreads, that is the difference between the interest rates on corporate bonds and the interest rates on government bonds, have returned to the levels that applied before Lehman Brothers filed for bankruptcy protection. The difference between interbank rates and the expected policy rate has also decreased (see Figure 15). The credit markets are also steadily improving. Companies that just a few months  BIS Review 105/2009  7  ago found it difficult to issue bonds now have access to the market again. Companies with a good credit rating can now borrow at a lower cost, at longer maturities and with lower collateral requirements than before the summer. It thus appears that the situation on the financial markets is beginning to ease and that confidence is slowly returning. This is in turn a precondition for the continuation of the recovery of the real economy. Global monetary and fiscal policy is still highly expansionary and there is plenty of spare capacity in most countries. It is not unreasonable to assume that a rapid recovery of the financial markets can also facilitate a more rapid recovery in the real economy. There are thus several reasons why it is reasonable to be cautiously optimistic. We must also remember, however, that we are still emerging from a severe recession and it may therefore take time before global demand recovers completely.
Fortunately, the gap between perceived and actual price developments is narrowing down again significantly. We are responsible for ensuring price stability for 306 million people in the euro area, who use the euro and make economic decisions every day. So it is essential, absolutely essential, that we preserve and enhance their trust in our single currency. They know they can rely on us to preserve their purchasing power over time. We are an anchor of stability created by the Treaty to ensure low inflation, in line with our definition of price stability. Let me conclude on a more personal note. 4  BIS Review 5/2005  The times when central banks were rather reclusive and closed institutions administering interest rates with some dedication to surprise observers and markets have gone. One of the main goal of a responsible central bank now is to have a reliable communication guiding expectations in a rapidly changing environment. In this respect one has to fully realize that the ECB has unique challenges to cope with. First, when we start the press conference the Vice-President and I know that we are speaking in quasi real time, through all of you, not only to European market participants, investors, savers, economic agents, entrepreneurs but also to all our European fellow citizens to whom we are accountable as a last resort. This is already a demanding and exciting task taking into account the fact that we are the only major central bank embarking on a press conference immediately after the monetary policy meeting.

Chart 12 10-year euro area GDP-weighted sovereign bond spread versus euro OIS rate  https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp200519~e5203d3520.en.html  8/14  5/19/2020  Pandemic central banking: the monetary stance, market stabilisation and liquidity  (percentages per annum)  Sources: Refinitiv and ECB calculations. Notes: Daily data. The latest observations are for 14 May 2020. This tightening of financial conditions represented a further headwind for the effectiveness of monetary policy. There was an evident risk of adverse liquidity spirals and an overshooting of asset price corrections in many markets, impeding the transmission of monetary policy and endangering financial stability. In the context of a monetary union, the absence of currency risk means that flight-to-safety dynamics have an intrinsic cross-border element, which primarily takes the form of reallocations across sovereign bond markets. In view of the central role of sovereign yields as benchmarks in pricing assets and setting lending rates, non-fundamental volatility in sovereign spreads impairs the transmission of monetary policy. In this context, the PEPP announcement acted as a stabilising force. The announcement of the PEPP has successfully halted the tightening in financial conditions and contributed to a partial reversal in the trend. The embedded flexibility of the PEPP, which allows for fluctuations in the distribution of purchase flows over time, across asset classes and among jurisdictions, has been a crucial element in fostering its effective market stabilisation function.