samchain/econo-pairs-v1 huggingface dataset:
On other fronts, there was also an abundance of events which could have affected confidence in the currency over the sensitive period of political transition leading to the resumption in the exercise of sovereignty over Hong Kong by China on 1 July 1997. But the Hong Kong dollar’s link with the US dollar has remained rock solid, with the exchange rate staying very close to the fixed level of $ to $ 6. There are good reasons why our exchange rate has remained so stable against such eventful background. Hong Kong’s economic fundamentals are strong2. We pursue sound macroeconomic policies. We have an impressive track record of fiscal discipline3. In the last 14 years of the fixed exchange rate link, while most countries were grappling with fiscal deficits, Hong Kong has consistently run budget surpluses averaging 2% of the GDP per year. Our fiscal surplus in the financial year 1997-98 was 5.8% of GDP. As a result, we have over the years built up strong fiscal reserves. These are deposited with the Exchange Fund which holds the foreign reserves of Hong Kong, including those backing the issue of our currency. As at the end of 1997, Hong Kong’s foreign reserves stood at $ billion, which was the third largest in the world after Japan and the Mainland of China, providing not just 100% backing, but nearly 800% backing for the currency4. 7.

This stands in stark contrast with the mystique and opaqueness which characterized earlier central bank communication. For a long time central banks have focused predominantly on their interest rate policy. Considerably less attention has been devoted to their liquidity policy which used to be carried out somewhere in the basement of the monetary policy temple, far away from the spotlight of the announcement of interest rate decisions. This year, liquidity policy has moved into the spotlight and has taken over the lead role at the forefront of the monetary policy scene. The current situation also highlights the close interaction between price stability and financial stability and that the focus of policy makers today is on crisis management. The challenge in the coming months and year is to pursue a dual approach consisting of short-term action and long-term solutions. We must constantly be on the alert to put out fires when and where they emerge, while studying the causes of the current crisis and finding the right long-term remedies in the form of new rules and systems so that we do not repeat the same mistakes. As the French saying goes, there is no point in putting a band-aid on a wooden leg. 2  Ecklund, Gunhild (2008), Creating a new role for an old central bank: The Bank of Norway 1945-1954, Series of Dissertations No. 2-2008, BI Norwegian School of Management. 3  Sejersted, Francis (1994), On the so-called “autonomy” or “independence” of central banks.
No immediate consequences have been felt so far in the US debt market which remains the most liquid one and the ultimate benchmark for assessing risk. However, a pervasive uncertainty has been created, which might be responsible for the decline in confidence that has occurred over the last weeks. In Europe, on the contrary, sovereign credit risk has had immediate and dramatic consequences. It is difficult to foresee how, in the longer run, markets will assess debt sustainability. BIS central bankers’ speeches  1  But let me challenge some current analyses about debt sustainability in Europe. –  First competitiveness. In the UK, for instance, the effective real exchange rate has depreciated by 23% over the last four years and its exports have grown by a healthy 15%, year-to-year over the first semester of 2011. But Italy, Spain and Greece have done better, with exports growing respectively by 16%, 19% and 37% over the same period, with, of course, no internal exchange rate adjustment. Linking competitiveness with exchange rate depreciation is therefore too simplistic. Improving competitiveness can be achieved by proper domestic reforms with a lasting result. –  Second, the euro is the only major currency area with its external accounts in balance, which is a strong guarantee of long-term solvency. –  Third, the euro area’s aggregate budget deficit will stand at around 4.1% in 2011, less than half that of the UK or the US.

Emerging economies will enjoy  BIS central bankers’ speeches  3  sustainable growth in the years to come. Above all, in Europe, the community of nations are willing to face the extraordinary challenges they are confronted with and to build the lasting solutions needed towards greater integration within the Eurozone. Central banks are constantly cooperating in monitoring the situation and acting as they have done recently to provide dollar funding to international banks. This spirit of cohesion is a strong asset. It is deeply rooted in our dual role of preserving monetary and financial stability. BANQUE DE FRANCE is, for its part, strongly committed to overcome this challenge. Thank you. 4  BIS central bankers’ speeches
This means that the different opinions must instead be brought together into a compromise as far as this is possible. The Monetary Policy Reports and Updates that we publish can thus be said to reflect the average stance of the members of the Executive Board. If one or more of us considers that the opinions expressed in the Report or Update differ too much from our own opinion to be able to express support from them, we must enter a reservation at the monetary policy meeting. We have, of course, also had the opportunity to put forward any dissenting opinions during a number of earlier meetings. When a member of the Executive Board enters a reservation at a meeting, it therefore rarely comes as a surprise to those initiated in the  BIS Review 65/2010  5  forecasting process or to the rest of the Executive Board. Most of the Executive Board members believe that they know roughly how their colleagues on the Executive Board will vote at the actual meeting. This is usually true, according to the conclusions of a study made by the Monetary Policy Department, and which is based on a questionnaire sent to all current and previous members of the Executive Board. 8 The reservation and motivation are published after the monetary policy meeting, in the press release and in the minutes of the meeting.

The more information we receive on the effects that different risk scenarios have on the economy, the clearer the base for the monetary policy decisions will be. Then it is necessary for decision-makers to realise that it is not always possible to explicitly include all possible scenarios in the forecast. Sometimes this is impossible due to lack of resources. In principle, we Executive Board members have insight and the possibility to discuss the forecasts with the Monetary Policy and Financial Stability Department throughout the whole of the forecasting process. We can then question the assessments made. The Board members’ assessments of which risks are most relevant for the decision naturally also affect which analyses are made by the Monetary Policy Department. The analyses published in Monetary Policy Reports and Updates are normally just one part of those made during a forecasting round. Of course, the entire Executive Board does not always agree with the analyses presented as these are the results of a compromise where the different opinions are weighed together. But in this case it is clear, either from the Board member’s contribution to the debate as published in the minutes, or in the form of a reservation entered. In this way the general public has very good insight into how we Executive Board members have though when making our decision. BIS Review 65/2010  7
This is a clear entry point and a good opportunity for both public and private sectors to coordinate their efforts. 1.6 Despite their inherent weaknesses, automated teller machines, debit cards, automated clearing house networks and credit cards have reached critical mass. However, smart cards and some e-cash systems, electronic bill payments and person-to-person internet payment methods are yet to catch up. Accessibility, but at a high price, can also put off people from opting to use such payment methods or instruments. Similarly, if there are no service providers to facilitate transactions, card usage cannot be made popular and people may continue to use cash, as they are uncertain whether the substitute or new instrument is as accessible as the old ones. Despite inherent inefficiencies of cheques, they are still popular due to easy accessibility, although the regulators keep worrying about the systemic risks involved in cheques. That’s why, in the recent past, India, Sri Lanka, Singapore and many others have introduced cheque imaging or fully automated cheque clearing processes. Given the reduced time from t+5-7 to t+1-2 and facilities at regional level, in Sri Lanka, people now tend to use more cheques compared to cards or electronic payments, which is a worry. The public policy objectives of payment system development thus demands that we allay the fear of non-accessibility and, where possible, offer appropriate incentives to users to move out of paper-based inefficient instruments. 1.7 Preserving the public policy goals is easier where the regulator is also the retail payments service provider.

The optimal mix depends on the level of development of the financial market, but a more active role has to be played by the authorities to achieve the public policy objectives of retail payment reforms. 4.3  Policy elements  4.3.1 Central banks to play a catalytic role: Central banks should be at the centre, take the leadership and coordinate the development process as other stakeholders tend to have vested interests. While it is important to enhance oversight and supervisory functions by the central banks and ensure that governance arrangements for infrastructure and service providers are in place, it is also necessary to ensure that such arrangements do not lead to unnecessary restrictions on competition and innovation. 4.3.2 Stakeholder participation: It is essential that central banks engage in effective participation and secure cooperation from all stakeholders in the payment systems, through establishing National Payment Councils (NPC) or National Payment Committees/Advisory Councils etc. India, Sri Lanka, Pakistan and some others have already established NPCs and they are the highest level policy making authorities for development of national payment systems. Banks have a good opportunity to give their inputs at these meetings, especially on operational matters. 4.3.3 Declare public policy objectives of retail payment system development: The undeclared and unsaid public policy objectives have been a contributory factor for ad hoc retail payment system developments in the past.
In the case of the SNB, foreign currency investments have increased substantially as a result of foreign exchange interventions. This has exposed the SNB to a substantial exchange rate risk, which is a consequence of monetary policy considerations. Consequently, it is one that the SNB must take. We reduce the risks through suitable diversification of our foreign currency investments. However, the primacy of monetary policy means that our scope for diversification is limited.4 Additional risks in connection with zero interest rate policies can result from the fact that it has become very difficult for investors to achieve a satisfactory return on bonds. There is a danger that investors seeking an attractive yield will become imprudent and take excessive risks. The longer a low interest rate phase, the greater the danger of unintended consequences in the form of speculative price developments and misallocations. We have been observing a substantial increase in real estate prices in Switzerland for some years now, with strong growth in mortgage loans. The SNB has repeatedly expressed its concern over these developments. Prolonged low-interest phases also present the insurance industry and pension funds with considerable challenges. It goes without saying that central banks continually evaluate and reassess the effects and risks of monetary policy in the light of the most recent data. This applies in normal times and even more so in exceptional situations such as we have experienced over the past few years.

Consequently, the SNB will suspend its issuance of SNB USD Bills. The last auction will be held on 21 June 2010. As has already been mentioned by Philipp Hildebrand, the extent of foreign exchange interventions are leading to a higher risk concentration for the SNB. However, monetary policy considerations remain paramount. Furthermore, we need to keep the overall picture in mind. Thus, since our portfolio is well diversified, no loss has been recorded overall since the beginning of the year. This is due, in particular, to investments in foreign currencies other than euro as well as our gold investments, which also constitute one of our main sources of risk. What is more, the important time period is the long term and over that horizon potential exchange rate losses should be offset (at least in part) by the return on foreign exchange investments. Finally, it must be borne in mind that the SNB has set aside substantial provisions to absorb any possible future losses. Transition from a liquidity deficit to excess liquidity in the financial system The unconventional measures taken by the SNB to combat the impact of the crisis and to avert deflation risks have led to an ample supply of liquidity to the financial system. Therefore, we have witnessed a gradual shift from a liquidity deficit to a situation characterised by excess liquidity. In fact, before the crisis, banks had to obtain liquidity from the SNB in order to satisfy their minimum reserve requirements.
5  Specifically, the trends generated by Chicago Fed economists’ preferred models are very close whether they are estimated using data through 2002, 2007 or 2014. 6  See, for example, Acemoglu and Autor (2011) and Charles, Hurst and Notowidigdo (2013). See Shierholz, Mishel and Schmitt (2013) for a skeptical view. An alternative explanation is based on changes in the use of social safety net programs, especially disability insurance (DI), that are partly cyclical in nature. The DI rolls have been increasing throughout this business cycle, although they have been on the rise, more or less uninterrupted, since the 1990s (Autor, 2011; and Burkhauser and Daly, 2011). The DI program tends to be cyclical partly because eligibility standards ease amid deteriorating labor market conditions (Mueller, Rothstein and von Wachter, 2013). That is, people with moderate disabilities are more likely to qualify for the DI program when there are fewer suitable jobs available. BIS central bankers’ speeches  3  high this summer. 7 Yet, despite some improvement, the JOLTS hiring rate remains disappointingly below where it stood before the recession began. 8 Why might firms report many more openings but be slower to fill them? Posting a vacancy is only part of the hiring process. Jason Faberman of the Chicago Fed, in collaboration with Steve Davis of the University of Chicago and John Haltiwanger of the University of Maryland, estimate that the overall effort that firms actually are putting into filling a job vacancy fell by over 20 percent during the recession.

Despite the headwinds from continuing debt-overhang and recent financial distress, European authorities in 2011 judged that the eurozone economy was emerging from recession and headline inflation was at risk to rise persistently above target. The European Central Bank (ECB) responded by raising policy rates in 2011. The ECB soon had to backtrack as output in the eurozone fell again and inflation began to march down below target. Today, the eurozone faces continued economic weakness and an inflation rate that is just about 1/2 percent. As a result, the ECB recently lowered policy rates to the ZLB, has started undertaking additional unconventional monetary policies, and is now encouraging fiscal expansion among eurozone countries that are able to do so. These lessons from monetary history strongly suggest that there are great risks to premature liftoff from the ZLB or near-ZLB conditions. Unless economic conditions are fundamentally strong and the previous impediments to growth have receded sufficiently, the odds remain high that monetary authorities will need to retreat right back into the ZLB. And the costs of being mired in the ZLB are simply very large. The ZLB prevents using our very best policy tools to address negative shocks. The ZLB means that interest rates cannot fall low enough to equate the supply of saving with the demand for investment, which, of course, significantly impedes capital formation, future economic growth, and the health of labor markets.
(iii)  The economic transformation process experienced after the 2001 crisis has enabled significant achievements in macroeconomic stabilization and helped reduce the “dollarization” effect created by unstable macroeconomic policies and high inflation in the past. Despite some deviations from this main tendency due to exogenous shocks and changes in risk perceptions, decisive implementation of economic program has always enabled a return to the main tendency. This process, combined with favorable developments in the balance of payments, has supported the increase in foreign exchange supply in the economy. (iv)  In this framework, in order to minimize the impact on supply and demand conditions in the foreign exchange market, the Central Bank, which follows a moderate reserve-raising policy, has conducted its FX buying via auctions, whose terms and conditions are announced with due notice, since 1 April 2002. Moreover, the Bank has announced annual auction programs since 2005 and does not make any amendments to these programs, unless extraordinary differences are observed in foreign exchange liquidity. (v)  Meanwhile, as also emphasized in all its press releases, the Central Bank will continue to closely monitor the volatility in exchange rates and may directly intervene in the markets in the event of excessive volatility that might occur in either direction. These volatility interventions are not only carried out by considering past data with a mechanical rule, but by evaluating all aspects of realized and potential volatilities.

The Fund therefore purchased a large volume of equities from 2001 to 2003 and is buying a considerable volume now. Of the equities now owned by the Fund, 40 per cent were purchased last year when prices were moving down. 9  Knut Hamsun (1976): August. In Samlede Verker 11, Gyldendal Norsk Forlag, p. 120. (Unofficial translation by Norges Bank’s translators). BIS Review 16/2009  19  As a result, ownership in the business sector in the US, Europe and Asia has increased – in companies’ human capital, in their machinery and equipment, brands and organisation. In the long run, and even though many companies have now folded, it may perhaps be at least as safe as extending loans. Conclusion Let me conclude. At the moment, activity is falling in the Norwegian economy, as elsewhere. The source of the downturn is external. We cannot shield ourselves from its impact, but we can decide how we will address the turnaround. The global financial highway is now being modernised and overhauled. It is essential that traffic again flows smoothly. Rimbereid asks: “In which landscape Will we lay our next lucrative track?” 10 Norway has a credible and robust economic policy, and a business sector that is quick to adapt. This is a good point of departure. Thank you for your attention. 10  20  Øyvind Rimbereid, 2008: Herbarium, p.54. (Unofficial translation by Norges Bank’s translators). BIS Review 16/2009
Once the minister concerned had appointed each director, they could draw up a contract of objectives and means whose results could be tracked to ensure accountability. This approach is widely practised in Sweden and elsewhere, and requires no legal changes. Why not start experimenting it straight away? By way of examples, the Attali report cited the tax and accounting administration, INSEE, civil protection and the prison service. Support for managers These increased levels of responsibility and autonomy must be accompanied by a change in managerial culture to one that is more open and participative with a cross-cutting focus. When it comes to change management, we never spend enough time listening to and informing the men and women working in the public service, nor do we devote enough resources to supporting them dayto-day. Social dialogue, when it manages to get beyond posturing, can provide one of the levers for change. This support is particularly important for "middle"  Page 18 of 19 or local managers: they are the link between senior management and public service workers, and recognition and empowerment are crucial. For example, every year we bring the top 600 managers at the Banque de France together to discuss the progress of our strategic plan. We have given them more leeway when evaluating their teams or organising teleworking, backed up by feedback as often as possible. Simplification Lastly, simplification is an essential vector for transforming public services – expected by everyone but all too often neglected.

Measures which set an upper limit for individual household indebtedness can therefore be effective in terms of reducing the risk of weak macroeconomic growth, even though the effects of the total debt-to-income ratio would be limited. The Riksbank’s previous analysis has also shown that a debt-to-income limit (that is to say a limit for how large debt can be in relation to disposable income) could be an effective complement to the current loan-to-value limit. 16 This is due to the fact that incomes grow in a more stable way than housing prices. Whenever housing prices increase sharply, there is a risk that debts will continue to increase in relation to incomes if the only limitation is a loan-tovalue limit. A debt-to-income limit is also more effective in terms of preventing interest payments taking up too large a share of incomes in the future. So those are the measures we could take. But what would happen to household indebtedness if no further measures were taken? A few different scenarios for household indebtedness Normally, the Riksbank creates forecasts regarding household indebtedness three years ahead. Making an assessment any further ahead than this would involve considerable  16  See the article “Debt-to-income limit as a policy measure” in the Financial Stability Report 2015:1, and Alfelt, G., Lagerwall, B. and Ölcer, D. (2015) “An analysis of the debt ratio ceiling as a policy measure”, Economic Commentary no. 8, 2015. Sveriges Riksbank. BIS central bankers’ speeches  13  uncertainty.