samchain/econo-pairs-v1 huggingface dataset:
The recession after the credit bubble burst and oil prices fell in 1986 was deep. The recession was deeper than would have been the case if we had maintained a larger and competitive manufacturing sector. Norwegian industry lost export market shares in the late 1980s in spite of the booming conditions abroad and substantial capacity slack at home. It was recognised that a substantial revision of economic policy would be necessary and that the problems created by inflation had to be taken seriously. The exchange rate was chosen as the nominal anchor in 1986. A fixed exchange rate was an intermediate target for achieving low and stable inflation. Inflation fell gradually to 2-3 per cent in 1991-1992. We had to abandon the fixed exchange rate policy in 1992. An important reason was the weakness inherent in the fixed exchange rate regime in a world with free capital flows and deep financial markets. The krone exchange rate showed, however, little change to begin with and rapidly found a new range. A formal inflation target for monetary policy was introduced in the spring of 2001. The operational target of monetary policy as defined by the government is inflation of close to 2.5 per cent over time. Many countries had already gained many years’ experience in operating such a system. New Zealand was the first in line towards the end of the 1980s. Canada followed shortly thereafter.

This policy was at the root of many of the problems that followed in the 1970s and 1980s. Today’s formulation of economic policy reflects the experience gained and the lessons learned in these two decades. The economic policy contributed to wide fluctuations in the Norwegian economy. Inflation became high and variable. This was largely due to a perception in the 1960s and 1970s that strong growth and low unemployment could be achieved if we were only willing to accept somewhat higher inflation. But it was gradually recognised that there was no such trade-off. The absence of a nominal anchor was one of the main reasons behind the pronounced swings in the Norwegian economy. With a policy of low interest rates and devaluations, inflation took root. Nominal interest rates were kept at a low level even though inflation rose. Frequent devaluations from 1976 were unable in the long term to prevent a decline in the manufacturing sector. On the contrary, they proved to be self-reinforcing. The wide fluctuations culminated in a credit boom in the mid-1980s. The fluctuations were reinforced by oil price shocks and the use of expected revenues from oil production. The government began already in the 1970s to budget on the basis of future strong growth  2  BIS Review 22/2006  in petroleum revenues. The result was that we spent a large share of our petroleum wealth in the 1970s and 1980s. Welfare schemes were expanded significantly. Manufacturing industry was scaled back.
To August, the central government, Social Security and regional government budget outturn evidenced a deficit of 4.3% of GDP, a 0.3 pp improvement on the same period the previous year. To meet the deficit target requires an improvement of 0.8 pp of GDP over the year as a whole; accordingly, the increase in revenue and/or the containment of spending in the final four months of the year will need to be greater than that recorded between January and August. This greater effort should be concentrated at the regional government level where, on the information available, the risks of slippage are located. For 2015, the Budgetary Plan sets a budget deficit target of 4.2% of GDP, 1.3 pp of GDP below that for 2014. In terms of the different agents, the reduction in net borrowing would amount to 1 pp of GDP in the case of central government and the Social Security system, while the regional governments should adjust their fiscal imbalance by 0.3 pp of GDP and local governments should run a balanced budget. In 2015, the improvement in the cyclical position and the reduction in government debt yields will contribute to enhancing public finances. On the estimates available, meeting the deficit target for the coming year will require a budgetary adjustment drive, measured by the change in the primary structural balance, that is appreciably less than that made in previous years. Overall, what we have is a more favourable macroeconomic scenario for the adjustment than that in place in 2012 and 2013.

For instance, such systems would render the reconciliation of transaction and balance data between banks and a third-party system obsolete. The paradigm seems to have been turned on its head: decentralisation – not centralisation – now appears to promise the greatest efficiency gains. I do not, however, believe that decentralisation will become the ‘new normal’ in all financial market functions and infrastructures. Many existing financial market infrastructures are already highly competitive, and barriers to entry for new technology are correspondingly high. The conventional, centralised model they are built on is already low-cost and meets high safety standards. And improvements are being made all the time. Distributed ledger technology, meanwhile, has yet to prove it can outperform the existing set-up with respect to safety and efficiency. Having said this, there may be some scope for deploying distributed ledgers in certain complex financial market functions or infrastructures. The settlement and safekeeping of securities is one example. In the end, we may well see conventional and new technologies coexisting or blending. Staying with the securities example: it is conceivable that we will see a hybrid scenario. This could entail security-specific information being settled via a distributed ledger, while the payment leg could continue to be effected via a traditional, centralised payment system. 4 5  6  7  Cf. Diana Chan, Florence Fontan, Simonetta Rosati and Daniela Russo, ‘The Securities Custody Industry’, European Central Bank, Occasional Paper Series, No. 68, August 2007.
Therefore, it is in the interest of all stakeholders to migrate quickly to the SEPA instruments. So what will make industry and/or customers stop using the old products and switch to SEPA? A SEPA migration end-date for credit transfers and for direct debits would make clear that migration cannot take forever. The European Commission in collaboration with the  6  4  ECB, SCT Indicators (see http://www.ecb.europa.eu/paym/sepa/timeline/use/html/index.en.html). BIS Review 151/2009  Eurosystem is, therefore, investigating the possibility of a Regulation to facilitate the migration to SEPA. The Eurosystem considers a legally binding instrument necessary for a successful migration to SEPA and hence fully supports such regulation. I also see a lot of support for this way forward in the market. Therefore, we should continue our efforts in setting a realistic but ambitious end-date for migration to SCT and SDD to reap the full benefits of SEPA. Conclusion Let me conclude. SEPA is not just about making life easier for European citizens and companies by removing obstacles to cross-border payments. SEPA is also about removing barriers to the single market, making payments more efficient, introducing more competition to the payments industry and speeding up innovation. Hence, rapid SEPA migration would bring tremendous benefits to the European economy as a whole. The single market for goods and services – created with the Maastricht Treaty 16 years ago – now needs a single market for financial services.

A successful SEPA for Cards also needs the harmonisation of technical standards, basic business rules and certification practices across schemes. Only this will bring an integrated cards market into effect. SEPA by its nature of harmonizing the retail payments market will promote more competition and hence will be a key driver of innovation in the market. New developments have already taken off in the field of eSEPA. eSEPA means the provision of various retail payment services by means of electronic channels – such as internet – in order to offer benefits to payment service users in the form of easier access, better functionality and a more attractive user experience. More and more companies and consumers operate online. Hence, the market needs to create European e-payment – or online – solutions, which will bring even more efficient and transparent trading at the retail level. For example, an “e-payment” is an internet banking payment. The web-merchant receives a payment guarantee confirmation in real-time and the goods can be released immediately. In addition, they have a security advantage, insofar as the merchant does not have to handle and store his clients’ confidential banking details. We welcome that the EPC is currently developing a framework for the interoperability of such online payment schemes. The Eurosystem strongly encourages the EPC to finalise the e-Payments framework in the near future. Moreover, we encourage the EPC to consider establishing a European e-payments scheme or to taking over one of the existing schemes.
The problems with subprime loans spread to other parts of the world economy The subprime loans were repackaged into new investment instruments which were later sold to investors in other countries. As it became increasingly evident that these securities were probably substantially overvalued, it came to light that a number of banks had suffered large losses. The uncertainty over which banks had suffered the largest losses made the banks unwilling to lend to one another. The financial crisis escalated when the US government decided in autumn 2008 to allow US investment bank Lehman Brothers to fail. The unease on the global financial markets increased and the financial crisis that had started in the United States developed into a global crisis. The supervision in the financial markets has been insufficient With hindsight, we can observe that many investors took excessive risks. The risk price they had calculated on was too low. It can also be noted that the credit rating agencies gave the new financial products too high ratings because they had not taken sufficient account of the risk that it would not be possible to sell these products in the market. At the same time, the supervision of the financial markets did not give sufficient consideration to the problems that can arise when a house price bubble bursts. The remuneration structure in the private sector has moreover encouraged short-term thinking and substantial risk-taking.

However, the Riksbank can stimulate the economy further in other ways without needing to cut the repo rate to zero. The most important measure concerns ensuring that the real interest rate, that is, the repo rate adjusted for inflation expectations, is sufficiently low. This can be done by influencing inflation expectations, which is made easier as we have a numerical inflation target and we publish forecasts for both the inflation rate and the repo rate. We can, for instance, announce that we are going to hold a low repo rate for a longer period than we assumed at the monetary policy meeting in April and show how the inflation path will then approach 2 per cent more quickly than otherwise. This would raise inflation expectations. A further possibility would be for the Riksbank to contribute to pushing down the rate on government bonds, housing bonds or commercial paper by purchases in these markets. There may also arise a portfolio balance effect if other market participants’ demand for corporate bonds, for instance, were to rise as a result of the Riksbank's purchase of government bonds. However, there is reason to await a more detailed analysis of the need for, and possibilities with, these measures. There are also a number of legal issues surrounding this type of measure that must be taken into account before such measures are implemented. At the most recent monetary policy meeting I did not consider that it was yet time to do anything other than cut the repo rate.
Since we published our Monetary Policy Report in July, new statistics have been published, which indicate that US growth is already beginning to slow down. According to the preliminary National Accounts for the second quarter of this year, GDP increased by 0.6 per cent compared with the first quarter, which is marginally less than the 0.7 per cent we were expecting, and less than during the first quarter. Employment in the private sector rose in July, but was still slightly lower than expected. US unemployment remained unchanged at the same time, at 9.5 per cent. There are also other signs of weakness. The housing market has not yet begun to recover from the deep fall in connection with the financial crisis. The purchasing managers’ index for the manufacturing industry in the United States fell from 59.7 in May to 56.2 in June and 55.5 in July. Although an index figure above 50 indicates growth in the sector, these listings are the lowest since December 2009. (Figure: Purchasing managers’ index). Inflation in the United States has fallen in recent months. Measured in terms of the consumer price index, inflation was 1.2 per cent, but when foods and energy are excluded, it was unchanged at 0.9 per cent. The relatively low inflation is linked to the low resource utilisation in the United States, among other things. Wages are also subdued. (Figure: Inflation in the USA).

According to Statistics Sweden’s first preliminary compilation of the National Accounts for the second quarter of this year, Swedish GDP increased by 1.2 per cent, compared with the first quarter (seasonally-adjusted). This is slightly more than the 0.9 per cent we have assumed in our report, and also slightly more than other forecasters have expected. GDP has thus increased for five quarters in a row and has recovered half of the large fall totalling 8 per cent that took place during the previous five quarters. (Figure: GDP per quarter). The picture of continued good growth is also supported by the National Institute of Economic Research’s Economic Tendency Survey, which was presented at the end of July. Although the indicator fell between June and July this year, the fall was marginal and the indicator still points to the mood among companies and households being much stronger than normal. (Figure: Economic Tendency Survey). The purchasing managers’ index in Sweden rose to 64.2 on the other hand, which can be compared with a figure of 62.4 in the previous month. It was primarily increased orders and production that contributed to the rise. (Figure: Purchasing managers’ index). Moreover, new statistics show that industrial production has continued to increase strongly, and slightly more than market expectations, while the production of services has remained at an almost unchanged level. However, industrial production is still far below the earlier peak levels. (Figure: Industrial and services production). Brighter labour market The recovery in the labour market has also continued.
Villy Bergström: Monetary policy in an uncertain world Speech by Mr Villy Bergström, Deputy Governor of the Sveriges Riksbank, to the Sparbanksstiftelsen Nya, held at the Gävle concert hall, 14 May 2001. *  *  *  Following several years of very strong GDP growth, we are now seeing a slowing down in the Swedish economy. It is necessary for the growth rate to slow down over the next few years to avoid a long-term threat to price stability. While there was a plentiful supply of free resources, GDP could grow more quickly than the long-term productivity growth and labour force supply allowed. Now, however, the resources are running out and production needs to be adapted to a slower rate that is more sustainable in the long term. When the Riksbank raised its repo rate by 25 points to 4 per cent in December last year, the decision was based on assessments that demand would continue to increase to such an extent that the shortage of resources would lead to the inflation target being exceeded. The interest rate was raised despite the fact that the inflation rate was then only 1.4 per cent. This shows the pedagogical and practical problems the Riksbank faces when making such decisions. Monetary policy decisions are based on assessments of the inflation rate a couple of years ahead and are aimed at achieving the inflation target in this time horizon.

In addition, the target that has been used to guide monetary policy has rarely been able to signal early enough that imbalances were being built up, regardless of whether monetary policy was aimed at a fixed exchange rate or towards a price stability target. To simplify, one can say that the result of an exaggerated optimism in countries with a fixed exchange rate has been that the build-up of financial imbalances was expressed in rising inflation without any depreciation pressure on the currency. It has not been possible to subdue inflationary pressure through raising interest rates while optimism regarding the country's economy and confidence in the fixed exchange rate regime have remained, as a more stringent monetary policy would have reinforced the nominal exchange rate. At the same time, increases in consumer prices have been kept down by the strong currency, temporary increases in productivity, or by demand being aimed towards, property, shares and land – assets whose prices are not included in the central bank's target function. There has thus been no reason for monetary policy to counteract the emergence of financial imbalances. When the financial bubble has actually burst, the country has often suffered a deep and long-lasting recession caused by adaptations to the imbalances that have been built up. A high level of indebtedness, falling asset prices and unprofitable investments have subdued demand for a long period of time. Households have chosen to increase their savings to reduce their debts.
The clearer it is to the bank’s creditors, counterparties and financial market infrastructure firms that a resolution comes with the expectation of access to public liquidity, if needed, the smaller the amount that may end up needing to be drawn-down. In contrast, doubts over whether and how liquidity will be made available to a bank upon its entry into resolution risk undermining a resolution, and leaving the authorities with a potentially far bigger problem. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  So it is important to ensure resolution and liquidity strategies are aligned - whether they are delivered by a single institution, as in the UK, or by separate ones. The Purple Book, to be published next week will set out the Bank of England’s approach to providing a liquidity backstop in resolution, where required. To be eligible, a bank will need to be restored to solvency by the bail in of shareholders and debt holders. It will need to meet the PRA’s authorisation conditions, including capital requirements, so that it can continue to operate while in resolution. Solvent but illiquid banks in such a situation would have access to the Bank’s published facilities subject to meeting the necessary eligibility criteria. To supplement those arrangements, the Bank also has put in place a new, flexible Resolution Liquidity Framework providing the tools to lend to banks which are in a Bank of England led resolution.

Philipp M Hildebrand: Monetary policy in a global context Speech by Mr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, at the Swiss-American Chamber of Commerce, Zurich, 8 October 2003. *  *  *  It is a special privilege to be able to give my first formal address as a central banker before the distinguished audience of the Swiss-American chamber of commerce. I have always been very fond of the Swiss-American friendship. It has been an integral part of my family’s life for several decades. More importantly, I am convinced it is an essential ingredient to the long-term vitality of the Swiss economy. Like any friendship, it has had to endure difficult moments. The vibrancy of your association is testimony to the fact that the cultural affinities and common interests between our two countries provide a reliable foundation for extensive and mutually beneficial economic relations. Let us strive to make this foundation as solid as the public service record of the Geneva-born Albert Gallatin, whom Thomas Jefferson appointed as the fourth Secretary of the U.S. Treasury in 1801. To this day, Gallatin remains not only the longest serving Treasury Secretary in the history of the United States but the only Swiss-American to have occupied that most prestigious position in the then newly established capital in Washington D.C. My focus today will be on the long period of global disinflation following Paul Volcker’s paradigmatic shift of monetary policy in the United States.
[17] And the liquidity framework has been designed from the start to facilitate the usability of those liquid asset buffers when banks face liquidity pressures. For example, there is no minimum and buffer structure in the LCR. It’s all one giant buffer. And there are no automatic restrictions that result from drawing down liquid asset buffers, unlike in the case of usage of capital buffers that incurs distribution restrictions. There is no specific time period in the regulatory framework within which banks need to rebuild their high quality liquid assets (HQLA) after a draw down. And there is no expectation on banks to hold excess liquid assets in order to avoid falling below the regulatory standard in the event of a potential stress. And some jurisdictions, like the PRA, had gone out of the way before the crisis to say that liquid asset buffers should be usable. [18] Yet during the early stages of Covid-19, we saw evidence that suggested banks were overly reluctant to use their HQLAs, reinforcing similar evidence gathered from the Bank of England’s exploratory liquidity stress test. In February 2020, the market reacted to the Covid-19 stress through a typical flight to safety leading to increased prices of safe assets and falling safe asset yields. In mid-March however, the illiquidity of other markets turned a ‘flight to safety’ into a fevered ‘dash for cash’: to meet sudden large margin calls, firms began to sell their most liquid assets, which drove safe assets prices down.

The LCR, together with individually set ‘Pillar 2 add-ons’ to address additional risks (including risks from margined derivatives and intraday volatility), set the UK minimum amount of high quality liquid assets (HQLA) that a bank is expected to hold in normal times. This minimum amount of HQLA constitutes what we call the quantitative individual liquidity guidance (ILG). 17. Bank of England Financial Stability Report, June 2018 18. For example, see PRA Supervisory Statement 24/15 'The PRA's approach to supervising liquidity and funding risks',  Page 13 Section 4 – Drawing down liquid asset buffers, June 2015 19. See Speech by Jon Cunliffe ‘Learning from the dash for cash – findings and next steps for margining practices’, February 2022; and Speech by Andrew Hauser ‘Seven Moments in Spring: Covid-19, financial markets and the Bank of England’s balance sheet operations’, June 2020 20. Speech by Andrew Hauser ‘Why central banks need new tools for dealing with market dysfunction’, January 2021 21. See Financial Stability Board (2021)  analysis on Covid-19 support measures. 22. BCBS (2021), ‘Early lessons from the Covid-19 pandemic on the Basel reforms’  , Implementation report. 23. For example, Gerba and Katsoulis (2021) show evidence for the period 2016-2020 that where banks were increasing LCRs, they reduced longer-term reverse repo lending against lower quality collateral. 24. BCBS (2021), ‘Early lessons from the Covid-19 pandemic on the Basel reforms’ 25. BIS (2022), ‘Market dysfunction and central bank tools’  , Implementation report. , Markets Committee Paper. 26.