samchain/econo-pairs-v1 huggingface dataset:
8 The Federal Reserve permits purchases of debt issued or guaranteed by the U.S. government or government  agencies (such as agency debt and agency MBS). 9 This channel usually relates to signaling about short-term rates. A variant is to target longer-term interest rates  by a commitment to use balance sheet expansion if necessary. The ECB’s OMT program, created to purchase government bonds of euro-area countries that were granted financial assistance under certain conditions, was perceived as meaningfully reducing yields through commitment alone; no actual purchases were needed. In late September 2016, the Bank of Japan unveiled a new monetary framework called “quantitative and qualitative monetary easing with yield curve control” (QQEY). The new regime consists of two major components: (1) “yield curve control,” in which the BoJ will target both short-end interest rates (with the deposit rate at –0.1 percent) and long-dated yields (around 0 percent for 10-year Japanese government bond yield), and (2) an “inflationovershooting commitment,” which amounts to maintaining monetary expansion until the 2 percent inflation target is exceeded in a stable manner. 10 See the May 10, 2010 press release for the ECB’s Securities Markets Programme. 11 For example, the Federal Reserve chose to transact in the agency MBS market via external investment  managers at the start of LSAP I “as a means of implementing the MBS program quickly and efficiently while at the same time minimizing operational and financial risks.

In November 2008, there were significant dislocations in many financial markets, especially in the markets for the U.S. federal housing agencies’ securities. 23 In addition, the housing market was a focal point of the financial crisis. To help support the housing market and improve conditions in financial markets, the FOMC announced an LSAP program on November 25, 2008, that consisted of purchases of agency debt and agency MBS.24 The stated purpose of this program was to “reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally. "25 Research suggests that this program reduced “abnormal pricing” in agency MBS— the component of the spread considered to be due to market dysfunction—by about 70 basis points over its first six months.26 In that same time period, the spread of agency MBS repurchase agreements (repos) to Treasury repos fell from more than 200 basis points to near zero. In the framework noted above, this LSAP worked primarily through the market functioning channel. However, research also suggests that borrowing costs were lowered more broadly 27 6 / 10  BIS central bankers' speeches  through a portfolio balance effect.27 Overall, the Desk’s purchases, aided by the lowering of fed funds to the ZLB in December 2008, resulted in lower mortgages rates, which in turn reduced the cost of home purchases and allowed existing borrowers to refinance at more attractive terms.
With further harmonisation of rules and regulations and increasing capital market linkages, we look forward to the deepening of ASEAN market liquidity. As financial and capital markets in the region become more integrated, there will be seamless flows of investments and capital. ASEAN has also made a strategic decision to strengthen its organisation politically. ASEAN is finalising a Charter that will lay out a bold and visionary future for ASEAN. It will also provide an institutional framework for the grouping and transform it into a more effective and efficient rules-based organisation. The Charter will be signed at the Singapore Summit in November. Singapore – a global city As for developments in Singapore, we have used the last 10 years to remake ourselves, strengthen our competitiveness and expand our economic space. We have also continued with efforts to enhance Singapore’s position as a gateway to Asia by transforming Singapore into a global city. We have enlarged our economic space by aggressively pursuing FTAs. We have concluded 11, including with the US, India, Japan, South Korea and Australia. We are negotiating 11 more FTAs, including one with China. We have progressively restructured and diversified our economy. Manufacturing will continue to play a key role but we are also moving into more technology- and knowledge-intensive manufacturing. Fostering world-class scientific research and strengthening Singapore’s attractiveness as an R&D (Research and Development) hub is a key priority. More of Singapore’s growth will come from innovation and knowledge.

Clearly, more time and analysis will be needed before we have better answers for this important question. Our role in climate policy action Let me now turn to the second theme of my talk, namely what financial supervisors and regulators, and central banks could or should do to assist governments in tackling climate change within our mandates. I will start with an important reminder. The main responsibility for addressing climate change resides with governments – namely, fiscal and environmental authorities– because they have the most effective tools and the legitimacy to do so. There is some consensus in the  3  literature that the most effective measure would be to apply Pigouvian taxes3 to carbon emissions. The latter, if well-designed, would lead agents to internalise the social cost of their carbon emissions, inducing a change in the relative prices of energy inputs and final outputs in favour of less carbon-intensive ones. That said, preventing climate change requires a holistic approach that involves all policies. Careful analysis should be devoted to the interactions of the various policy instruments in the economic sectors affected by transition and physical risks. The final aim should be to define an adequate “climate policy mix” that ensures the optimal achievement of environmental targets. In this context, and as part of our main responsibility to guarantee the stability of the financial system, we - regulatory and supervisory authorities - must ensure that the materialisation of climate risks does not endanger financial stability.
BIS central bankers’ speeches  5  Challenges to monetary policy Central banks in other countries are deploying strong measures to buoy up economic activity and inflation. Key interest rates in many countries are close to zero. Central banks in the US, UK and Japan have made large-scale bond purchases and thereby expanded their balance sheets in order to push down long-term interest rates. The European Central Bank (ECB) is still the bankers’ bank – not the government’s bank. But the ECB has also stretched itself, for example by providing long-term loans to banks, which must be seen in the light of low growth in Europe. The EU is working on measures to restore financial market confidence – and public confidence. In March this year, 25 countries are to sign the fiscal compact – an agreement on stricter surveillance of fiscal policy and binding deficit limits. Banks have been instructed to increase their core capital. Both measures could contribute to improved budgetary discipline in the public as well as the private sector the next time they are tempted to overspend. The Norwegian economy is still well equipped to withstand the negative effects of the financial crisis. Oil prices are high and are in large part behind Norway’s favourable terms of trade. Growth is being sustained by high activity in the oil industry. We have room for manoeuvre in economic policy. However, a number of enterprises are feeling the impact of the downturn abroad.

In particular, the Banco de España is now empowered to require that banking institutions establish countercyclical capital buffers by credit segment, limits on concentration in relation to economic activity sectors, and limits and conditions when underwriting new loans (in terms of loan-to-value, loan-to-income and debt service-to-income ratios, and also the maturity, the currency in which the operation is denominated and whether the interest rate is fixed or variable, among others). These new instruments complement those previously available to the Banco de España and included in the European legislation:11 the countercyclical capital buffer, the systemic risk buffer and the buffer for systemic banks, among others. In addition, this year saw the creation of the Macroprudential Authority Financial Stability Council, whose main goal is to contribute to the promotion of coordination and the exchange of information on financial stability issues among the Banco de España, the Ministry of Economy and Enterprise, the Spanish National Securities Market Commission and the Directorate-General of Insurance and Pension Funds). All in all, this new institutional setting is a significant step forward in reinforcing financial stability in Spain. 4. Other policies should also promote economic and financial stability The notion that other economic policies should complement monetary policy and also contribute to economic stability has always been embedded in the design of the European Economic and Monetary Union.
The Central Bank’s short-term foreign liabilities were close to zero at year-end, where they in fact remain. The Bond Market Bond market reforms were continued in 1997. In 1996, the Central Bank decided to withdraw from the long-term market and reached custodian agreements with three securities firms following a bidding process. The Bank handed over to the firms a part of its securities portfolio and at the same time ceased to be a market maker in government bonds, government notes and housing bonds. The experience from these agreements is positive and they were BIS Review 42/1998  -4-  renewed in March 1997. The new agreements were more extensive than the earlier ones, and in their wake two banks announced that they would engage in market making for certain classes of government securities in the same manner as the custodial firms. It is not unlikely that such custodial agreements will become unnecessary and that the Central Bank will no longer need to be involved in ensuring adequate market making in the long-term market. Both the Treasury and the State Housing Authority began to reorganize the classes of bonds they issue, with the effect of improving the price determination of government guaranteed bonds and raising turnover in the secondary market. The Central Bank’s Monetary Policy Instruments In 1997, the Central Bank began preparing changes to its monetary policy instruments.

Domestically, financial conditions showed early signs of normalizations, with lending increasing from month to month, low interest rates and credit standards that were more expansionary during the fourth quarter of 2009 than during the preceding quarter (figure 3). The value of the peso has fluctuated significantly since December, partly owing to global phenomena, but largely due to domestic factors. After continuing with the process of  2  BIS Review 61/2010  appreciation that began in early October, the peso peaked at the beginning of January. It then depreciated sharply, driven by increased tensions in world financial markets and by changes in the hedging strategies used by pension funds. The depreciation trend reversed during the course of February due to a decline in external tensions and a change in pension funds’ purchase flows. After the earthquake and tsunami, the peso experienced further fluctuations due to changes in private expectations about how the reconstruction would be financed and how insurance claims would be paid. The importance of idiosyncratic factors is apparent in multilateral indicators that measure the peso’s movements with respect to the dollar and other currencies, which are showing smaller variations than those of the peso/dollar exchange rate (figure 1). Annual CPI inflation returned to positive territory earlier than what had been foreseen in December (figure 2). Core measures, in particular the CPIX1, continued to display low month-on-month variations.
This is not something we will do for one or two years. We will have to continue this work as our children become young adults and eventually retire, giving rise to a whole new cycle. Hence the work on financial education has to be done continuously, as it is a very important area to help Singaporeans. 1  Financial Literacy Survey of over 1,800 Singaporeans and PRs conducted by The Nielsen Company on behalf of MAS between August and October 2013. Respondents answered questions and participated in focus groups on their knowledge of, attitudes and behaviour towards financial products and management. BIS central bankers’ speeches  1  Towards better financial wellbeing Financial protection 7. What will MAS do? We have a two-pronged approach to help Singaporeans to enhance their financial well-being. The first is to regulate the conduct of our banks and financial institutions. For banking, the key issue is to discourage the imprudent use of unsecured credit facilities. Consumer research has shown the immediate pleasure of purchasing a designer accessory or purchasing the latest gadget using a credit card. If you have a credit card, the immediate pleasure of using it to purchase the latest good that you’re interested in can lead people to spending more than they otherwise would. There was an experiment with a group of students in the US who were asked to bid for a pair of tickets to a basketball match.

For how can we justify the costs of these efforts, which will have to be borne for at least a generation, without fundamentally addressing the flaws that got us into this terrible crisis in the first place? Ladies and Gentlemen, there are many areas in financial regulation that can and should be improved. Given what is at stake, there is a need to prioritise. I have attempted to lay out to you today where the SNB puts those priorities and where it will focus its greatest efforts in the months and years to come. Together with FINMA, it is our duty to provide robust analysis and to issue sound recommendations that will help put our financial system on a more sustainable foundation. In certain areas, like capital requirements, regulators can issue – and have issued – decrees intended to strengthen the resilience of the financial system. With respect to the “too big to fail” problem, political decisions are required. The topic is crucial. The consequences of not addressing it adequately could be severe in the event of a future crisis. Politicians need to become acquainted with and get involved in this matter. The sooner, the better! 17  17  The Swiss government has recently mandated a group of experts to make proposals to limit the risk associated with large firms. 8  BIS Review 145/2009
Indeed, our recent experience has shown impressive convergence between Switzerland and the EU in monetary matters. The inflation differential has decreased and interest rates have moved closer. But we are still far from a monetary integration. On the contrary, the Swiss National Bank has been able to operate more freely since the introduction of the euro than before. BIS Review 70/2004  3  Thanks to a much more stable monetary landscape in Europe, the Swiss franc is today much less under speculative pressure than before. Our currency has still its international dimension, but it sticks closer to economic fundamentals, which is good news for our exporters. It also means that the exchange rate volatility between the franc and the euro is today less pronounced than the volatility we observed in the past between the franc and the German mark. Clearly the franc belongs to the family of the European currencies, reacting similarly vis-à-vis dollar fluctuations. In that sense, for sure, the franc and the euro are sister currencies. 4  BIS Review 70/2004

We have been intervening since the beginning of 1990 to develop the Hong Kong dollar debt market, again because the market was considered essential for effective financial intermediation, and, regrettably, the private sector was not able to develop one that is properly structured. The linked exchange rate system is also a product of the policy of positive non-interventionism. The Government intervened to fix the exchange rate because we found out in 1983, and since, that there is a need for a monetary anchor. In the absence of such an anchor, the value of our currency will be, in mathematical terms, an indeterminate. In other words, it is not something that the free market can determine in the best interest of the community without intervention. We have had four speculative attacks on our currency since the outbreak of financial turmoil in the region in the middle of last year. BIS Review 67/1998  -3It is very well known to almost everyone in the market that a handful of hedge funds have on each occasion conducted a double play in the stock futures market and the currency market. We have come to realise how this double play works, although it has only become apparent, at least to us, in the third and fourth attacks in June and August this year respectively. On each occasion, interbank interest rates were pushed higher, to varying degrees, with a view to engineering a sharp fall in the stock index futures.
I would submit that, in normal circumstances OFIs’ money holdings are unlikely to be transferred to non-financial agents and to generate an additional demand for goods and services. The reading of M3 developments, and its interpretation in terms of the risks to price stability, should, most likely, be adapted accordingly.   Financial innovation has also affected money and credit developments by making it easier for banks to hedge credit risk and manage maturity and credit mismatches. This may have supported the supply of credit, especially long-term loans to  Noyer, 2006b  BIS Review 42/2007  households, in recent years. Indeed, housing loans have grown at a rate of 9.8% per year in the euro area since the beginning of 1999.   In recent years, two innovations that may have an impact on the interest rate elasticity of money demand have emerged. One takes the form of high-yielding and highly liquid deposits accessible via direct banking or internet accounts. The second, which is still marginal, consists in the introduction of so-called “retail derivatives”, which are usually short-term deposits with embedded derivatives tailored to the needs of investors. Taking into account the effects of financial innovation is a clear challenge for monetary analysis. Meeting this challenge requires regularly updated tools and in-depth research based, in particular, on sectoral analysis. 2.

•  Noyer C. (2007), “Hedge funds: what are the main issues?”, Financial Stability Review, Special issue on hedge funds, Banque de France, 10, pp 105-111, April. •  Rajan R.G. (2005), “Has Finance Made the World Riskier?”, European Financial Management, 12 (4), 499-533. •  Rajan R.G. and L. Zingales (1998), “Financial dependence and growth”, American Economic Review, 88, pp 559-586. •  Thornton D.L. (1994), “Financial Innovation, Deregulation and the “Credit View” of Monetary Policy”, Review of Federal Reserve Bank of Saint Louis Review, pp 31-49, JanuaryFebruary. •  Weber A. (2006), “Concluding Remarks”, Conference of the ECB-CFS Research Network on “Financial system modernisation and economic growth in Europe”, September 29. •  Weber A. (2007), “Hedge funds: a central bank perspective”, Financial Stability Review, Special issue on hedge funds, Banque de France,10, pp 101-168, April. 6  BIS Review 42/2007
Banks may therefore have less incentive to monitor credit risk properly and may provide too many loans to non-profitable business. Over time, such misallocation of financial resources would undermine overall productivity and depress growth and employment. The third challenge is that protracted monetary accommodation may fuel bubbles in house prices and other asset markets. As the crisis has painfully demonstrated, the bursting of such bubbles inflicts large costs for the real economy. In this context, a natural question is whether monetary policy should be used actively to contain asset price booms and bubbles – a response known as “leaning against the wind”. Thanks to our monetary policy strategy, implicitly we do this to some extent. We focus on the medium-term horizon and take account of monetary developments in assessing risks to price stability. Having said that, let us be clear that changes in policy interest rates are normally not the first best instrument for addressing financial imbalances. They should be considered only under very special circumstances, for example when a widespread rise in asset prices threatens price stability in the euro area as a whole. In the absence of such imbalances relevant from a euro area perspective, the appropriate tools to counter imbalances in the financial sector and possible asset price misalignments are at the country level. To avoid the build-up of excessive risks in the financial system or housing markets, national authorities have appropriate tax and supervisory instruments at their disposal.

The interest rate in the overnight interbank market is now even lower, close to zero. Second, we have acted to prevent an abrupt reduction in the supply of credit to the real economy. We have given banks unrestricted access to central bank funding in all our refinancing operations. We have extended significantly the average maturity of these operations. We have broadened the set of eligible collateral. This assurance of funding to banks has prevented disorderly deleveraging in the financial sector and averted a collapse in money and credit, with potentially severe implications for price stability, and thereby employment and growth. All these decisions have ensured price stability and stabilised inflation expectations during an exceptional period. Naturally, the ECB is aware of the challenges arising from a protracted period of low policy rates and ample liquidity. Let me elaborate on the three main challenges. 2  BIS central bankers’ speeches  The first is that low interest rates may affect the ability of savers and investors to generate returns. This is especially the case for institutions targeting nominal returns, such as insurance companies and pension funds. Yet, by ensuring price stability throughout the crisis, monetary policy has contributed to more stable financial conditions. This is central to the interests of savers and investors: there can only be sustainable returns in a stable environment. The second challenge relates to incentives. A protracted period of low interest rates and ample liquidity facilitates rolling-over loans at very low costs.