samchain/econo-pairs-v1 huggingface dataset:
1/4  BIS central bankers' speeches  But, we do not for a moment believe that we can maintain the arrangements we have without change. As the world around us changes, so too do we have to adapt how we achieve these public goods. Also, we do not participate in these global institutions with the intention to water them down, misguidedly because we think this would preserve some notion of our competitiveness as a nation. The UK could not be a global financial centre for long if we did. Let me reiterate again, the public goods of open economies, an open financial system and the stability of that system are global, not regional, in nature. The UK is one of the world’s largest global financial centres, and its financial stability – as the IMF have reminded us – is therefore a global public good. We are deeply committed to financial stability and given that the success of our financial centre. That is not because we are mercantilist in our outlook. As the City’s long history shows, that has never been the outlook of people in the City; rather it has been to trade freely and compete and grow new markets, to face outwards. We see that today for instance in the embrace of fintech. The UK’s financial markets and its financial system are therefore open for trade to all who will abide by our laws and act consistent with our public policy objectives.

There may also be reason to make changes that span both life and non life, but that is not the point I want to emphasise here. Let me be clear, none of this means that the UK should or will create a low regulation, high risk, anything goes financial centre and system. We have an overwhelming body of evidence that such an approach is not in our own interests, let alone anyone else’s. That said, I believe we have a very bright future competing in global financial markets underpinned by strong and effective common global regulatory standards. I want to finish with one further important area, that is, how the rules are applied – supervision as we call it – and how we can be sure that this application of rules is effective across borders, and particularly between the UK and the EU. It is of course critical that rules are applied effectively, and that there is co-operation between the authorities in different countries. With this in mind, we already have 36 MoUs agreed between the Bank of England / PRA and supervisors across Europe. They ensure supervisory co-operation will be deeply engrained in the relationship. And let me welcome the content of the joint declaration on financial services that was contained in the UK-EU trade agreement.
The way we at the Riksbank conduct our monetary policy is described in the brochure “Monetary policy in Sweden”, which was published in May this year and is available on our website. I shall here reproduce the main features of the brochure and provide some comments of my own. The target for monetary policy is to maintain a low and stable level of inflation. The assignment we have been given by Parliament is to “maintain price stability”. The Riksbank has specified an inflation target whereby the annual change in the consumer price index (CPI) is to be 2 per cent with a tolerance interval of plus/minus 1 percentage point. The target for monetary policy is thus formulated in terms of CPI. However, when we analyse the development of inflation, we look at several different measures. Underlying inflation measured as UND1X is one such measure. This excludes household mortgage interest expenditure and the direct effects of taxes and subsidies. The former is particularly important, as an increase in the policy rate pushes up the CPI. It then looks as though inflation increases when we raise the policy rate, despite the fact that this measure will in the long-term dampen inflation. There is no such problem with UND1X. However, we also look at other measures. For the purpose of more clearly explaining the analysis, it may sometimes be necessary to disregard energy prices, or to divide inflation up into price developments on imported and domestically-produced goods. The effect of monetary policy on inflation has a considerable time lag.

Svante Öberg: The Riksbank and the Swedish economy Speech by Mr Svante Öberg, Deputy Governor of the Sveriges Riksbank, at a meeting of SIMRA, the Swedish Society of Business Analysts, Stockholm, 5 October 2006. *  *  *  I would first like to thank you for the invitation to this lunch meeting. Today I intend to speak about monetary policy and wage formation. This is a very topical subject, particularly given that most of the collective wage agreements in the labour market are due to be renegotiated next year and that wage formation has such significance for developments in inflation and the stability of the Swedish economy. Wage formation has functioned much better over the past 10-15 years than it did during the 1970s and 1980s and it is essential that this good development can continue. I will divide my speech into five parts: First a section on how monetary policy is conducted, followed by a section containing a long-term perspective on economic developments, and then a section on how wage formation has changed, a section on the conditions for wage bargaining and finally I will conclude with a summary. Allow me to begin by describing how we work at the Riksbank. How monetary policy is conducted In Sweden we now conduct monetary and exchange rate policy based on inflation targeting and a floating exchange rate. This is different from the decades up to autumn 1992 when we had a fixed exchange rate as target.
The US yield curve is currently at its flattest level for more than ten years, with ten-year Treasuries yielding just about 60 basis points more than two-year bonds. At the start of 2017, the difference was around 130 basis points. You can also see that the German Bund curve is currently about twice as steep as the US Treasury curve and has remained relatively stable, with ten-year bonds over most of the time yielding around 100 basis points more than two-year bonds – not very far from the average observed over the past 20 years. My second slide focuses on the US Treasury curve. What you can see here is the ten-year yield 1/7  BIS central bankers' speeches  and a model-based breakdown of the yield into its two main components: the average of the current and expected future short-term interest rates over the maturity of the bond and the term premium. All series are shown as cumulative changes since the start of last year. Two facts can be drawn from this chart. The first is that the recent marked flattening of the curve reflects what markets call a “bear flattening” – that is, short-term rates have been rising faster than long-term rates. This is evident from the fact that the ten-year yield – the blue solid line – today is about the same as it was a year ago. Short-term interest rates, meanwhile, have risen by around 90 basis points.

And within that asset class, most market participants have rebalanced their portfolios towards US Treasuries and government agency bonds. This confirms that the portfolio rebalancing channel has been instrumental in delivering the intended benefits of our quantitative easing. Slide 4 shows the extent of this rebalancing more clearly. Since the start of our asset purchase programme (APP), euro area investors alone accounted for more than half of foreign purchases of US debt securities. History suggests that these shares are highly unusual for the euro area. Only recently has the share started to decline again. Now, according to conventional models of the term structure, such capital flows should play no direct role in determining yields.4 In these models, the term premium reflects the covariance between expected bond returns and the representative investor’s stochastic discount factor. However, the conditions under which the supply of and demand for bonds are entirely neutral on yields are very restrictive and unlikely to hold in practice. Indeed, it is now widely accepted that arbitrageurs are often risk-averse and that many investors have so-called preferred habitats for certain assets or segments of the yield curve.5 Pension funds, for example, typically need to invest a significant portion of their assets in safe long-dated bonds to match the liability side of their balance sheet. With arbitrageurs capital-constrained, changes in the demand from preferred habitat investors can then affect the price of duration risk and hence term premia.
The exchange rate is governed not only by oil – oil is an important factor, but not the only one to influence the exchange rate. The depreciation of the ruble was also largely triggered by typical seasonal variation in the current account – the current account usually shows stronger performance in the first quarter, irrespective of oil prices. The second factor is the growth in oil prices and oil sales by exporters. The third factor is important but the Central Bank believes that it should not be overestimated or exaggerated. I am referring to certain inflows of capital, which are comparable to the inflows of foreign capital to emerging markets. Further developments will depend on many factors: oil price movements, the Fed’s policy, strengthening or weakening of the exchange rate, and the strength of our economy. There are many forces at play here. QUESTION from TV channel Russia-24: Mrs Nabiullina, you have already mentioned that the Central Bank will support Russian stateowned banks affected by sanctions in relation to the situation in Ukraine. What specific measures are you going to take? Thank you. ELVIRA NABIULLINA: I would like to repeat and emphasise that we do not see any risk to financial stability of our credit institutions even if their investments in Ukrainian assets depreciate completely, because they account for only a very small share of their assets. Therefore we do not see any systemic risks here. Our banks have already created or are creating provisions for such assets.

This effect was expectable but proved to be stronger. The contribution of exchange rate fluctuations and heavy crop to inflation slowdown may decline in future. We took this into account when choosing the scale of key rate reduction. The Bank of Russia maintains a focus on the analysis of inflation trends in the regions. Although most regions are enjoying slower inflation, it still varies considerably. February data suggest that annual inflation in the regions ranged between 1.9 and 6.4%. Differing readings for price growth across regions are explained by a number of factors including households’ capacity to pay, the level of competition, industrial specialisation and the policy of local authorities. Monetary policy 1 / 14  BIS central bankers' speeches  checks overall inflationary pressure; yet, regional differences will persist, albeit, as we foresee, will diminish progressively. Inflation may also vary across households with different incomes. Early last year, these differences became stronger. This year we are witnessing lower inflation almost in all income groups, except for highest income households. Inflation in medium and low income households is approaching the 4% target, which is certainly a positive trend. This lays the groundwork for soundness of households’ savings and incomes. Second, a more sustainable economic recovery does not trigger inflationary pressure. The updated Rosstat data suggest that the downturn in the Russian economy was not so deep in 2015–2016 and the economy saw a recovery earlier than expected.
As growth prospects have weakened we have cut the repo rate over the last 12 months in order to attain the inflation target and support economic activity. However, a lower repo rate also increases the risk associated with household indebtedness. The decisions to cut the repo-rate have therefore not been self-evident. Low repo rate in Sweden over the last 12 months In connection with the financial crisis the repo rate was lowered all the way to 0.25 per cent, where it remained for almost a year - from mid-2009 to mid-2010. During the strong recovery that followed the financial crisis we moved towards a normalisation of monetary policy, and during the autumn of 2011 the repo rate reached 2 per cent. However, the financial crisis then became a debt crisis in Europe, which has undermined economic prospects once again. We therefore had to call a halt to the normalisation process. This year, the Riksbank has instead cut the repo rate in a number of stages to stimulate the Swedish economy and prevent the rate of inflation becoming too low. Historically speaking, the repo rate is now very low (see Figure 1). Let me now go back a little and describe how we ended up in the position we are now in with regard to monetary policy. I also intend to take up some of the important lessons learned from the international financial and debt crisis of recent years. The financial crisis became a debt crisis in Europe… The global financial crisis began about four years ago.

We are collaborating with the Bank of Thailand to explore the potential of a blockchain-based Central Bank Digital Currency (CBDC) network, with a view towards more efficient crossborder payments. 35. We have already developed a Proof-of-Concept prototype that enables real-time crossborder funds transfers on a peer-to-peer basis. In the next phase, we are exploring business use cases such as cross-border trade settlement and capital market transactions. We will soon bring banks and large corporates into trials to test the network using actual trade transactions. 36. Looking into the future, further studies will be undertaken to extend the architecture to a 3/4  BIS central bankers' speeches  multi-CBDC platform. Leveraging the wholesale-CBDCs on this platform, e-wallet service providers may be able to offer retail use cases such as remittances and cross-border payments for travelers within the region. We hope this initiative can provide the market with efficient, cost-effective, and transparent cross-border payments services. 37. Together, the CDI and CBDC initiatives show the HKMA’s commitment to delivering on our market development mandate. They are live examples of our focus on applying technology to achieve better banking. We believe they hold great potential for bank customers in Hong Kong – and for innovators like you. Concluding remarks 38. I said earlier that the principles of service, trust, and capital management are timeless and core to good banking. I hope that what you will take away from my remarks today is that the HKMA is committed to creating a healthy fintech ecosystem to enhance these principles.
At that time, the euro will probably also be easily accepted for payments in Swiss border regions and tourist areas. As final advantage, the single currency greatly enhances market transparency and stimulates competition. On the one hand, Swiss importers can now directly compare euro denominated offers from different countries. On the other hand, exporters can less easily differentiate prices according to the market destination of their products. In the long run, transparency will promote efficiency for EU-members and non-members. The almost daily news about mergers and acquisitions in Europe is an expression of the ongoing fight for a favorable position on the unified European market. 2. Extraordinary stability of the Swiss franc/euro exchange rate in the past ...  After these remarks on the general consequences of the euro for Switzerland, let us now turn to the more specific, but nonetheless central, question of the exchange rate between the Swiss franc and the 1  BIS Review 17/2000  euro. As already mentioned, the exchange rate between the Swiss franc and the euro is of crucial importance to the Swiss economy. So far, the relation between the two currencies has been remarkably stable. Since the introduction of the single currency, the Swiss franc/euro exchange rate has fluctuated in an extremely narrow band of only 2%. Thus, exchange rate volatility has until now been even lower than the 8% volatility observable between the Swiss franc and the Deutsche mark during the three years preceding the monetary unification.

Mr Roth remarks on the euro and Swiss franc: two sister currencies? Speech by Mr Jean-Pierre Roth, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Swiss Business Association Annual General Meeting, Singapore, 24 February 2000. *  *  *  For more than a year now, the euro has been a reality. It has crowned a decade long process of monetary integration in Europe. The introduction of a common currency in eleven closely related, but independent countries is an unique experiment. It is still too early to assess all the far-reaching implications of this monetary revolution. Therefore, the thoughts and remarks I am going to express today can only be intermediate and provisional. 1. Consequences of the euro for the Swiss economy  Switzerland is not part of the Monetary Union. It is nonetheless deeply integrated in its European environment through its geographic situation and its strong historical, cultural and economic links with Europe. Over 50% of our exports go to countries of the euro-zone, while 70% of our imports come from there. But, besides that, Switzerland has strong traditional links overseas, too. The US, Canada and Japan account for 10% of our imports and 15% of our exports while emerging markets represent 4% and 10% respectively. Although concentrated on Europe, our foreign trade is geographically more diversified worldwide than that of other small open European economies such as Austria, the Netherlands or Belgium.
Let us have a step-by-step look at these channels of influence of globalisation on the monetary policy. Re 1) The growing share of international trade in the global output as well as the increasing international capital flows cause a situation, where the growth rate of a national economy depends increasingly on the developments of the global economy. To illustrate the impact of globalisation on the economic prospects, attention should be drawn to the hot topic in the macroeconomic policy, namely the problem of global imbalances. To give you some facts, the US current account deficit had been growing gradually over the past years to exceed USD 800 billion, i.e. 6.5% of the U.S. GDP, last year. This deficit, which represents import of savings from the rest of the world to the USA, is financed by the Asian central banks, for example the Peoples Bank of China, and by oil-exporting countries. The available forecasts show that the deficit will continue to grow. An animated debate is currently underway to determine whether this is a steady situation that simply reflects the new principles in the global economy 5 , or whether this trend is bound to stop and reverse sooner or later, which may entail a significant increase in the US long-term interest rates, a strong depreciation of the US dollar and a serious slowdown in the global economic growth. The majority of empirical and theoretical studies indicates a growing probability of the latter scenario, especially if no due steps are taken in many countries.

In EU Member States, between 2002 and November 2005, 202 cases of the restructuring of companies related to offshoring were publicly announced, which resulted in the transfer of nearly one hundred thousand jobs. Over that period, offshoring stood behind nearly six per cent of all cases of publicly announced restructurings of companies in the EU. So far, the scale of the phenomenon has not been large. However, offshoring as a strategy of increasing competitiveness is becoming more and more common and includes not only the manufacturing of products but also — increasingly — services. Table 2. Offshoring in EU Member States Countries to which job transfer took place  Number of jobs liquidated in the EU between 2002 and 2003 due to transfer of jobs  Number of jobs liquidated in the EU between January and November 2005 due to transfer of jobs  China  3361  3077  India  9458  5470  Asian countries  3786  3271  Czech Republic  780  3890  Hungary  1110  772  Poland  120  2676  33151  31942  8  Source: European Restructuring Monitor , own calculations  Numerous analyses show that the process of offshoring is bound to grow and increasingly affect services 9 . For example, between 1980 and 2002 the trade in goods and services grew at 6.9%.
Auctions of funds against wider collateral of the kind introduced by the Fed and the Bank of England side-step the stigma problem by having a number of banks borrow at the same time. They have definitely helped to underpin the system. But, compared with a facility, those auctions are available only periodically – fortnightly in the UK at present – rather than every day. The DWF is available on a continuous basis, and is designed to avoid the stigma problem. In particular, in its usual mode of operation, it involves a collateral swap, so there is no give away of its being used in the size of either the banking system’s reserves balances or our open market operations. And we publish data on its use on an aggregate, averaged basis and with a lag. This puts onto a permanent footing some of the technology of the Bank’s Special Liquidity Scheme, which was used in 2008 to provide 3-year financing, via a collateral swap, for assets that had become illiquid as a result of the crisis. 20 How the facilities can work in extremely stressed conditions Monthly, wide-collateral repos for a 3-month maturity and typically of fairly modest size, together with a continuously available Window for 30-day collateral swaps, are now permanent features of the Bank of England’s regime. Various parameters can be adapted in the face of extremely stressed conditions of the kind we have been facing. Thus, the widecollateral repos have been held fortnightly rather than monthly, and for very large sizes.

But people get used to this – or, in models, anticipate it – and so the extra inflation is simply built into their wage and price setting, without any benefit to output or jobs, but at the cost of a higher steady-state inflation rate. 11  This is discussed in Mervyn King’s 2007 letter to the Treasury Select Committee. 12  Page 205 of the 1999 paperback reprint of Bagehot (1873), “Lombard Street” in the Wiley Investment Classics series. 4  BIS Review 67/2009  assets and collateral. In doing so, the Bank recognises that its decisions will have a bearing on the development of markets. For example, for securitised assets, the Bank plans in due course to establish criteria for both the structure of the securitisations and the composition of the underlying portfolios that it will lend against. The Bank’s Discount Window Facility and wider-collateral OMOs: adverse incentives and the terms of liquidity insurance These expansions of the Bank of England’s facilities have required us to be much clearer than, perhaps, ever before about the terms on which we insure against liquidity risk. As with other types of insurance, without care central banks’ provision of insurance could inadvertently have the perverse effect of reducing banks’ incentives to contain their exposures to liquidity risk in the first place – no doubt bringing the banks temporarily higher profits, but increasing the potential costs to the wider economy of those liquidity risks crystallising.