samchain/econo-pairs-v1 huggingface dataset:
Finally, the price hikes began feeding back into inflation expectations. Facing the resurgence of inflation, we sped up the process of raising the monetary policy interest rate (MPR). Between June and September of 2008, we increased it 200 basis points. In September of that year, when we still thought we would continue to raise the interest rate in order to bring inflation back to the target – as we had said in Congress early that month – came the Lehman Brothers debacle, and the rest is history. Uncertainty and fear took over investors, consumers and entrepreneurs. Consumers postponed expenses; firms interrupted their projects and depleted inventories; manufacturing production collapsed; demand plummeted; commodity prices fell sharply and the global recession followed. Chile was not spared. Domestic demand also fell with unprecedented force. Sales came to a halt (figure 5). Although the inflation scenario was still complex – it peaked at 9.9% in October 2008 – , a slowdown was foreseen that suggested changing the orientation of monetary policy. Growth projections plummeted unusually fast in every region of the world, going from a moderation to a recession (figure 6). Chile was no exception. In November 2008 we modified our predictions and pointed out that the economic slowdown would entail a drop in inflation, not only because of the sharp fall in commodity prices, but mainly because of the sudden creation of output gaps. We then observed that most likely we would begin cutting down the MPR in the coming months, which set out the process of financial easing.

If wages are slow to adjust, higher productivity growth lowers unit labour costs and thereby reduces price inflation. Here again there are important questions for policymakers. Should this effect be allowed to result in a temporary reduction of price inflation or unemployment? Third, an increase in the trend rate of productivity growth could also result in a higher equilibrium real interest rate, when the output gap is closed, in order to balance saving and investment. Fiscal policy and the development of public financial balances could at least partly offset this effect, as could the economy’s degree of openness. All this implies that monetary policymakers could face quite a few challenges. One of them is to identify structural changes and distinguish these from cyclical variations. Another challenge is to detect the magnitude of the effects. Furthermore, looking ahead in monetary policy is hard when the economy is going through major changes that make it difficult to forecast the future path of the economy and inflation. 5  BIS Review 65/2000  It is quite clear that this demands a great deal of forecasters as well as of those who construct macro models. The forecasts concern inflation one to two years ahead, which calls, for instance, for reasonable precision in the measurement of the output gap and the relationship between the output gap and inflation. It is already evident, for example, that inflation forecasts were frequently on the high side in many countries in the 1990s.
In that context, and fully consistent with the priorities of Her Majesty’s government, the Bank of England will work to build a responsible financial globalisation that first protects and serves the UK real economy, and then secures the UK’s traditional role of supporting global prosperity through an open global economy. II. The UK Financial System is a National Asset and a Global Public Good  Having a large financial sector brings substantial benefits to the UK. 4  Financial services accounts for 7% of output and is a source of over 1 million jobs, two thirds of which are outside London. It contributes around £ or 11%, of annual tax revenues. 5  Financial services are the UK’s most important exports, running a trade surplus of around £ or 3% of GDP. The rest of the economy runs a deficit almost twice as large. Being at the heart of the global financial system reinforces the ability of the rest of the UK economy, from manufacturing to the creative industries, to compete globally. And it broadens the investment opportunities for UK savers, giving them the potential to earn better risk-adjusted returns. But the UK’s financial system is more than a national asset. It is also a global public good. 6  The UK is the leading internationally active financial centre. It has the largest global share of cross-border bank lending and foreign exchange trading, the second largest asset management industry, and the fourth largest insurance industry in the world.

The Bank’s primary one is, of course, to ensure that the UK financial system serves UK households and businesses. This includes protecting the UK real economy from being sideswiped by global developments. As much as possible, we must do so in a manner that keeps cross-border markets open. When these responsibilities come into conflict, we have to work with others to build resilience at home and abroad in the most efficient and cooperative way possible. The pillars of responsible financial globalisation eroded prior to the global financial crisis. Regulation became light touch and ineffective. Looming risks in the financial system were ignored. Markets were fragile and unfair, plagued by numerous instances of misconduct and limited market discipline on large firms. And few participants were exposed to the full consequences of their actions as governance and compensation arrangements focused on the short term. 1  For example, Britain accounted for nearly 20% of the world’s manufacturing by the mid-19th century. At the end of the 19th Century, the UK accounted for as much as a quarter of world trade and produced around a tenth of global GDP. Today, those shares have both fallen under 5%. For details on how the historical estimates are calculated, see ‘The UK at the heart of a renewed globalisation’, speech given by Mark Carney, 24 October 2013, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2013/speech690.pdf. 2  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  The resulting cost to our citizens has been tremendous.
In other words: if you’re used for payments you should be regulated to the same standard as other entities conducting payments activities. It doesn’t matter what technology you are using. Same risk, same regulation. Nothing new under the sun  The second challenge for regulators is that stablecoins differ from existing payments systems in one fundamental way: Regulation of existing payment chains largely focuses on the resilience of arrangements to transfer money – how money gets from point A to point B. However, the reliability of those chains also crucially depends on the stability of the money they transfer. Existing payment systems transfer money that has been created by other entities — central banks or commercial banks. Stablecoins propose to create the digital tokens or ‘coins’ they transfer. Existing payment systems effectively outsource this issue - they only transfer money that is subject to separate protections and regulations to help maintain stability and confidence. The value of central bank money, which gives holders a claim on the state, is protected by the Bank of England’s monetary stability mandate and inflation targeting regime, while the value of commercial bank money is protected by legal rights that ensure holders can redeem this money one-for-one in the currency they deposited. Robust prudential regulation and deposit insurance in turn ensure that commercial banks can make good on this in all but rare circumstances. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  These protections are important as they underpin confidence in the system.

The defining trend of the last ten years has been the weakness of productivity. Given the size of the financial sector in the UK, I can see fintech driving competition and a 4  pick-up in productivity in the medium term . 5  And as a member of the Bank of England’s Financial Policy Committee, in line with our remit , I need to be open minded about, not just the risks, but the opportunities fintech could pose to the financial system. The FPC recently discussed the current risks posed by crypto-assets and judged that they do not pose a material 6  risk to UK financial stability . We judge that crypto-assets themselves may have limited utility, particularly as money. They are too volatile to be a store of value, and with high transaction costs and slow settlement times, they are an inefficient 7  medium of exchange . However, we also recognise the opportunities in the technologies that underpin crypto-assets. Adapting these technologies for the demands of the financial system poses significant challenges. Balancing the resilience, performance and privacy features of distributed ledger technology is not an easy problem to solve – and many developments are currently focusing on performance and privacy, at the potential cost of resilience. But the distributed ledger and cryptographic technologies used by crypto-assets have the future potential to deliver benefits both to the financial system and to the economy it serves, including increasing efficiency and resilience and contributing to a more distributed and diverse payments system.
And deposit protection schemes ensure that transactional balances up to £ remain interchangeable with cash even if that happens. This model is relatively recent. It was not ever thus. And as we think about new forms of digital payments, it is important that we do not take this for granted. A large number of financial crises of the last century have featured a loss of confidence in the reliability and safety of the money people rely on for transactions. Money that is usually considered safe. Money that people normally do not think about very much. In the emerging market financial crises of the 1990s and early 2000s, people and businesses lost faith in the state’s ability to maintain the value of their local currency against the dollar4. Other crises have had at their heart a loss of confidence in the ability of private issuers – commercial banks – to fulfil their IOUs with depositors and lenders and maintain the interchangeability and reliability of the money they issued. Think of the Great Depression-era bank run depicted in ‘It’s a Wonderful Life’. Think of the Northern Rock example – where worries about the Northern Rock’s funding led to a crisis of confidence; first from wholesale lenders and then from retail depositors – who suddenly worried that their deposits would no longer be interchangeable with cash or other bank deposits. Remember the queues outside of branches in 2007, as depositors rushed to exchange their deposits before – they believed – it might be too late5.

The Bank of Japan (BoJ) responded by reducing overnight interest rates from a peak of more than 8 percent in early 1991 to ½ a percent by the fall of 1995.2 Most studies of this period suggest that policy was generally appropriate given economic forecasts at the time, but too tight relative to the actual outcomes.3 Economic forecasts for Japan – both by the official community and by private sector agents – were consistently more optimistic than the actual outturns. It is noteworthy that as late as January 1995 – on the eve of deflation – 10-year Japanese Government Bond (JGB) yields were still at 4.7 percent. With the benefit of hindsight, we now understand that the disinflationary consequences of the asset price bust and financial stress where vastly more powerful than was widely realized at the time. As we later saw in the U.S., the forces of contraction and disinflation operated through many different channels – not just directly on household wealth, for example, but also through the impact of the asset price bust on the health of financial intermediaries and the supply of credit to households and businesses. Over time, the Japanese banking system came under mounting stress. This was a slowmotion crisis, as the assets were mainly loans that were not marked-to-market. Accounting practices and regulatory forbearance allowed banks to delay charging off bad loans and recapitalizing at the cost of impairing the availability of credit to new potential borrowers. A full-blown banking crisis finally materialized in 1997.
For example, in our July/August 2018 Desk surveys, only 33 percent of respondents who provided expectations for this spread expected it to narrow to two basis points or less by year end. On the other hand, the dynamics of the decrease in the spread since June seem very similar to earlier periods, as can be seen in Figure 9. In particular, as noted above, rates on eurodollar transactions have lagged. 28 The distribution of reserves throughout the banking system has important implications for rates and volumes in the federal funds market. Federal funds and other market rates above the IOR rate could reflect frictions related to the distribution of reserves across the banking system; this dynamic may occur at levels of reserves not consistent with aggregate reserve scarcity. For further discussion, see Afonso, Armenter, and Lester, “Size Is Not All: Distribution of Bank Reserves and Fed Funds Dynamics,” Federal Reserve Bank of New York Liberty Street Economics (blog), July 11, 2018. 12  interbank volumes trading at rates above the IOR rate, increased overdraft activity, shifts in bank payments behavior, or a day-to-day relationship between shifts in the stock of reserves and overnight interest rates. As discussed earlier, the upward pressure in EFFR likely reflects the premium on borrowing from FHLBs in fed funds relative to other funding sources. In addition, it also likely reflects bargaining dynamics among banks with limited access to alternative shortterm funding sources.

Our assessment is that unemployment will reach approximately 6.5 per cent at the end of the forecast period (see Figure 19). A lasting  BIS central bankers’ speeches  5  reduction in the level of unemployment also demands that wage formation is effective so that costs in the business sector do not increase too rapidly. …and inflation can approach the target A new round of collective bargaining has now begun and the wage demands presented so far are higher than those presented in 2010. The Riksbank’s assessment is that wages will rise by almost 3.5 per cent per year in the years ahead. This is compatible with the inflation target. The assumption behind our forecast is that wage formation will work as well as it has over the last 15 years. Responsibility for this lies with the social partners. The krona is an important factor for inflation in Sweden as it determines how prices abroad are “translated” into import prices in Sweden. Historically the krona has weakened in periods of financial unease as investors often move their money from small currencies like the krona to the dollar and the euro. However, the krona has weakened only moderately this time, despite the financial unease (see Figure 20). We expect the krona to gradually strengthen as the financial unease subsides. The combination of falling commodity prices internationally and a stronger krona means that inflationary pressures from abroad will be rather low in the period ahead.
William J McDonough: Bank supervision and credit standards under Basel II – perspectives for SMEs Remarks by Mr William J McDonough, President and Chief Executive Officer of the Federal Reserve Bank of New York and Chairman of the Basel Committee on Banking Supervision, at the Gürzenich Köln, Cologne, Germany, 25 April 2002. *  *  *  Introduction Graf von Hohenthal, Herr Dr. Breuer, members of the panel, “meine Damen und Herren…” It is an honor to join your discussion on the efforts of the Basel Committee on Banking Supervision to ensure that the international rules on capital adequacy serve the needs of twenty-first century banking effectively. What makes this a special privilege for me is the opportunity to meet so many entrepreneurs, owners of small and medium-sized businesses, and others who make up the real engines of the economy. Your interest in the work of the Basel Committee reminds us all that we must look beyond the banking sector to ensure that the foundation we lay provides for the stability and growth of the entire economy. I have long emphasized that the role of supervisors is not to hinder growth or profit, but rather to promote the responsible pursuit of opportunity and innovation. As we improve the rules for bank capital, we must certainly keep this mandate in mind and consider the effects that changes to those rules may have on the economy.

In this regard, the Committee has over the last six months been engaged in a significant research program to assess whether the size of a borrowing firm should be explicitly considered when banks calculate their capital requirements. BIS Review 27/2002  3  At this point, the Basel Committee is discussing whether and how to factor a firm’s size into the new framework. A lower capital charge for a portfolio consisting mainly of loans to many small companies makes economic sense because that portfolio is likely to be better diversified than one concentrated in loans to a handful of large companies. Assuming the discussions within the Basel Committee continue to proceed in this direction, it means that loans to small and medium-sized borrowers would have lower capital requirements than loans to larger companies that are otherwise rated the same. One point should be made about the treatment of loans to small and medium-sized enterprises. The Basel Committee wishes to ensure that our new framework reflects the sound risk management practices of banks. For example, many banks manage and evaluate their loans to smaller businesses in a way that is similar to the way they handle consumer loans. The design of the internal ratings-based framework will, therefore, allow a number of such loans to be treated like retail credits, as opposed to corporate loans. This principle also will apply to another important issue within our capital framework, namely the role of a loan’s remaining maturity.
The measures to enhance access to financing are also reinforced by the provision of financial advisory services and by developing channels for redress by borrowers. The BNM LINK and TELELINK established by Bank Negara Malaysia and the ABM-Connect that has been set up by the Association of Banks in Malaysia serve as important conduits for greater interface between the banks and the borrowers. These measures are also complemented by the institutional framework to deal with problem loans in the retail and business segments. The Small Debt Resolution Scheme (SDRS), which was created in 2003 to facilitate the restructuring and rescheduling of credit facilities for small businesses has now been expanded to include all viable SMEs facing financial difficulties with financing from multiple financial institutions. Importance of Information Credit Bureaus Malaysia has been ranked number one in the world in terms of access to credit by the World Bank in 2008. Despite its favourable assessment, efforts will continue to be intensified to ensure that this access continues, particularly during this more challenging and uncertain time. The establishment of the SME Credit Bureau is one of these measures. The SME Credit Bureau is a vital element in the information credit bureau industry. SMEs are thus encouraged to maintain and compile the required information so as to enhance their potential access to credit. SMEs are expected to benefit greatly from the services of the SME Credit Bureau. Firstly, the SME Credit Bureau empowers SMEs to build their credit reputation from a wide range of transaction behaviors.

On the other hand, we expect to see weak developments in exports and for example in investment in commercial buildings. The Norwegian krone has appreciated markedly this year. Developments in wage settlements have probably been an important driving force. High wage growth leads to high interest rates, making it attractive to take krone positions. As a result, the Norwegian krone appreciates. We must be prepared for fluctuations in the krone exchange rate in line with that observed in other countries. There is free trade in goods and services and free capital movements. The krone is floating. This means that economic agents cannot assume that the krone will be stable against the euro, against the dollar or against a weighted average of foreign currencies. The krone does not fluctuate any more or less than other currencies. A large share of petroleum revenues is invested in foreign equities and bonds through the Petroleum Fund. Changes in oil prices influence the size of the Fund, but have little effect on the domestic use of petroleum revenues. The Petroleum Fund thus serves as a buffer against fluctuations in oil prices and shields the krone exchange rate. Nevertheless, we have been prepared for fluctuations in the krone exchange rate on a par with changes in other countries. Over the last two years, the appreciation of the krone has been driven by the wide and increased interest rate differential between Norway and other countries, which reflects the relatively high level of wage growth in Norway.
This electronic central bank money plays an important role and, like cash, is risk-free. It is used to implement payments between financial institutions participating in the central bank's payment system. In Sweden, this payment system is called RIX and it is operated by the Riksbank. Responsibility for a central payment system is a second central bank task that is of great significance for ensuring that our payments are efficient and safe, and thereby for the financial system. Most non-cash payments in Sweden that are not internal within a bank pass through RIX one way or another. On average, around 21,000 payments are settled in RIX every day to a total value of around SEK 565 billion 4 . In other words, every week an amount is settled that is roughly the size of Sweden’s GDP. RIX also acts as the hub in a large universe of systemically important financial infrastructures that consists of central counterparties, securities companies and clearing organisations. The Riksbank's role is to supply the RIX system and to guarantee that the parties that are members of RIX can settle their payments efficiently. The requirements for operational reliability for the RIX system are very high, as a breakdown would have major repercussions on society. If payments do not reach  4 http://www.riksbank.se/Documents/Riksbanken/RIX/2017/rb_RIX_tertial_3_180119_eng.pdf  4 [12]  counterparties as planned, this could entail problems for the companies and households that are affected.

Lack of transparency can result in delay in tackling the problem and erode public confidence in the soundness of the banking system. Innovation and technological change 21. Asset quality is thus one main issue which Asian banks have to tackle. But one of the results of globalization is that even banks in relatively undeveloped banking systems are now having to cope with the challenge of product innovation and new technology. This can accelerate the transformation of such banking systems: modern computer systems can be installed and banks can make the jump straight from cash to smart cards. The downside is that banks may have less time to build up the skills properly to use the new technology and the new products which their counterparts in developed banking systems have taken many years to BIS Review 55/1997  -5-  acquire. Derivatives are a case in point. While the derivatives markets in the region other than Tokyo are still quite small, these products are certainly being sold to, and in some cases being traded by, local banks in the region; and a number of them have suffered losses as a result. 22. Looking further ahead, the opportunities provided by new technology will pose important strategic challenges for the banks. To what extent, for example, should they invest in new delivery mechanisms such as telephone or internet banking? These channels offer the potential to bring down dramatically the cost of transactions compared with the traditional branch network.