samchain/econo-pairs-v1 huggingface dataset:
However, while the hope that a depreciation of the franc will boost export opportunities is understandable, it is deceptive all the same. On the one hand, the exchange rate is only one of the factors determining export success. Exports do not only depend on price elasticity, but also on their income elasticity, i.e. the cyclical development abroad. On the other hand, as I have pointed out before, it is the real rather than the nominal exchange rate that matters for production  BIS Review 60/2002  5  decisions and trade flows. It is well known that monetary policy cannot manipulate the real exchange rate for any length of time. Expanding the domestic money supply until the Swiss franc was depreciated to the desired degree would inevitably lead to a massive rise in inflationary risks. As a consequence, the SNB would no longer be able to fulfil its mandate of ensuring price stability. In the long run, such a policy would result in the well-known costs of rising inflation without any compensating real benefits. Moreover, if the SNB tied the Swiss franc to the euro, as some calls from the industry and the unions have demanded, a first consequence would be the erosion of the "interest rate island". One can only begin to imagine what this would mean for the Swiss financial centre, the building and construction industry, or Swiss asset prices.

BIS Review 128/2010  3  Custodian of the Two Holy Mosques The endorsement of the Ninth Development plan coincided with the announcement by the Central Department of Statistics and Information of preliminary results of the population census. The population of the Kingdom amounted to 27.1 million, of whom about 18.7 million are Saudis, and 8.4 million are residents. The number of houses stood at 4.6 million. These results support your Royal instructions to exert every effort to achieve the objectives of the Ninth Development Plan in a timely manner, especially with regard to enhancing citizens’ welfare, providing housing, employment, education, health care services, and modern facilities needed, and working hard to fight poverty, paying special attention to balanced development in all regions of the Kingdom. At the regional level, the four member states of the GCC Monetary Union (Bahrain, Saudi Arabia, Qatar and Kuwait) have ratified, at the beginning of this year, the convention of the Monetary Union. By your Royal encouragement and support and that of your brothers the leaders of the Council’s states, the Monetary Council began its work as the nucleus of the central bank to be established upon the completion of the main facilities and infrastructure of the Monetary Union. The central banks and monetary agencies, members of the Monetary Council, are doing their utmost to conduct the Council’s work in accordance with the guidance of the leaders of the Council’s States. In spite of these bright achievements, there are still many challenges posed to our development march.
That’s a more serious problem for some types of instruments than others. The large majority of business loans in existence today will mature or be renegotiated before the end of 2021 in the ordinary course. So the loans can be converted entirely to SOFR loans before the clock runs out on LIBOR, or at least fallback provisions can be added. There’s also good news on derivatives, relatively speaking. A large percentage of derivative contracts are also shorter-term. Over-the-counter derivatives that do extend past 2021 can be amended to incorporate new rates and fallback provisions through a protocol procedure that the International Swaps and Derivatives Association (ISDA) will put in place. That’s still a lot of work for everyone who has LIBOR derivatives, but it’s a relatively clear way forward. And for exchange-traded derivatives, the exchanges themselves can specify fallbacks through rulebook amendments. The exchanges have indicated they will adopt the same basic fallback methodologies as ISDA. This is all good news. Consumer loans present different issues. The documentation generally gives the lender discretion to unilaterally choose a comparable rate if LIBOR goes away. That sounds simple. But, in practice, the knot of reputational, operational, and legal considerations involved in changing the interest rate basis on consumer loans will require attention and resources to unravel. And over 40% of LIBOR-based residential mortgage loans currently outstanding extend past 2021. One of the more difficult challenges is the one posed by floating-rate notes, securitizations, and preferred stock whose payments are tied to LIBOR.

On the one hand, it is tautological to say that crises are unpredictable, or else  2  It is out of the scope of this presentation to discuss the role of monetary policy in causing the crisis. As I have argued elsewhere (De Gregorio, 2010), the cause of the crisis was mainly financial fragility, while lax monetary policy played only a secondary role. Many countries, such as Chile or Canada, for example, had very expansionary policy before the crisis, and did not suffer a financial collapse. BIS Review 84/2010  3  they would never occur. History is plagued with crises. Moreover, crises have become more frequent in recent decades as compared with the Bretton-Woods period, although their severity and duration have not changed significantly (Bordo et al., 2001). Crises must be avoided, but the only way to make sure they do not happen is to eliminate financial innovation and development altogether, which we know is not a good prescription. Therefore, crises will still occur, and the role of policies is not to be the cause of them, but to increase resilience of financial systems and minimize their cost. 3 Of course, all these elements were absent in the global financial crisis and for this reason we need to devote more thinking to reforms. Although crises will continue to happen, we must not conclude that since crises are unavoidable, there is nothing we can do about them.
8 And yet, the G20 lacks the legitimacy that historically has been associated with a truly multilateral framework. Its ambitious economic cooperation should be anchored in a multilateral institution. The IMF is the logical choice. The G20 includes only the countries that established it. Membership seems to have been somewhat arbitrarily determined and not solely on the basis of relative size or importance in the global economy. The G20 formally founded the Financial Stability Board (FSB) 9 and sets its agenda. Membership is at the discretion of the G20. The G20 agrees on the activities of and changes in the IMF and more or less dictates decisions to the rest of the membership. The FSB agrees on standards for financial sector activity, which the rest of the world is expected to adopt, without having been consulted or given the opportunity to voice an opinion in the preparatory phase. A strong institution like the IMF must be at the center of multilateral economic and financial cooperation. Virtually all the countries of the world participate and are represented in the IMF. To be able to continue to play an effective role, the IMF needs to enjoy confidence and trust, and to be seen as having a legitimate structure of governance. Last but not least, the IMF needs to be financially strong, to have at its disposal financial resources commensurate with its tasks, including the ability to provide prompt and significant financial support when needed.

It engages the membership of the IMF directly and indirectly. It would lend legitimacy and integrity to the process of international economic and financial cooperation. The Articles of Agreement of the IMF confer upon it to “oversee the international monetary system in order to ensure its effective operation.” 13 During the crisis, the IMF proved its ability to respond promptly and effectively to very challenging developments. I therefore submit that a statutory-based and representative global order should be one of the main objectives of the discussions on changes in the international financial architecture. Conclusion To conclude, I have presented my view on the prevailing international economic order which I find deficient in important respects. The G20 played a vital role in the response to the global crisis and the rest of the world depends on its successful cooperation. With the world recovering from crisis, the G20 should merge its activities with those of the IMF. That will give them both wider acceptance and legitimacy. At the outset, I described some characteristics of Norway and emphasised our history of active support of multilateral institutions and collaboration. Currently, we do not participate where decisive discussions take place on international economic and financial issues and cooperation, including changes in the governance of the IMF. Yet we are called upon to make relatively large contributions to efforts agreed by a non-statutory body. 11  IMF chief warns of reliance on exports; interview with the Financial Times January 30–31, 2010, p. 5.
This range for the terminal rate has been obtained assuming that the Eurosystem maintains the size of its asset portfolio under the APP and PEPP constant over a horizon consistent with our communication on the PEPP (for which reinvestments are foreseen to extend until end 2024) and with survey-based expectations on APP (for which the reinvestment horizon is more open-ended). However, in the case of the APP the ECB could potentially decide to start reducing its asset stock earlier than markets currently anticipate. Given our understanding of the way asset purchase programmes work, such a course of action would have a downward effect on the terminal rate.17 This is because, if we announce our intention to initiate the unwinding of our APP portfolio earlier than expected by investors, bond yields will increase, especially those at  14  We consider both fully structural Dynamic Stochastic General Equilibrium (DSGE) models, semi-structural models, like NiGEM,and large macroeconometric models estimated to replicate the euro area economy. In the case of the DSGE and the macroeconometric model, we set them to reproduce the September ECB MPE projections and then consider counterfactual paths for rates, whereas in that of the NiGEM we employ its built-in projections. Agents in the DSGE model have rational expectations. NiGEM is solved both with rational and adaptive expectations. Adaptive expectations require a less aggressive response (terminal rate 1.75%) as expectations are heavily influenced by the past, characterised by a long period of below-target inflation in the euro area.

Why by raising interest rates and not by reducing the size of our balance sheet? I see three important reasons. First, we understand better the transmission mechanism of interest rate rises than that of quantitative tightening. We have decades of experience with the former, but we have never reduced the size of our balance sheet from such large levels. Second, quantitative tightening could potentially cause market turmoil in certain market segments, as supply may outgrow demand and liquidity may dry up. This could imperil the policy normalisation path at a time in which all our efforts should be focused on it. Third, monetary policy transmission in the euro area is heavily dependent on bank credit. Loan pricing is typically benchmarked to short- and medium-term rates. Policy rates are thus a more effective instrument to tighten monetary policy. Going forward, a key question is: by how much should our key interest rates eventually increase? That is, what is the value of interest rates that guarantees that inflation converges to 2% by the end of our medium-term horizon? I will call this level the “target-compatible terminal rate”. A second, related question is: how fast should this terminal rate be reached? Let me address the second question first. What should the optimal path towards the terminal rate be? One possibility would be to raise rates to the terminal level straightaway.
Around two-thirds of the public say they have never had any formal education and training in economics. 21  In practice, that fraction may be higher still. And  almost half of all people never discuss economic and financial matters, or do so no more than once a 22  month. Why This Matters  If economists are a remote and mistrusted tribe, and if the public feel their understanding of this tribe is inadequate, does this matter? Yes. The reason we know this is because the general public say so. In a recent UK survey, over 80% of people said that economics was relevant, or very relevant, to their everyday lives. 23  Respondents expressed a clear desire to improve their understanding of economics, to  help them when managing money, voting or understanding the economy. Like economists, the general public also think that the Twin Deficits are reason to purse lips, suck teeth and take sharp intakes of breath. It is not difficult to see why. Imagine that, instead of economists plumbing the depths of the trust league table, it was high-flying doctors. A loss of public trust and understanding in our health services would impose significant costs on society. Fewer sick people would seek expert medical advice. Non-expert, alternative medicine would rise in popularity. And there would be an increased risk of medical scare stories taking root. There is plenty of evidence to suggest these costs can be considerable.

Turning to economics, the educational pyramid could not be more different (Figure 2). It is more diamond than pyramid. Economics is not a compulsory part of the school curriculum at any stage. Up to age 16, economics forms only a very small part of PSHE (Personal, Social and Health Education), a voluntary part of the curriculum. Surveys suggest that PSHE provision is patchy and has decreased significantly in recent years. 56  Among early-years children, there is little foundation for learning everyday economics. 57  Beyond 14, students at some schools can opt to study economics. In practice, only around a third of schools offer this option. As a result, in 2016/17 only just over 9,000 students across the UK studied GCSE economics, typically between the ages of 14 and 16. That is a tiny 1.4% of the student population in that age range. These numbers have been flat over the past decade. More than a decade into their educational lives, then, the vast majority of students have had virtually no exposure to economics and business. Beyond age 16 the number of schools offering, and students studying, economics picks up - the pyramid begins to widen. Around 33,000 students completed A-Level economics in the UK in 2016/17, typically studying between the ages 16 to 18. Encouragingly, these numbers have swelled, by around 70%, over the past ten years. That remains only 4.3% of the total number of young people in this age range.
Several key initiatives contribute to this Financing Union and already exist: (i) the Capital Markets Union, which promotes the diversification of private financing; (ii) the Juncker Investment Plan, which mixes public and private investment towards the real economy; and (iii) the Banking Union, which addresses persistent financial fragmentation. These initiatives, however, lack the unified governance of a Financing Union, which would help circumvent bureaucratic barriers and foster synergies. In addition, progress towards a Financing Union is still needed in four key areas: First, providing incentives for cross-border investments – mainly in equity – through accounting, taxes and insolvency laws. Strengthening the free movement of capital within the EU requires overcoming a wide range of legal obstacles. We should improve the 2/5  BIS central bankers' speeches  predictability of insolvency frameworks, eliminate tax-related biases that penalise equity and harmonise the accounting rules for small businesses; Second, developing pan-European savings products more oriented towards long-term investment. This could be done through a variety of savings vehicles: the creation of European venture capital funds, new market initiatives for green bonds, securitised portfolios that are diversified across member states, and so on and so forth; Third, completing the Banking Union; Fourth, controlling financial activities and risks that are of vital importance for the euro area, such as supersystemic CCPs. Improvements in these four areas are needed so as to reach significant gains for digitalisation, SME’s scaling-up or energy transition. In each of these fields we have significant investment needs.

In a recent survey of the banks and insurers we regulate, conducted as part of our ongoing monitoring of the impact of COVID-19 by the Bank’s Fintech Hub along with colleagues from the PRA, around 45% of those firms that participated reported that the crisis has led to an increase in the importance of AI and data science applications for their future operations, with around 55% reporting no change, and none noting a decrease. The survey also looked at changes in firms’ investment plans and resource commitments for AI projects as well as areas where the crisis has had an impact on existing applications across different business lines. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  While the use of AI has clear benefits in an increasingly data-driven economy, there are risks and challenges. And the impact of those benefits and risks will be felt at different paces and different depths at technological, social, corporate, and systemic levels. It’s useful to think of the risks and challenges in a hierarchical way, starting with those that may become apparent at the data level and building up to the level of models trained on those data; then, widening to the level of the firm, and finally, up to the level of the financial system as a whole. Overlaying this are the regulatory and legal challenges presented by AI.
All the institutions involved in our payment system are devoting increasing resources to prevent cyberattacks, from banks and Norges Bank to our security authorities. However, we can never be completely certain that the system will be able to resist all possible attacks. We can lose money too. Ultimately, there may come a time when our systems have to be shut down for a period. We need to be prepared for a situation where the payment system – or parts of it – has to be shut down for a period. Contingency arrangements must provide protection against a wide range of incidents, not just cyberattacks. These arrangements primarily comprise a number of reserve solutions in our electronic systems. Our ultimate contingency and reserve solution is our banknotes and coins. This part of our contingency arrangements must be strengthened. On the advice of Norges Bank and Finanstilsynet (Financial Supervisory Authority of Norway), the Ministry of Finance recently circulated a consultation paper proposing a regulation to ensure the availability of cash in a contingency. What should the future form of money be? The role of banknotes and coins, which have been our central bank money since Norges Bank was founded a little more than 200 years ago, continues to diminish. Everyday payments are increasingly made using deposit money in bank accounts. New forms of payment are a new stage of this trend. This prompts the following question: what should the future form of money be?

Having a deep and solid financial system is an asset and a source of strength for Chile and that is why it is so important to safeguard the capital market as a central pillar to achieve the sustainable and inclusive growth that our country needs. 2. Moderating macroeconomic cycles and providing financial stability Let me now talk briefly about the actions taken by the Central Bank to contribute to the process of resolving macroeconomic imbalances after the pandemic as well as to mitigate the impacts of external shocks in the past moderate macroeconomic cycle. The year 2022 has been a very challenging time from a macroeconomic perspective. The end of many long-lasting quarantines and the return of economic activity as we knew it before Covid erupted in 2020 provided an auspicious start. Yet inflation was increasing both domestically and abroad. The most urgent and important, macroeconomic challenge that Central Bank of Chile had to address is inflation. Given that maintaining low and stable inflation is the main mandate of the central bank, this current situation undoubtedly represents the biggest test for the central bank at least since inflation targeting was adopted in the late 1990s. We have had a 4  difficult year in terms of inflation. In August, it reached a peaked to 14.1% yoy, and currently stands at 13.3% according to the figure released last Wednesday. This latest monthly inflation print showed an elevated number (1% for headline, 0.9% for core) highlighting that the deceleration of inflation is still not completely consolidated.
As a result, the capital buffer for the more systemic firms should be higher based on size, complexity, interconnectedness, global exposure and substitutability, so that their expected probability of failure will be lower than for less systemic firms.1  1  New liquidity requirements such as the liquidity coverage ratio also work to reduce the risk of failure by giving firm management more time to address problems before a funding squeeze becomes acute. BIS central bankers’ speeches  5  The SIFI surcharge acts as a penalty for size and complexity, leaning against any remaining funding cost advantage that might remain for a large complex firm even after a viable resolution regime is in place. This should further level the playing field for smaller firms and reduce the incentive to become systemically important in the first place. However, I expect that it will take considerable time for the surcharge to have a meaningful impact on size and complexity. We also need to create new mechanisms and incentives for bank management to act early, well before resolution becomes necessary. Early intervention is likely to be much more successful in preventing failure as compared to last-ditch efforts. These actions can take many forms – cutting capital distributions earlier, raising new capital faster, restructuring businesses sooner, and reorganizing senior management and boards of directors more radically when the firm is not performing well. In this regard, the Comprehensive Capital Analysis and Review (CCAR) should bolster the incentives for early action.

After all, collectively these enhancements to our current regime may not solve another important problem evident within some large financial institutions – the apparent lack of respect for law,  6  BIS central bankers’ speeches  regulation and the public trust. There is evidence of deep-seated cultural and ethical failures at many large financial institutions. Whether this is due to size and complexity, bad incentives or some other issues is difficult to judge, but it is another critical problem that needs to be addressed. Tough enforcement and high penalties will certainly help focus management’s attention on this issue. But I am also hopeful that ending too big to fail and shifting the emphasis to longer-term sustainability will encourage the needed cultural shift necessary to restore public trust in the industry. One alternative strategy for dealing with too big to fail is to reduce the size of large banks by imposing size limits. While I understand the motivation, it is important to recognize that imposing size limitations might not be a very efficient means of making the financial system more stable. First, it could sacrifice some socially beneficial economies of scale and scope, especially to the global clients of large financial institutions, depending on how the size limits were implemented. Second, the resulting benefits in terms of reducing systemic risk might be quite small.