samchain/econo-pairs-v1 huggingface dataset:
The price stability target was written into the law in 1999, at the same time as monetary policy decisions were delegated to an independent Executive Board. The fiscal policy framework For its part, fiscal policy would focus considerably more than previously on keeping public finances in good condition so as to maintain market confidence. The budget process was changed so that it would be easier to gain control over government spending, while public net lending would, on average, be positive through the so-called surplus target.7 The purpose of the latter was, of course, in the long run to get rid of the rampant government debt and to restore confidence in public finances. Industrial Agreement Swedish wage-formation also changed. It now works in a completely different way than in the 1970s and 1980s. One important reform was the so-called Industrial Agreement in 1997, under which the manufacturing industry has set the benchmark for wage negotiations and ultimately steered wage cost increases in the entire economy for almost twenty-five years. 6 Dagens Nyheter, 20 November 1992, Section A, p. 5. 7  For a discussion on the interaction between fiscal and monetary policy, which is not specifically addressed in this speech, see Jansson (2021). 5 [16]  ...laid the foundations for positive developments The ‘total renovation’ we made after the 1990s crisis has contributed to the overall positive developments during these past thirty years. The Swedish economy is working better. I would just like to briefly mention a few examples of this.

In a final attempt to stop the currency outflow, the Riksbank first raised its policy rate to 75 per cent again on 16 September 1992 and then, at 15:20 on the same day, to 500 per cent. At the same time, the pound sterling and the Italian lira left the ERM and were allowed to float freely. In this situation, the government and the opposition managed to agree on a crisis package that was presented on 20 September, intended to strengthen the state budget by SEK 40-45 billion. The Riksbank then cut the rate to 50 per cent. After a second crisis package at the end of the month, the interest rate could be cut further, to 24 per cent. This calmed the market somewhat and the Riksbank was able to gradually lower the marginal rate to 11.5 percent in the late autumn. However, the calm was only temporary. In mid-November, the outflow of foreign currency began to accelerate again. Repeating the same manoeuvre with a substantial rate increase and further crisis packages was considered pointless – confidence had been exhausted. On 19 November 1992, the Riksbank abandoned the fixed exchange rate. When you go through the press cuttings from this period, it is not very difficult to see an image of how we were desperately using rate increases and hastily concocted fiscal policy agreements in an attempt to patch up and repair a house that was really so run down that it needed to be completely renovated.
So as much as the account openings themselves, today we commemorate the symbolism, principles, and values they represent. Today’s event commemorates the start of the Federal Reserve’s international operations and involvement in the international arena. It honors the Federal Reserve’s past and ongoing support for the principle of the major central banks to provide safe, confidential, and reliable account services in their currencies to the global central banking community in support of financial stability and other central banking mandates. And it acknowledges the value of cooperation among the world’s central banks and the role that these initial operational ties played in paving the way for broader and deeper cooperation among central banks. In doing so, we also recognize the individuals past and present who have played a role, often behind the scenes, in managing the Federal Reserve’s dollar account operations for the global official sector. The early years: war, ambition, and cooperation The story of the early years of the Federal Reserve’s dollar accounts for foreign central banks is one of war, ambition, and cooperation. It is no coincidence that the first agreement was signed less than a month after the United States entered the First World War on April 6, 1917.

See Barry Eichengreen and Marc Flandreau, “The Federal Reserve, the Bank of England, and the Rise of the Dollar as an International Currency, 1914– 1939,” Open Economies Review 23, no. 1 (2012): 57–87. 9 In his report on the discount system in Europe, Paul Warburg wrote that the “annual tribute to Europe resulting  from our primitive financial system is not merely a waste of money, but reflects upon the dignity of a nation and economic importance of the United States.” See Paul Warburg, The Discount System in Europe (Washington: Government Printing Office, 61st Congress, 2nd Session, Senate Doc 402, 1910), 9. 10 For the guarantee, from 1921 until 1974 when the New York Fed discontinued the guarantee option on banker’s  acceptances, the New York Fed charged 1/8th of 1% on the face amount of banker’s acceptances purchased on behalf of foreign central bank accountholders. Dollar banker’s acceptances became a favored investment instrument by foreign central banks in the days before the introduction of the first regularly issued U.S. Treasury bill in 1929. 11 The maintenance of gold vaults and reciprocal gold custody accounts among major central banks provided  significant operational advantages for the functioning of the international gold standard. In addition to the safety of storing gold with another central bank, through the practice of earmarking central banks could settle accounts with one another without the need to physically deliver gold bullion. This was especially useful in periods, such as wartime, when navigation of sea lanes could be impeded.
Arguably, it’s been a long time since monetary policy was “normal,” so it’s worth describing what normal looks like in some detail. At its most basic level, policy-making will remain the same: The path of interest rates will continue to be guided strategically by our dual mandate objectives and shaped tactically by the data and their implications for the economic outlook. We’ll continue to be transparent about our thinking about the economy and monetary policy. But, changing circumstances call for some changes in how the FOMC communicates its policy views. Now that interest rates are well away from zero and the economy is humming along, the case for strong forward guidance about future policy actions is becoming less compelling. For one, the future direction of policy will no longer be as clear as it was during the past few years. When interest rates were extremely low, it was obvious that the direction for rates was upward, toward more normal levels, and our forward guidance reinforced that point. At some point in the future, it will no longer be clear whether interest rates need to go up or down, and explicit forward guidance about the future path of policy will no longer be appropriate.

But, as we move toward more “normal” conduct of monetary policy, we shouldn’t rest easy and think we won’t confront our own fair share of future challenges. The most important one in front of us today is sustaining the long economic expansion without allowing risks to grow that ultimately undermine economic prosperity. Whatever the future may bring, I will be guided by our dual mandate, a heavy dependence on data, and a steadfast commitment to transparency. Thank you. 1 1 See FOMC Statement and Implementation Note, September 26, 2018. 2 2 See Minutes of the Federal Open Market Committee, March 17–18, 2015. 3 3 See FOMC Communications related to Policy Normalization, and Simon Potter, Money Markets and Monetary  Policy Normalization, April 15, 2015. 4 4 See FOMC Statement and Implementation Note, September 26, 2018. 5 5 See FOMC issues addendum to the Policy Normalization Principles and Plans, June 14, 2017. 6 6 See Simon Potter, Confidence in the Implementation of U.S. Monetary Policy Normalization, August 4, 2018. 7 7 See FOMC Statement and Implementation Note, September 26, 2018. 8 4/5  BIS central bankers' speeches  8 8 See Jerome H. Powell, Monetary Policy in a Changing Economy, August 24, 2018. 9 9 See Policy Normalization Principles and Plans, as adopted effective September 16, 2014. 10 10 See Simon Potter, Confidence in the Implementation of U.S. Monetary Policy Normalization, August 4, 2018. 5/5  BIS central bankers' speeches
In particular, the actual and expected oil price dropped significantly, mainly due to supplyside factors that have generated a surplus balance in the oil market. It has also translated into a reduction in the relevant external inflation forecast, and has improved Chile’s terms of trade. However, part of this is offset by the lower copper price – actual and foreseen – which traded at less than 3 USD per pound in the weeks prior to the statistical cutoff of this IPoM Report. The baseline scenario assumes that the copper price will average 295 and 285 cents per pound in 2015 and 2016, respectively. Chile’s annual headline inflation is expected to remain above 4 percent for some more months. Still, the mix of high comparison basis in 2014, the evolution of fuel prices and the accumulation of capacity gaps in the economy will pull it down towards 3 per cent over the course of 2015. Then it should hover around 3 percent until the last quarter of 2016, i.e., the end of the projection horizon (figure 9). The CPI that excludes food and energy CPIEFE forecast for 2015 is corrected upward, taking into account the sharper depreciation of the peso, its transmission to prices and the evolution of nominal wages. At any rate, it is expected to end next year around 3 percent and fluctuate close to that value throughout 2016.

Thus, any surprises in the evolution of the US monetary policy could affect  4  BIS central bankers’ speeches  financial conditions – like they did in May of 2013 –, raising credit costs in world markets, reversing portfolio flows and depreciating emerging-country currencies against the US dollar. The beginning of a new cycle of quantitative expansion by the European Central Bank, plus similar announcements by the Bank of Japan, might reduce the likelihood and impact of these volatility episodes, depending on how these unconventional policies ultimately reflect in global lending conditions. A different risk has to do with the slowdown of emerging economies resulting in reduced capital flows. This because their assets become less attractive, all the more so in Latin America. A scenario in which the recent drop in commodity prices is prolonged or intensified, or where doubts about China’s performance resurge strongly, might trigger this kind of event. The scene may become more complex if at the same time long-term rates go up in the US, increasing the cost of external funding. It should also be considered that an increase in the cost of external financing could put upward pressure on local long-term interest rates. The decline in external and domestic long-term interest rates has motivated bond issues in both markets and local demand for type-3 mutual funds.
It is unclear what the net impact will be, but if all firms pursue the same strategies in search of higher risk-adjusted returns, greater similarity could result. This pressure is potentially stronger now than in the past due to the highly competitive nature of banking and this is an area for further study. Technology A third theme is the emergence of “fintech”, which I think of as the intersection between technological innovation and the provision of financial services. While innovation has always been a competitive driver in banking, there is a sense that both the pace of change and the potential impact have become more pronounced. As prices for technology services and capacity continue to fall and technological opportunities expand, more firms are able to adopt and leverage the latest technological breakthrough. Scale is likely to remain a relevant factor in the deployment of the latest technology, but, at least among the largest firms, the playing field may be leveling as firms have the opportunity to benefit from direct investments, consultants, and third-party vendors offering the latest services. If the largest financial firms are responding to the same technological forces and pursuing the same opportunities, one might expect their resultant strategic choices to contribute to greater similarity over time.8 Again, this is an empirical question that deserves further inquiry. Next Steps An important next step is to look at the data to assess whether recent industry trends are consistent with the premise that large banks are becoming more similar.

If true, an obvious follow-up question is whether this should be a concern from a supervisory and regulatory perspective. Today, I will discuss the premise that large banks in the U.S. have indeed become more similar and then consider some reasons why this might be a topic of interest for the official sector. I can think of several compelling microprudential and macroprudential reasons why this would be the case: the need for an appropriate risk management framework that is commensurate with evolving risks; the need for supervisors to ensure that our assessments are 1/5  BIS central bankers' speeches  proactive and flexible enough to evaluate evolving firms; the potential for similar firms to become “systemic as a herd,” where a given shock leads to correlated responses and large-scale disruption in the provision of financial services; and the potential for firms to move away from areas of comparative advantage, which could diminish the overall efficacy of the financial sector. I’ll conclude with some implications for our supervisory regime. Environmental Context The performance of financial firms in the decade since the financial crisis has been influenced by a broad range of external forces. I’ll focus on three factors impacting how financial services are provided and their impact on large firm similarity: the regulatory response to the financial crisis, the interest rate environment, and technological innovation.
Indeed, it seems that excess demand now shows up in asset prices before wages or inflation, complicating the trade-offs between price stability and financial stability. However, it would be remiss of me not to briefly mention the short-term challenges that we currently face. Confronting this unprecedented Covid crisis, we acted boldly and rapidly, using all the tools at our disposal and inventing new ones such as the PEPP. By doing so, we successfully avoided both fragmentation and deflation. That said, inflation is not yet where we would like it to be, back towards 2% over the medium term. Have no doubt about our determination to act as much as needed, and about our capacity to act. Again this Autumn, we are hearing chatter about the ECB running out of ammunition. It proved completely wrong in March, and it remains wrong today. If needed, the ECB has ample room for manœuvre. By  Page 3 sur 10  the way, the yesterday's take up (EUR 174 bn) of our TLTRO-3 confirms the attractiveness and the adequacy of this innovative tool. We decided to keep a steady hand in the last Governing Council due to the continuity of our economic forecasts. But steady hands are not tied hands: we have free hands for the future. ** Let me now come to the ECB’s strategic review, on which work has restarted after the peak of the Covid crisis.

TLTRO’s and the tiering system we use today for refinancing the Eurozone banks are two good examples in this respect. On climate change, the emphasis put by Christine Lagardeix herself is welcome and totally warranted. In my view, the fight against global warming is already an imperative for us under our price stability mandate: not only will the effects of climate change have significant repercussions on future inflation and growth, but they are already having an impact now. We could implement our climate decisions in no more than 3 to 5 years, which would make us pioneers among major Central banks. Page 8 sur 10  4. How to improve communication with the general public? My final remarks concern communication. Central banks have come a long way in being transparent about their decisions and explaining their reasoning. However, our communication is too often addressed to a narrow group of people – the media, the markets and economists. We need to do a better job of reaching the general public. And this means two changes of paradigm:  it is not only a question of democratic accountability – however essential this remains –, it is also key for our economic efficiency. Better-informed firms and households will also make better decisions and ones more aligned with our strategy, I will come back to it.  Secondly, we should evolve from a narrow objective of “transparency” to a wider objective of “clarity”.
Indeed, this attitude has, in many respects, proved highly advantageous for the country. Nonetheless, it doesn’t change the fact that international competition has increased and that the Swiss are making the most of the growing number of possibilities to avail themselves of goods and services from abroad. BIS Review 69/2004  1  Of course, we can’t talk about Switzerland without also talking about the Swiss franc. The Swiss franc forms the basis for the Swiss National Bank’s monetary policy autonomy and for price stability. It also underpins the efficient Swiss capital market, which is characterised by a low interest rate level, when compared internationally, and which represents an important locational advantage for the country. The European political and economic environment - of which Switzerland is an integral part - has, however, gone through a great deal of change. It is therefore not surprising that our relationship with Europe is a topic of much discussion in my country. 2. Switzerland and the European scene  For almost six years now, Switzerland has been surrounded by the single European currency. And for six years we have been trying to make it clear to our friends abroad that Switzerland is nevertheless not an island, but is in fact deeply integrated into Europe. Approximately 20 percent of our workforce comes from EU member states. A total 60 percent of our exports go to the EU and 80 percent of our imports come from there.

It is more important to ensure that the goods markets also adjust and the inflated price level drops - this can be achieved by systematically promoting competition and by reducing state regulations. The eastward enlargement of the EU inevitably begs the question as to whether the rocky bilateral road on which Switzerland has set out will also be a fit for the challenges of the future. Accession to the EU is currently not an issue, however. Reasons for the scepticism of the Swiss people in this regard are manifold. For instance, Switzerland would have to give up the Swiss franc if it joined. This in turn would mean a higher interest rate level and an end to our autonomous monetary policy. 2  BIS Review 69/2004  It was precisely in the past three difficult years, that the possibility of conducting an independent monetary policy proved advantageous. At the beginning of 2001, the Swiss National Bank relaxed its monetary policy before the European Central Bank and, in the following months, also cut its short-term interest rates more drastically than the ECB. In March 2003, we lowered our key rate, the three-month Libor rate, to almost zero. This was in reaction to the deflationary risk in the wake of the strong appreciation of the Swiss franc. We have, in the meantime, pushed our interest rates back up slightly.
Or as we usually say, the interest rate path is a forecast, not a promise. The uncertainty was also illustrated with some alternative scenarios, where we among other things examined how the forecast for the repo rate would be affected by a more rapid increase in wages. For the first time, we wrote in detail about these problems of monetary policy considerations in our report and to mark this the Inflation Report changed its name to the Monetary Policy Report. During the spring new information was received, which to some extent made us revise our assessments. The labour market situation looked to be tighter than expected, partly because the supply of labour was not increasing as much as we had expected. The new wage agreements signed in the labour market were slightly higher than both we and many other analysts had anticipated. At our monetary policy meeting in May, we Executive Board members were unanimous that the repo rate needed to be raised in total more than we had previously thought. But we did not yet have a complete picture of the central wage negotiations and I personally did not consider the change to be so large that there was reason to move more quickly and raise the interest rate already in May. An own repo rate forecasts allows us to discuss in a natural way the timing of future interest rate changes. But in May we did not publish any new interest rate forecast and our communication was limited to a qualitative assessment.

The rapid transformation of economic structure and the development of interbank markets and economic agents were coupled with fundamental changes in the monetary policy transmission mechanism. The latter has now become more complex, involving more players whose sophistication is ever-increasing, and incorporating more instruments and financial contracts that are timely structured and indexed to different indicators. The Albanian economy is now economically and financially integrated into the global economy, having the characteristics of a market economy but at the same time featuring the typical challenges of economic management that such an economy entails. These changes have called for the constant monitoring by the monetary authority in order to make the necessary changes in the monetary policy regime and the operational aspects of its implementation. Against this background, the Bank of Albania has been committed to a process of constant evaluation of the interbank market performance and at the same time fine-tune its monetary policy regime. The Monetary Policy Document for the 2009–2011 Period was a major step in this regard. In this Document, the role of monetary aggregates as indicators of inflationary pressures in economy and as intermediate targets of monetary policy was complemented with a wide range of information provided by the real sector of the economy, which is systemized and finalized in the inflation forecast performance. This change was entirely based on the Albanian experience.