samchain/econo-pairs-v1 huggingface dataset:
But a spread is only defined around some mid-price, whether market or model-determined – and the former may simply not exist in dysfunctional markets, leaving it hard to avoid being a price setter, whether you like it or not. We found ourselves coming close to this in our index linked gilt purchases, where a near-complete lack of liquidity required us to set an additional level of reserve pricing in levels terms (a ‘reference yield’ below which we  Page 12  would not buy) to ensure we both removed the threat of renewed dysfunction while also preventing yields from falling to levels that would leave us acting as the entire market (Figure 5). That proved workable for a few days – whether it could be applied over longer periods is an important question for future reflection. Questions for future research Let me end with some questions for future research, drawing on points I’ve made today: First, we need a clearer sense of how much market dysfunction societies are willing to tolerate – whether defined in terms of a certain spread around risk-free rates, a certain level of liquidity, or the absence of unstable firesale dynamics. And, we need a clearer sense of the extent to which this tolerance should be achieved through self-insurance by market participants (in particular non-banks) – with the residual presumptively falling to public authorities to backstop through tail risk insurance.

While there were no big surprises for the CPIEFE regarding expectations in March, headline inflation figures were below projections, affected by some temporary factors which are expected to reverse in the coming months. On one hand, the decline in international fuel prices, along with an appreciation of the peso in the first four months of the year, reflected in lower energy inflation. The recent depreciation of the peso will help to reverse this situation soon. Electric power has also helped to keep inflation low, but this effect is reversible once the impact of refunds implemented in April and May fades away and the forthcoming entry into force of new price regulation. In addition, the low basis for comparison of June 2012 will mean that CPI inflation will enter the tolerance range in the coming months. With respect to the CPI measurement, and as I pointed out on when I presented the last Monetary Policy Report to this Commission, I want to reiterate that the measurement of this index and other statistics, poses many methodological and practical challenges that must be dealt with in a continuous and transparent fashion. The improvements announced by the National Statistics Institute to the measurement methodology of certain specific products in the basket, as well as other improvements to be made on the occasion of the regular review of the household basket, are most welcome.
The transferors may have proper insight into the nature of the risks. But to whom have the risks been transferred? Are the transferees actually aware of the risks they have taken on? And are they in the best position to monitor these risks as they evolve? How do they acquire day to day knowledge about the quality of those risks? Going further, what might they do when they find out? 2  BIS Review 29/2003  Some of the concerns being expressed by private and public sector commentators in these areas are, in my view, important and worthy of further examination. Those concerns I’m talking about include: a lack of aggregate data on derivative positions; lack of transparency in accounting for them; and the potential for unexpected concentrations of risk to build up. Although in principle this redistribution of risk should be benign we simply do not have the information at present to judge what the actual impact has been. But why is all this relevant to insurance? It’s certainly true that in a lot of cases originating banks have laid risks off to other banks. There are many possible reasons for this: for diversification or to avoid concentration; opportunities to earn fees; regulatory arbitrage; and different views on pricing and spreads. But it is also well known too that risks have been transferred from banks to various areas of the insurance world. That includes reinsurance, where the degree to which such risk has now been concentrated is difficult to assess.

Otherwise you couldn’t achieve standardised capital requirements; and greater transparency is of limited value unless comparisons can be made. So the work being undertaken by the International Accounting Standards Board on a disclosure standard for insurance will be absolutely crucial in this respect. Conclusion My observations about the value of convergence in what I have called the ‘infrastructure environment’, come down to these areas of focus: First, convergence will enable better understanding of the reality, or absence, of systemic risk. In particular I’m talking about the potential for transmission of shocks between the insurance industry and the banking system. Second, it will discourage arbitrage that is based on technical accounting and regulatory factors. Instead, convergence will enable the market to focus on arbitrage which reflects the substantive evaluation of risks where real economic value may reside. And third, the added transparency of interfaces between the two industries will enhance confidence in the risk transfer arena. That will help dissipate the sort of unease which I sense around the place at the moment. The data deficiencies we confront today where the actual location of risk is so opaque is to my mind a major challenge. Better transparency will surely help to avoid adverse consequences of shocks which are inevitable from time to time. The infrastructure environment has to be robust enough to withstand these shocks. Of course there are challenges. For example: in avoiding over-engineering and over-prescription in regulation and accounting standards, and sticking more to a principles-based approach.
Consider the example of fixed income, currencies and commodities (FICC) markets, which have historically relied heavily on informal codes and understandings.17  12  Recall that the Arrow-Debreu world relies on people being able to calculate the odds of each and every possible scenario. Then they can trade contracts and insure each other against risks they are unwilling to bear. Even a moment of introspection reveals the absurdity of these assumptions as a description of the actual world. More often than not, even describing the universe of possible outcomes is beyond the means of mere mortals, let alone ascribing subjective probabilities to those outcomes. 13 Knight, F (1921), Risk, uncertainty and profit, Signalman Publishing. 14 FA Hayek Nobel prize speech 1974 “The pretence of knowledge”. 15 In Keynes (1936), Chapter 12, he wrote: “Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits – of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.” Keynes, J M (1936), The General Theory of Interest, Employment and Money, Palgrave Macmillan.

16 Carney (2014), Inclusive capitalism: creating a sense of the systemic. 17 They have also, over the centuries, been beset by poor behaviour, as shown by the FMSB’s comprehensive review of misconduct over the past two centuries. The history of financial fraud has rhymed all too frequently. See FMSB Annual Report (2017). 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  Repeated episodes of misconduct – such as the Libor and FX scandals – called into question the social licence that markets need to innovate and grow.18 Rather than being professional and open, markets became informal and clubby. Rather than competing on merit, participants colluded online. Rather than everyone taking responsibility for their actions, few were held to account. The crisis reminded us that real markets don’t just happen; they depend on the quality of market infrastructure for their effectiveness, resilience and fairness. Robust market infrastructure is a public good in constant danger of under-provision, not least because the best markets innovate continually. This risk can only be overcome if all market actors, public and private, recognise their responsibilities for the system as a whole. III. TRUE FINANCE So this time is no different. Markets don’t always clear. And we can suffer from their amorality. What to do with such knowledge? And how to retain it? To resist the siren calls of the three lies of finance, policymakers and market participants must bind themselves to the mast.
Andréa Maechler will examine the implementation of our monetary policy in more detail later. Inflation forecast  I would now like to address the development of inflation. Inflation has declined somewhat in recent months, and stood at 3.0% in November. This decrease was above all attributable to  Page 1/4  Berne, 15 December 2022 Thomas Jordan  News conference  smaller price increases for oil products. However, inflation is still clearly above the range we equate with price stability, and is likely to remain elevated for the time being. Our new conditional inflation forecast is based on the assumption that the SNB policy rate is 1.0% over the entire forecast horizon (cf. chart 1). Up to the beginning of 2023, the forecast is below that of September owing to the somewhat lower oil price. From mid-2023 onwards, the new forecast is higher and stands at 2.1% at the end of the forecast horizon. That our new forecast is higher over the medium term despite the raising of the SNB policy rate is attributable to stronger inflationary pressure from abroad and the fact that price increases are spreading across the various categories of goods and services in the consumer price index. The new forecast puts average annual inflation at 2.9% for 2022, 2.4% for 2023 and 1.8% for 2024 (cf. table 1). Without today’s SNB policy rate increase, the inflation forecast would be even higher over the medium term. Global economic outlook  I will now move on to the economic outlook.

News conference  15 December 2022, 10.00 am  Introductory remarks by Thomas Jordan Ladies and gentlemen It is my pleasure to welcome you to the news conference of the Swiss National Bank. I would also like to welcome all those who are joining us today online. After our introductory remarks, the members of the Governing Board will take questions from journalists as usual. Monetary policy decision  I will begin with our monetary policy decision. We have decided to tighten our monetary policy further and to raise the SNB policy rate by 0.5 percentage points to 1.0%. In doing so, we are countering increased inflationary pressure and a further spread of inflation. It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term. To provide appropriate monetary conditions, we are also willing to be active in the foreign exchange market as necessary. The SNB policy rate change applies from tomorrow, 16 December 2022. Banks’ sight deposits held at the SNB will be remunerated at the SNB policy rate of 1.0% up to a certain threshold. Sight deposits above this threshold will be remunerated at an interest rate of 0.5%, and thus still at a discount of 0.5 percentage points relative to the SNB policy rate. With this tiered remuneration of sight deposits and open market operations, we are ensuring that the secured short-term Swiss franc money market rates are close to the SNB policy rate.
As a result, after nearly $ trillion of agency MBS reinvestment purchases—due in large part to refinancing activity among U.S. homeowners—there will be no agency MBS reinvestments for the first time since September 2011. In my remarks, I will first review progress on the FOMC’s program to normalize the stance of monetary policy, which so far has shown that the Federal Reserve’s monetary policy implementation framework continues to provide appropriate control over the federal funds rate and other short-term rates. I will focus on the balance sheet and discuss the drivers of the longrun balance sheet size and composition. Next, I will review the relationship between reserve levels, which fall as the portfolio declines, and short-term interest rates. Then, I will discuss the technical adjustment to the rate of interest paid on reserves (IOR), which the Federal Reserve made in June to provide greater comfort that the effective federal funds rate (EFFR) would remain within the target range set by the FOMC. 5 I will discuss how this adjustment had exactly the intended effect on money market conditions, and how it has reinforced my certainty that the Federal Reserve is well positioned to maintain the public’s high confidence in its ability to appropriately control overnight interest rates. 1 I would like to thank Linsey Molloy and Kathryn Chen for their assistance in the preparation of these remarks, Darrian Robinson and Anne Chen for their assistance with data, and colleagues in the Federal Reserve System for insightful comments and suggestions.

Before I address the benefits of EMU and the stability-oriented policies that have to be implemented to ensure that these benefits are achieved, let me briefly mention the main institutional bodies involved in the formulation and implementation of the single monetary policy. Monetary policy is determined by the Governing Council of the European Central Bank (ECB), which consists of the eleven governors of the national central banks (NCBs) of the participating Member States and the six members of the Executive Board of the ECB. The implementation of the single monetary policy is the responsibility of the Eurosystem, which is comprised of the ECB and the eleven NCBs of the participating Member States. The Executive Board of the ECB is a separate decision-making body. Its role is to ensure that the tasks conferred upon the European System of Central Banks (ESCB) are implemented, either through its own activities or through the NCBs. Economic growth - the benefits of EMU I should now like to address the benefits of EMU and why I believe that the introduction of the euro and the single monetary policy can result in higher economic growth in the euro area and thereby contribute positively to the development of the world economy. Of course, the degree to which these benefits are achieved depends not only on the monetary policy of the Eurosystem but even more so on accompanying stability-oriented fiscal policies and appropriate labour market policies.
While MAS will intensify its supervision, the first responsibility for soundness and prudence lies with the Board and management of the bank itself. Bank management must ensure that they have in place robust, group-wide risk management systems adequate to the new scale and risk profile of the combined entity. This again underlines the importance of top quality institutionalised, professional management for the banks. Competition We should not allow an enlarged bank, or a few banks in a consolidated banking industry, to use their market power to engage in monopolistic or other anti-competitive practices that raise prices, diminish consumer choice, or erect barriers to entry by other players. MAS does not think this will happen. It is unlikely that the largest bank in the system will have an over-dominant share. For example, if OUB merges with one of the larger banks, their combined market share of non-bank deposits will be at most about 30%. This will still be significantly less than the share of the largest banks in other small countries, like the Netherlands and Hong Kong. BIS Review 61/2001  3  Secondly, the competition will not just be among the remaining local players. The banking liberalisation programme will continue to introduce greater competition from foreign banks, in the range and pricing of products they offer and quality of service. Thirdly, the Government will be vigilant against any abuse of market power. The Competition Act that MTI is now considering will help us to do that.

The view that much of this growth reflects structural changes of this sort is supported in my view by the way the spread between deposit and loan rates of interest has vanished in the last few years (Chart 13). Of course that might be the product of competition between banks to lend more and attract more deposits; it also seems plausible that much of this lending is more about balance sheet restructuring than making a profit. However deposits associated with special purpose vehicles and intra-group only account for part of the growth. Even if we strip out all OFC deposits the growth rate of money has still been strong compared with the growth rate of money spending (Chart 14). In my final section I want to discuss what we should make of this. The significance of the money supply In the Treasury in the 1980s I was a close observer of the attempts to find a monetary aggregate as an intermediate target to guide policy. We were looking for both a predictable relationship between the policy instrument, interest rates, and the measure of money and a predictable relationship between that and our final objective, inflation. I remember the frustrations when both links proved unreliable. I am in no doubt that we are better off focussing directly on our final target, inflation. However I was struck, returning eighteen months ago to the economic debate, how the place of money in our debates had changed. Our model, like most others, is “new Keynesian”.
This year they are expected to increase by almost 5 per cent, almost 80 per cent of which will come from increased transfers and reduced taxes and charges. An increase in income of this size has only occurred on a few occasions over the past decades. During 2003 and 2004 the increase is expected to be almost 3 per cent a year. It is primarily the strong development in disposable income that is expected to contribute to an increase in consumption over the coming years. Consumption of durable goods, such as fridges and TVs is expected to increase in particular. An expected recovery on the stock market (albeit modest) and a slight rise in property prices are other factors that will contribute to an increase in consumption in Sweden. Public consumption in Sweden is also expected to grow, by approximately 1 per cent a year. BIS Review 37/2002  3  As a whole, industrial activity in Sweden is showing several signs of improvement, although the upturn is still proceeding at a fairly slow pace. The recovery is fragmented. Base industries such as forestry and steel are in a period of recovery and the motor vehicle industry is also showing some improvement. The telecommunications product industry, on the other hand, has experienced a continued deterioration in demand. In mid-April Ericsson presented an interim report that painted a very gloomy picture of prospects for the near future and the company warned of redundancies. This development is a source of some concern and uncertainty.

The Riksbank has therefore been working on internal EMU preparations for several years now. What would the economic consequences of membership of the Eurosystem be for Sweden? Swedish participation in stage three of EMU is essentially a political issue on which the Executive Board of the Riksbank has not taken a stand. On the other hand, earlier General Councils of the Riksbank have declared themselves in favour of EMU membership on two occasions, in 1994 and 1997. So, what economic consequences would membership of the Eurosystem have for Sweden? One advantage, in my opinion, is the strength and stability entailed in belonging to a large currency area rather than a small one. Fluctuations in the value of the currency ought to decline, which would reduce uncertainty. The most evident economic effect of EMU membership would be the transaction gains as a result of the currency borders disappearing. These are the costs and the inconvenience of  6  BIS Review 37/2002  exchanging currency when one visits or trades with different countries in the euro area. Another concrete advantage is that the administration costs companies have been forced to bear to safeguard against undesirable fluctuations in exchange rates would disappear. It is probably of greater significance for the economy that a single currency would promote competition to the advantage of consumers, who would meet lower prices and thereby have more money left in their purses. When all parties use the same currency unit, it is possible to make price comparisons between countries.
1 Notwithstanding the fact that the EU has introduced additional proportionality measures in its updated Capital Requirements Regulation. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  As the host of a very large international financial centre, we also have a global responsibility to maintain high prudential standards in the UK. This is important for the Bank of England’s objective of financial stability, but it also makes sense for industrial policy for the UK financial services industry: we want people to bring their money to the City for the right reasons, not the wrong ones, and we have no interest whatsoever in a race-to-the-bottom approach to financial regulation. And it was very good to see the Chancellor making this same point clearly in his wide-ranging address to the House of Commons on Monday. None of that is to say that nothing will change as we leave the EU. Financial regulation is constantly developing as financial services change, and it is clear that neither the EU nor the UK wishes to be shackled in lockstep with the other as these developments occur in both jurisdictions. But of course financial regulators tend to be interested in similar things, we coordinate with each other across borders constantly, and we hammer out international agreements at the Financial Stability Board, the Basel Committee, and the International Association of Insurance Supervisors in order to keep us moving forward together as we tackle issues like climate change, cyber and operational resilience.

Indeed, the Lord Mayor’s Green Horizon Summit in London this week is a great example of this sort of activity. Our commitment to those mechanisms of international coordination, including working closely and cooperatively with our European colleagues, will not waver with Brexit – indeed we will double down on them. Still, it is reasonable to ask: what will be different? I have a strong interest in this but ultimately it’s for the government and parliament to decide, and the Treasury already has this question firmly in its sights in the 2  form of its Future Regulatory Framework consultation, which was published last month. But as one very small contribution to that debate, I would like to suggest three lodestars to guide us:   first, high regulatory standards – no surprise to find that on my list! More seriously, for the reasons I just gave I do think that is a vital ingredient of our future success;    second, responsible openness. By international standards the UK is very open to financial services, and we will continue to put a huge effort into making this work safely for us and the rest of the world, including those in the EU who want to do business with the UK; and    third, dynamism.