samchain/econo-pairs-v1 huggingface dataset:
International standards explicitly call on payment systems to settle in central bank money when possible and where that’s not possible, to settle in commercial bank money and to strictly limit any credit and liquidity risk of the instrument being transferred and settled. However stablecoin arrangements propose to transfer new instruments that they will create themselves – and to settle most of their transactions across their own books. With the right regulation, stablecoins may be safe for use in systemic payments chains. But the protections these stablecoins would offer are currently big question marks. Some major stablecoin proposals offer no legal claim for holders. None. This is significantly different from how we currently pay: When my parents pay for their groceries using their debit card, the shop ultimately receives an electronic deposit in the shop’s bank account - a promise from the shop’s bank to redeem the amount deposited in local currency on demand. When – pre-COVID – my parents paid in cash, the shop got banknotes with a central bank promise to “pay the bearer.” Were they to pay in the future with some proposed stablecoins, the shop would just get a bunch of stablecoins. If the shop can’t sell the stablecoin to get local currency or other goods in an amount equivalent to the price of the grocery order, tough luck. Additionally many stablecoins propose backing in instruments that may have market and liquidity risk. While these risks might be acceptable for speculative investment purposes, payments are different.

Events that we once thought to be implausible or highly unlikely, have become the “new normal”. 1/5  BIS central bankers' speeches  In many parts of the world, health care costs continue to rise, and many face uncertain futures as public sector safety nets and government finances come under increasing strain. Against this backdrop, financial inclusion for the underserved segments remains an elusive goal. For the insurance industry, this raises important issues. Two issues come to my mind. First is on the industry’s role in addressing a few of the challenges facing our economies and society. And second, the manner in which regulation and supervision can adapt to support broader economic and social development. In addressing these issues, I shall attempt to advocate the idea that a rethinking in approach is an imperative. New paradigms are needed to anchor business and public policy to the realities of the future. I will touch on three of them: competitive, stability and ethical paradigms. A new competitive paradigm In an increasingly interconnected world, traditional models of competition deserve a re-think. Network effects will become more important, both in increasing the value of insurance products and services, and to better manage risks. Rather than see the competitive landscape through a zero-sum lens, co-operative competition or “co-opetition” can result in synergistic benefits. The example of Hewlett- Packard (HP) clearly illustrates this idea.
Tony Latter: Why blame the peg? Speech by Mr Tony Latter, Deputy Chief Executive of the Hong Kong Monetary Authority, at a luncheon of the American Chamber of Commerce in Hong Kong, 12 March 2002. *  *  *  Introduction When things aren't going too well, it's natural to look for scapegoats. In the case of the Hong Kong economy, the pegged exchange rate certainly gets its fair share of that treatment. What is the basis for complaints about the peg, and how far are they justified? Before examining some of the complaints, however, let us review the monetary policy background. Monetary policy It is widely accepted that the duty of monetary policy - and that embraces exchange rate policy - is to provide that monetary environment which is most conducive to long-term growth and prosperity of the economy. This is seen to imply a desire for stable monetary conditions, but there is scope for judgement as to how this stability should be defined. The majority of regimes focus on internal purchasing power and thus aim for low and stable domestic inflation. Thus, the practice of inflation targeting has now become quite widespread and well understood. This requires an active monetary policy, necessarily impacting on domestic interest rates and money market liquidity; and, at least in the strictest form of targeting, it inevitably involves some exchange rate flexibility, even if not an entirely free float.

Summing up Back in 1983 when the peg was installed, I recall being asked whether it was the government's intention that the arrangement should be permanent, or in what circumstances a change would be contemplated. I said then simply that the peg was for the time being the most appropriate monetary anchor for Hong Kong. I would give very much the same answer today. Our peg is not a fixed rate that is supported by or dependent on discretionary intervention. It is a rulebased currency board system which imposes a particular discipline of adjustment through interest rate channels and domestic prices. It enjoys widespread support from international observers both in official circles and more widely. This is not just people being nice to us and choosing not to say anything which might rock the boat, although there may be one or two of them. Rather it reflects an appreciation of the unique features of a currency board structure and the benefits which it has brought over 18 years, as well as an appreciation of the distinctive characteristics of the Hong Kong economy. The main distinctive characteristics to which I allude are the following: the flexibility in costs and prices, as discussed earlier; the extreme openness of the economy in terms of both trade and capital flows; the constitutional commitment, through the Basic Law, to support the free movement of capital and not to operate exchange controls; and the soundness of the banking sector.
That tension between monetary and financial stability is best managed in a coordinated way in a single institution. The use of macroprudential tools can decrease the need for monetary policy to be diverted from managing the business cycle towards managing the credit cycle. This enhances the credibility of the inflation target. That in turn may reduce the need for sharp or persistent moves in interest rates, which themselves might threaten financial stability. Similarly, macroprudential policy can more effectively focus on its primary goal of systemic stability by recognising that, while it affects the economic cycle, it is not suited to managing it. Instead its effects on the economic cycle should – like fiscal policy – be taken into account in setting monetary policy, which is the primary and most effective tool of demand management. Taken together with the synergies from sharing information and analysis, these are strong arguments for operating monetary policy and prudential policy in the same institution. In the short time the Bank has been responsible for both, we have already seen the benefits of operating them in a coordinated way. For example, our forward guidance framework for monetary policy reflects a clear division of responsibilities. Although monetary policy has an important role to play in mitigating financial stability risks, it does so only as a last line of defence. This is important because vulnerabilities can emerge from a long period of unusually low interest rates, as complacency sets in about the future path of policy and asset prices.

Through our strategic plan, we will also increase the transparency of our work on financial stability. We will publish the results of regular bank stress tests. As with monetary policy, we also intend to publish more of the research and analysis underlying our policy choices. Over  21  See King (2005). BIS central bankers’ speeches  9  time, the financial sector will be better placed to anticipate our responses and as with monetary policy, increased transparency will make us not just accountable, but also more effective. Conclusion The first Mais Lectures launched the fight against inflation. With time and increased confidence policymakers would win that war only to lose the peace. As a consequence, George Osborne’s 2010 lecture heralded the return of prudential supervision and the introduction of macroprudential policy to the Bank of England. Today’s challenge is to create a macroeconomic environment that provides the basis for strong, sustainable and balanced growth, the economist’s equivalent of a land fit for heroes. This evening I have sketched how the Bank of England intends to makes its contribution. I am in no doubt that those who come after me will add to our collective knowledge of how best to coordinate the Bank’s vast array of policy levers to achieve our fundamental mission. An open and confident Bank will welcome such advice and criticism. Why? Because the need for broad macroeconomic management is not just an intellectual curiosity, but rather a reality that will persist for years to come.
In Switzerland by contrast, the collateral accepted in 99.8% of the transactions in the secured interbank market corresponds to the definition of the SNB collateral basket, that is, to the collateral accepted by the SNB in its own repo operations. The SNB’s collateral policy is based on a transparent, essentially rule-based approach. This means that when securities are excluded from the list of acceptable securities  2  See Diamond and Dybvig (1983). “Bank runs, deposit insurance, and liquidity”, Journal of Political Economy 1983, vol. 91, no. 3, pp. 401–19. 3  Typically, the total amount of the deposit will be some amount less than the value of the underlying asset, with the difference called a “haircut”. For more details, see Gorton and Metrick (2009) “Securitized Banking and the Run on Repo”, NBER Working Paper Series (NBER Working Paper No. 15223), August 2009. 4  This could be a reasonable approximation. See Gorton (2009): “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007”, Prepared for the Federal Reserve Bank of Atlanta’s 2009 Financial Markets Conference, May 2009; and Gorton and Metrick (2009). 5  Chart 4 illustrates the average repo haircut on structured debt. This is a good indication for an overall “haircut index”, as shown by Gorton and Metrick (2009). 6  Another important difference is that the Swiss repo market is conducted on a highly efficient automated and centralised platform while US repo transactions are traded over the counter. 7  Hördahl and King (2008).

The costs of taking these courses in college are high, especially because they do not count for college credit. Low readiness contributes to persistently low college completion rates, with only 55 percent of first-time undergraduates completing a degree within six years.13 College dropout rates are especially high among lowerincome, part-time, and nontraditional students, with high costs, low perceived ability to pay, and a lack of information about the returns to degree completion also contributing to the high dropout rate. The importance of college readiness underscores the value of high-quality K-12 schooling. But, research indicates that fewer than half of five-year-olds from low-income families possess the math and reading skills, behaviors, and overall health required for learning success, compared to 75 percent of children from middle- and high-income families.14 These differences are important because they have long-lasting effects on academic achievement and future careers. A substantial body of evidence, including research by economists at the Minneapolis Fed, points to very large economic returns to high-quality preschool and early-childhood development programs.15 Clearly, such programs can play an important role in improving economic mobility. I benefited from nursery school and kindergarten and a mother who taught me to read before I entered elementary school. And, when my junior high school tried to move me out of an accelerated math program, my mom intervened and got me back in. Paying for college is another major impediment to college attendance and completion.
Indeed, such was the surprise that the market immediately revised up its expectations for future interest rates. And there was a measurable increase in uncertainty, as different interpretations of the Committee’s unusual action were debated across the wires. This episode highlights the difficult balance which the mature Committee needs to strike between innovation and predictability. Today’s Committee members – only one of whom has been there since the beginning – quite reasonably do not want to be unduly constrained by the habits of their predecessors. But the passage of time has given ‘the Committee’ a collective personality. So changing established patterns of behaviour requires at least as much care and explanation as in the early days of the framework. Second, even if we have not changed our procedures very much over the past decade, other central banks have. They have become much more transparent. And the debate about how much central banks should communicate – and how – has moved on, among academics, central bankers and central bank watchers. For example, a long-standing issue is how much central banks should say about their expectations of future interest rates. The traditional concern has been that commentators would mistake a projection for a commitment, the risk being that when interest rates did not change as projected this would be damaging to credibility. However, in recent years other central banks have moved increasingly towards giving indications about the likely path of interest rates, given their forecast for the economy.

The chart shows the actual trade-weighted exchange rate (TWI) and expected TWI one year ahead as from 1998.3 When the krone is “weak”, the expected exchange rate one year ahead tends to be stronger than the actual rate. Likewise, the expected exchange rate one year ahead tends to be weaker than the actual exchange rate when the krone is strong. In the period 2002-2003, the krone exchange rate varied considerably. Movements in exchange rate expectations, however, were less  3  4  Consensus Forecast data were not available earlier. BIS Review 25/2004  volatile. When the krone was at its strongest in the second half of 2002, the expected exchange rate one year ahead was 4-5 per cent weaker. This illustrates that exchange rate expectations seem to be more stable than actual exchange rate movements and that after moving markedly beyond a long-term equilibrium level, the krone exchange rate is expected to revert to around this level. The equilibrium level for the nominal exchange rate is not, however, constant over time, but partly depends on price and cost developments in Norway relative to our trading partners. The advantage of a flexible exchange rate is perhaps most evident when the economy is sluggish. If the krone were to remain at a level that is too strong, nominal wages would have to remain unchanged over a longer period or fall in order to bolster companies and jobs. This only occurs when unemployment is very high.
And, notwithstanding the legitimate debate about the NorthSouth divide, unemployment is at around its lowest rate in every individual region of the UK for some 20 years. It’s not the Holy Grail but there’s no doubt that things are better than they were. But sadly that is not - indeed cannot be - true for everyone. Even in a stable macro-economic environment, economic progress depends upon structural change with some industries and individual businesses declining while others develop to take their place. That process of structural change is, of course I understand, immensely painful for those businesses that run down and for those people who lose their jobs as a result, even if they are able to find new activity or employment in an economy BIS Review 110/2000  2  operating close to capacity. What is more, these structural pressures have been aggravated over the past few years by the strength of sterling’s exchange rate against both a range of weakening emerging market currencies following the financial crisis which started in Asia three years or so ago and against the weakening euro. The hard choice - and it is a hard choice - for macro-economic policy, or more specifically for monetary policy, in this context is could we - or should we - seek to protect the suffering sectors or failing businesses even if that meant consciously putting at risk the stability of the economy as a whole?

Boris Vujčić: Croatia's joining the euro area makes it an active participant in defining a common monetary policy Speech by Mr Boris Vujčić, Governor of the Croatian National Bank, at the conference "Croatia, the 20th Member of the Euro Area", Zagreb, 24 January 2023. *** Your Excellencies, esteemed guests, ladies and gentlemen, it is my honour and pleasure to welcome you to the conference that marks an outstanding success of our country, our economy and our society as a whole, to which many of you have directly contributed: the introduction of the euro in Croatia. Allow me to extend my deepest gratitude to you for all your effort, hard work and dedication to this, in all respects, complex and demanding project. Commenced in 2017 with the Eurostrategy, a strategic document outlining significant and lasting economic benefits to be brought to the Croatian economy by the euro and, in contrast, relatively small and mostly one-off costs, the project involved a lot of stakeholders in Croatia and abroad. Exposed to a great many risks, it demanded that quite a few goals be achieved and challenges overcome in the process, which was done successfully and in the shortest possible period, notwithstanding all external shocks and requirements that had to be met along the way. Some of them are widely known, while only a narrow circle of those involved is familiar with the others. Still fresh in our memories are the COVID pandemic and the devastating earthquake that hit Zagreb in March 2020.
As with monetary policy, both operate subject to statutory objectives and remits set by Parliament. And as with monetary policy, each is subject to rigorous accountability mechanisms enforced by Parliament. Both FPC and MPC have instrument, but not goal, independence. These institutional features have attractions as a response to the time-consistency dilemma which faces financial policymakers. The Bank of England is an institution with around 320 years of history. Financial crises have pock-marked its history. This ought to provide the Bank with the institutional memory necessary to make sense of dots on distant horizons, to diagnose emerging obesity in the financial system’s tails, to conscientiously object to next time appearing different. The primary objective of the FPC is to preserve the resilience of the financial system and, subject to that, to support the government’s objectives including for employment and growth. That ordering of the FPC’s objectives helps lean against short-term pressures to go for growth today at the cost of instability tomorrow. In effect, the FPC provides the longsightedness necessary to preserve future stability at a time when private risk horizons may be shortening. And it provides necessary insurance against future tail risks at a time when these tails may be fattening. This macro-prudential regime, with the FPC at its centrepiece, is an explicitly institutional solution to the financial policy dilemma. It is regulation of the system for the system: of the system because the FPC’s focus is system-wide; for the system because the FPC’s aim is stability in the wider economy.

Andrés, López-Salido and Nelson (2004) incorporate imperfect substitutability between short- and long-term bonds. Here the lack of a secondary market for long bonds is the source of the friction. In this model, base money expansion by a central bank can relieve portfolio constraints and lead to an increase in demand for long bonds, thereby raising their prices. Much of this literature is still in its infancy and there is some way to go before it can be combined within an applied, quantitative model that policy makers can use. But the central message I take from this work is that there are a number of channels through which monetary policy is likely to be able to influence the economy at the zero bound. Unfortunately, the financial crisis meant that we had to put these insights into practice. When doing so at the Bank, we placed weight on three key channels of monetary transmission: the impact of imperfect substitutability and the portfolio rebalancing channel on relative prices, the role of financial market liquidity, and the importance of expectations. All three channels were important in the design of the Committee’s asset purchase programme. Let me take them in turn. Channels of transmission To date, the Bank has purchased £ billion of assets financed by the issuance of central bank reserves, the vast majority of which have been relatively long maturity gilts. The central objective underlying those gilts purchases was to inject a substantial amount of additional money into the economy.
As a consequence, credit institutions see their loan loss provisions to vary more closely in line with the credit risk existing in their balance sheets, and the profit and loss account fluctuates less over the cycle. The main point here is that this strengthens the solvency of each individual credit institution and the stability of the entire financial system. Before continuing with the background to the dynamic provision, I should like to address a criticism made by accountants. It was said that this provision amounted to a distortion, and sometimes even a manipulation of the income statement. This is far from true. The Spanish regulator required institutions to advise the market of the amount of this provision so that analysts and investors could, if they so wished, “discount” its impact. The mechanism is completely transparent and institutions cannot use it to manipulate their results. Admittedly, bankers did not welcome the statistical provision as warmly as we supervisors did. In fact they openly opposed it at first, arguing, with some reason, that this provision, by tightening the requirements for Spanish institutions alone, gave rise to an uneven playing field, especially for those institutions most heavily exposed to international competition. With time they came to appreciate that this provision helped strengthen their solvency and, therefore, their medium-term attractiveness and resilience, despite the fact that around 10% of their net income had to be assigned to the statistical provision.

I am going to have a blog. It’s usual in the United States; in other places, not so usual. I will comment on general questions about the future, about Europe, about macroeconomics. What will your first post be about? I am still hesitating. It could be about the future of monetary policy and the points I left out in my recent speech, from neutral interest rates to yield curve control. Are there any rules that bind you in terms of what you can write about? Beyond the ECB rules what will bind me is European decorum. 1 The role of central banks in prudential supervision 2 See Funke, M. Schularik, M. and Trebesch, C. (2016) “Going to extremes: politics after financial crises, 1870-  2014” in European Economic Review, 88, 227-260. 8/8  BIS central bankers' speeches