samchain/econo-pairs-v1 huggingface dataset:
A further means of enhancing confidence and reducing vulnerability is to establish contingency plans, i.e. measures that will be resorted to should problems still arise in spite of all preparations. Such plans are not something that should be unique to the change of millennium; they should always exist in organisations in the financial sector. Many of the measures that have been taken in preparation for the transition to the year 2000 have focused on questions related to confidence. A high degree of confidence in financial markets is important if the markets are to function efficiently. For this reason, anxiety that the functioning of the market may be impaired or a lack of confidence in the payment systems, are enough in themselves to constitute a problem. 1  BIS Review 97/1999  Lately, comments have frequently centred around possible liquidity problems. However, the exact significance invested in the word liquidity is often unclear, as is what, fundamentally, could lead to problems. The word liquidity means “the capacity to quickly obtain funds for the settlement of debts”.1 In practice, the word liquidity is used to express a variety of phenomena. In my opinion, therefore, it may be appropriate to take a closer look at the concept of liquidity and to clarify the role played by the Riksbank in managing liquidity. The comment that liquidity in the market is poor often describes a situation in which major price changes occur even when turnover is low. To use market jargon, the market is said to be thin.

Maria Merian, one such famous artist from the 17th century, was recently celebrated for her works at an exhibition at Buckingham Palace last October. Merian’s work which featured detailed drawings of plants and insects are preserved to this day in private and academic collections all over the world. I confess I knew nothing about Maria before this week. Having now seen specimens of her incredible body of work, I can only imagine the sensation she would have created in her time with the quality and eye for detail that brought her drawings to life – and on a subject like insects, of all things, which were her passion. They are immensely, strikingly beautiful. We hope the artists of ‘Nature Nurtured’ will receive the same appreciation. The artists in this exhibition do much more than record what anybody with a handphone can manage these days. They immerse us in the natural wonders that surround us, from the bustling cities to the more distant hinterlands. Whatever the setting, every one of the artists has a visual story to tell, informed by research and many hours spent to observe and understand the subjects of their artistic creations. These are not just snapshots, in many ways they tell us as much about the artist as they do their subjects. If people centuries ago could be thrilled by pictures of insects, then surely these artists can reignite a deeper appreciation in all of us of our environment.
Such an application is not uncomplicated, partly because the Riksbank's independence is somewhat eroded when financing becomes dependent on parliamentary decisions.41 Even if the Riksbank's loss were to be significantly higher this year than market prices now indicate, there is hardly any urgent need for capital injections; the scenarios I have discussed do not arise overnight. According to the new Sveriges Riksbank Act, the Riksbank is to apply for a capital injection when equity falls below a certain (positive) level, but since the new law does not apply until the 2023 financial statements, I see no reason for the Riksbank to apply for a contribution in the near future.42  Many central banks are going to make losses now Following the global financial crisis in 2008, and especially during and after the pandemic, many central banks have purchased assets for similar reasons to the Riksbank. In addition, several of them have purchased considerably larger volumes in relation to the size of their economy than the Riksbank (see Figure 13). They have also often bought assets with a longer maturity – and thus more interest risk – than the Riksbank. We can expect these central banks to also report losses this year. 41 See Nordström and Vredin (2022) for a more detailed discussion of financial independence. 42 The ECB has long argued in its convergence reports that “an NCB should always be sufficiently capitalised.

References Alsterlind, Jan (2021), "The development of risk premiums on covered bonds during the coronavirus pandemic", Economic Commentaries No 13 2021, Sveriges Riksbank Archer, David and Paul Moser-Boehm (2013), "Central bank finances", BIS Papers No 71 Bank of England (2022a), “Asset purchase facility quarterly report – 2022 Q3”, Bank of England Bank of England (2022b), “Letter from the Governor to the Chancellor”, Bank of England, 22 November 2022 Bernanke, Ben (2020), ”The New Tools of Monetary Policy”, American Economic Review 110(4), 943-983 Bhattarai, Saroj and Christopher Neely (2022), “An analysis of the literature on international unconventional monetary policy”, Journal of Economic Literature 60(2), 527-597 Bullock, Michele (2022), ”Review of the Bond Purchase Program”, speech on 21 September 2022, Reserve Bank of Australia Calmfors, Lars, John Hassler and Anna Seim (2022), “Samspel för stabilitet – en ESO-rapport om rollfördelningen mellan finans- och penningpolitik, (Interaction for stability – an ESO report on the division of roles between financial and monetary policy), report to the Expert Group for Public Economic Studies ESO 2022: 3  26 [30]  De Rezende, Rafael B., David Kjellberg and Oskar Tysklind (2015), “Effects of the Riksbank's government bond purchases on financial prices”, Economic Commentaries, No. 13 2015, Sveriges Riksbank Del Negro, Marco and Christopher Sims (2015), “When does a central bank’s balance sheet require fiscal support?”, Journal of Monetary Economics 73, 1- 19 Di Casola, Paola (2021), "What does research say about the effects of central bank balance sheet policies?
Thomas Jordan: Globalisation and financial markets – challenges and opportunities Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at ETH Alumni Engineering & Management, Zurich, 13 November 2007. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  In the past few years, globalisation of financial markets has attained a remarkable level, exceeding that of goods markets in a number of respects. The future is likely to see considerable further development in this direction. In principle, the effects of financial market globalisation are positive. It leads to a higher level of efficiency in the international allocation of capital and allows for better risk distribution in investments. However, the globalisation of financial markets in Switzerland means that more companies are being taken over by foreign investors, while new risks arise in the case of investments abroad – risks that are difficult to quantify. The globalisation of financial markets confronts monetary policy with a dual challenge. On the one hand, it changes the way in which the monetary policy transmission mechanism works, and the interpretation of economic models becomes more difficult. On the other hand, external shocks have a greater impact on both domestic financial markets and the domestic economy. Consequently, globalisation of financial markets results in greater uncertainty in monetary policy and increases the necessity of monetary policy stabilisation by central banks.

After all, information is a  2  BIS Review 2/2008  public good and rating agencies are the providers of this good. But the case for further regulation has not as yet been compelling. First and foremost, we should consider the contents of possible improvements. I would pinpoint three areas, among others, for consideration: first, greater transparency of rating methods and the overall role of rating agencies in the securitisation process. Second, a marked difference in the metric used for rating bonds and structured products, which would restore confidence in ratings. This could be done in two ways, which could also be combined: either by adopting another rating scale for structured products (with another symbol for example); or by including an additional measure in the credit rating, in particular on its volatility in times of market or liquidity stress. Third, a specific rating for liquidity risk. I am aware that rating agencies are considering this, despite the difficulties of such an exercise. We must hope that the discussions currently underway in international fora, such as the FSF and groups of central bankers in which the Banque de France is actively involved, will restore the integrity of the ratings system, given its prominent role in the development of modern financial markets. Ladies and gentlemen, thank you very much for your attention. BIS Review 2/2008  3
In the case of the DWF, we lend securities (gilts) that are eligible in our OMOs, so they can be turned into cash either in the market or via our repo operations. But, in its usual mode of operation, the DWF does not directly affect the Bank’s aggregate supply of reserves. 15 Indirectly, it may even reduce the demand for reserves, as it gives sound banks a source of liquidity insurance separate from holding precautionary balances with the Bank. By contrast, the wider-collateral LTR OMOs do inject reserves. For a given monthly reserves target, that means that, other things being equal, the Bank has to reduce the size of its weekly short-term OMOs, in order to ensure that its net supply of reserves is equal to the target; otherwise overnight rates would sink below the MPC’s policy rate. But when, as during the current crisis, the scale of wider-collateral repos is massively increased, reducing short-term repos to zero is not always enough to achieve our monetary objective. The Bank of England has therefore introduced the sale, via auction, of very short-term Bank of England bills to drain excess (ie above target) reserves from the market. That has enabled us to make a very significant (order of magnitude) discretionary increase in our cash-liquidity insurance without cutting across monetary policy. (In my view that is preferable, on technical and presentational grounds, to draining the market by HMG depositing with the Bank the proceeds of increased Treasury issuance, which could be confused with deficit-financing operations.)

While labour supply in these countries will remain abundant, it is not all that clear whether it will remain cheap. Indeed, we are currently seeing  1  Speech by Charles Bean, “Globalisation and Inflation”, to the LSE Economic Society, 24 October 2006. BIS Review 103/2007  1  an increase in export prices in emerging countries, which translates into higher import prices for developed economies. This inflationary impact seems to have grown over the past few years, while, by contrast, the disinflationary impact of globalisation seems to have slowed down. Going further, some analysts have suggested that, because of capital market integration, real interest rates will equalize around the world, thus reducing the ability of national Central Banks to control inflation. However, this need not be true. Indeed, the classic MundellFleming analysis concludes that monetary policy should be more effective, rather than less, in the case of international capital mobility, although it can operate through different channels of transmission including the exchange rate. But inflation is more than the direct result of macroeconomic shocks. It is a process in which business cycles as well as expectations play an important role. Has this process changed? A change in the output – inflation trade-off? Inflation dynamics have changed over the past fifteen years or so. Inflation persistence has declined, or, in other words, upward changes in the path of prices have become more temporary and easily reversed. Also, inflation itself has become less responsive to shocks. Both are very welcome developments for monetary policy.
The reality is that the location of financial activity does not depend upon the local currency. It will continue to be carried on wherever it can most conveniently, efficiently and profitably be carried on. And the fact that foreign-owned institutions -- from Europe itself and from around the world -- continue to build their presence here, despite the near universal assumption that the UK will not in fact participate in EMU from the beginning, suggests that they share this perception. I would hope that the rest of Europe would positively welcome the contribution that the City can, and I am confident will, make to the development of markets and other financial activity in the euro, because it is in their interest too. International or intra-regional trade and investment activity is not, at the macro-economic level, a zero-sum game. It is a positive sum game. And this is true of financial, just as much as of any other kind of economic activity. The prosperity of the City -- whether the UK is “in” or “out” -- is simply a particular case of the general point which I made at the outset. I welcome the BIS Review 106/1997  -3prospect of increasing financial activity in Frankfurt, Paris, Milan or Amsterdam or wherever because it will result in increased activity here too in London. And the converse is equally true. It is in this sense that the City is a major European, not simply a national asset.

But perhaps the most salient international economic development in 2004 was the persistent rise in oil prices. At the root of this, above all, is the force of demand from the United States and China, in a  BIS Review 45/2005  1  situation marked by production and refining capacity bottlenecks, arising from limited investment in the past. Compared with other recent periods of oil price rises, such as the peaks in 1990 and 2000 linked to geopolitical tensions, the increase in prices on this occasion fed through to a much greater extent to long-term futures contracts, suggesting the markets are expecting oil prices to hold at high levels. Despite this, and on the indicators available, dearer energy scarcely affected inflation expectations, meaning the so-called second-round effects - linked to the reaction by wages - were avoided. On past experience, it is these latter affects which are most damaging. So far, the effects of higher oil prices have been surprisingly mild. But economic policies should remain vigilant in the face of a potential pass-through to inflation expectations, all the more so when there are other risks and vulnerabilities in the world economy which, in some respects, have not only not diminished but have tended to increase. Of note, here, is the necessary re-establishment of a more normal macroeconomic stance (the main countries’ policies have been adding abnormally expansionary momentum in the world economy in recent years), and the potential impact on financial markets.
But there are other factors contributing to the recovery: the fall in oil prices, which is translating into a boost to household incomes and into a reduction in firms’ production costs; the very significant depreciation of the euro; and the favourable economic activity figures of some of our trading partners within the Monetary Union. Turning to prices, the annual rate of inflation has been negative in the first three months of 2015, running at –1.3%, –1.1% and –0.7%, respectively, although the non-energy CPI and the core inflation index have been more stable, posting positive figures. In particular, in March, on preliminary figures, the annual rate – though still negative – is estimated to have stood at –0.7%, an increase of 0.4 pp on February, which largely stemmed from the correction in oil prices. Following several quarters of sluggish growth, a recovery is discernible in the euro area. Most member countries are posting positive GDP growth rates, although there are significant differences. Among the major economies, the pace of economic activity is highest in Spain and Germany. In 2014, euro area GDP grew by 0.9%, compared with a decline of 0.4% in 2013. Driving this recovery has been the increase in private consumption, in a setting of improved household confidence and income. Other favourable factors have been the contribution of exports and gross fixed capital formation, the latter due to the pick-up in construction.

The hoped-for higher returns could not be maintained. Again with the benefit of hindsight, it is possible to identify a number of structural weaknesses in the mechanisms for financial resource allocation in the recipient countries. There was, for example, a general lack of reliable financial information, and a lack of transparency in relation to the financial position, of both public and private sectors. Complex and opaque links between government, financial institutions and non-financial companies made it difficult for outsiders to understand the real nature of their exposures. Financial markets were not well developed, leaving the system heavily dependent upon the banks. There was inadequate regulatory or supervisory oversight. There was widespread, often informal, government influence over BIS Review 36/1998  -4-  financial flows, which importantly also contributed to a perception that much of the borrowing was implicitly under-written by the government. The list could go on. The problem was compounded by the absence of any real perception of exchange rate risk. Borrowers were evidently confident that governments would maintain their exchange rate pegs against the dollar, even when it began to strengthen, so that unhedged foreign currency debt, much of it at short-term, appeared to be a cheap alternative to domestic currency borrowing. The result was a build-up of short-term foreign currency liabilities, by banks and non-banks, which was not fully appreciated, and which left the Asian economies especially vulnerable to a flight of capital in the event of a change in sentiment.
Economic policy must increasingly reflect the capacity constraints facing many Norwegian businesses. There are prospects that the interest rate will be raised gradually – in small, not too frequent steps – towards a more normal level. Thank you for allowing me to make the introductory statement at this hearing. 4  BIS Review 44/2006

The securitization markets have shrunk since the financial crisis and the Federal Reserve has further reduced the amount of available securities by snapping up trillions of dollars in bonds in recent years.” Let me repeat that last clause: The Federal Reserve has further reduced the amount of available securities by snapping up trillions of dollars in bonds in recent years. To be precise, $ trillion of Treasuries and asset-backed securities were purchased under QE3, on top of the $ trillion purchased under the previous rounds of quantitative easing. To be sure, we have instituted programs to counter this problem: We have developed sophisticated operations whereby we sell assets in our portfolio and promise to buy them back at a later period. This is known as our overnight reverse repurchase agreement (ON RRP) facility, and its net effect is to shift longer-term securities out of our portfolio and into the hands of market operators. This has expanded the traditional reach of our New York desk, where the aggregate portfolios of the 12 Federal Reserve banks are traded under directives given it by the FOMC. Thus the Fed's reach – some would say intrusion – into trading markets has been expanded. Now, let's bring together these observations with the thought I asked you to hold earlier. It strikes me that given current circumstances, it would do no harm to start slowly trimming our holdings by letting them roll off as they mature.
In this way uncertainty diminishes and therefore also the risk premiums in the fixed income market, thus leading to improved efficiency in the economy. Economists also say that the price mechanism works better when inflation is low. This means that changes in relative prices become more evident the more stable the general price level is. There has also been a marked stiffening of competition as many markets in a large number of countries have been deregulated or re-regulated with the express purpose of lowering barriers to entry and increasing price competition. Another contributory factor is the rise in productivity that increasingly appears to be a reverse in the trend. In the US and a number of European countries, including Sweden, labour productivity has increased considerably faster since the middle of the 1990s. In Sweden productivity growth in the business sector averaged 2.7 per cent during the period 1995-2001. It has risen further since then, although cyclical effects have presumably something to do with this. We will have better information regarding the durability of the rise in productivity when the business cycle matures and employment picks up. It is worth noting that low inflation in the world economy has not come at the cost of higher volatility in the real economy. Instead GDP growth has also stabilised during the 1990s and current decade, as indicated by the recent, mild downturn.

Prices of commercial property are following the economic cycle Lower inflation and lower volatility in the inflation level has not led, however, to lower volatility in the prices in asset markets. As we all know, developments in the equity market have been unusually dramatic since 1995, with a steep rise up until spring 2000 and then three years of price declines. In the property market price developments have been somewhat more orderly, and less dramatic than they were at the end of the 1980s and beginning of the 1990s. When the Riksbank discusses developments in the property market, which is mainly done in the Bank’s Financial Stability Reports that are published twice a year, we usually divide it into two parts: the commercial property market and the housing market. Commercial property is defined as such property that is leased for commercial purposes, e.g. office premises, shops and industrial premises. Developments in the prices of commercial property, especially those of office premises, have tracked the economic cycle relatively well in recent years. Developments in the prices of commercial property  1  2  See, for instance, OECD working paper No 353: Macroeconomic policy and economic performance, 2003. BIS Review 28/2004  are largely determined by rent developments, which in turn depend on the demand situation. The weak economic situation in recent years has contributed to dampening demand for mainly office premises. This is evident partly in the number of vacancies, which continue to rise, with the exception of the Stockholm region.