samchain/econo-pairs-v1 huggingface dataset:
The “crypto winter” caused by the crashes of Terra-Luna followed by Celsius Network, by no means signifies that cryptos are over; it’s more of a weeding-out process. The share of stablecoins that are, in principle, backed by mechanisms to stabilise their value has risen fivefold in 20 months. Ensuring a lasting future for stablecoins – which is a legitimate goal – means remaining vigilant with regard to the associated risks. Because, in reality, the name covers a wide range of different forms: -  “crypto-backed” stablecoins, where the word “stablecoin” is a misnomer  as the coins are backed by other crypto-assets; or algorithmic stablecoins, a category to which Luna belonged; -  stablecoins backed by a basket of assets held in reserve, for example  commodities or monetary assets, such as money market funds and commercial paper; in reality these are similar to investment tools and should be treated as such; -  last, stablecoins backed by bank deposits denominated in a single  currency, which are designed to be used as global payment instruments. Page 4 of 5 Regardless of what form they take, stablecoins are, at this stage and in the majority of cases, denominated in dollars and have been developed outside Europe. Their widescale use within Europe would therefore pose a dual challenge, for our strategic autonomy and for our monetary stability; indeed this is one of the reasons why the Eurosystem has launched an investigation phase on a retail digital euro.

Today, a central bank in a small open market economy, which would wish to turn a blind eye on the developments in the external environment and focus solely on the developments in the national economy, is doomed to failure. Secondly, globalisation changes the wage and price setting mechanisms in the national economy, which have an impact on the domestic inflation. Globalisation (the growing openness of economies) through the growing share of countries with low manufacturing costs in the global output - increases the margin and wage pressures, in consequence lowering the inflation. At the same time, globalisation drives up commodity prices, and thus contributes to - at least temporarily - increased inflation. Thirdly, increased international migration of workforce changes the situation on local labour markets. Where the workforce outflows, the wage pressures increase; in the case of an inflow of workforce, the wage pressures go down. Fourthly, globalisation changes the functioning of financial markets and increases the uncertainty as to the impact of decisions made by the central bank on these markets and on macroeconomic variables. Fifthly, globalisation has an impact on the central bank’s perception of the economic environment and the monetary policy strategy it applies. A fast transfer of the economic know-how (flow of the economic knowledge and analytical methods) changes the methods of economic analysis by central bank economists, as well as the way decisions regarding the monetary policy are made. Sixthly, globalisation increases the risk of speculative bubbles on the assets market.
Fast growth means increasing prosperity, which in turn may result in a stable social and political climate. However, in order for China to switch from export-led to domestic demand at a quicker pace – which has to happen in the future – it will require institutional and other reforms that take time to implement. The financial infrastructure in particular is in great need of change and development. Where will demand come from when the economy is tightened in the US? The weak growth in Europe and the uncertainty surrounding developments in the Japanese economy means that there is no obvious candidate to take the United States’ place as growth engine. While China has recently become the world’s third biggest trading nation it can hardly assume the mantle on its own. Domestic demand in Europe needs to pick up but the current upswing here is sluggish and is being restrained by efforts to tackle public finance deficits in countries such as Germany, Italy and France. So how likely is it that China will abandon its fixed rate with the dollar in the period ahead? Most commentators believe that China will take a gradual, slow and cautious road towards a floating exchange rate. Should the dollar continue to weaken, therefore, the euro will continue to bear a large part of the adjustment in the future as well, thus having an adverse effect on European competitiveness and growth. 2  BIS Review 10/2005  Another important growth factor is how interest rates develop in the period ahead.

Baldwin attributes the severe and synchronous slump in goods exports to two main factors: first, the uncertainty that was triggered simultaneously around the world by the collapse of Lehman Brothers; second, the strong internationalisation of the value chain. The former led to a concurrent drop in demand, particularly for consumer durables, while the latter resulted in the goods trade volume reacting disproportionately to changes in production. This is because a product can cross national borders several times during the manufacturing process. Demand for services remained relatively robust, however, with the exception of financial services. Cf. also Ingo Borchert and Aaditya Mattoo (2010): Services trade – the collapse that wasn’t. BIS Review 157/2010  1  more, the recovery observed since mid-last year has been comparatively brisk. As a result, by mid-2010, Swiss goods exports had recouped almost two-thirds of the losses suffered. The Swiss National Bank’s decisive action undoubtedly contributed to the fact that the Swiss economy as a whole emerged from the crisis relatively unscathed. The SNB didn’t hesitate to lower interest rates decisively and – like other central banks – to employ unconventional monetary policy measures when required by the legal mandate, once the room for manoeuvre using the traditional interest rate instrument had been exhausted. In particular, we created additional liquidity through the purchase of foreign currency. In doing so, we resisted extreme exchange rate developments that could have initiated a deflationary dynamic and would have had devastating consequences for the Swiss economy.
OECD projections, in fact, point to a reduction in saving rates of between 5 and 12 percentage points of GNP over the period 1980 to 2025. Such a contraction could lead to a vicious circle, as the resulting higher interest rates reduce investment, adversely affecting economic growth and, in turn, the ability to finance social security commitments. Ageing could also have a negative impact on financial markets. Pension funds are at present major players in most stock markets. As the baby boom generation retires during the current decade, most of these funds will have to gradually liquidate their assets, probably leading to downward pressures on share prices. This would in turn create a negative wealth effect, as declining asset prices dent the purchasing power of households and give rise to a reassessment of consumption patterns. The simultaneous decline in fertility rates, meanwhile, is expected to adversely affect the supply of labour and its quality. A smaller labour force would act as a drag on potential output growth, and impact negatively on competitiveness by tightening labour market conditions, leading to upward pressures on wages and inflation. An older work force is also likely to be less mobile and flexible, albeit more experienced. Policy measures to address the challenge In economic terms, population ageing is tantamount to a negative supply shock, of which the fiscal impact is but a manifestation. More fundamentally, the ageing phenomenon undermines the economy’s productive base and its competitiveness.

The adverse effects of the reduction in output are meanwhile compounded by higher consumption, which tends to crowd out investment expenditure and exert adverse pressures on price levels and the external balance of payments. The desirable outcomes of policies intended to meet population ageing are, therefore, not hard to identify. Such policies must aim at producing an increase in productive capacity and output, and stimulating saving and investment, thereby alleviating pressures on inflation, fiscal resources and the external account. Indeed, these outcomes are desirable independently of population ageing, but are rendered even more urgent by the onset of the phenomenon. It is the way in which this strategy is to be implemented that is often subject to contention. Opinions tend to diverge because it is not always appreciated that any course of action chosen, including a passive stance, involves sacrifices. An increase in resources devoted to pensions must imply higher taxation, a reduction in funds allocated to other equally worthy causes, or burdens on society as a whole in terms of higher inflation and interest rates. On the other hand, reforms that should engender a win-win situation in the long run could perhaps impose sacrifices on a number of individuals in the short term. It is, therefore, important to promote an informed debate which takes account of the costs and benefits involved in any course of action, with a view to reaching agreement on viable solutions.
This is necessary to ensure a balanced economic development and an inflation rate in line with our target. Our repo rate forecast is exactly that – a forecast, not a promise. But it is nevertheless important that anyone borrowing money to buy a home or for other reasons should include a sufficient margin, taking into account that today's low interest rates will not last for ever. Let me linger a bit with the housing market and interest rates as these subjects have much discussed recently. BIS Review 138/2009  3  Monetary policy and house prices One issue that has been taken up, not least in the media, is that the policy we are now conducting could possibly contribute to a further rise in house prices, despite the weak economic activity. This could in turn increase the risk of imbalances arising in the housing market. It is true that the Riksbank’s policy, by affecting interest expenditure, has significance for the way housing prices develop, although many other factors are also important. But the policy we are currently conducting is what we consider to be necessary to attain the inflation target and to provide sufficient support for the recovery in the Swedish economy. We cannot adapt monetary policy on the basis of individual markets as long as we do not regard this as something that affects our ability to meet the inflation target and to safeguard financial stability. But this does not mean that we do not care about house price movements.

But we are not there yet. How shall we keep our balance in the future? In a financial crisis most of what is not built on stable foundations and does not have a robust structure is washed away. But when the situation has calmed, we have the chance to build up something new that will work better than that which failed the trials. We have this chance now. We must take part in the change work Keeping our balance once we have landed on our feet will require reforms with regard to legislation and supervision. Difficult and important challenges lie ahead of those of us who work with these issues – the central banks, the financial supervisory authorities and the legislators. Here Sweden must take on the challenge and play an active role in the international discussion. And it is necessary to act quickly. The reform work has already begun. Within the EU a new supervisory structure is being built up with regard to banks, insurance, securities and systemic risk. The new body, the European Systemic Risk Board, ESRB, will play an important role in this. Change is required in a number of different areas. The most recent crisis has demonstrated how a liquid market can very quickly dry up and become illiquid under certain conditions. Tougher rules are required regarding liquidity and the buffer that banks and credit institutions need to be able to withstand shocks. Further consideration is required here before we find a good solution.
2  BIS Review14?/2001  Inflation 1990 - 2001 Per cent 5  5  4  4  Norway 3  3  2  2  1  1  Euro area 0  0 1990  1992  1994  1996  1998  2000  Since 1997, inflation has been higher in Norway than in the euro area. The difference partly reflects a period of strong growth in Norway, while the level of activity in Europe has been low. The higher level of inflation in Norway cannot be sustained, however, as this would undermine the basis for stability in the krone exchange rate and confidence in monetary policy. Short-term capital inflows and outflows are probably the most important factor determining movements in the krone exchange rate from day to day, from week to week and from one quarter to the next. They are governed by expectations concerning future returns. Changes in expectations concerning the future value of the krone can trigger extensive capital movements. As a rule, Norges Bank does not intervene in foreign exchange markets with a view to influencing the krone exchange rate. The krone is floating, and the value of the krone fluctuates in periods by the same magnitude as exchange rates in other open economies. Nevertheless, the prevailing stability of the krone is largely a reflection of confidence that inflation in Norway will be kept at a low level.

The government’s motive for saving resembles the motives underlying saving in pension funds and life insurance companies. Among the government’s saving vehicles, investments in the National Insurance Fund and the Government Petroleum Fund are best adapted to this motive for saving. For both funds, there is a clear division of responsibility between the manager and the government, with the Ministry of Finance as owner. In the case of the Petroleum Fund, Norges Bank’s mandate is to achieve the highest possible financial return in keeping with the strategy and risk limits established by the government. The Fund’s investments are distributed among many countries and spread among a large number of equities and bonds. At end-2000, the Fund had invested NOK 153 billion in about 1800 companies in 21 countries, while NOK 234 billion had been invested in bonds in 18 countries. All ownership interests are now less than 1 per cent of the companies’ total value. A turnaround in one country or a region, which in isolation may be pronounced, will not have a major effect on the total value of the Fund. The value of the Fund’s equity portfolio will therefore shadow developments in prices on international stock exchanges. There is a substantial element of risk diversification, although we are not immune to the risk associated with the uncertainty in global developments. Along the same lines, the return on bond investments will reflect international interest rate developments. The Government Petroleum Fund is built up through transfers of petroleum revenues that are not used domestically.
12  10  10  8  8  6  1 6 -6 4 y rs . 6  4  4  2  2  0  0  76  77  78  79  80  81  82  83  84  85  86  87  88  89  90  91  92  93  94  95  96  S o u rce : S ta tis tics S w e d e n  approximately the same magnitude as the unemployment rate.1 Sweden’s increase in unemployment can in this way be estimated to cost around 10 per cent of GDP a year, which is equivalent to SKr 150 billion. Considering the sensitivity of general government finance to variations in unemployment and production, the cost to the public sector, in the form of lower  1  Assuming that changes in the capital stock roughly parallel employment and that average productivity is constant. BIS Review 38/1997  -4-  tax revenue and increased expenditure on unemployment support, for example, may actually be as high as 9 per cent of GDP or SKr 135 billion.2 Conversely, an appreciable reduction of unemployment implies decreased social tensions as well as substantial economic gains.

In this way, we can assess the relevance of vulnerabilities on the mortgage and real estate markets for financial stability, and decide on any need for action. Of course, we are continuously developing our risk monitoring. Thus, we regularly review the range of indicators and the stress tests we use, taking into account new research findings as 6  7  Cf. Aldasoro, I., C. Borio and M. Drehmann (2018): Early warning indicators of banking crises: expanding the family, BIS Quarterly Report, March 2018. With a focus on Switzerland, cf. also Jokipii, T., R. Nyffeler and S. Riederer (2020): Exploring BIS credit-to-GDP gap critiques: the Swiss case, SNB Working Papers, 19/2020. Cf. emi.snb.ch/en/emi/HYPO (consulted on 30 August 2021). Page 5/12  well as experiences gained in other countries. Significant progress has been made in recent years in terms of the data available in Switzerland, particularly with the aforementioned Hypo_B survey on newly granted mortgage loans. However, there are still no corresponding data in Switzerland on outstanding mortgage loans. Please allow me to appeal to the researchers among you here: As of this year, Hypo_B survey data in aggregate form are also available to the general public. With this step, we would also like to make a contribution to new research in the field of financial stability – and we look forward to the results.
However, from December, market expectations have approached the Riksbank’s forecasts (see Figure 4). So how can the gap between market expectations and the Riksbank’s repo rate forecasts in 2009 be explained? Some of the deviations may be explained, for example, by the possibility that statements on the lower bound of the repo rate were interpreted to mean that there were only upside risks for the repo rate, but this does not explain them all. A major part of the deviations thus remain to be explained. One possible explanation may be that money market participants have taken a more positive view of economic development. For example, they may have expected GDP growth and inflation to be higher in the future than stated in the Riksbank’s forecasts, and thus require a tighter monetary policy. However, this hypothesis is not supported by surveys of the expected economic development. These show that the money market participants expected both lower inflation and lower GDP growth in the period ahead than the Riksbank. 12 The market participants seem to have believed in a different reaction pattern from the Riksbank than that expressed in the repo-rate path. The disagreement among the members of the Executive Board may have contributed to this. At the monetary policy meetings in July, September, October and December, reservations against the published repo rate path were entered by members who considered that the repo rate path in 2010 should be slightly higher.

It is a question of choosing a repo-rate path so that the forecast for inflation and resource utilisation entails the best possible stabilisation of inflation and resource utilisation. As the forecasts play such a central role in the monetary policy decisions, it is of course important that the Riksbank employs good forecasting methods and uses all the relevant information available when the forecasts are produced so that they are as accurate as possible. An important step in the assessment of monetary policy is therefore to investigate whether the forecasts are reasonably accurate. One way to do this is to compare the Riksbank’s forecasts with those of other forecasters. The Riksbank makes such comparisons every year. Another component of the assessment of monetary policy is to analyse how predictable monetary policy is and what impact it has on market rates. Monetary policy mainly acts by influencing expectations regarding interest rates, inflation and the real economy in the future. Expectations regarding the repo rate in the years immediately ahead affect interest rates with  2  BIS Review 32/2010  longer maturities, and therefore inflation and the real economy, more than the repo rate in the period up to the next monetary policy decision. The predictability of monetary policy can be measured in terms of how well the market predicts the next repo-rate path. How effectively monetary policy steers market expectations and market rates can be measured in terms of how closely the market expectations regarding future repo rates correspond to the repo-rate path after it is published.
http://www.bankofengland.co.uk/publications/Pages/inflationreport/2016/aug.aspx 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  In auctions we offer to buy across the range of eligible assets the MPC has specified, pre-define the mechanisms we will use to weigh the competitiveness of offers, and then passively respond to the pattern of bids that we receive in any given auction. Our judgement last summer was that the MPC’s corporate bond purchase objective would probably also be best achieved using auctions, but that we would need to make a number of changes relative to the pre-existing gilt auction design to cater for the differences in the underlying markets. Let me highlight this by explaining three of the main, mutually reinforcing, changes that we made, informed by auction theory and expert advice. First, the size of our purchase operations were designed to be flexible, adjusting automatically to reflect the quantity and quality of the offers received. This means the purchase pace can fluctuate to account for seasonality, market conditions and so on. It also encourages greater competition between offers, as some offers are likely to be rejected, even in auctions where there are a smaller total number of offers. By contrast our gilt purchases are made at a pre-announced pace through fixed-size auctions. Second, we changed our allocation method within our auctions with the aim of promoting participation and competition. Experience has shown that the competitive nature of the gilt market routinely delivers 8  widespread participation in our auctions.

The risks depend, for instance, on how well-diversified the credit portfolio is. The more concentrated it is to certain industries and countries, the greater the capital requirement. A portfolio where the risks are well spread instead reduces the total risk in the portfolio and thereby the capital requirement. This means that the banks  BIS Review 24/2007  5  may have reason to sell some of the risks that arise in their own credit granting and to buy others instead. The current rules do not allow the banks to reduce their capital very much when they use credit derivatives. Basel II increases the opportunities here. It is also likely that the credit derivatives market will to a greater degree develop to include traditional loans. It is already possible to obtain prices for credit derivatives for companies that do not have bonds issued on the bond market. This is on condition that the loan documentation meets the predetermined requirements. It increases the opportunities for Swedish banks to use credit derivatives to sell parts of their own credit risk. Concluding remarks Let me round off. My assessment is that the advantages of credit derivatives exceed the risks for the economy. They have revolutionised the trade in credits in important aspects. The problems related to the market infrastructure are being dealt with successfully and there are many indications that the risks in this field are declining as the market matures. The financial sector has also improved its routines for risk control over the past ten years.