samchain/econo-pairs-v1 huggingface dataset:
Eva Srejber: Experiences from the cash changeover in the euro area Speech by Ms Eva Srejber, Second Deputy Governor of Sveriges Riksbank, at a meeting of the Swedish Federation of Trade, Stockholm, 9 April 2002. *  *  *  Let me begin by thanking you for the invitation to come to the Swedish Federation of Trade's meeting to speak about the cash changeover that has taken place in the twelve countries now participating fully in the third stage of EMU. The changeover from national banknotes and coins to euro has gone much more quickly and been more problem-free than expected and now the euro is an established currency in the countries concerned. The cash changeover was a major challenge for these countries, as the volumes were so extensive and the time period for the changeover was relatively short. Almost 15 billion euro banknotes and 50 billion euro coins were to be distributed, and at the same time all of the national banknotes and coins were to be withdrawn to the central banks. The logistics and security for the changeover therefore had to be specially designed and extra capacity was required. However, the most important factor in making the changeover a success was the enthusiasm of the general public and the naturalness demonstrated by banks, the retail trade and other institutions handling cash when carrying out their work.

Bank lending to business has risen more sharply in France than anywhere else in Europe: up 4.5% in annual terms at end-November 2015, compared with a rise of 1% in Germany, and 0% in Italy. Moreover, interest rates in France are among the lowest in Europe. Interest rates on new bank lending are currently below 2% on average, compared to 5% in 2007. However, I would like to stress the fact that access to cash loans is more difficult for very small enterprises. Their fragile financial position may be one reason; but there is an ongoing misunderstanding with the banks that the latter must seriously address. French households’ savings must also adjust to the low interest rate environment. This is an opportunity to encourage more “risky” and more long-term investments, both in the interest of investors themselves and of our economy. Today only 31% of French households’ financial investments are made up of risky assets, against 45% in the euro area. This requires taking action in two directions. First, the decrease in interest rates should be gradually passed on to risk-free investment returns – this is why I proposed lowering the rate on the PEL, the French housing savings plan, this is also why we must resolutely continue to lower the returns on life insurance invested in euro funds. Second, new products should be developed: probably less liquid, with or without a capital protection over the long term, and possibly offering the best equity performance over time.
At the same time, economists are increasingly being given the opportunity to help governments design new policies and regulations2. And, in this respect, we should bear in mind that carefully designed scientific experiments have been an engine of economic, technological, and social progress. Social experiments have become crucial to ensure that governments implement policies with a proven record of success3, that are based on evidence and not on prejudice or intuition. We are now in a position to create a virtuous circle that begins with the allocation of resources to the compilation of data and the provision of access to them, continues with the evaluation of public policies, and ends with the application of the findings to the design of policies. However, unlike medical trials, social experiments – large-scale, publicly funded randomised controlled trials – have not become the gold standard for the evaluation of public policy interventions. 1  Einar, L. y Levin, J. (2014) "The data revolution and Economic Analysis", Working Paper 19035 National Bureau of Economic Research (NBER) 2  Duflo, E (2017)"The Economist as Plumber" Richard T. Ely Lecture, American Economic review: Papers and Proceedings 2017, 107(5):1-26 3  Heffetz, O y List, J (2021) "Who's afraid of evidence-based Policymaking?" Artefactual Field Experiments 00739, The Field Experiments Website 1  In many cases, critics argue that such experiments are inherently unfair. Ironically, this resistance to experimentation could eventually lead to less progress and even less fairness.

Without evidence about what works best, governments end up effectively running a mass experiment on everyone, but without the appropriate controls and therefore without learning as much as they could do to improve their policies. In this regard, the "causal revolution" of the past 30 years has also been characterised by the increasing attention that researchers have devoted to justifying causal interpretation of their research findings. In parallel, the appearance of new data, together with new concepts to be measured and new measurement techniques, have multiplied the opportunities to provide convincing descriptive analysis, even in the absence of experimental data. The influence of these approaches has been immense and has given rise to empirical results capable of shaking the most entrenched beliefs of economists. The truth is that there are still wide disparities in data availability across countries. At one extreme there is Denmark and other Scandinavian countries, with a culture that encourages the use of public data by the research community for the common good. But, in most cases, even if public administrations are repositories of enormous wealth in the form of individual data, the administration that holds the data is not capable of exploiting their full potential. Analysing this data is not their main priority and information is usually scattered among various administrations that do not readily communicate with each other or are very reluctant to share their data, even with external researchers.
Ultimately, protectionism could also change the long-run equilibrium values, i.e. the levels to which an economy tends over the long term. These play a decisive role in determining the monetary policy stance since they serve as a compass for central banks. Increased uncertainty regarding the growth potential of a more closed off economy could result in misdirected monetary policy. If a central bank’s estimate of growth potential on the basis of previous  6  Empirical evidence that increasing globalisation has made prices less sensitive to domestic demand can be found in International Monetary Fund (2006). Cf. also Bank for International Settlements (2018). Page 6/9  conditions is too high, there is the risk of overly expansionary monetary policy delivering unnecessary stimulus to the economy and generating inflation. All in all, we can say that a wave of protectionism would create a lot of uncertainty, be it with regard to the short-term development of the real economy and prices, or with regard to the longer-term macroeconomic context. It is true to say that central banks have to constantly contend with structural change in the economy in any case; that is indeed part and parcel of what we do. However, protectionism would additionally complicate monetary policy. The risk of monetary policy mistakes would increase, at least while the economy is in the process of adapting to the changed market conditions. Rules rather than isolationism As a small open economy, Switzerland would be hit hard by a trade war.

Yet, since 2008, many governments have actively used fiscal policy to combat the effects of the crisis and to refinance the banks. As a result, the debt-to-GDP ratios of G7 countries, for example, have increased by an unweighted average of almost 30 percentage points (slide 3). As a consequence, today, the option of implementing new fiscal stimuli has been virtually ruled out. Monetary policy: in the frontline once again When it comes to economic policy matters, central banks have, therefore, returned to the limelight somewhat by default. In the current crisis, monetary policy has proved more effective than the IS/LM model might suggest. This is essentially because central banks have resorted to using various combinations of conventional and unconventional measures to help provide conditions conducive to economic growth in a context of deflationary risks . Here, the aim has often been to impact long rates directly, given that it was no longer possible to influence short-term rates. Several central banks have therefore purchased assets to put pressure on their longerterm yields (quantitative easing). To the same end, some have extended the maturity of the assets on their balance sheets, while others have purchased private sector assets to contribute to the easing of market conditions (credit easing). Meanwhile, others have conducted foreign exchange interventions to reduce pressure on the export sector and to ease monetary conditions. Many have also made implicit or explicit long-term commitments to foster expectations of future low rates.
It also reflects the policy response to the shock – the MPC cut Bank Rate to 0.25%, launched a Term Funding Scheme to reinforce the pass-through of that cut, and embarked on a new round of asset purchases; and the FPC cut the CCyB. Fiscal policy has also been more supportive, and the world economy grew more strongly than we had expected. But part of that performance also appears to reflect the underlying resilience of the UK labour market. The growing flexibility of the labour market has been a theme in UK economic policy developments for some time. The share of long term unemployed has fallen steadily from its 1980s peak of 4½% to reach 1% now; even in the financial crisis, when unemployment stayed around 8% for several years, long term unemployment remained below 3%. This resilience is good news, and has been positive for households and businesses. But as policymakers it is important that we look at the underpinnings of this resilience. GDP growth since the Brexit referendum has mainly been supported by continued consumption growth, even despite the hit to real household income caused by the fall in sterling around the referendum. Consumption has instead been funded, perhaps less sustainably, by a historically low household saving ratio.

My second lesson from the crisis was that we need to think about resilience much more broadly. Reflecting that, economic policy makers now think as much about stability over the financial cycle as we do over the business cycle – a broader definition of resilience. One major response to the financial crisis was the creation of a new Financial Policy Committee as part of the Bank of England, giving it an explicit mandate to identify, monitor and take action to remove risks to the financial system. The Committee’s goal is to ensure the financial system is resilient to shocks, so that it doesn’t again act as an amplifier, worsening the impact on households and businesses in the real economy, as it did in the crisis. My MPC colleague SIlvana Tenreyro sets out these arguments in detail in her spech “The fall in productivity growth: causes and implications”, available online at https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/the-fall-in-productivity-growth-causesand-implications.pdf. 4  6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  The FPC has been active in pursuing this goal. We have a mandate to ensure the safety and soundness of the financial system as a whole. To do that, one of the things that we do is to regularly reassess and actively adjust the amount of loss-absorbing capital that banks, who are at the heart of the financial system, are required to hold as our assessment of the level of risks changes. (Our tool for doing this is called the counter-cyclical capital buffer rate, or CCyB.)
But I can certainly tell you a lot about how it is perceived from my part of the world. And when it comes to the behaviour of financial markets we all know that perception is as important as reality. Perception and reality - Hong Kong Allow me to illustrate this point by starting first with Hong Kong, for I cannot resist the temptation to take advantage of this opportunity to do a bit of advertising. I would like to describe some of the negative perceptions which financial markets and analysts have had about Hong Kong over the last few years, and how these have compared with actual developments. First was the belief that Hong Kong’s fixed exchange rate with the US dollar would not survive the Asian economic crisis. The reality is that it has survived, and the Hong Kong economy has now rebounded strongly, with the year-on-year growth rate of GDP for the fourth quarter of last year recording 8.7% and the forecast for the year 2000 now put at 5%. What the doomsters refused to recognise, despite the compelling evidence of the preceding one-and-a-half decades of the same fixed exchange rate system, was that Hong Kong has a highly flexible internal cost-price structure, which can quite quickly deliver the same external relative price adjustment as a currency devaluation.

Ravi Menon: Building talent in the financial sector Opening address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Institute of Banking & Finance Annual Conference, Singapore, 22 June 2011. *  *  *  Ms Kate Sweetman, fellow Council Members of the IBF, ladies and gentlemen, good morning. The financial crisis has triggered a fundamental shift in the global financial landscape. There has been much discussion globally on levelling up regulatory standards to meet the risks of an increasingly complex and inter-connected financial services sector. But there has been less discussion on the competencies that need to be levelled up in financial services – competencies in risk management, corporate governance, and financial supervision. Only if competency standards are raised, will the ongoing financial regulatory efforts bear fruit. Since its inception, the Institute of Banking and Finance (IBF) has been playing a critical role in raising the standards of the financial sector in Singapore. Today, this has become more relevant than ever. Let me give an update of IBF’s efforts. In 2005, IBF launched the Financial Industry Competency Standards (or “FICS”). This is a set of competency standards developed by the industry, for the industry. It provides a practice-oriented approach and a clear roadmap for people working in the financial sector to attain the competencies they need to do their jobs. FICS has taken off quite well. As at end-2010, some 360 training/assessment programmes have been accredited under the FICS framework.
First, foundational digital infrastructure – systems that allow different users, different solutions, and different devices to seamlessly interact with one another. Just as physical infrastructure like roads and railways helped to connect and advance the industrial economy, we need digital infrastructures to enable a vibrant digital economy. What are these digital infrastructures? One, a digital identity, so that we can interact with one another digitally, with trust and confidence, knowing who is on the other side of the transaction. In Singapore, we introduced Singpass as a digital identity to facilitate secure, consent-based verification for residents to digitally access more than 700 different government services. 1/3  BIS - Central bankers' speeches  Two, interoperable electronic payments. We need not only digital payment solutions but common payment rails or networks for these different payment solutions to be interoperable. In Singapore, we built PayNow, an instant payment service. Residents can move money to one another's bank account in real-time at zero cost, with just three clicks on their mobile phones, regardless of which bank app they use. Three, a trusted data exchange so that individuals and corporates can access all their relevant data in digital form for purposes of carrying out digital transactions. In Singapore, we established MyInfo, a platform which allows residents to access via their mobile devices more than 100 of their personal particulars and share them with third party service providers through open, secure APIs. Second critical enabler - connectivity and collaboration.

In March 2000, the group issued a sobering reminder: institutions that provide leverage to HLIs must improve their counterparty risk management and hedge funds need to enhance their disclosures. Along with these developments, or some say in spite of them, the hedge fund industry has continued to grow from strength to strength. There are now about 6,000 hedge funds worldwide, managing more than $ billion. In 2001, some $ billion of new capital was invested into hedge funds. By 1 comparison, the entire industry was only $ billion in 1990 . While high net worth individuals remain the main source of capital, hedge funds are becoming more popular among institutional and retail investors. Funds of hedge funds and other hedge fund-linked 2 products are increasingly being marketed to the retail market . For example, ABN Amro launched the first retail fund of hedge funds in Singapore last month. There are a number of factors behind the meteoric rise in demand for hedge funds. The unprecedented bull run in the US equity markets during the 1990s swelled investment portfolios. This led both fund managers and investors to become more keenly aware of the need for diversification. Hedge funds are seen as a natural “hedge” for controlling downside risk because they employ exotic investment strategies believed to generate returns that are uncorrelated to traditional asset classes.
In the worst case, falls on the stock exchange that correct overvaluations can lead to financial instability, if share prices have been driven by pledged shares and if the market participants are in some cases unable to pay back their loans. This can result in panic sales, exaggerated falls in prices and credit institutes facing difficulties as a result of exposure to households and institutions that have become insolvent. This result risks leading to large fluctuations in the real economy. Critics of the Federal Reserve in the USA claim that when Alan Greenspan coined the phrase "irrational exuberance" in 1996, it was clear that prices on the stock exchange had risen too much and that this development should have been counteracted. Nothing was done and the rise in share prices continued until March 2000. Since then the stock exchanges have fallen, Nasdaq by 70 per cent, and the fall on the stock exchange risks pulling the USA down into a recession that could have been avoided. However, comes the objection; is it really possible to realise when a stock exchange has risen too much? The answer is that prices on the stock exchange must have some relation to the underlying development of productivity in trade and industry, to company profits and to the market's pricing of risks. Of course, it is not possible to determine precisely when the stock market has risen too much or when it is undervalued. However, it should not be too difficult to detect obvious deviations.

Those small countries in particular had to accept the new economic reality of lower demand, higher unemployment and forced fiscal consolidation due to a fall in tax income or borrowing difficulties. The other group consists of bigger or more closed economies that were relying on domestic demand. They were able to smooth the initial impact of the crisis with more extensive government support measures. There was also the expectation that the crisis would be temporary. With the benefit of hindsight we know that we were not facing a temporary bump on the road, but a more fundamental need for adjustment. The initial smoothing of the shock may have been even more costly as it resulted in a higher level of public debt. Secondly, the required policy adjustment involves a dimension which we now consider critical: the speed of reacting and the decisiveness of policy actions. The Baltic countries have learned it firsthand through their experience, which of course is the hard way. There are few economists today that would fundamentally question the need for fiscal consolidation and structural reforms in Europe, as the crisis has clearly turned out not to be temporary. However, we all know it is politically difficult to cut government spending and implement reforms fast. The natural tendency for most politicians is to favour gradual adjustment. “Gradualists” say that in case of fast changes the risk of possible policy mistakes is higher, leading to losses in physical and human capital. Opponents of that view, including myself, certainly acknowledge those risks.
The turmoil has also affected all of the Bank’s work; from the setting of interest rates, to the scale and structure of our market operations, and to our joint work with the FSA and Treasury to deal with institutions under stress and to help design an effective international response to the crisis. For example, like other central banks, we have adapted our money market operations to provide the liquidity the banking system as a whole has required. First, we have allowed banks to increase their reserve balances at the Bank, increasing the size of our overall provision of central bank money; second, within that larger total, we have shifted the balance towards longer-term lending as the terms of market finance have shortened; third, we have widened the collateral we accept for longer-term repos. And in April, we introduced a special scheme to provide banks with up to three years’ finance for legacy assets which have become illiquid. Last week we offered extra sterling liquidity through our usual Open Market Operations and provided US dollar liquidity as part of co-ordinated action with the Federal Reserve, ECB, Bank of Japan and Swiss National Bank. We also extended the window in which banks can swap their legacy assets under the Special Liquidity Scheme until January next year. Even once the window closes, the Scheme’s asset swap will provide liquidity for a period of up to three years, something many people have not fully appreciated.

Our investment banks have suffered losses in their trading books and a wider group of banks have lost money on their treasury books because of the fall in the values of structured credit of all sorts. At the same time they have found that some of their major sources of finance, notably securitisation and medium term unsecured lending, have dried up and others, notably shorter term lending in money markets, have become much more expensive (Chart 4). What is more, all these effects have lasted longer than expected and seem set to continue for some time. Banks have responded by hoarding liquidity and trying to reduce their leverage by raising new capital (not without difficulty in some cases) and by constraining the growth of lending. One direct effect has been a marked tightening of credit conditions over the past year (Chart 5), which seems still to be underway. That in turn is pushing down asset prices and demand. Our forecasts and our policy decisions have reflected our best assessment of the likely impact of this feedback. We brought down interest rates earlier in the year to cushion the impact of the change in bank behaviour. In effect we have relied on the credit squeeze in large measure to produce the slowdown we consider necessary. But we are fully aware of the risk that the squeeze on banks and the feedback to the economy could prove more powerful than expected. That risk does not just arise from the drama of the last week or two.