samchain/econo-pairs-v1 huggingface dataset:
First, despite the increasing integration of the world economy, which might appear to reduce the effect of national policies, the nation state has in fact flourished since 1945. The collapse of ideology and empire, and the triumph of the ideas of a liberal market economy, have been accompanied by an extraordinary expansion in the number of countries in the world. In 1946 there were fewer than 80 countries. Now there are 192 members of the UN. Much of that increase represents the division of empires, such as the former Soviet Union, into new states, as well as growing ethnic separation. Most of these new countries were not “present at the creation” and see no reason why they should acquiesce in governance arrangements made in their absence. And the economic weight of countries has changed greatly since the post-war international institutions were set up. In 1950, Asian countries accounted for a sixth of world GDP measured at purchasing power parity. Now they account for more than a third. Second, the world economy is very different today than when the IMF, the World Bank, and the other international economic institutions were set up. At the end of the Second World War, the international monetary system was built around fixed exchange rates and controls on capital flows. The rules of the game were simple. Countries were supposed to balance their current account. When “imbalances” arose, they were under an obligation to correct them. In practice, however, the obligations on creditor and debtor countries did not prove to be symmetric.

The main tool to monitor those commitments is surveillance. The surveillance activities of the IMF have been criticised because they pay insufficient attention to spillover effects and instead examine in unnecessary detail microeconomic issues. For example, the sharp rise in oil prices over the past two years has posed a risk to economic stability in many countries. But there is no reference in the IMF’s Article IV report on China to the role that Chinese demand may have played in pushing up world oil prices. And the report on the United States this year singled out the electricity sector and competition among auto manufacturers and airlines as areas warranting special examination by IMF staff. It would be better if those microeconomic issues were examined within the OECD, and, in turn, issues of macroeconomic spillovers and global “imbalances” were left to the IMF. But even when IMF surveillance has been well-focussed, as in the analysis of Thailand’s exchange rate policies in 1996, it has not always carried sufficient weight to influence countries’ policies. 4  BIS Review 126/2006  These short-comings must be remedied in two ways. First, the focus of IMF surveillance should be on spillover effects and the consistency of macroeconomic policy frameworks. By the Spring Meetings of the IMF in Washington in April, we shall know whether this is likely when we see the results of the current review of the 1977 decision on exchange rate surveillance. Second, IMF surveillance should be more independent of member countries.
Many other central banks are now considering upgrading their payment systems. Payment flows now... Historically there has been a differentiation between large-value and smaller payment, also known as retail payments. The large-value payments include payments between the banks’ major customers, international payments, payments to and from financial infrastructures and the Riksbank's own transactions. This type of payment is often large, time-critical and settled one by one in RIX according to the principle of “first in, first out”.5 Retail payments are the millions of smaller everyday payments made between households, companies and authorities, for instance card payments in the retail trade, wage payments, pensions and normal payment of invoices. Retail payments that are not settled directly are normally first compiled and aggregated by a clearing house (in Sweden by Bankgirot) and then settled in RIX according to a predetermined timetable, this is also known as batch clearing. However, this regime is now being disrupted as technology has reached such a level of maturity that it is possible to send small payments without clearing to reach the recipient in the space of seconds. At the Riksbank we call this type of payment an instant payment.6 This is often called “swishing” in popular speech, after the mobile app used to make the payment. Swish has really taken Sweden by storm and is one reason why the use of cash is declining here.7 Today around 70 per cent of the Swedish population has access to the app and in 2018 almost 400 million instant payments were made with it.

The institutions that take part in the Riksbank's payment system can then pay by moving money, on behalf of themselves or their clients, between the participants’ accounts. When central bank money is used in a transaction, an asset with counterparty risk is converted into a safe and liquid claim on the central bank. Central bank money is safer than other money, as a central bank can always meet its obligations in domestic currency. It is important for financial institutions to be able to pay in central bank money, as they would otherwise be burdened with counterparty exposures when paying.2 Central bank money and the possibility to make safe payments are thus closely linked. The Riksbank needs to adapt its payment system so that the infrastructure remains safe and cost-efficient as technology develops and the payment market is changing. A growing trend both in Sweden and abroad is that households and companies expect to make payments at any time they like. The payment system we offer today therefore needs to be supplemented with a new system that is open 24 hours a day and adapted to the instant settlement of large volumes of payments. My assessment is that the best way for the Riksbank to attain this target is to make the Swedish krona available on the same technical platform as the European Central Bank (ECB) and the Eurosystem use.3 By taking advantage of the economies of scale that arise here, the right conditions are created for cutting transaction costs for Swedish households and companies.
Vipps’ market dominance reduces these challenges, but this assumes that all market participants will be connected to the system. This assumption may be too strict. Other payment service providers and payment solutions will also wish to enter the market on equal terms. The alias registers are important here. An alias register links account numbers to telephone numbers and other ways that identify account holders. Today, separate registers are compiled in each solution. In my opinion, there are clear advantages to having a central register that is used by all banks and other service providers in the Norwegian payment market. This should be part of a common infrastructure and not be part of private closed systems where ownership can change. A common register facilitates interoperability and high register quality. The greater the level of activity is, the more up-to-date the information is. We would also then avoid contradictory information in the various registers, which can arise, for example, when customers do not update their information everywhere at the same time. Insufficient register information may be a barrier to competition. An alias register shares similarities with a public good that should be organised as common infrastructure and be available to all service providers, for a price, if necessary. Service providers should compete on other aspects of the services they offer. I look forward to seeing initiatives from Finance Norway and Bits in this respect. It is often most appropriate for the industry to arrive at satisfactory solutions on its own.

Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the Eden Project, Cornwall, 12 October 2004. *  *  *  A year ago I described the period since the early 1990s as a non-inflationary consistently expansionary - or “nice” - decade; a period in which growth was above trend, unemployment fell steadily, and inflation remained low and stable. The ups and downs of the economy were much smaller in the nice decade than in any previous historical period. Will this stability last? To answer that question it is necessary to understand the causes of our new-found stability and, in particular, the link between growth and inflation. In the long run there is no trade-off between the two. Monetary policy determines inflation and the supply capacity of the economy determines the rate of growth. In the short run, however, it is reasonable to suppose that when the economy is running at above-normal levels of capacity utilisation there is upward pressure on inflation, and the opposite to hold when the economy is running below capacity. Such, at least, is the conventional wisdom. But over the nice decade inflation was much less sensitive to movements in output and employment than in the earlier inflation-prone 1970s and 1980s. Inflation barely moved despite substantial falls in unemployment.
And it is differences in those judgements across the members of the MPC that lead to the finely balanced vote outcomes like that we saw last week. Guiding monetary policy by the stars In discussing those judgements – and, in particular, in converting them into monetary policy decisions about Bank Rate – I am often confronted by questions about ‘starred variables’ in the standard new Keynesian model. In highly stylised form, three starred variables lie at the heart of these models: Pi-star, the steady state rate of inflation; R-star, the Wicksellian neutral real rate of interest; and Y-star, the potential level of economic activity. Pi-star is the easiest to dispose of. Within an inflation targeting framework, the steady-state level of inflation is determined exogenously by the central bank’s mandate. In that context, the inflation target should be as clear as possible: uncertainty about the target only adds unnecessary – and costly – volatility into the economy. The UK’s inflation targeting framework delivers on this score. The inflation target is defined as an annual rate of CPI inflation of 2%, which is given primacy in the remit delivered to the Bank of England by the Treasury and deemed to hold at all times. 9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  While there are inevitably times – like those we are experiencing today – when unforeseen shocks to the economy drive inflation away from target. These circumstances beg questions about how quickly it is feasible and/or desirable to return inflation to target.

Should they fall slowly in line with futures prices, inflation is forecast to fall below the 2% target by a meaningful margin at the policy-relevant horizon. Yet uncertainty on this dimension remains considerable. With the pandemic giving way to geopolitics as the driver of international energy prices, they are unlikely to become easier to forecast. This brings me to the second key element of the forecast: our treatment of the labour market and wage developments. Recent data confirm that the UK labour market is tight. It is tighter than we expected at the time of the previous Monetary Policy Report published in November.4 And we expect it to tighten further in the coming months. On the back of this labour market tightness and in light of our Agents’ recent wage survey – which embodied the highest expectation for pay settlements since well before the financial crisis 5 – we have revised up underlying wage growth in 2022 to rates approaching 5%. Given expected productivity developments, this rate is probably stronger than that consistent with the inflation target over the medium term. But we expect the forecast stronger momentum in domestic wage and cost growth to ease beyond this year, as headline inflation falls and unemployment rises owing to the impact of higher energy prices on real incomes and domestic demand. This is a crucial assumption – the ‘big call’ – underlying our inflation outlook.
So that ailing institutions may urgently embark on restructuring and integration processes or so that control may promptly be taken of institutions that are non-viable, Parliament – once again with the agreement of the party in government and of the main opposition party – has provided the Banco de España with the necessary instruments, namely the Fund for the Orderly Restructuring of Banks (FROB), for these processes to proceed normally and without risks to the stability of the system. According to the law regulating it, the FROB may engage in two types of actions. The first involves pushing through and facilitating the restructuring of those banks that evidence pressing viability problems. In this type of situation, FROB regulations stipulate taking control of the institution and replacing its directors, by the FROB itself. The new directors shall draw up a report on the institution’s situation, submitting a restructuring plan for the approval of the Banco de España. This plan shall include merger measures, spin-offs or, where appropriate, the winding-up of the institution, adhering to competition law and seeking at all times to minimise the potential cost of the measures for the public coffers. So far, this exceptional decision to take control and replace directors has only been unavoidable in one instance, prior to the approval of the FROB. If at any point it were necessary to adopt this decision at any other institution, rest assured that the Banco de España, thanks to the creation of the FROB, will act with all due diligence.

The same can be said of the banking system, since if we undertake sufficiently extensive reform, we will be able to reasonably negotiate the current crisis; otherwise, banks would have to ultimately focus on the battle against bad debts and on the difficulties in obtaining external funding, and the authorities would have to focus on restructuring the banks that have deteriorated to the point of being clearly inviable. However, if we take advantage of this historic moment and carry out far-reaching labour reform, we will face a more positive scenario in which Spanish firms could promptly raise their competitiveness in the difficult (for these purposes) environment of a monetary union. Spain would enter a scenario in which increased productivity would provide a significant boost to its best firms. This would be particularly positive for SMEs, which find it most difficult to take advantage of the flexibility mechanisms offered by the current institutional framework, and they would benefit enormously from the implementation of a more flexible and simpler system. Meanwhile, budgetary consolidation could be achieved without swingeing cuts in expenditure and the banking system would be in a position to support this new growth phase. It would thus be a mistake to opt for small-scale labour reform, as if we could even afford to tackle this reform slowly, in various phases over various years. This would have been possible 5 or 10 or 15 years ago, when the last expansion phase started and the need for labour reform was not pressing.
When one thinks about the distant future – that is, the period beyond the influence of the current set of cyclical factors – one tends to think that interest rates will tend toward a level that reflects the rate of return on investment, and hence the potential output growth of the economy. Potential output growth matters a great deal for monetary and macroprudential policy. In the long run it determines the rate at which the economy can grow without generating abovetarget inflation, and it determines the rate of income growth in the medium term, and hence the sustainable level of debt today. During the financial crisis, we rediscovered the fact that recessions accompanied by financial crises tend to be followed by a sustained fall in the level of potential output. 13 The only silver lining was that although the level of potential output tended to be permanently lower, the growth rate could be expected to recover. However, if the current yield curve can be interpreted as an indicator of financial market participants’ expectations of the return on investment in the long term, it suggests they are  11  Barro (2006) shows that the potential for rare economic disasters can explain low risk-free rates  12  This can be broadly defined to include the higher cost of financial intermediation  13  IMF (2009)  4  BIS central bankers’ speeches  sceptical that potential output growth can even return to pre-crisis norms.

The macroeconomic projections by Eurosystem staff constitute an important input into the monetary policy decisions, because they are a way of organising a large amount of information and they help to create a consistent picture of possible future developments. However, the economic projections cannot encompass or even reflect all the complexities, conditioning factors, nuances and the multi-dimensional nature of a comprehensive assessment of the risks to price stability on which monetary policy decisions need to be based. While the information synthesised from various indicators serves as an important input into the decision-making process, the Governing Council of the ECB does not take decisions only on the basis of projections. The Governing Council’s “judgement” must eventually come into play in order to assess the likelihood of the alternative scenarios suggested by the economic analysis. This is particularly important when it is quite unclear how a certain situation will evolve, as is the case sometimes with sharp movements in asset prices. Related to this, attempts to base monetary policy decisions solely on inflation forecasts would involve significant limitations. Notably, they would entail an inefficient use of information, since every forecast, or any composite index of indicators, is based on one possible scenario and one combination of assumptions. In the end, monetary policy requires judgement on the part of the policy-maker to assess  BIS Review 67/2004  5  not only the plausibility of all possible scenarios, but also the nature of the shocks and the best policy reaction in order to deal with this uncertain environment.
In this environment, the UK is running a historically large current account deficit. On the positive side, the deficit is funded in domestic currency and financial reforms have increased the resilience of the UK system, thereby making larger imbalances more sustainable. But the UK’s deficit has also been associated with markedly weak investment and latterly with rapid consumer credit growth. This is not an imbalance that is, as yet, funding its eventual resolution. Moreover, despite the large depreciation around the referendum, the extent to which the UK’s deficit has moved closer to sustainability remains an open question, one whose answer depends crucially on the outcome of the Brexit negotiations. Most fundamentally, the UK relies on the kindness of strangers at a time when risks to trade, investment, and financial fragmentation have increased. III. Potential Solutions The world economy has been here before. In the 1930s monetary policy was exhausted and fiscal policy was in abeyance. The trap was sealed by a wave of protectionist measures originating in the US and spreading to Europe. As current and capital accounts closed, stagnation ensued. What should be done to prevent history from rhyming? In the simple world of the economist, the prescription is straightforward. Deficit countries should loosen monetary policy and tighten fiscal policy. Surplus countries should do the reverse. roll up its sleeves, it could easily solve this economic Sudoku.

To find something profound that I might pinch for your amusement today, I pored over the sayings of the great minds through time: Plato, Socrates, Mencius, Muhammad, St. Paul and St. Augustine, Voltaire, Martin Luther, Mother Teresa … Miley Cyrus, Justin Bieber. The maxims put forward by the sages of the ages are inspiring, but you already know them or you would not be where you are today: Be disciplined; be prepared; be loyal and thrifty and brave; always question conventional wisdom; take risks; push the envelope; be true to yourself; never promise more than you can deliver; never compromise your integrity; don’t waste your talents; never forget that you have been given those talents in order to do good; never, ever, ever, ever give up the pursuit of excellence. These are all wise maxims. But, truth be told, it would save time and expedite many a graduation ceremony if organizers would forgo a commencement speaker and simply remind the graduating class to read and, throughout life, reread the Old and New Testament or the Quran or Confucius or Shakespeare – the ultimate sources of almost every graduation speech I have ever read or listened to. For example, it would tax the capacity of the most powerful search engine to pull up the countless commencement speakers who have lifted and adapted variations of Shakespeare’s lines in King Henry VI, Part 2, Act 4, Scene VII that “ignorance is the curse of God, [k]nowledge the wing wherewith we fly to heaven”.
Overall, the economy in the euro area stagnated. As in the last monetary policy assessment, we assume that the global economy will continue to recover slowly. This will be driven by globally expansionary monetary policy and strong domestic demand in the emerging economies. In the euro area and the US, developments are likely to be more subdued. Here we assume that the European financial and sovereign debt crisis will gradually ease. However, risks in this respect remain high. In particular, the difficult situation in Greece and Spain has already led to a significant deterioration in the  BIS central bankers’ speeches  1  confidence of households and companies in the euro area. As a result, the economic situation remains vulnerable. These high risks are also affecting the financial markets. Following a temporary recovery at the beginning of the year, the situation on the financial markets at present is again tense. A substantial correction has taken place on the share markets. By contrast, investments perceived to be safe, such as US, German or UK government bonds, recorded all-time low yields and correspondingly high price gains. Real yields on these investments are in negative territory for most maturities, measured in terms of inflation expectations. In addition, interest rates on money markets are at record-low levels worldwide. Swiss economic outlook In Switzerland, real GDP rose faster than expected in the first quarter.

While to some extent procyclicality is inherent in the financial system because risk is by its own nature cyclical, it is important to ensure that the regulatory framework does not amplify these fluctuations. Instead, the public sector should play an active role in mitigating procyclical behaviour as far as possible by enhancing the forward-looking nature of the regulatory framework. Concrete areas for attention that have been identified include certain elements of the fair value accounting rules and the implementation of the new capital requirements for banks and insurance companies. In the future, public authorities will need to be continuously aware of the importance of applying sufficiently long-term horizons for financial rules and prudential practices. Third, it will be necessary to pay closer attention to the growing importance and complexity of liquidity risk in the more market-based financial system. In this context it will be essential to ensure that prudent liquidity risk management of financial institutions provides an effective line of defence, also to pre-empt the moral hazard risk associated with a possible undue reliance of market participants on central bank actions. The experience gained from the financial market correction has indicated that the liquidity risk management of a number of financial institutions was not commensurate with their increasing exposure to liquidity risk from both the assets and liabilities side.