samchain/econo-pairs-v1 huggingface dataset:
BIS central bankers’ speeches  11  16  In July 2015, the FOMC announced that changes in administered rates would go into effect on the day after its policy decision. Otherwise, the intraday timing of a policy change could result in various operations being conducted with inconsistent settings. 17  ON RRP is currently offered to a broad set of counterparties; these counterparties make up a fairly large proportion of the lending community in overnight money markets. By offering this large group of counterparties an alternative, risk-free investment option, ON RRP should improve lenders’ market power and help keep money market rates near or above the ON RRP offered rate. Even if money markets were perfectly competitive, ON RRP would likely still be effective at supporting the floor provided by IOR, for example through addressing segmentation between secured and unsecured money markets. 18  The preservation of enough activity in the federal funds market to maintain the viability of the effective federal funds rate was one component of this. 19  A final operational change to improve the transmission of IOR into market rates was a revision to the interest calculation methodology that became effective in July 2015. As originally implemented, interest on excess reserves (IOER) was paid on each bank’s average balances over a two-week maintenance period, at the average interest rate.

44  In September 2014, money market rates were soft for several days going into quarter-end, as market participants anticipated that the ON RRP would reach its aggregate capacity on that day. According to market participants, money market lenders lent overnight funds well in advance of quarter-end at rates below the ON RRP rate to informally secure balance sheet capacity for the quarter-end date. 45  The foreign repo pool is authorized each year by the FOMC. For more background information about the foreign repo pool, see “Services for Central Banks and International Institutions.”  46  Other major central banks provide analogous services. In managing the foreign reserves of the United States, the Federal Reserve avails itself of these services when appropriate. 47  As a result, the rate paid on the pool closely tracked the interest rate achieved on temporary open market operations. BIS central bankers’ speeches  13  48  We are also monitoring developments in money fund net yields versus retail bank deposit rates. Money fund management fees declined considerably as interest rates fell to near-zero levels, apparently as fund managers worked to preserve a non-negative yield for their investors. Net interest margins at banks were also compressed. It is natural to expect that this compression in margins, both at money funds and at banks, will reverse as rates move away from zero, but the magnitude and timing of this reversal in margin compression may vary among these two investment types.
In Italy, but also in the vast majority of euro area countries, the fall in loans recorded in December has come to a halt, avoiding a much more severe risk of credit restriction which would have had far more serious consequences for growth and monetary stability than the ones we are seeing currently. The Bank Lending Survey registered a gradual normalisation of interest rates set by banks and of the criteria for granting loans to companies. The continued anaemic developments in lending reflect the weakness in demand and the worsening of creditworthiness resulting from an adverse economic cycle. Furthermore, in the countries most adversely affected by the crisis, banks are rationing credit on account of certain prevalent contractual structures. The large-scale participation in the February operation, in which around 800 banks obtained funding, and the composition of counterparties in terms of their size and type implies that the distribution of liquidity has been widespread and could be even more so in the near future. Furthermore, this widespread distribution of liquidity is also of advantage to small and medium-sized enterprises with which smaller banks have closer relationships. We would wish for the liquidity provided to end up as credit to the private sector. This is the motivation behind the new non-standard monetary policy instrument.

Social progress is one of the key objectives of the European integration process: “The Union shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress … It shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child”. (Article I–3 of the draft European Constitution). Welfare is not only a remedy for the failure of insurance markets, but also a tool to promote inclusion, solidarity and a sense of fairness. In the three post-war decades (the so-called “Golden Age”), which especially in Europe were marked by high growth rates, use of advanced technologies, high growth employment, stable lifetime employment, welfare started to emerge, at different times and on different scales depending on the country, as an integrated system that protects its citizens from significant risks. The European model redistributes many more resources for social purposes than the US and Japanese systems: on the eve of the crisis, the total expenditure on pensions, unemployment benefit, for children and families was, in relation to GDP, more than twice that of the US and Japan. This can take different forms as regards the composition of social policies and the degree of labour protection.
In 2010 Norges Bank had to maintain high liquidity in the banking system to keep short-term money market rates close to the key policy rate. To dampen demand for central bank liquidity and promote increased activity in the money market, Norges Bank’s Executive Board approved changes in the system for managing liquidity in the banking system in December 2010. Under the new regulation, only a certain amount of banks’ deposits – a quota – will bear interest at the key policy rate. Deposits in excess of this quota will bear a lower interest rate. This will give banks a stronger financial incentive to redistribute liquidity among themselves, making the Norwegian money market function more effectively. The new system is expected to take effect from 3 October of this year. 3. From financial crisis to debt crisis  Chart: General government gross debt The experience of recent years has shown the costs of financial instability in many countries. Global economic growth has recovered, but the effects of the financial crisis are still visible and will be so for some time ahead. Financial crises tend to be followed by debt crises. Fiscal policy was used actively in most countries to dampen the effects of the financial crisis. The mistakes of the 1930s were not to be repeated. But as a result, weak public balances became even weaker. On top of this, some countries provided substantial government funding to banks. Government debt quickly mounted.

The new regulatory framework will make it more costly for banks to expand rapidly. Moreover, the new framework includes macro-prudential measures that can be triggered when necessary. Basel III includes a countercyclical capital buffer that requires banks to set aside more capital against their loans. This will increase their capacity to absorb future losses, which to some extent can also dampen credit growth during an upturn. In today’s situation in Norway, with elevated debt burdens and high and rising house prices, a countercyclical capital buffer would have been a useful instrument. Chart: Inflation The interest rate affects general economic developments, including the housing market and other conditions that have implications for financial stability. Experience indicates that monetary policy alone cannot ensure stable economic developments. The objective of  4  BIS central bankers’ speeches  monetary policy is low and stable inflation, and we only have one instrument – the key policy rate. There are limits to the number of considerations the interest rate can bear. We therefore need more targeted instruments to dampen the build-up of risk in the financial system. The interest rate also has effects on other asset prices, such as the krone exchange rate. A monetary policy that aims at bringing down the value of domestic assets can easily push the value of the krone in the opposite direction. In interest rate setting we can never lose sight of the primary objective of monetary policy, which is low and stable inflation. Thank you for your attention.
The 2018 task force on artificial intelligence led to the publication of a first report, and in turn to the launch of experiments with volunteer players, which shall continue in new forms next year. This work is a first step towards the publication of principles of governance for AI algorithms. The working group on remote customer identification led to a number of regulatory changes this year. We are now supporting ANSSI’s efforts to publish a framework so that these changes can be fully implemented. We have also set up two working groups with players from the crypto-asset sector. The first, which published its report last Wednesday, examines all anti-money laundering methods used by digital asset service providers: it highlights the potential of blockchain technology in transaction tracing, and sets out technical avenues for ensuring that electronic transfers meet the transparency requirements recommended by the FATF. The second aims to promote dialogue between digital asset service providers and banking players, to help cryptoasset entrepreneurs get access to the bank accounts and services that they need. II. The digital revolution in payments I would like to turn now to a subject that is closely linked to Fintechs: payments in the digital era. Innovations in the field of payments are disrupting the traditional split between central bank money and commercial bank money. People are using less and less cash, and therefore less and less central bank money, and more and more contactless payments.

0109  0108  0107  0105  0909  0509  0109  0908  0508  0108  30  0907  0 0507  70  0107  100  0106  110  200  Source: Bloomberg. Source: Goldman Sachs. The course of food prices is another important assumption for inflation forecasts. Contrary to the upward trend in previous years, the seasonally adjusted food prices displayed a decline in the third quarter (Figure 33). This change was mainly driven by the decline in unprocessed prices fuelled by prices of fruits and vegetables decreasing at a faster pace than seasonal averages. Unprocessed food prices had displayed an upswing in the first half of the year. Deceleration in annual inflation in processed food prices continued as well and prices fell compared to the same period of the previous year for the first time in the history of the index (Figure 34). The July Inflation Report envisaged food inflation to be 7.5 percent at the end of 2009 and 6 percent for the following years. However, better than expected outcomes regarding food prices necessitated a downward revision in food inflation to 5.8 percent for end-2009, while the projection of 6 percent was maintained for the following years. 14  BIS Review 143/2009  Figure 33: Food Prices  Figure 34: Food Prices  (Seasonally Adjusted,  (Annual Percentage Change)  Quarterly Moving Average)  2 1,5 1 0,5 0 -0,5  Source: TURKSTAT, CBRT.
Although the notional total value of these contracts, now approaching $ trillion, is not a particularly useful measure of the underlying economic exposure at stake, the size of gross exposures and the extraordinarily large number of contracts suggest the scale of the unwinding challenge the market would confront in the event of the exit of a major counterparty. The process of closing out those positions and replacing them could add stress to markets and possibly intensify the direct damage caused by exposure to the exiting institution. Credit derivatives, where the gaps in the infrastructure and risk management systems are most conspicuous, are less than 10 percent, and perhaps less than 5 percent, of the total OTC derivatives universe, but are growing much more rapidly. Large notional values are written on a much smaller base of underlying debt issuance. The same names show up in multiple types of positions-singles-name, index and structured products such as CDOs. These create the potential for squeezes in cash markets and greater volatility across instruments in the event of a default, magnifying the risk of adverse market dynamics. 2  •  The net credit exposures in OTC derivatives, after accounting for collateral, are a small fraction of the gross notional values. The ten largest U.S. bank holding companies, for example, report about $ billion of potential credit exposure from their entire derivatives positions, the total gross notional values of which are about $ trillion.

The major dealers and their principal supervisors met at the Federal Reserve Bank of New York about two weeks ago to review progress and discuss next steps. The dealers are now in the process of reaching agreement on a new set of proposals designed to build on the progress to date and produce a more mature, efficient and operationally robust post trade processing infrastructure for the OTC derivatives market. I want to conclude with a few observations about the role of supervision in encouraging progress in both these areas of risk management and the infrastructure for these markets. We live in a system in which nonbank financial institutions play an increasingly important role in a wide range of financial markets, in which the differences between the activities of bank-centered financial institutions and nonbanks has substantially diminished, and in which the largest banks and investment banks in the world compete together in the U.S. market and in other major markets. These changes have many positive implications but they also mean that differences in the incentives faced by institutions with different supervisory and regulatory regimes can have larger competitive effects, and the effects of regulatory arbitrage can reduce the impact of changes applied only to regulated or supervised institutions. They suggest that adverse developments outside the banking system, such as the failure of a major nonbank financial intermediary, can potentially cause greater damage to the core of the financial system than might have been the case in the past.
Let us consider the prerequisites for capital account liberalisation and Iceland’s position on the path towards fulfilling them: The IMF Stand-by Arrangement has ensured sufficient foreign exchange reserves to roll over Treasury debt in coming years and address potential outflows associated with the first stages of liberalisation. When the loan facilities have been drawn in full, Iceland will probably be in a better position than many European countries in terms of refinancing risk. This will place the Icelandic Government in a comfortable position when it seeks foreign market funding once again. A central government budget aimed at ensuring a primary surplus in 2011 has now been drafted and, according to the medium-term fiscal programme, the Treasury will record an overall surplus in 2013. According to these estimates, public sector debt will peak in 2010. Fiscal consolidation is the cornerstone of the policy aimed at reviving Iceland’s creditworthiness and creating the conditions necessary for capital account liberalisation and sustainable exchange rate stability. Thus it is vital to adhere to these objectives. 2  BIS Review 138/2010  The financial system is now in a better position than it was only a few months ago to withstand the volatility of short-term capital flows that could accompany the removal of capital controls. The most recent Supreme Court judgment eliminated a large source of risk that had made it extremely difficult to estimate the banks’ liquidity. According to the Icelandic authorities’ Letter of Intent, the Financial Supervisory Authority will review the banks’ planned responses to the judgment by 15 November.

The UK economy entered the crisis with too much debt in banking, in the household sector, in government and, for the nation as a whole, externally. And the UK entered the crisis with the composition of demand imbalanced – too much public and private consumption, too little net trade. Indeed, aggregate demand had been unbalanced for so long that the economy’s productive capacity was (and probably still is) unbalanced, investment in capital having followed the pattern of demand. For prosperity to be put on a secure footing for the longer term, adjustment is still needed. With one vital exception, engineering structural change in the economy is not the responsibility of the central bank. The exception of course is the safety and soundness of the banking system, which is a precondition for broader monetary stability. An undercapitalised banking system would not be able smoothly to supply sufficient credit to aid recovery as demand picks up, enabling investment in innovations and efficiency. Nor has it been able to do so as much as needed to help capital shift to firms and sectors that are beneficiaries of the new pattern of global and domestic demand. In my view, that may explain some of the weaknesses in productivity growth.9 The Financial Policy Committee required recapitalisation of the UK’s big banks and building societies not simply because that is needed to underpin stability, which it is, but also because a resilient banking system is a precondition for sustained and better balanced recovery.
The system is mandatory for all workers at companies that are part of the agreement. In this system, 4.5 per cent of labour income is allocated up to a cut-off point. If a worker earns more than the cut-off amount, 30 per cent of the difference is added to the original allocation.4 The individual also has a number of investment options to choose from in this system. Once again, the conclusion here is that pension wealth among those included in this pension scheme agreement is more evenly distributed than other wealth. Another way of expressing this is that many people in Sweden do not own their own home and have no financial assets but as a result of their labour income, they benefit from elevated asset prices as they have a share in funded collective pension systems. So how many of them are there? We don’t know at present, as no wealth statistics on the individual level have been recorded since 2007. A government inquiry has recently started to look at whether Sweden shall once again compile wealth statistics on the individual level.5 The Riksbank has been stressing for a long time the importance of reintroducing these statistics as soon as possible. An important reason is that household indebtedness has shown a rising trend in recent years and we now know more about households’ debt than about their assets.

Waldenström, Daniel (2016), “The National Wealth of Sweden, 1810–2014”, Scandinavian Economic History Review 64(1), pp. 36–54. Waldenström, D (2017) “Wealth-income ratios in a small, developing economy: Sweden, 1810-2010”, Journal of Economic History 77(1), pp. 285-313. 6 [6]
The work conducted under the aegis of the G20, in which the Banque de France played a leading role, has confirmed that a CBDC can bring benefits in this area. However, to fully exploit this potential, central banks will need to coordinate their efforts to ensure that CBDCs in different jurisdictions are interoperable. In its experiments on a wholesale CBDC, the Banque de France tested the main multipleCBDC arrangements identified in the literature. As described in the report published by the Banque de France on 8 November, these experiments showed the different ways in which CBDCs can be made interoperable and highlighted the benefits of a CBDC in a cross-border setting (e.g. more efficient correspondent banking, settlement security). Lastly, choices will need to be made so that the CBDC interacts smoothly with private initiatives such as the EPI project, in order to strengthen the integration of the European payments market. CONCLUSION To conclude, I would like to come back to a question that comes up regularly, about the future role of banks and commercial bank money in a world of stablecoins and central bank digital currencies, and respond with one conviction and one wish. My conviction is that, given the way in which investigations are being conducted into a digital euro, which I have just summed up here, it is unlikely that banks will be erased from a future payments landscape in which stablecoins and central bank digital currency dominate.

In order to fully understand the scope of these risks, I believe it is important to recall the organisational principles of our payment system, which are at the root of its efficiency and stability. a- The organisational principles of our payment system  The first is the dominance of currencies linked by a legally binding rule of convertibility at par: central bank or public money, and commercial or private money, issued by regulated financial sector players, first and foremost banks. The second is that only central bank money is legal tender and must therefore be accepted by all. The third is the complementary roles played by the dominant currencies: central bank money fulfills an integrating and anchoring function that guarantees the efficiency and stability of our payment system, while commercial money, and the services associated with it, which are traded on a highly competitive market, plays a key role in trade and the financing of the economy. 1/5  BIS central bankers' speeches  b- The risk of calling into question the foundations of the efficiency and stability of our payment system However, these foundations are threatened by the diffusion of innovations across the payments field, which has been sped up by the health crisis and social distancing, if no measures are taken to preserve them.