samchain/econo-pairs-v1 huggingface dataset:
If the theory of purchasing power parity is valid, we can make decisions about which countries to invest in independently of which countries we import from5. Chart: GDP and regional allocation of equities in the Fund Today, just over half of the Fund’s capital is invested in Europe. The proportion of European investments in the Fund’s portfolio is considerably higher than would be implied by a market-weighted portfolio. The Fund’s holdings in European equity markets, for example, are twice as large as its holdings in Latin-America and Asia. As the world’s economic geography changes, it is natural to raise the question of whether the Fund’s investment strategy should be adjusted to improve the ratio of return to risk. In the annual report to the Storting (Norwegian parliament) on the management of the Fund, the Ministry of Finance pointed to a number of factors that indicate that the Fund’s overweight in Europe should be reviewed. This is in line with previous advice from Norges Bank6. Capital markets in emerging economies have become more developed. As these countries account for an increasingly large share of global output and there are prospects of strong growth, it may be advisable to invest more of the Fund’s capital there. A more even distribution of the Fund’s capital across major regions would also reduce the Fund’s overall risk. Such changes must be introduced over time. The owner’s most important investment strategy decision is the share of the Fund’s capital that should be invested in equities.

Fixed income investment should primarily contribute to reducing the fluctuations in the Fund’s value. In addition, the Fund should be exposed to credit premiums. The financial crisis taught us that different types of fixed income investments have very similar qualities when market liquidity declines. There are limited gains from holding a large number of diverse securities. Norges Bank therefore recommends simplifying the indices by substantially reducing the number of fixed income instruments. The most commonly used benchmark indices for bonds are market-weighted. Borrowers are assigned weights according to the level of debt they hold. Increased debt can reduce debt-servicing capacity. A market-weighted index is probably not the best approach for diversifying the risk of loss given default. Norges Bank has therefore proposed the use of GDP weights instead of market weights for government debt in the Fund. Under the fiscal rule, central government spending is to correspond to the expected real return on the Fund, estimated at an annual average of 4 per cent. As manager, Norge Bank must invest with a view to achieving a return in line with this objective. Estimating the expected return over the Fund’s long-term horizon is challenging. Some models now suggest that return requirements in equity markets are fairly normal, in spite of low yields7. This may imply a real return of 5–6 per cent in equity markets. With positive contributions in active management, property investment and fixed income management, a total return of 4 per cent is not unreasonable.
For example, a “core” measure that relied exclusively on inflation in the services sector would have run above 2% in the pre-crisis era, when overall inflation was around 2%, in light of low inflation rates in goods prices. A “core” measure with a higher weight on goods prices would have shown the opposite. 22  For example, although they are uncertain, estimates of the pass-through of exchange rate movements to CPI inflation suggest that, on average a 1% appreciation reduces consumer prices by around 0.3%. Those effects take time, though they are mostly complete in around three years – consistent with complete but gradual passthrough of exchange rate changes to consumer prices. That likely reflects, among other things, rigidities in retailers’ pricing decisions. See the box on page 28 of the November 2015 Inflation Report for further discussion.

Last summer I said that the decision as to when to start raising Bank Rate would likely come into sharper relief around the turn of this year. Well the year has turned, and, in my view, the decision proved straightforward: now is not yet the time to raise interest rates. This wasn’t a surprise to market participants or the wider public. They observed the renewed collapse in oil prices, the volatility in China, and the  4  Refers to non-farm business sector unit labour costs in the US and unit labour costs based on the MPC’s backcast in the UK. 5  Where openness is measured by the share of exports in GDP. 6  Vlieghe (2016), Rachel and Smith (2015), Carney (2013) and Carney (2010). BIS central bankers’ speeches  5  moderation in growth and wages here at home since the summer and rightly concluded that not enough cumulative progress had been made to warrant tightening monetary policy. The outlook for monetary policy depends on three things: the MPC’s objectives, its strategy, and the UK’s economic prospects. Our objective is clear: to return inflation to the target in a way that avoids undue volatility in output and employment. The MPC’s strategy for achieving the inflation target varies over time, and it depends on the nature of shocks hitting the economy and the risks facing the economy.
As always, what I have to say today reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System.1 The Federal Reserve’s employment objective can be viewed both narrowly and broadly. Narrowly, we focus on the degree of slack or tightness in the labor market. This leads to discussion of many measures of the labor market such as the unemployment rate, the participation rate and the growth of wages. Broadly, the economy’s potential growth rate depends on effectively investing in and taking advantage of all of the resources in the economy – in particular, we need to achieve the full potential of the human capital of all Americans. For the United States to reach its maximum economic potential, all Americans must have the opportunity to reach their potential. The United States has always prided itself on being “the land of opportunity.” Parents hope that their children can achieve more than they did. Over the course of our history, immigrants have journeyed to America in search of a better life, a chance to live the “American Dream.” What defines the American Dream?

By accelerating the pace of cheque decline, we can shorten the number of years needed to reduce cheque usage to a negligible level and derive greater cost savings for the country. Harness the prevalence of mobile payments to expand reach Most Malaysians are likely to carry both a debit card and mobile phones and there are 45.4 million debit cards and 42.8 million mobile phone subscriptions. For a population of 32.1 million this is considered high. We need to take advantage of this. In particular, for debit cards. We need to optimise the use of this medium. In the case of debit cards, the Merchant Discount Rates are still very high despite the direct debiting of the users’ account. Acquirers should reduce the rates further. There are certain segments of the merchant community that are cost-sensitive and may not be able to afford the MDR of card payments. In this regard, mobile payment has the potential to complement the debit card as a low-cost alternative to accepting cash. Mobile e-wallet is a strong alternative to debit cards as merchants can accept payment through a QR code. The use of QR codes has enormous potential. Out of 24 million adults in Malaysia, there are only 12 million active online banking accounts. We estimate that there are about 10 million bank accountholders who are not using online services, while the remaining 2 million adults are likely to be unbanked.
The real interest rate is expected to be very negative throughout the forecast period. This entails a powerful stimulus of the Swedish economy. The discussion is currently dominated by the question of how we should manage monetary policy in the prevailing recession. As monetary policy is forward-looking, it is important not to overlook the potential inflationary impulses now being built in for the future. Price impulses from a weak krona and from high unit labour costs are two such factors. If the global economy recovers more quickly than we are predicting, this will also contribute to making monetary policy less expansionary. Before further measures are taken, there are thus many reasons to evaluate the effects of all of the measures taken so far, and to evaluate the new information on economic activity and the financial market situation that is received.

What the Riksbank must consider further ahead is whether economic developments require further interest rate cuts and whether the current monetary policy then needs to be supported by more unconventional methods. We must be prepared to be able to implement an alternative monetary policy if developments should so require. However, one should be aware that the situation in the financial markets differs in different countries, which means that not all central banks choose to take exactly the same measures. 6  BIS Review 56/2009  I would also like to mention in this context that the Riksbank is not the only institution involved with regard to managing the alternative measures to improve the functioning of the financial markets. It is important in this situation to analyse the financial structure in Sweden and how one wishes this to look in the future. The measures will to some extent govern the structure of the financial sector when the crisis is over. There is also a discussion on whether the Riksbank should try to weaken the krona directly in a situation where the repo rate cannot be cut further. I would like to emphasise that such measures are not under consideration. If inflation risks rising more quickly than expected in the future, monetary policy will have to be tightened sooner than is indicated by the repo rate path It is important to emphasise that the Riksbank has changed over to very expansionary monetary policy over the past six months.
European leaders have a great opportunity to rectify the now apparent failings of EMU’s institutional structures. In particular, the financial market architecture must be at the centre of our discussions on the future of EMU. The intellectual foundation of the monetary union is Robert Mundell’s insight that exchange rate stability, financial integration and national monetary policies are incompatible objectives: a concept that has been called “Mundell’s trilemma”, or the “impossible trinity”. We now find ourselves bound by a concept that Dirk Schoenmaker has called the “financial trilemma”: 7 namely, that pursuing simultaneously financial stability, financial integration and national financial policies is unfeasible. Any two of the three assignments can be combined, but not all three. In this crisis, financial integration in the euro area but national responsibility for financial policies has resulted in financial instability. We can solve this trilemma either by going back to financial markets delimited by national borders or by passing financial and crisis management policies to the euro area level. The latter is the only viable solution. It is the most conducive to economic growth, as it will help European companies and households reap the benefits of a single financial market based on a deep pool of savings. Some institutional reforms have already been undertaken. They represent a great step forward. We have made national fiscal policies more responsible under the Fiscal Compact, and subject to stronger surveillance. We have created a permanent solidarity framework – the European Stability Mechanism.

Benoît Cœuré: Restoring trust in the Economic and Monetary Union Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the Forum Eco Libération ESCP “Reprendre confiance en (l’)Europe”, panel discussion: “L’Euro méfiance, c’est fini?”, Paris, 1 December 2012. *  *  *  It is a great pleasure to participate in this panel that touches on a topic very close to our hearts at the ECB: trust in our common currency, the euro. 1 In any society, the monetary contract fundamentally rests on trust, and I will borrow the explanation from my co-panellist, Michel Aglietta: “Money involves trust because it is a debt between society as a whole and each of its members.” 2 Remember that credit comes from credere and fiduciary comes from fidere, both verbs meaning to trust in Latin. As for trust in a central bank, well, that is secured and reaffirmed by permanent assessment of the central bank’s performance against its mandate and strategy. Such an assessment has become very complicated as a result of the global financial crisis. Communication about the intentions and policy actions of a central bank has long been focused on its decisions on the level of the short-term interest rate and, in the case of some central banks, on the likely direction of that rate. But in a deep financial crisis this channel of policy interventions and communication becomes less significant.
Determination is necessary in order to act in a timely way, because an untimely monetary policy will delay the convergence of inflation to the target or will do so at an unnecessary cost. 9 / 19  BIS central bankers' speeches  In practice, this means making robust monetary policy decisions in uncertain conditions. Thus, in our last monetary policy meeting we communicated that, in the most likely scenario, a bounded easing of the monetary impulse would be needed. The search for the right combination of prudence and determination is also necessary in the other fields where the Central Bank operates. To monitor the financial sector without restricting its ability to innovate; to develop instruments and facilities that are attractive to the market, and to improve risk management and transparency without compromising efficiency and timeliness. Identifying the new challenges facing the Central Bank and finding the answers that best balance prudence and determination requires organized and systematic efforts. As an expression of it, in the coming months we will develop a new institutional strategic planning exercise. We intend to consult with various players, both public and private, including, of course, this Committee. The purpose of this exercise, of the initiatives we undertake, and the conduct of our regular policy decisions must be particularly explicit. What we ultimately aspire is to continue to strengthen the Central Bank of Chile as an institution of excellence, that our fellow Chileans can trust. Thank you.

This course reflects a significant reduction in the CPIEFE in 2017, owing to different elements. On one hand, the exchange rate trajectory will continue to contribute to reduce imported goods inflation. On the other hand, beyond the effects of comparison basis related to the stamp tax, services inflation is expected to continue to decrease gradually, especially because the reduced inflation at the end of 2016 will affect indexed prices during the early part of 2017. This, in a context where medium-term inflationary pressures are bounded, and where capacity gaps will continue to exist during the entire projection horizon. Meanwhile, energy and foods inflation is expected to rise, partly offsetting the effects of the aforementioned elements on headline inflation (figure 12). Beyond the presence of higher risks, this forecast assumes that the external impulse facing the Chilean economy will be as estimated in September. In particular, external financial conditions will be less favorable, but better terms of trade are expected. The baseline scenario projects a copper price of $ and $ per pound in 2017 and 2018, respectively, in line with forecasts by market analysts and with an environment marked by an appreciated dollar and higher interest rates. The oil price, in turn, is revised slightly upward 4 / 19  BIS central bankers' speeches  from September, to an average of 55 dollars per barrel in 2017–2018. Growth projections for the world and our trading partners show no changes on aggregate and point to some acceleration in 2017 and 2018 (table 2).
First, the experience of the Single Supervisory Mechanism shows the advantages of all the players being subject to one leading authority in an integrated banking space, with clearly defined responsibilities and coordination. This single supervision allows for comparisons across a vast sample of comparable institutions, and thematic campaigns of on-site missions. Second, our active supervision features regular and comprehensive stress testing including on interest rate risks, which is also applied to less significant institutions. The  2/3  BIS - Central bankers' speeches  European Banking Authority (EBA) conducts an EU-wide banking stress test every two years, taking into account the latest macro-financial developments: in 2023, stress test scenarios are typically based on a sharp rise in short-term and long-term interest rates. Moreover, following the EBA guidelines on Interest Rate Risk of the Banking Book (IRRBB) – as part of the rigorous application of the Pillar 2 process – , published in 2018 and enhanced in 2022, European banks are required to perform regular supervisory tests to measure the impact of interest rate movements on their interest margins and economic value of equity; US regional banks such as SVB are not. III. Resolution: how to make it work Now for our last blessing. Since the global financial crisis, banks and authorities have strengthened their ability to deal with crisis events by developing a resolution framework. However, in the case of Credit Suisse, the Swiss authorities chose the option of a merger.

But as the master of detective novels, Agatha Christie said: "The truth, however ugly, is always curious and beautiful to seekers after it". We will continue to investigate and learn. But this should not obscure the elephant in the room. One of the most important potential source of vulnerabilities nowadays remains non-bank financial intermediaries, which are not regulated appropriately. This is where the liquidity mismatch is the highest and this is why I strongly concur with Klaas' determined commitment to deliver on the FSB agenda there. I thank you for your attention. 1 Pablo Hernández de Cos, Banking starts with banks: initial reflections on recent  market stress episodes, Speech, 12 April 2023. 3/3  BIS - Central bankers' speeches
We will be having another round of public consultation at the end of this month on our risk-based capital framework for insurers (or “RBC 2”). The aim is to finalise our proposals for providing capital relief for long-term assets which match the cash flows of the liabilities. We will also be raising questions, as part of this review, on the merit of having a different set of risk charges for infrastructure in particular. Catastrophe insurance 36. The second major opportunity is in catastrophe insurance. The economic cost of natural disasters is growing. It’s certainly growing here in Asia, a consequence partly of economic growth itself, a consequence of urbanisation and the growing concentration of wealth in cities in Asia, and a consequence of a higher incidence of natural disasters. •  Lloyd’s has estimated that even a modest an increase in penetration rates for catastrophe will allow for a large reduction in the economic costs that are being borne by governments and local communities in Asia. 37. So far the take-up of catastrophe insurance in Asia has been woefully low. Part of the reason has to do with a lack of insurance awareness among businesses around the region. But it also has to do with data gaps – the industry needs good data on the frequency, location and economic impact of natural disasters, so that insurers and reinsurers can price risks adequately.

Lending rates for very small loans, which can be taken as a proxy for loans to small and medium-sized enterprises (SMEs), have declined by almost 190 basis points. The significant improvement in funding conditions for SMEs is especially encouraging as they provide two-thirds of total private sector employment in the euro area. Heterogeneity of lending rates across countries has also fallen sharply. For example, the difference between the average lending rate for firms in countries that were severely affected by the crisis versus other countries has narrowed by around 100 basis points over this period. The pass-through of monetary policy has become more even. Banks are passing on the favourable funding conditions to their customers due to the second series of targeted longer-term refinancing operations, which further supports these positive 2 1/3  BIS central bankers' speeches  developments.2 The sharp reduction in bank lending rates has been accompanied by easier access to funding, which continues to improve in the third quarter according to newest survey results.3 Furthermore, bank lending volumes have been gradually recovering since early 2014. According to the latest Survey on the Access to Finance of Enterprises, covering the period from October 2016 to March 2017, euro area SMEs have continued to signal improvements in the availability of bank loans. Market-based funding conditions, too, have improved significantly in response to the corporate sector purchase programme launched in June 2016.
However, they do not benefit from the same regulatory safeguards that aim to put a limit on those risks and to ensure that they are properly recognised, monitored and managed. Moreover, crypto-asset infrastructures and activities, beyond expanding outside the regulatory perimeter, have done so by including products, services and practices that carry certain specificities. From a risk perspective, these specific features may either amplify traditional vulnerabilities or introduce new ones, and should fall within the scope of regulation and supervision. Let me illustrate this point with two examples. The first concerns financial integrity risk. Attention should be paid to this risk for two reasons: first, because, as shown by our supervisory experience at the ACPR, AMLCFT controls by service providers appear to be difficult to grasp and master, and are sometimes not performed in the crypto ecosystem, and second, because investors have the possibility of using and holding crypto-assets pseudonymously. The second concerns cyber risk. It is currently the number one operational risk for financial players, and it has the ability to jeopardise the stability of the entire financial system. The exposure of the crypto ecosystem to this risk could be exacerbated by its technical specificities, including the recourse to blockchains, and the introduction of new points of vulnerability such as bridges between blockchains and so-called oracles that feed data into blockchains. In my opinion, the repeatedly successful cyberattacks aimed at crypto players are a warning signal that should capture the attention of regulators and supervisors.

To conclude, let me just stress that it is not clear to me what is going to be the future of the crypto ecosystem and the shape that the financial landscape will eventually take as a result. Market forces will decide. But what is clear to me is that, for the crypto ecosystem to overcome the confidence crisis it is currently facing, and to develop on a sustainable basis, a confidence prone regulatory and supervisory framework is needed. Central banks have an important role to play in helping develop that framework, and in facilitating a very much needed convergent and coordinated framework at the international level. Thank you for your attention. 4/4  BIS - Central bankers' speeches