samchain/econo-pairs-v1 huggingface dataset:
However, it is an unrealised accounting loss, and it would reverse if the exchange rate should move in the opposite direction. No assets have been lost. The foreign currency value of the reserves is unchanged, and the purchasing power in terms of what the reserves would be used for is intact. Other aspects of the matter are of greater concern: the negative interest rate differential resulting from investing the reserves at historically low foreign interest rates and the interest expense on the Central Bank’s króna-denominated liabilities, which bear much higher interest. Extrapolations to 2025 indicate that, other things being equal, the Central Bank will record losses of 18 b.kr. per year from 2018 onwards, and the Bank’s equity will be negative thereafter. This in and of itself is not Armageddon, and many central banks have functioned quite successfully with negative equity. Nevertheless, it is better for a number of reasons if the Central Bank has an acceptable capital position. Extrapolations carried out by the Bank show that with various measures and appropriate distribution of the cost of the reserves among the parties that benefit from them, the gap can be closed. Among the measures is the possibility of increasing returns on the reserves by splitting them up into two or more tranches based on term and yield. The question has arisen whether the foreign exchange reserves are too large, or in other words, whether the costs outweigh the benefits.

There is limited upside for credit improvement but large downside from the threat of default. We have therefore limited our exposure to some large government bond markets, taking into account the default risk of these bonds. Another area where we have customised our benchmark is with respect to Renminbi (RMB) assets, in particular Chinese government bonds. Here, the consideration was not to limit exposure but to gain exposure ahead of market benchmark inclusion as markets develop. MAS started investing in RMB assets in 2012, fully expecting market indices to catch up at some point. Indeed, recent announcements by major index providers to include or accelerate the schedule of inclusion for RMB assets in their indices reflect this trend. Next, tapping on relevant investment expertise. Part of the MAS portfolio is managed by reputable external fund managers. These investment managers are hired for their deep investment expertise and specialised knowledge in particular investment fields. For instance, factor-based investing is an area that we are watching closely. Institutional investors are starting to look beyond asset classes to view returns via a “factor lens”. There are two applications of this approach, return enhancement and portfolio analysis. Looking through asset class labels to underlying risk factor exposures can enhance understanding of return sources. Flipping them around, they also help to enhance understanding of risk drivers. In fact, the vulnerability-based stress tests that I described earlier is an application of this factor approach. This can help investors to create more efficient and diversified portfolios, compared to a traditional asset class-driven approach.
This involves imposing a levy on the incomes of the working population and transferring these funds to pensioners, either through redistribution in the present (pay-as-you-go system) or via a capital funding system which benefits future generations of senior citizens. Thus, demographic ageing means that the working population is obliged to shoulder ever greater levies. If, at the same time, the global creation of wealth progresses slowly, the responsibility of financing old age pensions is going to impose an increasing social burden. Thus, it is not only necessary to improve our economic efficiency, we also need to be careful not to impede these efforts through inappropriate measures. We must allow the invisible hand of competition to bring about the most efficient allocation of our resources possible in both the domestic and the foreign arenas. Consequently, we need to do more with the resources at our disposal. At the same time, we need to make sure we have access to better quality resources. This means taking a longer-term approach to our system of education. The conditions within which our economy operates also play an important role. Growth in investment activity not only allows us to create new jobs but also, and above all, to accelerate productivity advances – both of these factors encourage growth and help to achieve a better financial basis for our old age pension scheme. There are three reasons why the Swiss National Bank is concerned about demographic developments and growth.

Our reorganization strategy focuses on four aspects, namely organizational structure and work process, human resource management, decision-making process, and database and information technology. Our hierarchical structure has now been reduced from a total of seven layers to four. Authorities and responsibilities are being further delegated toward a lower level to the operating officers in charge. This helps reduce the previously lengthy approval process and increase our flexibility. New departments have been established to better cope with the rapidly changing economy and the rising information need of the organization. These include the Data Management Group, the Information and Public Relation Group, the Planning Group who conducts a bank-wide risk assessment as well as a new Department of Risk Management and Information Technology Examination, who monitor risk profile and risk management at the financial institutions. In addition, our business processes are now more client-oriented with a new website, new voice-mail, and new central point of contacts being offered as services to our stakeholders. Both the Netherlands and Thailand are small open economies in the world market. To survive the tide of globalization, we both need a well thought out strategies. We have to choose our battleground and cooperate with friends around the world. To do this, local strength has to be further strengthened while lessons and technologies must be learnt from others. Here, international co-operations through jointed ventures, through foreign direct investment, or through international trade will play major roles in our successes.
For the private consumers, the most significant advantage may be convenience: just imagine that you receive your invoices electronically and can directly initiate their payments with one tick or click. This is already reality in some countries, but should become available across SEPA. Even more benefits are possible for corporates, since settling paper invoices is usually a very cost-intensive process. Just imagine that 97.5% of all invoices worldwide are estimated to be paper-based! Let’s think about the average unit cost for a biller per invoice and the average unit cost for a payer. Incoming invoices need to be copied, forwarded, entered into different systems and stored – i.e. touched and managed by a large number of hands and transported physically between all of them. These procedures – and also potential mistakes happening along the handling chain – can be significantly changed by introducing electronic invoices that allow seamless automated handling, including direct links e.g. to payment functions. Approximately 27 billion invoices per annum are being produced in the EU. It is obvious that any change leading to their more efficient handling quickly results in billions of possible savings per year for the European economy. How to foster the development of European E-Invoicing has become an important topic for the European Commission, who is currently setting up an official working group to coordinate the standardisation approaches, to address the legal barriers as well as issues of trust and operational risk.. Let me now briefly conclude.

SOFR is sometimes criticized for the lack of a term rate, but my message is don’t wait for a term rate to get your house in order. Don’t use that as an excuse to halt the vital work of understanding where your exposure to LIBOR lies and how to prepare your business. The OSSG has produced a document explaining how market participants can use overnight risk-free rates, as opposed to waiting for term rates.15 In addition, the New York Fed is preparing average SOFR rates and a SOFR index, with the goal of publishing them daily by the middle of next year. Contracts that reference U.S. dollar LIBOR continue to be written, which only serves to increase the level of systemic risk. In rare cases where for some reason LIBOR must be referenced, robust fallback language that accounts for a future without LIBOR needs to be included. I also strongly encourage market participants to address legacy LIBOR-linked contracts. There’s no one-size-fits-all approach for closing out or converting existing LIBOR positions so market participants need to get ahead of this issue. We know this is difficult and complex work. At the New York Fed, we’re working to identify where we have potential exposure to LIBOR and other non-IOSCO-compliant reference rates. We have teams examining monetary policy operations, foreign reserve management activities, and trading agreements with counterparties. We want to hear your voice so we can incorporate your feedback and facilitate the development of the tools you need to ensure an orderly transition.
That might imply a path for rates closer to Chart 23. Conclusion In June, when evaluating the UK’s monetary stance, I used the metaphor of a batsmen in cricket deciding whether to play off the front foot (raise rates) or the back foot (hold rates). And I compared the averages of two English batsmen, one who played from the front foot (Ian Bell), the other from the back (Joe Root), to illustrate the dilemma. At the time, Ian Bell averaged 45 to Joe Root’s 43. In other words, while it was a close run thing, the data narrowly favoured the front foot. Cricketing statistics are not the sole basis for my views on the appropriate stance for UK monetary policy. Nonetheless, on balance, I felt the same front-foot judgement was appropriate for UK interest rates at the time. Three months on, it is time to update the batting averages. Ian Bell’s batting average has remained at 45 – the front foot recovery has remained on track. But over the same period, Joe Root’s has risen to 51. Cricket statisticians and financial markets are agreed. While still a close run thing, the statistics now appear to favour the back foot. On balance, my judgement on the macro-economy has shifted the same way. I have tended to view the economy through a bi-modal lens. And recent evidence, in the UK and globally, has shifted my probability distribution towards the lower tail. Put in rather plainer English, I am gloomier.

Nevertheless, there is not the remotest possibility of the sums involved being so large that the collateral held by the banks might impose limits on their borrowing from the Riksbank. In an earlier financial stability report, we outlined a highly hypothetical argument in which we followed the assumption that all households wanted to hold an extra SEK10,000 in cash. This would be equivalent to increased withdrawals totalling approximately SEK38 billion. A more reasonable assessment of the risk is that each household might withdraw an additional couple of thousand kronor; this would be equivalent to about SEK10 billion. I am therefore on firm ground when I say that the Swedish bank system is well equipped to cope with any rise in the demand for cash. Nevertheless, some central banks have announced special lending facilities for the banking system in preparation for the turn of the millennium. These central banks include the Federal Reserve and the Bank of Canada. However, both the structure of the banking market and the central banks’ systems for managing the supply of liquidity vary from country to country. In Sweden we have financially strong banks and the banking market is easily surveyed, since the number of banks is so small. Moreover, as a result of the rules that the Riksbank follows for collateral requirements and because of the structure of the Swedish securities market, a considerable stock of pledgeable securities exists. In supervising financial stability, the Riksbank also has other means at its disposal.
One example of this enhanced impact is provided by the behaviour of hedge funds who customarily borrow short-term funds to finance their (longer-term) investments 9 . -  Turning to the exchange rate channel, financial innovation results in greater integration of domestic and international financial markets, which should also strengthen the exchange rate channel as exchange rates become more sensitive to interest rate differentials between currency areas. This has been illustrated by the recent debate about cross-border carry trades 10 . -  At the same time, financial innovation has probably weakened the credit channel 11 . Several phenomena may be at play : •  Financial innovation gives firms broader access to securities markets, which may reduce information asymmetries at the source of the credit channel. 7  BIS, 1994  8  Noyer, 2001  9  Weber, 2007  10  Weber, 2007  11  BIS, 1994; Thornton, 1994  BIS Review 42/2007  3  •  More specifically, securitisation by banks has reduced their liquidity constraints and thus further weakened the credit channel. A recently published research paper by the New York Fed, using a micro data set of individual loans granted by a sample of banks between 1997 and 2005, shows that the use of credit derivatives is associated with a greater supply of newly negotiated loans extended to large corporate borrowers. Previous research has generally found that banks have used earlier credit market innovations such as loan sales and securitisation to diversify credit risk exposures and increase lending.

•  Noyer C. (2007), “Hedge funds: what are the main issues?”, Financial Stability Review, Special issue on hedge funds, Banque de France, 10, pp 105-111, April. •  Rajan R.G. (2005), “Has Finance Made the World Riskier?”, European Financial Management, 12 (4), 499-533. •  Rajan R.G. and L. Zingales (1998), “Financial dependence and growth”, American Economic Review, 88, pp 559-586. •  Thornton D.L. (1994), “Financial Innovation, Deregulation and the “Credit View” of Monetary Policy”, Review of Federal Reserve Bank of Saint Louis Review, pp 31-49, JanuaryFebruary. •  Weber A. (2006), “Concluding Remarks”, Conference of the ECB-CFS Research Network on “Financial system modernisation and economic growth in Europe”, September 29. •  Weber A. (2007), “Hedge funds: a central bank perspective”, Financial Stability Review, Special issue on hedge funds, Banque de France,10, pp 101-168, April. 6  BIS Review 42/2007
This can be regarded as an estimate of long-run sustainable unemployment up to 2006, before the government’s reforms. However, the estimate disregards the fact that average inflation has undershot average inflation expectations. As I explain in an annex to the minutes from the meeting in July 2012 (Svensson (2012a)), this difference between inflation and inflation expectations means that average unemployment becomes a biased estimate of the long-run sustainable rate of unemployment. When I take this difference into account, I reach the conclusion that the bias is approximately 0.75 percentage points. All else being equal, the Riksbank’s estimate should then be reduced by 0.75 percentage points, whereby the Riksbank’s final interval after the adjustment will be 4.25–6.75 per cent, with a midpoint of 5.5 per cent. The estimates made by the Ministry of Finance and the National Institute of Economic Research do not take into account the fact that average inflation has been lower than inflation expectations, either, so their estimates may also need to be adjusted downwards  BIS central bankers’ speeches  7  somewhat. The average of the Ministry of Finance’s and the National Institute of Economic Research’s estimates so far and of the Riksbank’s estimate after my adjustment is in any case be 5.5 per cent. While awaiting new estimates that take into account the bias that average inflation lower than average inflation expectations entails, I will use 5.5 per cent as my own assessment of long-run sustainable unemployment.

As a result, an attempt to prick a bubble may lead to an intervention that puts a halt to “a good boom” which would have pushed the economy towards a higher level of development. The cost of such unwarranted interventions in the form of foregone growth could be substantial.5 How to deal with the cyclical dimension of systemic risk – a macroprudential approach The immense cost of the global crisis has led to a thorough rethinking of this traditional view on financial regulation and macroeconomic policy. For instance, estimates have been provided suggesting that the cumulated output loss incurred by the recent crisis could amount to 90% of 2009 world GDP.6 Naturally enough, the afore-mentioned approach of “benign neglect” is no longer seen as an acceptable way to deal with potential excesses building up through the financial cycle. Given that the cost of inaction when imbalances develop in the credit market can be huge, a more precautionary approach is indispensable (slide 3). In general, its goal should be, first, to enhance the resilience of the financial system to adverse shocks, and second – to the extent possible – to try and preventively contain the build-up of systemic risk. This is the thrust of the macroprudential approach. For instance, in order to address the root cause of cyclical systemic risk directly, the goal of this approach should be to reduce the procyclicality of financial agents’ behaviour. Can we hope to achieve this with monetary policy instruments, or do we need new specifically designed instruments?
Finally, let me say something about future challenges in this area that are of special relevance to today’s conference and to the research agenda in which you are all engaged. We are already involved in a coordinated review with other central banks and supervisors of how we should adapt policy and supervision in the wake of this financial crisis. Two issues are of particular interest in the context of this conference. The first relates to the incentives we create, through regulation and supervision and other policies, for influencing how financial market participants manage liquidity risk. Several aspects of the existing capital framework and other parts of the policy and regulatory  2  BIS Review 149/2007  framework affect these incentives. In addition, the evolution of the financial system has altered the role and importance of liquidity provision by banks and how that provision of liquidity responds to different types of stress to the financial system. The second issue relates to the tools that central banks have at their disposal for providing liquidity in ways that do support our monetary policy objectives. Do we need additional instruments that would better enable us to mitigate marketwide liquidity problems? And how can we mitigate the moral hazard risk inherent in such instruments? Efforts are underway to address these issues both within the Fed and among our central banking colleagues around the world. We will be looking both to financial market participants and to the academic community for advice.

During Jarle Bergo’s 40-year long professional career, views on monetary policy have changed. The general economic environment has also changed dramatically. The global economy has become increasingly integrated. When I speak of the term globalisation, I refer to the growing interdependence of national economies as reflected in greater and freer flows of goods, services, capital and labour across national borders. The number of countries taking part in the global exchange of goods and capital has soared. China, India, Russia and many other emerging markets have opened their borders and embraced capitalist reforms. The globalisation process has accelerated over the last two decades through increased trade liberalisation, political changes, technological advances, and a sharp reduction in transaction costs. This new, globalised world economy presents us with new possibilities, but also with challenges. We are very proud to be hosting this conference and we are especially glad that we have been fortunate enough to attract such a distinguished group of speakers. We are honoured to have President Axel A. Weber of the Deutsche Bundesbank here as our first speaker of the day. He will be taking a closer look at globalisation, monetary policy and the euro. In terms of age, the euro is still in its youth, in terms of global economic importance a mature adult. Since the euro was introduced almost ten years ago, it has gained importance as a global reserve currency. Globalisation changes the environment in which we live. Increased trade and economic integration are bringing opportunities for raising living standards to ever larger groups.
June and the first half of July showed the first signs of weakening inflationary pressure, this is still not enough to speak of a steady decline in the inflation rate. In July, households’ inflation expectations continued to rise. In these conditions, even one-off factors might have a longerlasting impact due to their secondary effects. To prevent this, it is essential to create conditions that would encourage the propensity to save. For this, we need higher interest rates. We should not tolerate high inflation expectations in order to prevent their anchoring at this high level and avoid a more significant increase in the key rate that would be needed further on in this case. The second topic is the economy. According to our estimates, economic growth sped 1/3  BIS central bankers' speeches  up considerably in the second quarter. High-frequency indicators show that Russia’s economy has bounced back to its pre-crisis levels. Output in two-thirds of the major industrial sectors already exceeds pre-crisis levels, and this upward trend continues. Oil production has not restored yet. Output has also not recovered in international air transportation and hotel and restaurant business. However, this was due to remaining anti-pandemic restrictions, rather than insufficient demand. Moreover, the pandemic drastically affected the structure of demand and supply. In my previous statement, I mentioned the changes caused by the transfer of a significant portion of employees to work from home, as well as the elevated level of inventories now formed by companies.

Therefore, I would say that this risk is less acute than at the moment of our previous key rate meeting. Furthermore, investment from the National Wealth Fund and geopolitical risks are still in the focus of our attention. Disinflationary factors are much weaker. A rich harvest might result in a more significant seasonal decrease in food prices. The pandemic situation is still uncertain. The spread of new coronavirus strains worldwide might force countries to introduce new restrictions and disrupt production and supply chains, which in turn might slow down global economic recovery. For Russia, this would involve a decrease in external demand and intensify disinflationary risks, on the one hand. On the other hand, if borders are closed, domestic demand will remain elevated longer, which might become a proinflationary factor. In conclusion, I would like to comment on monetary policy prospects. Beginning from March, we have raised the key rate by a total of 2.25 percentage points. We will assess how our earlier decisions have been influencing monetary conditions, aggregate demand, and inflation. We will also consider how quickly supply-side constraints have been weakening and, accordingly, what level of the key rate is needed to bring inflation back to the target. According to our revised forecast, the average key rate next year will equal 6.0–7.0% per annum. Further on, as inflation expectations go down and inflation decelerates, the key rate will return to its long-term neutral range.