samchain/econo-pairs-v1 huggingface dataset:
The projections for the key rate, inflation, output and other variables are based on our assessment of the economic situation and our perception of the functioning of the economy and monetary policy. If economic developments are broadly in line with our projections,  5  See Staff Memo 2008/3 from Norges Bank. BIS Review 37/2009  13  economic agents can expect that the interest rate path will also be approximately in line with that projected. On the other hand, the interest rate path may shift if the economic prospects change, or if the effect of interest rate changes on inflation, output and employment differs from that assumed. In the Monetary Policy Report, we present two alternative scenarios where demand is higher or lower than presented in the baseline scenario. The yellow lines in the chart illustrate a scenario where growth in private consumption is stronger than expected and the turnaround occurs more rapidly. In this scenario, interest rates may decrease to a lesser extent and move up more quickly. The red lines in the chart illustrate a scenario where the global downturn is deeper and more prolonged, with more pronounced effects than assumed. It will then be appropriate to set a lower interest rate in order to stimulate the economy and thereby prevent inflation from becoming too low. The primary effect of a key rate close to zero will probably come via a weaker krone. It will then be appropriate to consider instruments other than the interest rate.

We have of course always been fully aware that any discussion of these problems is a sensitive issue. In consideration of the necessary legal adjustments on a constitutional and statutory level, we had no other choice but to lay bare the situation in detail. I should like to underline once more that we do not underestimate the significance of abundant currency reserves. The sky, however, cannot be the limit. It will be in our own interest to exercise the necessary diligence when converting part of our gold holdings into interest-bearing assets. This includes close contacts with institutions with which we entertain friendly relations. BIS Review 106/1999  4  Financial centre Let me conclude with a few reflections on Switzerland as a financial centre. A financial centre is by definition the location in which the various financial market players combine their efforts. Conforming to more recent developments, we no longer talk about regional centres in Switzerland. We rather refer to the Swiss financial centre. In the forefront are of course activities of banks and insurance companies. To these must be added a growing number of further providers of financial services. In keeping with international developments, the dividing lines are gradually becoming blurred. The decisive criteria for assessing the substance of a financial centre are integrity, stability and quality. These depend on various factors of a human and material nature. On a human level, these factors are know-how and mentality.
But others might argue that the structural changes of the eighties and nineties which were consistent with an appreciating real rate because of much more rapid productivity gains in the tradable than in the non-tradable sectors, cannot be repeated, so that the assumption of a continuing secular uptrend is invalid. On that view, the net appreciation over the past couple of years may be deemed to have dragged us away from our preferred path. It is hard to judge where the proper balance of these views lies. I recall how, 15-20 years ago, the doom merchants were prophesying the end of Hong Kong’s long run of growth because we were rapidly losing competitiveness in much of manufacturing. Presumably they did not 1  Slides are not included in this text document. 1  BIS Review 54/1999  foresee the remarkable extent to which the service sector would develop as an alternative wealth-generating lynchpin of the economy. Now, the next generation of doom merchants is prophesying imminent disaster as competitiveness in certain parts of the service sector appears to have been eroded. Will they be wrong again? Have they failed to appreciate the true workings of the market economy and comparative advantage? Do they not realise how difficult it is to foretell exactly how an economy will evolve, even though the evolution is taking place right under our noses?

Indeed, as we sit here worrying about it, there are people out there who are busy exploiting niches and opportunities which will mould the future structure of the economy. We can try to facilitate that process, or even to guide particular aspects which we reasonably expect to be important (eg the cyberport), but there will always be surprises. In any analysis of competitiveness there is inevitably scope for argument about the appropriateness of the statistics one is using. I believe that in the current Hong Kong conjuncture the popular measures such as the real exchange rate may have been lagging somewhat behind the recovery of competitiveness that may have actually occurred. Business decisions are influenced more by marginal prices and expectations of future prices, than by prevailing average prices; yet the measure of rentals which enters the CPI is typically based on an average of outstanding contracts and not the price at which new contracts are being struck which have over the past year or so fallen much more steeply. Thus, when thinking of business decisions, even assuming that residential rentals are a satisfactory proxy for rental costs affecting business, some adjustment for the marginal/average discrepancy may be needed at times when that discrepancy is significant - as it certainly is when one is at or near turning points in the rental cycle.
Similarly, it makes the (still necessary) process of balance sheet cleansing even harder for those financial intermediaries that have been unable to finish it or have put it off since the last crisis, and still bear the scars in the form of legacy non-performing loans. The increased uncertainty in the macroeconomic and geopolitical environment is also weighing on markets, where valuations still seem elevated in a medium-term perspective. This raises the risk of abrupt and marked downward corrections in financial asset prices, particularly as market liquidity seems more fragile since the last financial crisis. From a more forward-looking perspective, the downward revision to growth forecasts could prolong the current low interest environment which, despite being overall consistent with the macroeconomic situation, still has implications for (more) economic agents’ borrowing and for the (weaker) profitability of financial intermediaries. Added to these clearly identified cyclical risks are a number of new, structural risks – among them those arising from the increasing digitalisation of the financial industry. Digitalisation in finance is being driven by a combination of cutting-edge technological developments (big data, cloud computing, artificial intelligence or blockchain technology), which are transforming the way financial products are designed, developed, distributed and managed. Digital transformation offers the promise of better user experiences, more diversified sources of financing for the economy, lower production costs and greater efficiency in the financial system. But it also raises three types of risk. First, it requires huge investment, the management of complex projects and greater agility on the part of financial institutions.

Such a rise in prices cannot and may not be corrected with monetary policy measures as long as no wage-price spiral is set in motion. First, we do not know whether this price rise is a permanent or merely a temporary phenomenon. Second, the change in oil prices impacts directly on the price level, whereas monetary policy changes act only indirectly and after a considerable time lag. Third, higher oil prices constitute a cost shock that cannot be countered by means of monetary policy. Experience shows that a monetary policy which attempts to counteract the effects of a one-off increase in oil prices on the price level can cause considerable damage to the national economy. Furthermore, it must be noted that the present price increase is modest in a historical comparison. For example, during the second oil price shock at the end of the 1970s, oil cost approximately twice as much as today calculated at current prices. Our interest rate decision of today is thus not aimed at combating the effects of the oil price rise on inflation. The increase in oil prices nevertheless casts a shadow over the prospects for the economy, which are optimistic overall. We are not of the opinion, however, that the upswing is threatened by this. Model calculations have shown that higher oil prices would slow growth in Switzerland only moderately.
Andrew Sentance: The challenges of the “New Global Economy” Speech by Mr Andrew Sentance, External Member of the Monetary Policy Committee of the Bank of England, at the Jersey Chamber of Commerce, St Helier, 25 May 2011. All speeches are available online at www.bankofengland.co.uk/publications/speeches. *  *  *  I would like to thank Adrian Chiu for research assistance and I am also grateful for helpful comments from other colleagues. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Monetary Policy Committee. It is a great pleasure to have this opportunity to speak here today at your Annual General Meeting lunch and I am extremely grateful to Ray Shead and the Jersey Chamber of Commerce for inviting me and helping to arrange this visit. For you here in Jersey, this event is a first – as I believe it is the first major speech which a member of the Bank of England Monetary Policy Committee has given in Jersey or any of the other Channel Islands. Hopefully I am blazing a trail for my MPC colleagues to follow in the future! For me, however, it marks the close of a chapter. This is my last public speech as a member of the Bank of England Monetary Policy Committee (MPC), as my term in office comes to an end this month.

If these are not of sufficient quality, we will be criticised (for example by the Norges Bank Watch, of which Petra Geraats was a member in 2004). Public scrutiny disciplines the internal process and, I believe, results in better monetary policy. BIS Review 94/2008  5
However, continuing improvement in risk perceptions towards the end of the year recently paved the way for market interest rates to once again ease to historically low levels (Figure 16). 6  BIS Review 31/2010  During the crisis, real market interest rates went down progressively on the back of rate cuts and declined to all time lows. Although the limited increase in market interest rates reverberated on medium-term real interest rates in the last quarter of the year, real interest rates currently hover around historically low levels (Figure 17). Likewise, tightness in credit markets continues to ease on account of monetary policy practices and reduced credit risk perceptions (Figure 18). BIS Review 31/2010  7  3. Inflation and monetary policy outlook  Distinguished Members of the Press, Distinguished Guests, After summarizing inflation and monetary policy developments in the final quarter of 2009, in this part of my speech, I would like to share with you the evaluation of the inflation outlook and monetary policy of the Central Bank of Turkey in the upcoming period. Firstly, I will briefly describe the economic framework underlying these forecasts. Then, I will outline the Central Bank’s inflation forecasts presented in the Inflation Report that will be posted on our website shortly. In the last quarter of 2009, perceptions grew that the crisis was over and recovery started, which helped the upward tendency in global risk appetite to continue.

Depending on how they are structured, stable coins may have the characteristics of a bank deposit or a privately issued banknote. This would be the case for the Swiss franc stable coin, were it to be used widely for cashless payments or as a store of value, as it would effectively become a substitute for Swiss franc bank deposits. The issuers of such Swiss franc stable coins would take on functions similar to those of a bank – all the more so if they were to use the funds collected to finance risky, long-term projects and engage in maturity transformation. If the economic function of stable coins is comparable to that of bank deposits, their issuers should have to play by the same rules as banks. The principle of regulating by activity rather than by technology (‘same business, same risks, same rules’) must apply here. On the other hand, not all stable coins are directly comparable with bank deposits, particularly if a token is used more for investment purposes. Certain stable coins could therefore conceivably be issued without the issuer holding a banking licence. Today, the Swiss Financial Market Supervisory Authority already classifies tokens according to their function, and the regulatory treatment is  Page 4/7  different for each category. However, the more a stable coin resembles a bank deposit or cash in terms of its economic function, the greater its utility as money will be.
This could be done by stating that we would hold the federal funds rate at extraordinarily low levels until particular markers were reached with regard to the unemployment rate and inflation. I will talk about this in more detail in a minute. Alternatively, I have previously discussed how state-contingent, price-level targeting would work in this regard.7 Another possibility might be to target the level of nominal GDP, with the goal of bringing it back to the growth trend that existed before the recession. I think these kinds of policies are worth seriously contemplating as ways to enhance economic growth and employment while maintaining a disciplined inflation performance. Policy problem Such conditional-trigger and level-targeting policies could result in inflation running at rates that would make us uncomfortable during normal times. I understand this discomfort. The difficulties in reestablishing credibility following the inflation of the 1970s weigh on all central bankers’ minds. And many of us are conditioned by the work of Ken Rogoff8 and others, who note that in normal times, we may want conservative central bankers as institutional offsets to what would otherwise be inflationary biases in the monetary policy process. Given this strong anti-inflationary orientation of central bankers, appropriate policy actions may face a credibility challenge of a different nature than we are used to talking about – can conservative central bankers be counted on to commit to keeping interest rates low in the event inflation rises above their long-run target?

Given the sharp drop in output during the recession and lackluster early recovery, GDP is currently below its potential by nearly 7 percent, or $ trillion dollars.1 Just prior to the recession, the unemployment rate averaged between 4-1/2 and 5 percent. It peaked at 10.1 percent during the recession and, as I just noted, is still 9.1 percent today. In terms of jobs, payroll employment is about 6-1/2 million below its pre-recession level. These are massive shortfalls in output and employment. It does not appear as if these gaps are going to be reduced significantly any time soon. Real GDP growth has been anemic so far this year. Gains in employment have slowed markedly. Even though credit conditions overall have been improving, many households and small businesses still seem to be having trouble getting credit. In addition, the repair process in residential real estate markets is painstakingly slow, and households are still in the process of paring debt and adapting to the huge losses in real estate and financial wealth that they experienced during the recession. I largely agree with economists such as Paul Krugman, Mike Woodford and others who see the economy as being in a liquidity trap: Short-term nominal interest rates are stuck near zero, even while desired saving still exceeds desired investment. This situation is the natural result of the abundance of caution exercised by many households and businesses that still worry that they have inadequate buffers of assets to cushion against unexpected shocks.
The entrance of new, large emerging economies into the world trading system has strongly influenced relative prices and the prospects for nominal stability. The potential labour supply available for the global economy has doubled 7 and increased relative to the supply of capital. Wage shares have fallen and profit shares have risen, both globally and in Norway. Firms in high-cost countries increasingly offshore activities to low-cost countries. Imports of goods in industrialised countries have shifted from high-cost to low-cost countries. Furthermore, the collapse of the Soviet Union and the accession of Central and East European countries to the European Union have played a significant role for the labour market in Europe. Labour migration has increased. Off-shoring and outsourcing – or merely the threat of it – may have, at least temporarily, reduced the bargaining power of trade unions and employees. Increased competition, both in product and labour markets, has probably motivated productivityenhancing measures. Productivity growth has been unusually high. 5  John Gieve (2006): “Practical Issues in Preparing for Cross-Border Financial Crises”, at the Financial Stability Forum Workshop: “Planning and Communication for Financial Crises and Business Continuity Incidents”, 13 November. 6  Financial Times January 16 2008. 7  See Richard Freeman (2006) “Labour Market Imbalances: Shortages, or Surpluses, or Fish Stories?” presented at the Federal Reserve Bank of Boston’s Economic Conference, June. 4  BIS Review 14/2008  Lower import prices, intensified competition and high productivity growth have been important disinflationary forces both in Norway and elsewhere.

As Ken Rogoff puts it “…the greatest challenge ahead for central banks is to make sure that their institutional mechanisms for preserving low-trend inflation are robust to possible setbacks in the future course of globalisation…” 16 As I pointed to earlier we have been greatly helped by positive supply-side shocks in recent years. Fighting inflation has been almost costless. This may change in future. One could argue that the process of disinflation will ebb, and downward price pressures from cheap imported goods abate. What initiated the process of disinflation in the first place was the integration of labour-abundant developing countries into the world economy. In the course of time these countries will “catch up” and achieve a production and income level per capita more similar to that of industrialised economies. They will experience a real appreciation. This can happen through a nominal appreciation of local currencies, or by higher wage- and price inflation. Either way, it will have inflationary consequences for the rest of the world. With easing disinflation pressures, and if prices for energy, other raw materials and food remain high, the positive supply shocks we have faced during the last decade may fade away, posing new challenges to monetary policy. Our dismal economic history from the 1970s and 1980s clearly shows that maintaining nominal stability is of the utmost importance. So inflation must be fought, also if it should rear its head in periods of low growth.
Together, these efforts allow us to expand the reach of our operations while making tangible progress on our commitments to diversity and inclusion, including to minority-, women-, and veteran-owned firms. Let me now turn to transparency and accountability. In the spirit of these principles, we have reported to the public in near real-time our market activity, including the details of every SMCCF transaction. Our holdings are publicly reported on a weekly basis through the Fed’s H.4.1 release. Every month the Fed publishes the full holdings in a detailed Congressional report. We also provide the attributes of the Broad Market Index, including detailed issuer-level weights. Aside from portfolio activity, we have also disclosed the CCF’s legal agreements. On the New York Fed’s website, you can find all documentation with the Department of Treasury that governs the operation of the facilities, as well as all contracts with external vendors. On the latter, we remain committed to disclosing all fees to service providers as they are paid. Impact on Credit Conditions As you all know, corporate credit conditions have recovered substantially from the worst strains of March.

Research from the New York Fed estimates that, within the first three months following the CCF announcement, credit spreads retraced about 90 percent toward pre-pandemic levels, with two-thirds of the improvement occurring on facility announcement dates (i.e., before purchases even began), and that half of the improvement in bid-ask spreads since the peak in March occurred on the initial announcement date itself.14 This provides strong evidence that the market found credible the design the CCFs, as well as the Federal Reserve’s commitment to following through. Improvements in secondary market conditions pass through to corporate borrowing costs in two ways: directly through borrowing rates that are benchmarked to secondary market yields of similar bonds, and indirectly by increasing the willingness of dealers to underwrite bond issuance. And this is precisely what we’ve observed. Since the CCF announcement, firms have raised about $ trillion in the corporate bond market from investors, or about double last year’s pace. Companies have raised new funds and refinanced maturing debt, helping them to maintain their operations and payrolls and build liquidity buffers against continued uncertainty. Importantly, the dramatic improvements in credit conditions have come despite an extremely small CCF footprint that has decreased over time. On account of healthy primary markets, the PMCCF has yet to be tapped. And since mid-May, when we began SMCCF purchases, the pace of our buying has fallen steadily in response to improvements in market functioning.