samchain/econo-pairs-v1 huggingface dataset:
However, Swedish banks’ profitability has been good in recent years, especially in relation to banks in the euro area (see Figure 4). The negative repo rate has contributed to making their extensive market funding less expensive, at the same time as lending volumes have increased. In low interest rate environments there is also a tendency for income from fees and commission to rise, as the demand for the banks’ asset management increases as more people want to invest in for example funds. Nor does it appear to have been too difficult or expensive to adapt IT systems to manage negative interest rates. The Riksbank's overall assessment is that the negative interest rates have had little or perhaps even a positive effect on the banks’ profitability. 3 As negative nominal interest rates are a new phenomenon, it is nevertheless natural that they are met with scepticism and give rise to various psychological reactions. One fear along these lines has been that the negative policy rate would be perceived as a crisis signal that would increase uncertainty among economic agents. I believe that reactions of this kind should be taken seriously. That there are such reactions is one reason why I am taking up this question here today. However, there are so far few signs of declining demand resulting from concern among households and companies.

5 These aspects are important, for instance with regard to the discussions about various possible negative side-effects of the very expansionary monetary policy. One argument is that the low interest rate constitutes a danger to pensions as the return on pension savings becomes so low. But with regard to pensions, it is the long-term return that is important. This means it is the long-term real interest rate that is the most relevant variable. The solution to the problem is thus not that central banks should raise their policy rates, much less that the Riksbank should do so singlehandedly. To make interest rates persistently higher, one needs to implement 4 Bernanke (2016). Rogoff (2016) reasons similarly. 5 See, for instance, Rachel and Smith (2015) for a more detailed discussion and quantitative estimates of the  global real equilibrium rate. 4 [20]  structural measures that push up the long-term real interest rate. This is unfortunately not so easy to do. With reasonable estimates of the long-term real interest rate, the Riksbank's monetary policy has in recent years been clearly expansionary. The reasons why the Riksbank has conducted this policy are that inflation has undershot the target for a long time and that long-term inflation expectations have fallen to worryingly low levels. Around the turn of the year 2014-15 the situation was particularly serious. Expectations of inflation five years ahead had fallen some way below the target and there was a tendency towards acceleration in the decline (see Figure 7).
•  They continuously adapt to new data as well as feedback and inputs gathered from their experiences, including interactions with humans. We are already beginning to see examples in the financial industry: •  In equity, commodity, and FX markets, some traders are using self-learning algorithms –  •  they not only analyse historical data, predict price movements and make trading decisions, but continually upgrade and adjust their trading strategies in the light of new evidence and market reactions. In lending, learning machines have been used to construct models for consumer credit risk and improve the prediction of loan defaults. The legal minds assembled here might want to reflect on where the legal liabilities arising from the actions – or inactions - of such learning machines lie. The six technologies that I have outlined have the potential to transform the financial industry globally. There could well be others that I have not mentioned. The important thing for our FIs is to be alert to these and other technology trends, understand their possible implications, and seize the opportunity to apply relevant technologies safely and efficiently - to boost productivity, gain competitive advantage, and serve consumers better. Smart nation needs a smart financial centre At the national level, Singapore has set its sights on becoming a Smart Nation – one that embraces innovation and harnesses info-comm technology to increase productivity and improve the welfare of Singaporeans.

Pablo Hernández de Cos: Central banks at the frontline of the COVID-19 crisis - weathering the storm, spurring the recovery Welcome address and introductory remarks by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chair of the Basel Committee on Banking Supervision, at session 1 of the VI Conference of Mediterranean Central Banks, jointly organised by the Central Bank of Tunisia, the Organisation for Economic Co-operation and Development (OECD), the European Institute of the Mediterranean (IEMed) and the Bank of Spain, 28 June 2021. * * * It is a great pleasure for me to welcome you all to this Conference on Central banks at the frontline of the COVID-19 crisis: weathering the storm, spurring the recovery, jointly organised by the Central Bank of Tunisia, the Organisation for Economic Co-operation and Development (OECD), the European Institute of the Mediterranean (IEMed) and the Banco de España. Let me start by thanking our colleagues from the Central Bank of Tunisia, the OECD and the IEMed and, in particular, Governor El Abassi, Ambassador Florensa and Luiz de Mello for their cooperation in organising this Conference. We could not have asked for better partners to help set up this event. Under the resolute impulse of the IEMed, this Conference is becoming a mainstay among the fora for dialogue and cooperation in economic and financial relationships in the Euro-Mediterranean region.
lower even than England’s ranking in the World Cup. 20  This is far  Moreover, that diffusion ranking has fallen very 21  sharply over recent years, again in lockstep with England’s world football ranking. It is not just that the UK has a lowly ranking on R&D expenditure by international comparison – at 1.7% of GDP, more than 1 percentage point below our main competitors. 22  It is that three-quarters of the UK’s  private R&D spending is concentrated in only 400 companies, less than 0.01% of the UK’s business population. 23  Among smaller firms, the UK ranks low down the European league table on in-house  innovation and the introduction of new products and processes. 24  Typically, we think of “Research and Development” (R&D) as a rhyming couplet. In the UK’s case, the R and the D do not seem to rhyme. The UK does R well, as a world-leading innovation hub. But it does D poorly, where the D refers not just to development but the diffusion and dissemination of innovation to the long, lengthening, languishing lower tail. When it comes to innovation, the UK is a hub without spokes. Understanding the Barriers to Diffusion  What explains why the UK is poor at disseminating and diffusing the innovation it is rich at generating? Answering that question is important for identifying potential barriers to improved diffusion and, hence, for devising policies for breaking down these barriers and supporting productivity growth.

In closing those gaps, a useful intermediate objective would be to create in the UK a leading-edge diffusion infrastructure, to rival and complement its leading-edge innovation infrastructure. This boost our world (and, with luck, our World Cup) rankings. Inclusive innovation could serve as a conduit to inclusive growth. The UK’s innovation hub would get the spokes it needs to reach every sector, every region, every worker. It would be an industrial strategy for everyone. 58  Haldane (2017). 23  All speeches are available online at www.bankofengland.co.uk/speeches  23  References Acemoglu, D (2002), ‘Directed Technical Change’, The Review of Economic Studies, Vol. 69, No. 4, pp. 781-809. Acemoglu, D, Gancia, G and Zilibotti, F (2015), ‘Offshoring and Directed Technical Change’, American Economic Journal: Macroeconomics, Vol. 7, No. 3, pp. 84-122. Acemoglu, D and Robinson, J (2012), Why Nations Fail: The Origins of Power, Prosperity and Poverty, Penguin Random House. Aghion, P, T, Besley, J, Browne, D, Caselli, R, Lambert, R, Lomax, C, Pissarides, N, Stern, J, van Reenen (2017), ‘Investing for Prosperity: skills, infrastructure and innovation’, LSE Growth Commission Report. Andrews, D, Criscuolo, C and Gal, P (2015), ‘Frontier firms, technology diffusion and public policy: micro evidence from OECD’, OECD Productivity Working Paper Series, No 2. Andrews, D, Criscuolo, C and Gal, P (2016), ‘The Global Productivity Slowdown, Technology Divergence and Public Policy: A Firm Level Perspective, Hutchins Center Working Papers. Baddeley, M (2006), ‘Convergence or Divergence? The Impacts of Globalisation on Growth and Inequality in Less Developed Countries’, International Review of Applied Economics, Vol.
The answer here is that the digital euro payment infrastructure will coexist with the current one and offer an additional option. In a growing market for electronic payment, there is room for such a new solution with previously mentioned built-in limits. At the same time, private sector participants will continue to play a key role in developing digital euro functionalities. The role of central banks will be to provide basic back-end infrastructure while everything else will be left to the industry to find the best solutions and innovate. And the third risk is connected with the international dimension of the digital euro. Here, in general, every CBDC at first seems like a win-win solution. The current system of international retail payments is full of friction. It is slow, expensive and opaque, and the CBDC could play a significant role here to make it cheaper, faster and more transparent. Enhancing cross-border payments' speed and transparency while increasing access to cross-border payment services and reducing their costs are the key objectives of the G20 cross-border payments programme. [6] Since the G20 Leaders endorsed the Roadmap for Enhancing Cross-border Payments in 2020, much has been accomplished. Ongoing experiments undertaken by the Bank for International Settlements are also showing how wholesale and retail CBDCs (Icebreaker), as well as the interconnection of domestic payments systems (Nexus), can deliver faster, cheaper and more transparent cross-border payments. [7] But the risks of internationalised or cross-border CBDCs for developing economies could be large and unintended.

The Times They Are A'Changin' CBDC Lately, central bankers have rapidly started to tinker with something called the central bank digital currency or, shortly, the CBDC. Even though the idea seems new, it dates back to 1987 when the Nobel laureate James Tobin proposed the concept of a "deposited currency", or "a medium with the convenience of deposits and the safety of currency", to enhance payments and reduce the reliance on deposit insurance. [1] It was only 16 years later that the first CBDC came into production. Then, it was the Avant card, a stored-value card created by the Bank of Finland in 1993 capable of offline payments using a custom-made card reader device. A similar attempt ensued two years later in the UK called Mondex. However, none ever caught on due to costs and the fact that debit and credit card networks had become more efficient. [2] [3]  Or, maybe the times haven't changed enough to accept these changes. The environment needed to be more mature. But before I continue, let me move one step back. To understand the CBDC, we must remind ourselves how the current payment system works. Central banks provide the monetary base – cash for individuals and CB deposits for banks –both often referred to as "public money". The private sector has its own payment solutions - cards or mobile banking apps issued against the deposits, called "private money".
A relationship in which financial sector disruption can become the tool of other policies is difficult to square with financial stability. Third, we need on both sides to have deep supervisory cooperation in all areas of cross border financial activity – banking, insurance, markets and market infrastructure. Depending on the circumstances, that can mean line of sight, joint discussion of risks and mitigation – in short ensuring that the importer of risks has information and influence. It means assurance not just about business as usual but also that failing firms that are active cross border can be resolved effectively and safely by their home jurisdiction. We have such arrangements at present with non-EU jurisdictions whose firms are highly active in the UK. In areas such as global financial infrastructure, supervisory co-operation can mean a degree of joint supervision. Again, we have such arrangements with non-EU jurisdictions – and indeed with EU jurisdictions particularly in the payments area. We are likely to need to develop such arrangements more generally at the international level in future to manage the technology driven changes in cross border payments systems. But such arrangements must be practical. Effective supervision of systemically important firms in business as usual cannot be achieved with multiple hands on the steering wheel. Firms need clear and consistent messages. This is true, a fortiori, at times of stress.

It is true that the past, global financial centres emerged in jurisdictions with huge trade surpluses: Amsterdam in the 16th century, London in the 19th century New York in the early 20th. But London’s re-emergence 60 years ago was long after the global economic dominance of the UK – and long before the single market in financial services developed in the EU. Openness, time zone, language, law, developed domestic financial markets and, crucially, the concentration of skills and expertise and talent, seem better explanations of the agglomerations of economic activity that are today’s global financial centres.3 The EU has the ambition to build a more integrated and more market based financial system – the Capital Markets Union. I certainly believe this is the right ambition; a greater role for risk capital and for market based rather than bank-based finance will help to diversify risk across borders, reduce costs to the real economy and avoid too great a reliance on the banking channel of credit intermediation. BIS (2019): UK’s share of global 2019 (April) turnover in OTC interest rate derivatives and foreign exchange UK’s FinTech adoption rate was 71% in 2019, global average is 64 3 Roberts, R. (2005). London as an international financial centre, 1980-2000: global powerhouse or Wimbledon EC2?. In: Cassis, Youssef and Bussière, Eric (eds.) London and Paris as International Financial Centres in the Twentieth Century. Oxford University Press, Oxford, pp. 287-312. ISBN 9780199269495. Wójcik, D., Knight, E., & Pažitka, V. (2018). What turns cities into international financial centres?
This approach was consciously at odds with that adopted for TAURUS, which had tried to be all things to all people 7. But it also focused minds in the industry, forcing them to make difficult tradeoffs, and creating a clear incentive to market providers to produce “add ons” for extra user functions. The project team itself projected a similarly minimalist, open approach in its work – building on their own past experience of having developed the Bank’s system for dematerialised settlement of gilts (the “Central Gilts Office”), involving a full range of disciplines (including policy, IT and legal) in all outreach and design meetings, and embracing a robust attitude to analysis and self-criticism, perhaps best summed up in their T-shirt logo “Purist and Bloody-Minded”. Not everything went to plan. Some early project management structures were found wanting. PWC’s audit of the project in Spring 1994 identified what might be euphemistically termed “a range of unfinished business”, but allowed the project to go forward. And the early months of operation after that launch day in July 1996 faced technological challenges and setbacks. But it is remarkable to think that this basic approach delivered a system that, at its core, remains with us twenty years later. How has the Bank applied the lessons from the building of CREST to the strategic renewal of RTGS?

The equilibrium real rate (typically labelled r*) is the rate required to match the desired levels of saving and investment. The combination of slower population growth, rising life expectancy and an ageing population acts through multiple channels to push up desired savings and reduce desired investment. A reduction in desired investment also reflects slower productivity growth and, possibly, shifts in the structure of the aggregate production function. In the wake of the global financial crisis, risk appetite may also have diminished, which provides a disincentive to invest, reinforces the precautionary saving motive and encourages a portfolio shift to less risky assets, such as sovereign bonds. Finally, the scars of the crisis have also affected desired savings and desired investment levels: many banks, firms, governments and households have focused on repairing their balance sheets or have been constrained by legacy effects when making investment decisions. Some of these forces may go into reverse over time, especially if we see a more complete recovery from the crisis and if there were improved public policies to cope with demographic trends and better productivity developments (such as the successful, widespread adoption of artificial intelligence, innovations in automation and enhanced infrastructure investment). However, for now the downward pressure on the equilibrium real rate is a significant environmental constraint on the options available to central banks. The low equilibrium real rate has been compounded by weak nominal developments over the last decade.
Until very recently, combating climate change was seen as something outside our remit. Following the 2015 Paris Agreement, the fight against climate change has taken on a more specific form and greater momentum, with a term being set for fulfilment of the 2030 Agenda. Coinciding with the signing of the Paris Agreement, the role of finance in combating climate change has moved onto the agenda of international financial organisations. This change has come about exponentially. New initiatives emerge almost daily, under the aegis of the G20, the United Nations, the Financial Stability Board or the OECD. At central banks, I would highlight the work of the Network for Greening the Financial System (NGFS), a network of supervisors and central banks created in December 2017. In a short space of time, the number of members has increased from eight to 46, along with eight observers. We might wonder what exactly has changed since 2015 to warrant this sudden interest on the part of banking regulators and supervisors in climate risks. This may be summed up in two conclusions, expressed in the form of two international initiatives:   First, in 2015, the Paris Agreement stressed for the first time the importance of the financial system in efficiently channelling the resources needed to transform the economy towards a sustainable model.   Second, the first NGFS report, published in 2018, stated that climate-related risks were a source of financial risk, and that supervisors and central banks should shore up the system’s solvency in the face of these risks.

Transition report 2015-2016 “Rebalancing Finance”, European Bank for reconstruction and development. 7  Chart 8: Quality of infrastructure in CESEE region vis-à-vis EU 28 Quality of infrastructure index (difference in p.p.) Real public capital stock, per capita, % of EU-28  0.0  0.80  -0.5  0.70  -1.0  0.60 0.50  -1.5  0.40  -2.0  0.30 -2.5  CESEE  CEE  SEE  2015  2013  2014  2011  2012  2009  2010  2007  2008  2006  2004  2005  2017-2018  2002  2010-2011  0.20  CESEE  2003  2007-2008  Baltics  2000  SEE  2001  CEE  Baltics  Source: World Economic Forum, IMF Investment and Capital Stock Dataset (2017) and NBRM calculations. Complementary and equally important question is whether CESEE countries invest in costeffective, viable and long-term growth supportive projects. Largest part of infrastructure projects in CESEE region is publicly financed (60-70% in transition countries, compared with 15 to 60% in the EU15 economies6). This is problematic because of two reasons – first, public resources may become insufficient for infrastructure financing, given the tight fiscal constraints and rising public debts and second, in practice, very often, public investment decisions are not guided by economic rationale which might lead to inefficient and unproductive projects.
Our CBDC experiments, on which I will elaborate in a few minutes, also led us to develop our own permissioned blockchain (called DL3S- Distributed Ledger for Securities Settlement System) in collaboration with an IT provider. We have also drawn on artificial intelligence for various uses, such as a new forex trading tool and supervisory tools. The question that now attracts public attention is whether central banks’ investigation phases will lead to the development of CBDCs. Almost all of that attention is focused on retail CBDCs. At the same time, we can sometimes hear, and not only from commercial banks, that they are “a solution in search of a problem”. iii In my view, this phrase simply misses the point. What we are currently doing is keeping our eyes and minds open on this new way of making “public money” available. In Europe, we are halfway through our  Page 4 sur 5 investigation phase: the Eurosystem will make its decision by the end of 2023, before a potential launch in 2026 or 2027. I am sure President Christine Lagarde will be able to shed some light on the project. Beyond purely technical considerations, a retail CBDC could play an anchor role in the digital world, similar to the role played by banknotes in the physical world,iv and hence preserve the accessibility and usability of central bank money.

On the contrary, financial stability creates trust, which is an imperative for innovation to last. Well-tailored, consistent and evolving regulations are key in this regard. The second false contradiction opposes public and private players, with the former supposedly conscribed in their conservative regulators’ role and the latter in their innovators’ role. After decades of developing and maintaining state-ofthe-art technologies, central banks may sometimes consider this caricature as unfair. To private players who know us better – and to others: you can rest assured that we are willing to continue our fruitful partnership. We will obviously have to reinvent the terms and conditions of that partnership to some degree, but let me stress that central banks’ action will only succeed together with you, not against you. And that we central banks need to be on both sides: regulation, and innovation. I will now elaborate on these two key issues. Page 2 sur 5 I. The need for well-tailored, consistent and evolving regulations A number of players in the crypto world have recently stumbled - so-called “stablecoins”, DeFi protocol, lending platforms, hedge funds -, demonstrating in practice what many regulators and central banks had been claiming for years: that these new tools of payments and finance had unlocked age-old dangers, meaning that the industry requires robust regulation. Salvador’s decision to make bitcoin an official “currency” in September 2021, regrettable as it is, is a noteworthy experience of a forced attempt to label a currency something that is nothing more than a crypto asset.