samchain/econo-pairs-v1 huggingface dataset:
These economies show signs of a slowdown that can be traced to decreased exports to Asia but there are also indications that their domestic demand is slackening. In the euro area, however, growth prospects seem to be more favourable. The recovery appears to be firm—to a growing extent as a result of stronger domestic demand—and it looks as though inflation will remain low. The overall picture of international activity is somewhat weaker than the Riksbank forecast in June. International inflationary pressure is low. The extensive economic problems in Japan and the unrest in global stock exchanges are contributing to this. BIS Review 66/1998  -4-  Swedish economy strong Economic growth in Sweden seems to be good, however. As expected, the statistics show an accelerating growth of domestic demand, accompanied by a slowdown in foreign trade. Private consumption is rising strongly and a continuation of this trend is indicated by a number of factors: households’ personal economic expectations are still rising, employment is expanding and disposable income is growing as a result of low inflation and a less restrictive fiscal policy. Uncertainty about share prices could have a contrary effect but the downward movements that have been observed constitute no more than a correction after a relatively strong increase. Since the beginning of 1998 the Stockholm Exchange has risen 20 per cent. The statistics also show strong growth for public consumption as well as gross capital formation. But foreign trade is weakening; export growth is slowing and imports are rising.

In recent years monetary policy has been assisted in the first place in that the consolidation of government finances has restored a stable foundation for economic policy; in addition, there has been the more direct restraint—in a cyclical perspective—on demand and price impulses. In recent decades that was by no means invariably the case. On the contrary, there were periods when fiscal policy accentuated the cyclical movements. I find it important to issue a warning about repeating mistakes of this type. In the middle of an economic upswing we are now hearing calls for expansionary fiscal policies in the form of increased public spending as well as unfinanced tax cuts. There are strong long-term grounds for using the upswing in activity to build up government surpluses as a buffer for harder times. That will increase our future freedom of action in economic policy. It will be easier to cope both with future economic downturns and with structural challenges such as an ageing population. A tighter fiscal policy also eases the burden on monetary policy and increases the probability in the years ahead of being able to continue to have low interest rates and a stable economic development, with good growth of production and employment. BIS Review 66/1998
The size of the gap, combined recently with a rather limited growth differential between the two groups of countries, suggests that the process of real convergence will be very gradual and will have to continue much beyond the tentative dates for EU accession. Although differences in income levels are not incompatible with EU and even EMU membership, it is extremely important for accession countries to increase real convergence. Indeed, real convergence is essential to create economic cohesion within EMU and promote integration between Members States, thereby helping to minimize the risk and the effects of asymmetric shocks, in the best interest of accession countries themselves. Let me stress seven points of particular relevance for the Eurosystem, and for accession countries themselves on the road towards achieving catching-up and convergence with the EU. –  Firstly, we should never forget that nominal convergence must be sustainable and therefore not only constitutes an objective that must be met at a given point of time but rather a goal that must be achieved continuously. Strict compliance with the Maastricht criteria will be key for joining the euro area. Indeed, the EU Treaty calls, as a prerequisite for adopting the euro, for a high degree of sustainable convergence in the fields of price stability, government fiscal position, stability of the exchange rate, and long-term interest-rate levels.

Thomas Jordan: Discussions on the topic of the euro/Swiss franc minimum exchange rate Speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, held at the Swiss National Bank, Zurich, 10 April 2012. *  *  *  Ladies and Gentlemen I would like to welcome you to this discussion on the topic of the euro/Swiss franc minimum exchange rate and thank you for attending at such short notice. As you are aware, on Thursday of last week a few of the transactions in the foreign exchange market for the euro were concluded at a rate below the minimum exchange rate set by the Swiss National Bank (SNB). I consider it important that you are aware of the sequence of events, and also that I reaffirm the SNB’s current policy. Since this is a specifically market-related topic, we have chosen this rather special approach involving a discussion with news agencies. The fact that a few individual transactions at less than CHF 1.20 per euro were observed last Thursday has led to some isolated doubts being raised about the SNB’s resolve to enforce its minimum exchange rate. Right from the start I want to make it quite clear that such doubts are misplaced. The Swiss National Bank is enforcing the minimum exchange rate with all the means at its disposal. We are prepared to buy foreign currency in unlimited quantities for this purpose. In this respect, our policies are totally unchanged. What precisely occurred last Thursday?
Central banks have an operational independence but they do not decide their own mandate. The mandate given to the Eurosystem is clear: our primary objective is price stability. However, our mandate states that we “shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system” x. Careful attention to the dynamics of the indebtedness of households, firms, and financial intermediaries would also be in line with the intellectual tradition of the Eurosystem. Since its inception, the ECB has always given special attention to broad financial aggregates in setting the course of monetary policy. It was emphasised by its monetary pillar and is now emphasised by its monetary analysis. Restricting attention to measures of liquid liabilities such as M3 has probably little justification today in view of the little direct relevance of monetary aggregates for price developments. But the relevance of broader and more varied credit aggregates is beyond question for both price and financial stability concerns. Together with asset prices, they could constitute the base of a revised credit and financial pillar. xi  2.2  The Separation Principle becomes less relevant with a multifaceted monetary policy  The link between monetary policy and financial stability raises two questions. First, what are the quantitative effects of monetary policy instruments on financial stability?

We have enough evidence by now that interest rate policies can have effects on indebtedness, risk-taking (through maturity transformation,  Page 7 sur 11 search for yield, or other channels) and the profitability of financial actors. It would therefore be short-sighted to ignore the side effects of monetary policy on financial stability. Second, are these effects large enough to make it possible to preserve financial stability without compromising price stability? At this point, the precise terms of a possible trade-off are still being debated. xii The issues are complex: as Nuno Coimbra here at PSE emphasises in a paper with Hélène Rey, a decrease in interest rates can encourage risk-taking when interest rates are low, but discourage it when interest rates are high.xiii We need more work on this important issue. Let me just suggest two thoughts on this open issue. a/ Incorporating Financial Stability Concerns with an Extended Monetary Toolkit First, the binary opposition between the traditional separation principle and “leaning against the wind’’ makes less sense when monetary policy has itself several instruments at its disposal. A median way, which we could call “coordinated” or “integrated” is possible. Indeed, that several instruments can allow to pursue several objectives is just what the old Tinbergen rule asserts. This is particularly relevant within monetary policy in our current context. Over the past years we have brought innovations to our operational framework, and we have considerably extended our toolkit with balance-sheet policies such as quantitative easing and (T)LTROs.
Swedish enterprises have quickly gained a leading position in the new fields. Sweden can be said to act as something of a European centre for the new information technology. Even the older companies, such as large state-owned enterprises, are adapting to the new technology. The ability to transform a small, open economy is again proving feasible. The key to growth has been the capacity to introduce innovations and get the whole economy to expand on a wide front in connection with the historical ‘revolutions’. But as I have shown, growth is not just a matter of the innovations as such; it also involves their spread. In other words, an invention by itself is not enough. 5  4  Greenwood, J. & Yorukoglu, M. (1997), 1974, Carnegie-Rochester Conference Series on Public Policy, June, pp. 49–95. BIS Review 10/2001  A country must also possess or create the appropriate structures that can enable growth to really get going. Perhaps one of the principal driving forces is knowledge, as Alfred Marshall, the father of modern political economy, already pointed out in the late 19th century. Remember that a long time usually elapses before these changes occur in earnest. Railways existed as a technical innovation well before the construction of railroads took off. The automobile saw the light of day long before the era of motoring. So the development of new systems and new infrastructure takes time — in some cases a long time. Basically it is a matter of societal changes and they do not happen overnight.

However, the industry must lose no time in tackling the restructuring that is needed, particularly in the traditional segments. In the area of alternative products, Switzerland has admittedly been successful in the fund of funds business. It is to be hoped that its financial industry will build on this success and become even more of a centre of excellence for alternative investments too. BIS Review 24/2006  1
Savings capital is attracted to this and these industries can thereby grow and provide jobs to replace those lost in industries that are declining. This means that equity prices on average and across a business cycle should increase at the same rate as potential GDP-growth plus the risk premium required by investors. However, we know from experience that periods when households and companies have increased their borrowing at a rapid rate and asset prices have risen substantially have often preceded large falls in growth and capacity utilisation in the economy and even led to financial crises. It is only with hindsight that we have been able to note that imbalances had built up. Regulation, fixed exchange rate policy, insufficient supervision and deficiencies in accounting systems have often contributed substantially to imbalances being able to accumulate over a long period of time. However, asset price and credit cycles also appear in many cases to have been exacerbated by exaggerated optimism and speculation, what is known as bubbles. This over-optimism often begins because equity prices in a sector, perhaps as a result of a technological advantage, have risen over a period of time and the optimism then spreads. The problem for those of us responsible for monetary policy is that inflation – measured as consumer prices – has often remained relatively unaffected during these periods. It is difficult to distinguish bubbles from economically-motivated fluctuations in advance, which partly is because we have insufficient experience of credit and asset price cycles in deregulated financial markets.

Many of the countries that were hit by depression and banking crises during the 1930s had beforehand witnessed steep rises in asset prices and a sharp credit expansion without any appreciable increase in inflation. We have seen a similar development in Japan in the late 1980’s. Also during the latter part of the 1990s we have seen examples of crises with a similar course of events, for example in Thailand and other parts of Asia. Countries can suffer considerably from adjustments made in asset prices and debts - even if they do not suffer a crisis in the entire banking system. This is shown by what happened in the United States, Spain and England at the beginning of the 1990s. Corrections after long periods of credit booms and increases in asset prices there led to private savings rising substantially, investment declining and it took a long time for demand to recover. A tighter monetary policy than was motivated by the inflation rate or by the exchange rate when this was the guiding factor could perhaps have reduced the fluctuations in the real economy. Structural reforms reduce the risks but provide no guarantee against financial imbalances. Several of the measures taken in recent decades have probably reduced the risks of seeing a similar development recur: •  2  The aim of the policy towards price stability, stable public finances and deregulated markets  BIS Review 62/2006  •  Extensive international efforts to develop standards and regulations regarding supervision, accounting and auditing. So far, so good.
3/ How can we give further impetus to Europe? Getting back to the European level, I would like to point out that many improvements have also been made in the field of crisis prevention and management. Prevention is based on much more 2/3  BIS central bankers' speeches  efficient financial regulation and on a European governance framework that is better organised now with well-designed monitoring mechanisms on fiscal performance as well as on macroeconomic imbalances and structural reforms. Banking Union contributes to strengthening financial stability in the euro area and the EU as a whole and to ensuring that the banking sector is safe and reliable. The global European picture is of substantially enhanced resilience since the crisis. The Common Equity Tier 1 ratios of significant banking groups in the euro area have risen from 7% in 2008 to 14% today. Crisis management – including for Greece – has also evolved considerably with the creation of the ESM. So you can be fully confident about the resilience of the euro and of the euro area. It is not only an economic asset, it is also a political one, supported by each of the 19 governments and – which is still more important – by 68% of euro area citizens (and even by 70% of French citizens and 73% of German citizens). Moreover, monetary policy played its full part to maintain euro area cohesion. Europe has clearly succeeded with monetary union, but monetary policy should not remain the only game in town.

Growth and employment will be stronger in Europe if we combine more reforms where they are needed, such as in France and Italy, and more fiscal support in those countries with room for manoeuvre, such as Germany. In practice, for such a collective economic strategy to exist, the euro area needs an institution that fosters confidence: it could consist of a euro area “Finance Minister”. The third step, in the longer term, would be a European fiscal capacity. It comes at the end as it requires more convergence and more confidence. A genuine euro budget would be a stabilisation tool and could include, for example, a euro area-wide unemployment insurance scheme. It could also be used to finance certain “European public goods” such as digital technology, the energy transition or the integration of refugees. And in the long term, it could directly issue common debt and even raise taxes. Let me sum up. Since the beginning of the crisis, Europe has been able to strengthen itself and to build a set of instruments and mechanisms that have significantly increased its resilience (Banking Union, the ESM, the enhanced SGP, etc.). It is now a matter of continuing this progress and not seeing Brexit as a shock to the euro area but rather as an opportunity to pursue, in a structured way, the setting-up of a better Economic Union. And at the core of Europe, France has made progress, which needs to be accelerated.
I’ve spent this morning talking about measures to tackle the root cause of the stress last autumn, poorly managed leverage. But LDI funds aren’t the only non-bank to use leverage. [20] And leverage is also not the only vulnerability in the non-bank system. Forced selling that can follow from leverage can also arise from liquidity mismatches[21] or from a lack of preparedness for margin calls. [22] Identifying vulnerabilities is only half the battle. We also need to understand how market participants will behave when a stress hits. To this end, the Bank is very shortly launching its exploratory exercise to enhance understanding of the risks to and from non-banks, their behaviours, and how these behaviours can amplify shocks. As part of this exercise the Bank may reach out to some of you attending this conference. Shining a light on how market participants may behave collectively in a stress will help both the Bank and yourselves better prepare for such events. You’ll hear plenty from us once the exercise is launched. In particular, my colleague Lee Foulger will be giving a speech next week outlining how this exercise will helps us to better understand system-wide resilience. But what should we do about these vulnerabilities? We should seek to contain them and to mitigate their financial stability impact. This is what I’ve laid out today with respect to LDI funds’ leverage. Further frameworks may need to be built up.

Philipp Hildebrand: Lessons from the financial market turbulence Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Jefferies prize-giving ceremony, Zurich, 27 August 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The current financial crisis is probably the most complex since the 1930s. The extent of international cooperation in overcoming it is greater than ever before. An important part in these activities is being played by the Financial Stability Forum (FSF), which was founded in 1998 and to which Switzerland has belonged since 2007. Six months after the start of the crisis, in April 2008, the FSF published a series of recommendations for enhancing the resilience of the international financial system. There are three main advantages to cooperating internationally in this way. First, it is easier to focus more clearly on identifying solutions. Second, it ensures that particular attention is paid to maintaining a level playing field when establishing regulatory measures. Third, it creates considerable pressure for any recommendations issued to be implemented in practice. The current crisis has shown that the Swiss banking system remains vulnerable to major shocks. As part of its statutory mandate to contribute to financial stability, the SNB has been monitoring developments since the start of the crisis very carefully. The lessons learned by the SNB from the crisis tie in with the recommendations of the FSF.
The reforms in recent years have been appropriate and have contributed to shoring up the system’s financial sustainability; but adverse demographic developments require measures whose application should not be delayed. Population ageing gives rise to a reduction in the proportion of the total population making up the workforce, which negatively affects productivity and our economy’s ability to innovate and incorporate new technologies. Given that it is impossible or very difficult to change demographic trends, even in the medium term, it will be important to persevere in enhancing the education system and pursuing the institutional and regulatory reforms that contribute to improving productivity, promoting or enabling greater competition and innovation. Thank you very much for your attention. 6/6

We are quite far from the creation of a global private currency. But stable coin projects reveal gaps in existing cross-border payment systems. Hence, at the European level, we should aim at promoting a genuine European strategy for retail payments. Payments are no longer a mere boring back-office technicality. They are innovative, and they provide two strategic assets: data, and daily customer relations. The raw truth however is that the European payments market is already dominated by non-European stakeholders. Furthermore, the growing role of non-European digital firms – be they American or Chinese – offering payments solutions should be taken seriously. Despite the creativity of the European ecosystem of payments, our  Page 4 sur 5 market remains too fragmented. Against this background, I call for the creation of pan-European payment solutions, building on a common brand and on the technical success of the Target Instant Payment Settlement infrastructure (TIPS) managed by the Eurosystem. We don’t have much time left, but regulators – starting with the Banque de France – and market players should work hand in hand to create a momentum. III. Green finance, “a new frontier for the 21st Century” Let me now conclude with some words on green finance. As I once said, it is “a new frontier for the 21st Century”. Much has already been undertaken over the past few months. We are currently witnessing a growing awareness from central banks, supervisors and financial institutions about climate-related risks.