samchain/econo-pairs-v1 huggingface dataset:
In the context of economic recessions and rising government expenditure, such as the sovereign debt crisis or the current COVID-19 crisis, higher risk premia in some euro area countries could tighten the overall financial conditions in those jurisdictions and threaten price stability in the euro area. This warrants permanently equipping ourselves with sufficiently flexible tools, so as to avoid the re-emergence of fragmentation dynamics that jeopardise the correct transmission of monetary policy throughout the euro area. In other words, the new strategic framework's tools should inherit, in my opinion, the flexibility that has characterised the PEPP. Regardless of the final outcome, I am sure that this review will boost the effectiveness of monetary policy in the euro area and its ability to achieve its targets in the macroeconomic environment of the coming decade. 11  The introduction of a digital euro  Monetary policy and the tools available to enhance its effective implementation are not the only matters currently to the fore of central banks’ agendas. At a time of such deep-seated transformation like the present, there is no shortage of topics vying for our attention. One I find particularly relevant at present is the growing speed of the ongoing digitalisation of the financial system. The pandemic, on one hand, and the European Commission’s announcement of its digital finance strategy, on the other, have placed this matter at the heart of the European debate.

This would not be problematic if nominal rates could fall as far as necessary; for example, with expected inflation of 1%, to achieve a real interest rate of, let’s say, -2%, the nominal rate would have to be lowered to -1%. The problem is that nominal interest rates cannot drop as far into negative territory as sometimes would be necessary. Were central banks to set interest rates of -5%, for example, commercial banks would endure negative yields on a large part of their assets, which would adversely affect their profitability and, ultimately, their financial intermediation  2  The concept, determinants and implications for monetary policy of the natural rate of interest are discussed in Galesi et al. (2017). Holston et al. (2017), for example, estimate that in 2016 the natural rate was positive, but very close to zero, in the United States. 4 See, for example, Fiorentini et al. (2018). 3  7  capacity. This would have an attendant negative impact on credit supply, economic activity and inflation. There is therefore a lower bound on nominal interest rates. Should central banks lower interest rates below this bound, the effect on the economy may be contractionary rather than expansionary, owing to the adverse effects on the financial system as a whole.5 The level of this lower bound on interest rates is not directly observable and varies over time based on the financial sector’s situation. In any event, it represents the floor for central bank interest rate cuts.
Economic growth in the euro area has become more broadly based, as is reflected in private consumption and investment. At the present juncture, the outlook for the euro area economy is still very much influenced by the uncertainties surrounding the evolution of the world economy in 1999. These uncertainties have adversely affected indicators of industrial confidence in the euro area and have fuelled expectations of a slowdown in economic activity in the short term. In part, the deteriorating external environment, which has its origins in the Asian and Russian financial crises, places a BIS Review 9/1999  –7–  high burden on overall growth prospects. The picture, however, is mixed. Order books and capacity utilisation point to a less optimistic outlook, while retail sales and the recent pattern in employment and unemployment suggest more favourable trends. Consumer confidence also remained high until late 1998. In general, this pattern of mixed evidence appears to characterise the economic situation in the euro area around the turn of the year, and we shall continue to monitor developments carefully. I should also like to emphasise that the Governing Council carries out a forward-looking assessment of inflationary pressures and carefully assesses risks to price stability, whatever direction these may take. With respect to the latest data on the HICP, the annual increase for November 1998 showed a further slowdown to 0.9%, compared with 1.0% in the two previous months. This development was in line with previous trends.

If they occur, it is important that we explain their causes and state how inflation is to be brought back into line with the target. To influence consumer prices, the Riksbank uses its instrumental rate—the repo rate. Simplifying somewhat, one can say that, by altering the marginal interest rate for banks, the Riksbank influences other domestic interest rates and thereby the level of economic activity in Sweden and consequently the development of prices. It should be noted, however, that in the short and medium term, pricing is also affected by other factors, such as the construction of fiscal policy and the development of wages. That is why the Riksbank is concerned that, when making decisions, politicians and labour market organisations should also promote low inflation. It is the reason, moreover, for my returning to these matters at the end of this talk. But in the long run the course of inflation is crucially dependent on monetary policy. Interest rate adjustments have their main effect on prices after an interval of one to two years. Monetary policy decisions therefore have to be based, not on the latest figures for inflation but on the Riksbank’s current assessment of future price movements. Our quarterly inflation reports accordingly present ongoing inflation forecasts based on analyses of a large array of economic indicators, supported by economic models and knowledge of relationships between different parts of the economy. The inflation assessment is used by the Riksbank in drawing conclusions about the direction of monetary policy.
The second key question is, how concerned should we all be about a flare-up in inflation – and aren’t the measures the Fed has taken inflationary? Many have expressed concern that Federal Reserve policy actions that expanded our balance sheet dramatically will cause inflation. I firmly believe that in the short run inflation is likely to remain quite low – and that in the longer term we have the tools, and the steadfast commitment, to address inflationary pressures. Indeed, while monetary policy works with lags, I would note that it has been more than two years since the Fed’s balance sheet expanded dramatically. Since that time, core inflation  1  Of course, the views I express today are my own, not necessarily those of my colleagues on the Board of Governors or the Federal Open Market Committee (the FOMC). BIS central bankers’ speeches  1  has fallen and core inflation measures using the CPI or PCE indexes are at something like 50 year lows. Today I will briefly address the role of the low inflation rate for the economy and policymaking. In doing so, I will discuss why inflation concerns have not materialized to date, and why I expect core inflation to remain below 2 percent over the next several years. Question 1: Housing and the economic recovery The economic recovery officially began in the third quarter of 2009, according to the organization responsible for dating our recessions – the National Bureau of Economic Research (NBER).

4  BIS central bankers’ speeches  The second concern remains, however. In sum, my primary concern about rising energy prices is not so much that they will lead to higher inflation, but that they will subtract from household income and thus weaken the economy. Financial markets are also not expecting sharply higher rates of inflation. The difference between the 10 year Treasury rate and the 10 year inflation-protected Treasury security (TIPS) rate provides a measure of the expected average inflation rate over the next decade. As shown in Figure 16, the average expected inflation rate by this measure is still below what the markets expected prior to the recession and the necessary expansion of the Fed’s balance sheet. Concluding observations Thankfully, we are seeing signs that the economy is experiencing a more self-sustaining recovery. However, it is important not to lose sight of how much excess capacity remains. It is likely to take at least four years to return to full employment from the current unemployment rate of 9.4 percent. It is also likely that measures of core inflation will remain well below 2 percent over the same period. This suggests that the signs of improvement we have seen so far are not worrisome, but are most welcome. A sustained period of the economy growing well above its potential – not just for a few quarters – is exactly what we need. The current level of accommodation from monetary and fiscal policy is appropriate.
Figure 4: WW2 U-Boat Campaigns  Figure 5: War Games  Source: IWM Collections (public domain). Torpedo fired on a merchant ship (image available here). Source: GSC Game World (GNU FDL) (Image from ‘Cosacks: European Wars’ (image available here). The US Air Force has an agent-based model known as Systems Effectiveness Analysis Simulation (SEAS). The SEAS package models the entire surface of the earth and its satellites. Each agent has a specific longitude and latitude to a resolution of one millimetre. In order to allow interaction, SEAS agents are equipped with sensors, communications, and weapons allowing co-operative or competitive behaviour (Brooks et al (2004)). Most recently, the work on ABMs in a military context has taken on a new direction. As autonomous vehicles such as drones are used in war, they add a new dimension to ABM simulations. In a world of human agents, ABMs could only approximate agent behaviours. In a world of military automata, these simulations come closer to replicating real-world warfare (Sanchez and Lucas (2002)). A more benign military application of ABMs has been in the context of war games. Military ABMs were a forerunner of many of today’s computer war games: Eve Online, World of Warcraft and Command and Conquer are all popular, sophisticated ABM-based games which mix computer and human controlled agents. (c) Physical Sciences  As the Large Hadron Collider illustrates, modern physics is heavily computational in certain fields. This arises in part because even simple systems can quickly exhibit complex behaviours.

10  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  10  Yet in economics, ABMs have been used relatively less (Battiston et al (2016)). Chart 5 shows the number of citations that the most-cited article on agent-based modelling has in different fields. Economics has been a late and slow-adopter of ABM techniques. In other words, ABMs may be another example of the lack of cross-disciplinary perspective in economics. To be clear, ABMs are no panacea for the modelling ills of economics. In discussing them here, the implication is not that they should replace DSGE models, lock, stock and barrel. Rather, their value comes from providing a different, complementary, lens through which to make sense of our dappled economic and financial world, a lens which other disciplines have found useful when understanding their worlds or when devising policies to improve it. (a) Early Origins  ABMs grew out of some of the earliest applications of computing at Los Alamos National Laboratory in the United States (Metropolis (1987)). In 1945, it was this lab that developed the first-ever nuclear weapon – the fission bomb. The chain-reactions used in these weapons are based on the fissioning of large atoms by neutrons. Neutron transport involves high-dimension, discrete collisions, with each step probabilistic. This quickly gives rise to a vast probability tree of possible outcomes. Enrico Fermi had experimented with a method to solve these sorts of high-dimensional problems in the 1930s, using a small mechanical adding machine.
Dimitar Bogov: “The savings deposits soar also during crisis” – interview in Radio Free Europe Interview with Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, in Radio Free Europe, conducted by Mr Aleksandar Pesev on 29 September 2013. *  *  *  Mr. Bogov, is the ending of the crisis in the Euro area going to have a direct impact on the boost of the economic growth in the Republic of Macedonia? Of course, the Euro area and the European Union are the largest trading partners of the Republic of Macedonia, the largest portion of our export is placed there, and as a result, the demand in the Euro area has large influence on the production in Macedonia. We were encouraged by the data for the second quarter of the year on the Gross Domestic Product, where after six quarters of negative results, positive growth rate has finally been registered. We expect that this will endure also in the following period, we are aware that this growth in the Euro area and the European Union is still very fragile, meaning, there are still risks, but we are optimistic, the indicators that emerge in the Euro area economy every day are mainly positive, so it is expected that it will reflect adequately on the Macedonian economy growth, as well. Can the recent trade war we had with the neighboring Kosovo somehow spoil the perceptions for this positive growth?

The banks restraint over crediting is a result of several factors. One is the economic crisis in the Euro area, the deceleration of our economy last year, the banks prudency, the rise of the bad placements. Another very important factor is the condition in the parent banks of some of the owners of our banks, you know that they mainly come from the Euro area, some of them have serious problems in their own countries and they face with serious challenges, although their banks in Macedonia have extremely good quality and they are in good condition, since the strategy is developed at the level of the group, the problems in the parent bank prevail so they can have conservative strategy also in our country. This exactly was the reason that caused panic in the public, that some banks have problems in their main offices. Has the situation been stabilized a little in this regard? The situation here is mainly stable. Although there are occasional rumors in the public, the data do not mirror that, and we did not have registered, in any moment, that the deposits plunged with the banks the main offices of which are facing with problems. The deposits, generally, were increasing during all these past several years.
We need banks to manage these risks, in line with the expectations for sound risk management practices that we have published in a supervisory guide in 2020.4 Two weeks ago, we published the results of a thematic review of how banks manage climate-related and environmental risks.5 This is the first time that our core banking supervision teams – the Joint Supervisory Teams – have thoroughly assessed banks' risk management practices in this area. Their findings show that, even though banks are starting to manage these risks by putting the basic infrastructure in place, they still have a long way to go to be truly resilient to the climate and environmental crises. For example, they lack granular information on these risks, and their methodologies for assessing their risk exposures remain relatively unsophisticated. And as supervisors we are concerned about banks' ability to successfully execute their plans, as most of their implementation practices are not sufficiently effective. Against this backdrop, we will continue to scale up our supervisory activities on climaterelated and environmental risks. We expect banks not just to be able to manage these risks in full by the end of 2024 at the latest, but to actually be doing so. This means that by then they will need to be in full compliance with all the supervisory expectations we set out in 2020. We have also set intermediate deadlines for them to reach specific milestones, and we have shared the good practices among banks derived from our thematic review.

The first one is of a general nature, while the second lies in differences in the relationship between the size of the financial sector and the size of the real economy in the most developed economies and the emerging ones. As to the general difficulty, I strongly believe that the world is becoming more fundamentally uncertain. Alignment and coordination of regulatory tools and policies can only take us so far. There is no guarantee that rules and harmonisation will produce the right outcome, that the new rules will be significantly better than previous ones, or that in the fundamentally highly uncertain world the “right” set of rules exists at all. Therefore, it is surprising to me that we are so focused on the design of the, hopefully, right set of rules and often also on limiting the space for their diversification. After all, diversification is a tried and tested strategy for dealing with fundamental uncertainties. The push for harmonisation at the expense of space for diversification is leading individual sovereigns to take a different approach, namely, that of insulation and buffering. This itself is not such a bad thing. After all, taking as a benchmark the maritime world, in which the rules of shipbuilding are fundamentally clearer, more certain and more effective than the current rules of financial market regulation, big ships are constructed with watertight compartments to contain any flooding if the hull is breached.
Denis Beau: Stablecoins - a good or a bad solution to improve our payment systems? Opening address by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Stablecoin Conference “Which ambitions for Europe?”, organized by Paris Europlace and ConsenSys, Paris, 15 January 2020. * * * I would like to thank Valérie Fasquelle and Christian Pfister for their contributions to this speech. Ladies and gentlemen, The growing number and forms of crypto-assets in our payments landscape has triggered a significant and important debate about their virtues and risks, in case the role of these cryptoassets in our payment systems were to become less marginal than it currently is. The emergence of so-called “stablecoins” has brought additional fuel to this debate as they could bring to the market new settlement assets and payment schemes, which may compete against and possibly, according to their promoters, replace those in commercial and central bank money, currently at the centre of the functioning of our payment systems. In order to share with you a few thoughts on this debate, speaking as a central banker and a supervisor mindful of the benefits of innovation but also of the risks they could bring to financial and monetary stability, I will focus my remarks on two topics: Whether stablecoins can contribute to improving our payment landscape? How to respond to the public policy challenges they raise? 1 – Are stablecoins a brand new solution or a brand new problem? From my perspective, they can be both. Let me explain.

2 – What role for regulatory and oversight authorities? In this context, it is first and foremost the responsibility of the private sector to design stablecoin schemes that do not bring undue risks to our payment systems. For that purpose, regulatory and oversight authorities have an important role to play in order to ensure that the risk management requirements to be met are clear, comprehensive and complied with, while preserving the potential for technological innovation offered by crypto-assets. To that end, they should in my view focus on three main tasks:  - Firstly, working on a regulatory response that preserves the positive potential impact stablecoins might have on the efficiency of our payment systems. Given the rapid pace of innovation, which is also characteristic of stablecoin initiatives, this pleads for developing an agile, pragmatic and proportionate regulatory response rather than setting up an ad-hoc, unique and comprehensive framework. This would be simpler, faster to implement and to adjust, and be more likely to achieve level-playing field conditions. In the European context, this is an encouragement for building on and adapting the functional coverage of existing regulatory frameworks and, in some cases extending their geographical coverage. What comes to mind in particular is the framework for crypto-assets service providers created in France with the 2/4  BIS central bankers' speeches  Pacte bill, and the European framework for e-money issuers, investment funds and financial market infrastructures.
Of course, any such support policy, if anticipated, will be taken into account when banks establish their risk management frameworks for “tail” events. Still, one cannot generally conclude from this that central banks should not re-act and support the system in the case of severe tensions. To rigorously analyse moral hazard issues relating to financial crisis management by central banks, one first needs to distinguish between different but interrelated types of policy interventions. The reason for this is that the possible effects on incentives of different measures can be very diverse. However, this differentiation has often been missed when criticising central bank actions on the grounds of moral hazard considerations. 3  A. Giovannini and L. Spaventa (2007), “Subprime lessons: fix the information gap”, 5 November 2007, http://www.voxeu.org/index.php?q=node/690. BIS Review 143/2007  5  Let me distinguish briefly between four possible types of central bank measures: First, moral hazard issues have been raised in relation to the case in which the central bank lowers its key policy rate in response to financial turmoil. It has been argued that, if central banks lower interest rates at a time of market corrections and declining asset prices, economic agents may believe that the policy-makers are prepared to use monetary policy to support asset price valuations in order to prevent market downturns. If such belief becomes widespread, investors are likely to engage in excessive risk-taking behaviour, thereby sowing the seeds of future financial crises.

Developments in the Swiss housing market have been relatively steady, despite the strong demand pressures discernible in certain regions. At present we do not detect any obvious signs of a speculative bubble that might culminate in a sudden fall in prices. The main explanations for the rise in real estate prices in the past few years have been higher expectations and good financing conditions. Around Lake Geneva the pressures on the limited available space and the fast growth in the residential population have acted as special stimulants. Thus there have been no speculative developments as witnessed at the end of the 1980s. Now that the business cycle has peaked in Switzerland, it is very likely that we will move into a phase of more moderate price increases. BIS Review 73/2008  1