samchain/econo-pairs-v1 huggingface dataset:
It is more extensive than the FOMC’s as it will cover, among many things, structural change; climate change; financial stability; and the effects of digitalization. The Eurosystem will take its time, as the Fed did, to consider the different alternatives. What professional economists find theoretically appealing may not be either easily applicable or comprehensible to the general public. What financial markets expect in the short run is not always consistent with long-term economic objectives. But let me try today to share some preliminary thoughts on four key questions: 1. Is there such a difference between a dual mandate and the ECB’s twotiered mandate? 2. How could we clarify the inflation objective? 3. What about the “second pillar” of the ECB and is there a link with the socalled “secondary” objectives? 4. Last but not least, how can we improve communication with the general public and economic actors? My aim obviously is not to give you conclusive answers to these four questions but to highlight important elements of the debate. The Fed’s conclusions are a significant part of it but one shouldn’t assume that the ECB will simply follow suit. Other contributions – such as the ECB Listens exercise, our academic roundtables, Sintra or the current review of the Bank of Canada – are also important and differences are not always where expected. Page 4 sur 10  1. Is there such a difference in mandates?

We have now lived with inflation targeting for almost twenty years. I am convinced that most people today would say that it has worked well on the whole – that it has fulfilled its purpose, and perhaps even exceeded expectations. But when one has got used to a particular system over a long period of time, it is fairly natural to start looking for faults and begin to question whether it might not be possible to make some modifications and improvements. And I do have the impression that inflation targeting in Sweden has recently been criticised somewhat harder and somewhat more often than usual. 1  For an interesting account of the situation at the Riksbank at this time, see Andersson, Krister (2003), “Utformningen av inflationsmålet och den penningpolitiska analysramen” (the shaping of the inflation target and the framework for monetary policy analysis), in Lars Jonung (ed), På jakt efter ett nytt ankare (looking for a new anchor), SNS Förlag. BIS central bankers’ speeches  1  Today I intend to discuss and respond to three types of criticism that have been put forward. The first is the claim that the Riksbank has an inbuilt tendency to set the interest rate too high and has thus caused unemployment to be unnecessarily high. The second criticism suggests that the target for monetary policy should be revised, by raising the inflation target and giving the Riksbank a numerical target not just for inflation, but also for employment or unemployment.
There are benefits to depositor preference both ex-ante (by heightening debtor incentives to monitor risk) and ex-post (by facilitating resolution). There are also some potential downsides, including causing unsecured creditors to run sooner. It may be a good time to reweigh these arguments in the UK. •  Reconsidering the industrial organisation of banking: Over the past few decades, the global banking system has evolved into a particular organisational form, with a small number of large banks, a high degree of concentration and relatively low rates of entry and exit. Events of the past two years have accelerated these trends. In 1998, the five largest global banks had around 8% of global banking assets. By 2008, this fraction had doubled to around 16% (Chart 10). These structural trends worsen the time-consistency problem for the authorities, increasing the pressure for state support to banks “too important to fail”. This has heightened recent interest in rethinking the industrial organisation of finance. 19 There are a number of potential forms such a restructuring could take. 20 In weighing these options, there may be lessons from an, on the face of it, unlikely corner of finance: hedge funds. Hedge funds started this crisis in the doghouse. Yet they are the dog that has not barked. Their industrial structure may explain why. Unlike banking, the hedge fund sector does not comprise a small number of large players, but rather a large number of relatively small players.

Chart 6: Number of deposit insurance schemes and crises 100 90  Number of adopters  80 70 60 50 40 30 20 10  1934 – Great Depression (US) 1977 – Banking crisis (Spain) 1982 – Banking crisis (Kuwait) 1985 – Banking crisis (Kenya) 1994 – Banking crises (Czech Republic, Uganda)  2008  2004  2000  1996  1992  1988  1984  1980  1976  1972  1968  1964  1960  1956  1952  1948  1944  1940  1936  1932  0  1995 – Banking crises (Brazil, Bulgaria) 1996 – Banking crises (Belarus, Lithuania) 1996-1998 – Asian crisis (Indonesia, Korea, Malaysia, Thailand) 1998 – Banking crisis (Ukraine) 1999 – Banking crises (Ecuador, El Salvador)  Source: Demirgüç-Kunt, A., Kane, E., and Laeven, L (2008); Laeven, L. and Valencia, F (2008). 16  BIS Review 139/2009  Chart 7: Leverage and risk-taking in UK banks Total Asse ts/Tier 1 Capital 80  2005-2008  70  2001-2004 1997-2000  60 50 40 30 T ier 1 ratio of 4%  20 10  T ier 1 ratio of 8%  0 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Risk We ighte d Asse ts/Total Assets Source: Published accounts and Bank calculations.
The underlying principles are those of home licensing for operation anywhere in the area and of a level playing field for competition where size and location are not supposed to matter. This European “Passport” enabled the Icelandic banks to operate throughout the EEA, including through branches in other EEA countries. 1  Some of the topics discussed in this speech are dealt with at greater length in the following two sources: Gudmundsson, Már & Thorsteinn Thorgeirsson (2010). “The fault lines in cross-border banking: lessons from the Icelandic case.” SUERF Studies – 2010/5 Contagion and Spillovers: New Insights from the Crisis. On-line source: http://suerf.org/index.php?option=com_k2&view=item&id=177&Itemid=133 and Gudmundsson, Már (2010). “The fault lines in cross-border banking”, speech at the FIBE meeting in Bergen on 7 January 2011. On-line source: http://www.bis.org/speeches/sp0702525.htm  BIS central bankers’ speeches  1  I will discuss the flaws in this setup as regards banking later in my remarks, but in order to provide a proper perspective on the story, I must make two points. First, it goes against the grain of the underlying principles of the European Passport to consider the size of banks relative to GDP as a metric for concern, as is now rightly in fashion. Second, we should see this more in the nature of a necessary rather than a sufficient condition, and it does not exonerate Icelandic banks and authorities of blame for their part in the story.

Mr. Bäckström discusses monetary policy and unemployment in Sweden Speech by the Governor of the Bank of Sweden, Mr. Urban Bäckström, before the Swedish Economics Association on 6/3/97. First a word of thanks for the invitation to this evening’s discussion. This is the third year in succession that your Association’s agenda has featured monetary policy. My first introductory talk, in 1995, was about the importance of low inflation and the background to and implications of focusing on price stability. Last year I took up matters to do with monetary policy’s construction and effects, as well as the considerations behind the monetary policy decisions in recent years. This evening I shall be elaborating on those discussions and then deal with monetary policy in the context of Sweden’s high unemployment. Economic developments in Sweden Following the deep recession in the Swedish economy in the early 1990s, we are now in the fourth year of economic expansion. Since 1994 production’s annual growth rate has averaged 2.8 per cent, which is considerably above the trend to which we have been accustomed in recent decades. In 1994 and 1995 the GDP growth rate averaged as much as 3.5 per cent. This increase was concentrated on the internationally oriented sector and industrial activity registered the fastest upswing in a long time. This led to capacity problems despite relatively high investment growth. The strong expansion was therefore not sustainable. Moreover, the credibility of economic policy was impaired by weak central government finance and an unfavourable history of inflation.
Because the Federal Reserve is such a critical player in the market, it is important that it not create unnecessary uncertainty. That is, the Federal Reserve has a responsibility to be as transparent as possible in the conduct of its monetary policy. Since February 1994, there have been direct and immediate announcements following FOMC meetings of the Committee’s policy decisions, which, in my view, have helped remove uncertainty. In addition, in implementing monetary policy through its trading role, the Open Market Desk has made numerous changes in recent years to add clarity and transparency to its day-to-day market interventions. The thrust of these changes has been to reduce uncertainty and enhance the price discovery process in the Treasury market. As to the Federal Reserve’s responsibility for ensuring that banks support the trading process by making sound credit decisions, let’s not forget that, despite the increase in market players, banks in the United States, as elsewhere, continue to play an extremely important role in the financial markets. Not only do banks often underwrite bond issues and structure hedging instruments for BIS Review 108/1998  –4–  these bonds, but they also provide much of the financing that allows market makers to take positions. Dealers in the U.S. bond markets finance themselves through repurchase agreements with bank counterparties. In many cases, banks are also the source of backup liquidity. It is in these ways that bank credit supports the price discovery process.

During the last ten years, for example, U.S. nonfinancial corporations borrowed a net amount of $ billion in the form of bonds, three times the net amount they borrowed from banks. Over this same period, these companies as a group spent $ billion more to retire stock – through buybacks and mergers – than they raised in new offerings. Accompanying these increased levels of debt market activity has been a continuous process of financial innovation. This innovation has served to unbundle different kinds of risk and, thereby, to enlarge the menu of risks that investors may choose to bear. For example, interest-rate swaps, futures and options help reconfigure various interest-rate risks. Total return swaps and creditspread options are tools for reallocating the payment risks primarily of emerging market debt. Credit-default swaps and credit-linked notes are ways to redistribute default risks. In practice, this unbundling of risk means that a broad range of financial institutions today performs the credit intermediation process, eroding the historical comparative advantage of banks in bearing credit risk. At various times, some institutions will be underwriting issues, while others will be making bridge loans, providing credit enhancements, writing derivative contracts and taking up riskier components of securities. Within the United States, the fixed-income market is today a market of some $ trillion, roughly the same size as the total equity market. Trading activity in fixed-income instruments is concentrated in Treasury securities.
Another example is the Netherlands which, like Sweden, is normally characterised as a small, open economy. Even there, worrying signals similar to those in the Swedish and American economies can be perceived. The improved economic activity has led to falling unemployment and rising asset prices. During the last two years, total lending has risen at an annual rate of around 15%. In the Netherlands too, a large part of this rise in lending can be explained by rising prices, especially house prices. Dutch house prices rose on average 15.8% during 1999. As a comparison, it can be mentioned that Swedish house prices rose by approximately 8% during the same period (prices for tenant-owned apartments rose to a considerably higher extent, however). In the Netherlands, household indebtedness in relation to GDP has traditionally been low, but has risen dramatically in recent years and today amounts to almost 45% of GDP. If we compare the developments in Sweden, the USA and the Netherlands, we see Dutch property prices have risen considerably faster than Swedish and American prices both in real and nominal terms. In this context, the development in Sweden appears to be less sensational. What can the Riksbank do if the build-up of risk increases? An increasing level of indebtedness in the economy, combined with rising asset prices, involves greater vulnerability to changes in the macroeconomic environment, i.e. growing risks. The obvious question then, is what the authorities can do to prevent such a build-up of risk.

Indeed, if prices are slow to adjust fully, there might even be a positive output gap, on this basis, for a time. The degree to which this is important hinges on how flexible firms’ prices are. The Bank’s recent survey on firms’ pricing practices indicated that, while price changes have become more frequent for many firms over the past decade, for some sectors and smaller firms a substantial minority will take more than six months to adjust prices, and therefore output, after a cost shock. 11 This suggests that the downward effect on supply might have been quite strong recently, following the oil price increases and fall in the exchange rate. It is very unlikely that this would be sufficient to alter the conclusion that presently the output gap is significantly negative, but it might affect interpretation of the effect of the output gap over the recent past, and judgements about how quickly the gap could be closed. And at the present conjuncture other considerations are also relevant. The key shock firms are facing is to the availability and cost of credit. Unlike a one-off shock to commodity prices, this will not have affected all firms at the same time, as the impact will be felt when a firm seeks to expand, or to replace investment. So the impact on supply capacity may build up over a longer period.
And in the UK, the experience of the crisis created a swell of opinion that legislative updates to the Banking Act were necessary and, significantly, that banking supervision should be undertaken by the Bank on a statutory basis for the first time. This was not necessarily a welcome development for the Bank. George Blunden, head of Banking Supervision at the time, felt the key characteristics of the Bank’s approach – flexible, personal, progressive, participative – were highly desirable, and he was keen not to have these eschewed by the forthcoming legislation. The Bank prided itself on its flexible approach, its recognition of the role of the market and its consensual mode of supervision – and was determined not to lose this as its oversight of the banking sector inevitably took on a more formal tone. In large part, the Bank achieved its aim – the 1979 Banking Act was more evolutionary than revolutionary and written in such a way that “clear scope was preserved for the 20  continuance of the Bank of England’s particular supervisory style” . Indeed, “the legislation was designed to interfere as little as possible with what was regarded as good in what had come before and only to add to the 21  earlier arrangements new features where the previous system had been found wanting” .

In this way, it was possible to retain overall liquidity in the bank system at an appropriate level. As you will see in graph 3, the average level of bank sight deposits changed very little throughout the year, if we compare each minimum reserve period with the next. Our other operational processes have also stood up well in the turmoil of the past few months. Payment transactions carried out between banks in the SIC system ran smoothly at all times, although banks have made greater use of SNB intraday loan facilities. In order to bridge liquidity bottlenecks at the end of the day, the National Bank provides a liquidityshortage financing facility to banks. This allows them to obtain liquidity on a temporary basis 2  BIS Review 150/2007  when needed, provided they have a limit with the SNB and provided this limit is continually covered with eligible securities. The continual coverage of the limits ensures that the banks have access to a liquidity cushion, even in critical situations. Actual use of the limits is generally restrained, and this has also been the case in recent months. Lessons learnt I would like to draw your attention to some of the lessons that we have already learnt from the current crisis. I will mention four points. First, the worldwide money market upheaval clearly shows how highly integrated international financial markets are today. Local crises can spread around the globe in a flash. The money market crisis is unlikely to have been overcome yet.
As always, what I have to say today reflects my own view and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. Although a reserve currency can formally be defined as any currency that is part of a foreign country’s foreign exchange reserve holdings, I do not think this is what we have in mind when we talk about a reserve currency. While the status of being a reserve currency can be conferred, the stature of being a reserve currency must be earned. As I see it, a successful reserve currency needs to satisfy a number of conditions. First, the currency needs to be fully convertible – with no risk of restrictions that could limit the ability to convert such holdings into cash denominated in the investors’ domestic currency. Second, the reserve currency country needs to have deep, liquid and transparent capital markets so that the sovereign debt instruments and other highquality debt obligations can be bought and sold at narrow bid-ask spreads and easily converted to and from cash. Third, the assets in the country must be governed by a wellunderstood, consistent and enforceable legal regime. This is to ensure that investors’ rights will be well protected, regardless of short-term political developments or changes in the governing regime. Fourth, the financial system in the country must be strong and stable to ensure that liquidity will be available even during times of stress.

Third, the U.S. has an independent central bank – the Federal Reserve – which has been successful in keeping inflation low and stable. As a result, the dollar has been a reliable store of value in recent years. Another point in the United States’ favor is the considerable steps taken to shore up areas of weakness revealed by the financial crisis. In particular, the safety and soundness of our financial system has been enhanced. Capital and liquidity requirements for U.S. banks have been raised significantly. Stress tests have been imposed to enhance the viability of large systemic institutions even in very adverse economic and financial environments. Reforms have been enacted to facilitate the recovery and resolution of troubled institutions. This  2  BIS central bankers’ speeches  includes living will requirements for the major systemically-important financial institutions, and the development of an improved resolution regime to ensure that institutions that do get into difficulty can be resolved without disrupting the stability of the financial system. In conclusion, I welcome other countries’ progress toward achieving the preconditions necessary for their currencies to attain the stature of a reserve currency. However, we should not act as if this is sufficient to achieve a well-functioning global financial system. In particular, the current regime is inefficient in a number of important ways. Countries have found it necessary to self-insure against the risk of large capital flow reversals. This has led to a very sharp rise in aggregate foreign exchange reserve holdings.
This is why it’s crucial to eliminate the obstacles to offering jobs to young and old, to everybody in fact. With the right institutions in place, not only would entrepreneurs be able to offer a higher number of jobs that were profitable for their companies but, more importantly, workers would have the option to decide whether they wanted to accept these jobs or not. Because the problem now is that, with no jobs being offered, they do not even have the possibility of deciding. It is sometimes claimed that, whatever our legal and institutional framework, unemployment can only fall if we manage to substantially raise the GDP growth rate. Admittedly, past experience shows that, on average, the Spanish economy has created jobs when it has been able to grow at over 2%. But these relationships are not unmovable since they are precisely an outcome of the institutional framework in place. If structural changes are made to eliminate the obstacles to offering jobs, lower unemployment rates with lower GDP growth rates may be attained. The reforms aimed at increasing the supply of jobs are, moreover, absolutely unavoidable now we are in the Monetary Union. And this should be stressed because, although I believe there is broad consensus on the need to adjust our economy, there is still not sufficient recognition that this adjustment must be different from those made when we had the possibility of devaluing our currency.

Exposures to emerging market economies are low and limited as credit and financial institutions have taken measures to protect their balance sheet from any undue risk. Despite the strong historical ties with the UK, studies carried out by the Central Bank of Malta indicate that the potential direct adverse effects of a ‘hard Brexit’ on the Maltese economy are deemed to be manageable. The robust economic developments together with the regulatory measures  implemented by domestic authorities have contributed to the further decline in credit risk and improving asset quality, with the non-performing loans ratio for the whole banking system falling to just 3.1% and comfortably below the EU average. Following a contraction phase of four years, lending to non-financial corporates finally turned the corner, increasing by an annual rate of 4.6% in September 2018. This is a welcome sign since it does not only hint that bank disintermediation is normalising, but it also augurs well for monetary policy effectiveness, given that banks are the conduit for its proper functioning. Although such signs are encouraging, we have yet to stimulate more usage of the current liquidity lying idle at the Central Bank. Here, banks play a crucial role in finding new viable business niches. Page | 7  Key performance indicators (KPIs) for domestic financial institutions are healthy but we must not become complacent. Vulnerabilities remain. Aggregate KPIs only give one side of the story masking the variability in operational performance at an institutional and sectoral level.