samchain/econo-pairs-v1 huggingface dataset:
Market power, in this setting, is captured by the capacity of firms to charge prices in excess of marginal costs, rather than by their capacity to build-up ever-larger market shares. Market power means higher markups, but not higher degrees of market concentration. Different competitive settings might generate quite different pricing behaviour and Phillips curves (for example, Rotemberg (1982)). In this setting, the monopolistically competitive firm maximises profits by setting its price (𝑃 ∗ (𝑖)) as a mark-up over nominal marginal costs (𝑀𝐶): 𝑃𝑡∗ (𝑖) = 𝜇𝑀𝐶𝑡  (4)  𝜖 𝜖−1  (5)  𝜇=  where 𝜇 is the mark-up defined in terms of the elasticity of substitution. This tells us a firm increases its mark-up as the demand for its good becomes more inelastic. That might arise for a variety of reasons. Customer loyalty or brand might be one reason. Network economies of scale and scope might be another. In either case, the implication is that prices are being set above (and sales below) their socially optimal value – that is to say, their value under perfect competition when price equals marginal cost (𝜖 tends towards infinity). When prices are sticky, firms set prices in a forward-looking manner to get as close as possible to the desired mark-up over time. The forward-looking Phillips curve in (1) summarises that price-setting behaviour in the economy at large. The slope of the Phillips-curve, 𝜅, is a composite of deep structural parameters in the model.

After extensive discussion and a careful evaluation, the Governing Council concluded that the revised design concept of Coop Himmelb(l)au best meets the functional and technical requirements specified by the ECB, and has features that reflect the ECB’s values and transforms them into architectural language.” [Quotation of the Press Release] On 13 February 2004 an international jury consisting of architects, Eurosystem representatives and a representative of the City of Frankfurt chose three winning designs in accordance with the following criteria, as laid down in the Competition Rules out of the 12 design concepts submitted in the Second Phase of the competition: 1. Overall town-planning, architecture and landscape;  2. Compliance with the main features of the functional and spatial programme, including modularity;  3. Feasible approach to an energy/environmental concept and compliance with the main features of the ECB’s technical requirements;  4. Compliance with the relevant rules, in particular in the field of building law and environmental law. The first prize was awarded to Coop Himmelb(l)au, Vienna; the second prize to ASP Schweger Assoziierte, Berlin; and the third prize to 54f architekten+ingenieure, Darmstadt, in cooperation with T.R. Hamzah & Yeang, Selangor. On 18 March 2004, the ECB’s Governing Council decided to invite all three prize winners to revise their design concepts in accordance with the Jury’s recommendations and the ECB’s requirements. The purpose of this Revision Phase was to remedy the remaining functional and technical deficiencies of the concepts.
The Governing Council chose covered bonds due to their particular importance in Europe and the fact that, by carrying a signature from the issuing bank and the underlying asset, they are akin to our repo operations. Our aim was to have a catalytic role: we decided on a purchase programme with a volume that was significant enough to improve market functioning but not so large as to dominate the market as such. We also chose the covered bond market because we knew we could trigger new issuance activities, and thereby have a positive spillover effect on the overall financing of banks as well as on other market segments. All in all, there are encouraging signs that these measures – in combination with the substantial interest rate reductions – are gradually bearing fruit. At the same time, there is no room for complacency and we are, as always, alert and prepared for any unexpected developments. III. How to exit? – The ECB’s exit strategy  Having described the set of non-standard measures, let me now turn to the question of how to exit from them. The rationale for exit from these measures is the inverse of the rationale for their implementation. We have introduced exceptional measures under exceptional circumstances and will unwind these measures when the situation returns to normal and the rationale for the measures fades away. Note that an exit strategy is not identical to a particular course of action.

The exit strategy, in the end, will need to be invoked at the precise time in which the traditional link between broad money and our provision of liquidity to the banking system will re-establish itself. This calls for a constant and careful monitoring of the conditions at which the Eurosystem supplies central bank credit to banks in view of the evolution of the economy and of markets expectations. Thank you for your attention. BIS Review 103/2009  9
Favourable results Looking back at the ten or so years that have passed since the change of regime, I think that most would agree with me that the shift in policy has turned out well and that the new stabilisation policy regime has lived up to our hopes. Sweden has gone from having been a high-inflation economy with recurring cost crises, high interest rates and unstable economic performance, to being an economy with low, relatively stable price rises and wage increases that put real money in people’s pockets, and where the risk of overheating and subsequent recession has diminished markedly. In an international perspective, too, the Swedish economy has performed well in the past decade, in stark contrast to the 1970s and 1980s. The robust performance is evident if you compare developments in a number of central variables during the 1970s and 1980s with their developments under the new stabilisation policy regime. (Chart 1.) In the 1970s and 1980s the rate of price increases stood at just over 8 per cent a year, while the corresponding rate since 1995 has been just below 2 per cent. The lower inflation rate has not entailed weaker growth in output. On the contrary, GDP growth has averaged around a half percentage point higher a year under the new regime. Productivity growth has also been more robust. The higher  BIS Review 59/2004  1  economic growth and productivity has contributed to healthy growth in real wages.

Jean-Pierre Danthine: Does cash have a future? Summary of a speech by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the Assemblée Générale de l’Association des Alumni HEC, Lausanne, 8 May 2014. *  *  *  The complete speech can be found in German on the Swiss National Bank’s website: www.snb.ch. One of the traditional tasks of the Swiss National Bank (SNB) is to provide the economy with banknotes and coins. Since the establishment of the SNB, banknotes have constituted the most visible link to the population. As an everyday article of use, but also symbolically, banknotes embody the quality, security and stability of the SNB, and of Switzerland in general, not least of all also for the rest of the world. It is therefore of key importance that the SNB undertake the task of cash supply and distribution conscientiously. The role that banknotes play in the public’s trust in the institution and its decisions is not to be underestimated. In turn, this trust is an important prerequisite for the SNB to be able to fulfil its core monetary policy mandate, and thereby ensure price stability. Due to technological developments in the post-war period, the significance of cash declined, as measured in terms of economic performance. Since the beginning of the 1990s, however, the demand for cash has hovered at a stable level, and since 2008, in the wake of the financial crisis, there has even been a marked increase.
In 2005 the decision was taken to join ERM II with a unilateral commitment to maintain the exchange rate at its central parity. This was supported by a process of fiscal consolidation, driven both by revenue enhancing and expenditure cutting measures; the first stage of pension reform; the liquidation of loss-making State enterprises and the privatization of others; and further liberalization measures, including in telecommunications and the postal and port services. Measures were also taken in pursuit of the Lisbon Agenda objectives, especially to improve labour market participation and to enhance educational attainment levels. Finally, EU accession also saw the adoption of a new framework for product market regulation. The decision to meet the Maastricht criteria at the earliest possible opportunity seemed overly ambitious to some at the time, but a combination of appropriate policies implemented within a clear strategic framework and an improvement in Malta’s external environment led to the desired objective being achieved just three years after EU accession. In July 2007, in fact, the European Commission recommended to the EU Council that Malta be allowed to adopt the euro on the grounds that it had achieved the high degree of sustainable convergence required by the Treaty. Achievements of the past five years The implementation of reforms began to pay dividends after 2004. Also with the help of stronger external demand, growth accelerated to an average annual rate of 3.4% between 2005-2008, compared with 0.5% in the preceding four years.

The FX part of the balance sheet therefore had a significant maturity mismatch. However, there was no safety net of the type we have in a national setting, in the form of liquidity provision and lender-oflast-resort (LOLR) to back it up. It was an accident waiting to happen, and happen it did, with a vengeance, at the peak of the international financial crisis in autumn 2008, when there was a wholesale run on the FX financing of internationally active banks. When the Icelandic authorities were dealing with the failing banks, they assumed, based on published CAD ratios and stress tests, that the banks were solvent. Now, however, we know that this was probably not truly the case, as there were hidden vulnerabilities in their capital positions. Be that as it may, with the solvency assumption in mind, the authorities tried to build defences against potential foreign currency liquidity problems at the banks by  BIS central bankers’ speeches  1  negotiating swap lines and tapping foreign capital markets – in both cases, with limited success. Given the lack of international co-operation, the Icelandic authorities were forced to consider radical solutions. Although they were not necessarily articulated in full at the time, these solutions entailed several goals: to preserve a functioning domestic payment system, ringfence the state in the case of bank failures, limit the socialisation of private sector losses, and create the conditions for rebuilding a domestic banking system.
Thus, we can claim that greater transparency has led to better economic performance. As we see in Chile, there is a lot of talk about the decisions and the scenarios of the Central Bank and this is good because it strengthens credibility and keeps authorities committed to their objectives, not only at the moment of communicating but also at the moment of adopting those decisions. Effectiveness of monetary policy is reinforced by communication with market participants and by some degree of predictability in the Central Bank’s conduct of its policies. Monetary policy affects inflation through its effects on spending (consumption and investment) and on asset prices. The Central Bank controls short-term interest rates but these have only limited effects on the economy; financial market participants base their decisions on the whole term structure. Investment, for example, is fundamentally guided by long-term rates. Nevertheless, expectations about the course of short-term rates naturally are key determinants of the long-term rate and therefore do influence the whole term structure. Thus, expectations about the evolution of monetary policy contribute to its effectiveness. A transparent central bank affects the market’s expectations by providing  2  BIS Review 92/2008  market participants with information on which they base their vision of the likely course of inflation and monetary policy actions. The Central Bank of Chile’s communication of monetary policy In the Chilean case, our main vehicles through which we give account for our objectives of price and financial stability are the quarterly Monetary Policy Report and the bi-annual Financial Stability Report.

The key difference with previous programmes is that purchases are now conducted in a flexible manner and fluctuations in their distribution will be allowed over time, among jurisdictions and across asset classes, with a view to preventing fragmentation in monetary policy transmission. 1  The volume of purchases initially announced under the PEPP was € billion for the whole of 2020. In June the term was extended up to at least June 2021, and the volume by a further € billion, making for a total of € trillion. The PEPP, together with the new purchases under the Asset Purchase Programme (APP), will increase the portfolio of the Eurosystem’s securities purchase programmes to around € trillion in June 2021. In early October 2020, net purchases of public and private sector assets under the PEPP had already reached € billion since its launch at the end of March, i.e. 42% of the current envelope. Today we can safely say that the PEPP has been clearly successful in curbing financial market deterioration in all euro area countries. This is particularly visible in sovereign yields, which are now close to their pre-crisis levels; but it may also be perceived in other market segments such as that for corporate debt. And, of course, this decline in the cost of sovereign debt has provided policy space for fiscal authorities in all euro area countries, enabling them to take unprecedented measures to sustain the income of households and firms.
They have at their disposal a second policy lever of direct relevance for investment, namely fiscal policy. Companies will only invest in the future when there is confidence and certainty about the future, about the medium-term fiscal path, and ultimately about taxes. We need a consistent and credible application of the Stability and Growth Pact across time and across countries. Within the existing framework, governments can find space to support productive investment, and achieve a more growth-friendly composition of fiscal policies by lowering the tax burden and reducing unproductive current expenditures. In parallel, it may be useful to have a discussion on the overall fiscal stance of the euro area with the view to raising public investment where there is fiscal space to do so. In this regard, there is also a complementary role to play at European level in supporting the rebound in private investment. I therefore welcome the € billion package announced by the incoming Commission President two months ago. The role of monetary policy Let me finally say a few words on the contribution of monetary policy. We successfully fought the confidence crisis in the euro that raised interest rates to abnormal levels. We provided the euro area banking system with unprecedented funding. We have continuously lowered our policy rates. Now we have reached the lower bound. To ensure that this very accommodative monetary policy stance is transmitted to the real economy across the euro area in an equal manner, we have also deployed a number of non-standard tools.

It is an idea that the ECB fully supports. The development of the market for simple and transparent Asset Backed Securities deserves particular support. Member States should consider the provision of public guarantees to support lending to small and medium sized enterprises. There also needs to be a consistent and credible application of the Stability and Growth Pact across time and across countries. Within the existing framework, countries should explore how to support productive investment. In monetary policy, we have deployed a number of non-standard tools to ensure our very accommodative monetary policy stance is transmitted to the real economy. Last week, the Governing Council decided to start the purchase of certain high-quality asset-backed securities and covered bonds in October. Senior tranches of such ABS have proven to be high quality assets. Alongside our Targeted Longer Term Refinancing Operations, we expect these measures will enhance the functioning of monetary policy transmission, provide further accommodation now that we are at the lower bound, and have a sizeable impact on our balance sheet. *** Ladies and gentlemen, It is a pleasure to be here tonight with you in Milan. In a recent speech in Jackson Hole, I spoke about the need for a policy mix involving monetary, fiscal and structural policies to jump-start the economic recovery in the euro area. We are currently facing a set of conditions – low growth and low inflation, high debt and high unemployment – that can only be addressed by concerted action on both the demand and supply sides of the economy.
Japanese banks currently account for about 8% of total loans for use in Hong Kong, compared with 12% before the crisis. However, there have been welcome signs that the decline in the Japanese banks’ domestic loans in Hong Kong has been levelling off this year. Moreover, in the Hong Kong syndicated loan market, it appears that the Japanese banks have recovered some of their appetite for lending. According to the figures collected by Basis Point, in 1998 the Japanese banks had dropped to 8th place in the league table of completed loans, with deals amounting to only $ million. In the first half of 2000, however, the Japanese banks had completed loan deals amounting to almost $ billion and had climbed to 3rd place in the league table. I hope that this is a trend that will continue. Japanese banks have in the past made a significant contribution to promoting the growth of the Hong Kong economy and I am sure that they will be able to resume this role in the future. This may, however, involve less reliance on straightforward lending than in the past and a greater focus on capital market activities. 1  BIS Review 65/2000  The Japanese banks have been through difficult times due to the collapse of the boom economy in Japan and the impact of the Asian crisis. Things are now looking brighter.

This would enable us to surprise market participants, and in the short term this might allow interest rate changes to have a greater impact. But enterprises and financial operators would gradually learn from experience and take positions to guard their interests. The long-term results would be weaker confidence in monetary policy, higher interest rates and risk premia, lower investment and an unstable exchange rate. Economic developments Chart 4 Effective exchange rate for EUR Nominal and real. Index 1995=100  There have been substantial fluctuations between the major currencies since the introduction of the euro. In general, the euro has depreciated against other currencies. Some academic papers suggest that the euro is undervalued. For instance, calculations in a working paper published by the IMF indicate  BIS Review 67/2000  6  that the nominal equilibrium exchange rate at the time of the introduction of the euro at the beginning of 1999 was USD 1.26 per euro.3 Forecasts Norwegian krone Market makers’ estimates  Expectations in money and foreign exchange markets seem to suggest that the euro is also considered to be undervalued in relation to the Norwegian krone. Estimates from market-makers indicate that the krone is expected to weaken against the euro over the next three to twelve months. Chart 5 Other exchange rates Index. January 1999=1000  The krone has depreciated against other currencies since the beginning of the year. It has weakened considerably against, for instance, the US dollar and pound sterling, but less against the Swedish krona.
On the one hand, the global economy has continued and is expected to expand robustly, driven mainly by strong growth in the euro area and the emerging market economies, particularly China and India. Financial stability has, on the other hand, become more vulnerable than a few years ago. Recent developments in the US economy and sub-prime credit markets may indeed be an early wake-up call for policymakers and market players worldwide. The US sub-prime related problem has prompted a retrenchment from risky assets and de-leveraging, causing wider credit spreads for riskier assets classes and higher volatilities in bond and equity markets  BIS Review 104/2007  1  around the world. The unwinding of carry-trade and flight to quality of international capital have also been observed. Importantly, the resulting disruption has already required extraordinary liquidity injections by a number of central banks to smooth market fluctuations. Beside the financial sector, turmoil in the sub-prime markets also posed negative impact on the real sector, denting US growth prospects going forward. I would like to digress briefly to tell you that the direct exposures of Thai financial institutions in collateralized debt obligations (CDOs) are relatively minimal, in terms of shares of their total assets. I also like to reassure you that we are keeping vigilance on potential indirect repercussion that may arise further from the impacts of US sub-prime markets to the global economy and financial markets, as the adjustment process is likely to be protracted.

Its government finances were in fact in better shape than in many other advanced countries. But troubles had been accumulating in its banking system, caused especially by small and medium sized banks having made excessive loans to a property sector that has now crashed – a familiar problem repeated almost in cycles, across a range of countries. The result is a cutback in credit, a deeper recession, greater strain on government finances both as revenues decline and the government is forced to bail out banks, and worsening bank balance sheets as banking assets lose further value and borrowing costs increase. We are therefore seeing a vicious cycle of economic decline and a loss of confidence. The situation is not unique to Spain. The specifics of the balance sheet problems vary from country to country, but a self-reinforcing cycle of feedbacks between falling economic activity and weak bank and sovereign balance sheets is now taking place in several countries in Europe. It is complicated by an increasing fragmentation in politics, which makes the journey to a credible and lasting solution in the Eurozone all the more complex and challenging in the years to come. The problems in the Eurozone and the US underline the absolute necessity for consistently sound banking practices and governance by banks. The crisis also provides lessons for regulators and the supervision of banks. The IMF has found that regulatory intervention in Spain lacked timeliness and effectiveness, even though the problems in banking had been identified early on.