samchain/econo-pairs-v1 huggingface dataset:
Because the investment with the Fed is riskless, little or no economic capital would be needed to support such arbitrage by banks. In this way, the IOER rate should theoretically form a “floor” beneath short-term interest rates, allowing the Fed to achieve its target for the fed funds rate even with a very high level of reserve balances. In practice, however, many lenders in the U.S. money markets are not banks and so cannot earn IOER. Moreover, from the perspective of a potential lender to a bank, the arbitrage  2  In the five years prior to the crisis, total reserve balances averaged $ billion and excess reserves – balances in excess of those required to satisfy reserve balance requirements – averaged about $ billion. Currently, total reserve balances are about $ trillion, nearly all of which are excess reserves. 3  For discussion of changes in recent years to activity in the fed funds market, see the Liberty Street Economics blog posts, “Who’s Lending in the Fed Funds Market” and “Who’s Borrowing in the Fed Funds Market,” at http://libertystreeteconomics.newyorkfed.org/. 4  The FR 2420 is a transaction-based report that collects daily data on federal funds transactions, Eurodollar transactions, and certificates of deposits from domestically chartered commercial banks and thrifts that have $ billion or more in total assets and from U.S. branches and agencies of foreign banks with total third-party assets of $ million or more.

Finally, allow me to express once again my gratitude to the co-organizers of this event for making the conference possible, and to wish all the participants a very fruitful meeting and a pleasant stay in Madrid. And without further due, let me now introduce our first speaker, Governor Philip Lane. It is a special honor for us to have him here today. He is especially suited to be our first Keynote Speaker in this event because he has a profound knowledge of economy and finance, as a result of his long and prestigious career as an academic, as well as a brilliant policy-maker. His keynote speech today will verse about “Trends and Cycles in Financial Intermediation”. Philip, you have the floor...  10  For more information on the impact of FinTech on the finance industry see Philippon, T., “The FinTech opportunity”, NBER Working Paper, No 22476, 2016; and Huang, Y., Shen, Y. Wang, J. and Guo, F. , “Can the internet revolutionise finance in China?”, in Song, L., Garnaut, R., Fang, C. and Johnston, L. (eds. ), China’s new sources of economic growth: reform, resources, and climate change, Australian National University Press, 2016, pp. 115-138. 6/6
Whatever its starting position the subsequent declines in prices were far more than the domestic industry could bear. Since the mid-1970s domestic output has shrunk by two thirds, domestic employment by 90%. If ever there was a loser from globalisation the UK’s clothing and textile industry would surely qualify as one. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Chart 5: Even in nominal terms clothes are  Chart 6: Globalisation crushed domestic  cheaper than in the 1970s  production of clothing and textiles  price index, 1975=100 800 Rest of consumption 600  Clothes  400  200  0 1975  1985  1995  2005  2015 Source: ONS  Source: ONS  What can we say about the balance of these effects? The red line in Chart 7 plots the estimated gains to consumers from lower prices over this period, relative to an assumed “non-globalisation” path of 1¼% per year. As I said above, the actual and more pronounced declines have delivered a real income gain for consumers of around 3%. The blue line plots the estimated loss in labour income in the sector. Because we’ve assumed real prices would continue to fall somewhat, even in the absence of globalisation, the industry would probably have to have slimmed down a bit (falling prices have to be matched by falling average costs). In a plausible scenario, consistent with the assumed 1¼%-per-annum rate of (real) deflation, job numbers would have 3  fallen by around a quarter .

But there’s little doubt that, for the UK’s clothing and textile businesses, globalisation mattered a great deal. And if you’re inclined to view de-industrialisation as a sorry tale, it can only be the sorrier for a sector that played such a prominent part in our history and in the industrial revolution in particular. During the ten years Adam Smith spent writing the Wealth of Nations, and a few miles further south of here, the inventor and entrepreneur Richard Arkwright was awarded patents for his new spinning and carding machines. He opened his famous mill at Cromford in 1776, the same year as the book was published. By 1790 mills using his new machines employed 30,000 people. By the 1820s, Britain was producing half of the global cotton  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  1  textiles . Famously, in his two-sector example of the principle of comparative advantage, Ricardo chose Portuguese wine and “English cloth”. And yet it is still worth bearing in mind Smith and Ricardo’s basic insights. If people can move relatively easily from one job to another, employment needn’t fall in aggregate even if it’s doing so in one particular sector. (Nationally, the rate of employment is significantly higher and the rate of unemployment far lower than in the mid-1970s.) And in the meantime, we have all had the benefit of cheaper clothes.
Nevertheless, I cannot leave the topic of the financial system without mentioning the massive overhaul of financial market infrastructure that is currently underway and the germination of ideas in the area of payment intermediation, as the Central Bank is integrally involved with both. The renewal of the most important core infrastructure elements used for decades to operate the financial system began recently. The investment as a whole represents the financial system’s largest IT investment ever undertaken. The overhaul will move us away from “home-grown” solutions to standardised international systems. The systems being renewed are the banks’ internal payment systems, the Central Bank’s interbank payment systems, and the Nasdaq securities depository’s securities settlement system. A variety of benefits accompany new financial market infrastructure, but the implementation process can be risky, partly because the new systems must communicate with the old ones during the transition phase. Supervisory bodies monitor this risk. It is analysed at meetings of the Systemic Risk Committee and is identified as a risk factor in statements issued by the Financial Stability Council. Such a risk materialised to an extent last November and the cooperative forum on operational security of financial market infrastructure that I just mentioned was set up afterwards. In that forum and elsewhere, work will be done to minimise the operational risk accompanying the ongoing renewal process.

Apart from a short period early in this decade, when Iceland was at an entirely different point in the business cycle than it is now, the Central Bank’s interest rates are at their lowest since the early 1990s, when they became an important monetary policy instrument. We must therefore consider realistically whether we can expect further reduction of interest rates without an outright slack in the economy. Developments in Central Bank rates over the coming term will be determined by economic developments, which could be in either direction. When we met a year ago for the Bank’s Annual Meeting, the vast majority of the capital controls had just been lifted. As expected, exchange rate volatility increased afterwards. But that volatility proved temporary, and short-term fluctuations in the exchange rate subsided markedly in the latter half of the year. In recent months, short-term volatility has actually been limited in historical and international context. The Central Bank has not intervened in the foreign exchange market in recent months, supporting the conclusion that this reduced volatility is due to improved balance in capital flows. According to currently available forecasts, GDP growth is set to remain robust and the domestic economy will experience a “soft” landing. The outlook is uncertain, however, and various risks could materialise, not only in Iceland but also abroad, where uncertainty is considerable at present. In addition, it is important that there is considerable scope for interest rates and large foreign exchange reserves to respond to adverse developments.
Conclusions  In conclusion, if monetary and budget policies appear to be different on the two shores of the Atlantic, and indeed have been in terms of gradualism and activism, the reason does not necessarily lie in differences of conduct on the part of the economic policy authorities, but in differences in the way the economies are structured and in how they function. Let us take a look at the current monetary policy stance in the two economies, where the policy interest rate has been brought to 1% in the US, 350 basis points below the level one year ago, while in the euro area it was reduced to 3.25%, just 75 below the levels of one year ago. Anyone who, in comparing the different stance of monetary policy between the US and the euro area, fails to take into account the differences in economic structure and in the shocks hitting the two economies is making an error of judgment. In particular, the US economy has been hit by a major slump in the real estate market, which in Europe is restricted to only a few countries. The financial crisis, that started on the other side of the Atlantic but it has propagated rapidly on our side, is having a bigger impact on the US banking system’s capability to convey financing to non-financial firms on account of the different financial structure.

There are factories 1/4  BIS central bankers' speeches  located in the United States, Switzerland, Germany, Belgium and Spain, and then there are other materials (such as glass for vials, or refrigerators) from all over the globe. The irruption of trade barriers, both for vaccines and some critical medical supplies in the early months of the pandemic, exemplifies the harm a parochial, protectionist view can do to global growth and health. In turn, while global supply chains have drawbacks, including their exposure to foreign shocks, they have proved their robustness during the pandemic. Firms whose production is more integrated into global value chains have performed better and with least disruption to their output. True, the sectors most integrated into the value chains bore the brunt of the initial external shock originating in China. But when the pandemic also hit domestic markets, such sectors clearly performed comparatively better, by accommodating the shocks to the domestic economy.1 What lessons are to be learned? I think a similar approach to that taken after the Global Financial Crisis is warranted. The answer then was not less but more and better integration; deeper, more rules-based, more resilient. So too for the role of value chains after the COVID crisis. Global supply chains have to be tested, as banks were after the crisis with stress tests. And critical supply chains need specific regulation, just like big banks, so vulnerabilities can be detected.
It has justifiably become a cornerstone of our global economy, which thrives on openness, including in international financial and banking services. But such openness makes domestic economies more vulnerable as a result of contagion and spillovers from shocks that originate elsewhere – whether from other international economies or global capital markets and the international financial system. In addition, when banking is international, it can generate problems of effective oversight and coordination, and so difficulties in ensuring a full understanding of the risks being run within that sector. To get the benefits of international banking safely, these risks need to be managed. We need to work out how to be better lion tamers to create a safe environment for all. And we should aim to get to the point where we are happy that even in a crisis it is safe to put our heads in the lions’ mouths. Globally, the regulators of financial services activity have been prominent in their response to the crisis. We have sought to improve the resilience of banking, domestically and globally, thereby supporting financial stability. But in pursuing this objective, we need of course to look at the costs as well as the benefits of our approach. We need in particular to ensure that that resilience and stability is not achieved at the expense of what might colloquially be described as the “stability of the graveyard”.

There is sometimes a tendency by the authorities to try to solve all problems by more regulation. It is  BIS Review 104/2006  5  true that we could regulate away all the risks in the banking sector – but such regulation would hamper economic development. There must be a balance. Thus for each regulation we introduce we must also conduct a fair analysis of its costs, also non-financial, as well as its benefits, also non-financial. I agree that this is not easy, partly since in most cases you will not find any clearly measurable indicators, but the process of conducting the cost/benefit analysis will in itself help you in your decision. Supervision Good regulation is closely linked to good supervision. Supervisors must be able to build their work on a broad and relevant regulatory framework. Supervisors must also possess the necessary powers and other prerequisites to conduct efficient work. There are at least four important aspects: First, the supervisory authority must have operational independence from industry as well as from politicians. These must not interfere in the operational decisions of the supervisors, e.g. to take remedial measures or to close banks. Such decisions must be taken on purely prudential grounds. Of course, the supervisors are still responsible for their actions and could be criticized afterwards, e.g. in Parliament hearings, but they must be able to perform their operational duties independently. Also the bank, its owners and management should be able to sue the supervisors for malpractice and they may receive compensatory payments.
Elvira Nabiullina: Overview of Russia's fiscal and monetary policy Speech by Ms Elvira Nabiullina, Governor of the Bank of Russia, at the panel meeting of the Russian Federation’s Ministry of Finance, Moscow, 20 April 2017. * * * Good afternoon, Mr. Medvedev, and good afternoon to my esteemed colleagues. For us here at the Bank of Russia, the Ministry of Finance is our closest and most important partner. It is not for nothing that we are brought together in a single understanding of fiscal and monetary authority. And of course our measures – monetary policy on the one hand, and fiscal policy on the other – are closely intertwined, and have an influence on one another. We share the responsibility of maintaining economic stability between us. The financial system was the first to take the hit of external shocks experienced two years ago. And since that time we have often needed to make tough, and sometimes unpopular, decisions. In our view, the Ministry of Finance, in making conservative fiscal policy decisions, and in consistently holding the course towards reducing the budget deficit and towards reducing dependence on oil revenues, has made a significant contribution to the preservation of stability and provided support to adaption processes in the economy. Major credit is due to the Ministry of Finance for the fact that the Russian economy now feels more secure and macroeconomic indicators are normal. The current economic situation in general looks very promising.

Even as regional economic integration increases in Asia and other parts of the world, these economies seem a long way from the point where economic, or political conditions, will make a compelling case for monetary integration. In Europe, of course, the political case for monetary integration to a large extent preceded the economic case. And the architects of the European Union integration worked consciously to induce a level of economic integration in Europe that would induce conditions that more closely met the economist's test for an optimal currency area. For most of the emerging markets today, in contrast, the challenge is to establish the conditions that will enable them to live more comfortably in a world where their exchange rates will adjust more freely in response to changing fundamentals. As these economies become more open to capital flows, they will necessarily find it more difficult to occupy the tenuous middle ground with an exchange rate regime that is neither fully fixed nor flexible, but managed in a way that closely tracks the value of the dollar or carefully constrains fluctuations against the dollar. This does not mean that these countries can be indifferent to exchange rate movements or that the exchange rate is irrelevant to the conduct of monetary policy. For many small open emerging economies, price stability and exchange rate stability are obviously intertwined, and a monetary rule that responds effectively to inflation pressure cannot afford to overlook the signals coming from the foreign exchange market.
As we move to the next level, ethics and compliance will increasingly become a part of a single program. 2. Ethics and compliance as a tool for on-boarding risk  The last 20 years have demonstrated the benefit of ethics and compliance in identifying legal risk and taking operational measures to keep that identified legal risk within the organization’s accepted risk appetite. In most applications, though, compliance has been the vehicle that prompts the organization to reduce risk by constraining activity. In the financial services industry, correspondent banking provides an illustrative case. Correspondent banking is the business of effecting funds transfers for other financial institutions. Because the U.S. dollar is the international medium of exchange, financial institutions throughout the world have a need to effect dollar-denominated transfers of funds. Ethics and compliance professionals in U.S. banks have pointed out that this type of business presents several different legal risks: money laundering, terrorist financing, and sanctions evasion are the most obvious and the most notorious. There is no doubt that these compliance professionals are correct. One consequence of their being right, however, is that U.S. correspondent banks decided to “de-risk”. To execute on the de-risking mandate, many U.S. correspondents stopped providing correspondent banking services to those perceived to present such risk. As a result, certain elements of the global financial services industry now find it increasingly difficult to transact business in dollars.

One related to fear on the part of the chief ethics and compliance officer to engage in action to resolve a conflict with a key business person – a fear of losing one’s job or her place in the corporate hierarchy. The other problem concerned access to the board of directors. It is one thing to go before the board of directors annually to have the compliance program approved. It is quite another to go before the board of directors to do battle with a senior executive who is probably before the board of directors on a regular basis. One possible solution as we move to the next level is to embed ethics and compliance issues in the disciplines that are more typical of governance issues involving the board of directors. These would be issues like strategy, business goals, and risk management, all of which touch ethics and compliance. Another solution would be to create escalation pathways to the board of directors for resolving conflicts between the chief ethics and compliance officer and a senior business leader. Conclusion As I said at the outset, ethics and compliance have come a long way in a very short time. We have learned a great deal during the journey. As I look out over the road ahead, I believe we will continue to make significant progress in business organizations that deliver on their value proposition, not only to shareholders, but to the other constituents that these organizations serve, their customers, employees, and communities.
To do so would be a violation of the Treaties. Article 11 of the TFEU provides that environmental protection requirements must be “integrated into the definition and implementation of the Union's policies and activities”. This imposes an obligation on the ECB to take into account and consider the objectives of the  Climate Law when performing its tasks. In addition, Article 11 could be understood as supporting measures which incorporate environmental considerations as secondary aims. This means the ECB could rely on Article 11 to support the climate neutrality dimension of measures falling within its monetary policy or supervisory competences. But it does not go so far as to establish an autonomous competence to adopt environmental measures. In addition, under Article 7 of the TFEU, the activities and policies of the ECB need to be consistent with Union law and therefore also with the Climate Law. We have diligently assessed how these provisions of the Treaty, together with the Climate Law, affect our tasks, always being guided by and staying within our mandate. The ECB is not an environmental policy institution. The ECB is a central bank and banking supervisor. As such, let me share with you what we have done to reflect these legal requirements in the common fight against the climate crisis within our mandate. First of all, when defining and implementing monetary policy, we need to take into account environmental protection requirements, such as the climate-neutrality objectives contained in the Climate Law. And that is what we have done.

In the new banking package, the concept of “transition plans” is important. Under Article 76 of the proposed amendments to the Capital Requirements Directive (CRD VI)[13], a bank’s management board is required to monitor and address environmental risks arising in the short, medium and long term. [14] Banks have to make sure that their business model and strategy are not misaligned with the relevant Union policy objectives towards a sustainable economy and they need to manage potential risks from such misalignments. Article 11 TFEU, the requirement to integrate environmental requirements into the policies and activities of the Union, plays a role in supervision. The ECB has a duty to integrate the Climate Law’s neutrality objectives into its supervisory policies and activities. However, we have some discretion as to how we do this. After all, the climate neutrality objective affects the ECB’s mandate in many respects and Article 11 TFEU does not prescribe how the ECB should integrate the environmental requirements. Do not expect us to act to regulate or enforce environmental policies. We will stick to our mandate. Our mandate is to keep under control the risks that banks and the financial system are facing, and in that capacity we have to look closely at the risks that are building up in the banking sector as a consequence of the climate crisis. Lastly, I would like to draw your attention to the work of the Central Banks and Supervisors Network for Greening the Financial System (NGFS).