samchain/econo-pairs-v1 huggingface dataset:
But, if we look at the right-hand side of this slide, it is intriguing to see such a close relationship between the exchange rate and relative bond term premia differential as that observed during the course of this year. Conclusion Let me conclude. Deciphering exchange rate movements, and giving them a structural interpretation, remains a topic that requires the dedication and passion of many researchers. Much has already been learned, but much still remains to be understood. The introduction of unconventional monetary policy measures forces us to think more deeply about the channels through which such 9 / 11  BIS central bankers' speeches  measures affect the exchange rate, with regard to their impact both on the expected future path of short-term interest rates and on risk premia. An important aspect in this endeavour is to gain a better understanding of the role of portfolio rebalancing. Evidence is growing, and my remarks today are intended to add to this, that portfolio rebalancing is a major transmission channel of central bank asset purchases. At the same time, the signalling and portfolio rebalancing channels of central bank asset purchase programmes might, at times, work in opposite directions, with unclear implications for the exchange rate. Moreover, in an integrated global financial system, unconventional policy measures have been shown to often trigger large cross-border capital flows.

To the extent that such policies can be anticipated by market participants, financial intermediaries could be expected to price in the resulting shift in the relative supply of and demand for currency before capital flows take place. As a consequence, international portfolio rebalancing considerations may, at times, drive a wedge between expected future short-term rates and the exchange rate. My remarks today are by no means conclusive and they are based on tentative evidence. But I hope that they provide impetus to further, more systematic research on a topic that is not only intriguing from an intellectual perspective, but also of significant relevance to policymakers in their efforts to improve the understanding of the transmission channels of non-standard monetary policy measures. Thank you for your attention. 1 See e.g. Fratzscher, M., M. Lo Duca and R. Straub (2016), “ECB Unconventional Monetary Policy: Market Impact  and International Spillovers”, IMF Economic Review, 64(1), pp. 36-74; Georgiadis, G. and J. Gräb (2016), “Global Financial Market Impact of the Announcement of the ECB’s Asset Purchase Programme”, Journal of Financial Stability, 26, pp. 257-265; Rajan, R. (2014), “Competitive monetary easing: is it yesterday once more?”, remarks at the Brookings Institution, Washington, D.C., April 10; and Bernanke, B.S. (2015), “Federal Reserve Policy in an International Context”, paper presented at the 16th Jacques Polak Annual Research Conference hosted by the International Monetary Fund, Washington, D.C., 5 and 6 November. 2 See Cœuré, B.
That has included work on the specific issues of leverage and liquidity of LDI strategies, which was assessed with a stress simulation in 2018, and which led to further close work with the Pensions Regulator and the Financial Conduct Authority[14] to enhance understanding of financial stability risks, enhance monitoring and inform further work. The vulnerabilities in market-based finance that the FPC had articulated were exposed in dramatic fashion in the ‘dash for cash’ in the early stages of the Covid pandemic. [15] That gave additional momentum to this work. And there has been some progress in recent years, on the regulation and monitoring of the non-bank sector[16], particularly relating to liquidity mismatches in MMFs and OEFs. [17] The international community has made less progress in addressing the risks from non-bank leverage. The international nature of leveraged investors requires a firm response by the global regulatory community to assess those risks and develop policy solutions. And the UK’s recent experience is a timely reminder of the risks here. So in the final minutes I will zone in on the actions relevant to this issue. Let’s start with transparency, where it is vital that regulatory authorities have sight of leverage building up in the system, and what that means for resilience. That requires better regulatory disclosures for non-banks and investment in monitoring capabilities. The Bank has access to transaction-level data from regulatory datasets[18] which we use to monitor the build-up of systemic risks stemming from leverage in the non-bank system.

CN: What has been designed by various countries – bearing in mind the structure of their economies and the relative importance of the automatic stabilisers – is probably the right balance between what needs to be done to stimulate global demand and the necessity to retain the credibility of the fiscal policy and budgets over time. It is especially important in European countries where we have the feeling that the so-called Ricardian effects can play a role. So if we were to give the impression to citizens that public finances were to deteriorate by too much and for too long consumers might increase their savings ratio to prepare themselves for tax increases in the future that they might regard as inevitable, or the reduction of benefits and pensions. So you have to keep the right balance between long term credibility and immediate stimulation. As far as we can judge, that balance is probably appropriate. That will have to be reviewed according to future economic developments. A related issue is the fact we all agree that a condition for the revival of the global economy is that financial systems everywhere are stabilised and that stabilisation is convincing the markets. I have the impression that we are a little more advanced in that regard in Europe than in the US. It is clear that the US authorities are making every effort to reach that goal, but that is probably as important as the size of the stimulus itself if we want to stabilise the economy.
We will then be in a better position to evaluate what steps if any might be taken by the relevant authorities to contribute to greater pass-through. Regional economic conditions Our region’s economy was on a moderate upward trajectory before Sandy struck, and while the storm had many severe effects – more on that in a few minutes – I do not expect it to derail the region’s ongoing economic expansion. New York City’s economy has been performing quite well. Employment in the city reached an all-time high at the beginning of this year and it has continued to grow briskly since then, even without help from its key finance sector. While job growth has been considerably more  2  BIS central bankers’ speeches  subdued in the surrounding areas, such as Long Island, northern New Jersey, Fairfield County and the lower Hudson Valley, many workers in these areas commute to New York City for their jobs, so the strength here in the city is helpful to the region as a whole. Still, the unemployment rate in the city remains high, above 9 percent, and this is something that needs to improve. Upstate New York’s economy is also on a generally positive trajectory, although some areas have fared better than others. Albany, Buffalo, and especially, Rochester and Ithaca have recouped many of the jobs lost during the recession, whereas Syracuse and Binghamton have lagged. Looking beyond the employment statistics, I see other encouraging signs across the region. Housing markets here have improved.

The storm shut down all New York City schools for a full week, and many schools across the region remained closed the following week. Hardships borne by students and families are also reflected in record low post-storm attendance rates. The New York City Department of Education moved quickly to relocate schools from damaged buildings to temporary premises, enabling children to resume their studies. But even two weeks after the storm, schools that had to be relocated had attendance rates below 70 percent, a huge drop from their regular rates of over 90 percent. Research shows that lost school days and relocations can significantly impair student learning. The good news is that the situation is getting closer to normal every day. Today, only 9 out of a total of 1,750 New York City schools remain relocated. Also of particular importance is that their leaders – administrators, teachers, principals and others – have agreed to make up three and a half days of the lost time. It is impressive that so many districts across the region are working hard to make up for much of the lost time. Our region must learn the right lessons from this experience. The storm revealed significant shortcomings in the resilience of our public and private infrastructures in three critical areas: power, transport and communications. This vulnerability must be addressed. National economic conditions Turning to the storm’s effects on the national economy, I expect a modest negative effect on the annualized growth rate of real GDP for the fourth quarter of 2012.
There is also a risk that the market will become fragmented and by this I mean that there may be a number of different payment solutions, but that none of them is generally accepted by the payment recipients. One example could be mobile payments. If the launch of new mobile payment services continues, perhaps I as consumer will need to have a couple of different payment applications in my mobile phone to be sure of being able to pay in different shops. Similarly, the retailer will then need to subscribe to several different payment services. Last year, an inquiry on the use of cash in Sweden was published, and earlier this autumn the commission of inquiry presented its report entitled Cash management in Sweden. This inquiry has resulted in a number of proposals and I will discuss two of them here. The first is that it is proposed that the Riksbank has overall responsibility for cash management in Sweden. The second is that the counting services of cash-in-transit companies should become subject to licence and come under financial supervision. It is recommended that the Riksbank become the supervisory authority for these operations. The Riksbank welcomes the work of the inquiry as we consider it important that cash management in Sweden functions smoothly. We have taken part in the work of the inquiry and will now analyse the proposals put forward and respond to the submission sent out for comments.

I believe we can all agree that it is easier to use banknotes and coins today than it was a couple of hundred years ago, and that it is easier, quicker and safer to use chips and PIN codes than paper slips for card payments. Cards are in turn preferable to cheques. What about the Swedish payments market? Does it give us payment services that are uniform, safe, efficient and accessible? The transformation of the Swedish retail payments market As the market changes rapidly through technological advances and through the establishment of new operators, it is important that the Riksbank follows and analyses the Swedish retail payments market. The results I am about to describe come from a telephone interview survey about households’ payment behaviour that the Riksbank regularly carries out. High accessibility and high level of confidence If we look at the most common payment services we use when we pay at points of sale, 96% of the respondents said that they had access to cash, and almost 99% said they had access to a bank or credit card. No respondent said that they had access to neither cash nor cards. Accessibility for cards and cash is thus very high and so is the general public’s confidence in them and this is reflected in the fact that both are used to a considerable extent. However, cards are being used increasingly often as a means of payment at the cost of cash.
This created a void when the programs ended and made our policy response sporadic and hard to forecast. This limited the scope for market prices to adjust in anticipation of our future actions in ways that would help stabilize the economy. 7  7 Committee members, through their submissions to the Summary of Economic Projections, had already indicated that their inflation objective was close to 2 percent as measured by the personal consumption expenditures deflator; in January 2012 the Committee formalized the inflation objective as a 2 percent “longer run goal” (see http://www.federalreserve.gov/ newsevents/press/monetary/20120125c.htm). 4  BIS central bankers’ speeches  Another shortcoming was in our use of forward guidance with respect to the path of shortterm interest rates. Although calendar-based guidance worked reasonably well in influencing expectations about the future path of short-term rates and thus the shape of the yield curve, it was clumsy in a number of respects. For example, if we moved the forward date guidance out in time, did this reflect a change in our reaction function, the amount of desired policy stimulus or greater pessimism about the outlook? Of course, as we have learned, we have acted to rectify these shortcomings. For example, our asset purchases are now outcome based, tied to the goal of substantial improvement in the labor market outlook, and our forward guidance on short-term rates is tied to unemployment and inflation thresholds rather than to a calendar date. The Japanese authorities have also capitalized on our joint experiences and actions.

BIS Review 131/2009  3
We are actively promoting all these areas, capitalizing on our reputation and brand name. Singapore welcomed 380,000 Indian tourists in 2002, 11% more than the year before. We especially value Indian visitors, who stay longer and spend more than tourists from elsewhere. To attract more tourists from India, we have relaxed visa requirements, and made multiple entry visas more available. We are also wooing corporate customers from the region, to use our financial, legal and other professional services. Many Indian companies choose Singapore as the venue for their arbitration proceedings. We liberalised our financial sector thus freeing our capital markets and wealth management industry to grow. Indian companies that are expanding need capital, and will find Singapore a viable location to raise funds, be it debt or equity. The companies can tap into a large and growing investor base in Singapore. Close to 200 international fund management firms and 150 venture capitalists operate out of Singapore, managing over $ billion in assets. To support the growth of our economy, we are investing heavily in human capital, upgrading our skills and refreshing our knowledge. But in a small country of three million people, the talent pool is never big enough. We will therefore continue to attract talent globally. Over the years, we have benefited greatly from an inflow of talent from India, as well as of NRIs from around the world, and we will  BIS Review 3/2004  3  continue to welcome them.

These enduring traits are embedded into our geography and culture, and will serve us well for many years. India since the early 90’s India too has been opening up since the early 1990s, although not at a uniform pace. Since independence, India had adopted an economic model that emphasised self-sufficiency, strong central planning, and the state controlling the commanding heights of the economy. By the late 1980s this model had run into difficulties. In 1991 Prime Minister Narasimha Rao started to deregulate and open up the Indian economy. Countries in Asia watched with close interest successive budgets of Finance Minister Manmohan Singh, as decisions that had hitherto been made centrally were devolved to the private sector, the Rupee was devalued, subsidies were reduced, state-owned enterprises were privatized, and industries opened up to competition and foreign participation. They looked forward to a dynamic, prosperous India, participating fully in the regional economy. But the political situation in India changed after several years, and the pace of reform slowed down, or so it seemed to those watching India from afar. However, in the last few years under the BJP government led by Prime Minister Vajpayee, not only have the reforms resumed, but a new spirit and vigour have manifested themselves across the country. Last week’s mini-budget announcements show the resolve of the government to press on with the reforms. 2  BIS Review 3/2004  India is now a fast growing economy.
And for those individuals with an account, cross-border payments are still slow, expensive, and not very transparent. This is why the G20 countries have developed a comprehensive programme aimed at enhancing cross-border payments. The programme is organised as a roadmap containing 19 building blocks, where 16 are focused on enhancing current systems. Building blocks 17, 18, and 19, on the other hand, look at possible ways to explore future, not yet fully operational, means to enhance cross-border payments: multilateral platforms, stablecoins, and CBDCs. I am very much involved personally in this work as I chair the ‘Future of Payments’ working group that comprises these three building blocks. The roadmap is the modern version of the Postgirot intervention – on a global scale – if you like. The public sector – dissatisfied with the current situation – takes action to guide, but also push the private sector. I want to be clear about this: this is an area where the public and private sector have to work together. Cross-border payments are heavily reliant on harmonisation, standards, and  11 See Petition to the Swedish Riksdag 2018/19:RB3 The state’s role on the payment market, https://www.riks-  bank.se/globalassets/media/betalningar/framstallan-till-riksdagen/petition-to-the-swedish-riksdag-the-statesrole-on-the-payment-market-summary.pdf  14 [15]  trusted legal foundations. These are areas where the public sector has a lot to offer, but ultimately, it is the private sector that has to deliver the services towards the end-users.

In my historical walkthrough, I gave you some cases of this: The foundation of the Riksbank on the ruins of Stockholms Banco; Postgirot, a rare example of the private sector failing to accommodate consumer needs; and Amsterdamsche Wisselbank was an example of the government trying to solve the problem of not having uniformity of money. Network and scale effects as important as ever My fourth and final lesson relates to network and scale effects, and the barriers to entry they pose. Providers of new payments solutions need to invest money for development, setting up the infrastructure and marketing. Hence, there is a high fixed cost associated with market entry. Furthermore, to have a successful payments method, you need to have both payers and payees on board, and you need to reach a critical mass to cover your costs. We say that payments are a scale business. However, reaching a critical mass can be difficult since the value of the payment method is determined by the number of users. In economics, we often use the term network effects to describe the situation where a user’s value from a product or service depends on the number of users. A classic example is that of the telephone: Two telephones enable only one link between participants. Adding a third telephone allows for two more connections, and adding a fourth telephone enables three new connections. Hence, each new participant grows the value of the network more than the last one did. The same holds in the payments market.
Both of these factors create new incentives for fiscal policy to focus more on short-term job creation schemes and less on long-term fiscal soundness. And the new member states are not much different in this respect. They have experienced a decade of incredible structural change, and yet more is ahead. Furthermore the new member states have great infrastructure needs and, coupled with high unemployment, there will be continued pressure for fiscal expansion, even in a cyclical upturn. So from this perspective, too, the hope that the recovery alone will “fix” the European deficit problem might be too optimistic. In addition, structural fiscal deficits in many of the euro area member states might be larger than present calculations show since there is a large risk that potential growth is lower than commonly assumed. Estimates of potential growth for the old Europe have successively been lowered as labour productivity growth has fallen gradually during the last two decades from around 2% to about 1% per year. However, the figures for the second quarter of this year were the highest we have seen for some time. The IMF’s latest potential growth estimate for the euro area is about 1.8%. Nevertheless, inflation has been remarkably stable, just above 2% in recent years despite poor growth and presumed large negative output gaps. If potential growth is lower, the need for fiscal consolidation is even higher than present consolidation programmes show. Let me summarize the problem.

Does that not offer a recipe for success in so many areas of our lives?   We tell our children to play less and study more, so that they can acquire the education necessary to lead productive and comfortable lives in future.   We tell ourselves to eat less and exercise more, so that we can keep in good health for a longer time and continue to enjoy good food.   Should it be any different in matters financial? What does it mean to be patient and prudent in finance? Three things.   Budget carefully    Borrow responsibly    Invest wisely  These are the three areas that MoneySENSE – our national financial education programme – will focus on increasingly. MoneySENSE – spearheaded by MAS and involving a number of government agencies – has been working in partnership with the financial industry, education institutes, and professional and consumer associations to help empower Singaporeans to manage their finances well. BIS central bankers’ speeches  1  Budget carefully Let me start with budgeting – the first area of focus. The financial questions we face in our lives are quite similar to the dilemma the children had with their marshmallows. If anything, they are more complicated. For one, marshmallows or the good things in life are usually not free. We have to pay for them with money we receive from working or from our savings. Or from borrowing.