samchain/econo-pairs-v1 huggingface dataset:
The high debt incurred by Spanish households and firms, encouraged by overly accommodative financial conditions but also by optimistic expectations about future income, is now acting as a drag on their consumption and investment decisions. And further exacerbating this is the dizzying deterioration in confidence which, fuelled by the global climate of uncertainty, is pushing households and firms to postpone their spending plans and to strengthen their saving. Pinpointing which specific mechanisms lie behind a certain type of behaviour of economic agents' confidence is always a complex task. But in the current circumstances, and especially in Spain, it would not be hazardous to link much of the behaviour of confidence to that of employment. The intensity with which employment is shrinking is the most distinctive feature of the recession in Spain. In this respect, it repeats traditional patterns of behaviour and shows the persistent weaknesses in the institutional structure of our labour markets that must be corrected. The best way to restore confidence in these circumstances involves a calm and realistic analysis of the problems, reasoned discussion of potential solutions and the rapid implementation of measures deemed appropriate. When faced with a severe recession, neither an alarmist overstatement of the difficulties nor well-meaning calls for confidence in a prompt recovery that will come about spontaneously, with no need for relevant measures, are of any use.

In this respect, the legislation recently approved by the Council of Ministers initiating transposition should smooth access to services activities; prior authorisation will no longer be needed, administrative procedures will be notably simplified and certain obstacles to free movement of services will be eliminated. 4  BIS Review 43/2009  Nonetheless, the success of the reform, in terms of greater liberalisation of services, will depend on its proper application to key sectors, such as professional services and retail trade, and on the strict limitation of legally permitted opt-outs. Top of the to-do list is a matter concerning the main source of wealth of any country: the human capital of its citizens. It is well known that the level of educational attainment of the Spanish labour force increased notably during the second half of the past century. But it is also a fact that convergence in educational terms with our European partners has slowed in recent years, which will bear most adversely on the economy’s productivity. Many facets of our education system need changing, but the overriding priority is to extend and improve the quality of secondary education, an area where regional governments admittedly have an essential role to play. The system for continuous training throughout employees’ working lives must also work properly. Here, the delay in the labour market reform not only has adverse effects on employment but also discourages investment in human capital by workers themselves and by companies, which negatively impacts productivity.
According to Sweden’s central bank, the Riksbank, settlement of instant payments in SEK may be made available on the TIPS platform. If so, this would mean that at least some Swedish real-time payments will not be cleared through P27, which could affect the profitability of the project. Norges Bank is aware that the industry is also assessing other possible Norwegian solutions for better real-time payments in Norway. In its letter sent in October to Finance Norway and the P27 banks in Norway, Norges Bank called upon the banks to continue this work. The objective must 2/5  BIS central bankers' speeches  be to make the necessary adjustments to the Norwegian infrastructure as quickly as possible to give both businesses and private individuals in Norway access to modern real-time payments on a 24/7/365 basis. The technological set-up should be adapted to customers’ needs, particularly businesses, while also eliminating interbank settlement risk. As far as possible, the set-up should also be suitable for use in future solutions, such as P27, including a system for control of reserve cover at Norges Bank. Reusing a technological set-up will keep total costs down. Establishing a satisfactory Norwegian solution for instant payments will also decouple P27 work from any deadlines for the system in Norway, which in time may increase the chances of success for the P27 initiative. A common infrastructure for all payments has given Norway an important competitive advantage, provided economies of scale and facilitated interaction across the banking sector.

Owing to their substantial day-to-day volatility and the interfaces with money laundering and other criminal activity, cryptocurrencies are unsuitable as a universal means of payment. On the other hand, cryptocurrencies are attractive as speculative assets. Crypto-assets is therefore a better term than cryptocurrencies. Central bank digital currencies Another possibility is central bank digital currencies (CBDC). A CBDC is a digital form of central bank money made available to the general public. A number of central banks, including Norges Bank, are assessing whether introducing a CBDC would be advisable and, if so, in what form. For the time being, banknotes and coins are the only form of central bank money, with a role to play both in a contingency and under normal circumstances. Effective electronic contingency arrangements are crucial for ensuring that the payment system is resilient to disruption. Cash is part of the overall contingency arrangements, in the role of last resort should the electronic contingency arrangements fail. Banknotes and coins will continue to be in use into the foreseeable future. However, the use of cash is relatively low in Norway compared with other countries and is declining. It is not impossible that cash usage, at some point in the future, will fall to such a low level that banknotes and coins can no longer be regarded as a generally accepted means of payment.
Still, we have to reflect on the future role of central banks, both as stability guardians and crisis managers. This crisis has somewhat shaken up our pre-crisis understanding of the role central banks have for both monetary policy and financial stability. Central banks will not be able to just switch back to the status quo ante of before August 2007. I will therefore first take a step back and briefly review the pre-crisis consensus on the role of central banks. I will then discuss the ECB’s role as crisis manager and guarantor for stability in the current crisis, before reflecting, in the final part, on the future role of the ECB for both monetary and financial stability. BIS central bankers’ speeches  1  The pre-crisis consensus Before reflecting on where we have to go, let me start by reviewing where we stood ahead of the crisis regarding the role of central banks. By the 1980s, the global economy had experienced two oil price shocks and found itself in a stagflationary environment. The academic literature and policy watchers concluded that monetary policy could not contemporaneously control both, inflation and the level of unemployment. In this environment a consensus on the role of central banks emerged with two key elements. 1 The first element: central banks should focus on maintaining price stability. As you know, for the European Central Bank price stability over the medium term is the primary objective. Other central banks – though with differing emphasis in their mandate – clearly follow the same understanding.

But achieving a forward looking scenario analysis implies bringing together three “bricks”: -  A handful of severe enough but realistic transition path scenarios all the way to 2050. The NGFS is working on those and plan to publish some technical papers soon. -  Macroeconomic assumptions to capture the impact of climate change on macroeconomic variables (productivity, inflation, unemployment, etc.) -  The direct and indirect exposures of the financial system to climate risks. Here of course, disclosure can help. We are not there yet, climate risk analysis needs to rely on new methodological tools in order to deal with challenges related to long-run impacts, accounting for technological change and shifts in political priorities and social behaviour for  instance, non-homogeneity and non-linearity of impacts, and irreversibility of effects. We need to look beyond the standard one-year horizon for default probabilities that does not fit the climate agenda. c. The green economy is still in its infancy and needs to mature As time goes by and our ability to achieve a 1.5 to 2°C scenario is seriously challenged, the amount needed to finance the transition is increasing steadily. The demand for green assets is high, but the supply of green assets fails to keep up. This quantitative challenge to match demand is linked to the massive investment required to promote further development of technologies and to accompany shifts in social behaviour.
From E-Government to E-Inclusion, United Nations, 2005  1  Capgemini Online Availability of Public Services: How Is Europe Progressing? Web Based Survey on Electronic Public Services. Report of the 6th Measurement, June 2006  6  BIS Review 90/2006  When compared against other EU countries, we rank very poorly 2 in such categories as the ability to file tax returns online (submit tax forms and make payments), obtaining a driving license online or registering a car. We ranked last in the EU for the lack of online company registration, as it is not possible to download forms to fill in, whereas in as much as 7 EU countries it is possible to register a company online without the necessity of filling in any paper forms. The only area where Poland meets all requirements to join the group of leaders is online submission of customs declarations. It is a rare example of an area whose development proceeded in line with a daring and clearly defined vision. WE NEED TO HAVE A VISION, SHARE A VISION, a well-defined vision that will help us take advantage of emerging opportunities and will allow us to prepare for possible dangers associated with homo sapiens globalus society.

So the risk of central banks having “too little” scope to carry out LOLR is real. At the same time, the public has a legitimate interest in avoiding “too much” LOLR. We cannot afford for financial institutions to view liquidity support as a substitute for prudent financial management: central banks must not be “lenders of first resort”. And lending to institutions that are in need of capital rather than liquidity is the wrong solution. Given the uncertainties involved, neither outcome can be avoided with certainty. But it is right to seek robust safeguards against them. BIS central bankers’ speeches  1  A well-designed LOLR framework must therefore get the balance right between lending “too little” and “too much”: –  To help avoid “too little” LOLR, central banks must be given clear responsibilities and the tools and powers needed to carry them out, including the ability to lend to individual institutions, covertly if necessary to maintain financial stability. –  To help avoid “too much” LOLR, central banks must have strong risk management, be ring-fenced from special interests (in public or private sectors), have a clear public mandate specifying their scope for action, and be subject to strong transparency and accountability requirements. There are powerful parallels between these design challenges, and those for monetary policy. Like monetary policy, LOLR is vitally important to an economy’s health, but involves intrinsically complex, technical judgments – including the solvency or otherwise of potential borrowers, the pricing, scale and maturity of loans, and the appropriate collateral.
There is an economic logic behind this argument, notably with regard to infrastructure. But it ignores the sad reality, which is that no country has sufficient credibility at present to implement this policy effectively. Decades of deficits have created a deep-seated scepticism. The current balance is very fragile and, in this highly volatile environment, any major deviation from the required fiscal path would probably be punished with a sharp rise in interest rates. Fifth assertion: within the banks, we need to separate those activities which serve to finance the economy from those that are purely speculative; and prevent customer deposits or central bank refinancing from being used to fuel dangerous behaviour. The idea  2  BIS central bankers’ speeches  in itself is a sound one. Unfortunately, it has often translated into an absurd cleavage between commercial banks (by that I mean lending banks) and investment banks. In fact, it is not possible to make a clear distinction between “good” lending and “evil” markets. What is important is that all participants in the real economy find the right combination of financing to suit their needs. And for that, nothing can rival the universal banking model which provides a one-stop shop for a full range of banking products. III/- I’d like to look now at my own proposals for how we can reduce the uncertainty surrounding the financial sector.

With a reservation for other effects on this indicator from various interest rate premia that may fluctuate over time, this suggests a growing understanding of our policy. With a longer time horizon, the predictive error naturally tends to be larger. With a oneyear horizon the error presumably has less to do with imperfect communication or a lack of understanding of how our policy functions; it is no doubt more a matter of shifts in the whole picture of economic activity and inflation. Things are somewhat different in a three-month perspective; predictive errors then presumably also arise from misinterpretations of the Riksbank’s signals. During the past year the repo rate has been raised once and lowered once. This has required a great deal of the Riksbank in the way of communicating policy to the outside world and explaining the reasons for its measures. A study of the market’s prices, predictions and statements shows that the repo rate increase in December 1997 was broadly expected. It was, in fact, just at last year’s Conference here that an important piece of signalling took place. As regards the repo rate cut in June, on the other hand, the pattern of market expectations changed relatively late. The implied forward interest rate curves three months earlier show that the June cut had not yet been foreseen by market players. It was mainly in connection with an interview I gave some weeks before the decision that expectations shifted to a cut.
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 what is the solution? Let me first note an interesting development: since 1999 the average fiscal deficit in the euro area has been 1.6 per cent of GDP while the average surplus of the three old outcountries (the UK, Denmark and Sweden) has been 0.5 per cent of GDP. Some Euro-sceptics will of course attribute this difference to monetary union itself but I think the difference is that all three out-countries have been forced to find new ways of building a strong national macroeconomic framework based on clearly stated goals and a transparent evaluation of how these goals are to be met, in addition to the common EU rules. The part that has been much in focus has been the monetary policy regime - in Sweden and the UK, inflation targeting with a specific target for inflation and regular and transparent inflation forecasts has worked well. But inflation targeting, or for that matter Denmark’s euro peg, would never have been as successful had fiscal policy not been reformed in parallel, with clear rules and budgetary ceilings in all three out-countries, which put the problems squarely in the sight of the public.

It cannot be ruled out that the volatility of the foreign exchange market will remain at higher levels than usual in previous years, although certainly below the peaks reached during this year's most stressful moments. Per se, this does not imply a malfunctioning of the market, and is mainly due to international factors over which Chile has no influence. To the extent that some central banks that have been lagging behind in the fight against inflation accelerate their rate adjustment, volatility in financial markets will remain high. 5
Andrew Bailey: Taking our second chance to make MMFs more resilient Speech by Mr Andrew Bailey, Governor of the Bank of England, at the International Swaps and Derivatives Association (ISDA) 35th Annual General Meeting, 12 May 2021. * * *  Introduction Thank you for inviting me to speak today. I want to start by thanking ISDA for the important work you do, and in recent times particularly Scott O’Malia and his colleagues for working with central banks and regulators to manage the transition away from Libor. Your support on this complex transition has been hugely important. You may be relieved to hear that I am not going to talk about Libor today. I did speak on the subject yesterday, it’s on the Bank of England’s website if you are interested (Bailey, 2021). Instead, I am going to speak about another important part of our current work and a priority for the global Financial Stability Board (FSB), namely Money Market Funds (MMFs). The FSB analysed last March’s so-called “dash for cash” in their Holistic Review published at the end of last year, highlighting a number of vulnerabilities in non-bank finance and setting out some considerations for reforms required to tackle the issues we saw in that episode (FSB, 2020). MMFs were one of the issues at the top of that list. MMFs also played a role in amplifying the stress we saw during the Global Financial Crisis, so this is the second time they have proven not to be sufficiently resilient.

The key policy rate was lowered and has been kept at 0.5 percent since March 2016. Our experience has shown us the crucial importance of flexibility in inflation targeting in enabling us to make the appropriate trade-offs in response to shocks to the economy. The time horizon for achieving the target must be sufficiently long, and the balance of risks, including risks related to financial stability, must be taken into account. The past couple of years have been demanding for the Norwegian economy, and the transition towards being less oil-dependent is ongoing. New sectors must grow to offset the downturn in petroleum-related industries. Monetary policy can facilitate this process, but the necessary adjustments must take place in the business sector. At its September meeting, Norges Bank’s Executive Board decided to keep the key policy rate unchanged at 0.5 percent. The Executive Board’s current assessment of the outlook and balance of risks suggests that the key policy rate will remain at today’s level in the period ahead, followed by a gradual increase to close to 1.5 percent towards the end of 2020. Inflation is expected to remain low in the years ahead. At the end of 2020, inflation is projected to be just below 2 percent. Capacity utilisation for the economy as a whole is projected to rise gradually and to be somewhat above a normal level in 2020. This assessment is based on the outlook for economic developments abroad.
Interest rate assumptions in Central Bank forecasts Various changes have been made to the exchange rate and interest rate assumptions behind the Central Bank’s forecasts in recent years. In the early years of inflation targeting, forecasts were based on the assumption of an unchanged exchange rate and unchanged policy rate over the forecast horizon. By showing how developments would unfold if the Bank left the policy rate unchanged, they indicated whether it needed to be changed. In December 2004, the first alternative scenarios to the baseline forecast were presented which assumed changes in the exchange rate and interest rate over the forecast horizon. In December 2005 the same baseline forecast was used, but in the alternative scenarios, the policy rate path followed financial market analysts’ forecasts and the exchange rate was extrapolated from uncovered interest rate parities. These approaches were developed further in 2006 and the baseline forecast in July and November was based on a policy rate path calculated from forward interest rates and analysts’ expectations. The alternative scenarios assumed, respectively, an unchanged policy rate and a policy rate path that would bring inflation to target within the forecast horizon. Earlier forecasts based on an unchanged policy rate across the horizon, in an environment where there was an obvious need for a sharp hike, produced a misleading picture. They presented developments that the Bank had to explain would never materialise. The baseline forecast in Monetary Bulletin in November 2006 represented an enhancement insofar as it was based on market expectations about policy rate changes.

As I mentioned earlier, the Central Bank left its policy rate unchanged on the last interest rate decision date, February 8. In December it raised the rate to 14.25%. This was the eighteenth hike since May 2004; prior to that, the policy rate had been held at 5.3% for more than a year. The Central Bank noted that its December hike seemed to come as a surprise. The introduction to Monetary Bulletin, which was published on November 2, stated that a reduction in the policy interest rate was still not in sight, in spite of substantially brighter inflation prospects. On the contrary, it was impossible to rule out a further policy rate hike in order to attain the inflation target within an acceptable timeframe, and the analysis presented then implied that there were still grounds for tightening the monetary stance further. However, the Board of Governors had decided to postpone such a measure for the time being. The next interest rate decision, to be announced on December 21, 2006, would be based on the analysis in the November Monetary Bulletin and additional data that became available by that time. The Chairman of the Board of Governors underlined this message from Monetary Bulletin in a speech a few days later when he described the decision to leave the policy rate unchanged on November 2 as a deferral of an increase rather than the end of the tightening of the stance.