samchain/econo-pairs-v1 huggingface dataset:
As we have shown, it is entirely feasible to steer secured money market interest rates effectively in negative territory. This is due in no small part to the fact that the secured Swiss franc money market is efficient, is based on a modern infrastructure, and can count on committed market participants. The SNB will continue to help shape this money market infrastructure in the future. Ladies and gentlemen, many thanks indeed for participating in this event this afternoon. The fact that you have made the effort to tune in, despite the unusual format, demonstrates your interest in the Swiss money market, and we thank you for this interest.

Banks can satisfy some of their demand for liquidity by participating in these auctions. As the participating banks are then no longer as dependent on the secured interbank market for obtaining the desired amount of liquidity, aggregate demand for overnight liquidity in the repo market falls, thereby reducing upward pressures on SARON. We also wish to note that, over time, liquidity can be redistributed between banks via other channels than just the repo market. For instance, liquidity redistribution may take place via the transfer of customer deposits and longer-term deposits between banks. Naturally, such adjustment processes take some time. Let me summarise the key points we have made so far. The steering of short-term money market rates continues to work – even in negative territory. Three interest rates play a key role  Page 10/13  here. The SNB policy rate is used to communicate the monetary policy decision and, in particular, the desired stance of monetary policy. The negative interest rate on sight deposits that commercial banks hold at the SNB is the main instrument with which the SNB implements monetary policy on the money market. The exemption thresholds allow the burden on the banking system to be reduced without jeopardising the SNB’s ability to keep secured short-term money market rates, in particular SARON, close to its policy rate. As you can see, the SNB has the instruments needed to steer money market interest rates, including during times when these interest rates are in negative territory.
The setting of working and wage conditions having regard to general or sectoral criteria, without taking into account the specific situation of each company, has been one of the main causes of our structural imbalance in terms of employment, and one of the factors that explains why Spain has always, even at times of greater economic activity and higher growth, had a far higher unemployment rate than the euro area, and indeed the European Union, as a whole. It will not be possible to reduce our structural unemployment rate in a collective bargaining framework that does not take into account productive, commercial and cost conditions, that is to say each firm’s conditions of competitiveness. The duality of our labour market – whose adverse effects on productivity, on decisions regarding investment in human capital and on collective bargaining itself nobody denies – cannot be scaled back if there continues to be a major imbalance between the labour costs (including firing costs) of permanent jobs and of temporary ones. Moreover, it is unlikely that we can manage to reduce duality and, in turn, to increase total employment – which must be the main priority – simply by raising the labour costs of temporary employment. 2. The reduction of public debt  Our second challenge is to contain the growth of public debt and, then, to reduce its volume.

The reforms since 2011 to the public pension system (the progressive raising of the retirement age; the definition of a sustainability factor linking the initial pension to changes in life expectancy; the introduction of a new pension indexation system; and the segregation from the system of specific non- contributory pensions that should be financed through general taxes and not through social security contributions) have been in the right direction as far as the sustainability of the system is concerned. Apart from these reforms, there are insurance and saving mechanisms that can help supplement the unfunded pension system. But, as I said earlier, a key factor for the public pension system is the buoyancy of employment. It is in this nexus between employment, pensions and public finances where, I believe, the “hard core” of the difficulties facing our economy in the years ahead is concentrated. 3. The reduction in private debt and in the net external debit position  The third challenge facing the Spanish economy is high private debt and the heavy dependency on external financing. The Spanish economy’s net external debit position stood at around 93% of GDP at end2015, far above the level in other euro area or developed countries in a debit position, not to mention core Monetary Union economies such as Germany, Belgium and the Netherlands, which run an external credit position.
When income growth is high, it is natural that some of the increased wealth will be reflected in a greater preference for leisure. It is nevertheless telling that the number of hours actually worked is considerably lower in Norway than among our main trading partners, despite very low unemployment in Norway. Generous transfer schemes and other aspects of our welfare system induce many to exit the labour force – wholly or partially. In recent years, the high level of labour immigration has compensated for this. Nonetheless, this situation does not seem sustainable. Reforms that provide stronger work incentives are needed and should be implemented in anticipation of an ageing population. The pension reform was an important step in the right direction. Chart 16: Productivity growth has declined What about the other factor that is crucial to growth? Mainland productivity increased markedly in the 1990s, partly owing to a number of structural reforms. The banking sector was rationalised after the crisis. The tax reform set the stage for profitable investments and business sector restructuring. Improved competitiveness and the development of the oil industry facilitated the rapid integration of new technology by firms. Productivity growth remained relatively high up to around 2005. But since then it has declined. The decline has been more pronounced than among our trading partners. BIS central bankers’ speeches  7  Chart 17: Growth in real capital Productivity is closely linked to capital stock per worker. Growth in real total fixed capital formation for mainland Norway fell during the financial crisis.

The increase in margins may reflect banks’ efforts to build up their capital. Household debt is rising in Norway, but household income is growing at a solid pace. Given the present economic situation, households can tolerate higher interest rate margins in the  4  BIS central bankers’ speeches  banking system. Banks’ owners must also make a contribution, which they can do by participating in equity issues or by accepting that a smaller share of profits is distributed as dividends. In addition to raising more capital, banks must base their lending on more stable funding sources. Improved capital adequacy and more stable funding will be an advantage for banks, and not a disadvantage, in an environment of intensified global competition. Although growth in our part of the world is weak and real interest rates are low, many banks are still operating with high return targets, which could lead to excessive short-term risk taking. Banks and their owners should accept that return on equity will be lower, but also safer, in the years ahead. A more robust financial system will benefit us all. The forthcoming regulatory framework for banks in the EEA includes a countercyclical buffer – a capital requirement that can be increased in upturns and turned off in downturns. When banks are required to build up an additional buffer, they are better equipped to cope with periods of rising losses. Banks will be less likely to reduce lending in order to comply with the minimum capital requirements.
Decisions on the pace of asset purchase and forward guidance must be based on what is most appropriate to achieve our dual mandate objectives of maximum sustainable employment in a context of price stability. Economic outlook Let’s dig a bit deeper into the tug-of-war between improving fundamentals and the drag exerted by fiscal policy and tighter financial conditions. Starting with the improving underlying fundamentals, one important aspect is the household sector and its balance sheet. In a number of dimensions, households have made significant progress in repairing their finances. Prior to the recession, households took on an excessive amount of debt – much in the form of residential mortgages. The process of deleveraging and reducing this debt overhang is now well advanced. For example, household debt relative to disposable income has declined substantially since it peaked in the third quarter of 2007,  BIS central bankers’ speeches  1  bringing it back to levels last seen in early 2003. Delinquency rates on mortgages, auto loans and credit cards continue to decline. In addition, household wealth relative to disposable income has recovered from the steep decline following the crisis and is now near its 20-year average. Reflecting this improvement, credit standards are beginning to ease, which should support consumer spending on durable goods. Another sector in which the fundamentals have improved is the housing sector. Most importantly, the excess supply of housing created during the boom appears to have been largely worked off.

[...] the existence of public debt [on a large scale] imposes frictions and obstacles to readjustment [...] If the Government wish to help revival, the right way for them to proceed is, not to revert to their old habits of lavish expenditure ... “ The debate between Keynes and Hayek took place at a time when millions of people were out of work. Governments, firms and households were heavily in debt and many banks were on their knees. In many countries, deflation made debt even heavier to bear. At the same time, pessimism and caution put a damper on the willingness to spend. Deflation and unemployment led to a low level of consumption, and investment that could have generated jobs and growth was held back. The question is, then, can the authorities curb a crisis by spending borrowed money? According to Keynes, spending would not only prevent the economy from sinking even lower, it would also reduce the extent of the crisis and bring the economy back into balance more quickly. Or was Hayek right when he claimed that misjudged attempts to curb a crisis by means of debt-financed spending can sow the seeds of a subsequent and even deeper crisis? According to Hayek, measures should be focused on the underlying challenges, such as public debt, that had created the crisis. In Hayek’s opinion, higher public debt would inevitably end up funding unproductive investments and consumption in the public sector, which would lead to low growth.
News conference  Berne, 13 June 2019 Thomas Jordan  Introductory remarks by Thomas Jordan  Ladies and gentlemen It is my pleasure to welcome you to the Swiss National Bank’s news conference. I will begin by setting out our monetary policy decision and our assessment of the economic situation, and will also be explaining an adjustment to our monetary policy strategy. I will then hand over to Fritz Zurbrügg, who will present this year’s Financial Stability Report. After that, Andréa Maechler will talk about the situation on the financial markets, the progress made in replacing the Libor, and the SNB joining the Network for Greening the Financial System. Finally, we will – as ever – be pleased to take your questions. Monetary policy decision and introduction of the SNB policy rate  Let me begin with our monetary policy decision. We are maintaining our expansionary monetary policy. Interest on sight deposits held by banks at the SNB remains at –0.75%, and we will continue to be active in the foreign exchange market as necessary, while taking the overall currency situation into consideration. Our expansionary monetary policy remains necessary. We thereby stabilise price developments and support economic activity. At our monetary policy assessment we also decided to make a small adjustment to our monetary policy strategy. We are now introducing the SNB policy rate, which will take over the function previously performed by the target range for the three-month Libor. The SNB policy rate currently stands at −0.75%.

More unutilised resources could subdue inflationary pressure and finally result in a lower inflation rate. The labour market situation can also be an indicator of supply conditions in the business sector and thereby of how inflationary pressure will develop. The weaker demand for labour in the business sector during 2003 has not been due to weak production growth, but to companies being able to increase production without increasing the number of employees. Nor is it the case that the already employed have worked more. Instead, the average number of working hours has fallen more than we had anticipated. Production per hour worked, i.e. productivity, has thus shown a stronger development than expected. But it is still too early to determine the cause of this. It is therefore also uncertain whether the increase in productivity will endure. It could be an element of the jobless growth phenomenon now being discussed intensively in the United States, although productivity growth has not been as strong in Sweden as it was there. While the statistics are uncertain, it is still exciting to see that, according to the Swedish National Accounts, productivity growth has also become more rapid in the service industries. One possible explanation for the strong growth in productivity put forward by the Federal Reserve, for instance, is that increased use of IT is now beginning to make a mark outside of the IT sectors.
The monetary expansion measures taken by central banks are unquestionably vital for achieving the objectives in terms of inflation rates and credit flow stimulation and of the financing of the economy. However, sustainably bolstering economic activity and job creation requires the monetary stimuli to be accompanied by measures in other areas. In the European case, the reform drive has to be maintained to ensure the proper functioning of the markets and fiscal policies favouring growth while at the same time meeting the commitments assumed under the Stability and Growth Pact. Position in the cycle and monetary policies of the main developed economies To conclude, I would like to refer to the different position in the cycle of the leading developed countries. In the United States, and to a lesser extent in the United Kingdom, both of which are at a much more advanced stage of economic recovery than the euro area, the monetary policy debate now centres on when and how rapidly to start withdrawing part of the monetary stimulus, whereas in the euro area and in Japan further stimulus measures are being introduced. This difference in cyclical position is affecting prices on the financial markets, and particularly exchange rates.

These rates are not only modest, but are also subject to certain risks, which, on balance, point to even lower increases in economic activity. Turning to prices, for some months now inflation has been well short of the 2% benchmark, which is the ECB’s medium-term monetary policy target. The forecasts available continue to point to the risk of inflation remaining too low for too long. The ECB’s latest projections entail a further downward revision, with inflation expected to stand at 0.7% in 2015 and 1.3% in 2016. In recent months, against a background in which, given the weakness of demand and fierce competition, firms have limited price-setting power, the slump in the price of oil has exacerbated the drop in inflation. At the end of 2014, the annual rate of inflation stood at –0.2% (the average rate in 2014 was +0.4%) and it is expected to remain at very low or negative levels in the early months of 2015. This heightens the risk of second-round effects on wages and prices that could have an adverse impact on inflation expectations in the medium term. Indeed, the latest private sector forecasts have seen substantial downward revisions for all terms. Thus, for example, according to the January edition of Consensus Forecasts, the leading private sector economic forecast publication, the average rate of inflation forecast for 2015 is just 0.1%, compared with 0.6% forecast for the same period a month earlier.
The typical response from the other side of the Atlantic to such fears was that in a globalised world these imbalances are physiological and do not cause problems so long as they are financed with capital inflows. Moreover, the status of the dollar as sole international reserve currency used to guarantee such financing. In the end, the theory (which in fact is no more than an accounting identity) was put forward according to which America’s deficit was in reality the other side of the coin of an excess of savings in the developing countries, resulting inter alia from the fixed exchange rate policy vis-à-vis the dollar. The adjustment had therefore to start first of all from a modification of the policy of the other countries, rather than from the recovery of the savings capacity of American households. In synthesis, the prevailing theory up to recently was that the US imbalance was physiological and its correction, if any, would have implied no painful adjustment on the US economy. The second imbalance that has built up in recent years relates to the development of financial products that have loosened the ties between lenders and borrowers. Securitisation, which has enabled lenders to spread risk better, restructuring it and selling it to others, has however reduced the incentive to value it correctly, either by those who originated the product or those who acquired it.

But, in contrast to that prophecy, at the end of the day the countries that did not have to bail out any of their financial institutions were, with one exception (Malta), located typically in the CEE region. So it seems to me that GDP per capita, human development and industrial tradition are not the criteria driving the market’s classification of “emerging” economies. Should euro membership automatically make a country “developed”? In other words, does giving up independent monetary policy make a country more “stable”? But why, then, isn’t Bulgaria considered a developed country, when it holds a fixed exchange rate against the euro? Why not Kosovo and Montenegro, which have adopted the euro unilaterally? Much space has been devoted to the so-called decoupling debate, in which many experts 1/2  BIS central bankers' speeches  claimed that emerging countries were less affected by the global financial crisis. But with the benefit of hindsight, we now know that the GDP declines in emerging countries were, on average, just as steep as those experienced by developed countries. A part of the explanation, once again, lies in the confusing taxonomy: we see huge differences among individual emerging countries as well, even within BRICS. I suggest an analogy to the decoupling debate: we are now observing a “BRICS decoupling” to the power of two: only China and India have shown robust growth since the Great Recession. Russia, Brazil and South Africa have been stagnating, each for its own specific reasons.
The enhanced depth of the Islamic financial markets has also increased its attractiveness as an asset class for investment. These developments have resulted in an extensive range of Islamic financial products and services that is being offered to consumers and businesses. The third dimension in which there has been significant evolution is in the regulatory and legal framework for Islamic finance which has taken into account the distinct features of Islamic financial transactions. This has ensured that the growth and developments of Islamic  BIS Review 23/2008  1  finance is accompanied by the corresponding development of the supporting legal, regulatory and supervisory framework to ensure its soundness and stability. The establishment of the Islamic Financial Services Board in 2002 also marked an important milestone in the development of the prudential regulatory standards and best practices for Islamic financial institutions. Its establishment has also contributed to the harmonisation in the development of Islamic finance across different jurisdictions. Fourthly, the international dimension of Islamic finance has rapidly gained significance as it evolves to become an increasingly important part of the international financial system, and as is becomes poised to contribute towards greater global financial integration. Islamic financial institutions have now ventured beyond their domestic borders and funds raised in Islamic financial markets in different jurisdictions have drawn investors from financial centres across the globe. As market players across continents participate in the expansion of interregional investment flows, it has enhanced financial linkages among the major regions.

That’s part of the political discussion; that’s not for us to decide. Very finally, the Eurozone budget – which is an idea wanted by the French President, Emmanuel Macron – seems to face a lot of opposition. Do you think it’s a good idea? Is it necessary and what could overcome this opposition? It is not an easy discussion. It’s a fundamentally political discussion that’s about sharing money, that’s about sharing sovereignty. It’s good the discussion has started. It’s good that ministers and leaders are discussing ways to make the Eurozone more resilient and to make the Eurozone stronger. Given the amount of uncertainty that we see around us in the world, all of us in Europe, in the Eurozone, have a duty to make our system stronger. It’s good that that the discussion has started, finally. 3/4  BIS central bankers' speeches  Even if it’s being delayed, even if it might not happen in this mandate of Emmanuel Macron? No one expects that discussion to be easy, so there is lower-hanging fruit such as completing the banking union. We would certainly hope that the capital markets union would feature more prominently on the agenda and also that the rules, the fiscal rules and the macroeconomic rules we’ve been working with, can be improved, can be made more credible. Fiscal union is not lowhanging fruit; it is difficult, it will take time, but it’s good that that discussion has started. 4/4  BIS central bankers' speeches