samchain/econo-pairs-v1 huggingface dataset:
In May and June we saw what could happen if expectations of a less expansionary monetary policy course become widespread in the market. At that time, the announcement by the US Federal Reserve of a possible reduction in its bond purchase programme caused share markets to plunge temporarily. The wave of selling did not recede until the beginning of July, when the Federal Reserve, the European Central Bank and the Bank of England reassured markets that key rates would remain at very low levels until the recovery of the individual economies was on a firm foundation. On bond markets, interest rates continued rising in June and July. Since then, they have largely moved sideways. This applies to US, UK, German and Swiss government bonds, in particular. Until the beginning of September, yields on ten-year Confederation bonds rose to almost 1.2%. They are currently at around 1%, which means that they have increased by about half a percent year-on-year. Government bonds in the emerging economies were particularly strongly affected by the rise in interest rates, since the expectation of an impending monetary policy normalisation in the US led to significant capital outflows from these countries. By contrast, risk premia on government bonds for the peripheral euro area economies did not increase very much. Moreover, these risk premia have fallen again in the meantime so that returns on government bonds in the peripheral economies are now in fact lower than at the beginning of the year.

Although the level of activity on the money market remains persistently low, they continue to be available to the market as a basis for interest rate transactions in Swiss francs. However, the Libor retains its position as the most important interest rate benchmark in the money and capital markets. BIS central bankers’ speeches  3
However, as long as the rules of the game prize short-term gain over long-term earnings stability, the temptation to cheat by  4  BIS Review 50/2002  manipulating the market will remain strong. Reforms cannot remove risk from investment, but firms can do more to promote transparency and ensure that their risks are properly disclosed. It is thus vital for firms - not just politicians and the public - to determine if there are weaknesses in legislation or regulation so that they too can correct and begin their part of the process of rebuilding investor confidence. But the present challenges are not only those of better regulation. The global economy is also facing a crisis of confidence, which interferes with investment decisions and dampens activity. Against this international backdrop, we have reacted swiftly to the changing winds that bring new risks to the domestic economy. The latest reductions in the target range are aimed at injecting further monetary stimulus in our economy. These actions are undertaken with an eye on keeping price stability in check. This is the best contribution the Swiss National Bank can make to restore confidence in the economy and promote a strong and sustainable recovery. BIS Review 50/2002  5

Notes: Net percentages are defined as the difference between the sum of the percentage of banks responding “tightened considerably” and “tightened somewhat” and the sum of the percentage of banks responding “eased somewhat” and “eased considerably”. The net percentages for responses to questions related to contributing factors are defined as the difference between the percentage of banks reporting that the given factor contributed to a tightening and the percentage reporting that it contributed to an easing. “Cost of funds and balance sheet constraints” is the unweighted average of “costs related to capital position”, “access to market financing” and “liquidity position”; “risk perceptions” is the unweighted average of “general economic situation and outlook”, “industry or firm-specific situation and outlook/borrower’s creditworthiness” and “risk related to the collateral demanded”; “competition” is the unweighted average of “competition from other banks”, “competition from non-banks” and “competition from market financing”. The latest observations are for Q1 2020. Our monetary policy measures, together with the contribution from the announcement of public credit guarantees in many countries and other direct and indirect support for firms and households, are contributing to the protection of bank-based credit flows. Banks have indicated that TLTRO III is having a net easing impact on the terms and conditions offered to borrowers and a positive net impact on their lending volumes, particularly on their expected lending volumes over the next six months (Chart 17).
A Fine Balance Speech given by Mark Carney, Governor of the Bank of England  The Mansion House, London 20 June 2017  I am grateful to Clare Macallan and Iain de Weymarn for their assistance in preparing these remarks, and to David Bailey, James Benford, Paul Brione, Bob Gilhooly, Jeremy Martin, Eleonora Mavroeidi, Alex Michie, Anisha Tibrewal, Kenny Turnbull, Simon Whitaker and Tom Wise for background research and analysis. 1  All speeches are available online at www.bankofengland.co.uk/speeches  I. Introduction My Lord Mayor, Chancellor, ladies and gentlemen. In recent weeks, we have been reminded of fine balances: in decisions, in parliament, in life. The fine balance between hope and despair. 1  Despair at the murder of Jo Cox. Hope in her remarkable life of service – an inspiration that lives on in her family, friends, colleagues and many admirers. Despair at the terrorist attacks in Manchester, Borough Market and Finsbury Park. Despair at the tragedy of Grenfell Tower. Hope in the heroism, resiliency and the community of the responses. Hope when we recognise our common humanity. The best tribute this City and this Country can give to the memories of those lost is to renew our shared commitment – whatever our differences – to promote the common good. This includes pursuing a Brexit, and building an economy, that works for all. ------------------------------------Since the prospect of Brexit emerged, financial markets, notably sterling, have marked down the UK’s economic prospects.

In this environment, the UK is running a historically large current account deficit. On the positive side, the deficit is funded in domestic currency and financial reforms have increased the resilience of the UK system, thereby making larger imbalances more sustainable. But the UK’s deficit has also been associated with markedly weak investment and latterly with rapid consumer credit growth. This is not an imbalance that is, as yet, funding its eventual resolution. Moreover, despite the large depreciation around the referendum, the extent to which the UK’s deficit has moved closer to sustainability remains an open question, one whose answer depends crucially on the outcome of the Brexit negotiations. Most fundamentally, the UK relies on the kindness of strangers at a time when risks to trade, investment, and financial fragmentation have increased. III. Potential Solutions The world economy has been here before. In the 1930s monetary policy was exhausted and fiscal policy was in abeyance. The trap was sealed by a wave of protectionist measures originating in the US and spreading to Europe. As current and capital accounts closed, stagnation ensued. What should be done to prevent history from rhyming? In the simple world of the economist, the prescription is straightforward. Deficit countries should loosen monetary policy and tighten fiscal policy. Surplus countries should do the reverse. roll up its sleeves, it could easily solve this economic Sudoku.
A second key principle of capital adequacy is that establishing the boundary between the going and gone concern (or resolution) regimes for loss absorbency is important. This is one reason why the work on resolution and gone concern loss absorbency is so important. Put simply, if we don’t convincingly deal with the too big to fail problem, the boundary between going and gone concerns will need to be re-set, and the former will need to be strengthened. This should not be necessary with a good outcome on the gone concern side. For me, the issue of gone-concern loss absorbency is the key outstanding one on the current agenda. The idea that there is no single right measure of the capital a bank requires is gaining ground. Each approach – risk-based, stress tests, leverage ratio – has its strengths and weaknesses. For me, there are a number of governing principles. First, supervision is about assessing and mitigating risks. That is the core of our job. We therefore naturally think in riskbased terms. That said, the leverage ratio is a very useful complement, which is why the PRA has moved to using a baseline leverage ratio more rapidly than the international standard requires. It is a very useful check and balance and it should prompt searching questions about the danger of model errors in more complex capital assessments. It is not a substitute for a risk-based approach, but it is a very good complement.

The changes that we have seen include action under both Pillars I and II of the Basel framework. The numbers I gave for minimum capital requirements (the change from £ to £ represent Pillar I. I mentioned earlier that Pillar II was not consistently or rigorously applied before the crisis. Between 2008 and today the Pillar IIA capital requirements for the major UK banks have risen from £ to £ This increase in capital required is additional to the impact of Basel III and the resulting increase in core capital requirements of around 7 times I set out above. The PRA’s approach to supervision emphasises the use of judgement on a forward-looking basis, and the use of Pillar II is evidence of that. A further important element of the new framework of supervision is so-called Asset Quality Reviews (AQRs), undertaken either by or at the request of supervisors like the PRA. AQRs are designed to assess the more structural features of loan books as well as their performance, including whether forbearance is being applied by the lender. The granularity with which AQRs are undertaken can vary with their purpose, but there is always a fairly high level of intensity in terms of the closeness of the inspection. In the best of all worlds, supervisory initiated AQRs should not reveal anything that isn’t already known. I will just say that experience shows that we are not there yet. Basel III requires more and better quality capital in banks.
A people’s initiative on this issue has been submitted in Switzerland, and a referendum is to be held later this year. The second proposal concerns allowing private individuals (as opposed to just commercial banks) to hold sight deposits at the central bank. Both proposals give the public access to digital central bank money and have consequences for money and credit creation by banks and thus for the financial system. Comments on sovereign money  What specifically does the Swiss sovereign money initiative propose? At the heart of the initiative lies the separation of money and credit. Under the current regime, as we have seen, there are two types of money: central bank money created by the SNB, and bank deposits, which are created by commercial banks in their interactions with the general public and the 8  Cf. D. Niepelt (2017), Geldschöpfung «aus dem Nichts», Neue Zürcher Zeitung, 238 (267), 16 November. Page 7/12  central bank and represent a claim on central bank money. Under the Swiss sovereign money initiative, bank deposits would be converted into central bank money – what the proponents of the initiative call ‘sovereign money’. Customers’ sight deposits would be transferred from commercial banks’ balance sheets and kept as separate sovereign money accounts. Sovereign money would be issued by the SNB through allocations of central bank money to the Confederation and cantons, or directly to the public. Banks would ultimately be payment agents for the SNB.

The definition of a severe economic downturn has been changed, however. According to the old agreement, a country experiencing a fall in GDP of 0.75% could be exempted from the EDP and a fall in GDP by 2% always led to exemption. Now the GDP requirement is changed to negative growth or a period of very low growth relative to potential. Exemptions can also continue to be granted by taking into account other relevant factors, on condition that the deficit is temporary and close to the reference level. But the number of other relevant factors to be included in the judgement of whether an EDP should be initiated or not has been increased. Such factors now include not only public investment but also potential growth, the Lisbon agenda achievements, R & D, pension reforms, international solidarity, and European policy goals. In my opinion, there is a risk here that the Pact could be interpreted differently and be applied differently to different countries. It will therefore be important to closely follow up how the revised Pact is applied in this respect. So far, however, no exemptions have been granted under the new Pact. The countries that have exceeded the three per cent limit have also been assessed to have an excessive deficit. If countries are found to have an excessive deficit, they now can have a longer time frame for taking effective action to correct the deficit and a longer timeframe to the initial deadline for correcting the excessive deficit.
If there were a benign, enlightened regulatory planner, able to co-ordinate the actions of traders on a lower-velocity equilibrium, the Flash Crash might have been forestalled. Unfortunately, there was not. ************ The pre-crisis quest for return has, over the past few years, been replaced by a quest for safety. Return on capital is no longer investors’ priority. Return of capital is. That risk-aversion is manifest in high risk premia on a wide range of risky assets and abnormally low yields on a range of risk-free assets. It is also evident in investors’ desire for financial instruments which are secured on high-quality collateral. Investors are taking literally the notion of a security. That desire for security has had a particularly pronounced impact on banks, which are refinancing large legacy asset portfolios. The cost of refinancing those portfolios has increased dramatically since the crisis, particularly for instruments lower-down the creditor hierarchy. The cost of unsecured borrowing by European banks has increased roughly 27-fold since 2007, while the cost of borrowing against high quality assets has risen “only” 16-fold. These relative price effects have shaped importantly banks’ financing choices. A large and rising fraction of global banks’ refinancing has taken place on secured terms. In 2007, the majority of term refinancing of European banks’ debt was on an unsecured basis. By 2011, secured and unsecured refinancing were roughly balanced. In 2012, secured financing is likely to take the lead (Chart 6).

During discussion of the Basel II agreement, it was suggested that provisions should be its fourth pillar but this idea was, in the end, rejected by the developed countries because of potential conflicts with accounting norms. After the crisis, there is, however, renewed interest in provisions as a prudential instrument. The idea of applying some countercyclical rule has gained ground. Several Latin American countries have advanced in this direction and their experience should be followed with attention. Mortgage operations, which are very closely related to the origins of the crisis, will need to be reviewed. The volumes and amounts committed to this activity are growing and have, without doubt, acquired systemic importance. This has implications both for the banking system, where these operations tend to originate, and for the securities market which provides the financing. The recommendations that warrant attention include the application of a prudent loan-to-value ratio taking into account cyclical fluctuations in the price of the dwelling, stricter requirements for institutions in the business of originating to sell, and the use of covered bonds to finance these loans so as to leave credit risk in the hands of the issuer while transferring market risk to the investors. This latter recommendation is backed by several successful experiences including that of Chile with covered bonds.
The intermediaries and infrastructure that are required depend on which means of payment is chosen. It is therefore very relevant to talk about payments as a consumption of payment services. An efficiently-functioning market for payment services assumes that payment services meet certain important requirements. Three important requirements of retail payment services Firstly, the payment service must be safe, but this is not enough. It must also be perceived as safe. Both the payer and the payee must feel secure, otherwise the payment service will not be used. If banknotes are easy to counterfeit, shops will not want to accept them. If cards can be easily hijacked, consumers will not want to pay with them.1 When we pay by other means than cash, security also means that we rely on the mediator of payments that we have actually entrusted with our money. Secondly, the payment service must be useful. It must be simple and convenient. You may remember when a card payment was made using a paper slip, with carbon in between, where you filled in the amount and signed it and showed your ID. This was not as simple and easy as the chip and PIN code in today’s card terminals. Thirdly, payment services must be accessible to households and accepted by companies and public authorities.

François Villeroy de Galhau: Ensuring confidence in the currency Introduction by Mr François Villeroy de Galhau, Governor of the Bank of France, at the conference on "Recent monetary policy developments", Paris, 4 May 2017. * * * Our currency, the euro, is at the centre of debates that are particularly important to French citizens. The Banque de France is independent from politics, but in keeping with our mandate within the French Republic to ensure confidence in the currency, it is my role to provide certain clarifications. I hear proposals for a dual currency with the return of a national currency in parallel to a European currency. I must say that such suggestions would put confidence in the currency in danger. No advanced economy has this type of parallel circulation. Where two currencies exist (or have existed) and can be used to make payments, one always inspires less confidence than the other. Generally, it is the “national” currency that suffers – the only one accessible to households, particularly poorer households, and to SMEs. The currency therefore quickly loses its value, leading to excessive price increases and a negative impact on purchasing power. If we were to consider returning to the ECU, it is important to remember that it has not existed for 18 years and was not a real currency: the ECU was a unit of account that could not be used by either individuals or companies to make payments.
In so doing, we take the overall exchange rate situation into consideration. Furthermore, we are supplying generous amounts of liquidity to the banking system via the SNB COVID-19 refinancing facility (CRF). The SNB’s expansionary monetary policy provides favourable financing conditions, counters upward pressure on the Swiss franc, and contributes to an appropriate supply of credit and liquidity to the economy. Page 1/4  Zurich, 17 December 2020 Thomas Jordan  News conference  Inflation forecast  In the current situation, the inflation outlook remains subject to high uncertainty. The new conditional inflation forecast through to the end of 2021 is slightly lower than in September. This is primarily due to the renewed deterioration in the economic situation as a result of the second wave of the pandemic. In the longer term, the inflation forecast is unchanged from September. The forecast for 2020 is negative (−0.7%). The inflation rate is likely to be higher again next year (0.0%) and slightly positive in 2022 (0.2%). The conditional inflation forecast is based on the assumption that the SNB policy rate remains at −0.75% over the entire forecast horizon. The long-term inflation expectations are well anchored and stand at around 1%. Global economic outlook  The coronavirus pandemic and the measures implemented to contain it led to a historic downturn in the global economy in the first half of 2020. With the decline in new infections and the easing of the containment measures in the summer months, economic activity increasingly resumed.

On the other, the fiscal and monetary policy measures implemented could support the recovery more strongly than anticipated. Swiss economic outlook  Through to late summer, the Swiss economy also recovered markedly and more strongly than originally expected from the first wave of the pandemic. Following a record increase, GDP Page 2/4  Zurich, 17 December 2020 Thomas Jordan  News conference  was still 2% below the pre-crisis level in the third quarter, having been more than 8% below in the second quarter. However, in October coronavirus also spread rapidly again in Switzerland. This has resulted in a renewed deterioration in the economic outlook, at least in the short term. The containment measures implemented thus far are restricting economic activity less than was the case in the spring. However, certain industries are severely affected again, above all hospitality and entertainment. Sentiment is also subdued in other industries. Economic momentum is thus likely to be weak in Q4 2020 and Q1 2021. We expect that GDP will shrink by around 3% this year. At our monetary policy assessment in September, we had anticipated an even stronger decline. The revision is due to the fact that the decrease in GDP resulting from the first wave of the pandemic was not as substantial as originally expected. Developments going forward largely depend on how successfully the spread of the virus can be contained in Switzerland and abroad. Our assumption is that there will not be a significant easing in the containment measures in Switzerland until the spring.