samchain/econo-pairs-v1 huggingface dataset:
With the collapse of Lehman Brothers in September last year, the crisis entered a new phase: it intensified greatly and abruptly, spread across economic sectors, and broadened globally. Risk aversion rose dramatically and confidence plummeted, stresses in the banking system increased, the money market became dysfunctional, and world economic activity weakened substantially accompanied by a sharp drop in world trade and a marked decline in commodity prices. The sudden and substantial deterioration in financial market conditions and the macroeconomic environment changed the outlook for price stability and inflation risks diminished significantly in the euro area and globally. At the same time, the risks to financial stability increased. In response, the ECB and other major central banks eased monetary policy and injected large amounts of liquidity, also employing non-standard policy measures. Over the past seven months, since the financial crisis deepened and broadened, the ECB has reduced its key policy interest rate by 325 basis point, to now 1%. The magnitude of the monetary policy easing over such a short period of time is unprecedented. 4  At the end of September 2008, the size of the balance sheet of the Eurosystem was EUR 1013 billion, an increase of 11% compared to its size at the end of June 2007, before the turmoil erupted. BIS Review 65/2009  3  Indeed, the provision of liquidity by the ECB to the euro area banking system has been extraordinary in size and scope, and has involved implementation of non-standard measures.

As a central banker, I will concentrate in my remarks on the role of central banks – and of the ECB in particular – in dealing with the current financial crisis and establishing conditions that support the economy’s recovery and return to a path of sustainable growth and price stability. In particular, I will address the following issues: •  first, the available central bank policy instruments in managing a financial crisis and the rationale for the measures actually taken;  •  second, the effectiveness of the ECB’s policies in promoting the orderly functioning of money markets, in fostering the provision of credit to firms and households, and, more generally, in countering the effects of the crisis on the financial system and the broader economy;  •  third, the role and effectiveness of other policies – notably the government measures to support the banking system and the fiscal stimulus packages – in mitigating the impact of the crisis and in complementing the actions of central banks; and  •  fourth, and looking forward, the prospects for sustainable growth in an environment of price stability and financial stability; that is, the prospects of escaping from the current state of economic underperformance and financial system stress, and the associated need for an appropriate exit strategy from the extraordinary measures taken by central banks and governments. II.
Jon Nicolaisen: Will debt be reduced? Speech by Mr Jon Nicolaisen, Deputy Governor of Norges Bank (Central Bank of Norway), at the Norwegian Academy of Science and Letters, Oslo, 9 April 2019. * * * Accompanying slides of the speech. Why do we have debt? Nearly 50 years ago, on 23 December 1969, Phillips Petroleum informed the Norwegian authorities of a major oil discovery on the Norwegian shelf. When it came time to develop the shelf, the Norwegian government decided to invest through direct ownership, financing its direct investment in oil activities with foreign borrowing. Between 1973 and 1979, Norway’s public debt soared, and Norway’s current account deficit climbed to more than 10 percent of GDP. The project was risky. Up until 1972, oil prices had hovered around USD 2 per barrel. The cost of producing Middle Eastern oil was a fraction of this, while production costs in the North Sea were far higher. Even so, the Norwegian authorities took a chance and started to develop the North Sea with borrowed capital. Today, it is safe to say that this decision was a good one. Why do we borrow? The fundamental reason is that borrowing – credit – makes it possible to bring forward consumption and investment. Credit enabled Norway to finance its investment in the oil sector. Credit enables consumers to buy a home early in the life cycle rather than waiting until middle age.

Zeti Akhtar Aziz: Overview of scenario thinking and planning Official remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia and Chairman of the International Centre for Leadership in Finance (ICLIF) Board of Directors, at the ICLIF's Seminar on “Overview of Scenario Thinking and Planning”, Kuala Lumpur, 5 October 2006. *  *  *  I am very pleased to welcome you this morning to ICLIF's Scenario Thinking and Planning Seminar. There has been growing interest amongst corporations and policy makers in the usefulness of scenario thinking and planning as a strategic tool. In the current environment that is rapidly changing and highly uncertain with new risks emerging, we need to be better positioned to be prepared for the future. Scenario thinking and planning may offer a solution to managing such situations. Good scenarios have been used most productively by many multinationals to challenge perceived business expectations. Scenario analysis and planning have also been extensively used by policymakers to ensure a state of readiness to respond to sudden or significant changes in the environment. Scenario analysis and planning is particularly relevant to the financial services sector in which the pace of change has accelerated exponentially in this recent decade. Unpredictable shifts in the environment have also heightened the uncertainty and increased the unpredictability of the future. Thinking about the possibilities and probabilities thus becomes relevant. Scenario analysis and planning offers a solution.
First, was the low interest rate reasonable given the information available at the time? Second, could a different monetary policy with higher interest rates have prevented the crisis? The first question, whether the low interest rate was reasonable given the available information, is the relevant one when evaluating monetary policy. It is more relevant to evaluate policy taking into account the information available ex ante to the policymaker rather than information ex post that was unknown to the policymaker at the time (see Svensson, 2009a, on evaluating monetary policy ex ante and ex post). 7 During the period in question, given the information available, there was a genuine and well-motivated fear of the U.S. falling into a Japanese-style deflationary liquidity trap, and the optimal policy in such a situation is a very expansionary monetary policy. 8 It may be that, in retrospect, the risk of deflation was exaggerated, but there was no way to know this ex ante. Hence, I consider the expansionary policy very appropriate. Adding some ex post evaluation, one can note that it did not lead ex post to very high inflation or an overheated economy. 9 The second question, whether a different monetary policy could have prevented the crisis, is relevant when assessing to what extent monetary policy can be blamed for causing the crisis, notwithstanding if it was reasonable from an ex ante perspective. The credit growth and the housing boom in the U.S. and elsewhere were very powerful.

Because it is more common for US households to fix the interest rate on their home loans for very long periods, they are mainly affected by changes in long-term interest rates. Moreover, the pick-up in inflation in the US has meant that real rates of interest have not increased in line with the rises in the Federal Funds rate. Estimates at the Riksbank suggest that the upswing in Swedish house prices to date is largely attributable to rising incomes, low interest rates and low construction activity. Since house prices began to increase in the mid-1990s, nominal disposable incomes have risen by around 40 per cent and interest rates have dropped sharply. In 1996 the average nominal mortgage rate for households was just over 9 per cent. In June this year it was a little less than 4 per cent. Meanwhile, construction of new homes has been very low, even though low interest rates and rising prices have meant that construction has picked up relatively well in recent years. My assessment is that so far there are no indications of any significant overvaluation of house prices on average in the country at current interest rate levels. Furthermore, Sweden essentially has no buyto-let market, i.e. a market in which private investors buy homes solely with a view to letting them. That limits speculation in housing.
8  BIS central bankers’ speeches  In the area of climate change adaptation, the Dyke Construction Programme, launched in 2045, proved critical not only in preventing the ongoing rise in sea levels from inundating our island, but also in generating a variety of ancillary economic activities. Adapting and building on the earlier Dutch designs and technologies, Singapore became a major exporter of dyke solutions to many other coastal cities around the world. The last 25 years have seen perhaps the most significant transformation of the Singapore economy – competitive, dynamic, resilient, and environmentally sustainable. GDP grew by an average 1.5% per annum, and GNI 1.7% per annum. Conclusion Let me conclude. I have described the evolution of our economy over the last 100 years, chiefly from the perspective of industrial developments, technological trends, and other global forces. It is a story of continuous restructuring, made possible by a judicious blend of the invisible hand of the market and the visible hand of good government. But the key non-economic factor that made this development journey possible is the culture of our people. It is a culture of innovation. Today, we have a highly productive and engaged workforce with deep skills, continually learning and taking advantage of new technologies, and building meaningful careers. It is this spirit of constant adaptation and lifelong learning that has It is also a culture of resilience.

The readiness to issue a CBDC can prove an important lever to that end. - In such a context, even if the jury is still out whether we will have to use it, it is essential that we show openness to change and to investigate ant test practical solutions, among central banks and with the private sector. 4/4  BIS central bankers' speeches
Reinhart and Rogoff document the substantially detrimental effects that financial crises typically impose on the subsequent economic recovery. As we all know, the recent recession was accompanied by a large financial crisis. When I look at the U.S. economy today, I see it tracking Reinhart and Rogoff’s observation that such recoveries are usually painfully slow – and are so for reasons that have little to do with structural impediments in the labor market and the like. Liquidity traps are rare and difficult events to manage. They present a clear and present danger that we risk repeating the experience of the U.S. in the 1930s or that of Japan over  1  See Christiano, Eichenmbaum and Evans (2005), Smets and Wouters (2007) and Chung et al. (2010). 2  Federal Open Market Committee (2011). 3  Reinhart and Rogoff (2009). BIS central bankers’ speeches  3  the past 20 years. However, liquidity traps have been studied over the years in rigorous analytical models by a number of prominent economists, including Paul Krugman, Gauti Eggertsson, Michael Woodford and Ivan Werning.4 Variants of these models have successfully explained business cycle developments in the United States. The lesson drawn from this literature is that the performance of economies stuck in a liquidity trap can be vastly improved by lowering real interest rates and lifting economic activity using an appropriately prolonged and forward-looking period of accommodative monetary policy. Of course, such monetary accommodation is the antithesis of the policy prescription for the structural impediments scenario.

As the industry gears itself for the next phase of growth in the more challenging environment, our commitment and strategies to keep raising the bar to bring Islamic finance to a new level will enhance its prospect to contribute to achieving our shared vision of inclusive growth in an environment of financial stability. 2  BIS central bankers’ speeches
The Migration Board, the Swedish Prison and Probation Service and the Social Insurance Office are a few of the authorities expressing an interest in the new card, although there will certainly be other users. It will be interesting to follow the development of this new means of payment. Summary Let me round off. •  We use our cards more and more; we use them more often and for smaller and smaller transactions. The importance of cards to the safe and efficient functioning of the payment system has increased significantly. As one of the tasks of the Riksbank is to promote a safe and efficient payment system, there has been a corresponding increase in our interest in card payments. •  It is hardly likely that the costs of using cash have fallen; it is more likely that they have increased. On the other hand, most of the indications are that a card payment costs somewhat less today. From an economic point of view the use of cards should have become increasingly favourable. •  Few people know what payments actually cost. There are increasingly strong reasons for the banks and the retail sector to consider how payments should be priced for customers. Experiences from Sweden and other countries indicate that consumers are price-sensitive when it comes to the use of means of payment. Consumers would use less cash if they had to bear a larger portion of cash-handling costs.

The Finance Minister could thus be appointed for a five-year period by the European Council acting by qualified majority on a proposal from the president of the EU Commission. The new appointment would be subject to the formal approval of the European Parliament, and the Finance Minister would be member of the Commission, as well as chair of the Eurogroup. The Minister would  9  Angela Merkel’s first parliamentary speech of the third term, 18th December 2013. BIS central bankers’ speeches  7  thereby have the legitimacy to represent internationally the euro area in Economic and Financial fora, alongside the President of the ECB. Second, the euro area Finance Minister would need to be backed by a genuine Treasury administration, which could include staff from the Commission’s Economic and Financial Directorate General, the ESM, and the Economic and Financial Committee Secretariat. Such a civil service would also benefit from the public advice of two independent bodies, the European Fiscal Board and the Competitiveness Council. Last, if we succeed in implementing further integration, we will need stronger democratic control over euro area affairs. To this end, we will need to consider institutionalising a euro area format of the European Parliament. Relationships between euro area MPs and national parliaments will also need to be enhanced, through an inter-institutional agreement, or by creating dedicated commissions.
For instance, now in 2019 Germany is going to be one of the countries with a lower growth rate. And yet it was the euro area’s growth engine two or three years ago. There is not an accumulation of divergences, but situations change. Some countries that were underperforming are now overperforming, and vice versa. And this is not going to depend on monetary policy. Monetary policy has to take care of price stability and some real factors that can explain inflation levels across the euro area. But it’s exactly the same in the 3/4  BIS central bankers' speeches  United States. Do you think a single currency area can work in the long term without having a single budget to address shocks, banking problems or competiveness issues? I think the institutional architecture of the euro area has not been finalised at all. We have made some progress with the creation of the European Stability Mechanism, and we have launched the banking union, but this project is not complete. We have to finish the European Deposit Insurance Scheme (EDIS) and we need to complete the capital markets union. I am fully in favour of having an instrument with a stabilisation capacity. It can take different forms. Of the kind French president Emmanuel Macron is proposing? If you look at what was agreed in the European Council, it was a first step in the right direction. But that should not be the steady state of the instrument.

Such tokens could be used in payment transactions between financial market participants in the same way as sight deposits are today, and could ultimately result in efficiency gains for financial market infrastructures. Taking Switzerland as an example, this would mean that the SNB would make Swiss franc tokens available to financial market participants. The financial industry and a number of central banks are currently assessing whether, and to what extent, tokens can bring efficiency gains. For instance, experiments and tests are being conducted with digital tokens in the areas of securities trading, settlement and management. It is hoped that ‘security tokens’ could be transferred between counterparties in near real time, resulting in more efficient management of securities. In a ‘Swiss franc tokens for financial market participants’ scenario it would be possible to exchange security tokens for token money on a delivery-versus-payment basis. In-depth analysis will be required to determine whether security tokens can indeed bring the desired efficiency gains. Besides the technical hurdles that would to be overcome, steps must also be taken to ensure that applicable legal and regulatory requirements can be met. Moreover, efficiency gains must never be allowed to compromise the security of technical systems. It is too soon to answer the question of how best to configure money flows in trading with security tokens. In certain situations, security tokens could be traded and settled just as efficiently if the transfer of funds continued to flow directly via the sight deposits at the  Page 6/7  central bank.
We are also working on the inclusion of these risks in the stress test methodology for the Spanish financial sector. In sum, banks and supervisors alike are moving along this path, which poses all sorts of challenges. For instance, it is in no way straightforward to envisage these risks as part of the commonly used valuation and measurement methodologies. Moreover, there are cultural factors hampering their inclusion, which calls for involvement from the uppermost levels of organisations. And, above all, one of the main challenges is the lack of information, which enormously hinders further progress. Allow me briefly to refer to these valuation-based aspects and the absence of data. Traditionally in finances there is a tendency to value investments exclusively from the standpoint of economic return. The classic focus of study in finances would be cash flows; once capitalised or discounted, these enable us to compare different investment options. From a theoretical standpoint, responsible investment reminds us that we should not value and compare different investments looking solely at an Excel chart. Rather, we should perhaps look at variables that are not directly monetisable in the expected return on each investment. Measuring this “non-monetisable” return is clearly not straightforward. The approach being followed focuses on the measurement of “impact”. For example, environmental sustainability has for some time used measurements that take “footprints”, be they carbon, hydric, environmental, etc.

The stock market slump has persisted for almost three years now. In the past few weeks, though, all major stock markets have at least witnessed some upward corrections. 2  BIS Review 73/2002  The long-term expectation that higher yields can be achieved only by taking higher risks has not proven true over a relatively long period of time. Unlike shares, low-risk bonds have generated attractive yields during this phase. This experience together with the fact that numerous, notably institutional investors have lost part of their risk capability might, in many instances, result in equity weightings remaining low in the foreseeable future. This change of behaviour will limit the stock markets' growth potential for the time being. At present, the price/earnings ratios of the major stock markets are close to the average of the past 15 years. This indicator suggests that, despite the price losses suffered, shares are not yet particularly low-priced. However, compared with the very low yield level of bonds, which are the most important investment alternative, shares do seem quite inexpensive. Does the stock market slump have any adverse effects on economic development? This seems certain for several reasons. For the corporate sector, it has become more expensive to raise capital, which undermines investment activity. Although direct shareholding is less common in Switzerland than, for example, in the United States, the asset losses incurred discourage private consumption. In many cases, the deteriorated financial position of pension funds necessitates an increase in contributions and/or a decrease in existing premium reductions.
Almost six years down the road since the start of the financial turmoil that turned into a crisis, many euro area countries have experienced a significant, but to date still partial, correction of external and domestic imbalances. Substantial progress can be seen most clearly in the development of current account balances. In the programme countries – Greece, Ireland and Portugal – current account balances have improved by more than 7 percentage points (relative to GDP) between 2008 and 2012. In Spain the current account has improved even more dramatically. Much of this was driven by an inevitable drop in domestic demand, but we have also seen strengthening exports in a global environment that is not really buoyant. This indicates that the countries’ efforts to rebalance their economies are starting to bear fruits. Part of this picture is also the partial reversal of previous losses of competitiveness, but here the pace of progress varies across countries. Ireland has performed very well, with accumulated unit labour costs falling by 18 percentage points relative to the euro area average. Greece, Portugal and Spain have seen a 10 percentage point relative improvement so far. In some other countries in need of strengthening competitiveness we are still waiting for the correction to become apparent. And in yet other countries, notably some of the countries that joined the euro area more recently, we have actually seen an incipient loss of competitiveness. It is important that these countries take a lesson from the mistakes of others. Fiscal balances have shown strong improvements.

As a consequence of our first hands-on experience with this technology, some questions which are still unanswered were raised during the process: a. How could this primary market be integrated with the secondary market? Could this same model be useful? b. There is the need for further analysis of our legal framework and identify possible gaps (the PoC scope only has a high-level legal analysis). c. When will this technology be mature enough to be considered as an alternative for critical systems? Now, I will narrow the topic of blockchain to Central Bank Digital Currencies (CBDC), which is the focus of our panel, and talk about the motivations, benefits and concerns. To begin with, it is important to understand that CBDCs are not new, and Central Banks have been issuing CBDCs since the first RTGS systems were around. These are the commercial banks’ reserves held in the RTGS systems. Even though this form of CBDC is not blockchain based, it is important to mention that the CBDC concept is not a novelty. Page 5 of 11  Central Bank of Chile September 2019  That being said, the central banks need to have a clear motivation to issue a CBDC. These motivations will be different and therefore the CBDCs will be different in their design, benefits and concerns. One way of categorizing CBDCs is by their access: general purpose, or retail, and wholesale.