samchain/econo-pairs-v1 huggingface dataset:
We thank the Fund for its analytical work on assessing reserve adequacy, but we would like to stress that reserve holdings are not an economic policy goal, nor are they driven primarily by precautionary self-insurance motives, but are the outcome of a larger policy strategy for macroeconomic and financial stability. Thus, we view that the Fund’s emphasis on assessing reserve adequacy might be misplaced and would add little value to policy dialogue in the Fund’s surveillance process, the focus of which should be on the broader macro-policy mix in relation to economic policy objectives. Moreover, assessing reserve adequacy remains an inexact science, with theoretical underpinnings yet to be concretely established. The Fund’s recent exercise may therefore be best viewed as an addition to ongoing research on this issue, which would help clarify expectations about what the new metric can and cannot achieve. 8. The Fund cannot hope to establish confidence in the IMS without building adequate financial safety nets to ensure the necessary backstops in the event of global systemic crises. We therefore call on the Fund to strengthen its financing toolkit, including the possible inclusion of a short-term liquidity line, taking into account reinforcing relationships with Fund facilities and other regional financing arrangements. 9. Over the long term, the eventual choice of a global reserve currency, or currencies, needs to reflect evolving international trade and investment flows and be widely accepted by the market.

In such circumstances, it would be extremely penalizing to give up the possibility of real exchange rate adjustments. This shows that there is no single model of monetary cooperation which could be duplicated around the world. It is up to each group of countries to find their own sustainable path to economic integration. Will monetary union evolve towards closer political union? As you well know, these are difficult times for European political integration. The Treaty creating a Constitution for Europe was not ratified by two founding members of the European Community. As a consequence, the future of political integration is fraught with uncertainties. These raise several important questions for the future. Has the process of political integration stalled or just paused? What is the appropriate institutional framework for an enlarged Europe? These are questions best left for the historians and political scientists to answer. But one question is essential: can monetary union progress and survive without a full fledged political union? Can we – to quote, Otmar Issing, my former colleague in the ECB's Executive Board – have "a currency without a state"? For me, like for Otmar Issing, the answer is clear: yes, we can. From the start, the European project has ventured into unchartered territory. We have created an institutional framework without any historical precedent and model. This is especially true for monetary policy,  BIS Review 43/2007  3  where we have transferred the decision making powers to a supra national entity.
Remember that your personal liability, will also be at stake in case of failure and such loss can be quite substantial if you have not taken the right steps. So, take the interest; take the time to study, and, be diligent in your activities. Actually, if you do that, you will find that it is much better for your Company, much safer for yourself, much easier for the regulator, and much easier for the market. My dear friends, risk can be a sudden occurrence. Risk can, at the same time, be slow in coming. You don’t know which risk is there, but you have to be alive to risk. Today, management is all about risk management. What are the risks in doing something? What will be the repercussions? What will be the dangers? You have to think-safety first, just like how it is said at some of the modern construction sites. When you go to some construction sites, you see a large sign that says “safety first”. Why? Because you have to survive before you are able to construct, and accidents can be both painful and costly. In looking at safety, in the case of financial institutions, the important factor is to focus on liquidity management. You may be profitable. You may be having a very good plan for the future. But if you do not have liquidity, i.e., if you do not have cash to meet your obligations, you cannot survive. It is like a very fit athlete who can run very fast.

Expanding foreign trade and globalisation of the production of goods and services call for the development and internationalisation of the financial system so that the opportunities of greater prosperity can be fully utilised. A well-developed financial system is particularly important, moreover, when advances in tele- and data-communications are beginning to have more far-reaching consequences for production processes. At the same time, the transition to a more global financial system has not been straightforward. Developments have often been so rapid that systems have been “left behind”. But this does not mean that the problems lie in the deregulated financial system or in capital mobility as such. Turning back the clock would be difficult but the notion is worth a thought to indicate the consequences that a return to a highly regulated financial sector would have in terms of growth and employment. BIS Review 127/1999  6  Here I have tried instead to show how the system itself, as well as the authorities around the world, are endeavouring in various ways to contribute to greater financial stability at the same time as the positive characteristics of the new financial system are allowed to contribute to the growth of prosperity in the world. 7  BIS Review 127/1999
By drawing explicitly on the information embedded in the network, PageRank produced dramatically improved web search capabilities. By now, the graduate project had become a company called Google. The vast, growing multi-dimensional cats-cradle of global information could now be sliced and diced in fractions of a second. Navigating the web no longer required a specialist pilot; it could be mapped by a novice. The World Wide Web had been given an instantaneous backrub. That has yielded vast productivity improvements. Google itself is today valued at around $ billion, having gained in value by on average $ million every week of its life. Applications of Google’s network mapping technology grow by the day. For example, Google indicators produced from the analysis of the popularity of search terms such as “estate agents” or “motor vehicles” have outperformed some existing indicators of house prices and motor sales.19 And what has allowed the World Wide Web to be Googled in this way? A common language. (d)  Lowering barriers to entry  Creating a common language also has the potential to transform the industrial organisation of an industry. It does so by simultaneously expanding the frontiers of a global network and by lowering the barriers to entering it. This allows new companies, with innovative and superior product offerings, to quickly erode the market share of incumbents. Higher productivity and growth have been the fruits.20 Global supply chains are one example. Prior to GS1 standards, small suppliers faced an uphill struggle connecting to global supply chains.

Figure 1: Financial Services Value Chain  At present, the most significant changes are taking place at the front-end, where innovative payment service providers (PSPs) are providing new user interfaces for domestic retail and cross-border payment services through digital wallets or pre-funded eMoney. 8  Other aspects of the customer relationships are being opened up. For example, aggregators are providing customers with ready access to price comparison and switching services. This will increase further when aggregators gain access to banks’ Application Programme Interfaces (APIs). 9  These new entrants are capturing potentially invaluable customer data which can be used to target non-bank products and services. 10  8  For example, more than 80% of incumbent financial institutions thought their customers were already using FinTech companies to make payments whilst nearly 70% thought they were doing the same for fund transfer and around 60% for personal finance. Only 50% thought their customers were doing so for traditional deposits and savings. See PWC “Global FinTech Report” (2017). 9 The second Payment Services Directive (PSD2) will allow, conditional FCA authorisation and customer authority, non-banks to access customers’ bank account data. In the UK, the Competition and Markets Authority has required that the UK’s nine largest banks adopt an open banking standard for APIs by early 2018.
The preparatory steps that we have decided to take will provide a basis for deciding whether the Riksbank should enter into contractual negotiations with the Eurosystem. In practice, we will analyse thoroughly a number of key issues, ranging from the consequences for monetary policy and financial stability to governancerelated aspects and possible contingency solutions. This entails also further study of potential requirements stemming from the Swedish protective security legislation. Now, this is not something that will happen overnight. A first transaction using Swedish kronor on T2 or T2S is likely to happen perhaps seven or eight years ahead. The work following a decision to proceed – negotiation with the Eurosystem, implementation, testing, etc. – will take several years. Yet, my message to Swedish banks listening to or reading this is, I would like to bring the message across that this is no small task, neither on our side or yours. We will invite for further dialogue around this in due course. Serving society beyond interbank infrastructure In addition to the just mentioned development plans for the next generation of payments systems, we also conduct work that more directly focuses on end-users rather than wholesale payments. E-krona: maintaining the public’s access to central bank money Against the background of declining cash use in society, the Riksbank began work in 2016 on analysing opportunities and challenges associated with issuing a Swedish krona in digital form to the public: an e-krona. When we started this investigative work, we were very much alone.

At one extreme - and I exaggerate to make the point - some appear to have a vision of maximum harmonisation across the EU, with uniform regulation and centralised oversight at some point in the future, whereas others lean more towards harmonisation only to the extent to which it is demonstrably necessary, with mutual recognition, and an EU-wide passport based primarily on the removal of barriers to cross-border activity. Of course that approach leaves plenty of room for debate about what exactly “demonstrably necessary” means. Underlying the debate at that level are legitimate differences in priorities as between the different public policy concerns - how much weight to put upon consumer protection as against systemic stability or freer competition, for example, which are not necessarily easy to resolve even at the national level. And there may - just possibly - also be, less legitimate, differing perceptions of national self interest. The truth is that there are no easy answers, and I think myself that we are bound to move forward in a pragmatic, incremental, way - recognising the different considerations that apply in different areas of the markets rather than on the basis of a grand design. In this context, I am actually rather encouraged by the recent discussion papers put out by Eurofi and the Wicks group, which stand back a little from the more immediate issues and look at the way forward in a broader - and longer-term - perspective.
I doubt that rules alone can accomplish this. Telling people to be ethical doesn’t make it so. Seeing others engage in ethical decision-making is, by contrast, quite powerful. With that prologue, let me turn to my first message: Stay in banking. This might be a surprising message in light of my introduction. Nonetheless, banking is important work. Society relies on its financial system to “create substantial value for our society.” 3 As investor and author John Bogle has written: “[Banking and finance] facilitate the optimal allocation of capital among a variety of users; it enables buyers and savers to meet efficiently; it provides remarkable liquidity; it enhances the ability of investors to capitalize on the discounted value of future cash flows, and other investors to acquire the right to those cash flows; it creates financial instruments [. . . ] that enable investors to assume additional risks, or to divest themselves of a variety of risks by transferring those risks to others.”4  To fulfill its potential for creating value for society, the financial system needs talented and dedicated people at the helm. This is especially true for banks, which are indispensable to our economic system. As the philosopher Onora O’Neill has observed, banking requires more than just technical competence.5 Bankers must reproduce their efforts and results with reliability. And, above all, bankers must be honest. They must do what they say and say what they mean. This is necessary for the financial system to be viewed as trustworthy.

It is timely, therefore, for you to consider what type of leader you want to be, what type of firm you want to lead, and what type of industry you want to work in and influence. I have some views on all three, which we will get to in a moment. I am encouraged that members of the industry have convened here today to engage on these issues. I think it is important that the industry tackle this together. You can learn from one another. And, given the scandals of recent years, you really do have to sink or swim together. Before the recent spate of conduct problems, there were times when one might be secretly happy when a competitor stumbled through some sort of misconduct. All the better if such a stumble generated negative publicity and headlines. Today, the situation is vastly different. When each new scandal emerges, the industry is painted with the same broad brush. This underscores the importance of taking both individual and collective responsibility for reform. You have a personal stake in improving bank culture. Your firms have a stake too. And so does the industry. There are three messages I am going to focus on today: First, stay in banking and be good role models of the behaviors and conduct that we all want to see. It’s important. The banking industry needs your talents. And, if done the right way, it will result in a fulfilling career.
So even if inflation is now high, people can trust inflation to come back down to target. As a result, savers have come to demand a lower premium to compensate for expected inflation. But it is not just nominal interest rates that have fallen. If we adjust nominal interest rates for inflation and look at real interest rates, we can see that they have fallen too. Chart 2 shows the UK ten-year real interest rate, measured directly from index-linked bond prices. It is clear that the real interest rate is quite responsive to cyclical events, and that it has risen sharply over the past year. But beneath the volatility, there appears to have been a fairly steady downward trend from the 1990s at least up until the onset of the Covid pandemic. Bank of England  Page 6  Chart 2: The UK ten-year real rate has fallen over recent decades Ten-year zero coupon yield (spot interest rate) from UK index-linked gilts (a) Per cent 6  6  4  4  2  2  0  0  -2  -2  -4 1985  -4 1990  1995  2000  2005  2010  2015  2020  (a) Sources: Bloomberg Finance L.P, Tradeweb and Bank calculations. Much has been said about this trend in risk-free interest rates.

Chart 3, replicated from a speech I gave last year, shows estimates of the global trend component of the equilibrium real interest rate by Bank staff (in blue) along with other estimates from academic papers. We call this trend component Global R*. Chart 3: Empirical measures of Global R* have fallen in recent decades Estimates from panel of 31 countries from 1900-2015 (a)  (a) Source: ‘The economic landscape: structural change, global R* and the missing-investment puzzle – speech by Andrew Bailey’ (with references to academic papers); and ‘Structural change, global R* and the missing-investment puzzle’, Bank of England Staff Working Paper No. 997 (2022) by Andrew Bailey, Ambrogio Cesa-Bianchi, Marco Garofalo, Richard Harrison, Nick McLaren, Sophie Piton and Rana Sajedi. Bank of England  Page 7  There are wide error bands around the central estimate, but the direction of travel has been clear. Global R* has fallen markedly over recent decades. As we look deeper into the causes of this, two supply factors stand out: a slowdown in productivity growth and population ageing across advanced economies. While this is a global story, let me focus on the United Kingdom. Chart 4: UK productivity growth has slowed since the financial crisis Annual growth in output per hour for the whole economy and manufacturing sector (a)  (a) Sources: ONS and Bank calculations. Chart 4, reproduced from our latest Monetary Policy Report, shows that there has been a marked and sustained fall in productivity growth in the United Kingdom following the global financial crisis in particular.
BIS Review 67/2009  5  Consistent with those Design Principles, during the current crisis we added to the Bank of England’s Sterling Monetary Framework two instruments that are explicitly designed to help contain financial system stress, by providing financing against securities that may become illiquid in stressed conditions: •  A Discount Window Facility (DWF) making available to commercial banks collateral swaps in which the Bank can lend UK government securities in exchange for a wide range of eligible collateral. •  Long-term repos (LTRs) via which the Bank lends cash against collateral comprising a range of high-quality securities going beyond the sovereign securities routinely eligible in the Bank’s short-term repo operations. For the Bank’s short-term repos, eligible collateral has not been widened: it remains essentially high-quality government bonds. That is because the purpose of the weekly shortterm OMOs is to manage the Bank’s net supply of reserves rather than to provide broader liquidity insurance. Liquidity insurance and monetary policy The two new facilities differ from each other in so far as the long-term repos (LTRs) are for a total size determined by the Bank, whereas drawings from the Discount Window Facility are for amounts determined by individual counterparties; and in that the Bank lends cash via the LTRs, whereas we would usually lend securities via the DWF. That affects their interaction with monetary policy.

21 Banks earn a return from providing liquidity services, and so make a trade-off in deciding how much liquidity risk to run. But, because of the spillover effects from bank failures, the overall social cost of banks’ liquidity risks crystallising can be considerably greater than the costs for the individual banks themselves. Regulation by the micro-prudential authorities has been the primary tool for dealing with that issue. There is currently a very important, and long overdue, international debate about how to improve the regulation of liquidity. I want to dwell today on just one important element of this debate. This concerns whether or not the assets counted by prudential regulators as part of a bank’s liquidity buffer should be defined to include all of the assets held by the bank that are eligible in the operations/facilities of the central banks to which the bank has access. Some argue that they should. The Bank of England would regard that as a big mistake. For the reasons I have described, the collateral eligible at most central banks goes way beyond securities that can be relied upon in stressed conditions to be liquid in private markets (whether outright or repo). So if they all counted as core-liquidity for regulatory purposes, banks would in effect be liberated from having to hold a buffer of low-yielding assets that they could confidently use in the market before they turned to us.
In recent months the judgement about precisely when to raise Bank Rate has become more balanced. We have no pre-set course, however; the timing will depend on the data. Moreover, the precise timing of the first rate rise is less important than our expectation that, when rates do begin to rise, those increases are likely to be gradual and limited. Rates will go up only as far and as fast as is consistent with price stability as part of a durable expansion, with the maximum sustainable level of employment. For a variety of reasons ranging from the weakness in the euro area, to ongoing repair of household balance sheets, we are not expecting interest rates to head back to the levels seen before the Great Recession. 19 The actual path of interest rates will be determined by the evolution of the balance of aggregate demand and aggregate supply. 19  See, for example, the Box on page 42 of the August 2014 Inflation Report. BIS central bankers’ speeches  7  Before the crisis, monetary policy largely tracked developments in aggregate demand because the structural dynamics of labour supply and productivity growth were relatively consistent. 20 But in the wake of the crisis, the supply side of the economy has been anything but predictable. Originally, we thought the major uncertainties were centred on productivity growth.

With inflation at 1.6%, continuing downward pressure from the appreciation of sterling, and with slack remaining, the current inflation environment is benign. But it will not remain benign if we do not increase interest rates prudently as the expansion progresses. Our latest forecasts show that, if interest rates were to follow the path expected by markets – that is, beginning to increase by the spring and thereafter rising very gradually – inflation would settle at around 2% by the end of the forecast and a further 1.2 million jobs would have been created. In other words, we would achieve our mandate. There is, as always, uncertainty about the future. But uncertainty does not mean stasis. You can expect interest rates to begin to increase. The exact path will depend on the economy. Our assessment will undoubtedly change as the economy evolves and policy will of course be adjusted if geopolitical events have a material impact on the outlook. If indicators suggest the economy is moving more slowly towards our goals, we will have learned that we are further from sustainable capacity. Prospective wage and unit labour cost growth will be weaker. Rates will go up later and more gradually. And should we see faster progress, prospective wage and unit labour cost growth will be stronger, which will suggest we are closer to maximum capacity and that the economy can sustain higher rates sooner. In all events, rate rises can be expected to be gradual and limited compared to the experience of the UK in the past.