samchain/econo-pairs-v1 huggingface dataset:
Private money that end customers hold at commercial banks is seamlessly linked to the central bank money held by commercial banks via instant payments. This integration enables retail payments to be settled in real time and in central bank money. The SNB is aware that the implementation of instant payments at commercial banks presents not only opportunities, but also challenges and costs. Perhaps the biggest challenge is the need to adapt today’s core banking systems so that they can handle the increased speed. Such adaptation will benefit retail payment transactions and provide an important basis for integrating further digital innovations into our payments in a secure way. Let me now focus on a second area of innovation that is also benefiting from the increase in speed and could require major adjustments to the financial system. This is distributed ledger technology (DLT) and tokenisation. Page 6/11  DLT and tokenisation DLT is a peer-to-peer computer network that enables its members to access transaction data simultaneously and to update it (cf. slide 7). It provides the basis for a clear allocation of ownership in a computer network without the need for a central party. DLT offers interesting potential applications for the financial sector, and is therefore regarded as one of the biggest innovations in the fintech area. It is no surprise, then, that the private sector is investing considerable resources in this technology. The public sector also recognises its potential.

At this point, let us make it clear that this work is not intended as a declaration of the SNB’s intent to issue wholesale CBDC, or indeed to offer another settlement model. Rather, the point is to act prudently and proactively so that we can continue to fulfil our mandate in the future. Integration of token money and book money Let me now turn to the integration of token money and book money. We do not yet know what role DLT and tokenisation will play in the financial system of the future (cf. slide 14). There are three possible scenarios. In the first scenario, both remain niche products. A second, hybrid scenario, in which assets can be transferred and paid for in both tokenised and traditional form, is also conceivable. In the third scenario, infrastructures would be based primarily on DLT, and assets would only be available in tokenised form. For the second and third scenarios, a seamless integration of different forms of money as well as a high degree of interoperability between existing and new payment and settlement systems are essential. A lack of interoperability may lead to segmentation of the financial market infrastructure. A lack of integration may lead to fragmentation of the monetary system and threaten the singleness of the Swiss franc. The SNB will pay particular attention to this issue. Conclusion This evening we have looked at how we can harness the potential of digitalisation and new technologies while at the same time maintaining security and confidence in the payment system.
One can’t be precise about these things, but I do think that, for reasons on both the demand and supply side, these very rapid rates of wholesale goods-price inflation are likely to subside at some point. Indeed, in some cases they could even go into reverse. When it comes to demand, I think it’s reasonable to expect shifts caused by the pandemic to narrow again as the threat of it recedes. Consumers will rotate some of their spending back to services. To the extent strong demand for durable goods specifically is to make up for ground lost last year that only needs to be done for a while: people buy a new computer or car only once every few years, not every quarter. Indeed there may already be signs – tentative but visible – that these imbalances are beginning to diminish. Retail sales fell in May, in both the US and UK. Spending on Barclaycard doesn’t suggest any reacceleration in June, in this country (Chart 14). It does on the other hand suggest that other areas of spending – those most heavily affected by the lockdowns, like hospitality and restaurants – has been growing faster than that on goods since the economy re-opened in April. Second, supply in some of these goods markets is ultimately quite “elastic”: over time, higher prices encourage higher production, ensuring a degree of self-correction. For some basic commodities the response could be relatively straightforward: it might simply be a question of reopening an existing plant, mine or sawmill.

The UK labour market is flexible and here too there are early signs that the degree of mismatch may be easing a little. But in some cases that may take time and it may take extra costs. As is often the case, therefore, the behaviour of labour costs will for me be important in judging the appropriate stance for monetary policy. This won’t be straightforward. Unfortunately, there’s still a great deal of noise in the earnings data – base effects, shifts in furlough and in the composition of employment are all still distorting official estimates of wage growth – but they are nonetheless a key area of focus. Let me now go through these two broad areas in more detail – first traded goods and then the domestic labour market – before wrapping up with some implications for what matters for policy. The strength of global goods price inflation: shifts in demand and constraints on supply The upside surprises in inflation, here and in other countries, have been concentrated in prices of physical goods. Chart 6 plots the two series in the UK. For the first time in quite a while, goods price inflation is  Put another way, mismatch in the labour market tends to raise the rate of unemployment consistent with stable wage growth – the so-called “NAIRU”. 4  6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  higher than that in services. This has happened before – briefly in 2008, 2011 and again in 2017.
Technology would give birth to a new “leisure class”. Debates on the relationship between jobs and technology stirred again during the 1960s in the US, during the 1970s in advanced economies, and again in the 1980s and 1990s in the UK and parts of Europe. In each case, the prompt was rising rates of unemployment. And in each case, this debate subsided as unemployment rates fell. 4  BIS central bankers’ speeches  Moving into the 21st century, this debate has once again been re-kindled. The prompt this time has not so much been rising rates of unemployment. Rather it is been the rapid emergence of smart machines, jet-propelled by modern computing. These machines are different. Unlike in the past, they have the potential to substitute for human brains as well as hands (Autor et al (2003), Manyika et al (2013)). In Race Against the Machine and The Second Machine Age, Eric Brynjolfsson and Andrew McAfee paint a persuasive picture of robot-fuelled growth in productivity and an accompanying reshaping of the role and nature of work (Brynjolfsson and McAfee (2011, 2014)). Whether this vision is utopian or dystopian, it poses a fundamental challenge to the relationship between jobs and technology, to which I will return. The economics of these debates, which I hope is not too bloodless, is relatively straightforward. There are two opposing effects at work. The first is the substitution or displacement effect. Labour-saving technologies displace workers, almost by definition. Capital substitutes for labour, machine for man.

By the middle of the 19th century, aggregate real wages were rising in the US and UK. Yet despite increased demand for their services, unskilled workers do not seem to have shared in this pay rise. Higher demand for their services was more than matched by increased supply, both from child labour and from displaced artisans as they moved down the skill spectrum (Clark (2010)). As a result, their pay appears to have flat-lined. At the high-skill end, the supply of workers was also increasing as some workers skilled-up (Clark (2010), Wallis (2014)). Despite that, there is evidence the skill premium for clerks and other professionals rose through the 19th century. The net effect of these complex shifts was thus to widen the distribution of wages between skilled and unskilled workers (Katz and Margo (2013)). Income inequality rose. The pattern of labour’s share of the national income is also interesting. This appears to have fallen in the first part of the 19th century (Allen (2009)), as Chart 21 illustrates. Workers do not appear to have enjoyed the early fruits of the Industrial Revolution. That perhaps explains why David Ricardo entered the fray at this time. In the event, these concerns proved ephemeral. With a lag, the rising tide of productivity and incomes lifted all boats, whatever their level of skill. Inequalities in wages started shrinking and labour’s share of income began to rise, returning to their levels at the end of the 18th century.
This is exactly why EU legislation requires a central bank to have adequate financial resources to be able to carry out its tasks independently. 7 This reasoning does not necessarily mean that a central bank must have positive equity. Negative equity can be compensated for by a large amount of outstanding banknotes and coins, at least if there is confidence in the bank’s continued earning capacity. 8 But in Sweden, the demand for cash is low and continues to fall. Therefore, the Riksbank can hardly count on having sufficient earning capacity in the future unless its equity remains positive. But how does this reasoning about the Riksbank’s financial position relate to the bond purchases? Bond purchases increase the risks on the Riksbank’s balance sheet When the Riksbank purchases a government bond, both the assets and the liabilities on our balance sheet increase. The bonds purchased by the Riksbank are of course reported as an asset. But we fund the purchases by simultaneously selling Riksbank certificates with a maturity of one week. And these certificates become a liability on the Riksbank’s balance sheet, and the interest rate on the liability is the repo rate. As the bonds we buy have a much longer maturity (about five years on average) than the certificates, the Riksbank has to renew the borrowing every week by selling new certificates. It is this maturity transformation that poses an interest-rate risk for the Riksbank.

First, the authorities must become better at gathering and analysing information about conditions in the financial sector and the rest of the world in order to be able to better assess the risks of future crises in the financial system. One of the problems has been that the risks have developed during periods when the financial sector has appeared to be in excellent health, at least on the surface. This points to the importance of two things: We need a more transparent financial sector and we need ongoing research and development work to produce indicators that are better at revealing that systemic risks are developing, as well as other types of analytical tools. However, this is not only about discovering and understanding the risks, it is also about counteracting the development of the risks in a more concrete way. This is why we also need effective corrective tools that enable the authorities to better influence risk behaviour in the financial sector and thus reduce the risk of crises in the future. This includes, for instance, finding ways to ensure that the assessments of the authorities have a sufficient impact on the risk behaviour of the financial players. Apart from effective communication, we also need to think about whether we have the "teeth" needed to put sufficient pressure on the players to make them change their behaviour. For example, the possibility to im-pose an extra capital adequacy requirement on particularly large and complex (and therefore systemically-important) banks has been discussed.
14  Report, Sept. 14  2016 (f) Report, Sept. 14  (annual change, percent) 3.4  3.9  3.9  3.8  3.9  2.4 1.0 1.6 7.3 5.4 4.1 2.0  2.1 0.8 1.0 7.3 5.4 4.0 1.7  2.9 1.5 1.1 7.2 6.3 4.5 3.4  3.1 1.7 1.0 7.2 6.2 4.4 3.0  3.0 1.7 1.5 7.2 6.2 4.5 2.6  3.2 1.8 1.2 7.0 6.5 4.8 3.3  300 106  310 108  315 106  (levels) 285 101  290 103  305 104  300 101  -0.9  -0.5  -0.8  -0.5  3.5  3.3  3.2  3.8  3.7  3.7  4.4  (annual change, percent) -0.2  -1.1  -1.5  (f) Forecast. Sources: Central Bank of Chile based on a sample of investment banks, Bloomberg, Consensus Forecasts, the IMF and statistics bureaus of respective countries.

Longer maturities have smoothed the growth of borrowers' debt burden in terms of monthly payments of a mortgage. Of course, looking at total loan servicing costs, the overall debt burden has increased. When we compare Estonia and other Baltic countries with more developed economies, there is obviously room for further credit growth: total bank credit as a percentage of GDP in 2004 was over 100 percent in the euro area, around 60 percent in Estonia, and only 20 percent in Lithuania. And although it is rapidly increasing, the debt burden of Estonian households, at 32 percent of GDP by end-2005, was still about two times lower than in the Nordic countries. Secondly, the increase in incomes enables people to upgrade their living conditions. For example, the number of square meters per capita in Estonia (at around 30) is relatively small compared to Sweden  2  BIS Review 81/2006  (45) or Denmark (50). Moreover, older housing stock needs quality improvements. Both these factors may indicate that real estate markets may continue to perform reasonably well over the medium term, even if some slowdown might be ahead. Indeed, the relative contribution of Estonia's construction sector to GDP is hardly exceptional if compared to many other EU countries. Are risk premia sufficient? However, this rapid growth poses important questions of sustainability and stability, especially in countries with shorter borrowing experience.
It was a clear priority of the G7 French Presidency this year. Second, regarding data protection, financial supervisors and authorities in charge of privacy have to invent new ways of cooperation to address data issues that have become central to financial services. Third, regarding competition and anti-trust policies, situations where “the winner takes most” while staying outside the scope of financial regulation should be adequately anticipated and addressed. And fourth, fair taxation, thanks hopefully to OECD work. “Stable coin” projects, including Facebook’s Libra, are a case in point. “Stable coins” are quite different from speculative assets like Bitcoins. However, regulators will have to keep a very close eye at the global level, and believe me, we will do it. At their meeting in Chantilly in July, G7 members have expressed a clear position: stable coin projects raise a sovereignty challenge, and “serious regulatory and systemic concerns, as well as wider policy issues, which both need to be addressed before such projects can be implemented.”1 France, as Chair of the G7 this year, has created a dedicated task force – as soon as the project was announced by Facebook. The task-force, chaired by Benoît Coeuré, will make its conclusions public and make recommendations in October. Our aim is to formulate a response that is common across all jurisdictions, and holistic, covering all the issues. And to quote only two of many requirements: it is imperative that such projects comply with anti-money laundering regulations; the anonymity of the users creates heightened risks.

We believe, rightly, that the banks entrusted with our life savings are prudent. When we transfer money, we don’t worry about whether the payment system will get the funds to where we want them to go. We also expect that the currency we hold will be stable – and that we will not wake up one day to find that our purchasing power has been eroded overnight. 1/4  BIS central bankers' speeches  9. In Hong Kong, you and I expect all of this to run like clockwork. And it does. But it’s only when the smooth operation of our monetary and banking systems is put under test by severe external shocks that we will see a reflection of true resilience. 10. We all know the challenges Hong Kong has faced over the past year, including social events, COVID-19, and the China-US tensions. Despite all these challenges for our economy, Hong Kong’s financial system has remained remarkably stable. 11. The value of the Hong Kong dollar has stayed close to the strong side of its trading band for most of this year. There have been strong inflows to the local currency, partly because of substantial demand for Hong Kong equities, including some large IPOs, and partly because of the very strong market confidence in the Linked Exchange Rate System. 12. There have been talks about capital flowing out of Hong Kong, especially during the peak of the social events last year.
Andrew Sentance: Prospects for global economic recovery Speech by Mr Andrew Sentance, Member of the Monetary Policy Committee of the Bank of England, at the British Chambers of Commerce Annual Convention, London, 18 March 2010. *  *  *  I would like to thank Michael Hume and Abi Hughes for research assistance and I am also grateful for helpful comments from other colleagues. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Monetary Policy Committee. Over the three-and-a-half years I have spent so far on the Monetary Policy Committee, one of the things that has struck me most forcefully is the way in which the UK economy is so heavily influenced by international developments. The global financial crisis and the recession which resulted from it have highlighted that very clearly. But even before we felt the full force of the crisis in late 2008 and early 2009, UK inflation was pushed up to over 5% by a surge in global energy and commodity prices. And looking back over the whole history of the MPC since 1997, most of the shocks to UK growth and inflation that the Committee has had to worry about have had a significant international or global dimension. 1 These global influences on the UK economy partly reflect our economic history.

In my view, three main factors have been driving the recovery over the last year – a bounce back in business and consumer confidence, strong growth in Asia and other emerging markets, and the impact of policy stimulus. These three factors will also have a key bearing on future global economic prospects, and I will discuss them briefly in turn. Recovery in confidence A key factor which plunged the world economy into recession was the massive shock to business and consumer confidence across all the major economies of the world when the global financial system appeared to be rocking and reeling in late 2008 and early 2009. Since then, confidence has gradually recovered as the financial system has stabilised and the shock waves from the traumatic events of eighteen months ago have subsided. 3  See http://www.iata.org/whatwedo/economics/ for data compiled by the International Air Traffic Association (IATA). 4  The 8.5% increase relates to the seven-month period Q2 2009 to Nov–Jan 2010. 5  UK exports of goods and services grew in volume terms by 5.4% per annum from 1992 to 2007; exports of goods excluding oil and erratics increased by 4.5% over the same period. 6  This has been reflected in an upgrading of world growth forecasts for 2010. For example, the IMF forecast of GDP growth across the world economy this year has risen from 1.9% in April 2009 to 3.9% in its latest World Economic Outlook (January 2010).
However, despite this method of stating assets in the balance sheet at amortised cost, the StabFund had already used up its equity capital by the end of March. Up until that point, it had been necessary to make value adjustments amounting to roughly USD 5 billion. Nonetheless, it still looks as though the StabFund will ultimately be able to pay back the loan. This is because, on the one hand, markets can recover; the positive turn of events in April and May corroborates this. On the other hand, the assets have been generating relatively robust cash flows until now. Owing to interest payments and loan repayments, the SNB loan has already been reduced considerably. By mid-May, it came to only USD 23.7 billion. In addition, the original size of the StabFund has declined by around USD 6.7 billion as a result of sales, maturities and the closing out of derivatives positions. In mid-May, the size of the StabFund, as valued at amortised cost, was just roughly USD 32 billion, of which around USD 4 billion comprised contingent liabilities from derivatives. The performance of the stabilisation fund’s assets is due to be reassessed at the end of the second quarter. Approximately 80% of the SNB’s loan to the StabFund is denominated in US dollars. Originally, the SNB fully refinanced the dollar loan via the existing swap facility with the Federal Reserve. Now, less than 20% is refinanced thus, accounting at this stage for only about USD 3 billion.

The financial system is built on a fundamental (and ever-present) mismatch. Savers want access to their money instantly, if necessary. But borrowers are usually unable to give it to them anything like as quickly. BIS Review 142/2007  1  The banks have traditionally bridged that gap. But the only way they can do so is to borrow short and lend long. This mismatch makes them vulnerable. That is why governments have imposed regulations on the banks, requiring them to hold reserves against emergency. But if there is a complete loss of confidence among depositors, there is really not much an individual bank can do. The central bank is usually obliged to help. Modern innovations in the financial system have seen banks, rather than holding on to the loans that they have made, parcelled them up and sold them on. The aim was to disperse risk; in the case of default, it was better for a lot of investors to lose a little than for a few banks to lose a lot. However, all the clever types of “securitization and structured products” have not eliminated the fundamental mismatch. Someone still has to borrow short and lend long. Northern Rock, the stricken British bank in recent weeks, is a case in point. In relation to this case, I just want to paraphrase an interesting article in the latest publication of The Economist headed “A generation has prospered from the wholesale transfer of risk through securitization. Now it is paying the price”.