samchain/econo-pairs-v1 huggingface dataset:
The bank then forwards this money to a subsidiary bank in another country. The subsidiary in turn lends the money to an end customer. If we now assume that the borrower is unable to repay the loan, for example because he has borrowed in a currency other than the one he has his income in, then the subsidiary bank may find it difficult to repay its loan from the parent bank. The parent bank may then in turn find it difficult to repay its loan. This means that the liquidity risk in foreign currency ends up in Sweden although the lending that created the risk took place outside Sweden’s borders. The best solution for limiting the liquidity risk is that the central bank or the supervisory authority in the country where the risk develops takes action. However, if the authority in this country does not deal with the situation we must ask ourselves whether the situation poses a serious risk to the Swedish banks and, if so, whether we should act, for example by introducing a reserve requirement in foreign currency for the Swedish bank. Action on the part of the Riksbank is a second best solution, but this alternative is probably still better than doing nothing at all. We will therefore investigate the measures we can take to better limit the risks that are built up outside Sweden in the future. In this connection, the possibility to set reserve requirements is one of the alternatives we are investigating.

Overall, our monetary policy measures are effective, and are gradually bringing inflation back to a path that is consistent with price stability over the medium term. This takes time, and it requires determination and patience. 1 I would like to thank Sören Radde and Fédéric Holm-Hadulla for their contributions to this speech. 2 See Ciccarelli, M. and Osbat, C. (eds. ), “Low inflation in the euro area: Causes and consequences”, Occasional  Paper Series, No 181, European Central Bank, Frankfurt am Main, January 2017, and the references cited therein. 3 At the level of individual euro area countries, a large proportion of specifications also displays a significant  Phillips curve slope, albeit with the exception of some euro area countries, probably on account of confounding factors related to global exposures and persistent structural changes. However, the finding that domestic cyclical conditions were an important driver of the disinflationary period from 2012 to 2014 is common to all countries. 4 Theoretically, the impact of population ageing on inflation may go both ways, but the bulk of the literature points  to a negative effect. See e.g. Bullard, J., Garriga, C., and Waller, C.J., “Demographics, Redistribution, and Optimal Inflation”, Federal Reserve Bank of St. Louis Review, Vol. 94, No 6, 2012; Shirakawa, M., “Demographic Changes and Macroeconomic Performance: Japanese Experiences”, Opening Remark at BOJ-IMES Conference, Bank of Japan, 2012; Carvalho, C., Ferrero, A. and Nechio, F., “Demographics and Real Interest Rates: Inspecting the Mechanism”, European Economic Review, North-Holland, April 2016.
The Fair and Effective Markets Review – which I am leading along with my cochairs, Martin Wheatley from the Financial Conduct Authority and Charles Roxburgh from the Treasury – was set up to restore confidence in the operation of these markets. We don’t want to do this alone. That is why we have launched a consultation document today soliciting the views of anyone with an interest in FICC markets. The consultation is open for three months, and we will issue our final recommendations in June. In the meantime we want to work closely with: •  Market participants – who have the primary responsibility for putting things right. We have enlisted the help of a panel of senior market practitioners to help launch and take forward the Review’s final recommendations. •  International policymakers and regulators – because these markets are global in scope, although a significant share of these markets is based in London. •  The academic community – with which we are actively consulting – including the audience here tonight. •  The general public - including companies and households, for whom, I will argue, these markets matter most of all. In the rest of my speech I would like first to dismiss any notions you may have that Fixed Income, Currency and Commodity markets don’t affect your lives. Then I’ll talk about what went wrong in these markets and why, including a discussion of some of the markets’ key characteristics.

These are like salt rubbed into the wounds to public confidence in financial markets. This is in no one's interest. Many leaders in the financial industry and the majority of those who work in these markets are ashamed of this bad behaviour and want to find a way to put it comprehensively behind them. The fines alone have been sufficiently large to require substantial reshaping of firms’ businesses. I am confident we can find a way forward. I recall the story of when the Queen visited the LSE in November 2008 and asked the gathered assembly of eminent economists why had nobody noticed that a crisis was on its way? The reply came in the form of a letter from the British Academy7. Their bottom line was that the crisis was caused by “a failure of the collective imagination of many bright people, both in this country and internationally to understand the risks to the system as a whole.” This is a moment when we need collective imagination – to imagine financial markets that are fair and effective and work in the interests of all of us.
...even though advanced-economy output is barely higher than a couple of years ago  Per cent  Level relative to 2019 Q4, per cent  6  4 0  5 -4  4 3  -8  2  -12  1  UK GDP (output estimate)  0  -16  UK market sector output  -1  World GDP  -20  -2 -3  -24  97 99 01 03 05 07 09 11 13 15 17 19 21  2016  2017  2018  2019  2020  2021  Twelve-month CPI inflation. Includes November flash estimate of Euro Area inflation. Sources: Eurostat, ONS, Refinitiv Eikon from LSEG, US Bureau of Economic Analysis and Bank calculations. World GDP is constructed using GDP data of 188 countries weighted according to their shares in UK exports. UK market sector output is real market sector gross value added. Sources: IMF World Economic Outlook (WEO), ONS, Refinitiv Eikon from LSEG and Bank calculations. This pattern – levels of output that are still relatively subdued but rapid and skewed price rises – has been evident for some time. Qualitatively, at least, nor has there been any change in the best explanation we have for it. Inflation in global goods prices looks to be the result of a big shift in global consumer demand, induced by the pandemic, away from services and towards goods. Even at the best of times it would have been hard for the supply sides of our economies to adapt to this.

We cannot allow the Swiss franc to appreciate further. Hence, we must continue with our current policy, in particular as interest rates are already around zero. To enforce this policy, we are prepared to buy foreign currency in unlimited quantities, if necessary. Moreover, we stand ready to take further measures if the economic outlook and the risk of deflation so require. By setting a minimum exchange rate, we have opted for a simple and clear policy, to which we are fully committed. For precisely these reasons, this policy has been absolutely credible to the markets. Before concluding, let me elaborate on two potential side effects which are often discussed in the context of our current monetary policy. On the one hand, it is argued that the significant increase in liquidity since August 2011 may trigger inflation risks in the longer term. Given the current economic situation, however, expanding the supply of liquidity was a necessary monetary policy response. There is currently absolutely no risk of inflation in Switzerland. First, headline inflation turned negative in October 2011 and continued to decline through the end of the year. It is assumed to fall even further in early 2012. Second, neither our inflation forecasts nor the medium-term inflation expectations from our surveys of households and companies show any signs of  2  BIS central bankers’ speeches  inflation risks. Consequently, there is no necessity whatsoever for the SNB to reduce the level of liquidity for the time being.
Therefore, I would encourage the industry to build deep expertise in the regional markets and be in close proximity to Asia, so as to attain a good understanding of the Asian risk and underwriting environment. 10. While the industry is taking measures to enhance its capabilities in risk modeling and analytics, regulators also play an impartial role in steering the industry to model uncertainties better and in turn, strengthen the financial resilience of the industry. This has been done via new regulations which explicitly take into consideration insurance catastrophe risks in capital frameworks. We have seen these in countries such as Australia, Switzerland, Bermuda and the Euro Area. In Singapore, MAS has proposed the introduction of insurance catastrophe risk requirements in the RBC 2 framework, where we are currently working very closely with the industry in the calibration of catastrophe risk charges. In addition, the set of Enterprise Risk Management (“ERM”) requirements, which came into force from 1 Jan this year, can steer industry to model catastrophe risks better as insurers are required to identify and manage material risks such as catastrophe risks. The panel discussion on the topic of “Regulatory Environment on Catastrophe Risks in Asia” this afternoon would focus on how the regulatory environment can support the effective financing of natural catastrophes in the region. PPP – A collaborative approach for sustainable disaster risk financing in Asia 11. While it is important to have different stakeholders step up in their respective roles in natural catastrophe risk management, it is not likely to be sufficient.

It is of course possible to constantly register whether a crisis has occurred or not, but if a crisis has not occurred it is difficult to determine whether the measures taken have been well-designed or not. As it is a case of unpopular measures, one might think that it would be an advantage if the decisions were made by people who in practice cannot be dismissed. But this this may not be a particularly good solution from a democratic point of view. At the same time, macroprudential policy may address the issue of macroeconomic stability in such a way that it comes close to what monetary policy aims to achieve. The historicallyhigh level of household indebtedness in Sweden does not perhaps in the first instance pose a risk of financial crisis but to macroeconomic development in the longer term. A fall in housing prices in connection with an economic slowdown with increased unemployment could lead to a severe downturn if the households reacted by significantly increasing their saving to compensate for declining wealth.21 This risk relates to financial and macroeconomic  18  Similar criticism was expressed by my colleague Kerstin af Jochnick in the speech “Monetary policy and macroprudential policy”, 25 January 2013. 19  The European Systemic Risk Board (ESRB) highlights the role of the central bank in its recommendations on institutional frameworks for national macroprudential policy (see the Recommendation of the European Systemic Risk Board of 22 December 2011 on the macroprudential mandate of national authorities).
Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the Lord Mayor’s Banquet for Bankers and Merchants of the City of London, Mansion House, 15 June 2011. *  *  *  My Lord Mayor, Mr Chancellor, My Lords, Ladies and Gentlemen: In recent years, I have set the Mansion House audience a numerical examination. After a pleasant dinner, you will not want to listen to more numbers. A more literary style is appropriate. So my question to you tonight is: which aspect of financial regulation is most deserving of the adjective “tragic”? The answer comes later. A year ago, we met in the wake of a major sovereign debt crisis in Greece with market nervousness about how far that might spread. Since then, this crisis of external indebtedness has consumed Ireland and now Portugal, as well as Greece. Current account imbalances in the euro area remain large, should concern us all, and will certainly affect us all. Inexorably, the world economy is adjusting from an unstable disequilibrium to a new equilibrium. Trade imbalances and the associated levels of borrowing proved unsustainable. In more biblical language, failure to tackle the imbalances during the seven years of plenty before 2007 threatens seven lean years thereafter for at least part of the world economy.

The disadvantages of not having a developed bond market were brought home to us during the Asian financial crisis of 1997-8. An efficient and mature bond market can play an important role during times when the other channels of financial intermediation - the banks and the equity markets - falter or fail. In particular, through developing an alternative source of funding, the corporate sector can reduce its over-reliance on short-term foreign currency loans. A sound and healthy corporate sector contributes directly to macroeconomic and financial stability. Improved financial intermediation also brings such microeconomic benefits as efficiency gains and diversification of tools for both borrowers and savers. The absence of a developed bond market in the region was one of the main factors behind the extreme volatility that precipitated the Asian financial crisis. The crisis itself spurred governments in the region to focus on bond market development. This has been one of the positive, constructive outcomes of the crisis, and this is the area in which most progress has been made. It is heartening that the lasting response to the crisis has been to develop rather than to restrict markets. Since the crisis, other important reasons for a stronger, deeper and broader debt market in the region have come to the fore. The strong current account performance of economies in the region has led to a very sizeable accumulation of reserves by the public sector.
For example, although unemployment has moved more than three quarters of the way from its peak back towards what we might consider its equilibrium rate, unit wage cost growth is still just over one third of its pre-crisis rate. 2 There are a multitude of possible explanations for this. But one I put weight on is that, in light of six years of very weak wage growth, workers are not quite confident enough to demand the kinds of wage increases which would have been the norm in the years prior to the crisis. Were the recovery in wage growth not to materialise and inflation to linger far below the 2% target for longer than currently embodied in the MPC’s forecast, it would be a very undesirable outcome. It would prolong the headwind from deleveraging that I will come on to discuss, and potentially result in higher real interest rates than would otherwise be appropriate. And the MPC has underlined its commitment to avoiding such an outcome. 3 However, recent data have been more encouraging. And as workers become more confident over the coming years, I would expect wage growth to continue to pick up. There is already  2  Unit wage costs defined as whole economy AWE relative to GDP per worker. Latest value of 1.1%, compared to 2004-2007 average of 2.9%. 3  http://www.bankofengland.co.uk/monetarypolicy/Documents/pdf/cpiletter130515.pdf. 2  BIS central bankers’ speeches  anecdotal evidence that the tightening labour market has made recruitment and retention concerns a source of upward pressure on labour costs.

Minouche Shafik: Interpreting the yield curve – warning or opportunity? Speech by Ms Minouche Shafik, Deputy Governor for Markets and Banking of the Bank of England, at the Association of Corporate Treasurers Annual Conference, Manchester,  22 May 2015. *  *  *  Accompanying charts can be found at the end of the speech. The views in this speech are my own, and not those of the Bank of England or the Monetary PoIicy Committee. I would like to thank Ben Broadbent, Ronnie Driver, Kristin Forbes, Grellan McGrath, Martin Weale and Chris Young for their comments. It is a pleasure to be here. I would like to talk today about long term borrowing rates – a topic that I am sure is often on the mind of a corporate treasurer. I have been thinking about this issue since I joined the Monetary Policy Committee (MPC), as not only are long yields an important input to current financial conditions, but – carefully interpreted – they can offer an insight on future developments too. I have been waiting to find a group who might be as intrigued by it as I am, so I jumped at the chance to speak to the Association of Corporate Treasurers. The yield on nominal 20-year UK government debt peaked at around 17% in 1974. After that long term yields began a period of decline which continued right up to the mid 2000s (Chart 1).
This would allow banks in Switzerland to settle securities transactions in euros more cheaply. T2S has a multicurrency dimension, and the ECB is very interested in integrating other currencies into the system. Consequently, the SNB, in agreement with SIX Group and the banks, is currently investigating the suitability of T2S for settling Swiss franc-denominated securities. For this to happen, the SNB would have to permit SNB accounts in Swiss francs to be maintained in T2S (similar to Swiss Interbank Clearing SIC), and allow the banks to hold part of their central bank deposits (sight deposits) on their Swiss franc accounts in T2S. The management of SNB accounts within a foreign system would be a significant change that needs to be investigated thoroughly. These investigations are currently underway, and a decision by the SNB on whether to settle Swiss franc transactions in T2S is expected by midMay 2011. BIS Review 173/2010  3  4  BIS Review 173/2010  BIS Review 173/2010  5

This first step was followed by other steps related to other segments of the financial market, such as the securities and capital markets, including the establishment of the relevant supervisory and regulatory institutions. Initiatives in these aspects have promoted a constant expansion of the financial market, in terms of both diverse institutions and number of financial products and trading volumes. Yet, despite these developments, the financial system remains dominated by the banking system and relevant developments in it. The last financial stability report of the Bank of Albania states that banks account for around 90% of total financial system assets, equivalent to 92% of the GDP, whereas the rest of the financial sector shares only 10% of the financial system total assets. Assessments and studies of the Bank of Albania, as well as comparative studies by third parties, particularly by the International Monetary Fund, show that the financial distribution and expansion in the Albanian financial market is close to the equilibrium, dictated by the Albanian economy and consumers. Moreover, financial intermediation indicators, as a percentage of the Gross Domestic Product, are at similar levels to those in other countries of the region. The dominance of the banking segment has naturally led to a higher level of concentration of financial products and services in its favour. More than 80% of resident investments in the financial system are in the form of deposits and current accounts in banks.
This percentage is much higher in countries such as Germany and Italy (17% and 22%, respectively). However, in a highly volatile environment, the war is affecting the cost of these goods on global markets, irrespective of their origin. In particular, the rise in energy prices has significant effects on the cost of the household consumption basket and on firms’ costs of production. Also, the war itself could ultimately hamper the supply of some of these goods, which would obviously tend to have a large impact on prices and economic activity. The European authorities have formally announced their intention to reduce structural energy dependence on Russia, but clearly this is not something that can be achieved in the short term. The surge in inflationary pressures apparent in the March data partly reflects the increase in commodity prices associated with the war, but also the delayed effects of the acceleration in intermediate costs in the preceding months on the prices of other goods and services, and the scarcity of certain products as a result of the road hauliers’ strike. The impact of the increase in energy costs is highly uneven across groups of agents. In the case of households, those with low incomes are most affected. In the case of productive sectors, the impact is naturally greater on the more energy-intensive ones. A second channel, that is also very significant, is the impact of the war on household and business confidence, given the extraordinary uncertainty surrounding the duration and course of the war.

The European Central Bank’s monetary policy Against the recent backdrop of high inflationary pressures, the European Central Bank (ECB) has continued with the normalisation of its monetary policy initiated last December. The Governing Council has explicitly expressed its willingness to maintain optionality, gradualism and flexibility in the conduct of monetary policy going forward. In the current climate of uncertainty, this is deemed necessary to allow us to respond to 5  incoming data to fulfil the ECB’s mandate to pursue price stability and to contribute to safeguarding financial stability. Indeed, the war in Ukraine is increasing the short-term upward inflationary dynamics, adding to the pressures generated by rising energy prices, bottlenecks and the normalisation of demand. The intensification and prolongation of these short-term inflationary pressures make it more likely that second-round effects will emerge and, therefore, that the inflation dynamics will become entrenched in the medium term. However, the war is having an adverse effect on economic growth, which could potentially be significant, particularly in the short term, in a setting where euro area GDP remains below its potential level. Overall, the upside risks to the inflation outlook have intensified, particularly in the near term. Although various indicators of long-term inflation expectations drawn from financial markets and surveys of professional forecasters put inflation at around 2%, there are preliminary signs, which will have to be monitored carefully, of those indicators being revised to above-target levels.