samchain/econo-pairs-v1 huggingface dataset:
It says that a country cannot simultaneously maintain independent monetary policy focused on domestic objectives, a high degree of capital mobility, and currency stability. Any two of these regime characteristics can be chosen, but not all three. While the trilemma suggests sharp tradeoffs, additional policy tools can soften the tradeoffs. Fiscal policy is one tool that serves this purpose. When foreign credit conditions tighten, expansionary fiscal policy can allow a country with a high degree of capital mobility, and a policy preference for currency stability, to effectively manage towards domestic macroeconomic objectives and internal balance. In fact, fiscal policy can also be used to rebalance the composition of demand towards the desired mix of investment and consumption. Softer tradeoffs than implied by the trilemma are suggested by some of the empirical evidence on interest rate co-movements. For example, there is ample evidence that domestic short-term interest rates become progressively less correlated with short-term interest rates in large foreign countries, and that monetary policy is more autonomous, as countries move from high capital mobility to low capital mobility, and from rigid currencies to flexible currencies.5 Using foreign exchange reserves to support currency stability is unlikely to be as effective in enabling the country to attain domestic growth and inflation objectives. If losses of foreign reserves are not sterilized, the effect will be similar to that of domestic monetary tightening, and as already discussed, might work against domestic growth and inflation objectives.

Mr Gehrig focuses on special structural characteristics involved in solving the Year 2000 problem for the financial sector in Switzerland Speech by Prof Bruno Gehrig, a member of the Governing Board of the Swiss National Bank, at the Global 2000 Coordinating Group Meeting in Montreux on 30 April 1999. I am most delighted to be your luncheon speaker today and thank you for your invitation. I am sure that Montreux provides you with a highly stimulating environment for today’s Global 2000 meeting. As you are no doubt aware, you are leading the way in tackling the Year 2000 issue. I would like to thank you for your extremely important and valuable commitment, and I am certain that I also speak on behalf of my colleagues from other central banks, bank supervisors and - even more importantly countless customers in the financial industry. On the threshold of the third millennium we are indeed confronted with most complex and - in many regards - unique challenges. In terms of methodology, I believe it is essential to realise that we are dealing with complex network problems which cannot be solved on the basis of the behaviour patterns of market and competition we are all familiar with. In this context, external or third-party effects are in fact so significant that remarkable collective effort is necessary in order to minimise potential damages resulting from malfunctions. This applies both to the preparatory work and the challenge to overcome frictions which - in spite of our best efforts - will be unavoidable.
Thank you.

(ii)  proactive macro-prudential regulation to prevent unsustainable debt and limit foreign currency borrowing can be useful to reduce the procyclicality of financial flows, avoid excessive risk-taking and ensure an orderly external sector adjustment. (iii)  Finally, one could also explore state contingent financing instruments, such as GDP linked bonds, which could also offer innovative means to smooth external financing needs and avoid expanding scarce resources on assistance programs. However, prevention can never cover all risks and so, we need a stronger GFSN. As highlighted by the IMF the global financial safety net, although larger, has also become more fragmented and asymmetric. Some of its key building blocks have not been fully tested, and some of its key aspects suffer to various degrees from being costly, unreliable, and lacking adequate policy incentives. This shared diagnosis offers a key opportunity to strengthen the GFSN. Reserves, swap lines and Regional Financial Arrangements (RFAs) are not a substitute for having a strong, well-resourced IMF at the heart of it, on the back of the recent approval of the 2010 Quota and Governance reforms, which has strengthened the Fund legitimacy. From our perspective, three elements stand out: First, identify potential ways to improve the use of existing IMF facilities, notably precautionary facilities, and/or consider the possible creation of new facilities. The objective here is to mitigate stigma, without creating moral hazard.
Many might believe that since Norges Bank’s key policy rate is set every six weeks, there might be scope for correction should it transpire that economic developments were not as expected. To a certain extent this is the case. But since it takes time for the effects of our decisions to come into evidence, our scope for correction is in reality rather narrow. Setting the key rate at an inappropriate level for a period of time, may have serious consequences for the Norwegian economy. Without complete and reliable information at our disposal, it is easy to err. A number of studies have shown that in such situations humans often resort to more or less qualified guesses, gut feelings or rules of thumb. Allow me to offer an example involving distance judgement. Ordinarily, the closer an object is, the more clearly we will see it. Thus, if they see an object clearly, most people will perceive it as nearby. But when the astronauts landed on the moon, they had great difficulty judging distances, nearly always underestimating them. The reason was that visibility was unusually clear and they were in a landscape without known references. 11 One approach to uncertainty is to do what others do in similar circumstances. The UK decided to abandon the gold standard in summer 1931. In practice this meant a devaluation of the pound sterling against the US dollar. A few days later, Norway and the other Nordic countries decided to follow suit.

The author-narrator has embarked on an expedition to a South Pacific island with six companions. On the island they experiment with different forms of social organisation. After the group tries despotism, anarchy, democracy, etc., Loe concludes that enlightened despotism has much to recommend it: “Of course it very much depends on who the ruler is and how enlightened he or she is, but at its best this is probably one of the more sensible forms of government.” 16 Martin, one of the other members of the expedition, also thinks that this system might work well. He stresses, however, that the form of despotism must be a truly enlightened one: “Not just moderately enlightened, but ultra-enlightened. The ruler needs to be highly educated, plus be well travelled and have lots and lots of varied interests (…) Just find an exceedingly likeable individual, someone you trust, someone who is warm-hearted and good-natured, and ask him or her to manage things as best they can.” 17 Most people would probably argue that despite certain benefits, enlightened despotism would not be very robust. As you may have noted, a number of assumptions underlie Martin’s conclusion, and these assumptions are not always satisfied. Delegating decisionmaking responsibility to a group may help to guard against situations where the individual’s weaknesses and vested interests come to dominate. It can also provide some insurance  attending the IMF meeting). The business card revealed the date and magnitude of the British devaluation. It was a busy night.
Since 2007, the level of Spanish GDP has fallen by seven percentage points; that said, perhaps the most representative measure of the severity of the crisis has been the labour market, with unemployment falling by 19% and a major increase in the unemployment rate, which affected 26% of the labour force at the close of 2013. The crisis has moreover entailed a substantial readjustment in the composition of GDP, with a strong decline in national demand, broadly across all its different components, but a fall of even greater depth in investment in construction. Late last year, the cumulative decline in investment in construction was 50% compared with its level in the pre-crisis years. Adding to the collapse in residential investment from 2010, following the onset of the public spending adjustment plans, was the decline in non-residential construction, where civil engineering is to be found. Naturally, the external environment has played a major role in the origins and unfolding of our crisis. The contraction in world trade during the 2009 recession strongly affected our exports. However, as from 2011, net external demand has been markedly buoyant, mitigating the contractionary effect of the fall in domestic demand on activity, and it has provided for the correction of some of the macroeconomic imbalances I shall refer to. Further, the climate of uncertainty which took hold on international financial markets and the subsequent fall-off in financing flows had a more marked impact on those economies, such as Spain, which are more reliant on external saving.

Philipp M Hildebrand: The international monetary system Opening remarks by Mr Philipp M Hildebrand, Chairman of the Governing Board of the Swiss National Bank, at the High-Level Conference on the International Monetary System, Zurich, 11 May 2010. * I. *  *  Introduction  Good morning, Ladies and Gentlemen. It is a pleasure and special privilege to welcome you to this conference on the international monetary system. I am delighted that, together with the IMF, we have succeeded in bringing together such an outstanding group of policy makers and academics. I want to thank you for taking the time to join today’s discussion at this critical juncture for the international monetary system. I am especially grateful that the Managing Director of the IMF is with us today. Dominique, a very warm welcome to you. I know I speak on behalf of everyone here today when I say that we really appreciate your presence. Conferences on the international monetary system are held with great regularity, particularly in the wake of financial crises. It is therefore not surprising that the recent crisis has brought renewed attention to the functioning of the international monetary system. But as Herb Stein noted more than 40 years ago, it is not easy to define the international monetary system. Where does the international monetary system end and domestic economic policy begin? Did the recent crisis have its roots in shortcomings of domestic policies or in shortcomings of the international monetary system?
But, funding is only one aspect of a micro-business. Prior to as well as subsequent to funding, there are a large number of other requirements that have to be satisfied. First and foremost, anyone desirous of starting a micro-business should have a good knowledge of the market in which he would sell his products. A feature of the market is that it is driven by the consumer who is considered the sovereign. If the consumer does not need a product, no one could force him to buy it, even when it is supplied free of charge. Hence, the goods and services that are produced by micro-businesses should always meet the requirements of the consumers. How can a micro-entrepreneur identify the market requirements? What proxies can he use for that, if he does not have direct information on the same? A problem which he would face in this respect is that he has to produce for the future. Hence, any information relating to the past may be a poor guide for that. This is not a problem unique only to micro-businesses. It is equally relevant to big producers as well. But the advantage for such big business firms is that they have the benefit of the results of consumer preference surveys conducted by various institutions. Such survey results are expensive and beyond the financial capacity of micro-businesses. Yet, without the benefit of such results, it would be a pure gambling for a micro-business to get into the production of these goods and services.

The problem arises in the case of people who are unable to move forward at the speed of the market. They become laggards and are left out. Hence, there should be a special strategy to bring them to the mainstream of economic life. The normal strategy that had been adopted to address this issue has been the introduction of safety nets to capture them before they make a free fall to the ground. The safety nets so introduced have taken different forms depending on the era or the country. About five decades ago, the safety nets took the form of providing outright grants to the poor people. The objective of the grants was to provide some relief to them, so that they could at least meet their food requirements. The weaknesses in this type of strategies are well known. It encourages poor people to remain in the safety net forever. They have no incentive to move out of the net, because moving out would mean their having to work hard for a living. If at least the basic requirement of food is provided free of charge, then why would anyone want to work for the same? Economists have long named this problem “moral hazard” problem. This problem simply says that, when one helps another, the person being helped does not have the incentive to adopt even the minimum safety measures. As a result, he increases the chance of the occurrence of the event which the helper desires to prevent.
It is also true that, if the rebound in activity in 2021 projected in the scenarios published both by the Banco de España and by other institutions were to materialise, that would significantly mitigate the strong decline in GDP in 2020. This would provide for an improvement in the credit quality of bank borrowers and for a more favourable path of the prices of the assets that act as collateral to the loans. In turn, that would considerably limit actual losses. In this respect, the results of the stress test performed to date show that, if following a period of slowing economic activity the pace of recovery is swift, there is less likely to be a pronounced deterioration in the aggregate solvency of the banking system. 18  In any event, the uncertainty over the duration of the pandemic and its effects is very high. In this respect, the consequences of adverse economic scenarios that are prolonged over time can indeed worsen aggregate solvency significantly. But even under these scenarios, the loss absorption elements will mean that capital erosion is not immediate. This affords some leeway which, where appropriate, should be used to set in place all the elements allowing a forceful economic policy response with the aim of ensuring financial stability. Second, the foregoing considerations on the aggregate situation of the system mask a high degree of heterogeneity. This is mainly due to the fact that starting positions, in terms of funds and credit quality, are per se divergent.

BIS Review 70/2002  1  The euro area performance since 1999 and Sweden’s situation So what can we say about the state of the Monetary Union, some three years after its inception? Let me first emphasize that three years is a very short time span to evaluate a project of this scale, not nearly enough for anyone to make an authoritative judgement. But, undoubtedly, for those who had great expectations regarding convergence, increased competition and higher productivity during these first three years the euro will have been a disappointment in some respects. Many were hoping that the creation of the euro, with the integration of financial markets, increased cross-border competition and the reduced transactions costs, would usher in a period of higher growth and productivity gains for the euro area. Instead, we have seen a slowdown in productivity and an economic performance steadily below that of the US, and also slightly below that of Sweden and other pre-in countries. Since 1999 GDP growth has on average been 2.3 percent in the euro area against 2.9 percent in Sweden, while overall productivity in the euro-economy according to the OECD has been only 0.6 percent in the euro area 1999-2001, against 1.0 percent in Sweden. So, at least superficially, it does not appear to be the case that Sweden has underperformed because of its non-participation in the euro area. During the economic boom in 1999 and 2000 the euro area lagged behind the US and Sweden in productivity increases.
When a credible central bank cuts its interest rate to offset the adverse effects of a shock to demand, it will not be perceived as trying to raise demand and employment in the short term (say over the next year or so), at the expense of higher inflation down the road. Rather it will be understood as trying to avoid deficient demand: as trying to stimulate demand a bit in the short run in order to bring it back to the economy’s supply capacity and so, precisely, to maintain inflation in line with its target. For at least this policymaker, however, there is a risk of commentators overstating our capacity to stabilise demand – understandably perhaps following, in the UK, more than a decade of fairly steady growth since inflation targeting was introduced. To be clear, I do believe that we should be able to put behind us the self-inflicted economy-wide boom and bust that, miserably, characterised the UK economy for a few decades until the early 1990s 13 . All too frequently in the past, aggregate demand was allowed to get out of control, bringing with it, variously, a credit boom, an assetprice bubble and, sooner or later, runaway wage and consumer price inflation. Belatedly, the monetary authority would slam on the brakes, tipping the economy into recession. Inflation would then slow. But that we no longer neglect the inflationary consequences of excess demand does not mean we can nicely fine tune demand to ensure uninterrupted growth. Why? I will mention just two reasons.

Given that objective, the determinants of aggregate demand, and a short-run trade off between output and inflation, the monetary policymaker is assumed to proceed by setting interest rates in the light of the outlook for demand relative to supply and for inflation. The central bank decides a nominal interest rate, which it establishes in the money markets 3 . As the prices of many goods and services are sticky, this has the effect of enabling the central bank to move  1  Some of the points made here were prefigured in my written submission to the House of Commons’ Treasury Select Committee ahead of a confirmation hearing on my reappointment to the MPC. See ‘Treasury Committee Questionnaire ahead of appointment hearing for Mr Paul Tucker’, The Monetary Policy Committee of the Bank of England: appointment hearing, First Report of Session 2005-06, Volume II. 2  ‘Inflation targeting and the IMF’, International Monetary Fund, March 2006. 3  A completely new framework for doing so in the UK was introduced last week. See ‘The Framework for the Bank of England’s Operations in the Sterling Money Markets’ (the ‘Red Book’), May 2006. BIS Review 46/2006  1  around the actual short-term real rate of interest relative the ‘natural’ or ‘neutral’ real rate 4 that would prevail in the absence of those frictions. Broadly, another consequence of prices and wages being sticky, together with some inertia in inflation, is that when shocks hit the economy, the central bank cannot get inflation to return to target instantly.
The e-krona must also be designed with consideration for the fact that there are certain groups who risk a type of financial exclusion when cash disappears, as for various reasons, they find it difficult to use digital solutions. This is a different type of financial exclusion than is often discussed internationally. In Sweden, all adults have the right to a payment account with basic functions so we have no problems with what is normally called financial inclusion. The elderly, those with disabilities and people who find it difficult to manage digital solutions risk encountering problems when cash disappears, despite having access to a bank account, because they are not able to manage digital technology. It is the state's job to ensure that 12 This argument has been highlighted by Kumhof and Noone (2018). 13  This reasoning has been developed, for instance, in Engert and Fung (2017). 14 This is also one of the conclusions in the Icelandic central bank Sedlabanki’s report, see Sedlabanki (2018). 6 [9]  these people can manage their day-to-day payments. We cannot expect the private market to take full responsibility for this on its own initiative. The future payment market is already here In today’s digitalised world, rapid and digital payments are in great demand. In a world where we can send information around the world in real time, it may appear strange that it takes such a long time and is so difficult to move digital money.

As the Riksbank and the banks must have personnel in place, the system is only open during normal office hours, and even if these can be extended by an hour or so, it is not likely that we will operate it 24 hours a day. At the same time, we want all payments in Swedish krona to be settled in Riksbank money. This reduces counterparty risk in the financial system. If, for instance, a private bank were to run such a system, all participants would have a claim on that bank before the payments are settled. If that bank were to go bankrupt, all of the money would be lost. That risk does not exist if the central bank runs the system. Additionally, it would be preferable if the system were run by a competition neutral actor in the form of the central bank. We therefore want to ensure that all payments in Sweden will continue to be settled with us. However, instant payments require systems that can manage payments around the clock. The European Central bank, ECB, is in the process of developing a new technical platform called “Target Instant Payment Settlement” (TIPS). This will enable instant payments around the clock and it will be operational at the end of 2018. It will also be prepared to handle other currencies than the euro, for instance the krona.