samchain/econo-pairs-v1 huggingface dataset:
New facilities were introduced that extended liquidity for longer durations against expanded sets of collateral (public and private) to new counterparties (bank and non-bank). This took last-resort lending to a new level. Some central banks went one step further, becoming effective market-makers of last resort in some assets to secure market liquidity. These were new and bold steps. A fourth dimension was transparency. With monetary, regulatory and operational policies all working in overdrive, central banks have had plenty of explaining to do. During the crisis, their actions have shaped the behaviour of pretty much every financial market and institution on the planet. So central banks’ words resonate as never previously. Rarely a day passes without a forensic media and market dissection of some central bank comment. These, too, are significant steps to have climbed. Where does this leave central banks today? We are not in Kansas any more. On monetary policy, we have gone from setting short safe rates to shaping rates of return on longer-term and wider classes of assets. On regulation, central banks have gone from spectator to player, with some granted micro-prudential as well as macro-prudential regulatory responsibilities. On operational matters, central banks have gone from market-watcher to market-shaper and market-maker across a broad class of assets and counterparties. On transparency, we have gone from blushing introvert to blooming extrovert. In short, central banks are essentially unrecognisable from a quarter of a century ago. Up or down? The key question, then, is where next?

The ECB’s asset purchases are being expanded in terms of both size and composition: the monthly purchase volume has been increased from € billion to € billion and the universe of eligible assets now includes non-bank corporate bonds. Purchases are intended to run until the end of March 2017 – or beyond, if necessary – , and in any case until the Governing Council sees a sustained adjustment in the path of inflation to levels close to 2% over the medium term. Taking into account the current outlook for price stability, the Governing Council expects the ECB’s key policy rates to remain at present or lower levels for an extended period of time, well past the horizon of the net asset purchases. We are confident that the very accommodative monetary policy stance will provide further support to the euro area recovery and will accelerate the return of inflation to levels that we consider to be consistent with our objective. The Governing Council has done and, within its mandate, will continue to do whatever is needed to pursue its price stability objective. Our very accommodative monetary policy stance has provided considerable support for the euro area recovery. By supporting growth prospects, our actions have also been beneficial for financial stability.
Ambassador, is that Texas is part of the United States and, all told, our economy is on the mend from the frightful shock of the financial and economic implosion of 2007–09. This is the dashboard that we at the Dallas Fed use to track our national economy:  BIS central bankers’ speeches  5  The Federal Reserve is mandated by the laws of the United States to manage monetary policy to achieve full employment while maintaining price stability and “moderate interest rates” over time.1 A “Hindu goddess” As you can see from this graphic, unemployment has declined to 6.2 percent, and the dynamics of the labor market are improving. At the Federal Open Market Committee, where we set monetary policy for the nation, we have been working to better understand these employment dynamics. This is no easy task. Bill Gross, one of our country’s preeminent bond managers, made a rather pungent comment about our efforts.

I should note that the Review uses data that was available up to 5 May 2006. In my presentation (some of the slides), I will refer to developments since this cut-off date. In presenting the main findings of the analysis, I will broadly follow the structure of the Review (as outlined on slide 2). 2. Overview of the main risks and vulnerabilities  I would like to begin with an overview of some pertinent developments in the euro area financial system and of the main sources of risk and vulnerabilities for euro area financial stability, in comparison to the assessment in the December 2005 Review. Overall, the developments since last December lend support to the view that the euro area financial system is robust and well-capable of withstanding shocks. First, the pace of global economic activity has strengthened and it has become more evenly distributed. Second, the balance sheets of euro area banks and insurance companies have continued to strengthen. At the same time, these positive developments are clouded by the fact that the risks and vulnerabilities we identified in the December 2005 Review remain and some of them have increased. Global imbalances have continued to grow. Moreover, it cannot be excluded that tightening liquidity conditions in the G3 economies could yet expose vulnerabilities in the pricing of assets following a protracted period of hunt for yield in a low interest rate environment. Particularly at risk are leveraged investors, especially hedge funds, and this could accentuate the risks of disorderly market corrections.
In the UK at least, macroprudential policy has become an operational reality. Now, with the help of research and the latest techniques, we’re looking to the future. That work will help us stay disciplined and agile in keeping up with changes in the economy. It’s guiding us to what needs to be monitored closely in the non-bank system and where new standards of resilience might be needed to keep up as the financial system changes shape. Keep up we must. It’s no use waiting for the tremors. When the economic ground shakes, whenever that may be, we will all want the financial system to be resilient. 20  All speeches are available online at www.bankofengland.co.uk/news/speeches  20

Payments: A platform for innovation Speech given by Victoria Cleland, Executive Director; Banking, Payments & Innovation  SIBOS, London Tuesday 24 September 2019  With thanks to Sara Ward and Emma Playford. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  It is a great pleasure to be speaking today at the ‘UK payments infrastructure – renewing for growth’ event at Sibos. This year’s event is exciting for two reasons. First, it’s National Inclusion week here in the U.K.1 And, it’s a great coincidence that SIBOS has fallen during this week: at the heart of its agenda are discussions around how change and diversification in payments could lead to a more inclusive financial system. Second, this is the first Sibos conference to be held in London – and it is certainly an exciting time for so many global payments experts and innovators to be here. London has a long history at the heart of the global financial system. It continues to build on this expertise and is one of the leading fintech hubs in the world. It is home to an incredible pool of the world’s best and brightest talent, with 44,000 people already working in fintech, more than in Silicon Valley or New York.2 Investment into the UK’s fintech sector continues to grow and reached a record level of $ in the first half of 2019, which was nearly 85% of the 2018 total.3 And we can see that the UK fintech sector is maturing, evidenced by the size of increased investments.
For a long time the inflation target was expressed in terms of the Consumer Price Index (the CPI), but since 2017, it has been expressed in terms of the CPI with a fixed interest rate (the CPIF). In the CPIF the direct effects of changes in mortgage rate have been excluded. 1 2 The following description of the concept of inflation can be found on the Riksbank’s website: If prices of some individual goods or services rise, this is not inflation. Prices of individual goods and services can rise because, for instance, it is more difficult to get hold of them. For instance, the price of oil may rise as oil reserves diminish. Such price increases are usually called relative price increases and are thus not inflation. For inflation to exist there should be an increase in the general price level, that is, prices in general should rise. And if one is to call it inflation, the price increase should be lasting. If, for instance, the government raises VAT, this has a one-off effect on the general price level, but does not lead to prices continuing to rise. The CPI is calculated every month by Statistics Sweden (SCB) and is intended to measure the changes in an average Swedish household’s living expenses. The measure is an aggregate of prices of a number of different goods and services. The aggregate is based on how large the proportion of each product or service is in relation to an average household’s total consumption costs.

The Fund therefore purchased a large volume of equities from 2001 to 2003 and is buying a considerable volume now. Of the equities now owned by the Fund, 40 per cent were purchased last year when prices were moving down. 9  Knut Hamsun (1976): August. In Samlede Verker 11, Gyldendal Norsk Forlag, p. 120. (Unofficial translation by Norges Bank’s translators). BIS Review 16/2009  19  As a result, ownership in the business sector in the US, Europe and Asia has increased – in companies’ human capital, in their machinery and equipment, brands and organisation. In the long run, and even though many companies have now folded, it may perhaps be at least as safe as extending loans. Conclusion Let me conclude. At the moment, activity is falling in the Norwegian economy, as elsewhere. The source of the downturn is external. We cannot shield ourselves from its impact, but we can decide how we will address the turnaround. The global financial highway is now being modernised and overhauled. It is essential that traffic again flows smoothly. Rimbereid asks: “In which landscape Will we lay our next lucrative track?” 10 Norway has a credible and robust economic policy, and a business sector that is quick to adapt. This is a good point of departure. Thank you for your attention. 10  20  Øyvind Rimbereid, 2008: Herbarium, p.54. (Unofficial translation by Norges Bank’s translators). BIS Review 16/2009
If monetary policy were to need to be more expansionary we can extend the purchases of government bonds, or cut the repo rate further and lower the repo-rate path. We also have the possibility of introducing a programme of loans aimed at companies similar to the ECB’s TLTRO or the Bank of England’s “Funding for Lending Scheme”. Moreover, we can intervene on the foreign exchange market. How do complementary monetary policy measures work? Regardless of which measure one chooses, the effects of complementary monetary policy can be divided into two main lines; one is that they contribute to reducing interest rates in general and the other that they increase the amount of money in the economy. The purchases of government bonds reduce the supply available in the market, which leads to an increase in the price and a decrease in the yield. When government bond yields fall, investors find it more attractive to seek higher-risk assets, which pushes down interest rates and raises prices there, too. This is usually called the portfolio balance channel. When the price of the assets rises, the wealth of those who own the assets also increases, which contributes to stimulating consumption and investment. More liquidity among the banks may also lead to increased lending. All in all, complementary monetary policy thus functions in roughly the same way as normal repo-rate cuts.

Negative repo rate and bond purchases – to safeguard the credibility of the inflation target The fact that we now have introduced a negative interest rate and begun purchasing government bonds in Sweden is basically because we want to safeguard the role of the inflation target as nominal anchor. I mentioned earlier that monetary policy should give consideration to financial stability. But this is because financial stability is a necessary condition for attaining stable inflation in the long run. Conditions for being able to give  23  For further information, see “Low global interest rates”, article in the Monetary Policy Report, October 2014, Sveriges Riksbank. See also Hamilton, D., Harris, E. S., Hatzius, J. and West, K.D., “The Equilibrium Real Funds Rate: Past, Present, and Future”, University of California at San Diego Working Paper, 2015. BIS central bankers’ speeches  9  consideration to financial stability in monetary policy decisions are that inflation expectations are firmly anchored around the target and that inflation is fairly close to the target. With hindsight, we can see that inflation has been lower than the Riksbank and most other forecasters had expected. And this doesn’t only apply to Sweden; inflation is very low in most developed countries. What happened in Sweden last year, when inflation continued to be lower than expected at the same time as inflation expectations continued to fall, has thus rather dramatically changed the conditions for monetary policy.
Widespread acceptance in over 100 countries of the first Basel Accord as the international  “yardstick” has strengthened the capital base and leveled the playing field for banks that compete internationally. As you may know, by the late 1990s, it became clear that the original Accord was becoming outdated. Its broad-brush nature - where required capital generally does not differ by degree of risk - has had a tendency to discourage certain types of bank lending. It has also tended to encourage transactions whose sole benefit is regulatory capital relief. Further, the improvements in risk management tools changed the way that banks monitor and measure risk in a manner that the 1988 Accord could not anticipate or address. Today it is quite clear that the original Accord provides internationally active banks, for which it was intended, with less meaningful measures of the risks they face and of the capital they should hold against them. To respond to these challenges, the Committee began a few years ago to develop a more flexible and forward-looking capital adequacy framework - one that better reflects the risks facing banks and encourages them to make ongoing improvements in their risk assessment capabilities. The Committee believes that all banks should be subject to a capital adequacy framework comprising minimum capital requirements, supervisory review, and market discipline. These are the three pillars of the New Accord. As you may know, the current Accord only has one pillar - minimum capital requirements.

On the other hand, financial globalisation may have reduced the natural rate of interest by increasing global demand for safe assets. With regard to all these factors, it is worth considering whether globalisation affects inflation via structural changes in markets, pricing behaviour or mark-ups. Its impact is ambiguous. On the one hand, as discussed above, trade and participation in global value chains could increase competition and generate strategic complementarities. On the other hand, it has been argued that the interplay between globalisation, digitalisation and the increase in importance of intangible assets may give rise to high-margin firms with considerable market power, lower pass-through of costs to prices 21 and implications for inflation volatility, the transmission of monetary policy and the natural interest rate. 16  Fo rbes, K. (2019). “Inflatio n dynamics: dead, do rmant o r determined abro ad? ”. Bro o kings Papers o n Eco nomic Activity, Fall. 17  In highly interlinked financial markets, lo ng-term interest rates and risky asset prices are expected to be increasingly affected by glo bal facto rs. 18  Geo rgiadis, G. and A. Mehl (2015). “Financial glo balisation and monetary po licy effectiveness”. Jo urnal o f International Eco no mics, 103, pp. 200-212. 19  Fo r example, as the exchange rate depreciates in respo nse to mo netary po licy lo osening, imported inputs used in the pro ductio n o f expo rts beco me mo re expensive, inducing expo rters to raise their ho me currency price.
At the end of the day, the question is an empirical one. Here, there is no evidence that Hong Kong’s long term growth has been impeded by our exchange rate regime. Indeed, there is some evidence that Hong Kong has grown more rapidly than would otherwise be expected on the basis of our factor endowments. Perhaps this should not be surprising. It would seem natural that the very flexibility required to respond to short-term shocks under a fixed exchange rate regime would foster a climate of innovation capable of turning challenges into opportunities. Hong Kong’s involvement in the rapid opening and development of the Mainland economy is an excellent example of this. It seems to me, then, that the sustainability of our exchange rate system has been demonstrated through its performance. While the economic logic is important, of course, it is irrelevant unless it is complemented by a high degree of public support — the ultimate test of sustainability is that the public at large recognise and endorse the benefits of the linked exchange rate. The high degree of public support that the linked exchange rate continues to enjoy — in spite of the painful aspects of the current adjustment process — testifies to the strength of the consensus that our system is appropriate. The choices for Asian economies The linked exchange rate system, with its strict currency board arrangements, has served Hong Kong well since 1983.

The only policy rule in common use in developed countries with floating exchange rates is inflation targeting: so far this appears to have been quite successful, although the experience is still limited. The technical requirements are demanding, however, and especially so for developing economies. Policy makers must be able to accurately forecast not only inflation but also the response of inflation to changes in the policy levers. This is a challenging enough task for the highly trained staff in central banks of developed economies, who generally benefit from dealing with a relatively stable economic structure and from considerable experience in  BIS Review 53/1999  6  monetary management under floating exchange rates. Needless to say, the success of developing economies in operating such a system is far from assured. An alternative approach would be to proceed along the same path that Europe is pursuing, in the form of a monetary union. There are clear advantages to this approach. One of these is the creation of markets in a single currency that are sufficiently large to make it difficult for individual speculators or groups of speculators to manipulate markets. Another advantage is that trade within the monetary union is fostered by the certainty and ease of transaction in a single currency. Of course, as the EMU experience shows, there are important political issues that must be resolved before monetary union can become a reality.
The first of these is that size must be determined by the banking system’s size and funding structure. It is therefore inappropriate to confirm a specific figure by law, as it is very difficult to make an accurate forecast of how the banking system and financial markets will develop over the coming decades. My second point concerns whether foreign exchange should be held in advance or borrowed when problems arise. One advantage of having small foreign exchange reserves is that the running costs for them will be very small. If you believe that foreign exchange can always be borrowed when necessary, there is good reason to only have small foreign exchange reserves. But I have been involved in managing a number of banking crises around the world and one lesson I have learned from that work is how rapidly a developing crisis can worsen when foreign exchange reserves are not easily accessible. Neither do I believe that it will be so easy to borrow foreign exchange fast enough in all conceivable scenarios and therefore consider it important that the possibility of holding well-balanced foreign exchange reserves is not restricted. Sufficiently large foreign exchange reserves also send an important signal to the rest of the world that we are ready to manage problems should any arise. Furthermore, it is always the lender who sets the terms, at the same time as lending preferably takes place to those who do not need to borrow.

Now, we’ve all become very familiar with breathless reports on China’s “economic miracle,” so I won’t go over this at length. Still, the startling pace of growth does warrant underlining. In a little over a decade since the year 2000, the Mainland’s nominal GDP increased sixfold from 1.2 to 7.2 trillion US dollars; and its external trade expanded more than sevenfold, from less than 500 billion to over 3.6 trillion US dollars. At the same time, its cross-border direct investments rose fourfold, from just over 40 billion to approaching 180 billion US dollars. These are all impressive indicators of the vast amount of business opportunities present. It is perhaps even more astonishing that, by 2016, the Mainland is expected to contribute over a third of total world economic growth, according to the projections of the International Monetary Fund. Change in the international financial system Such shifts in the global economy have inevitably foreshadowed a change in the international financial system. As the Mainland economy has grown, its currency and financial sector have moved increasingly centre-stage. Over the last decade or so, policymakers, investors and others have shown more interest in using a greater mix of currencies for international trade and financial transactions. This trend has been accelerated by the recent Global Financial Crisis, as the need to reduce reliance on just one or two global currencies has grown. Taken together, these trends imply a greater role for the RMB in the Mainland’s trade and investment with the rest of the world.