samchain/econo-pairs-v1 huggingface dataset:
(2017) ”Designing New Money The Policy Trilemma of Central Bank Digital Currency”. CBS Working Paper, June 2017, and Bordo, M. and Levin, A. (2017) ”Central Bank Digital Currency and the Future of Monetary Policy”. Economics Working Paper 17104 Hoover Institution. 29 The banks would still have access to central bank money as they have reserves at the Riksbank. 11 [15]  An e-krona system could work for the instant settlement of payments around the clock. We are also analysing the possibility of getting certain parts of it to work off-line. This could turn out to be important, not least in a crisis situation. In addition, there exists a risk for cyberattacks, which may increase in the future. I consider that Sweden’s preparedness will be weakened if, in a serious crisis or the event of war, we have not decided in advance how households and companies will pay for fuel, food and other necessities. Making it possible to make payments off-line may also be necessary to ensure that payments can be executed in all parts of the country. Any e-krona would also have to be designed bearing in mind that there are certain groups in society that presently experience problems with the disappearance of cash as, for various reasons, they find it difficult to use digital solutions. This may include older people, disabled people or people without access to bank cards for economic or other reasons.

When the human race moved from subsistence to conducting trade, the need for some kind of instrument of payment soon arose. Barter is inefficient, as it is not easy to find a counterpart who not only wants the goods or services you can offer but is also willing to give you what you want in exchange. Possibilities for trade are thereby highly restricted. 2 This problem has been solved by various cultures around the world with the use of various forms of money. For example, some island cultures used seashells as money. History tells us that money can be absolutely anything that a group of people in a region have decided will act as money. It is, quite simply, a social convention, more or less in the same way as an alphabet is an agreement over how a language should be written. 3 Money works, therefore, because everybody accepts the convention. So which conditions need to be met for the convention of money to be accepted by everybody? Many people have pondered this question over the ages, leading to a definition of money that goes all the way back to Aristotle. 4 Put simply, it could be said that the conditions are met when you can trust that you will be able to pay with money to purchase what you want and that money’s value or purchasing power will not be undermined if you want to use it later on.
As reported in a recent post on our new Liberty Street Economics blog, they find no evidence to suggest that a wage-price inflation spiral is getting underway. However, we will continue to monitor expectations for medium-term inflation very closely. To sum up, economic conditions have improved in the past year. Yet, the recovery remains moderate and we still have a considerable way to go to meet the Fed’s dual mandate of full employment and price stability. Regional economic conditions So, how is our region doing? As some of you may know, the New York Fed produces Indexes of Coincident Economic Indicators to help monitor the performance of the region. Based on these measures, the downturn in economic activity in New York ended in November of 2009, and since then activity in New York State and New York City has been recovering steadily at a moderate pace. Regional employment trends Let me turn specifically to employment trends in the region. In particular, I want to describe our region’s experience during the recession and recovery. Nationally, the Great Recession, which began in December 2007, has been the deepest economic downturn since World War II. When employment finally bottomed out in February 2010 – about seven months after the official end of the recession – the country had lost almost 6.5 percent of its jobs and the unemployment rate had more than doubled. Many people lost their jobs or saw their hours or income cut, and the duration of unemployment for jobless workers reached a historical high.

Privatesector job growth has been strong enough to more than offset government layoffs, particularly at the state and local levels. A particularly encouraging sign is the rapid growth of manufacturing jobs over the past year and the recent broadening strength in services employment. While the exact pace of a jobs market recovery is always hard to predict, we were expecting the rate of job growth to pick up over the first half, and I am hopeful that job growth will continue to strengthen in the coming months. We would welcome this. However, even if the economy added 300,000 jobs per month from now on, we would likely still have considerable labor market slack at the end of 2012. Despite these clearly encouraging signs, there are still some downside risks to the growth outlook that bear watching. Let me list them for you:   As I mentioned earlier, high oil and commodity prices have cut into household purchasing power, a difficult situation for many families that could constrain overall spending more than I anticipate.   The renewed decline in home prices could dampen consumer spending and housing activity more than I expect.   Finally, aggressive near-term government spending cuts or tax increases could slow economic growth at least in the short- to medium-term. I would emphasize, however, that a credible plan for medium-term fiscal consolidation is sorely required and would have many economic benefits. Although these issues bear watching, they remain risks rather than likely outcomes.
That was shown, for instance, by the latest price data released last Friday, where the inflation outcome for February was actually a little higher than the forecast in the Inflation Report that we published today. Individual monthly figures for inflation are difficult to forecast, however, and next month the forecast could just as easily overshoot the outcome. In the main scenario productivity is also assumed to follow the normal cyclical pattern, but just like the effects of the international competition there are arguments to suggest that this pattern may imply an underestimation or overestimation of the future trend. The overall assessment of the different risk factors is that the risk outlook is balanced, i.e. that the risks of inflation turning out higher than in the main scenario are as large as the risks of inflation turning out lower. Thus, the balance of risks does not change our assessment. Inflation in the coming two years will be low, coming into line with the target at the end of the forecast period. Some considerations The point of departure for our discussion about the future path of the repo rate is the assessment of inflation prospects in the coming years that I just presented. Allow me in this context to point out that the Riksbank does not conduct monetary policy according to a mechanical rule, even though that sometimes seems to be the perception. There are also other aspects than inflation one to two years ahead that must be taken into account when setting the repo rate.

Should that price outlook change, we may find that excessively high price pressures have been established, which may then prove difficult to break. It remains to be seen how long the effects on inflation of the price cuts for certain products will last. This argument, too, can essentially be said to involve an ambition to avoid excessive swings in interest rates and the real economy. Yet another factor that has been discussed for some time by the Executive Board is the rapid growth in household debt and the increases in house prices. A number of commentators have begun to highlight risks in this area. We have previously concluded that the developments are not a cause for great concern. Even though that largely remains our assessment, it has gradually become clearer that the developments in credit and house prices are one argument against looser monetary policy. A rate cut followed by a faster hike could bring about problems through their effects on household indebtedness and consumption. The inflation assessment I presented earlier indicates that inflation will be in line with the target at the end of the two-year period on which we normally focus. At the same time the issues that I have just discussed give cause for a certain amount of caution in interest rate policy in line with the Bank’s clarification of monetary policy in 1999. All in all, the arguments I have put forward advocate leaving the repo rate unchanged, which was also the decision we took yesterday.
Source: OECD  An article in the Monetary Policy Report published in July analyses the potential consequences of this.8 One risk in this connection is that the major Swedish banks largely fund their operations on the international capital markets and the level of confidence in the banks is decisive for their ability to get funding. A future economic downturn with a fall in housing prices in Sweden could therefore in the worst case be aggravated if international investors chose to reduce their exposure to the Swedish banking sector. The IMF recently repeated its warning about the high level of household debt in Sweden and the relatively large and concentrated banking sector and called for the quick implementation of the macroprudential policy instruments.9 Clearer boundaries affect the risk analysis However, clearer boundaries have been set for the work on preventing future crises since I became a member of the Executive Board. The government has proposed that Finansinspektionen should be responsible for macroprudential policy in Sweden and that a stability council should be formed in which Finansinspektionen, the National Debt Office, the government and the Riksbank should openly present their assessments and recommendations concerning financial stability. It is good that there is now a plan for clarifying the framework for financial stability. Macroprudential policy should also be able to use special instruments to manage developments in that part of the economy where there is a risk of imbalances.

Annual percentage change 5  Interest rate costs Food  4  5 4  Energy Good  3  3  Services 2  2  CPI  1  1  0  0  -1  -1  -2  -2  -3  -3  -4  -4 08  09  10  11  12  13  Source: Statistics Sweden  All in all, given the relatively weak development abroad, it is thus not difficult to understand the division in demand that has marked the Swedish economy in recent years. What can monetary policy do today? Swedish monetary policy cannot do anything about the causes of the weak demand from abroad, but it can mitigate the effects on the Swedish economy. How low the repo rate needs to be, and how quickly inflation should rise towards the target are ultimately questions of judgement. I believe that it is appropriate that the Riksbank has let the repo rate remain at one per cent since the end of last year in order to boost the Swedish economy and to get inflation to rise to 2 per cent. According to the forecast, the repo rate will remain at this level until the end of 2014. In the forecast, the real interest rate will remain negative until the beginning of 2015, which shows that monetary policy is expansionary.
We have expected that the import pattern would gradually become more stable, but if the shift continues, the price-dampening effects of increased imports from low-cost countries in Asia and Central and Eastern Europe may persist longer than assumed. The change in China’s exchange rate regime in July, with a 2 per cent revaluation of the Chinese currency, may over time have an impact on price developments for imported consumer goods. The global economy Economic growth among trading partners appears to be somewhat lower this year than in 2004. In the years ahead, growth is expected to be relatively stable. The outlook for growth in different regions indicates that the imbalances in the global economy, with a large deficit in the US and large surpluses in a number of other countries, will persist. There are particularly large imbalances both in the US balance of trade and current account. Persistent trade deficits have pushed up US foreign debt to a high level. This is partly due to the federal budget deficit. Moreover, US households have a high level of consumption and a low level of saving. This may be related to a more rapid rise in the US population than in other OECD countries. This suggests in isolation that saving in the US is somewhat lower and investment somewhat higher, but the impact is now considerably greater than implied by demographic factors alone. The imbalances may persist, and may increase. International capital markets are deep and liquid with an ample supply of credit for US borrowers.

the ratio of persons over the age of 67 to persons aged 20 to 66, will rise sharply in the years ahead. The National Insurance Scheme’s spending on old age and disability pensions, based on current social security rules, is increasing. The return on the Petroleum Fund can only cover a small portion of higher pension expenditure. According to Ministry of Finance calculations, a funding requirement equivalent to 6 per cent of GDP will still not be covered in 2060 given an oil price of NOK 230 (at constant prices) or around USD 35 per barrel. This is a relatively high estimate in terms of average prices in the last ten years, but at the same time oil futures are now far higher than this. Increased saving today may be a way to address this challenge, but this is not enough in itself. In the long term, the most important factor will be how we manage our national wealth. Thank you for your attention. 7/7
Related to this is the question of whether Asian governments have the political will to devolve monetary policy to a single central monetary authority. Asia is more disparate than Europe in its political systems, and it has often been noted that there is less of a tradition of cross-border institutionbuilding here than there is in other regions. It is quite striking, for example, that the approach to free trade agreements so far has been rather piecemeal, where in Europe they have grown and developed from a strong and centralised common market. Indeed, one serious political obstacle that has often been pointed out is the lack of embryonic supranational bodies within Asia from which to launch Asian monetary union efforts. These disadvantages must, of course, be recognised. But, on the other hand, it should be remembered that European monetary union has been a unifying force - a common interest that has brought countries together. All of these "special considerations" point to the conclusion that Asia is not yet ready to implement monetary union. In the process of discussing them, it may well turn out that Asian monetary union is a non-starter. But that does not mean that we are not yet ready to talk about monetary union. After all, it took Europe about half a century to move from the idea of monetary union to the reality.

Joseph Yam: Can the euro be a benchmark for Asian monetary co-operation? Remarks by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the keynote discussion: “The euro: a stabilising factor of the international monetary system. Can the euro be a benchmark for Asian monetary co-operation?” before the Paris Europlace Financial Forum: the euro markets in a global investment strategy, Hong Kong, 21 March 2005. *  *  *  It is a great pleasure to be here this morning to take part in this keynote discussion on the euro hosted by Paris Europlace. One of the great benefits of living in an international financial centre is the opportunity to share something of the life and culture of other parts of the world without leaving one's own city. We have always been fortunate in Hong Kong in our enjoyment of the fruits of European and particularly French - civilisation. We are currently enjoying, as part of "The Year of France in China", the superb Impressionism exhibition at the Hong Kong Museum of Art: together with all of the excellent performances in our international Arts Festival, and the growing popularity of al fresco dining, this is helping to create a very European atmosphere in Hong Kong this spring. And, from what I see on the streets, I do not get the impression that the strong euro is having any effect on sales of European fashion.
By setting up the Pension Fund, we have separated the extraction of oil and gas from the actual spending of the petroleum revenues. This has probably resulted in higher production of oil and gas over the past two decades. 14  BIS Review 37/2008  The Pension Fund was formally established in 1990, but it was not until 1996 that the first allocation – NOK 2 billion – was made to the Fund. Since then, it has grown to around NOK 2 trillion (well above USD 350 billion). The Fund is fully integrated with the government budget, and the same priorities are imposed on spending from the Fund as on any other government spending. This means that the entire petroleum revenues, as well as the return, go into the Fund. Then, as part of the budget resolution, the Storting decides on an annual transfer from the Fund to cover the government budget deficit. This procedure effectively prohibits use of the capital in the Fund for purposes not considered sufficiently important to be prioritised in the regular budget process. BIS Review 37/2008  15  The fiscal rule states that the Government is to spend – as an annual average through the business cycle – the expected real return on the Fund, estimated at 4 per cent. This cyclically adjusted transfer is estimated at a good NOK 80 billion this year – that is around 10 per cent of public expenditure. It is estimated that the transfer will increase in the years ahead.

BIS Review 37/2008  13  Over the past year, we have seen a growing international debate about government-owned investment vehicles; so-called sovereign wealth funds (SWFs). The increased attention reflects their rapid growth over the last decade. The debate has revealed some scepticism towards these funds, where key concerns relate to a lack of transparency and possible nonfinancial investment objectives. In my view, the debate should also reflect these funds’ potential to positively influence international financial markets through enhancing market liquidity and financial resource allocation. Typical features of this type of funds are long investment horizons, no leverage and no demands for the imminent withdrawal of funds, unlike the growing number of leveraged hedge funds with short time horizons. Hence, sovereign wealth funds have a high risk-bearing capacity and are resilient to short-term volatility. They may therefore act as a stabilising factor in financial markets by dampening asset price volatility and liquidity risk premiums. Let me elaborate and exemplify this by looking at the Government Pension Fund – Global: The Pension Fund is a policy tool to support long-term management of Norway’s petroleum wealth and avoid the resource curse. An important objective is to shield the Norwegian economy from fluctuations in prices and extraction rates in the petroleum sector. The Fund is only invested abroad in financial markets. The alternative to an oil fund would have been to regulate the extraction path by putting a conservative upper limit on annual extraction.
Such effects are intensified because the cyclical components of GDP, large net capital inflows and higher budget outlays in real terms boost one another. From this perspective, but also judging by the fact that large capital inflows are associated with financial crises, Romania opted for an imprudent fiscal policy during 2004–2008. There were two reasons for this and both are fully explained in the literature. The first reason was that policymakers believed “good times” would be permanent, which obviously meant that the spending spree could last forever. The second reason relates to 2008 being an election year, which pushed up budget expenditures further. The loose fiscal policy laid the groundwork for an involuntary fiscal contraction in the event of an economic downturn. Next, I will now focus on the pattern displayed by developments in certain indicators once the episode of large capital inflows has ended. 3.2. Macroeconomic adjustment following the end of large capital inflow episodes  The slope curve, which illustrates adjustments, relies directly on foreign investors’ expectations and decisions relative to macroeconomic and structural policies. In 2008, the global financial crisis induced a general lack of trust and fuelled markedly investor aversion to risk. Romania has become a risky destination for investors due to the size of its current account deficit, banks’ hinging on external financing, the relatively large foreign borrowing requirements and the high ratio of foreign currency-denominated loans to foreign currencydenominated deposits.

•  Do regulatory policies – either the microprudential or macroprudential variety – have an impact on market liquidity or short-term interest rates? The BIS recently convened a working group to assess the impact of microprudential policy on the efficacy of monetary policy. The report concluded that it was difficult to draw firm conclusions. But there were some interesting observations. •  The lending activity of less well-capitalised, higher risk-taking or less liquid banks appears more responsive to a tightening of monetary policy. •  This would seem to suggest that more stringent regulations tend to weaken the transmission of monetary impulses. •  And the transmission of policy rate changes to other interest rates and asset prices may be altered if debt markets become less liquid as a result of regulatory changes. Conclusion Let me conclude by drawing together the main points. •  Microprudential policies are critically important for financial stability and we must get them right. •  But the ability of microprudential policies to achieve financial stability may be dampened by credit cycles that have their roots in broader macro forces. •  Monetary policy matters for financial stability because it affects the credit cycle. To what extent monetary policy should therefore take account of financial stability remains an unresolved matter. •  Macroprudential policy potentially offers a way out by targeting the macro sources of financial instability, leaving monetary policy to focus on price stability. •  But macroprudential policy is neither a panacea nor without cost or distortion.