samchain/econo-pairs-v1 huggingface dataset:
The idea behind the fixed exchange rate policy was to ensure that inflation in Sweden would be in line with our most important trading partners’ inflation rates and that the fixed exchange rate would function as a nominal anchor. Instead, price and wage developments repeatedly came on a collision course with the fixed exchange rate and Sweden suffered cost crises. To rectify this situation, the krona was  BIS Review 111/2006  1  devalued a total of five times during a period of seven years. However, the trend increase in domestic prices and wages continued to rise, so the fundamental problem was still there in the background. The result was modest economic growth, poor productivity growth and more or less stagnant real wages. This performance was markedly weak both compared with earlier periods and in relation to other countries. During the crisis years at the beginning of the 1990s the situation deteriorated even further. Unemployment increased fourfold in the course of a few years and the central government finances deteriorated dramatically. Long-term interest rates rose and the interest rate differential vis-àvis Germany, for example, occasionally came to several percentage points. The fixed exchange rate lost credibility and had to finally be abandoned in November 1992, following large currency outflows and extreme interest rate hikes in an attempt to defend the krona. The nominal anchor that was to hold down inflation and inflation expectations in the economy had loosened. To pin it down again and bring the Swedish economy onto a better track required drastic measures.

When the gold standard was relinquished in 1931 and the krona started to float, as a crisis measure the Riksbank was given the task of maintaining a constant purchasing power for the krona, that is, establishing a constant price level. It all functioned relatively well to the extent that the economic recession of the 1930s was not as severely felt in Sweden as in other countries and the recovery was unusually strong 1 . Economic developments during the inflation-targeting period How has the period with an inflation target worked? Well, looking back on the developments in the past ten years, it is difficult to come to any other conclusion than that the new stabilisation policy regime has lived up to the expectations. The high inflation economy with recurring cost crises, high interest rates and an unstable economic development is a thing of the past. Inflation has instead been low and stable. GDP growth has on average been higher and also more stable than in the 1970s and 1980s, and real wage growth considerably more favourable. Productivity growth has been surprisingly robust – stronger than in the rest of the EU – and there now seems to be broad consensus that the economy’s potential growth rate has been raised. Growth in employment has not been quite as good, but it is nonetheless worth pointing out that the situation today is far better than it was in the mid1990s. It is also interesting to study inflation expectations.
Between May 2000 and March 2001, the BIS sold 220 tonnes on behalf of the SNB. For the first 120 tonnes, the SNB paid the BIS a fixed commission while the performance risk resided with the SNB. For the next 100 tonnes, the BIS agreed to pay the average price of the AM and PM London gold fixing plus a small fixed premium. In April 2001, the Governing Board decided that there was no reason to continue to sell through the BIS. The SNB now had the necessary professionals, know-how, trading resources and contacts to the international gold market to trade directly. Two types of selling operations were subsequently pursued: spot sales in the market and sales programs with price caps. Over the next three and a half years, 730 tonnes were sold directly in the spot market. For these sales, the SNB used 25 counterparties in four different continents. In an effort to receive consistently competitive pricing, the Governing Board allowed the SNB traders to become two-way participants in the market. In other words, traders were allowed to buy gold on an intra-day basis up to two thirds of the daily allocated sales volume. Overall, the sales had to be conducted within a clearly defined corridor which was structured around daily sales volumes of approximately one tonne (Figure 5). Typically, the Bank of England was used for the physical settlement of these operations. Apart from spot operations, 350 tonnes were sold through option programs.

The Basel Committee is therefore working intensively on completing the current reform work by the end of the year 1. 1  However, it is still not clear when the review of the exposures to governments and public bodies will be complete. 3 [5]  Critics have expressed fears that the reforms I am talking about now will lead to minimum capital for certain banks increasing radically, which in turn risks resulting in a real economic decline. Here I would like to point out that the Basel Committee’s ongoing reform work does not aim to significantly increase the total global capital requirements. Instead, it concerns ensuring that all banks around the world have adequate resilience to manage financial crises and that risks are covered by capital in a uniform way in all banks and all countries. One result of this exercise is that banks that currently have very low risk weights will probably face higher capital requirements, while banks with very high risk weights may face lower capital requirements. Designing a uniform global regulatory framework is not an easy task, particularly as banking systems differ from country to country, but also because we are living in a changing world. The Basel Committee's work is therefore largely a question of finding compromises that all member countries can support and which will stand the test of time. Naturally, the Basel committee is also evaluating very carefully the effects of the proposals now under negotiation. This applies to the effects on the banks as well as on society.
Christian Noyer: Lessons from the European experience with exchange rate and monetary policy co-operation Speech by Mr Christian Noyer, Vice-President of the European Central Bank, at the Third Asia-Europe (ASEM) Finance Ministers' Meeting, held in Kobe on 14 January 2001. *  *  *  Ladies and gentlemen, I am delighted to be given the opportunity to participate in this ASEM meeting today in Kobe. This is the second time that the ECB is taking part in this event of increasing importance for the economic and financial co-operation between Asia and Europe. I will discuss today with you which lessons of relevance to Asia might be drawn from the European experience in exchange rate and monetary policy co-ordination. 1. Institutional background One crucial aspect of the ongoing process of globalisation is that, on average, international trade and financial flows are growing at a faster, sometimes a much faster pace than world GDP. This has posed and will continue to pose unique policy challenges. In particular, individual countries are increasingly susceptible to external developments and shocks. This implies an increased need for international cooperation, both at the global level and at the regional level, in order to mitigate the effects of the potential negative externalities associated with globalisation. In this context, the various processes of regional integration (e.g. EU, NAFTA, MERCOSUR, ASEAN) should be seen as integral parts of broader multilateral co-operation, and not as a weakening of global surveillance.

In fact, the spill-over effects transmitted from one region of the world to another via interest rates, exchange rates and equity prices, for instance, can be mitigated through closer regional integration. By reducing the relative degree of economic and financial openness of the regions concerned, such integration can be an effective instrument to shield them from external shocks, thereby obviating the need for trade or capital restrictions. The European experience shows that regional integration can be beneficial in this respect. The euro area weathered well the economic slowdown and financial market uncertainties arising from the series of balance of payments crises seen between 1997 and 1999. Likewise, provided that the current economic slowdown in the United States does not develop into a hard landing, the euro area is expected to record in 2001 above-potential growth for the second year in a row. To be sure, sheltering domestic economies from external shocks was not the primary consideration of European integration when it was initiated almost 50 years ago. Nor were the creation of the euro and the setting-up of the European Central Bank (ECB) objectives at that time. These are, in fact, only the latest developments in a long process of regional integration that started and is continuing with a strong political commitment.
For example, in the June TLTRO III operation, participating banks received a total of € trillion, a record high for the Eurosystem’s refinancing operations. The evidence available suggests that these operations have fulfilled  1  See Aguilar et al. (2020). 3  the purpose for which they were conceived, since banks have indeed used the funding received to lend to the real economy.2 These measures, along with those adopted complementarily both by national governments (in particular through the public loan-guarantee schemes) and by the prudential authorities, aimed at enabling financial institutions to use some of the capital buffers built up in recent years, have been pivotal in facilitating the flow of financing to the economy during the crisis.3 Near and medium-term challenges for the euro area economy and monetary policy Let me now share some thoughts on the current outlook for the euro area and the role that monetary policy could play in the near and medium term. One year on from the first reported cases of COVID-19 in Europe, the coronavirus pandemic continues to exact a tragic human cost and pose enormous challenges for the economy. Since reaching its weakest level last spring, economic activity in the euro area has been on a recovery path. However, this recovery is subject to a high level of uncertainty and has been partial, uneven and fragile.

- In this regard, we must closely monitor long-term nominal interest rates and act accordingly in order to maintain favourable financing conditions, in accordance with our communication in December. - These long-term interest rates developments must also be analysed alongside developments in the rest of the yield curve. In this respect, in tandem with the aforementioned developments, we have observed a steepening of the risk-free yield curve, which may reflect market expectations of an earlier start to the process of reducing the accommodative stance of our monetary policy. Given that medium-term inflation expectations, as I have already said, remain far below levels consistent with our aim, and high uncertainty persist on the evolution of the economy, these developments underline the importance of avoiding premature increases in nominal interest rates that may jeopardise the convergence of inflation towards our mediumterm aim. - We must also continue to focus on heading off cross-country financial fragmentation, which hinders the smooth transmission of monetary policy and the achievement of our inflation aim. In addition to analysing changes in interest rates on sovereign debt, this means that, among other things, we need to pay special attention to developments in bank lending conditions, given the particular importance of the bank-based channel in the euro area for the financing of households, firms and the self-employed. In this regard, 9  sovereign risk premia have so far remained very subdued.
The IFSB which was established in 2002 has been instrumental in developing and issuing global prudential standards and guiding principles for the industry. The IFSB has also contributed to the harmonisation in the development of Islamic finance across different jurisdictions. Apart from the implementation of these prudential standards, there is also a need to ensure the supervisory and legal infrastructure remains relevant to the rapidly changing Islamic financial landscape. In Malaysia, these efforts are also supported by a comprehensive financial safety net that includes a deposit insurance scheme and a resolution mechanism, so that not only are depositors protected, but it also allows for prompt, effective and least cost resolution of the financial system that can facilitate recapitalization of Islamic financial institutions as well as institute programme to remove troubled assets from the books of financial institutions. Greater collective effort by international community to strengthen global financial stability In the reform of the international financial architecture, the G20 has launched an ambitious agenda to reform financial regulations, which include key main areas namely, (1) the strengthening of international frameworks for prudential regulation, (2) the review of the scope of regulation, (3) the revision of accounting standards; and (4) more effective oversight of the credit rating agencies as well as strengthening risk management. 1 These areas should  1  2  Declaration on Strengthening the Financial System by Leaders of the G20, London 2 April 2009.

Zeti Akhtar Aziz: Islamic finance and financial stability Opening remarks by Mrs Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the BNM High Level Conference on Financial Stability, Bank Negara Malaysia, Kuala Lumpur, 24 November 2009. *  *  *  It is my great pleasure to welcome you to Bank Negara Malaysia Conference on Financial Stability that is being held in conjunction with 15th IFSB Council Meeting and the 3rd IFSB Public Lecture on Financial Policy and Stability. This conference takes place at a time when there has been intense discussion by the international community on the necessary financial reforms at both the national and international level so that we will avoid such global crisis of such a scale in the future. This conference today provide us with an opportunity to reflect on the new challenges that are emerging from this global financial and economic crisis and discuss Islamic finance and the need to ensure not only its resilience but how it might contribute to global financial stability. Indeed, Islamic finance has a potential role in contributing not only to global financial stability but also towards a more balanced global growth. While Islamic finance by its very nature and its direct link to economic activity contributes to this process, the recognition of the new financial challenges ahead require further steps to be taken to strengthen its resilience and robustness.
8  This tendency of financial systems towards boom-bust cycles goes back, for example, to the work by Minsky (1977), “A theory of systemic fragility”, in Altman and Sametz, Financial Crises, Wiley. Notably, observers from the Bank for International Settlements, such as Bill White and Claudio Borio, warned before 2007 that such imbalances were building up. 9  For example, Gorton (1988), “Banking panics and business cycles”, Oxford Economic Papers, 40, observes that most US banking crises during the national banking era could have been predicted with a simple business cycle model. 10  See, for example, Acharya, Pedersen, Philippon and Richardson (2009), “Regulating Systemic Risk”, in Acharya and Richardson (eds. ), Restoring Financial Stability: How to Repair a Failed System, Wiley; Lo (2008), “Hedge Funds, Systemic Risk, and the Financial Crisis of 2007-2008”, Written Testimony prepared for the US House of Representatives, Committee on Oversight and Government Reforms, Hearing on Hedge Funds, November. 11  Basel Committee on Banking Supervision, “Comprehensive response to the global banking crisis”, press release, 7 September 2009. 4  BIS Review 115/2009  system and potentially to a financial crisis. It would have to pay attention to the sources of the three forms of systemic risk discussed earlier – contagion, imbalances and macro shocks. Risk monitoring should identify sources of risks and vulnerability coming from within the financial system – i.e. stemming from financial institutions, markets or market infrastructure – and also those present in the macroeconomic environment and non-financial related events.

Thus, payments enabled by new providers have just started to take off, but it looks promising to become a new normal as they are expected to improve the user experience. How fast this segment of the financial system in the EU is developing can be witnessed by the approximately 300 new providers operating by midSeptember this year, which is just two years since the application of the new regulation-relevant regulatory technical standards under the PSD2 (Open Banking Report, 20212). Most of the companies that offer these innovative services are fintechs, but open banking also 3 1/3  BIS central bankers' speeches  offers a possibility for traditional banks. In fact the survey conducted by Accenture3 finds that three quarters (75%) of the banks see payments modernization as being driven by changes in the national payments infrastructure and regulation, which include improving bank-to-bank payments systems, new industry standards and open banking. The rapid move to digital payments has put additional pressure on banks, with three-quarters (75%) of bank executives saying that the pandemic has increased the urgency of their plans to modernize payment systems. Pressures are felt by the central banks as well. In response to changes in consumer payments preferences, the need to further increase efficiency of payments, as well as the disruption caused by COVID-19, the interest in central bank digital currency (CBDC) has also increased. In fact, last year was the launch of the first “live” digital currency in the Bahamas.
In total, sterling money market funds saw outflows of around £ or 10% of their total assets, in the eight days between 12th and 20th March last year. At first, the outflows were met by running down their holdings of cash, but as the outflows increased, they sought to liquidate some 2/6  BIS central bankers' speeches  of their bank assets – CDs and CP. But they found that the market for those assets – which typically comes primarily from dealers buying back their own paper – was closed. The dash for cash meant that the tide was flowing fast against them. As the regulatory system currently works, if MMFs’ liquid asset ratios fall towards prescribed thresholds, and they are unable to top up their liquid assets (cash) through sales, they are able to ‘gate’ or impose fees on investors, in other words decline to provide immediate liquidity. As with banks, the broader danger of this situation – which is a threat to financial stability – is that such a problem in one fund could trigger contagion to other funds, through fear that they might have the same problem, and thus lead to a highly destabilising run on money market funds. These thresholds can, therefore, also affect the behaviour of fund managers, making liquidity buffers not usable in times of stress, for fear this would fuel investors’ desire to run.

I should note that the remaining vulnerabilities in non-bank finance are perhaps the exception, as on the whole the post-crisis reforms have left a financial system that has stood up well to the acute stress of the Covid period. In order to create a framework for reforms, it is important to set out clearly the principles that should shape the changes. The following principles – while not intended as prescriptive rules – are I think helpful in this respect: 1. As a general principle for all funds – investment and money market – redemption terms should be aligned with the underlying liquidity of assets. 2. Where investors regard funds as cash-like, they should be made resilient so they can operate as such at all times, which means running minimal maturity mismatch risk. 3. Money market funds should not hold less liquid assets on a scale that would make them more suitable to be traditional investment funds. 4. Money market funds should not be designed with regulatory thresholds or cliff-edges which create adverse incentives and amplify first-mover advantage behaviour. 5. Reforms should improve the ability of funds to support short-term funding markets, including by making them more resilient. These principles may sound obvious; indeed, I hope they do. But I would emphasise that they are not obvious in the sense that the current landscape is some way from meeting these principles. I think there are three big picture changes which follow from these principles, and should form the basis of the necessary reforms.
Total turnover on the foreign exchange market was 162 billion kronur in 1997, and had doubled since 1996. In addition, the participation of the Central Bank in foreign exchange market transactions fell from 82 percent of turnover in 1996 to 37 percent in 1997. So far this year turnover has continued to increase and the share of the Central Bank has declined to 13.2 percent. Average daily turnover has been about 2 billion kronur this year. Daily fluctuations in the exchange rate increased as a result of last year’s change, but not much when compared to what is common among other countries. Since mid-1993, or for almost 5 years, the exchange rate of the krona has never deviated more than 2.1 percent from the central rate. Yields on Domestic Markets Money market yields declined in the course of the year until the Central Bank raised its rates in November after which they rose. Yields on 3-month Treasury bills rose to 7.22 percent where they stood at year-end. A low Treasury borrowing requirement at times caused a shortage of Treasury bills. Demand for Treasury bills was also boosted because of increased interest in them for liquidity management. Yields on indexed bonds changed little during the first half of 1997 but during the second half the yield on government bonds and housing bonds fell sharply, albeit unevenly. This decline was partly the result of the low Treasury borrowing requirement. The yield on non-indexed government bonds also declined sharply in 1997, although also unevenly, to 8.3 percent at year-end.

Ardian Fullani: The financial future of the region Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the summit of finance ministers and governors “The financial future of the region”, Becici, Montenegro, 14 June 2013. *  *  *  Dear Ministers of Finance, Dear Governors, The crisis we are going through, being so profound and lasting, will leave its mark on economics in general, and central banking in particular. Up until the Great Recession, monetary policy was living in a world that we may call “the inflation targeting era”. To anyone that has followed the discussions regarding the optimal central bank policy ever since the onset of the crisis, it is clear that the validity of the previous approach has been heavily questioned. In many ways inflation targeting made the central bank’s job simple, as long as it followed the policy correctly. The Central Bank, seen by the public as an independent institution, had to credibly commit to an explicit inflation target, in order to anchor mid-term inflation expectations. Self-fulfilling expectations from economic agents and price setters would, in turn, help deliver the objectives of monetary policy. Unfortunately, as shown recently, this strict approach to monetary policy has some shortcomings. What this approach missed, due to its focus in consumer prices, was the drift in prices of assets in general. Escalating asset prices and their sudden burst affected significantly the behaviour and balance sheets of the economic agents and challenged the stability of the financial system.