samchain/econo-pairs-v1 huggingface dataset:
I am very sceptical about this strategy, as it could turn into an indirect yield curve control, which is not the intention.25 There is a considerable risk of misunderstanding between the central bank and market participants. I think that the experiences of the coronavirus crisis clearly indicate a middle way. During the initial phase of the crisis, economic uncertainty was monumental. We decided to go big and fast, as illustrated, for instance, by the fact that most of the measures were decided within a week of the WHO declaring a pandemic on 11 March 2020. The rest of the measures were adjustments or additions to an existing plan. As decision-makers, we did not have the luxury of awaiting detailed research results on what would be the best response, but acted to avoid the real economic crisis developing into a financial crisis. Both the Swedish Coronavirus Commission and the external assessment of monetary policy by Flug and Honohan concluded that such an approach was favourable to economic developments in Sweden.26 So much for big and fast. However, I am very doubtful about the rapid phasing out of assets on our balance sheet through active sales. One reason I have already mentioned is that the maturity of our assets is relatively short. But another reason is that the aggregate international experience with QT is very limited, and there are very few data points for estimating the effects. The precautionary principle 24 See Bailey (2020).

The official statisticians have redrawn the profile of growth in different sectors of the economy. In particular, the data for spending and output in the first half of this year now appear more consistent. But October is often a month in which fog turns into storms. So it is worth asking whether the remaining statistical fog enveloping the UK economy foreshadows stormy economic weather ahead. After a decade of unparalleled stability of both growth and inflation, it is time to take stock. For much of the 60 years since the end of the Second World War, Britain experienced a succession of economic cycles - variously described as stop-go or boom-bust. On average these were larger than the fluctuations experienced by other major industrial economies. Not only was our growth rate lower, it was also more variable. But the past decade has seen a remarkable shift of fortunes. In the 10 years from the second quarter of 1992, the average annual growth rate of GDP was 2.9%, above the post-war average of 2.5%. Following the adoption of an inflation target in late 1992, inflation averaged 2.5%, the lowest for a generation, and never deviated more than one percentage point from that average. Unemployment fell from almost 10% to around 3% on the claimant count, its lowest level for almost three decades, and has now been virtually unchanged for twenty months, by far its longest period of stability. The terms of trade moved in Britain’s favour, raising our national standard of living.
4  US Dollar 3-months Libor on 25 January 2009 were 1.48%; and Sterling 3-months Libor 1.79%. 2  BIS Review 38/2009  Nevertheless, and although bank lending rates have been gradually falling, bank credit standards on new loans have been tightened and credit growth to the private sector has been decelerating. This partly reflects the impact of the decline in economic activity on the demand for bank loans, but it is also a consequence of the ongoing deleveraging process in the banking system and continued stresses in the funding markets. Government support for the banking system Since last autumn, governments have supported the banking system through various measures: by injecting new capital, by providing guarantees on new bank debt issuance and, more recently, through asset relief schemes (involving the removal of impaired assets from the banks’ balance sheets or the provision of guarantees to limit the valuation losses of such assets). These measures have succeeded in stabilising the banking system, by reducing systemic risks and strengthening confidence. The support provided has been substantial, for example banks in the euro area have received 115 billion euro of capital injection from governments (of which 75 billion euro were provided to the major banking groups) and 217 billion euro of funding guarantees. However, these bank support measures are taking some time to implement. So far, only one third of the commitments for capital injections have been used and a smaller fraction – about 12% – of the commitments to guarantee new bank debt have been called upon.

It is equally important to avoid an inflation rate that is too low, as it is to avoid an inflation rate that is too high. BIS Review 74/2001  3  A change in interest rates is not expected to have an immediate effect on inflation. Our analyses 1 indicate that a substantial share of the effects of a change in interest rates will occur within two years. Two years is thus a reasonable time horizon for achieving the inflation target of 2½ per cent. Hence, the key rate is set with a view to achieving an inflation rate of 2½ per cent two years ahead. In some situations, where unexpected events lead to an inflation rate that is too high, it may be appropriate to apply a longer time horizon than two years. For example, reducing inflation to 2½ per cent within this time horizon may be associated with unnecessary real economic costs. A precondition for applying a longer time horizon is that there is clear evidence of strong confidence in low and stable inflation over time on the part of economic agents. Gradually, as we gain experience with setting interest rates according to an inflation target, the possibilities for placing emphasis on stability in the real economy will probably increase. Low and stable inflation is a necessary precondition for stability in the foreign exchange and financial market and the property market.
Overall the euro area banking system is now far more resilient: in terms of capital for instance, the Common Equity Tier 1 ratio of significant euro area banking groups has risen from less than 7% in 2008 to more than 14% today. In this context, and within the banking union framework, we need to allow more cross-border bank mergers. These will enable banks to better shift savings across national borders towards where investment needs are. And obviously we should preserve and complete international financial regulation on both sides of the Atlantic. Cooperation on regulation has been a win-win game. Competition on regulation would be a destructive one. 3. How I see the future of the euro area: a call for action. This leads me to the question of the future of the euro area. Let me be blunt here: I see it as promising, if we act. Obviously there are challenges today, be they domestic – euroskepticism and unemployment – or global – uncertainty in the West (US and UK) as well as in the East. But I am convinced that the answer to the current challenges is not “less Europe”. Less Europe would be a mistake if we want to remain in control of our common destiny. That said, there is room for further improvement, for a “better Europe”. Twenty-five years ago, we spoke of an “Economic and Monetary Union”. Since then, we have made a success of Monetary Union, but we have not been very effective with regard to Economic Union.

To counter these centrifugal forces, we notably launched an unlimited provision of liquidity for a maturity of three years at our main refinancing rate and against a larger range of eligible collateral in December 2011. Proof of our credibility in keeping Mario Draghi’s word to do “whatever it takes to preserve the euro” (July 2012), the simple announcement of our Outright Monetary Transactions programme was sufficient to alleviate financial market strains. More recently, beginning 2014, we had to react to the risk of sliding into deflation, which was due to a combination of factors: the slowdown in global growth, the collapse of commodity prices and the persistent weakness in domestic demand. That is why we implemented a set of vigorous measures, including three main ingredients: asset purchases, forward guidance – both of which are measures that the Fed also put in place – and negative interest rates. The asset purchase programme – or QE – included first private debt instruments and then also public sector debt. Since April 2017, and till December 2017, purchases amount to EUR 60 billion per month, having been reduced from EUR 80 billion. The perhaps most unconventional policy is the use of negative interest rates. I emphasise this measure as the most unconventional because for most people, as well as in all economic models that I am aware of, nominal interest rates are positive.
Lars Heikensten: Introduction on monetary policy Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at the Riksdag Committee on Finance, Stockholm, 20 October 2005. *  *  *  Let me begin by thanking you for your invitation to the Committee on Finance. We have now been working with inflation targeting for just over ten years in Sweden. We have had open hearings in their current form since 1994. The hearings are one of the cornerstones of the Riksbank’s strategy regarding openness and are an important instrument with which to win democratic legitimacy for monetary policy. Today is the last time I will have the opportunity to appear before the Committee in my capacity as Riksbank Governor. Against that background I thought I would begin with a look back at the last ten years. What have we achieved during these years? What has gone well and less well? I also intend to discuss a couple of issues concerning the formulation of the inflation targeting policy; what expectations are reasonable to have? How is policy being conducted and how can it be developed? These are relevant questions, not least given the discussion that we have seen recently. Finally, I intend to speak about the outlook for the economy and inflation that is presented in the Inflation Report and my own view on future monetary policy. Developments in the past ten years As I’m sure you all remember, our country was hit hard by a deep economic crisis at the start of the 1990s.

Despite this, we have been able to significantly increase resources in our main fields. We now have a lot more people working on analysing issues related to monetary policy and financial stability than we had ten years ago. The academic level has also been raised substantially, which can be noted, for instance, in the fact that we have a much higher percentage of employees with postgraduate research degrees than we had ten years ago. The emphasis on openness has also had clear consequences. We publish a comprehensive report showing the reasoning behind our interest rate decisions, the Riksbank Governor attends hearings at the Committee on Finance and members of the Executive Board travel around the country taking part in discussions and giving information on the Riksbank's work. In studies of central bank transparency, we are regularly ranked among the top few (Figure 6). In my opinion, this openness has been a central issue in gradually building up confidence in the Riksbank and its inflation target. It is also important to make it possible to regularly examine the Riksbank’s work in a serious manner. One indication that we are on the right path to achieving a solid monetary policy regime is what happened when Urban Bäckström announced his resignation in May 2002 and when I myself did the same thing a couple of weeks ago. In neither case were there any significant effects on either the exchange rate or interest rates.
Recently, the focus has moved partly away from pure studies of the effects of the income tax system to the combined effects on the labour supply of taxes and various benefit and social insurance systems. The focus has often been on people that work to a smaller extent, that are on sick leave or that are outside the labour force. We know from economic research that different types of compensation and benefit affect the individual’s reservation wage, that is to say, the wage level that primarily influences the individual’s decision to participate in the work force. The reservation wage varies from person to person and if the wage level offered on the market is lower than the reservation wage, the person chooses not to work. One can say that the individual values his or her time more highly than the market does. The relationship between the wages for work offered on the market and the individual reservation wage is thus a decisive factor in the decision on whether or not to work. It is easy to understand that the reservation wage will be affected by taxes, compensation levels in the unemployment and social insurance systems, rules for early retirement, etc.

The degree of employment fell considerably in connection with the crisis years and has only partially recovered since then. Moreover, since the 1990s crisis, many of those who lost their jobs have not returned to the labour market at all. This is ominous, given that economic growth in the past decade has nevertheless been relatively high in a historical perspective. To some extent, the drop in the labour force percentage can be explained by education factors. In connection with the 1990s crisis there was a significant decline in labour force participation among younger age groups, which was connected to tougher competition for jobs and many young people choosing to improve their qualifications instead of entering the labour market. Since then, there have been changes aimed at raising the level of education in society in general, for instance by lengthening upper-secondary school programmes and expanding university colleges. These education initiatives are highly justifiable in themselves, but they also entail a lower participation in the labour force and thereby an increased dependency burden for the active part of the population. Although some of the decline in labour force participation can be attributed to education factors, this is not the full explanation. Calculations for 2003 show that close to 30 per cent of the group remaining outside the labour force were studying. The others remained outside the labour force for other reasons, with early retirement for health reasons, now known as sickness benefit, as one of the most common causes.
Moreover, according the IMF’s latest assessment from January this year, the deficits are expected to fall even more slowly than was predicted as recently as September last year.1 According to the IMF, the advanced economies reduced their cyclically-adjusted deficits by an average of less than  1  2  Fiscal Monitor Update, January 2012. IMF  BIS central bankers’ speeches  one percentage point between 2010 and 2011, as shown in Figure 2.2 These deficits are expected to fall by as much or, if you prefer, by as little, in 2012. If we look at the euro area separately, the reduction between 2010 and 2011 was slightly larger, that is 1.3 percentage points. However, it should be noted that a large part of this reduction was due to improved public finances in Germany and not in the countries where such an improvement is needed most. Despite a continued improvement during 2012, the assessment is that public finances in the euro area will, on average, still be in deficit. Consequently, the average level of public debt is expected to increase from almost 90 per cent of GDP in 2011 to 92.5 per cent in 2013 according to the IMF. In order to reduce the level of debt instead, several European countries would need to transform the relatively substantial deficits of today into surpluses over a period of several years. Figure 2.

This applies, for example, to the need for consolidation and which strategy is best for finding solutions to the debt crisis in the euro area as quickly as possible. The question of what role the central banks should play in counteracting an excessive expansion of credit and indebtedness is also often debated, and the members of the Executive Board of the Riksbank also have different opinions about this. I don’t find this strange at all, on the contrary it is entirely natural. Hopefully, this debate will contribute to constructive solutions going forward. Thank you. BIS central bankers’ speeches  13
In the first phase, the crisis generated a significant decline in firms’ revenues relative to fixed costs (such as supplies, rentals, labour costs) that led to an increase in firms’ liquidity needs on top of those derived from the amortisation of pre-existing debt. In turn, this raised the risk that some of these corporates would not be able to meet their payment obligations (liquidity risk) together with a non-negligible probability of negative spillovers to other companies. The decisive and forceful action of economic policies has helped mitigate this risk to a great extent, so that a large proportion of these firms with liquidity needs were able to cover them. Key measures included, for example, furlough schemes that help to alleviate fix costs, and also public guarantees for business financing that have allowed for the liquidity needs to be financed. However, as the crisis unfolds, concern is shifting from liquidity risk to the deterioration of the solvency position of firms, associated with the combination of higher levels of debt as a result of the crisis with still low profitability expectations for the coming quarters, especially in sectors most impacted by the crisis and irrespective of whether these firms are viable in the long term. And this situation leads to the following two related concerns. First, it is obvious that it increases the probability of defaults which could lead to viable firms going out of business, thus making the costs of the crisis deeper and protracted.

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.
Critical infrastructure such as transport, water, power and telecommunications systems are also likely to be affected. Nearly all aspects of the economy in every country are therefore potentially at risk because of the widespread dependence on a country’s core infrastructure. The unprecedented scope of the Year 2000 problem means that a critical aspect of the issue is the management challenge. Substantial management resources are needed to coordinate the efforts to assess, repair, and test affected systems prior to the fixed deadline of BIS Review 85/1998  -2-  January 1, 2000. At the Federal Reserve, for example, we have created a number of management positions within our organization that are focused exclusively on different aspects of our Year 2000 preparations. A final point that underscores the need for urgent and sustained action is the increasing focus on the issue by the media, by the public and by market observers such as the rating agencies. Over the course of 1999, the extent of Year 2000 preparations by financial organizations will become the subject of ever more intensive scrutiny. As supervisors, therefore, we must do all we can to support the efforts of market participants to address the problem effectively, and to build confidence among others that this is being accomplished. While we must make it clear that supervisors cannot solve the problem, we can help mobilize others to take the necessary steps.

Needless to say, there is no way that the financial sector can completely insulate itself from more widespread Year 2000 disruptions by developing contingency plans. However, we should do what we can to prepare realistically for a wide variety of outcomes, including some that may not be very likely. We also should open lines of communication with relevant associations and regulatory bodies outside the financial sector in order to better understand their preparations and contingency plans, and so that they could understand ours. BIS Review 85/1998  -9-  Conclusions These thoughts represent my perspective on the key issues facing the global supervisory community regarding the Year 2000 challenge. As you can infer, I am a very serious believer in the need for vigorous efforts to address the problem. The scope of the challenge is enormous and much work remains to be done before January 1, 2000. Nevertheless, I am not a doomsayer. I believe the financial sector can and will successfully address Year 2000. I say this because I believe we are capable of harnessing an unprecedented level of cooperation to tackle the problem. I see this happening here today. I say this because the resources that are being devoted to address Year 2000 are large and growing. We see a number of firms and systems testing successfully ahead of the schedules they have set for themselves, demonstrating the value of the Year 2000 investments that these organizations have made.
This moved money market rates back to the level the Central Bank had aimed for when it set its interest rates in November, a range of 7.2-7.4 percent. It is always debatable what is precisely the right level of money market rates in light of the situation on and prospects for the foreign exchange market in the short run and for the goods and labour markets 1-2 years hence. The Central Bank’s current assessment is that the level of the interest rate set in November provides sufficient restraint to ensure price stability in the period ahead. However, this assessment is under constant review in light of the development of a host of indicators. BIS Review 42/1998  -6-  Foreign Exchange Market The foreign exchange market was reorganized in 1997. The exchange rate quotation meetings were abolished and replaced by a continuous market. Furthermore, market participants other than the Central Bank, now six institutions, replaced the Bank as market makers on this market. The arrangement is now similar to that among many neighbouring countries. The Central Bank’s transactions on the foreign exchange market are now always at its own initiative, and should be view as intervention aimed at influencing the exchange rate. The new market arrangement has greatly improved the flow of information about market conditions and made the market more active. Also, all information about pressure on the exchange rate now appears instantaneously and the volume of transactions has grown sharply.

I wish to acknowledge the endorsement of the Ministry of Plantation Industries and Commodities and the support by the Malaysian Palm Oil Board, Malaysian Palm Oil Association and Malaysian Palm Oil Council as well as the CPO industry players towards this initiative. On this occasion, I wish to take the opportunity to congratulate the team at Bursa Malaysia, Bank Negara Malaysia, the Securities Commission and the market players for their perseverance in concluding this project that was started two years ago and in making it a reality today. 2  BIS Review 98/2009