samchain/econo-pairs-v1 huggingface dataset:
Over the past several years, central banks in a number of countries, most notably in Canada, New Zealand, Australia, and the United Kingdom, have become increasingly convinced of the value of making a public commitment to an articulated and transparent policy standard, usually price stability. By setting clear policy objectives, the makers of monetary policy can eliminate much of the guesswork that central bank watchers must engage in to figure out what the central bank will do next. In so doing, they can help anchor inflation expectations over the long term, and thereby foster economic growth by ensuring a stable price environment. Many central banks are also increasingly coming to realize that much of the secrecy and cautious signaling that once characterized monetary policy decisions is, to some extent, counterproductive. In recent years, a number of central banks have taken measures to further open up their policy processes to the public. For example, prior to February 1994, changes in monetary policy in the United States were signaled to the market through open market operations. Since that time, the Federal Reserve has publicly announced changes in policy, typically following each meeting of the Federal Open Market Committee, or FOMC. Some policymakers had been concerned that this shift in procedure for communicating policy decisions might create additional market volatility. In fact, a recent study by some of my colleagues at the Federal Reserve Bank of St. Louis found just the opposite -- that announcing policy changes has not led to increased volatility in the federal funds rate.

Given these realities, we must ask ourselves what has changed to alter the way foreign exchange rates fluctuate in the global marketplace? It is obvious that this is not a case of declining volume. The foreign exchange survey most recently published by the Bank for International Settlements in 1996 shows that daily volume in foreign exchange grew by almost 50 percent between 1992 and 1995, and we have no reason to think that anything has changed since then to alter this trend. What has changed, however, is the new, higher level of transparency that has been introduced in recent years into the foreign exchange market. When I speak of transparency, I am actually referring to a combination of several factors. Broadly speaking, I define transparency in this market as the degree to which its participants have equal and simultaneous access to the inputs necessary to price assets and their associated risk accurately. By reducing guesswork and uncertainty, transparency helps to smooth price adjustments and eliminate some of the shocks that can result when market participants discover they have “priced in” assumptions that are inaccurate. In my view, the current move toward greater market transparency is reflected in four broad categories: policy, information, pricing, and risk management. The increased transparency of central bank policy -- which is a product of deliberate steps taken by policymakers -- is an important aspect of the move toward more transparent overall market conditions that we’ve been observing.
Arnór Sighvatsson: Guidelines issued to financial institutions due to non-binding clauses linking loans to the exchange rate Introduction by Mr Arnór Sighvatsson, Deputy Governor of the Central Bank of Iceland, about guidelines issued to financial institutions due to non-binding clauses linking loans to the exchange rate, Reykjavík, 1 July 2010. *  *  *  This morning the Central Bank and the Financial Supervisory Authority issued guidelines to financial undertakings in order to instruct them on how to respond to the Supreme Court judgement on non-binding exchange rate linkage clauses. With these guidelines, the supervisory bodies concerned declare that their unequivocal understanding of the situation resulting from this Supreme Court decision is that, in cases involving loan agreements that have been ruled unlawful, the settlement and repayment of those agreements shall take account of Articles 4 and 18 of the Act on Interest and Price Indexation, no. 38/2001, unless the parties agree otherwise. The guidelines are intended to create stability in financial market transactions and promote a secure and effective financial system. The Financial Supervisory Authority and the Central Bank are required by law to ensure financial system stability, which is a matter of vital public interest. With the issuance of the present guidelines, these institutions are acting in accordance with the legal obligation resting on them.

Meeting these challenges has not been straightforward in recent years as the euro area economy was hit by several shocks: financial instability in the aftermath of the stock market  6  BIS Review 113/2007  collapse in 2000, exceptionally high economic and geopolitical uncertainty between 2001 and 2003, just to name a few. -  First of all, we have to identify and account for temporary “special factors” or “distortions” that may affect monetary developments and blur their information content. To some extent it is the aim of the methodology developed at the ECB which allows for periodic adjustments to measured monetary aggregates in order to account for portfolio shifts which impact the demand for money without any incidence on future inflation. This approach has met with great success in the period 2000-2004, allowing the Eurosystem to enter an easing cycle despite a rapid growth of M3. -  Second, and more permanently, it is necessary to disentangle, in monetary and credit evolutions, those which reflect structural and permanent changes from those which simply result from moves in the level of interest rates and the position in the economic cycle. -  Finally, we must be able to assess whether these developments result from money supply shocks, in which case they clearly entail some risks to price stability, or whether they are caused by money demand shocks that may raise the desired level of money balances without necessarily impacting aggregate demand.
With reference to the question above, I can tell you that there have been several reasons to begin with these three countries, but the main reason for which we compare today the present situation in Sweden, Turkey and Romania is due to the diligent and assiduous activity of the Ambassadors of these two countries in Bucharest. Then, I would like to salute their presence here today: His Excellency Mr. Anders Bengtcén, Ambassador of the Kingdom of Sweden, and His Excellency Mr. Ömür Şölendil, Ambassador of the Republic of Turkey and to particularly extend my gratitude to them and to all the persons involved in the materialization of this conference. I also thank Mr. Klas Eklund, Senior Economist at the Swedish Bank SEB and Adjunct Professor of Economics at the Lund University and Mr. Çağri Memişoğlu, Deputy General Manager at Garanti Bank Romania. There are, of course, historical links between the three countries. I do take this opportunity to highlight a few of them. With the Republic of Turkey one could go back to the proclamation of the new state as a republic, last century, and even more, centuries of ties between the Romanian Principalities and the Ottoman Empire. I also like to notice the connection between our two central banks. In the National Bank of Romania’s archives there are letters, exchanged between Governor Mitiță Constantinescu and Governor Salâhattin Çam, regarding the organization of a conference for the governors of the central banks in the Balkanic Coalition, in November 1937, in Ankara.

Over the period since 2011, we’ve witnessed a number of fundamental changes in the banking sector: The regulatory and supervisory framework has substantially raised requirements and expectations around capital, liquidity and risk management including, for example, more rigorous stress testing and capital surcharges for systemically important firms; The macro/finance environment of sluggish growth and low rates is putting pressure on bank business models. We are now in the eighth year of interest rates near zero in the U.S., which has hurt bank profits and affected risk-taking and business model choices. Ongoing technological innovations have altered both the opportunities and the threats facing financial institutions. Marketplace lending, distributed ledger, and robo-advisers promise great opportunity, while cyber threats, data privacy issues, and IT-related vendor management issues are legitimate concerns. With that idea in mind, I thought it would be useful to look at the last five years of this Forum’s program in order to identify key themes and common topics. I’d like to discuss three specific issues: systemic risk, governance, and regulatory reform. First, systemic risk has been a central topic of discussion at each Global Risk Forum over the past five years. Given the acute trauma of the financial crisis and its systemic nature, that is not surprising. I did find it interesting to see how the discussions of systemic risk have shifted over these five years. Initially, the discussions were primarily focused on defining systemic risk, including the underlying shocks and propagation channels.
At a minimum shouldn’t we aim for clarity on certain essential features, such as clarity on the rights of digital currency holders and the nature of assets that back a digital currency? Third, are there key activities that are cardinal to the functioning of digital currencies that require special attention from regulators? These may include actions to create, distribute, destroy, or and transfer digital currencies, and may also include key infrastructures, such as the technology that underpins a particular digital currency. To the extent that these critical activities are performed by actors that are not within a regulatory purview, should we fill this potential gap in oversight? Fourth, should we agree on a common approach across jurisdictions on least some aspects of a refined regulatory approach? Digital currencies can be designed to be used across borders. Key parties may be situated across the globe. If we are to reach ubiquity in regulation, or at least something approaching it, isn’t coordination the way to do so? The Financial Stability Board and the Basel Committee on Banking Supervision may address some of these questions, but it’s too soon to know what they will conclude. Last, should we consider other lenses through which to view these activities? Common sense dictates that we begin with an approach that considers protections for holders of digital currencies against unfair losses and the potential for certain digital currencies to present risk to financial stability. Are there other factors for us to consider? This is not easy stuff.

In Chairman Clayton’s view, “tokens and offerings that incorporate features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others continue to contain the hallmarks of a security under U.S. law.”22 In 2018, SEC staff published guidance to clarify that exchanges, investment vehicles, investment advisers, and dealers doing business in digital currencies that are digital asset securities would be subjected to securities laws.23 The guidance makes clear that digital currencies that function as securities will be subject to U.S. securities law, but where we draw this line may not always be clear. Products that blur the boundaries between money and securities are not new. Take, for instance, certificates of deposit. In 1982, the United States Supreme Court analyzed whether a certificate of deposit was a security for purposes of certain U.S. anti-fraud laws. The Court concluded that it was not. In doing so, the Court recognized that the most important distinction between a certificate of deposit issued by a bank—money—and other long-term debt was the comprehensive regulation of the banking system. 24 The Court’s conclusion was a sensible one more than a century after the “wildcat” banking era: Lawmakers could not  have intended to treat money in the banking system like it was something else because there was no need to do so. At least for now, the case does not appear to be as strong for digital currencies.
Although we don’t know yet whether the interest rate control exhibited to date with the new tools will continue at different settings of the target range, so far, things have gone as well as could have been expected. While other countries have operated a “floor” system before, no country with as complex a financial system as the United States, with its wide variety of bank and nonbank institutions, had ever attempted to raise interest rates with such a large supply of excess reserves. The success of the new tools so far has been important for instilling confidence that policymakers can control overnight interest rates at levels appropriate to meet their goals. It also means that, in future, the Federal Reserve will not have to face the same technical constraint that leads to a conflict between easing strains in broad money markets and controlling the policy rate whether it uses a floor or corridor system. This could make the Federal Reserve System more agile and better able in future circumstances to provide the elastic currency that has  6  The Term Deposit Facility was established to facilitate the conduct of monetary policy by providing a tool with which the Federal Reserve can manage the aggregate quantity of reserve balances held by depository institutions. An increase in term deposits outstanding drains reserve balances because funds to pay for them are removed from the accounts of participating institutions for the life of the term deposit.

Consequently, the need and the potential for mitigating the accumulation of systemic risk through regulation raises a number of questions with regard to the specific design of such regulation. Where do we start? How do we set priorities? Which principles should we abide by? The number of regulatory solutions that have been proposed are as numerous as the possible triggers of systemic crises. Often, individual solutions focus on one specific cause. In my opinion, there are so many possible causes of a systemic crisis that it is insufficient to focus on just one specific cause when drawing up possible regulatory solutions. It would be an illusion to think that the issue of systemic risk could be totally eliminated in the long-term with such an approach. Consequently, I believe it is important that the problem be approached in a systematic manner, and that comprehensible criteria for a list of measures that is likely to be effective be drawn up. Unless a roadmap is drawn up based on principles which guide us in the handling of the challenges we encounter in regulating systemic risk, there is a danger that decisions on the requisite measures will be made arbitrarily, that solutions lacking substance will be implemented or that nothing at all will be done. From the viewpoint of systemic stability, the result would be suboptimal. I will now talk about the criteria for assessing regulatory measures. Do the measures ensure market discipline?
The International Labour Organization (ILO) estimates that the said ratio will increase to 36 percent in the EU-15 by the year 2020. However, it is expected to be only 16 percent in Turkey by that time. According to another study by the United Nations, the EU would need an average of 6.1 million immigrants a year from 2015 to 2040 to maintain a ratio of three working-age adults for each retiree20. This I believe clearly implies a substantial contribution of Turkey to the EU on the demographic front. On the other hand, when it comes to labour force participation rate in the income per capita equation, Turkey lags behind the EU. One of the reasons of Turkey’s lagging behind is the low female participation rate in the labour force. Although the female participation rate in banking, legal and medical sectors are among the highest in Europe, the very low participation in rural areas cause the overall female participation rate to remain quite low. Another reason of low participation rates based on official figures is the high share of the unregistered economy. With the ongoing reform process and their expected effects on the structure of the labour market, the share of the unregistered economy would decrease and then the female participation rate would increase. This will imply further increase in the labour force participation rate in the Turkish labour market in the near future. Moving on to the employment side of the equation, I will mention some other important points regarding the Turkish labour market.

The Americans present things in a different way, but they too consider that price stability is a necessary condition for sustainable economic growth and job creation. Most Finance Ministers of the euro area countries and the European Commissioner for Economic and Monetary Affairs Joaquín Almunia want regular discussions with the ECB. Does that bother you? The Treaty already arranges for precisely that. I myself invite Jean-Claude Juncker and Joaquín Almunia twice a month to attend the meetings of the Governing Council at the ECB, and I am invited to attend the meetings of the Eurogroup. As I have always said, we have to apply the whole Treaty and nothing but the Treaty. Is there really no political pressure? Everyone in Europe and the rest of the world knows that the ECB is independent, even on the major financial markets of New York, Tokyo, Singapore and Hong Kong. There is no doubt about that. The ECB's credibility, which stands at a very high level, relies on its independence. It is that independence which allows us to solidly anchor inflation expectations. Our credibility is reinforced by the strong team spirit within the Eurosystem – including our excellent relationship with the Bundesbank and its President Axel Weber – and within the ECB's Executive Board, which features of course my colleague Jürgen Stark. But in the view of many consumers, the introduction of the euro actually pushed up inflation. At the level of the euro area, we have had inflation under control since the introduction of the euro.
Over the past several years, central banks in a number of countries, most notably in Canada, New Zealand, Australia, and the United Kingdom, have become increasingly convinced of the value of making a public commitment to an articulated and transparent policy standard, usually price stability. By setting clear policy objectives, the makers of monetary policy can eliminate much of the guesswork that central bank watchers must engage in to figure out what the central bank will do next. In so doing, they can help anchor inflation expectations over the long term, and thereby foster economic growth by ensuring a stable price environment. Many central banks are also increasingly coming to realize that much of the secrecy and cautious signaling that once characterized monetary policy decisions is, to some extent, counterproductive. In recent years, a number of central banks have taken measures to further open up their policy processes to the public. For example, prior to February 1994, changes in monetary policy in the United States were signaled to the market through open market operations. Since that time, the Federal Reserve has publicly announced changes in policy, typically following each meeting of the Federal Open Market Committee, or FOMC. Some policymakers had been concerned that this shift in procedure for communicating policy decisions might create additional market volatility. In fact, a recent study by some of my colleagues at the Federal Reserve Bank of St. Louis found just the opposite -- that announcing policy changes has not led to increased volatility in the federal funds rate.

Designating the policy rate to another role, like managing capital flows, would then confuse its primary role, especially when the risk of overheating together with a surge in capital inflows presents policymakers with a dilemma. Thus, our interest rate policy is not meant to deal directly with capital flows. Its side effect on capital flows is, however, not to be ignored. A fine balancing act is also needed when it comes to making interest rate decision given this dilemma. Perceivably, large interest rate differential may be a push factor for capital flows. However, given relatively small interest rate differentials between Thailand and major economies, we view that a gradual increase in the policy rate should not in and of itself be a cause of further inflows. In fact, we have empirically found that other factors such as growth differential and global risk appetite and liquidity are far more important than interest rate differential in explaining the recent surge of capital inflows to the country. On the other hand, given the pickup in global and domestic demand recovery, the risk of inflation has recently materialized and posed increasing threat to domestic price stability. With all these considerations, we deem that the recent interest rate normalization was necessary and was consistent under our inflation targeting, while its impact on further capital inflows should be minimal. So let me recap our challenge. Capital inflows are beneficial but they are not cost-free.