samchain/econo-pairs-v1 huggingface dataset:
A number of reports would still have needed to be written, but there would have been fewer than with the CPI, and above all they would have contained more meaningful explanations as to why inflation was outside the tolerance band than that households' interest expenditure in the CPI has been influenced by the Riksbank's altered repo rate. But once again – my aim here is mainly to contribute to the discussion. How an interval would be designed, and whether we should have one, is something that we will of course need to look further into. However, this is also a change I believe we could make without turning the monetary policy framework as it is inside out. The policy of inflation targeting does not need fixing, but can potentially be improved Let me now briefly summarise what I have said here today. One of my most important messages is: “if it’s not broken, don’t try to fix it!”. In our eagerness to bring about change, we can often do more damage than good. The aspect I believe is not broken and therefore does not need fixing is the policy of flexible inflation targeting, which in recent decades has developed into something of an international standard. This is not to say that I think it is without problems and cannot be improved. I have highlighted a couple of areas for which I believe there are grounds for consideration as far as Sweden is concerned.

However, using the CPI as a target variable has occasionally led to a number of pedagogical difficulties, not least in recent times. The reason for this is that household mortgage rates are included in the CPI. For example, when the Riksbank lowers the interest rate to bring inflation up, mortgage rates will fall. The short-term effect on the CPI therefore heads in the “wrong direction”, that is, the interest rate cut makes inflation fall further (see Figure 2). 5  See, for example, Skingsley (2015) and Flodén (2015). 6  When the inflation target is very low, say, 1 or 0 per cent, inflation will vary around that level. The nominal interest rate will also be lower on average for a lower target. The lower the interest rate is in normal conditions, the less scope there is to lower it before it hits its lower limit and can no longer be used to stimulate the economy. Another problem with permanently low inflation is that because it has proved to be difficult to lower nominal wages in practice, it can be difficult to adjust real wages between individuals at a company and between different sectors.
They might be an efficient means of forestalling “runs” on a country because they prevent pessimistic creditor expectations becoming self-fulfilling. More generally, whether capital is short-term or not, they could serve as an important incentive device. Having standstills as a credible backstop might in some circumstances increase incentives for debtors and creditors to seek voluntary resolutions to crisis sooner. Through both of these mechanisms, standstills might help resolve coordination failures among creditors, and hence forestall liquidity crisis. How do we ensure that standstills are efficient and equitable? The decision to default must be principally for the debtor. But the official sector can alter debtor incentives in important ways. One incentive device would be for the IMF to support standstills by agreeing to lend through their duration - what the IMF call “lending-into-arrears” - provided the standstill process, once entered into, is orderly and speedy. If standstills were a structured part of the IMF’s ex-ante crisis management framework, this would increase the chances of the standstill process itself proving ex-post efficient. There is also encouraging work being done by the private sector on drawing up best practice guidelines for sovereign debt work-outs. Some have argued that articulating a clearer role for standstills may perversely alter debtor incentives, by weakening the presumption that debtors should pay their debts in full and on time. But an orderly standstills process should support, not supplant, market forces and market disciplines.

First, it sets out a method for measuring the riskiness of assets. Second, it sets out a definition of capital. And third, it lays down a minimum ratio between capital, the numerator, and risk assets, the denominator, namely that capital should be at least 8% of risk-adjusted assets, with at least 4% of this consisting of Tier 1 capital. What changes will the new Accord make to these elements? BIS Review 70/2000  2  The work has to date been heavily focused on the first element of the framework, the method for measuring risk. There will be substantial changes here, with the aim of introducing more risk sensitivity to the existing crude measures and to widen the coverage of the measures beyond just credit risk and market risk which was addressed in the previous review of the Accord. The direction of the changes was laid out in the Committee’s consultative paper of June last year and I do not intend to go into a description here. On the second aspect, the Committee has stated that “With respect to the definition of regulatory capital, the Committee will maintain at this stage the existing rules set out in the 1988 Accord.” In other words, they will not at this stage be revising their definition of capital. Just to remind you, this definition of capital broadly divided capital into two tiers, of which Tier 1 mainly consists of shareholders equity and reserves and Tier 2 of certain subordinated debt instruments and an element of general provisions.
In the course of the very powerful upturn in the American economy, significant imbalances have built up at the same time. Among other things, the deficit in the current account has never been as great as it is now, and recently consumption has been increasing more rapidly than household incomes, which means that the savings ratio has been at a record low. Sooner or later these imbalances will need to be corrected. However, a discussion of how this might come about lies beyond the bounds of what I intended to talk about this evening. Are there traces of a “new economy” in Sweden? –  Since Sweden switched from a fixed exchange rate to an inflation target, monetary policy has been designed so as to reach this target and thereby create credibility. Monetary policy has succeeded in stabilising prices and at the present time long-term inflation expectations approach the Riksbank’s target of 2%. The changes in fiscal policy, which have entailed among other things a reform of budgetary procedures and the imposition of a ceiling on public expenditure, have had positive effects. This is manifested, for example, in the budget surpluses now being produced. Overall, we have made good progress towards achieving macroeconomic stability and therefore appear to fulfil the requirements for “good economic policy”, even if we have fulfilled these for a considerably shorter time than the USA. –  If, on the other hand, we look at structural factors, our problems were perhaps also worse from the start.

Households and companies may feel growing uncertainty both about developments in public revenues and expenditure, and about the formulation of monetary policy. This can be costly for the economy if it leads to a failure to carry out investments and to unnecessarily cautious decisions about the allocation of resources. To sum up, then, it becomes more costly to pursue an excessively expansive fiscal policy when monetary policy is guided by an explicit inflation target. A good policy mix makes for better conditions A better policy mix arises if the orientation of fiscal policy does not make for higher inflation risk premiums. It can avoid this if the orientation of fiscal policy appears to be sustainable in the long run. The surplus-target in the public finances is a good example of this. One means by which the confidence felt by the general public in economic policy can be monitored consists of inflation expectations, which should not diverge substantially from the Riksbank’s inflation target. When expectations of inflation diverge from this target in the longer term - whether upwards or downwards - it implies that monetary policy should be adjusted so as to steer expectations back towards the target. In this connection it is important to observe that a central bank whose inflation target commands high credibility often has more scope for acting than one that has little credibility. Assume, for example, that an economy where the credibility of the inflation target is high experiences a positive disturbance to the business cycle, leading to higher demand.
To be successful in today’s environment, a case-by-case approach needs to be market-based and adaptive to the particularities of the case at hand, as well as the global financial and economic context. This requires seeking, as far as possible, to work with the grain of a given situation, as a good artisan works with the grain of the wood. •  The approach needs to be market-based in part because that is what the game is all about. Today, the relevant considerations for crisis management relate more to markets and the problem of restoring market confidence, than to individual borrowers and creditors. To the extent that systemic concerns pertain, they more often relate to the risks of market disruption and over-adjustment than to potential domino effects caused by the failure or impairment of key institutions. •  Also, in today’s environment, a market-based approach is much more feasible. Financial recoveries can proceed more rapidly than in the past, because market participants generally have the ability—and many have little choice, because of the prevalence of mark-to-market accounting—to digest losses and move on. •  Working with the grain means recognizing the realities and limitations inherent in the current market structure and its functioning, and tailoring approaches accordingly. This involves acknowledging that attempts to impose solutions are unrealistic and potentially counterproductive. Instead it involves identifying ways to induce and encourage desired behaviors. I would also suggest that it means avoiding departures from normal market functioning whenever possible.

In particular, there is unease that the current approach to crisis management that has evolved out of the experiences in Mexico and Asia, notwithstanding its successes in some cases, entails solutions that: •  are potentially too costly, given the repeated reliance on large-scale financial support packages,  •  introduce adverse incentives, or moral hazard, and  •  are in themselves a source of uncertainty, and potentially of instability. 4  BIS Review 35/2001  But the alternatives look even more unpalatable in their implications. Notwithstanding considerable efforts at the public and private level to search for a better way, no magic bullet or formula has been found. Nor is one likely to be available. Experience and a reading of the historical record suggest that the seductive allure of grand solutions must be resisted. Cases differ greatly with respect to what is possible and desirable in terms of their implications for the interests of the public and private sectors. Moreover, if history is any guide, new developments in markets and practices quickly will render obsolete those measures that might seem well attuned to today’s circumstances. Then what is the right path? The solution is neither a single piece of financial engineering nor a compact between the official lenders and private creditors. Rather, it is a process incorporating a number of elements. Essentially, I would suggest that our current case-by-case approach to crisis management needs to evolve in ways that are market-based and adaptive, yet strategic, creative, and principled. Allow me to explain.
But the fact of the matter is that hardly any far-reaching reforms such as those being drawn up for credit markets have been proposed. Those interested in this viewpoint should read the latest speech by Fernando Restoy, the vice-chairman of the CNMV (Spanish National Securities Market Commission). In it he suggests certain areas in which the regulation of these markets could be improved. I’m going to adopt a less ambitious approach, focusing on describing market behaviour from the standpoint of a country such as ours, which in recent months has had to tackle a lack of investor confidence. What have we learned from the behaviour of the debt markets in this second phase of the crisis? Perhaps one of the key lessons is that markets are capable of identifying certain structural problems which, for whatever reason, may affect an economy’s solvency. And this is why markets can offer us economic policy pointers, of interest not only to them but also to us. Restoring health to public finances, reforms to boost growth and reduce unemployment, the restructuring of our banking systems so they are positioned to promote growth when credit demand picks up, etc. are all pieces of advice of benefit to us and which are worth following. Admittedly, some may say, markets issue warnings. But they usually do so belatedly. And this is true.

Muhammad bin Ibrahim: Migration to electronic payments Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the Payment System Forum 2013 “Migration to electronic payments”, Kuala Lumpur, 9 December 2013. *  *  *  It is my pleasure to welcome all of you to the Payment System Forum 2013 organized by Bank Negara Malaysia in collaboration with the Association of Banks in Malaysia (ABM) and the Association of Islamic Banking Institutions Malaysia (AIBIM). Overview of the payment system forum The objectives of the Payment System Forum are: •  Firstly, to build greater awareness amongst the business community on the wide range of electronic payment solutions available in the market; and  •  Secondly, to showcase experiences by businesses who have successfully migrated to, and are reaping the benefits of, electronic payments. Besides featuring presentations by banks and payment system professionals, and the sharing of experiences by businesses, I am pleased to announce that the Payment System Forum has also brought together 27 exhibitors. The exhibitors comprise representatives of banks, payment service providers and government agencies who will showcase their electronic payment solutions. Members of the business community are encouraged to visit the exhibition booths located outside of this Auditorium and sign-up to the latest offers. Enhancing Malaysia’s payment system infrastructure An efficient, reliable and secure payment system is critical to the stability of a country’s financial system, besides contributing to a country’s economic growth and competitive position.
Many of you will know that similar changes are taking place globally in AML/CFT; technology is providing practical solutions that are being applied in the real world. So what’s holding some of us back? Should we be afraid to experiment, to change the way we are doing AML work? 13. Let me be very clear about one thing: the risk for all of us is being complacent, of carrying on as we have been and not confronting the barriers that may stand between us and progress. We should not be afraid of trying out solutions that we feel will have genuine impact, even if some turn out not to deliver everything they promise. 14. With that in mind, our focus in these two days is to bring banks, regulators, technologists and other important players within our AML/CFT eco-system together to challenge our thinking, tackle pain points and discuss how we can move further ahead. Working collaboratively with like-minded people, we need to be ambitious because this is just as much about the human element, the impact of global financial crime, as it is about compliance with AML/CFT requirements. 15. We want to help enable change in banks because we recognise that, the better banks are able to apply a data driven, technology-enabled approach to AML work, the better we are able to discharge our role and achieve the HKMA’s statutory objectives. 16.

But, to take one example proposed by some, if a systemic stablecoin were required to be fully backed by deposits at the central bank, the implications for central bank balance sheets could be very similar to CBDC (Chart 4). This would also be the case if a ‘narrow bank’ chose to issue its own tokenised deposits and put all the proceeds into holdings at the central bank. Indeed, arguably any stablecoin with a credible link to fiat currency relies ultimately on settlement in central bank money. Of course, that does not mean that it is central bank money: even fully-backed, regulated stablecoins would remain the liabilities of private sector companies, and hence pose a range of risks not associated with CBDCs. 4  See Record of the Financial Policy Committee - 13 December 2019 (bankofengland.co.uk) and https://www.bankofengland.co.uk/financial-policy-summary-and-record/2022/march-2022 5 As proposed by the UK Treasury in O-S_Stablecoins_consultation_response.pdf (publishing.service.gov.uk). Bank of England  Page 7  3. Digital currencies may alter the transmission mechanism for monetary policy A key unknown in assessing the impact of digital currencies lies in judging the extent to which they may affect the flow, and pricing, of money and credit in the economy – which in turn has implications for the transmission mechanism for monetary policy. When a bank creates a new loan, it must retain or attract sufficient deposits to fund it.6 Digital currencies do not fund credit creation, but they do increase the competition for, and hence the cost of, deposits, with knock-on implications for the price and availability of credit.
In Europe, the situation is even more disheartening, given the fact the output of many peripheral countries and the UK and France is not yet back to pre-crisis levels. Again, when faced with criticisms that the central banks had gone beyond their remit and capabilities by taking up the role of supporting economic growth, mainstream thinking argued that, even though QE was not as potent as it was hoped, the economic conditions post-crisis would have been a lot worse without these unconventional monetary policies. At this juncture, based on the empirical evidence available so far, it is hard to judge one way or the other whether the unconventional monetary policies have worked, or will work. 15. However, it should not take long to find out the answer. This is the fifth year of QE in the US; and the main issue now is not to what extent QE has helped economic recovery since 2009, but what happens when the Fed actually exits from these accommodative policies. Of course we don’t know exactly when the Fed will exit, which entails three stages: tapering in the asset purchase programme, ending the purchase programme and eventually raising policy rates. Chairman Bernanke and some FOMC members have made it clear the timing of these stages is still uncertain as it will depend on the actual pace of economic recovery and improvement in the job market. The three stages have long been known to the markets and are nothing new.

Peter Praet: Interview with Bloomberg Interview by Mr Peter Praet, Member of the Executive Board of the European Central Bank, with Bloomberg, conducted by Mr Alessandro Speciale, Mr Jeff Black and Mr Jonathan Ferro, and published on 17 November 2015. *  *  *  How can we estimate the impact of the tragic events in Paris? I would like first of all to express our profound sympathy for the victims. It’s something that concerns everybody. Now when we talk about the possible impact on the economy, in general, we have to take a holistic view. It’s not so much the economy as the geopolitical environment that is impacted by these events. The impact remains to be seen, beyond the tragic events of last week. The main issue is the economic context of such events, which is a rather difficult one, we cannot deny that. It’s difficult because the euro area is still going through the aftermath of a balance sheet recession which started in 2008. As of today, the GDP of the euro area has still not recovered the level it had in 2008. That’s one thing, and the second thing is the management of immigration in Europe which creates some strains at the political level in different countries. How is the next round of staff economic forecasts shaping up? It’s too early to tell, of course, because the teams are working on it.
Williams, J. C. (2009), “Heeding Daedalus: Optimal Inflation and the Zero Lower Bound,” Brookings Papers on Economic Activity, No 2, pp. 1–37. Woodford, M. (2012) “Inflations Targeting and Financial Stability,” Economic Review 2012:1, Sveriges Riksbank. BIS central bankers’ speeches  19

In doing so, it has blurred the information content of many important variables or indicators relevant for the monetary policy maker, making monetary policy probably more complex in a context of increased uncertainty. Economic theory usually distinguishes between parameter and model uncertainty. In the presence of parameter uncertainty, i.e. when the policy maker is uncertain about the impact a policy instrument has on the economy, economic theory suggests that it is optimal to respond more cautiously than would be the case in the absence of uncertainty (this is the well-known Brainard conservative principle). By contrast, model uncertainty would require more active monetary policy, the idea being to insure oneself against particularly bad outcomes. I will leave it to your wisdom to guess in the present circumstances which of these two approaches would be preferable. Thank you for your attention. 5  Bordes, C., Clerc L. and Marimoutou V. (2007): “Is there a break in equilibrium velocity in the euro area?”, Banque de France, Notes d’Etudes et de Recherche n° 165, February. 4  BIS Review 103/2007