samchain/econo-pairs-v1 huggingface dataset:
Given the trends away from physical cash, which cannot be used in an increasingly digital economy, and, potentially, towards new forms of tokenised money, a digital pound may be needed in future to fulfil the same function. Second, to ensure that there can be competition and innovation in the development of new  Page 9  functionalities using tokenised money. Given the network externalities around money and the likely cost of developing robust and risk managed tokenised money like stablecoins, it is possible that the development of digital settlement assets will converge on a few large players who will dominate and perhaps control innovation in payment services. We have seen a similar dynamic in the emergence of large internet platforms and marketplaces. A digital pound would provide a digital settlement asset available to a wide variety of private sector innovators and developers of payment services. The first concern is primarily for central banks, charged with ensuring the stability of money in the economy. The second is more of a concern for government. And of course there are other motivations, such as financial inclusion and resilience. I do not have the time to go into those in detail today, and, in any event, I do not wish to pre-empt the report on the next steps for this work that we and the Treasury intend to issue soon.

But I do want to emphasise that this work, and any future decision to introduce a digitally native pound should not be seen in the context of the status quo but rather in the context how current trends in money, payments and technology might evolve. And above all, in this, as in the work on regulation that I discussed earlier, our aim is to ensure that innovation can take place but within a framework in which risks are properly managed and which safeguards the sustainability of such innovation. The events of last week provide a compelling demonstration of why that matters. Thank you. The views expressed here are not necessarily those of the Bank of England, the Monetary Policy Committee or the Financial Policy Committee. I would like to thank Amy Lee, Teresa Cascino, Emma Butterworth, Katie Fortune, Bernat Gual-Ricart, Jenny Khosla, Grellan McGrath, Marilyne Tolle, Andrew Walters, Daniel Wright and Cormac Sullivan for their help in preparing the text. 1. ‘CPSS-IOSCO Review of Standards for Payment, Clearing and Settlement Systems. (2010)’ 2. The intuition here is generally quite familiar to people - you probably would think twice before buying fire insurance from a company being run out of the house next door for example. 3. Information for FTX customers | FCA 4. For an argument of this position see for example ‘Let Crypto Burn: Just say no to legitimacy-inferring regulation’ – FT Alphaville  (17.11.2022)  5.
We have had considerable benefit of households and companies, savers and investors, expecting a future rate of inflation that is on a reasonably low level and that their expectations are more or less consistent with one another. This has contributed to a completely different stability in price setting and wage formation over the past two decades than in the two decades prior to this, which has in turn contributed to inflation falling at the same time as we have had more stable and much higher real wages on average. That high and fluctuating inflation has disappeared as a disturbing factor should also have meant that financial decisions by households and companies have in general become simpler and better. But the key to this type of development is a joint anchoring of inflation expectations and a condition for this is that the inflation target of 2 per cent is perceived as credible. This is the problem that has marked the Riksbank's monetary policy in recent years. In January 2015, when I became a member of the Executive Board, we were in an unfortunate situation where inflation expectations in the longer run were losing their anchorage around the 2 per cent target. Monetary policy had been expansionary for a long time and further measures were needed to strengthen confidence in the target and to send very clear signals about the Riksbank’s intentions to bring inflation back to 2 per ce nt.

Against this background, it should be stressed that notable headway has been made in recent years in correcting some of the imbalances that had built up in the Spanish economy during the expansion prior to the crisis. Contributing factors here, in addition to the more temporary factors I have just mentioned, were certain structural reforms introduced during the crisis. Of note, first, is the intense deleveraging, carried out by households and non-financial corporations. Specifically, the corporate debt/GDP ratio has fallen by 42 percentage points (pp) from mid-2010, when it peaked, to 2018 Q3, meaning that this indicator now stands some 2 pp below the related figure for the euro area. In the case of households, the process has been slower (partly on account of the greater average life of the debt incurred), but also very significant. Over the same period, households’ debt ratio fell by 25 pp and its level is but 3 pp above the related euro area figure. Accordingly, in both cases, the deleveraging 3/7  process is at a very advanced stage, although some heterogeneity is evident. In particular, in the two sectors, certain agents continue to face situations of high financial pressure as a result of debt incurred. In parallel, the banking sector has been subject to an intense process of clean-up, recapitalisation and restructuring. And in the past four and a half years its basic parameters – such as asset quality and profitability and solvency levels – have improved notably.
Here in the UK, the Bank of England has adopted a new code for banks prescribing deferred variable performance payments, introducing the ability to reduce deferred bonuses when subsequent performance reveals them not to have been fully deserved, and paying bonuses in stock rather than cash. The deferral of bonuses awarded today allows them to be reduced before they are paid if evidence emerges of employee misconduct, error, failure of risk management or unexpectedly poor financial performance by the individual, their team or company. We are continuing to refine our approach. The Bank has just completed a consultation on a requirement for variable remuneration to be clawed back after payment and will consult later in the year on new standards for bonus deferrals. These provisions will apply not only to employees who are judged culpable directly, but also to others who could reasonably have been expected to identify and manage risks or misconduct but did not take steps to do so, and senior executives who could reasonably be deemed responsible by establishing the culture and strategy of the organisation. Where problems of performance or risk management are pervasive, bonuses should be adjusted for whole groups of employees. Of course, no compensation package can fully internalise the impact of individual actions on systemic risks, including on trust in the system. 19 To do so, market participants need to become true stakeholders. That is, they must recognise that their actions do not merely affect their personal rewards, but also the legitimacy of the system in which they operate.

19  6  More fundamentally, to think that compensation arrangements can ensure virtue is to miss the point entirely. Integrity cannot be legislated, and it certainly cannot be bought. It must come from within. See Carney (2013). BIS central bankers’ speeches  Fourth, building a sense of vocation and responsibility To build this sense of the systemic, business ultimately needs to be seen as a vocation, an activity with high ethical standards, which in turn conveys certain responsibilities. It can begin by asking the right questions. Who does finance serve? Itself? The real economy? Society? And to whom is the financier responsible? Herself? His business? Their system? The answers start from recognising that financial capitalism is not an end in itself, but a means to promote investment, innovation, growth and prosperity. Banking is fundamentally about intermediation – connecting borrowers and savers in the real economy. In the run-up to the crisis, banking became about banks not businesses; transactions not relations; counterparties not clients. New instruments originally designed to meet the credit and hedging needs of businesses quickly morphed into ways to amplify bets on financial outcomes. When bankers become detached from end-users, their only reward becomes money. Purely financial compensation ignores the non-pecuniary rewards to employment, such as the satisfaction from helping a client or colleague succeed. This reductionist view of the human condition is a poor foundation for ethical financial institutions needed to support long-term prosperity.
Chile)  2.8 -0.5 2.0 7.8 5.1 3.8 2.7  1.9 -0.4 1.1 8.1 6.3 4.3 3.3  1.9 -0.6 1.8 7.6 5.4 3.8 2.8  1.5 -0.5 1.7 7.5 5.4 3.8 2.7  2.5 1.3 1.3 8.2 6.4 4.7 3.7  2.7 1.0 1.0 7.5 5.9 4.1 3.1  2.6 1.0 1.0 7.4 5.8 3.9 2.9  2.7 2.1 0.8 7.5 6.3 4.1 3.7  LME copper price $ Brent oil price $  361 112  350 108  325 105  330 108  (levels) 340 101  305 98  305 108  290 97  Terms of trade  -4.1  -0.4  -3.5  0.1  -1.2  (annual change, percent) -5.2  -1.6  0.4  (f) Forecast. Sources: Central Bank of Chile based on a sample of investment banks, Consensus Forecasts, IMF and respective statistics bureaus. BIS central bankers’ speeches  9  Table 2 Domestic scenario (annual change, percent) 2012  2013 (f)  Mar. 13 Report  Jun.

8  BIS central bankers’ speeches  Figure 5 MPR and expectations (percent) 9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0 07  08  09  10  11  12  13  14  FBS, second half August 2013  EES, August 2013  Forward, September Report  MPR  15  Source: Central Bank of Chile. Table 1 International baseline scenario assumptions 2012  2013 (f) Mar. 13 Jun. 13 Report Report  GDP growth  Sep. 13 Report  2014 (f) Mar. 13 Jun. 13 Report Report  Sep. 13 Report  2015 (f) Sep. 13 Report  (annual change, percent)  Trading partners' GDP  3.4  3.6  3.4  3.3  4.2  3.7  3.6  4.0  World GDP at PPP  3.1  3.3  3.1  3.0  3.9  3.6  3.5  3.9  United States Eurozone Japan China India Rest of Asia (excl. Japan, China and India) Latin America (excl.
Trust and reputation are valuable competitive assets for financial institutions, and the desire to preserve those assets creates a powerful incentive for firms to manage conflicts and compliance with exceptional care. Supervision and regulation, and the enforcement response to management failures, should help strengthen the incentives for a stronger compliance infrastructure, but they cannot insulate firms from the consequences of reputational damage. Financial innovation has made it possible for the market to assign values to a broader range of financial activities. And this, combined with improved disclosure, has increased the potential power of market discipline. But the increased complexity that comes with innovation also creates challenges for investor and counterparty risk assessment. Although the overall quality of disclosure has improved in recent years, along with accounting and auditing processes that underpin the integrity of disclosure, the complexity of public financial reporting can make it very difficult to discern the true picture of a firm’s financial condition and its exposure to risk. Financial innovation has also made it possible for risk to migrate to - and for leverage to accumulate in - parts of the financial system with less strong, or simply different, supervision, capital requirements, or disclosure norms. Risk today, on balance, seems to be allocated more effectively to those institutions better able to manage and hold it, resulting in reduced risk to banks and to the financial system as a whole. However, limitations in the extent of public disclosure over institutions that hold large amounts of risk make it hard to develop a comprehensive picture.

Although the present economic environment looks quite favorable, these broader macroeconomic policy challenges make it even more important that we build on the substantial progress we have already made in strengthening risk management and the resilience of critical market infrastructure. Our success in meeting these challenges will help ensure that our financial system proves as resilient in the future as it has in the recent past. Thank you. 4  BIS Review 18/2004
This suggests that the industry is ripe for transformation to a new growth trajectory. The industry in essence has not delivered the required results. Jumping the “S-curve”: The need for positive feedback loops Successfully jumping the cusp of the “S-curve” is the only way to realise the aspiration of a deeper and more diverse insurance market. This calls for transformational change, driven and reinforced by positive drivers that will revitalise the industry. In the context of financial services today, these drivers focus on three “T”s – talent, technology and trust. These three factors can be harnessed to catapult the industry onto a path of new and stronger growth, or they can precipitate its decline over time. The industry must secure the former for its future expansion or else it will continue plateauing. Let me speak briefly on these three factors. Firstly, we must grow the talent we need to bring our insurance and takaful sector to the next level. As our economic structure evolves, we will need a deep pool of insurance and takaful professionals who can develop and support new solutions for managing risks. Unfortunately, talent shortage has been a persistent issue which, if not resolved, will not only hold back the industry from gaining new ground; it could lead to a further retrenchment of business growth. The industry needs to make further efforts to attract and nurture new talents.

New products and delivery channels that enhance outreach ultimately contribute towards expansion of a larger industry, and pool of customers for all participants in the insurance sector as a whole. In other words, it is not a zero sum game. Everybody will gain. Insurance agents and financial advisers will continue to provide a valuable service as households and businesses move up the income ladder and require more personalised advice on product options. It is important that this evolution is accompanied by a strong focus on raising standards of professional competence. Increasing the proportion of full time agents from the current 40% in the life sector and 30% in the general sector will be a vital component of this agenda. Equally important is ensuring that remuneration structures are aligned with the  BIS central bankers’ speeches  3  interests of consumers. The implementation of the balanced scorecard is an important step in this direction and should not be further delayed or diluted. There is no question that the potential for growth in the insurance and takaful industry is significant, with estimates placing the life and medical insurance protection gap alone in Malaysia at between RM550,000 and RM723,000 per household. Closing this protection gap is ultimately the moral responsibility of the industry. Microinsurance and microtakaful should be further developed to improve access to the underserved segment of society.
Both these guides to monetary policy reflect the historically low level of the equilibrium interest rate, or r*.9 As the Bank of England has long emphasised, a number of forces have depressed r* 10 – a view that has been validated by muted inflation over the past five years, despite a long period of historically low interest rates.11 As the Federal Reserve has observed, incoming data will provide important information about the evolution of the equilibrium rate.12  8 The PBOC have introduced several easing measures since April 2018 including cuts to the reserve requirement ratio, relaxing capital requirements for banks, and introducing credit support for private businesses. 9 The equilibrium interest rate is the level of the real policy rate that, if allowed to prevail for several years, would place economic activity at its potential and keep inflation low and stable. 10 A set of profound forces in the world economy, both secular and cyclical, has pushed down on the level of world real interest rates over the past 30 years by as much as 450 basis points - see Carney, M (2013), ‘The spirit of the season’ and Rachel, L and Smith, T (2015), ‘Secular drivers of the global real interest rate’, Bank of England Working Paper No. 571). The global equilibrium interest rate is likely to rise in coming years as some of the shorter-term factors pushing it down ease.

Like households, companies repaired their balance sheets following the crisis but unlike households, corporates then went back to the well. Relative to earnings, aggregate corporate debt in the US and UK is 16  Germany, France, Italy, Spain and the Netherlands. Household credit growth has been subdued, rising at an annual rate of less than 5% in each of the UK, US and euro area for the past decade, compared to rates of over 12% in the US and UK pre-crisis. 18 Highly indebted households are defined as those with debt servicing ratios of more than 40%. 17  10  All speeches are available online at www.bankofengland.co.uk/speeches  10  nearing pre-crisis peaks,19 and the distribution is worsening. In the UK, the share of highly levered companies is above pre-crisis levels. This is despite the very modest growth in investment. Globally, the average quality of corporate borrowers has deteriorated materially. The share of lower-rated debt in global corporate bond markets has increased significantly over the last 10 years, with BBB-rated bonds now about half of the market compared to just a quarter in 2007. The global leveraged lending market grew by 21% in 2018, faster than the rate of growth in US subprime mortgages in the run up to the crisis. At $ trillion, the stock of outstanding leveraged loans is double that of subprime in 2007. Leverage of the most indebted issuers has been increasing rapidly (Chart 8).
Sources: Statistics Sweden and the Riksbank  Of course, the correlation between the exchange rate and inflation is neither clear-cut nor straightforward. It depends, for example, on what has caused the exchange rate to fluctuate and how long it is expected to last. 6 But the fact that there is a correlation, insofar as a weakening of the exchange rate tends to result in rising inflation and vice versa, is obvious. Finally, it should be emphasised that monetary policy has of course been important in this development. From the ongoing debate, the impression can sometimes be that monetary policy does not play such a major role and that economic activity had been just as strong and inflation had been on target regardless of the policy conducted by the Riksbank. This is of course not the case. No causal relationship between wages and prices What then does the fact that inflation has risen but not wages actually signify? To begin with, and for the sake of completeness, we can also plot inflation against wage increases (see Figure 8). As we see, there is a tendency towards a positive correlation, at least periodically. See for instance the articles “The impact of the exchange rate on inflation” in the December 2016 Monetary Policy Report and “The exchange rate and inflation” in the April 2018 Monetary Policy Report. 6  13 [16]  Figure 8.

One is that what is normally referred to as “structural unemployment”, the unemployment level in a situation with normal activity in the economy, has fallen. 2 An overestimation of structural unemployment implies that there is more spare capacity in the economy than originally thought and it is thereby possible to stimulate demand more before wage growth kicks in. The fact that structural unemployment cannot be observed and also varies over time obviously makes it difficult to verify the hypothesis. Purely theoretically, the observation that wage increases are unexpectedly low is well in line with an overestimation of structural unemployment. Personally, I am a little sceptical  2 For example, Bell and Blanchflower (2018) think this is the case in the United Kingdom. 7 [16]  about this hypothesis as far as Sweden is concerned. I will come back to this later on. Another possible explanation for the low wage increases has to do with how inflation has developed after the financial crisis. For about six years, between 2011 and 2017, CPIF inflation was below and often well below target. It would not be particularly surprising if this has had a certain impact on what economic agents generally believe about inflation. It is true that inflation expectations, as they are measured in surveys, indicate that economic agents are now once again expecting inflation to remain on target in the long term. It also appears that employee organisations are increasingly seeing the inflation target as the basis for wage negotiations.
Inflation expectations over the medium to longer term continue to be firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term. Risks to the medium-term outlook for price developments are still broadly balanced but, as already indicated in January, could move to the upside. Currently, upside risks relate, in particular, to developments in energy and non-energy commodity prices. Furthermore, increases in indirect taxes and administered prices may be greater than currently expected, owing to the need for fiscal consolidation in the coming years, and price pressures in the production chain could rise further. On the downside, risks relate mainly to the impact on inflation of potentially lower growth, given the prevailing uncertainties. Turning to the monetary analysis, the annual growth rate of M3 declined to 1.7% in December 2010, from 2.1% in November. The annual growth rate of loans to the private sector also declined, albeit marginally, to 1.9% in December, after 2.0% in November. These declines partly reflect the reversal of special factors that operated in November and do not indicate a general weakening of monetary dynamics. Overall, however, broad money and loan growth is still low, confirming the assessment that the underlying pace of monetary expansion is moderate and that inflationary pressures over the medium to long term should remain contained. Looking at M3 components, annual M1 growth moderated further to stand at 4.4% in December 2010, reflecting the prevailing low remuneration of overnight deposits.

Such a commitment helps to strengthen confidence in the sustainability of public finances, reduces interest rate risk premia and improves the conditions for sound and sustainable growth. The implementation of credible policies is crucial in view of ongoing financial market pressures. Substantial and far-reaching structural reforms, complementing fiscal adjustment, should be urgently implemented to improve the prospects for higher sustainable growth and employment. Major reforms are particularly necessary in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. Increased product market competition and labour market flexibility would further support the necessary adjustment processes in the economy. All these structural reforms should be supported by the necessary improvements in the structure of the banking sector. Sound balance sheets, effective risk management and transparent, robust business models remain key to strengthening banks’ resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth and financial stability. We are now at your disposal for questions. BIS central bankers’ speeches  3