samchain/econo-pairs-v1 huggingface dataset:
Rumors abounded and the shorting of the Hong Kong dollar ahead of the weekend had become a weekly affair. In the first half of August, Hong Kong’s GDP growth for the first quarter was revised down to - 2.8%. Wall Street was down sharply. The yen fell to over 147 against the US dollar. On the approach of the long weekend in the middle of August, rumors of a devaluation of the RMB and/or the abandoning of the Hong Kong dollar’s link with the US dollar intensified, risking the creation of panic and a breakdown of confidence in the currency. Fact number five: there had been much selling pressure on the Hong Kong dollar in the first half of August. In accordance with the discipline of the currency board arrangements, the HKMA would have had to sell foreign reserves and buy Hong Kong dollars passively. This would have created a serious shortage in the Hong Kong dollar monetary base, thus sending interbank interest rates sharply higher and the stock market sharply lower. Given, however, the need to fund the budget deficit for this financial year, the opportunity was taken to switch some of our accumulated fiscal reserves held in foreign currencies back into Hong Kong dollars, leaving the monetary base and therefore interbank interest rates largely unchanged. The amount of Hong Kong dollars absorbed in this manner was large, exceeding the $ billion accumulated by the hedge funds.

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The unrest increased when it was revealed at the beginning of August that several financial institutions had made significant losses in connection with the US sub-prime market. The background to this was that the number of households experiencing difficulties in paying their mortgages had gradually increased. It was also difficult to assess to what extent the different market agents were exposed to the assets concerned – in which balance sheets the credit risks had ended up. This was the starting point for a more general reassessment of risk in the financial markets. To make a long story short, one can say that the general uncertainty led to an increasing demand for safe assets such as treasuries. Government bond rates have fallen, while rates on some other investments have been pushed up. This is probably because risk premiums have increased, after being very low for a long period of time. For instance, interest rates on loans and deposits between banks, interbank rates, have risen in many countries. For instance, the European Central Bank (ECB) and the Federal Reserve have seen a need to supply extra liquidity to slow down the rise in interbank rates. In the United Kingdom, the Bank of England has chosen to use its position as lender of last resort and to grant emergency liquidity assistance to a mortgage institution, Northern Rock. Emergency liquidity assistance is only given if the institution in question is assessed to be solvent but lacking sufficient liquid funds.

Switzerland is to be represented as an entirety, as a country open to the rest of the world and also as a meeting place for the world. The focus should not be on any individuals, inventions or achievements. Much rather, a basic attitude and its manifestations should be conveyed: Switzerland as a platform for dialogue, progress, humanitarian commitment, exciting experiences, creativity and the search for practical approaches to solutions within organisations. It is envisaged that these topics will be dealt with through the lens of economics, education, research and development, human rights, tourism and recreation, culture and, lastly, sports. Six topics have to be depicted, namely the activities of negotiating and exchanging, teaching and researching, helping and mediating, enjoying and relaxing, creating and designing, and deciding and implementing. Each of these topics will be assigned to one denomination of the new banknote series. The artistic representation must emphasise the topics rather than specific events or institutions. The traditional portrayal of personalities and the depiction of institutions and previous achievements should be dispensed with. The illustration of a university, for example, should not serve as a self-portrayal but could symbolise “progress”. As previously, the banknote series should form a “family” both with regard to content and design. In other words, although each banknote type must have its own characteristics, they must at the same time share sufficient features to be easily recognised as part of the new series.
Confidence may also improve more quickly, labour market deterioration may be less marked than currently expected and foreign demand may prove to be stronger than projected. On the downside, concerns remain relating to a stronger or more protracted negative feedback loop between the real economy and the still strained financial markets, renewed increases in oil and other commodity prices, the intensification of protectionist pressures and a disorderly correction of global imbalances. At the same time, the uncertainty surrounding this outlook remains higher than usual. With regard to price developments, annual HICP inflation was, according to Eurostat’s flash estimate, -0.2% in August , compared with -0.7% in July. This development is in line with previous expectations and reflects largely base effects resulting from the movements in global commodity prices a year ago. Owing to these base effects, annual inflation rates are projected to turn positive again within the coming months. Looking further ahead, inflation is expected to remain in positive territory, with overall price and cost developments staying subdued in the wake of ongoing sluggish demand in the euro area and elsewhere. In this context, it is important to re-emphasise that the indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term. This outlook is consistent with the September 2009 ECB staff projections for euro area inflation.

In addition, the relatively steep yield curve and the re-emergence of risk appetite, reflected particularly in the increase in stock prices over the past few months, may have dampened M3 growth to some extent. The overall flow of bank loans to the non-financial private sector remained subdued in July, with the differences across borrowing sectors becoming more marked. The flow of loans to households remained slightly positive, whereas in the case of non-financial corporations the flow of loans was negative again. The decline in loans to non-financial corporations continues to reflect mainly a strong net redemption of loans with a shorter maturity, while lending and borrowing at longer maturities remained positive. The fall in production and trade and the ongoing uncertainty in the business outlook are likely to have dampened firms’ demand for financing. Given the normal lag between a recovery in economic activity and a pick-up in  2  BIS Review 102/2009  loans to enterprises, further weak developments in loans to non-financial corporations in the coming months appear likely. At the same time, a gradual improvement in financing conditions, as lower market interest rates continue to be passed on in lower bank lending rates, should support the demand for credit in the period ahead. Against the background of highly demanding challenges, banks should take appropriate measures to strengthen further their capital bases and, where necessary, take full advantage of government measures to support the financial sector, particularly as regards recapitalisation.
Oil supply is traditionally slow to respond to changing prices – lead times for developing new fields are often around 3-7 years; and there are constraints on refinery capacity which may influence petrol prices. This is bound to have implications for the UK and for our European markets. Over the past decade, we have benefited from the downward pressure on imported goods prices exerted directly and indirectly by low cost production in Asia. Even if these trends continue, as in principle they could for some time, it is becoming increasingly clear that consumers may also need to contend with upward price pressures as world energy markets adapt to meet the needs of emerging Asia. The second key area of risk is global imbalances. These pose risks to foreign exchange markets and to world activity. Higher oil prices have intensified the scale of the problem. Yet we seem no closer to a denouement – indeed, as the US current deficit topped 6% of GDP, the dollar has tended to strengthen. What does this mean for the UK? I find it extremely hard to predict how sterling’s effective rate would be affected, were there to be a major re rating of the dollar. But a resolution of global imbalances which was accompanied by global recession would represent a major challenge for us – one to which, I suspect, we are now less well placed to respond than we were in 2001.

Finally, there is the puzzling matter of long term interest rates; last year, as central banks raised their policy rates, long term nominal and real rates fell to levels not seen in 40 years (though of course, US rates have now ticked up a bit recently). At the same time, risk premia of all kinds – bond spreads and term premia – have been sharply compressed. This state of affairs has caused a great deal of head scratching, and nowhere more than in central banks. Plausible explanations for low risk free real rates include the possibility that there is a global savings glut. It is also argued that there has been an investment ‘strike’ almost everywhere except China and maybe the US, perhaps reflecting a persistent overhang from the East Asian crisis or the last IT cycle. These are speculative explanations, and it is not easy to discriminate between them. However, they all seem to point to a more or less prolonged period of low rates. More worryingly, compressed risk premia of all kinds may reflect a belief that the world is no longer such a risky place, a belief fostered by the period of low inflation that many economies have enjoyed in the past decade. Hopefully, low inflation is here to stay.
Finally, we need structural adjustment policies to facilitate the reorientation of the U.S. economy away from the growth path of the previous business cycle – away from a reliance on asset price gains and easy credit to support consumption to a more durable long-term growth path with greater reliance on business investment and exports. BIS central bankers’ speeches  7  As I discussed in a previous speech, we can learn from the example of emerging nations that took the tough decisions necessary to emerge from past crises stronger, more competitive, and better positioned to take advantage of their comparative advantages in a fasttransforming world economy. This means not just plugging gaps of deficient demand, but also solving structural problems. Done right, such structural reforms would provide the foundations for long-term growth. But this would also support the recovery today. By boosting household and business confidence about the future and about their future income prospects, this would reduce the need and desire to further deleverage and increase precautionary savings. A structural adjustment program for the U.S. would include a number of elements beyond those already mentioned. These include labor market policies to retrain workers, investment in education and infrastructure, more efficient regulation, more efficient provision of healthcare services, and pro-growth trade and immigration reform. Steps that raise the productivity of U.S. workers lead to rising living standards. Also, they can help put the economy on a more sustainable fiscal path.

Interest rates on lending have remained very low, although in the latest rounds of the Eurosystem’s Bank Lending Survey, banks have reported a slight tightening of credit standards and expected them to possibly tighten further in the coming quarters  We must also continue to monitor developments in the exchange rate with regard to their possible implications for the medium-term inflation outlook. Although the upward pressure on the euro has eased in recent weeks, the euro has gradually appreciated since mid-2020. This has led to disinflation pressures at a time when the outlook for euro area inflation was already, as previously mentioned, historically low. As result, on the ECB Governing Council we have reiterated that we will continue to closely monitor developments in the exchange rate. 10  In relation to this framework, I must once again stress the importance of maintaining a high degree of monetary accommodation so that fiscal policy can, in turn, continue to be highly supportive of the euro area economy until a solid recovery is assured. This complementary monetary and fiscal policy action, which we have been insisting on since the start of this crisis and which is proving so important to alleviate its effects, is particularly relevant for countries which had less fiscal headroom at the start of the crisis. A tightening of financing conditions in such countries may prompt a restrictive fiscal policy reaction, as we saw at times during the previous crisis, which would seriously damage the recovery.
FT: What more should they be doing? CN: They should finish the work they have started and reach the goal of convincing all market players that this is done and the financial system is fully repaired. FT: But do you think doing too little is riskier than doing too much? CN: I would say there are two risks. Doing too little is a risk. Doing too much is a risk. If you trigger these Ricardian effects and actually trigger a reduction in the spending propensity of consumers, then of course, the result would be worse. FT: Would you put the emphasis on putting the regulating framework and only discuss other measures if there is time address other issues, as Axel Weber said yesterday? CN: The regulatory framework was identified at the summit in November by G20 heads as a very important thing to give back confidence to all market players and citizens in the financial system and the economy. The heads [of government and states] set out a road map on  BIS Review 29/2009  1  which we have since been working on in various working groups. This holds true. Of course there are things that can only be implemented over the next cycle because I hope there will be things that are designed to be counter-cyclical and to provide for cushions in good times and help the financial system and therefore the health of the economy in the low part of the cycle.

4/4  BIS - Central bankers' speeches
In regards to monetary policy, the global slowdown and heightened market uncertainty has increased Thailand’s external vulnerability prompting the Bank of Thailand to pay increased attention to the issue of external stability; particularly Balance of Payments and International Reserves. Healthy outlook in the country’s external financial position is always useful in maintaining investor’s confidence in times of greater uncertainty. The one time increase in the 14-day repurchase rate in June to 2.5 percent was partly intended to foster increased support to Thailand’s external stability in the face of a more challenging global environment. Indeed, since then distortions in the interest rate structure have been corrected, the negative differential between domestic and international interest rates has been reversed, capital outflows seem to have decelerated, the baht has become more stable, our real effective exchange rate continues to be competitive, the level of international reserves remains at a comfortable level, with reserves to short-term debt ratio as high as 140%, and inflationary pressures are well contained-headline inflation for the third quarter stood at 1.5 percent year on year, while core inflation remained well below target at 1.6 percent. With a firmer position on macroeconomic stability, the economy is expected to grow by around 1.3-1.8 percent this year. However, the economic recovery process remains fragile and is now being undermined by the weakening global environment as well as declining consumer confidence. Looking to the future: More to be done Going forward, I believe we are faced with significant challenges.

From 1 April onwards, all coins issued are 100% backed by US dollar. 17. Before China’s resumption of the exercise of sovereignty over Hong Kong, the PBOC and the HKMA reached the following consensus on licensing procedures and supervision for each other’s financial institutions: • Financial institutions based on the Mainland or Hong Kong that set up offices in each other’s territory shall be approved on the same basis as foreign financial institutions. • The mainland offices of Hong Kong-based financial institutions shall continue to enjoy the same preferential treatment in the Mainland as other foreign financial institutions. • Mainland financial institutions in Hong Kong shall be regulated by the HKMA in accordance with the same set of requirements; they shall not enjoy any privileges. 18. Following the handover, the HKMA has followed the Banking Ordinance and international standards in ensuring a high degree of professional and prudential supervision of authorized institutions. We are pleased that various international credit rating agencies have, in their recent reports, continued to commend Hong Kong’s banking system as being the safest and most stable in the region. The hardest financial turmoil in decades has not imperiled the stable foundation of our banking sector. During a process of market adjustments and recession, and under a harder operating environment, in which banks’ bad debts increase and profits drop, Hong Kong still boasts one of the world’s safest and most stable banking systems.
Weak banks have been recapitalised, bad loans reduced, and prudential regulations strengthened. Government finances have been put on a firmer footing, while balances of payments have moved into surplus. The result is a stronger and leaner Asia, more prepared for storms and more ready to seize opportunities. A major development in recent years is the emergence of China as an economic powerhouse. China’s growth and transformation have been phenomenal. Its buoyant exports, supported by low-cost manufacturing capabilities, and its huge domestic market, have created strong competition as well as immense opportunities for the rest of the world. China’s growth has driven the rapid increase in intra-regional trade, and fuelled economic expansion in the region, if not worldwide. China’s economy is showing signs of overheating, but its government is mindful of the danger and determined to act decisively to rein in credit and investment. This gives them a good chance of achieving a soft landing. Beyond this cyclical issue, China is set to continue growing strongly for the next decade or two. The other Asian giant, India, is becoming a dynamic and prosperous economy. Liberalisation policies and market reforms are freeing up the long moribund Indian economy. State-owned enterprises are being privatised. Ports, airports, telecommunications and financial services have been opened up to competition and foreign participation. As the dead hand of bureaucracy is withdrawn, growth is taking off, especially in the services sector.

Yet, MiCA stands out from other legislative initiatives in how it tackles stablecoins, of which it distinguishes two types: electronic money (e-money) tokens and asset-referenced tokens. E-money tokens purport to maintain a stable value by referencing to the value of one official currency. As such, they are considered electronic money. Their issuers are limited to credit institutions and electronic money institutions, which must comply with MiCA and the existing provisions in this field. Asset-referenced tokens, on the other hand, are a different kind of animal. These cryptoassets are not e-money tokens and purport to maintain a stable value by referencing to any other value or right, or a combination of both, including one or more official currencies. The composition and administration of the underlying reserve assets thus become key elements and, consequently, MiCA extensively addresses the conditions which should guide their management. As such, the reserve assets may only be invested in highly liquid financial instruments with minimal concentration, credit and market risk. Moreover, MiCA requires that the reserve be managed in such a manner that the liquidity risks associated with the permanent redemption rights of the holders are addressed, and that the risks associated with the assets referenced by the asset-referenced tokens are covered. Finally, in order to protect the interests of token-holders, the reserve will have to be operationally segregated from the issuer's estate. Despite the significant progress achieved, MiCA is unfortunately facing what I hope proves to be one last delay in its adoption process.