samchain/econo-pairs-v1 huggingface dataset:
Plainly, there has been a dramatic expansion in both the scale and scope of state liquidity insurance to the banking system. This pattern has been repeated in the majority of recent systemic banking crises. In a study of 42 systemic banking crises between 1970 and 2007, Laeven and Valencia find peak liquidity provision of almost 30% of total deposits. Drastic times clearly call for drastic measures. Harman’s description of last resort lending in 1825  6  Thorton (1802), Bagehot (1873). 7  Quoted in Bagehot (1873). 8  The sample ends before quantitative easing began, so base money growth is not affected by recent monetary policy actions in the UK. 9  Committee on the Global Financial System (2008). BIS Review 139/2009  3  would not look out of place today. Except, crucially, the decimal point would have changed place. Deposit insurance and capital insurance have a shorter history. Deposit insurance was first introduced in the US in 1934, to protect retail depositors scorched by the experience of the Great Depression. It failed to catch on internationally. By the early 1960s, the US was still the only developed country with an explicit deposit insurance scheme. Since then, there has been a steady rise in the number of adopting countries (Chart 6). By 2009, almost 100 countries globally had such a regime. Typically, the introduction and extension of deposit insurance regimes has been a response to banking crisis. This time’s crisis has been no exception. Australia and New Zealand have both introduced deposit guarantee schemes.

BIS Review 139/2009  15  Chart 5: Bank of England’s balance sheet as % of GDP 20  (a)  (c)  (b)  (f)  (e)  (d)  (g)  (h)  (i)  (k)  (j)  18 16 14 12 10 8 6 4 2  (a) Famine / End of railroad boom (1847) (b) Overextension of credit from 1855-1866 (c) Failure of Overend Gurney (1866) (d) Failure of City of Glasgow Bank (1878)  (e) Support for Barings (1890) (f) W W I (1914) (g) Currency and Bank Note Act (1928) (h) W orld W ar II (1941)  2004  1998  1992  1986  1980  1974  1968  1962  1956  1950  1944  1938  1932  1926  1920  1914  1908  1902  1896  1890  1884  1878  1872  1866  1860  1854  1848  1842  1836  1830  0  (i) Secondary Banking Crisis (1973) (j) Small Banks Crisis (1991) (k) Current Crisis (2007)  Source: Bank of England.
At the same time, a relatively low coverage of unemployment benefits means that the risk of poverty is comparably high. Rigid wage bargaining structures in the formal economy generate a highly compressed wage structure. Together with a large and inefficient public sector, the features of this model may render public finances increasingly unsustainable. The differences in the institutional features of the four models and the related growth and employment performance clearly show the relationship between values, institutions and economic outcomes. While, in the first place, there might be differences in the importance which the various European nations attach to fundamental values such as protection from poverty, safety of employment or income equality, the resulting domestic institutions and regulations make a crucial difference. For example, whether countries choose to protect workers from unemployment through restrictive employment protection legislation or through generous unemployment benefits has an impact on the overall level of employment: stricter employment protection legislation in the Continental and Mediterranean models appears to a have an adverse impact on employment creation, whereas generous unemployment benefits seem to play only a secondary role.5 Similarly, the probability of escaping poverty is greater in the Nordic and the Continental models, which is not only the result of a generous tax-benefit system, but also a consequence of higher human capital endowments (see Chart 8). 5  See Sapir (2005), as well as recent work at the OECD, e.g. van den Noord et al (2006).

Are there any other objectives than price stability and financial stability that may be suitable for a modern central bank? Many countries also have objectives for developments in the real economy written into the regulatory framework governing the central bank’s activities. For instance, in the US legislation it says that the Federal Reserve shall promote ”maximum employment”, while the British legislation says that the Bank of England shall support ”the economic policy of Her Majesty’s Government, including its objectives for growth and employment”. In Sweden there is no specific objective for real economic developments written into the law, but it is nevertheless considered to be understood that the  4  See, for instance, Oosterloo, S. and J. de Haan, (2003), ”A Survey of Institutional Frameworks for Financial Stability”, Occasional Studies Vol.I/No. 4, De Nederlandsche Bank, for an overview of how the task of promoting financial stability is dealt with in different central banks’ regulations and in practice. 4  BIS Review 52/2006  Riksbank – as an authority under the Riksdag, the Swedish parliament – shall support the objectives of economic policy with the aim of attaining sustainable growth and a high level of employment. Exactly how the objectives are worded thus varies considerably between countries, often depending on the fact that changes and modifications have gradually been made to regulations originally written much earlier. I dare to claim nevertheless that the essence of modern central banks’ wording of their objectives is the same.
4  BIS Review 17/2002  Largely as a result of these differences in the response of internal costs, Hong Kong managed to recoup all of the lost competitiveness (as measured by the real exchange rate), which had amounted to about 15%, but Argentina failed to achieve any lasting recovery; indeed, loss of competitiveness resumed, long before lost ground had been recovered. In view of this evident flexibility in Hong Kong, to what extent is it therefore correct to talk of the peg imposing some sort of rigidity on the economy? In the strict sense of the word, there is of course some rigidity, because, even with speedy and flexible adjustments of domestic costs, the correction of these which may be needed to offset a shock to the nominal exchange rate cannot be instantaneous. But if this rigidity is judged against how other economies might or do fare under fixed rates, Hong Kong emerges rather favourably. And, when compared with the alternative of floating, it is by no mean  BIS Review 17/2002  5  obvious that the peg delivers an inferior result for Hong Kong, given the possibility of volatility or overshooting under floating, especially for a small and highly exposed economy. Indeed, although it is always difficult to predict events in hypothetical circumstances, there is a concern that a more flexible regime would, rather than liberating monetary policy, actually pose more problems - especially in the short term as confidence would have to be re-established and might remain more brittle.

I now come to central banks’ foreign exchange market interventions. The exchange rate is an important variable for a small open economy like Switzerland, and thus for its monetary policy. Yet the SNB only rarely intervened directly in the market in previous decades, and 5  6 7  In addition to the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan have also introduced securities purchase programmes. With respect to Switzerland, the SNB’s purchases of Swiss franc bonds in 2009 and the large-scale repo transactions and foreign exchange swaps concluded in August 2011 may be termed quantitative easing. These are exchange-traded funds which replicate the TOPIX, Nikkei 225 or JPX-Nikkei 400 indices. Andrade et al. (2016), The ECB’s asset purchase programme: an early assessment, ECB Working Paper Series, No. 1856, September 2016. Page 4/8  then only with small amounts. Since March 2009, this has changed. It was at this point that the SNB began buying foreign currency on a large scale, in order to counter excessive upward pressure on the Swiss franc and prevent an undesirable tightening of monetary conditions in Switzerland. Alongside the negative interest rate, our willingness to intervene in the foreign exchange market as necessary constitutes a key element of our current monetary policy. To sum up my remarks so far: the sphere of influence of monetary policy on the financial markets has increased markedly with the broad application of unconventional measures.
However, the growing rate of the deficit has accelerated in the recent years, which has brought the negative net investment position of the largest economy in the world down to the vicinity of 30% of the GDP in 2005 and - according to all available forecasts - will continue to deteriorate it rapidly. The large US current account deficit is related to a negative balance of household savings and a sharp increase in real property prices, observed not only in the USA but in all Anglo-Saxon countries 6 in the recent years. Moreover, the US current account deficit is financed to a large extent from purchases of American debt securities by Asian central banks and - in the years 2004 and 2005 - to a growing increasing extent by public institutions managing foreign exchange reserves in oil-exporting countries. Foreign exchange reserves have increased substantially over the recent years. In China, for example, reserves of the People’s Bank of China increased from USD 166 billion in December 2000 to USD 819 billion in December 2005, and it is broadly expected that - in terms of size of its foreign exchange reserves - China will outdistance the to-date leader Japan, whose FX reserves reached USD 847 billion in December 2005, and that Chinese reserves will exceed USD 1 trillion in 2006 7 . As yet, there is still no definition of global imbalances that would be commonly accepted by most of economists.

The ADB, one of the sponsors of this forum, has played a vital role in nurturing growth and technical advances in Asian economies, and this role has in recent years both deepened, in the assistance it has been offering, and broadened in the geographical scope it has been covering. The ADB’ s joint sponsorship of this forum is one of many examples of the good work it is doing to address regional concerns. The co-sponsor of the forum, the Institute of International Finance (IIF), has, in two timely and important reports issued in March this year, argued strongly for private-sector, as well as publicsector, initiatives to address global financial crises. The co-sponsors have brought together a diverse and experienced forum of participants from private-sector and public-sector organisations, all of which have a large stake in ensuring that our regional and global financial systems work properly. The Hong Kong Experience As a regional and international financial centre, Hong Kong’s livelihood depends, perhaps to a greater extent than other economies, on the proper functioning of the international financial system. Our stake in this, arguably, is larger than other economies. This perhaps explains why we seem to have been quite forthcoming, in both our views and our actions, on issues affecting international monetary and financial stability. This unusual stance has caused some controversy, particularly when we intervened last summer in the stock and futures markets to deter market manipulation and correct market failure.
We appreciate your accepting of our request to share with the participants your knowledge and experience in this field of your Ministry’s work, which reflects your regulatory role towards preventing and/or detecting criminals offences, including money laundering. This is the first Workshop of its kind on this important topic, with emphasis on the role of the NPOs to detect and prevent the offences of money laundering or terrorist financing activities. Money laundering and the financing of terrorists are problems that should concern us all. They are not problems for only the Government and the law enforcement agencies to worry about. Rather, the public sector, the business community, the private sector and even ordinary citizens must play a role in combating these illegal activities. This Workshop is therefore opportune, as it covers one of the important sectors, other than financial institutions. I am referring of course to yourselves, the Non-profit Organization Sector. Non-profit organization sector There is a strong belief internationally that the non-profit organizations sector is one of the more vulnerable sectors, which criminals would try and exploit to conduct their illegal activities without attracting much attention. And, some of the reasons for such vulnerability relate to generally weak management structures and the lack of regulatory supervision over NPOs operation. Many jurisdictions  BIS Review 85/2009  1  have relatively low institutional capacity to monitor NPOs and detect their being used for money laundering and by terrorist. Some jurisdictions even indicate their unwillingness to impose a regulatory requirement on this Sector.

Indeed, such is further complicated by the fact that this invisible crime operates on the fringe of society, acting as a bridge between the underworld and the rest. Hence, we need a collaborative approach to work together to overcome such challenges that could damage the image and reputation of Samoa’s financial system, as well as the good standing of NPOs in the country. I now have the pleasure of officially opening this Anti-Money Laundering and Countering Terrorist Financing Activities Workshop. BIS Review 85/2009  5
If between-region income differences were much larger than within-region differences, we would expect the violin to be much longer on its left than on its right hand side. This is clearly not the case. The distributions of income within and between regions are in fact quite similar, at both the NUTS 2 and 3 levels. If anything, the distribution of outcomes within each region appears to be a little larger than the distribution between regions. If anything, income inequalities within a region appear to be larger than income inequalities between regions. Chart 9: ‘Violin’ plot of GVA per head  Sources: ONS and Bank calculations. Notes: Regional gross value-added (GVA, income approach) per head of population at current basic prices for 2017 for NUTS 1, 2 and 3, log-scale. Regional figures weighted by population. Dark bar shows interquartile range, dots show median and circle shows mean. 14  All speeches are available online at www.bankofengland.co.uk/speeches  14  Charts 10, 11 and 12 are violin plots for wages, health and well-being at higher resolutions. For health and well-being, differences within a region or local authority are materially larger than differences between regions. The standard deviation of health outcomes at the local authority level is almost 3 times larger than at the regional level. The difference between the highest and lowest life expectancy among UK local  authorities is 12 years, or 15% of the average expected lifespan. Chart 10: ‘Violin’ plot of wages  Sources: ONS Annual Survey of Hours and Earnings (ASHE) and Bank calculations.

This combination of measures has contributed to a stabilisation in the financial environment and an improvement in the transmission of our monetary policy. We need to carefully monitor further developments. It is also important to keep in mind that all our non-standard monetary policy measures are temporary in nature and that all the necessary tools are available to address upside risks to medium-term price stability in a firm and timely manner. Let me now explain our assessment in greater detail, starting with the economic analysis. Real GDP contracted by 0.3% in the euro area in the fourth quarter of 2011. Survey data confirm a stabilisation in economic activity at a low level in early 2012. We continue to expect the euro area economy to recover gradually in the course of the year. The outlook for economic activity should be supported by foreign demand, the very low short-term interest rates in the euro area, and all the measures taken to foster the proper functioning of the euro area economy. However, the remaining tensions in euro area sovereign debt markets and their impact on credit conditions, as well as the process of balance sheet adjustment in the financial and non-financial sectors and high unemployment in parts of the euro area, are expected to continue to dampen the underlying growth momentum. Downside risks to the economic outlook prevail. They relate in particular to a renewed intensification of tensions in euro area debt markets and their potential spillover to the euro area real economy.
The speculations against the krona finally led  BIS Review 52/2007  1  to the Riksbank, after using large interest rate increases to defend the krona, was forced to let the krona float in autumn 1992. We suffered a crisis and unemployment soared. An insight was gradually reached that a new economic policy approach was necessary. Earlier experiences and even research indicated that a healthy economic policy should be based on ”stable game rules” in the form of orderliness in public finances and low, stable inflation. These two principles became the mainstays of the new economic policy framework produced at the beginning of the 1990s. Fiscal policy was subjected to a requirement of long-term sustainability. Monetary policy was given the task of safeguarding price stability. Monetary policy aims at price stability One may sometimes gain the impression in the general debate that the economic policy change of regime in the early 1990s meant that monetary policy was given responsibility for stabilisation policy in a broader sense. Those who argue that this is the case think that the Riksbank should give greater consideration to developments in the labour market. I therefore think it is important to point out that the objective of monetary policy is low and stable inflation. This was made clear in the new Sveriges Riksbank Act that came into force in 1999. The act states that the objective is to maintain price stability but this is not specified in greater detail.

Jean-Pierre Roth: Recent Swiss experience in monetary policy strategy Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at a seminar on monetary theory and policy, University of Fribourg, Fribourg, 28 November 2007. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  One continually recurring element in the history of the Swiss National Bank has been the application of a clear set of rules that we refer to nowadays as ′strategy′. The SNB′s monetary policy strategy consists of three elements: a definition of price stability, an inflation forecast and a fluctuation range assigned to a short-term interest rate. Experiences with this strategy since its introduction in the year 2000 – judged in terms of both price stability and cyclical developments in the economy – have demonstrated its value. Nevertheless, certain aspects of the strategy have been questioned by academics and by central bankers. These include inflation forecasting under the assumption of a fixed Libor, the choice of the reference interest rate, the role of monetary aggregates and exchange rates in the SNB′s models, and the decision not to publish the minutes of Governing Board meetings. However, these deliberately selected elements in fact serve to reinforce the legitimacy of the SNB′s strategy. BIS Review 139/2007  1
Except for the fact that output is not forward-looking – I will come to this in a minute – this is a standard New Keynesian IS curve where the output gap is based on estimates by the European Commission, the short-term interest rate is the three-month Euribor, expected inflation is taken from the ECB’s Survey of Professional Forecasters (SPF) and the natural rate is taken from the euro area estimates by Holston, Laubach and Williams (2016). Clearly, the real interest rate gap is not statistically significant at any reasonable confidence level. This finding holds true if we use actual ex post inflation – specification 2 – instead of expected inflation, or if we include the real interest rate per se, and not as a deviation from the natural rate, as is sometimes suggested, as in specification 3. The financial crisis and the use of non-standard policy measures do not seem to explain the puzzle either: the real interest rate remains insignificant if we restrict the sample to the period before the outbreak of the crisis, specification 4, or if we take the euro area shadow rate as estimated by Wu and Xia (2016) – specification 5 – a measure that attempts to mimic the joint 9 / 14  BIS central bankers' speeches  effects of unconventional policy measures at the zero-lower bound. What I would argue, however, is that the short-term interest rate is not the appropriate measure to use in an empirical IS curve.

Even if residents choose to move into foreign assets, the liquidity in the domestic currency will not disappear and will ultimately be deposited with the domestic banking system. In the end, and as a whole, the banking system is trapped. The question then is how banks will react and with what consequences for the economy. They could impose negative rates on depositors, but that is not always easy, and in the case of households, it could have a negative impact on the wealth sentiment. They could increase their credit margins, with the effect of tightening credit conditions, although that may also be difficult if the demand for credit is weak. Or the banking system could simply become weaker, with the paradox that the more a bank is conservative and well-managed, extending high-quality loans and covering them by deposits with no short-term market funding, the more it will be penalized! A second, different challenge, relates to the rigidities in the economy. Price rigidity is higher in Europe than in the United States as the goods and labour markets are less “contestable” and outsiders find it harder to compete. And in the labour market, there is a strong downward rigidity on wages. Structural rigidities have complex effects on inflation and monetary dynamics. In the very short run, price rigidity may somehow protect the economy against deflationary shocks and, more generally, increase the output response to a monetary stimulus.