samchain/econo-pairs-v1 huggingface dataset:
4  See Kenneth Rogoff, Aasim M. Husain, Ashoka Mody, Robin Brooks and Nienke Oomes (2003): “Evolution and Performance of Exchange Rate Regimes”, IMF Working Paper 03/243; Eduardo Levy-Yeyati and Frederico Sturzenegger (2003): “To Float or to Fix: Evidence of the Impact of Exchange Rate Regimes on Growth”, American Economic Review, September 2003, pp. 1173-1193; Jeannine Bailliu, Robert Lafrance and Jean-Francois Perrault (2003): “Does Exchange Rate Policy Matter for Growth?”, International Finance 6:3, 2003, pp. 381-414. BIS Review 25/2004  5  In 2003, wage growth was considerably lower than in the previous five years. This provided a sounder basis for substantial reductions in Norwegian interest rates, resulting in a narrowing of the interest rate differential between Norway and other countries. The reduction has contributed to a weakening of the krone since December 2002. Thus, the real exchange rate has also weakened and business sector competitiveness has improved. However, the business sector is still feeling the effects of the loss in competitiveness that resulted from high wage increases. The internationally exposed sector has been scaled back. Those companies that are still operating may be in a better position to bear the high wage level. Nevertheless, costs may hamper activity and employment growth. For a long time, a stable exchange rate and the level of cost inflation among our trading partners provided an anchor for wage determination in Norway.

With a flexible exchange rate, a depreciation of the krone can also boost competitiveness. A flexible exchange rate can reduce fluctuations in employment and output. Empirical studies4 have also suggested that economic growth in industrialised countries with floating exchange rates has been as strong, and often stronger than in countries with a stable exchange rate. A precondition is that there is an economic policy framework so that inflation does not spin out of control. The real exchange rate The chart shows developments in two measures of the real krone exchange rate, i.e. consumer prices and relative labour costs in Norway relative to trading partners, measured in a common currency. The real exchange rate measured by relative wage costs in a common currency is an expression of the cost competitiveness of Norwegian companies. The real krone exchange rate as measured in terms of developments in relative prices is an expression of the Norwegian krone’s purchasing power. When the curves in the chart are above zero, the exchange rate is stronger and competitiveness weaker than the average level since 1970. The real exchange rate has fluctuated considerably over time and has deviated substantially from the average level over longer periods. Nevertheless, there has been a tendency for the real exchange rate to revert to this level. The points on the chart marked 2004 show the real exchange rate with wage and inflation projections for 2004 from Inflation Report 1/04. 1 2004.
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.

I would like to reiterate: •  that all European banks now have unlimited access to short-term liquidity, denominated in both euro and dollars, at a fixed rate;  •  that in all countries there are guarantee mechanisms enabling banks to ensure their financing and therefore to maintain their credit activities;  •  that banking systems are all being recapitalised at equivalent or higher levels than those prevailing before the crisis;  •  and lastly, that macroeconomic policy instruments are still available and could be used if economic activity were to decline durably. Moreover, for the past two months we have witnessed a reversal of the oil and food shock which strongly penalised economic growth during the first half of the year. Prices are now falling. If this trend continues, or even if it just stabilises, we can expect a gradual but marked  4  BIS Review 130/2008  slowdown in inflation. This should spontaneously give households extra purchasing power, contributing to a possible pick up in consumption. Together, these developments could stabilise the economy and allow a recovery in economic growth during 2009. We cannot, of course, predict a precise date or forecast the extent of this recovery. However, in my opinion, the prospect of a significant recovery in economic growth in 2009 is not being sufficiently taken into account, either by analysts or markets.
Jon Nicolaisen: Challenges for the payment system Speech by Mr Jon Nicolaisen, Deputy Governor of Norges Bank (Central Bank of Norway), at the annual conference on payments systems, hosted by Finance Norway, Oslo, 16 November 2017. * * * Please note that the text below may differ slightly from the actual presentation. Introduction The payment system is changing along a number of dimensions. These changes will not only have an impact on the way we make payments, they will most probably also contribute towards promoting and even accelerating the structural changes we have already seen in the financial industry. Today, I will briefly outline some of the most important challenges we are facing. We can perhaps call the sum effect of these challenges a change programme. For this programme to succeed, cooperation is necessary, both within the financial industry itself and between the business community and the authorities. The authorities and the financial industry largely have coinciding interests. We all share the same aim: that Norway will continue to have an efficient, robust and modern payment system. PSD2 and new payment service providers In recent years, the EU has issued a number of regulations which we must adhere to. The revised Payment Services Directive (PSD2) is particularly important. The purpose of PSD2, together with other regulation, is to secure cheap, modern and efficient payment services. PSD2 will enter into force in the EU in two months’ time. A consultation process has been initiated on proposals to implement the directive in Norwegian law.

Fast payment solutions The general public increasingly expects to be able to transfer funds on any day of the week and outside traditional opening hours. They also expect that payees will be credited quickly. In the future, there will have to be a good reason not to credit payees immediately, rather than with a delay, as is the case currently. This means that the payment system must meet new requirements. In Norway, there is a provisional instant payments solution, which an increasing number of banks are adopting. It is positive that the solution is becoming more widely used, but it has its drawbacks. For even though participating banks have entered into a loss-sharing agreement, banks still incur credit risk before payments are settled and the solution cannot be used for certain types of payments. Bits and Norges Bank are therefore jointly developing a better solution, called BRO in Norwegian “Betalinger med raskere oppgjør” (payments with faster settlement). BRO will be an efficient underlying infrastructure that is intended for all types of payments. The solution will be in place by the end of 2019. Norges Bank has initiated an in-house project to make the necessary adjustments to the settlement system. The Bank will do its share to enable banks to settle payments to each other without incurring credit risk. Customers will also be able to make instant payments in larger amounts. Customer services will also have to be modified.
In the United States, the largest productivity gains were not realized in the high-tech sector or from the IT investments itself but from the widespread use of information and communication technologies in traditional sectors like wholesale trade, financial intermediation and construction. The new technologies led to a complete reorganization of the value chain thereby enhancing total factor productivity, albeit with a lag. One cannot entirely exclude that this leverage effect will simply occur with a lag in Europe. After all, productivity growth is one of the least well understood phenomena in economics. While I do not want to exclude a productivity lag effect in favour of Europe, I suspect the story is a more complicated and a more challenging one. Structural conditions must be in place in Europe to allow maximum flexibility so that the full potential of the new technologies can be unleashed throughout the real economy. Conclusions The question of why the EU recovery is so slow implies a cyclical answer. The European track record of the last ten years, however, strongly suggests that there is a crucial structural dimension to the problem of weak European growth. The real challenge for the EU is to boost productivity growth and augment its potential growth rate. In the words of Mervyn King: “Raising productivity growth is the key to improving the prosperity of future generations.”4 It is therefore not particularly meaningful to analyze the growth weakness in Europe in purely cyclical terms.

Much as it did in 1994 in the U.S., the hard part lies ahead. Appendix Graph 1 Average Annual GDP Growth Rates 0  1  2  3  4  5  6  7  8  9 [%]  France Germany Ireland Italy Japan Korea Spain Switzerland United Kingdom United States  1970-1980 1980-1990 1990-1995 1995-2003  EU-13 (EU-15 excl. Austria and Luxembourg)  Source: OECD, Productivity Database, February 2005. 4  BIS Review 27/2005  Graph 2 Average Annual Growth Rate of Labour Input: EU-13 vs. U.S. [%] 1.5  1.0  0.5  0.0  -0.5 1990-1995  1995-2003  -1.0 EU-13 (EU-15 excluding Aust ria and Luxembourg)  Unit ed St at es  Source: OECD, Productivity Database, February 2005. Graph 3 Growth of Labour Productivity: EU vs. U.S. 4.0% EU - U.S.  U.S.  EU  3.0%  2.0%  1.0%  0.0%  -1.0%  -2.0%  -3.0% 95  96  97  98  99  00  01  02  03  04  05  Source: Datastream (OECD Economic Outlook). BIS Review 27/2005  5  Graph 4 Average Annual Growth Rates of Labour Productivity: EU vs. U.S.  [%] 4 3 2 1 0 EU-11 U.S. EU-11 minus U.S.  -1 -2 1970-80  1980-90  1990-95  1995-2000  2001-2003  Source: OECD, Productivity Database, February 2005. 6  BIS Review 27/2005
Because they are based on value-at-risk (VaR) calculations, and reflective of recent historical market conditions and correlations, they do not necessarily provide an effective measure of vulnerability to loss under more severe conditions of market stress and illiquidity. Stress tests must be designed and applied to compensate effectively for these limitations. Designing an appropriate set of stress tests that can capture the underlying pressure points and concentrations across a broad range of relationships with many different hedge funds is not easy, but it’s necessary. BIS Review 70/2004  3  And, the results of these tests need to inform judgments by the firm on the scale of exposure that it is willing to take to individual funds, groups of funds with similar strategies, and to hedge funds as a whole. Moreover, firms need to find ways to consider assessments of their stress-level exposures to hedge funds in tandem with stress tests of their own market risks to inform an overall judgment on the extent of capital market trading-related risks that the firm is taking on - especially in relation to low probability but high impact events. Third, and especially in light of the current competitive climate, we believe it is appropriate for dealers to have more exacting standards for the overall due diligence process, and to adjust credit terms on the basis of those higher standards. This is particularly important in those cases where there has been innovation in the manner in which credit is extended.

We need in particular to ensure that financial groups maintain information on the assets and liabilities of their legal entities; it is legal entities that  4  BIS Review 39/2009  go into resolution not business divisions. Lehmans shouts that out loud and clear. We need to ensure that banks, however grand they are, keep information that would facilitate rapid payout from deposit-protection schemes. We need banks to have contingency funding plans that are shared with regulators and central banks. We need, more ambitiously, to address Too Big To Fail. And we need to do just massively better at working together internationally. However much we do, I fear that the inescapable conclusion will be that we cannot rule out that very rarely the banking system will end up needing to be supported by some ultimate source of capital. If that is right, then society needs principles and policies for what might be called “Capital of Last Resort”, to sit alongside the Lender of Last Resort (LOLR) principles developed by and for central banks since the 19th century. Parts of the academic community have started to think about and advocate capital-insurance from the private sector, but over the long term we need to decide whether or not to have a policy for public sector capital insurance. At a high level, this faces exactly the challenges of central bank liquidity insurance. Its terms must not incentivise imprudent behaviour; and they must be time consistent.
All this is not enough, but you should not doubt France too much, even in this election year. The soundness of our political institutions and majority system represent lasting advantages. From its significantly more positive economic situation, Germany should also continue with reform: demographic change is likely to result in a decline in the working population – and the present inflow of refugees will not change this to any significant extent. This means that growth will slow in the long term. However, it is obviously not for me to advise measures for your country. At European level, our competitiveness will depend in particular on creating a large digital single market. I know that when the French speak of coordination in Europe, Germans sometimes suspect it to be a new trick to avoid reform. We must break out of this dead-end: we need both national reforms and European coordination. As Helmut Schmidt repeated frequently, we must build economic union as well as monetary union. But this does not in my view mean a “Union of Transfers”, which Germany quite legitimately refuses. The second growth lever: create in parallel what I call a “Financing and Investment Union” (FIU). Why? Because numerous businesses in Europe wish to invest and innovate but are unable to find appropriate financing. Still, the funds are by no means lacking: the euro area has a savings surplus of 350 billion euro, i.e. more than 3% of GDP. The FIU would facilitate the mobilisation of these abundant savings towards investment.

Both headline and core inflation are expected to edge up from last year despite the government’s attempts to contain inflation through administrative price controls. As such, the Bank of Thailand continues to gradually normalize the policy interest rate. At present, the policy rate is still deviated from the norm as the real policy rate remains negative at around –0.7 percent. Thus, interest rate normalization is another feature for the year 2011. Last Wednesday rate hike marked the 8th increase in the policy rate to 3.25 percent. Many have asked at what level of interest rate the Bank of Thailand’s target is. There is no definite answer to when the upward cycle of interest rate will end. Theoretically, a desirable interest rate path would be the path that leads economy to its potential output level without exerting excessive inflationary pressure on the economy. However, this state is subjected to change with economic developments. Thus, the Monetary Policy Committee’s decision must be based on their assessments of current economic development and outlook at each time of the meeting. Having said that, even if inflation has been curbed and the economy is on its normal trend growth, Thailand should not be complacent with economic normalcy. We need to look beyond normalcy which is the second part of my focus today. Moving the country forward will be more challenging than the past especially now when competition intensifies across the globe. Raising productivity will be the key objective of economic development in this regard.
During both phases of the programme, the US Federal Reserve undertook similar policies, and in recent months the ECB has injected large amounts of liquidity through its two longer-term refinancing operations. Equity prices rose in those jurisdictions too. Many of the companies in the equity price indices are international in focus and will be as exposed to developments abroad as in their home market. Moreover, there will have been other factors affecting equity prices, though during the second programme those other factors – slowing growth and the worsening euro-area situation – seem more likely to have depressed equity prices, rather than boosted them. Given that QE is supposed to operate by driving asset prices up, however, it would seem peculiar not to ascribe some part of the rise to our actions. Econometric studies4 carried out at the Bank imply that equity prices probably rose by about 20% as a result of the first phase of purchases. Assuming QE2 has proportionately the same effect as QE1, this implies an increase of around 10% as a result of the second phase of purchases. In other words, around half of the rise over the two episodes taken together appears attributable to QE. I should, however, emphasise the considerable uncertainty around these estimates. Let me now turn to the question of how this all affects a pension fund.

Such low real interest rates would normally lead to GDP and inflation abroad being unreasonably high. If reality and models differ, it is in my opinion reality that applies. In the current abnormal times, models and historical patterns do not work so well and should to a great extent be replaced by judgement. In my opinion, the forecasts for inflation and GDP abroad under the current abnormal circumstances are compatible with the low interest rates abroad. Monetary policy alternatives in October I would thus claim that the assumption in the main scenario that policy rates abroad will be high is unrealistic, and that it is more reasonable to assume a forecast for policy rates abroad that is compatible with market expectations of interest rates abroad. This also means assuming the prevailing actual long interest rates abroad with regard to the effect on the exchange rate. Figure 9 shows monetary policy alternatives, all under the assumption of a forecast for policy rates abroad in line with market expectations, that is, a forecast for policy rates abroad that follows the grey curve in Figure 7. Figure 9a shows different interest rate paths. The red broken curve, called “Main scenario repo rate path”, is the main scenario’s repo rate path. The blue broken curve, called “Riksbank’s reaction function”, shows the repo rate path arising from the Riksbank’s historical reaction function when policy rates abroad are compatible with the prevailing market expectations. The yellow broken curve, called “Market repo rate path”, shows the prevailing market expectations for the repo rate.
The second issue I would like to highlight is a emerging focus internationally on the sharing of information between the public and private sectors, which I believe offers great potential in enhancing the effectiveness of our AML efforts. Increasingly, law enforcement agencies, regulators and the financial sector are cooperating in ways that go beyond the filing of STRs and assistance with investigations although these, of course, remain essential. The focus is now more on two-way sharing of information on trends and typologies. 20. In Hong Kong, the Fraud and Money Laundering Intelligence Taskforce, led by the Police and with participation by the HKMA and the banking sector, was established as a pilot scheme in 2017. This is a public-private platform along similar lines to initiatives overseas, notably in Australia and Singapore, and while it is at an early stage, it has already shown concrete results, not least in the freezing or restraint of some $ million as well as 71 arrests over a 10-month period. I believe that this kind of cooperation shows real promise for sustainable 3/4  BIS central bankers' speeches  enhancement to the effectiveness of our framework, and the HKMA strongly supports its continuation and development. 21. The third issue is that we all need to keep under constant review whether we are getting the risk-based approach right. To implement AML efforts using an approach based on risk is the cornerstone of the FATF Recommendations. No one – neither institutions nor regulators – can be watching all risk areas all the time.

And these are all important elements in achieving our objectives. 3. And talking about objectives, this is definitely something worth reiterating and reinforcing at the start of this conference. This is because there’s always a danger, when we’re up to our neck in discussions around compliance, policy developments and technology, so much so that we may tend to forget what AML is all about basically. So let’s be clear about this upfront. ML and TF are crimes. And they facilitate other crimes - fraud, tax evasion, trafficking in drugs and people, and of course, terrorism. These crimes have economic and social effects that are far-reaching and often very nasty ones. They also generate financial flows – in fact significant financial flows - that divert resources away from economically and socially-productive uses. But more importantly, people get hurt. Victims, who are often from the more vulnerable segments in our societies, have their life savings stolen by fraudsters, our youth are damaged by drugs, or, in the case of terrorism, we see terrible acts of violence which kill and injure indiscriminately. Of course, investigating and prosecuting these crimes is the job of law enforcement agencies. But financial institutions do have a key role to play in helping to stop bad people doing bad things, and getting away with the proceeds from doing such bad things. This is the BASIC OBJECTIVE that one should remember next time when you are working on the details of CDD policy or calibrating the settings on your transaction monitoring and sanctions screening systems.