samchain/econo-pairs-v1 huggingface dataset:
The payments system we live with today is a complex mix of national and cross border systems originally designed for a safer, slower, less complex, more segmented financial world. While many improvements have been made to this system over time, it is important that we work to strengthen further the core infrastructure of the payments system. We also need to promote further evolution in the framework of supervision and regulation of our more complex and integrated global financial system. To paraphrase Bob Rubin in a different context, we need a framework for supervision and regulation that is “as modern as the markets” and that stays abreast of the pace of change and innovation. Perhaps the greatest challenge we face – in macroeconomic policy and in financial supervision - is a challenge of imagination: How do we best prepare for the low probability of an extreme event; a crisis not captured by past experience? How do we generate the will today to build a greater degree of insurance against a more uncertain future, particularly if the risk of adversity seems remote and the immediate future looks strong? We can take considerable reassurance from apparent moderation in overall macroeconomic volatility recently, and from the ease with which our system has handled recent stress. Prudent macroeconomic policy actions will increase the likelihood that these beneficial circumstances will continue. But we cannot know with confidence that the future will bring an enduring reduction in volatility and risk, and it would be imprudent to plan for such a world.

But we need to be careful to give the world confidence that we will conduct policy in a manner that will keep inflation expectations stable, at low levels. Second, to fiscal policy. We now face a substantial and unsustainable gap between our fiscal commitments and our resources, not just over the longer term with respect to Social Security and Medicare, but also with respect to budget projections for the coming ten years. Reducing this gap to a more sustainable level is vital. The decisions we make this year and over the next few years will be important to building more confidence that we have the will to act in a manner commensurate with the challenge. Achieving a substantial and sustainable reduction in our fiscal imbalance is important to decrease the risk of lower future growth in private investment which could dampen future productivity gains. Reducing our fiscal imbalances is also important for reducing the risk of adverse shocks to financial markets, and for maintaining the willingness of investors to invest in our economic future. Improving the credibility of our commitment to this fiscal challenge is the most important contribution we can make towards improving the chance of a more benign adjustment in our external imbalance. Third, the U.S. and the major economies have an important role to play in guiding further evolution in the international monetary system. Policy makers in Asia are well aware of the complications and costs involved in sustaining their current regimes. Many are moving toward more flexibility in their exchange rate regimes.
So as members of the Monetary Policy Committee we see it as more important than ever to make visits such as this so that we can talk to businesses face to face about the conditions they are experiencing on the ground. And every month our Agents in the regions, including the North West, give us a comprehensive report based on a large number of meetings with contacts in all sectors of the economy. 2009 is certain to be a difficult year for the UK and the global economy more generally. In the United Kingdom, we expect the sharpest fall in output for decades while on some measures, retail prices are likely to fall for the first time in almost half a century. We are not alone in our difficulties. Most of our major trading partners are also entering recession. A decade or more of remarkable macroeconomic stability; the Great Stability as economists called it, has come to a shuddering halt. These exceptional developments have led already to exceptional policy measures. Here in the United Kingdom, the government has set in train a fiscal expansion and has stepped in to support the banking system and lending. And earlier this month, we reduced official interest rates to an historic low of 1.5%. Similar measures have been taken overseas.

Data on new orders suggest that output is likely to fall sharply in the first quarter of 2009 as well as in Q4 of last year; further declines in output, if not at the same pace, are likely beyond then. The widening margin of spare capacity will act as a significant drag on costs and prices. Coupled with the deflationary impact of falling commodity prices and the cut in VAT, CPI inflation will continue falling over the year and may go well below the target rate of 2% despite the impact of sterling’s depreciation on import prices. With its inclusion of mortgage interest and other housing costs, the change in the RPI is expected to turn negative. The downturn itself has set powerful contractionary forces to work. Over-indebted households and companies will be pulling back on spending to try and pay down those debts. Although the recent falls in commodity prices will help to mitigate some of the downward pressure on household income, rising unemployment is not only constraining the spending of those losing or not finding jobs but is likely to boost precautionary saving across the household sector. And falling property prices are reducing activity in the housing market and the construction sector. With credit hard to come by, companies will find it difficult to fund new investment projects and few companies would be likely to invest large sums of money even if they could raise the funds. Commercial property prices are still falling rapidly.
Via this re-evaluation, negative rates loosen the perceived lower bound on the future distribution of short-term interest rates.4 Through this mechanism, negative interest rates have a marked impact on transmission, particularly in the euro area, as they push down the short and medium segment of the risk-free curve, which for the most part is the segment of the curve that determines the pricing of loans to non-financial corporations. It follows that control of this segment of the curve directly influences the level of lending rates. To illustrate the effectiveness of negative policy rates, ECB staff undertook a counterfactual exercise. They constructed the forward curve that would prevail in a scenario without either the negative interest rate policy or the forward guidance on the future path of the policy rates. As shown in Chart 2, the forward curve derived from the overnight index swap curve would be pinned at a higher level and would be distinctly steeper (the dashed blue line on the right) than the forward curve that we observe today (the red curve). 3 / 19  BIS central bankers' speeches  While this mainly serves as an illustration, as it is based on a number of assumptions and input parameters, it is indicative of the sort of tighter interest rate constellations that the euro area economy would face in the absence of this important policy tool. Our negative policy rate thus contributes substantially to providing monetary accommodation.

Finally, I am pleased to see many old friends of the HKMC supporting this new issue. I would like to thank the HSBC and Bank of China (Hong Kong) for underwriting a portion of the bond issue as well as placing the notes. Taking this opportunity, I would also like to thank the other placing banks, namely, Bank of America (Asia), Bank of Communications, Bank of East Asia, Chiyu Bank, CITIC Ka Wah Bank, Dah Sing Bank, DBS Bank, Hang Seng Bank, Fubon Bank (Hong Kong), Liu Chong Hing Bank, Nanyang Commercial Bank, Shanghai Commercial Bank, Standard Chartered Bank (Hong Kong), Wing Hang Bank and Wing Lung Bank, for their participation in this bond issue. With their extensive branch networks, and sophisticated telephone banking and the Internet banking facility, I look forward to another successful retail bond issue by the HKMC. Thank you. BIS Review 55/2005  1
At such a meeting, Malta's method of participation in ERM II, including the central parity rate, would be agreed. The way would then be open to join the mechanism. ERM II is characterised by a standard fluctuation band of +/- 15 per cent per cent. How relevant do you expect such a band to be for Malta? The system allows so much flexibility to ease the burden of transformation and structural reforms in those Member States which still have a relatively long way to go before they reach average EU levels of development and whose exchange rate may not yet, therefore, have reached an equilibrium level. The standard band represents the maximum exchange rate flexibility that can be availed of, depending on individual country circumstances. The existence of the bands should not, therefore, give rise to the expectation that the exchange rate will automatically fluctuate to this extent. In the case of Malta, for example, the economy has already achieved a relatively high level of real and nominal convergence and one would, therefore, expect that the daily rate should remain close to the central parity rate. Indeed, given the crucial role that exchange rate stability plays in the highly open Maltese economy, and the significant credibility attained by the Maltese lira under the existing basket peg, the authorities would like to preserve the important positive effects of the current arrangement, namely exchange rate stability, during ERM II. Will participation in ERM II entail a change in the level of the lira/euro exchange rate?

But they necessarily remain our best judgements and that, of course, leaves us vulnerable to assertions that we do not give sufficient weight to this or that factor. For what it is worth, at the time of our last forecast in November, our central projection – on the assumption of 6% interest rates – was for output growth of around 2½% over the next couple of years, with RPIX inflation remaining modestly below target this year but rising to 2½% in 2002. There was, of course, a good deal of uncertainty around that central projection, as there always is, for the reasons that I’ve tried to explain. But on the basis of that forecast the short answer to the question: can our steady economic progress be maintained over the next couple of years is a cautious “yes”. Since that forecast was completed things have gone in different directions. The prospect for external demand has somewhat weakened and so too has the oil price. There are mixed messages relating to  2  BIS Review 1/2001  tightness in the labour market, but earnings growth has so far remained reasonably well contained - as it must continue to do. On the domestic demand side, private consumption growth has remained stronger than we had supposed, while the growth in private investment has been weaker; meanwhile it is not clear that underlying public sector demand has – at least yet – picked up as rapidly as planned. The exchange rate has fallen, and so, too, have market interest rates.
Legislation in 1942 followed the then German model, particularly in making the Bank of Japan subservient to the Ministry of Finance; and after the war, there was American influence. 1 Rosa Maria Lastra, “Central Banking and Banking Regulation”, LSE Financial Markets Group,  1996, page 285. BIS Review 33/1997  -3-  In Figures 1 and 2, I have attempted to capture some of the distinctions between these leading central banks. (Because I am concentrating on distinctions, I have omitted common tasks - such as the issuance of banknotes and acting as banker for government - which are carried out by virtually all central banks.) Figure 1 shows the UK’s “scores” in five areas, while Figure 2 adds in, by way of comparison, the other G5 countries. Mapping the distinctions is not an easy task. For instance, though in Germany a government office is responsible for banking supervision, it is central bank staff who undertake much of the day-to-day work of monitoring individual banks. In France, supervision is the responsibility of the Commission Bancaire, but its secretariat is effectively part of the Banque de France, and the Governor chairs it. And in Japan, the central bank closely monitors the large banks, though the responsibility for supervision formally rests with the finance ministry.

(The UK is also unusual in that foreign exchange reserves, and any profits earned on them, belong to the government rather than to the central bank, although the Bank of England does of course have responsibility for managing the reserves). European integration 3 Maxwell Fry, Charles Goodhart and Alvero Almeida, Central Banking in developing countries,  Routledge, 1996, pages 97-99. BIS Review 33/1997  - 10 -  Looking at the European continent as a whole, it is interesting that, whereas the common history of central and eastern European countries over the last half century has produced broadly similar central banks in the different countries - at least in those which are contemplating accession to the European Union - the central banks of the existing member states are a disparate bunch. What remains to be seen is how far the advent of Economic and Monetary Union may induce more homogeneity and, indeed, reduce costs. It ought to be the case, after all, that one monetary policy is cheaper to administer than 15, or 25. The European Central Bank will appear a much more concentrated creature than the central banks we have been looking at. It will be responsible for the issuance of euro banknotes (known to the cognoscenti as bridging finance) but beyond this, in terms of the diagram I have been using, the ECB will be almost uni-dimensional (figure 7). According to the Maastricht Treaty its independence in setting interest rates will be unparalleled.
At the moment, the likelihood of an international financial crisis seems slight, and so does the likelihood of contagion effects to Sweden. There is a major difference between the banks that have been affected and the Swedish banks, which have high profitability, good liquidity and relatively large capital buffers. There is thus a high threshold for the problems to spread to Sweden. However, the financial system is closely interwoven at a global level, and there is every reason to be vigilant. The Riksbank monitors developments around the clock and we have a continuous dialogue about the situation with the other members of the Financial Stability Council. I shall return to developments on the financial markets later on. What I mainly want to talk about today is what has been most in focus in my first months on the job, namely monetary policy and inflation. The monetary policy decision in February was the first made by the Riksbank under the new Sveriges Riksbank Act. It may therefore be appropriate to begin with a few words about what the Act means for the Riksbank's monetary policy framework. After that I would like to give my view on inflation, the economic situation and monetary policy and also go into more detail on why it is so important that inflation comes all the way down and stays close to the Riksbank's target of 2 per cent. This may not be obvious to everyone – after all, it has been thirty years since we were last in a similar situation.

For an independent central bank to be perceived as legitimate in a democracy, it must be granted a clear mandate against which its performance can be assessed. However, the environment in which central banks operate is highly complex, and conditions can change rapidly. For this reason, mandates usually only sketch out a framework for central banks’ operations. This gives them much-needed flexibility in difficult situations. As a counterweight to its independence, a central bank has a duty to report on its actions, and the results. Indeed, the SNB has regularly provided detailed reports on matters relating to both monetary policy and financial stability. For example, it has explained the rationale behind deciding to discontinue the minimum exchange rate or introduce the negative interest rate, and how these measures have helped it to fulfil its mandate. As regards financial stability, the fact that macroprudential instruments often have powerful distribution effects speaks against handing over the entire responsibility for such instruments to the central bank. In contrast to monetary policy, these measures are sometimes targeted at specific sectors and groups, and thus also have fiscal implications. In Switzerland, macroprudential tasks have therefore been divided up between the government, the financial market supervisory authority and the SNB. The SNB is responsible for assessing the systemic importance of banks and financial market infrastructures, and plays a key role in the deployment of the countercyclical capital buffer. 1/1  BIS central bankers' speeches
The HKMA endorsed this consensus and issued a circular in June 2004 requesting banks to implement such security measure by June 2005 for high-risk retail Internet banking transactions (such as fund transfers to non-designated accounts). Two-factor authentication is a security measure recognised by the information security industry to combat Internet banking frauds. In addition to the normal login ID and password, a customer needs a second factor which is in his or her physical possession for additional identity verification. This second factor should be difficult to be stolen together with the customer’s login ID and password by fraudsters over the Internet. We believe that this is an effective way in tackling the latest Internet banking frauds such as fake bank websites, phishing e-mails and Trojan software. We understand that a number of banking supervisors in other financial markets are currently reviewing the implication of the latest Internet banking frauds and consulting their banks in relation to the adoption of two-factor authentication for Internet banking. Hong Kong is one of the first places to offer such security measure to bank customers. So far the implementation of two-factor authentication has been progressing satisfactorily. All banks offering high-risk retail Internet banking transactions will allow customers to apply for two-factor authentication from next month. Individual banks may offer different two-factor authentication methods to customers. Three common methods being adopted by banks in Hong Kong are digital certificate, security token-based one-time password and SMS-based one-time password.

To help you better understand the various methods, we will have a brief demonstration to illustrate these methods towards the end of the press conference. A series of promotional activities will be launched by the banking industry and individual banks from June 2005 onward to help customers to fully understand this security measure. Mr He will highlight the key features of the consumer education programme to you. Two-factor authentication strengthens the security controls of Internet banking and protects bank customers from Internet banking frauds. We are confident that with the joint efforts of the banking sector, bank customers, the Police and the HKMA, Internet banking will continue to flourish under a safe and sound environment in Hong Kong. BIS Review 44/2005  1
For instance, a nominal interest rate of 2% when expected inflation is 4% is much more expansionary than a nominal interest rate of 1% in a noninflationary setting. Given that the prices that determine inflation are partly rigid, the central bank may influence the real interest rate by adjusting nominal rates. Before the onset of the financial crisis, the central bankers’ handbook prescribed that if the economy was overheating and prices and wages were under upward pressure, the central bank should raise nominal interest rates above inflation expectations, thus tightening real rates and cooling down the economy. And vice versa, in a downturn, with falling prices and rising unemployment, it was thought that the central bank should cut nominal interest rates, thus reducing real rates and stimulating aggregate demand. 12  Conceptually, central bankers tried to keep real interest rates at a level — known as the “natural rate of interest” — that held GDP at its potential level and inflation stable at around its target.7 The natural rate of interest cannot be observed directly and can only be estimated, with some degree of uncertainty, using econometric techniques.8 According to available estimates, in recent decades the natural rate of interest appears to have progressively declined in the advanced economies. This is attributed to demographic factors, such as population ageing, or technological factors, such as lower productivity growth, which have changed the balance between the supply of savings and investment demand.

However, these values are far below the objective of price stability, which is defined as inflation of below, but close to, 2% in the medium term. The latest data, referring to the February estimate, for the euro area’s Harmonised Index of Consumer Prices show a year-on-year increase of 0.9%, the same figure as in January. The smaller drop in energy prices appears to have been offset, in the context of rising oil prices, by moderation in the core component (which excludes energy and food). The latter fell by 0.3 pp with respect to January to 1.1%. This outcome was determined in particular by temporary factors, such as the updated HICP weights, which since January are based on 2020 consumption patterns and which, although they will have a very marginal downward moderating effect on the year as a whole, will have a considerable impact on short-term inflation dynamics, making them difficult to interpret. Also, the pandemic containment measures appear to be changing the seasonal sales calendar in various countries. The situation I have just described is, therefore, one of a fragile, uneven and uncertain recovery in the euro area, where some of the downside risks for our short-term baseline scenario, which were identified just a few months ago, appear to be materialising. Against the current backdrop of uncertainty surrounding both the course of the pandemic and the speed of the vaccination campaigns, the best contribution that economic policy can make is to instil confidence and certainty.