samchain/econo-pairs-v1 huggingface dataset:
The interest rate differential reflects not only lower average inflation in Switzerland compared to other countries, but also the country’s political stability and credible monetary policy. Investors are prepared to hold Swiss franc investments at lower yields. Chart 4 plots policy rates in Switzerland and in the euro area. Since the outbreak of the financial crisis, the interest rate differential has become ever narrower. When the negative interest rate was introduced in the euro area in June 2014, the interest rate differential even turned negative. Every subsequent monetary easing measure by the ECB added to the pressure on the Swiss franc, which at the time was subject to the minimum interest rate against the euro. Chart 5 shows the exchange rate of the euro against the Swiss franc (blue curve) and against the US dollar (red curve). In the second half of 2014, the value of the euro fell sharply against all major currencies. This meant that the minimum exchange rate was no longer sustainable. The volume of interventions that would have been required to defend the minimum exchange rate, even just temporarily, threatened to spiral out of control. This is why we adjusted our monetary policy in January 2015. The discontinuation of the minimum exchange rate caused the Swiss franc to appreciate, by an amount roughly equal to the gain in value that most other currencies had experienced against the euro in the preceding months.

Negative interest also puts a strain directly on banks, and indirectly on pension funds and life insurance companies, which worry about their profitability and about meeting their obligations. As I have mentioned, the SNB takes these concerns very seriously. Yet the challenges now facing pension funds are not caused first and foremost by monetary policy. Rather, their problems stem from the fact that pension funds have to achieve returns that are nominally fixed and were set when the equilibrium interest rate was higher. For banks, the negative interest rate undoubtedly represents a cost because they have to pay interest on their deposits at the SNB. However, the SNB grants a generous exemption threshold, which reduces the effective interest rate burden for the banking sector. These exemption thresholds give banks the freedom to decide whether – and to what extent – they should pass on negative interest to their customers. From a financial stability perspective, it is not negative interest per se which poses a challenge, but rather the low level of interest rates more generally. It is conceivable that low interest rates will lead investors to take greater risks. This can result in imbalances developing on the real estate and mortgage markets. In Switzerland, a variety of measures have been implemented since 2012 – the countercyclical capital buffer for instance – with the aim of reducing the associated financial stability repercussions. Since then, the pace of growth on the real estate and mortgage markets has slackened somewhat, although mortgages continue to grow faster than GDP.
Attempting to achieve this is important to ensure the inflation target continues to function as a benchmark for expectations in the economy, as it has done for twenty years now. However, this does not mean that the inflation targeting framework will be exactly the same as it is today forever. We are learning from previous experiences, and the global economy is constantly changing. We therefore welcome a discussion of ideas about the content and direction of the monetary policy. Naturally, we at the Riksbank listen to the arguments and analyses presented to us, and we try to contribute to this discussion with our own analysis. 16 I hope that my speech today has conveyed that I am not convinced by the arguments recently put forward which say that the Riksbank should abandon or lower the inflation target, or show even greater patience with low inflation. 16  10  The Riksdag is also contributing to this process by carrying out both its own and external assessments of the monetary policy. An external assessment is currently being conducted under the management of Marvin Goodfriend and Mervyn King (The Riksdag, 2014). Their conclusions will be presented at the beginning of next year. BIS central bankers’ speeches  References Andersson, Rune (2015), Det är därför minusräntan är så farligt. [Why the negative rate is so dangerous.] (In Swedish), Debate article, Dagens Industri, 12 August. Armelius, Hanna, Paolo Bonomolo, Magnus Lindskog, Julia Rådahl, Ingvar Strid and Karl Walentin, (2014), “Lower neutral interest in Sweden”, Economic Commentaries, no.

A discussion of these kinds of central considerations is typically missing from the criticism put forward. In the international discussion, the central banks’ policy rates are currently seen as quite blunt tools when it comes to curbing the rise in household debt and housing prices. The reason for this is that the interest rate cannot be targeted at the problem area in question, but has a much broader impact on the economy, such as companies’ investments and, via exchange rate effects, their export opportunities. 11 It does not come as much of a surprise therefore that no central bank has so far used the interest rate weapon to any great extent for this purpose. There is currently a relatively high level of agreement that macroprudential policy and well-designed financial regulation should be the first line of defence in preventing financial imbalances from accumulating. 12 The tolerance band was not a target range As I mentioned, one proposal has been that the tolerance band for the inflation target should be reintroduced, as it is assumed this would make it easier for the Riksbank to raise the repo  11  The broad impact of the interest rate is occasionally highlighted as an advantage, however. Unlike macroprudential policy measures which can sometimes be circumvented, “the interest rate gets into all the cracks” (Stein, 2013). 12  See IMF (2015). BIS central bankers’ speeches  7  rate. It could be helpful to remind ourselves here why there was previously a band surrounding the inflation target.
First I will review the harmful effects that the ongoing crisis will have on the future development of financial markets. Next I will discuss financial bubbles and booms in monetary policymaking, and the nature of the present crisis and possible consequences, to wrap up with the implications of the world growth scenario on the Chilean monetary policy. In the present turmoil, authorities have acted as lenders of last resort providing liquidity to ensure proper market functioning. Nonetheless, regarding financial bailouts two costs have to be balanced: averting a financial collapse with catastrophic consequences on the one hand, and the negative signals that come from said bailouts, on the other. Not only have the too-big-to-fail institutions been rescued, but also entities whose connections with the system are such that if they fail the whole financial system may be shaken. Troubled companies’ shareholders should not be bailed out, because it is important that risk evaluation is done more diligently in the future. Care must be taken in rescuing debtors of defaulted firms, because it may relax borrowing and repayment discipline, and punish good creditors by comparison. The tradeoff between these two objectives is clearly illustrated with the developments of the past week. Allowing the demise of Lehman Brothers was a sign that bailouts would not be up for grabs and even the downfall of a large investment bank would be accepted, but this may have accelerated the devastating chain of events that followed.

BIS Review 124/2008  7  References Auer, R. and A. M. Fischer (2008), “The Effect of Trade with Low-Income Countries on US Industry”, CEPR Discussion Paper 6819. Barajas, A., G. Dell’Ariccia and A. Levchenko (2008), “Credit Booms: The Good, the Bad and the Ugly”, CEPR Discussion Paper No. 6683. Bernanke, B. (2005), “The Global Saving Glut and the U.S. Current Account Deficit”, the Homer Jones Lecture, St. Louis, Missouri. Blanchard, O. and J. Galí (2007), “The Macroeconomic Effects of Oil Price Shocks: Why Are the 2000s So different from the 1970s?”, NBER Working Paper N°13368. Buiter, W. (2008), “Housing Wealth Isn't Wealth”, NBER Working Paper No. 14204. Caballero, J., E. Farhi, and P.O. Gourinchas (2008), “An Equilibrium Model of "Global Imbalances" and Low Interest Rates”, American Economic Review, 98:1, pp. 358-393. Allen, F. and E. Carletti (2008), “The Role of Liquidity in Financial Crises”, presented at Mantaining Stability in a Changing Financial System, organized by the Federal Reserve Bank of Kansas City, Jackson Hole, WY. De Gregorio, J. (2007), “Comments”, en Clarida, R. (ed.) G7 Current Account Imbalance, Sustainability and Adjustment, NBER and Chicago University Press, also economic Policy Document No. 115, 2005, Central Bank of Chile. De Gregorio, J., O. Landerretche and C. Neilson (2007), “Another Pass-Through Bites the Dust? Oil Prices and Inflation”, Economía, vol. 7, number 2, pp. 155-196. Freund, C. and F. Warnock (2007), “`Current Account Deficits in Industrial Countries: The Bigger They Are, The Harder They Fall?,” in Clarida, R. (ed.)
This is how it was before the Executive Board was established. Furthermore, as I have already remarked, there should be a monetary policy committee, with or without external members, that takes monetary policy decisions. In addition, if the Riksbank and Finansinspektionen are merged, there should also be a similar committee or board to take decisions of the type currently taken by Finansinspektionen, with the exception of decisions dealing with macrofinancial stability, which should be taken by the monetary policy committee.11 This would give us an arrangement similar to the model presently being launched by the Bank of England.12 Finland also has a similar model, with the financial supervisory authority as a part of the Bank of Finland, but with its own board and head. The Riksbank should have a sufficient foreign currency reserve One issue that we in the Executive Board have not agreed upon is the issue of the size of the foreign currency reserve. Previously, under the present foreign exchange policy with a floating exchange rate, the foreign currency reserve has primarily been intended to support  11  In addition, there should be a financial stability council for inter-agency cooperation and the exchange of information. As an alternative for strengthening macrofinancial stability, the Swedish Fiscal Policy Council has proposed such a council, and, in its recently concluded mission to Sweden, the IMF advocated a committee of this kind.

In particular, I have addressed ways in which the Riksbank could play a stronger role in this connection. Thank you! 15  14  My colleague Lars Nyberg has proposed that charges be introduced. BIS central bankers’ speeches
BIS Review 43/2006  5  The importance of monetary policy Monetary policy cannot affect long-term developments in the potential to produce and compete in the Swedish economy. Technological developments, investment levels, entrepreneurship and the ability of the labour market to adapt all determine the long-term growth rate and employment. The Riksbank can only affect the short-term cyclical variations around the trends in real economic developments (see Figure 11). How do these cyclical variations actually look? Diagram 11 – which should be regarded as an arithmetic example – provides a calculation of the trend unemployment. The difference between actual and trend unemployment is cyclical unemployment – which is higher in a recession and lower in a boom. The trend is determined by factors such as those I just mentioned – i.e. demography, technological developments, labour market policy, wage formation – while cyclical unemployment is determined by transient shocks and can be affected by monetary policy. 5 The diagram shows that – if we disregard the 1990s crisis – cyclical unemployment was 1 percentage point at most (corresponding to 45 000 persons). According to this example, cyclical unemployment varies by an average of 0.6 per cent. This is the margin that monetary policy can affect. However, it is not realistic to believe that this can become zero. We will always have to live with cyclical fluctuations. This is the whole point of stabilisation policy, as Keynes pointed out back in the 1930s; to even out fluctuations between booms and recessions.

There are always disturbances in the economy that cause inflation to deviate from the target level. If we were then to rapidly bring it back to 2 per cent, we would sometimes be forced to change the interest rate to unreasonable levels. This would also lead to undesirable fluctuations in production and employment. We therefore consider carefully what is a reasonable period of time within which to bring inflation back on target. This is what is known as flexible inflation targeting. At present, our forecasts also indicate a fairly rapid growth in employment – the number of redundancies is declining and the number of new vacancies reported is increasing. The number of persons employed increased by just over 70 000 between the last quarter of 2005 and the first quarter of 2006. Assuming that economic developments are as favourable as we and most other analysts predict, open unemployment will fall to around 4.6 per cent in 2008. The reason why this will not happen more quickly is because the supply of jobs will increase. So, all in all, prospects look much brighter now than they did one year ago. As inflation will probably be low for some time to come it would have been possible for the Riksbank to wait a few more months before increasing the interest rate, without jeopardising the inflation target. One can regard it as a choice between beginning to increase the interest rate relatively early in small steps, compared with waiting and then increasing in larger steps later on.
Investor protection or market integrity: As most of these crypto-assets are traded in unregulated platforms, usually via the internet, there are significant gaps in data collection and investor protection. Crypto-asset markets are therefore prone to (c) market manipulation, such as spoofing or flooding the market with fake orders to trick others into buying or selling. Moreover, the security or integrity of some of the trading platforms is also in doubt given the number of cyber incidents that have led to significant losses of the investors. 7. Having said all the above, I wish to conclude by making the following points: Crypto-assets are not money or currencies. So people wishing to invest or speculate (a) in crypto-assets should do so without harbouring the unrealistic expectation that they would one day become money or currencies that can be used as a means of exchange. Central banks must take extra care in making sure that the issuance of fiat (b) currencies is managed prudently in order not to diminish the purchasing power of the currencies or people’s confidence in them. Overseers of payment systems must take proactive steps to ensure that large value as well as small value retail payment systems, making use of commercial bank or central bank balances, are efficient, convenient and at low cost to the users. This is increasingly important as the public now expects and demands a faster and cheaper means of electronic payment or digital cash, as some would call it, for their day to (c) day transactions.

Expressed in USD, the average selling price was USD 351,40 per ounce, which was 17.2 USD higher than the average London fixing price between Mai 2000 and March 2005 (334,2 USD). The bulk of this excess  BIS Review 31/2005  3  performance (13.4 USD) resulted from the currency hedge of the expected USD proceeds (CHF 829mio). In the context of increasing gold prices, the profile of the yearly quotas, with their overweight at the end of period, contributed with 3.1 USD to the excess performance. The residual performance (0.7 USD) was related to the combined effects of the option programs, the spot sales and the sales through the BIS. SNB spot sales were realized at a price corresponding to the fixing plus 22 cents, whereas the average premium over the fixing for the cap sales was USD 1.9. IV. Lessons and conclusions  Last week, the SNB’s General Assembly approved the 2004 accounts of the SNB, thereby formalizing the disbursement of the CHF 21.1bn proceeds of the 1300 tonnes of gold. One third of that amount will go to the federal government and two thirds to the 26 cantons. Beginning on May 12, the SNB will disburse the money in ten weekly tranches. The disbursements will have no impact on the Swiss yield curve or the exchange rate as the necessary portfolio adjustments were made in the run up to the pay out.
It should be noted that although the economic outlook has deteriorated in recent years, the capitalization of the banking sector has not changed significantly. The system's capital adequacy ratio (CAR) stands at 13% since mid-2016, close to its historical average, but still below international standards. Stress tests show that the banks' capital gap has narrowed over the last few years. Thus, the fraction of banks with a CAR above 10% after a severe stress scenario would go from representing 85% of the system's assets in 2011-2014, to 50% in the last two years (figure 17). This is so because the banks that are most exposed to the economic slowdown have not adjusted their capital levels accordingly. In this context, the new General Banking Law would 8  contemplate a gradual convergence towards the Basel III framework, which has implicit higher capital requirements for the banking system. I would like to end this presentation with some thoughts. Concluding thoughts The two reports I just presented (i.e., the Monetary Policy Report and the Financial Stability Report) provide us with a full overview of the Chilean economy, that includes not only its most likely trajectory, but also the risks that might push it away from it. This illustrates the fact that monetary and financial policies are two important complements in Chile’s macroeconomic policy scheme.

William C Dudley: A bit better, but very far from best – US economic outlook and the challenges facing the Federal Reserve Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Fordham Corporate Law Center Lecture, New York, 5 October 2009. *  *  *  Thank you for having me here to speak today. It is a real pleasure to have this opportunity to discuss the economic outlook and the challenges that face the Federal Reserve in terms of monetary policy going forward. As always, my remarks reflect my own views and opinions and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. My assessment of where things stand today is mixed. On the positive side, the financial markets are performing better and the economy is now recovering. In fact, the improvement in financial conditions has caused usage of the Fed’s special liquidity facilities to fall considerably. Consistent with their design, these facilities have become relatively less attractive as market conditions have improved. Also, the Federal Reserve has begun to taper its rate of asset purchases. The Treasury purchase program will end this month and the agency MBS purchase program by the end of the first quarter of 2010. On the negative side, the unemployment rate is much too high and it seems likely that the recovery will be less robust than desired.
Various other countries have also adopted such a policy, and there are good arguments for claiming that the US Federal Reserve and the twelve members of the European Monetary Union also in effect follow such a policy, although their monetary policies also have other characteristics. Under this arrangement, specific targets are set and the Central Bank will keep the rate of inflation consistent with them within a specified timeframe. At the same time, the exchange rate is no longer used as an intermediate target and the fluctuation bands are abolished. However, it should be underlined that the exchange rate always exerts a strong price impact in an open economy. Monetary policy will therefore continue to take exchange rate developments into account. The Central Bank will implement the policy by producing an inflation forecast, and if this indicates that inflation is heading beyond the target, the Bank will be obliged to respond by applying its monetary instruments. Conditions for credible implementation of this policy are that the Central Bank must be granted full independence to apply its instruments in order to achieve the targets which have been set, monetary policy must be transparent and a smooth flow of information from the Central Bank to the general public and government authorities must be ensured. Furthermore, the new regime makes great demands of the Central Bank since inflation forecasts will be a crucial tool in the formation of monetary policy and it is vital for them to be firmly founded.

3 Yet amid this cautious optimism, we should acknowledge the continued unevenness in the strength of the expansion across regions in the global economy, as well as the persistence of policy uncertainties, which will weigh on firms’ long-term spending commitments. We are also confronted with the seeming rise of nationalism and growing populism which can have unpredictable effects on policies and growth. Against this backdrop, the uncertainty over trade policies and the future of the multilateral trading system is another area of concern of trading nations in Asia, as it comes at a time when important underlying structural shifts in global production and trade arrangements are already taking place. 4 In the financial sector, the advent of FinTech – driven by unprecedented mobility, connectivity and computing power – possesses the potential to fundamentally change the way intermediation takes place in the financial sector. 5 Indeed, it seems that continuous shifts and unrelenting changes are the defining characteristics of the future economic and financial landscape. Finding Opportunities amidst Uncertainty 6 While some degree of uncertainty is inevitable in this environment, there remain several broad trends which will unfold and present opportunities which Shanghai and Singapore institutions can leverage together. 1/3  BIS central bankers' speeches  7 First, China’s future direction in financial sector deepening and liberalisation is clear. President Xi Jinping announced at the G20 Summit last year that China would continue with efforts to make the RMB an international currency and further internationalize China’s financial sector.