samchain/econo-pairs-v1 huggingface dataset:
As described  10  In addition to improving competition in money markets, by conducting a daily operation with a known, fixed rate, the Fed can reduce uncertainty and absorb day-to-day variations in the supply of and demand for funds and collateral. An eligible lender that cannot earn the IOER rate and that has an unexpectedly large amount of funds to invest would be able to place the funds in the ON RRP facility rather than sell them in the market at an unusually low rate. This should reduce downward pressure on money market rates. 11  See the discussion in the minutes to the June and July FOMC meetings, http://www.federalreserve.gov/monetarypolicy/fomcminutes20140618.htm and http://federalreserve.gov/monetarypolicy/fomcminutes20140730.htm. 12  See the Survey of Primary Dealers and the Survey of Market Participants  BIS central bankers’ speeches  5  earlier, if the magnetic pull of IOER alone is insufficient, ON RRPs should help to form a floor on rates by providing a risk-free, overnight asset to a broad range of non-bank investors. As a result of these forces, the effective funds rate should generally print within the target range. That said, as the Chair noted during her September press conference, the Committee expects that the effective fed funds rate may vary within the target range and could even move outside of it on occasion. For example, the effective rate could move outside the target for a day or two around key financial reporting dates, such as quarter-ends, when some banks’ marginal balance sheet costs are particularly high.

It’s an argument which seems to say, we can’t value the firm, we can’t supervise it, and we can’t resolve it, so therefore let’s ensure it has a very large amount of equity financing, what I call the “Big Equity” argument. Honestly, it’s a nonsense. Large amounts of equity financing will not be available for such firms, so the best we can say is that this is a route to a radically different financial system, but in that world the risk goes somewhere else, and we shall still be worried. But this is not an argument against having non-risk based tools like the leverage ratio in the supervisors’ toolbox. They are very important, because to understand risks well, we need more than one view of the firm. And the leverage ratio is an important other view. But I want to emphasise that understanding risk is at the heart of supervision. BIS central bankers’ speeches  1  But this, of course, begs a very important question. Why did supervision go wrong in the period before the financial crisis, and what do we learn from that bad experience? Let me offer a number of thoughts on that. First, supervision was never given sufficient prominence and attention. It’s a very real skill. In my experience it demands not just high levels of technical skill but also interpersonal skills – to get very strong egos to change their thinking and actions – do things that they had not intended – to recognise the public interest.
Negative repo rate and bond purchases – to safeguard the credibility of the inflation target The fact that we now have introduced a negative interest rate and begun purchasing government bonds in Sweden is basically because we want to safeguard the role of the inflation target as nominal anchor. I mentioned earlier that monetary policy should give consideration to financial stability. But this is because financial stability is a necessary condition for attaining stable inflation in the long run. Conditions for being able to give  23  For further information, see “Low global interest rates”, article in the Monetary Policy Report, October 2014, Sveriges Riksbank. See also Hamilton, D., Harris, E. S., Hatzius, J. and West, K.D., “The Equilibrium Real Funds Rate: Past, Present, and Future”, University of California at San Diego Working Paper, 2015. BIS central bankers’ speeches  9  consideration to financial stability in monetary policy decisions are that inflation expectations are firmly anchored around the target and that inflation is fairly close to the target. With hindsight, we can see that inflation has been lower than the Riksbank and most other forecasters had expected. And this doesn’t only apply to Sweden; inflation is very low in most developed countries. What happened in Sweden last year, when inflation continued to be lower than expected at the same time as inflation expectations continued to fall, has thus rather dramatically changed the conditions for monetary policy.

Lars Heikensten: The integration of European banking - some regulatory challenges Speech by Mr Lars Heikensten, Governor of Sveriges Riksbank, at the seminar “The Integration of Financial Markets in Europe”, at the “Riksdagshuset” (Swedish Parliament), Stockholm, 21 April 2004. *  *  *  Thank you for inviting me to share my views on the integration of financial markets in Europe. We have just heard about the positive role capital markets might have in fostering economic growth and stability. We have also heard about how the regulatory process has been changed to promote the growth of an integrated European market for capital and securities. It is my hope that also the area of bank regulation will become part of this simplified process. It is certainly needed. Compared to the European securities market, the banking market is lagging many years behind in terms of integration. True, large companies may have access to foreign bank funding as well as to international debt and equity markets. When it comes to choosing your bank at the retail level, however, Swedish households and small and medium sized companies are left to a market which is to more than 90 percent dominated by Swedish banks. This situation is shared by most other EU countries. This is not a problem in itself. Swedish (or, in general, domestic) banks might very well be excellent. However, most of us tend to believe that cross-border integration, just as trade, is something good because it increases competition.
Krzysztof Rybiński: Single euro payments area from the point of view of the National Bank of Poland Address by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the Conference of the Polish Bank Association, Single Euro Payments Area, SEPA Organisational Structure in Poland – SEPA PL, Klub Bankowca (Bankers’ Club), Warsaw, 10 October 2006. *  *  *  Ladies and Gentlemen, Not all of you may know that the first bank that fulfilled many functions of a modern central bank was established in 1609. It was the Bank of Amsterdam. This bank issued its own money, managed its supply through open market operations and operated an RTGS system for large volume payments, although the meaning of the term “system” was slightly different four hundred years ago as compared to its current meaning 1 . Four hundred years ago, the RTGS system of the Bank of Amsterdam completed payments equal to the Netherlands’ GDP within three weeks. Today, many countries need less than a week for the same task. Bankers who managed floren’s agio in the seventeenth century could have never dreamt that four hundred years later we all would not only use a single European currency, but also implement standards of the Single Euro Payments Area, or SEPA. SEPA is to be real. It is part of a vision of united Europe where payment services are part of the single market.

Such views should take into consideration the interests of European and Polish consumers, the interests of Polish banks and the interests of the institutions comprising the infrastructure of the Polish payment system. Moreover, they should be coherent with the assumptions of the Lisbon Strategy, i.e. with the obligation to prepare the European Union economy for global challenges of the 21st century. A separate issue is to specify the pace of works in Poland as regards the implementation of SEPA standards and mechanisms that have already been worked out. According to the timetable approved by the EPC, Poland will have to comply with SEPA standards for euro transactions already in 2008. However, the lack of established date for Poland’s accession to the euro area means that Poland should have more time to implement solutions specific for SEPA, which would mean that necessary investments and changes could be spread over time. On the other hand, it seems that early involvement of Polish banks and infrastructural institutions in the approved solutions, e.g. through the implementation of mechanisms to lower costs in the sector, through increased efficiency and attractiveness of offered payment services and through strengthened security of financial transactions, could be extremely significant for increasing their own competitive edge on the overall European scale. Thus, it seems that the above dilemma over the appropriate pace of works should be thoroughly analysed by the banking community and infrastructural institutions.
Relaxing monetary policy too little might not be enough to break the upward pressure on the franc; relaxing monetary policy too much might lead to inflationary tendencies later on. The dilemma faced by the SNB would become even greater should the pressure on the Swiss franc to appreciate become more pronounced. In such a situation, we could react by pegging the exchange rate of the franc to the Euro. A peg could either be temporary or the Swiss authorities could decide to link the Swiss franc permanently to the new single currency through a fixed exchange rate. BIS Review 102/1997  -5-  A permanent peg could do away with the problem of an appreciating currency. It would, however, have major drawbacks: First, we would give up our relative autonomy in setting the course of monetary policy in Switzerland. Monetary conditions in our country would be determined entirely by the ECB. As a consequence, interest rates would rise close to the level prevailing in the EMU. Adapting to this new level of interest rates would pose major problems, especially for the real estate sector and for those sectors of the economy which rely on low interest rates to finance their capital-intensive production. Second, choosing the right parity in a system with fixed exchange rates is a very difficult task. A peg that would leave the Swiss franc overvalued would force the SNB to follow a monetary policy that is too restrictive.

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.
The June 2014 Eurosystem staff macroeconomic projections foresee a gradual increase in annual HICP inflation towards levels consistent with our definition of price stability. The pace of the increase is, however, slow. From 0.7% in 2014, inflation is expected to reach 1.1% in 2015 and, more uncertainly, 1.4% in 2016. All three figures have been revised downward in comparison with the March 2014 ECB staff macroeconomic projections and portray a situation distant from our objective of keeping inflation below but close to 2% in the medium-term. Inflation developments alone go a long way in motivating the combination of the measures announced by the Governing Council of the ECB on 5 June, to provide additional monetary policy accommodation and to support lending to the real economy. This package included further reductions in the key ECB interest rates, new longer-term refinancing operations targeted to stimulate credit creation, and preparatory work related to outright purchases of asset-backed securities. In addition, the ECB committed to an extension of the fixed-rate full allotment regime in tender procedures and decided to suspend the weekly fine-tuning operation sterilising the liquidity injected under the Securities Markets Programme. Over time these measures will contribute to a return of inflation to levels closer to 2% and safeguard the anchoring of medium to long-term inflation expectations. Nevertheless, with policy interest rates close to the effective lower bound and persistently timid growth prospects, there is a small, but non-insignificant risk that any additional adverse shock may open the door to a more protracted period of low inflation.

It fell by as much as 10 percentage points according to some estimates as the shocks from the crisis – deleveraging, the slowdown in world trade and the increase in uncertainty – pushed the natural rate very deep into negative territory. 6  Even using QE, it was difficult for monetary policy to follow the natural rate down to the level necessary to offset the shock and to close the output gap over the policy horizon. In other words, though it appeared exceptionally loose by historical standards, bank rate at ½% and a very large, £ programme of asset purchases, in retrospect, constituted a tight policy setting relative to what the economy needed to offset the shock. This is perhaps one reason why the UK recovery from the post crisis recession was slow by historic standards. It is generally acknowledged that the exceptional monetary policies implemented in the years immediately following the crisis were necessary. However, we are now eight years on and monetary policy still appears to many exceptionally loose by reference to historical rates of interest. Can this still be justified by reference to the natural rate? My own view is that it can. The natural rate, according to most estimates, has risen since 2012 from its deep post-crisis trough. It is now closer to the zero mark but it’s still likely to be negative.
This aspect also requires additional discussions. Now, I would like to proceed from current risks to the trends in the financial sector. Digitalisation might be an even more significant trend for finance than for the economy in general. Actually, the financial sector has been extensively applying advanced technologies for a long time already. An ecosystem, which is the most powerful business model, is exactly the result of a fusion of technologies and finance. Ecosystems have become so powerful that they now impact not only the development of and competition in the financial sector, but the real economy as well, considerably altering consumer behaviour, distribution channels, and work conditions for suppliers of non-financial services. Ecosystems provide great convenience to consumers, but on the other hand, they involve new challenges to regulation. It is essential not to hinder the development of ecosystems and simultaneously not to leave them unattended as there are risks to competition and a possibility of an even larger share of the state in the financial sector. Last week, we published a consultation paper on the regulation of ecosystems built around banks and are beginning to discuss it. The key thing we believe essential to do now is to control the risks of banks as the centres of emerging ecosystems. These risks are associated with increasing investments in nonfinancial assets, as not all these investments will probably turn out to be successful, and a part of them might depreciate, which might involve risks for creditors and depositors.

The potential costs of the support measures taken – capital injection, asset purchases, and guarantees of bank debt – in the G7 countries together with Australia, the Netherlands, Spain and Switzerland amount to about twenty per cent of GDP in these economies. 1 Moreover, the consequences of the crisis in terms of job, output and wealth losses, unprecedented increases in public spending and declines in public revenues are enormous. In the end, the citizens of the individual countries involved will have to foot the bill, one way or another. Arguably the most important intangible cost, however, is the fact that governments had to issue an explicit guarantee for systemically relevant institutions, in effect executing a partial government take over of the financial system. 2 Going forward, the world of finance will not be the same anymore. It should therefore come as no surprise that at the national and international level intensive efforts are underway to increase the resilience of the financial system. In recent months, these international reform efforts have included the presentation of many reports and recommendations. The Financial Stability Board (FSB) has published two comprehensive sets of recommendations to improve financial regulation. 3 Both have been endorsed by the G20 leaders. The public sector has not been alone in issuing  1  The outlays totalled eight per cent of GDP. These figures relate to government support measures introduced between September 2008 and June 2009. Source: “An assessment of financial sector rescue programmes”, BIS paper No 48, July 2009.
The MAS may accumulate or sell foreign assets, principally through its intervention operations in the foreign exchange market, to manage the float of the Singapore Dollar. Given Singapore’s positive net savings and persistent capital inflows, the nominal exchange rate often tends to appreciate more than what is required to keep inflation low and stable. The MAS accumulates foreign assets on average in the process of managing the Singapore Dollar within its policy band even as it sells foreign assets during times of stress on the Singapore Dollar. As the central bank, the MAS is the most conservative of the three investment entities, with the OFR invested mainly in safe and liquid assets. The OFR is sized to take into account its role as a buffer against a large and sudden outflow of capital that would undermine confidence in the exchange rate and Singapore’s macroeconomic stability. Traditional measures of reserve adequacy such as the number of months of imports the OFR could finance if all other sources of foreign financing dried up are less relevant for Singapore. A sizable and liquid OFR sends a clear signal that MAS has the wherewithal to resolutely defend the Singapore Dollar against speculative attacks. The GIC is a professional fund management company that manages the government’s foreign assets. These assets are separate from the OFR. The history of GIC begins with the MAS. Through the 1970s, Singapore ran persistent fiscal surpluses, received sizeable capital inflows, and had an elevated private savings rate.

A stable financial system features solid cushions that reduce the risk of problems spreading from one institution or market to other institutions or markets, or across borders. This risk constitutes a systemic risk, i.e. the risk of failure of the financial system. 1  BIS Review 124/1999  Disturbances that may develop into a systemic risk can be transmitted through financial institutions and financial markets. Stable institutions are solid institutions in which there is general confidence, whereas stable markets are markets where there are no “excessive” price variations. The banks are in a special position. They transform short-term deposits into long-term loans. They are responsible for payment settlements, and bank deposits serve as a means of payment. The volume of amounts outstanding in the interbank market is sizeable. As a result, problems in one bank may rapidly spread to other banks. The financial strength of banks is thus important for financial stability. The more capital a bank has the larger the losses it can absorb. The risk of contagion is thus reduced. A bank’s capital adequacy ratio is not the only variable that must be taken into account. A bank’s earnings provide an indication of the bank’s future financial position. Another important factor is the size of a bank’s loss provisions. Financial unrest spreads through payment and settlement systems. These systems can also be at the origin of risk. This occurs when banks credit customers before they have received settlement from the payer bank.
These ratios are many times what they were prior to the crisis (Chart 1). Recognising the feedback mechanisms that so  Sources: PRA regulatory returns, published accounts and Bank calculations. Note: Refers to major UK banks. For detailed definitions see notes to Chart B.1 in the November 2017 Financial Stability Report. amplified the severity of the crisis, there were also reforms designed to ensure the stability of the financial 3 4  Bean (2010) and Svensson (2015). Tucker (2011). 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  system as a whole. Extra capital is now required for institutions judged to be systemically important. Trading in many derivatives has been shifted to central clearing houses, and the associated collateral requirements tightened. And in several countries new authorities have been created to identify and mitigate system-wide risks, using what is known as “macro-prudential” policy. In the UK, macro-prudential policy is conducted by the Financial Policy Committee (FPC), housed within the Bank of England. Mirroring the set-up for the Bank’s Monetary Policy Committee (MPC), the FPC’s remit is set by the UK government but it is operationally independent of the executive and accountable directly to parliament. There are many instruments that might fall under the heading of macro-prudential policy, some of which – quantitative restrictions on lending, for example – have, in one form or another, been around for a long time (Elliot et al. (2013), Goodhart (2015)). Others, such as the counter-cyclical capital buffer, are newer.

The improvement we have seen in the economy over the last year and the abovetarget inflation we have experienced point to the need to begin the process of withdrawing the very substantial level of monetary stimulus which was put in place to counter the big financial shocks we experienced in late 2008 and early 2009. Such a policy should not be a threat to the recovery. In my view it is the key to sustaining the recovery. It is the right response to an economy which is growing but experiencing persistent above-target inflation. It would reduce the risk of a future shock to confidence if current above-target inflation does become more deeply embedded and interest rates then need to rise more sharply to combat it. And it would provide more confidence to the public and the business community that the MPC takes its remit seriously and is determined to ensure that this recovery is built on the solid foundation of price stability. BIS Review 134/2010  13