samchain/econo-pairs-v1 huggingface dataset:
Money issued by central banks (monetary base) in Sweden, the euro area, USA, UK and Japan Per cent of GDP 140 120 100 80 60 40 20 0  01  05  09  The Riksbank ECB Federal Reserve  13  17  Bank of England Bank of Japan  Note. Monetary base here refers to the banknotes and coins held by the general public and banks’ assets with the central banks. Sources: The Bank of England, the IMF and Macrobond  35 [35]

See the following references: Bauer, M. and C. Neely (2013): “International Channels of the Fed’s Unconventional Monetary Policy”, Federal Reserve Bank of San Francisco, Working Paper 2012-12. Glick, R. and S. Leduc (2013): “The Effects of Unconventional and Conventional U.S. Monetary Policy on the Dollar”, Federal Reserve Bank of San Francisco, Working Paper 2013-11. Neely, C. (2010): “The Large-Scale Asset Purchases Had Large International Effects”, Federal Reserve Bank of St. Louis, Working Paper 2010-018C. BIS central bankers’ speeches  1  because asset purchase programs are expected to be scaled back, thereby unleashing a new round of currency tensions. Against the background of currency fluctuations and weak global demand, the problem of global imbalances still lingers. In the debate on global adjustment, there have also been calls for countries with a current account surplus to let their currencies appreciate. For some observers, this includes Switzerland. Our country’s large current account surplus – so the argument goes – is a sure sign that the Swiss franc is too weak. The SNB should therefore abolish the minimum exchange rate and allow the Swiss franc to appreciate further. This in turn would allow the current account surplus to diminish, thereby contributing to global rebalancing.3 I would like to point out that such a critique is not based on a full understanding of Switzerland’s situation. For a comprehensive assessment of the Swiss current account and the Swiss franc, the following factors also need to be considered.
Unemployment rate stayed on a downward track and employment rate was stuck to the uptrend (Figure 6). Nevertheless, these developments should be read considering the widening of the structural government deficit and the increase in the trade deficit, whereas inflation rate returned quickly into the upper half of the variation band of the target and the exchange rate of the leu against the euro depreciated slightly since the beginning of the year. At the same time, the interbank market rate rose at an accelerated pace in September, and stabilised thereafter, amid the pick-up in annual inflation rate and the consolidation in expectations of an adjustment in the monetary policy stance, coupled with the decline in the structural liquidity surplus under the simultaneous influence of the main autonomous liquidity factors, namely operations in the Treasury account and non-residents’ transactions on the local financial market. As for the banking sector, key financial and prudential indicators have further posted a robust performance. In the assessment conducted by the EBA, the indicators are in the lowrisk bucket in terms of capitalisation, coverage by provisions, profitability, and balance sheet structure; in the medium-risk bucket in terms of asset quality and operational efficiency; and in the high-risk bucket as regards restructuring measures (Figure 8). Solvency indicators continued to stand at adequate levels and the substantial capital reserves relative to prudential requirements provide a good capacity to absorb unexpected losses and resources to ensure lending to the real sector (Figure 10).

11  In the literature on determinants of foreign direct investment it has been emphasized that an investing firm needs to have some advantage over a potential local investor in order to overcome the disadvantage of doing business in a foreign environment (see e.g. Dunning 1977). 12  The standard theory of so-called horizontal foreign direct investment is based on the idea that firms selling in foreign markets face a trade-off between the benefits of concentrating production in one place (because of economies of scale) and the benefits of avoiding costs associated with exporting the good (see e.g. Horstmann and Markusen, 1992, Markusen and Venables, 1998, 2000; for an overview of this literature, see Barba Navaretti and Venables, 2004, Chapter 3). BIS Review 82/2010  17  the expansion of Western European banks in Central and Eastern Europe during their transition to market economies. Western European banks had expertise and know-how that local banks lacked, and by establishing themselves in Central and Eastern Europe – in many cases through the acquisition of local banks – they were able to quickly gain market shares. Another motive, perhaps more specific to the wholesale operations of banks is to follow the cross-border expansion of clients, sometimes referred to as “the defensive expansion approach”. 13 The rationale for this would be to preserve existing banking relationships in the home country. Indeed, many of the European banks entering the US initially did so to provide services for their home-country clients that were starting US operations.
The question, then, is whether the approaching end of net asset purchases in the euro area might see a sudden waning in the support for global bond yields, and thereby risk amplifying 2/7  BIS central bankers' speeches  prevailing upward pressure on global sovereign bond yields stemming from the ongoing tightening by the US Federal Reserve. If such adjustments were abrupt, they could risk causing broader capital reallocations, including from emerging market economies, and force a revaluation of global equity prices, with potentially adverse impacts on the financial conditions consistent with our primary mandate. The gradual decline in net capital outflows since their peak in the spring of 2016, which you can see in the chart on the left-hand side, would, at least at face value, nurture such concerns. It suggests that there is at most a loose correlation between the actual pace of Eurosystem purchases under the APP – which has been gradually declining since April last year – and the intensity of cross-border capital flows. The persistence of policy-induced cross-border capital flows The chart masks important differences across investors, however. You can see this more clearly on my next slide. Up until May this year, net capital outflows in debt securities have decelerated, by and large, as a result of a reduction in the pace of net sales by non-euro area residents – as you can see in the chart on the left-hand side.

[5]  In April this year, non-euro area residents became net buyers of euro area long-term debt securities – in moving annual sums – for the first time in nearly three years. As non-residents have been important counterparties to the Eurosystem in implementing the APP, the gradual slowdown in their net sales of euro area securities may not be surprising. It is likely related to the step-wise reduction in the actual pace of Eurosystem purchases. [6] 3/7  BIS central bankers' speeches  Euro area residents, by contrast, and this you can see on the right-hand side, have reduced their purchases of foreign securities to a much lesser extent. In fact, when we cut the monthly pace of our purchases from € billion to € billion in April last year, euro area residents increased their acquisition of foreign debt securities by more than 15% over the following six months. Even when we cut the monthly pace of purchases to € billion as of January this year, euro area residents remained important buyers of foreign securities. In the United States, and this you can see in the chart on the left-hand side of my next slide, euro area residents accounted for nearly 30% of total US Treasury purchases during the first half of 2018. In 2017, their share was 25%. Now, there is no simple answer that could help explain the observed investment pattern. Some would argue that foreign securities – US Treasuries in particular – offer a considerable yield pickup compared with comparable euro area securities.
In order to support the process of fiscal consolidation, to underpin the proper functioning of the euro area and to strengthen the prospects for higher sustainable growth, the pursuit of far-reaching structural reforms is essential. Major reforms are particularly needed in those countries that have experienced competitiveness losses in the past or that are suffering from high fiscal and external deficits. Measures should ensure a wage bargaining process that allows wages to adjust flexibly to the unemployment situation and losses in competitiveness. Reforms to strengthen productivity growth would further support the adjustment process of these economies. We are now at your disposal for questions. BIS Review 104/2010  3

Joint EU integration would supersede certain regional integration frameworks, such as trade and factor mobility, but it would not supplant the need for further policy dialogue and common regional perspectives and solutions. Let me now to briefly describe the role of institutions in structural reforms in Albania. Institutions and structural reforms in Albania It is virtually impossible to do justice to the breadth and depth of reforms in Albania over the limited allotted time. Therefore, I will try to highlight only its main items. In order to improve our business environment, the Albanian authorities have engaged in comprehensive reforms of the property rights, of the tax regime, of the electricity sector, of the general infrastructure, and remain engaged in the fight against informality. The most recent measure in this regard is a banking sector regulation that aims to put an end to the practice of lending through uncertified company balance sheets. Further, to enhance efficiency and tackle corruption and informality, a determined drive to improve the functioning of the public administration, which broadly speaking encompasses also the judicial system reform, has been undertaken. In order to increase economic stability and to improve financial resilience, we have initiated a wide ranging set of reforms. To that end, the Government has improved its public finance management procedures, has adopted a fiscal responsibility framework, and has undertaken measures to reduce debt. The Bank of Albania has strived to model itself after the ECB. Its professionalism has increased while its independence, transparency and credibility have all improved.
At the same time as it will take a while for the euro area countries to bring down their debt levels, it is important to point out that these countries are not alone in facing budget consolidation. The United States is also facing the challenge of improving its public finances. USA – fiscal policy challenges The US public debt amounted to 103 per cent of GDP in 2011, and is expected to rise to 107 per cent in 2012 and 110 per cent in 2013. As a comparison, the average public debt for the 14 largest euro area countries amounted to 80 per cent in 2011, while the forecast for 2012 and 2013 is 82 and 84 per cent respectively. 7 The well-known economists Reinhart and  6  The World Economic Forum weighs together a number of indicators of a country's competitiveness, for instance, the quality of the infrastructure, the level of education, financial development, etc. See http://gcr.weforum.org/gcr2011/ for a more detailed definition. 7  IMF Fiscal Monitor (April 2012), “Balancing Fiscal Policy Risks”. BIS central bankers’ speeches  5  Rogoff conclude in an extensive study that a public debt exceeding 90 per cent of GDP entails risks to long-term growth and stability. 8 When public debt reaches these levels, economic growth is rarely sufficient to reduce the debt, in their opinion. The US economy is thus facing substantial fiscal policy challenges.

The driving force behind growth can be very strong, as earlier economic upswings have shown. The situation in Sweden – some positive signs What is the situation in Sweden? The weak growth abroad at the end of last year led to an unexpectedly severe slowdown in Swedish exports. This means that the fall in GDP growth in the fourth quarter of last year was larger than we had predicted. The weak year-end has an impact on GDP growth for 2012, which was revised down in April in relation to the forecast made in February. At first glance, the GDP figure may appear ominous. But unlike exports, domestic demand during the fourth quarter was in line with the Riksbank’s forecast. Developments in the retail trade sector and indicators of confidence in the corporate and household sectors pointed to demand beginning to increase again. In addition, exports of goods increased strongly in January and recovered a large part of the fall that took place in the fourth quarter of 2011. 9  The support facilities currently available consist of three parts. The largest, the EFSF (European Financial Stability Facility), was established in spring 2010 and has been built using guarantees from the euro area countries themselves. The second part is the EFSM (European Financial Stability Mechanism) which is based on a guarantee from the EU. The third part, which was also announced in spring 2010, was that the IMF could provide loans of up to EUR 250 billion.
This led to a wider loss of confidence in banks, the hoarding of cash and illiquidity in many financial markets which is still not over. As financial institutions all around the world have struggled to shrink their balance sheets in the face of this storm, there has been a pronounced tightening in the supply of credit. The number of loan approvals for house purchases fell to a new low in April to – on some indicators – its lowest level in over thirty years (Chart 3). In the past, the swings in the UK economy have been home grown. Credit squeezes have typically resulted from rising domestic arrears and defaults, driven by economic downturns at home. This time the sequence has been reversed. The broadest measures of economic activity have continued to grow: quarterly GDP growth in the latest data for 2008Q1 was 0.4% and employment has continued to rise. The level of defaults on corporate and personal loans has been low. So the squeeze on new lending has preceded rather than followed the slowdown in the UK. The judgement we have to make is how far that tightening will restrain the domestic economy in future. There is no doubt it is having a material effect already (Chart 4). This is most obvious in the housing market, where prices have fallen by around 7% since their peak, and have further to fall. The drop in transactions and turnover is rippling through the housebuilding industry,  BIS Review 80/2008  3  estate agencies and mortgage brokers.

The New York Fed has maintained a gold vault used to store the gold reserves of foreign central banks since 1924 when construction of its main building was completed. Prior to 1924, the New York Fed held gold in custody for foreign central banks in other nearby vaults, such as the one maintained by the New York Clearing House. 12 Defined in general terms as “an arrangement under which one bank (correspondent) holds deposits owned  by other banks (respondents) and provides payment and other services to those respondent banks.” See the glossary of terms used in payments and settlements, published by the Committee on Payments and Market Infrastructures of the Bank for International Settlements. 13 Perhaps the most vivid historical example of this involved large-scale flight-to-safety flows of European central  bank gold reserves to the vaults of the New York Fed during the Second World War. In addition to safeguarding their gold reserves from the Axis powers, inflows of gold were used by Allied nations to finance their purchases of war supplies from the U.S. 14 The Federal Reserve’s Bretton Woods swap lines with foreign central banks were first established in 1962 and  used extensively until the collapse of the Bretton Woods fixed exchange rate system in the early 1970s. 15 The mechanics of currency swap operations among central banks is a case in point.
If a QT sale is pre-announced ahead of implementation, the initial fall in bond prices will result in a pre-implementation increase in the share of money in the overall portfolio: money is capital certain, whereas the value of bonds will be lower on announcement because of the expectation that bond prices will fall on implementation. To justify that relative increase in money holding ahead of the implementation of QT, the expected return on bonds must be lower in the post-announcement / pre-implementation period, requiring an expected capital loss in the period up to implementation. So the post-announcement fall in the bond price must be smaller than the implementation fall in the bond price, to create the expectation that bond prices will fall – there is some ‘undershooting’ in announcement effect relative to the implementation effect. Applying this logic over a longer time scale implies that an earlier announcement will lead to a smaller initial impact on asset prices followed by a larger number of periods where the asset price falls ahead of implementation. Furthermore, the greater the substitutability between money and bonds in the NBFI’s portfolio, the less the expected capital loss on bonds required to sustain the higher relative holdings of money in the post-announcement / pre-implementation phase. By implication, a greater part of required  Page 13  overall downward adjustment in bond prices can happen up-front on announcement.

It features a portrait adapted in the late 19th century from an original sketch by Jane’s sister and closest friend Cassandra, together with the quote “I declare after all there is no enjoyment like reading!” from Pride and Prejudice. Our intention is that the Austen note will be introduced within a year of the recently announced Churchill £ note, so that the new note could come into circulation as early as 2017. I am certain she will prove to be a popular choice. This will not, however, be the first time that the Austen name has appeared on a banknote. Jane’s brother Henry set himself up as a banker with interests here in Hampshire as well as in London. At that time many banks were small and local, and could issue their own banknotes. The British Museum in fact holds a £ note from Henry Austen’s bank in Alton, just a couple of miles from here, listing on the note the names of the partners in the bank: Austen, Gray and Vincent. Unfortunately, while Jane Austen wrote in an early work that “when a man has once got his name in a banking house he rolls in money”, that turned out not to be the case for her brother Henry. Banking was for a time profitable, but unwise lending led to the collapse of Alton bank, followed by the collapse of Henry’s London bank and his bankruptcy in 1816. Depositors in these banks, including Jane Austen herself, were left out of pocket.
The more that the compliance function is perceived to be certifying or validating the business’s actions, the less the business sees itself 2/6  BIS central bankers' speeches  as responsible for adhering to the firm’s policies, and even to the law. Because the compliance function often has the power to block business decisions, as a practical matter, it can also be viewed as giving its approval by not blocking decisions. That tacit approval can work like a license to take increased risks. When those increased risks become a control failure, government investigators start asking questions about what went wrong. Witnesses then start pointing fingers. Compliance is quick to say that the business owns the risk. Bankers say it is not their fault because compliance gave its blessing—often inferred from silence. Neither side has it quite right. For one thing, I do not buy the excuse “if it was really a problem our compliance people should have stopped us.” This kind of scapegoating can sacrifice credibility with a regulator. It can also damage the morale within the compliance group. On the other hand, I wonder why compliance personnel did not look for and identify a gap in understanding and escalate the issue. It is not enough for compliance to lob its advice over the wall and then move on. Compliance is not simply an advisory function. It bears a certain responsibility to safeguard the organization. When risks are not being addressed, senior management—or, if necessary, the board—must be alerted.

One can’t be precise about these things, but I do think that, for reasons on both the demand and supply side, these very rapid rates of wholesale goods-price inflation are likely to subside at some point. Indeed, in some cases they could even go into reverse. When it comes to demand, I think it’s reasonable to expect shifts caused by the pandemic to narrow again as the threat of it recedes. Consumers will rotate some of their spending back to services. To the extent strong demand for durable goods specifically is to make up for ground lost last year that only needs to be done for a while: people buy a new computer or car only once every few years, not every quarter. Indeed there may already be signs – tentative but visible – that these imbalances are beginning to diminish. Retail sales fell in May, in both the US and UK. Spending on Barclaycard doesn’t suggest any reacceleration in June, in this country (Chart 14). It does on the other hand suggest that other areas of spending – those most heavily affected by the lockdowns, like hospitality and restaurants – has been growing faster than that on goods since the economy re-opened in April. Second, supply in some of these goods markets is ultimately quite “elastic”: over time, higher prices encourage higher production, ensuring a degree of self-correction. For some basic commodities the response could be relatively straightforward: it might simply be a question of reopening an existing plant, mine or sawmill.