samchain/econo-pairs-v1 huggingface dataset:
Clearly, the disappearance of 11 national currencies and the introduction of the euro as a major international currency had an immediate impact on the turnover and focus of attention in the global foreign exchange markets. This has been reflected, for example, in rather active and liquid euro/dollar trading in the foreign exchange market since the launch of the new currency. However, there are also indications that the euro has further potential to grow in other markets as the surprisingly slow development of euro/yen trading suggests. The euro can also be expected to become an attractive currency for the investment of official reserves. One of the key elements to further international portfolio diversification in favour of the euro is the creation of a large, liquid and integrated capital market in Europe that began with the launch of the euro. For short-term instruments, we are now dealing with a broad and liquid European money market that ensures very similar short-term interest rates for comparable instruments and credit risks. The development of this market has been strengthened by the Eurosystem’s operational framework of open market operations, which is mainly based on reverse transactions, and the implementation of the new TARGET real-time gross settlement system in participating countries. At the longer end of the maturity spectrum, market integration was jumpstarted by the redenomination of outstanding government debt in euro and by the convergence of interest rates to narrower spreads following the elimination of the exchange rate risk.

If exchange rate developments pose a significant threat to price stability in the euro area, all other things being equal, monetary policy will have to respond. Of course, all other factors that impart information on price developments will also be taken into account before an interest rate decision is taken. Monetary policy decisions and the outlook for price stability In December 1998 the Governing Council announced that the interest rate on the main refinancing operation would be 3%. In the first quarter of 1999 the Governing Council kept this rate unchanged. After an in-depth review of recent monetary, financial and economic developments, the Governing Council decided at its meeting on 8 April to set the interest rate for the ECB’s main refinancing operations at 2.5%. In addition, the interest rate on the marginal lending facility was lowered to 3.5% and the interest rate on the deposit facility to 1.5%. These rates were left unchanged at the meeting of the Governing Council last week. The decision to lower interest rates taken at the first meeting in April has to be seen in the context of the stability-oriented strategy. The decision has thus been taken from a forwardlooking perspective, focusing on the medium-term trends in inflation and the compatibility of these trends with the Eurosystem’s definition of price stability. By adhering to this strategy, the Eurosystem’s monetary policy contributes to creating the economic conditions which are essential to exploiting the considerable growth potential of the euro area and to reducing uncertainty about future economic developments.
We must also recognise that there will be occasions when interventions are not yet needed, as emerging risks are not yet systemic in nature. To return to our analogy, a good doctor might decide not to start medication, but instead simply monitor a patient’s general health to judge better how to improve it. Macro-prudential policy should be ready to adapt to change, allowing the economy to expand and innovate safely. Change always brings with it opportunities and risks and so our macro-prudential framework will need to evolve. To overuse the health analogy once more, doctors need to adapt. A doctor in the 1960s, for example, would never have had to think about the health effects of vaping. Challenges that lie ahead Ten years after establishing the FPC, we have reached the point where we have both made the case for macro-prudential policy, and built a macro-prudential framework designed to ensure the sector is resilient to stress. In other words, we have pulled together the skeleton for a healthcare plan and convinced the patient that they need it and that it needs to be updated regularly. These are important achievements. Indeed we need to make sure we hang on to them even as memories of the global financial crisis fade. But we need to decide the plan for the coming months and years too. Recent shocks – the  Covid pandemic, and more recently, Russia’s invasion of Ukraine – and structural changes to the financial system have reaffirmed that our work is not yet done.

It is this macro-prudential perspective that I want to discuss today – specifically, to consider how macro-prudential policy will need to adapt, just as our health-care plans adapt, to be fit for the challenges of the future. Since the global financial crisis, the financial system has not been a cause of sustained economic instability. But this is no reason for complacency. The financial system is ever changing. And experience suggests our job may not yet be complete. So today, I will begin by setting out why financial stability is important and the role of macroprudential policy in delivering it. In so doing I hope to set out why it’s as important for the financial system to observe macro-prudential policies as it is for patients to stick to their health-care plans. I will then briefly set out some principles on which good macro-prudential policymaking is based. The rules of thumb that underlie our prescriptions if you like. And I will conclude by raising some challenges that macro-prudential policy is facing now, including my thoughts on the road ahead. Through that, I hope to set out how we need constantly to adapt macro-prudential policies, as we do with our health-care plans as lifestyles evolve. Interactions between financial stability and sustainable growth and the role for macroprudential policy Why is financial stability important? To understand why we place so much emphasis on a well-grounded macro-prudential framework, it’s important to understand why we care about financial stability in the first place.
But, as I emphasised earlier, it is not only these indicators that we will be considering. All incoming statistics that contribute to the picture of future inflationary pressure will be followed closely. It should also be underscored that the outcome is not inevitable. An influence can be exerted with economic policy. I spoke earlier of how budget measures in the form of taxes as well as expenditures can modify the workings of the labour market and the economy in general. As regards the labour market and wage formation, there are many other things to do, for instance in labour market policy, the rules and implementation of unemployment support, the rules that influence wage formation and so on. Concluding remarks In many respects, economic policy has produced good results in recent years. This applies not least to the interaction of fiscal and monetary policy. Government debt has been reduced, interest rates have fallen and economic growth has been good, and all this has been combined with low inflation. Employment has been a problem; there are now clear signs of an improvement here, too. One important explanation for the successful combination of high growth and low inflation in recent years is that the crisis in the early 1990s brought capacity utilisation down to a low level. If economic  7  BIS Review 77/1999  activity strengthens as expected, the situation may gradually change. Capacity utilisation is rising. This presents policy with new challenges, with an increased risk of higher inflation.

Mr Heikensten talks about the interaction between monetary and fiscal policy and labour market developments Speech by Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, the Swedish central bank, to the Landskrona Municipality in Landskrona, Sweden on 16 June 1999. For more than six years now, monetary policy in Sweden has been conducted with an inflation target. Sweden was one of the first countries, together with Canada, New Zealand and the United Kingdom, for example, to adopt an inflation targeting strategy. Other countries have recently displayed an interest in targeting inflation directly as the guideline for monetary policy. Examples are countries with strong economic growth in Asia, South America and Eastern Europe. In many respects, Sweden’s period with an inflation target has been one of good economic results. Inflation and interest rates have come down to levels that are historically low and growth since the crisis in the early 1990s has been relatively high and stable. Part of the explanation is, of course, that the recession left us with plenty of unutilised resources. But new production capacity has also been created at a rapid rate. Moreover, inflation expectations have been lowered, which gives a new and better environment for price and wage formation. International inflation has also been low. The picture of unemployment is more disappointing, though here too the recent trend points in the right direction.
In this regard, Bank Negara Malaysia has constantly strived to improve the payment system infrastructure in this country. Payment system efficiency has contributed towards making Malaysia a competitive and efficient economy. Cheque truncation Bank Negara’s effort in improving the payment infrastructure has been continuous. A significant milestone was achieved in 2009 when the e-SPICK system, an image-based cheque-clearing system was introduced. This modernized cheque processing in Malaysia. In essence, e-SPICK is a cheque truncation system which converted paper-based processing to electronic processing of cheques. Physical cheques are no longer sent to the issuing bank and the cheque clearing center for processing. Instead, images of cheques are sent electronically. Cheques which previously took up to 8 business days to clear (or T+8) can now be cleared within 2 business days (or T+2). This was done at a time when the country’s broadband penetration rate was low at 32% compared to 67% today. The move to transmit cheques electronically not only shortened the clearing times for cheques, but also contributed to a significant reduction in the banks’ cheque processing cost from RM6 to about RM3 per  BIS central bankers’ speeches  1  cheque1 today. With the lower cheque processing cost, the cost savings for the banking industry is estimated at about RM600 million2 per year. Migration to chip payment cards Another notable achievement in the country’s payment system infrastructure is in the migration from magnetic stripe payment cards to chip payment cards, where Malaysia was the first country in the Asia Pacific region to do so.

A lot of our exports are in sectors which have a large carbon footprint and will be susceptible to policy measures like the Carbon Border Adjustment Mechanism currently being put in place by the European Union (EU), as part of the EU green deal. So, what role can sustainable banking play in taking Thailand from where it is today to where it needs to be in terms of reducing its vulnerability to climate change? Banks in Thailand can play an important role in getting us to where we need to go. Banks play the predominant role in channeling credit to the private sector. Over 90 percent of private credit comes from the banking sector. So, banks will need to increasingly incorporate sustainability considerations into their lending decisions and increasingly need to improve disclosure on climate-related information. They will also need to improve their risk assessment tools. For all these to work, there needs to be a very clear tone from the top from these institutions. There has been progress to date. The Thai banking sector, including the Thai Bankers’ Association and the Association of International Banks in Thailand, have developed and adopted Sustainable Banking Guidelines in 2019. We have seen concrete steps taken by Thai Banks to incorporate sustainability into their business strategy. We have seen them setting up clear governance structure on sustainability issues such as dedicated sustainability committees, developing risk assessment tools, and disclosing ESG-related information.
However, Exter did not expect this arrangement to be effective at all times. Hence, he made the proviso that “it would depend on the men occupying the key positions” and not on any legal formula. He argued quite correctly that such complex and delicate relationships cannot be established full-blown by a piece of legislation. It must be the result of years of experience and the slow growth of political conventions. The writer has been questioned on this point on many occasions at numerous public fora. The position taken by him agrees fully with that of Exter. This position requires the critics to compare central bank’s independence with the relationship within a family unit. Both spouses have their personal interests, but work together for the well-being of the family unit. There are at times occasions where one spouse overrides the other. But, as a normal rule, the family unit moves forward without publicizing those internal family debates and sometimes family fights. This is the main lesson which Exter has left for us in the twenty first century. That is, both the Governor of the Central Bank and the Secretary to the Ministry of Finance should know their rights and responsibilities well and act on an ethical platform in which they continue to appreciate the distinctive roles to be played by them for the well being of the country. John Exter, in his wisdom, firmly believed that when laws fail, human beings working with moral consciousness could do wonders. BIS Review 20/2007  3

2.4 Given these challenges in Risk Management, financial institutions are expected to move towards Integrated Risk Management (IRM) which, in simple terms, is a continuous proactive and systematic process aimed at understanding, managing and communicating risks from an organization-wide perspective. It is about making strategic decisions that contribute to the achievement of an organization’s overall corporate objectives. In other words, IRM requires an on-going assessment of potential risks at every level and every segment and then aggregating the results at the corporate level to facilitate priority setting and improved decision-making. IRM should be embedded in the organization’s corporate strategy and it should shape the organization’s risk mitigation culture and highlight the importance of effective coordination among interdependent risks. 2.5 Many of you may have been following the rogue trading scandal that cost 4.9 billion Euros for Societe Generale – SocGen, the French Bank in recent months. The credibility of the bank suffered a fresh blow this week following the interim report handed over by the Finance Minister, Christine Lagarde to the Prime Minister. In summary, the findings of this report said “Very clearly, certain mechanisms of internal controls of SocGen did not function and those that functioned were not always followed by appropriate modifications”. Further, the report highlighted 8 elements of internal controls that were clearly inadequate and they may have been the decisive factors behind the crisis.
Public lecture at the Oesterreichische Nationalbank Vienna, 6 October 2017  The euro area’s monetary policy in the context of economic recovery  Speech by François Villeroy de Galhau, Governor of the Banque de Francei  Press contact: Clara Martin (+33 1 42 92 98 75; +33 6 74 83 32 38; clara.martin@banque-france.fr). Page 1 sur 8  Ladies and gentlemen, I would like to thank the Oesterreichische Nationalbank and my friend Governor Ewald Nowotny for having invited me today. A little more than one year ago, the full Governing Council of the ECB celebrated in this very place the 200th anniversary of the Oesterreichische Nationalbank (OeNB). Today, your country is on the eve of important national elections. Throughout history, Vienna has been one of the centres of Europe, and Austria a country that we love: on a more personal note, I am indebted to Austria for enabling me to improve my German during a lengthy stay in Graz, Styria, over 40 years ago. And the Austrian economy has been a strong performer in the euro area: a low unemployment rate of just 5.6% in August 2017, against 9.1% for the euro area as a whole. You are the proof, along with other countries, that our common European social model is compatible with economic success. Today, you have invited me to speak about euro area monetary policy in the context of economic recovery. The prospect of a possible normalisation of our monetary policy gives rise to expectations and somewhat unduly to concerns.

[slide] This improvement in investment is underpinned notably by ongoing growth in lending to the private sector, at 2.5% year-on-year in August 2017 for firms and at 2.7% for households, with interest rates also remaining very low. We are also observing favourable developments in inflation, which is gradually moving back towards our target of 2% over the medium term [slide]. After peaking at the start of 2017, the inflation rate stood at 1.5% year-on-year in September. This performance remains below our inflation aim, partly reflecting headwinds due to the past appreciation of the exchange rate. However, for 2017 as a whole, euro area inflation, at 1.5%, should be much higher than a year ago. For the next few years, we foresee inflation at 1.2% in 2018 and at 1.5% in 2019 – with a change in composition: less “energy” inflation, more underlying inflation. This represents a first success: our monetary policy measures have succeeded in warding off the risk of deflation which was still threatening the euro area last year – we mustn’t forget that inflation was declining in April 2016, standing at -0.2%. That said, despite the progress made towards our target, it is still incomplete. Underlying inflation, excluding energy and food, has admittedly increased – rising from 0.8% in the first quarter of 2017 to 1.1% in September 2017 – but it  Page 3 sur 8 still remains at subdued levels, despite the strong recovery in activity and employment. A significant factor is the relatively low nominal wage growth.
The Federal Reserve Banks’ strategic plan focuses on fostering safety and  BIS central bankers’ speeches  3  security not only in Federal Reserve interbank networks and applications, but also the safety and security of the payments process from end-to-end. The challenges and opportunities related to speed, efficiency and security of payments are most apparent when we examine the mobile and international payment ecosystems. The mobile revolution is blurring the lines between commerce, both online and offline, and payments. In this new world, payments are but a small part of the value to be delivered in the commerce experience, with loyalty programs, location and behavior-based offers, and personal financial management tools becoming part of the broader customer experience. Financial institutions are working hard to figure out how they will participate. We must consider how the payments industry can design its future systems and services to address these new opportunities. The business challenges for financial institutions are also great when considering international payments. Cross-border transactions are generally slow, inconvenient and inefficient, especially bank account-centric international payments sent or received on behalf of consumers or businesses. Some closed networks, such as Western Union and PayPal, have made advances in this space, but their networks are not as ubiquitous as open banking networks. Our leadership in the global economy calls for a more seamless international payment experience. Each of these areas – speed, efficiency, security – are embodied in the Federal Reserve’s vision for the future of payments.

BIS central bankers’ speeches  5  Prospects for SOMA income The path of the balance sheet that is realized, along with the evolution of the term structure of interest rates, will determine the stream of income that will be realized from the SOMA portfolio. 12 It is important to note that this income is not the objective of the asset purchase programs. The income from the SOMA portfolio is instead a byproduct of policy decisions taken by the FOMC to promote its economic mandate of full employment and price stability. However, because there seems to be considerable interest in the income produced by the portfolio, let me touch on it briefly. Given the uncertainty about how the balance sheet and interest rates may evolve, there is a wide range of outcomes for the income stream from the SOMA portfolio. 13 At this point, if interest rates and the balance sheet were to unfold in the manner that appears to be expected by market participants, the asset purchase programs should produce a substantial amount of cumulative income. The SOMA Annual Report for 2010 presents some projections for the portfolio income under an illustrative set of assumptions for the evolution of interest rates and the balance sheet. 14 Under that projection, the portfolio produces about $ billion of cumulative income over the period from 2009 to 2018, which is about $ billion in excess of what we project would have been realized in the absence of asset purchases.
(1985), FDIC, Bundesbank, Swiss National Bank, Bank of England calculations  Chart 3  Chart 4  Ratings uplift for systemic institutions  Implicit subsidy for systemic institutions  Notches  $ bn 1,200  4  1,000 3 800 2  600 400  1 200 0 02  03  04  05  06  07  08  09  10  11  Source: Moody’s, Bank of England calculations  10  12  0 02  03  04  05  06  07  08  09  10  11  Source: Bank of England calculations  BIS central bankers’ speeches  Chart 5  Chart 6  Expected system-wide loss  Bank ratings uplift in the US Notches  $ 800  4 700 600  Correlated  3  500  Independent  400  2  300  1  200 100  0.0%  1.0%  2.0%  3.0% 4.0% 5.0% Systemic surcharge  0 7.0%  6.0%  Source: Bank of England calculations  0 02  03  04  05  06  07  08  09  10  11  12  Source: Moody’s, Bank of England calculations  Chart 7  Chart 8  Sovereign and Bank CDS during bailout announcements  Economies of scale (assuming no implicit subsidy)  CDS Index: -20 days = 1  Average CDS - Banks  95th percentile Mean Constant returns to scale  Estimated scale economies 1.30 1.25  3.0  Average CDS - Sovereigns  1.20 2.5  1.15 1.10  2.0  1.05 1.5  1.00 0.95  1.0  0.90 0.85  0.5 0.0 -20 -16 -12 -8  -4  0  4  8  12  16  20  0.80 <100bn  100bn500bn  500bn- 1tn  1tn- 2tn  >2tn  Total assets $ Source: Markit, BoE calculations  BIS central bankers’ speeches  Source: Capital IQ, Bank of England calculations  11  Chart 9 Economies of scale (implicit subsidy-adjusted) 95th percentile Mean Constant returns to scale  Estimated scale economies 1.30 1.25 1.20 1.15 1.10 1.05 1.00 0.95 0.90 0.85 0.80  <100bn  100bn500bn  500bn- 1tn  1tn- 2tn  >2tn  Total assets $ Source: Capital IQ, Bank of England calculations  12  BIS central bankers’ speeches  References Acharya, V, Pedersen, L Philippon, T and Richardson, M (2010), “A tax on systemic risk”, NYU Stern Working Paper.

http://www.bankofengland.co.uk/publications/Pages/speeches/2013/679.aspx  8  BIS central bankers’ speeches  Annex: Charts Chart 1: UK CPI inflation  Chart 2: Recoveries across the G7 Per cent  Index (pre-crisis preak =100)  108  6  106  5  104  4  102 100  3  98 Germany France Italy UK US Japan  2 1 0 2005 2006 2007 2008 2009 2010 2011 2012 2013  96 94 92 90  2007  2008  2009  2010  2011  2012  2013  Sources: Eurostat and Datastream The pre-crisis peak was: 2008 Q1 for Germany, France, Japan and the UK; 2007 Q3 for Italy; 2007 Q4 in the US; and 2008 Q3 for Canada. Chart 3: UK labour productivity Percentage change on five years earlier  25 20 15 10 5 0 1861  1886  1911  1936  1961  1986  2011  -5 -10 -15 -20  BIS central bankers’ speeches  9