samchain/econo-pairs-v1 huggingface dataset:
A comparison with similar investments – for example, with the average yield on Swiss investment trusts and investment funds for foreign currency bonds – shows that this is a remarkable result. Gold holdings (Sfr 21 billion) and Swiss franc assets (Sfr 5 billion in securities, Sfr 16 billion in repos) also contribute to the earnings from monetary assets. The overall yield is largely determined by gold price and exchange rate fluctuations, while interest rate and credit risks play a lesser role. In the past year, overall aggregate income on monetary assets amounted to approximately 4.5%. Other than in earlier years, the price of gold contributed to a positive yield. Still, the gold price is subject to strong fluctuations and its development is difficult to foresee. Moreover, as in the past, unfavourable currency movements are to be expected. These influences were clearly at work during the past year. The appreciation of the Swiss franc has had a noticeable adverse effect on yields. In the first quarter, the soaring gold price led to a yield of approximately 3% on monetary assets. In the second quarter, considerable losses resulted on the currencies; these losses have already cancelled out a part of the positive overall yield from the first quarter. This illustrates the strong yield fluctuations to which our assets are exposed. With the current composition of monetary assets, average returns of close to 3% per annum are to be expected in the long term, however accompanied by high annual fluctuations.

This is precisely what happened to both Lloyds Banking Group and Bank of America, which required large public capital injections after they made their acquisitions. If no suitable purchaser could be found, the choice for the authorities was between administration – for all or some of the business – or a taxpayer bailout. In a number of small and middle sized cases it was possible, without unacceptable disruption, to protect insured depositors by drawing on deposit insurance and, in some cases, public funds, while selling some parts of the business to another firm and putting the other parts of the business, including shareholders and subordinated debt, put into administration. Bradford and Bingley was the most notable example of this in the UK. But putting all or part of large institutions – especially large international ones – into administration proved impossible with one, notorious exception. And that exception, Lehmans, proved the rule that large, complex, systemic institutions were truly too big to fail. This should not have been a surprise. There was generally tough talk from regulators before the crisis. And there were some idiosyncratic isolated failures, like BCCI and Barings, which occurred outside a systemic crisis. But as a number of researchers have pointed out, large systemic institutions were able to raise debt on more favourable terms than smaller ones reflecting the perception – which turned out to be generally true – that investors in these institutions were protected by an implicit government guarantee.
Changes in the instrumental rate have an effect through the "exchange rate channel" partly by changes in the nominal exchange rate for the krona affecting the relative prices for net export. Higher interest rates should thereby strengthen the domestic currency and make domestic goods more expensive relative to other goods and vice versa. Higher interest rates thereby dampen export at the same time as import becomes cheaper and increases. Lower demand for domestic goods contributes to reducing the use of resources and subduing inflation. A stronger nominal exchange rate dampens consumer prices at the same time since part of consumption is directed towards imports when prices are dampened. However, lower import prices also increase the real purchasing power which per se contributes to increasing purchasing power. In economies with diversified industry an increase in the interest rate thus also leads via the exchange rate channel to lower inflation. The strength of the effect depends inter alia on income and price elasticities and on the composition and size of foreign trade. In certain cases the positive effect on incomes from stronger currency can even predominate and vice versa. Changes in the nominal exchange rate probably have less impact on import and export prices if the changes are not considered to be lasting. In a floating exchange rate regime, it is therefore probable that changes in the nominal exchange rate will not have such a great effect as in the case of a devaluation or revaluation in a fixed exchange rate regime.

When confidence in the American economy returns and investment growth takes off, there is every indication that productivity will continue do develop favourably. However, this does not mean that the long-term growth path indicated earlier by developments in share prices and demand will be realised. Secondly, it seems that the over-investment has mainly taken place in the IT sector, where financing has been largely via the risk capital market. The depreciation period for IT investments is often short, which means that investment mistakes do not affect the willingness to invest in the long term. The bank system does not appear to be particularly strongly exposed to the IT sector and the risk spread among the banks' assets is assessed as good. There would thus appear to be little risk of problems in the banking sector reinforcing the slowdown to any great extent. Finally, there is scope to use fiscal and monetary policy to stimulate the economy, if necessary. The American central bank has utilised part of this scope and lowered interest rates by a total of 2 percentage points since the beginning of the year. The central government finances are in good condition. For several years now the public sector – unlike earlier periods of large American current account deficits – has shown a surplus in savings. All in all, there are thus many factors indicating that confidence in the American economy can quickly be recovered. If this is true, the economic decline will not last very long.
•  And we do not know yet how to exit successfully from these policies. Can monetary policy contribute towards financial stability? And there is a further problem. Macroprudential policies may not be equally effective in all countries – which brings us back to the United States. •  As Stanley Fischer put it recently: “The US macroprudential toolkit is not large and not yet battle tested.”  •  There is a significant shadow banking sector in the US that extends credit but is not regulated like banks. •  This will blunt the effectiveness of any macroprudential tools applied to regulated entities. If macroprudential policy is not able to secure financial stability on its own, could monetary policy lend a helping hand? •  As Stan Fischer goes on to say: “The limited macroprudential toolkit in the United States leads me to conclude that there may be times when adjustments in monetary policy should be discussed as a means to curb risks to financial stability.”  6  BIS central bankers’ speeches  The question then arises: under what circumstances should monetary policy consider financial stability? •  One way to look at it could be as follows. •  If the market interest rate is clearly below reasonable estimates of the neutral rate, there could be a case for monetary policy to step in on both price stability and financial stability objectives. Can regulatory policy help contribute towards macroeconomic stability?

A credible inflation target with a flexible exchange rate regime should help to avoid the problems we faced during the 1990s. Indeed, during the period of large capital inflows, no monetary policy in Latin America operated under a full-fledge inflation targeting regime, and most countries had some form of exchange rate rigidity. Despite having a flexible exchange rate and an inflation target in place, the effects on the exchange rate could reflect that domestic asset prices could be forming a bubble. In this case, sterilized intervention, without an explicit objective on the level of exchange rate, can also help. I already discussed some principles to guide sterilized intervention within an inflation targeting framework. A much debated proposal is the use of capital controls. The  5  In addition, a traditional concern is that with the same speed as capital flows in, capital may flow out, generating costly adjustment processes. See Cowan et al. (2007) for a review of sudden starts and sudden stops around the world. Sudden stops of inflows are as common in developed as in emerging countries, but in the former, the sudden stop tends to be offset by a return of domestic capital invested abroad, while in the latter it results in a severe squeeze in the capital account. Accumulation of reserves or another form of insurance should help to avoid large swings. BIS Review 113/2009  5  evidence on their effectiveness is elusive.
The reductions in the interest rate will also contribute to pushing up growth in the economy. There was a decline in mainland GDP this past winter. Subsequently, it appears that growth has picked up somewhat, but investment activity in mainland Norway is still low. Investment in the petroleum sector is rising, but a large portion of the increase in demand is being met by imports. Public consumption rose sharply in 2002, but the public sector is providing little stimulus to the economy this year. In spite of relatively high growth in nominal budget ceilings, high wage growth gives little room for increased activity. It is primarily private consumption that is making a positive contribution. More balanced growth might be desirable, but households have strengthened their financial position in recent years at the expense of private and public enterprises. Therefore, these sectors’ capacity to push up growth will be somewhat reduced in the period ahead. We expect that growth in private consumption will gradually contribute to higher employment and increased investment in mainland enterprises. The interest rate reductions will underpin these developments. Growth in the global economy is also expected to accelerate and stimulate growth in Norway. The recovery of the US and Japanese economies appears to be somewhat more swift and more pronounced than expected. The recovery in the US has not, however, led to higher employment, adding to the uncertainty about the strength and duration of the recovery.

The real interest rate is also low, but not nearly so low as in the beginning of the 1980s when inflation was high. Without a considerable easing of monetary policy, inflation might have been too low for an extensive period. This may in turn lead to expectations of continued very low inflation. In such a situation, it may be more demanding to increase economic activity. It was therefore appropriate to reduce the interest rate considerably. 4  BIS Review 43/2003  Since December last year, monetary policy has been eased to a greater extent and more rapidly than has been customary. Following this phase of substantial easing, uncertainty with regard to economic developments in the period ahead may be somewhat greater than normal. If households assume that interest rates will remain low, private consumption may increase substantially, and the rise in house prices and household borrowing may again accelerate. The risk of stronger growth in household demand must be weighed against the sluggish developments in the business sector. Despite the depreciation of the krone, enterprises’ competitiveness is still rather weak after many years of high wage growth.Vacancy rates for commercial premises are high and rents have fallen. Another risk is that wage growth may accelerate again, as it did following the interest rate reductions in 1999. This risk is also being reduced by a slacker labour market. Unemployment in 2004 will probably be on a par with the level in 1996 and 1997.
6  BIS Review 150/2007  more they have recognised their obligation to be accountable to the public. Typically, more accountability has meant more transparency. An independent central bank is therefore likely to be transparent about how it pursues its mandate. The same may turn out to be true for SWFs. There are a number of difficult questions that need to be addressed before a set of SWF guidelines can become operational. What exactly do we mean by a non-political investment mandate? How do we gauge to what extent there might or might not be political interference in the pursuit of such a mandate? Will there be a need for a referee to determine whether a SWF complies with a particular set of guidelines? What happens if a SWF initially signs up to a code of conduct but subsequently fails to comply with its guidelines? As you can see, much work remains to be done and the timeframe is tight. Ideally, a first set of guidelines will be agreed upon jointly between the G7 countries and the most prominent SWFs by the 2008 spring meetings of the IMF and the World Bank. If well designed and agreed upon, such a set of guidelines could serve as a basis for determining which SWFs will continue to enjoy full market access in mature economies. 5. Conclusion  Before I conclude, let me say a few words about the capital participation of the GIC in UBS that was recently announced.

27 For this reason, I believe that to alleviate fears about excessive meddling of governments in private companies, a SWF code of conduct will have to set the limit for individual stakes at a level significantly below the typical threshold of a controlling minority, let alone an absolute majority. As long as a recipient country can be confident that a particular SWF operates in accordance with these two paramount guidelines, there is no reason to demand intricate levels of portfolio transparency from SWFs. Transparency is an attractive answer to intractable problems. But it is unlikely to solve the problems I have tried to outline here. Indeed, I fear that, in some cases, extensive transparency requirements for SWF portfolios could actually end up triggering protectionist reactions in mature markets. It is also important to remember that most stock exchanges already impose various disclosure requirements for large equity holdings in listed companies. There are, of course, a host of reasons why SWFs should, over time, become more transparent. Many of these reasons have to do with the presumed desire of the citizens of a SWF country to demand accountability. Once again, the history of central banking may provide some valuable insights here. The more independent central banks have become, the  November, 2007. McCormick moreover stressed that the US remains open and welcoming to investment from Sovereign Wealth Funds. 26  Truman (2007a). 27  As far as I know, Larry Summers has coined this term.
16  Figure 9 Volume exports of goods (annual change, percent)  30 20  75 Agriculture, forestry and fishing (right axis)  Manufacturing  10  50 25  Total  0  0  -10  -25  Mining  -20  -50 11  12  13  14  15  16  17  Source: Source:Central Bank of Chile. Table 1 Domestic scenario (annual change, percent)  2016  2017 (f) Sep.17 Report  GDP Domestic demand Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Goods and services exports Goods and services imports Current account (% of GDP) Gross national savings (% of GDP) Nominal gross fixed capital formation (% of GDP)  1.6 1.1 2.0 -0.8 2.8 -0.1 -1.6 -1.4 20.2 23.2  1.25-1.75 2.6 1.7 -1.6 2.7 0.1 4.6 -1.2 19.8 21.7  2018 (f) Dec.17 Report 1.4 3.1 1.6 -2.5 2.9 0.0 5.8 -1.1 20.0 21.4  Sep.17 Report 2.5-3.5 3.9 2.9 3.2 2.8 4.5 7.4 -1.8 20.2 21.8  Dec.17 Report 2.5-3.5 3.7 3.0 3.1 3.0 4.5 7.3 -1.2 20.5 21.4  (f) Forecast. Source: Central Bank of Chile.

I would like to also point out that a couple of mitigating factors are currently at play, which can help alleviate the adverse impact of capital flow surge. First, the new investment cycle in Thailand may have taken off, led by both the private sector and large public infrastructure  2  BIS central bankers’ speeches  projects. Many of these projects have high imported contents, and stand to gain from an exchange rate appreciation. Spells of baht appreciation thus provide an incentive for many firms to implement a long-overdue technological upgrading and import more capital goods in an environment where labor is scarce and no longer cheap. In turn, these imports can help slow down the pace of appreciation and mitigate the adverse effects on export industry. Furthermore, corporations that have expanded their operations overseas or plan to do so will also benefit from stronger baht which can help, to some extent, reduce the overall impact of baht appreciation on their businesses. With cooperation from all sides, including policymakers and private sector alike, Thailand could seize this opportunity to strengthen the fundamentals of the economy further, and reap long-term benefits that are likely to be greater than short-term costs of adjustment. Second, it is often overlooked that under flexible exchange rate, adjustments in the currency’s value themselves can be an effective buffer for capital flow volatility. In a wellfunctioning market, a currency that is overvalued relative to its fundamentals would be subject to market discipline that helps slow down further appreciation.
in mortgages); the associated transactions produce a swap curve, which serves as a benchmark for pricing and valuing bonds and loans. To date, however, trading – and hence liquidity – in SARON swaps has been low. This will change once more SARON-based cash products become available. The successful transitioning away from Libor therefore hinges on the development of such products. Page 2/6  Berne, 12 December 2019 Andréa M. Maechler  News conference  In order for SARON to be used as the reference rate for cash products, a longer-term interest rate must be calculated from the daily rate. As early as 2018, the NWG recommended various options for calculating an average interest rate based on realised SARON values. This approach, known as compounding, is also gaining traction abroad. A wide range of options for calculating such average rates has been proposed and evaluated. At its latest meeting, the NWG was more specific and narrowed down its set of recommended options. 1 As a result, market participants can now begin embedding the compounding approach in products such as mortgages. In addition to new SARON-based cash products, solutions must be found for existing Liborbased products. Ideally, these will be replaced by new, SARON-based contracts. At the very least, the existing contracts must be furnished with fallback clauses, which will come into effect when Libor is no longer available as a reference rate. I should stress that it is evident that the Swiss franc Libor will cease to exist.

In the context of investment policy, climate risks are not fundamentally different from other financial risks – they too can trigger or amplify market fluctuations, which influence the attractiveness of certain assets. By opting for broad coverage of entire markets, the SNB takes into account the complexity of the many different risks. We regularly review changes in the risk landscape and factor them into our investment policy where necessary. Furthermore, as an investor the SNB has long had in place a clear set of exclusion criteria for companies that violate Switzerland’s fundamental norms and values. For instance, it does not invest in companies that systematically cause  1  Relevant documents are available on the SNB website: www.snb.ch/en/ifor/finmkt/fnmkt_benchm/id/finmkt_reformrates  Page 3/6  Berne, 12 December 2019 Andréa M. Maechler  News conference  severe environmental damage. Given the monetary policy requirements of our mandate, we are convinced that the approach we have chosen is appropriate. Foundation of the BIS Innovation Hub  In October, the SNB announced that it was collaborating with the Bank for International Settlements (BIS) to establish the BIS Innovation Hub Centre in Switzerland. This Hub Centre, which is scheduled to commence operations at the beginning of 2020 alongside the Hub Centres in Hong Kong and Singapore, will initially focus on two projects. The first will examine the integration of central bank money into a distributed ledger technology infrastructure, with a view to facilitating the settlement of tokenised assets between financial institutions.
Perhaps the most important dimension of this experience was the doubling of productivity growth, from about 1.5 percent a year in the two decades up to 1995 to more than 3 percent a year in the decade since. Productivity growth is important because it is the primary driver of long term gains in living standards. And this acceleration in the United States seems more remarkable in part because most other large mature economies experienced a slowdown in productivity growth during the same period. This doubling of productivity growth in the United States can be broken down into several important elements. One was rapid improvement in the productivity of the relatively small part of the economy that produces information technology, including computers and computer software and telecommunications equipment. Also important was very substantial growth in investment in information technology by the rest of the economy. And alongside these changes, U.S. firms became significantly more efficient in their use of equipment and labor. The sources of these improvements in productivity are varied and complex. Economists do not fully understand what drove them, but they seem to agree on several contributing factors. We experienced a very large and positive technology shock, a dramatic increase in innovation, which improved the power of technology, reduced its cost, and made possible a revolution in production and business processes. The skills and knowledge of the United States workforce played a critical role in contributing to the extent and spread of innovation.

This decline in home bias - as Alan Greenspan has spoken about extensively - seems to have made it easier for countries to sustain larger current account deficits than might have been possible in the past. However, we don’t know much about how much further room there is to run in this phenomenon. We don’t know much about the present degree of concentration in the exposure of private savers to the United States relative to their longer term preferences, or how stable those preference are likely to be. And, therefore, we don’t know how likely it is that those outside the United States are going to be willing to continue to acquire claims on the United States at the recent pace. Finally, a number of observers have suggested that the present imbalances reflect what could be called a balance of interests, and that this balance is likely to endure for sometime. On one side of the balance is the substantial part of the world economy that has an interest in shadowing the dollar closely, as they absorb excess capacity, and that these governments are likely to continue to want to acquire dollars to make that exchange rate objective possible. On the other side of the balance is the United States, which is able to sustain higher rates of private spending and larger government deficits than it could if others were not willing to lend us their savings.