samchain/econo-pairs-v1 huggingface dataset:
If this second statement is correct, I see it as the Riksbank's obligation to investigate the possibilities of issuing an e-krona that can fulfil approximately the same role as cash previously did. If the Riksbank does not offer an electronic alternative, this also means, in practice, that all of our payments will have to go through banks or other financial institutions. Since the payment market has the imperfections it does, as I have described earlier, it is likely that monopoly situations, inefficient for the economy as a whole, would arise if the private market was allowed to act freely with no central government involvement. This problem could possibly be managed with the use of regulations, but it can be difficult to effectively regulate a monopoly. As long as a public alternative exists, this puts certain natural restrictions on the private players. Historically, cash has been this alternative. There are various possibilities for creating a technical platform for the e-krona. One possibility is to connect it to the existing infrastructure. Another alternative could be to develop a new system that could act as backup for other payment systems. This would give us an alternative independent platform that can build upon other technology, which would reduce vulnerability in comparison with only having one system. This could be particularly important if we decide to utilise the ECB’s system so that the main payment infrastructure becomes located beyond Sweden’s borders. 28 The Riksbank’s e-krona project. Report 1. September 2017. See also Bjerg, O.

Ravi Menon: FinTech for an inclusive society and a sustainable planet Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Singapore FinTech Festival 2020, Singapore, 8 December 2020. * * * Welcome to the fifth edition of Singapore FinTech Festival and SWITCH. More than 60,000 participants from over 130 countries have joined us in the world’s first week-long-round-the-clock hybrid digital and physical event. Let me also welcome participants of the Milken Institute Asia Summit joining us. FinTech as a Force for Good We are in the midst of three global crises – a pandemic; a recession; and climate change. Covid-19 has infected 67 million people and taken the lives of 1.5 million across the world. The global economy has plunged into its worst recession since the Second World War. One in five people in the world were affected by climate disasters in the last decade. But as Albert Einstein said, “In the midst of every crisis, lies great opportunity.” Two themes have consistently come up in discussions on how we can build back better as we emerge from the Covid-19 crisis: creating an inclusive society; ensuring a sustainable planet. The pandemic and economic crisis have laid bare the inequalities in our societies. The digitally enabled are able to order food and buy things online, borrow or invest money, and largely carry on with their lives; for the digitally excluded, it was a lot more difficult.
But other sectors, those most exposed to international competition - most of agriculture, large parts of manufacturing and some service sectors - were already then having a much more difficult time. Understandably, they were more vociferous. They had been hit, initially, by the exaggerated strength of sterling against the major European currencies in the run up to decisions about the euro. And they were hit, subsequently, by the successive waves of turmoil spreading through the world economy which saw exchange rates fall and demand dry up in Asia and elsewhere. So, faced with this dilemma, what were we to do? It is true that the external factors - unhelpful as they were in a more fundamental sense, in terms of the imbalance in the economy - did act as a restraining influence on overall aggregate demand and on inflation, and that meant we had somewhat more time than we would otherwise have had to moderate the growth of domestic demand. But even allowing for that we in fact had no choice but to tighten policy. BIS Review 98/1998  -3-  It wasn’t that we didn’t know that the internationally-exposed sectors were under the hammer we’d have had to be blind as well as deaf not to have known. Our problem was that if we had held back more than we did, in order to shelter the exposed sectors, we would have put the whole economy - including the sectors we were trying to protect - at risk of accelerating inflation.

The problem lies with its quality and productivity, which is insufficient to  BIS central bankers’ speeches  1  support growth: a large amount of construction, not enough machinery and equipment nor research and development. Boosting productive investment is not something that can be decided from above: it depends on the decisions of thousands of entrepreneurs. But all are above all sensitive to three levers. First, growth prospects, since order books, i.e. expected demand or GDP, are the main drivers of investment. To raise medium-term growth in France, structural reforms are essential. Today we know France’s handicaps: a highly indebted public sector, declining competitiveness, unwieldy procedures. We also know the solutions: they have worked in other European countries, Sweden in the 1990s, Germany in the 2000s, Spain in the 2010s. The second lever is confidence. Uncertainty is the enemy of investment. To reduce uncertainty, rules should be simplified, stabilised and made more visible. Finally, the third lever is profitability. This factor has a more direct effect for many SMEs which are sensitive to the volume of their selffinancing. II. However, while firms’ investment decisions are mainly influenced by economic levers, financial levers also have an important role to play. a) Today, companies need more appropriate financing: our challenge concerns equity financing more than debt financing. In order to steer investments increasingly towards innovation, making them de facto more and more risky, financing has to evolve. Innovative investments call for new modes of financing.
The mission statement of the Eurosystem very well reflects this by stating that, beyond the overriding objective of maintaining price stability, “we aim to safeguard financial stability and promote European financial integration.” In the light of the recent events, the benefits of financial integration are sometimes put into question and it may look like that the two objectives – safeguarding financial stability and promoting financial integration – potentially conflict with each other. It is exactly because we live in an increasingly interconnected world that the crisis has been so severe and widespread. So why should we – after the recent crisis – still promote financial integration? And still believe in the reconcilability of financial integration and financial stability? I will argue that financial integration is not only a fact, it is absolutely necessary for the functioning of the euro area economy. It is an irreversible process which should be promoted. While it may be true that financial integration poses some risks to financial stability – such as contagion fostered by greater interconnectedness – the benefits stemming from financial integration far outweigh its costs. I will try to convince you that – instead of containing financial integration – our efforts need to be directed at a better understanding of the different forms of financial development, particularly related to two aspects, namely complexity and size. Opaque products, when difficult to understand, may lead to mispricing of risks and distorted allocation of resources.

Investors, on the other hand, were attracted by the relatively higher return in times of low investment rate levels and by the sense of security provided – among other things – by the assessment of rating agencies. The ultimate outcome was that instead of dispersing risks associated with bank lending, securitisation had the opposite effect of concentrating them in the banking system, with harmful consequences for financial stability. The size of the financial sector is another aspect which deserves close scrutiny. When the financial system grows too large it may eventually lead to a misallocation of resources. Of course, it has to be acknowledged that developed credit markets are important for business start-ups. However, while finance is a crucial element for the Schumpeterian process of creative destruction, the recent financial crisis has also highlighted the role that large financial markets play in downside risk. A growing number of academics and opinion makers are questioning the theory that the effect of financial markets on growth is always positive and increasing. The relationship may well be non-linear: when of reasonable size, financial markets do help allocating resources efficiently and promote economic growth. However, as they grow larger, it may well be that financial markets may exert a decreasing marginal contribution to growth. In extreme cases, as the size of financial systems exceeds some threshold, their effect on growth could even turn negative.
He justified his limitation arguing that “many central banks and national economies have come to grief because governments have had too easy access to central bank credit”. Hence, he argued that it would be wise to limit such credit just to meet only the very short term cash requirements of the government arising from seasonal requirements of funds. This wisdom of Exter was not followed and, as a result, provisional advances which were meant to be short term credit facilities for six months became permanent credit. As a result, the level continued to increase to a new high level in each successive year with increased estimates of government revenue. It has, therefore, provided permanent free funding to the government, almost similar to the annual profit transfer which the Central Bank makes to the government. 2. The Central Bank has been authorized to acquire Treasury bills from the primary issues and it, therefore, constitutes another form of lending to the government. The Bank has been prohibited to subscribe to primary issues of or, underwrite, the other types of government securities, viz., Rupee securities or Treasury bonds. Exter justified this prohibition on the ground of the obvious possibilities of abuse by governments. Even the purpose of investing in Treasury bills was not to finance the government but to acquire the necessary liquidity for conducting smooth open market operations. This was explained by Exter as an injunction familiar to central bankers and commercial bankers alike that a bank should look to the liquidity of its portfolio.

It is in this part that he argued the case for a central bank for the country in preference to a currency board. Part II is a draft bill for the establishment of the Central Bank of Ceylon with explanatory comments. These comments have helped to guide generations of central bankers, in the past, what was exactly meant by each section or clause of the bill. It will continue to do so in the future as well. The commentaries presented were succinct, precise and to the point. They testify to the vast knowledge which Exter had about the functioning of an economy, his reading of the status and the direction of the country’s economy, the functioning of a monetary system both in domestic and global economies and how a central bank should be organized and operated. Hence, to understand Exter Philosophy of Central Banking, there is no better document than the Exter Report. Nearly six decades after John Exter completed the Exter Report, it would be useful to re-visit the report and assess his philosophy of central banking in the context of the body of knowledge of central banking today and identify its relevance to central bankers as guidance. This paper is an attempt at this exercise. The choice between a central bank and a currency board Prior to the establishment of a central bank, Sri Lanka was operating under a currency board system in which the country’s currency had been backed by 100 percent in foreign reserves maintained with the Reserve Bank of India.
For example, there is a striking correlation between the pattern of unemployment and wage growth in the UK and the US (Charts 3 and 4). In the US, unemployment has fallen to its lowest levels since 1969, while pay growth has remained modest. Given the strength of jobs growth, the weakness in pay has surprised many people, including the Bank of England. Chart 5 plots the Bank’s wage forecasts at annual intervals since 2012. Over this period, there has been a sequence of negative forecast errors, averaging around one percentage point per year. The same has been true of external wage forecasts, for the UK and elsewhere. These surprises suggest that the recent pattern in pay and unemployment has been unusual by historical standards. In the 1950s, A W Phillips uncovered a negative empirical relationship between pay growth and unemployment: pay grows faster when unemployment is lower. The Phillips curve was born (Phillips (1958)). This relationship has since become a central pillar of macro-economic theory and policy. Part of  3  All speeches are available online at www.bankofengland.co.uk/speeches  3  the attraction of the Phillips curve lies in the fact that it tells a simple story: the tighter the jobs market, the greater the pressure on pay. Exactly 60 years on, the Phillips curve is still widely used, and widely debated, by economists and policymakers. But with pay undershooting expectations, and with unemployment touching generational lows, some big questions are being posed of it.

Our overhaul of RTGS is helping to reduce complexity and costs in other areas as well. Take cross-border payments, where the Bank is leading by the adoption of emerging global standards for payments messaging and by working with other central banks and the private sector to explore the scope for cross-border payments in central bank money through synchronised national RTGS systems. This all could increase the speed and safety, as well as lower the costs, associated with cross-border transactions to support purchases and travel overseas. When coupled with the capture of richer payments data made possible by its renewal, RTGS will help support innovative services for the more effective management of personal and company finances. These benefits will be amplified by the UK’s ambition in implementing the Open Banking standard– under which the largest banks will be required to make customer data available to other existing firms and innovators, if the customer demands. In turn, this will help improve aggregator, comparison and switching services. Taken together, these advances will support innovation that allows you to manage your finances seamlessly, from tracking how much you spend on beer and books, to managing your future savings and current loans.
When the downturn comes, lending is tightened and many players want to sell their assets at the same time, which aggravates the downturn in both the financial and the real sectors. Cyclical risks can also be met using existing tools or tools especially designed for the purpose. A loan limit has been imposed on lenders in Sweden in the form of a mortgage cap. Although Finansinspektionen introduced this cap for consumer-protection reasons, the measure can also be used, at least potentially, for counter-cyclical purposes. Liquidity requirements also have a cyclical dimension. The Basel III regulations comprise a counter-cyclical buffer that should be built up in good times when lending is increasing faster than the trend. When a downturn comes, the authorities can then release the buffer, which gives the banks a safety margin and can counteract credit tightening. 10  BIS central bankers’ speeches  Macroprudential policy requires organisational development The advance of macroprudential policy has also led to organizational changes in supervisory work. In an increasing number of countries, individual authorities, or authorities working in collaboration, are being given direct responsibility for macroprudential policy. However, the question of the responsibility for macroprudential policy analysis and tools is not always simple. Macroprudential policy encompasses clear elements of both supervisory and central bank activities. I discussed this in my speech here at Nationalekonomiska föreningen a year ago.

The imminent entry into force of the regime allowing state-guaranteed loans to be accepted as collateral will give banks even greater access to Eurosystem financing. 2.3 Adaptation of prudential policy The ECB, ACPR and banking supervision bodies (the European Banking Authority, the Basel Committee, etc.) have also decided to take account of the impact of the crisis by making intelligent use of the flexibilities that they have as supervisors in the implementation of the regulations: we have reduced certain capital requirements and called on banks to reduce their precautionary reserves. We sometimes hear the suggestion that this is an unjustified relaxation: it is precisely the opposite. It is for this sort of exceptional circumstance that the reserves of capital and liquidity were built up. This is indeed in the spirit of the regulation that they should be used now, in a countercyclical way. This equates to a temporary reduction in the minimum capital requirement of about 3 percentage points for French banks. We have also temporarily reduced certain workloads by postponing stress-tests and easing certain reporting conditions. In addition, the European Commission recently proposed a series of targeted revisions to the CRR, to provide a regulatory response to the crisis on top of the flexibilities granted to the supervisor. While preserving the resilience of the banks, there is a need to make some adjustments to the prudential framework, to limit some procyclical effects of the current crisis on the level of capital requirements.
Box 8 of the Review discusses recent market initiatives for improving the functioning of the credit derivatives market. As shown by the chart on the right, the structure of market participants on the two sides of the credit derivatives market has changed over the past three years. Among the buyers of credit protection, the share of banks has declined in favour of hedge funds and other investors, such as private equity firms. Among the sellers of protection, insurance companies have increased their share at the expense of banks. It is worth noting, however, that hedge funds have been active also on the issuing side of the credit derivatives markets which is a business typically characterised by lucrative fees. 5.2. Euro area banking sector  With regard to the financial situation of large euro area banks, the financial results, overall, paint a picture of a very profitable banking sector with rather comfortable solvency ratios. In most euro area countries, bank profits were driven by continuing cost control and volume growth in mortgage lending that more than compensated for the narrowing of interest rate margins. Moreover, banks have also benefited from a recovery in lending to the non-financial corporate sector, as well as from the buoyant growth in fees and commissions. It should also be kept in mind, however, that the introduction of new international accounting standards might have had an impact on banks’ profitability.

The prices of commercial properties and private housing are also analysed not least because they reflect the value of the major part of the collateral that is pledged for loans from banks and mortgage institutions. Insofar as your banks conduct activities in foreign countries, stability surveillance also needs to encompass developments in these countries to ensure that negative developments will not destabilise your banks. Second, the major banking groups are analysed in various respects. Profitability trends illustrate the ability of the banks to build up reserves for future unexpected losses. Moreover, there is always the strategic risk that a bank with weak profitability will be tempted to try out new, bold but risky lines of business in order to generate a higher return on equity. Our analysis of the banks’ credit portfolios provides an indication of how loan losses are likely to develop in the coming year or two. Another aspect of the analysis relates to banks’ liabilities. Traditional banking involves accepting deposits and using the funds for making loans. People’s growing propensity to save in other instruments than bank accounts has forced the banks to finance a major part of the growth in credit by borrowing, mostly short-term funds, in the capital market. The structure of bank funding provides an indication of the risks in bank liquidity. Monitoring this is perhaps the most difficult part since the liquidity situation is liable to change very rapidly. 3.
Moreover in the European Union, where the ECB lacks a formal bank regulatory role, Caruana said he sees no need for changes in the system. “We are talking about national supervision with very good contact with national central banks, which are part of the euro system. This is a structure that is working now, and I don't think the Basel II will affect this structure. Certainly it makes it extremely necessary that supervisors and banks have a good relationship and risk-focused supervision, but this is already there.” *  *  *  New Basel Committee head opens door to rules delay A top global regulator thrashing out new banking rules left the door open on Monday to delay the “Basel II” accord, which will force sweeping changes in how banks set aside capital for unforeseen hazards. In an interview with Reuters, Jaime Caruana, the new chairman of the Basel Committee on Banking Supervision, defended the controversial accord, saying he was more concerned with getting it right than with meeting the committee's self-imposed deadline of end-2003 for a final draft. The committee would decide at its next meeting in mid-October whether it would be possible to meet the original timetable, he said. “There are some concerns that the tight timing that we have may jeopardise the quality we have in the accord,” he said in his first major interview since taking over the committee in May. “The first consideration is going to be the quality of the accord.

A more automatic system of activation could solve many of these problems, while at the same time introducing an additional automatic stabiliser for the lending and/or the business cycle. However, given that we do not have much experience to date with the working of this tool, the calibration of an explicit policy rule would be premature and the principle of “guided discretion” seems a second-best option. Assesing how to use the different macroprudential tools Let me now turn to the second issue I wanted to tackle. Systemic risk, unlike inflation or the public deficit, is multidimensional and this is why having different macroprudential tools at the disposal of the macroprudential authority is crucial. However, it is not always obvious how to discriminate among the different macroprudential tools, in particular given the potential interactions between them. A first example is the decision to activate the CCyB as opposed to activating a sectoral CCyB. It is perfectly feasible that some credit segments show exhuberant behaviour in the economy without any evidence of the credit cycle being in an expansionary phase. The activation of the countercyclical capital buffer to address a situation of this type does not seem advisable. If this particular activity is sufficiently profitable (at least in the short term) and that is why it is gaining weight in the overall credit portfolio, the increase in the aggregate cost of financing derived from the activation of the CCyB could be counterproductive.