samchain/econo-pairs-v1 huggingface dataset:
14  Sources for these data include the United Nations (from the oil-for-Food program) and the Central Bank of Iraq. 8  BIS Review 5/2004  clearly a consequence of the evolution of the actual and expected money supplies in the two territories. Given the monetary and fiscal policies pursued by the Saddam regime, the rise of the Swiss dinar against the Saddam dinar is, perhaps, understandable. But what is less obvious is the path of the Swiss dinar against the US dollar. Chart 4 shows the Swiss dinar-dollar exchange rate from 1997 onwards. Chart 4: The Swiss Dinar/Dollar exchange rate, Jul 1997-Oct 2003 0  Swiss $  5 10 Swiss $  15 20 25 30 35 Jul-97  Jul-98  Jul-99  Jul-00  Jul-01  Jul-02  Jul-03  Source: United Nations, Central Bank of Iraq  After fluctuating in the early 1990s, the Swiss dinar rose sharply against the US dollar from the middle of 2002 as the prospect of an end to the Saddam regime increased. It rose from around 18 to the dollar in May 2002 to about 6 to the dollar by the beginning of May 2003 when the war ended. That appreciation reflected expectations about (i) the durability of the political and military separation of Kurdish from Saddam-controlled Iraq and (ii) the likelihood that a new institution would be established governing monetary policy in Iraq as a whole that would retrospectively back the value of the Swiss dinar.

Mario Draghi: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament Introductory statement by Mr Mario Draghi, President of the European Central Bank, for the Hearing at the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 17 November 2014. *  *  *  Mr Chairman, Honourable Members of the Economic and Monetary Affairs Committee, Ladies and Gentlemen, It is a pleasure for me to be back again in this committee for the last hearing of 2014. This year has once again been a year of profound change for the euro area and for the Union as a whole. It was a year of legislative and institutional progress on many fronts, as 2014 saw the birth of banking union with the agreement of the Single Resolution Mechanism, the start of the Single Supervisory Mechanism and the successful conclusion of the comprehensive assessment of banks’ balance sheets. And it was indeed a challenging year for monetary policy, which saw the ECB take a wide range of measures to respond to the risks emanating from an increasingly sobering economic outlook. You have chosen two topics for today’s hearing, the relationship of financial fragmentation and monetary policy as well as the Eurosystem’s collateral framework. I will touch on both these issues, but let me first run you through our current assessment of the economic outlook. Economic and monetary developments The euro area growth momentum has weakened over the summer months and most recent forecasts have been revised downwards.
But whatever the explanation the resulting strength of sterling against the euro has contributed to the pressure on the internationally - exposed sectors of our economy, and a stronger euro would, from my perspective, help us towards better balanced growth in this country. It would also incidentally facilitate debate about sterling's possible entry into the single currency, in the sense that the undoubted attraction of nominal exchange rate certainty vis à vis our European trading partners, which is a major potential advantage of our adopting the euro, must depend to some degree on the likely exchange rate at which we might join. These then are the monetary challenges that we have faced over the recent period. The question now, of course, is where do we go from here? There has recently been encouraging evidence - in the US data particularly but also for example in many of the more forward-looking indicators of European economic activity - that we are now in the early stages of global recovery. We cannot be sure that the early momentum will be maintained; nor do we know just how strong the expansion will prove to be or how long it will last; but the signs are promising, and indeed far more positive than any of us would have dared to hope just six months or so ago in the aftermath of the terrorist attacks on New York and Washington.

And the rate of unemployment fell from a peak of over 10½% on the LFS measure to around 5% last summer; on the claimant count measure it fell from some 10% to just over 3%, which meant that the number of people claiming unemployment benefit, at under 950,000, was the lowest for 26 years. Short-term interest rates are at a 38-year low. All of that it seems to me gives the lie to a view that was quite widespread a decade ago, that sustained low inflation would inevitably mean continuous suppression of the real economy. I'd go further myself and suggest that it provides considerable positive support for the central bankers' credo. Now some of you - given what's been happening to your own businesses, to certain particular business sectors, and in regions of the country where those sectors are particularly heavily concentrated - may think that I've been living on a different planet. The problem is - and it is a real problem - that with the best will in the world macro-economic stability, the stability of the economy as a whole, cannot guarantee stability at the more micro-economic level: it can not guarantee the prosperity of every individual business or even of whole business sectors or geographic regions.
And is there an important “So what?” Starting with the “Why?”, market intelligence suggests that uncertainty surrounding the global outlook has been one factor; itself in no small part a consequence of the unexpected rough halving in the price of oil since last summer. This uncertainty can be seen in the recent increase in the dispersion of economists’ forecasts for inflation in the US, UK and euro area during 2015. Central banks themselves have reacted to the changed global outlook and monetary policy makers have been active in recent months. Indeed, so far this year 24 central banks have cut their policy rates. Moreover, the decisions by the ECB and three other central banks since  1  2  An EGARCH model is fitted to FTSE All-Share daily returns and returns on a sterling-denominated investmentgrade corporate bond flat price index. The EGARCH model allows for conditional volatility to react differently to negative and positive shocks to returns. The model is fitted on returns data split into two sub-samples of approximately equal length: pre-crisis (Jan 2001 – Jun 2007) and post-crisis (Apr 2009 – Jan 2015). BIS central bankers’ speeches  last summer to set negative policy rates have raised questions about where the lower bound for monetary policy exists. Clearly the answer is no longer as simple as just above zero for all central banks. And those decisions are raising questions about how markets work when negative rates persist several years down the yield curve (Chart 4).

In such a scenario, demand for perceived safe financial assets would fall in general, and for the Swiss franc in particular. However, as downside risks are currently far more likely to materialize, the SNB will enforce the minimum exchange rate with the utmost determination. Under these exceptional circumstances, it is a necessary measure to fulfill our mandate. BIS central bankers’ speeches  3
Recent work using French data7 shows that the pass-through for a positive shock on energy costs is over 100%, while that for a negative shock is much lower: 58%. This asymmetry implies that the decline in energy and input  7  See R. Lafrogne-Joussier, J. Martin et I. Méjean Transmission des coûts importés et montée de l'inflation (caeeco.fr)  Page 11 sur 14 costs, currently occurring as tensions and bottlenecks in supply chains ease, may not fully translate yet into lower inflation. (ii) Besides, even though the external part of inflation is currently falling, core inflation remains high. Inflation excluding energy and food stood up at 5.6% in April, slightly below March (5.7%). External supply-driven price increases have spread to core inflation. Service inflation, in part fuelled by wage developments, has gradually but steadily increased over recent quarters. This deserves close monitoring. Historically, services are the most persistent component of both headline and core inflation, and their share in “core consumption” has significantly increased. Page 12 sur 14  Unlike for non-energy industrial goods, prices in the services sector will only get little relief stemming from decreasing international prices. Looking a few quarters ahead, services inflation is likely to become the dominant source of inflation in the euro area. Non housing services especially are less directly sensitive to interest rates; the dampening effect of monetary policy on aggregate demand will be felt but it will take more time. III. What conclusions can be drawn for monetary policy?

It is the drive to making the difference to the economic well being of our citizens. Fiercely knowing this responsibility and accountability is the very source of the intense energy necessary to preform the function of central banking. Knowing the high costs that destabilising developments can have on the people and businesses and its potential damage to the nation is a major prompt of the perseverance to press on, to survive and to succeed. Often we need to just confront the realities and produce a solution when it seems hopeless. Courage is also needed to stay the course. Knowing the stakes are high, knowing that you are being counted upon spurs the unwavering determination. From my experience as a lifelong career central banker, such extreme conditions that test us to the limit have become increasingly frequent. While there have been many great successes that have been achieved, there have also been those moments that have been most trying  BIS central bankers’ speeches  1  and devastating. During such times, developments set you back to a much worse situation than your original position. Those times have arisen from external shocks that are beyond our control, from ambitious agendas that have been met with violent resistance and domestic stress brought on by actions that are in conflict with the Bank’s mandate or from political tensions.
This led to a downward movement of the implied forward rate, which we stated that we considered reasonable in the press release in connection with the interest rate decision. At present, the implied forward rate is slightly higher than it appeared immediately after publication of the unexpectedly weak CPI outcome for January. However, in the short term the differences are marginal. The current implied forward rate path entails the repo rate remaining unchanged until summer and then subsequently being increased gradually. We Executive Board members will thus take a stance with regard to which monetary policy conclusions can be drawn from the information received since the end of February at our meeting on 27 April. Let me say a few words here on my own view of the situation. The February Inflation Report contained the forecast that international economic activity would remain relatively stable over the coming years. Since the Report was published, the oil price has risen by almost 10 dollars per barrel which is clearly higher than the forecast in the Report. The forward prices for oil have risen, which indicates that there may also be reason to expect a higher oil price for some time to come. Experiences from recent years are that the international upturn in economic activity has been surprisingly resilient to increases in the oil price. Revised national accounts for the United States have been received, which show that growth was marginally stronger at the end of 2005 than was indicated by preliminary figures.

The strong level of economic activity and the inflation forecast indicate, however, that it will again be necessary to gradually shift monetary policy onto a less expansionary path to ensure that inflation remains close to target. 6  BIS Review 33/2006
They have done so more acutely in certain particularly vulnerable emerging market economies, and relatively moderately – to date – in the advanced economies where share prices have fallen and corporate debt spreads have risen since mid-2018. Against this background, consumer price indices have tended to post significant slowdowns in the final stretch of 2018, which are mainly due to the notable recent decline in oil prices. In the euro area, the lesser pace of economic activity in the first three quarters of 2018 led the ECB, in December, to revise down its growth forecast for the year to 1.9%, 0.6 percentage points (pp) less than in 2017. Discounting the effect of certain transitory factors, such as strikes, bad weather and, more recently, the temporary difficulties in the automobile industry, especially in Germany, and the “yellow jackets” crisis in France, everything points to a significant slowdown in the pace of expansion of the euro area in 2018 compared with 2017. Of particular note is the sluggishness of exports, weighed down by the moderation of global trade and by the possible lagged effects of the appreciation of the euro. Conversely, domestic demand appears to have remained firmer, at least until the most recent period, underpinned by the favourable financial conditions and the growth of employment and of household and corporate income. According to the latest ECB forecasts, the expenditure of these agents will continue to allow GDP growth rates in the euro area to remain somewhat above their potential over the coming years.

Second, as I noted when looking at the macroeconomic scenario, the overall economic slowdown is becoming stronger, particularly in the euro area, which poses downside risks to the macroeconomic scenarios of the Draft Budget and of the Banco de España. I now review the main courses of action defined by the Draft Budget for budgetary policy in 2019. 2  Draft State and Social Security Budget for 2019  Meeting the deficit target of 1.3% of GDP for general government as a whole included in the Draft Budget depends largely on the projected growth of taxes and social security contributions. On official estimates, the additional revenue would be sufficient to finance a significant portion of the proposed increase in the spending of the State (observing the ceiling set by the Council of Ministers), the social security system and regional and local government. Regarding the behaviour of government spending, many, albeit not all, of the measures in the Draft Budget, were included in the budgetary plan published by the government in October 2018, which moreover provided the expected broad outline of the budgets for the rest of general government. The budgetary plan projected an increase in overall government expenditure in 2019 of 3.1% (in National Accounts terms), below nominal GDP growth for that year, thus allowing a corresponding reduction of the budget-deficit-to-output ratio.
In keeping with the traditional role of a lender of last resort, the extensions of credit to Bear Stearns that the Fed made to facilitate the merger were secured by collateral. The $ billion loan will be extended only when and if JPMorgan Chase and Bear merge. We will be protected from loss by three different risk mitigants: first, a substantial pool of professionallymanaged collateral that, as of March 14, was valued at $ billion; second, the agreement on the part of JPMorgan Chase to absorb the first $ billion of any loss that ultimately occurs in connection with this arrangement; and third – and perhaps most importantly – a long-term horizon during which our collateral will be safe-kept and, if sold, will be sold in an orderly fashion that is not affected by the unnaturally strong downward market pressures that have been associated with the recent liquidity crisis. Are there risks here? Yes, but the risks are modest in comparison to the substantial damage to the economy and economic well-being that potentially would have accompanied Bear’s insolvency. Congress created the Federal Reserve after the Panic of 1907 with broad  BIS Review 39/2008  7  authority and a range of instruments to assume precisely this type of risk, in support of overall financial stability and economic growth. Assisting the JPMorgan Chase merger with Bear was the best option available in the unique circumstances that prevailed at the time.

By reducing the probability of a systemic financial crisis, the actions taken by the Fed on and after March 14 have helped avert substantial damage to the economy, and they have brought a measure of tentative calm to global financial markets. Relative to the conditions that existed on March 14, risk premia have narrowed, foreign exchange markets are somewhat more stable, energy and commodity prices are lower, perceptions of risk in the financial system have diminished, and the flight to quality is less pronounced. Nevertheless, liquidity conditions in markets are still substantially impaired and the process of de-leveraging remains underway. And this will amplify the headwinds facing the U.S. and global economy. In this context, policymakers and financial market participants need to continue to act forcefully. And their actions need to be proportionate to the challenges. Financial institutions need to continue to improve the quality of disclosure, and even the strongest institutions face compelling incentives to raise new equity capital so that they can take advantage of the opportunities ahead. Actions to strengthen the capacity of the major government sponsored enterprises, the Federal Housing Finance Board and the Federal Housing Administration to provide finance to the mortgage market and help reduce the risk of avoidable foreclosures are a very important complement to the broader policy actions already in place to contain the downside risks to the economy. The Federal Reserve, working closely with other major central banks, will continue to provide liquidity to markets to help facilitate the process of financial repair.
Low risk premiums, possibly based on irrational expectations of future profits, can contribute to overinvestment. In a recent study3 Carsten Detken and Frank Smets show that those financial cycles that have preceded periods with large falls in output, unlike the other financial cycles, have been characterised by rapid growth in the real stocks of money and credit at an early stage of the cycle, as well as by a sharp rise in property prices. They also find that monetary policy has been relatively looser at an earlier stage during the expansionary phase of such “high-cost cycles”, compared with other cycles. So, it seems as if the central bank at an early stage of the cycle is sometimes led to conduct an overly loose policy and in that way contributes to supporting unsustainable developments in the prices of financial assets and property. Structural changes can, as I mentioned, also result in the forecasts of inflation not showing that imbalances are accumulating. Forecast models, formal and informal, are based on experiences obtained from data covering a long period of time. This is generally an advantage, but during periods of large structural change there is a risk that formal models will be inaccurate as regards extrapolating short-term tendencies. For example, there are many factors that can result in actual inflation not behaving as assumed in the formal forecasting methods. Some can be attributed to the shift to a low-inflation regime.

Christine Lagarde: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament Speech by Ms Christine Lagarde, President of the European Central Bank, at the Hearing at the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 20 March 2023. ***  Accompanying charts of the speech I am happy to be back in this Parliament to discuss the ECB's monetary policy shortly after last week's Governing Council meeting. More than one year has now passed since that February morning when we all woke up to the horrifying news of war in Europe. The Russian invasion of Ukraine – which you have selected as a topic for this hearing – is first and foremost a human tragedy for the people of Ukraine. And in the face of this senseless atrocity, they have shown remarkable resilience and determination. In the words of the former President of this Parliament, José María GilRobles, who sadly passed away last month, "The future belongs to those who are prepared to make the effort to hear the voice of hope".1 As Europeans, we need to continue hearing the voice of hope coming out of Ukraine and support the Ukrainian people in their struggle for freedom, democracy, and peace – the fundamental values of our Union. It is clear that solidarity, especially during this crisis, makes us stronger and more resilient.
10 (d)  Leakage  From the outset of this debate, I have stressed the hazards in trying to steer credit growth in a world in which capital can flow freely across borders. Think of a case where the domestic authorities increased the risk weight on mortgage lending. The measure would apply only to banks headquartered here or operating out of a subsidiary. It would not apply to branches of foreign-headquartered banks, still less to pure cross border activity. But it is easy to imagine that, rather than borrowing from UK-domiciled banks, mortgage brokers could arrange for households to borrow from a lender based overseas, or at least with the loan booked overseas. In terms of the accumulation of debt in the sector concerned – in this hypothetical case, housing – there might, after a time, be little or no effect. That would obviously not be great for the risk of default by the borrowing sector concerned. But UK-based banks would have been required to build their defences. That might mean that, other things being equal, if and when the borrowing sector got into difficulty, UK-based banks would be less likely to collapse under the strain of losses. If so, the damage to financial stability would be reduced, and the eventual economic costs might plausibly be lower than otherwise; especially if those UK banks were able to take up some of the slack created by withdrawal of credit supply by foreign banks to sound UK borrowers. It might, though, just be possible to go further.

Participant deposits in the ALF are backed by a fund of high quality securities – sukuk –  3/5  BIS - Central bankers' speeches  complemented as needed by cash deposits at the Bank. The return from these instruments, net of hedging and operating costs, may be paid to depositors in lieu of interest. Deposits held with the ALF help enable participant banks to meet regulatory requirements to hold a buffer of high quality liquid assets to meet obligations as they fall due. Using our convening power as a central bank we collaborated with and learnt a lot from numerous institutions in the Islamic finance sphere from around the world, whose experience and input was essential in helping us create the facility. Since launching the ALF in December 2021 we have seen strong usage of the facility and received, and continue to receive, positive feedback on its design. We are pleased with progress in meeting the challenge. First from the perspective of fairness, but also in the support that it gives to the real economy, be that through lending to businesses, or as the focus of today's event, supporting sustainable investment. The approach we took in developing the ALF can be extended to efforts beyond the world of central banking.