samchain/econo-pairs-v1 huggingface dataset:
Owing to their substantial day-to-day volatility and the interfaces with money laundering and other criminal activity, cryptocurrencies are unsuitable as a universal means of payment. On the other hand, cryptocurrencies are attractive as speculative assets. Crypto-assets is therefore a better term than cryptocurrencies. Central bank digital currencies Another possibility is central bank digital currencies (CBDC). A CBDC is a digital form of central bank money made available to the general public. A number of central banks, including Norges Bank, are assessing whether introducing a CBDC would be advisable and, if so, in what form. For the time being, banknotes and coins are the only form of central bank money, with a role to play both in a contingency and under normal circumstances. Effective electronic contingency arrangements are crucial for ensuring that the payment system is resilient to disruption. Cash is part of the overall contingency arrangements, in the role of last resort should the electronic contingency arrangements fail. Banknotes and coins will continue to be in use into the foreseeable future. However, the use of cash is relatively low in Norway compared with other countries and is declining. It is not impossible that cash usage, at some point in the future, will fall to such a low level that banknotes and coins can no longer be regarded as a generally accepted means of payment.

Following the financial crisis in Japan at the beginning of the 1990s, prices fell and households postponed their consumption as they were expecting prices to continue to fall. The Japanese central bank cut its policy rate to zero and let it remain there, but falling prices meant that monetary policy was nevertheless too tight, in real economic terms. The liquidity trap problem meant that growth was very low over a long period of time. For the three decades prior to the outbreak of the financial crisis in the early 1990s, the average GDP growth in Japan was just over 6 per cent a year. Following the financial crisis it has been just over 1 per cent a year. 5 Because of the risk of a liquidity trap it was difficult for the US central bank, on the basis of the information available at the time, to do anything other than cut the policy rate – the Fed  2  OTC instruments are bilateral financial instruments that are traded outside of the usual stock exchanges and market places, i.e. “over the counter”. 3  Bean (2009). 4  Bean (2009) and Taylor (2009). In BIS (2008) it is pointed out that low policy rates globally may have contributed to the crisis. Bubbles have also arisen on the housing markets in a number of other countries that burst in recent years. 5  See Figure 8 in the presentation material. BIS Review 162/2009  3  Funds Target rate – to 1 per cent.
As we review the text of Basel II to consider our next steps, it is easy to be impressed by some of its advanced techniques for quantifying the risk of loss. But the formulas in Basel II are not revolutionary. The advanced approaches to credit and operational risk contained in Basel II reflect the tremendous advances in risk management achieved among some of the most sophisticated banking organisations. Indeed, rather than inventing something new, the Committee adopted many of the sound practices that the industry had already identified. What is new in Basel II, and what matters most for supervision, is the marriage of two important trends. By building on these trends, Basel II will incorporate principles that are relevant for all supervisors. 2.1  First trend: qualitative assessments of internal controls  The first trend that is captured in Basel II represents a shift in the focus of safety and soundness evaluations. In the past, supervisors emphasised the use of backward-looking evaluations of a bank’s performance to determine its financial condition. This drew our attention toward past results rather than future risks and a bank’s readiness to manage them. In contrast, today many supervisors focus more on qualitative reviews of the internal control structures that protect a bank against its specific risks. This represents a far more difficult way of evaluating a bank’s safety and soundness. It requires that we look beyond the numbers and into the bank’s internal processes.

‘Too large’, and central banks may find themselves accused of usurping the role of financial markets, harming innovation and inducing imprudent behaviour; fuzzying the boundary between monetary and fiscal policy, providing a ‘dangerous temptation for … the political class’1; or giving unmerited financial rewards to reserves holders.2 ‘Too small’, and central banks may be criticised for being asleep at the wheel3 at times of crisis; failing to play their part in ensuring an adequate supply of risk-free assets in the economy to maintain financial stability during peacetime4; or hampering the effectiveness of monetary policy transmission.5  Chart 1: Central bank balance sheets compared  Source: Individual central banks’ published data, IMF  The Bank of England has found itself on both ends of this debate in the past 10-15 years. Before the financial crisis, our balance sheet was modest, at 4% of GDP. Since then, and in direct response to the crisis, that figure has risen to around 30%: a more than seven-fold increase. Other regions have seen similar, or in some cases much larger, expansions (Chart 1). But by the UK’s own standards this is truly exceptional. You have to go back to the end of World War 2 or the early 18th century to find anything even approaching the same highs (Chart 2).
The issue here is not only the financial effort involved, but also the difficulty, from a political perspective, to explain to the public the need for a financial contribution to mechanisms benefiting wealthier countries for the time being. A case in point is the fall of the Radičová cabinet in Slovakia in 2011. Euro adoption – a conclusion In my view, euro adoption is in the best interest of EU Member States in the long run – given the high degree of business cycle correlation and market integration –, but several essential preconditions, added to the nominal criteria, need to be cumulatively fulfilled in order to make the most of these benefits. I have been on this job long enough to remember a time when the dominant view was that fulfilling nominal convergence criteria was enough for successful euro area membership. The paradigm appears to have shifted. First, the emphasis falls now on the sustainability of nominal criteria fulfilment. Second, achievement of a relatively high degree of income per capita convergence, prior to joining the euro area, is considered increasingly important, since too much catching-up in terms of real convergence poses the risk of more intricate economic cycle management in the absence of independent monetary policy. Third, another essential prerequisite is that the new institutional framework of the euro area has to prove its efficacy in preventing and addressing the imbalances menacing economic activity.

My speech will endeavour to outline the arguments that support the opt-in decision for Romania, but I believe that, despite the slightly different circumstances, the reasoning also holds true for other non-euro area countries – such as Poland, Hungary, the Czech Republic or Bulgaria. General remarks Before dealing with the arguments underpinning our position regarding the Banking Union, let me give you a short account of Romania’s recent economic history that should enable all of you to better understand our particular circumstances. No doubt the crisis has taken its toll on Romania’s economy, given the large imbalances which had been steadily accumulating during the boom years. Whether the crisis has ended or not on the European level is still a matter of debate. What may be said for certain is that Romania undertook the necessary adjustments during the 2009–2012 period and the preconditions for sustainable growth are now in place. Indeed, the outcome of these adjustments may already be seen in the 2013 economic performance, which hopefully marks a turnaround in Romania’s economic development: •  rapid (judged by the current standards in the European Union) economic growth, namely 3.5 percent,  •  sizeable adjustment of the current account deficit, from the double-digit area (between 2006 and 2008) to 1.1 percent,  •  historically low inflation (1.55 percent at the end of the year),  •  fiscal deficit well below 3 percent.
The main risks and factors of vulnerability The scenario I have outlined also poses risks to our economy. Firstly, the improved international setting has been affected by higher global uncertainty, the result of recent proposals to curb trade, migratory movements and policy coordination. In this respect, mention should be made of the potentially adverse impact of the Brexit negotiations, given the highly significant trade and financial ties between Spain and the UK. Secondly, the rise in US long-term interest rates in late 2016, which partly reflects certain changes expected in the stance of its economic policies, has already impacted the European markets. While it is premature to conclude that this is the start of the normalisation of monetary conditions, it should be recalled that such normalisation will come about if, as is expected, the recovery in the advanced economies takes root. Within Spain, the level of public debt and of that of certain segments of the households and firms sectors remains at high levels, thereby generating high dependency on financing from abroad. This is a source of vulnerability, in particular to any future tightening in monetary and financial conditions on international markets. Finally, from a broader time perspective, the sizeable structural component of the unemployment rate, population ageing and low productivity are the main constraints on the sustained growth of our economy.

In part, I do not consider the risk very large of Sweden alone getting caught up in a crisis where these very instruments will be the best for stabilising our economy. In part, we have seen that the exchange rate can be governed for fairly long periods of time by factors on the financial markets that are not primarily related to the real economy. Instead of acting as a shock absorber for business climate developments in Sweden that are out of synch with other countries, there is a risk that the krona, by weakening more than motivated by fundamental factors, could instead upset Sweden's possibilities for stabilising its development. The economic gains of remaining outside the eurozone thus appear uncertain, while recent research indicates that Swedish debate has probably undervalued the integration gains from EMU. When you hold your first euro banknote next year and take a closer look at it, you will be able to see that Sweden is actually present, on the European map that adorns one side of every banknote. May I be permitted the cautious interpretation of this as a sign of things to come? BIS Review 92/2001  5
At the same time, there has been a considerable decrease in prices for our imports, such as clothing, footwear and electronic equipment. From 2003 to 2008, this improvement in Norway’s terms of trade alone boosted national income by more than 20 per cent, or a good 4 per cent per year. The picture of Norway’s favourable situation has been reinforced by the very severe impact of the financial crisis on other western economies, while Norway seems to have emerged with nothing more than a mild downturn. Nevertheless, there are many challenges ahead. Chart 1 Relative labour costs Deviation from the average for the period 1970–2009 Per cent, 1990–20101  1  Figures for 2010 are an average for the period 1 January–19 August 2010. A rising curve indicates weaker competitiveness. Sources: Statistics Norway, Technical Reporting Committee on Income Settlements (TBU), OECD, Ministry of Finance and Norges Bank. Norwegian labour has never been as costly as it is now. Norwegian businesses may lose out in the competition for contracts given the current high level of spare capacity in other countries. There are frequent reports of businesses relocating activities to neighbouring countries, such as Sweden. Labour in Sweden is perhaps as much as 30 per cent cheaper than in Norway and the two countries are closely connected in terms of language and culture. The management of Norway’s oil wealth poses another challenge.

He is supposed to explain both what is happening and what would happen if such and such an action were taken.” 10 However, as he also points out: “The purpose is not that he should reach a conclusion of the type: this is how you should act now! … Any economically important decision must also be based on a number of human, ultimately political, assessments that the expert, the economic scientist, is by no means more qualified to decide on than other good citizens.”10 It can often be difficult to distinguish the object, ie exercise objectivity, from the perception of that object, ie subjectivity. Ragnar Frisch discusses this too. In an article written in 1936, he draws a line from the natural sciences through to the social sciences, where “… the difficulties of arriving at such unconditionally valid results become greater and greater. The reason for this is first and foremost that the whole system of ideas on which the natural sciences are based becomes increasingly more diffuse as one approaches the social sciences.”10 When I was a student here at the University of Oslo at the beginning of the 1970s, there was a fairly broad consensus that the problem of unemployment had been solved once and for all. The belief was that the economy could be fine-tuned through government management, control and regulation. A similar optimism prevailed with respect to economics in the years prior to the financial crisis.
First of all, securing price stability will make permanent all that we have gained in the process of the falling inflation. When price stability is achieved, macroeconomic stability will sustain and efficiency in the economy will increase. You should remember that by attaining price stability, a precondition for sustained growth and increase in employment would be fulfilled. As a result of all these macro economic gains, economic units will no longer take into consideration an uncertainty like inflation both in their investment and consumption decisions. They will be able to forecast for the long term and plan more securely. 4  BIS Review 63/2004  Since economic units can forecast better while making decisions, in this stable environment labor market will work better, and people will be able to find more permanent jobs. In a continuous inflationary environment, growth also has ups and downs and in the period of growth for the unskilled labor force, which is very common in our country, it takes a lot of time to find a job and in the contraction period loses the job very easily and quickly. Stable environment achieved with the falling inflation will accelerate the inflow of foreign capital and our competitiveness edge in the international markets will increase. I would like to highlight one more matter in light of the above-mentioned issues. Inflation is not a fact that declines all by itself.

In the worst case, falls on the stock exchange that correct overvaluations can lead to financial instability, if share prices have been driven by pledged shares and if the market participants are in some cases unable to pay back their loans. This can result in panic sales, exaggerated falls in prices and credit institutes facing difficulties as a result of exposure to households and institutions that have become insolvent. This result risks leading to large fluctuations in the real economy. Critics of the Federal Reserve in the USA claim that when Alan Greenspan coined the phrase "irrational exuberance" in 1996, it was clear that prices on the stock exchange had risen too much and that this development should have been counteracted. Nothing was done and the rise in share prices continued until March 2000. Since then the stock exchanges have fallen, Nasdaq by 70 per cent, and the fall on the stock exchange risks pulling the USA down into a recession that could have been avoided. However, comes the objection; is it really possible to realise when a stock exchange has risen too much? The answer is that prices on the stock exchange must have some relation to the underlying development of productivity in trade and industry, to company profits and to the market's pricing of risks. Of course, it is not possible to determine precisely when the stock market has risen too much or when it is undervalued. However, it should not be too difficult to detect obvious deviations.
The euro exchange rate remains high by historical standards (6% in real terms above its average over the past decade). Finally, interconnectedness, which creates contagion inside Europe, also works well beyond the euro area. Banking and market pressures have been transmitted globally. Asia may be 6,000 miles away from Europe, but, for the financial markets the distance is less than 30 seconds. Origins and causes How could the crisis have been allowed to develop? There have been lags in the decisionmaking process. Fiscal discipline has not been respected in the past. European rules have not been implemented. Also, some policy decisions have produced unintended consequences. One example is private sector involvement (the so-called PSI) in sovereign debt resolution. On the face of it, it sounds totally appropriate. Economists like saying that, once debt has become unsustainable, it is better to reduce it immediately. Beyond simple economics, PSI is seen as necessary for eliminating moral hazard and ensuring market discipline. When investors have taken excessive risks, they should normally pay a price. Finally, PSI has a strong, and legitimate, political appeal: tax payers cannot be called to bear the consequences of the reckless behavior of borrowers and lenders. 2  BIS central bankers’ speeches  However compelling, this line of reasoning misses an important point. The sovereign bond market is more than a means of financing governments. It is the pillar on which all financial systems ultimately rest.

Total completed foreclosures including short sales and deeds-in-lieu from the beginning of 2008 until the end of the third quarter of 2010 represent around 58 percent of all foreclosure starts over that same period. In addition, in each quarter the pace of foreclosure starts has exceeded the pace of completed foreclosures. At best, then, we are only halfway through the resolution process. To conclude where I began, the name “Great Recession” is also appropriate in that it reminds us not only of the severity of what took place, but also of the travesty that was avoided – that is, the second Great Depression. This was only possible with the aggressive monetary and fiscal policy actions that were undertaken both domestically and abroad. Much was learned in the process about how to effectively deal with a financial crisis, and much remains to be learned about how to prevent them from recurring in the future.
For the time being, bank profitability has only somewhat declined due to interest rate cuts, lower fees and higher provisions to weather such an adverse situation. However, it remains uncertain how the pandemic may affect credit portfolios in the most vulnerable sectors.8 It is therefore particularly important to monitor the portfolio quality indicators for the various Latin American banking systems, which in 2020 accounted for more than 50% of profits at Spain’s two largest banking groups, and which during the previous European sovereign debt crisis played a countercyclical role for the Spanish banking system. The worsening of the pandemic in Latin America since late 2020 points to heightened uncertainty in the short run. The next six months will be a race between new strains of the virus emerging and the vaccination campaigns, which in Latin America are progressing but gradually. Among the factors supporting the region’s continued recovery in activity is external demand, which may also benefit from new stimulus programmes passed in the United States and better price performances for certain commodities. The IMF forecasts GDP growth for the region of 4.1% in 2021, albeit again with notable differences across the economies.9 In the medium term, the crisis poses a series of significant risks and challenges, some global in scope and others more specific to Latin America. 7  Mainly credit support programmes, moratoria on payments by the most vulnerable borrowers and government guarantees.

And this despite the fact that several Latin American countries adopted more stringent restrictions on people's movement and activity – and at an earlier juncture – than other emerging economies. Some of the region’s structural characteristics may have been behind the region’s greater vulnerability to the pandemic. Among these, analysts have pointed to high poverty levels, lower institutional quality compared with other emerging economic areas, high informal employment rates, the relative fragility of health systems and the high proportion of the population living in urban areas. 2  Defined as loans and other claims on households and non-financial corporations in the respective country or region, excluding public sector entities and financial institutions. 3 Further, as Chart 1 shows, these exposures rise to one-third of the total when risk-weighted. Lastly, defaulted exposures in Latin America represent more than 40% of all such exposures outside of Spain. 4 On data at 22 February 2021  2  The pandemic and the containment measures adopted led to a sharp drop in economic activity from March 2020. Thus, in 2020 Q2, activity in the region contracted by 14% in quarter-on-quarter terms. In 2020 H2, the situation began to recover. Among other factors, this was thanks to the gradual easing of lockdown measures, the Chinese economy returning to near pre-pandemic levels of growth and the favourable performance of financial markets, which has seen capital flows return to the region.