samchain/econo-pairs-v1 huggingface dataset:
High and fluctuating inflation, on the other hand, disrupts the signalling function of the pricing system and can more easily lead to bad economic decisions. In an environment with low inflation, the price system can do a better job in allocating resources to uses where they will do most good. In a broader sense, one could see an efficient pricing system as part of an efficient payment system – it ensures that the transactions made are based on the best information possible. Price stability can also be justified for reasons not immediately connected with the efficiency of the payment system, such as the fact that high and fluctuating inflation tends to give rise to undesirable distribution effects. For instance, inflation appears to hit poor people hardest as the rich usually have better opportunities to protect themselves, or even to benefit, from the effects of inflation 2 . This could be because, for instance, poor people often have no other opportunity than to retain a large part of their limited assets in the form of money or because they are to a greater extent than the rich dependent on public subsidies that are not fully indexed. Keeping inflation low and stable is currently the most obvious – and definitely the most noticed – task for modern central banks. The reason for the focus on price stability is of course the negative experiences of the high and fluctuating inflation many countries experienced in the 1970s and 1980s.

The main way we achieve these goals is by controlling the federal funds rate, the rate at which banks lend each other money overnight in the form of unsecured loans. This rate in turn affects overall financial conditions and thereby the wider economy. At each of its meetings, the Federal Open Market Committee (FOMC) decides on the target range for the federal funds rate, which currently stands at 1-3/4 to 2 percent.2 But how does this work—that is, what keeps the federal funds rate within the target range? The Fed has an operational framework in place designed to keep interest rates where the FOMC wants them. We call this an “ample reserves” regime. Back in January of this year, the FOMC communicated its intention to continue to implement policy according to this regime.3 The key benefit of this approach is that it’s a simple, effective way of controlling the federal funds rate and thereby influencing other short-term interest rates. The ample reserves framework has three elements designed to maintain the federal funds rate within the target range. The first, not surprisingly, is supplying an amount of reserves that banks hold at the Federal Reserve that is “ample.” By that, we mean that the supply of reserves is adequate to efficiently and effectively implement monetary policy. Here, “efficient” means that the level of reserves is not excessive, relative to what’s needed to be effective.
And, in some forms, they pose a danger to the environment and to other societal objectives. Stablecoins, meanwhile, are vulnerable to runs, as we have recently seen with algorithmic stablecoins. In this context, it is vital that any remaining regulatory gaps in the crypto-asset ecosystem are closed. I count on the work of this Parliament to ensure that an ambitious regulatory framework emerges from the current negotiations on the EU Regulation on Markets in Crypto-Assets (MiCA)[11] and on the current legislative proposals on anti-money laundering and countering the financing of terrorism, especially in relation to information accompanying transfers of funds and certain crypto-assets (FCTR). [12] To avoid this confusion about what digital money is and what it is not, we need the central bank to provide one of its own, responding to the demand for digitalisation and providing an anchor of stability in the world of digital finance. Protecting the stability of the financial system For the digital euro to play this role, we need to carefully evaluate its potential impact on monetary policy, financial stability and the provision of services by financial intermediaries. [13] A digital euro would of course be issued by the central bank. And unlike potentially dominant private actors in tomorrow’s digital payments market – such as big techs – the central bank would pay close attention to financial stability considerations and to preserving a diverse and vibrant ecosystem. This does not imply that the status quo must be maintained.

Panetta, F. (2021), ““Hic sunt leones” – open research questions on the international dimension of central bank digital currencies”, speech at the ECB-CEBRA conference on international aspects of digital currencies and fintech, Frankfurt am Main, 19 October. 10. Panetta, F. (2022), “For a few cryptos more: the Wild West of crypto finance”, speech at Columbia University, New York, 25 April. See also Hermans, L. et al. (2022), “Decrypting financial stability risks in crypto-asset markets”, Financial Stability Review, ECB, May. 11. In particular, it would be important for stablecoins with an algorithm-based stabilisation mechanism to be treated as crypto-assets other than e-money tokens (EMTs) and asset-referenced tokens (ARTs), and they should not be used for payment purposes. Given that some algorithmic stablecoins have failed in the past (including the recent collapse of TerraUSD), algorithm-based stabilisation mechanisms without a reserve have proven to be conceptually flawed and have performed no better than bitcoin in terms of stability. This means that algorithmic stablecoins without an issuer and a  reserve should be treated in the same way as crypto-assets other than EMTs and ARTs. Moreover, as crypto-assets are not of sufficient quality to back up the value and maintain the stability of ARTs/EMTs, the reserve assets of ARTs/EMTs should not include any crypto-assets – ARTs, EMTs or crypto-assets other than ARTs/EMTs.
SPEECH DATE:  3 December 2019  SPEAKER:  Deputy Governor Per Jansson  VENUE:  Danske Bank, Stockholm  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Contemplations of an interest-rate dove and inflation hawk* Those who follow the media reporting on monetary policy have probably noted that I have been considered the most dovish member of the Riksbank’s Executive Board for some time. By this, I mean that I am considered to be the one who, at least for the time being, is inclined to conduct the most expansionary policy. For anyone unfamiliar with the terminology, the opposite of a dove is a hawk, someone who instead advocates a tighter monetary policy. An alternative terminology that is common in theoretical models is that a hawkish policy instead attaches considerable importance to the inflation target and gives less weight to other things. 1 So actually, as I think it is justified to prioritise the inflation target and confidence in it, I could also be considered a hawk. More precisely, I could be described as a combination of an inflation hawk and an interest-rate dove. Describing the orientation of monetary policy-makers in ornithological terms is rather practical. Apparently, however, it is not entirely uncomplicated and misses some subtle differences. I would therefore like to start by elaborating on my view of current monetary policy and my reasoning at the most recent monetary policy meetings.

The reason is that it has proved difficult in practice to lower nominal wages. If inflation is low and nominal wages cannot be lowered, then it becomes difficult to adjust real wages between different professions, companies and sectors. This can ultimately lead to both higher unemployment and poorer productivity growth in the economy. A moderate level of inflation mitigates these problems. It functions as grease in the wheels of the economic machinery. Another advantage with an inflation target of 2 per cent, which has come to the fore in recent years, is that it creates at least some scope for lowering the policy rate before it reaches its lower bound. If the inflation target, and hence average  4 [17]  inflation, were to be lower, then the nominal rate would also on average be lower. This would be particularly problematic in a world where real interest rates are very low, as is currently the case. The scope for lowering the rate before it reaches its lower bound would then be more limited than it is today, which would make it more difficult to counteract future recessions. Therefore, if one does not like negative interest rates, one should not advocate a lower inflation target, as that would imply that the policy rate would have to be negative for longer periods. In the international debate, moreover, there are several economists who think that not even an inflation target of 2 per cent provides sufficient scope to conduct as expansive a monetary policy as is sometimes necessary.
When the risks subsequently subside, the capital requirements can be eased. A tool that can be seen as a complement to the countercyclical buffers is variable risk weights for different types of loan. Another proposal is to introduce a mortgage cap, for example by limiting the size of the mortgage in relation to the market value of the property, as we have done in Sweden since the autumn of 2010. But which tools are the most effective in which situations? It is hard to say. The area is relatively new and there is therefore a lack of experience and research in the field. This means that we will have to test our way forward for several years. There are a lot of reports that explain why macroprudential policy is needed and the tools it may entail. But not a lot has been written about how it should actually be conducted in practice. This is of course because the policy area is new and we still have a lot to learn. I believe that the IMF can contribute here too by increasing our knowledge about which tools are most appropriate in which situations and by issuing recommendations to countries on how they should actually conduct macroprudential policy and implement various tools. The IMF’s Articles of Agreement should reflect a clearer surveillance mandate One way to strengthen the IMF’s surveillance is to ensure that the IMF’s Articles of Agreement cover what the Fund actually does.

At the same time the system will strengthen Turkey’s links with the European member countries and will enable it to trade in the same currency as other members, a requirement for participation in the EMU. As far as the technical infrastructure is concerned, Turkey is ready to integrate itself into the EU. I would like to remind you that Turkey has been pursuing a series of liberalization policies since 1980 which are broadly in line with economic tendencies in the world. A wide range of policy measures were put into effect to achieve the restructuring of the economy. Changes in exchange rate and trade policies were the main instruments in this process. This program has brought a radical change in Turkey’s development strategy by increasing its dependence on market forces. In this context, the fixed exchange rate policy was replaced by the flexible one, restrictive control measures on imports were abolished and protection was reduced gradually. Similarly, foreign exchange transactions were thoroughly liberalized, free trade zones were established, foreign investment was further encouraged along with the privatization of public enterprises. As a result of these newly adopted policies, there have been spectacular changes in the Turkish economy, with exports and foreign investments having proved to be responsive to the structural adjustment process; within this process, the Turkish lira has become fully convertible and restrictions on capital movements have been effectively removed.
This is largely because some firms in these sectors were already close to the thresholds determining vulnerable status before the shock. 14  For households, an interest rate rise could contribute to some deterioration in their debt repayment capacity. But the effect of moderate rate hikes is not expected to be very significant, partly because of the increase in recent years in the proportion of fixedrate mortgages, which accounted for 24.9% of the outstanding amount at December 2021. Specifically it is estimated that the proportion of households with a high net interest burden28 would rise by 1.2 pp, 2.3 pp and 3.9 pp if interbank rates were raised by 100 bp, 200 bp and 300 bp, respectively. These effects would be most pronounced among indebted households between the 20th and 40th percentiles of the income distribution.29 Low-income households would be most affected by rising energy prices, as energy expenditure accounts for a larger proportion of their consumption,30 they are less likely to be able to absorb these higher prices by reducing their saving and their net interest burden is higher. 28  The net interest burden is considered to be high when the ratio of (debt service expenses - interest income from deposits) to household income is over 40%.

32  Inflation rises by up to an additional 3.2 pp in average year-on-year terms in 2022-2023 under the adverse scenario and by up to an additional 3.6 pp under the severe scenario. GDP growth slows, by an average of 2.8 pp under the adverse scenario and 5.4 pp under the severe scenario. The impact on average growth in house prices is -5.4 pp and -8.6 pp, respectively. As for interest rates, the increase in short-term rates is larger under the adverse scenario (2.2 pp for 12-month EURIBOR) and smaller under the severe scenario (0.9 pp) on account of weaker demand. There is a notable increase in long-term rates under both scenarios, with the average 10-year sovereign bond yield climbing by 2.6 pp and 3 pp, respectively. 17  Overall, the adverse scenario entails a negative impact of 1.8 pp on the aggregate CET1 ratio of Spanish banks; this impact rises to 3 pp under the severe scenario. By components, the largest adverse impact would be on credit quality, leading to greater losses on loans to the private sector in business in Spain and a sovereign bond value adjustment. There would also be a lower generation of funds. In turn, the lesser need for new provisioning (owing to the greater use of existing provisions), deleveraging at banks and more enforcement of guarantees to meet the expected credit losses associated with ICO-backed loans, would mitigate the fall in the CET1 ratio in 2023.
They are problems not limited in importance to foreign exchange traders and bankers but are vital factors in the flow of raw materials and finished goods, in the maintenance of high levels of production and consumption, in the establishment of a satisfactory standard of living for all the people of all the countries on this earth.” 3 These wisely spoken words are as relevant today as in 1944. When the IMF and the World Bank were established, it marked the beginning of a period of international economic and financial cooperation which over time embraced virtually all the countries of the world. The Bretton Woods Institutions have served their membership well. When needed, their policies have adapted promptly and timely to changes in the world economy and the global financial system. The IMF, with its crucial competence, has been a key forum for policy collaboration. Its surveillance and lending activities are unique. I strongly believe that global  3  Cited inter alia in Harold James: International Monetary Cooperation since Bretton Woods, The International Monetary Fund, Washington D.C., 1996. 2  BIS Review 22/2010  governance is best served by a statutory-based international economic order, with effective and legitimate multilateral institutions where all countries are represented. In the recent decade, the rapid expansion of many large emerging economies has greatly altered the global economic landscape. Most dramatic is the re-entry of China as a major economic power.

This dimension of economic research is often overlooked: it is nevertheless crucial to grasp complex interdependencies between physical and economic phenomena, across sectors and countries, and across time horizons – I will come back to it (2) disclose: impose transparency requirements including on counterparties; (3) incorporate climate risk, into our operations on corporates (on both asset purchases and collateral policies). As regards asset purchases, the CSPP3 should take into account climate-related factors, including the alignment of issuers with the Paris agreement, and will adjust purchases on the primary and secondary markets accordingly. Moreover, regarding euro-denominated non-monetary portfolios, Eurosystem central banks committed last February to implement sustainable and responsible investment strategies and to report the first results by end of 2022. Banque de France’s policy has been exemplary since 2018 regarding the management of its own funds, whose alignment on a 2° C objective is already effective. We won’t stop there though: we started to exit from non-conventional oil and gas earlier this year, we announced that we are exiting totally from coal by end 2024. We now commit to work toward aligning our own portfolios with a 1.5°C objective. One additional word about the international context of these developments. Here again, we saw a major improvement this last year with the new American involvement: climate-related issues are now firmly on the agenda of the G20, the G7, the FSB and all other standard setting bodies. The NGFS, created in Paris in December 2017, is a unique knowledge hub.
Thus, for example, expenditure on purchases of goods and services, a heading that includes purchases of health equipment, is expected to decrease by 2.5% in 2021 after increasing (foreseeably) by 14% in 2020. Similarly, unemployment expenditure, an item that has been hard hit in 2020, among other factors by the furlough schemes, is expected to fall by 36% in 2021. In this respect I wish to highlight that, as I have mentioned, insofar as the epidemiological situation currently poses clear risks for the economy, these expenditure items may not fall by as much as projected in the Draft Budget. For instance, because it is considered appropriate to maintain the furlough schemes for longer than was initially expected. This would entail upside risks in these items that are difficult to quantify. My third comment on the expenditure measures envisaged in the Draft Budget relates to certain discretionary measures. In particular, the Draft Budget includes a proposal to raise public sector wages by 0.9% in 2021, in line with the Government’s inflation forecast for that year. This is one of a set of proposals that also includes an increase of 0.9% in contributory pensions, of 1.8% in minimum and non-contributory pensions, and of 5% in the IPREM, the multipurpose public indicator of income index that is used as a benchmark for increases in subsidies, assistance and unemployment benefit. Clearly, public sector wages and pensions are two of the most sensitive issues in budgetary matters and are very much present in the social debate.

04.11.2020  Testimony before the Parliamentary Budget Committee in relation to the Draft State Budget for 2021* Pablo Hernández de Cos Governor  *Traducción al inglés del discurso original en español  Ladies and gentlemen, I appear before this Committee as part of the process to discuss and approve the State and Social Security Budget for 2021. The main aim of this Budget should, in my view, be to provide for the recovery of the Spanish economy in the coming quarters and to mitigate the considerable adverse impact caused by the COVID-19 pandemic to our economic growth and welfare. I shall begin by first describing the recent behaviour of the Spanish economy and, against a background marked by exceptional uncertainty, its possible course in the coming quarters, in light of the Banco de España’s projections. This description will allow me to assess the Government’s macroeconomic forecast which, as is habitually the case, frames the Draft Budget. Secondly, I shall offer my view of the main aspects of the Draft Budget for 2021, including the fiscal policy stance, its composition and the risks to the budget deficit target being met. Lastly, I shall set out what I consider to be the most significant challenges for Spanish fiscal policy in the medium term.
And ultimately delivering low and stable inflation is the best contribution monetary policy can make to achieving a robust and sustainable recovery. The trade off between growth and inflation Let me turn now to the second issue I wanted to discuss today which concerns the operation of monetary policy and, in particular, the likely trade-off between growth and inflation in the current environment. As I said, in February the MPC made clear that we thought it appropriate to bring inflation back to target more slowly than usual in order to support the nascent recovery. But is there a case for monetary policy going even further? What if, as some commentators have claimed, it were possible for the MPC to inject additional monetary stimulus, thereby providing even greater support to growth, with relatively little consequence for inflation. Stronger growth with little or no higher inflation: surely that would be a good use of the MPC’s flexibility? There are two strands of argument put forward as to why the current trade-off between growth and inflation may be unusually favourable. The first is that cost and price pressures in the current environment may be relatively insensitive to the degree of slack in our economy. If that were the case, the economy could grow relatively rapidly, absorbing spare resources and capacity, without putting much upward pressure on wages and prices. In economists’ speak, the so-called Phillips curve – which sketches out the relationship between spare capacity and cost and price pressures – may be relatively flat at the moment.

Throughout Malaysia’s more than 50 years of development, the country has demonstrated economic flexibility to successfully shift to the new areas of comparative advantage to the new areas of growth. I believe, with the foundations in place, Malaysia has every potential to transition into a high value-added, high income economy. Concluding remarks Asia’s new role in the globalisation process has only just begun. The continuous dynamic evolution of Asia as greater regional economic and financial integration take place will contribute towards raising the standards of living in this region. In this context, the important partnership between the Government and the private sector remains a key element in ensuring stability and sustainable economic development in the future. 4  BIS Review 43/2010