samchain/econo-pairs-v1 huggingface dataset:
The issue of communication is particularly relevant in the current economic environment. For much of the past three years, financial markets have reflected a high degree of certainty about the near-term outlook for monetary policy in the United States. Market expectations in the weeks preceding each of the last 16 Federal Open Market Committee (FOMC) meetings attached a probability close to one that the FOMC would raise the target for the federal funds rate by 25 basis points. Also, there was very little probability attached to inter-meeting moves over this period, or to moves in increments larger than 25 basis points. And, although market expectations about how far the FOMC would ultimately move were revised significantly over the course of this period as the economic outlook was revised, these changes occurred without the Committee needing to deviate from the near-term path. This period of unusual certainty in the path of the fed funds rate was the result of a confluence of factors. When the Committee first moved to tighten policy in June 2004, the fed funds rate was at the historic low of 1 percent, and it was clear that policy would have to move a substantial distance to get back within the range of plausible estimates of the neutral rate. Over the course of the following months the incoming data tended to reinforce the case for a progressive move up in the target rate.

Emerging Market Forum – Paris, 16 May 2022 Welcome remarks: “Multipolarity and the role of the euro in the International Financial System”  Speech by François Villeroy de Galhau, Governor of the Banque de France  Page 1 sur 7 Ladies and Gentlemen, It is a great pleasure to welcome you today in Banque de France premises for the 15th Emerging Markets Forum. “Navigating in a fast moving and turbulent world” certainly requires great skills, and recent developments in the International Financial System remind us that it is currently all but smooth sailing. We have seen disruption in the global value chains due to the still ongoing pandemic. International trade may slow down or even contract if these disruptions lead to a significant wave of re-shoring. Now the brutal war in Ukraine has induced further supply disruptions and led our democratic leaders to use financial sanctions in response. In this uncertain situation, our first duty as a central bank is to provide appropriate monetary policy. The consensus in our Governing Council is now clearly emerging, as summed up by Christine Lagarde in her speech last Wednesday i: to fight an inflation which is not only higher but broader, we now have to normalise our monetary policy. I won’t add my precise calendar prediction to the many existing ones, but expect a decisive June meeting, and an active summer.
One is hard pressed to find examples in history, where sovereign nation states voluntarily chose to cede or share sovereignty in the monetary field. It is therefore clear that European Economic and Monetary Union has been and will continue to be part of the wider economic and political project that the process of European integration process has represented from the very start. Monetary union is certainly not only about money. It is an important element in the very successful quest for lasting peace, stability and prosperity in Europe. This quest involves the building of trust and the sharing of sovereignty among European partners and the building of common institutions, in cases where this is desirable for the benefit of all. Europe is more than a collection of nation states, but it also stops far short of becoming a single federal entity. I do not believe that a stable monetary regime necessarily must have its root at the level of the nation state. Going back in history the international gold standard coincided with an era of stability. It was a system that was fundamentally based on rules and which transcended the nation state. Nevertheless, as a currency that is new and not linked in the traditional way to the nation state the euro does face particular challenges in winning the trust and the hearts of the people. Money is clearly regarded as more than simply a medium of exchange or a unit of account.

He recounts an episode when the colonial government imposed “fees” on disobedient district chiefs simply by painting black crosses on these stone wheels. This miraculously and promptly induced them to change their ways just in order to have these marks erased again and thus - in their perception - their wealth restored. Friedman concludes that this example illustrates “how important appearance or illusion or “myth”, given unquestioned belief, becomes in monetary matters. Our own money, the money we have grown up with, the system under which it is controlled, these appear “real” and “rational” to us. Yet the money of other countries often seems to us like paper or worthless metal, even when the purchasing power of individual units is quite high.” The euro has been in existence for almost two years now. It does not come in the form of stone wheels. In fact it does not yet have any concrete and tangible expression at all. Until the introduction of euro banknotes and coins at the beginning of 2002 it will essentially remain a “virtual” currency, which may perhaps seem as remote, unfamiliar and unnatural in the eyes of the public as the stone wheels described by Friedman. This lack of tangibility and visibility of the euro in part accounts for the particular challenges that the euro faces in winning the hearts of the general public as a new currency which has yet to replace the familiar and trusted national notes and coins in circulation.
Vibrant economic research is needed to help us dealing with these challenges, notably in three key areas. The first relates to the economics and implications of blockchain and crypto-assets, and will be the topic of David Andolfatto’s keynote lecture and of the concluding panel discussion: What are the implications for the financial system in general, and for central banks in particular? Will Central banks’ monetary policy become less effective and, if so, are Central Bank Digital Currencies a way to restore their effectiveness? The second one, which will be addressed by several research papers today, relates to the financing of the economy: Do alternative and innovative ways to finance the economy (marketplace lending, ICOs, alternative scoring models) perform better than traditional financial intermediation without increasing the risks? What roles can incumbent banks play if financial services are to be driven by data? The third one is not on the agenda for today’s conference, but should be on the research agenda, relates to the use of artificial intelligence in finance: What would be the dynamics of financial markets if most participants were to rely on AI and machine learning techniques? How should regulation and supervision practices adapt to ensure that AI behaves in accordance with a financial and social optimum? Conclusion I would like to conclude my intervention by quoting Bill Gates himself: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction”.

For that reason, Norges Bank’s initial activity was to enter this market. Norges Bank provided loans secured by real property. At its birth, the Bank was, to use current terminology again, “market maker of last resort”. A private banking system gradually took shape. The first savings bank was founded in 1822 and the first commercial bank in 1848. In 1852 the first state mortgage bank was established. These developments allowed Norges Bank to withdraw from the mortgage market and concentrate instead on providing liquidity to the short-term money market. However, it was not until the 1860s that the Bank’s predominant task was supplying short-term liquidity. Much digging and research remains to answer the question of how Norges Bank dealt with the challenges during the 19th century. So far, scholars have not found that the Bank took emergency action when a financial crisis affected Norway in 1847. But when the crisis hit again ten years later, the Bank sent silver abroad to Hamburg, which was the financial centre of the Norwegian merchants. This support was important to enable Norwegian industry to carry out international payments and have their bills of exchange discounted. In 1892 a new Act was passed whereby Norges Bank became the bankers’ bank. As the Governor mentioned in his speech yesterday, this made Norges Bank a modern central bank in a legal sense. In 1899, Kristiania (as Oslo was called at the time) experienced dramatic fall in house prices.
However, given the need to have a framework which can be adapted to a wide range of circumstances, cooperation among supervisors is clearly the most important tool in achieving an appropriate level of consistency. The Committee has established a working group of supervisors, called the Accord Implementation Group, or “AIG,” that shares information on implementation efforts among Basel Committee member countries. The AIG works with other supervisors as well, including through the Core Principles Liaison Group, a group of supervisors from many other countries that shares views and exchanges information. By promoting the sharing of information on practical issues, the AIG’s discussions will help to foster greater consistency in the implementation and application of the new framework across countries. Conclusion I now look forward to hearing some additional perspectives from our panellists on Basel II and especially their thoughts on its implications for the Indian banking sector. As I have stressed in my remarks, Basel II is intended to reinforce our focus on risk and to encourage all of us to improve our skills in measuring and managing those risks. In one sense, then, Basel II might be considered an effort to re-invigorate the risk management culture in the banking sector. I believe that Basel II provides banks with the incentives necessary to encourage them to improve their risk management systems and processes. At the same time, the new capital framework will help to ensure that capital supervision continues to serve as a cornerstone to safety and soundness in the banking system.

Nonetheless, we have worked hard over the past years to clarify the rules, to simplify those thought to be the most complex, and to provide options for those wishing to use a simpler approach. In fact, as the Basel Committee demonstrated in an annex to the third consultative paper, supervisors can select  BIS Review 68/2004  3  options that would result in a very simple set of rules that can be specified in just 12 pages of text. That is approximately half the length of the original 1988 Accord. The “simplified standardised approach”, as we call it, is intended to be useful for those countries that do not wish to adopt all of the options available under the new framework. The trade-off, however, reflects the fact that the policy balance at stake is between simplicity and risk-sensitivity; if one chooses simpler rules, the cost is less sensitivity to risk and hence greater conservatism in capital requirements. Competition and consistency of application Another broad concern that the Committee has worked to address is Basel II’s impact on global competition. In particular, some have asked whether banks that choose Basel II’s advanced approaches will enjoy benefits over those that choose simpler approaches. Others have wondered whether banks that remain on the 1988 Accord for some time will be disadvantaged. To respond to these concerns, we should understand that adopting an advanced approach does not automatically reduce a bank’s capital requirements. Basel II is intended to align capital requirements more closely to risk.
And it is vital, in any case, that clearing houses continue to have robust arrangements for monitoring and controlling risk, including proper margining procedures and adequate financial resources, and that their procedures and ownership structure gives members the incentive to ensure that risk is adequately controlled. That suggests to us that control and ownership of the clearing house should reside with clearing members, who are, in any case, likely to contribute a major part of any mutual guarantee fund. So we welcome the fact that the product of the LCH/Clearnet discussions is intended to be a non-profit mutual organisation which gives ownership to its users and look forward to as productive a relationship with the new body as we currently have with LCH. The topic of this week’s conference - putting the dot.com into derivatives - presents challenges but also opportunities. If we can address both, the derivatives industry will be better placed than ever to meet the needs of users world-wide. I wish you all an enjoyable week. 3  BIS Review 51/2000

Thus, the impact of the pandemic on domestic demand was less pronounced. Despite relatively successful public health measures, the large share of tourism services in Iceland’s GDP made the economy quite vulnerable to the economic consequences of global restrictions on travel and tourism services. In 2019 tourism and tourism-related services amounted to about 8% of Iceland’s GDP, a proportion second only to that of Portugal and Spain in the OECD. Reflecting the weight of tourism in exports, Iceland’s exports contracted by 31%, more than in any other OECD country, and service exports shrank by 54% in the wake of restrictive measures taken by all major trading partners. Other tourism-dependent countries such as Greece, Spain and Portugal also suffered severe export shocks. The weight of tourism and the effects of COVID on exports  In 2020, economic activity in Iceland contracted by 7.2%, compared to 4.9% on average in main trading partner countries. The difference may appear smaller than expected given the size of the shock to exports. As a small open economy, Iceland imports a large share of consumer durables, investment goods and tourism services. Therefore, a considerably larger share of shocks to aggregate demand tends to be absorbed by the external sector than in larger, more self-contained advanced economies.
While today’s announcement is significant, it does not mark the end of history for the Bank of England’s market operations. We will continue to evolve our approach as the financial sector changes. In particular, we need to respond to two big questions. First, should the Bank of England allow non-banks to have access to our regular facilities? After all, our responsibilities for financial stability run much wider than the banking sector. Institutions that play a central role in markets, like broker-dealers, are obvious first candidates. We will also consider the case for opening them to other participants including financial market infrastructures. If the scope of access to central bank facilities increases, the scope of regulation can be expected to expand in a proportionate manner.13 Backstopping the collateral management of a range of institutions should reduce the need for the Bank to act as a Market Maker of Last Resort.14 Second, given that we host an international banking system and global markets, to what extent should the Bank of England provide liquidity in currencies other than sterling? As markets evolve, banks and markets here may need backstops in other currencies in our time zone before business opens for the Federal Reserve and after it has closed for the Bank of Japan. Although the Bank of England can supply limitless quantities of sterling, we rely on other central banks for access to their currencies.

While I firmly believe it is up to history to judge as to whether I have been successful or not in discharging my responsibilities as Governor, I also believe that even at this late stage, it may be useful for those critics to reflect on the profile  BIS central bankers’ speeches  13  that John Exter had in mind for the position of Governor when drafting the MLA, and then perhaps consider, whether or not, I fitted the envisaged profile! In that background, I am inclined to believe that the education, training, and professional skills imparted by the Institute of Chartered Accountants of Sri Lanka, had a major role in my being appointed to this pivotal position as the Governor of the Central Bank of Sri Lanka. Therefore, please permit me to officially and publicly thank the Institute of Chartered Accountants of Sri Lanka for the tremendous impact that the Institute has had on my academic and professional career, in addition to the singular honour you bestowed on me this evening, by inviting me to deliver this prestigious Oration. Conclusion – running between the wickets! Mr. Chairman, let me now conclude, with a little story. About 6 months ago, a journalist friend asked me to explain the official relationship between the Governor and the Secretary, Treasury. In response, I gave him a long lecture for about half an hour, like what I have done today! While listening to me, I could see that he was quite restless, and somewhat bored.
For example, the work by Benjamín García, Mario Giarda, and Carlos Lizama that will be presented in this Conference combines location-based microdata on credit and debit card transactions with income surveys to show that fiscal policy programs that focused  2/5  BIS - Central bankers' speeches  on lower-income regions are associated with larger consumption responses, as predicted by models of heterogeneous agents with liquidity constraints. These theoretical and empirical advances in the literature were complemented by the improvement of computational capabilities. These gave rise to the recent development of the so-called Heterogeneous Agents New Keynesian Model or HANK model, which incorporated important features that improved the standard New-Keynesian-Model' fit to the data and introduced new transmission mechanisms of monetary policy. One of the main lessons from these models is that the direct effects of monetary policy on consumption, the so-called intertemporal substitution channel, can be very small compared to its indirect effects on income, which are shaped by general equilibrium forces that depend on the characteristics and behavior of households. Another important recent theoretical development is the model of heterogeneous firms and financial frictions, which alters the way we think about the transmission of monetary policy. While the empirical evidence suggests small effects of monetary policy on aggregate investment, the use of disaggregated data allowed us to observe that investment of firms with "good" financial conditions reacts strongly to monetary policy but not so the investment of financially constrained firms.

High income growth and a sharp rise in the number of households laid the basis for a sharp, long-term rise in house prices. Self-reinforcing mechanisms were also at work, generating an atmosphere approaching euphoria. People hurried to buy dwellings in order to take advantage of the rise in value. It now appears that the housing market is cooling after an almost three-fold rise in prices in real terms in the course of the past 14 years. House price inflation has been accompanied by strong growth in household debt. Household debt in Norway is now about twice the level of disposable income, making the debt-income ratio higher than ever. At the same time, saving is declining and now seems to be negative. This means that in addition to fully financing their housing investments through mortgages, households are also raising loans to finance current consumption. As I mentioned earlier, the favourable developments in the Norwegian economy of the past few years are primarily due to supply-side changes. A flexible inflation target for monetary policy – as in Norway and a number of other countries – provides a sound basis for coping with the shocks to our economy that have occurred in recent years. The aim of preventing  1  See Elisabeth Fevang og Knut Røed (2006): ”Veien til uføretrygd i Norge” (The road to disability pensions in Norway), Report No. 10 2006, Ragnar Frisch Centre for Economic Research. Norwegian only.
Charles Bean: The Great Moderation, the Great Panic and the Great Contraction Text of the Schumpeter Lecture by Mr Charles Bean, Deputy Governor for Monetary Policy and Member of the Monetary Policy Committee, Bank of England, at the Annual Congress of the European Economic Association, Barcelona, 25 August 2009. I am grateful for the assistance of Adrian Penalver. The views expressed are those of the author and do not necessarily reflect those of either the Bank of England or the Monetary Policy Committee. *  *  *  Summary Charles Bean, the Bank of England’s Deputy Governor, Monetary Policy, was invited to deliver the Schumpeter lecture at the Annual Congress of the European Economic Association. The Great Moderation, the Great Panic and the Great Contraction, looks back at the causes of the financial crisis and subsequent recession. He argues that much of what went wrong can be analysed using standard economic tools. The Great Moderation was a period of unusually stable macroeconomic activity in advanced economies. This was partly thanks to good luck, including the integration of emerging market countries into the global economy, and partly a dividend from structural economic changes and better policy frameworks. The longer this stability persisted, the more markets became convinced of its permanence and risk premia became extremely low. Real short and long term interest rates were also low due to a combination of loose monetary policy, particularly in the US, and strong savings rates in a number of surplus countries.

The new macroprudential toolkit is being accompanied by higher permanent capital requirements and new regulations on banks’ capital structure. The aim is to make the financial sector more resilient to shocks and to prevent or mitigate the build-up of systemic risk. As the new regulatory regime has been introduced, another dimension has been added to the discussion. The question being asked is the following: do reformed banking regulation and the new macroprudential instruments relieve monetary policy of any responsibility for financial stability? A good starting point for the discussion is Tinbergen’s basic principles, which state that a wider set of policy instruments makes it possible to achieve a wider set of objectives and that each instrument should be assigned to the objective it can achieve most effectively. 1 The comparative advantage of monetary policy is to control inflation and smooth fluctuations in output and employment. The first line of defence against shocks in the financial system is, on the other hand, regulation and monitoring of financial institutions. Macroprudential policy is part of this defence. We should also bear in mind that experience of the new regulatory regime and the macroprudential toolkit is still limited. It is too early to assess the effectiveness of the new instruments. On the other hand, we do know that interest rates affect house prices and debt. This suggests that monetary policy should take into account the risk of financial imbalances.