samchain/econo-pairs-v1 huggingface dataset:
Placing responsibility on one body is well in line with international recommendations and proposals starting to take shape in other EU countries.10 The Riksbank should have an influential role in macroprudential policy In my view, the Riksbank has solid fundamentals to shoulder responsibility for macroprudential policy in Sweden. Over the last 15 years, we have built up extensive systemic risks analysis capabilities. As I briefly mentioned before, we also have in-depth knowledge in terms of studying the relationships between the financial and real sector, for instance, as a result of the monetary policy analysis apparatus. Placing responsibility for macroprudential policy on the Riksbank would also involve synergies with monetary policy. Because coordination with microprudential policy is also important, in our consultation response we propose the establishment of well-defined ways of cooperation between the Riksbank and Finansinspektionen. The central bank having a key role in macroprudential policy is also recommended by the European Systemic Risk Board (ESRB). The Riksbank is an authority with a high degree of autonomy, which raises the question about how autonomous macroprudential policy should be. A high degree of autonomy can be beneficial when it comes to preventing financial instability, more or less for the same reasons as in monetary policy. On the one hand, the decisions can be unpopular politically, and on the other hand expert knowledge is important. However, there is a crucial difference between monetary policy and macroprudential policy in one respect.

Lending and the building up buffers among both lenders and borrowers then stabilises over time. I would like to emphasise that this is a highly simplified description of financial stability, which to a certain extent disregards the structural aspects of systemic risk such as resilience and risks in financial infrastructure on the one hand, and such factors that trigger financial crises on the other. However, even the simplified picture gives important insights. The new tools being developed and the old tools which can be used for a new purpose are crucial to the success of macroprudential policy. Allow me therefore to discuss macroprudential policy tools and how they are intended to function. Macroprudential policy tools and how they fit in with monetary policy Typical macroprudential policy tools are capital and liquidity requirements chiefly focused on banks and the supply of credit. However, it’s also about measures to limit demand, such as the mortgage cap, or the regulation of exposures and haircuts with the purpose of limiting the contagion risk in the financial infrastructure. The various tools can be divided into static and time-varying tools. Using my simple lending rate formula, I will illustrate how, in different ways, these tools affect lending rates and credit terms. That is, after all, partly their purpose. However, this also has consequences for monetary policy.
For example, we are working within the framework of the Swedish Retail Payments Council to survey the possibilities of making card payments and withdrawing cash in an offline situation, which is to 14 See Mancini Griffoli, T., Martinez Peria, M. S., Agur, I., Ari, A., Kiff, J., Popescu, A., and Rochon, C. (2018) “Casting Light on Central Bank Digital Currency”. IMF Staff Discussion Note. SDN/18/08. 15 It may, however, be difficult to know what the right price is in such a market. Theoretically, an efficient market is considered to be one in which no company makes excess profits. The price of one product should approximately reflect the cost of producing one more product, known as the marginal cost. But if the price were to reflect the marginal cost, the company would make a loss in these special markets. In normal industries, the marginal cost normally rises when production encounters bottlenecks. For natural monopolies, fixed costs dominate instead, so that a price corresponding to the marginal cost will be too low. 6 [8]  say when disruptions have made it impossible to check the balance of the account or credit to which a card is linked. 16 At present, certain cards do not function at all in an offline situation, while others do. If we were to be impacted by a complete breakdown of both the Internet and telecommunications, it would not be possible to withdraw cash. Consequently, we cannot, at present, rely upon cash being available in a crisis situation.

However, as the acceptance of cash in commerce is not legally required, the Inquiry’s proposal will not ensure that cash will remain usable in society. Consequently, even if the measures proposed may help slow down this development, I do not think that it will come completely to a halt. Streamlining within the banking industry, for example via cashless bank branches, may certainly have re-  5 See Armelius, H., Boel, P, Claussen, C. A. and Nessén, M. (2018) “The e-krona and the macro economy” Sveriges Riksbank Economic Review no. 3, and Juks, R. (2018) “When a central bank digital currency meets private money: effects of an e-krona on banks”. Sveriges Riksbank Economic Review, No. 3. Sveriges Riksbank. 6 See “Secure access to cash”. Interim report from the Riksbank Committee. SOU 2018:42. 3 [8]  stricted the general public’s ability to use cash, but other factors such as technological progress, changed consumption patterns and the lack of legal requirements forcing traders to accept cash are probably more important. For example, in its report “Grundläggande betaltjänster i en digitaliserad framtid (Essential payment services in a digitalised future)” 7, the Swedish Post and Telecom Authority (PTS) writes that “even if the cash infrastructure is maintained and cash is available, cash will not necessarily be fully usable in the future”. The most recent results of the Riksbank’s survey of payment patterns in Sweden also show that the proportion paying in cash is continuing to decrease, while Swish payments are increasing.
There are elements of the Code that speak specifically to participants that act as clients: the ninth principle, for example, notes that clients should be aware of the risks associated with the transactions, and regularly analyse their execution. The Code also empowers buy side firms to ask the right questions of their trading counterparties, for example what type of market colour they can expect to receive, and the appropriate transparency that should be provided around execution practices. And from my perspective it is important that buy-side firms ask those questions, as your informed, engaged, participation is vital to market integrity. A second key constituency that needs to embrace the Code is the range of newer market participants that have become increasingly important in recent years. Most notable perhaps is the entrance of non-traditional market makers – particularly principal trading firms – who can play an integral role in mobilising liquidity across the fragmented array of venues. Newer entrants like these may not have been caught in the mire of conduct issues that galvanised the work on the Code in the first place, but their commitment would enhance the Code’s success. In turn the Code’s success will be to their benefit: clearly defined expectations about good market practice level the playing field and are supportive of innovation. More generally, as the new entrants gain market share, they should recognise that increasing numbers of their counterparts are likely to expect them to demonstrate commitment to good conduct.

What is clear to me is that there is – at the very least – the potential for misuse of this specific feature, as various ongoing misconduct cases bear testament to. The Code already provides guidance that is designed to minimise the risks of that misconduct occurring. The underlying debate, which our consultative process seeks to resolve, is whether there are ways of reducing those risks even further. If we can identify specific, legitimate, uses of this type of trading activity, as well as the already well-known illegitimate uses, we can then cater for both within the Code. But if the evidence suggests that trading in the last look window is simply inconsistent with good conduct, this section of the Code will need to be updated accordingly. It’s impossible for me at this stage to presuppose the outcome. What I want to emphasise is the GFXC’s commitment to acting on the evidence we receive. We are fully aware that the Committee’s eventual conclusion has the potential impact on some firms’ current business models, and that is why we are committed to establishing the broadest possible evidence base on which to take our decision. There are nine days remaining before the feedback window closes, and I encourage all of you – both price makers and takers – to provide us with your views. While the last look debate is the current centre of attention it is important to recognise that over time the Committee will need to update other areas of the Code.
This shows that marginal costs – the costs of an additional unit of Swiss franc liquidity – are relevant for transmission on the interbank market. Although trading activity on the money market remains lower than before the financial crisis, it has revived somewhat. For instance, turnover on the  2  BIS central bankers’ speeches  secured money market, in particular on the Swiss franc repo market, has risen since the introduction of negative interest. As intended, negative interest has been transmitted from the money market to the capital market. The lower interest rates for all maturities have widened the traditional interest rate differential against other countries again somewhat. Previously, they had narrowed substantially. On the money and capital markets, the interest rate differential is now greater than it was without negative interest, in particular for short-term interest rates. Chart 4 shows the path of interest rates for three-month loans on the Swiss franc and euro money markets, together with the differential. The greater interest rate differential helps to ensure that Swiss franc investments are less attractive than investments in euros and other currencies. Moreover, the rise in the interest rate differential has increased the cost of hedging foreign currency positions on the forward exchange market, which is an additional factor dampening Swiss franc demand. Although the interest rate differential has risen, it is still considerably below the long-term average, particularly since interest rates abroad decreased more substantially during the financial crisis than those in Switzerland.

The exemption thresholds take account of the very high level of liquidity in the banking system, which is due to the SNB’s past interventions on the foreign exchange market. The exemptions are calculated to ensure that they remain virtually unchanged over time. This means that the interest burden increases as soon as the SNB feeds more liquidity into the system – in particular in the event of further foreign exchange interventions. Consequently, the SNB’s readiness to remain active in the foreign exchange market and the negative interest rate are two mutually reinforcing measures. By imposing negative interest on sight deposits that exceed a given exemption threshold, we set incentives for the entire financial system to give preference to investments in foreign currencies over those in Swiss francs, thereby limiting new inflows into the Swiss currency. Since the exceptional demand for Swiss francs is not only foreign but also domestic, there is no economic argument for differentiating by origin of investor. What is more, we have reduced to a minimum the number of exceptions from the obligation to pay negative interest. Impact of negative interest Six months after the announcement of negative interest, we can see that the measure is having the desired effect on the money and capital markets. The money market is working well, even with negative interest. Money market interest rates have reacted rapidly, and the three-month Libor has settled in the middle of the range we targeted.
As a result, country-specific factors have become less important in determining corporate bond prices and spreads. Cross-border holdings of long-term debt securities of monetary financial institutions grew from about 15% in 1999 to nearly 40% in 2007. Integration in the equity markets is less advanced but shows signs of improvement. Between 1997 and 2006, euro area investors doubled their holdings of equity issued in other euro area countries to 29% of their total portfolio of euro area equity assets. The retail banking segment has remained more fragmented. In particular, the euro area cross-country dispersion of bank interest rates, especially of interest rates on consumer loans, has remained relatively high. This reflects different conditions in national economies (e.g. credit and interest rate risk, size of firms, industrial structure and degree of capital market development), institutional factors (e.g. taxation, regulation, supervision and  2  BIS Review 20/2009  consumer protection) and financial structures (e.g. degree of bank/capital market financing and competitiveness). It was probably overoptimistic to expect a faster convergence in this segment. The creation of the euro also gave rise to expectations of a broad based convergence of underlying economic developments. These expectations were quite varied, in fact. Some people expected greater divergence as a consequence of specialisation. Others expected greater convergence. The result is mixed. Some convergence has been observed, in particular in terms of business cycle and dispersion across countries, which is comparable with that among the US states.

A superficial reading of David Marsh’s book might give the impression that political integration has taken place over the years as a result of some countries dominating others, distrust between political classes of different countries, threats, truces and fights, etc. It’s interesting to relate history in this way. But we should never forget that the creation of the euro has been the result of an unprecedented democratic and peaceful process in Europe, led over 50 years by leaders who have put the interests of the people of Europe ahead of any other objective. The next ten years Where does this leave us in the next ten years? As the euro enters its second decade, conditions aren’t exactly auspicious, as we are facing the most serious economic crisis since World War II. I’m sure the challenges ahead for the euro will be considerable. The global recession is a challenge not only for the euro area but for all countries. It has had and will have serious repercussions on our economies and on the fabric of our societies. They will be exposed to severe stresses and strains. The specialisation model of the past two decades might no longer be viable. I have the impression that some policy-makers think that their national economies will return to the state of balance which existed before the crisis. They don’t seem to realise that that was actually a state of imbalance, characterised by excessive borrowing by the private sector and excessive leverage by the financial institutions.
The Rt Hon Sir Edward George GBE: Macro-economic management in the UK Speech by The Rt Hon Sir Edward George, Governor of the Bank of England, at the 2001 Institute of Directors Convention, London, on 25 April 2001. *  *  *  The theme of your convention is change - and as a general observation what's always struck me about change is that it's not simply a one-off event - a discrete step from A to B. Change is a continuing process - and once you've embarked upon that process it's not always clear where it will lead. You either embrace the process, notwithstanding the uncertainty, it seems to me, or you resist it, with the risk then that the world changes around you and begins to pass you by. What is certainly true - in this country but much more widely internationally - is that there has gradually over a long period been a very profound change in the approach to overall economic management. For a long period after World War II the emphasis of macro-economic policy seemed to concentrate on aggregate demand management, with too little attention paid to the constraints imposed by the supply-side capacity of the economy to meet that demand. When growth and employment were judged to be insufficient, monetary and overall fiscal policy were used in combination to provide a stimulus to the economy, often supported by direct controls of one kind or another to suppress the emerging symptoms of increasing pressure on resources.

Well-crafted innovation can reduce market concentration, yield new risk-mitigating technologies, and increase the scope for electronic settlement in central bank money: all of which enhances, not reduces, financial stability. So we are open, not closed, to such advances. At the same time, we make no apologies for having a relentless focus on stability and resilience, and have 1  previously set out the criteria against which we assess change in the payments landscape . Indeed, households and companies expect nothing less. Surveys regularly show safety to be at the very top of people’s expectations from payments. No amount of real-time, API-enabled, mobile front ends can make up for the prospect – however remote – that one’s money might be lost or mislaid; or that a failure in one part of the payments network might bring down other parts of the banking system. Judged against those yardsticks, the UK’s payment systems have actually performed very well in recent years: combining the innovation of Faster Payments, Direct Debits and widespread use of online banking (to give just three examples) with a resilience record which – though by no means perfect – stands in contrast to some other parts of the financial system. So why the need for change? There is a one word answer to that, and that is: complexity. The UK has world-beating technologies. But too many sit in silos.
SPEECH  The Song Remains the Same June 01, 2022 John C. Williams, President and Chief Executive Officer Remarks at the New York Fed and Columbia SIPA Monetary Policy Implementation Workshop, New York City As prepared for delivery  Good morning, everyone. I'd like to give my thanks to Columbia University's School of International and Public Affairs for partnering with the New York Fed once again and for hosting us today. It's wonderful to be here and to see so many colleagues who have traveled from near and far to attend this workshop. We'll have many important conversations over the next two days. To kick us off, I'm going to share some observations on the digital transformation of money and payments. I'll also discuss the potential implications for monetary policy implementation and for central banks more broadly. Before I begin, I must give the standard Fed disclaimer that the views I express here are my own and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or anyone else in the Federal Reserve System. I will get to payments technology in a minute. But first allow me to take you back to the year 1877. You're amazed at the sound of music coming out of a new invention—the phonograph. Fast-forward a century, and you're listening to your favorite band on a cassette tape. In the 1980s, it's a CD. In the 2000s, you're scrolling through the greatest hits on your iPod.

It would be too much to promise that that can never recur. Nor can we hope completely to eliminate the linkages within the system that can propagate distress. But this realism is not remotely a counsel of despair. On the contrary, I want to emphasise this morning that the emerging new regime will enable the authorities to lean against stability-threatening exuberance and will make the financial system much more resilient . The tendency to excessive risk in the system That excesses occurred in the run-up to the current crisis is not remotely in doubt. As leverage increased, asset prices rose, increasing net worth and so inducing more balance sheet expansion. The buoyancy in markets gave intermediaries the confidence to lend secured on wider classes of securities – temporarily enhancing day-to-day liquidity. Facing depressed returns from their core business of providing liquidity to customers, banks sought to sustain high headline returns by resorting to ever more leverage and maturity transformation. In other words, increasing leverage fed upon itself. This poses deep but pressing questions about the efficiency and effectiveness of capital markets in monitoring and pricing risk. Why did boards and investors in bank equity expect such high returns? Why didn’t the capital markets downgrade the value of bank equity and debt as leverage and other sources of risk increased? Why didn’t the markets distinguish more between banks? 1  These remarks draw on a chapter contributed to a book, edited by Andreas Dombret of the Bundesbank and Professor Otto Lucius, being published next year.
iv This loss of growth occurred even before tariffs were raised, and for a reason that is often underestimated: protectionist uncertainty reduces business leaders’ confidence in the future and leads them to postpone their investments. Britain under the threat of Brexit has been a clear illustration of this private sector confidence deficit over the past three years [the Bank of England estimates that business investment is 20-25% below its previous trend], and even the United States is beginning to  Page 3 of 10  suffer. Faced with this situation, political leaders – and one of them in particular – have the most important role to play: it is up to them to restore the confidence they have undermined. Monetary policies do their part by keeping interest rates low in the face of the slowdown, but they cannot tackle the underlying cause. For the euro area, these uncertainties are being compounded by a painful paradox: the causes of the slowdown are largely external, but the region is being acutely affected. This imbalance is attributable to the weight of Germany, which is highly specialised in the manufacture of capital goods and “overexposed” to global trade. It nonetheless also illustrates the fact that Europe needs to make greater use of the scope it has to respond: it has less public debt (81% of GDP) than the United States (106%) or the United Kingdom (87%), but it makes less use of fiscal stimulus, especially in Germany.

In addition, the expansion of the euro’s international role would be a useful means of consolidating our economic sovereignty. The euro is 20 years old and it is our success: it ranks second in the international monetary system, but it still needs to increase its importance at the global level. The dollar remains a key pillar of America’s global power, and China is taking a greater interest in the internationalisation of the renminbi. The other major threat to Europe’s sovereignty is technological. Of the large digital corporations – the GAFA and other bigtechs – whose power equals that of sovereign states, none is European. And Europe is seriously lagging behind in investment: in 2015, the euro area’s stock of information and communication technology (ICT) capital amounted to 7.6% of GDP compared with 10.9% in the United States. v Yet Europe has the advantage of having a single market: you can see what happens without it with Brexit and the cost of a “no deal” for the British economy. But we need to be more bold. By taking full advantage of the size effect: there are still too many implicit borders and too much  Page 4 of 10  fragmentation. By using the power of standardisation, notably to direct innovation, as illustrated by the GDPR and data where Europe is taking the lead. By daring to implement an industrial policy with public-private partnerships, as in artificial intelligence and batteries.