samchain/econo-pairs-v1 huggingface dataset:
The reliance on retail deposits has been a major source of funding for the domestic banks. These remained stable during the period of financial turmoil. In other countries, banks that relied heavily on wholesale funding sources came under severe stress as interbank markets dried up and the cost of funding increased significantly. As I mentioned earlier the Eurosystem has stepped in with ample liquidity, and the Central Bank of Malta, as an active member of the system, stands ready to fulfil its intermediation role within the local banking system. Nevertheless, it is firmly my view that domestic banks should continue to operate along the lines of their traditional business model. This method of doing business has certainly protected them from the vagaries of the wholesale funding market. In this context, I would like to emphasise once again that the Central Bank will not be supportive of banking institutions that operate in Malta and seek central bank liquidity as their primary source of funding their loan and investment activities. When a banking institution funds its purchase of high yielding assets from short term sources, it is not only exposing itself to losses on the asset side but also to adverse changes in its funding costs, particularly at a time when historically low interest rates are in effect. For this reason, the Central Bank expects such institutions to look primarily to the markets for their funding requirements. I am pleased to note as well that the domestic banking system continues to be characterised by relatively high liquidity levels.

For the remaining five external members, the propensity to be in the minority has been very similar to the Bank executive (excluding the Governor), with dissenting as a proportion of total votes at 12% and 11% respectively. Moreover the differences in votes have been small. On only four occasions has the difference between the highest and lowest interest rate voted for exceeded 25 basis points, and, interestingly, all four were between August 1998 and April 1999, a period of great uncertainty about whether there would be a downturn in the world economy that did not in fact materialise. Since then differences of view have 5  4  Hall (1971), “Decisions, decisions, decisions”, Psychology Today, November. BIS Review 34/2002  never exceeded 25 basis points. The average difference between the interest rate cast by the member voting for the highest average level of rates and the member voting for the lowest average level of rates is less than 15 basis points! Such a small difference hardly corresponds to a major difference of view about the outlook for inflation. 3. Third, has the Committee explained clearly the reasons for its decisions? Transparency has been at the centre of the monetary policy framework since 1992 when it was recognised that clear explanations of policy would help to anchor inflation expectations on the target. The first major step in enhancing transparency was the Bank’s Inflation Report, which first appeared in February 1993, and was subsequently enhanced by publication of the minutes of the meetings between the Chancellor and Governor.
The forward exchange and options markets have expanded in recent years. A deeper market reduces transaction costs and it is easier to find counterparties. This has provided companies with greater scope for hedging against exchange rate risk. Instruments that reduce the risks associated with a floating krone are increasingly being used, also in Norway. Hedging against fluctuations in the krone involves costs for businesses. A krone that is stable - but too strong - also entails costs to the economy in the form of low activity. Similarly, a krone that is stable but weak - is a source of high inflation. Petroleum revenues generally provide substantial, but uneven currency inflows into Norway. The currency flows might have resulted in a strong krone and large variations in the exchange rate. This tendency is countered, however, when the annual use of petroleum revenues over the central government budget is predictable and independent of annual revenue flows, and the remaining revenues are saved and invested abroad. The capital outflows through the Government Petroleum Fund contribute to both curbing the appreciation of the krone and maintaining its stability. Higher oil prices have resulted in higher current account surpluses. In isolation, this contributes to strengthening the krone. However, higher surpluses are being offset by higher long-term capital outflows through the Government Petroleum Fund. In addition, the oil companies primarily invest their cash surplus abroad. Foreign trade figures indicate that mainland imports have increased sharply in recent months. This increases demand for foreign currency.

Svein Gjedrem: Monetary policy and the krone exchange rate Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the Annual Meeting of ACI Norge - The Financial Markets Association, Oslo, 26 August 2004. The text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 11 August, Inflation Report 2/04 and on previous speeches. The  Charts in pdf-format can be found on the Norges Bank’s website. *  *  *  In most countries, price stability, or low and stable inflation, is the objective of monetary policy. The historical experience of Norway and other countries shows that high and variable inflation results in considerable fluctuations in output and employment. In addition, a fall in the level of prices could easily accompany a period of decline. The first explicit inflation target was introduced in New Zealand in 1990. Canada followed in 1991, the UK in 1992, and Sweden and Australia in 1993. Norway introduced inflation targeting in the spring of 2001. Approximately 20 countries currently use inflation targeting in their monetary policy. In this context, I would like to mention that the central bank of Sweden was able to draw on its own experience from the 1930s when it sought to motivate and firmly establish inflation targeting during the 1990s. Admittedly, Sweden did not have an inflation target but a price target for monetary policy in the period 1931-1937.
The balance of risks between not relaxing the non-internationalisation policy on the one hand, and lifting some specific restrictions in a progressive manner on the other, has shifted. With a more mature financial industry and a more internationalised economy, corporate players and financial institutions have a greater need for Singapore dollars and its derivatives for commercial transactions. At the same time, the economy and financial system have grown and become more resilient and our ability to manage the exchange rate has strengthened. This is why MAS has liberalised the non-internationalisation policy, leaving only the most essential restrictions in place. This has enabled the bond market to take off, with foreign players raising Singapore dollar bonds, but swapping the proceeds into a foreign currency before taking them out of the country. We will continue to fine-tune the non-internationalisation policy from time to time, but the policy is no longer a significant constraint on the development of our capital markets or financial sector. Financial supervision MAS has also, since 1998, been reviewing and updating its approach to regulating and supervising the financial sector. First, we have instituted a fundamental shift in emphasis away from “one-size-fits-all” regulation of institutions to risk-focused supervision, and from merit-based regulation of products to a disclosure-based regime. Second, we have embarked on a programme to liberalise access to all parts of the financial industry to stimulate greater competition and dynamism.

Due to their specificities, stablecoins are a novelty in tune with some markets’ needs. In the context of the economy’s digitalisation, the past decades have shown how Fintechs as well as Bigtechs have aimed at taking advantage of the latest advances in web-based technologies, notably blockchain, to provide new payment credit and investment services. Often, they propose to achieve this through the creation of various new assets (coins, tokens, stablecoins, with or without smart contracts). We all have in mind the first generation of crypto-assets such as Bitcoin and Ethereum, initially designed to be instruments of exchange in the digital world but suffering from a number of limitations, not least severe price volatility and a lack of guarantee of their convertibility and security. A second generation is emerging in the form of « stablecoins », such as the JP Morgan Coin, UBS’s Utility Settlement Coin or Facebook’s Libra. They share many of the features of crypto-assets but seek to stabilise the price of the “coin” by various means. They might therefore be more capable of contributing to the enhancement of payment systems, with a potentially global reach, especially those sponsored by large technology or financial firms. In the retail market, stablecoin-based solutions seek to address evolving consumer preferences towards instantaneous, continuous, and standardized payments, as consumers become ever more mobile.
Nonetheless, while we do not think that the policy rate should be part of a macroprudential framework, we cannot completely rule out its use with financial stability considerations when facing a critical situation. The second question refers to the institutional framework for decision making regarding macroprudential policies. In this regard, a first issue relates to who should make decisions  1  Lim et al., 2011; Tovar Mora et al., 2012; Claessens et al., 2013; Kuttner and Shim, 2013; Bruno et al., 2014; Zhang and Zoli, 2014; Akinci and Rumsey, 2015; Cerutti et al., 2015. BIS central bankers’ speeches  3  regarding macroprudential policies at a system-wide level. A second issue refers to the decision making process within the central bank in relation to the macroprudential tools within its mandate. The aftermath of the financial crisis of 2008 has been widely active in institutional design around the world; particularly in countries were the crisis imposed large losses on taxpayers. There is a wide variety in the way decision making about macroprudential policies is organized, and to the extent to which decisions are mandates or recommendations. In the United Kingdom, a specific committee – the Financial Policy Committee – was set at the Bank of England with the responsibility for delivering financial stability through macroprudential regulation. Decisions by this committee, which is chaired by the Governor of the Bank and where the Treasury has voice but not voting rights, are mandatory for the prudential regulator (the Bank of England).

Economic history is full of episodes in which a preemptive rise in rates had a negative economic effect on the real economy, but was not effective in controlling financial speculation and asset price inflation (the Great Depression being perhaps the most salient). Nor is it clear that raising interest rates will necessary work in containing the expansion of the financial system: after all, a larger interest rate differential also attracts foreign capital. This force can be of particular importance in EMEs, often subject to carry-trade strategies which can lead to strong currency appreciations in countries that raise rates and create additional problems. Secondly, credibility and transparency are key assets in the design and implementation of an inflation targeting regime. It is hard enough to communicate the logic behind MP decisions that seek solely to stabilize inflation around our stated target, given the complex interrelations between shocks, transmission mechanisms, and model uncertainty that central banks have to deal with. However, after long years of sticking to our framework and showing consistency between our actions and our inflation objective, we have built a reputation which is essential for isolating longer-term inflation expectations from transitory shocks (both external and internal), which as we all know facilitates the job of central banks enormously. We worry that adding to this framework a second objective of financial stability will most likely create an important degree of confusion and discretion, putting our transparency and credibility at risk.
The chief executive? Peter Robinson. The company? Liverpool FC. Perhaps banks should have heeded the message. If they had, this crisis might have felt rather different. If UK banks had reduced dividend payouts ratios by a third between 2000 to 2007, £ billion of extra capital would have been generated. 13 Had payouts to staff been trimmed by 10%, a further £ billion in capital would have been saved. And if banks had been restricted from paying dividends in the event of an annual loss, £ billion would have been added to the pot. In other words, three modest changes in payout behaviour would have generated more capital than was supplied by the UK government during the crisis. Opportunistic behaviour is also needed to repair banks’ liquidity positions. Reversing the fall in the maturity of banks’ balance sheets will require a front-loaded terming out of their debt liabilities. There is some evidence of banks doing so. But given the scale of the refinancing mountain, this will be an uphill struggle. There is also some evidence of companies tapping capital markets opportunistically to help repair their balance sheets. Corporate bond issuance by non-financial companies during 2009 was around $ trillion globally, the highest on record. Manchester United have  10  Cameron, A (1995), “Bank of Scotland 1695-1995”, Mainstream Publishing. 11  Modigliani F and Miller M (1961), “Dividend Policy, Growth and the Valuation of Shares”, Journal of Business, 411–33.

Periodically, the FOMC publishes participants’ projections for several key economic variables. Our latest forecasts were made in early November. Our outlook then was for real GDP growth to be around 1.75 percent in 2011 and then rise to 2.75 percent in 2012. Though an improvement, this 2012 pace is not far above most analysts’ views of the potential rate of output growth for the economy. Thus, such growth rates are not strong enough to make much of a dent in the unemployment rate and other measures of resource slack. Indeed, the FOMC’s latest forecasts are for the unemployment rate to remain above 8.5 percent through 2012 and to fall only to about 8 percent in 2013. As I just noted, the somewhat firmer tone of recent economic data suggest some welcome traction, but the data are not strong enough, or uniform enough, to assert that momentum for growth is building. The headwinds that we face are still substantial. Moreover, the problems in Europe now loom larger. Careful analysis suggests that the direct impact of slower European growth on U.S. net exports likely would be small. However, there  2  BIS central bankers’ speeches  is a risk that substantial financial disruptions in Europe could impinge on the cost and availability of credit in the U.S. or induce a new wave of cautious behavior by households and businesses.
Luis de Guindos: International spillovers of monetary policy and financial stability concerns Speech by Mr Luis de Guindos, Vice-President of the European Central Bank, at the conference “The ECB and its watchers XX”, Frankfurt am Main, 27 March 2019. * * *  Introduction It is a great pleasure for me to speak at this year’s ECB Watchers Conference. Given the topic of this session, I will start by referring to our recent findings on international spillovers of monetary policy and the related financial stability concerns for the euro area. I will then focus on our financial stability assessment at the present juncture. In doing so, I will briefly refer to an analytical tool we have employed to monitor and assess the banking system’s resilience. Globalisation has not only caused inflation and output to become increasingly synchronised across countries. Equity prices and financing conditions have become more synchronised, too. Most of this synchronisation stems from (common) global shocks, but the effects of international spillovers of monetary policy are less obvious. In my talk today, I will touch upon issues surrounding these international spillovers, and whether they are of concern for the financial stability of the euro area. In a globalised and financially integrated world, spillovers from the monetary policy of one country to other economies are unavoidable. We can identify at least three international transmission channels: 1. The “aggregate demand” channel, through which monetary policy affects domestic demand and, thus, the demand for foreign goods. 2.

For example, Ehrmann and Fratzscher (2005) estimate that, over one day, about one-third of US Treasury bill rate changes feed through to euro area interbank rates, but that beyond this US monetary policy has no significant impact on the euro area. Neely (2015) finds spillovers of a similar magnitude. Curcuru et al. (2018), in contrast, find that during a one-day period, ECB announcement surprises spill over to US Treasury yields in a similar manner as Federal Open Market Committee announcement surprises spill over to German Bund yields. 2 See, for example, Kim (2001), Georgiadis (2016), Chen et al. (2017) and Iacoviello and Navarro (2018). The  5/6  BIS central bankers' speeches  results for conventional and unconventional monetary policy are similar. Rogers et al. (2014) and Chen et al. (2016) provide evidence on large spillovers from the Federal Reserve’s unconventional monetary policy to the euro area. 3 Ca’ Zorzi et al. (2019) and Jarociński and Karadi (2018) draw a distinction between monetary policy surprises  (the so-called shocks) and other surprises, such as news effects. 4 Spreads relative to speculative bonds (below BBB rating), averaged over all maturities. 5 Corporate bond spreads increase by about 10 basis points and stock markets decline by about 50 basis points  in response to a monetary policy shock that increases one-year government bond yields by 2 basis points. 6 See Ca’ Zorzi et al. (2019). 7 See Miranda-Agrippino and Rey (2018).
This is the fourth edition of this Conference organised by the European Institute of the Mediterranean, with the support of the Banco de España, to discuss economic and financial matters in the Mediterranean region. The three previous editions were in Barcelona, in 2014 and 2017, and in Rabat in 2015, on that occasion with the support and hospitality of Bank Al-Maghrib. This conference is therefore beginning to take root as a successful meeting point between different actors with interests in the economic and financial developments in these countries. The exchange of ideas among a wide and diverse range of participants – including central bankers, public officials, academics, and representatives from the private sector and international organisations– in a friendly environment proved enormously fruitful in previous editions, as, I am sure, will be also the case this time. Let me also add that forums like this are particularly relevant for central banks, which in recent years have had to face deep-seated transformations in economic and financial relations globally. This new environment forces us to re-think the design and implementation of economic policies in order to better contribute to the progress of our society. I would also like to inform you that the Banco de España is preparing a seminar on central bank communication, the first of which is aimed at Mediterranean and Latin American countries, to be held in the spring of 2019.

I am sure that the participants in the different sessions scheduled today will elaborate more on the best economic policies to ensure that globalisation and technological innovation will continue contributing to economic growth and prosperity in an increasing number of countries. Ladies and gentlemen, I leave the floor now to the President of the Executive Committee of the European Institute of the Mediterranean, Mr. Senén Florensa, thanking him for the cooperation in the organisation of this event and, of course, thanking you all for your presence here today. 4/4
What does that mean to the monetary policy? If domestic and foreign financial assets are treated more and more as perfect substitutes, domestic interest rates, especially mid- an long-term ones, are determined on the global market, and thus the influence of particular central banks on their level is weakened. This phenomenon is already observed in the USA. 12  Melick W., Galati G. “The Evolving Inflation Process: an Overview”, BIS Working Paper No 196, 2006. 13  Hannoun H. “Internationalisation of financial services: implications and challenges for central banks”, Conference of the SEACEN Governors Bandar Seri Begawan, Brunei Darussalam, 4 March 2006. 14  McKinsey Global Institute, $ Trillion and Counting: Taking Stock of the World’s Capital Markets, February 2005. 15  In 1980 bank deposits accounted for 45% of total financial assets, currently their share dropped to 30% (McKinsey Global Institute 2005 – ibidem). 16  It is called the Feldstein-Horioka puzzle, after the two economists, who were the first to empirically prove its existence (Feldstein, 2005). 17  Feldstein M. Monetary Policy in a Changing International Environment: The Role of Capital Flows, NBER Working Paper 11856, 2005. 6  BIS Review 57/2006  Although the key interest rate of the central bank has been raised from 1.00% in 2004 to 4.75% at present (i.e. by 3.75 percentage points), long-term interest rates, which are more important from the aggregate demand perspective, have remained roughly unchanged 18 .

On other occasions there may be an obstacle in the form of a disruption, such as the Asian crisis the other year. In both cases, monetary policy must be adjusted to the economic laws but also to the conditions that apply for the current phase of the journey. What I mean is that interest rate hikes and cuts are a natural ingredient of a monetary policy for price stability - a policy that ultimately aims for a stable development of production and employment. The favourable economic trend in Sweden in recent years is in fact a good illustration of price stability’s affinity with a stable expansion of output and jobs. Since the upturn after the crisis in the early-1990s, the annual GDP growth rate has averaged around 3%, the number in employment has risen by almost 150,000 persons and the rate of inflation has been more or less around the target. This has called for repo rate increases on some occasions and cuts on others. 1  BIS Review 6/2000  Rapid GDP growth during 1999 So at what speed is the Swedish economy currently travelling? What are the speed limits? And what repo rate is appropriate for a safe journey? According to the latest national accounts, published just before Christmas, the GDP growth rate for the first three quarters of 1999 was over 3.5%. It is still difficult to tell just what happened in the fourth quarter but demand growth seems, if anything, to have accelerated.