samchain/econo-pairs-v1 huggingface dataset:
5  53% of the stock of bank loans to non-financial businesses pay a floating interest rate, and for an additional one third the interest rate is fixed for one year or less. BIS central bankers’ speeches  5  As a result of the Bank of England’s actions, we can relax other requirements to help with the flow of credit. Balance sheet repair will give confidence to depositors and investors who provide funding to banks. With that market funding assured, banks can safely hold fewer liquid assets, such as government bonds, that act as a cushion to be sold in the event that investors withdraw their funding. Accordingly, I can confirm today that, for major banks and building societies meeting the minimum 7% capital threshold, the Bank of England will reduce the level of required liquid asset holdings. The effect will be to lower total required holdings by £ billion, once all eight major banks and building societies meet the capital threshold.6 That will help to underpin the supply of credit, since every pound currently held in liquid assets is a pound that could be lent to the real economy. Taken together, our actions create not just a more resilient system, but also one more able to support and sustain a recovery by serving the real economy. Crossing the threshold of balance sheet repair is not the end-point. The 7% capital threshold, like the 7% unemployment threshold, is only a staging post at which we assess our next steps.

The MPC’s guidance is fully consistent with price stability. I can also assure you of my personal commitment to price stability. I certainly have no hesitation in raising interest rates when required – when I was Governor of the Bank of Canada, we raised interest rates as the recovery there gathered pace. But that was the appropriate policy for Canada at that time. The challenges in the UK today are different, and policy must be tailored accordingly. The Bank of England’s remit recognises that, at times, it is appropriate to bring inflation back to target more slowly in order to avoid unnecessary volatility in output. With a depressed level of output and inflation above target due to temporary factors rather than demand  3  The trend is adjusted for the secular decline in North Sea oil and gas production. BIS central bankers’ speeches  3  pressures, this is such a time. The MPC is charting the right path back to its 2% inflation target. CPI inflation is currently being pushed up by rises in utility prices and tuition fees that do not reflect the underlying pressure of demand on supply, along with the effect of past increases in import prices. Underlying domestic inflationary pressure is subdued, with wages growing at only around 1% per year. Although there will be bumps in the road, inflation is set to fall back over the next two years. In these circumstances it would not make sense to choke off the recovery by raising interest rates prematurely.
And left unattended, these vulnerabilities are only likely to intensify.25 III. Policy Implications How should monetary policy makers respond to these challenges? In the short term, they must play the hand they’ve been dealt. The prevalence of dollar invoicing means using the flexibility in inflation targeting. 22  In addition to the direct costs of financing these reserves, there have been indirect costs including the crowding out of domestic investment. 23 Rachel, L and Smith, T (2015), ‘Secular drivers of the global real interest rate’, Bank of England Staff Working Paper No. 571, estimate that the savings glut has lowered global real rates by 25 basis points over the past 30 years. 24 See ‘Real interest rates and risk’, speech by Gertjan Vlieghe given at the Society of Business Economists’ Annual conference, 15 September 2017. 25 If history serves as a guide, EMEs’ external liabilities could double as a share of GDP by 2030: market-based finance could then account for half of external liabilities and investment funds could represent 40% of market-based finance flows to EMEs. By 2030, the reduction in sustainable capital flows arising from push factors could completely cancel out the positive impact stemming from domestic reforms in EMEs over the past two decades. To offset this reduction in the sustainability of EME capital flows, their reserves would have to double over the next ten years.

11 Boz, Gopinath and Plagborg-Moller (2017) show that a 1% appreciation of the dollar leads, all else equal, to a 0.6% contraction in trade volumes in the rest of the world. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  Third, a growing asymmetry at the heart of the IMFS is putting the global economy under increasing strain. Huge network effects mean the dollar has remained dominant in the IMFS despite the transformation of the global economy. At the time of the Latin American debt crisis, EMEs made up a little more than one third of global GDP. Since the last Fed tightening cycle, their share of global activity had risen from around 45% to 60%. By 2030, it is projected to rise to around three quarters. As well as being the dominant currency for the invoicing and settling of international trade, the US dollar is the currency of choice for securities issuance and holdings, and reserves of the official sector. Two-thirds of both global securities issuance and official foreign-exchange reserves are denominated in dollars.12 The same proportion of EME foreign currency external debt is denominated in dollars13 and the dollar serves as the monetary anchor in countries accounting for two thirds of global GDP.14 The US dollar’s widespread use in trade invoicing and its increasing prominence in global banking and finance are mutually reinforcing. With large volumes of trade being invoiced and paid for in dollars, it makes sense to hold dollar-denominated assets.
Conventional policy options at the zero lower bound Conventional macroeconomic theory states that, when interest rates are at the zero lower bound, monetary policy becomes ineffective and economic policy action should concentrate on fiscal measures. In slide 1, the depiction of the economy using the standard IS/LM model summarises this point of view. As you can see, the economic situation is represented in terms of two key variables, the interest rate and output (or GDP). Economic equilibrium is represented by the intersection of the IS and LM curves. The first corresponds to the interest rate and GDP levels that balance savings and investment and the second represents the combinations of these two variables, which equilibrate the demand and supply of money. Expansionary monetary policy corresponds to pulling the LM curve to the right. When interest rates are at the lower bound, however, the LM curve is horizontal. At this point, pulling a horizontal to the right has absolutely no impact on the intersection of the IS and LM curves, and therefore on the equilibrium level of output. Conventional monetary policy hence becomes ineffective. Intuitively, if interest rates are at the zero lower bound they cannot be lowered further, yet it is precisely by lowering interest rates that monetary policy can stabilise the real economy. By contrast, it is at the zero lower bound that the potential benefits of fiscal policy are most significant. As the same diagram suggests, it is precisely when the LM curve is flat that it becomes most appealing to use fiscal policy.

In the current exceptional circumstances, the imposition of a minimum exchange rate is a measure that has received strong support from economic and political actors in Switzerland and abroad. Both the IMF and the OECD recently confirmed that this was an appropriate response 3 to the risk of economic contraction and deflation in our country. 4 Given the perfect  3  OECD (2012). 4  IMF (2012). 4  BIS central bankers’ speeches  alignment of this exceptional monetary policy measure with the pursuit of the SNB’s price stability mandate, one would imagine that, in the future, the National Bank’s independent status will remain as strongly anchored as in the past. Finally, it is important to consider the risks associated with the SNB’s inflated balance sheet. Our balance sheet has become more volatile, principally because it has grown in size − it is four to five times larger than it was in 2007 – but also because of the volatility of the overall environment. In the course of the last two years, risks have manifested themselves both positively and negatively. In 2010, for example, the SNB experienced its biggest ever loss, but in 2011, it also experienced one of its largest gains. The much increased size of our balance sheet, the unavoidable exchange rate risks associated with our foreign exchange reserves and a dependence on developments in the gold and capital markets, mean that the high volatility of the SNB’s annual results will be a standard feature of the near future.
We achieve this by setting 𝛿 = 0.1, 𝛽0 = 0.5, 𝛽1 = −0.2, and 𝜃0 = 10, that is to say, a crisis reduces the level of GDP by 10% relative to baseline. If instead we set 𝜃1 = −0.1, such that each percentage point increase in capital reduced the GDP hit in a crisis by 0.1%, the optimal capital ratio increases to over 20%. 15 See Cunliffe (2017) and Bank of England (2017) for discussion of resolution. 16  This estimate is based on the difference in the estimated cost of crises across their sample depending on whether they occurred under more or less credible resolution regimes. 17 Admati and Hellwig (2013) have forcefully questioned the basis for assuming such costs, given that standard finance theory would predict that the cost of debt and equity funding for a bank will decline in response to an increase in its capital position. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  A recent paper from the BIS (Gambacorta and Shin (2016)) reaches a similar conclusion. It finds that banks with higher unweighted capital ratios have tended to have higher loan growth, with each one percentage point increase being associated with higher subsequent lending growth of 0.6 percentage points per year. This evidence is consistent with the macroeconomic costs of higher bank capital being lower than assumed in the Basel LEI study.

Risk that banks liquidating buffers to meet outflows in a stress could exacerbate a fire sale. Less effective Mitigants RWCR: Susceptible to expansion into assets with low measured risk. Places no constraint on debt funding. LCR: 30 day time horizon only limits the expansion funded by very short term liabilities. RWCR & LR: Higher capital should in principle help banks retain funding, but does not provide a cushion if a run occurs. RWCR & LR: Require small fraction of liabilities to be non-runnable equity but a small amount relative to illiquid assets. RWCR & LR: Do not directly mitigate the likelihood of deleveraging due to liquidity problems. Capital and Leverage  The objective of the capital framework is to ensure banks have sufficient capital to absorb unexpected losses and continue lending in situations of stress. RWCRs oblige banks to assign granular risk weights to their assets. If true risk of an asset can be estimated accurately – it is a “known known” - then the RWCR is typically better suited than the LR to guarding against solvency risk (Gordy (2003)). Greenwood et al (2017) conclude “the social optimum can be implemented with a single requirement that each bank maintain a sufficient ratio of equity to risk-weighted assets, provided the risk weights are chosen appropriately”. The last part of this sentence is, however, an important proviso. One key question is whether risks in the financial system are likely to be known with sufficient certainty that they can be estimated meaningfully and accurately.
This firm anchoring of expectations and various measures of underlying inflation trends confirm that price developments over the medium and longer term will be in line with price stability. In 2010, HICP inflation is likely to remain positive and below 2%, in an environment of sluggish demand in the euro area and elsewhere. Since last October, the Governing Council of the ECB has eased monetary policy significantly and rapidly, but also provided unlimited liquidity to the banking system and implemented “non-standard” enhanced credit support measures, which aim at ensuring that the monetary policy impulse deriving from the decrease in central bank rates is efficiently transmitted to the real economy. It is encouraging to observe that these policy actions, together with the substantial fiscal stimulus being implemented by governments and their measures aimed at supporting the banking system, are progressively having a visible positive impact on the growth performance of the euro area. In time, they should lead to a normalisation of conditions in financial markets and the recovery of the economy to a path of sustainable growth. And this leads me to some final remarks on the conference theme – “planning an exit strategy” – which is crucial. An exit strategy will need to have three elements: an exit from the environment of exceptionally low interest rates and unlimited liquidity provision; an exit from the extensive government support measures to the banking system, and an exit from the substantial fiscal stimulus.

The other step concerns the choice of the central parity rate for entry in ERM II. As explained earlier, this, however, remains a multilateral decision to be taken by consensus and the matter, therefore, is not at our sole discretion. What are your expectations with regard to the central parity rate? As I have just pointed out, exchange rate stability is vital for our open economy and we wish to preserve this important feature of the currency during ERM II. We have reason to believe that this is not an unrealistic expectation. It is based on the outcome of a study the Bank carried out on the equilibrium exchange rate. According to economic theory, the central parity rate in ERM II stands a better chance of being sustainable over the two-year period if it corresponds to the equilibrium exchange rate. Thus, if one could identify the latter rate, one would automatically have an idea of the most appropriate central parity rate for ERM II. The equilibrium rate, however, is not specifically known and cannot be observed. It can only be estimated under a number of assumptions and the estimates are sensitive to the methodology used. Recognising this caveat, the Bank used several methods to estimate the equilibrium exchange rate. Both the methodologies and the results of the Bank's study were shared with local and foreign experts, from the ECB and from fellow national central banks in the EU and in North America.
My main observation from recent experience with handling technology risk is that bank management should adopt a more proactive approach towards increasing the overall robustness of the IT environment, from both the crime prevention and BCP perspectives. In dealing with these IT-related incidents, we noticed the concerns sometimes expressed by bank management about the likelihood of causing unnecessary public panic if these matters were given publicity. Many preferred to deal with the problems quietly. The desire to be cautious and to avoid negative publicity is quite understandable. However, we have found that, far from causing panic, our insistence on publicity has been helpful in alerting members of the public of the nature of risks that they are exposed to as bank customers and how they can protect themselves. It enhances public education on the issues at hand and promotes the exercise of a degree of care by bank customers that the situation demands, not just to protect themselves but also to help in protecting the integrity of the system. Interestingly, nowadays, we sometimes receive reports of fake web-sites from members of the public even before the banks affected become aware of them. Diversification risk The fourth major force shaping the industry is the continued effort of banks to diversify their income source. This is an ongoing and inevitable trend given the increasing competition in the banking market, but it has gathered pace in recent years in response to the increasing pressure on interest income.

In some periods, oil prices have been important for developments in the krone exchange rate, while in other periods there has been no clear relationship. In August, oil prices fell at the same time as the krone depreciated. Interest rates are still low among many of our trading partners, in spite of the interest rate increases in several countries as a result of rising energy prices and higher consumer price inflation. In the November Inflation Report, Norges Bank assumes that money market rates among our trading partners will gradually increase over the next few years. Slower growth in the US has contributed to expectations that the rate tightening cycle is nearing an end and that the policy rate will be lowered in the course of next summer. Our interest rate projections are based on the assumption that external and domestic interest rates will rise to a somewhat higher level in the longer term than implied by forward interest rates. Monetary policy assessments and strategy Monetary policy in Norway is oriented towards low and stable inflation, with annual consumer price inflation of close to 2.5 per cent over time. In its conduct of monetary policy, Norges Bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment. At Norges Bank’s Executive Board meeting of 1 November, the sight deposit rate was raised by 0.25 percentage point to 3.25 per cent.
It was essential for digestion at a time when humans’ diet consisted mainly of grass and vegetation in our hunter-gatherer past. But such is the sedate pace of biological evolution, the appendix is still with us, and causing us grief, hundreds of thousands of years later.4 This is evidence of slow biological evolution of the type that constrains all animals. 3 4  Harari (2014). Looking across all its forms across species, the appendix probably evolved more than 30 times (Smith et al (2013)). 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Except, that is, humans. Many millennia ago, humans found a way of breaking free from their biological chains. The reason we know this is because the pace of human evolution has radically outstripped that of all other animals. Human environments, lifespans and tasks are unrecognisable from a hundred years ago, let alone a million. Something other than our bodies put humans on the evolutionary fast-track.5 That something was the brain. In particular, the energies released from digestion allowed a particular part of the brain to expand and connect - the pre-frontal cortex. This is located where our foreheads now sit. Indeed, our bodies may have adapted to meet this neurological need with the flat brow ridges of Neanderthal skulls in time replaced by the Tefal foreheads of today’s homo sapiens. And what exactly did this newly-installed pre-frontal cortex do? Modern Magnetic Resonance Imaging (MRI) can now tell us. Among other things, this part of the brain is responsible for imagination.

SPEECH DATE:  06/11/2018  SPEAKER:  Stefan Ingves  VENUE:  Di Framtidens betalningar  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  The e-krona and the payments of the future When did you last pay with cash? I suspect it was rather a long time ago. In Sweden, the Riksbank's money has been used for 350 years, so it entails a historical shift if you and all of us, completely stop using central bank money to make payments. Today we can buy food, pay our bills and receive medical prescriptions without needing to leave our homes. The more goods and services we purchase digitally, the more we need rapid and simple payment services that are adapted to our new way of shopping. Is it a problem that cash is being used less and less? Yes, in a way it is. If the Riksbank is to fulfil its mandate, to ensure that Sweden has a payment system that is both safe and efficient, the means of payment we issue must also be used. I believe that the arguments that once led to the central banks being allowed to issue money are still relevant, it is only the technology that has changed. This is why we at the Riksbank have decided to build a pilot version of a new type of Riksbank money – a digital krona, or e-krona.
The catastrophic impacts of climate change will be felt beyond the traditional horizons of most banks, investors and financial policymakers, imposing costs on future generations that the current one has no direct incentives to fix. Once climate change becomes a clear and present danger to financial stability it could already be too late to stabilise the atmosphere at two degrees. The longer adjustment is delayed, the more GDP-at-risk will grow. Catastrophic physical risks from the increased frequency and severity of climate and weather-related events will likely increase non-linearly. 30  All speeches are available online at www.bankofengland.co.uk/news/speeches  30  And late climate policy action could bring about a climate ‘Minsky moment’ when the scale of stranded assets dawns, bringing about sudden and sharp adjustments to asset prices. These risks to financial stability will be minimised if the transition begins now and follows a predictable path, thereby helping the market anticipate the transition to net zero and reducing the costs of adjustment. The policymaker’s discount rate is important to their assessment of the financial stability risks of climate change. 𝑇  min ℒ𝑡 ≡ 𝐸𝑡 {∑ 𝛽 𝑖 [𝑓(𝐺@𝑅𝑡+𝑖 ) − 𝜙𝑦𝑡+𝑖 ]} 𝜌𝑡  𝑖=0  Last year, the Government brought the horizon consistent with Parliament’s declaration of a climate emergency and the legislation of a UK Net Zero target for 2050.

Krzysztof Rybiński: Single euro payments area from the point of view of the National Bank of Poland Address by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the Conference of the Polish Bank Association, Single Euro Payments Area, SEPA Organisational Structure in Poland – SEPA PL, Klub Bankowca (Bankers’ Club), Warsaw, 10 October 2006. *  *  *  Ladies and Gentlemen, Not all of you may know that the first bank that fulfilled many functions of a modern central bank was established in 1609. It was the Bank of Amsterdam. This bank issued its own money, managed its supply through open market operations and operated an RTGS system for large volume payments, although the meaning of the term “system” was slightly different four hundred years ago as compared to its current meaning 1 . Four hundred years ago, the RTGS system of the Bank of Amsterdam completed payments equal to the Netherlands’ GDP within three weeks. Today, many countries need less than a week for the same task. Bankers who managed floren’s agio in the seventeenth century could have never dreamt that four hundred years later we all would not only use a single European currency, but also implement standards of the Single Euro Payments Area, or SEPA. SEPA is to be real. It is part of a vision of united Europe where payment services are part of the single market.