samchain/econo-pairs-v1 huggingface dataset:
This phenomenon has gained some interest in international media over the last couple of years. Let me give you some figures: The value of cash in circulation in relation to GDP has decreased steadily from approximately 10 per cent in 1950 to around 1.5 per cent today. Over the past decade even the nominal amount of cash in circulation has decreased, which is quite unique. The decrease has been substantial, between the peak in 2007 to 2016 the number of outstanding notes and coins decreased by more than a third. Most of this * I would like to thank Erik Lenntorp for his help in writing this text  1 [4]  decline has taken place in the last two to three years, driven partly by changing consumer habits, partly by our ongoing changeover of banknotes and coins. Value of banknotes and coins in circulation SEK billons (annual average)  Cash in Circulation/GDP  120  12,0%  100  10,0%  80  8,0%  60  6,0%  40  4,0%  20  2,0%  0  0,0% 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Nominal value (SEK bn, left scale) Value in relation to GDP (per cent, right scale)  Note: Banks’ holdings are excluded. Sources: Statistics Sweden and Sveriges Riksbank. Although there are many drivers explaining the move from cash to electronic payments, I would like to highlight two actions by the Riksbank.

0,4 / 1,0 / 1,8  One approach to a more detailed separation of trend or core inflation from these types of transitory price effects involves looking at the various indicators of underlying inflation that have been developed at the Riksbank. Whereas annual CPI inflation in the period 1996–98 averaged 0.7 per cent, inflation as measured by UND1X, which excludes interest expenditure, taxes and subsidies, averaged 1.5 per cent. As measured by UNDINHX, which also excludes goods that are mainly imported, inflation amounted instead to 2.1 per cent. However, the latter indicator disregards a large proportion of the factors that contribute to a weaker price trend for goods in the longer run. 6. Conclusions about inflation 1996-98  ■  Inflation - measured with the CPI - was below the target and the lower tolerance limit during 1996-1998  ■  CPI-inflation has been markedly affected in all three years by transitory effects that are easy to identify  ■  Excluding more transitory price effects, inflation has been inside the stipulated tolerance interval  This review shows that in all three years (1996–98) inflation has been below the target expressed in terms of the CPI. However, excluding more transitory price effects that monetary policy neither can nor should try to counter in full, inflation has been inside the stipulated tolerance interval. I shall be returning to the reasons why price effects of this type should be disregarded in an appraisal of the Riksbank’s monetary policy.
If the deficit were left unchanged at this year’s expected level of Lm95 million, it is estimated that debt service costs would rise from Lm85 million today to almost Lm120 million by 2010. In other words, the Government would have to register a surplus on its recurrent operations and borrow money just to service the debt. This unsustainable situation is a symptom of another feature of our economy, the high level of government expenditure. At 51% of GDP, this is the sixth highest in the EU. Government, moreover, employs 27% of the labour force, which is somewhat higher than the EU average, while the entire public sector absorbs over one-third of Malta’s labour supply. This is not to say that nothing has been done. Fiscal consolidation and structural reform have indeed in recent years become key features of the Government’s drive to enhance the productive potential of the economy. This awareness is reflected in the Convergence Programme, which targets a fiscal deficit of 1.4% of GDP by 2007, compared to 5.3% this year. This improvement is to be attained mainly through a reduction of about six percentage points, to 44%, in the ratio of government expenditure to GDP. What does this target mean in terms of the savings that need to be made? During the past five years government expenditure has been increasing by an annual average of Lm55 million. At this rate, it would exceed Lm1.1 billion in 2007. But the total contemplated in the Convergence Programme for that year is about Lm950 million.

On the other hand, it can also be interpreted as evidence that the fiscal burden is relatively low, which would be conducive to economic expansion. It is, however, probable that the moderate tax ratio does not reflect low fiscal pressure as much as the use of inappropriate mechanisms which yield insufficient revenues. One reason for this is that direct taxation is rather progressive, which creates a disincentive for work, or at least for work in the formal economy. At the same time, it is common knowledge that tax evasion is still widespread. These  4  BIS Review 67/2004  phenomena may well be compounded by distortions inherent in the system, among them the charging of a minimum national insurance contribution on part-time work. All of this suggests that the taxation system should be further refined in order to enhance the degree of compliance and to shift the tax burden away from productive activities. Conclusion On this same occasion five years ago my analysis of the country’s economic condition led me to conclude that the status quo was not sustainable. I expressed the view that the time had therefore come for us as a nation, not as followers of narrow sectoral interests, to revisit the choices made in the past and to establish new priorities commensurate with the prevailing economic realities, with the limited resources available to us and with our core values. The situation we face today compels me to reiterate this appeal with greater conviction. For we have clearly not done enough.
With the arrival of the Monetary Policy Committee (MPC) in 1997, the number of published speeches trebled. And with the advent of the FPC and PRC, Bank publications have kept going through the gears. In 2020, the Bank issued 62 speeches, 56 working papers, over 100 consultation documents, 74 blogs and around 100 statistical releases - in total, around 500 publications. That is around four million words - a genuine revolution in transparency practices. Transparency is necessary for central bank success, but not sufficient. The “twin deficits” of public understanding and public trust need also to be tackled.34 These deficits are closely linked as the public are unlikely to trust something they do not understand. Alongside a greater quantity of communication, tackling these deficits requires a shift in the nature of central bank communications to boost understanding and in the degree of central bank engagement to build trust. Both of those shifts are now underway. On public understanding, in surveys around 60% of the general public believe the Bank of England has a good understanding of the economy. That is the good news. The bad is that the same surveys suggest only around a quarter of the public believe the Bank explains its actions and decisions in ways they understand. Given the transparency revolution that has taken place, how can that be? Which of those four million words are people not understanding? 34  Haldane (2017a). 19  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  19  The answer is most of them.

These are: whether the UK economy has achieved sustainable convergence with the economies of the single currency; whether there is sufficient flexibility in the UK economy to adapt to change and other unexpected economic events; whether joining the single currency would create better conditions for businesses to make long-term decisions to invest in the UK; the impact membership would have on the UK financial services industry; and ultimately whether joining the single currency would be good for employment. It would then submit a favourable decision to Parliament, and the British people in a referendum. The Chancellor recognised that it was unrealistic to think that a decision could be reached during the lifetime of the present Parliament, which runs to May 2002 at the latest. But he stressed that in the meantime the UK should nevertheless prepare - not only for introduction of the euro on the Continent on 1 January 1999 - which we of course did very effectively - but also for our own eventual participation. The Chancellor’s statement was the first by a British Government to accept the principle of monetary union. It recognised that the single currency will affect us whether we are in fact in or out - and that it is clearly in our own national interest to do all that we can to ensure that the euro is successful.
3.3  Other economic policies  The fact that I have referred first to the role played, in combating the crisis, by macroprudential and microprudential policies and monetary policy – instruments that, moreover, fall within the remit of the institution I lead – does not in any way imply that fiscal policy is not playing an important role. On the contrary, it seems to me that, from the standpoint of economic policy, budgetary policy is our main means of defence against the consequences of COVID-19. And this instrument has been deployed decisively since the outbreak of the crisis in Spain and in other countries. First, steps have been taken to increase the budgetary resources assigned to health in response to the pandemic. Second, since the start of the period of induced hibernation of the economy, various actions have been taken to make up for the loss of employment income and corporate revenues. Notable, in particular, are the temporary employment adjustment programmes and the public guarantee schemes for credit institutions’ lending to businesses, which I have already referred to. As you well know, the aim of these actions is to facilitate the preservation of employment relationships when the measures restricting activity and personal mobility are lifted, and to support the viability of non-financial corporations which, despite being solvent, have seen their liquidity position deteriorate as a consequence of the crisis.

Looking ahead, we expect the euro area economy to grow at a moderate pace, in an environment of continued tensions in some financial market segments and of unusually high uncertainty. A cross-check of the outcome of our economic analysis with that of the monetary analysis confirms that inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth. Overall, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. Inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2% over the medium term. The firm anchoring of inflation expectations remains of the essence. Accordingly, the Governing Council will continue to monitor all developments over the period ahead very closely. As regards fiscal policies, the Governing Council welcomes the recent decision by euro area countries to formally establish a European Financial Stability Facility. This needs to be accompanied by decisive action at the level of governments. It is essential that all countries stick to their commitments to correct high budget deficits and government debt and reduce fiscal vulnerability. To this end, the concrete adjustment measures needed to achieve the budgetary targets should be fully specified. All countries must ensure that confidence in the sustainability of public finances is guaranteed.
And third, we will retain our stock of assets for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. Moreover, this sequence doesn’t depend on the fiscal uncertainties that can appear in member states. The Governing Council is clear about the fact that there is no fiscal dominance in the euro area and no influence of any national fiscal policy on our common monetary policy. Flexibility – Our sequence is clear but the details of implementation are flexible and state1/3  BIS central bankers' speeches  dependent. We have included several options to deal with incoming data. Let me illustrate this on two points: One frequent focus of speculation is the precise timing of the first increase in interest rates and the path of policy rates thereafter. Obviously, we have to consider here the trade-off between more clarity today and flexibility tomorrow. It is true that forward curves beyond the second half of 2019 are somewhat volatile. But for the time being, this volatility is relatively modest, and certainly so for interest rates that matter for the economic decisions of households and corporates. Therefore the trade-off currently favours keeping our options open. I wouldn’t see any value in trading off our flexibility tomorrow against more clarity today but as we approach the summer of 2019, the balance will shift in favour of detailing our forward guidance. We also have flexibility over reinvestment.

This should include “an IMF standing liquidity facility.’’ The global financial safety net is the best insurance we can get against the risks created by economic divergence and it comes at a limited cost. ** So, in conclusion, we as central bankers should be predictable without being pre-committed. In other words, we should give clarity without pretending to certainty. Voltaire summed this up nicely in 1770: “Doubt is an uncomfortable condition, but certainty is a ridiculous one.”4 In these times of doubt, the Governing Council of the ECB is committed to give as much clarity as possible; clarity, not certainty, which is neither possible nor desirable. Thank you for your attention. 1 Brainard, W. (1967), « Uncertainty and the effectiveness of policy » the American Economic Review, Vol. 57, No. 2, Papers and Proceedings of the Seventy-ninth Annual Meeting of the American Economic Association, May, pp. 411–425. 2 Blinder, A. (1999), Central Banking in Theory and Practice, the Lionel Robbins lectures, MIT Press, Cambridge  Massachusetts. 3 Rey, H. (2013) “Dilemma not Trilemma: The global financial cycle and monetary policy independence”, Jackson  Hole conference proceedings, Kansas City Fed. 4 Letter to Frederick William, Prince of Prussia (28 November 1770). 3/3  BIS central bankers' speeches
In this context, I would like to focus my speech today on three issues. I will begin by focusing on the implications of the changing patterns of globalisation for the European economy. In particular, I will provide an analysis of the vulnerabilities and dependencies affecting the  1  EU's trade and financial flows, based on a report soon to be published by the Eurosystem. 1 In the second section, I will take stock of the European policy response to reduce those vulnerabilities and exposures and the dilemmas it faces. I will also provide some insights into how I think European policies should react. In the last part of my talk, I will focus on the implications of this trend for the ECB’s monetary policy. In its recent strategy review, the ECB looked carefully at the consequences of globalisation for the conduct of monetary policy. The obvious question is whether we should now expect similar effects with opposite sign as a result of a possible increase in fragmentation. EU vulnerabilities in a globalised environment The EU is deeply integrated into the global economy and has strong links with other major geopolitical powers, such as the US in terms of finance and trade, China in terms of trade and, before the war, Russia in terms of energy and raw materials supply. What are the main vulnerabilities observed as a consequence of this high degree of integration?

This reflects the systemic impact CCPs can have in situations of extreme stress, by disrupting repo markets or channelling liquidity strains to banks – which are also monetary policy counterparties – thus affecting the circulation of liquidity in payment systems. Ultimately, CCPs may need to rely on central banks as lenders of last resort. Central banks therefore have an important role to play in the regulation of central clearing – a notion which is largely recognised but often misunderstood. In this context, let me say a few words about recent developments in the area of CCP regulation, and in particular the outcome of the legislative process regarding the revision of the supervisory framework for CCPs, the European Market Infrastructure Regulation (EMIR II), and the recommendation to amend Article 22 of the Statute of the ESCB and the ECB. The ECB recommended to EU legislators that its Statute be amended to clarify that the ECB had legal competence over CCPs, which would have allowed it to perform its statutory monetary policy role under EMIR II. We made the case that the ECB needed explicit general competence to monitor and address risks relating to our mandate, including broad discretion to take necessary measures in exceptional situations where the stability of the euro is at stake.
(2014): “Central banks and payment systems: The evolving trade-off between cost and risk” and Norman’s comments at Norges Bank’s conference “Of the uses of central banks: lessons from history”, 5–6 June 2014. BIS central bankers’ speeches  1  Allow me to give two examples. Just before the turn of the millennium, Norges Bank introduced a real-time gross settlement (RTGS) system that allowed large payments to be settled far faster than earlier. This also resulted in less uncertainty and lower risk. Another example is the introduction of the foreign exchange settlement system CLS just over ten years ago. Before CLS was established, one party could risk paying his leg of a trade without receiving anything from the counterparty. With CLS, this counterparty risk was eliminated. In both cases, the introduction of the new systems increased costs for private participants. This prompted criticism. But over time, the reduction in risk has more than offset the increase in costs. The financial crisis in autumn 2008 showed that the gains were real. Where there were adequate settlement systems without counterparty risk, markets functioned better. The core of the Norwegian payment system is the Norwegian Interbank Clearing System (NICS) and Norges Bank’s settlement system (NBO). On average, over NOK 200 billion passes through NBO each day. Without this system, payments in Norway would come to a halt. This would quickly have serious consequences. Norges Bank therefore has a target of 100-percent availability for the settlement system during opening hours. In recent years, the Bank has been successful in ensuring this.

Foreign direct investment has helped total factor productivity in recent years, yet if wages reach too high levels, attracting investment may become a problem. We therefore need to ensure that wage levels are compatible with attracting investors, but at the same time acknowledging that, at least in certain areas, wages need to go up at present, in order to mitigate the labour force drain that affects the private and public sectors alike. However, pay rises in the private sector should not be triggered only by an increase in public sector wages. While raising the minimum wage has been necessary, we should be very careful not to hurt employers, as they represent an important engine of the economy. The key is, in my opinion, to increase wages at an adequate, sustainable pace, in order for Romanians to ultimately benefit from an improved living climate reflected in a higher purchasing power, but also from preserved macroeconomic equilibria, as well as higher-quality public goods – especially highways connecting different regions of Romania, but also our country with the West. After all, wages are not the only side of the emigration story. 4. KEEPING THE EXTERNAL DEFICIT IN CHECK The wage matter is also closely linked to the topical issue of ensuring a balanced external position. To the extent to which the upward path of wage costs is too steep, it gets very difficult to preserve competitiveness, not only on external markets, but also on the domestic market.
I don’t think the time has come for this, either at a conceptual or practical level. But rather, I think that we need to develop the existing institutional system for European banking supervision in order to ensure that all of the possibilities for co-operation and convergence are fully taken advantage of. The main policy objective at this stage should be to enhance cross-border supervisory co-operation in order for supervisory action to be perceived as unified. This system should be built on four levels. At the first level, we have the competent supervisor of each banking institution (whether this is the home or host supervisor in the context of the group), which will have to fulfil its responsibilities and accountabilities, on the basis of the powers and obligations it has been given by the national parliament and legislators. The second level consists of bilateral co-operation between the supervisors of internationally active institutions. This has long been the bedrock of effective supervision in the context of increasing internationalisation, and will continue to be essential in the future. Multilateral co-operation forms the basis of the third level. This is an aspect that has become progressively more significant in recent times, and which will grow in importance in the coming years. Both bilateral and multilateral arrangements will be increasingly necessary in the context of Basel II, where, as we have already discussed, the consolidated supervisor will be responsible for co-ordinating the supervisory process in relation to assessing applications to use the advanced approaches.

In all, the domestic economy seems to have adjusted well to the greater risks and challenges that have emerged. The pace of growth has moderated from last year’s but the overall growth momentum still looks firm and economic stability remains sound. The key issue going forward is the risk posed by the higher oil prices to the outlook on domestic growth and inflation. And under a more pessimistic scenario, an important question is how resilient is the domestic economy to absorb a much larger shock, this is to say persistently higher oil prices. In the meeting of the Monetary Policy Committee last Wednesday, members of the Monetary Policy Committee spent considerable time discussing this type of questions based an preliminary analyses prepared by our staffs at the Bank of Thailand. While the numbers are still preliminary, the results seem to suggest a greater trade-off between growth and inflation going forward. In particular, higher oil prices will adversely affect both growth and inflation, but the effects on inflation is projected to be more pronounced because of the pent-up pressure on prices as mentioned earlier. Reflecting this, the Committee felt that the risks to economic stability have increased with higher oil prices and it is only proper that monetary policy should be vigilant on inflation.