samchain/econo-pairs-v1 huggingface dataset:
With the large levels of excess reserves in the system, certain institutional aspects of money markets in the United States – including bank-only access to IOR, credit limits imposed by lenders and other impediments to market competition, and the costs of balance sheet expansion – appear to create frictions that have made IOR act more like a magnet that pulls up short-term interest rates than a firm floor beneath them. Thus, in considering how to implement policy normalization, the Federal Reserve evaluated a variety of ways to increase competition for funds among borrowers and thereby improve the control provided by IOR.12 The Federal Reserve initially considered an approach to policy normalization that was based on a combination of term operations and asset sales or redemptions aimed at making reserves sufficiently scarce so that, once the FOMC decided to tighten monetary policy, this tightening could be implemented using IOR within a framework that was otherwise similar to that used before the crisis.13 As part of this approach, the Federal Reserve acquired a new set of reverse  2  BIS central bankers’ speeches  repo counterparties, including money market funds and government-sponsored enterprises, in addition to the primary dealers with which it had traditionally transacted. These new counterparties were major investors of cash in overnight markets and had capacity to facilitate the “draining” of substantial reserve balances, if offered attractive term investments with the Federal Reserve.

Instead, use of the pool has increased because over time the constraints imposed on customers’ ability to  BIS central bankers’ speeches  9  vary the size of their investments have been removed, the supply of balance sheet offered by the private sector to foreign central banks appears to have declined, and some central banks desire to maintain robust dollar liquidity buffers. Open questions Compared with the relative calm of the pre-crisis period, money markets have recently gone through a sustained period of substantial change. Some of these changes are the result of regulations to improve the safety and soundness of the financial system, others relate to business model enhancements, and, of course, some relate to Federal Reserve activity. The Federal Reserve continues to collect data on the structure of money markets to determine whether any changes are needed in its operating framework to ensure that its objectives continue to be met. We are continuing to watch developments as business models adapt to the numerous changes in bank regulation introduced over the past few years. We are interested in the extent to which these business model changes impact the structure of money markets and thereby affect the form of monetary policy implementation. For example, we are monitoring developments in bank behavior that could have implications for the transmission of monetary policy into market rates. Thus, we are paying close attention to the behavior of foreign banks on financial statement reporting dates.
The question of which should be the role of central banks in  3/4  financial crisis prevention or mitigation is still far away from reaching any definite answer. Several papers in this conference will deal with this important issue. Third, we need to have a better understanding of how monetary policy and other macroeconomic policies are transmitted. By now, it is clear that the standard new Keynesian framework, which still shapes our general view of the basic elements of monetary policy, has some relevant shortcomings. For example, recent research has underlined how additional channels related to household and firm heterogeneity may provide a more realistic depiction of how monetary and fiscal policies affects the economy, modifying –or even overturning- some of the prescriptions derived from models with representative agents. This is a line of research linking both empirical and theoretical work that may have consequences for our work as central bankers. Your discussions over the next couple of days will help to improve our understanding of some of these complex issues, ranging from the emergence and consequences of bubbles in asset markets, to the role of individual heterogeneity in the transmission of macro policies and in the aggregate incidence of financial frictions. Conclusion To conclude, I would like to say that both policymakers and academics face new challenges in our understanding of how central banks should act in order to fulfill our mandates and maximize the welfare of the citizens we work for.

Meetings such as this Conference provide an excellent opportunity to strengthen the links between central bankers and academics. I wish you a very productive meeting and a pleasant stay in Madrid, expressing my gratitude for your attendance to this First Annual Research Conference of the Banco de España. Thank you very much for your attention. 4/4
The deficit in savings in the private sector amounted to approximately 7 per cent of GDP at the end of last year, with both households and companies contributing to this figure. BIS Review 39/2001  1  Despite the strong demand, inflationary pressure has been only moderate. The dollar exchange rate was strengthened by widespread inflows of capital from foreign investors who bought American shares and a strong growth in productivity has had the effect of subduing prices. What characterises periods with a build-up of financial imbalances? The development of the American economy bears some similarity to the development that has usually preceded the financial crises that have affected many countries in recent decades. Characteristic for the development of countries that have suffered financial crises has been than an optimism, which has later proved to be unwarranted, has been reflected in rising asset prices, over-investment, excessively high consumption and a strong expansion in credit. It has rarely or never been possible to determine in advance when a realistic optimism has passed into over-optimism and in its turn pushed up asset prices, investment, consumption and indebtedness. It has rarely been possible to judge, for instance, whether a large build-up in indebtedness has expressed an adaptation to realistically based expectations of future growth prospects or whether the build-up in debt is based on exaggerated expectations.

Hence, it is crucial that we continue to give generously, to local and foreign deserving causes. 24. Yet giving is also difficult to do well because it must not lead to waste and leakage or diminish the spirit of self-reliance. I am pleased that Singapore is playing host to this global forum which brings together leading philanthropists and thought leaders to discuss how to better accomplish giving, and to push the frontiers of philanthropy in Asia. 25. I commend Credit Suisse for playing an active role in developing philanthropy capabilities in Singapore, and I wish you a fruitful meeting. BIS central bankers’ speeches  3
1 Indeed, international difference in living standards has declined over the latter half of the  1  Parente and Prescott (1999) documents the evolution of international income and growth differences and gives a list of growth facts before and after the industrial revolution. BIS Review 99/2007  1  twentieth century as a result of emerging markets’ fast-pace and sustained growth. During the past 20 years, the world’s income gap has narrowed even faster. It cannot be by sheer coincidence that this period has also witnessed growing international trade and financial integration and the entrance of China, and subsequently India, into the comity of trading nations. Along these high growth trajectories, emerging markets’ aggregate real income and consumption are an order of magnitude more volatile than advanced economies (both in terms of levels and growth rates). Not only is consumption more volatile in emerging markets, but it is also more volatile in relation to income. In fact, over the business cycle, consumption is around 40 percent more volatile than income for emerging markets, while it is less volatile than income for advanced economies. The unique volatility outcomes can be attributed to a distinct set of macroeconomic shocks which are specific to emerging markets or their propagation mechanism, or both. 2 I think that the extraordinary volatility in real aggregate consumption and income can be partially attributed to episodes of financial instability that occur not infrequently in emerging markets.

Norges Bank became a member of the NGFS in December 2018. The primary objective of this network is to create an arena for central banks and financial supervisors to exchange experiences and share best practices in developing environment and climate risk management in the financial sector. We consider this network to be an important meeting place to arrive at a well-considered understanding of the role and activities of central banks in this field. 3/3  BIS central bankers' speeches
d. Transparent balance sheets can make it easier to unwind troublesome financial institutions and divest their assets. e. Monetary policy channels in a world with CBDCs may be faster and more powerful. Today monetary policy works by affecting the balance sheets of banks and some financial intermediaries, which do not pass on all the rate changes to final users due to market power and other frictions. If central banks can reach out to more and more agents (businesses, households), then their role will become ever more central and effective. Page 7 of 11  Central Bank of Chile September 2019  Lastly, use of CBDCs could be explored as a more efficient alternative for remittances. In Chile, immigration has had a sharp increase in few years. As in other parts of the world, they face high costs for their remittances when using traditional methods based on a structure of correspondent entities. An alternative option that is being used, although because of its nature is not possible to have detailed information, are remittances based on cryptoassets. While these remittances may be faster and even cheaper, they are outside of the regulatory perimeter and thus their customers are exposed to several risks (counterparty, liquidity, operational). The cross-border use of CBDC would reap the benefits of crypto-based methods, without their risks. Certainly, this would require coordination between the central banks involved.

The creation of these indicators, their calculation and rating in the relevant markets would create the conditions for the real assessment of the competitive advantages that this district has to offer. The help that the local authorities can give in identifying the competitive advantages and the provision of local statistics are perhaps the best investment they can make for the regional and national development. Today, more than ever before, all the attention of global economy is oriented towards the markets, as the best estimators of the competitive advantages in the global economy. The developments in these markets are bringing about the reconfiguration of the economic powers at a global level. The new commercial and financial trends appear to be in favour of the utilization of natural resources and competitive advantages, through investments in emerging economies, to later import them in the form of final products, ready for consumption. These are advantages for the Albanian economy, which, with the major structural reforms taking place (privatizations, natural and human resources, creativity and the entrepreneurship spirit), enjoys all the opportunities and should play an active role in the regional market and beyond, in the global market. I am optimistic and I do believe in our economy and its potentials. Thanking you for your attention, I welcome any comments. BIS central bankers’ speeches  5
The slowdown in global growth has been more pronounced and spanned a longer period than we had expected. The Norwegian economy has also felt the effects of this. Norges Bank has therefore lowered the sight deposit rate from 7 to 5.5 per cent since 11 December, most recently on 5 March. The interest rate differential has narrowed. Since mid-January, the krone has depreciated, partly reflecting expectations of lower interest rates. Monetary policy has been relaxed. There is uncertainty associated with developments in many of the factors that will influence inflation ahead, among others the exchange rate. This implies a gradual approach to the conduct of monetary policy. Increased spending of petroleum revenues will have implications for Norway’s industry structure. High demand for goods and services that require domestic resources, necessitates higher employment in the sheltered sector. This labour has to be recruited from the exposed sector, or through the natural increase in the labour force finding its way to the sheltered sector. Even if employment and output in Norwegian manufacturing industry fall, developments for Norwegian enterprises may not necessarily be only negative. Some enterprises may be at the cutting edge of technology, and increase their efficiency in pace with the rise in costs in Norway. Others may relocate labour-intensive activities abroad. The scaling back of manufacturing still involves a risk. It makes the economy more vulnerable; the foundation for learning, innovation and development may be undermined when a smaller share of the business sector is exposed to intense international competition.

Here again, though, I should add that we are always on the way towards our goals and will never actually meet them. Even in the conditions we enjoy, it is not easy to reach the necessary consensus. This brings me to the “human factor”. The background conditions I have been talking about are aimed in no small measure at enabling individuals to develop their own interests as well as those of society. This symbiosis is essential to the prosperity of the economy as a whole. Where human resources are concerned, what is needed most of all is adequate training, motivation and the right mentality. Over the course of time, the development of the economy and the associated structural change have constantly thrown up new challenges for everyone involved. This can be seen, for example, in the phenomenon of structural unemployment, arising from an imbalance in supply and demand for specific skills. Although the need for continuous training and retraining is nothing new, it has now become an urgent concern. But qualifications alone are not sufficient. They only come into their own when the people in question are also motivated. If we were to restrict ourselves purely to economic activities, we could leave it at that. But after what I said about the correlations between the economy and society, there is clearly more to it. In a democratic community, we don’t just need “economic subjects” who contribute their skills in specific areas and with the right mentality.
In consequence, other banks struggled to get the liquidity they needed via market mechanisms, particularly term borrowing, even when there was more than sufficient cash in the system as a whole and even if the firms had good quality collateral. The amounts being rolled in overnight markets became a risk in itself. The Bank responded by massively increasing its lending at three months maturity from £ before the crisis to a peak of around £ in early 2009. Essentially we chose to lend so that any bank which needed to could bid for and obtain liquidity at three months. The significant increase in term liquidity that ensued meant that there would have been downwards pressure on short-term interest rates. So in order to keep market interest rates close to Bank Rate, the Bank drained the excess liquidity via issuing Bank of England bills. At its peak, the Bank issued around £ of one-week bills. 6  Currently, the deposit rate is zero and the borrowing rate 75bps. In more normal conditions, these spreads can be expected to be symmetric around Bank Rate. 7  The Bank can choose to lend in variable rate repos. This happened for a brief period in mid-2009. 8  Again, variable rate bills could be used. This happened during the first few months of the asset purchase programme.

The first concerns the state of the securitisation markets and that for covered bonds in particular. In Europe, the ECB routinely takes covered bonds and other private sector securities as collateral in all of its operations. And there is a perception of state support for the covered bond market, perhaps because covered bonds have often been issued by quasi-state banks. The Bank is occasionally lobbied by industry representatives to offer more support to the covered bond market. I want to make three points in response. First, that RMBS and covered bonds are already eligible collateral in both the Indexed LongTerm Repo operations and in the Discount Window Facility alongside a range of other private sector securities. 15 It is only short-term OMOs, which are conducted for monetary policy purposes, where such assets are not eligible. In order to help manage the risks arising from securitised assets, and to help improve market functioning by establishing higher standards, the Bank will be demanding detailed disclosures – to the Bank and publicly – on the underlying assets and structures. This transparency initiative has generally been welcomed by investors and we hope it will encourage the establishment of viable securitisation markets in future. 14  Further details are available on the Bank’s website at http://www.bankofengland.co.uk/markets/marketnotice100719.pdf. 15  A bank may not submit its own covered bonds in Long Term Repos, only those of other issuers. But it may submit either in the DWF.
Although the first small signs of success are apparent, we must still remain vigilant about the accompanying risks. Above all there is the moral hazard that would emerge were some government to lose its appetite for reform. The falls in interest rates provoked by the massive purchases of bonds will lower interest rates temporarily on government borrowing and this must not be used as an argument for pushing vital but painful reforms to some point far off in the future. Interest rates are only favourable for a short time and will support governments while they are making  BIS central bankers’ speeches  1  changes. If governments were to ignore the budget rules agreed in Europe and were to start to increase their debts further, the measures taken by central banks would be of very little help. The other main task occupying central banks alongside monetary policy last year was the launch of single banking supervision. Starting supervision and carrying out a thorough and comprehensive assessment of the assets of European banks needed a lot of work from central banks and financial supervision authorities. The successful conclusion of this work let us say with confidence that the biggest and most significant banks in a range of countries in Europe are now assessed and supervised on the same terms. In Estonia, Swedbank and SEB Pank have come under single supervision.

We would have done this earlier, but first it was necessary to complete the process of registering the manor house and the land it stands on. It is worth noting under cost efficiencies that Eesti Pank has added technical support for the Fiscal Council to its list of responsibilities together with the macroprudential supervision and increased requirements for compiling financial statistics. Despite this, the number of people employed at the bank is roughly the same as a year ago, and Eesti Pank remains the smallest central bank by staff size in the European Union. Eesti Pank’s operating expenses fell last year to 17 million euros from the 17.4 million of a year before. Although the central bank’s duty is to keep inflation low and not to chase every possible source of higher revenues, it is good to be able to note that we ended last year comfortably in profit. 4  BIS central bankers’ speeches  Conclusion In conclusion I would like to emphasise again that it is important for stable development in Estonia and for improved public well-being that we remain ready to adapt to a changing economic climate, to react rationally to changes, and yet to maintain the conservative stance on monetary issues that has served us well so far. Thank you for your attention. BIS central bankers’ speeches  5
And, as discussed in the Monetary Policy Committee’s (MPC) May Inflation Report, it is likely to rise further in the near-term before beginning to fall back (Chart 1). Moreover, the rate of inflation may well stay above target for the remainder of 2011 and 2012. Chart 1 CPI inflation projection based on market interest rate expectations and £ billion asset purchases  As I and many of my colleagues have already discussed in various speeches, MPC Minutes and the Inflation Report, the MPC attribute the rise in CPI inflation to three main shocks – the rise in VAT, increases in global commodity prices, and the impact of the fall in sterling since mid-2007. First, let me consider the increase in the standard rate of VAT to 20%. Mechanically this tax increase could account for around 1½ percentage points of the current inflation rate  BIS central bankers’ speeches  1  although, allowing for the behaviour of retailers in absorbing some of the increase, the marginal impact is probably nearer 1 percentage point.1 Second, there have been large increases in a number of commodity prices over the past two years or so. Those increases reflected the combination of renewed strength of the world economy, especially in emerging market economies, and the limited ability of the world’s commodity producers to increase supply – at least at the same pace as demand. Commodity prices are traded as an asset – they are inherently forward looking.

In-house training courses tailored to each business unit, commitment by senior management of banks, understanding of benefits of implementing Basel II by all stakeholders and hiring of right skills would help in mitigating skills shortage related risks. Regulators and supervisors have to be at it to assess progress within a reasonable time frame. 2  BIS Review 88/2005  11. Without data, there are no models and without models, the risk management capability is reduced. This does not mean that commonsense approach in handling matters should be discarded altogether. Given the heavy competition and highly leveraged nature of businesses, banks, at minimum, should record historical data for computing the probability of default loss, and operational risk losses. This is a difficult task. The challenge for banks is to build up databases for operational losses, both historical and potential future losses. The challenge for regulators is to ensure that banks start collecting this type of data in a systematic manner. Banks often see regulators as a pain in the neck due to constant nagging. Perhaps, moral suasion and organizing peer pressure might encourage banks. 12. Unbundling risk related capital charges in the new Basel II Capital Accord requires an explicit capital charge for operational risk. Calculating such a capital charge has proved extremely difficult because of a lack of an accepted methodology and credible industry data.