samchain/econo-pairs-v1 huggingface dataset:
Rather, I would ask those interested in the payments innovation to read and respond to the consultation and the proposed model – if they have not already done so. In the next phase of the work, which will lead to a decision on whether or not to proceed to launch a Digital Pound, the Bank will work with the private sector on further experimentation, proof of concepts and to develop the technical blueprint. The digital pound is envisaged as a general purpose retail digital currency for use by households and firms in everyday transactions. The Bank is often asked why it is focussing on developing a retail rather than a wholesale digital currency, given the potential for the new technologies I have been discussing to transform wholesale financial transactions and the desirability of settling such transactions in the highest quality settlement asset – i.e. central bank money. There is, bluntly, a misunderstanding here of the Bank’s position. We recognise very clearly the potential transformative effect on wholesale financial markets of tokenisation of financial assets, atomic settlement, smart contracts and other emerging technologies[19]. Indeed, the Bill now in Parliament will enable us, with the FCA, to set up a sandbox in which developers can explore ideas like collapsing trading and settlement into an instantaneous smart contract. And we want for financial stability reasons, wholesale transactions to settle in central bank money to the maximum extent possible.

Sir Jon Cunliffe Deputy Governor, Financial Stability  ©2023 Bank of England
In London, LCH’s move to clear repos in Spanish government bonds helped that market stay open during some dark days last year. Why are CCPs important? There has been a resumption of interest in the network characteristics of the financial system. CCPs simplify the complex web of counterparty exposures through multilateral netting – precisely what the US authorities contemplated trying to achieve ad hoc towards the end of a weekend when Lehman was slipping away. But they do more than facilitate multilateral netting. They substitute themselves as the counterparty to the trades they clear – hence a central counterparty. This makes them unusual financial institutions, because they run a completely matched book, and so ordinarily are not exposed to market risk in their core activity. They are exposed in a big way to counterparty credit risk. If a counterparty defaults, they have uncovered market risk positions, and need to enter the market to get back to square. Everything important about a CCP concerns how they manage those risks. In essence, having centralised risk upon themselves, they redistribute it to their clearing members. They do that through a waterfall under which, in the event of a counterparty defaulting, the CCP can draw on, first, the margin pledged by the firm, then its contribution to the default fund, then the rest of the default fund etc. CCPs as risk managers Given that CCPs centralise and concentrate risk, their job is not just to deliver ever greater operational and capital efficiency for their clearing members.

While the Fed raised the fed funds rate by 25 basis points in June and has signaled two more increases this year and three the next—while continuing to 4  downsize of its balance sheet—the European Central Bank extended its asset purchasing program and signaled that the benchmark rates will stay put for a while. The trade dispute between the US and China has continued to escalate. So far, the tariffs applied by the US and the reprisals have been limited, but the conflict has not subsided, and the measures adopted are already having an impact on risk perceptions, and the markets are more sensitive to them. As detailed in a Box in this Report, the effects that these measures may have on the global economy are difficult to quantify, as they depend on the number of countries that would be directly and indirectly involved, the amounts levied, the sectors affected and the time during which the higher tariffs would be applied. However, there are some qualitative dimensions and certain transmission channels common to the different possible scenarios. For the economies directly involved, there would be a negative impact due to lower external demand and greater uncertainty, which would affect local consumption and investment decisions. The size of the impact is related to the importance of trade among those directly involved and their ability to divert it to other economies.
Lately, price pressures from abroad have been subdued and the upturn in inflation has largely been domestically driven, primarily via price increases in the service sector. The combination of wage and price developments in domestic sectors and inflationary impulses from abroad will determine how monetary policy should be designed to influence domestic demand and the exchange rate in the desired direction, so that inflation ultimately stays around the target. To some extent, it will of course be less complicated for monetary policy if inflationary pressures both rise abroad and in domestic sectors and in ways we are used to – and the risks of imbalances may then also be mitigated. Complementary monetary policy measures may be the norm As I mentioned earlier, the environment of low real interest rates will probably last for quite some time to come, which means that the policy rates of central banks will on average be on a lower level. This may, in turn, limit the scope of central banks to tackle economic downturns by cutting policy rates. Say, for example, that the repo rate will on average be around 2.5 per cent, that is, at the lower bound in the Riksbank’s assessment of the long-term level. That does not provide much leeway down to zero. As we have shown, it is possible to lower the rate some way below zero but it is clear that there may be less scope for rate cuts than previously.

Flexible inflation targeting means in practice that the aim is not to bring inflation back to the target as quickly as possible if it deviates from 2 per cent. But a precondition for being able to be flexible is that there are expectations of inflation still returning to target in the longer run. The inflation target has been the nominal anchor in the Swedish economy for so long that it is easy to assume that inflation expectations automatically stay around 2 per cent. But, as developments after 2011 have shown, long-term inflation expectations are not immune to influence. A long period of sub-target inflation caused expectations to creep further and further below 2 per cent. It therefore became increasingly urgent for the Riksbank to focus on reversing the trend and bringing inflation up to the target. This turned out to require major monetary policy efforts over a long period of time. An insight gained in recent years that therefore needs to be highlighted is that confidence in the inflation target cannot be taken for granted. The main task of monetary policy is to maintain the nominal anchor in the economy and the expectations and demands placed on monetary policy should take this as a starting-point. But on condition that confidence in the anchor is not jeopardised, monetary policy has a certain amount of scope to allow deviation from the inflation target to take a back seat in favour of other considerations.
Central bank asset purchases potentially affect differently those with assets and those with debt, as well as affecting the balance between asset and debt-holding over time. This is how monetary policy works. When it comes to understanding how (indeed, whether) monetary policy is working, then, it is important to understand and monitor these distributional moving parts. Distributional analysis provides a window on the monetary policy engine at work. For example, when interest rates change it is important to gauge not only how cash flow switches between savers and borrowers, but whether it is being saved or spent. 14  Second, explaining the distributional impact of monetary policy is potentially important for building and maintaining understanding and trust among the general public in these policies. It can help preserve that all-important social contract between policymakers and citizens. 15  Doing so effectively may call for  explaining the impact of policy on the general public, not just at an aggregate level but on a disaggregated basis. 12  For example, Lipton (2014) and Cœuré (2012). For example, Haldane (2016) and Carney (2016). Bunn et al (2015). 15 Haldane (2017). 13 14  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Third, the ultimate yardstick of policy success is its impact on people’s well-being. That is affected importantly by how the effects of policy are distributed across society.

Greater awareness of these public goods might help, at least a little, in closing the public perception gap. A more promising approach is “personalised framing”. This links a policy intervention to the specific circumstances of an individual or set of individuals. For example, experimental trials suggest people are more likely to pay taxes or donate to charity if they are told about the local or personal impact of doing so. 43  Personalising a message in this way increases the changes of it being heard, understood and acted on. What would be the monetary policy equivalent? Imagine a personal monetary policy scorecard, similar in spirit to a personal tax scorecard, tailored to an individual’s characteristics – assets and liabilities, housing 39  For example, Ford (2016). The Behavioural Insights Team are specialists in this area, see Halpern (2015) for a discussion of their methodologies. 41 For example, Hallsworth et al (2014). 42 Barnes et al (forthcoming) and Sheffield Political Economy Research Institute (2015). 43 Agerström et al (2016), Service et al (2014). 40  15  All speeches are available online at www.bankofengland.co.uk/speeches  15  tenure, age, employment status etc. This would identify the channels and the amounts by which a significant change in monetary policy affected people’s finances (income, wealth) and wider well-being (employment and financial security). Now stop imagining. Figure 1 shows such a scorecard for the contribution of monetary policy since the crisis for the average UK household. In the upper part, it quantifies the annual impact on the average household’s finances.
Also, they are increasingly active in the restructuring the credit to businesses. Nevertheless, both sides have complaints related to each other. The businesses complain that banks are tight fisted, and often banks’ lending does not correspond with the businesses activity cycle. On the other hand, banks claim that businesses submit unreliable projects for crediting, and deficient financial information for decision making. The Bank of Albania is confident that the relationship between business and banks will develop to the benefit of both parties, if they: •  Enhance their understanding of the activity profile, market conditions and regulatory requirements, which determine the activity of each of them;  •  Enter into cooperation agreements, based on transparent, comprehensive and professional information;  •  Act proactively to detect situations in which this agreement should be reviewed, to improve the possibilities to settle liabilities against each-other. The measures that Bank of Albania proposes today support the need for a closer relationship between banks and business, in the current economic situation in Albania. They expand the banks’ room for a greater flexibility in the process of credit restructuring. However, banks would not finance unsuccessful businesses; neither would they lend to businesses that do not supply transparent and complete information. A closer relationship also implies that, in their analysis, banks need to utilise more effectively the available information about existing and new borrowers, which may be generated by such sources as the Credit Registry.

In consultation with other important stakeholders in this  BIS central bankers’ speeches  3  process, legal amendments to the Civil Procedures Code and to the Civil Code have been drafted. These amendments aim to accelerate the obligatory collateral execution, avoiding procedural delays caused by bank debtors. More specifically, the proposed amendments address the following: •  Courts do not take measures to secure charges/sues, when the bailiff actions are rejected;  •  Courts do not take measures to secure charges and do not suspend the execution of collateral, when the debtor requests the invalidity of the executive title, arising from a bank credit;  •  Reduction by 50% of the initial price of the immovable property, placing an acceptable average for the debtor and the bank, and making clearer the value (price) of the item with which the second auction begins. We are informed by the Ministry of Justice that these amendments are in process of finalisation and this legal package will be sent for approval to the Council of Ministers and then to the Parliament of Albania. I take this opportunity to iterate the need for these legal proposals to be approved by the Assembly of Albania at an earlier time possible. Improvements in the legal framework and collateral execution practice would provide public authorities with new spaces to boost lending in Albania. 2 – Monetary policy pillar I mentioned earlier that Bank of Albania’s monetary policy has been easing recently, undertaking 6 consecutive key interest rate cuts.
There is thus a need for decision-makers to put their uncertainty in a concrete form and the uncertainty should decline if the risks are identifiable and quantified. It is really only possible to quantify them with the aid of models. A decline in demand on the housing market and a fall in housing prices could – through negative effects on household wealth – have clearly negative effects on consumption. This subdues growth and employment and pushes down inflation. If one believes that the risk of such a scenario is affected by the level of the repo  8  See “Picking the Brains of MPC Members”, Mikael Apel, Carl Andreas Claussen and Petra Lennartsdotter, Sveriges Riksbank Working Paper Series No. 237, January 2010. 6  BIS Review 65/2010  rate, one must take this into account in the monetary policy decision. But the risk of a low repo rate increasing the probability of such a scenario must thus be weighed against the positive effects on employment it will lead to during the forecast period. The clearer we can be about how we assess these different risks – and take them into account in a systematic manner – the easier it will be for those outside the Riksbank to understand how the repo rate decision is affected by various factors. I cannot say exactly how probable it is that house prices will fall in Sweden. The only thing I can say today is that the rapid increase in lending to households creates certain risks.

Important to quantify the risks Normally, all risks that may have significance for the monetary policy decisions have been gone through by the Monetary Policy Department or the Financial Stability Department. But events may of course occur that are impossible to predict, or risks may arise at a later stage in the process that are very difficult to evaluate, such as the effects of the Lehman Brothers bankruptcy in autumn 2008. One central issue with regard to how the monetary policy decision-making process is set up is what stance the decision-makers, that is, the Executive Board, should take with regard to risks that for various reasons are not directly incorporated in the forecasts. If individual Executive Board members consider that there are observable risks and suspect that these may have significant consequences, the Riksbank will of course try to analyse these in depth. But it is not always easy to quantify such risks, and thus it may be difficult to include them in the actual forecast. The question then is how these risks should be taken into account in the monetary policy decisions. I consider it important to try to quantify as far as possible the risks deemed relevant to the monetary policy decisions. This is particularly so when it comes to risks with a low probability, but which would have substantial consequences for the way the economy develops, such as a burst housing bubble, so it is important to try to quantify how the risks are affected by the various alternative actions.
Competing against lower cost producers would require either wages having to fall to the levels of the least-cost producers or some substitution of higher-cost labour with capital. Both effects would have adverse consequences for euro area workers. This is not to say that cost containment is not a necessary condition for competitiveness. Rather it is saying that cost considerations should not be the only element on which we should aim to rebuild our economy in the aftermath of a severe crisis. All this raises many questions for policy makers: what kinds of investments do we need for future growth? What are the implications for workforce skills? How can we increase the degree of entrepreneurship to realise innovative activity? At the same time, policymakers cannot lose sight of the social consequences of such changes. A world where jobs are being created and destroyed with ever greater speed, and where people are expected to move regularly between them, is a world of greater insecurity. So we need also to consider the readiness of our societies to cope with these changes, and ask what type of new social models we will need to adapt to them. And crucially, so as not to lose more time, we need to start today. Conclusion We are experiencing a period a transition. Economically, we haven’t recovered fully from the after-pains of the crisis. Technologically, the jury is still out on whether the IT-driven transformation of work has ended or will continue, and what this means in terms of productivity.

9  6  Similar arguments are made by Marvin Goodfriend Mervyn King in their Review of the Riksbank’s Monetary Policy 2010–2015, (Stockholm: 2015). 7  Claudio Borio, Magdalena Erdem, Andrew Filardo and Boris Hofmann, “The costs of deflations: a historical perspective,” BIS Quarterly Review, March 2015, pp. 31–54. 8  See the box entitled “A tale of two crises: recent developments in euro area and US employment,” in the December 2015 issue of the ECB Economic Bulletin, and, for a longer term analysis, the article entitled, “Productivity developments and monetary policy,” in the January 2008 issue of the ECB Monthly Bulletin. 9  Lawrence Summers, “Reflections on the Productivity Slowdown,” Keynote Address to the Conference: Making Sense of the Productivity Slowdown, Peterson Institute for International Economics (Washington, D.C.”: 16 November, 2015): http://www.iie.com/publications/papers/transcript-20151116keynote.pdf. BIS central bankers’ speeches  3  There may well be some truth in this. After all, it’s well-known that the national accounts often take a long time to fully count the effects of innovations in technology. For example, US national accounts did not reflect the output from automobiles for nearly 15 years after the Ford Model T was available. 10 But even if we are mis-measuring productivity, we still need to raise it: the euro area is still lagging considerably behind others. And worse still, we only seem to be able to achieve productivity growth if it’s traded-off against employment.
In the case of the ECB, this review is ambitious; it not only analyses how to address this situation, but also the design and optimal use of monetary policy instruments, inflation measurement, the interactions between monetary and macroprudential policy, communication by the institution, and the impact of climate change, digitalisation and globalisation. One of the key issues will be the definition of the price stability objective. The current objective, consisting of a rate below but close to 2%, needs reformulating. First, it is necessary to clarify the inflation level it is wished to attain – e.g. 2% – to make it easier for citizens to understand and to allow a sufficiently high buffer, above zero, that will afford more leeway to interest rate policy. Further, this objective must be more symmetrical in nature, making it clear that our response to slippage below the objective will be as forceful as with deviations above it. Our determination to achieve symmetrical results in inflation developments around this objective will also be patent. Another key aspect is what monetary policy instruments we should have. In the setting described, asset purchase programmes and liquidity-providing operations for banks should be part of the normal “toolbox”. Moreover, we should equip ourselves with sufficiently flexible instruments to head off fragmentation dynamics that may compromise the proper transmission of monetary policy euro area-wide. Finally, allow me to voice some thoughts on the main challenges in the banking sector regulatory and supervisory area.

Jean-Claude Trichet: A rich variety of cultures at the heart of Europe Interview with Mr Jean-Claude Trichet, President of the European Central Bank, in the Frankfurter Allgemeine Zeitung special supplement of the ECB Cultural Days, published on 4 October 2009. *  *  *  1. The ECB Cultural Days have been held seven times since their launch. On three occasions, they have featured countries from eastern Europe. What does eastern Europe bring to Europe and to Frankfurt, in particular? It is very important for the ECB – with our staff coming from all 27 EU Member States – to discover or rediscover the wealth of European culture in the international environment of Frankfurt and its surrounding area. As you say, it has always been our aim to embrace the whole of Europe, both the old and new members of the European Union. It is no accident that we have welcomed three central and eastern European and three western European countries. Last year, on the occasion of the tenth anniversary of the ECB, the events involved all 27 EU Member States in order to underline the diversity of European culture. This year, the 20th anniversary of the fall of the Iron Curtain, the event takes place against the unique backdrop of the reunification of Europe. 2. You made a speech on European culture in Frankfurt this spring, which explored the link between the concepts of roots, diversity and identity. Did you have the ECB Cultural Days in mind? Of course.