samchain/econo-pairs-v1 huggingface dataset:
The stronger exchange rate pushes down net exports and thus general demand and GDP. If the international interest rate falls instead, and monetary policy in Sweden is held unchanged, the exchange rate will also strengthen, because the Swedish interest rate is higher than the international rate. The currency will appreciate until the domestic interest rate is the same as the international interest rate, and the stronger exchange rate will lead to reduced net export and GDP. We thus see that a lower international interest rate has a restraining effect on the economy through the exchange rate in roughly the same way as a tightening of monetary policy in Sweden. As I mentioned earlier, this model is a very simplified picture of reality. In practice, the results will of course depend on why the interest rates are changing and also on other factors not included in the simple model. But the conclusion, that a lower international interest rate has a restraining effect on the economy through the exchange rate in roughly the same way as a tightening of monetary policy in Sweden, is valid even in many more complicated models. The effect of lower international interest rates on the Swedish exchange rate and the Swedish economy has been discussed a lot at monetary policy meetings in recent years, although the discussion has revolved around the effects on inflation in Sweden and not the real economy.

The objectives and means of central banks have changed over time, usually as a result of economic crises. This has led to rethinking of the prevailing consensus view of monetary policy. Experiences from the 1990s crisis showed the importance of having a credible nominal anchor, which led to an increased element of “norm-based thinking” in monetary policy. For the Riksbank, this resulted in the inflation-targeting regime we have now. With regard to the experiences of the most recent global financial crisis, we are to some extent still on a learning curve. But personally, I think that one important lesson is that financial stability is a necessary condition for macroeconomic stability and price stability. Developments in the wake of the financial crisis have also shown how dependent Sweden’s economy is on developments abroad. I think that current monetary policy reflects all of these lessons. We are conducting a very expansionary monetary policy to preserve confidence in the nominal anchor provided by the inflation target for more than 20 years. At the same time, we are emphasising the importance of managing the risks linked to household indebtedness, as financial stability is a necessary condition for attaining the inflation target in the longer run. 12  BIS central bankers’ speeches
If they are used widely, they could lead to currency substitution and the potential loss of money sovereignty in these countries. With respect to Central Bank Digital Currencies (CBDCs), MAS makes a careful distinction between wholesale CBDCs and retail CBDCs. Both are digital currencies issued by the central bank. For wholesale CBDCs, MAS sees a variety of potential use cases. They can be used in the interbank system on a decentralised ledger to facilitate cross-border payments and transactions. MAS has conducted successful experiments with the industry and other central banks on wholesale CBDCs. This is an interesting development to watch. Most of the impactful use cases are going to be in wholesale CBDCs for, for example, cross-border payments, and cross-border trade finance. For retail CBDCs, MAS is keeping an open mind. We want to make sure we have the technology, governance, and policy structures to launch a retail CBDC, if necessary. But there does not seem to be a compelling case for it yet, given that today’s digital payment system is already effective and efficient in transferring money. The regulatory approach that MAS has taken towards crypto assets or tokens distinguishes the different types of such tokens. If a crypto token is being offered as a security with an expectation of a return, it is regulated under the Securities and Futures Act. If a digital token is being offered as a payment instrument, it is regulated under the Payment Services Act where the focus is on anti-money laundering and technology risk management, and increasingly, customer protection.

Jean-Pierre Roth: Demography and economic policy – the challenges ahead Summary of a colloquium by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, on “Chances et défis du vieillissement” (opportunities and challenges of demographic ageing), at the University of Geneva, Geneva, 10 November 2006. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  What will Switzerland look like in 2050? The demographic changes under way will have a strong impact on the future demographic landscape, with regard to both the working population and the older age segments. The ageing society poses two major challenges for economic policy: ensuring the production capacity of the Swiss economy as well as the continuance of the social security scheme. To address these challenges, an economic policy that promotes productivity increases while guaranteeing economic growth must be implemented with immediate effect. In line with this economic policy, adjustments must be made to our social security system.
Norman T L Chan: Remarks for TraHK 10th Anniversary Remarks by Mr Norman T L Chan, SBS, JP, Chief Executive of the Hong Kong Monetary Authority, at the TraHK 10th Anniversary Gathering Celebration/Reception, Hong Kong, 12 November 2009. *  *  *  Good afternoon ladies and gentlemen. I am delighted to be here today on the 10th anniversary of the listing of the Tracker Fund of Hong Kong and to see so many familiar faces from the original project team. Thank you State Street for organizing this timely get-together. A decade has come and gone since we created Tracker. We’ve seen another crisis and a whole raft of intervention measures by governments, some of which are of unprecedented scale. Now the focus is turning to "exit strategies" and, looking back ten years' on, I think we can all take some collective pride in having been part of one of the most innovative, and dare I say elegant, exit strategies. The strategy, of course, was to dispose of the stocks acquired by the Government in the stock market operations of the summer of 1998 with minimal disruption to the market. This was by no means a small task – but together we rose to the challenge with an exit strategy that saw us launch the first ETF in Asia ex-Japan, in a public offering which turned out to be the largest in Asia ex-Japan at the time of launch, raising $ billion from over 180,000 retail investors and institutions.

Our global coordinators were amazed by our determination to create an innovative “Tap Facility” to allow the continued block creation of more Tracker units from the remaining portfolio of shares. Also we insisted on not giving any discount to the public at launch of the IPO and instead we offered an innovative back-end loaded incentive scheme in the form of a loyalty bonus. From the Government perspective, we had by April 2001 recouped more than the $ billion used by the Exchange Fund in the stock market operation. In total, we sold $ billion worth of shares into Tracker, received $ billion from dividends on our shareholdings and still retained $ billion in the Exchange Fund’s long term equity portfolio when the "tap" into Tracker was terminated. We could not have achieved this without the dedication and support of our highly professional project team members: Tracker Fund’s manager and custodian (our hosts tonight), the three global coordinators, the lawyers, the Marketing & PR Firms, colleagues at  BIS Review 142/2009  1  the SFC, HKEx & CCASS, and of course the Chairman (Mr TL Yang), all the directors and fellow staff of EFIL. If one were to mark the Tracker Fund as an exit strategy, I think it deserves a fine report card. We did dispose of the shares with minimal disruption to the market.
In retrospect, of course, had we known that inflation would become as low as it did, we would have cut the rate sooner and faster. 10 This view is also supported by Goodfriend and King (2016). Somewhat surprisingly, the interpretation that unease over household debt was the main or even only reason for the increase of the repo rate 2010–2011 is still being put forward occasionally. One clear example that the economic slowdown in 2011 instead surprised most analysts is provided by the forecast made by the National Institute of Economic Research in June 2011. In this forecast, it was assumed that the repo rate would be 3 per cent by the end of 2012 and just over 4 per cent at the end of 2014 (in reality, the repo rate was 0 per cent at the end of 2014). This policy was considered compatible with a balanced resource utilisation in 2014 and a CPIF inflation rate close to 2 per cent in 2013–2015. This forecast, which was representative of Swedish forecasters, thus assumed that continued rate hikes would be justified for normal economic reasons. 11 For an analysis of the factors that contributed towards this low inflation, see Andersson, Corbo and Löf (2015). 5 [20]  But it is not particularly meaningful to evaluate events with the benefit of hindsight. For it to be meaningful, it has to be possible to identify things that could be done differently in a similar situation in the future.

They admit that it has now become more difficult and more complicated to conduct monetary policy, when global real interest rates have fallen for a long time and are currently very low. This means that central banks’ policy rates are likely to reach their lower bounds more often and that monetary policy will occasionally have to be conducted using other means than policy rate cuts. They also agree that digitalisation and globalisation are making it more difficult to reach inflation targets. But, it is argued, even if these complications must be managed, there is nothing to indicate that the inflation process should have changed so much and so fundamentally that inflation targets have become unobtainable and that inflation targeting as such would have to be fundamentally reassessed. Financial Times columnist Gavyn Davies has described this debate as an implicit ideological struggle between Claudio Borio, chief economist at the Bank for International Settlements (BIS), perhaps the leading advocate of the new ideas, and the departing Chair of the Board of Governors of the US Federal Reserve System, Janet Yellen, advocate of the traditional view. 2 There are good reasons for looking more closely into this debate. One is that it will probably be an important part of international monetary policy discussions in the years ahead. Another is that the debate is not merely about practical monetary policy but in fact also about fundamental issues within economic science.
Weaker institutional and regulatory frameworks have added up to make these economies historically associated with increased cyclical vulnerabilities. The procyclicality of bank credit and debt-driven fiscal expansions, together with more rigid exchange rate regimes, contributed in the past to amplify external shocks, making exposure to changes in external financial conditions a relevant driver of overall economic activity. Because of these vulnerabilities, EMEs are often considered a risky-asset class. As such, investment flows pour into them when global conditions improve and risk-on is the mood in the market—be it through international banking linkages or direct portfolio flows. Domestic asset prices surge more vigorously in response to these flows due to limited financial market depth, strengthening the market value of firms’ collateral and further contributing to the buildup of vulnerabilities. Two factors have been especially critical in the past. First, the so called “original sin”, whereby EMEs—especially governments—fund themselves in foreign currency, creating foreign exchange (FX) mismatches in balance sheets of the government, banks, or corporations. Second, procyclical fiscal and monetary policies that amplify external shocks. In such cases, even a mild external shock can push economies to the brink of recession. ∗  I thank the comments and suggestions in preparing this note to Elías Albagli, Miguel Fuentes, and Carlos Medel. 1  In short, domestic weaknesses interact with global financial attitudes in a dangerous mix that has historically proven to be highly destabilizing for EMEs, compared to AEs.

Figure 3: Actual MPR versus Taylor rule (†)  2.0  2.0  1.5  1.5  1.0  1.0  0.5  0.5  0.0  0.0  -0.5  -0.5  -1.0  -1.0  -1.5  -1.5 2010  2011 Lag  2012 Inflation  2013 GDP  2014 2015 Shock  2016 D(MPR)  2017 2018 Taylor rule  (†) Source: Central Bank of Chile. Figure 4: MPR Chile vs US (†)  9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0 2000  2002  2004  2006  2010  2008  2012  2014  2016  0 2018  CHL: Monetary Policy Rate US: Fed Fund Rate (†) Sources: FRED and Central Bank of Chile. Some key factors supporting the roles of ER as a shock absorber of financial and commodity price shocks A flexible ER regime is not a form of snake oil to alleviate any sort of global ailment. ER volatility can, of course, generate major wealth shifts, and even solvency problems to agents with large balance sheet mismatches—including government. They can induce major losses in competitiveness, which may harm overall activity if winners fail to capture benefits as fast as 6  losers realize costs. Constituencies around fixed prices—including the ER—are very concentrated and powerful.
Chart 3  Chart 4  Selected ten-year government bond yields(a)  Emerging market equity indices  Spain  Italy  US  Germany  UK  Indices: 22 May 2013 = 100  Per cent May 3rd  May 22nd  120  9  May 22nd  8  110  7 100  6 5  90  4  South Africa Korea China - Shanghai India Mexico Brazil Turkey Indonesia  3 2 1  80  70  60  0 Jan  Mar  May  Jul Sep 2012  Nov  Jan  Mar  May 13  Jul  Sep  Yields to maturity government bonds  Feb.  Mar. Apr. May. Jun. Jul. Aug.  Sep.  2013  Sources: Bloomberg and Bank calculations  Source: Bloomberg. (a)  Jan.  on  ten-year  benchmark  Although the sell-off has been wide ranging and left several EMEs with difficult policy challenges, I don’t sense any long-lived market dysfunction. Market infrastructures worked and prices adjusted to the revised policy outlook. Yes, volatility rose, but not to levels which  BIS central bankers’ speeches  3  are particularly unusual for such episodes (Chart 1). The most highly leveraged positions – such as in mortgage REITs1 – were reported to have liquidated quickly, and some ETFs2, primarily fixed-income, came under liquidity pressure. Those institutions with short trading horizons and leveraged positions may have found conditions very difficult at times to adjust portfolios.

Although it is clear that a number of firms must have made substantial losses on the positions they had, there have not been many visible signs of severe financial distress. For most longer-term investors the stress has been seen as rather limited. Credit spreads have not particularly blown out with rising “risk-free” rates. For example, yields on Italian and Spanish bonds were remarkably stable for most of this period; advanced economy equity prices largely recovered; and “cov-lite” loans have continued to be issued at a record pace. Overall the system seems to have survived in reasonable shape and for many market participants the “shock” is seen as a healthy correction to what had become a complacent outlook. As reported in the record of the recent FPC meeting published yesterday, staff from the FCA, PRA and Bank have carried out some analysis of the sensitivity of borrowers and financial institutions to upward movements in long-term interest rates and credit spreads.3 That preliminary work suggested that “a moderate rise in long-term interest rates did not pose an immediate threat to major banks and insurance companies. But borrowers would become more exposed to an increase in interest rates were debt levels to rise. And counterparty classes with higher leverage or exposures to market liquidity risk or credit spreads were more affected...”. The Committee did not draw too much comfort from this assessment and has asked that more detailed work be done to assess the risks. What have we learned from this episode?
BIS Review 88/2007  1  Strong GDP growth and investment 8.0  31.0  GDP growth (%)  7.0  29.0  Investment (%GDP)  6.0  27.0  5.0 25.0  4.0 3.0  23.0  2.0  21.0  1.0 19.0  0.0 -1.0  2001  2002  2003  2004  2005  2006  2007F  -2.0  17.0 15.0  Banking system health strengthening  Net NPL  23  Return on Assets  2.0 1.8 1.6  18  1.4 1.2  13  1.0 0.8  8  0.6 3  0.4 0.2  -2  2  2002  2003  2004  2005  2006  0.0  BIS Review 88/2007  Unemployment declining (%) 13 12 11 10 9 8 7 6 5 4 1995  1996  1997  1998  1999  2000  2001  2002  2003  2004  2005  2006  Public debt declining (% of GDP) External Government Debt  58  59  45  46  45  2002  2003  2004  BIS Review 88/2007  60  Domestic Government Debt  58  50  53  47  44  40  2005  2006  2007F  3  As you may have noted, just yesterday, Standard & Poors revised the outlook for Sri Lanka from negative to stable and that is indeed a useful confirmation of the success of the manner in which the economy is progressing.

1/5  Ladies and gentlemen, Policymakers must take on the challenges of developing our financial systems with a great sense of urgency. Thus far we have seen integration of the ACMECS economies on various fronts—through economic connectivity in trade and investment and through people-to-people connectivity in migration of labor and tourism. Yet, financial connectivity in our region lags behind developments in other sectors and should be prioritized so that it does not hinder further economic integration. Fortunately, today we have the opportunity to leapfrog development in our financial systems and regional financial connectivity because of rapid advancement in technology. Not at any point in history have powerful technologies been so affordable and accessible. For instance, the costs of industrial robots and smartphones are now 30 times and 50 times cheaper than those with similar features just ten years ago. Moreover, there are a diverse and extensive number of software applications as well as know-hows available to satisfy businesses and consumers; many of which can be accessed online and obtained free-of-charge. All of these have allowed for greater adoption of mobile devices as well as emergence of new financial technology platforms. Looking around our region, there are many exciting developments taking place that can enhance our financial systems and strengthen their productivity, inclusivity, and immunity. For instance: a.
First, I will talk about why the Basel Committee developed the Basel II capital framework and what it intends to accomplish. Second, I will share some thoughts on how prudential banking supervision contributes to the stability of the financial system. Next, I will discuss how I see Basel II contributing to financial system stability. Finally, I will offer some thoughts on steps countries can take in preparation for adopting Basel II. But let me advance the main conclusion of my presentation: In a nutshell, I think that the new capital framework represents a significant step towards achieving a more comprehensive and risk sensitive supervisory approach. Basel II is about much more than just setting better quantitative minimum capital requirements. It is about establishing incentive-based approaches to risk and capital adequacy management, within a comprehensive framework of three mutually-supporting pillars. In my view, the combination of better risk management, a stronger capital structure and improved transparency standards in the banking system can significantly improve financial stability. Why Basel II? Let me begin with an overview of the Basel II capital framework, which was released in June last year. As you may be aware, Basel II has probably attracted more public attention than any other banking supervision reform. While I will not go into the details of the new framework, it is important to spend a few minutes talking about what the Basel Committee hopes to achieve with Basel II.

One of the fundamental tenets of risk management is that banks need to create provisions to absorb expected losses and to have sufficient capital to absorb unexpected losses. Accordingly, capital and provisions are an essential part of any supervisory framework. I believe Basel II reinforces the need to implement sound policies in both areas. In this respect, it is important to analyse provisions and capital over at least one complete economic cycle. Moreover, a range of potential future scenarios, with an emphasis on stress scenarios, should be considered, taking into account past experience and current conditions. Indeed, Basel II requires banks adopting the more advanced approaches to credit risk to apply a forward-looking approach to credit risk management by meaningfully stress testing their credit portfolios. Gaining room for manoeuvre and shoring up finances during good times in the business cycle is not only prudent policy, but is also consistent with sound risk management. Many would say that risks increase during bad times, but I believe this is only partly true. In my view, the exposures of banks, and therefore their risks, actually increase during economic upturns. These risks may not materialise until times of difficulty, but the seeds are generally planted during good times. In sum, when designing their capital and provisioning strategies, managers should have the aim of strengthening banks during good times and should remember that the imbalances that foster financial instability usually build up during the best parts of the economic cycle.