samchain/econo-pairs-v1 huggingface dataset:
Barbro Wickman-Parak: Independence, inflation targeting and the importance of not being dead certain Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at a breakfast meeting at Skandinaviska Enskilda Banken AB (SEB), Stockholm, 14 May 2013. *  *  *  I would like to thank Mikael Apel, Advisor in the Monetary Policy Department for his help with this speech. An important lesson When one is, as I am, at the end of one’s professional career, it is natural to reflect on what is the most important lesson one has learnt. If one were to try to pass on one important insight to someone who is just beginning their career, what would it be? Of course, it is difficult to give a simple answer to this question, but one insight that would probably come pretty high up on my list is that it is so easy to fasten in what one might scientifically term the “prevailing paradigm”. By this I mean that it is so easy to believe that the means of regarding the world that is currently dominant is the best one and will apply, if not for ever, at least for the foreseeable future. I have come across this phenomenon numerous times during my professional life – and have of course been part of it myself. What is perceived as true and correct has varied from one time to another and sometimes the pendulum has swung violently.

New entrant banks can do a bit, but the big incumbent banks need to be healthy too. Their repair is now underway. That has required, and will continue to require, realism about asset values, expected losses and risks – not pretending, taking the medicine. In that sense, it is a policy in the spirit of Hayek.10 So the overall policy package has combined Keynes and Hayek. Conclusion In the wake of such a massive crisis, recovery has needed active monetary, liquidity and banking policy. Beyond the realm of central banking, it needs supply-side reform – to create optimism about higher incomes and better investment opportunities in the future. 8  See the Minutes from the Monetary Policy Committee’s meeting on 7–8 November 2012: “At the present time, it was possible that elevated uncertainty and a desire to reduce leverage meant that real activity was less responsive to lower borrowing costs than normal. But this situation could easily reverse, and with it the traction that lower yields could have in stimulating demand and output.”  9  See Broadbent (2012), “Productivity and the allocation of capital”, pages 30–33 of the Monetary Policy Committee’s November 2012 Inflation Report: and Tucker (2013), Annual Report to the Treasury Select Committee. 10  There is echo of this in Bean (2013), “Global aspects of unconventional monetary policy”. 4  BIS central bankers’ speeches  If recovery does gain traction, the MPC will need to avoid misperceptions about the likely course of policy.
In this we write that monetary policy should normally be aimed at attaining the inflation target within two years. But the current situation is not normal. In the present situation it is more reasonable to aim for CPIF inflation being close to 2 per cent towards the end of the forecast period. And it will be, according to our forecasts. CPI inflation varies substantially over time, partly as a result of our own repo rate decisions. The substantial fall in inflation this year is primarily due to our own repo rate cuts and falling energy prices. Inflation measured in terms of the CPIF, on the other hand, is more stable and provides a better picture of the underlying inflation trend. During the period 1995-2008, in which we have hade an inflation target, inflation measured as the CPIF has on average been close to 2 per cent and rarely outside of the tolerance interval of 1-3 per cent. The target for monetary policy is still that CPI inflation should be 2 per cent, but we must accept that it fluctuates around 2 per cent as a result of repo rate changes. BIS Review 25/2009  7  At the most recent monetary policy meeting my colleague Lars E.O. Svensson took up the question of temporarily replacing the inflation target with a price level target. Lars has put forward this idea earlier in his research into monetary policy with a zero interest rate and experiences from Japan's deflation problems in the 1990s.

Svante Öberg: The current economic situation Speech by Mr Svante Öberg, First Deputy Governor of the Sveriges Riksbank, at a meeting, Jönköping, 5 March 2009. The original speech, which contains graphs, can be found on the Sveriges Riksbank’s website. *  *  *  The minutes of the monetary policy meeting published just over one week ago show how we Executive Board members reasoned when we decided to cut the repo rate to 1 per cent at our monetary policy meeting on 10 February. Today I intend to give my views on economic activity and monetary policy. My speech can be summed up in the following four points: •  The financial turmoil worsened in the autumn and has developed into a global financial crisis  •  International developments will be weak this year and there is a considerable risk that economic activity will also be weak next year. •  GDP growth in Sweden will be negative this year and inflation will fall. •  The Riksbank has cut the repo rate to 1 per cent and may need to cut it further  I have structured my presentation in line with these four points. I shall begin with an account of developments in the financial markets. Then I shall describe international economic developments and what we see before us during the coming years. I shall then go on to discuss the Swedish economy. I shall conclude with some views on current monetary policy.
We feel the new technologies should be approached with an open mind so as to broaden our scope of economic activity and derive the best possible productivity gains from these advances, together with the corresponding positive impact on production costs and prices. We are anti-Malthusian as regards labour. It is essential to ease the bottlenecks in all sectors reporting a significant shortage of skilled labour in order to continue to contain production cost increases - and thus ensure price stability - and to allow unfettered growth. In this respect, we all welcomed the objectives of the European Council in Lisbon, which aim at boosting the labour force participation rate in Europe from 61% to 70% and increasing the supply of “new economy” skills. This is a very important decision which represents a conceptual turning point. We are anti-Malthusian as regards investment. We would like it to be as dynamic as possible, in terms of both capacity and productivity, in order to loosen production capacity bottlenecks, preserve production costs, which is good for price stability, and allow unfettered growth. More than ever, the time has come to invest in Europe. We are also anti-Malthusian as regards the liberalisation of trade. An open-minded attitude in this respect has the advantage of consolidating and strengthening price stability, increasing the purchasing power of consumers and encouraging long-term growth.

The diagnosis is the same in the short-term derivatives market, whose integration, standardisation and depth have increased. This is reflected, for instance, in the scale of daily transactions and the huge expansion of the euro interest-rate swap market. These structural changes in the euro area money market have generated significant moves by market participants, who have concentrated within the euro area their euro cash management activity and have benefited from better liquidity on the secondary market. Of course, such integration has to be brought to fruition in the other segments of the money market, i.e. the repo market and the short-term securities market. Further integration will enhance the efficiency of the euro area financial markets and will be beneficial to borrowers and investors alike. –  With regard to the capital markets, progress towards integration has been significant, both on the euro-denominated bond market and the equity market. The gross issuance of long-term debt securities denominated in euro amounted to 791 billion euro in 1999, against the equivalent of 902 billion euro for debt securities denominated in US dollars. The pace of euro-denominated issues remained brisk in the first three quarters of 2000 at 498 billion euros. According to the Bank for International Settlements, euro-area private sector borrowers have issued about three quarters of their debt in euros since 1 January 1999, compared with an average of 50% in the predecessor currencies since during the 1990s.
In contrast, bank deposits are claims on private banks. CBDC raises some fundamental questions as to the role of central bank money. This is much more than a question of technology. Chart 4 Central bank digital currency Norges Bank is not alone in assessing the need for central bank digital currency. Many central banks are engaged in similar research. Several are in the process of testing technical solutions. Both Sveriges Riksbank and the central bank of China launched pilot projects earlier this year. The European Central Bank (ECB) signalled last month that it was stepping up its research on a digital euro. Central banks are considering introducing a CBDC for a variety of reasons. In emerging economies, the focus is on financial inclusion and low-cost payments. In advanced economies, the focus is more on the role of cash and the emergence of new monetary and payment systems. A trend specific to Norway and some of our neighbouring countries is the low and falling level of cash use. Users increasingly choose solutions offering contactless payments and payments via smartphone apps. These solutions use bank deposits as the means of payment. At the same time, cash has some unique characteristics that could be important to preserve in the payment system of the future: Cash is part of the contingency arrangements if the electronic contingency solutions fail. Cash is a credit risk-free alternative to bank deposits and can promote competition in the payment market. 2/6  BIS central bankers' speeches  Cash is legal tender that is widely accessible.

It is more interesting to look back on the reasons for this success, which, to my mind, was built on three founding principles: the Eurosystem’s mandate of maintaining price stability; the means employed to carry out this mandate, i.e. independence; and the spirit that drives its action – general European interest. A - The mandate: price stability The Eurosystem has been entrusted with a very clear mandate by the European treaties:1 its primary objective is to “maintain price stability”, in other words to avoid prolonged periods of excessive inflation – as seen in Germany after World Wars I and II – or deflation – seen following the crisis of 1929 –, which have consistently negative effects on the economy. Price stability preserves household purchasing power; and more than that, it builds confidence in the value of the currency and consequently reinforces the confidence of economic players in all their decisions for the future, from investment to contract conclusion. Some observers would have preferred a “dual mandate” to target both inflation and growth or full employment, as is the case with the US Federal Reserve (the Fed), for example. However, this would be politically unattainable given German culture and not particularly different in economic practice. In 1998, the ECB established a quantitative definition of price stability that it went on to clarify in 2003: to maintain inflation rates below, but close to, 2% over the medium term.
During most of the 1970s, there was a darkening cloud over the perceived will and ability of the Fed to take action to reverse the rise in inflation, in the face of substantial political aversion to the perceived costs of disinflation. Memoirs of executive branch officials for the decades following the Treasury Accord are replete with references to attempts to influence the decisions of the FOMC. In 1978, Congress passed The Humphrey Hawkins Act which gave the Fed its present mandate of “maximum employment, stable prices, and moderate long-term interest rates,” and this legislation established a more systematic schedule of reporting and testifying to the Congress. This is the mandate that governs the Fed today. Over this period of broad continuity in the legal framework of the Fed, U.S. monetary policy had its good moments and its less distinguished moments. The degree of legal independence we enjoyed at the beginning of the 1970s was not materially different from what existed at the end of the decade. The institutional framework for formal decision making was the same. The formal mandate was modified in 1978 with the addition of the explicit reference to price stability, but this change cannot explain the substantial difference in monetary policy outcomes over the last two and a half decades. An institutional framework that was not sufficient by itself to produce a consistent record of good  monetary policy decisions over the decade of the 1970s can’t be credited fully for the substantial improvements in monetary policy and economic outcomes that followed.

It was not until 1935 that Congress removed the representatives of the government from the seven-member Board of Governors and allowed the Federal Open Market Committee to take the form in which it functions today, which allows all seven governors and the president of the Federal Reserve Bank of New York a permanent vote with four of the remaining eleven district bank presidents voting on a rotational basis. Even after that important change in institutional independence, for significant parts of the succeeding decades, the Treasury played a major role in monetary policy, and monetary policy was often directed at accommodating the desire of successive Administrations for low interest rates and higher employment. It was only in 1951 that the Federal Reserve and the Administration took the next major step toward more independence. In what became know as the “Treasury/Fed Accord,” the Treasury agreed to step back and give the Fed more freedom to conduct policy, and the years of relatively low inflation and strong growth performance that followed for a time seemed to have vindicated the wisdom of that choice. But even after the Accord, monetary policy was characterized by periods of what was effectively a form of fiscal dominance. And even when fiscal policy was better, the Fed was at times under pressure to accommodate the objectives of the Administration with lower interest rates than might otherwise be appropriate for sustaining low inflation.
Macroeconomic developments started to turn more positive in the second half of 2013 and in 2014, and accelerated in 2015, although only up to a modest rate of 1.5 %, supported by an expansionary monetary policy, reforms of the institutional framework of the EMU, reduced financial stress, and, more recently, lower oil prices. The first weeks of 2016 came with a significant deterioration of global financial indicators, like stock market valuations or debt spreads. In the case of the euro area, aggregate financial conditions fell back to their prevailing levels of one year before, just when the ECB had announced an expansion of its already very ambitious QE program. Preliminary GDP data for first quarter 2016 Q1 posted a higher number (+0.5 % compared with +0,3 % in the last two quarters of 2015). Uncertainty and a weak global economy keep the balance of risks to the downside, posing important challenges for policy makers that require the contribution of all areas of economic policy at both the national and the euro levels. Challenges and the way forward in the euro area In the current circumstances, synergies among economic policies should be better exploited with a view to maximizing the stimulus to aggregate demand and to accelerate the recovery. There has been progress on structural reforms in recent years, particularly in those countries most affected by the crisis.

The Bank of Japan is implementing an intensive quantitative easing program and, similarly to the ECB, they include both public and private issues, but with a very important weight of public debt, which amounts now to more than 80 % of Bank of Japan’s total assets. The size of the Bank of Japan balance sheet represents now more than 75 % of the Japanese GDP. The provision of ample liquidity by Central Banks has contributed to restore financial market functioning in situations of severe stress and so, to support the economy. In the euro area, the effects of ECB actions are estimated to have contributed to reduce financial stress and fragmentation, easing financing conditions and helping to restore the credit channel. According to available estimates, all these developments have added significantly to inflation and GDP growth over the last two years. And, although quantitative estimates are surrounded by some uncertainty, it is clear by now that this battery of monetary policy actions have reduced the likelihood of very adverse scenarios. In due course, a need to restore more normal monetary conditions will arise, although its precise timing is impossible to predict and will depend on the cyclical situation of each economy or monetary area. This normalization process may create a scenario of monetary policy divergences, in which there maybe unexpected exchange rate movements and communication is very relevant.
(In the absence of direct data, it continues to be based on indirect quantitative and qualitative indicators.) 2  BIS Review 170/2010  Available indicators suggest that the economy grew in the second quarter in response to the higher foreign demand. The performance of domestic demand attests to a more positive private consumption, higher private investment and a more positive contribution of the public sector, albeit more moderately than in the previous year. Except for a more pronounced waning of fiscal stimulus effect, these developments are considered to have persisted in the third quarter as well. Although private consumption indicators are often contradictory, the overall setting shows a better performance compared to the first quarter of 2010. The rise in average wage and employment, the increase in the import of consumer goods and the substantial improvement of the consumer confidence index reinforce and signal the resurgence of consumption in the second and third quarter of 2010. On the other hand, the further decline of remittances and the contraction of consumer loans, the drop in the retail trade index and the higher consumers’ propensity to save suggest that the growth rates of consumption remain below the expectations. Private investment recorded positive growth rates as evidenced by the increase of capacity utilization, higher import of capital goods and better performance of investment loans. The further increase of investment in economy is reciprocally related to banking system lending; but ultimately, it will depend on the performance of domestic and foreign demand for Albanian goods and services.

It is also wise and sound judgment for a country to return to a sustainable fiscal situation in the medium term. There is a semantic issue here. What you call austerity plans I call plans for a progressive return to a sound fiscal situation. In any case these wise policies are favourable to growth since they increase the confidence of households, businesses and investors. Today this confidence is – as I have said – essential for the recovery. The OECD has just raised its growth estimates for 2010 and 2011. Do you share this view? At the global level we are seeing very robust growth among the emerging economies. This is true of China and Asia in general, but also of Latin America, in particular Brazil and Mexico. Africa is also performing better than expected. All these emerging economies are driving global growth. Within the euro area, some recent data suggest a phenomenon of a recovery in growth in the second quarter of 2010 that is slightly higher than expected. But we must remain very cautious. Our future growth is nowhere set in stone. It depends on all of us and on our ability to strengthen confidence as quickly as possible. When the ECB decided on 9 May to purchase government bonds that had found no takers in the market – a decision criticised notably by the President of the Deutsche Bundesbank – did it endanger its independence? Does it run the risk of becoming a kind of “bad bank”?
If successful, this will provide alternatives for cheaper, safer and faster cross border transactions. Benoit and my respective committees took a hard look at general purpose CBDC, – and there are many implications - including cost of bank funding, credit provision, and financial 26.  stability with the risk of deposits possibly taking flight to central banks during stress periods. These are issues that will have to be addressed should a central bank be deliberating on issuing digital currencies to its wider population. The CPMI and MC study is a reminder that even as we push the boundaries of payments and aim to utilise the latest technologies, central banks need to carefully assess each change and the larger impact to financial stability as well as monetary policy, before jumping on the bandwagon. E. CONCLUSION These are some of the issues that central bankers are grappling with in Asia, and how Singapore thinks about regulating this innovative area of payments through innovative regulation. With the fast-paced and global nature of changes, cooperation and 27.  dialogue between central banks are more crucial than ever before. I am glad to see many familiar faces from various central banks here today. The conference today is a useful forum for us to continue our dialogue, share important perspectives and keep tabs on the latest developments. 28. Thank you, and I wish all participants here today a fruitful two days ahead. 1 1 Capgemini, World Payments Report 2017 (Developed/Mature APAC includes Australia, Japan, Singapore,  and South Korea.

In it, we distinguished between two types of CBDC: wholesale CBDC that is limited to selected financial institutions, and general purpose currency for use by the public. The report highlighted the potential benefits in wholesale CBDC for more efficient and secure wholesale payment systems, although more exploration will be required to fully understand these benefits. 2 4 . MAS started on our wholesale CBDC journey two years ago when we introduced a digital token representing the Singapore dollar on distributed ledger technology (DLT) to settle interbank debts. Last year, we delved deeper into the problem of decentralised netting while preserving privacy, and demonstrated that these could be solved in the three major DLT platforms Corda, Hyperledger Fabric and Quorum. This year, MAS, Bank of Canada and Bank of England embarked on a project to explore how wholesale CBDC, underpinned by DLT, can be used to address the 25. 5/6  BIS central bankers' speeches  inefficiency that correspondent banking faces. It will identify pain points that commercial banks experience when making standalone cross-border payments, or payments as part of trade financing, securities services and foreign exchange. The project also looks at resolving settlement issues between commercial banks, and settlement of reserve between a central bank and a commercial bank. After these use cases are developed, a technical proof-of-concept will be conducted, building on the success of Jasper and Ubin, which are the DLT platforms from the Bank of Canada and the MAS respectively.