samchain/econo-pairs-v1 huggingface dataset:
To alleviate the problems here, the Swedish National Debt Office, in consultation with the Riksbank, decided two weeks ago to increase the supply of treasury bills through a number of additional auctions and at the same time buy, by reverse repo as it is called, the corresponding amount of mortgage bonds. These measures mean in total that the Swedish National Debt Office will probably have invested around SEK 150 billion in covered mortgage bonds by the end of November. However, there is also a flexibility to adjust the issue volumes on the basis of market developments. It is worth noting that the Swedish market for mortgage bonds has been open during the whole period of financial turbulence, although it has functioned less efficiently than before. Just over a week ago the Riksbank also increased the possibility for credit for the participants in the RIX payment system. The purpose of this is to facilitate the banks’ payments to one another during the day, where necessary. To oil the wheels a little, one might say. RIX participants can now to a greater extent use their own covered bonds, or those issued by an institution with close links, as collateral in the system. The collateral for a covered bond is directly tied to a particular portfolio of mortgage loans with high collateral. This means that  4  BIS Review 119/2008  the credit granter is protected, even if the institution issuing the bond were to collapse.

A large part of the collateral the banks pledge for these loans will probably be comprised of covered mortgage bonds. The measures should therefore also have a positive effect on the functioning of the mortgage market. Together with the measures taken by other central banks, this should lead to better liquidity in the financial markets globally. A further measure is that the Riksbank as recently as today decided to establish a loan facility in Swedish krona to increase access to loans of longer duration. There have thus been disruptions in the financial markets, but the Riksbank, other government agencies and central banks have taken action to improve the functioning of the markets. We will of course continue to follow developments very closely. We are constantly updating our analyses and we are prepared to take action if necessary. In addition, as I have already mentioned, we have close contacts with the banks, market participants, other government agencies and our central bank colleagues in other countries. Monetary policy When the Executive Board met for our most recent monetary policy meeting on 3 September, the decision was to raise the repo rate by 0.25 percentage points to 4.75 per cent. However, the forecast for how the repo rate would develop in future was lowered in relation to the interest rate path that had been presented in July. The July forecasts contained a fairly high probability for a further two raises during the autumn.
One topic that we are discussing with the industry is the treatment of “double default.” Some industry representatives believe that Basel II takes an overly conservative approach to the risk of loss associated with exposures covered by guarantees: they suggest that the risk of both a borrower and a guarantor defaulting on the same exposure is lower than the risk of just one party defaulting. The Committee believes that the new framework should recognise some double default effects, and we are currently considering all of the implications of doing so, including those associated with measuring the effects. Another topic we are discussing with the industry concerns the treatment of certain trading-related issues under Basel II. In the view of some industry representatives, neither the existing market risk capital rules nor Basel II go far enough in recognising advances in the measurement and management of risks arising from trading activities. We are evaluating these matters. Our work on double default and trading book matters is making good progress. We are consequently confident that we will issue papers for public discussion on these topics by early April this year so that  4  BIS Review 3/2005  we can finalise the rules during the summer, with a view to allowing their implementation at the same time as the rest of the new framework. As Chairman of the Basel Committee, I would of course like to see consistent implementation of these changes on an international basis, both in terms of content and timing.

7  This was due, in part, to the fact that the effective federal funds rate was a volume-weighted mean. The Federal Reserve Bank of New York recently changed the calculation of the effective federal funds rate from a weighted-average mean to a weighted-average median to make it more robust. In addition, it started publishing a broader measure of bank funding costs, the overnight bank funding rate. 8  The list of counterparties can be found at this link: https://www.newyorkfed.org/markets/expanded_ counterparties. BIS central bankers’ speeches  3  been one of our stated purposes since the Federal Reserve Act became law more than a century ago. Until a few months ago, many conversations about the long-run framework for monetary policy implementation considered at least two options; on the one hand, we had the old system based on reserve scarcity inducing competition for reserves, and, on the other hand, we had a theory about how competition in a range of money markets would pull market rates up in line with the interest rates administered by the Federal Reserve. The old system certainly had flaws, many of which were exposed during the crisis, but it had worked reasonably well. And a system that works reasonably well is often more appealing than one that exists only in theory. The successful liftoff has brought theory into practice, and the results have been good so far.
The Norwegian authorities have been successful in ensuring that the bulk of the petroleum wealth benefits society as a whole. Both the state’s ownership interests through the State’s Direct Financial Interest in petroleum activities (SDFI) and the tax system have contributed. The companies that extract oil earn a reasonable return on their investments and have incentives to invest, but the economic rent has essentially accrued to the general public. The authorities have so far also been successful in smoothing the use of petroleum revenues over time. This is important for several reasons. First, it is misleading to look upon the cash flow from petroleum activities as income. The appropriate economic perspective is to see the transfer of cash flow to investments abroad as a way of transferring capital from one account to another – from petroleum to foreign securities. By doing so, we diversify risk. Second, the size of the cash flow from petroleum activities varies. If petroleum revenues were to be used as they accrue, this would lead to wide fluctuations in demand in the Norwegian economy. Third, the use of petroleum revenues has an impact on competitiveness in Norwegian business and industry. A high level and substantial variations in the use of petroleum revenues would have a negative impact on internationally exposed industries. The establishment of the Government Pension Fund and the spending guidelines for petroleum revenues are intended to meet these challenges.

This contributes to predictability for those who take decisions about saving and investment today, although the result of those decisions depends on how the economy develops in the future. Monetary policy must strike a balance between the various objectives. Strong growth in the Norwegian economy, a tighter labour market, a pronounced rise in equity prices and high credit growth must be weighed against unexpectedly low inflation. Norges Bank’s projections in the Inflation Report are based on an interest rate path that in the Executive Board’s assessment strikes a reasonable balance between the objectives of monetary policy. Previously, we based our analysis on various technical assumptions concerning future interest rates. One such assumption was market interest rate expectations. As from late last year, we now base our projections on an interest rate path that we consider reasonable. This gives Norges Bank more active ownership of the projections that are presented and of the uncertainty we believe surrounds these projections. In the baseline scenario presented in Inflation Report 1/06, interest rates in Norway and abroad are assumed to rise somewhat faster in the longer term than current forward rates may imply. Exchange rate movements are difficult to project. The interest rate path at home and abroad may be consistent with an approximately unchanged krone exchange rate. The high growth rate in the economy implies a gradual pick-up in price and cost inflation.
Thomas Jordan: Monetary policy in the euro area’s neighbouring countries Text of the SAFE Policy Lecture by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the SAFE Policy Center, Frankfurt am Main, 23 February 2016. *  *  *  The author would like to thank Oliver Sigrist for his valuable support in preparing this speech. He also thanks Simone Auer, Petra Gerlach and Carlos Lenz for their helpful comments, the SNB’s Communications and Language Services units, and Francesca Boucard for compiling the data. Ladies and gentlemen I am delighted at the invitation by the SAFE Policy Center to give this presentation in the “capital” of the euro area. While most of my European colleagues attend ECB council meetings here every few weeks, I have somewhat less occasion to visit Frankfurt. Since Switzerland is not a member of the euro area, the Swiss National Bank (SNB) naturally has no right to take part in or influence the decision-making process here. Yet at the same time, decisions on European monetary policy are of utmost interest to us, since they strongly affect the SNB and Switzerland. This being the case, I would like to speak today about monetary policy in the euro area’s neighbouring countries. I will focus not just on Switzerland, but also on other small open economies, and in doing so, illustrate our experiences – both shared and divergent – since the onset of the financial crisis in 2008.

[4] If the trend continues, it could eventually entirely disappear. Since cash is the only source of public, risk-free money available to everyone, we see the need to adapt to people's preferences by offering a public version of money in this growing digital sphere. While doing this, we do not want to replace cash but to complement it with a widely usable, inclusive, free-for-basic use and convenient form of money. The other important reason for embarking on this digital journey is related to something we call "strategic autonomy". As I mentioned at the beginning, current geopolitical tensions show us how fragile our world is. Dependence on external sources and external suppliers for the basic needs of our population brings risks, and we must ensure these risks do not materialize, particularly in times of crisis. It is our duty to support the smooth functioning of the payment system or, to put it more bluntly - to ensure payment services continuity in unexpected scenarios. And this is precisely where the digital euro fits in. Built on its own infrastructure and further developed in cooperation with domestic payment service providers, we must ensure this option will work when all others fail regardless of the cause of the disruption, be it a cyberattack, technical glitch or something else. We must ensure the digital euro is there when you need it the most. PRIVACY Now let's mention privacy. This is very important for us, and I want to emphasize this aspect.
Given the weakness in domestic demand, limiting large currency appreciation becomes a necessity for some economies to support economic recovery. And with weak domestic demand, pursuance of banking reform was an important policy to normalize lending and credit growth. On top of this, liberalization to allow more capital outflows also became an instrument of choice in managing the macroeconomic impact of rapid capital inflows. On the demand side of global capital, policy configuration in the US was instrumental in allowing the external surplus of emerging markets to be absorbed through the US current account deficits. The key mechanism, as I noted, has been the easing of US monetary policy that has helped support global growth through the expansion of US demand. With private investment in the US still recovering from the stock-market correction in early $ lower interest rate and greater access to credit significantly increased US consumption at the expense of a fall in private savings. As a result, the US external imbalance widened while reserves accumulation by emerging markets increased. The next question is can this go on? And is reserves accumulation a temporary or a permanent feature of the international monetary system? To answer this question, one has to distinguish between stock and flows. On the flows side, given reserves accumulation essentially mirrors external surpluses of emerging markets, the pace of reserves increase going forward is more likely to ease. This is because the adjustment process that is now ongoing will reduce the imbalance.

Second, as I’ve noted many times in the past, a symmetric inflation target means we should be averaging 2 percent inflation over time. We’ve averaged well under that 2 percent mark for the past six and a half years. With a symmetric inflation target, one could imagine moderately above-target inflation for a limited time as simply the flip side of our recent inflation experience – and hardly an event that would impose great costs on the economy. The murky state of inflation expectations is another factor that enters my risk-management considerations. For inflation to take off rapidly, we would have to see a jump in inflationary expectations. But inflationary expectations certainly have not taken off. Indeed, we may be facing a quite different problem. Many forecasters – myself included – assume that stable 2 percent inflation expectations will be an important factor helping to pull actual inflation up. Over the past five years, professional forecasters’ projections for long-run inflation have been at the 2 percent target and the Treasury Inflation-Protected Securities (TIPS) break-evens generally have been flat. Yet actual inflation has only just recently made it back up to 1-1/2 percent. Moreover, we still have not seen much at all in the way of higher inflation compensation being built into interest rates or wages. So there is cause for concern that expectations might not produce as strong a pull on inflation as we hope.
The result is improved fiscal balances and better public debt structure, which is heavy toward longer maturities and domestic-currency denominated. Monetary policy’s first priority is to achieve long-term price stability, and in certain countries, Thailand included, central banks actively pursue explicit inflation targets. To be sure, countries have made efforts to ensure stronger prudential regulation and supervision of banks. The evidence is mixed on this front, but increasingly, more countries are adopting risk-based supervision and international accounting standards, including Basel II and IAS 39. A number of Asian emerging economies have also achieved significant  2  The same is true when comparing relative volatility in growth rates of consumption and income (Kose, Prasad, and Terrones, 2005). While this is a broad characterization of emerging markets, some countries, for example Thailand, have experienced a much less volatile consumption to income ratio. (Aguiar and Gopinath, 2007). 3  From the new External Wealth of Nations Mark II (EWN II) dataset, compiled by Lane and Milesi-Ferretti (2006). The extent of financial integration is measured by the total international assets and liabilities as a percentage of GDP and the degree of trade integration is measured by exports plus imports over GDP. 2  BIS Review 99/2007  consolidation and modernization of their financial institutions. They have built up new legal and information infrastructure to strengthen the foundation for financial system capacity for crisis prevention and resolution. In some countries, new foreclosure laws, bankruptcy laws, debt restructuring mechanisms, and credit bureaus, which were absent before 1997, are now in place.

“Bubbles and Crashes” Econometrica, Vol. 71, No. 1, pp. 173-204. 2. Aguiar, M. and G. Gopinath (2007). “Emerging market business cycles: The cycle is the trend,” Journal of Political Economy, Vol. 115, pp. 69-102, February. 3. Bannier, C. E. (2005). “Big elephants in small ponds: Do large traders make financial markets more aggressive?”, Journal of Monetary Economics, Vol. 52, No. 8, November, pp. 1517-1531. 4. Henry, P. B. (2006). “Capital account liberalization: Theory, evidence and speculation,” NBER Working Paper 12698, National Bureau of Economic Research, Cambridge MA, November. 5. Kose, A., E. Prasad, and M. Terrones (2005), “Growth and Volatility in an Era of Globalization,” IMF Staff Papers, vol. 52, pp. 31-63, International Monetary Fund, Washington D.C.. 6. Lane, P. R. and G. M. Milesi-Ferretti (2006). “The external wealth of nations Mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004”, Working Paper WP/06/09, International Monetary Fund, Washington D.C. 7. Parente, S. L. and E. C. Prescott (1999). Barriers to Riches, Third Walras-Pareto Lecture, University of Lausanne, Switzerland, October. 6  BIS Review 99/2007
Besides, there is a persistent and visible recovery in inflation dynamics, and thus the inflation inertia has, to a great extent, been. When we consider where we are after four years of fighting inflation following the crisis, we see that CPI inflation, which was 73.2 percent by January 2002, remained below the end year targets for three consecutive years, declining to single digit figures; annual CPI is realized as 7.94 percent in March 2005. The total decline in inflation during this period was more than 65 percent. This favorable development was apparent in the expectations as well. While the reliability difference, which is the difference between target inflation and inflation expectations, was 13.3 point at the beginning of 2002, it dropped to 0.4 points at the beginning of 2005. As of today, according to the results of the survey of expectations of the Central Bank of the Republic of Turkey, the year-end inflation expectation dropped to 7.5 percent. This figure is below the official target of 8 percent. As well as being a concrete indication of the fact that the inflation inertia has been broken to a great extent, this improvement in inflation expectations is clear evidence of the increased confidence in monetary policy. Moreover, this situation shows that the inflation target will be a nominal anchor for economic units in their future decisions.

Growth in the US, however, is likely to pick up as early as 2003. The US economy is not expected to reach its growth potential before the end of 2004, however. Economic activity in Europe will only see modest growth for the time being. We anticipate that a significant acceleration of growth will not set in before the middle of 2004, with potential growth being reached in the course of 2005. We assume that the dollar/euro rate will remain at about the current level and that the oil price will be around $ per barrel. On the assumption that the three-month Libor rate will remain stable at 0.25% during the next three years, average inflation should amount to 0.6% in 2003, drop to 0.4% in 2004 and climb to 1.2% in 2005. It is thus forecast to remain under 1% until mid-2005. In the course of 2005, however, an acceleration will get under way, with forecast inflation reaching the 2.5% mark in the second quarter of 2006. The new forecast is consistently below that of March 2003. The low inflation at the beginning of 2004 is attributable to a basis effect as a result of the development of oil prices. The lower inflation forecast for the period thereafter is due to the delayed economic upswing. According to the new forecast, inflation in 2006 is no longer in the range that the National Bank equates with price stability. It should be noted that these forecasts assume that monetary policy will remain expansive over the next three years.
The technical definition of a federal funds transaction is provided in Regulation D, 12 CFR 204.2(a)(1)(vii). The effective federal funds rate is calculated as the volume-weighted median of federal funds transactions reported by banks on FR 2420, Report of Selected Money Market Rates. See “Statement Regarding the Calculation Methodology for the Effective Federal Funds Rate and Overnight Bank Funding Rate,” July 8, 2015. 4 The FOMC’s September 2014 Policy Normalization Principles and Plans indicate that the Committee expects to  reduce the Federal Reserve’s balance sheet in a gradual and predictable manner, primarily by ceasing to reinvest repayments of principal. On March 15, 2017, Chair Yellen stated: “We’ve emphasized for quite some time that the Committee wishes to use variations in the fed funds rate target – our short-term interest rate target – as our key active tool of policy.” She also stated that while “asset purchases are a tool we could conceivably resort to if we found ourselves in a serious downturn where we were, again, up against the zero lower bound and faced with substantial weakness in the economy, it’s not a tool we would want to use as a routine tool of policy.” See the transcript of Chair Yellen’s March 15, 2017 press conference. 5 Overnight RRP operations supplement IOR by offering reverse repurchase agreements at a specified offering  rate to a broad set of counterparties, including several types of nonbank financial institutions that are significant lenders in U.S. money markets.

The Federal Reserve was therefore able to achieve the desired level of the federal funds rate, its policy target, by making slight adjustments in the supply of reserves in the system, so that it intersected the demand at that rate.3 On a typical day, implementing monetary policy entailed forecasting the level of reserves that would achieve the targeted level of the federal funds rate, and then, if necessary, conducting open-market operations to add or remove reserves. Nowadays, however, reserves are no longer scarce. The supply of reserves now fluctuates widely around roughly two trillion dollars, compared to remaining tightly around ten billion dollars in mid-2007. This largely reflects the effect of the large-scale asset purchase programs, the last of which concluded in 2014, and the FOMC’s subsequent direction to maintain the size of the balance sheet by reinvesting principal repayments. Because the stock of reserves is so large, it is impractical to use open market operations to quickly reduce reserves back to the point where the federal funds rate can be controlled with scarcity, at least for now.4 Our current framework relies, instead, on providing the market with two overnight investment opportunities to help steer money market rates: interest on reserves (IOR) and the overnight reverse repurchase agreement (ON RRP) facility.