samchain/econo-pairs-v1 huggingface dataset:
As long as everything is functioning well, the focus of public debate is much more often on our interest rate policy and the inflation target than on our stability task. But more recently, as the functioning of the financial markets has been hampered, the situation has almost been reversed. It has also become very clear how closely related our two main tasks are. The Riksbank’s most important tool in conducting monetary policy is the repo rate. One can say that we try to influence economic activity and inflation by steering the price of credit, that is, interest rates. But to be able to do this, the payment system and the credit markets must function so that the Riksbank’s interest rate decisions have an impact on other interest rates in the economy. Financial stability is in other words more or less a condition for being able to conduct monetary policy in an efficient manner. And of course it works both ways – monetary policy has significance for financial stability, not least through its impact on the banks and on economic activity. For instance, in an economic downturn the number of bankruptcies in the economy increases and so do the banks’ loan losses. A hiccup in the financial machinery In Sweden the market for the shortest interest rate in the economy, the overnight rate, has functioned more or less normally, with the interest rate close to the repo rate. So far so good.

This means that the companies can obtain financing by issuing commercial paper and selling to the banks, which can in turn use this as collateral to borrow from the Riksbank. The interest on the loans provides compensation for risk and time to maturity and the banks can only use the credit facility if they buy new commercial paper. If large companies outside of the financial sector gain greater access to credit, then the banks should have more scope to lend more money to small and medium-sized enterprises as well. Liquidity assistance on special terms The Riksbank has also provided special liquidity assistance to two Swedish financial institutions, namely Kaupthing Bank Sverige AB and Carnegie Investment Bank AB. These loans have been granted against collateral and at an interest rate that is higher than the normal borrowing cost. Although neither of these two market participants has a dominant position in the Swedish market, the Riksbank chose in both cases in the current turbulent market situation to grant liquidity assistance to prevent serious disruptions to the financial system and to maintain confidence in Sweden’s credit and payment systems. The decisions were based on assessments that the participants were solvent, but that they nevertheless were unable to acquire the necessary liquidity themselves to meet their payment obligations. With regard to this type of loan, liquidity assistance on special terms, it is important to remember why they are being granted. The issue is to safeguard the financial system and important social values.
7 For the Treasury market, see Michael Fleming and Francisco Ruela, Treasury Market Liquidity during the COVID-  19 Crisis, Federal Reserve Bank of New York Liberty Street Economics, April 17, 2020. For MBS, see Jiakai Chen, Haoyang Liu, David Rubio, Asani Sarkar, and Zhaogang Song, MBS Market Dysfunctions in the Time of COVID-19, Federal Reserve Bank of New York Liberty Street Economics, July 17, 2020; and Jiakai Chen, Haoyang Liu, David Rubio, Asani Sarkar, and Zhaogang Song. Cash-Forward Arbitrage and Dealer Capital in MBS Markets: COVID-19 and Beyond, Federal Reserve Bank of New York Staff Reports, no. 933, revised September 2020. 8 For the various New York Fed Open Market Desk statements on the expansion of repo operations during March  2020, see Repo and Reverse Repo Operations. FOMC statements regarding asset purchases at this time include: Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, March 15, 2020; Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, March 23, 2020; and Board of Governors of the Federal Reserve System, Federal Reserve Announces Extensive New Measures to Support the Economy, March 23, 2020. The improvement in Treasury market functioning following these actions is discussed in Michael Fleming, Treasury Market Liquidity and the Federal Reserve during the COVID-19 Pandemic, Federal Reserve Bank of New York Liberty Street Economics, May 29, 2020.

The provision of liquidity had the desired effect of reducing strains in markets, narrowing the dispersion of rates, and keeping the federal funds rate within the target range.5 Moving to more recent events, in March of this year the global spread of the pandemic led to a rapid and massive movement of funds around the world as investors sought to protect themselves from the highly uncertain and darkening economic outlook. These flows threatened to overwhelm the financial system and resulted in intense strain and disruption in short-term funding markets and markets for Treasury securities and agency mortgage-backed securities.6 Measures of market functioning deteriorated to levels near, or in some cases worse than, those we saw at the peak of the 2008 global financial crisis.7 In response to the extraordinary volatility and signs of market disruption caused by the pandemic, the Federal Reserve greatly expanded its repo operations and decisively and immediately began purchasing enormous quantities of U.S. Treasury securities and agency mortgage-backed securities. Our approach was to deliver a rapid and overwhelming response that would give assurance to market participants that liquidity would be there in the coming days and months. These actions, combined with the introduction of emergency lending facilities to provide liquidity to funding and credit markets, proved successful.
Also, considering the sovereign bond holdings held at fair value, those banks whose portfolios have shorter terms to maturity are less affected than those with longer terms to maturity. In the case of Spanish banks, 70% of sovereign bonds held at fair value have a remaining term over one year, while just 7% have terms to maturity over ten years. 36  These positive effects predominate over the decline in the stock of performing loans that generate interest income, prompted by higher interest rates and worsening economic activity, which lessen total credit growth and quality. 19  Conclusions To recapitulate, the banking industry is facing the new shocks stemming from the invasion of Ukraine, having posted a moderate lending performance in Spain in 2021, recovered prepandemic profitability and maintained its solvency levels. The recovery in economic activity in 2021 helped underpin non-financial agents’ financial position, although there are still industries and segments that are more vulnerable now than they were before the pandemic. Yet despite this favourable performance latent credit risks persist, associated above all with the higher proportion of Stage 2 loans, concentrated in the economic sectors most severely affected by the health crisis. Financial intermediaries in Spain have very low direct credit exposure to Russia. However, the deterioration in the macroeconomic outlook and further increases in inflation will intensify the likelihood of the materialisation, and impact on the banking sector, of the latent risks.

Nevertheless, the impact is quite uneven across banks, owing to differences in factors such as the composition of loans to the private sector and of the sovereign loan portfolio, their international presence and the coverage of the ICO guarantee programme. In particular, in the portfolios of loans to NFCs and sole proprietors, the impact varies considerably according to firm size and economic sector.33 Loans to individuals are also important, as in business in Spain they account for more than half of the total loan portfolio.34  33  The larger differential impact on smaller firms reflects their lower capacity to absorb shocks, as their sources of revenue and financing are less diversified. The reasons for the cross-sector differences include the distinct impact the energy price increase has on each sector, and also the differences in the sectors’ sensitivity to the macroeconomic downturn and in their initial financial positions. 34  The expected loss rates in the mortgage portfolio remain limited, owing to the nature of the loans and their associated collateral, and the scenarios therefore envisage a smaller impact for this business.
Should countries be subject to an excessive deficit procedure (EDP) or be involved in a financial assistance program by the European Stabilisation Mechanism (on which I will touch on shortly), they will also be subject to an enhanced monitoring by the European Commission. Overall, the cumulative effect of these reforms will be a significant enhancement of fiscal governance in the euro area and it is important that the reforms are now implemented fully. Macroeconomic Imbalances Procedure. Another important innovation of the “six pack” Regulations is the introduction of the Macroeconomic Imbalances Procedure (MIP), which is designed to prevent and correct phenomena such as high current account deficits, unsustainable external indebtedness, abrupt or prolonged loss of competitiveness and housing and credit booms and busts. Unlike reforms in fiscal governance, which were mainly aimed at strengthening what was already in place, the Macroeconomic Imbalances Procedure is something which was completely absent in the initial design of the founding fathers of EMU. The procedure starts from a scoreboard of indicators, whereby the European Commission identifies the countries and issues which require in-depth reviews. Based on these in-depth reviews and depending on the severity of the imbalances the Commission proposes a policy recommendation under either the “preventive arm” or the “corrective arm” of the MIP. In particular, if the Commission identifies an excessive imbalance that may jeopardise the proper functioning of EMU, it will propose a follow-up under the corrective arm of the MIP, the Excessive Imbalance Procedure.

Broadening the lens of the analysis, my staff then compared the Bronx to a random sample of comparable low income counties that were located in urban areas, again using data for 2013. They looked at the ratio of the volume of small business lending per small business. The ratio for the Bronx was $ as compared to a mean ratio of $ across the sample of other counties. While lower by $ this difference is not large. Taken together, the evidence suggests that while access to small business credit in the Bronx seems more constrained relative to Brooklyn, Manhattan and Queens, it is relatively consistent with what is typically available in lower income counties across the country. Of course, this may simply indicate that small businesses in lower income areas of the country are generally constrained in their credit access. Another way to investigate the question of credit constraints is to look for evidence that would reflect the consequences of these constraints. For example, more constrained access to credit might result in a slower rate of new business formation. My staff analyzed small business starts between 2010 and 2013. For the Bronx, the number of small businesses per capita grew at a 12 percent rate over that period, double the average rate for the sample of 50 lower income counties. This evidence can be viewed in multiple ways. My take is that, in general, it is difficult to prove or disprove the presence of credit constraints with the available data, especially at the county level.
How effective we are in meeting this political challenge is likely to depend significantly on how effective we are in improving educational opportunity and achievement in the United States, and perhaps also in improving the design of the temporary assistance we provide those individuals who bear the brunt of the adjustment costs that come with greater global economic integration. These policies by the United States would help improve the prospects of a more benign adjustment process. But they would not be sufficient to produce a more favorable adjustment path. A more favorable adjustment scenario would require policy changes in each of the major economic areas. For global growth to be sustained at a reasonably strong pace during this period of adjustment, the desirable increase in U.S. savings, and the necessary slowing in U.S. domestic demand growth relative to growth of U.S. output, would have to be complemented by stronger domestic demand growth outside the United States, absorbing a larger share of national savings. Exchange rate regimes, where they are currently closely tied to the dollar, will have to become more flexible, allowing exchange rates to adjust in response to changing fundamentals. Reforms to financial systems and to social safety nets over time would help reduce the need for exceptionally high levels of domestic saving we see in many countries. The global nature of these requirements does not imply that the United States can put the principal burden for adjustment on others.

BIS Review 3/2006  1  How much of the reduction in real forward rates is attributable to a drop in expected real returns and how much is a reduction in the real risk premium is still an open question. The low level of long-term real rates seems likely to reflect in part a general rise in the supply of global saving relative to demand for investment, and some have suggested this phenomenon may reflect concern about prospects for future returns on investment. However, there is also evidence from other financial market indicators that the required compensation for bearing real risk has fallen, raising the possibility that the declines in real rates are due not to pessimism (or at least not entirely), but instead to an increased appetite for, or a decreased perception of, real risk. Against this backdrop of a favorable but so far uneven productivity shock, lower inflation expectations and risk premia, greater economic and financial integration, and divergent saving and investment patterns, what are the implications of the imbalances that are the subject of this conference? It is important to note that the greater dispersion in external imbalances is the inevitable result of a fundamentally healthy change in the world economy.
Mr. Patrikis discusses global electronic commerce Speech by the First Vice-President of the Federal Reserve Bank of New York, Mr. Ernest T. Patrikis, at the 1998 International ACH Conference in Seattle on 9/3/98. I am very pleased to be here today to discuss global electronic commerce. At the Federal Reserve Bank of New York, we have a tradition of embracing emerging technologies as a means of fostering the growth of commerce. As early as 1914 the Federal Reserve System was using the telegraph to wire funds across the nation. By 1918, the Federal Reserve Banks had introduced their first dedicated funds transfer network. Today, over 350,000 funds transfers are sent over Fedwire every day with a total value of more than $ trillion. So, electronic commerce itself is not new. What is new is the emerging global network environment and its electronic access capabilities. The promise of this global network has brought electronic commerce to the forefront of public-policy making. The Organization for Economic Cooperation and Development and other international organizations have expressed their belief that “the exponential growth and diffusion of the Internet is quickly making the promise of widespread electronic commerce a reality.

The White House believes that the commercial and technological environment is changing far too rapidly for it to be able to develop policy that is both timely and appropriate. In the near term, therefore, the White House is calling for case-by-case monitoring of electronic payments experiments. In keeping with the spirit of the White House Framework, Federal bank supervisors in the United States have expressed a clear willingness to listen to what the private sector has to say on issues involving emerging electronic payments. For example, in 1996 the Board of Governors issued proposed regulations concerning the applicability of Regulation E to stored-value cards. As part of that proposed rule making, the Board requested comments from the public as to whether part or all of Regulation E should apply to electronic money or value residing on a computer system or personal-computer hard drive. Similarly, the FDIC requested public comment on the application of Federal deposit-insurance coverage to electronic value represented on computer systems. This openness, combined with an increasing willingness to let the banking industry partner with technology and other industries, reflects a commitment on the part of bank supervisors in the United States to allow the private sector to direct the future of electronic commerce and payments. From a longer term perspective, however, the market-place and industry self-regulation alone may not fully address all of the issues associated with e-money.
Smart regulation for a smart financial centre First and foremost, a smart financial centre must be a safe financial centre. Technology can be a double-edged sword. If not managed well, it can potentially lead to a variety of risks in the financial industry: •  financial crime and illicit transactions;  •  loss of data or compromise of confidentiality;  •  glitches that damage reputation, disrupt business, or worse, cause systemic crisis. The first priority on our journey towards a Smart Financial Centre is therefore to continually strengthen the industry’s cyber security. As more financial services are delivered over the Internet, the frequency, scale, and complexity of cyber attacks on FIs have increased globally. Hackers and cyber criminals are constantly probing IT systems for weaknesses to exploit. There are two reasons for concern: •  First, the connectedness among FIs mean that a serious cyber breach in one institution can potentially escalate into a more systemic problem. •  Second, repeated cyber breaches could diminish public confidence in online financial services and reduce people’s willingness to use FinTech in general. MAS and the financial industry in Singapore take cyber security seriously.

As a member of that Focus Group, I am happy to be in a position to contribute to this important and promising cause. I have already outlined elsewhere and in a different context a five-prong strategy developed in the Hong Kong Monetary Authority to further co-operation between the two financial systems, which will have the desirable dual effect of enhancing the effectiveness of financial intermediation on the Mainland and maintaining the status of Hong Kong as an international financial centre 6 . The strategy comprises: First, opening doors through CEPA and other forums so that Hong Kong financial institutions can provide the much needed financial services (and competition) on location in the Mainland; Secondly, sustaining the flow of fund raising activities from the Mainland to Hong Kong, not just in the IPO of H-shares but also in bank syndication and debt issuance, and creating channels, for example through QDII schemes, to facilitate the flow of investment funds from the Mainland; Thirdly, creating a mechanism for the marketing of suitable financial instruments (for example CDR of H-shares) on the Mainland to satisfy the enormous investor demand there;  4  The guidance was given to the Drafting Committee for the Basic Law of the Hong Kong Special Administrative Region when Deng Xiaoping addressed the Committee on 16 April 1987. 5  This principle was explained in the viewpoint article "A Basic Law of Finance", which can be found on the HKMA website. (http://www.info.gov.hk/hkma/eng/viewpt/20060810e.htm).
Last year’s growth was sound in the sense that it was not “borrowed” but based on an underlying current account surplus measuring almost 4% of GDP. In spite of the slowdown in GDP growth last year, the slack in the economy continued to diminish. The economic recovery is continuing, with current forecasts providing for GDP growth of over 2% this year and in the 3½–4% range in 2014 and 2015. Labour market statistics support this forecast of a diminishing slack in the economy. For instance, seasonally adjusted unemployment measured 4½% of the labour force in February, its lowest point since November 2008. A survey carried out regularly by the Central Bank in collaboration with the Confederation of Icelandic Employers shows that, for the first time  BIS central bankers’ speeches  1  since March 2008, respondents wishing to recruit staff members outnumber those interested in downsizing. The slack in the economy still exists, but these developments, together with disappointing inflation figures (which I will mention again later on), give rise to the question of how big that slack is. Every time they take a decision on interest rates, monetary policy decision-makers must ask themselves this question, as previous economic policy mistakes in Iceland and elsewhere – mistakes that have ended in inflation and instability – have often originated in an overestimation of output slack and potential output growth. It is vital to seek out structural reforms that could result in higher growth potential, and important work in that direction is currently underway.

Már Guðmundsson: Recent economic and financial developments in Iceland Speech by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, at the 52nd Annual General Meeting of the Central Bank of Iceland, Reykjavík 21 March 2013. *  *  *  Madame Prime Minister; Ministers; Madame Chairman; Directors and Ambassadors; Ladies and Gentlemen: As we convene for the 52nd Annual General Meeting of the Central Bank of Iceland, the domestic economic recovery that began in mid-2010 continues, although it has slowed down in recent months. At least to a degree, the slowdown is due to developments internationally. The margin of spare capacity in the economy continues to narrow. Inflation has proven more persistent than previously hoped, however. Early on, wage increases far in excess of productivity growth played a leading role in raising inflation well above the inflation target, but since last autumn the weakening of the króna, triggered by deteriorating terms of trade and a heavy foreign debt service burden, has played a greater part. Monetary policy responded to these developments with interest rate increases beginning in August 2011. The Bank’s interest rates have been unchanged since November, however, and intervention in the foreign exchange market has supported the exchange rate in the recent term, thereby supporting the monetary policy goal of bringing inflation back to target. Global output growth lost pace in 2012, but to differing degrees in various regions. There was a contraction in the euro area and marginal growth in the UK and elsewhere in Europe.