samchain/econo-pairs-v1 huggingface dataset:
As we move forward, we will continue to learn about demand for reserves and other Federal Reserve liabilities and market functioning, and may adjust the specifics of the plan as appropriate. What Does All of This Mean for SOFR? That’s a lot on monetary policy, interest rates, reserves, and repos. But before I close, I’d like to emphasize an important point about a particularly important repo benchmark rate, and that’s the Secured Overnight Financing Rate, or SOFR. SOFR is the reference rate that the Alternative Reference Rates Committee (ARRC) has selected as the preferred replacement for LIBOR. At the same time that we saw turmoil in the repo market, we saw a temporary spike in SOFR. As market participants make preparations to transition away from LIBOR, they’re understandably watching SOFR very closely. There are a few things I’d like to highlight with respect to SOFR. First, a temporary spike is not surprising, given that SOFR reflects rates on real-world transactions. Second, the very fact that we saw a spike in SOFR is an indication of how representative of its underlying market it is. It’s based on actual transactions, rather than judgment (like LIBOR), which is part of what makes SOFR so robust. Third and final, is that in the vast majority of use cases, the relevant metric for SOFR is an average over time. Focusing on overnight SOFR isn’t particularly useful in this context, as financial contracts will generally refer to an average of SOFR over many weeks or months.

My message to you is: Don’t let last month’s temporary spike in SOFR, or hope for the creation of some other replacement reference rate, become an excuse for delaying your transition away from LIBOR. I’ve said it before and I’ll say it again: like death and taxes, the end of LIBOR is unavoidable, and we must do all that it takes to prepare for a LIBOR-less future.9 And the existence of LIBOR is only guaranteed for another 807 days.10 Conclusion I’ve talked through a lot of important issues this afternoon, and I greatly appreciate your attention. The events I’ve described are an apt reminder of the importance of well-functioning financial markets and the vital role the Federal Reserve plays in providing liquidity. They are also a demonstration of our ability to act swiftly and effectively to execute our monetary policy implementation goals and keep the federal funds rate within in the target range. Thank you. 1 Board of Governors of the Federal Reserve System, Statement Regarding Monetary  Policy Implementation, October 11, 2019; Federal Reserve Bank of New York, Statement Regarding Treasury Bill Purchases and Repurchase Operations, October 11, 2019. 2 Board of Governors of the Federal Reserve System, Statement Regarding Monetary  Policy Implementation, October 11, 2019. 3 Board of Governors of the Federal Reserve System, Statement Regarding Monetary  Policy Implementation and Balance Sheet Normalization, January 30, 2019. Further details were announced in Board of Governors of the Federal Reserve System, Balance Sheet Normalization Principles and Plans, March 20, 2019.
Alongside that evidence, we could see that the sum of the projections for lending in the two years ahead for the UK banks was substantially negative. The case for acting was therefore strong, but the challenge was also that in its first year, success for the FLS was in some ways to prevent the most negative outcome for lending, which in an absolute sense would not look great. What we have seen over the last year is quite a substantial change in the funding costs of banks which has fed through into lower lending costs, but more so in terms of the amount of lending in the mortgage market than for small firms. Funding for the major banks have also become less disposed, which has probably increased the willingness of banks to compete on lending. But the uneven pattern of lending meant that we thought it was sensible to increase the incentives for banks to lend to small firms. We cannot say that this will conclusively deal with the question of whether the problem is a lack of loan supply or demand, but we can say that we have used our toolkit to create a big incentive for banks to lend to small firms. In summary, there is a strong public interest in the banks, which has been sharpened by the crisis. One element of that public interest is permanent – the role of banks in supporting the real economy.

Other factors could also have an impact during the course of 2008, for instance, via a decline in the total wage bill paid by the sector. Against this backdrop, Swiss GDP growth is likely to settle at around 2% in 2008. This easing-off should allow for a reduction in the level of capacity utilisation. In a moment I will outline the risks attached to our baseline scenario. BIS Review 150/2007  1  Developments in monetary and financial conditions Since the onset of the sub-prime credit crisis in August, yields on long-term Swiss Confederation bonds have remained almost unchanged. For 10-year maturities, the rate has fluctuated around 3%. For shorter maturity bonds, however, the search for quality investments has resulted in a drop in rates. Yields on two-year maturities, for instance, have fallen from 3.0% to 2.0%. However, this decline has been partly offset or even fully neutralised by an increase in risk premiums, in particular in the case of issuers with poor ratings. Since September, the depreciation in the US dollar has accelerated. The Swiss franc has also strengthened a little against the euro, although the movements were more volatile in nature. Monetary and financial conditions can also be analysed in terms of volumes. Special attention should be given to commercial lending, since a shortage of credit in the current circumstances would be equivalent to a tightening in monetary conditions. However, no effect of this kind can be identified in Switzerland, not even in the most recent statistics.
The success of the EU project cannot be assessed solely on the basis of its economic performance; we must also look at its other original objectives, namely, to increase the level of political and economic integration in the region. Throughout its history, the EU integration process has not been linear, and not even gradual. Actually, over nearly seven decades, the European project has experienced long, quiet periods –where little or nothing remarkable happened– punctuated by, so to speak, ‘transformative periods’, that have contributed decisively to its development and to shaping its current form. Normally, these deep transformations have been introduced in an orderly and negotiated fashion. For example, the launching of the Single Market in 1993 was the result of lengthy negotiations, which started when it was apparent that the European economy needed a qualitative boost to adapt to the new international landscape. The Euro itself was also the result of lengthy debates, negotiations and preparatory phases, that were not always fully successful. Take, for instance, the crisis of the European Exchange Rate Mechanism in September 1992. Yet, despite all the difficulties, the Euro was successfully launched in 1999 and, after the introduction of the Euro notes and coins 2002, has been a tangible reality for all citizens. Indeed, its popularity in the 19 Eurozone countries is higher than ever. All in all, the Euro represents the most ambitious economic integration process the world has witnessed since the end of the Second World War.

23.10.2019  The Banking Union: a key building block of the EU project Opening remarks at roundtable “Banking Union – Five years in the making” Banco de España Margarita Delgado Deputy Governor  Dear chairs of the Single Supervisory Mechanism and the European Banking Authority, president of the European Banking Federation, ladies and gentlemen, good morning. Let me start by welcoming you to Banco de España for this roundtable. Over the next couple of hours we intend to discuss both the achievements and pending elements of the Banking Union (BU) on its fifth anniversary. We are honoured to be accompanied by such distinguished panelists, so thank you for accepting our invitation and for being here today. But before getting down to the discussion, I would like to share with you a few general thoughts on the European Union project and the role the Banking Union (BU) plays as part of this collective endeavour. In my remarks today I will point out what the BU has meant in terms of greater integration for the euro area banking sector, and I will also refer briefly to those developments that, in my view, may still be missing if we are to achieve a truly integrated and cross-border banking sector. The EU project has certainly improved the life of millions of people in Europe since its creation, not only in economic terms, but also regarding rights and living standards across the whole Union.
While the global economy is adjusting toward a new equilibrium, solid macro-prudential long run policies should replace current stimulating efforts. Therefore the challenge for our economies in the long run is to address current problems and the inherited ones based on a new model of growth, based on: (i) higher savings and investments, aiming toward a contained consumption matched by domestic production; (ii) persistent FDI inflows oriented toward tradable sectors; (iii) regional cooperation. BIS Review 164/2009  1  Let me briefly share with you some of my thoughts on the importance of this last remark, namely regional cooperation. Following arguments illustrate the benefits of cooperation, at several levels: •  From a development point of view, increased cooperation and integration on a regional level creates a greater scope for economies of scale. This would increase incentives for local and foreign investors to undertake big investment project that would not be profitable otherwise. A related advantage would be increased specialization of our economies, leading to a higher economic performance. •  On a policy level, coordinated macroeconomic policies, legal and prudential frameworks, would tend to improve the allocation of resources and to prevent beggar-thy-neighbor policies. This race to the bottom type of philosophy would not benefit the region as a whole. •  From a strategic point of view, our region is in competition with several emerging regions on a global scale.

13  That’s one reason why the Bank of England’s Financial Policy Committee has commissioned an in-depth review of how the use of derivatives in the non-bank financial system may be shaping the dynamics of markets. 14  12  Investors who base decisions on value-at-risk (‘VaR’) and assess those risks using market measures can be guided into thinking their portfolio is safer. In some cases, this general behaviour is an explicit investment strategy: some investment funds explicitly try to keep the implied volatility of their portfolio at a fixed level. 13 See the market monitor of the Office of Financial Research for the second quarter of 2017: ‘The volatility paradox: tranquil markets may harbour hidden risks’. 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  We need to keep pace. And investors should too. Accidents can be avoided if driving speeds are based on the road conditions ahead rather than the price of insurance. ii) Liquidity mismatch in corporate bond markets The second development raising questions about market resilience is actually a combination of two changes in recent years. First, market-makers (‘dealers’) have become less active in their market making. This matters because they play an important role in warehousing bonds between the time a seller wants to sell and the point at which a willing buyer can be found. Our research suggests that, in response to asset sales by bond funds, dealers are less willing to see their inventories of corporate bonds increase.
The transfer of risks related with the debt is prohibited in Islamic finance. Therefore speculative transactions such as derivative are nonexistent. Transferring the risk related with the debt and speculative financial activities could cause unnecessary booming of the financial transaction volume well above the size of the real economy. Moreover, linking credit supply to growth rate of the economic activity, Islamic finance acts as a natural hedging scheme. In other words, financing extended by means of Islamic institutions can be used only with the real economic activity, and thereby, help restrict excessive credit boom. Credit is mainly extended for the purchasing of the real goods and services. In Islamic finance, Islamic financial institutions should own and possess the real goods and services and the buyers of the real goods and services should want to take delivery. Therefore, stakeholders share profits in good times, and losses in bad times. Distinguished Guests, There is ample room to improve Islamic financial system, more specifically on regulatory and supervisory side. While the high growth rate of the Islamic financial institutions is expected to continue in the coming years, they maintain certain market risks such as reputation and liquidity risk. Liquidity management is difficult under Islamic finance rules as practical instruments in accessing liquidity are limited. However, Islamic financial institutions, being aware of the limits in liquidity management, sustain higher liquidity ratios compared to conventional banks. Similar case is valid for their capital ratios.

So the message has to be not one like "we think it’s too risky to extend more credit to this sector” but instead more like “have you thought about the entire range of relevant risks in extending more credit and are your underwriting criteria in line with the riskier environment?" It’s important in publishing a financial stability report to present its findings as a range of possible outcomes which the private sector can then be encouraged to factor into its own risk management practices. Stress tests and scenario analysis provide the intellectual backbone for financial stability reports. Stress testing, in particular, has come a long way in recent years. The HKMA’s requirements on stress testing by banks have been in place for some time. Our Supervisory Policy Manual Module on Stress Testing, issued in early 2003, requires banks to have in place a stress-testing programme and to integrate stress testing into their risk management processes. For our own internal purposes we also conduct stress tests by applying a range of shocks to the supervisory data that is reported to us. These shocks take into account various adverse movements in banks’ liquidity, interest rate and market risk positions. However, the techniques of stress testing are rapidly evolving and are becoming increasingly more sophisticated. The first generation of stress tests simply took a variable and subjected it to a shock. It was basically just a matter of saying "let’s see what happens to capital if NPL’s go to 20 percent."
This is in line with the latest Updated Budgetary Plan for 2017, which anticipates a slightly contractionary fiscal policy stance for the current year, in contrast to the expansionary stance of the last two years. Naturally, any downward deviation in growth or inflation, or any increase in financing costs, would make fiscal consolidation more demanding. With regard to subsectors, the draft budget includes the stability targets approved by Parliament in December 2016. The budget deficits projected for central government and the Social Security system are 1.1% and 1.4% of GDP, respectively, as against the actual deficits of 2.7% and 1.6%, respectively, recorded in 2016. The deficit targets for regional and local government are 0.6% in the case of regional government (0.8% in 2016) and a balanced budget in that of local government (as against the surplus of 0.6% recorded in 2016). According to these plans, central government agencies will account for most of the improvement in the total deficit in 2017. Achievement of the budget deficit target is a result, first of the State spending ceiling, approved in December, which excludes spending under the financing arrangements for local and regional government; and second, of the growth in public revenue. The most important measure on the expenditure side, in relation to personnel costs, is the increase of 1% in the compensation of public sector employees, in line with that approved last year.

The macroeconomic projections used in the preparation of the draft budget are broadly compatible with the scenario that I have just referred to, which forms the backdrop to the latest forecasts of the Banco de España, and also with the consensus scenario of private analysts. Real growth in 2017 under the consensus scenario is somewhat lower than  5/9  projected by the Banco de España (2.5% as against 2.8%), but the nominal GDP growth forecasts are in line with each other. The deficit target for general government as a whole is 3.1% of GDP for 2017, which is compatible with the requirements of the Stability and Growth Pact and involves a projected reduction of 1.4 pp of GDP. Achievement of this target is essential for Spain to resolve its situation of “excessive deficit” (more than 3% of GDP) in 2018. Public debt, according to the draft budget, will be 98.8% of GDP in 2017, down 0.6 pp of GDP from 2016. The slight downward trend of recent years, from the peak of 100.4% in 2014, is therefore extended. In this macroeconomic context, it should come as no surprise that the improvement in the deficit in 2017 stems mainly from the favourable cyclical situation and the reduction in interest rates on public debt. In this respect, the budgetary adjustment required to make further progress with fiscal consolidation, as measured by the change in the primary structural balance, is very small.
This is almost double the 7 percent job loss on the mainland from the employment peak to its trough. Furthermore, the recession in Puerto Rico has lasted about five years – three times as long as the mainland downturn. The recovery has also lagged that of the mainland. While the mainland’s economy began to recover in mid-2009, Puerto Rico’s economy continued to decline for another year. But, since mid-2010 there have been promising signs: Recently released revisions suggest that job growth on the island, while still very weak, improved modestly since last summer. And most of the weakness since then has not been broad-based, but instead concentrated in construction and manufacturing. The unemployment rate has come down by a full percentage point since its peak. However, at just over 16 percent, it remains unacceptably high. Inflation generally remains subdued on the Commonwealth – although there has been some recent volatility. After a period of falling prices in 2009, inflation picked up in December 2009 with annualized rates of around 4 percent for a few months – with medical care a key driver for these increases. Since June 2010, reported inflation rates have reverted to a range  4  BIS central bankers’ speeches  between 1 percent and 2 percent. However, the rise in food and energy prices is likely to push inflation somewhat higher over the next few months.

On the activity side, a wide range of indicators show a broadening and strengthening of demand by households and production by firms. For example, on the demand side, after an unusually deep retrenchment during the recession, consumer spending has begun to recover, and that recovery strengthened considerably in the final months of 2010. Not surprisingly, businesses’ orders and production are following suit. These factors led to a 3.1 percent growth rate in our most comprehensive measure of national output (real, or inflation-adjusted, gross domestic product or GDP) in the fourth quarter of 2010. Growth for the first quarter looks likely to be similar, near 3 percent. In my view, the revival in demand and production – while not as strong as desired – suggests that we may be much closer to establishing a virtuous circle that will support stronger growth. What I have in mind is a cycle in which rising household and business demand generate more rapid income and employment growth, which in turn bolsters confidence and leads to further increases in spending. This is why we upgraded our assessment of the economy at last month’s FOMC meeting, noting the economy is now on a “firmer footing”. The major missing piece of the puzzle has been the absence of strong payroll job growth. We will need to see sustained strong employment growth in order to be certain that this virtuous circle has become firmly established. With respect to the labor market, we have seen some conflicting signals.
Indeed the transition to net zero is likely to be a bumpy one, particularly in light of recent events, and macro-prudential regulators have an important role to play in helping manage those bumps. 14 In support of this work, we are running a stress test of the UK’s largest banks and insurers that will extend the time horizons over which we, and they, view climate risks. This is a good start in 5/7  BIS central bankers' speeches  understanding the implications of climate change and transition for the financial system. But more work is needed to build the green market infrastructure that will support an orderly transition to net zero, and this will be an important area of focus for macro-prudential regulation over the coming years. Conclusion: The road ahead Where does all this leave us? It’s clear that we macro-prudential policymakers need to look forwards as well as backwards as we do our risk assessment. And we must also ground our analysis in the impact of shocks to the financial system on businesses, households and so the economy, and not just their impact on financial players. The source of shocks and the mechanisms through which the financial system could amplify those shocks is wide – covering climate, Covid, crypto, cyber, and conflict as well as the credit cycle and the core banking system. But our understanding of many of these is still developing, reflecting differences in the maturity across our framework.

True, it is far from clear that anytime soon a full-fledged digital currency (be it blockchain based or not) will be created by a central bank (some of you may be following the debate in the Riksbank in Sweden), but the last three years have seen an explosion of research on this idea in many central banks. Bitcoin must be credited for this powerful intellectual stimulus. When so many professors at the most esteemed universities of the developed world are not thinking about potential reforms of the current monetary order, we have received a stimulus from the libertarian IT guys instead. Fine. To be sure, a hypothetical digital currency issued by a central bank may have very little in common with the cryptocurrencies that currently exist. These two things are mixed up quite often in the public space. Cryptocurrency is in fact a different concept than a digital currency of a central bank and yet a different concept than electronic money such as pre-paid cards. They are all digital in one way or another, but they are conceptually separate. Central bank digital money does not have to be based ultimately on a blockchain at all, but, to enable price stability, it will certainly be linked to the value of conventional elastic currency. To keep the current system of elastic money working, even the concept of central bank digital currency will have to allow the amount of money to change, not to be fixed or constant over time.