samchain/econo-pairs-v1 huggingface dataset:
U.S. residents do in fact earn more on their assets than they pay on their liabilities, and U.S. firms operating abroad earn a higher rate of return than do foreign firms operating in the United States. Also, the fact that U.S. gross assets are denominated in foreign currencies but U.S. liabilities are mainly denominated in dollars implies that even a modest rise in the value of other currencies relative to the dollar can significantly reduce our net liability position by increasing the value of U.S. gross foreign assets relative to foreign liabilities. Nevertheless, going forward, the scope for positive net factor payments from abroad and sizable valuation effects is limited. The U.S. trade deficit is now roughly the size of the current account deficit, and U.S. net interest earnings have fallen to quite low levels. The continuing buildup in liabilities should soon push U.S. net investment income balances into deficit, with progressively larger net transfers of income to the rest of the world. In that event, net income flows will begin to boost the  BIS Review 3/2006  3  nation's current account deficit instead of reducing it, reinforcing the deterioration in net liability position of the United States. The arguments I have just described highlight factors that may improve the odds of a more protracted, gradual and benign scenario, but they do not really alter the general conclusion that these imbalances are unsustainable and that they will need to unwind at some point. Time does not necessarily help.

While the key motif ensures coherence within a given denomination, core design elements which appear in all denominations – a hand, a globe, a location and the security features – create continuity across all the notes and lend the series a sense of overall cohesion. The design thus sets new standards when it comes to combining security, functionality and aesthetics. Issuance successfully concluded Thanks to the close cooperation of all those involved, we were able to clear the numerous hurdles we encountered. We would like to take this opportunity to thank all of our partners sincerely for their contribution. Special thanks go to Manuela Pfrunder and her team for their designs. Their work has been consistently impressive – from the earliest drafts right through to the issuance of the final denomination. I would also like to thank our suppliers: Orell Füssli, Landqart, Sicpa and Kurz. Furthermore, allow me to thank our cash distribution partners, the banks and Swiss Post for their valuable cooperation and support in enabling a smooth issuance process. And finally, let me thank the many SNB staff who have managed this project so diligently over the years and have seen it through to a successful conclusion. In issuing modern and secure banknotes, the SNB is fulfilling its statutory task of ensuring the supply and distribution of cash in Switzerland.
Third potential impact: the launch of a CBDC could also raise questions related to modalities of access to central bank balance sheet. - Depending on its attractiveness and detailed specifications, a CBDC could trigger a demand from financial actors which usually do not have access to central bank money (money market funds, investment funds, insurance companies …) to be able to settle in CBDC. It would in particular be the case in a broader wholesale CBDC access scenario. The remuneration of the CBDC held by these financial actors – in case access were to be granted – would also matter for monetary policy implementation, as it would play the role of a ceiling for these institutions on the money market. - Beyond these settlement and detention aspects, expanding the counterparty framework (i.e. for central bank refinancing or asset purchases operations) as a response to the implementation of CBDC does not strike me at this stage as being particularly useful nor necessary. In any case the usual requirements related to counterparty eligibility criteria, including financial soundness assessment and supervision, would need to be taken into account. To conclude these introductory remarks, let me stress three points: - Digitalization is a major supply/technology shock, whose implications are multifaceted, and which have been intensified and accelerated by the Covid crisis - As central banks, in the context of our monetary and financial stability mandate, we have a role to play to make sure that digitalization becomes a blessing and not a curse.

- A successful CBDC should be attractive enough to be used by households and firms in their everyday payments. However, it should avoid the above-mentioned risk of excessive shifts from bank deposits to CBDC accounts, which would involve unwanted bank disintermediation and a possible destabilization of the financial system. A balance must be found to meet both goals. -  This could imply for example both a zero remuneration of CBDC (i.e. similar to cash) and a 3/4  BIS central bankers' speeches  limit to CBDC accounts holdings. Under such a scheme, the CBDC is likely to be used for daily payments, while households and firms would not be able to hoard large amounts of CBDC for investment or risk-aversion motives. A second model would involve no limit on CBDC holdings amount, but a differentiated remuneration rate beyond a certain threshold (a so-called “tiered CBDC remuneration”), which would disincentivize large CBDC holdings. - Whatever the model chosen, with its own benefits and drawbacks, it may have impacts on monetary policy implementation. I already mentioned the potential effect on the liquidity position of the banking system. Another question relates to how a new remuneration rate should be articulated with the current key policy interest rates and whether there could be a case for changing some CBDC parameters together with central bank key policy rates. In any case, CBDCs should be designed so as to not constrain nor influence in any way central bank monetary policy decisions and desired stance. 3.
This is the best way for them to win back their creditworthiness. Have the right lessons been learned from the financial crisis? We are on the road to far-reaching changes in the international financial system, and it is important that these changes are made. Together with the international community we are working hard to ensure that banking rules are changed. Much has already been done, but a great deal also remains to be done. Will the euro still exist in 20 years’ time? Of course, there is no doubt about that. Will more than the current 17 countries then have the currency? Today, 331 million people in 17 countries use the euro. The rules for joining the euro area must be applied strictly. That is the main thing: provided strict application of the rules, the euro area is open, as the entry of Estonia demonstrates. Mr Trichet, your term of office ends in October. Do you already have your eye on a suitable successor? That is not up to me. Rather, it is the responsibility of the Heads of State or Government. A German at the head of the ECB would surely not be a bad thing for the euro. This decision is a very important responsibility of the Heads of State and Government! What are you particularly proud of in the seven years you have been in office so far? The ECB has a clear primary mandate, which is to ensure price stability in the euro area.

So, exporters to the euro area are now able to recoup part of the margins they compressed during the downturn. The extent to which they are able to do so also depends on the degree of competition, a point made by Rudi Dornbusch back in 1987. The more concentrated market power is, and the less substitutable products are, the more likely firms are to increase their margins following exchange rate appreciations. This also means that the pass-through may well differ across industries.9 These examples demonstrate that it is by and large the state of the economy that will determine the strength of the pass-through. Monetary policy, for its part, is likely to influence the passthrough predominantly through its impact on the economy itself. And at the moment this support from monetary policy may be even more powerful than in the past. The reason is that, in the class of models used here, positive demand shocks are normally identified by assuming that short-term interest rates rise in response to higher growth and inflation. At the current juncture, however, the policy-relevant horizon – the “medium term” concept in our monetary policy strategy – is likely to be longer given the persistence of subdued inflationary pressures. Our forward guidance on both policy rates and the APP, as reiterated by the 6 / 14  BIS central bankers' speeches  Governing Council last Thursday, reflects this assessment.
How has the Riksbank formulated monetary policy during the autumn to counteract the negative events? On 8 October the Riksbank took part in a joint action with other central banks to alleviate the consequences of the financial crisis. The Riksbank, together with the Bank of England, the ECB and the Federal Reserve, announced cuts in their monetary policy rates. The advantage with this type of coordinated action is that it reinforces confidence and increases the chances of the rate cut having positive effects. The Riksbank cut the repo rate by 0.50 percentage points in this action. At our most recent ordinary monetary policy meeting on 22 October the decision was to cut the repo rate by a further 0.50 percentage points, to 3.75 per cent. The Riksbank adjusted its forecast for the repo rate path downwards, compared with that presented at the beginning of September. The members of the Executive Board were unanimous regarding both the repo rate cut and the new interest rate path. Together with the joint central bank action on 8 October, the Riksbank thus cut the repo rate by a total of one percentage point in the space of two weeks. Other central banks have also substantially cut their policy rates. For example, the Bank of England has cut its bank rate from 5 per cent to 3 per cent since the beginning of September.

It would take too long in this context to analyse what conclusions should be drawn for the future, and it is probably too early to do so yet, but I shall nevertheless share my impressions this far. In conclusion, I shall discuss how monetary policy can complement the more acute financial measures taken, and alleviate the effects of the financial crisis on the real economy. Acute financial crisis… The turn for the worse can be clearly dated to the middle of September when US investment bank Lehman Brothers was forced to file for bankruptcy protection. Money market participants had not expected such a prominent bank to default. When the bank nevertheless defaulted, fears grew that more participants risked the same fate. This was when the confidence crisis broke out in earnest. No one dared to lend money to anyone else because of fears that the other party could become insolvent and the money that had been lent would disappear. Investors preferred to put their money in government securities. One result was that interbank lending around the world more or less ceased. The difficulties the banks had experienced earlier with financing at longer maturities were intensified. The banks’ borrowing costs increased further and companies outside of the financial sector also experienced financing difficulties. At the same time, the large US commercial paper market suffered substantial disruptions. This market is an important source of financing, both for financial companies and ordinary industrial companies.
The benchmark reflecting the neutral position has been constructed in line with the objectives, the asset-liability structure and the liquidity needs of the bank for a one-year period. And it is going to be reconsidered periodically. The Risk Management Division in the Central Bank of Turkey is in the process of establishing a system to carry out risk analysis and to feed the results to the appropriate units. For the last year or so, duration and Value at Risk (VaR) figures reflecting interest rate and currency risks of the FX reserves, and liquidity indicators such as current ratio (percentage of liquid assets in total of liabilities) are being observed. However, these reports are not yet part of a comprehensive risk measurement and control system. Although they give an idea of the general level of market and liquidity risk levels, the actual risk exposure will be clearly seen only after the reserves portfolio is restructured and the benchmarks are included in these reports. The risk management process related to market risk that we plan includes daily marking to market of benchmark portfolios; monitoring risk limits determined in terms of currency and duration limits; daily measurement of actual portfolio’s VaR figures for currency and interest rate exposure; monitoring liquidity ratios and reporting these figures to the top management weekly including stress testing report. There is no specified global risk tolerance limit but our institutional objectives and constraints are reflected in portfolio benchmarks.

The reason for that partly stems from the lack of statistical knowledge about the interaction between variables. Therefore, the models mostly tend to rest on simplified assumptions based on subjective judgments. I do not want to go into details about the technical aspects of the risk measurement methods, but I would like to emphasize that it is necessary to combine them with sound judgment and common sense. Since these models are no more than simplified and limited images of the real world, they are better to be used having this fact in mind and the decisions must be taken not solely relying on the results of these models. The results should be supported with scenario analysis, stress testing and most importantly with the sound judgment of the decision makers. Another important aspect of risk analysis is that it should be integrated, meaning that the analysis results for different risk types should be comparable with each other to facilitate decision making. It necessitates that the assumptions, data, valuation models used in analyzing different types of risks be the same or at least consistent with each other. Organizationally, the integration of risk analysis requires that there be a single, common risk management authority for the whole organization. At the beginning, it might not be easy to look at risk on an institution wide basis. Since it requires a considerable amount of capital to be invested either in terms of technology, or in terms of staff.
The fact that no central bank knows exactly how the economy functions and the effects of monetary policy also means that one normally proceeds cautiously in changing interest rates. Finally, a desirable interest rate path should also be determined with consideration to an assessment of different types of risks and the consequences for inflation and the real economy if they are realised. Some risks may be difficult to quantify and capture in our normal forecasts. In my opinion, they should nevertheless be included in the balance when shaping monetary policy. One recent example is the risks linked to a rapid increase in property prices and household indebtedness as a result of a longer period of expansionary monetary policy; a problem many central banks around the world have faced. Let me also, for the sake of clarity, point out that when we publish our own forecast for the repo rate it will indicate a smoother development in the repo rate than the policy that will be conducted. This is because interest rate decisions must in practice be taken in stages and at particular points in time. It is difficult to build this into the forecasting work. Changes to the Inflation Report Let me mention another new item, before I round off. Our inflation report will involve a change of name, to "Monetary Policy Report”. One reason for the name change and the most important change is that the reports will from now on contain not merely inflation forecasts, but also a monetary policy message.

During the seventies the French labour market was characterized by a high degree of wage indexation on consumer prices, and the burden of the external oil tax was full born by the business sector. Firms then experienced a sharp fall in their profit margins, undoubtedly to the detriment of employment and investment in the following years. What’s happening at the current juncture? The distribution seems to be more balanced between firms and households than after the shocks of the 70’s. The distribution of primary income between firms and households is shown in the bottom left charts of these two last slides. Corporate profits are today a bit higher than their pre Covid level although this masks a lot of heterogeneity across sectors, with the energy sector being the only one recording currently an improvement. Page 12 of 14  The bottom right charts shows household and corporate gross disposable income that includes tax and transfer measures to overcome the two crisis episodes. Overall the income distribution between firms and households has so far remained much more balanced today than it was in the aftermath of the two oil crisis. In our current macroeconomic projections, household purchasing power, starting from a current level in 22q3 about 1.5% higher than its pre-Covid crisis level, should decline moderately in 2022 and 2023 while remaining above its pre-Covid level, before significantly rebounding in 2024 and 2025.
Currently, it crops up 10 times more often than the word “customer” and almost 7 times more often than the word “staff” in proximity to uncertainty. 24  Chart 2 plots a time-series of the incidence of the words “uncertainty” and “Brexit/referendum” in Agents’ company write-ups. The two, unsurprisingly, are positively correlated after the referendum. Indeed, mentions of Brexit have outnumbered mentions of uncertainty by a factor of around 3 since the referendum. While mentions of Brexit have fallen from their referendum peak, it is notable that they have picked up sharply over the past few months, with measures of uncertainty following suit. This new research strengthens the case for improving public understanding of the economy. An improved understanding could result in better-informed popular narratives, and more stable expectations, among the general. And that, ultimately, would make for a more stable economy and financial system. In practice, there may be structural factors which could be acting in the opposite direction. The great trust shift may mean people are less willing than in the past to trust expert opinion (such as through mainstream media) and more willing to trust non-expert opinion (such as some parts of social media). Around half of those in the EU use social media as a news source and, among those aged 18-24 in the UK, around a quarter use it as their main news source. 25  Yet we know that information from social media sources is typically filtered and personalised. 26  That fits  people’s (personalised, localised) preferences.

6 Climate Bonds Initiative and UNEP Inquiry into the Design of a Sustainable Financial System (2015) “Scaling up green bond markets for sustainable development”. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  such a shift is in its infancy and is an area where further research and collaboration is needed to support progress. Experts and financiers in the City and China have a role to play here. The work being done by the Taskforce in its pilot is to be commended. Mobilising private capital today is essential. Almost two thirds of required financing will need to be directed at sustainable projects in developing countries. Governments alone will not be able to meet this challenge. Yet it is not obvious that private investors will naturally fill that gap. For instance, debt instruments issued by emerging market firms often do not fall within the mandate of advanced market investors due to a missing, or too low, credit rating. It is in this context that bilateral partnerships such as the UK-China Taskforce are so important in accelerating progress.
To address this situation, the ECB has taken a number of non-standard measures, and two weeks ago it announced the modalities for undertaking Outright Monetary Transactions in secondary markets for sovereign bonds in the euro area. I will describe the rationale for this decision and argue that it is a key element to ensure a lasting “monetary dominance” in the euro area, compliant with the Treaties. Channels of monetary policy in normal times and crisis times In normal times, monetary policy works primarily through inter-temporal financial arbitrage. In the Eurosystem, this arbitrage covers two different time dimensions. There is the weekly arbitrage cycle, through which the volume of central bank liquidity is reallocated across  1  I would like to thank Roberto Motto, Stefano Nardelli, and Massimo Rostagno for their contributions to the speech. I remain solely responsible for the opinions expressed herein. BIS central bankers’ speeches  1  banks trading in the money market in the period between two consecutive weekly Eurosystem main refinancing operations (MROs). The reason for this reallocation is that – as a matter of routine, at least – the Eurosystem provides reserves at weekly intervals. While the banking sector’s need for reserves in the aggregate may not change significantly within a week, the cash needs of individual banks do fluctuate at higher frequencies, probably daily. 2 So banks with liquidity deficits in the infra-weekly period need to borrow from banks with liquidity surpluses. The price at which these trades of liquid reserves between banks occur, i.e.

the overnight interest rate (of which a euro area average, the EONIA, is computed and published every day by the ECB), is influenced by expectations of the cost of Eurosystem credit – the so-called MRO rate – at the next weekly monetary policy operation. A short-term inter-temporal arbitrage calculus anchors the overnight interest rate applied on the credit transaction between banks that need liquidity and banks that have a liquidity surplus. 3 The second dimension of the inter-temporal calculus has a longer horizon and a wider scope of application across asset classes. Banks can borrow short in the money market or from the Eurosystem and decide to engage in term lending to other banks or to their customers. Bank customers, in turn, can use bank liquidity to finance consumption or the acquisition of capital. It is important to note that all of these money transactions in the broader economy involve traders weighing the costs of their borrowing against the return opportunities on their asset acquisition at different points in time, where the horizon is typically longer than a week. But, again, as banks borrowing from the Eurosystem are the source of this liquidity propagation pattern, and banks’ financial calculus is based on their anticipations of the interest rate settings by the Eurosystem in the future, such anticipations anchor the pricing of credit in the broader economy. We call this “the interest rate channel” of monetary policy decisions.