samchain/econo-pairs-v1 huggingface dataset:
As an example, the HKMA and our peer authorities in the region have adopted fintech sandbox 3/4  BIS central bankers' speeches  regimes, which are effectively testing grounds with a well-defined scope and a clear timeline. The authorities do not generally stipulate an exhaustive list of regulatory requirements in these sandboxes; rather, the products are to be developed flexibly, and requirements would be evaluated during the process. Coordination among regulators has also already begun as the Global Financial Innovation Network (GFIN) is now inviting applications for cross-border testing of financial innovations. That said, while providing a conducive environment to support innovation, central banks and regulators would have to strike a good balance with its other functions in consumer protection and financial stability, especially as the new and innovative services grow in scale or become widely adopted. Cross-border coordination is also required to address potential arbitrage across jurisdictions, given the much wider reach of fintech products and services. Derivatives markets, on the other hand, have a much longer history. The regulatory framework should therefore be informed by history, and lessons from the global financial crisis must not be forgotten. Regulators need to guard against the problems that plagued derivatives markets before the crisis: namely, the overuse of leverage, excessive interconnectedness, and opacity. I don’t need to “preach to the choir” on the tremendous efforts exerted by regulators and market participants internationally to solve these problems.

In two weeks’ time an in-depth assessment will be published of Swedish monetary policy during the period 1995-2005, that is, the ten-year period during which the inflation target has been the official anchor for Swedish monetary policy. This report, which is written by researchers Francesco Giavazzi and Frederic Mishkin, will deal with the formulation of the inflation target, to what degree the monetary  7  Chapter 1 in Blinder, A. S. (2004), The Quiet Revolution – Central Banking Goes Modern, Yale University Press, contains a discussion of political and economic cases for central bank transparency. 8  See, for example, Eijffinger, S., and P. Geraats, (2006), ”How transparent are central banks?”, European Journal of Political Economy, 22, 1-21. 9  See Leeper, E. (2003), ”An Inflation Reports Report”, Sveriges Riksbank Economic Review, 2003:3, 94-118, for an evaluation of the Riksbank’s Inflation Reports. 6  BIS Review 111/2006  policy conducted by the Riksbank has contributed to attaining the target during the period, and the bases and forms for monetary policy decisions. I and my colleagues on the Executive Board are very much looking forward to the analyses and debates this assessment will inspire. Thank you. BIS Review 111/2006  7
When the pandemic broke out, the Riksbank already had a large portfolio of government bonds. We therefore primarily purchased mortgage bonds, whose risk premiums had risen rapidly at the start of the pandemic. This market is key to banks’ lending, as most of their mortgage loans to households are funded via mortgage bonds. The purchases reduced risk premiums, which supported credit granting in the economy. Risk premiums had also risen on corporate bonds. To reduce the risk premiums on corporate loans and support credit granting in general,  39 See Gertler and Karadi (2013). 40 See Elmér et al. (2012). 41 See Alsterlind et al. (2015). 42  See Melander (2021). 43 See also Sveriges Riksbank (2020b). 18 [35]  we therefore also purchased corporate bonds – although on a much smaller scale than the volume of mortgage bonds. A large balance sheet may be the new normal The Riksbank’s balance sheet is currently very large, and this is mainly due to the purchases of government bonds we began making in 2015, and to the measures taken during the pandemic. However, the balance sheet usually varies considerably over time. In a historical perspective – since the year 1800 – today's level is certainly the highest ever, but the balance sheet has been up at similar levels on several occasions, see Figure 10. The way the Riksbank has used the balance sheet over time thus varies a lot. The level does not stand out if one compares it with other central banks’ balance sheets, see Figure 11.

However, in crisis situations the banks sometimes do not want to borrow, as this could signal that they have financial problems, as was the case in the United States during the financial crisis 20082009. Former Fed Governor Ben Bernanke says that the unwillingness to borrow from the Fed could have been reduced if they had a larger balance sheet. If the banks had had substantial deposits and larger loans with the Fed and thus been in the habit of having transactions with the Fed during normal circumstances, the stigma of borrowing in a crisis situation could have been alleviated. Among European banks, unwillingness to borrow from the ECB during the financial crisis was a much smaller problem than for the Fed. Bernanke points out that one possible reason for this could have been that the ECB had a larger balance sheet even prior to the crisis and that the banks in Europe therefore were used to making large transactions with the ECB. Increased supply of safe assets for the banks in the economy 50 The demand for safe and liquid assets with a short maturity has been huge around the world for a long period of time. This is often seen as one of the main reasons for the low global interest rates. If the Riksbank has a large balance sheet and  47 See Duffie and Krishnamurthy (2016) and Bertsch and Molin (2016). 48 The interbank market is one where the banks can borrow money from one another at short notice.
Exports being our only area of sunshine, we have to make sure that the increasing exports are maintained until such time that investment or consumption is taking place normally and this can only be done with a low interest rate and a competitively priced baht. For this reason, it is our belief that the low short-term interest rate, coupled with the long-term interest rate of the same level as the EU and the US, is a correct strategy that we will try to maintain. Inflation is still low, around 2% headline and less than 1% core. This looks like a good level of economic numbers to nurse and nurture an economy that is still weak and recovering with a capacity utilization of only 54%. Astute investors will I think see all this and invest in the country just as they did two years ago when I lowered interest rate from the very high and unbearable level to the low level of today, against many contradictory advice from people who should know better. Whilst nursing the economy though, let me emphasize that we intend to put in mechanisms to improve the sustainability of growth and stability, some of which occurrence I have outlined in this speech, and others we are working on as we learn more and more about the economy and improve the accuracy and speed of our data collection and dissemination system. Ladies and gentlemen. In ending my statement let me recall that I began by stating that we still have plenty of problems.

Lessons learnt at great cost of human suffering and political upheaval may help us formulate sounder policies for the future. A thorough comparative study would occupy several PhD theses. But a brief review of what happened in each country will be a useful basis for examining some of the major themes for strengthening the global financial system. Asian crisis – what happened Thailand The crisis began in Thailand after a long boom. The establishment of the Bangkok International Banking Facility or BIBF and the implicit guarantee of a fixed exchange rate encouraged unhedged borrowing in foreign currency by Thai companies. This led to a build-up of external debt and an asset bubble. As the Thai economy weakened, the balance of payments deteriorated and the baht came under pressure. Attempts to defend the baht were costly and ultimately unsuccessful. When the baht was finally allowed to weaken, its sharp fall triggered the collapse of many Thai corporations as well as the banking system. The Thai economy contracted sharply. The aftershocks of the Thai problem affected many other Asian economies. Confidence in the whole region was shaken. Both domestic residents and foreign investors alike rushed to hedge or reduce their exposure to the region. Malaysia Malaysia was among the next to be affected. Its economy was fundamentally sound although there were concerns over a property boom and over investment in infrastructure. An acute loss of  1  BIS Review 93/1999  confidence, partially prompted by Thailand’s problems, led to a sell-off of Malaysian shares and the ringgit.
In such cases, maintaining the medium-term orientation in the definition and attainment of the target would be all the more advisable. How is expected inflation over the medium term measured? First, it is important to clarify that predicting inflation over a two or three-year horizon is a very challenging task. Especially in a setting as uncertain as the current one. Therefore, like other central banks, we at the ECB use various indicators of future inflation, such as surveys of professional forecasters and financial market prices, which I will come back to later. Key data in this regard are the ECB staff projections, which in turn draw on a wealth of economic and monetary analysis. As I have said, the latest projections published in September put average inflation in 2024 (the end of our medium-term horizon) at 2.3%, clearly above our target. These projections were based, among other considerations, on a future path of euro area interest rates – implicit in the financial market data available when the projections were prepared (specifically, as at 22 August 2022) – that began with a hike of 50 bp at our September meeting, followed by subsequent further increases.8 Accepting that, in line with our mandate, interest rates will have to rise to a level that allows us to ensure a gradual convergence of inflation to our medium-term target, returning inflation  8  Specifically, the projections were based on short-term interest rates of 0.2% in 2022, 2.0% in 2023 and 2.1% in 2024.

Under this framework and, as I have said earlier, in a setting in which inflationary risks have tended to increase over the last few months, in March we discontinued net purchases under our pandemic emergency purchase programme (PEPP) and we agreed to gradually reduce net purchases under our asset purchase programme (APP). In June we decided that as the three conditions established by our forward guidance for raising interest rates had been met,5 net purchases under the APP would end on 1 July, and we informed of our intention to raise policy rates in July and again at our September meeting.6 In July, we decided to raise all three ECB policy rates by 50 basis points (bp), taking the deposit facility rate to 0%, thus moving out of negative territory for the first time since 2014. This was a larger increase than signalled at the previous meeting, for two reasons. First, the updated assessment of the risks to inflation, which included the materialisation of certain upside risks in the short term relative to the June projections. Second, we took into account the reinforced support for the effective transmission of monetary policy provided by the new Transmission Protection Instrument (TPI), which was approved at that same meeting. Subject to fulfilling established criteria, the TPI will enable the Eurosystem to make secondary market purchases of securities issued in jurisdictions experiencing a deterioration in financing conditions not warranted by country-specific fundamentals, to counter risks to the monetary policy transmission mechanism to the extent necessary.
Thomas Jordan: Swiss National Bank monetary policy in light of financial market disruptions Introductory remarks by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the end-of-year media news conference, Zurich, 11 December 2008. *  *  *  Situation in the financial markets Looking at the financial markets, we currently find ourselves in a historically unprecedented situation. The financial crisis has escalated dramatically since September. In the course of the past three months, it has taken hold in almost every market segment around the globe. At the time of the last news conference in June, we had already experienced three waves of money market turbulence; now, a fourth wave has eclipsed all others (cf. chart 1). 1 The situation in the money markets has calmed somewhat since November. This is due in part to the measures taken by central banks and governments, in particular the generous amounts of liquidity injected into the system, the recapitalisation of banks, the provision of state guarantees for bank liabilities and the transfer of risk positions. After unsecured money markets had all but frozen in the autumn, central banks increasingly found themselves acting as lender of first resort, in other words, they were becoming the primary supplier of liquidity to the financial system. To this end, new monetary policy instruments and facilities were introduced, and the liquidity supply was expanded significantly.

In recent weeks, the SNB has pursued a policy which has brought the repo rates close to zero. This does not mean, however, that our monetary policy will cease to transmit further expansionary impulses. In addition to the short-term repo rate, we use a whole range of other methods to pursue a more expansionary monetary policy. We can, for instance, extend the maturities of our money market transactions or intervene in markets other than the money market. Updates to monetary policy instruments The SNB’s monetary policy instruments have fared quite well since the onset of the crisis. However, a review has highlighted two areas in need of adjustment. First, a liquidityabsorbing instrument was found to be necessary, and second, the conditions of the liquidityshortage financing facility were no longer deemed appropriate. The liquidity-shortage financing facility serves to bridge unexpected, short-term liquidity bottlenecks. It can only be accessed if a bank has a corresponding limit and if that limit is fully covered by securities at all times. Let’s start with the liquidity-absorbing instrument: The crisis has made it clear that a central bank must be able to offer large quantities of liquidity at short notice and do so via a number of channels and with different maturities. Repo transactions and foreign exchange swaps meet these requirements very well. However, the SNB lacked a separate liquidity-absorbing instrument to handle large volumes. We therefore introduced our own debt certificates – SNB Bills – to our range of instruments in October.
As a result, the Swedish banks are sensitive to disruptions both in the primary markets and the swap markets. This was a problem we saw during the crisis, when the Riksbank was forced to lend large amounts of foreign currency. Our outstanding US dollar loans peaked at USD 30 billion. Increased capital requirements for the trading book As I mentioned earlier, the current capital adequacy regulations have taken far too optimistic a view of market risk. To correct for this the banks must now complement their calculation methods to take into account potential losses even under stressed conditions. This means that the capital requirement for assets in the trading book will be increased. In addition, banks that trade in derivatives must use central counterparties to a greater extent than is the case today. The idea is to reduce the banks’ counterparty risks and thus reduce contagion risks. For trading where central clearing is not possible or appropriate a more sophisticated method is being introduced to calculate capital requirements for counterparty risk. By and large these changes mean that the banks will need to hold more capital to protect themselves against changes in counterparty risks. This means, for example, that if a counterparty’s CDS premium rises then the bank concerned will face a higher capital requirement. This is of course a good thing. It was precisely in trading in financial instruments that a large part of the losses that affected the banks in the financial crisis arose.

However, the Swedish banks need to retain the capital they have at present and, therefore, should not pay any extra dividends. Neither does the introduction of the leverage ratio look like being any great problem if the banks maintain current capital levels. We have looked more closely at the four major banks (Nordea, Swedbank, Handelsbanken and SEB) and, at present, none of them falls below the minimum requirement of three per cent. However, the Swedish banks are finding it difficult to comply with the new liquidity requirements. The greatest challenge will probably lie in complying with the structural requirement. Here, the banks have two alternatives – either cutting back on the commitments that require stable funding (for example lending for housing purchases) or exchanging shortterm funding for long-term funding. This second alternative could well result in the banks’ funding costs increasing, which should push lending rates up somewhat. As yet, we have no exact figure on what this may cost in terms of basis points, but we assess that, despite everything, these costs will be small. 10  BIS central bankers’ speeches  How all this will affect the banks’ customers is hard to say. In the final analysis, the question of how these costs will be divided among the banks’ owners and customers is a question of competition. But, as we are now introducing regulations to reduce the risk of bankruptcies, I think it would be reasonable to assume that the banks’ financiers will lower their expected return.
This is why in many countries the governments have tried to make the agents amenable to public’s requirements through the implementation of such devices as “people’s charters”. The result is the production of the agent remaining at low quality, becoming unreliable and failing to satisfy the users. The same fate has befallen the governmental organisations that produce and supply statistics to the public free of charge. Many have witnessed the increasing occurrence of the “misuse of statistics” by those who produce and supply statistics to the market. The Google search machine has documented some 2.5 million cases of the misuse of statistics from around the world. The misuse of statistics Why does the production of statistics become unreliable? There are many pitfalls to which statisticians fall when they produce statistics. Wikipedia, the cyber-encyclopaedia, has listed out these errors often committed by statisticians. According to Wikipedia, “a misuse of statistics occurs when a statistical argument asserts a falsehood”. It could be due to both accidental and purposeful. When it is purposeful, it is always perpetrated in order to gain an undue benefit to the perpetrator. The danger with the wrongful use of statistics is the creation of a statistical fallacy that would be costly to those who make use of the deliberately doctored statistics. Such statistics are damaging to the quest of knowledge in the sense that, once they are rooted in the minds of the people, it would take years to correct the falsehood that it would have created in the society.

Many member countries of the International Monetary Fund have adopted such a code in the form of signing for following the principles of outlined in a general data dissemination system and, at a more stringent level, a special data dissemination system. The Central Bank of Sri Lanka is a signatory to the IMF’s General Data Dissemination System. The final message In summary, if statisticians are desirous of supporting economic development, they should necessarily produce and supply statistics to meet the requirements of the market. It is essential that they produce such statistics as a readily usable product that could be sold in the market at a price. It is now time in Sri Lanka for the private statistics-producers to enter the vast market of information. The universities in this sense are in an advantageous position, because they have the best human talents with them. It is unfortunate that they sit idly on this vast wealth of resources. It is time that universities in Sri Lanka reorient themselves to gain advantage from the market resources and become financially self supporting. In addition, the universities should train their statistics students to become entrepreneurs of statistics rather than becoming employees of agencies that may plan to hire statisticians. BIS Review 36/2009  3
See for example, Allard and Blavy (2011): “market-based economies experience significantly and durably stronger rebounds than the bank-based ones (in particular the more bank-based economies of continental Europe).” 5 Carney (2014) 6 In contrast, at Northern Rock over the second half of 2016 retail and wholesale deposits each fell by nearly 60%. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  In a major crisis, market-based finance might therefore be expected to be a materially less disruptive way of passing very substantial losses back to end investors than bank lending. This is particularly true in the case of international capital flows where bank lending across borders, particularly short term inter-bank lending, can create an explosive channel of transmission of systemic risk from one jurisdiction to the next if banks do not have the resilience to absorb major losses and authorities are not able to resolve them safely if they fail. 7  It is no accident that the ECB identified market-based finance as an important risk sharing mechanism between euro area countries and encouraged the development of an EU Capital Markets Union. 8  Risks in market-based finance I have noted the trend in market-based finance away from the activities that amplified stress during the financial crisis. And I have tried to explain why, viewed through the lens of financial stability, I see major benefits in a strong market-based channel of finance.

Much of the post-crisis reform effort has been aimed at reducing the systemic risks that derivatives can create through the way they interconnect multiple actors in the system and can amplify market shocks. Mandatory margining, central counterparty clearing and trade reporting are all designed to create resilience and to simplify the network and make exposures more transparent. It may be however that widespread and increasing use of derivatives by market-based finance will over time make the opacity and complexity too difficult to manage. What is sensible for risk management at the fund level simply may be too difficult to manage risk at the system level. 18  Hedge funds and banks have different business models, which complicates comparisons of financial leverage. But, in aggregate, hedge funds’ non-derivative liabilities (made up primarily of borrowings through repo and prime brokerage) are roughly the same size as their total net asset value. Banks’ non-derivative exposures are over 15 times greater than their tier 1 capital. However, whilst the hedge funds industry’s financial leverage is lower than banks, some individual hedge funds make extensive use of financial leverage. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  Second, and more importantly, given the channel of interconnectedness created by funds’ use of derivatives, to what extent could the failure of a fund or a number of funds create systemic risk? Again, the post crisis reforms around margining and clearing reduce that risk.