samchain/econo-pairs-v1 huggingface dataset:
The Fund’s chief weapon is persuasion, exerted through a combination of channels: private advice, peer pressure, and public debate. But is this enough? Excellent analysis can frame the issues that policy makers focus on; and it can shape and inform the public debate, domestic and international, that leads to action. Ideas and analysis, widely and wellcommunicated, can be very powerful in the modern world, especially in the largest democracies. As Keynes reportedly remarked ‘Ideas shape the course of history’. The Fund can also facilitate dialogue between countries on issues where unilateral or even bilateral decision-making may not be the best way forward. On the biggest global issues, policies need to be designed with some depth of understanding about how others will act. But ultimately much turns on members’ confidence and trust in the Fund, and on the depth of their continuing commitment to its original first purpose: ‘to promote international monetary co operation through a permanent institution’. The support and commitment of those countries whose policies have the greatest impact on the world economy is clearly critical. So the Fund’s ability to shape and facilitate the debate is intimately bound up with its legitimacy. All countries need to feel they have a real stake in the governance of the Fund and an effective voice in shaping its activities and the decisions taken by its Board. This is why the governance agenda is so important and why there is a close link between the surveillance agenda and the second stage of quota reform.

First, the process for setting the remit probably needs to involve both the Fund’s Executive Board and the IMFC: the Board, because it is the body formally charged under the Articles with the oversight of surveillance; and the IMFC, because of its heavyweight political composition. The involvement of the most senior policy-makers matters, because by endorsing the remit they are effectively giving the Fund a license to discuss their policies. This is empowering to the Fund. One way for this to work might be for the Board to present a draft to the IMFC for discussion at the spring meeting each year, taking its cue from the IMFC communiqué issued the previous autumn. Second, one obstacle to relying exclusively on the Executive Board to evaluate the Fund’s performance arises from the position of the Managing Director, who is both Chair of the Board and Head of the Fund Staff. But the MD’s position is embedded in the Articles and raises much wider issues of governance. In the short term at least, this argues for giving a significant role to the IMFC. Third, the technical challenges in assessing the effectiveness of surveillance are formidable. This points to giving an important role to the IEO which, since its foundation in 2001, has been building up relevant expertise in assessing various aspects of the Fund’s work. How much difference can IMF surveillance really make?
The minutes and Inflation Report published regularly by the Bank’s Monetary Policy Committee (MPC) are pitched at a linguistic level which means they are readily accessible to only around 5% and 12%, respectively, of the UK population. 18  Minutes of the meetings of the United  States FOMC are pitched at a level which makes them accessible to only around 2-3% of the US population. To some extent, this inaccessibility problem applies to all technical disciplines. Economics appears, however, to have a particularly acute case. On many measures, economics is the most tribal of the social sciences, judged by cross-disciplinary collaboration and citation. There are signs recently of improvement, but from a low base. sciences. 20  19  Economics ranks high on the tribalism scale even by comparison with most natural  Only theoretical physicists (with the probable exception of Stephen Hawking) come close. 14  ING-Economics Network Survey of the Public’s Understanding of Economics (2017). Edelman (2017). YouGov / Rethinking Economics Survey (2016). 17 Financial Conduct Authority (2017). 18 Haldane (2017). See also Jost (2017) for an analysis of the Bank of England’s Inflation Attitudes Survey. 19 Angrist, Azoulay, Ellison, Hill and Lu (2017). 20 As measured, for example, by the degree of cross-citations (Haldane and Turrell (2017)). 15 16  4  All speeches are available online at www.bankofengland.co.uk/speeches  4  The other side of this coin is the public’s level of understanding of economic and financial issues. This, by the public’s own admission, is not as they would wish.

Its level of linguistic complexity is 5 years lower than the Inflation Report, making it accessible to around 14 million more people, or around a quarter of the adult population. A third example is the Bank’s flagship publication, the Inflation Report. In November, the Bank for the first time published the Report in three layers: Layer 3 was the usual “50 page, 50 chart” version; Layer 2 was the “1-2 page, 1-2 chart” version; and Layer 1 was the “1 line, 1 chart” version. With a level of complexity more than 6 years below Layer 3, Layers 1 and 2 in principle could reach an extra 21 million people. Early evidence suggests this layering has helped in reaching a broader audience. Website hits on the November Inflation Report were double the average from earlier quarters. These extra hits were entirely accounted for by Layers 1 and 2, while Layer 3 hits were essentially unchanged. This suggests that layering has enabled the MPC to reach a new, wider audience without cannibalising its existing audience. 42  Producing simplified material, like layering, is neither a short cut nor an easy option. Nor is it simply an act of communication. Message simplification is an act of policy. As such, simplified messages need to be agreed and signed-off by policy committees – as were the Layer 1 and 2 messages in the Bank’s November Inflation Report. They are another example of the Marshall McLuhan maxim of the medium becoming the message.
In contrast, most of the market analysts who participate in the monthly survey of inflation expectations, expect an additional increase of 25 basis points for the whole period from now until the end of 2008. BIS Review 120/2007  3  The recent evolution of the exchange rate deserves to be specially mentioned. The Chilean peso has appreciated against the US dollar in the last few weeks, reflecting, in part, the depreciation of this last currency in international markets. This in turn has been the result of the monetary impulse to compensate for narrowing financial conditions in the developed markets and the necessary adjustment of the current account imbalances among the main economic areas. This phenomenon has stressed international financial markets and is a main concern among the economic authorities in industrial countries, especially in the Euro Zone. In Chile, the appreciation of the Chilean peso reduces profits in those tradable sectors that have not been able to adjust their prices in dollars. However, it is important to mention that, thanks to the combination of a fiscal policy, anchored to a structural fiscal surplus and that saves transitory income, and the inflation-targeting monetary policy framework with floating exchange rate regime, the appreciation of the Chilean peso with respect to the US dollar has been one of the lowest among countries all around the world, since the beginning of the US dollar depreciation in international money markets in February 2002.

Credit risk transfer has facilitated the dispersion and sharing of risks across the financial markets, thus potentially enhancing their efficiency and stability. However, the recent market turbulence confirmed concerns about the risks stemming from the lack of transparency as to where the risks ultimately reside in the financial system, and in particular if those risks have been acquired by market participants that can properly manage them. The existing reporting requirements of the banking sector did not allow for a full  8  BIS Review 120/2007  assessment of banks’ exposures to the structured products, leading to the absence of accurate and timely information. Are Basel II requirements sufficient concerning the sponsoring by banks of SPV? Is bank disclosure of securitization operations, and exposures to SIV adequate? Questions also arise in relation to the functioning of markets for complex financial instruments. How to inform the individual investor when there are difficulties in measuring risk in structured finance products and valuate them? In this category of improved transparency, I shall also mention the need to implement ESCBCESR standards for payment and settlement including ICSDs and large custodians in order obtain more information on intraday market liquidity. Second: Valuation More work is needed on standards to ensure reliable valuation of assets particularly of those assets where markets are potentially illiquid in time of stress. At the same time compatibility with international financial reporting standards must be assured.
In the UK, Iwoca has made over £ worth of loans based on trading data, such as sales and customer reviews, to over 25,000 small businesses over the past five years. Even the big banks are getting in on the action. Earlier this month, Santander announced that it was partnering with eBay to offer small business loans, based on sales, cash flow and customer review data to sellers on the eBay platform. These initiatives are welcome but are still too small to plug the SME funding gap in the UK. To make real inroads, SMEs must be able to identify the data relevant to their businesses, incorporate it into their individual credit files, and easily share these files with potential providers of finance through a national SME financing platform. This would put into practice the recommendations from Professor Jason Furman’s Digital Competition Panel report on how to extract value from data and promote competition. One of the most important recommendations in this regard is to give consumers control of their data. This would allow consumers to move their personal information from one platform to another and avoid lock-in effects, opening the door to new services.19 To some extent, this is what Open Banking hopes to achieve. Although to make this a success means establishing common off the-shelf API standards and operating platforms onto which developers can build. An open platform for SME lending would enable open banking and empower SMEs.

Over the past decade, the proportion of total payments made in cash has declined from two thirds to one quarter.4 The digital economy is more inclusive, offering easier and more cost effective routes to market for firms both large and small, and greater access for consumers both near and far. This new economy is placing new demands on finance. Consumers and businesses increasingly expect transactions to be settled in real time, checkout to become an historical anomaly, and payments across borders to be indistinguishable from those across the street. While there have been some notable successes, the UK system has a way to go before it meets these expectations. Thus far, most innovation has happened around payment initiation – the method used to instruct a payment – such as credit or debit card, banking app or mobile wallet. There have also been some advances in the networks – or rails – that underpin some of these apps. For example, the Faster Payment System (FPS) launched a decade ago has made payments quicker (within two hours) and more cost effective by encouraging direct bank-to-bank transfers. While mobile app PayM uses FPS to facilitate direct bank-to-bank payments between individuals via text, it requires both the sender and recipient to be signed up to the third party service.
These are important function with regard to cash management in the economy. At the end of the 1990s, the Riksbank began work on achieving greater efficiency in cash management. We observed in the surveys made then that there were deficiencies in the system. This was partly due to the way the Riksbank organised its work. By offering a service to the banks without charging in full for it, the Riksbank had contributed to the preservation of an outdated cash management structure and inefficient methods of working, which included extensive cash-in-transit transports to and from the Riksbank for the sole purpose of avoiding interest costs overnight. This system was very costly, while it led to unnecessary risks for cash-in-transit companies. The Riksbank therefore wanted to make the cost of cash management more visible and allow the banks and other participants to bear the costs, which would give them a clear motive to make operations more efficient. The aim was to stimulate greater competition and increased product development for services all along the cash management chain, even outside of the banks. However, there were not merely economic reasons for reviewing the cash management system. The Riksbank’s own office network, its depots and working methods were considered too costly, for instance having overly large premises and surplus capacity. By allowing the banks to take greater responsibility for cash depots, for instance, the Riksbank can focus on its own core activities: maintaining low and stable inflation and promoting a safe and efficient payment system.

And as it is difficult to pass negative interest rates onto retail customers and as the introduction of fees provides only limited remedy, some of the banks will have to adapt their business models. Also, consolidation will continue to be necessary to increase efficiency in the long term. We are now already seeing that concerns about the future profitability of banks are affecting their share prices. The euro area bank index fell by around 40% between August 2015 and August 2016. This decline was driven by, among other things, a worsening outlook for the global economy and growing concern about the effects of the low interest rate environment and nonperforming loans. When banks’ share prices fall, their cost of equity increases, which could then reduce the net return on lending. This may cause banks to become more conservative in their lending in future and to raise the cost of lending. Internal calculations have shown that a decline of around 10% in a bank’s share price reduces corporate lending by around 0.5 percentage point. Allow me, however, to comment on the sometimes severe criticism, especially from Germany, that we face: the German banking sector is one of the largest in the euro area but at the same time it’s the least efficient. German banks have a cost-income ratio of 73%, which is much higher than that of the rest of the euro area.
In this context, the idea of a global currency did not prosper in the academic debates – and even less so in policy discussions. One recent exception stands out, to which I would like to pay a special tribute. In 2010, Michel Camdessus launched the Palais Royal initiative. This initiative sheds light on the shortcomings of the International Financial System, in particular its global governance and an overreliance on a single central currency. The initiative suggested a greater role for SDRs and enhanced cooperation between the World Bank, the IMF and the G20. However, other major projects have in parallel been assigned higher priority for instance the successful creation and development of the euro - or have been dictated by necessity - for instance the strengthening of the global financial safety net (GFSN) induced by the great financial crisis and then the Covid crisis. That said, there have been significant progress such as the increase of IMF resources, the two special drawing rights (SDR) allocations (including the last one of 650 billion USD in 2021) and the creation of the Resilience and Sustainability Trust (RST) on the 1st of May by the IMF, which will help deliver the G20 commitment to rechannelling at least 100 billion USD of this allocation to the countries in need. 2. The dangers of a fragmented financial system But there are dangers ahead. We have to avoid shifting from a dollar-dominated system to a confrontational non-system with, for instance, a dollar world opposed to a renminbi world.

It is expected to begin operations soon. Conclusion Let me conclude. Financial regulation remains work-in-progress. We must press on with the reform agenda and see it through to full, timely, and consistent implementation. At the same time, we must evaluate the effects of the reforms put in place and make adjustments where appropriate, to maximise their effectiveness and minimise their costs. We must strengthen the foundations for sound risk management and good conduct by working with the industry to embed deeply a culture of responsible risk-taking and ethical conduct. 6/7  BIS central bankers' speeches  We must prepare our regulatory and supervisory frameworks for the technological changes sweeping the industry - addressing new risks while promoting innovation, harnessing the benefits of technology, and promoting growth and opportunity in our societies. Thank you. 7/7  BIS central bankers' speeches
If, however, ON RRPs are offered above the level of money market rates that would be produced by IOER alone given prevailing frictions, ON RRPs should become attractive and help to form a floor for money market rates, either directly through increased take-up that reduces reserves or indirectly through the competitive pressure I described. Since money funds – the majority of the Fed’s ON RRP counterparties – don’t face the same balance sheets costs as banks, the floor formed by ON RRPs should be relatively firm. While ON RRPs are a potentially useful tool for monetary policy control with large amounts of excess reserves, FOMC and market participants have noted the potential for very large regular usage to alter patterns of financial intermediation. Further, a fixed-rate structure with no usage limits could exacerbate liquidity pressures during times of stress. 11 The FOMC recently authorized testing of a cap on the total daily usage of the ON RRPs that could help mitigate these risks. I’ll return to these risks and some ways that they may be mitigated in a bit. In sum, arbitrage activities by banks, complemented as needed by ON RRP operations, should cause a higher IOER rate to lead to higher levels of market rates. However, if the pressure on market rates from the Fed’s administered rates turns out to be insufficient, the Committee has a range of other tools – including term deposits, term RRPs, and asset sales – that could be used to help tighten the stance of policy.

Prior to the crisis, many banks typically borrowed fed funds in order to satisfy reserve requirements or obtain short-term  1  2  The effective fed funds rate is a measure of the prevailing rate in the market each day. This is calculated as a volume-weighted average of rates on trades arranged by major brokers, and is published by the New York Fed. See http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm. BIS central bankers’ speeches  financing. In recent years, however, the Fed’s LSAPs have led to very high levels of reserve balances, and thus reduced the need for banks to borrow fed funds to meet reserve requirements and clear payments. 2 As a result, trading activity in the fed funds market today is smaller and the nature of that activity is different than it was prior to the crisis. 3 Nevertheless, a new Federal Reserve data collection that captures both brokered and bilateral transactions shows that trading activity in fed funds remains significant. 4 These data indicate that daily trading volumes are about $ billion and are relatively stable. Moreover, longer-term correlations between the fed funds rate and other money market rates remain robust. As a result, the fed funds rate continues to be a suitable measure of the marginal cost of funding for banks, and remains connected over medium-term horizons to other short-term interest rates that also matter for the transmission of monetary policy.
Confidence in the speciedaler would be based on a stock of silver in Norges Bank’s vault. The promise to ensure that banknotes could be exchanged for the equivalent of their face value in silver was to be honoured. But the stock of silver had to be procured first. Appeals to raise sufficient funds through share subscription on a voluntary basis were not successful and the government had to resort to coercive measures. Anyone with the means to do so had to contribute to finance the newly established bank. For many Norwegians, the silver tax – as it came to be known – was a  1  In 1814, Norway entered into a personal union with Sweden under the Swedish king, who reigned from Stockholm. BIS central bankers’ speeches  1  heavy burden. Years of war and crop failures had set the economy back. 1816 is known as the year without a summer. In many cases, families were forced to relinquish their life savings or beautiful silver ornaments in order to pay the tax. Farmers from the Hallingdal and Valdres valleys marched on Christiania in protest. The finance minister, Count Herman Wedel Jarlsberg, chopped up the family silver himself and threw it onto the scales, with the heirlooms still wet from the tears shed by his wife, Karen, Prime Minister Anker’s daughter, so the story goes. Many years later, the poet Henrik Wergeland put words to the struggle – and the reward – brought by the silver tax.

If their non-financial activities run into trouble, the banks may feel compelled to support them beyond normal commercial considerations, to protect their own reputation. In so doing the banks may undermine their own soundness; yet if they did not extend the rescue, the problems of the affiliates may trigger a loss of confidence in the bank itself because of the close association. Secondly, with banking and non-banking activities inter-meshed within a conglomerate, there will be a strong tendency to stretch any safety net intended for the banking system also to cover non-bank operations in the group. If failure of an associated non-bank threatens the bank and systemic stability, the regulator or government may be forced to rescue both. We have seen this happen in the recent Asian crisis. An implicit safety net for the banking system may be a necessary evil; but extending it to 1  BIS Review 53/2000  non-banks compounds the problem of moral hazard. It also tilts the playing field against non-bank competitors who are not associated with banks. Thirdly, separation minimises the risk of non arms-length transactions between banks and their nonbank affiliates. When a bank lends to a related entity at more favourable terms than market, or invests in an affiliate in order to control it even though the investment does not perform, minority shareholders of the bank are disadvantaged, and so are depositors.