samchain/econo-pairs-v1 huggingface dataset:
However, it is unclear whether the purchases contributed to the exchange rate remaining weak, and – above all – whether the economy was stimulated by the lower long-term rates. The Riksbank’s purchases pushed down yields on securities Let me begin with yields on government securities, which fell. On the surface, this looks like a typical portfolio balance effect that has been highlighted in many studies, for instance Vayanos and Vila (2021). The idea is that the policy rate is limited by its lower bound, but that the yield curve slopes upwards so that interest rates at longer maturities can be pushed down. When the central bank buys government bonds with long maturities, investors who want debt instruments with long maturities need to seek other investments. This means that prices rise, that is, the rates fall, also on other assets with long maturities. As borrowers then gain access to cheaper financing, monetary policy has become more expansionary. But for several reasons, this was not really how it worked in Sweden. Certainly, rates on government securities appear to have fallen. This is supported by event studies which investigate how market rates are affected by new information on asset purchases.5 Erikson (2021) also finds that rates on government securities fell apace with the Riksbank's holdings increasing from 2015 to 2017, but he shows that the rate fell on the shortest maturities.

However, Figure 4 shows that the difference between these rates and the Riksbank's policy rate does not appear to have been affected by the asset purchases.14 Government bond purchases thus appear to have pushed down the interest rate on government bonds to a certain limit. However, there are no signs that this caused households and companies to encounter lower interest rates. It is therefore very unclear whether the result was that the economy was stimulated via the interest rate channel.15  13 The market is dominated by so-called FRN-bonds, where the coupon follows STIBOR 3 months. 14 Erikson and Vestin (2021) show a similar figure. Some larger companies also finance themselves through the  bond market. However, when the Riksbank began purchasing government bonds, this form of financing was fairly unusual and accounted for only 22 per cent of the companies' total borrowing (see the Riksbank, 2014). Moreover, it is common for companies' bond loans to have variable interest rates. As turnover in the market is small, it is difficult to follow price developments. Nevertheless, the statistics indicate that rates on corporate bonds fell less than those on government bonds in 2015 and 2016. 15 However, the lower interest rates could reasonably contribute to a lower central government borrowing cost, something I will return to in a moment. However, this was not the purpose of the Riksbank's purchases. 7 [30]  Figure 4. Lending rates have followed the policy rate Per cent  Note.
Indeed, since we announced a combination of unconventional measures to provide additional monetary policy accommodation in June 2014, financial conditions have eased considerably. Risk-free interest rates have shifted downward at all maturities (Chart 1), reducing the basis 1 / 12  BIS central bankers' speeches  used by banks and financial markets in determining financing conditions. Chart 1: EONIA forward curves estimated from OIS (percentages per annum)  This has been reflected in the sizeable reduction in bank lending rates for euro area non-financial corporations (NFCs) and households since June 2014 – which have declined by around 130 basis points and 110 basis points, respectively – as well as in the decline of NFCs’ cost of market-based debt financing (Chart 2). Chart 2: Nominal cost of debt financing for euro area NFCs by component (percentages per annum)  2 / 12  BIS central bankers' speeches  NFCs have also benefited from an increasingly diversified financing structure, with debt securities issuance and other forms of market-based financing substituting for bank-based sources of financing (Chart 3 and Chart 4).

Chart 7: EONIA forward curves around June 2018 Governing Council (percentage per annum)  9 / 12  BIS central bankers' speeches  Chart 8: Standard deviation of three-month EURIBOR option-implied density in one year’s time (percent)  10 / 12  BIS central bankers' speeches  But let me turn to the next steps for monetary policy in the euro area. The latest surveys of market participants’ expectations regarding the most likely date for a first rate increase indicate that the “at least through the summer of 2019” formulation has been solidly internalised by market participants. Looking ahead, the rotation implies that our key policy rates and forward guidance about their evolution will become an anchor for monetary policy as the end of our net asset purchases is nearing. Our communication, and the rate path itself, will be calibrated to ensure that inflation remains on a sustained adjustment path. Our policy will remain predictable, and we will proceed at a gradual pace that is most appropriate for inflation convergence to consolidate. In addition, as proved in the past, our forward guidance remains an effective firewall to insulate the euro area from unwarranted tightening pressures originating elsewhere. This protection will be crucial to ensure that, as we move along the normalisation path, euro area financial conditions remain consistent with continued progress towards our policy objective. Finally, our APP portfolio and our unconstrained provision of liquidity will continue, for the time being, to provide an accommodative environment.
Fortunately, we didn’t get to that point during this crisis. The Federal Reserve, and many other people around the world, pulled out all the stops to avoid the collapse of the banking system, of 5 / 15  BIS central bankers' speeches  the financial system, and as a consequence, we had a bad recession – worst recession that we’ve had since in the post-WWII period, but far short of what happened in the Great Depression. The Great Depression, the unemployment rate I think climbed above 20%. The price level, the level of prices dropped by about I think a third. So it was a really absolutely horrendous experience. If you talk to someone like my mother, my mom’s 94 years old, she was a relatively young girl during the Depression. She still remembers and talks about it, just incredibly searing. People were out of work for really until WWII. The Crash started in 1929, the U.S. economy really didn’t get back to close to full employment, only in the 1940s, and because of WWII. Dr. Olajide Oladipo: Thank you. President Dudley: So this time was quite a bit different, thank God. Dr. Olajide Oladipo: I’m sure that everybody here invests. And they are ... students in economics and finance. We talk about investment. I wanted to shed light or your perspective on how the fixed income investor performed in the last eight years, please.

There was apparently supposedly a subway line that was really close to the gold vault, and so they just had to punch a little hole in the subway tunnel and the gold vault was right there. But it doesn’t really actually work that way. So sorry. My point is, there’s a lot of different activities that we do. Obviously in education, Bachelor’s or Master’s, is sort of I think probably a good place to start. The more analytical skills you can get in terms of math and economics and business – those are the skills that are very attractive to us. Training and public policy because that’s what we do, is very important. It’s a great place to work. The typical New York Fed employee joins the Bank and says I’m going to be here two, three years. And then the next stop I ask them how long have you been here? “25, 30 years.” Which I think means that it has – it’s a good place to work. Reasonable pay, good benefits But mainly, a great culture. People are very committed to what we do. People have a strong sense of mission and integrity. I tell people that one of the great things about working at the New York Fed is there’s no moral ambiguity at any day about why I’m going to work. We’re there to serve the public interest, and that’s a nice thing to think about every day when you go to the office.
It involves actively engaging individuals within our community to participate more fully in the economy as well as reaching out to the marginalised community and bringing them into the mainstream financial system. It has now been three years since the financial adviser framework was first introduced. We are encouraged to note that consumers’ needs and demands continue to evolve to the extent that financial products and services must now be tailored to meet individual requirements. Being independent from any product provider or manufacturer, financial advisers are indeed in a unique position in terms of capability and capacity to compare and tailor-made various financial products in order to get the best deal for their customers. Such unique position underscores the importance of the financial advisers’ role in providing value-added service to consumers as they can expect financial advisers to provide financial advice on needs-based approach rather than merely product-push approach. Ultimately, this will contribute to a higher standard of professionalism in the sale of life insurance products and preserve public confidence in the insurance industry. Let me briefly share with you the outlook of life insurance and takaful sector in Malaysia. The insurance and takaful sector recorded a strong growth of 11.4% in 2007 with combined premiums and contributions totaling RM29.7 billion. New business premiums and contributions for life insurance and family takaful sector grew by 7.6% to RM9.1 billion driven primarily by stronger demand for savings and investment-related products.

Bank Negara Malaysia has so far issued eight financial advisers licences which employ a total of 57 financial advisers’ representatives. I encourage you to follow their footsteps and embark on a new chapter in your professional careers, to make the most of the opportunities that you will have to create a lasting impact in promoting sound financial planning among Malaysians. I trust that the distinguished speakers will share their valuable insights and experiences to provide you better clarity on the opportunities as financial advisers. On that note ladies and gentlemen, I wish you a successful and productive seminar. We look forward to your contribution to the further growth and development of the financial services industry. Thank you. BIS Review 136/2008  3
The aim of preventing inflation expectations from becoming entrenched below the operational target of 2.5 per cent was one of the main reasons that the interest rate was lowered to a very low level in 2003 and 2004, when inflation receded and approached zero. Low interest rates stimulated demand and output and have gradually led to prospects for higher inflation, to which we have responded by increasing the interest rate. Consumer price inflation is still fairly low, but capacity utilisation is now at such a high level that inflation is projected to move up gradually to 2.5 per cent. Higher interest rates will contribute to a gradual decline in capacity utilisation so that inflation will not become too high. In spite of several years of fairly low inflation, inflation expectations, as for example these – and not necessarily precisely – are measured by TNS Gallup’s expectations survey, have held up around the inflation target. Even if there has been a longer period of low and relatively stable inflation expectations, we must be alert to developments that may change this. Norway’s and other countries’ economic history show that inflation and inflation expectations can become unhinged. There are many self-regulating mechanisms in the economy, but inflation does not regulate itself. Through history, monetary policy has in various ways been geared towards providing the economy with a nominal anchor. From the mid-1800s, many countries decided to peg the value of money to gold. Norway switched from the silver standard to the gold standard in 1874.

As under the gold standard or the fixed exchange rate regimes, it is again our own choice of nominal anchor that determines the rate of inflation in Norway over time. 2  BIS Review 102/2007  Future studies will probably find that inflation reverts to the inflation target over time. This is an indication that monetary policy is working and not that there is a natural inflation rate or a natural, self-regulating mechanism. Inflation is still influenced by exogenous conditions. Increased globalisation, particularly China’s growing importance in world trade, has in the past ten years for example resulted in low imported inflation measured in a foreign currency. At the same time, productivity growth has been high in many countries. These positive supply-side features have for a period contributed to a favourable development in the short-term trade-off between economic growth and inflation. As a result, many countries where inflation was a little too high at the outset have been able to bring down inflation at virtually no cost. In this respect, we can probably talk about some degree of endogeneity in inflation.1 However, it is still up to the authorities through the orientation of monetary policy to choose whether inflation is to remain low and stable on a more permanent basis. Over time, interest rate setting is aimed at keeping inflation close to target. In the process, interest rates will have short-term direct or indirect effects on a number of other economic variables.
While it may be possible for the authorities in many instances to bring about stabilisation by catalysing action within the private sector - and the way in which the Federal Reserve handled the problems in Long Term Capital Management a couple of years ago is an outstanding example of that - the monetary authorities’ ultimate instrument is their capacity, typically exercised by the central bank, to intervene directly - within limits agreed by government since public money is involved - themselves. As in the case of IMF lending to member countries in difficulties, this “safety net” or Lender of Last Resort (LOLR) capacity needs to be used with great discretion if it is not to give rise to a similar kind of moral hazard - encouraging banks and their creditors to take excessive risks. It is only to be used where there is a genuine risk of systemic financial disturbance - where other banks are liable to be affected by contagion either as a result of their direct exposure to a failing institution or because they are likely to be seen themselves to be exposed to the same sort of pressures that affected the failing 3  BIS Review 66/2000  institution, and therefore likely to be similarly vulnerable and subject to loss of confidence. It is only in those circumstances - which I agree are difficult to recognise with total confidence - that official intervention can be justified.

In the USA, productivity growth between these periods has increased from 1.4 to 2.9% while productivity  BIS Review 20/2000  2  growth between the same periods has increased from 1.4 to 1.9% in the Swedish economy (see diagram 3). In the USA, the improvement in productivity has been preceded by strong increases in investment throughout the 1990s and investment during this upswing has contributed to GDP-growth to considerably higher extent than during previous upswings. The great productivity increase is one of the reasons why demand has been able to grow so strongly and for so many years without inflation accelerating. The questions raised are what underlies the US development, and whether there is anything to indicate that we will see the same development in Sweden. The new economy does not seem to have come as far in Sweden as in the USA. We see no equivalent to the investment boom in the USA or even for that matter to that in Sweden in the 1960s. The information technology will have its main impact first when the new technology has penetrated the whole economy. To get that, huge investment activity is needed which we still are waiting for. There are many explanations for the successes of the American economy. In common to most of these is reference to the economic policy carried out since the end of the 1980s. Price stability and a fiscal policy focused on budget consolidation have been highlighted as important components of the successful policy.
One is the move towards higher frequency of financial reporting, from annual, half-yearly to quarterly. While this move may have been driven by good intentions of promoting transparency and accountability, inevitably it compresses further the performance measurement period faced by bank management and increases the pressure on the senior managers in delivering short term performance. The second factor is the emergence of activist shareholders in the form of hedge funds and, to a lesser extent, certain pro-active fund managers. The net effect of 2/5  BIS central bankers' speeches  short-termism in banking is that firms would tend to opt for businesses or transactions that would boost short term performance in profits or share price, such as large scale acquisitions or mergers or rapid expansion. Investments that are necessary for the longer term viability or competitiveness of the bank, such as upgrading of IT systems and internal talent development, would tend to be given a lower priority. We have seen many high profile cases of massive expansion of business through indiscriminate acquisition or a sharp rise in proprietary trading by banks, which, as we now know, ended rather badly. Fast forays into areas with insufficient expertise or chasing bulge-bracket status by combining aggressive trading businesses with more traditional banking have left banks exposed and created culture clashes in the race for profit. Again, this short-termism in the modern corporate world is not at all conducive to regaining public trust in, and respect for, bankers. 9.

The scope of the directive may also include hitherto unregulated technical service providers supporting payment services. Next, the future architecture of payment services in the European Union will be built on immediate payments. In this regard, the Commission plans to assess the need for a statutory obligation to participate in the SEPA scheme of the European Payments Committee for immediate credit transfer in euros (SCT Inst.). To encourage the use of immediate payments, consideration is being given to requiring that immediate payment fees be no higher than ordinary credit transfer fees. In Bulgaria, Borika AD, in close cooperation with the BNB as an operator of the real-time gross settlement payment system (RINGS), is in an advanced stage of development of a project for immediate payments in BGN, based on the requirements of the SEPA scheme for immediate credit translations (SCT Inst.). The ambition of the company is in 2021 for the payment service 1/2  BIS central bankers' speeches  providers in the country to be able to provide their customers with immediate credit transfers in BGN. Interconnection and interoperability between the various payment systems providing clearing and settlement is required to ensure cross-border reachability in the execution of immediate credit transfers in euro. In July 2020, the ECB announced its decision to introduce measures to ensure a trans-European scope of immediate payments in euro by the end of 2021. As a result, all payment service providers that have joined the SCT Inst scheme will be required.
On the international level, the FSB and the Basel Committee have urged the authorities in each jurisdiction to identify the remaining transition issues and increase the intensity of their supervisory actions when the preparations of individual banks are unsatisfactory.24 The Basel Committee has also put out FAQs on benchmark reform under the Basel Framework.25 In the United States, the Federal Financial Institutions Examination Council (FFIEC) has emphasized the financial, legal, operational, and consumer protection risks of the upcoming transition and announced that the supervisory focus on evaluating institutions’ preparedness will increase in the rest of 2020 and 2021.26 And the SEC has identified registrant preparedness for the transition away from LIBOR as an examination program priority for the coming fiscal year.27 So be prepared to answer questions about how you’re planning for the end of LIBOR across your business. Conclusion Given how deeply embedded LIBOR is in products and systems across the commercial landscape, the transition away from LIBOR is a huge undertaking that presents a whole array of risks. There remain a host of uncertainties about the end of LIBOR, but very little uncertainty about what firms should do to prepare for it. A year and a half ago, I talked about ongoing consultations and said that the way forward for the vast majority of LIBOR-based instruments was rapidly becoming clear. Well, those consultations have concluded, and the way forward, for all types of LIBOR instruments, is now clear indeed. 1 Raymond Check assisted in preparing these remarks.

11 For contracts that are in scope for the EU’s existing Benchmarks Regulation, it would replace a benchmark that had ceased publication or become non-representative with one designated by the European Commission. But it would apply only to contracts with an EUsupervised entity and where there is no “suitable” fallback. Like the New York proposal and the UK law, the EU legislation is intended only to provide a fail-safe for contracts that cannot be proactively managed, and the fail-safe rate the European Commission decides on may not be the one that best suits your needs. As a last note on the legislative front, the European Commission has also said it will recommend that the various EU member states adopt national-level legislation to address contracts that the EU-level action doesn’t reach. To state what is perhaps obvious, it’s unclear at this point—and will likely remain unclear for some time—how the various legislative efforts in the UK, the EU, the EU members states, and the U.S. will play out, and how they will interact with one another. Every global firm that uses LIBOR anywhere in its operations will need to follow those developments and evaluate carefully what effect this legislation would have on each contract of each of its legal entities. To me, the clearest takeaway from all of that is that you should not wait for these proposals to become law and then decide how they affect you and whether you like the result. There isn’t time for that.