samchain/econo-pairs-v1 huggingface dataset:
And, therefore, without further ado, let me go into the substance for today: first, I will share with you our assessment of the economic outlook for the euro area. Second, I will explain the package of policy measures we adopted at the beginning of June. Finally, I will briefly touch upon the challenges that await us in the next five years. Economic outlook Let me start with the economic outlook: in the first quarter of 2014, euro area GDP grew by 0.2%. Growth was thus positive for the fourth quarter in a row. In line with earlier expectations, domestic demand has increasingly become the main source of growth. For the second quarter, monthly indicators have been more mixed, however partly reflecting technical factors. Overall, looking through the usual volatility in monthly indicators, the ongoing moderate recovery is expected to continue. Looking further ahead, domestic demand can be expected to continue to support growth – together with both the further monetary policy accommodation that was introduced in June and the on-going improvement in financing conditions. The progress made in fiscal consolidation and structural reforms, as well as gains in real disposable income, is expected to provide positive impetus to growth over the next two years. Furthermore, demand for exports should benefit from the on-going global recovery, and should thereby reinforce the growth momentum in the euro area. Although labour markets have shown some signs of improvement, unemployment remains high in the euro area. Unutilised capacity continues to be sizeable.

Nevertheless, the exchange rate remains an important driver of future inflation in the euro area. Certainly, the appreciation that took place since mid-2012 had an impact on price stability. In the present context, an appreciated exchange rate is a risk to the sustainability of the recovery. Recent monetary policy measures Let me now move to explaining our monetary policy stance. We decided on a number of monetary policy measures in early June. These measures are aimed at providing additional monetary policy accommodation by supporting lending to the real economy. In line with our price stability mandate, these decisions are an essential contribution to bringing inflation rates closer to 2%. They will also contribute to a further strengthening of the recovery. •  Specifically, we lowered all key interest rates further. Our main refinancing rate now stands at 0.15%. Accordingly, our deposit facility rate has been cut to a negative level and now stands at –0.10%. •  We will conduct targeted longer-term refinancing operations (TLTROs) as of September 2014. In these operations, banks will be entitled to borrow from the Eurosystem, conditional on their lending to the private non-financial sector, with loans to households for house purchase being excluded. •  In addition, we are intensifying our work in preparation of possible outright purchases in the market for asset-backed securities (ABSs).
But the fact that it retains this role after so long a time also reflects the trust placed in it by financial market participants and the wider public. 1  See Matthews (1921). 2  Cashier’s Department: Drawing Office Customer Account Ledger. The Bank of England Archive, Reference No. C98/4172. BIS central bankers’ speeches  1  Paper ledgers are long gone at the Bank of England. But in their place lies the Real Time Gross Settlement system (RTGS), across which all payments between banks are settled. 3 The amounts involved are immense. On an average day, RTGS settles around £ billion between banks; that is almost a third of the UK’s annual GDP every single day. In turn, those payments back nearly every other payment that matters to all of us on a daily basis – from salaries to company invoices, from car purchases to coffee sales, from pensions to investment flows. So it is no exaggeration to say that RTGS is the beating heart of the UK payment system. Indeed, RTGS is more critical to the UK economy than even these statistics suggest. By hosting the reserves accounts of the banking system, RTGS provides the mechanism through which the Bank provides liquidity for financial stability purposes and implements Monetary Policy Committee (MPC) decisions on Bank Rate. So it is intimately linked to the delivery of every aspect of the Bank’s mission. The Bank’s primary motivation in the provision of a high value payment system has always been to promote stability and resilience.

by rules of the game that would be coded once and for all and for which respect would be entrusted to algorithms, even if they are encapsulated in “smart contracts"... Will the forces pushing towards decentralised finance make unbalanced relationships disappear? As well as failing governance mechanisms, the concentration of operational risks, and cyber attacks? In my opinion, the answer is no: trusted third parties, central banks and supervisors are not about to disappear... Secondly, and this is a corollary of my first point, confidence requires maintaining central bank money as the anchor of the financial system. Finally, confidence requires a regulatory framework that is clear, fair (“same business, same risk, same rule”) and balanced, i.e. capable of both encouraging innovation and maintaining the stability of our financial system. The search for this balance implies that regulators and supervisors be involved in innovation issues alongside the innovative players. I will come back to this. Once the principle of confidence has been established, central bankers and supervisors must also be able to distinguish between what changes quickly and what changes more slowly in the sector they supervise. First of all, the health of French fintechs should not mask the importance of another piece of good news: the “traditional” banking world is resilient and useful. It showed its robustness during the two major crises that have occurred since the beginning of the century.
This effect should have faded now, and it is therefore up to the labour force, technology and renewal to do the job of raising potential growth in the long term. There are two main methods of increasing growth: firstly, that more people work or more people work more, secondly that productivity is improved. When, for instance, new technology or new organisations are introduced, production can be rationalised and productivity increases. If the content of production changes through a renewal in the direction of products and services that demand a higher value on the global market, the value of production rises. When this occurs without a corresponding increase in the number of hours worked, it leads to higher productivity. During the 1970s and 1980s and a little way into the 1990s, Sweden lost considerable ground in terms of real growth compared with other countries in the OECD region. According to an SNS paper produced last year, if Sweden had a growth rate of one whole percentage point over the average among the richest countries, it would take 17 years for us to regain our place among the ten richest 2 countries in the world. If growth is going to increase through more people working, part of the large percentage of the adult population that is absent from working life for various reasons would have to work. Today 3 approximately 800,000 full-time workers disappear from working life as a result of ill health .

At the beginning of the new monetary policy regime, when the fixed exchange rate was abandoned in 1992, there was a certain amount of criticism of the inflation target; many people feared that the unconditional attachment to an inflation norm would have a negative effect on growth and employment. A monetary policy aimed at price stability could lead to a prolonged period of low growth and, in extreme cases, to declining production. It may appear as though this objective forced the Riksbank to give a lower priority to the development of the real economy, i.e. production and employment. We have only one objective for monetary policy, unlike, for instance, the US central bank that also has the task of taking into consideration the effects of interest rate decisions on growth and employment. However, in actual fact, the difference is probably not so great - indirectly the assessments of the future path of the real economy also play an important role in our decisions. Moreover, we also have the task "without neglecting the price stability objective, of supporting the objectives for general economic policy with the aim of attaining sustainable growth and a high level of employment." This is expressed in the proposal for the Sveriges Riksbank Act from 1999. However, even more importantly, there is no opposition between good growth and price stability, quite the reverse.
This is anything but a typical recession, and it has called for a new set of measures to address the economic consequences of the virus. Amid all the change we’re experiencing, you can be assured of one thing: our unwavering commitment to limit the economic damage from the pandemic and foster conditions for a strong and sustained recovery. 1 See Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, March 3,  2020; and Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, March 15, 2020. 2 See Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, April 29,  2020. 3 See Board of Governors of the Federal Reserve System, Federal Reserve Announces Extensive New Measures  to Support the Economy, March 23, 2020.

This should include “an IMF standing liquidity facility.’’ The global financial safety net is the best insurance we can get against the risks created by economic divergence and it comes at a limited cost. ** So, in conclusion, we as central bankers should be predictable without being pre-committed. In other words, we should give clarity without pretending to certainty. Voltaire summed this up nicely in 1770: “Doubt is an uncomfortable condition, but certainty is a ridiculous one.”4 In these times of doubt, the Governing Council of the ECB is committed to give as much clarity as possible; clarity, not certainty, which is neither possible nor desirable. Thank you for your attention. 1 Brainard, W. (1967), « Uncertainty and the effectiveness of policy » the American Economic Review, Vol. 57, No. 2, Papers and Proceedings of the Seventy-ninth Annual Meeting of the American Economic Association, May, pp. 411–425. 2 Blinder, A. (1999), Central Banking in Theory and Practice, the Lionel Robbins lectures, MIT Press, Cambridge  Massachusetts. 3 Rey, H. (2013) “Dilemma not Trilemma: The global financial cycle and monetary policy independence”, Jackson  Hole conference proceedings, Kansas City Fed. 4 Letter to Frederick William, Prince of Prussia (28 November 1770). 3/3  BIS central bankers' speeches
Monetary policy, meanwhile, is designed taking into consideration the situation of the euro area as a whole. Attaining an appropriate mix of both would require effective coordination mechanisms or the creation of a fiscal stabilisation capacity for the entire area. As regards fiscal coordination mechanisms (based on the Stability and Growth Pact), there is consensus on the need for a far-reaching review.11 SGP arrangements have become excessively complex over time, which hampers transparency in their application, their implementation and, ultimately, their fulfilment. The most evident consequence of this is, across the board, that fiscal policy design has been procyclical in numerous countries and in the euro area as a whole. In recent years, some countries running expansionary public finances are those whose high debt and structural deficits would have advised a fiscal consolidation drive. The restructuring of public finances in these countries is a priority if it is wished to count fully on fiscal policy as a national macroeconomic stabilisation instrument ahead of any potentially more adverse scenario. In such a scenario, those countries with more fiscal space might provide a greater budgetary stimulus to their economies, especially bearing in mind that they have been particularly affected by the recent slowdown as a result of their heavy exposure to international trade flows.

By the same token, for member countries, this requires effective participation in multilateral bodies aiming to foster the development of the international financial system, either through capital account liberalisation or provision of liquidity where necessary, as the crisis has clearly shown. Neither can we escape from the fact that the international status of certain countries’ currencies affords them a specific role or may affect them adversely. In all of these matters, beyond the stereotypical vision of the different interests of developed and emerging countries, I wish to recall that in fact we have converging interests: since we are closely linked in terms of finance and trade, it is in our collective interest to participate in the surveillance of financial systems within an enhanced multilateral framework. To conclude, I would like to reiterate that the new financial architecture that we are in the process of defining should not be hidebound but gradually adapted to address the major  4  BIS Review 101/2009  developments in the international economic and monetary system. In this regard, the possible emergence of a “multicurrency” international monetary system deserves particular attention. Naturally, the US dollar remains the world's foremost reserve currency. Similarly, the euro plays a major role. However, the increasing prominence of other currencies, provided of course that they become fully convertible and tradable without any restriction, suggests that a new situation may materialise in which a growing number of currencies could enjoy international currency status.
Other factors that may have contributed to the surplus is that the financial market in the United States is more highly developed than in many Asian countries, which has made it advantageous to invest savings there rather than in the domestic economy, and that companies in China pay out a relatively small part of the profits in dividends, which probably helps to boost saving but restrict consumption. 13 Global imbalances and capital flows after the crisis The crisis that actually arrived took an entirely different course than many expected. Although the United States was hit hard, the dollar was actually strengthened initially because investors fled from risk and US government securities were seen as a safe asset. The countries that had large current account deficits were, however, hit to a greater extent  9  See for example Bernanke, 2009, White 2008 and King 2009. 10  For example Krugman, 2007. 11  See Bernanke, 2005. 12  See Llaudes et al., 2010. 13  See for example Caballero, 2006, Hoffman and Kuijs, 2006 and Bayoumi et al., 2010 for a discussion of this. BIS central bankers’ speeches  5  than countries with surpluses by major falls in housing prices. 14 This shows that current account deficits were often a reflection of underlying weaknesses, for example unsound lending practices and the build-up of debt. However, the crisis itself and the subsequent recession reduced the imbalances, at least temporarily.

19 It is difficult to assess whether the level of investment in Sweden can be regarded as having being unjustifiably low during the period in which the current account surplus has grown. Above all it is difficult to find any kind of reform that would generally have been able to increase the return on Swedish investments in particular and thus have led to a higher investment ratio. 18  The National Institute of Economic Research (2011) puts this forward as a possible explanation of the high level of household saving in Sweden. 19  The so-called Danell system implied a quick winding down of interest subsidies compared to the previous rules. BIS central bankers’ speeches  9  Figure 6 Investment in the EU and Sweden Percentage of GDP 24  24  22  22  20  20  18  18  16  16  14  14 Sweden - total Sweden -excluding housing  12  12  EU -total EU -excluding housing  10  10 80  82  84  86  88  90  92  94  96  98  00  02  04  06  08  Source: Statistics Sweden  After the fixed exchange rate regime was abandoned in 1992, the krona depreciated by almost 30 per cent in trade-weighted terms. The krona has in principle not recovered from this weakening, although it has strengthened significantly recently.
1/4  BIS - Central bankers' speeches  As regards other economic developments specific to the euro area, despite the recent favourable GDP outturns, Russia's unjustified war against Ukraine and its people, continues to act as a headwind to euro area growth. Whilst supply chain bottlenecks are gradually easing and the supply of gas has become more secure, inflationary pressures remain elevated. Specifically, following a peak of headline inflation at 10.6% in October 2022, in February this year it still stands at 8.5%. At the same time, core inflation, which excludes the volatile items of energy and food and therefore captures demand pull forces of inflation, continues on an upward trajectory moving from 5.0% in October 2022 to 5.6% in February this year. In addition, wages continue to grow fast, supported by robust labour markets, with some catch-up to high inflation becoming the main theme in wage negotiations. In this setting of high headline and core inflation, monetary policymakers must ensure that inflation does not become entrenched. Therefore, from an expansionary monetary policy up until the end of 2021, the ECB has moved through the neutral range and continued moving into the restrictive monetary policy interest rate range, currently at 2,5%. At the last ECB Governing Council meeting beginning of February, we reiterated the need to stay the course in raising interest rates at a steady pace and keeping them at restrictive levels to ensure a timely return of inflation to our two per cent medium-term target.

Let me stress this point: a CBDC would be created with banks, not against them nor in spite of them. I could go even further: in the digital universe, a CBDC can help to preserve the complementarity between central bank money and commercial bank money. Failing this, commercial banks will face a difficult challenge competing with the BigTechs and their unrivalled resources and network effects, and with private stablecoins. With that in mind, let me now turn to the triangle of actions:  The first action in response to the risks posed by private stablecoins is of course regulatory. Our main challenge is to avoid regulatory arbitrage, where players  relocate to other jurisdictions to circumvent regulations. We must ensure that all countries apply strict regulations regarding crypto-assets, and that no stablecoin arrangement enters into operation without having fully met the regulatory expectations. The European Union has been a pioneer in this field, putting forward last September a proposal for a Markets in Crypto-Assets regulation (also known as MiCA). I sincerely hope the EU shall adopt this first harmonised regulatory framework in the coming months. If it modifies the Commission’s proposal, it should only be to strengthen it. Crypto-asset issuers and entities providing additional services, such as transfer or custody, will in particular have to provide a predictable redemption right in sovereign currency for asset holders. They will also be subject to uniform requirements across the EU and act under the watch of supervisory authorities, from whom they will have to obtain prior authorisation.
By doing so, the MPC will not only deliver on its mandate, but will also create an environment of price stability in which households and firms can take the longer-term investment and spending decisions that drive the dynamism, innovation and productivity gains on which UK living standards depend. The MPC has tightened monetary policy over the past eighteen months to achieve the 2% inflation target. Bank Rate has been increased from its effective lower bound of 0.1% to today’s level of 4.25%. Quantitative easing (QE) has been halted and replaced with a programme of quantitative tightening (QT), involving the sale of gilts and corporate bonds held as a result of the Bank’s earlier asset purchase schemes. [1] And the MPC’s communication about the outlook for monetary policy has shifted significantly. Picking up on this lattermost point, in the monetary policy summary published following March’s MPC meeting, the Committee noted: “if there were to be evidence of more persistent [inflationary]  Page 3  pressures, then further tightening in monetary policy would be required”. [2] Even as the Committee’s communication has evolved, some variant of this line has been included in the MPC’s communication since the middle of last year. It illustrates the shift towards more data-dependent and conditional statements about the monetary policy outlook since I joined the MPC in the late summer of 2021. As is clear from the sentence I quoted, the concept of inflation persistence lies at the heart of the MPC’s assessment and communication of the policy outlook.

On the one hand it is difficult to measure these intangible assets, but on the other hand one disregards a large part of the companies’ investments if one does not take them into account. US and European studies show that investment in intangible assets comprises around 10 per cent of GDP. 11 The most recent productivity growth and forecasts Let me now comment on the development of productivity last year and during the period to come. 7  Bloom, Sadun and Van Reenen (2007). 8  Håkanson (2007). 9  By productivity is meant total factor productivity, TFP. In the study the comparison has been made with the median company. 10  Brynjolfsson and Hitt (2003). 11  See, for instance, Corrado, Hulten and Sichel (2005), (2006), Hao, Manole and van Ark (2007), Haskel and Marrano (2007). 4  BIS Review 12/2008  Productivity growth in the business sector has been 4.4 per cent a year during the period 2002-2006. In the increasingly mature phase of the economic cycle where the economy is now, it is normal for productivity growth to slow down in connection with an increase in employment. This is also something the Riksbank has been expecting. However, the downturn in the rate of increase in productivity last year was stronger than motivated by the prevailing economic situation and the Riksbank, like many other analysts, was surprised by the strength of the downturn.