samchain/econo-pairs-v1 huggingface dataset:
26  BIS Review 111/2010  Table 1  Swedish Riksbank  Swiss National Bank  Reserve Bank of Australia  Bank of Canada  Bank of Japan  Bank of England  European Central Bank  US Federal Reserve  Central Bank Policy Actions during the Crisis  Enhanced liquidity provision Modified discount window  X  X  Exceptional long-term ops  X  X  X  X  X  X  X  X  Broadening collateral  X  X  X  X  X  X  X  X  Expanding counterparties  X  X  X  X  X  FX swap lines  X  X  X  X  X  X  X  X X  Policy rate guidance Indicative policy path  X  X  X  Asset purchases/funding Government bonds  X  X  X  X  Foreign currency securities  X  Commercial paper  X  Asset-backed securities  X  Corporate bonds Other securities  BIS Review 111/2010  X  X  X  X  X  X  X  X  X  27  Table 2 Stationarity Tests on Price Level  Coefficienta  ADF Statisticb  Euro area  -0.487  -2.46  Japan  -0.119  -1.89  United Kingdom  -0.095  -1.02  United States  -0.183  -2.03  Australia  -0.105  -2.22  Canada  -0.186  -2.61  Sweden  -0.141  -2.55  New Zealand  -0.188  -2.68  Pooled  -0.138c  -5.98d  Notes: Sample runs from 1993Q4 to 2010Q1, except for the euro area, which runs from 1999Q4 to 2010Q1.

But the price-stability oriented policies of the Great Moderation proved to be instrumental in delivering not just low and stable inflation but also steady growth for a sustained period. The maintenance of price stability may be insufficient on its own to guarantee continued overall macroeconomic stability, but it surely has to remain the central objective of monetary policy in the long run, even if other considerations may intrude in the short run. Any other objective risks de-anchoring price expectations and inducing unnecessary extra volatility into the economy. Flexible inflation targets (explicit or implicit), which allow the monetary authority some constrained discretion in accommodating temporary price-level shocks, therefore remain a suitable organising framework for the conduct of monetary policy. We remain sceptical of the net benefits of moving to a higher inflation target in normal times so as to provide monetary policy with more room for manoeuvre. And a move to price-level targeting looks likely to offer only modest gains – particularly when there are also costs to changing the framework – though further analysis may shed additional light on this particular issue (Section 4). 6. Monetary policy and credit/asset-price booms. The twin beliefs that financial markets are efficient and that financial innovation is necessarily welfare-enhancing have been dealt a serious blow by the crisis. We have seen that financial markets are riddled with any number of incentive distortions and market failures. Alongside that, the crisis has also raised serious question marks about a policy of benign neglect towards credit/asset-price booms.
As a result the response of inflation is relatively muted. It still rises, thanks to the weaker exchange rate. But it does so by only 0.5% points, significantly less than we’ve seen over the past year or so. With output declining and inflation close to target it’s not clear the MPC would have wanted to raise interest rates. The point that comes across, for me, is that inflation would be lower had effective expectations of the implications of Brexit, across different parts of the economy, been more uniform. Let me be clear. I’m not saying one side or the other – households and financial markets – is “wrong” or “right”. We don’t yet know. My points are rather (i) that for as long as we don’t know the ultimate Brexit outcome, it’s understandable that expectations should differ and (ii) that the particular difference we’ve seen since the referendum, with the foreign exchange market more pessimistic than the real economy, has been inflationary, and the gap in expectations has therefore been an important contributor to the recent rise in inflation and therefore interest rates. A corollary is that at least until Brexit actually happens, its significance for inflation and interest rates derives not so much from the process itself but from whether those expectations move closer together or further apart. However it occurs, whether via a stronger exchange rate or weaker consumption, a degree of reconciliation would tend to lower inflationary pressure. Further divergence would do the opposite.

Singaporeans today are more educated, better informed, and keen to take part in the national debate. The government is adapting its style and approach to fit these aspirations of a new generation of citizens. Our strategic challenges have not fundamentally changed. We still have to make a living for ourselves, ensure the security of our homes and families, and build a better future for our children in an uncertain world. But the way Singaporeans mobilise themselves to respond creatively to these challenges has changed. The government will still play an active role, defining the issues, setting the agenda, and influencing opinions. But we also actively solicit opinions and proposals from outside the government. We are involving people much more in discussing and tackling national and community issues, whether it is managing their housing estates or reforming the financial industry. This will help strengthen Singaporeans’ sense of ownership and commitment to Singapore. Conclusion I have focussed on what Singapore and the other Asian countries are doing to get themselves back on track. But the region’s prospects also depend on the strategic backdrop – the relations among the major powers, namely the US, China and Japan, and particularly the role of the US. We have reasons to hope that US-China relations will remain stable. The US will not want a new version of the Cold War against China. And China’s over-riding priority for some decades to come will be to modernise and develop its economy and society, for which it needs peace and the cooperation of other countries.
The group has produced recommendations and guides to support defined contribution (DC) pension schemes safely investing in less liquid assets. This is in itself a great investment – DC scheme assets  more than doubled over the last ten years, and are projected  to be around £ trillion by 2035. So the benefits to pension scheme members of long-term investment gains, and to businesses of accessing this pool of capital, will only grow over time. We also need the right structures to facilitate long-term investment, which links back to our focus  Page 11  on financial stability. Like the CFOs looking to fund long-term projects with long-term investment, we worry when non-bank financial institutions pair illiquid assets – things you can’t sell or exit in a hurry – with short-term liabilities. If investors pull out, the financier needs either to sell assets at a discount, or stop withdrawals – as we saw with commercial property funds in Brexit and Covid. And because once you suspect others of withdrawing it is rational to do so yourself, ‘run dynamics’ can escalate quickly. That’s why the FPC has been supportive of work by the Productive Finance Working Group, the FCA and others on the long-term asset fund (LTAF) – a new type of UK fund structure specifically designed for investment in long-term, less liquid assets. From an FPC perspective it ticks the boxes for both our primary and secondary objectives. And just last month the FCA authorised the first LTAFs – hopefully the first of many.

It should not be forgotten that extensive capital regulations entail a mispricing of risks. Deregulation then leads to desirable price adjustments. But it is during these transitional corrections that financial problems are liable to occur. Changes have often outstripped the ability of the system, including the institutional infrastructure, to keep pace. In most cases, neither the banks nor the public authorities had the necessary prerequisites for adapting to the new conditions that a freer capital market created. The expansion of lending had too free a rein in many countries and the authorities did not adequately monitor what was happening at either micro or macro level. 1  BIS Review 65/2000  Due to a rapid expansion of credit, the deregulation and opening up of the domestic financial system was often followed by economic overheating. Asset prices rose sharply and imbalances developed. Furthermore, in countries with a fixed exchange rate system, extensive short-term borrowing abroad was stimulated. A large proportion of these funds was often channelled through the domestic banking system and rendered this rather vulnerable. When capital flows subsequently reversed, the adjustment was often dramatic. Production fell, unemployment rose and both the currency and the banking system faced an acute crisis. Although several factors may have played some part in the run-up to recent financial crises, it is important to bear in mind that a deregulated financial system with free capital movements is not the basic problem.
This may come at a cost in the longer run, however, as price rigidity impedes the adjustment process and reduces the efficiency of monetary policy. A large part of the perceived differences between the FED and the ECB in terms of policy reactions results, in fact, from differences in price flexibility. Because of specific rigidities in Europe, the fall in inflation that normally follows a decline in output materialized later and more slowly. Moreover, it notably happened after several governments had implemented a series of structural reforms and adjustment policies in 2010–2011. This explains part of the delay in implementing non-conventional measures in Europe, as compared to the United States. A third challenge comes from managing the risks that low interest rates and nonconventional policies imply for financial stability. Significant advances have been achieved in developing proper macroprudential frameworks and instruments for the banking sector. Strong capital and liquidity requirements have increased its systemic robustness. New countercyclical tools have been developed. Progress has been made towards reducing moral hazard through proper resolution mechanisms for large and systemic institutions. However, the timeliness and efficacy of macroprudential measures on specific areas of exuberance, such as real estate, are still being put to the test. More importantly, I see one blind spot. Risk has not fully disappeared but rather has morphed and migrated to new parts of the financial system. Specifically, maturity transformation has developed outside the banking sector and by direct market intermediation.

Well the summit, or summits that are the cessation dates for Libor are now clearly on the horizon with the FCA announcing earlier in the year that Friday 31 December 2021 will be the final publication date for panel bank sterling, Japanese yen, Swiss franc and euro Libor rates along with a number of lesser used US dollar tenors. The remaining US dollar tenors will cease in mid-2023. These summits have been on the horizon for over a decade and have been well signposted but they are now clearly visible, but as any climber will tell you the hardest part of mountaineering is often the descent. It can often be more treacherous than the climb. So with the market having definitive dates for the end of Libor – I am going to focus my comments today on descending safely – remembering the important role benchmarks play in the financial system and why financial firms and borrowers would be well served in choosing the most robust alternative reference rates that meet their use case. Transition from Libor was always going to be challenging given its widespread use, but to those looking for an easy descent by substituting Libor for credit sensitive rates that do not address all of its fundamental weaknesses, they risk much of the good progress that has been made. While these rates may offer convenience as a short-term substitution, they present a range of complex longer term risks.
Variability of inflation increases uncertainty and exerts a major negative influence on investment and thus on potential output as well as on  15  European Commission, 2004, “A 3% R&D effort in Europe in 2010: an analysis of the consequences”, study prepared by the Research Directorate General of the European Commission. 16  OECD Education at a Glance 2006. 17  European Commission, 2003, “Chapter 3 - Education, training and growth”, in: The EU Economy: 2003 Review  BIS Review 82/2007  7  other components of aggregate demand. The environment of price stability, the credibility of the ECB in delivering price stability over time and therefore the solid anchoring of inflation expectations, are paving the way for sustainable economic activity. Conclusions Ladies and gentlemen, I would like to conclude by stressing a few points. Monetary Union has been effective – and very successful – in supporting growth. In 2006, real GDP in the euro area grew by 2.9%, which is the highest rate since 2000. This positive development is very encouraging, but this is no time for complacency. Europe still has some way to go to fully benefit from globalization and meet the challenges of rapid technological changes and ageing population. We should also keep in mind that in a context of monetary union, not only fiscal policies, but also price competitiveness and unit labour cost developments across countries should be continuously and closely monitored. That said, structural reforms are decisive to raise the long-term speed limit of the European growth.

5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  One example is artificial intelligence. Ten years ago, the potential impact of AI and machine learning on financial firms was discussed in niche conferences as one of those things on the horizon. Today, 80% of firms we regulate use machine learning. The increasing use of AI will pose big societal questions – what kind of decisions can AI be allowed to make, how to protect against AI creating and amplifying biases/discrimination. These are debates which go much wider than the international financial regulatory community, but to which we must contribute. And there are also specific financial-regulatory issues that have cross border implications. For example, whether AI systems could contribute to procyclicality and risk amplification, whether and how they should be used in regulatory capital models, and what should be the standards for the appropriate governance and oversight of decisions made by AI. That is just one example. Use of the cloud by financial firms poses similar issues – as does the technology-driven changes that are happening in cross-border payment systems and that present new combinations of risk. The challenges go beyond new technology. Regulators and supervisors are increasingly working together to ensure the financial system is resilient to the risks posed by climate change and the transition to a low carbon economy. The regulatory response to this complex financial stability risk is, rightly, multi-faceted.
I am sure that in the period ahead, we will raise the level of transparency, by promoting the way, the form and the channels of communication, and we will always make sure that we are socially responsible institution whose communication with the media representatives will be at the highest professional level and will be an example for others. I believe that we will succeed in this by mutual correctness, respect and professionalism. I wish you a pleasant, successful and fruitful workshop. 3/3  BIS central bankers' speeches

Broad impact on the economy All in all, the Swiss economy got off relatively lightly compared with other countries in the difficult years following the global financial crisis – and this despite the fact that, as a small open economy with a large financial sector, we were hit hard by the shocks. This can be mainly attributed to two factors. First of these was the remarkable flexibility of Swiss companies and workers, which made it possible to increase efficiency, develop new products, and tap into new markets. Coupled with this, the SNB’s unconventional monetary policy substantially cushioned the blow of external shocks. The real trade-weighted exchange rate of  Page 4/8  the Swiss franc has thus remained fairly stable since September 2011. Were it not for the negative interest rate and the extensive interventions by the SNB, Switzerland would today be facing a different economic reality. The franc would have become much stronger, inflation would have fallen well below zero, growth would have slowed abruptly and unemployment would have risen markedly. For us there is thus no question that the negative interest rate was significant in helping Switzerland emerge from a difficult period in good shape. And it is still making an essential contribution to ensuring that our economy continues to fare well today, despite the array of uncertainties worldwide. But how exactly does negative interest work? Negative interest rates take effect on an economy in a very similar way to a monetary policy with positive rates.
But the National Institute is one of the forecasters with the largest resources and it usually “sets the trend” for other forecasters. Last November the Institute counted on annual rates of CPI inflation of 2.0 per cent for 1998 and 2.5 per cent for 1999. In other words, inflation would move gradually upwards from the price stability target. In keeping with this, the Institute also counted on an monetary policy realignment, with an expected increase in the repo rate from 4.10 to 5.5 per cent, that is, by 140 basis points. This March - only four months later - the National Institute’s prediction of inflation had changed considerably, to annual rates of 1.1 and 1.5 per cent for 1998 and 1999, respectively. The Institute’s most recent assessment is that during 1998 and 1999 there is no need for any change from the present level of the repo rate. What has happened to forecasters’ perception of inflation? Increased element of transitory price effects Basically, nothing has happened in the appraisal of the upward cyclical phase. The National Institute, like most other observers, counts on good growth in the coming years. The strength of the upswing may vary but the overall picture is that demand growth will be somewhat above the long-term trend, which implies rising resource utilisation. But besides expectations of lower wage increases, there have been a number of favourable price shocks on the supply side. Falling international crude oil prices have already led to price reductions for energy-related goods.

These costs are significant, though still modest compared to the output falls during the recession of around 8 per cent in the United States and over 10 per cent in the United Kingdom, relative to a continuation of pre-crisis trends. So this could be an insurance premium worth paying if there was a reasonable chance that it could have prevented these falls. (The regression model obviously does not capture the inherently nonlinear link between the earlier credit/house-price boom and the subsequent near-collapse of the banking system and associated contraction in output; any gain from this more restrictive policy in terms of reducing the likelihood of a future bust is therefore absent – that is why the extent of the downturn in 2008–9 is largely unaffected.) Although the impact on house prices is quantitatively significant, the limited impact on credit – arguably the more important variable in determining the vulnerability of the system – as well as the plethora of other factors at work in creating the crisis, makes us reluctant to conclude that it would have had a major impact on the probability of a crisis materialising. But ultimately this is very much in the eye of the beholder, as we cannot be sure what would have happened under the alternative policy. There may nevertheless be times when a well-judged monetary policy intervention is particularly effective in curbing financial excesses.
(b) Balance sheet consolidation and a reduction in NPLs Continuing high levels of non-performing loans in some euro area countries pose a number of problems, since they constrain banks’ profitability and generate provisioning needs that weigh on the level of own funds, and even a viability risk for the most fragile banks. But since the introduction of the SSM, large European banks have overall significantly reduced their outstanding NPLs. This outstanding amount reached EUR 587 billion in March 2019, compared with over EUR 1,000 billion at the end of 2014. French banks, for their part, have always outperformed their European peers: their NPL ratio has always been below the European average, now standing at 2.8% (against 3.1% for the EU). Furthermore, French banks consistently displayed an NPL coverage ratio of more than 50% over the December 2009-June 2019 period, well above the 45% average for European banks. (c) Results of the recent stress tests Prudential stress tests are simulation exercises designed to assess the impact of a given economic and financial scenario on an institution’s prudential situation, in order to test its financial soundness. During the crisis, they were first used as a crisis management tool to identify the most vulnerable banks for which recapitalisation measures were needed. Their role then evolved into an essential and flexible tool for the supervision, oversight and management of risks and vulnerabilities of banks considered individually (microprudential supervision) as well as for financial stability purposes (macroprudential supervision).

This has included convening topic-specific roundtables and seminars, supporting analytical and policy initiatives, and providing periodic updates on hot topics in the sector. What have we learned? Some tentative conclusions  The work undertaken by the Accelerator has been of significant value, both for the Bank and, we believe, for the broader FinTech community. For the Bank, we have gained first-hand experience of a range of new technologies, helping us to evaluate their application both to the Bank’s own functions and in the wider market. Our work on DLT has helped us start to think through how the financial networks of the future may be able to operate in safer and more efficient ways, and how we can ensure they can continue to benefit from access to central bank money. Our work on data analysis has thrown light on how we can manage ever larger data sets to monitor the economy and the financial system in real time and draw out patterns that might help us set better policy or spot the next crisis coming before it happens. And our work on machine learning has helped us take the first baby steps towards engaging with that data in a more interactive way, putting computers alongside our staff to help them form the judgments on which monetary and financial stability depend.