samchain/econo-pairs-v1 huggingface dataset:
In wholesale markets it has the capacity to change fundamentally the relationships between end-users, intermediaries and organised exchanges by affecting the whole spectrum of activity from trading through clearing to payment and settlement, across the whole range of financial instruments and across national boundaries - not just within Europe which was until recently the immediate focus of attention, but much more widely internationally. Beyond a general evolution towards international consolidation of trading activity and parallel, though not necessarily coincident, consolidation of clearing and settlement, it is not at all clear precisely where all this is taking us - just where the end point is or what the stepping stones are that will get us there. But it is clear that standing aside is not an option. That’s why we are seeing such a proliferation of initiatives as the various market participants feel their way ahead. It is in that context that I welcome the iX initiative which Gavin has described to us this morning. The process of integration will involve a huge cooperative effort on the part of market participants, but it will also involve active cross-border cooperation between the relevant financial regulators and central banks. Our role is not to determine the way ahead, but to facilitate the steps that the markets themselves decide upon, consistently with our public policy concerns. The prize - of greater market efficiency and liquidity and of more effective international allocation of financial resources - is immense.

Overall, factors that affect inflation showed low activity intensity and prices of other goods of the basket do not signal for inflationary pressures on the economy. From the macroeconomic perspective, the downtrend of annual inflation is dictated primarily by rapid decline of pressures on the supply side, notably: slowdown of commodities price rise in international markets and low inflation in our main trade partner countries; cancelling out of the administered price rise effect; and stability of the national currency. Although these developments had been factorised by our analyses and projections, their influence was higher than expected. On the other hand, inflationary pressures originating from the aggregate demand continued to be low, in the context of below-potential economic growth and anchored expectations on inflation. Figures on real economy developments in early 2012 are scarce. Indirect statistical data, available for the monetary, fiscal and trade sectors of the economy, signal for slow economic growth in the first quarter of the year. As expected, aggregate demand was sustained less by the fiscal stimulus, in response to the prudent fiscal behaviour for 2012. Similarly, the contribution of foreign demand, during this period, is assessed as low, owing to economic activity slowdown in our partner countries. Moreover, despite signals for its recovery, the domestic private demand remains slow, given the consumers and private business hesitation to spend and invest. Fiscal sector data for January reveal positive budget balance for this year, about ALL 1.6 billion.
To be clear, this is not the same as saying that the growth rate of the supply potential of our economy has been permanently scarred by the financial crisis. But rather over the next two or three years – which is the horizon which matters for monetary policy – we shouldn’t automatically assume that underlying productivity will necessary grow at the sorts of rates to which we have become accustomed to in the past. Policymakers need to think about supply as well as demand when responding to weak output growth. Recent policy developments Let me conclude with some brief comments about the current policy outlook. You may know that between February and August of this year, I was one of the members of the MPC that had been voting to raise Bank Rate. As I mentioned at the time, my vote was not based on the nice reasons that the economic recovery looked firmly entrenched and the exceptional monetary easing implemented at the height of the crisis was no longer required. Rather, it was driven by nasty reasons. I wasn’t confident about the strength of the recovery and I was worried about the downside risks to growth. But I was even more worried about the outlook for inflation. In particular, the risks from continuing global price pressures, and the risk that the prolonged period of high inflation would affect the credibility of monetary policy.

And indeed, based in part on the pattern of past revisions, the MPC does think that the current and recent level of measured output is more likely to be revised up than down (Chart 3).6 But such revisions are likely to provide only a partial explanation of the productivity puzzle. For example, if GDP were to be revised in line with the path the MPC judge most likely, that would account for only around one fifth of the 9% productivity shortfall.7 If labour hoarding and data revisions provide only a partial explanation of the recent sluggishness of productivity growth, what else might account for it? Difficulty of extrapolating from the past The second explanation is that it might be misleading to extrapolate from previous trends when gauging the extent of the productivity puzzle. The past is not necessarily a good guide to the future. In particular, there are reasons to think that past productivity growth in both the energy extraction sector and the financial services sector may provide a poor guide to more recent trends in underlying growth in those sectors. In the twenty years prior to the financial crisis, productivity in the energy sector grew at an average annual rate of over 3%. But the pace of productivity growth slowed markedly in the past decade or so as North Sea oil fields aged and energy extraction became more difficult. Indeed, since the mid-2000s, productivity has actually been falling (Chart 4).
As it will usually be a question of taking measures that are unpopular – for example limiting the possibilities of households to borrow money in a way that will restrict their choices about where they can live, or limiting the possibilities of financial companies to earn money – it is vital that someone is made responsible for ensuring that the measures are actually taken. This may well be, as the Commission suggests, the Riksbank or Finansinspektionen. However, I am sceptical about both authorities being responsible, as it will be all too easy to blame each other when a crisis actually develops.18 It is of course natural for the Riksbank to play a central role in macroprudential policy, as financial stability is a precondition for macroeconomic stability and risks to financial stability are therefore analysed on an ongoing basis.19 However, a responsibility for macroprudential policy may potentially come into conflict with the independence the Riksbank has in the field of monetary policy. This is an independence based on the realisation that a politicallygoverned monetary policy tends to be inflationary, as it may be tempting for political reasons to renege on a promise of low inflation and to conduct a more inflationary monetary policy that reduces unemployment in the short-term.20 However, independence goes hand in hand with a clearly-defined objective for monetary policy that can be constantly evaluated. Macroprudential policy is different in nature, as the objective is to prevent crises.

Karolina Ekholm: Monetary policy, business cycle stabilisation and macroprudential policy Speech by Ms Karolina Ekholm, Deputy Governor of the Sveriges Riksbank, to a meeting at the Confederation of Swedish Enterprise, Stockholm, 13 March 2013. *  *  *  The views expressed in this speech are my own and are not necessarily shared by the other members of the Executive Board of the Riksbank. I would like to thank Kerstin Hallsten, Kerstin af Jochnick, Cecilia RoosIsaksson, Lars E. O. Svensson, Anders Vredin and Barbro Wickman-Parak for their comments and Magnus Wiberg for help with drafting the speech. As I am sure most of you know, I have in recent years advocated a more expansionary monetary policy than the policy that has actually been conducted. That I have done so recently, when the growth of the Swedish economy has been relatively weak, is perhaps not so surprising. On the other hand, it may be more difficult to understand the reasons for my stance in 2010, when the Swedish economy had growth rates of over 5 per cent. However, as I intend to explain today, I believe that demand has been too low in Sweden ever since the global financial crisis seriously affected the Swedish economy in the autumn of 2008. The low level of demand is ultimately the result of weak economic development around the world, which is subduing the demand for Swedish exports and making households and companies more pessimistic.
A few years ago, these ideas would have sounded difficult, but today we are edging ever closer to realising many of them, which is indicative of the rapid pace of change in the offshore RMB market. But as we all recognise, this will be a paced process and not something that would or should happen overnight. On this front, the HKMA has been engaging with Mainland Chinese authorities on further expanding fund flows between the onshore and offshore RMB markets. And I am pleased to say that significant progress has been made. Most recently, the quota for the RMB Qualified Foreign Institutional Investor (RQFII) scheme was expanded by RMB200 billion, bringing the total to RMB270 billion. The Qianhai cross-border lending pilot scheme was also launched, enabling companies incorporated in Qianhai to borrow RMB loans from banks in Hong Kong for uses relating to the development of Qianhai. I look forward to the further streamlining of policy arrangements so that all cross-border transactions currently settled in US dollars can have the option to be settled in RMB also. This in turn could be followed by the continued relaxation of cross-border flows of RMB into and out of Mainland China along with the liberalisation of China’s capital account. The relaxation of capital account restrictions, the expansion of the offshore RMB market, and an increase in the financial depth of the onshore markets can be mutually reinforcing and beneficial to the growth of the offshore RMB market.

As we consider the possibilities for the offshore RMB market, it is instructive to review the development of the Eurodollar market. What are the key underlying elements that have driven the growth of the Eurodollar market and how do they feature in the current offshore RMB market environment? The Eurodollar market as a comparison A close examination of the differences and similarities between the two markets can help shed light on how offshore RMB market activities might evolve as well as how its further development can be fostered. Let’s compare the two markets using four sets of characteristics. Economic weight and trade centrality The first set of characteristics involves economic weight and trade centrality. The Eurodollar market is an offshore market for the currency of a country that has both. Similarly, the offshore RMB market is supported by China’s rapidly expanding economy and its substantial trade links with other parts of the world, given its status as the world’s second largest economy and largest trading nation. Indeed, these are two important macro trends that are driving offshore RMB market activities now and in the future. In roughly three years since the relevant policies were liberalised, currently some 10% of Mainland China’s total trade, about 12% of foreign direct investment into China and about 4% of outward direct investment from China are settled in RMB. 1  Mr Tony Shale, Chief Executive Officer, Euromoney Institutional Investor, Asia. 2  Mr Richard Morrow, Editor, Asiamoney.
Fluctuations in equity markets are less pronounced but are still wider than before the market turbulence began. Expected corporate earnings have not changed substantially since March 2009. It is likely that the recovery in equity markets primarily reflects a reduction in uncertainty and lower risk premiums. Oil prices have doubled since the trough in December 2008, reflecting OPEC production cuts and concerns in non-OPEC countries about supply further ahead. In addition, a number of  BIS Review 115/2009  1  market participants expect that oil demand ahead will increase at a more rapid pace than assumed as global economic activity picks up. Expectations of future economic growth are pushing up oil futures prices. Oil consumption is now rising in China but has been very low in western economies. OPEC spare production capacity is still increasing and oil inventories in advanced economies are high. Oil prices have nonetheless held up. Keeping large inventories is profitable when oil futures prices are high. However, the scales are easily tipped. If expectations of higher demand deteriorate, futures prices will fall and, in turn, prices for immediate delivery. Large oil inventories may then push down prices even further. The krone is floating and fluctuates somewhat. The krone tends to appreciate in good times and depreciate when negative shocks occur in the Norwegian economy. Fiscal policy and the petroleum fund mechanism, however, contribute to maintaining the stability of the krone.

15 Previous fluctuations in inflation, real interest rates and tax rules have created redistributions that have benefited certain generations at the cost of others and that have created an economic middle class of middle-aged and older people with relatively strong economic resources. Increasingly difficult to enter the housing market At the same time, those people outside the owned housing market, the outsiders, have not been able to take advantage of this development, and the high prices have made it increasingly difficult for them to be able to purchase a home at all. Particularly in metropolitan areas, it is difficult to save enough for a down payment without help. Without parents who can contribute to a down payment or stand as co-borrower for a mortgage, it has become more difficult for many firsttime buyers to purchase a home. The development of the housing market has therefore led to great differences in possibilities for people to enter the housing market. Another aspect of the problems on the owned housing market is that the lack of opportunities to purchase a home forces many young people to sublet. Subletting is often expensive and insecure for the subtenant, at the same time as their consumer protection is weak. Difficulties in finding a home also lead to problems in  14 Långtidsutredningen [Long-Term Survey of the Swedish Economy] (2015) and Jahnson, D. and J Lundberg (2013). 15 Långtidsutredningen [Long-Term Survey of the Swedish Economy] (2003). 5 [13]  skills supply.
The upswing – a new structure of banking The roots of the problem lay in the so-called “great stability” of steady growth and inflation and in particular the last five years of persistently low nominal interest rates. The confidence born of that stability was combined with an increased institutional demand for fixed income and heightened international competition among the largest banks to develop scale. That led to a remarkable decline in corporate investment yields which was matched, and for a while seemed justified, by declining volatility (see Chart 1 which shows the fall the spreads and volatility of high yield bonds). 1 And it put pressure on investors to find new ways of generating returns from credit. At the same time advances in IT and financial modelling allowed the development of new derivatives, and the slicing, dicing and recombining of credits in new structured credit instruments. The search for yield would have made the US sub-prime mortgage market attractive to many investors. What made it irresistible was the financial engineering that offered high yields with high credit ratings. The success of structured credit created a huge demand for the raw material of these products in particular sub-prime mortgages (Chart 2). It allowed banks to move increasingly from the traditional “lend and hold” model towards an “originate and distribute” model. This boosted the supply of credit and allowed risk to be more widely dispersed across the system as a whole. But it also involved a long chain of participants from the original lenders to endinvestors.

Oct. Jan. 2006  2007  40  40  20  United States  20  United Kingdom 0  08  Source: Datastream and JP Morgan Chase & Co. (a) Equity and property indices rebased to Jan. 06 = 100. BIS Review 24/2008  60  Euro area Jan.  Apr. Jul. 2007  Oct.  Feb.  May. 08  0 -20  Aug. Source: Bloomberg. (a) 3-month LIBOR spreads over 3-month overnight index swap (OIS) rates. (b) Solid lines show 3 month historical data, with dotted lines derived from forwards. 5  Chart 5: Sub-prime mortgage losses  Chart 6: Monoline CDS prices(a)  $ billions 350 300 250 200 150 100 50 0 Default losses to date (a)  Projected losses (cashflow method)  Projected Writedowns losses to date (market prices) (b)  Sources: Bloomberg, Banks' financial statements and Bank calculations. (a) Estimated default losses to date on subprime securities based on cumulative delinquency rates. (b) Net of hedging. •  •  Sources: Bank of England, Barclays Capital, Goldman Sachs, IMF and Moodys. (a) Average of bid and offer premia of five-year senior debt CDS contracts.
These rules establish that it will be the shareholders and investors who will bear, in the first instance, the losses of a bank. In 2016 additional rules will come into force, protecting member states and taxpayers from having to pay for systemically relevant banks by establishing a resolution fund paid for by banks. It will take eight years for the fund to reach its target level of 55 billion euro. Is this not too little, too late? It will be a quite significant amount, taking into account several other safety buffers. First, banks have considerably increased their own funds in recent years. Second, the resolution fund will only be used after contributions have been made from shareholders and creditors. These could reach up to 8% of liabilities, which is already a significant amount. Thus the overall loss-absorbing capacity of banks has increased considerably. The resolution fund comes on top of this. The third pillar of banking union, the creation of a European fund to guarantee savings deposits, has come to a standstill. Should we be worried? Not unduly, because deposits are already guaranteed up to 100,000 euro at the national level. But more importantly: if the first two pillars of the banking union work properly and secure the stability of individual banks and the banking system, the need for a joint fund significantly diminishes. The stress tests revealed worrying weaknesses in Italian banks. Is Italy the weak link in the euro area?

Muhammad Al-Jasser: Review of the latest economic developments in Saudi Arabia Speech by His Excellency Dr Muhammad Al-Jasser, Governor of the Saudi Arabian Monetary Agency (SAMA), to the Custodian of the Two Holy Mosques, on the presentation of the 46th Annual Report of the Saudi Arabian Monetary Agency, Riyadh, 25 September 2010. *  *  *  It is a great pleasure for me that the celebration of our National Day coincides with the submission of the 46th Annual Report of Saudi Arabian Monetary Agency which reviews the latest economic developments in the Kingdom for fiscal year 1430/1431H. (2009) and the first quarter of the current year. Custodian of the Two Holy Mosques, The impact of the global financial crisis on the world economy continued during 2009, with the world production of goods and services recording a downturn of 0.6 percent in 2009. However, economic variables over the past months of the current year indicate positive growth rates. Given that our national economy is characterized by its openness to the external world and high levels of trade integration with it, it is natural to affect and be affected by developments in the global economic system. The growth rate of GDP at constant prices declined to 0.6 percent in the Kingdom during 2009 compared to 4.2 percent in the preceding year. The non-oil sector maintained good growth rates, growing by 3.8 percent in 2009 compared to 4.3 percent in the preceding year.
These purchases, far higher than those in Europe, have been conducted with the express purpose of contributing to easing monetary and financial conditions. The Bank of England has, in this respect, been closer to the Federal Reserve than to the ECB. There have therefore been notable divergences in the use of unconventional instruments between the ECB, on one side, and the Federal Reserve and the Bank of England on the other. BIS central bankers’ speeches  3  These divergences reflect the characteristics of the respective financial systems, in particular the predominant role of banks in the euro area compared with the greater significance of capital markets in the United States and the United Kingdom. However, they also respond to a different perception of the risks that a central bank can and should assume in terms of its credibility and reputation. Widespread opinion has it that the Fed’s strategy has involved some blurring of the boundaries between monetary, fiscal and financial stability policies. The ECB, on the other hand, has kept a greater distance from these boundaries because the joint existence of a single central bank with the fiscal and financial authorities of 17 independent countries (18 as of today and, possibly, 19 as from January) poses particular challenges and difficulties. In sum, I have focused on structural aspects of monetary policy. I believe, nonetheless, that some brief thoughts on the monetary policy decisions adopted by the ECB governing Council last week would not go amiss.

Competitiveness is determined by the intrinsic efficiency of the economy, which is in turn the result of investment, productivity, structural evolution, and so on; these may in turn be amenable to influence by government policy in various fields, but the role of monetary policy is to provide a stable monetary environment within which those longer-term forces can operate most propitiously, and not itself to attempt short-term fine-tuning. There is one further aspect of this debate which I should like to address, since it seems to be the focus of increasing attention. It is the issue of what should or should not be done with the Hong Kong dollar, were the renminbi to move more flexibly against the US dollar, and, more particularly, whether we should consider pegging the Hong Kong dollar to the renminbi. Adjustment of competitiveness Prices in Hong Kong are observed to be flexible in both directions in response to market forces. One of these forces is the influence of competing prices from the Mainland; our research indicates that there is a gradual process of convergence at work (which includes rises in prices across the border as well as falls in Hong Kong), although this may be weaker than some observers claim and certainly 3 does not mean that prices will or should eventually equalise completely. Moreover, prices of tradables in Hong Kong are found to be particularly adept at adjusting to movements in the effective exchange rate.