samchain/econo-pairs-v1 huggingface dataset:
Hansen, Lars Peter, and, Thomas J. Sargent, 2008, Robustness, Princeton, NJ: Princeton University Press. Kiley, Michael T., 2014, “An evaluation of the inflationary pressure associated with short- and long-term unemployment(external),” Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System, No. 2014–28. Kocherlakota, Narayana, 2013, “A time of testing,” speech, St. Paul Chamber of Commerce, St. Paul, MN, November 12. Krueger, Alan B., Judd Cramer and David Cho, 2014, “Are the long-term unemployed on the margins of the labor market? (external),” Brookings Papers on Economic Activity, Spring. Lockhart, Dennis, 2014, “Thoughts on liftoff,” speech, Global Interdependence Center, Sixth Annual Rocky Mountain Economic Summit, Jackson Hole, WY, July 11. Mueller, Andreas I., Jesse Rothstein and Till M. von Wachter, 2013, “Unemployment insurance and disability insurance in the Great Recession,” National Bureau of Economic Research, working paper, No. 19672, November. Shierholz, Heidi, Lawrence Mishel and John Schmitt, 2013, “Don’t blame the robots: Assessing the job polarization explanation of growing wage inequality,” Economic Policy Institute, working paper, November 19. BIS central bankers’ speeches  9

In this context, we felt it was vitally important to defuse these unfounded fears that were not only fragmenting the euro area’s financial markets, but also, in the longer term, threatening to undermine the effectiveness of our monetary policy. That is why we created the OMT which will consist of an ex ante unlimited intervention on the secondary market to acquire sovereign bonds for which we consider the risk premium applied by the markets is unjustifiably high. The OMT will therefore represent a massive and effective backstop to the unjustifiable increase in sovereign yields and will allow us to counter the fragmentation of the euro area’s markets and restore the proper transmission of our monetary policy. The use of this instrument will be subject to very strict conditions: States must have previously negotiated a programme with the ESM and must respect their commitments regarding fiscal consolidation, financial reforms and competitiveness. This should enable a return of confidence and stability, not just in the short and medium term thanks to our action, but also on a longer term basis. *** Today, the euro area is advancing with determination in the right direction. The Eurosystem’s monetary policy is a source of immediate confidence and stability. Its governments are making fiscal, structural, financial and institutional reforms that will ensure the future stability and growth of the euro area. Our determination is total and our efforts must be continued relentlessly. I thank you for your attention. 4  BIS central bankers’ speeches
This must surely be considered an ambitious goal. Sizeable imbalances can be seen in the global economy. The massive US current account deficit is eating up a large share of total global saving at present. Managed exchange rates elsewhere, for example in China, delay markets in responding to this problem. Economists claim that a change is inevitable, and the later that it comes, the more upheaval it will cause when it eventually does. As far as Iceland is concerned, however, external conditions have been favourable so far. It enjoys high creditworthiness and wide open access to markets. Interest rates have been low and product prices high, making the strong position of the króna – which will not last forever – much easier than otherwise for many to weather. But we need to make  2  BIS Review 82/2005  sure that favourable external conditions in most areas do not become a fundamental precondition for our own success. In my opinion – after only a few weeks at the Central Bank of Iceland –one of the main reasons that its management is employed there is to pay particular attention to risks in the economy. I shall mention the following illustration. Of course it is perfectly normal for progressive and rapidly growing banks, which feel constrained by the small size of the Icelandic market, to be eager for foreign capital in their efforts to expand and reap profits. The financial system infrastructure and all the criteria assessed by supervisory authorities and ratings agencies are in excellent shape.

I will return to the important issue of transparency in a moment, when I discuss the ECB’s monetary policy strategy. With regard to accountability, let me simply highlight that, drawing on the successful experience of several central banks, in October 1998 the Governing Council of the ECB decided to publish a quantitative definition of price stability. This definition of price stability as an annual increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2% provides a clear yardstick against which the public, its elected representatives and agents in the media can hold the ECB accountable. The ECB’s monetary policy strategy Within this institutional framework, how should price stability be maintained? This question is addressed by the ECB’s monetary policy strategy. It is obvious that the development of the ECB’s strategic framework drew heavily on the experience of euro area NCBs prior to Monetary Union. This is one area where the experience of national central banks was extremely influential and important. Prior to the introduction of the euro, several central banks, including the Banque de France, assigned a prominent role to money within their monetary policy strategy. Some announced intermediate monetary targets, while others adopted monitoring or reference ranges for monetary growth. At the same time, other euro area central banks emphasised the role of inflation forecasts as the key monetary policy indicator. Of these, several proceeded to announce direct inflation targets, as became fashionable in the 1990s.
Arnór Sighvatsson: Iceland’s future monetary and exchange rate regime Speech by Mr Arnór Sighvatsson, Deputy Governor of the Central Bank of Iceland, at a meeting of the Icelandic Federation of Labour, Reykjavík, 10 January 2012. *  *  *  Ladies and gentlemen: In the wake of severe financial and monetary instability, it is appropriate for the Icelandic authorities to conduct a comprehensive review of Iceland’s exchange rate and monetary policy regime. The re-assessment must be based on an accurate diagnosis. The authorities should not only review the experience of recent years, but also grapple with the fundamental questions of why Iceland’s monetary policy track record has been so dismal, over nearly a century, that the Icelandic króna has depreciated by 99.95% against the Danish krone since the two currencies were uncoupled in 1920. Monetary policy generally faces two conflicting roles of the currency exchange rate: to be an anchor of monetary policy, on the one hand, and a tool for adjustment, on the other. During the Icelandic króna’s lifetime as an independent currency, exchange rate policy has moved along the axis between fixing and floating, but without managing to stop the virtually uninterrupted erosion of the króna’s purchasing power except for short periods of time. There could be four potential types of explanations for Iceland’s poor performance in the field of monetary policy, and corresponding types of measures for improving the performance: 1. First of all, the source of the problem might be the implementation of monetary policy or its framework.

Considering those characteristics, adopting any currency other than the euro would have serious drawbacks.8 Therefore, reforming the current regime appears preferable to a radical change should EMU membership be unattainable, at least for the next decade. The fact that the vast majority of small countries either use another country’s currency or pursue some type of rigid fixed exchange rate policy could indicate, however, that a floating currency may face difficulties over the long haul (Chart 3). Ladies and gentlemen: No monetary framework or choice of currency will solve Iceland’s economic problems once and for all. The set of solutions labelled “cure-for-all-ills” is an empty set. Protracted discussions of the contents of an empty set are not only empty in themselves; they are absolutely pointless. Irrespective of the framework, economic policy must be pursued with greater discipline than has been the case to date. However, imposing a framework that forces the authorities to adopt more long-term oriented policies could improve performance. One way to do this is to join a currency union. The experience of Greece and other countries on the periphery of the EMU shows, however, that if economic policies remain short-sighted and solving imminent fiscal problems is delayed for too long, the imposed discipline is anything but palatable. I think Iceland’s experience of its collaboration with the IMF indicates, however, that it would flourish under such discipline. But if EMU membership is not an option, that discipline must come from within.
In every crisis, depositors would typically ask for foreign currency cash, inducing exchange rate pressures and prompting monetary policy tightening in order to counter those pressures. Euro adoption was the only way to get rid of currency mismatches and endow the central bank with the ability to provide euro liquidity in the case of emergency. This eventually took place at the beginning of this year, after a process that was internally started in 2017 and followed a new, more complicated procedure (due to the changed euro area architecture after the crisis). EDP, MIP, BU... The process was successfully completed in the shortest possible time, five years. Before the introduction, however, we also had to deal with public fear of unwarranted price increases, in particular due to the euro introduction taking place during a period of high inflation. Nevertheless, the immediate impact of the changeover on the aggregate price level was in line with the experiences of other Member States, around 0.4 p.p. What were the immediate effects? Credit rating agencies responded promptly to the elimination of currency and liquidity requirements, increasing the sovereign rating by two notches immediately following the formal decision on euro adoption. Also, market participants repriced government bonds, reducing the yields by around 80 bps, with some additional price in effect taking place even before the decision. At the time of the entry, reducing high mandatory reserve requirement from 9% to 1%, and foreign currency liquidity requirement from 17% to 0, substantially increased excess liquidity.

In my intervention this afternoon, I would like to offer first some views on why the new capital framework is necessary. I would then like to address two topics: firstly, co-operation among supervisors; and secondly, the work that must continue to maintain the relevancy of the framework. 2. The benefits of Basel II. Why the new framework is the one we need. Forward-looking approach to capital and risk management As I mentioned before, the new capital framework takes a forward-looking approach to capital and risk management that will remain up-to-date with sound practices in the industry. In the sixteen years since the 1988 Accord was adopted, the tools for measuring and managing risk have evolved in ways that its architects could not have anticipated. Improvements in technology and telecommunications, the explosive growth in the markets for securitised assets and for credit derivatives, and the emergence of new disciplines in risk management - such as operational risk management - have changed the ways that banks measure and manage their risks. As risk management practices become more sophisticated, the static and very simple rules of the 1988 Accord are becoming less relevant to the most sophisticated and complex banking businesses. Therefore, in the mid-1990s, the Basel Committee agreed that it was time to develop a new framework for capital. Our goal was to develop a new approach that would be more sensitive to the actual risks that banks take on and that would ensure a level playing field for banks that compete globally.
But, you might say, the behaviour of borrowers and lenders, whether rational or based on distorted expectations, ultimately depends on interest rates. Only if interest rates are low, can such a dynamic develop. Interest rates in turn are strongly influenced by central banks. In the last part of my speech I would like to address this argument, and discuss the question that has come back into focus since the financial crisis: What role do central banks play in the event of excesses and crises on the credit market? The fundamental task of central banks like the SNB is to ensure price stability, while taking due account of economic developments (cf. slide 17). The main instrument they use for this are key or reference interest rates. If, for example, the inflation rate threatens to fall too low, key rates are lowered. This has a positive impact on price development via various channels. 19 One of these is loans: An interest rate cut reduces borrowing costs and creates incentives for expanding the credit supply. This encourages investments and consumer expenditure and ultimately has a positive effect on price development, too. With their interest rate decisions, central banks therefore consciously influence lending practice. If, for price stability reasons, interest rates have to be kept low for a prolonged period, it is possible that over time there  18  SFBC (1998). 19  The literature distinguishes different channels through which monetary policy can impact on aggregate demand and thus inflation.

(2016), Cost-benefit analysis of leaning against the wind: are costs larger also with less effective macroprudential policy?, IMF Working Paper, 16/3, January. Taylor, A. (2015), Credit, financial stability, and the macroeconomy, NBER Working Paper, 21039, March. Tinbergen, J. (1956), Economic policy: principles and design, North-Holland. Page 16/16  Credit, debt and growth  Fritz Zurbrügg Vice Chairman of the Governing Board Swiss National Bank Collegium generale Berne, 1 November 2017  Debt vs. credit  Debt:  debere = to owe  Credit:  credere = to believe, trust creditum = that which is entrusted in good faith  2  1 November 2017  Collegium generale | Fritz Zurbrügg | © Swiss National Bank  Contents  Part 1: Why are loans useful from an economic perspective? Part 2: Under what circumstances is lending detrimental to an economy? Part 3: What role do central banks play in the credit cycle? 3  1 November 2017  Collegium generale | Fritz Zurbrügg | © Swiss National Bank  Part 1: Why are loans useful from an economic perspective?
BIS central bankers’ speeches  11  Chart 10: Average hours have fallen since the start of 2015, but additional reported desired hours have also fallen in tandem 33  0.7  Average hours per head (LHS) Reported average desired hours per head (LHS) Net additional reported desired hours per head (RHS)  32.5  0.6 0.5 0.4  Hours  0.2 0.1  31.5  Hours  0.3  32  0 -0.1  31  -0.2 -0.3 -0.4 Jun 15  Oct 14  Feb 14  Jun 13  Oct 12  Feb 12  Jun 11  Oct 10  Feb 10  Jun 09  Oct 08  Feb 08  Jun 07  Oct 06  Feb 06  Jun 05  Oct 04  Feb 04  Jun 03  Oct 02  Feb 02  Jun 01  30.5  Source: ONS and Bank calculations. Chart 11: Employment growth still solid 5 Employment growth (oya) Employment growth (3m annl.) 4  2 1  Per cent  3  0 -1  Sep 15  Jul 15  May 15  Mar 15  Jan 15  Nov 14  Sep 14  Jul 14  May 14  Mar 14  Jan 14  Nov 13  Sep 13  Jul 13  May 13  Mar 13  Jan 13  -2  Notes: LFS heads. Source: ONS.

Mr Duisenberg reports on the outcome of the latest meeting of the ECB Governing Council Introductory statement by the President of the European Central Bank, Dr W F Duisenberg at the press conference held in Frankfurt on 6 May 1999. Ladies and gentlemen, the Vice-President and I are here today to report on the outcome of today’s meeting of the Governing Council of the ECB. The Governing Council reviewed, as usual, the main monetary, financial and other economic indicators in line with its monetary policy strategy. Following this discussion it decided to keep the ECB’s interest rates unchanged. The interest rate on the main refinancing operations will thus remain 2.5%. In addition, the interest rate on the marginal lending facility will continue to be 3.5% and that on the deposit facility will remain 1.5%. Let me give you some details about our latest assessment of the monetary policy stance and thereby provide explanations for the decisions taken today. Overall, monetary developments and our broadly based assessment of future price developments do not signal dangers to price stability over the short and medium term. With regard to monetary developments in the euro area, in March 1999 the 12-month rate of growth of M3 remained constant at 5.1%. While the pace of increase in overnight deposits reduced further, signalling the waning influence of the uncertainties surrounding the launch of the euro, deposits with an agreed maturity of up to two years grew at a stronger pace in March than in February 1999.
the SRB, in the case of the Banking Union. Admittedly, setting a relatively long transition period may add complexity to the resolution processes that have to be managed during that period. As stated, current regulations require that resolution funds should only be activated when the institution has absorbed losses for an amount equivalent to 8% of liabilities. Evidently, if the bank did not yet have sufficient loss-absorbing debt instruments because the transition period were not over, the established requirement would only be met if haircuts were imposed on other creditors, such as deposit-holders. While the deposits covered by national guarantee schemes would be excluded from loss-bearing, there is no doubt this step might prove destabilising. Thus, in the ongoing revision of the Directive, it might be wise to add a flexibility clause in respect of the requirements established for the use of funds external to the banks concerned 8/10  in their resolution processes, at least for the duration of the transition period set for the fulfilment of the MREL requirements. Lastly, before concluding this section, a remark on the need for coordination among the different Banking Union authorities. The current regulations and the European Commission’s proposals for their revision afford the SRB extensive discretion for deciding, case by case, on questions as important as the objective volume of MREL, the nature of the eligible instruments and the transition regime.

Furthermore, new flow of credit demand has been sluggish, owing to the low-growth prospect, low private investment, excess capacity in many industries, and low commodity prices. The loan growth prospect has also been hampered by the more attractive funding sources in the capital market. Debt overhangs of both corporates and households in many Asian economies have also undermined investment and consumption, while threatening financial stability in some countries. In addition, the trend towards trade protectionism and growing geopolitical tension in the Northeast Asia and the South China Sea could jeopardise both growth and stability in our region, leading to financial volatility and possibly much higher cost of funds. Along with rapidly changing and increasingly volatile economic and financial environment, technology advancement is fast re-designing financial and business landscape. Sharing economy will soon become the key feature of modern economy and financial system. Crossborder transactions of e-commerce as well as payment and settlement will become more widespread. New fin-tech firms have offered financial products unbundled from the 2  longstanding value chain of banks. Certain banks’ existing business models might be obsolete and they must be agile enough to keep up with customers’ new lifestyle and requirements as well as competitors’ new business practices. In the current world, banks having economies of scale and scope might not gain advantages without agility and economies of speed. And, one should not forget that new forms of technology also bring along new forms of risks. Among others, cyber safety should be in the top priority of all banks.
In the EU countries that are not using the euro, the effects from monetary conditions in the euro area led to improving macroeconomic environment, loosening financing conditions, and high bank liquidity. That stimulated lending and, in turn, the increase in residential property prices. However, these developments also increased cyclical risks. The Bulgarian National Bank conducted research into Bulgaria’s financial cycle. Our findings showed that we are currently in an upward phase of cyclical risk accumulation. Hence, we activated and then raised the rate of the countercyclical capital buffer. We have so far taken two decisions. In 2018, we set the countercyclical capital buffer rate applicable to credit risk exposures in Bulgaria at 0.5%, with effect from October 1 2019. In early 2019 we raised the rate to 1.0%, with effect from April 1 2020. The rate is applied to the overall credit stock of banks and not to the volume of newly issued loans. We announced that we could increase the rate to a higher level earlier if credit growth significantly accelerates. Our decisions were taken despite the fact that the standard metric of how the credit-to-GDP ratio deviates from its long-term trend remained deep in negative territory. Furthermore, we strengthened the macroprudential powers of the Bulgarian National Bank. The key element here was the introduction into Bulgarian law of a framework of borrower-based measures – requirements such as loan-to-value (LTV) and loan-to-income (LTI) – in addition to the existing capital-based measures.

I shall explain why. The reason is that the foreign currency reserve needs to be much larger than before, as the banks’ funding in foreign currency has expanded so much over the past ten years. And this means that the traditional funding sources, equity and banknotes and coins, are not enough. How should the Riksbank fund its assets? As I have already described, the Riksbank chose to borrow foreign currency on the international capital market through the Swedish National Debt Office when the foreign currency reserve was strengthened. We assessed that this was the most suitable procedure at the time and it functioned well and is still doing so. Although the Riksbank is able to borrow euros and dollars at a low cost on the capital market through the National Debt Office, the interest expenditure for the currency loans is higher than the return the Riksbank receives on the money when it is invested in safe assets with very low risk. The difference is around 0.2 per cent. This means that the strengthening of the foreign currency reserve of SEK 200 billion costs the Riksbank around SEK 400 million a year. One can regard this cost as a form of insurance premium that the Riksbank considers is worth paying to ensure a good level of preparedness for a crisis. As the Swedish banking  4  See Peter Sellin and Virginia Queijo von Heideken: “The banking system’s liquidity surplus and interest rate formation” in Sveriges Riksbank Economic Review 2014:3.