samchain/econo-pairs-v1 huggingface dataset:
But you know full well – as  does the private sector – that, when the time comes, you’ll want to do something else in that case. It’s one thing to promise in abstract to be “irresponsible”, in advance of some hypothetical inflationary shock. It’s quite another, in the teeth of a real one, actually to be irresponsible. By that time the promise is in the past, the inflation is happening now and it obviously feels more important to deal with what’s in front of you than to abide by a pledge you might have given some time – even some years – earlier. Knowing this, people will naturally be sceptical about the promise in the first place and the policy would lose its force[14]. You’d be back in the world of the red line in Chart 4 (subject to the effects of QE). In a paper in 2019[15] economists at the Bank formalised this idea by introducing a probability that the central bank reneges on earlier commitments. The probability was assumed to rise in line with the scale of the subsequent inflation (and therefore the temptation to abandon the promise). But it’s precisely from the possibility of these high-inflation states of the world that the prior commitment really gains its force. (This is the Catch-22 of time-inconsistent policies: the only promise worth making is one you’ll subsequently be tempted to break).

I said the simple pre-crisis pattern in Chart 1 was the appropriate way to set interest rates if you’re in an environment where swings in economic growth are driven predominantly by shocks to demand, things that push output and inflation in the same direction, and if there are few other enduring shocks to inflation. But if that was a reasonable view of the world in the years before the financial crisis – a period some now call the “the Great Moderation” – it’s clearly been much less of one since. Productivity growth is less predictable and it’s harder to count on a single rate of “trend growth”. (Nor can we be assured of a fixed, “neutral” rate of interest, below which policy is necessarily expansionary and contractionary only above it. In particular, it became clear even before the crisis, and increasingly so after it, that this “neutral rate” had over many years been declining.) And if we’d forgotten during the Great Moderation that domestic output isn’t the only thing that affects inflation we’ve certainly been reminded of it since. In the UK, the two big exchange-rate depreciations in 2008 and 2016 pushed up inflation for a protracted period, independently of activity at home. The strains in global goods markets caused by the pandemic, and the substantial impact on commodity prices of Russia’s invasion of Ukraine, have done the same, to an even greater extent.
For example, at LaGuardia, we have a $ billion project. Contracts to facilitate that will probably be too high for many minority and women-owned businesses. Therefore, if we don’t have access to capital, we won’t even be allowed to bid on that work. And that’s when fraud comes in, when a major contractor proposes to a small contractor, “I’ll help you out if you bid, give you give me a number on this contract.” If we had access to capital, we then bid. I’d like you to take a look at what the New York State Department of School Construction Authorities are doing. They worked out a system that allows us to bid on major contracts. If you took a look at that, because we need some ingenious new ways of financing. We don’t have a black bank per se. There were 94 black banks across this country, now there’s only 23. Some of the banks that’s going out of business, I don’t think is kosher, but something has to be done to allow us to participate in the marketplace. On your material, you have listed some organizations within the minority community that you deal with. I’d like to recommend some additional organizations. For example, the ones that are primarily interested in the flow of contracts and development. I’m not in a prime area of what’s going on today. In addition, for example, we have here at York College one of the best small business development sectors.

We can also add forward guidance to this arsenal, on PSPP (including the reinvestment horizon) and policy interest rates, which we could strengthen further through a condition of a greater degree of persistence in inflation around our target. This forward guidance provides considerable leeway to adapt to economic changes thanks to its self-stabilising endogenous component. However, it would lose its effectiveness if it appeared to be too volatile or too arbitrary and for this reason cannot be considered a flexible adjustment instrument. Our new instruments to cope with the crisis This is why the ECB introduced new instruments in addition to those already available, which are more flexible in dealing with an unprecedented and multifaceted crisis. The supply of liquidity to banks has been reinforced in terms of quantity and, above all, through an incentivising price structure. Interest rates on TLTROIII operations were cut dramatically on 12 March and again on 30 April and are now, at –1%, 50 basis points below the deposit facility rate for any bank that maintains the outstanding amount of its lending to the economy. This is a radical – and yet largely unheralded – innovation that represents several billion euro in support to the European banking sector each year. Above all, we have created the EUR 750 billion Pandemic Emergency Purchase Programme (PEPP). While it was its size that impressed, its greatest innovation lies 4/5  BIS central bankers' speeches  in its exceptional flexibility in terms of time, volume and allocation between countries and asset classes.
I am referring to the deregulation of the financial markets and the development of these in recent years. A number of international studies indicate that a deregulated and well-functioning financial market clearly stimulates the development of factor productivity. With regard to a more efficient use of the labour force, several changes have been implemented that have probably stimulated development. These include reforms in the pension system, the tax system and the social insurance system. The burden of taxation has been subdued and the economic return on higher education has increased - in particular in technical education. In addition, wage formation has been improved, which should have been facilitated by the monetary policy focus on price stability. At the same time, the pressure on companies to use resources efficiently has increased during the 1990s. Tougher competitive pressure as a result of both increased internationalisation and deregulation in a number of sectors has increased the need for companies to economise with scant resources. Less wastefulness with resources means that labour force and capital are employed in other areas, where they can better contribute to the national economy. The development of investment is another factor that may have contributed, even if capital intensity has increased at a very slow rate. One factor that has not contributed to a long-term improvement in resource allocation is the development of the exchange rate. The devaluations in the 1970s and 1980s have been followed by a floating exchange rate, but with an undervalued Swedish krona.

However, any theory of optimal capital level will have to strike a balance between the increased cost of financial intermediation which result from higher capital requirements and the benefits of the decreased probability of bank failure and economic harm which will be achieved. Recent developments have established a prima facie case for higher minimum capital requirements. The challenge will be for supervisors to manage the transition to higher capital requirements in a phased approach and take into account the need to avoid procyclical pressure on bank capital adequacy under conditions of economic downturn. Zambia has adopted Basel II for implementation although work is still on-going in this area. The enhanced approaches to capital that I have just described have the potential to significantly minimize the probability of bank failure. They may also assist in reducing the extent to which strains on bank capital and liquidity result in an impaired ability to extend credit to the real economy. But the probability of bank failure cannot be reduced to zero. The system of bank regulation and supervision therefore needs to be buttressed by arrangements for deposit insurance (for protecting depositors in the event of default) and for bank resolution (to ensure orderly wind up and avoid knock-on effects to the rest of the banking system). In this regard, an effective deposit protection scheme becomes an important aspect of the financial safety net especially in crisis times.
For those of you familiar with Chapter 11 in the United States for non-financial corporates, this amounts to applying those techniques in a very accelerated way and under the discretion of the resolution authorities rather than through a negotiation mediated by a judge. As I have described it, it is a resolution tool. There is no good reason of public policy why resolution should always involve closing the firm, provided that shareholders, uninsured creditors, the board and management pay the appropriate price. Whichever combination of tools is incorporated into resolution regimes, we should expect them to induce changes over time in behaviour of banks and their creditors. There might, for example, be greater incentives to lend to banks against security or at short maturities. As we reintroduce the disciplines of capitalism back into the heart of the financial system, we might have to think carefully about regulatory policies on the encumbrance of assets and on the maturity structure of liabilities. The third point I would make is that even if we were equipped with a decent set of tools for the domestic context, we must be able to cope with the cross-border element of a financial firm failure. Within the EU, this should not be the hardest thing in the world and I hope that the Commission will be able to develop proposals that will lead the way for the rest of the international community in identifying how we can do this.

Because within the EU we can enter into more or less binding commitments under the terms of rules and legislation that comes out of the process here in Brussels, without infringing on national sovereignty. The fourth point I would make is that the EU, as well as leading the way in addressing that problem regionally, must take a very close interest in the arrangements for global resolution, because pretty well every single one of Europe’s largest financial institutions operates on a global scale and, furthermore, the largest global institutions headquartered outside the EU all have sizable and complex businesses within the EU. In the run up to the G20 meeting of Finance Ministers and Governors in October and then the Leaders summit in November, our community and the political community will have to think about the extent to which sovereignty in this area could be pooled or whether, instead, to come up with a middle road which at least removes obstacles to co-operation. I suspect it is unrealistic at this stage of global financial development and co-operation for there to be a multilateral binding treaty that would put a single country in the sole and unqualified lead in the resolution of a global financial institution. But that doesn’t mean that there is nothing useful to do. We could do things along the following lines. First of all, in our national and EU legislation, we could all remove impediments for one country to co-operate with other countries in the event of a resolution.
Covered bonds are therefore good collateral and many other central banks accept them to a greater extent than the Riksbank. In our case, the permitted share was raised from 25 per cent to 75 per cent. This measure meant, to put it simply, that participants in the RIX system, were given the opportunity if necessary to use more collateral as a base for their loans from the Riksbank. Another preventive measure taken by the Riksbank has been to establish, together with other central banks, a swap facility with the US central bank, the Federal Reserve. This agreement entails the Federal Reserve supplying US dollars in exchange Swedish krona if the need should arise. But it should also be pointed out that the Riksbank has a substantial foreign currency reserve. The agreement is not the only means for the Riksbank to obtain loans in US dollars, but it makes it easier for us to take action quickly. Right now, the situation regarding short-term funding in USD has been very strained on many markets. To increase access to liquidity in US dollars and to make the markets function more normally, several central banks, including the Riksbank, have agreed on coordinated actions. The Riksbank has decided to lend dollars to Swedish banks in two auctions during October. The first was held yesterday and amounted to USD 7 billion. A second auction with loans extending over the turn of the year will be held on 22 October and amount to USD 15 billion.

In principle, households and companies could be granted access to digital central bank money via both a token-based and an account-based system. Broad access to digital central bank money would call the existing two-tier banking system into question. Instead of being the banker to the banks, as it is today, the SNB would act like a commercial bank, taking on the role that is currently played by the private sector. Moreover, broad access to digital central bank money could pose a threat to financial stability. Switching over from bank deposits to digital central bank money is easier than changing to physical banknotes. In a crisis situation, this could increase the risk of a bank run. Thus, overall, the implementation of this proposal would have far-reaching consequences not just for banks, but also for the entire financial system. These fundamental concerns would argue against opening up access to digital central bank money to all households and companies. Furthermore, cashless payments in Switzerland are already reliable, secure and efficient and the system is continuously being updated and refined. So from that standpoint, too, access to digital central bank money for all households and companies, whether in the form of Swiss franc tokens or sight deposits, would bring virtually no advantages. Now let’s turn to the second potential area of application for state-issued digital tokens: digital token money exclusively for financial market participants.
The opposite holds, of course, for those who always prefer a higher interest rate. I expect we shall have to learn to live with this type of monetary policy personification. But I hope that in time the discussion that follows our decisions and published minutes will still lead to a wider understanding, among people in general as well as in markets, of the deliberations and choices the Executive Board has to make. For market players I continue to believe that fundamentally it is most important to arrive at their own sound assessments of inflation. Those who do so are likely to be fairly close to the mark in their predictions of the repo rate, at least in the somewhat longer perspective. 3. The current monetary policy situation  Let me now consider the present situation, starting from the Inflation Report the Riksbank presented last week. The assessment in the Inflation Report The signs of a global recovery have been confirmed and also become stronger since the June Report. The Riksbank has accordingly made an upward revision to the forecast for GDP growth in the OECD area, to an annual rate of not quite 2.5% up to the end of 2001. The growth is occurring on a wide front. The Asian and European economies are recovering, from different initial situations, and the slowdown in the United States is expected to be milder than we counted on earlier. Even with the prospect of higher global economic growth, international price pressure is assumed to remain relatively low.

The target range for our reference interest rate, the three-month Libor for Swiss franc investments, thus remained unchanged at between –1.25% and –0.25%, and we confirmed the interest rate on sight deposits at the SNB of –0.75%. We also reaffirmed our willingness to intervene in the foreign exchange market as necessary. The SNB’s policy of negative interest and foreign exchange market interventions – measures that are intended to relieve upward pressure on the Swiss franc – is helping to stabilise price developments and 4  BIS central bankers’ speeches  support economic activity in our country. The SNB thus continues to take account of the exchange rate situation in formulating its monetary policy. Conclusion The SNB – like the ECB and many other central banks – has been deploying unconventional monetary policy measures in recent years. These were prompted by the financial and debt crisis, which caused the central banks to reduce short-term interest rates to near zero and significantly expand the monetary base. In Switzerland, the crisis led to a very substantial appreciation in the Swiss franc, particularly against the euro. The SNB thus took targeted unconventional measures to ease upward pressure on the Swiss franc. Between September 2011 and January 2015, it maintained a minimum exchange rate against the euro. Since the discontinuation of this measure, monetary policy has been based on negative interest and the willingness to intervene in the foreign exchange market. Logically and quite rightly, the central banks were major economic protagonists during the financial and debt crisis.
Assessing whether capital flows to emerging market economies are permanent or transitory is a challenging task. The current wave of capital inflows reflects both global push factors (including ample liquidity and low interest rates across advanced economies) as well as country-specific pull factors (including buoyant growth prospects, relatively sound fiscal positions, and decreasing country risk perceptions). Over the medium term the pull factors  BIS central bankers’ speeches  1  are likely to remain complacent, as relative to advanced economies, emerging markets are expected to grow faster, which would put upward pressure on interest and exchange rates, perpetuating their attractiveness for international capital. Although it is far from certain whether quantitative easing in several advanced economies would persist in the medium term, monetary authorities in these countries are likely to maintain their accommodative stance in the near future as well. All in all, the current outlook suggests that capital flows to emerging market economies may be a permanent phenomenon, while its magnitude is subject to change in risk perceptions. While tools to manage large capital inflows are well known, the appropriate policy mix depends on country-specific circumstances. Fiscal policy, monetary policy, exchange rate policy, foreign exchange market intervention, macro-prudential tools, and capital controls could be used to cope with the inflows, but each of them entails some tradeoffs, which are likely to be quite costly for emerging deficit countries in particular.

They will help economies to reap the full benefits of belonging to the Single Market and to the Economic and Monetary Union. They will help societies to sustain social models which would otherwise be debased by the permanent output loss caused by the crisis, and the related loss of tax revenues.16 I should add that there is a need for reforms in all euro area countries, including the larger ones, albeit to varying degrees and in different areas. Even if a euro area country doesn’t feel the pressure of financial markets and programme conditionality, its government should take seriously the responsibility to carry out necessary reforms that will ultimately support growth elsewhere in the region. And it is the responsibility of all euro area governments, jointly, to advance the reforms outlined last December by the President of the European Council that will give stable foundations to the single currency. The Single Supervisory Mechanism is an important first step, to be complemented as soon as possible by a Single Resolution Authority and Fund; further steps towards an economic, fiscal and political union should follow, completing our Economic and Monetary Union. If there is a lesson to be learnt for all euro area countries, it will be to make sure that in the future they make the necessary changes pro-actively and not in response to a crisis. Thank you for your attention. 15  A coordinated reduction of mark-ups would lead to a similar impact on GDP growth in the adjusting countries.
Evidently, the Business Sentiment Index or BSI, surveyed by the Bank of Thailand, which has lingered below the 50 benchmark, slid further in the past few months. In addition, tourism has been adversely impacted by travel warnings as the Thai political developments made global news. This latest dent on confidence has added to the list of challenges facing the economy since the end of last year, including inflationary pressure from volatile oil and commodity prices, tightening domestic monetary policy, as well as potentially more downside risks to global economic growth in light of recent US economic developments. The headline and core inflation in July rose at decade-high rates of 9.2 and 3.7 percent from a year ago, respectively. The rising inflation largely stemmed from soaring oil prices. At their worst, oil prices set new records almost on a daily basis, led by a combination of growing demand for fuel of emerging markets, geopolitics of the oil-exporting countries, and the depreciation of the US dollars. Even though, in August, headline and core inflation went down to 6.4 and 2.7 percent, respectively, due to moderating commodity prices as well as government measures, the risk on inflation from high and volatile commodity and oil prices remains, particularly given the constraint in supply adjustment. In the meantime, the risk of global economic downturn seems to have accumulated as the bottom-out of US subprime problem is still uncertain.

Most importantly, European economies and their financial systems, among which the Austrian financial system enjoys a significant share of the market, define the globalization for the region and are, to a large extent, important determinants for the success or failure of these economies. Given the large share of the European financial groups, they have and will play an important role in the transmission of global shocks in the region. What is more important, they have a significant role in the transmission of legislative and regulative shocks carried over by European monetary and supervisory authorities. The size is such that even a simple change in the future business plans of a single European financial institution can transform into real shocks for the economies of the region. It became evident during the crisis and afterwards that an increase in risk and uncertainty, led to increased incentives for banks to withdraw from the Emerging Europe economies. Though this was mostly prevented due to increased cooperation through institutions such as the Vienna Initiative, the concerns from our perspective have not completely dissipated. In this respect the business plan of EU based groups can play a potentially important role in the nature and outcomes of this cooperation.