samchain/econo-pairs-v1 huggingface dataset:
We would expect changes in the interest rate on reserves to have a significant influence on other short-term interest rates. However, in order to ensure our ability to influence those other short-term interest rates, we have been developing two tools that can be used to reduce the large amount of excess reserves in the banking system – term deposits with banks and reverse repurchase agreements (reverse repos) with a broader universe of financial institutions. Let me first provide an update on the progress we have made in developing these tools. On term deposits, the Federal Reserve has received public comments on the proposed structure of the facility that was published in December, and we are working toward its final form. As described in the recent Monetary Policy Report, the Federal Reserve expects to be able to conduct test transactions in the spring and to have the facility fully ready, shortly thereafter, to conduct transactions when needed. On reverse repos, we have already successfully run small-scale operations using Treasury and agency debt as collateral with primary dealers. However, that leaves two significant steps still to take in preparing the tool. One is developing the capacity to use our MBS holdings as collateral. Work in that area is nearly complete, and we will likely conduct some small-scale operations with MBS collateral in a month or so to exercise that capability. The other step is expanding the set of counterparties that we use for such operations.

To get to this point, the Trading Desk at the New York Fed has so far conducted 126 discrete operations to purchase Treasury and agency debt, and has managed 292 trading days on which either it or its investment managers have acquired MBS. My view is that the purchase programs have helped to hold down longer-term interest rates, thereby supporting economic activity. With the conclusion of the programs approaching, the Desk has been tapering the pace of its purchases of agency debt and MBS. However, even as the pace of our purchases has slowed, longer-term interest rates have remained low, and MBS spreads over Treasury yields have remained tight. This pattern suggests that the  2  BIS Review 39/2010  effects of the purchases have been primarily associated with the stock of the Fed’s holdings rather than with the flow of its purchases. In that case, the market effects of the purchase program will only slowly unwind as the balance sheet shrinks gradually over time. 3 In my previous speech back in December, I discussed in detail the channels through which these market effects may arise. By removing large amounts of duration and prepayment risk from the market, the Fed’s asset purchases reduced the volume of risk that the market had to hold, which lowered the risk premia on those assets. Put differently, the purchases bid up the prices of those assets and hence lowered their yields.
But even if there is no such restriction on raising the policy rate, the problems gradually increase the higher the policy rate has to be raised to bring inflation back to the target. It is therefore not a question of whether inflation will be able to reach the target at all, but of how large the cost will be for the Swedish economy in the short term to attain this. The better the interaction, the smoother the slowdown in inflation will be. 10 [15]  If we really see the inflation target as a macroeconomic target that provides favourable prerequisites for a good long-term economic development, such interaction should be both possible and desirable to achieve. References Auclert, Adrien, Hannes Malmberg, Frederic Martenet and Matthew Rognlie (2021), ”Demographics, Wealth, and Global Imbalances in the Twenty-First Century”, NBER Working Paper 29161. Calmfors, Lars, John Hassler and Anna Seim (2022), Samspel för stabilitet – en ESO-rapport om rollfördelningen mellan finans- och penningpolitik, (Interaction for stability – an ESO report on the division of roles between fiscal and monetary policy), report to the Expert Group for Public Economic Studies. Jansson, Per (2020) “Thoughts on the need for changes to inflation targeting”, speech at Handelsbanken, 16 December. Jansson, Per (2021), “Is it time to review the division of roles in macroeconomic policy?” speech at Sveriges Riksbank on 8 December. Obstfeld, Maurice (2022), ”Uncoordinated monetary policies risk a historic global slowdown”, blog post, Peterson Institute for International Economics, https://www.piie.com/blogs/realtime-economic-issues-watch/uncoordinatedmonetary-policies-risk-historic-global-slowdown. 11 [15]  Figure 1.

I once told a friend of mine that small open economies, as is the case with the Balkan economies, are net importer of goods, services and crises. The crisis did not originate in the region. It was gradually transmitted as a result of the integration of the region with the global markets and economy and a consequence of the presence of large international banking groups. Our countries are all as similar as they are different. Consequently, the form, outburst and consequences of the crisis were as similar as they were different. The economic and social structure, the level of convergence and integration with the global markets, the legal and institutional norms and the nature of exchange rate regimes in particular, have established the features of the crisis for each country. The experience of the distinguished governors present in this conference will throw light on the above aspects. As regards the Albanian case, the last 12 months have been challenging for the banking industry. Despite the turbulent times, the banking system has in no case shown any signs of panic or confusion. The Bank of Albania considers that the rationale behind is the prudence shown in the recent years with respect to the banking system’s financial stability. The high level of resilience and the quick recovery were a consequence of a number of important decisions.
Thus, in this way central banking for the first time really became a cornerstone of the building of world prosperity and world peace. Of course the single reserves might be sufficient under normal circumstances but when things get out of hand, it may not be sufficient, and banks do shut down. The government and the central banks thereupon undertook that most important function of building world peace, which is looking after the poor and the disadvantaged, by putting up deposit insurance schemes, the first being in New York in 1829 but the first nationwide schemes being in Czechoslovakia in 1920 whereby at least the smallest and the least knowledgeable depositors are protected. Of course, a better alternative would be to try and make banks less liable to failure. Since banks are often in an oligopolistic system or at the very least, they are leveraged by the ratio of debt to equity of around 12:1, being the inverse of the capital adequacy ratio now defined by the Bank for International Settlements to be at least 8%, and using other people’s money in a way that normal companies cannot 1  BIS Review 111/2000  do - the central bank then underpins the viability of commercial banks by supervising and examining them so that sensible decisions are made and fraudulent activities are minimised. Surprisingly, that may not even be the biggest way central banks contribute to world peace. For nations taken individually, the biggest function deemed to be of the central banking is monetary policy.

Each of us a little bit or a lot depending on the occasion can contribute to peace. So I truly hope that whenever the opportunity arise we will do our part to try and put up a better world monetary system at which tasks the emerging countries are so powerless. 3  BIS Review 111/2000
I think the consensus at present, as reflected in the recent discussion at the LegCo Financial Affairs Panel, is that neither the current volume and nature of complaints nor the deficiencies in existing arrangements would justify the creation of such elaborate machinery. The second option would be to give the HKMA a clear mandate to arbitrate and resolve consumer complaints and the powers to impose sanctions. This option could go some way towards addressing the current gap between the expectation of bank customers and what the HKMA can do for them under its existing powers. However, I think there is a consensus that this is not the right time for the  BIS Review 39/2002  3  HKMA to be given such a role. It would require a considerable increase in resources and some form of cost recovery from the banking industry, and it would also require addressing concerns about conflict of interest between different branches of the organisation - a problem that is not insoluble, but which would nevertheless require some careful thought. This, at least for the time being, does not seem to be the preferred option. The weight of opinion seems, then, to fall on the third option, which is to rely mainly on the industry itself to ensure that complaints are properly handled. There are three things which banks can do in helping to promote self-regulation: •  First, AIs should strictly follow the Code of Banking Practice, which is issued by their own industry associations.

However, it would be stretching these powers too far to apply them to the "micro" region of individual consumer complaints about the cost or quality of banking services. We frequently receive complaints about fees and charges made by banks which appear unreasonable to the complainant - for example the imposition of charges on dormant or small deposit accounts. Our practice with such complaints is to refer them to the bank concerned and to ask it to reply direct to the complainant. As long as we are satisfied that the transparency standards in the Code of Banking Practice have been met, then we take the view that fees and charges are commercial decisions and we do not intervene. In handling complaints about bank services, the HKMA's role is limited to ensuring that the process by which the complaints are handled by AIs is fair and efficient. We have a very limited role in dispute  2  BIS Review 39/2002  resolution. Even if we wanted to intervene formally in such cases, it is difficult to see how, legally speaking, we could do so. The sanctions available in section 52 of the Ordinance - and the triggers specified for these sanctions - make it clear that intervention by the MA against an AI must be a response to issues affecting the health of the AI as a whole, or the interests of its depositors or creditors as a whole, or the broader public interest.
I do hope this seminar is going to offer you the opportunity for fruitful discussions and the experience and skills you gain from here will be beneficial to all of you. This is quite a special place for such a seminar since, for eight years in a raw, we organised along with the International Monetary Fund a regional conference on financial stability issues. Thank you and enjoy your dinner. 2  BIS central bankers’ speeches

So, if those are the benefits, what about the potential risks of international banking? The risks from banking are well known – that the failure of an institution can lead to contagion and spillovers that may have direct and indirect impacts on financial stability. These risks may be amplified, accelerated, and transmitted through the increased degree of interconnectedness that international banking brings. This could be through greater exposure to cyclical global macroeconomic trends, or through a greater appetite and capacity for risk without appropriate controls. Successive crises have clearly demonstrated the effects of international banks, and capital markets, “freezing”. Contraction in credit supply is a powerful channel through which financial crises hit global and domestic economies. And the balance between international and domestic services can shift rapidly in a recession as international banks serve the home market. In 2008–09 for example, UK resident banks cut cross-border lending by 30% 5, significantly more than lending in the UK. The same patterns were seen internationally. Lehman of course had global effects, but numerous other entities had substantial cross border effects too. The crisis showed us all too clearly that international banking, interconnectedness, and unrestricted capital flows carry risk as well as rewards. All this underlines the importance of delivering effective oversight of international banks. Prudent international regulatory standards are a necessary part of this, but are not on their own sufficient.
Although some of the excess reserves that have been generated by the balance-sheet expansion were initially sopped up by the Treasury’s Supplemental Financing Program, total excess reserves have climbed to more than $ billion from nearly zero at the beginning of the crisis. The sharp rise in excess reserves has caused the monetary base, which is simply the sum of currency plus total reserves, to expand significantly. The increases in excess reserves and in the monetary base generated by the Fed’s balance-sheet growth have led some observers to worry that this expansion will ultimately prove inflationary. Proponents of this view say that the monetary base, the broad monetary aggregates, total credit outstanding and inflation have historically tended to move together, at least over longer time periods. Thus, if the monetary base is growing rapidly, as it has been over the past year, the view is that this growth will ultimately lead to inflation. Is this concern well founded? The answer is that in a world where banks could not be paid interest on excess reserves, these persistent high reserve balances would indeed have the potential to prove inflationary. 2 In that world, the excess reserves are likely to lead ultimately to an overly accommodative monetary policy. The story goes like this: If banks are earning no interest on their excess reserve holdings, they will be willing to lend those reserves out to any creditworthy borrowers as long as the interest rate is positive after adjusting for risk.

The other European economic authorities have also reacted forcefully to support the financial system, to safeguard its functioning and to stimulate the various economies. Amid these global difficulties, cooperation and coordination between national authorities, particularly in Europe and in EMU, is today more necessary than ever. Responses based on the adoption of measures designed from an eminently national standpoint are, as in the past, bound to fail. The response to the current difficulties assailing our economies involves more Monetary Union and more European Union. Allow me to conclude by responding to the argument currently being aired in the press on the uneven impact of the crisis in different economies. As I have said, referring to the differentials observed in the past, this problem cannot be resolved by the ECB. It is for governments and national parliaments to adopt the structural reforms I mentioned earlier. Indeed, the crisis should in fact be taken as an opportunity to carry out all these structural reforms. Weak growth potential, competitiveness and productivity problems, the need to find an ideal level of regulation and government intervention, and insufficient goods and labour markets flexibility are, to name but a few, some of the challenges that remain central to the welfare of Europeans and that should, therefore, continue to feature prominently on the political agenda. Beyond the short term, these are the factors that determine the relative economic performance of the various euro area countries.
His book Urban Dynamics, published in 1969, set out how these computer models could be used to understand the evolution of cities.36 Reading Forrester’s book in the 1980s, video-game developer Will Wright had an idea for creating a game involving building a dynamic model of a city. The result was SimCity (Figure 2). This quickly became one of the most popular video games of its era. Computer-simulated video games quickly came to be used to solve real-world city planning problems. Subsequently, ABM-like models of simulated cities have found  widespread use for urban planning and development.37  32  For example, Karnopp, Margolis and Rosenberg (1990). Shaw and Fruhlinger (2019). Bolton et al (2018) have discussed the possible guiding values for a national digital twin framework as part of work on behalf of the Centre for Digital Built Britain. 35 Hardgrave et al (2006). 36 Forrester (1969). 37 For example, Motieyan and Mesgari (2018). 33 34  27  All speeches are available online at www.bankofengland.co.uk/speeches  27  Figure 2: SimCity  Sources: Electronic Arts, available at: https://help.ea.com/en-us/help/simcity/simcity-buildit/all-about-regions-in-simcitybuidlit/  If creating a digital twin is possible at the firm and city-region level, might it be feasible economy-wide? An economy-wide map constructed at the microscopic level, and an accompanying digital twin tracking flows among the moving parts, is an intriguing vision of how a future economic model might be constructed.

These measures should contribute to supporting the positive trend in private domestic and foreign investment in France. [Slide 12] All these reforms should be enhanced by further progresses made by the French government to improve the sustainability of public finances; I would also hope for an acceleration in this respect. Nevertheless, the present package is already impressive, and reinforces the attractiveness of France. As you know, France has many assets: it has many fast-growing techfirms. It offers high-quality infrastructures and a high-standard quality of life. But more importantly, its capital, Paris, besides being one of the most attractive cities in Europe, is in a strong position to become the main euro area centre for market activities, especially in the Brexit context. 3. Paris’ attractiveness as an integrated financial centre in a post-Brexit world Brexit was and remains bad news mostly for the United Kingdom but also for Europe. As for now, there is one principle which in our view is the corner stone of the future agreement between the European Union and the United Kingdom – preserving the integrity of our common good, the EU single market. In practice, it means that we cannot separate access and rules and that UK based entities cannot get a European passport and access the EU single market if they do not fully comply with the single market’s rules and do not recognise the authority of the European Court of Justice.
Some might argue, however, that risk-takers are drawn to finance like they are drawn to Formula One racing, and that regardless of risk or reward, these types of individuals will always want to push the boundaries. This logic might lead one to conclude that incentives are unlikely to be an effective tool to limit excessive risk-taking and to promote more ethical behavior in the financial sector. I disagree. First, the degree to which an industry attracts risk-takers is not pre-ordained, but reflects the prevailing incentives in the industry. After all, risk-takers have options. Second, and, more importantly, incentives matter even for risk-takers. In my speech on ending too big to fail, I stressed the importance of reducing the likelihood that large financial firms would face insolvency, as well as the need for a credible resolution plan that does not involve taxpayer money. Compensation policies can play a useful role in reducing excessive risk-taking. Similarly, compensation policies can complement an improved culture, and play a role in reducing unethical and fraudulent behavior. Individuals who decide to bend the rules or to step over the line usually do this in the context of an assessment of the expected risks and rewards of their actions. This implies that one objective should be to rebalance the scales so that the expected risks from unwanted behaviors are more likely to outweigh the expected rewards. The expected risks are a function of the likelihood that an individual (or set of individuals) is caught and the attendant consequences.

All of these elements need to be aligned with the desired culture. Through our supervisory process, we have seen that a number of firms have started this process by developing or refining employee surveys and 360 feedback processes to target issues of behavior and  2  BIS central bankers’ speeches  culture. Some firms are incorporating case study discussions into training programs to highlight ethical dilemmas and decision-making. Some are revamping senior level promotion criteria to reinforce what are the desired characteristics and behaviors of leaders. These efforts are at various stages in terms of their depth, breadth and maturity. Supervisors will need to see how these frameworks evolve, and more importantly, see evidence of how these efforts yield results in the form of more open and routine escalation of issues, consistent application of “should we” versus “could we” in business decisions, rigor in identifying and controlling of conduct risk, and how compliance breaches factor into compensation. Measurement and accountability for progress in developing a healthier culture across the industry is paramount to us as supervisors and central bankers. An important measurement of progress is employees’ assessment of their firm’s culture. To this end, we encourage the industry to harness the various individual efforts that have been initiated at a number of firms in order to develop a comprehensive culture survey. This anonymous survey would be fielded across firms each year by an independent third-party and the results shared with supervisors.