samchain/econo-pairs-v1 huggingface dataset:
Efficient Multi Currency Payments and Settlements – Project Ubin Next, making cross-border payments and settlements cheaper and faster for SMEs. This has been MAS’ clarion call since five years ago, when we embarked on Project Ubin to explore the use of blockchain technology to solve one of the biggest pain points for SMEs. The industry consortium and MAS completed the final phase of experimentation in July this year, when we successfully tested a blockchain-based prototype for multi-currency settlement. We have also integrated commercial applications, such as trade and supply chain financing, with blockchain-based payment functionalities. Industry players are now moving from experimentation towards commercialisation. DBS Bank, JP Morgan, and Temasek are leading the development of a digital multi-currency payments network aimed at enhancing commercial cross-border clearing and settlements globally. Pilot trials will commence next year. The goal of cheaper cross-border payments that settle round-the-clock and in realtime is drawing closer. SMEs will greatly benefit when this becomes a reality. FINTECH FOR A SUSTAINABLE PLANET Let me move on to my second big theme: ensuring a sustainable planet FinTech can play an influential role in helping to advance the sustainability agenda. Finance fuels the economy, shapes investment decisions, and drives action. Technology provides solutions to channel finance towards the cause of sustainability. Singapore is deeply committed to global efforts to mitigate climate risk. We contribute in two ways: making Singapore more sustainable; and helping Asia become more sustainable.

The Covid-19 pandemic and economic crisis has, in a way, helped to focus our minds on these two issues. There is a growing consciousness across the world that if we do not act now and act decisively, we will put our future at grave risk. This crisis presents us an opportunity to create a more inclusive society and a more sustainable planet. Finance, Technology, and FinTech can be powerful enablers in this endeavour. Everything we do in Finance, Technology, and FinTech must have a larger purpose. What greater purpose can there be than making our societies more inclusive and our planet more sustainable? 10 / 10  BIS central bankers' speeches
Except for the fact that output is not forward-looking – I will come to this in a minute – this is a standard New Keynesian IS curve where the output gap is based on estimates by the European Commission, the short-term interest rate is the three-month Euribor, expected inflation is taken from the ECB’s Survey of Professional Forecasters (SPF) and the natural rate is taken from the euro area estimates by Holston, Laubach and Williams (2016). Clearly, the real interest rate gap is not statistically significant at any reasonable confidence level. This finding holds true if we use actual ex post inflation – specification 2 – instead of expected inflation, or if we include the real interest rate per se, and not as a deviation from the natural rate, as is sometimes suggested, as in specification 3. The financial crisis and the use of non-standard policy measures do not seem to explain the puzzle either: the real interest rate remains insignificant if we restrict the sample to the period before the outbreak of the crisis, specification 4, or if we take the euro area shadow rate as estimated by Wu and Xia (2016) – specification 5 – a measure that attempts to mimic the joint 9 / 14  BIS central bankers' speeches  effects of unconventional policy measures at the zero-lower bound. What I would argue, however, is that the short-term interest rate is not the appropriate measure to use in an empirical IS curve.

Holston, K., T. Laubach and J. Williams (2016), “Measuring the Natural Rate of Interest: International Trends and Determinants”, Federal Reserve Bank of San Francisco Working Paper No. 2016–11. Joyce, M., D. Miles, A. Scott, and D. Vayanos (2012), “Quantitative Easing and Unconventional Monetary Policy – an Introduction”, Economic Journal, 122(564), F271–82. Landau, B. and F. Skudelny (2009), “Pass-through of external shocks along the pricing chain: A panel estimation approach for the euro area”, ECB Working paper No 1104. Meltzer, A.H. (1999), “The Transmission Process”, Working Paper, Carnegie Mellon University. Modigliani, F. (1963), “The Monetary Mechanism and Its Phenomena”, Review of Economics and Statistics, 45(1), 79–107. Interaction  with  Real  Modigliani, F. (1971), “Monetary Policy and Consumption”, in Consumer Spending and Monetary Policy: The Linkages. Boston: Federal Reserve Bank of Boston, 9-84. Osbat, C. and M. Wagner (2006), “Sectoral exchange rate pass-through in the euro area”, ECB. Praet, P. (2017), “Calibrating unconventional monetary policy”, speech at The ECB and Its Watchers XVIII Conference, 6 April. Smets, F. and R. Wouters (2007), “Shocks and Frictions in US Business Cycles: A Bayesian DSGE Approach”, American Economic Review, Vol. 97, No 3, 586–606. Stracca, L. (2017), “The Euler equation around the world”, The B.E. Journal of Macroeconomics, Vol. 17, Issue 2. Svensson, L. (2000), “Open-Economy Inflation Targeting”, Journal of International Economics, 50, 155–183. Taylor, J.B. (2000), “Low inflation, pass-through, and the pricing power of firms”, European Economic Review, Vol. 44, Issue 7, 1389–1408.
Did they comply with the traditional principles expounded by Bagehot many years ago, i.e. lend to temporarily illiquid but solvent financial institutions, lend at penalty rates against sound collateral, and provide liquidity to any institution satisfying the aforementioned solvency and collateral criteria? These essential questions are, however, mainly academic. Today, they take on different dimensions. Indeed, all financial crises cause a downward spiral in asset prices, which before long transforms a temporarily illiquid institution into an insolvent institution, making Bagehot’s initial distinction difficult to apply. This situation is exacerbated in our developed financial systems by the joint application of new accounting standards requiring fair value measurement for financial assets and prudential arrangements that may prove partly procyclical. In this context, central banks have the clear duty of preventing the market from seizing up, with incalculable consequences for other financial players and more generally for the real economy. However, it should be borne in mind that the central banks’ criteria for accepting assets as collateral for their refinancing operations are particularly restrictive and penalising, and comply with the traditional principles that I have just mentioned. In particular, the value of these securities must be at least equal to the amount lent and the accrued interest, after applying a haircut to take account of a possible decline in their market value during the repo. 4)  Why have the central banks responded differently as regards their monetary policy stance?

-  Second, with regard to monetary policy, let me reiterate that one must carefully distinguish between the monetary policy stance on the one hand, which should remain focused on the macroeconomic objective of price stability in the medium term, and the refinancing conditions of the banking system on the other hand, that may have to be adapted in times of financial turmoil. Moreover, a solid anchoring of inflation expectations seems to me particularly crucial in a period of economic and financial uncertainty. -  Last but not least, in my view, regulatory issues related to the increase of financial innovation over the recent period of rapid market growth should now be a matter of primary concern. Moreover, the return of greater market discipline, closer monitoring of risks by market participants and quite simply the use of commonsense principles, such as acknowledging that there is no such thing as low risk/high return assets, are in my view prerequisites for a return of confidence to the markets. 4  BIS Review 78/2008
In fact, I am concerned that inflation will not pick up quickly enough. As I noted, we have been stuck at 1 percent inflation since early 2013, and there is little indication of a pickup in the recent data. Low inflation is just as economically costly as high inflation. When we set an inflation target of 2 percent, we need to hit our target without too much delay. Simply put, we need to average 2 percent inflation over the medium term. Accordingly, the current 1 percent inflation situation calls for extended policy accommodation. If the Fed embarked prematurely on more restrictive monetary policy conditions, these adverse actions would work to reduce inflation to further unacceptably low levels. That’s going in the wrong direction.2 Financial stability and monetary policy It is easy and most natural for a Fed policymaker to talk about inflation. Price stability is one of the explicit goals of monetary policy as mandated by the U.S. Congress. Financial stability risks are more complicated. How does financial stability dovetail with the Fed’s dual mandate? There is clearly an interdependent relationship between them. A strong economy with low inflation provides a key stabilizing force for beneficial credit intermediation and robust financial market functioning. At the same time, stable and well-functioning financial markets are essential for achieving maximum employment and price stability. The global experience since 2008 reinforces this critical interplay between monetary and financial conditions.

Prices in the global markets and the exchange rate were relatively stable; hence, they did not exercise pressures for upward prices at home. Likewise, expected inflation remains anchored around Bank of Albania’s 3% target. Finally, monetary developments are characterised by low demand for liquid monetary assets. The monetary policy pursued by the Bank of Albania has contributed to stimulating the aggregate demand, administrating the liquidity in the system, and keeping inflationary expectations in check. This situation of inflationary pressures is expected to remain steady in the medium run. Available figures on the economic activity over the second half of the year are partial. Indirect data analysis, however, confirm earlier estimates for positive growth during this period, at levels similar to the second quarter of the year. Economic growth was mainly driven by foreign demand, while domestic demand was weak. Consumer spending is assessed to have been up during the third quarter, reflecting also better activity of the services sector. Private consumption, however, remains weak, due to the slow economic performance and the perceived uncertainties about the future. Its prospect in the medium run remains unclear. Private investments remain at low levels, in the presence of partial utilisation of production capacities, uncertainties about foreign and domestic demand, and tightened lending terms by the financial sector. Public sector demand was also low during the third quarter and did not, therefore, contribute to higher aggregate demand. As at end-October, the budget deficit for this year was about 19.0% lower than a year earlier.
However, there are risk scenarios which, if materialized, may alter the macroeconomic outlook, with implications on monetary policy. On this occasion, after assessing the alternative scenarios, the Board estimates that the risk balance for both output and inflation is unbiased. Although the risks in the international scenario are similar to those in previous Reports, their possibility of occurrence is smaller. Still, structural issues persist in the Eurozone, so the regained confidence in financial markets is yet to be consolidated. Repeated or intensified financial stress episodes, in a context where banks are more cautious in their lending decisions and capital requirements have increased, could deepen credit constraints, complicating the growth outlook for the region and the world at large. There are also persistent doubts about how China’s slowdown will be. If more intense, its effects will not only hinder world growth, but also pull down commodity prices, especially for copper. Conversely, other economies could well perform better than expected, and offset part of these effects. The calmer external financial markets and the renewed appetite for risk have revived concerns about how to accommodate the new capital flows into emerging economies. Prolonging the strong monetary stimuli in the developed world, particularly in the U.S., may foster an extension of global imbalances. Public indebtedness is elevated in the U.S. and the high oil price hinders the resolution of its external deficit.

I am sure there will be very interesting and fruitful exchange of views and ideas on the major financial stability issues, including those that I have mentioned earlier. Once again, thank you all for being with us today. BIS central bankers’ speeches  1
Øystein Olsen: Management of the Government Pension Fund Global Introductory statement by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the hearing before the Standing Committee on Finance and Economic Affairs of the Storting, Oslo, 3 May 2021. * * * Please note that the text below may differ from the actual address. I would like to thank the Committee for the invitation to speak on the Bank’s management of the Government Pension Fund Global (GPFG). Norges Bank manages the GPFG with the objective of achieving the highest possible return over time within the limits of the investment mandate defined by the Ministry of Finance. The GPFG is to be managed within an adequate control and risk management framework and in a responsible and efficient manner with a high degree of transparency. The GPFG is managed to track the benchmark index fairly closely, ie the return largely tracks the return on the benchmark index. The benchmark index is defined by the Ministry of Finance and endorsed by the Storting. However, even though Norges Bank closely tracks the GPFG’s benchmark index, many large and small choices have to be made every day. These choices are based on a clear mandate from the authorities and a well thought-out investment strategy. The year 2020 was a special year for us all, including the GPFG. As for many others, working conditions during the Covid-19 pandemic have been demanding.

Norges Bank has adopted a set of recognised international standards for corporate governance and the exercise of ownership rights and takes an active part in their further development. The GPFG’s expectation documents and voting guidelines clearly express the bank’s priorities as a long-term owner. We exercise our ownership rights by voting at shareholder meetings and engaging in dialogue with companies. On 7 April, we announced the GPFG’s first investment in unlisted renewable energy infrastructure, ie a 50 percent stake in the world’s next largest offshore wind farm off the Dutch coast. Unlisted renewable energy infrastructure is still a relatively new area for Norges Bank. We intend to build up the portfolio gradually, primarily through investments in wind and solar power. We will prioritise investments that contribute to improving the overall risk-return tradeoff in the GPFG. Management of the GPFG is to be cost-efficient, and the Executive Board monitors cost developments closely. Earlier this month, Norges Bank announced a revised strategy describing how we will fulfil the investment mandate ahead. The strategy plan expresses our ambitions and our overall aim of achieving the highest possible return after costs. Our ambitions are high. As they should be. Nonetheless, we still aim to be a small, flexible and cost-efficient organisation. 2/2  BIS central bankers' speeches
The results are visible, even though – for statistical reasons – the NBR calculations appear to give a different picture. In order to avoid possible confusions, allow me to present several technical details. The data released indicate a faster dynamics of demand deposits compared to time deposits, apparently hinting at the emergence of additional inflationary pressures. We are dealing in fact with two developments related to statistical evidence rather than real economic substance. One such development is the transfer, since 2007, of forex-denominated demand deposits from “quasi-money”, which is part of M2, into M1 (narrow money). This is merely a matter of compliance with EU definitions. The economic substance has not changed: the Romanians do not resort to foreign currency accounts for current transactions, but rather as a means of saving. Another development weighs heavier and it is also manifest in the case of forex-denominated current accounts, while being extremely significant from a quantitative perspective for RON-  BIS Review 162/2008  3  denominated ones. Since deposit accounts are subject to income tax, while current accounts are not, banks have developed a way to attract customers: current accounts whose yields are higher than deposit rates. This led to massive portfolio shifts to the detriment of traditional deposits, as households placed their savings in the so-called current accounts, or even card accounts, which are highly remunerated conditional upon maintaining a balance higher than a certain floor.

This attractiveness may no longer be objectively related to low unit labour cost or disproportionate tax facilities which would not comply with EU norms. Therefore, an investor-friendly environment should be the result of a different set of characteristics such as increased flexibility in the fiscal regime and in the labour market. Thus, the NBR’s primary objective to ensure and maintain price stability is closely linked to the policy mix pursued by the Romanian authorities. Another nominal objective which is essential for joining the euro area is exchange rate stability. In recent years, the improved performance of the Romanian economy enabled the significant alleviation of exchange rate fluctuation as compared with the situation in the last decade. In fact, the foreign exchange regime adopted by the Romanian authorities, namely a flexible exchange rate requiring far lesser interventions in the forex market by the central bank, bolstered the national economy. Even the over-appreciation episode in early 2007, generated by massive capital inflows following Romania’s accession to the EU, was corrected via autonomous forex market movements. We may state that, at present, there are no significant pressure-inducing factors in relation to the exchange rate in terms of  2  BIS Review 162/2008  appreciation or depreciation, despite the temporary two way movements caused by global financial market turmoil.
However, financial firms are not transparent enterprises, and it would be difficult even for a diligent shareholder to be able to know when these bad behaviors are taking place, much less to be able to take actions to prevent them. This limits the potential effectiveness of market discipline exerted by shareholders. How can we improve on this situation? Assume instead that a sizeable portion of the fine is now paid for out of the firm’s deferred debt compensation, with only the remaining balance paid for by shareholders. In other words, in the case of a large fine, the senior management and the material risk-takers would forfeit their performance bond. This would increase the financial incentive of those individuals who are best placed to identify bad activities at an early stage, or prevent them from occurring in the first place. In addition, if paying the fine were to deplete the pool of deferred debt below a minimum required level, the solution could be to reduce the ratio of current to deferred pay until the minimum deferred compensation debt requirement is again satisfied – that is, until a new performance bond is posted. Not only would this deferred debt compensation discipline individual behavior and decisionmaking, but it would provide strong incentives for individuals to flag issues when problems develop. Each individual’s ability to realize their deferred debt compensation would depend not only on their own behavior, but also on the behavior of their colleagues.

The recent reduction of the MPR is part of a necessary adjustment to deal with recent changes in our macroeconomy and, as I said, ensure compliance with our inflation objective. Going forward, further changes to the MPR will depend on incoming information and its implications on the economy’s evolution. Actually, the baseline scenario does not foresee the need for any significant changes in the MPR but, should such need arise, monetary policy has room and is prepared for further adjustments. BIS central bankers’ speeches  1  Over the period, both the real and the nominal exchange rates have depreciated, which is part of the process of restructuring the sources of growth after some time when domestic demand has been the primary driver of such growth. Let me now describe for you our baseline scenario and the main risks we have identified in our reports. Macroeconomic scenario Chile’s third-quarter growth was 4.7 percent y-o-y. Mining grew strongly, boosted by the startup of major investment projects of recent years. Thus, mining exports have increased, helping to reduce the current account deficit. Sectors other than natural resources, meanwhile, continued to post lower growth rates than in 2012 (figure 1). This, together with the revision to growth rates of earlier quarters, confirmed that the Chilean economy has lost some strength compared with last year. On the expenditure side, the slowdown extended to each and every component, including private consumption, which was accompanied with significant inventory depletion (figure 2).