samchain/econo-pairs-v1 huggingface dataset:
For its part, it was only upon seeing the FPC’s action, that the market became alive to the risks. It is possible that, having woken up, the market, though somewhat reassured that some action is being taken, worries that the FPC has not done enough. In that case, debt spreads might rise at the same time as banks switch towards more expensive equity financing (Column 3, Row B). Credit conditions could tighten, slowing the economy and so exacerbating the situation. A final variant (Column 4, Row B) would be that although the market and the FPC share the same information set, the market thinks an increase in capital requirements is unnecessary. In that case debt spreads, having already been low given the market’s view of the risks, would not fall. Firms overall funding costs might even rise slightly, given the required switch to more expensive equity financing. But, crucially, the system would be more resilient and any eventual bust should be less severe. These examples serve to illustrate that it is unlikely to be as simple as: a rise in capital requirements entails tighter credit conditions. Where there are question marks over the system’s capital adequacy, the reverse can sometimes be true. More generally, the first round effects on credit conditions will depend upon whether the policymaker’s actions revealed information about the state of the system and its approach to policy, and on whether the market regarded the actions as warranted, insufficient or too much.

In isolation, higher carbon prices could carry the risk of households facing higher prices, without being able to switch their consumption expenditures towards greener technologies. Strong public and private investment efforts are therefore needed to prevent consumers from being locked into carbon-intensive technologies. Public investments can serve a catalytic function in this context. Infrastructure investments, for example for charging electric vehicles, can trigger wide-ranging changes in the type of energy mix used in public and private transport. The coronavirus crisis offers a must-seize opportunity. The costs of letting the current crisis go to waste would be exceptionally large, for two main reasons. First, business dynamism in Europe has been comparatively weak for a long time (see figure 3). There are considerably lower shares of both growing and shrinking firms than in other advanced economies, holding back productivity growth as well as technology creation and diffusion. [6] Put simply, new firms are more likely to adopt new and greener technologies, and we are not seeing enough of them in Europe. Figure 3 New business creations (thousands)  Notes: Number of new businesses created outside of agriculture (FR, DE, IT, ES), and number of business applications outside of agriculture (US), 12-months rolling average. Data for France excludes sole proprietorships. US data has been transformed from weekly to monthly, data for Italy from quarterly to monthly and data for Spain from annual to monthly. Data for Spain available only until 2018. Sources: INSEE (FR), Destatis (DE), Banca d'Italia (IT), Census Bureau (US) and INE (ES).
19  A rather different set of concerns about monetary policy strategy, and particularly about a more stodgy strategy, centre on the fact that UK interest rates are currently very low and the stock of assets purchased in the course of quantitative easing remain on the Bank of England’s balance sheet. 17  Haldane (2017) The MPC’s projections are conditioned on the average of a range of possible outcomes for the United Kingdom’s trading relationship with the European Union. They also assume that households and companies base their decisions on the expectation of a smooth adjustment to those new trading arrangements. 19 Following the United Kingdom’s vote to leave the European Union, the exchange rate fell and the outlook for growth weakened. At the time of the August 2016 MPC meeting, that weakening was particularly evident in surveys of business activity, confidence and optimism. In response, the MPC voted for a package of measures designed to provide additional support to growth and to achieve a sustainable return of inflation to the target. As the Governor set out in his opening remarks at the August 2016 Inflation Report press conference: “by acting early and comprehensively, the MPC can reduce uncertainty, bolster confidence, blunt the slowdown, and support the necessary adjustments in the UK economy”. 18  10  All speeches are available online at www.bankofengland.co.uk/speeches  10  I want briefly to look at three of these arguments: I will call them as ‘room for manoeuvre’, ‘financial stability’ and the ‘time value of money’.

However, as long as the rules of the game prize short-term gain over long-term earnings stability, the temptation to cheat by  4  BIS Review 50/2002  manipulating the market will remain strong. Reforms cannot remove risk from investment, but firms can do more to promote transparency and ensure that their risks are properly disclosed. It is thus vital for firms - not just politicians and the public - to determine if there are weaknesses in legislation or regulation so that they too can correct and begin their part of the process of rebuilding investor confidence. But the present challenges are not only those of better regulation. The global economy is also facing a crisis of confidence, which interferes with investment decisions and dampens activity. Against this international backdrop, we have reacted swiftly to the changing winds that bring new risks to the domestic economy. The latest reductions in the target range are aimed at injecting further monetary stimulus in our economy. These actions are undertaken with an eye on keeping price stability in check. This is the best contribution the Swiss National Bank can make to restore confidence in the economy and promote a strong and sustainable recovery. BIS Review 50/2002  5
Today I intend to explain why we are doing this and how we imagine it might look. For those who are interested in more details, there is a newly-released report available to be downloaded from our website. 1 Why is an e-krona necessary? The Riksbank has been issuing money since the 17th century. 2 And they have formed the linchpin of our payment system. But now cash is being marginalised in our society. Not only many restaurants and cafés, but also many shops, no longer accept cash. You cannot use cash to pay for parking your car, to pay your taxes or to buy a bus ticket. Several large department stores are testing cash-free stores. We must therefore prepare ourselves for a future where almost all payments are made electronically. And then the question arises whether it would make any dif-  1 See Sveriges Riksbank (2018a) and Sveriges Riksbank (2018b.) The Riksbank first issued coins and then began during the first half of the 18th century to also issue banknotes. For a more detailed description, see for instance Ögren and Edvinsson (2014). 2  1 [9]  ference if there was no electronic money issued by the Riksbank. Is there a particular reason why the state, in countries all around the world, throughout history, has played the leading role with regard to issuing money? Central bank money creates confidence even in privately-issued money To find the answer to this question, we must go back in time.

The Riksbank would thus have an account in the ECB’s system so that settlement can be made in Riksbank money without having to keep the Swedish large-value payment system open 24 hours a day. The vision is simply that payments can be made immediately, regardless of what time of day they are made, and that settlement shall be in Riksbank money. In this vision, the e-krona  7 [9]  would be a national back-up to the private payment system and it would enable both instant payments and settlement in central bank money. Conclusion Let me conclude by summarising what I have said. I believe that it is important to update the money the Riksbank issues to a format that suits the modern economy. We will therefore develop a pilot version of a central bank digital currency – an e-krona. Once we have tested the pilot version we can choose to issue, or not to issue, a digital krona to the general public. I have also talked about the rapid changes in the payment market, where rapid real time alternatives will be important in the future. In my opinion, payments ought to be made as quickly as we exchange information in the current digital society. It should be possible to make payments instantly 24 hours a day and to settle them in Riksbank money. A connection to the ECB's technical platform, TIPS, would be one way of doing this.
Today over 60 per cent of foreign direct investment into the Mainland is routed through Hong Kong. A similar figure applies to China’s outward investments. Hong Kong is the pre-eminent fund-raising venue for Mainland corporates, through equity IPOs, debt issuance, bank lending, and various forms of private investment. In recent years, two major developments in financial linkage have been gaining momentum. One is the continuous opening of the Mainland’s financial markets to global investors through the various northbound Connect schemes with Hong Kong. The other is the increasing southbound traffic, again through the Connect schemes, that enables Mainland investors to invest in overseas financial assets. These are significant developments. They demonstrate China’s confidence and willingness to be connected to the global financial markets. The southbound schemes also send a clear 2/4  BIS central bankers' speeches  message: as China’s economy grows and its people become more affluent, both institutional and retail investors look for more diversified allocation to overseas assets. Let me offer some context here. When we think about the northbound traffic, we should bear in mind that, in global terms, China’s stock and bond markets are second in size only to their US counterparts. For the southbound traffic, we are talking about managing the wealth of the world’s second largest economy and most populous country. And we are only in the early stages of these two-way flows through the Connect schemes. Hong Kong is the natural choice of venue to host the Connect schemes.

Eddie Yue: Hong Kong's positioning and prospect as an international financial centre Opening remarks by Mr Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, at The People's Bank of China and Hong Kong Monetary Authority Joint Seminar “Hong Kong's positioning and prospect as an international financial centre”, 9 December 2021. * * * Distinguished guests and friends in Beijing, Hong Kong and overseas: Good afternoon, and a very warm welcome to you all. I begin with heartfelt thanks to Governor Yi, not only for his inspiring opening remarks, but also for the unfailing support the PBoC has given to Hong Kong over many years. My colleagues and I also extend our gratitude to international institutions such as the BIS and the IMF for your close partnership through all these years. Without your support, Hong Kong’s financial sector would be in a far less robust position than it is today. In a little over six months we will be celebrating the 25th anniversary of Hong Kong’s establishment as a Special Administrative Region. This is a good moment to pause – both to reflect on Hong Kong’s success as an international financial centre, and to consider the steps we need to take to build on that success. Tackling such a vast subject in ten minutes is a tall order. Let me make an attempt by asking two simple questions. What are the attributes of an IFC? And, how far does Hong Kong possess them? I do not have all the answers.
Our interest is in ensuring the safety and soundness of banks, the protection of insurance policy holders and the resilience of financial ecosystem as a whole to these changing risks. It is about activities not labels. That is why the Bank has been engaging with FinTech firms to understand better the financial stability risks that could emerge as banking is re-shaped. We will monitor those that arise along the transition path and those that could endure. Where firms or activities become systemic and risks to the real economy grow, they will come within the purview of the Bank’s responsibilities for the stability of the system as a whole. The Financial Policy Committee will continue to monitor the scope of the regulatory perimeter. Adjustments will follow if necessary. When FinTech companies fall within our remits, we will monitor them in the same proportionate way that we approach other firms – backed by analytics and judgement, taking action where appropriate. We are building a system that allows for orderly failures. Not just to end the blatant unfairness of Too Big to Fail, but also to foster industry dynamism and better outcomes for consumers. After all, ease of exit promotes ease of entry. We won’t discourage avatars by preserving dinosaurs. 5. Conclusion  Will FinTech mean a restoration, reformation, or revolution for finance? Through our regulatory approach, widening access to RTGS, and facilitating technological development, the Bank is helping to enable a sustainable FinTech reformation.

The second is needed to enable these firms to deposit monies in RTGS on behalf of their customers. The final change provides assurance that any longer-term stability implications of these changes can be addressed under the Bank’s prudential remit. 8  We do not intend, however, to extend facilities to PSPs for which they have no need. Non-bank PSPs will not therefore be eligible for membership of the Sterling Monetary Framework – and in particular the Bank’s credit facilities. That is because PSPs are not part of the monetary policy transmission mechanism or exposed to inherent overnight liquidity risk. The Bank may also take steps to limit PSPs’ capacity to hold unlimited overnight balances on their settlement accounts. BIS central bankers’ speeches  5  billions of pounds worth of capital. With the economics of wholesale banking under pressure, cutting inefficiencies is a high priority for industry. That is why it is welcome that FinTech innovators are exploring the potential of distributed ledger technology to simplify the settlement chain, reduce its cost, and raise its speed while increasing resilience. The instruments involved range from equities to bank loans. However, the challenges facing such projects are legion, including reliability, resilience, security and scale. And fundamentally, how to prove technologies that are still nascent? One challenge an otherwise robust system of sufficient scale would not face is access to central bank money from the Bank of England. The Bank has for many years sought to ensure that, wherever possible, wholesale securities settlement occurs in central bank money.
More participants are thereby given the opportunity to invest in assets that have largely been reserved for financial institutions. Banks are also provided with increased possibilities to diversify the risk in their loan portfolios across different sectors and regions. All in all, this contributes to spreading the credit risk linked to the loans. When risk is diversified, the financial system is less vulnerable in the face of financial turbulence. b)  Continuous pricing of risk reduces the possibility of shocks  Loans from financial institutions and securities debt differ widely in terms of the degree of transparency in credit rating and pricing. The credit rating in financial institutions must be looked upon as internal company information. Loans provided by banks and financial institutions are far less liquid than negotiable securities and the price will generally not change as a result of new information about the borrower. On the other hand, securities markets are subject to transparency and information requirements. Participants’ credit ratings are continuously reflected in the transparent pricing process in the market. The stability in our financial system is strengthened when market operators’ assessment of the correct value is reflected transparently and continuously in prices. A precondition is of course that the information that companies are obliged to provide is correct. Economic shocks will also be more easily absorbed, even though considerable price changes may have substantial wealth effects. Because banks lend at relatively fixed rates, financial institutions must be able to adjust volumes when new information is available.

As percentage of GDP, 2001 30 25 20 15 10 5 0 Ge  rm  any  No  rw a  y  F in  lan  d De  nm  ar k  F ra  nc e  Sw  ed e  n  UK  US  Sources : BIS/OECD SG Kommunalbanken, 30.august 2002  The turnover and issue volume in the market increased sharply up to the mid-1990s. However, Norwegian companies use the bond market on a far more limited scale than companies in comparable countries. Solid state finances also help to explain the limited size of the private bond market in Norway. A well functioning government bond market can stimulate the private segment of the debt securities market. In most countries, the state has a sizeable borrowing requirement, with a high level of debt. Even though its borrowing requirement is small, the Norwegian government also places emphasis on a well functioning bond market in its government debt policy. Government debt issues are confined to few and large standardised loans. This contributes to higher turnover in the secondary market and hence greater liquidity. With ample liquidity and low risk, government bond rates can serve as a benchmark for private bonds. Effective interest rates on government bonds and private bonds 5-10 year maturity. Per cent 9 8  9 8  Private bonds  7  7  6  6  5  Government bonds  4 Ja n .
The reason for excluding import prices here is that the exchange rate fluctuations in this period mainly reflected rapid changes in the degree of confidence in the consolidation of government finances. BIS Review 5/1998  -5-  Since 1995, when the inflation target first applied, the annual increase in the CPI averaged 1.5 per cent. This outcome is thus relatively close to the targeted rate and well inside the tolerance interval. Underlying inflation, as measured in the diagram, has averaged 2 per cent. In other words, the transitory effects that lowered inflation have been somewhat stronger than th upward effects. In the absence of any transitory effects, inflation would accordingly have fluctuated around 2 per cent. After only three years with an inflation target policy, it is too early for a final evaluation. But when allowance is made for transitory effects, it is difficult to demonstrate that the Riksbank has acted asymmetrically. What this does show is that CPI inflation sometimes deviates from the target and may even move outside the tolerance interval. It is then important that the Riksbank can make it credible that inflation will gradually return to 2 per cent. This can be done either by showing that the forces at work have been mainly transitory effects or, if the effects in question are more permanent, by using the instrumental rate to pilot inflation back to the target rate in the time frame with which monetary policy operates.

The basis for the Riksbank’s assessment included the prospect of a continued strengthening of economic activity, now with increased support from domestic demand. GDP growth was put at about 3 per cent in 1998 and over 3 per cent in 1999. Inflation expectations were considered to be largely in line with the inflation target. Compared with the September report, the Riksbank’s assessment in December represented a minor upward adjustment (by some tenths of a percentage point) of inflation in 1999, mainly in view of higher wage costs and lower productivity. Of greater practical importance for monetary policy was the forward shift of the time perspective by one quarter, which meant that the inflation forecast now included a period when capacity utilisation and BIS Review 5/1998  -6-  inflationary pressure were calculated to be somewhat higher. The picture of the real economic future had not changed appreciably during the autumn. The December report also presented two alternative scenarios that were judged to be equally probable. One envisaged stronger inflationary pressure due to higher wage increases and weaker productivity growth. The other involved stronger effects than expected from the Asian crisis and consequently a smaller increase in inflation. It has been claimed in the public debate that the Riksbank played down the Asian crisis. That is not so. Certain effects were allowed for in the main scenario for the December report. But above all, the risk of the crisis becoming more profound was highlighted in a risk scenario as an important factor for monetary policy to consider.
BIS central bankers’ speeches  3  This risk faced by the clearing banks, in turn, unnerved the tri-party repo investors. After all, if the unwind did not occur, they would be stuck with the collateral securing their loans from the night before. Most of these investors were not prepared to take possession of and liquidate such collateral, and had no interest in doing so. The incentives for these investors were to run at the first sign of trouble to avoid getting stuck with the dealer’s collateral. This incentive to run was reinforced by the fact that if the investors were stuck with the collateral, they would have strong incentives to sell it quickly in order to generate the liquidity needed to meet redemption calls or to keep their portfolios in line with regulatory guidelines. Such “fire sales” of assets could result in losses and could be extremely destabilizing to markets. The crisis also made it clear that the monies provided to the money market mutual funds by their own investors were also inherently unstable. This made such funds, in turn, an unreliable source of finance in repo, commercial paper and other markets. Investors in a fixed net asset value (NAV) money market fund could take their money out on a daily basis at par value, with no redemption penalty. This could occur even if the money market fund did not have sufficient cash or liquid assets that it could easily sell to meet all potential redemptions.

What was new prior to the crisis was the extent to which maturity transformation and financial intermediation began to take place outside of commercial banks. This activity occurred largely without the types of safeguards – robust prudential regulation, deposit insurance, lender of last resort – that have safeguarded the commercial banking system from the types of widespread panics and runs that are capable of destabilizing the entire financial system. The risk created by this gap in coverage was not well recognized by regulators or the private sector. Market participants had little incentive to internalize the negative externality of run-risk created by their collective choice of finance and made erroneous assumptions about the liquidity of asset markets and the capacity and willingness of banks to distribute central bank liquidity to the wider financial system during periods of stress. 3  A repo is a sale of securities coupled with an agreement to repurchase the securities at a specified price on a later date. 4  Market makers are institutions such as securities brokers and dealers that buy and sell securities on behalf of customers. Market making accommodates the asynchronous arrival of sellers and buyers, thus providing liquidity to financial markets. 5  Conduits are bankruptcy-remote, special purpose vehicles that fund pools of securities in short-term funding markets. The securities might consist of loans, mortgages, receivables and securitized products such as asset-backed securities (ABS).