samchain/econo-pairs-v1 huggingface dataset:
In particular, it would be needed in the event that citizens become reluctant to use cash as they go digital. This is not the situation we face today: cash is still the most common way of making retail payments in the euro area. However, its role as a payment instrument is diminishing – in some countries rapidly so – as consumers are increasingly paying electronically:10 as a proportion of all physical retail payments, cash payments decreased from 79% in 2016 to 73% in 2019. This trend has accelerated during the pandemic – with a vast majority of consumers expecting to continue using digital payments as often as they do now, or even to use them more often in the future.11 And because of this trend, we may see a further increase in the uptake of international card schemes and solutions such as payment wallets and apps developed by large technology firms. A digital euro would ensure that even in a situation where there is rapid digitalisation in the world of payments, sovereign money remains at the core of the European payment system. This would contribute to financial inclusion. It would also shield us from the risk that a private or public digital means of payment issued and controlled from outside the euro area could largely displace existing domestic means of payment. Such a development would raise regulatory and financial stability concerns and could even put Europe’s monetary and financial sovereignty at risk. How could a digital euro be introduced?

Fabio Panetta: A digital euro for the digital era Introductory statement by Mr Fabio Panetta, Member of the Executive Board of the European Central Bank, at the ECON Committee of the European Parliament, Frankfurt am Main, 12 October 2020. * * * Madame Chair, honourable members of the Committee on Economic and Monetary Affairs, Thank you for inviting me to present the Eurosystem report on a digital euro.1 The quest to ensure that means of payment are fit for purpose has characterised economic history. In the provision of money by the sovereign, Europe can boast of a primacy dating back to ancient Greece2 and the Roman era.3 The search for sound money continued in the “dark” years of the High Middle Ages, despite the resumption of bartering; in the eighth century the monetary reform of Charlemagne spread out in many European countries.4 The evolution of money over the centuries and across different regions has reflected changes in economic life, in technology, and in societal beliefs and behaviours. When Marco Polo visited China in the 13th century, he was shocked to discover paper money, which we now know had already been used there for centuries. He called its creator a perfect “alchemist”.5 Today, digitalisation is spreading to all areas of our life, including the way we pay. So I do not expect anyone to find the idea of a digital currency as astonishing as Marco Polo found the idea of paper money.
That selling pressure overwhelmed the capacity (or willingness) of intermediaries to warehouse those instruments, leading to sharp and disorderly price declines in core assets relied upon, directly or  Page 5  indirectly, by households, firms and governments to support economic activity. And central banks’ traditional tools, working through banks, were unable to direct liquidity to the source of the shock (Figure 1). European energy markets in Spring 2022 saw similar dynamics too, when sharp price movements triggered by the invasion of Ukraine triggered large margin requirements on energy derivative positions that thinly-capitalised intermediaries struggled to meet, driving liquidation of positions that further amplified the initial shock to energy prices. Some may argue that Covid, Putin and the UK’s autumn 2022 fiscal announcements are truly exceptional shocks that would challenge any market structure, and are unlikely to be repeated. Maybe. But the underlying vulnerabilities are real and growing, and hoping for calmer times is not a strategy. LDI was just the latest warning of the need for action. 2) Public backstops vs. private self-insurance Given that the evolution of this new form of systemic liquidity risk is real and growing, there is an important debate to be had about how responsibility for insuring against the social consequences of that risk should be shared between private and public interests. It is a core function of public institutions to provide a backstop against genuine tail risks. The alternative – systemic collapse – would be hugely costly to the real economy.

In parallel, investors have become more reluctant to invest in the banking sector when profit expectations are low, making it difficult for banks to raise new funds. Banks’ soundness therefore tends to be more correlated to economic fluctuations than in the past, contributing to the amplification of the credit cycle. •  Accounting regulations so far may also contribute to amplifying credit cycles to some extent. In most financial centres, current provisioning behaviour does not allow banks to take a forward-looking view of their risks, as accounting and tax rules only accept loan-loss provisions for impaired loans. Such a regulatory environment may amplify the credit cycle, contributing to low provisioning and over-lending during upswings and paving the way to sharp corrections during downswings. Using full fair value accounting for loan portfolios might further amplify credit cycles by increasing the volatility of banks’ earnings. •  Prudential rules may also have been unable so far to always prevent these developments. Current capital adequacy rules are not risk-sensitive; as a result, credit  2  BIS Review 41/2001  deterioration does not require additional regulatory capital unless loan losses erode the capital base under minimum requirements. As most banks – particularly large ones – have capital far beyond the prudential minimum requirements, they can bear a reduction of their capital base without being compelled to restrict their credit granting. Therefore, capital ratio is not pro-cyclical as such.
And they are typically much less leveraged. But increasingly they do offer a liquidity promise – that the investors can redeem the value of their investment at very short notice. In this way they can create liquidity mismatches when investors in funds are offered a greater degree of access to investment than is consistent with the ease with which the assets in which they are invested can be sold without a big impact on price. A particular concern occupying both the FPC and authorities internationally is that simultaneous redemptions from open-ended funds offering short-term redemptions could test the resilience of market liquidity, with wider adverse effects through mark-to-market pricing and collateral calls. This risk has increased due to the growing importance of open ended mutual funds. As described in the FPC’s July 2015 Financial Stability Report, global assets under management have grown significantly over the past decade, to around $ trillion. Within that, the share of funds typically offering investors near-term redemptions such as open ended mutual funds has increased, from just below 40% a decade ago to approaching half. This could give rise to particular risks where a liquidity promise offered by a fund gets too out of line with the liquidity characteristics of the assets the fund holds. Corporate bond funds could be relevant here. These funds have more than doubled in size over the last 10 years, from $ trillion to almost $ trillion AUM.

Indeed, it is worth observing in passing, one of the puzzles in recent years has been the degree to which market participants have expressed their concerns about the fragile liquidity in  BIS central bankers’ speeches  3  markets and the higher risk while at the same time charging less to hold those assets. Though they have increased somewhat of late, liquidity premia are still well below historic averages suggesting that liquidity risk is being under-priced and prices do not reflect the underlying characteristics of the assets. Assets that attract a more diverse set of participants are likely to be traded more frequently. This, in turn, should raise the likelihood of finding an instant match at any point in time, meaning there is limited need for intermediaries to warehouse risk. If trading is sufficiently frequent, this should also minimise the need to transact in larger trade sizes. In this respect, assets with standard terms and structures increase price transparency and the ease of price discovery, thereby attracting a larger pool of buyers and sellers. Government bonds, equities, foreign exchange and futures are good examples. Similarly assets that are designated benchmark instruments and those included in indices tend to attract a larger pool of buyers and sellers. And assets that can be posted as collateral against securities financing and derivatives transactions experience greater demand. On the other hand, while some characteristics make assets more liquid, some make them more illiquid.
They should lead by example, notably by supplying the new European payment instruments to their clients and by ensuring that the retail payment system they operate complies with the interoperability principle enshrined in the SEPA project. 2.2. Acting as a facilitator of market and regulatory evolutions  Turning to the involvement of the Eurosystem in payment systems issues as a facilitator of market and regulatory evolutions, it is fair to say that this mode of action has been mainly used in the field of retail payments to support the SEPA project. The SEPA project was launched in 2002 by the European banking community under the aegis of the Eurosystem and the European Commission. The banking industry has taken on the responsibility of delivering the SEPA products, in particular the specifications of the new European instruments. The European Commission, which grants a great importance to the SEPA project in so far as the latter contributes to the achievement of the common market and the completion of the Lisbon agenda, has elaborated a legal framework for payment services in the European Union. It made public, in December 2005, a directive proposal that should be adopted at the European level before being transposed in national laws by 2008. Since 1999, the Eurosystem’s central banks have been actively promoting, at European and national levels, the establishment of a SEPA.

They proposed a vision which is now shared by all stakeholders, contributed to a constructive review of the banking community’s deliverables and cooperated with the European Commission to address legal and regulatory impediments. While the design phase of the SEPA project is almost completed, the next challenge is to ensure that migration towards the SEPA is well-organised and delivered. Because the starting point in each  BIS Review 53/2006  3  country is different, migration plans to the SEPA will primarily have to be organised locally. This should naturally lead to a further involvement of the Eurosystem’s central banks at national level, at least to help co-ordinating the efforts of the wide range of stakeholders. For example, the Banque de France and the French banking federation have created a national committee dedicated to the implementation of the SEPA. This committee gathers representatives of banks, different categories of users – public administration, corporates, retail business and citizens – as well as members of the French Parliament. It is in charge of coordinating works relating to the migration towards the SEPA. Having held its first meeting in April 2006, the committee foresees to adopt the French migration plan by October. 2.3. Overseeing payment systems  As overseers, the central banks of the Eurosystem have also contributed to the objectives of European financial integration, technological progress and higher resilience of the financial system.
3 However, as in the case of the impact of consolidation measures on growth prospects, one could argue that the alternative to requiring a higher level of capital adequacy would be even worse. Without such requirements for banks with a low degree of capitalisation, there is a risk that the crisis will spread to other banks through poorer access to market funding. Although we ourselves do not belong to the euro area, we are still highly affected by developments there. Sweden is a small, export-dependent country and our most important export markets are in Europe. It is therefore of crucial importance to the Swedish economy that the euro crisis is managed in an orderly way. Can crises be avoided with different fiscal and monetary policies? As the European drama has unfolded, many observers have asked how we can prevent similar crises from occurring in the future. When, like me, you come from a central bank, it is natural to ask whether a different monetary policy had been able to prevent the crisis. Some analysts have identified the low interest rates that prevailed in many countries, and above all in the United States, for some years before the crisis as an important cause of unsustainable increases in indebtedness and property prices.

10. The ABF2 project has been a good example of co-operation between the public and private sectors. While this is an official initiative with seed money of $ billion provided by the EMEAP central banks, we relied on the private sector for product design, implementation and marketing. The nine fund managers and the global custodian for the nine funds were selected based on a very competitive process. After all, the private sector is much better at making these products marketoriented than central bankers. 11. The ABF initiative has also been successful in a wider sense in a number of ways. First, it has helped to promote product innovation. ABF2 Funds by themselves represent a new class of bond products, which has helped to raise the awareness of Asian bonds among investors. Some ABF2 Funds take the form of a bond Exchange-traded Fund (ETF), which is the first of its kind in Asia. They are a convenient and cost effective way for regional and international investors to gain exposure to Asian bonds. With their low costs and low entry thresholds, the funds also facilitate retail participation in bond markets. ABF2 has also led to similar products and derivatives coming into the market. We notice that some banks have come up with their own Asian bond funds, a welcome development, while an investment bank has issued a structured note using PAIF units as the underlying asset. 12. Second, ABF2 has led to improvements in financial market infrastructure.
(b) Coordinated central bank measures announced (12th  6  00  01  02  03  04  05  06  07  Jan 2008  Source: Dealogic. Data to end-December 2007  BIS Review 7/2008  Dec 2007).

The distribution of the government's financial investments and the choice of corporate funding structure should not be based on the notion that we are living in a barter economy. The government can choose the composition, required rate of return and risk profile for its financial investments without regard for the funding requirements of Norwegian enterprises. By the same token, Norwegian companies can choose their debt and equity structure independently of the government's financial investments. Both mainland private saving and business fixed investment have been high in recent years. Thus a possible weak capital market has not been reflected in a low level of investment and saving. As a result of developments in the late 1990s, equities and funds make up an increasing share of 1 households’ total assets. The equity ratio of enterprises strengthened in the 1990s, with a rise in new equity capital from the markets in particular. 1  Norwegian limited companies excluding petroleum companies, financial undertakings and government activities, and groups and holding companies. 2  BIS Review 18/2002  The Norwegian loan and capital market probably has weaknesses nevertheless, with thin securities markets and little breadth in investor and owner environments compared with some other countries. The reasons, and hence the solutions, can probably be found in the structure of the taxation of dwellings, property and financial assets, in a high level of government ownership of enterprises and in the organisation of pension saving in Norway.
In comparison with other countries, productivity gains in banks and other service sectors stand out in particular. Examples are automated processes and swifter payments in the financial industry, and improved inventory and management systems in commerce and transport. This reduces production costs. The business sector is quick to adapt and change, and to make use of new technology that is available in an international market. This is probably due to the modernisation in the 1980s and 1990s of the way the economy functions, which resulted in more efficient markets. Although satisfactory current statistics for central government and local government productivity are not available, government agencies have probably also become more efficient. New technology and new organisational structures have certainly provided opportunities to increase efficiency. Third, an ample supply of foreign labour has been an important factor behind output growth. In particular, the supply of foreign labour has increased sharply after EU enlargement in 2004. Improved terms of trade, high productivity growth in the Norwegian business sector and the increase in labour supply have resulted in a favourable environment for the Norwegian economy. Unemployment has declined considerably and is now very low. The labour market is tight. Unemployment has not been as low since the second half of the 1980s, and employment has risen sharply this year. Wage-earners and enterprises have both fared well. Cheap imported goods have resulted in a subdued rise in consumer prices and a substantial increase in wage-earners’ real wages. High export prices have restrained the rise in real labour costs.

Furthermore, last year we conducted a survey to landscape the development of the fintech sector and to assess the opportunities and barriers for innovation. The results of the survey indicate that about 90% of all respondents are aware of the benefits that digitalization of financial services brings, about 70% invest in digital transformation, payment services in particular, while regulation and market size seem to be the two main obstacles for faster fintech development. Regulatory barriers mainly refer to data protection, money laundering and payment system areas. The latter will be addressed with the new Law on Payment Services and Payment Systems that transposes the European regulation in the payments area, including PSD2. The Survey has served as a base point for the preparation of the first National Fintech Strategy to be adopted at the begging of next year. We expect that the new regulatory framework and more broadly, the implementation of the Strategy, will bring and make the new “inside out” for the Macedonian payment industry. Apparently, the digital age is propelling innovations in the financial area and changing profoundly the habits and preferences of consumers. I have no doubt that these innovation waves will continue. To maximize benefits and contain risks that might come to the surface, regulators, including central banks have to be part of the innovation waves to meet consumers’ needs in the payments landscape of tomorrow.
But I think that, at least in some areas, Basel II will act as a kind of catalyst for action. Under the new framework, internationally active banks will use systems whose recognition and on-going validation will indisputably require vastly increased collaboration among supervisors. Co-operation is a key word, but so too are convergence, communication and confidence. Communication is vital not only between supervisors or between supervisors and the industry but also, and very importantly at this stage, within banking groups so that all units are aware and understand the implementation plan. Additional co-operation and communication among supervisors will enhance confidence, reliance and convergence of supervisory practices. And some reliance and convergence will be necessary if we want to avoid redundant work, inefficiencies in the use of supervisory resources and an excessive burden for the industry. We are placing great emphasis on all these issues in our “Accord Implementation Group”, which is working together with many supervisors on what we call “real” case studies, and which is making good progress. 8. Conclusion  Let me take a few moments to draw some conclusions. What I have tried to do today is to highlight the anticipatory and forward-looking elements of Basel II. But, as with many things, I think that the real value of Basel II will be best evaluated with the benefit of perspective. This brings me back to our author of 2046. It may be that Basel II does not cover all the areas and refinements that are necessary to complete the framework for financial stability.

Mojmír Hampl: Central banks, digital currencies and monetary policy in times of elastic money Speech by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at the Official Monetary and Financial Institutions Forum (OMFIF) Roundtable, London, 11 July 2017. * * * Ladies and gentlemen, Good afternoon. Before I start in earnest, let me thank the OMFIF for the kind invitation to this event, which allows me to speak in front of such a distinguished audience. It is an utmost pleasure for me to be here. The topics of today’s session are threefold: cryptocurrencies, central bank digital currencies and monetary policy with elastic money. I’ll try to touch upon all of these topics and bind them together, yet I realise the task is challenging. Let me begin with a story from Prague. In our capital city we have a strong community of supporters and users of cryptocurrencies. Among libertarians, some of them my ex-colleagues or friends from the University of Economics in Prague, bitcoin is seen as a real, fully fledged alternative to the current monetary order. Indeed, I could show you a place in Prague where one can only pay in bitcoin. By the way, I appreciate the name chosen for the most popular cryptocurrency, bitcoin. In the era when the foundations of the monetary system were based on precious metals, people sometimes “bit the coins” to check whether or not they were counterfeit.