samchain/econo-pairs-v1 huggingface dataset:
However, there are also many examples from history where paper money proved to be decidedly bad, as high inflation led to a rapid erosion of value with disastrous consequences in some instances for the economy, society and politics. The flexibility that is the defining feature of the paper money system is both its strength and its Achilles heel. Used properly, i.e. with the focus on the goal of value retention, this flexibility can contribute to the stability of economic development and the solidity of the banking system. However, things start to get dangerous when it is misused to solve political or structural problems by issuing central bank money – as advocated by the proponents of the aforementioned modern monetary theory, for example. The temptation to fulfil such wishes via the printing presses, by creating money out of thin air, is of course all the greater the more politicised monetary policy becomes. 8 The solidity of a paper money system therefore lies in three mainstays: a clear mandate for the central bank, setting as its target the preservation of price stability and thus ensuring sound money; protection from political influence by enshrining the independence of the central bank in law and actually putting this into practice; and healthy state finances. After all, experience shows that high government deficits mean increased political pressure on the central bank, and in cases where monetary policy has been politicised, there is a clear risk of significant currency depreciation sooner or later. When are bank deposits sound money?

On the other hand, the consequences of the coronavirus crisis could also impact on the soundness of money. Overall, state financing needs and thus government debt have increased considerably as a result, and this could undermine the third mainstay if countermeasures are not taken over the medium term. In addition to this, many central banks have themselves bought exceptionally high amounts of their country’s own sovereign debt. In a crisis, that may be the right thing to do in terms of monetary policy, but it must not be done for reasons of 9 Money supply and monetary aggregates can be represented as the product of the money multiplier and the monetary base. 10 For more information on the sovereign wealth fund issue, cf. inter alia Jordan, Thomas J. (2016), Comments on Swiss monetary policy, speech at the SNB AGM, Berne, 29 April. For more information on how the SNB contributes to a healthy pension system, cf. Jordan, Thomas J. (2019), Challenges confronting the pension system – options and limitations of monetary policy, speech at the PK-Netz conference, Berne, 31 October. Page 7/8  state financing. The challenge lies in safeguarding the clear separation of responsibility for monetary policy and fiscal policy even in this crisis situation, and thus ensuring that central banks remain independent in practice and not just on paper. It is particularly important to avoid scenarios where excessive government debt means that a central bank is de facto forced into making its decisions dependent on their impact on public finances.
In addition to transition risks, climate events are already having increasingly visible effects on activity and food prices. The price of wheat has currently reached a historic high, partly for climate reasons. In Europe itself, the drought in the summer of 2018 had caused the Rhine to drop to a historically low level and slowed growth in Germany by disrupting river transport. Page 3 sur 8 In the longer term, climate change will weigh on the potential growth of our economies. Numerous studies show that higher temperatures reduce labour productivity by about 2% for every degree above 25°C. iv According to simulations by the Banque de France, real GDP in Europe is expected to be 2 to 6% lower in 2050, in the event of a disorderly rather than orderly climate transition. 1.2 For the smooth implementation of monetary policy Climate risk is also a source of financial risk. It is therefore essential, as my colleague and friend Jens Weidmann, President of the Bundesbank, says, that "central banks […] practice what they preach" v for the banks they supervise, i.e. better factor climate risk into their own operations. Moreover, preserving financial stability is a prerequisite for ensuring the smooth transmission of monetary policy, as the NGFS also recently recalled. vi Let's face it: the ECB's balance sheet is "exposed" to climate risk through the securities it purchases and the assets pledged as collateral by banks, to an extent that is insufficiently taken into account.

This is primarily due to the lack of comprehensive and standardised information that is needed for all economic agents to factor in climate risk. I will come back to this need for standardisation later. But more fundamentally, the difficulties in pricing climate risk are due to the very characteristics of these risks, and in particular to what we call "green swans", which generate radical uncertainty and whose consequences can be systemic. vii In this respect, market neutrality – which guides the execution of our market operations – should not put a brake on carbon neutrality. viii Market operations are conducted in a neutral manner as long as they comply with the central banks’ risk control rules. And yet, climate risk is precisely a financial risk that is currently insufficiently measured by markets. ix Another difficulty is often put forward, but it can be overcome: the fact that climate risk is long-term, while many of our risk measures are short- to medium-term. Page 4 sur 8 This is a real technical challenge: the "probability of default" is usually one year; our economic forecasts cover a two to three-year horizon. We must therefore work to "lengthen" our measures, but the fact that a "tragedy of the horizon x" exists is not a call for a status quo. On the contrary! Climate change calls for early and resolute action as the benefits of corrective measures will essentially only be felt in the longer term. II. How should the central bank intervene? How can this be concretely achieved?
•  In the 1980s, Singapore became the world’s leading producer of hard disk drives – an early form of memory storage used in computers at the time. The first two decades of Singapore’s economic history could be described as the “take-off” phase. It was the period when the economic fundamentals of prudent public finances, sound monetary policies, co-operative industrial relations, outward orientation, and market-based strategies took root. The economy grew by an average of about 10% each year during this period, and Singapore emerged as a newly-industrialised economy at the forefront of developing countries. 1985–2010: Liberalisation and the rise of modern services In 1985, the Singapore economy went into recession – the only time in our history the domestic economy contracted while the global economy was still growing. The 1985 recession exposed structural strains in the economy, which had hitherto been masked by strong economic growth. •  As the earlier phase of “catch-up” growth came to an end, resource constraints and diminishing returns to investment began to set in. •  The cost advantage that Singapore enjoyed began to narrow. The 1985 recession was a significant milestone in Singapore’s development history. It led to a fundamental review of the policies and strategies that prevailed at the time.

These two decisions proved to be among the most important in our economic history. Promoting exports and promoting foreign direct investments at a time when few other countries were doing the same gave Singapore a decisive advantage. But it was an advantage that Singapore had to work hard to realise. •  The government developed industrial land, put in place infrastructure facilities, reformed labour laws to promote industrial peace, and invested in basic education with emphasis on technical skills relevant to industrialisation. •  Sound fiscal and monetary policies ensured macroeconomic stability and underpinned investor confidence. The two strategies paid off handsomely. •  By 1975, Singapore had established a substantial industrial base, with manufacturing’s share in GDP climbing to 22% from 14% in 1965. •  The economy was at full employment and it was clear that Singapore had to move up the value chain towards more capital-intensive and skill-intensive activities. The compositional change within manufacturing was striking. •  Industrialisation began in the 1960s with factories producing items such as matches, fish hooks and mosquito coils. o  •  By the way, for those unfamiliar, mosquitoes used to spread life-threatening diseases in the tropics in those days until the disease-causing ones were eradicated in 2033 by genetic modification. In any case, these labour-intensive industries saw a steady decline through the 1970s. By the late 1970s and early 1980s, we saw the emergence of strong clusters in higher valueadded electronics, petrochemicals, component and precision engineering.
Huw Pill: Monetary policy - an anchor in challenging times Speech by Mr Huw Pill, Chief Economist and Executive Director for Monetary Analysis of the Bank of England, at the Scottish Council for Development and Industry, Glasgow, 12 October 2022. *** Good afternoon everyone. It is a great pleasure to be with you in Glasgow today. My thanks to the Scottish Council for Development and Industry for their invitation to speak, to the University of Strathclyde for hosting us, and of course to all of you for taking the time to attend. I am looking forward to our discussion. I have spent the past couple of days here in Scotland talking with firms, speaking to business leaders and engaging with our Citizens Panel. As you can imagine, some of those discussions have been challenging. We are living through challenging times. The invasion of Ukraine has led to a dramatic rise in European wholesale gas prices. Household incomes are being squeezed by higher energy bills. Company profits are being squeezed by higher energy costs. And headline inflation has risen to unacceptably high levels. For a net importer of energy like the UK, the rise in global energy prices weighs on national income: the cost of what we are buying from the rest of the world has risen dramatically relative to the price of what we are selling. You don't need to be an economist to understand the implications of this for domestic demand. Higher energy prices dampen household spending, and weigh on economic activity.

As the study team has found out, emigrants in Italy have a high banking utilization rate – more than 50 percent have bank accounts. On the Albanian side, this figure drops to less than 20 percent. Emigrant families’ access to banks is suboptimal despite the considerable geographical expansion of commercial banks in recent years. In contrast with other remittance-receiving countries, banks in Albania still have only a small market share in remittance services. However, there are encouraging signs of demand for new technologies, innovative partnerships and entry points to reach disadvantaged groups. The high fees of the money transfer applied by the banks are often brought up as a motive why individuals do not prefer this service. Nevertheless, there is already an Albanian commercial bank, which offers transfers from Italy to Albania without charging any fee for amounts up to 250 euros a day, when the average monthly delivery of emigrants usually ranges from 100 to 150 euros. In the meantime, there are several other banks that provide the same service for transfers from Greece. Actually, we are examining the possibilities to lower the transfer costs through broader bilateral agreements between the two countries. Even though, money transfer companies provide transfer services at reasonable rates with a good geographical coverage, we still observe a lot of cash entering the country in bags. I retain, this is more a regulatory problem rather than the preference of emigrants to go informal.
For banks in particular, the majority of the Basel III work – let’s say 80% – has already been done in 2010–2011. However, discussions remain ongoing on the question of the measurement of risk on bank balance sheets. It is in the strategic interests of France and Europe, which has always promoted international rules, to conclude a final agreement on Basel III. We are working hard towards a fair and reasonable agreement. But beyond Basel III, we should finalise measures that target non-banks. We must ensure a balance between financing channels. The priority has now shifted from the solvency of banks, which has improved substantially, to the liquidity of the shadow banking sector, particularly funds and asset management companies that are exposed to the risks of sudden panic-driven runs. Let me conclude my speech by quoting a French Philosopher, who spent many years in the Netherlands: René Descartes. He was both the father of “l’esprit cartésien” – having a clear vision of our aims – and a pragmatist, with this useful principle: “divide each of the difficulties under examination into as many parts as possible and as might be required in order to resolve them better”1. Indeed, we must not get bogged down by misunderstandings, sterile debates and considerations about which of the intergovernmental or community method to use. But in order to move forward, we should combine a holistic vision and a stepwise approach to implementation.

It will in particular change the relationships between the members of the financial community and between this community and the non-financial world  II. Regarding Big Data, central banks will have to switch from an observer status to a user or player position, which implies significant changes in performing part of their activities  III. Big Data raise regulatory issues that cannot be solved within a national context but require a global reflection from public authorities. I. Big data will have significant economic effects. Entry costs for carrying out financial  transactions have already been reduced and will be lowered further in the future. Customer knowledge, in particular regarding the conditions applied by financial institutions, will be enhanced and more generally information asymmetries between clients and providers of financial services will narrow. Big Data can be a powerful card to play by GAFAs or other native non-financial firms to develop new activities. The financial industry has therefore to adapt rapidly to face the data revolution and compete with the new entrants, while protecting privacy against increasing cyber risks in particular. All in all, competition will increase, which is beneficial to the economy. The flip side can be enhanced risks for financial stability, implying a new form of vigilance for central bankers in particular. I will elaborate a bit more on this later on. II. Terabytes of data are available and more will be coming soon. Central banks will  collect more and more granular data. This is a clear opportunity for better forecasting and even nowcasting.
After all, on the other side of the ledger, the policy response following the crisis has been much more aggressive than is typical. On the monetary policy side, the Federal Reserve cut short-term interest rates close to zero, communicated that short-term rates were likely to stay exceptionally low far into the future, and undertook a series of large-scale asset purchases in order to ease financial conditions further. On the fiscal side, in 2009 the Congress and Administration enacted the largest fiscal stimulus program in history and some of these fiscal actions were renewed (e.g., extended unemployment compensation benefits) and new initiatives undertaken (e.g., the payroll tax holiday) once it became clear that the recovery was faltering. Also, there were significant  1  These lessons are evident in surveys of past financial crises and are examined in detail by Carmen Reinhart and Ken Rogoff in their superlative book, This Time is Different: Eight Centuries of Financial Folly. 2  BIS central bankers’ speeches  policy actions taken to strengthen the banking system, including forcing banks to recapitalize so that they would have the capacity to sustain their lending. So why has the recovery disappointed? One possibility is that the negative dynamics of a post-bubble environment are even more potent than had been appreciated. Feedback loops may be more powerful and frictions may be larger. In the U.S. case, this is particularly germane with respect to housing and mortgage finance.

My conclusion is that the easing of financial conditions resulting from non-traditional policy actions has had a material effect on both nominal and real growth and has demonstrably reduced the risk of particularly adverse outcomes. Nevertheless, I also conclude that, with the benefit of hindsight, monetary policy needed to be still more aggressive. Consequently, it was appropriate to recalibrate our policy stance, which is what happened at the last FOMC meeting. As I argued in a recent speech, simple policy rules, including the most popular versions of the Taylor Rule, understate the degree of monetary support that may be required to achieve a given set of economic objectives in a post-financial crisis world. That is because such rules typically do not adjust for factors such as a time-varying neutral real interest rate, elevated risk spreads, or impaired transmission channels that can undercut the power of monetary policy.2 One reason that monetary policy may have been less powerful than normal is that one of the primary channels through which monetary policy influences the real economy – housing finance – has been partially impaired. This has both quantity and price dimensions. Credit availability to households with lower-rated credit scores remains limited and households with homes that have fallen sharply in value have lost most or all of their home equity and this makes it very difficult for them to refinance these mortgages. 2  Dudley, William C. (2012). “Conducting Monetary Policy: Rules, Learning and Risk Management”.
Combined with new financial instruments that were intended to spread risk – but that did not prove to be viable – the US housing crisis has spread to many parts of the world and whose outcome is still unknown. Seven or eight years ago, we experienced a similar situation, although not as severe, when the dotcom bubble burst. Many also recall the crises in the emerging market economies in Asia, Central Europe and South America ten years ago and the downturn in the Japanese economy in the 1990s. Nor will we forget the banking crises in the Scandinavian countries in the early 1990s. However, financial crises are nothing new. We also find parallels to today's crisis if we go back to the Great Depression in the 1930s. If we go much further back in history, to the 1600s, the same phenomenon occurred with speculation in the tulip trade. In Holland, they discovered at an early stage that a virus could give tulips stripes and beautiful colour. A forward market for bulbs developed in the 1630s. In 1636 market prices rose sharply and in a short time that winter bulb prices increased 25-fold. This did not last. The market collapsed in February 1637 and prices fell to 5 per cent of earlier levels in the course of few days. Auction lists a hundred years after the crisis show prices from one per cent to 0.005 per cent of the level before the collapse.

It also started to become clear for old Taraldsen; but immediately afterwards, he became very confused again; because he understood the entire scope of this; he had the entire town's bills of exchange in his head; and of course he had seen a lot of this kind of thing during his long life but all of those were trifles compared to what would happen now. His voice shook as he almost ceremoniously asked: "Will Carsten Løvdahl's papers be protested?" "Yes," replied Marcussen without looking up. Old Taraldsen trotted out of the offices; but on the steps he met the messenger from Aktiebanken: "Is it true? – Taraldsen!" "Now the entire town is going to collapse," answered the old man, throwing up his arms in despair. Kielland’s description of a financial crisis and its consequences was realistic. There was speculation then and there is speculation today, but in other kinds of financial instruments than at that time. We might find employees at Lehman Brothers today who have expressed themselves in the same way as old Taraldsen. It seems to be an inherent property in financial markets that financial bubbles and crises occur from time to time. A monetary policy that is oriented towards stabilising inflation and inflation expectations will reduce the impact. We have seen that when the interest rate is raised to restrain the rise in prices for goods and services, it also has the effect of stabilising house and property prices. In some areas, however, regulations and frameworks – cf.
As attendees at previous regional press briefings may recall, the New York Fed produces economic activity indexes (CEIs) to help monitor the performance of the regional economy. Based on these measures, activity continued to expand in both New York State and New York City through June, with growth decelerating only modestly in the second quarter. By contrast, the recovery in New Jersey’s economy has been more sluggish, though the index for New Jersey did pick up in 2011, which is an encouraging development. We monitor Puerto Rico using an index produced by the Government Development Bank for Puerto Rico. This index shows that the recession there, which started back in 2005 – well before the mainland’s – continues to be a challenge. The sharp decline in activity that persisted well into 2010 appears to have subsided. However, for some time now the island’s economy has experienced a series of fits and starts. As such, the recent improvements will need to be sustained for a period of time before we’ll know that they are breaking out of the pattern of mixed signals. The performance of regional housing markets continues to influence the pace of recovery for local economies. Many of the places hit hardest by the housing bust have had a particularly weak recovery. Although housing markets remain fragile, an encouraging development here is that home prices appear to be firming across much of our region.

It does not take into account that the evolution of relative exchange rates stems, to a great extent, from a natural compensation for inflation rate differentials. This is particularly relevant to Switzerland, where we have experienced far less inflation than our commercial partners over the last thirty years. If this issue is accounted for, that is, in real terms, the Swiss franc can then be said to have appreciated by around 100% against the US dollar and 70% against the British pound since 1973 and by 14% against the Euro between 1999 and today. We learn more if we take a multilateral viewpoint, based on the real effective exchange rate13. On a statistical basis, it can be argued that the Swiss franc’s effective exchange rate has remained more or less stable, at least from 1990 until recently. This does not mean, however, that it has been constant. On the contrary, it fluctuates constantly around its  12  The Bank of England has reached the same decision regarding the British pound. 13  This rationale and the figures that follow refer to the export-weighted real exchange rate (nominal rates which correct the gaps between price indexes and consumption), as published by the BIS. BIS central bankers’ speeches  5  average.14 You may recall, in particular, that for approximately three years in the mid-1990’s it remained well above its long-term average, then peaking at 12% in 1995. Until now, this was the Swiss franc’s most significant deviation from the long term average observed.