samchain/econo-pairs-v1 huggingface dataset:
This could be part of a European Monetary Fund, provided that its scope of action is extended beyond the current European Stability Mechanism. -  A micro accelerator: i.e. a Financing Union for Investment and Innovation. The aim is to mobilise the EUR 350 billion savings surplus of the euro area, notably to shore up equity which is the key to an innovation economy, and also to foster synergies, thanks to an integrated steering mechanism, between the Juncker investment Plan, the Capital Markets Union and Banking Union. -  A fiscal accelerator, once we have increased trust between Member States and made headway towards greater economic convergence: the euro area budget could be used to  Page 6 sur 6 finance, for the benefit of all countries, certain “European common goods” such as digital technology, energy transition, security, and migration controls. -  An institutional accelerator: The fourth is not an accelerator in substance, but rather a “facilitator” for the first three. In terms of institutions, we would need first and foremost a euro area Finance Minister, President of the Eurogroup and member of the Commission, backed by a European Treasury; but also a euro area Parliament group, in order to ensure the democratic legitimacy of the institutions and decisions. But it only makes sense if we make progress on the substance: if not, it would be little more than mere window dressing. The latter two accelerators, fiscal and institutional, would require Treaty changes, unless they were to be very limited.

I will not elaborate on Asia, but on Europe, and the European Monetary and Economic Union. **  I. The need for active multilateralism to face our global challenges. Let me start with my first point: the need for active multilateralism to face our global challenges. We have to strive to maintain the collective rules of the game, at international level and with all our partners. In the current context, international cooperation between countries is more important than ever: it is essential to preserving the improvement in the global economic environment. The global recovery has indeed been gathering pace since 2016: according to the latest IMF forecast, global growth should stand at 3.6% in 2017, after 3.2% in 2016, while in Japan real GDP growth should pick up to 1.5% in 2017 after 1.0% in 2016. Moreover, growth in the euro area should reach at least 2.2% this year, reflecting a strong economic recovery. However, there are two major risks threatening growth: financial instability and protectionism. Regarding financial instability, the continued rise in global public and private debt since the start of the 2000s – from 190% of global GDP in 2001 to 230% in 2016 [slide] – has become a subject of concern. The 2008 crisis stemmed from this, but this trend has unfortunately not slowed down since; the private debt in emerging countries (namely corporate debt) has risen particularly rapidly.
In a Taylor Rule, the nominal federal funds rate depends on the equilibrium or neutral real short-term rate of interest, the deviation of the level of economic activity from estimates of the level of activity that would be consistent with long-run price stability, and the deviation of inflation from the central bank’s target.5 The Taylor Rule formulation has a number of characteristics that make it a useful input into the policy-setting process. First, it very explicitly focuses on the two parameters – the long-term inflation objective and the level of potential output consistent with that objective – that map directly to the Federal Reserve’s dual mandate objectives. Second, standard Taylor Rules are self-equilibrating. They respond to economic shocks and forecast errors in a way that pushes the economy back toward the central bank’s objectives. Third, academic research shows that Taylor-type rules typically perform quite well across a wide range of economic models. This is important because we want rules that are robust; that is, not overly sensitive to model-specific assumptions about how the economy performs or how households and businesses alter their expectations and behavior in response to changes in monetary policy. Fourth, with respect to the United States, the most popular versions of the Taylor Rule approximate how policy has evolved since the late 1980s – a period in which the Federal Reserve has been successful in keeping inflation in check (Figure 1).

Legal considerations and possible challenges A digital euro would raise legal, technological and policy questions that we need to address. 2/4  BIS central bankers' speeches  Let me start with the legal basis. Today, only euro banknotes and coins are legal tender under EU primary law. This means they can be used to pay anywhere in the euro area.12 Therefore, a key issue discussed in the report is the importance for a digital euro to have legal tender status. Indeed, central bank money is a public good. Euro banknotes fulfil the core function of providing people with risk-free central bank money. It is crucial to ensure that, as a form of public money, a digital euro enjoys universal reach and acceptance, as the legal tender status provides. The introduction of a digital euro also raises technical challenges. Some are related to information technology and cyber risks, which will need to be managed effectively. Others are related to design choices. In this respect, we can leverage the experience gained in past projects that have put us at the frontier of payments.13 Finally, the design of a digital euro would have to be consistent with key policy objectives. In particular, its design should address the possibility that investors could rapidly move significant amounts of bank deposits into a digital euro, with potential adverse effects on the banking sector and financial stability. We are exploring design strategies to address this and other challenges, and we will assess them in depth.
“Modified Jackson-Hole consensus” The first view is in principle based on the same monetary policy strategy as I have described earlier and called the standard prior to the crisis, but with a few small additions. Smets calls this view a “modified Jackson-Hole consensus”. According to this view, there is indeed a need to prevent financial imbalances, that is, it is not enough to wait until afterwards and deal with the problems caused by the imbalances. But the preventive work should be entirely done by macroprudential policy, while monetary policy should have the same role as before.7 The monetary policy strategy as such thus does not need to be changed very much. The most common argument in favour of this view, according to Smets, is that monetary policy is a blunt instrument and has limited effects on the financial risks one wishes to counteract. The macroprudential policy tools, on the other hand, are regarded as much more effective for this purpose. The interaction between macroprudential policy and monetary policy can thus be kept to a minimum, and it is perfectly simple to keep the objectives and tools separate from one another. “Leaning against the wind vindicated” Characteristic of the second view is that one is more doubtful that macroprudential policy will always manage to prevent financial imbalances on its own. It could, for instance, be because the macroprudential policy tools are not as effective in practice as many people believe and hope. If this were the case, macroprudential policy would need support.

See, for instance, Brunnermeier and Sannikov (2013). BIS central bankers’ speeches  3  I think that the division into these three main views provides a good reflection of the current debate. But there are of course no sharp dividing lines between them, rather the dividing lines are relatively fluid. And where one finds oneself on the scale ultimately depends on which argument or arguments one allocates the greatest significance. It will probably come as no surprise to those of you who follow the monetary policy debate in Sweden that I myself have great sympathy for the principle that monetary policy needs to support macroprudential policy. I would therefore place myself fairly close to the second view in Smets’ description. So what has led me to this view? Allow me to begin by giving my interpretation of what a monetary policy that leans against the wind entails. What does it mean that monetary policy leans against the wind? There are different ways of illustrating how and why financial imbalances and risks should be included in the monetary policy deliberations. Essentially it is a question of avoiding scenarios where the imbalances will lead to very negative effects on GDP, unemployment and inflation. So in principle it is a question, as usual in monetary policy, of stabilising inflation and the real economy.
The alternative to the e-krona, increased regulation, could be difficult and expensive One conceivable alternative to the introduction of an e-krona would be for central government to intervene with increased regulation of the payment market to ensure safeguard objectives that private agents may not see as important but which are important for society. These include objectives such as general accessibility, resilience and innovative capacity. However, achieving both efficiency and security via regulation on a market like the payment market may be complicated. Allow me to explain why. In general, we usually consider competition to be good for achieving cost-effectiveness and innovation on a market. However, this does not apply to all types of market. In economics, we talk about ‘natural monopolies’. These arise on markets where major investments in infrastructure are needed and where the cost of serving an additional customer is low. A common example of such a market is the water system, where large investments are needed to lay water pipes and extend sewage systems. It would not be efficient to have two different companies digging up the streets and competing to supply water. In addition, once a system is in place, it is difficult for a competitor to enter the market and thus a monopoly arises. 12 See, for example, Tobin, J. (1985). ”Financial innovation and deregulation in perspective”. Keynote paper presented at Bank of Japan and BIS, CPSS (2003) “The role of central bank money in payment systems”. 13 Arvidsson, N., Hedman, J. and Segendorf, B.

(2018) ”När slutar svenska handlare acceptera kontanter?” (When will Swedish retailers stop accepting cash?) Swedish Retail and Wholesale Council research report, 2018:1. 5 [8]  On the payment market, we have what is basically a similar situation, requiring major investments in IT infrastructure, which easily leads to a monopoly situation with one dominant company. So far, however, cash has always been available as an alternative that restricts the monopoly’s chances of exploiting its power. 14 Often it is central government that is responsible for production on markets with natural monopolies, but a private company can also have a monopoly at the same time as the state intervenes and regulates prices. 15 If the company were allowed to set the price itself, excess profits would arise, in addition to which quantities of the product would be too small and/or the quality too poor, as in all monopoly situations. On the payment market, there are also economic advantages in the participants using the same infrastructure. For the consumer, it is convenient if the same solution works everywhere the consumer makes a payment. We would prefer not to need one card for each shop, another for parking, using public transport and so on. This means that so-called network effects arise, as the more people who join the same system, the better it is for everybody in the system. However, this also means that it is difficult to set up normal competition on the market.
Not only are government finances in considerably better condition than they were earlier (in fact, Sweden is one of the relatively few EU countries, which, according to the EU Commission can be expected to have a budget deficit in 1997 that complies with Maastricht targets with a margin), but also Sweden has a large current account surplus and the inflation forecasts are positive. Despite that, the krona has depreciated by 6 to 7 per cent in effective terms since October last year. How should monetary policy handle such a situation? We can use ‘open-mouth operations’ and inform the markets and other players of our assessment of what has been happening. Maybe this can influence developments in some measure. If the krona’s downward trend cannot be stopped, it will eventually have an effect on demand -- something the Riksbank has to take into account when the instrumental rates are decided. Accordingly, a depreciating exchange rate is an important factor that can affect the estimate of future inflation and thus the direction of monetary policy. Target Variable To conclude, I intend to discuss a few issues that have to do with the design and interpretation of the price stability objective. The line of argument I am going to take can hardly be perceived as controversial. Even with the general support for a price stability objective that has been achieved, a number of questions of a more practical nature concerning how monetary policy should be implemented remain.

The synchronized recession which ensued has made it even more urgent not only to ensure that our financial systems are resilient and able to absorb external shocks but that sufficient attention and resources are also available for achieving the financial inclusion agenda. We are now entering a period of improved international economic and financial conditions. However, even in times of economic stability, financial inclusion is a demanding endeavour. Firstly, the outreach needs to be comprehensive to include the low income and underserved segments, given that that they are generally geographically dispersed and have low levels of financial literacy. Secondly, micro finance institutions need to generate sufficient sustainable returns to cover the high costs involved in providing such services and the lack of potential for economies of scale so as to remain viable. Thirdly, such financial institutions also face the challenges of obtaining sustainable and competitive funding. Recognising the challenges in addressing these issues to achieve financial inclusion, this programme, which started more than two years ago, is an outcome of a proposal I made at the Langkawi Commonwealth Partnership for Technology Management (CPTM) Heads of Government meeting in 2007, which discussed the subject of poverty eradication through human capital development. The purpose of the Financial Inclusion Advisers programme was to provide practitioners and regulators in the area of financial inclusion with practical ideas via the sharing of knowledge and experiences on developing institutional structures, creating an enabling environment and enhancing financial literacy.
We are responsive to the feedback in these consultations, and use it to inform our policy decisions, to ensure they remain proportionate, reflecting the nature of the diverse UK banking sector to which they apply. This includes subjecting our policies to ex-post review to check they remain fit for purpose. As part of our ongoing development, we are working on revising expectations on Operational Continuity in Resolution requirements, incorporating lessons since the initial policy was published in 201610. We are currently reviewing comments from industry and other stakeholders on our proposals communicated last year.11  See Sam Woods’ ‘Strong and Simple’ speech Our initial policy is here: Ensuring Operational Continuity in Resolution 11 Updates to the policy are here: Operational Continuity in Resolution: Updates to the Policy, 9  10  5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  Ensuring sufficient financial resources to support an orderly resolution is another core element of our resolution regime. And again we have coupled this with an appropriately flexible and proportionate approach, through our policy on MREL, the ‘minimum requirement for own funds and eligible liabilities’. 12 MREL represents a requirement for banks to maintain resources which can be ‘bailed in’ or otherwise be exposed to loss if they fail13.

This will lead to increasing the confidence in the financial system. The Basel Committee on Banking Supervision and the Board for International Accounting Standards have already undertaken certain activities. •  The regulation on determining and measuring banks' solvency deserves special attention. The appropriate level of capital is the main anchor for a stable banking system. When this issue is discussed internationally, primarily a reference is made to the New Capital Accord, the so-called BASEL II. It is being criticized even before its full implementation and therefore it is inappropriate to refer to it as one of the reasons for the current crisis. However, it is important to mention that draft amendments have already been prepared as a response to the new developments. Those are, inter alia, the following: -  Improvement of the manner of covering the risks arising from the use of structural financial products. -  Changes in determining the capital necessary for covering the risks from banks' trading portfolio, especially of those instruments characterized with lower liquidity on the market. -  Measures for reducing the effects from the economic cycles on the level of the capital requirement. The purpose is: to allocate more reserves in periods of expansion in order to provide sufficient capital for covering the losses in times of crisis. This is Spanish experience, known as "dynamic provisioning". -  Expanding of the type of data which the banks will be obliged to disclose.
But it’s one that has gained colour from the debate about derivatives. An oddly polarised debate. Overstating it somewhat: in one corner, a group contending that derivatives bring tangible benefits to civilisation. In the other, a group arguing that they have within them the seeds of severe disorder. Unsurprisingly, my take is that the truth lies somewhere in between. It is nicely illustrated by the quite extraordinary development of the credit derivatives market over the past five years or so.2  Dispersion of risk, and the price of risk Credit derivatives plainly have been used as an effective risk management tool by a number of banks and others. Contrary to some suggestions, the acid test is not especially whether banks, individually or in aggregate, have been net sellers of credit risk. Individual banks have been able to reduce concentrated loan exposures to single corporates, industries or countries. As the Telecom episode reminded everyone just a few years ago, that is really important, if elementary. Individual banks have also been able to increase their exposure to borrowers with which they do not have a lending relationship. (Indeed, some commentators suggest that it may sometimes be more effective for second-tier and smaller banks to take corporate credit exposure via the derivatives market than via participation in the lower tiers of loan syndicates.)

The emerging economies will be the key drivers of economic transformation over the next decades, both within and across borders resulting in a more integrated global economy. It is therefore imperative that efforts are increased in ensuring collaboration and sharing of experience for the common good. The Langkawi International Dialogue continues to be an important platform for such exchanges and it is a great honour for me to have this opportunity to be here today. Thank You. 4  BIS central bankers’ speeches
All in all, the introduction of the euro has been a very positive development for the international monetary system in general, and for Switzerland in particular. We benefit from the greater transparency offered by the euro and the lower transaction costs made possible by its creation. Perhaps for the first time in history, we are surrounded by an area that shares the same monetary policy objectives as we do, namely price stability. This explains to a large extent why the Swiss franc/euro exchange rate has been relatively stable over the past five years. But the presence of a single European currency has per se also shielded third currencies - like the Swiss franc - from too much volatility in the case of dollar turbulence. At the same time, we keep the trump card of an independent monetary policy that enables us to respond very rapidly to the specific needs of the Swiss economy. Between 2001 and 2003, we have thus lowered interest rates more quickly and more decisively than the ECB. Once economic activity showed signs of recovery, we were able to gradually shift to a less expansionary stance, again well  4  BIS Review 72/2004  before any similar move by the ECB. With inflation around the one percent mark, we enjoy price stability and our interest rates lie clearly below corresponding rates in the eurozone. Thanks to enhanced stability in Europe with the introduction of the euro, a two headed international monetary system is good news for small countries.

BIS central bankers’ speeches  5  For example, to cool Singapore’s property market, we imposed multiple measures to target different aspects of systemic risk. •  Tighter LTV ratios on borrowers with multiple housing loans served to moderate credit-fuelled investor demand. •  Caps on housing loan tenures served to curtail the phenomenon of those who stretched out their loans in order to meet the tighter LTV ratios. •  Transaction taxes in the form of stamp duties served to constrain demand from investors who did not take loans to buy properties a. Stamp duties on sellers helped to deter speculators who resell their properties shortly after purchase. b. Stamp duties on buyers helped to curb investor demand by raising the hurdle rate. •  Such a multi-dimensional approach required close co-ordination among the Monetary Authority of Singapore, the Ministry of Finance, and the Ministry of National Development. So, where does all this leave monetary policy? •  To the extent that strengthened microprudential policies coupled with the newly developed macroprudential policies can adequately address the problem of financial stability, monetary policy is freed to focus on price stability. •  We are back in the Tinbergen world. •  Or are we? Monetary and macroprudential policies: working hand-in-hand? If only our job were that simple. Macroprudential policies are still in the experimental stage: •  Its transmission mechanisms are not well understood. •  Its collateral effects and potential distortions have not been studied in depth.