samchain/econo-pairs-v1 huggingface dataset:
Richard W Fisher: Beer goggles, monetary camels, the eye of the needle and the first law of holes Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the National Association of Corporate Directors, Dallas, Texas, 14 January 2014. *  *  *  With reference to Peter Boockvar, the Book of Matthew, Sherlock Holmes, “The Wolf of Wall Street” and Denis Healey. The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Thank you, George [Jones]. George is a great member of the Dallas Fed board of directors, and I am honored he would take the time to introduce me. Waylon Jennings said of your namesake that “if we could all sound like we wanted to, we’d all sound like George Jones.”1 I often feel that way about George at our board meetings. He gives a sharp, crisp, spot-on briefing of banking conditions in that deep, beautiful voice of his and I always think: I want to be just like George when I grow up. Again, thank you George for that kind introduction. During the holiday break, I spent a good deal of time trying to organize my thoughts on how I will approach monetary policy going forward. Today, I am going to share some of those thoughts that might be of interest to you as corporate directors.

While much effort has been made to deepen our understanding of and ability to respond to market dislocation since the global financial crisis, the emergence of these problems suggests the Bank and wider central banking community still have some work to do in throwing light on and building resilience in some of the shadow-ier parts of the non-bank financial sector, as emphasised by my colleagues on the FPC and internationally in the FSB. But that is for the future. Right now, we are dealing with the problems that pose an immediate threat. The intervention announced yesterday by the Bank is intended to facilitate an orderly adjustment in the positions and structures that were threatening to generate dysfunction in that market segment. By acting in the gilt market to facilitate the necessary reduction of leverage – or at least creating an environment where that reduction can take place – the Bank is preventing a self-sustaining vicious spiral of collateral calls, forced sales and disappearing liquidity from emerging in a core segment of the financial markets. Restoring market functioning helps reduce any risks from contagion to credit conditions for UK households and businesses. The intervention is targeted specifically at that market segment where problems were emerging. And it is time-limited, because the Bank buys assets in order to sell them on afterwards, thereby helping the orderly re-shuffling of holdings of and exposures to longer-dated gilts that needs to  Page 4  take place. These operations do not create central bank money on a lasting basis.
Extreme leverage could conceivably have systemic repercussions. The hedge fund industry and the investment banks trading with hedge funds no longer calculate and apply the leverage concept in the form it is traditionally used.7 Hedge funds define a target value at risk (VaR) or capital allocation to each position. Similarly, investment banks trading with hedge funds control the risks involved with the hedge funds by allocating to the fund a VaR limit. All open positions to the fund - mainly derivatives like futures, swaps, swaptions or forwards - are taken into account in the VaR limit. Offsetting positions are usually netted out. The size of the total position the hedge fund can build up is a function of the variables that determine the VaR, such as the volatility of the underlying asset or the correlation with other instruments. As a measure of risk control the VaR of the fund has to be covered with margins, mostly in the form of securities. Generally speaking, the investment banks apply the well known margin system of futures exchanges to the overall business with hedge funds. There exist additional safety procedures. As a result of a large draw down in the net asset value the VaR limit can be reduced automatically, forcing the fund to reduce or close out its positions. Nonetheless, it should be kept in mind that VaR measures have limitations – they reflect price behavior in normal markets and are not well suited for a stressed market environment.

The sudden stop in capital flows during the initial phases of the crisis and the subsequent rapid increase in capital inflows into emerging-market economies have focused attention on the problem of volatile capital flows. Massive inflows can lead to overheating and asset-price bubbles and as there are no clear guidelines a number of emerging-market economies have chosen to manage massive inflows by introducing a range of capital controls. The member countries have therefore given the Fund the task of drawing up guidelines on how countries should manage such capital flows. This work has been underway for the last 12 months and a proposal for a comprehensive framework will be discussed by the IMF’s Executive Board at the end of October. According to the proposed guidelines, countries should in the first instance review their fiscal and monetary policies in order to manage or counteract major capital flows, and as a complement to this they should use various macroprudential-policy tools. As a final resort they may introduce capital controls. The idea is that the IMF should give advice on how these tools should be designed in order to be effective. No organisation has played a clear role in the liberalisation of capital flows. This is a major difference compared to the liberalisation of trade, where the World Trade Organisation (WTO) played and still plays a prominent role.
Turning to fiscal policies, all euro area governments need to show their inflexible determination to fully honour their own individual sovereign signature as a key element in ensuring financial stability in the euro area as a whole. The Governing Council takes note of the fiscal commitments expressed in the Euro Summit statement of 26 October 2011 and urges all governments to implement fully and as quickly as possible the measures necessary to achieve fiscal consolidation and sustainable pension systems, as well as to improve governance. The governments of countries under joint EU-IMF adjustment programmes and those of countries that are particularly vulnerable should stand ready to take any additional measures that become necessary. It is crucial that fiscal consolidation and structural reforms go hand in hand to strengthen confidence, growth prospects and job creation. The Governing Council therefore calls upon all euro area governments to accelerate, urgently, the implementation of substantial and comprehensive structural reforms. This will help the euro area countries to strengthen competitiveness, increase the flexibility of their economies and enhance their longer-term growth potential. In this respect, labour market reforms are essential and should focus on measures to remove rigidities and to enhance wage flexibility, so that wages and working conditions can be tailored to the specific needs of firms. More generally, in these demanding times, moderation is of the essence in terms of both profit margins and wages.

Lim Hng Kiang: Opening of the Norges Bank Investment Management’s Singapore office Remarks by Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman of the Monetary Authority of Singapore, in celebration of the opening of the Norges Bank Investment Management’s Singapore office, Singapore, 1 July 2010. *  *  *  Minister Sigbjørn Johnsen, Governor Svein Gjedrem, Ambassador Janne Julsrud, Ladies and Gentlemen, Good evening. 1. It is a pleasure to be here to celebrate the opening of Norges Bank Investment Management’s (“NBIM”) Singapore office. 2. The opening of NBIM’s investment office here is an affirmation of the growing importance of Asian markets in the portfolios of many long-term investors like NBIM. It also reflects Singapore’s role as a key location to manage Asian investments. Your presence here will not only bring you closer to the markets you invest in but also help form stronger ties with partners in this part of the world. 3. Among the Sovereign Wealth Funds or SWFs around the world, NBIM is widely regarded as a role model for transparency and governance. Being one of the earliest SWFs, NBIM has built up a strong reputation of excellence and leadership in investment and risk management, governance and talent management practices. NBIM has stayed focused on its objective to preserve and grow wealth for the future generations of Norwegians by diversifying its investments internationally and developing a talented investment team. Your track record has been most enviable. 4.
Second, the impact of the financial crisis was mitigated by the strength of the domestic banking system, underscored by the absence of toxic assets in bank balance sheets, prudent lending policies and a funding structure based primarily on retail deposits. The third factor was the strategy of temporary government assistance targeted to those non-financial corporations (NFCs) that were in difficulty, mostly in the manufacturing and tourism sectors, along with the implementation of some infrastructure projects. Besides limiting the number of potential job losses, this approach proved to be more appropriate in the domestic context than an across-the-board increase in spending whose impact would have been severely weakened through import leakages. The fourth factor was the continuing diversification of the economy towards high value-added services, which have proved less vulnerable to the downturn. Small businesses have featured prominently in this process. Indeed, most of the enterprises in the emerging sectors of the economy, such as those in pharmaceuticals, remote gaming, ICT and business and financial advisory services are SMEs. Going forward, the prospects are for only slow growth in Malta’s external demand. While IMF projections suggest that global activity and trade volumes will expand by around 4% and 6% this year, respectively, the recovery in the euro area promises to be less robust and more gradual than in other advanced economies, and is expected to be conditioned, inter alia, by the ongoing process of balance sheet adjustment in both the private and the public sectors.

The rise in the surplus savings of the rest of the world, the relative ease with which those savings now move across borders, and the increase in the relative attractiveness of claims on the United States together may suggest the world can sustain larger imbalances, more easily, for a longer period of time. These factors, however, do not alter the fundamental judgment that our external position is unsustainable and the adjustment process ahead could materially affect future economic outcomes. The fact that these imbalances might be sustained for some time shouldn’t make us more confident that they will be. Even if we could be confident that the world would be comfortable financing the United States on these terms going forward, that would not make it prudent for the U.S. to continue borrowing on this scale. Time doesn’t necessarily help. The longer these gaps continue to build, the greater the risks, and the more difficult their resolution. What can we do to mitigate these risks? For the United States, these challenges put a premium on putting in place a more credible fiscal policy framework, maintaining as strong and resilient a financial sector as possible, and preserving an open and flexible economy. These things are all important and desirable, but they are more important, and we can less afford to tolerate any erosion, than would be the case if we were closer to a sustainable external position.
This implies that fiscal policy is given a clear mandate, with clear targets, strong institutional arrangements and a high degree of openness. Of course, using fiscal policy as an effective tool additionally implies a strong budgetary position over the cycle - which is also important given the present demographic trends which point to increased costs for supporting an ageing population. I believe this discussion could also be of some interest in relation to the present debate on the Stability and Growth Pact, as it stresses the importance of strengthening the institutional framework and the long term goals for national stabilisation policies in the monetary union, as opposed to a more passive policy simply letting automatic stabilisers take their course. And, like Sweden, the euro area needs a strong fiscal stance in order to cope with the future fiscal burden of ageing populations. Even more important than the alternatives for stabilising the economy are the structural reforms which are needed to increase potential growth and contribute to an economy more responsive to changing circumstances. If this is done successfully the problems of instability will probably not arise or will be of less significance. As we analyse Sweden's labour markets it is worrying that unit labour costs have increased slightly more rapidly in Sweden than in the Euro area recently. As the possibility to conduct an independent economic policy decreases, the need for functioning adjustment mechanisms increases which implies greater flexibility in factor and product markets in Sweden.

The US certainly has the advantage of having a young and growing population, but Europe has large numbers of unemployed or underemployed people who could become mobilized for increased growth of the  2  BIS Review 70/2002  economy, This need not imply that Europe must adopt US hiring and firing practices, there are other ways of achieving this, with economic incentives, labour market policies and education. Challenges for Sweden ahead of a possible EMU participation Wage formation is also an important challenge for Sweden prior to a possible EMU participation. The main issue after a possible participation in the euro zone will be the loss of the exchange rate and an independent monetary policy as stabilisation tools. If Sweden, within EMU, is out of step with the business cycle in the euro area, neither an exchange rate, nor Swedish interest rates are available to adjust for this. In reality, the exchange rate may in fact be a less efficient stabiliser than expected. It is quite apparent that macroeconomic fundamentals and Sweden's position in the business cycle have not been the only, sometimes not even the major, factors affecting exchange rate developments. If the weakening of the krona in 2001 did indeed cushion the blow from global recession, earlier periods of weakness have run counter to the overall improved relative growth performance. Personally, I believe that there might be a tendency in the Swedish debate to overstate the gains from having a flexible exchange rate in the longer run.
BIS Review 7/2000  12  4.3.2. The importance of “proper” incentives  It is important to have incentives which reflect the real costs connected to various payment services if participants are to come up with their own solutions balancing risk against efficiency. A pertinent example may be the regulations concerning loans in the central bank. It is a basic responsibility of the banks to ensure that liquidity is sufficient to cover settlement. The main rule for settlement in Norges Bank is that there shall be adequate cover in the account. If, for one reason or another, a bank does not have sufficient cover, it must turn to the market for financing. If necessary, the settlement should in part or in its entirety be delayed so as to give the institution enough time to obtain sufficient liquidity. Too easy access to loans in the central bank in situations where financial stability is not at risk involves costs in that it weakens banks’ incentives to address elements of risk in the payment systems and presents the customer with prices which do not reflect the risk attached to various payment services. 4.3.3. The importance of competition  The stipulated regulatory framework affects competition, such as who is allowed to initiate new payment services. Competition is important, both for improving the use of known, reliable payment services and for the development of new services.

I could talk about r-star at great length, but you may be relieved to hear that for the purpose of this speech, there’s just one point I want to make: r-star has fallen, not only in the U.S., but around the world. 1/4  BIS central bankers' speeches  Fundamental shifts have been occurring in the two main drivers of r-star over the past two decades: demographics and productivity growth. Lower fertility rates and aging populations, as well as slower productivity growth, have pushed down r-star by as much as two percentage points in a number of developed nations. These structural shifts are having fundamental effects on real interest rates, growth, and inflation. A number of advanced economies have inflation below desired levels and longer-term interest rates that are well below where they were a decade ago. There are, of course, a few outliers, but the commonalities between the world’s developed economies are becoming more and more apparent. There’s no doubt that the U.S. is experiencing first-hand the effects of the structural shifts in demographics and productivity growth. But the fact that these changes are a common experience for so many developed economies creates challenges to our economic prospects at home. Slowing Global Growth Which brings me to the second trend I highlighted: slowing global growth. This story—of low interest rates, low inflation, and slow growth—is showing up in the data. The latest numbers from the International Monetary Fund (IMF) follow the recent trend of steady downward revisions of growth estimates.
Stepping up reforms is now a priority in France too, with a focus on two main areas: on the one hand, sustainably consolidating our public finances, and on the other, aiming to achieve a structural economic transformation, with a major simplification effort in the labour market, and large-scale investment in education, vocational training and apprenticeships. The new government, under Mr Macron’s Presidency, has made decisive steps in that direction with the labour market reform voted this summer and already implemented, and a forthcoming reform of unemployment insurance, vocational training and apprenticeship next year. At the same time, measures have been taken to reduce the tax burden on investment. Moreover, decisions have been taken to reduce the government deficit. For the first time in 10 years, the government deficit should be below the threshold of 3% of GDP in 2017 (2.9%). The micro accelerator: a Financing Union for Investment and Innovation Let me now focus on the micro accelerator for the Economic Union, which is the second concentric circle. This micro accelerator would take the form of what I call a “Financing Union for Investment and Innovation”. The euro area is experiencing an excess of savings relative to investment of about 350 billion euros per year, which is more than 3% of GDP. The aim of such a Financing Union is to better steer these savings towards productive investment, notably by shoring up equity which is the key to an innovation economy.

François Villeroy de Galhau: Economic Union, Financing Union, Banking Union Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Annual General Meeting of the Foreign Bankers’ Association, Amsterdam, 16 November 2017. * * * Ladies and Gentlemen, It is a pleasure to be in Amsterdam today and to give the keynote speech at your Annual General Meeting. I wish to warmly thank my friend Governor Klaas Knot and FBA Chairman Leonique van Houwelingen for their kind invitation. For a central banker, Amsterdam is a highly significant place, especially because the Bank of Amsterdam, in Dutch the “Amsterdamsche Wisselbank”, which was established as early as 1609, can be considered a precursor to central banks, before its role was taken over by the Nederlandsche Bank, which is also a venerable ainstitution since it was created by King William I in 1814. Furthermore, for a long time, Amsterdam has been an economic and financial capital and a major city at the heart of Europe. If I add your tradition of freedom and tolerance, your country is a paragon of many of the European virtues that we cherish. This afternoon, I would like to share with you some reflections as a central banker on a highly topical issue: the future of Europe. Your new Minister of Foreign Affairs, Halbe Zijlstra, gave a speech on this very theme last week and rightly called for “a Europe that is relevant to its people [and] which is again synonymous with prosperity and growth”.
6  BIS Review 169/2010

On this, I see substantial scope for the pace of financial integration in East Asia to be gaining more momentum going forward as the constraints that used to limit the pace of integration begin to unwind. First, the external positions of the economies in East Asia have now become much stronger, with current account surpluses, substantially lower external debt, and larger international reserves. Second, Asian savers themselves increasingly want to diversify their savings abroad in search for better yields while Asian firms also look for better opportunities to lower their costs of fund by tapping funds from external sources. Reflecting these two factors, we are seeing a reorientation of policy in the region to make cross-border capital outflows more liberal without compromising the risk on macroeconomic stability. And the third factor is that Asian financial institutions are now back in good health after a period of restructuring and consolidation. So, we are likely to see Asian financial institutions becoming more active in intermediating cross-border capital flows within the region, as they explore new business opportunities based on their expertise and knowledge of the region. All these factors, I think, will set in train a stronger momentum of cross-border capital flows within the region in the period ahead. And under such circumstances, what then should be the role of policy? Government policies, in my view, have played an important role in the development of East Asian financial markets.