samchain/econo-pairs-v1 huggingface dataset:
Paul Tucker: Introductory remarks at the book launch for “Investing in change – the reform of Europe’s financial markets” Introductory remarks by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, at the Association of Financial Markets in Europe book launch, London, 1 February 2012. *  *  *  AFME’s book is significant as it has reached beyond its own community – of investment and wholesale bankers. The contributions come from journalism, politics, academia, business, and central banking. Each of our communities carries some of the responsibility for the mess that engulfed the world’s financial system, inflicting hardship on households and businesses around the globe. That must continue to drive us as we work to devise new “rules of the game” for a better financial system. This evening, I want to dwell on just one of the guiding principles of the international reform programme: banks should not depend on a safety net from taxpayers. Of course, retail deposits – up to £ in this country – will continue to be insured. And we probably also need measures – possibly segregated accounts – that can protect the Temporary High Balances that arise when, for example, a person sells a house or receives a legacy. But regular creditors of banks should be at risk. Pretty much everything underway in international finance at present reflects the dynamics set in train by a progressive withdrawal of the safety net. Two points on how that will be delivered.

And three points on what it will mean. On the “how”, the first thing to say is that going forward, banks are being required to carry considerably more capital and liquidity. Second, as is now well known within the industry, the international authorities have agreed a blueprint for resolution regimes to manage the failure of so-called Systemically Important Financial Institutions in an orderly way. G20 Leaders have committed to legislate that regime into their domestic systems where necessary. All resolution regimes have the effect of distributing the losses of distressed financial firms – ie losses already or prospectively exceeding equity – across unsecured, uninsured creditors. That is the only place losses can go if taxpayers are to be spared. “Bailin” has focussed minds on this, but is in fact just one method, albeit a very important one, for ensuring that uninsured creditors take losses. Those “how” points are very familiar. A few comments, therefore, on possible implications – all of which, looking ahead, point towards the crucial importance of our capital markets. First, in a world of less leveraged banks, a business model of Originate and Warehouse – because that is what it became by the middle of the past decade – is unlikely to be viable. Maybe a genuine model of Originate and Distribute will emerge, with something like agencytype market making and trading. Second, holders of bank paper – especially bonds – will be living in a different world. They will have a big incentive to monitor the riskiness of banks.
Productivity puzzles Speech given by Andrew G Haldane, Chief Economist, Bank of England  London School of Economics 20 March 2017  The views are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Sandra Batten, Shiv Chowla, Fergus Cumming, Adriana Fernandes, Jeremy Franklin, Dena Jacobs, Gabor Pinter, Alex (Sasha) Naumov and Jessica Verlander for their help in preparing the text. I would like to thank Omar Ahmed, Saleem Bahaj, Giuseppe Berlingieri, Phillip Bond, Sara Calligaris, Greg Clark, Chiara Criscuolo, Angus Foulis, Peter Gal, Richard Harrison, David Hendry, Bill Janeway, Casey Murphy, Lukasz Rachel, John Van Reenen, Michael Saunders, Patrick Schneider and colleagues at the ONS Research Database for their comments and contributions. 1  All speeches are available online at www.bankofengland.co.uk/speeches  By common assent, economists do not agree on much. I have lost count of the number of jokes about economists whose punchline ends “and they still couldn’t reach a conclusion”. That is why Harry S Truman, when President of the United States, famously yearned for a one-handed economist. Whether or not this critique is fair, the issue I will discuss tonight is one on which economists do agree: productivity matters.

The reason for this is that a significant part of firm-specific variation in productivity is absorbed by firms in their profits or reflected in their prices. The reason is that firms’ profits and prices absorb a significant part of firm-specific variation in productivity. Many of the workers in the more productive tail of firms are being underpaid relative to their average productivity, which results in frontier firms making a larger profit share. The opposite is the case at the other end of the productivity distribution. 55  For example, Furman and Orszag (2016) There is time series evidence to suggest a strong historical relationship between aggregate productivity and real wages. For example, Castle and Hendry, Blundell et al (2013) and Disney et al (2013). 56  17  All speeches are available online at www.bankofengland.co.uk/speeches  17  57  This analysis focusses on differences in pay across firms. But what about pay within firms? We can  examine this by tracking differences between the average pay in each company and the pay of their highest paid director. Chart 28 plots the median across firms of these series over time, while Chart 29 compares the variance of each series as well as the gap between average pay and the highest paid director. Since 1998, the variance in average pay and director pay has increased across firms, although it has fallen notably since the financial crisis. The median gap between average pay and director pay has followed a similar pattern.
And many commentators have expressed worry about the possible role that the current, uniformly rather low, capital requirements for short-term interbank lending played in the massive build up of capital flows to Asian countries prior to the 1997/98 crisis. BIS Review 29/2001  1  In several developed countries, of course, the risk insensitivity of the capital requirements has led to a whole industry of capital arbitrage, which has swelled to enormous proportions over the past 10 years or so. It has been estimated that by March 1998, non-mortgage securitisations by the 10 largest US bank holding companies amounted to around $ or more than 25% of these banks' risk-weighted loans. A combination of conscientious supervisors, market discipline and relatively benign economic conditions for much of the past decade has, of course, meant that such arbitrage has not so far led to any major problems in developed countries, but the issue is not one that the authorities can afford to ignore. Ultimately, capital arbitrage and capital requirements that do not capture accurately the risks that banks are actually running mean that we risk tolerating unsound banks and jeopardising financial stability. Getting the level of capital requirements right So the move to introduce greater risk sensitivity is right. But determining the optimum level of risk sensitivity for a common set of rules intended to apply to banks in a wide range of different markets, countries and businesses is more difficult. And so there are two questions I want to go on to explore.

Capital adequacy and liquidity regulation are thus two sides of the same coin. Just as it would be impossible or uneconomic to require banks to operate without risk to provide total certainty of solvency, so liquidity regulation is needed as a form of insurance. The issue is discussed in an article in the December edition of the Bank's Financial Stability Review. The Basel Supervisors' Committee has done valuable work in examining issues and techniques in liquidity management and this work deserves to be carried forward further. For those of you who have already digested the 500 pages of the new Basel Accord we are discussing today and are looking for some more recreational reading, over the Easter holiday, I thoroughly recommend a re-read of the update the Basel Committee published last year of its sound practices for managing liquidity risk. In the meantime, thank you for allowing me to address you this morning. BIS Review 29/2001  5
The SFR plays a minor part on the stage of the global currency game - it is a dwarf among giants, so to speak. Its position may be described by means of three indicators. First, by the SFR's share in the global turnover in foreign exchange trading. Volume composition in Forex (Daily foreign-exchange transactions, $ billion 500 450  Tradi ng wi t h ot her currenci es Tradi ng wi t h US dol lar  430  400 350 300  300 250 200  158 291  267  101  100  73 44 79  £  Y  DM  0  58  42  AUD  50  FFR  118  CHF  150  This chart is based on data collected by the BIS in 1998, i.e. during the period prior to the introduction of the euro. The columns illustrate the composition of an average daily volume of approximately 1.5 trillion USD by currencies. The USD clearly predominates. This is shown by the size of the lower areas, which represent the respective trading volume vis-à-vis the USD. It seems very likely that the advent of the euro has not significantly changed the pre-eminence of the dollar. The new figures to be expected this year will be instructive in this regard. The SFR accounted for USD 100 billion, i.e. approximately 7% of the total daily volume in 1998. This may seem modest, but relative to the size of our economy it is a very respectable figure.

But post-crisis, bank profitability has come under pressure in a prolonged period of low growth and low interest rates. •  The banking industry’s return on equity (ROE) has fallen significantly since the financial crisis. •  The average ROE of the 200 largest banks has fallen from 17% before the crisis (2005–2007) to 9% in the period 2011–2013. Monetary policy, as it comes up against diminishing returns at the zero lower bound, is also not helping bank profitability. As policy rates are pushed into negative territory in a growing number of countries, the implications for financial stability need to be assessed carefully. In a low or negative interest rate environment, banks are likely to engage in market segmentation and charge different rates to different groups of clients. •  Banks are reluctant to impose negative interest rates on retail depositors. •  This means that, to make up for the interest they have to pay on their deposits with the central bank, they may have to charge a higher interest rate on their borrowers. High returns during the pre-crisis period were in part due to excessive risk taking or leverage, coupled with insufficient capital buffers against these risks. •  This has proven both untenable and perilous. •  A reduction in leverage and an increase in capital requirements are therefore desired outcomes of the reform agenda, to restore more prudent business practices and provide more sustainable finance over cycles. But sustainability in finance requires that banks are reasonably profitable.
During that period, she confronted many of society’s biggest challenges – for example introducing legislation to tackle domestic violence, to eradicate modern slavery and to counter terrorism. Never afraid of a challenge, she stepped into the breach to become Prime Minister following the referendum. The Prime Minister and her Government are committed to making the most of the opportunities that Brexit brings, and more fundamentally to working to build a stronger, fairer and more prosperous country for all. Please join me in welcoming the Prime Minister, Theresa May. 6  All speeches are available online at www.bankofengland.co.uk/speeches  6

The wave of consolidation has, however, created mega-exchanges in the U.S. and Europe, and competition among them has proceeded at a furious pace. The Chicago Board of Trade (CBOT) faces a serious challenge on its home turf from Eurex, the all-electronic exchange owned by Deutsche Börse and the Swiss Stock Exchange. Eurex is now offering electronic trading in U.S. dollar denominated fixed income futures which have been the mainstay of the CBOT. The pan-European exchange, Euronext.Liffe, is offering electronic trading in Eurodollar futures contracts in direct competition with the Chicago Mercantile Exchange (CME). CME has responded quickly, announcing initiatives to accelerate the migration of its flagship Eurodollar contract to GLOBEX, its electronic trading platform. And just this month, it was reported that the New York Stock Exchange may enter the derivatives market too. Hardly a week passes without press reports of strategic moves by the exchanges. Securities exchanges have not been spared from the competition. London Stock Exchange (LSE) will launch its Dutch Trading Service, euroSETS, in May this year. This will allow the most liquid stocks listed on Euronext-Amsterdam to be traded through LSE. This bold move is being watched closely by the industry, and may challenge conventional wisdom on the contestability of stock exchange liquidity. The outcome of these contests could significantly alter the competitive landscape for exchanges in the next few years. Key drivers of consolidation and competition One key driver behind the consolidation and competition is technology. Exchanges and clearing houses are very much technology businesses today.
Jean-Pierre Roth: Recent economic and financial developments in Switzerland Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the end-of-year media news conference, Zurich, 14 December 2006. *  *  *  As stated in our press release, the Swiss National Bank is raising its target range for the three-month Libor with immediate effect by 0.25 percentage points to 1.50–2.50%. The SNB intends to hold the rate in the middle of the target range for the time being. Economic activity in Switzerland is very robust. Next year, the economic trend is likely to continue favourable, albeit somewhat less pronounced. This will have a positive effect on the labour market. The National Bank is expecting real GDP to grow by just under 3% in 2006 and by around 2% in 2007. Declining oil prices have pushed back inflation. Average inflation for 2006 is likely to stand at 1.1%. By lifting the target range, the National Bank ensures that the inflation outlook will remain favourable, even in view of the high level of utilisation of economic resources. On the assumption of an unchanged three-month Libor of 2.00%, it expects annual inflation to reach 0.4% in 2007 and 0.9% in 2008. If the economy performs as expected, the SNB will further pursue its strategy of gradual normalisation of its interest rates.

Almost all components of demand continue to grow, albeit at a more moderate pace. Private consumption will benefit from the healthy improvement in disposable income. Equipment investment is being stimulated by the high rate of utilisation of production capacity and the favourable business outlook in many industries. Residential construction is likely to see a measure of calm. Yet increased investment in commercial and industrial building may offset this development to some extent. The somewhat weaker global economic development – though still favourable overall - will probably continue to have a positive impact on exports. For 2007, we expect overall GDP growth of about 2%. Monetary developments Allow me to explain developments in the financial markets and the monetary aggregates. Two topics merit particular attention: the development of credit and money supply and the exchange rate. In addition to long-term interest rates and exchange rates, loans – among other things – play an important role when changes in key interest rates are transmitted to the economy. What information can we derive from the development of lending activity? Loans are registering constant growth. Mortgage loans, which account for the great majority of all bank loans, have grown at a rate of more than 5% since 2003. This is a reflection of the clearly expansionary monetary policy at that time. The growth rate of mortgage loans has gradually slowed, however, and is now slightly below 5%. This is nevertheless still a high growth rate. Other loans, however, are witnessing stronger growth and are currently expanding by 6%.
hat said, there were some troubling properties associated with the growth of shadow banking. For instance, quite a few were sponsored by banks as a means to reduce the amount of capital to be held against risk exposures. When the crisis hit, in a number of cases those banks found they had to stand behind their offshoots for contractual or reputational reasons, so the separation was illusory and led to greater leverage in the system. Another issue was that the originate and distribute model of securitisation was often opaque and led to insufficient genuine risk transfer away from the banking system, in ways that became very problematic when the crisis hit. Shadow banks, also neglected the funding side of their balance sheets, so that they came to depend upon using their assets as security to obtain funding, often from banks. This is quite different from the traditional model of deposit funded banking where the assets (loans) are not used as security for raising funds. However, it must be said that in the run-up to the crisis, banks too came to depend overly on such secured funding. When the crisis hit, the value of the assets used as security for collateral fell, funding conditions tightened and in some instances were cut off. 2 These weaknesses meant that the counterbalancing behaviour of shadow banks vanished. Instead, they retracted just as banks did, but much more violently, which exacerbated the magnitude of the crisis.

Accordingly, any policy wishing to be effective in enhancing productivity must be underpinned by incentives to save and the lifting of any related institutional obstacles, something which is also connected to the reforms that boost competitiveness and legal certainty. Spain must persist with reform policy geared to these objectives. Thank you. 4  BIS central bankers’ speeches
Figure 6 Loans by type of credit (1)  Lending interest rates (3)  (annual change, percent)  (percent)  30  30  50  50  20  20  40  40  10  10  30  30  0  0  20  20  -10  -10  10  10  -20  -20  0  0  98 00 02 04 06 08 10 Consumer Corporate (2)  Housing  02  04  06  08  Consumer, from 181 days to 1 year  10  Consumer, over 3 years (4)  Commercial, 30-89 days (4)  Commercial, from 181 days to 1 year (4) Housing, over 3 years (5)  (1) Data for May 2010 are provisional. (2) Sum of commercial and foreign trade loans. (3) Weighted averaged rates of all operations performed in the month. (4) Nominal rates. (5) UF-indexed rates. Sources: Central Bank of Chile and Superintendence of Banks & Financial Institutions.

Frankly, I understand that the general public is not familiar with concepts like overheating or positive output gap, but I believe that annual growth rates to the tune of 20% for retail sales and in excess of 10% for wages are more than self-explanatory. Still, with all the obvious signs – even for non-economists – that the economy is growing fast, we are criticised for not fighting deflation. The recent experience has made us painfully aware that – despite the large amount of information provided through a wide range of communication vehicles – our messages get through to a much lesser extent than we had thought. Therefore, we should enhance our efforts in escaping the professional jargon and trying to be as accessible as possible when explaining to the public the rationale behind our monetary policy decisions. If I were to conclude on Romania’s experience with inflation targeting, I would say that it worked quite well, even though the concept of inflation targeting has not been immune to criticism, especially in the post-crisis period. I would mention here Axel Weber, who suggested in 2015 that inflation targeting is a simplistic framework that could not stabilise the value of money in a complex and constantly evolving economic environment. However, his opinion is not shared by other well-known economists.
17.03.2021  The Role of Central Banks and Banking Supervisors in Climate Action Opening remarks. Resilience of the financial system to natural disasters, IESE online conference Pablo Hernández de Cos Governor  Ladies and Gentlemen, Let me first thank Professor Xavier Vives for inviting me to this conference on the “Resilience of the financial system to natural disasters”, organised by the IESE. It is a pleasure for me to open the conference. I am sure the final version of your forthcoming report1 will benefit from the views of such distinguished members of academia that are today with us. And I am certain they will provide us with much food for thought, ultimately benefiting the joint efforts to address the risks associated with climate change. This topic has, in recent years, come to the fore of the concerns of the overall financial sector, including firms, supervisors and central banks. Let me offer some brief remarks on this topic, starting with the impact of climate-related risk on the financial sector and the role of regulators and supervisors, and followed by the connection between climate change and the conduct of monetary policy. Climate-related risk for the financial sector and the role of regulators and supervisors Across the studies measuring the impact of the various industries and sectors on climate change, the financial sector is usually classified among the environmentally friendly branches of activity.

In this context, we also welcome the ongoing work by international organisations, including the IMF and World Bank, on the design of efficient and effective insolvency regimes worldwide. It is, of course, difficult to establish international standards in this area, because the approaches adopted by different countries reflect not only different legal traditions but also different policy choices, most especially on the extent to which the system should favour debtors or creditors. Indeed, this is a debate that is live in several countries, including the UK where new measures were announced last month in the Queen’s Speech, and I am sure is occupying minds at this Congress. But the IMF work argues, rightly in my view, that any insolvency regime, whether debtor- or creditor-oriented, will enhance financial stability effectively only if it protects value for the benefit of all interested parties and the economy in general; and this requires the allocation of risk among market participants to be done in a way that is predictable, equitable and transparent. Financial sector restructurings Let me turn now to my second area: financial sector restructurings, and I would like to start by noting the importance of confidence in the smooth running of a financial system. Confidence is important in most industries, but it is at the heart of the financial industry. It is confidence that permits banks to operate, as a matter of course, with gearing many times capital, and with a maturity mismatch between their assets and liabilities, often concentrated in short-term or sight deposits.