samchain/econo-pairs-v1 huggingface dataset:
We also see limited overall risks to euro area financial stability. Without sufficient mitigating action, however, a cliff-edge Brexit could have an adverse impact in certain areas of centrally cleared derivatives markets. Sources of risk from outside the EU have grown since May. A stronger US dollar and heightened trade tensions triggered renewed stress in a number of emerging market economies. Financial integration and the deepening of EMU Thanks to our collective efforts at the European and national level, we have come a long way since the start of the financial crisis. However, to strengthen our economies and preserve financial stability, we need to go further. Let me highlight in particular some of the concrete steps in the area of financial integration that we need to take at the European level. First, we need to complete the architecture of the banking union. The benefits of having a euro area supervisor are clear when we look at banks’ strengthened balance sheets. Still, more needs to be done to reduce the risks for citizens as both taxpayers and depositors and to break the remaining link between banks and national governments. In addition to the adoption of banking package which is currently under negotiation among EU legislators, a genuine banking union needs further regulatory harmonisation, for instance through greater reliance on Regulations 2/3  BIS central bankers' speeches  instead of Directives. In particular, unwarranted national options and discretions still stand in the way of a level playing field for banks.

Our institutions have successfully tackled the COVID-19 crisis thanks to a combination of suitable risk management and the set of extraordinary measures approved by the public sector (governments, prudential regulators and supervisors). I am confident that they are well prepared to deal with these new tensions and turbulence. In conclusion, the economic situation remains highly uncertain, in particular due to the ongoing war in Ukraine, the implied tensions in food and energy markets, the sanctions enacted against Russia, and the risks surrounding the continuation of energy trade with the latter. The economic effects of this situation can now clearly be seen for the economy as a whole and, in particular, for the more vulnerable citizens. With all of the uncertainty that surrounds any projection in these changing circumstances, while we foresee a significant deceleration of the economy and high inflation in the very short-run, we also expect the economic situation to normalise thereafter, with inflation easing over 2023, once all of the factors I referred to earlier have returned to normal. Fiscal policy has a key role to play, provided it targets the households and economic sectors hardest hit by the crisis, as also recently stressed by the European Commission, given the limited room for manoeuvre in public budgets. An appropriate combination of policies would support economic normalization and help tackle the inflationary episode, as would the continuation of prudent approaches by wage- and price-setters. Monetary policy can certainly meet the challenge.
Svante Öberg: The economic situation Speech by Mr Svante Öberg, First Deputy Governor of the Sveriges Riksbank, to the Västerbotten Chamber of Commerce, Umeå, 25 August 2011. *  *  *  My message today can be summarised in four points:   Developments have been dramatic over the summer.   However, statistics for the Swedish economy received during the summer have been in line with the forecasts made in July.   The turbulence on the financial markets has nevertheless increased uncertainty over future developments.   We will discuss how this may affect monetary policy in September. It is now the fourth year in a row that I have held a speech on the current economic situation in the month of August. Normally, I give an account of the most recent forecasts from the latest monetary policy decision in late June/early July and of the statistics received since then. This year it seems justified to give just a brief account of the forecasts made before the summer holidays and of the new statistics and to instead discuss events during the summer and what future consequences they might have. I shall therefore begin with a brief background, and then move on to discuss in more detail the turbulent developments in the financial markets during the summer, concluding with a few words about the problems I believe we will face at the next monetary policy meeting.

Denis Beau: Building an appropriate climate stress testing framework for capital markets Opening remarks by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Future Europe Sustainable Europe Global Virtual Conference "Europe’s global response - promoting global financial coordination towards our common sustainable future", 6 July 2021. * * * I would like to thank you very much for your kind invitation to present the work the Banque de France and the ACPR, its supervisory arm, conducted on climate stress-testing and to share some of the lessons we have drawn from it. I will focus my remarks on 1/ the objectives to be set to such exercice 2/ the tools to be used. ***** 1- I think it is not a matter of debate between financial institutions and their supervisors that climate change affect financial institutions through the traditional risks categories they face. Sizing the exposure to and impact of climate-related drivers on those traditional risk categories is however difficult, given the specificities of those climate-related risk drivers, which are not necessarily economic in nature, and the multiple layers of uncertainty which affect them. In particular, data on past changes in climate and their financial impact may be a particularly poor guide to future magnitude and dynamic of climate related risks. In addition, financial institutions decision-making horizons are usually too short-term oriented to fully account for the long time horizon of risks associated with climate change, the so-called “tragedy of the horizon".
That is, monetary policy must worry about, and act upon, unstable dynamics that can lead to increases in inflation that may later be too costly to contain. These are the undesired second-round effects that may require strong monetary policy actions. In a flexible inflation targeting regime, once there are deviations from the target, monetary policy is implemented on the basis of bringing back inflation projection towards the targeted level within a given time horizon. In Chile, this would mean bringing down projected inflation to 3% in the two year horizon. This length of the horizon takes into account the lags in the effects of monetary policy, as well as the fact that bringing back inflation to target has an output cost. It also allows for transitory shocks to undo their effects without shifting the path of monetary policy. Therefore, in the current context of sharp inflationary pressures, monetary policy must avoid undesired second-round effects, which are those that generate an adjustment longer than the one envisioned in the policy horizon. In order to monitor these potentially undesired second-round effects, we scrutinize price dynamics that appear to be out of the normal. For example, we follow the evolution of wages compared to an estimated evolution of wages based on the historical patterns of indexation. If wages are growing faster than these estimates, we could be facing worrisome wage dynamics that may require a policy reaction.

Again, as noted, we have a variety of tools to remove excess reserves at a time when that becomes appropriate. As a result, I agree with many forecasters who expect disinflation in the near term. The substantial excess capacity in labor markets that I mentioned earlier has caused compensation to decline quite markedly (see Figure 11). Because employee compensation is the main cost component for most companies, lower labor costs enable businesses to improve profit margins without substantial price increases – particularly as the demand for goods and services improves. This brings us back to Yogi Berra, who famously said, “When you come to a fork in the road, take it.” At times, a fork in the road is exactly what confronts monetary policymakers. We would face a fork, for example, if inflationary pressures were building despite a high unemployment rate. In this case, the choice between restraining inflation and supporting employment is a difficult one, and the policy decision becomes more complicated. However, with employment well below the level of full employment, and disinflation continuing to move us away from my own inflation target of 2 per cent, one does not currently need to make such trade-offs. Another possible complication could occur if very low interest rates were causing excessive, leveraged bets that were inflating the price of assets that have macroeconomic importance. While we need to be vigilant against the buildup of asset bubbles, there is little evidence of such a problem now.
Jaime Caruana: Presentation of the Bank of Spain’s annual report Speech by Mr Jaime Caruana, Governor of the Bank of Spain, to the Governing Council of the Bank of Spain on the presentation of the annual report, Madrid, 14 June 2002. *  *  *  A year ago I addressed you in my first presentation of an Annual Report, that for the year 2000. At the time I highlighted the importance of an impending event: the introduction of euro notes and coins. This event clearly symbolised the culmination of monetary union in Europe, a process set in train ten years earlier and coming to fruition against a background of enormous expectation not free from uncertainty. It is only fair today to start by stressing the success of the cash changeover, which was notably smooth despite the complexity inherent in such a singular, large-scale and radically novel operation. Underpinning this success was the collaboration of all the sectors concerned: households and firms and, in particular, the banking system and the distribution sector, without whose contribution the changeover of notes and coins would have simply been unviable. The fact that such a far-reaching change should have found such widespread support in society ultimately reflects European citizens' acceptance of their new currency and their confidence as to the benefits they may reap from it. With the culmination of this process, the euro area is consolidated as an extensive and stable monetary zone.

First, in response to the Global Financial Crisis of 2008 the Bank increased the supply of liquidity in pesos and dollars – through repos and swaps –, augmented the extensions of the swap program, and broadened the range of eligible collaterals. They were all measures designed to align market rates with the Monetary Policy Rate and to mitigate foreign currency liquidity tensions. Forward guidance was also an important tool. With the Monetary Policy Rate close to zero – we cut the interest rate from 8.25% to 0.5% in less than a year – , communicating that we planned to keep a very low short-term interest rate for an extended period of time. This was essential in keeping medium and long term interest rates low. These measures – as well as some other more exogenous developments such as the rapid recovery of commodity prices – allowed the economy to rebound quite fast from a mild recession in 2009. Actually, in the post-crisis years GDP growth was above 5% in a context of low inflation. Over time, these measures were eliminated, but certainly the lessons we learned from the crisis have been incorporated into our policy analysis and toolkit. Among the most significant I would mention two: First, the fact that the central bank must be rapid to respond and use all the available tools if necessary.
Since the effects of monetary policy are exerted with a certain lag the Riksbank must adopt a forward-looking approach and base its interest rate decisions on a forecast of future developments. Before each decision, therefore, we prepare forecasts of factors such as inflation developments and the business cycle over the next two years. Since December 2000 we have often found reason to supplement the forecasts two years ahead with a qualitative assessment of the longer term. We have also worked with a simple policy rule: If inflation is forecast to be above target one to two years ahead we normally raise the repo rate, and vice versa if the forecast is below target. We haven't followed this rule mechanically, of course. That is exactly why the word ”normally” is always included  1  See Heikensten, L., “Behind the Riksbank’s massive walls – establishing the inflation targeting policy 1995-2003", Sveriges Riksbank Economic Review 3, 2003, 45–80, for a more in-depth account of the analytical framework for monetary policy and how it was developed up to 2003. BIS Review 11/2005  1  in the formulation of the policy rule. It is a rule that on average provides a good description of the Bank’s policy. The policy rule was introduced in 1997, primarily due to a desire to make policy even more transparent. The studies available at the time, all of which are uncertain, indicated that interest rate adjustments tended to have their largest impact on inflation in this time perspective.

The long run containment in inflation necessarily relies on containment of monetary expansion and increase in production in the country, particularly by improving productivity. As the Central Bank, what we can do? Obviously we cannot produce goods or services for the consumption of the economy, but certainly we can create the right conducive environment enabling the country’s economic performance. Why should the Central Bank be interested in productivity? Our role is to maintain economic and price stability and financial system stability. We also provide necessary payments and settlement infrastructure. We advise the government in economic affairs and policy making, and we provide important agency services such as exchange control, public debt management, provident fund management and regional development activity. In all these functions, our Mission is to “contribute to Sri Lanka’s prosperity”. At the same time, the Central Bank widely pronounces the theme of “success through productivity”. 4  BIS Review 116/2008  But, obviously this cannot be done by ourselves… The success through productivity needs a consolidated national effort. That is why we all have to push ourselves to a greater productivity level. We have to, •  work smarter,  •  combine better,  •  deliver results,  •  get it right. It should be noted that the private sector has continued to make commendable efforts in order to improve productivity in the country. What can the ICC Sri Lanka do? ICC Sri Lanka too can play a prominent and essential role.
I/ – When we look at the economic and financial environment today, we can see that it is characterised by five paradoxes 1/ – First paradox: we have carried out a lot of reforms, but the flow of credit, at least of bank credit, to the economy is still insufficient. After three years of intense efforts, the main international regulatory bodies – the Basel Committee, FSB, and G20 – have achieved impressive results. We have significantly reinforced financial regulation, tightened capital and liquidity requirements, built more robust and efficient banks with healthier and more solid balance sheets. But despite this, bank lending remains sluggish. At the same time, bond issues have shot up, including those by less creditworthy borrowers, while issuance conditions have become less and less rigorous. The main losers in this two-pronged scenario are SMEs. 2/ – Second paradox: the economy is struggling but stock markets are soaring. As you know, although many countries are now seeing a marked recovery, the overall pace of growth remains disappointing. Recent figures for the US are below expectations. There’s still some uncertainty over Chinese growth. And the euro area is struggling to get off the ground. Despite this, the main stock market indices have risen by around 50% in the past two years. For many, this contradiction serves to confirm the idea that finance exists within a world of its own and is disconnected from the “real” economy. 3/ – Third paradox: we have made the banks “secure”, but financial risks are appearing in other areas.

Christian Noyer: Is speculation the enemy of investment? Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, Aix-en-Provence Economic Forum, Aix-en-Provence, 5 July 2014. *  *  *  Between paradox and illusion: a narrow path for finance Seven years after the start of the crisis, the French public – and they are not alone in this – remain largely hostile to the world of finance. Despite huge efforts at reform, there are still doubts hanging over the sector. Is finance useful for the economy? Or, in its current form, is it merely a tool for ever-increasing speculation, at the expense of investment and the longterm needs of the economy? The fact that we still need to ask this question shows that we are living in difficult and paradoxical times, where the inner workings of the economy are often a mystery. In this context, it is tempting to fall back on simple solutions; but that would be dangerous, and I will try to sketch out, in just a few minutes, what I believe would be a good middle ground between an unconditional love for and an exaggerated hatred of financial activity.
All these phenomena push the borders of informality further and reduce the monetary policy efficiency. It is the financial system’s duty and responsibility to make all its efforts in co-operation with the Bank of Albania and other Government authorities to find the solution to these problems. In conclusion I would like to say that as a result of the reforms undertaken, the Albanian banking system, being the most dynamic part of the financial system, has made significant progress during the last years. This progress results from the clear visions and seriousness shown by the Albanian authorities in reforming the banking sector, the fruitful co-operation these authorities have had with the international financial institutions such as the IMF and the World Bank for designing medium-term strategies and developing this sector further. This progress is also a result of the numerous challenges the Albanian banking system has been faced with over the recent years. It may be concluded that the Albanian banking system is presented safe, sound, under a constant reformation and consolidation process. It is going through a new stage, which will provide to the business and the banking clients modern banking services, aiming to reach the western banks’ standards. ¨ With regard to the aspirations of the Albanian economy and strategies to be employed for its further opening to foreign investors, we believe that these undertakings will have a positive impact on the country’s macroeconomic, technological and institutional area.

In the past few decades, international estimates of the neutral real interest rate have fallen and are now at 1 percent or below in many countries (see Rachel et al (2015), Laubach et al (2015), Hamilton et al (2015), Constâncio (2016) and Zhu (2016)). Obviously, international interest rate developments affect Norwegian interest rate setting, particularly through the exchange rate channel. And Norges Bank’s estimate of the neutral interest rate has been gradually revised down in pace with international developments. The Bank’s forecasts are now based on the assumption that a neutral nominal money market rate in Norway will be between 2½ percent and 3½ percent in the coming years. The associated neutral nominal key policy rate is somewhat lower.1 The low level of the neutral interest rate raises a number of issues. Today, I would like to focus on two aspects that have been given weight in recent years in Norges Bank’s assessment of a robust interest rate path. The first is that the effect of changes in the policy rate tends to be more uncertain when the rate is very low. The second relates to the challenge persistently low interest rates pose to financial stability. GREATER UNCERTAINTY ABOUT THE EFFECT OF THE POLICY RATE Monetary policy decisions are made under uncertainty. Central banks operate in an environment of uncertainty regarding the current situation, the driving forces in the economy and the functioning of the economy. Much of this uncertainty is associated with conditions beyond the influence of monetary policy.
This is still a somewhat high number, given the country’s population, and above all, the similarity of products banks are offering. Further mergers and acquisitions may have a positive impact on cost management, which will in turn make it easier for economies of scale to be achieved. On the other hand, domestic mergers and acquisitions are unlikely to involve a cutback in foreign ownership. Enhanced cooperation amongst regulators and supervisors from home and host supervisors is thus essential to the continuing stability of the system. BIS central bankers’ speeches  1  Yet there exists no precise definition what international regulatory cooperation is. Most of the time, it brings to mind the system of committees and working groups meeting in Basel, at the Bank for International Settlements. The international regulations which are the outcome of the Basel system, comprise among other documents, Basel III, the bold new guidelines at the core of which is the concept of risk-weight; some assets are riskier than others and this should be reflected in the percentage of capital that should be held against them. For credit risk, this riskiness is taken to depend on the obligor, i.e. it is taken that savers and investors are almost inherently more averse to obligations of some entities than to obligations of other entities. This approach is not new, but an enhancement of the existing Basel I and Basel II infrastructure.

Fritz Zurbrügg: The financial crisis in its sixth year – an end in sight? Speech by Mr Fritz Zurbrügg, Member of the Governing Board of the Swiss National Bank, at the Money Market Event, Zurich, 21 March 2013. The complete speech can be found in German on the Swiss National Bank’s website (http://www.snb.ch/en)  *  *  *  In this, the sixth year of the financial crisis, the situation on the financial markets has eased considerably. Is what we're seeing the prospect of an end to the crisis, or is this just a flash in the pan? Measures by central banks made a major contribution to stabilising the financial sector. This sector, however, is just a part of the whole, and while its stability is a precondition for sustained global economic growth, it is by no means a guarantee. The positive mood in the financial markets and leading economic indicators raise hopes that a recovery is underway. If these hopes are to be realised, however, structural reforms need to be implemented. The three most significant challenges for the global economy are increasing the resilience of the financial sector, improving the flexibility of labour and goods markets (especially in Europe), and consolidating the public finances of the advanced economies. Progress has been made in all three areas. The way ahead, however, is still both long and difficult. Due to the relatively lengthy period of weak growth, there is considerable danger that reform fatigue might spread in those countries most severely affected.