samchain/econo-pairs-v1 huggingface dataset:
Mr. McDonough assesses the role of the central bank in ensuring a stable price and financial environment and fostering sustainable growth Remarks by the President of the Federal Reserve Bank of New York, Mr. William J. McDonough, at the Society of Investment Analysts in Dublin on 11/2/97. I am delighted to have the opportunity to address the Society of Investment Analysts here in Ireland, home of my forebears. In my remarks this evening, I want to say a few words on a topic of great importance to both our professions: the role of central banks in ensuring a stable price and financial environment, and fostering sustainable growth. I would also like to offer some thoughts on the importance of a safe and sound banking system for the wellbeing of the economy. As members of the financial community, we all recognize the importance of price stability to the successful long-run performance of the economy. Indeed, there now seems to be a worldwide convergence of views among central bankers and investors alike on the importance of price stability as the primary goal of monetary policy. For me personally, stable prices have always been the prism for making monetary policy decisions. As I see it, price stability must be viewed in a long-run context as an ongoing goal, not a one-time objective. That goal requires monetary policy to be oriented beyond the horizon of its immediate or near-term impact on inflation and the economy.

Here again, estimates vary from one study to the other, and all agree on the same finding: a huge potential is still there to exploit. This being said, risks in the financial sector are the most varied and most important, especially in terms of money laundering, financing terrorism, cyber security, as well as protecting customers and personal data. Such risks have become major concerns both at the national and international level. For us, central banks in particular, the changes brought by the Fintech challenge us in several aspects, namely in our core functions. Now, even the monopoly of issuing currency is exposed, leading some central banks to consider the option of issuing a digital currency, and therefore reduce the costs related to conventional banknotes’ production and use, and minimize the insecurity risks involved. 6  Among the other fields concerned is financial supervision. This area is now gradually expanding as new actors and financial products have emerged, which can certainly affect monetary policy transmission. Ladies and gentlemen, The digital transformation we are facing today is primarily driven by operators and private companies that continue to invest heavily in this area and seize the opportunities and the potential it offers. Considering the important economic, financial and social implications of such a revolution, public authorities are compelled to set an adequate legal framework and provide an environment  conducive  to  technological  innovations  and  Fintech  development.
Denis Beau: What will shape the future of crypto-assets? Opening address by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Banque de France webinar, 15 June 2021. * * * Good morning Ladies and Gentlemen, Crypto-assets is a stimulating topic for a Central Banker and one that cannot leave him indifferent! It should be remembered that, historically, crypto-assets have been designed to be issued in a decentralised manner, with the ambition to replace legal currencies: the very denial of the Central Banker’s functions. Clearly, the initial objective was not achieved. So far, crypto-assets have proven to be much less efficient than our traditional currencies, for different reasons, starting with price volatility, transaction costs and delays, which make them difficult to use as a means of payment, not to mention the risks they expose their users and service providers. However, we cannot ignore the potential for innovation of crypto-assets and their underlying technology, the technique of distributed ledgers or blockchain. Already in 2017, with the Madre project, the Banque de France was one of the first central banks in the world to use this blockchain technology for an interbank use case. At the rate of innovation, it is a long history, but since then we have been closely monitoring the development of this vibrant blockchain and crypto-assets ecosystem, the opportunities it creates and the risks it carries.

Credit can be used to finance education, a car and a place to live while we are young and enables us to enjoy the benefits while earning money to pay for them. Over the past century, a modern financial system has evolved that provides ample access to credit. A welldeveloped credit market is an important part of a well-functioning economy. There is another side of the coin: Once we have incurred a debt, it remains with us. The debt must be repaid – with interest. We might say that while credit is an unvarnished good, debt is a necessary evil. Paying for bread already eaten can be tough. When we borrow money, we draw up a repayment plan with the bank. Implicit in this plan are a number of expectations – regarding our future earnings, net worth and interest rates. If these expectations pan out, the plan succeeds. We arrive at the desired outcome. And many times, the future turns out even better than expected. In recent decades, house prices have risen and with them our wealth. Income growth in Norway has been high and has benefited nearly everyone. At the same time, interest rates have fallen to historically low levels. This has made a high debt burden easier to bear. In forming our expectations, we often look in the rear-view mirror. As anyone knows who has driven a car, mirrors are important. But if you only look back in the mirror, you will land in the ditch.
Durmuş Yilmaz: Managing liquidity in the Islamic financial services industry Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the conference on “Managing liquidity in the Islamic financial services industry”, organised by the Islamic Financial Services Board (IFSB), Istanbul, 6 April 2011. *  *  *  Distinguished Participants, Esteemed Guests and Valued Members of the Press, Welcome to the Conference on Managing Liquidity in the Islamic Financial Services Industry organized by Islamic Financial Services Board (IFSB). As the Central Bank of Turkey, we are very pleased to host this special event. I would like to extend my appreciation to the IFSB for organizing this timely conference in this beautiful city. I believe that this conference will be a productive platform for fruitful discussions on Islamic liquidity management practices. In this opening speech, I will share my thoughts regarding managing liquidity in Islamic finance and the challenges ahead. Distinguished Participants, As you all know, unconventional polices and extraordinary measures have been put in place by central banks and fiscal authorities during and after the financial crisis. As liquidity concerns played a major role in the deepening of the crisis, intense discussions on a new structure in global liquidity management have dominated the global arena. In this context, liquidity management issues in the Islamic Financial Services deserve a special attention. Successful implementation of a solid liquidity management system can be the key for sustaining the rapid growth of the industry.

If hosts cannot influence the process of supervision or crisis management, their trust in and use of the information from the home authority will be very limited. Sharing information and cooperating on regulatory actions may be problematic already in normal times, but is probably much more difficult in a crisis situation when economic risks and costs are clearly visible. So far, cooperation and coordination in crisis situations is dealt with in the EU by various Memoranda of Understanding. Even if these MoUs are not legally binding, they are valuable documents. They provide a basis from which more operational crisis cooperation agreements can be developed by the countries and authorities that see the need to do so. But looking at this increasingly complex patchwork of supervisory colleges, central bank networks and MoUs that we are now creating, one cannot help to wonder if there are not any better alternatives for cross-border cooperation. Future alternatives to the home-host model What are, in the long term, the alternative models to the current home-host set-up? In the EU, we are committed to creating a single market for financial services. If we take off our national central bank and supervisor hats, are we really convinced that the home-host model is the best one in the long run? After all, several serious alternative models have been suggested. The pros and cons of the three main models are reviewed in an interesting paper by Oosterloo and Schoenmaker.3 I will briefly comment on these.
In the modern literature, these risk premia are taken to be determined by how useful a financial asset is in helping households to smooth the path of their consumption. Assets that deliver low returns during bad times don’t contribute much to helping households sustain consumption, and so carry a higher risk premium. So risk premia might vary with the volatility of the asset return; the volatility of consumption; and with the correlation between asset returns and consumption. 16  See Dooley, M.P, Folkerts-Landau, D and Garber, P (2003), “An essay on the revised Bretton Woods System”, NBER Working Paper 9971. “System” is not quite the right word, because it is not the product of collective international thought and planning. 17  See Tucker, PMWT (2006) “Uncertainty, the implementation of monetary policy and the management of risk”, Bank of England Quarterly Bulletin 2006 Q2 pp 202-211. BIS Review 112/2008  9  Like other economic variables, such premia may change as their underlying determinants change, and given the nature of the “shocks” affecting the macroeconomy. All that is familiar, fairly orthodox stuff these days. Indeed, an extraordinary amount of work at the macro/financial frontier has been going on over recent years. But as John Cochrane has commented, “work has barely begun”. 18 From a policymakers’ perspective, that does seem to be the case.

For a given path of nominal demand, that would tend to reduce the pressure of demand on global commodity prices, as many of the largest EME economies are, basically, commodity importers themselves. But persistent elevated inflation in the EMEs would also increase the nominal price of some of our imports, unless an adjustment in nominal exchange rates were permitted. In fact, over recent months there have been some steps towards taking domestic monetary action across a number of emerging market economies. But there is a risk that higher EME inflation will persist if, left unchecked, it becomes embedded in inflation expectations. With inflation also elevated across the major industrialised economies, this underlines the risk to global inflation from imbalances in global supply and demand. Individual countries can suffer exogenous shocks to inflation from commodity prices, but that is essentially a relative price shift, to which the world economy has to adjust. By contrast, a persistent rise in inflationary pressures cannot be exogenous for all countries collectively. In that respect, the international monetary regime, and the global imbalances it has sustained, continues to pose risks to the outlook for our economy. Indeed, in terms of where we find ourselves, we must take care not to put the cost shock and the credit shock in completely separate boxes. They both owe something to global imbalances.
Another institution set up during the crisis, in which the FROB has a stake, the Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria (Sareb), also played a significant role in this process. Between December 2012 and March 2013, Sareb assumed property development loans with a gross value of approximately € billion and foreclosures of € billion. Thus, against a background of notable declines in their activity levels, banks have managed to reduce the weight of troubled assets on their balance sheets very significantly. Specifically, the non-performing loans ratio has decreased by more than eight percentage points and currently stands at 5.7% of total credit. Foreclosures, meanwhile, are at half the level recorded in 2014. Over this period there was also a significant improvement in the solvency ratios of Spanish credit institutions, which increased their tier 1 capital ratio from 7.5% in 2007 to 13.5% at the end of 2018. Despite these improvements, the Spanish financial sector clearly continues to face significant challenges. Among other factors, these arise from a non-performing loans ratio that is still higher than before the crisis, a rate of return below the cost of capital, and capital levels that, despite exceeding the minimum regulatory requirements, are on average below those of other European countries and below those needed to restore its reputation. 1  Consolidated groups and institutions not belonging to a group that are Spanish owned.

This situation has most affected sectors of the economy such as construction, which relies totally on domestic demand and, at a lower extent, other sectors such as industry, which generates most of its activity from external demand. Under these circumstances, investments pace was relatively lower, compared with previous years. The Bank of Albania considers that domestic consumption and investments will have a better performance during the current year. Conditions for funding the private sector demand appear improved, while risk premia in financial markets appear lower. Uncertainty for the future should gradually decrease. Additionally, the expected positive influence of external demand and fiscal policy during 2011, are expected to stimulate domestic demand. Correction of fiscal conduct is followed by a lower contribution to the economic growth during 2010. Public expenditure reduced by about 5% year-on-year, while the budget deficit reduced by about 4 p.p. of the GDP. The Bank of Albania has always highlighted that fiscal stability is a fundamental precondition for a long-term economic growth. In this context, we deem that respecting objectives on budget deficit and public borrowing during 2011 will yield a positive contribution to the country’s economic development. Maintaining relative levels in budget deficit will eliminate a direct negative effect on economic growth, while relatively low levels of public borrowing will have an impact on the control of long-term interest rates and reduction of risk premia in financial markets. These developments were manifested during the second half of 2010 and are expected to stimulate domestic demand during 2011, as well.
I’ll use this to lead into a discussion of the issues facing policymakers as we go forward. This slide was put together for a briefing recently by Harvey Rosenblum. It charts employment by Federal Reserve district from the time job creation peaked in each district until today. A quick explanation to make this easier on the eye: The bottom, or horizontal  2  BIS central bankers’ speeches  axis, is the time in months since employment peaked in each district. For example, it has been roughly 54 months since employment peaked in the Atlanta district, which is depicted by the tan bottom line; it has been 36 months since employment peaked in the Dallas district, as shown in the shorter red line at the top. Observing the vertical axis, you can see that the only Fed district that is recovering to employment levels enjoyed at the peak is Dallas. In point of fact, the only other states that are back to or have punched through their previous peak employment levels are Alaska and North Dakota, which, combined, have a population of 1.4 million good citizens. The other 11 Fed districts are hovering at levels approximately 3 to 8 percent below peak employment, while the nation as a whole – the black line – is still 5 percent below the levels that prevailed in 2008. Of course, in Texas we have a long tradition of outperforming the nation – a tradition matched only by our long-standing reputation for modesty.

It draws on two stylised approaches to resolution: a so-called “single point of entry” approach, under which resolution of a whole group is executed, primarily by the home authority and mainly at the level of the parent or holding company; and, secondly, a “multiple point of entry” approach whereby co-ordinated actions are taken by a number authorities along national, regional or functional lines. There is, of course, a spectrum between those two poles. Identifying the resolution strategy that is most likely best suited to each specific firm is very important. The strategy must be relatively easy to understand – a strategy that cannot be explained concisely to top officials in central banks and regulators is not a strategy at all. But although authorities should try to identify a preferred strategy and should be as transparent as possible, I should caution that what turns out to be the best approach in the event of distress will depend on the circumstances. The suggestion of a “Presumptive Path”, being aired by some in the market, is somewhat unrealistic, at least in its strongest form. Public authorities with statutory obligations to maintain stability cannot bind themselves to detailed strategies that in the event might not work as well as an alternative. At the planning stage, whether a single- or a multiple-point-of-entry strategy looks more feasible will depend upon a group’s organisational and financial structure. It is likely that some groups will need to adapt themselves in order to remove impediments to resolution. Much of that will be case by case.
On five occasions between 1990 and 1994, SEB securitised mortgage loans totalling SEK 12 billion, and in June 2000, the same bank securitised mortgage loans worth approximately SEK 8.5 billion. SBAB securitised mortgages worth approximately SEK 1 billion in February 2000 and loans worth approximately SEK 8 billion in October 2000. Bokredit, owned by Den Danske Bank, has securitised a stock of mortgage loans to a 7  BIS Review 99/2000  value of SEK 1.3 billion. A new Internet-based issuer of mortgage loans is Europeloan, which started up operations in Sweden in February 1999. Europeloan is financing their internet based mortgage lending by securitisation of the loans abroad, up to now around SEK 0,5 billion. Objections that have been expressed against securitisation include the fact that up until now it has been relatively complicated and costly to set up special purpose vehicles, and it has not been possible to invest the bonds at such favourable interest rates as their rating would imply. Possible reasons are that the market is underdeveloped and the issues have been few, which has meant that liquidity in the bonds has been low. Securitisation of mortgages is common in the USA, where around half of the total outstanding loans stock of secured loans is securitised. In Europe, housing financing has mainly taken other forms. If competition in the mortgage market increases as a result of EMU, it is likely that the need to finance mortgage loans as economically as possible will also increase.

The yield on 10-year German government bonds continued to decline from mid-year under the influence of the ECB’s bond purchases. A moderate decline in yields was also observed in Switzerland. For example, the latest reading shows the yield on 10-year Confederation bonds just below the mid-year values, at around –0.6% (cf. chart 2). On the foreign exchange markets, the persistent downtrend of the US dollar has been the dominant theme in recent months. On a trade-weighted basis, the dollar has depreciated by over 7% since the end of June. Against the backdrop of predominantly positive risk sentiment, the dollar was less in demand as a safe-haven currency. The rise in inflation expectations in the US is also likely to have contributed to the depreciation of the dollar. The euro, by contrast, has appreciated by almost 3% on a trade-weighted basis since mid-year. It strengthened in particular following the announcement of the EU recovery fund, which market participants interpreted as a sign of stronger fiscal cohesion within the euro area. Trading in the pound sterling has been volatile over recent months in light of the ongoing Brexit negotiations; the currency has appreciated over 2% on a trade-weighted basis since mid-year. The Swiss franc trended mainly sideways on a trade-weighted basis during the summer months, before coming under renewed appreciation pressure in the autumn due to the second coronavirus wave and heightened uncertainty ahead of the US elections.
One possibility is to look for ways to expand the support for the formation of partnerships between higher education and industry, which have proven to be effective ways for regions to promote innovation, entrepreneurship and economic growth. Puerto Rico has many of the ingredients in place to harness the benefits of these industry-education partnerships and policymakers should begin to look for promising opportunities for mutually beneficial collaboration. A second step is to comprehensively reform the Commonwealth’s tax system, which is heavily dependent on income taxes and tends to levy high rates on narrow bases. When rates are high, it increases incentives for activities to be shielded from taxes, perhaps by moving activity to the informal sector, or perhaps by halting the activity altogether. Either way, collecting the necessary revenue requires rates to be even higher on activities that remain in the base, reinforcing the problem. Typically, comprehensive reform is necessary to break the cycle by simultaneously broadening the tax base and reducing rates across a range of taxes. Such a reform would likely produce a significant bonus in terms of faster economic growth, particularly in the formal sector. A third step would be to improve the Commonwealth’s financial reporting. Puerto Rico’s unique status means that it is one of few jurisdictions whose finances are not regularly surveyed by a public agency. The U.S. Census Bureau reports annually on mainland state finances and the International Monetary Fund generally reports on the finances of nations.

In addition to this work, our commitment is reflected in our research on issues of concern to the Island. Our economists monitor and analyze local economic conditions. A complement to our internal research is the outreach that I and other senior bank staff undertake to meet with our stakeholders – the leaders in the business community, members of professional organizations like yourselves, academics, students, elected officials and leaders of nonprofits – to hear firsthand about the issues and problems facing the people in our district. What we learn during these engagements also helps to shape our understanding of the issues facing the Puerto Rico economy and inform our efforts to support it. Earlier on this trip I met with leading business owners from many different sectors of the economy, elected officials and several agency heads. And from what I have learned so far, there are many important initiatives underway to effect change and to address what are clearly large and complex issues. On my last visit to the Island in 2011, I saw examples of expansion and growth. This gave me confidence that Puerto Rico has the capability to be an economic success story. However, my discussions with a range of stakeholders confirmed to me that conditions were not what we want them to be – in particular, growth and expansion were not happening either fast enough or broadly enough.