samchain/econo-pairs-v1 huggingface dataset:
Christian Noyer: There will be no break-up of the euro area – interview in Sud Ouest Interview with Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, in Sud Ouest, Bordeaux, conducted by Mr Bernard Broustet on 17 January 2011. *  *  *  Sud Ouest: How is our economy faring? Christian Noyer: The economy is picking up. The third quarter of 2010 was slightly disappointing, but the fourth was better, with estimated growth of 0.6%. This trend is expected to continue in early 2011, even though a number of factors call for caution: the automobile sector could slow down due to the phasing out of the scrappage scheme, and the fiscal retrenchment measures implemented in some European countries may weigh on demand. But, all in all, growth is there. Sud Ouest: Will household consumption, which is the main driver of growth in France, be impacted by higher inflation? Christian Noyer: The surge in inflation that we are now observing at the start of year can be ascribed to higher energy and commodity prices. Current price levels appear particularly high when compared to the exceptionally low levels seen at end-2009. This difference will no doubt become less marked in the coming months. Given the unemployment rate and the still low capacity utilisation rate, I think that it is unlikely that the rise in commodity prices could result in second round effects in our economy.

18.10.2018  Welcome Address Conference “The New Bank Provisioning Standards: Implementation Challenges and Financial Stability Implications”/ Banco de España, FSI and CEMFI Pablo Hernández de Cos Governor of the Banco de España  Good morning to everyone. It is my pleasure to welcome you all to the conference: “The new bank provisioning standards: implementation challenges and financial stability implications”, hosted by the Banco de España and co-organised with the BIS Financial Stability Institute and CEMFI. Let me first thank these two institutions for their participation and active involvement in the conference. The invaluable work and expertise of the FSI and the ever-necessary academic rigour provided by CEMFI combine perfectly with the Banco de España’s long-dated experience in banking supervision and create the sufficient conditions for this event to be a fruitful one. These three elements should be the ideal ingredients to ensure a promising and, hopefully, successful conference. Furthermore, the presence of leading international figures from academia, the banking industry and supervisory, accounting and auditing organisations as chairs and panelists, are an effective guarantee that a lively and enlightening debate over the next two days will arise and retain the interest of the audience and ultimately meet the organisers’ original aspirations for the conference. As a starting point, we should recall that credit risk is, by far, the most important type of risk universal banks face, as their customary activity is based on granting loans.
Although this remains a significant risk, my reading of the available evidence to date is that inflation expectations remain relatively well anchored. Measures of households’ short-term expectations have picked up over the past year or so, but so have the MPC’s projections for nearterm inflation. Indeed, the MPC’s own revisions to its central inflation projection over the past year have been similar to that implied by a majority of survey measures (Chart 3). And measures of households’ medium-term inflation expectations have remained broadly stable, as have expectations of professional forecasters. Indeed, the surprising strength in inflation during the recession may partly stem from inflation expectations being more firmly anchored than in the past, so helping to offset the downward pressure from spare capacity. This may reflect the different role played by monetary policy in this recession from that in the 1980s and 1990s. In those earlier recessions, policy was designed to reduce trend inflation. As such, expectations about future policy and the emerging spare capacity reinforced each other in bearing down on prices. In contrast, the aim of monetary policy during this recession has been to work against the downward pressure on inflation from excess capacity in order to avoid a prolonged period of belowtarget inflation. Where does all this leave us? To my mind, there is no great puzzle or mystery surrounding the period of above-target inflation seen over the past few years.

Output fell precipitously through the second half of 2008 and into 2009 and, despite the recovery in recent quarters, the level of output remains around 10% below that implied by a continuation of its pre-recession trend. The precise degree of spare capacity is difficult to judge since it depends on the extent to which the recession damaged the supply potential of our economy. 4 Some of the channels through which recessions in the past have impeded supply growth appear, thus far at least, to have been less damaging than we initially feared. Despite a larger fall in output, the fall in employment, although substantial, has been less than in past recessions. Likewise, the pickup in company liquidations has been relatively muted. It is likely that the financial crisis and the reduced availability of credit have affected supply in other ways, such as making it harder for smaller or more entrepreneurial companies to raise funds for investment or expansion. But even so, demand has probably weakened by substantially more than potential supply, implying a large degree of slack both in the labour market and within companies. Consider each in turn. Slack in the labour market has contributed to the muted growth in earnings seen over the past 18 months or so. Annual private sector earnings growth has averaged a little below 1 1/2 % since the start of the recession, around a third of its rate in the five preceding years.
The rapid growth across most large emerging market economies (EMEs) in particular has fuelled global demand for raw materials, which in the short term are in relatively fixed supply, pulling their prices upwards. In August, oil prices were up 60% higher than a year earlier, wholesale gas prices were up 90%, and food prices 40%. These sharp increases in costs have fed into food and petrol prices and passed along the supply chain, driving up the prices of other goods including in particular household gas and electricity bills (Chart 2). But so long as the prices of wholesale energy and foodstuffs on global markets stabilise at their new higher levels, their direct impact on inflation should wash out after a year. In other words, by late 2009 these items would not be making any contribution to the rate of consumer price inflation: whereas, at present, they are contributing almost 3 percentage points. Moreover there are some signs that the commodity cycle may have turned down. Since the peak in July, the price of food has fallen by 10% and the price of crude oil has fallen by over a quarter, and that is consistent with other indicators that point to a slowing in growth in both emerging and advanced economies. That good news on commodity prices has been offset somewhat in the UK by a falling exchange rate. Sterling has been trading at around 1.8 against the US dollar – a year ago it was 2.0.

But with hindsight, seen across the world as a whole, there was a case for somewhat tighter monetary policy to prevent the demand for resources outstripping supply (although I would note that our interest rates have been consistently higher in recent years than those elsewhere in the advanced economies). The rise in oil and food prices has appeared as an external pressure on each country on its own but it is not external to us all collectively. A particular problem here – that has yet to be resolved – is the expansion of the dollar bloc. The emerging economies were importing loose monetary policy, which scarcely seemed appropriate to their domestic conditions. However it is hard to believe that a somewhat tighter monetary policy would have been guaranteed to head off the credit boom and subsequent crunch altogether. Put another way, monetary policy is a blunt instrument. To prevent excesses in financial markets, we might have had to generate an unnecessary slowdown in the real economy. I share the view therefore that we have to look for new regulatory measures to complement interest rates. There are a number of specific lessons on regulation which have already been identified. The FSA, for example, is already strengthening its prudential supervision. And internationally, we need to fill gaps in the current framework – for example on mortgage origination in the US, increasing the capital requirements for some credit products and loan commitments, and ensuring that investors and rating agencies assess new products more diligently.
6  BIS Review 65/2002  If Sweden joins ERM2, the responsibility for maintaining economic balance rests essentially with the Government and the Riksdag. In the event of a referendum next autumn resulting in a majority for Swedish entry into the EMU, followed by entry to ERM2, the fiscal policy that is already being established this autumn will be highly important. However this may, the Riksbank should do what it can to contribute to price stability being maintained also in ERM2. Under these circumstances there are grounds for continuing to make forecasts, publish Inflation Reports and set the repo rate in much the same way as at present. Neither do I see any reasons for altering the inflation target. But the room for manoeuvre in monetary policy would rapidly narrow as entry to full monetary union approaches. At the same time, exchange rate stability in ERM2 is important but the potential risks of conflicts between price and exchange-rate stability during this short period should not be exaggerated. It is natural that the central rate in ERM2 will be the conversion rate in the changeover to the monetary union and this reduces the scope for speculation. The objective of monetary policy in Sweden as well as the euro area is price stability. Moreover, the process for EMU entry by other countries was calm even though the circumstances in a number of cases were more difficult than they look like being in Sweden's case. BIS Review 65/2002  7

The banking system expanded very rapidly in just five years, from a combined balance sheet of less than 2 times GDP (at the end of 2003) to almost 10 times GDP (in mid-2008). Most of this expansion was cross-border, and a lot of it had very little to do with Iceland, as both financing and investment took place abroad. A number of domestic mistakes were made throughout the process, and I do not have time to go into them here, but the expansion of the banks was greatly facilitated by Iceland’s membership in the European Economic Area (EEA), as the EEA Agreement provides a legal and regulatory framework based on European Union Directives, including free movement of capital and provision of financial services. The underlying principles are those of home licencing for operations anywhere in the EEA and of a level playing field for competition, where size and location supposedly do not matter. This European “Passport” enabled the Icelandic banks to operate throughout the EEA, including through branches in other EEA countries. We now know that there are deep flaws in this framework and that these flaws are important elements in the current euro area crisis. A key issue here is the contradiction between, the European passport rights on the one hand and, on the other hand, national supervision, national deposit insurance and national crisis management and resolution regimes. This is what recent proposals of a banking union are supposed to deal with.
In particular, the use of resolution tools like the bail-in when financial markets are in distress could exacerbate those turbulences and reduce the ability of other banks to obtain external financial resources. Or, in the case of the sale of the business, it could create a problem of fire sales that may additionally reduce the prices of the assets, generating losses for the rest of the institutions. In these circumstances, there should be a powerful, usable and credible backstop that could be activated even preemptively. The stability of the financial system and the potential for systemic risks to alter the functioning of that system have long been important topics for central banks, and I would like to encourage some additional consideration to this broader approach. Some episodes, including the Spanish experience during the Great Financial Crisis, suggest that the propagation of shocks is especially relevant for mid-sized entities and that the swift and orderly resolution of the problems is the vaccine against contagion. So, allow me to finish my presentation where I started: the current crisis management framework has been crucial in advancing the Banking Union and it has proven most useful in resolving very relevant events. However, the experience allows us to draw lessons that should be incorporated into the framework to contribute more effectively to maintaining financial stability and to ensuring the functioning of the Banking Union.

In every platform we participated and in every announcement we made, we emphasized our policy objective, which is to achieve and maintain price stability, the reasons underlying our policy implementations and the importance of having a medium-term vision in terms of lagged effect of policy decisions. To this end, we try to use communication policy effectively as an important part of the inflationtargeting regime. We base our communication policy on the grounds of trust, transparency, consistency and decisiveness. I believe this is not peculiar to the Turkish case. Many central bankers in emerging market countries have to deal with the drawbacks of a past of high and chronic inflation and thus incredible policies. And it is by all means clear that designing a communication strategy is not easy under these circumstances. As you may all agree, the concept of communication itself is a dynamic issue. Therefore, given the importance of effective communication, it is important to note that we at the Central Bank of Turkey have been working continuously on improving our communication policy. 5  Woodford, M. (2003). Interest and Prices. Princeton Univesity Press. 6  BIS. (1998). “The Transmission of Monetary Policy in Emerging Market Economies”. BIS Policy Papers No. 3. 7  Orphanides, A. (2006). “The Road to Price Stability”. BIS Review 88/2006  5  Dear guests, There is no doubt that central banking can be considered as a combination of positive sciences and human psychology, or as you could say, the union of science and art.
Like the privatisation of the distribution system, the facility at Arlanda is a part of the Riksbank’s efforts to streamline cash handling. The 19 Riksbank offices that conducted these operations 10 years ago will have been reduced to one by 2013. In the same period, the number of personnel will have been reduced from around 300 to approximately 10 people. 7  Payment Security Report Sweden 2008, VISA Europe. 8  I am talking about the Observatory for Payment Card Security (Observatoire de la sécurité des cartes de paiement) which since 2004 produces an annual report that gives an objective account of the state of the card industry in France. BIS Review 7/2010  5  The Riksbank also recently evaluated the use of cash in Sweden and concluded that the current Swedish banknote and coin series is becoming outdated. There is a need to further develop the security details. It may also be sensible to make the relatively heavy Swedish coins lighter. Another problem is that the level of coin circulation is low. A few years ago, every Swedish household had an average of SEK 850 in coins stored in a bowl, jar or money box. It is hardly likely that this figure is lower today. Partly on the basis of this evaluation, the Riksbank has decided that the 50-öre coin is no longer needed. It will therefore be withdrawn during the autumn and öre will thereafter only exist as a virtual arithmetical unit. I think it feels rather strange to imagine this virtual öre.

Today, in the aftermath of global financial crisis, the key focus of central banks is both the successful conduct of monetary policy and macroprudential policy, in order to reinforce each other to stabilize economies. In Sri Lanka too, monetary policy formulation, operational framework and strategies adopted, have all evolved in line with the changing structure of the economy, developments in the financial markets, and the availability of data and communication strategies. I do not intend to discuss  BIS central bankers’ speeches  5  these changes in detail here, but would like to highlight that a greater coordination of monetary and fiscal policies would become even more crucial in the implementation of monetary policy and achieving macroeconomic stability, in the future than in the past. Another position that should be clear to us is that the need for harmonization between the Central Bank and the Ministry of Finance, is not a virtue that has been suggested recently, but a vital ingredient that had been provided for, since the establishment of the Central Bank, in order to ensure the sound economic management of the country. The recent evolution of our economy Armed with that background, I would now like to proceed to share with you, some instances of harmonization that has taken place in the recent past in our country. However, before I do that, I think it is necessary to first touch upon the recent evolution of our economy in order to set the stage for what would follow.
Output is still some 4% below its previous peak and more than 10% below where it would have been if the economy had simply continued growing at its pre-crisis historical trend. There have been few winners over the past few years. In a deep sense, the low level of real interest rates here and in the other advanced economies is a reflection of the impact on the financial crisis. Heightened uncertainty and, for some households, a desire to reduce their indebtedness have resulted in an increased propensity to save. And the same heightened uncertainty has reduced the appetite of businesses to invest and encouraged them to build up cash buffers. Substantial dissaving by the public sector could offset that initially, but there are limits to how long the markets will allow high deficits to be sustained. Fiscal consolidation was unavoidable at some juncture. Given that, the stance of monetary policy needs to be loose in order to sustain demand. If we had chosen to run a substantially tighter monetary policy, then that would only have served to depress activity and raise unemployment even further. By slowing growth, it would also make the task of fiscal consolidation and de-leveraging even more challenging. And by providing a gloomier climate for business, it would also inhibit investment and slow the necessary re-balancing of our economy towards manufacturing and internationally tradable services. Treating serious medical conditions often has unwanted side effects. But, unpleasant as those side effects sometimes are, treatment is invariably better than the alternative.

Gathering market intelligence in a more complex and transparent world  Given its responsibilities for monetary policy, macro-prudential regulation and microprudential supervision, it is quite rightly expected that the Bank’s policy decisions are taken with a detailed understanding of the financial market context in which the Bank operates. Since its inception, the Bank’s market operations have long provided a key input to this understanding, by providing first-hand information from financial institutions. Between the years 1786 and 1989, this was epitomised by the “Senior Broker to the Commissioners for the Reduction of the National Debt.” Clad in a top hat, and invariably with a tightly rolled umbrella (see Figure 4 for an example), the holder of that position was responsible for announcing (in person) changes in the Bank’s minimum lending rate, and at the same time gathering opinion on the state of the gilt market. He was expected to report to the Gilt Edged Division three times a day, providing information about market activity, the quantity of buying and selling, and the gilt maturities and coupons that were in particular demand. He was also responsible for reporting on the mood of investors and advised the Bank on the appetite for stock, institutional cash positions and expectations. 9, 10 Even if top hats are a thing of the past, the essence of Market Intelligence (MI) gathering remains the same today: our staff maintain a regular dialogue with financial market participants to draw on their expert knowledge and perspective of the markets in which they operate.
Today, we do not make any distinction between “internal audit” and “management audit”. Whatever the term we use to call him, an internal auditor has to function as a management auditor as well. New challenges for internal auditors The expansion of banking business both horizontally and vertically over the years has posed new challenges to the internal auditor. This expansion has resulted in creating giant banking holding companies encompassing almost all areas of financial services. A bank which was confined only to borrowing and lending some six to seven decades ago is now a universal bank that provides all types of financial services to its customers. They may do it through different units or departments set up under one umbrella or through the establishment of a host of associate and subsidiary companies under one holding company. An internal auditor in a bank, therefore, cannot simply confine his work only to the main business of banking. Since there are cross-border risks involving different segments of a banking holding company, he now has to expand his area of operation to cover the entire business as a single entity. This adds not only a new work-load, but also a new challenge to an internal auditor. It behooves on the auditor to acquire new knowledge and skills to handle the job effectively. Hence, an internal auditor today has to be an all-rounder in banking and associated financial business, if he is to do his job effectively.

Hence, the auditor, including the internal auditor, is still a watchdog and not a bloodhound. 4  BIS Review 143/2007