samchain/econo-pairs-v1 huggingface dataset:
Peter Praet: Interview in Expresso Interview with Mr Peter Praet, Member of the Executive Board of the European Central Bank, in Expresso, conducted by Mr João Silvestre on 18 June 2018 and published on 23 June 2018. * * *  Is the asset purchase programme (APP) really going to conclude at the end of this year? What we did last week was to express an anticipation that net asset purchases would end at the end of the year. We didn’t say we were now deciding to stop the programme in December. We still have six months to go. We translated the increased confidence we expressed about developments in the economy and inflation into an anticipation about the APP. And, at the same time, we also enhanced the forward guidance on interest rates. But, in any event, to anticipate the end of the programme is to give a strong signal. What exactly do you mean by giving a strong signal? We undertook a careful review of the progress made towards a sustained adjustment in the path of inflation to levels below, but close to, 2%. It was a strong signal because, in spite of a recent moderation in euro area economic growth, we concluded that progress towards our aim has been substantial so far, and actually sufficiently substantial for us to be in a position to express this anticipation of an end to net asset purchases at the end of the year.

24.05.2017  Welcome address I Conference on Financial Stability/Banco de España-CEMFI Luis M. Linde Governor  Good morning ladies and gentlemen, It is my pleasure to welcome you to this first Conference on Financial Stability, jointly organised by the Banco de España and the Centro de Estudios Monetarios y Financieros (CEMFI). Thank you very much for your interest in and attendance at the Conference. We have a very interesting agenda for today and tomorrow, structured around six sessions and a panel discussion covering a wide range of topics related to the theory and policy practice of financial stability. This event is bringing together distinguished speakers and discussants from central banks, international financial institutions and academia - a combination which will offer a diversity of perspectives and also ensure a lively and, for sure, interesting debate over the next two days. This conference has been possible thanks to the joint effort of Banco de España and CEMFI. I am very grateful to the organisers, in particular to Rafael Repullo, Director of CEMFI, as well as to all the members of the scientific committee responsible for promoting this meeting and selecting the papers to be presented in the programme. This event has aroused particular interest among researchers, with -I am told- nearly one hundred papers having been submitted for just twelve slots.
Additionally, adjustments in electricity tariffs are forecasted to be made in compliance with this assumption. Assuming that policy rate stays constant for a while and gradually ease thereafter, our forecasts under this scenario suggest that inflation will be 6.1 percent at the end of 2009 and around 4.9 percent at the end of 2010. In sum, monetary policy will be conducted so as to minimize upside deviations from the targets should the upside risks materialize. Downward surprises in food and energy prices, on the other hand, will be perceived as an opportunity to bring inflation back to target in a shorter period than envisaged in our baseline scenario. 12  BIS Review 100/2008  Figure 15: Inflation Forecasts, Baseline and Alternative Scenarios Baseline Senario  End-Year Inflation Targets  Pessimistic Senario  Optimistic Senario  12  Percent  10 8 6 4  2011-II  2011-I  2010-  2010-III  2010-II  2010-I  2009-  2009-III  2009-II  2009-I  2008-  2008-III  2008-II  2008-I  2  Source: CBT. Distinguished Guests, Despite the expected decline in inflation in the medium term, uncertainties exist regarding the degree of inflation persistence. Long-lasting supply shocks have been keeping headline inflation at elevated levels and thus increasing the risk of rising backward-looking schemes in the wage and price setting behavior.

Risks and monetary policy  Distinguished Guests, I would like to dedicate the last part of my speech to the upside and downside risks to inflation and monetary policy in the upcoming period. Uncertainties about food and energy prices still continue. Our baseline scenario is based on quite conservative assumptions for food and energy prices, implying that downside risks on these factors are as apparent as upside risks. In order to enhance the predictability of the monetary policy, in a period when uncertainties pertaining to oil and agricultural commodity prices continue, we deem it to be useful to share with the public the inflation and monetary policy outlook, which is based on alternative scenarios for food and energy prices. In our pessimistic scenario, we assume that food price inflation materializes at 16, 12 and 10 percent in 2008, 2009 and 2010 respectively; whereas oil prices rise to USD 180 at the end of 2008, staying constant thereafter. Additionally, adjustments in electricity tariffs are forecasted to be made in compliance with this assumption. Assuming a gradual monetary tightening during the rest of the year, our forecasts under this scenario suggest that inflation will be 9.1 percent at the end of 2009 and around 7 percent at the end of 2010 (Figure 15). In our optimistic scenario, we assume that food price inflation materializes at 12, 6, and 4 percent respectively, in the 2008-2010 period, whereas oil prices ease to USD 100 at the end of 2008, staying constant thereafter.
And there is now a new puzzle: why, despite this rapid fall in unemployment to 6%, have we seen such weak pay growth in the official data? On the average weekly earnings measure, annual private sector pay growth is running at just 1%, still below the rate of inflation. Had the MPC been told last November that unemployment would fall to just 6%, we would have expected pay growth to have been very considerably stronger. What has happened to what, hitherto in the UK, has been a relatively stable relationship between pay and unemployment? Part of the explanation for the weak growth in pay is surely the very low increase in productivity – if workers are producing less output per hour, there is less scope for pay rises. But even adjusting for low productivity by looking at pay relative to the output of the average employee, we find a very weak picture. Growth in “unit labour costs” has been negative over the past year. Not only have we been producing more but with relatively more people and hence lower productivity. We are also paying less labour cost per unit of output than we were before. There are, as always, possible seasonal and one-off factors: some patterns of pay seem to have been distorted by the change in income tax rates in April last year, which cloud annual comparisons.

(iii)  Third, our approach must be sensitive to the impact on industry. No new regulation is costless. MAS must weigh the cost of new regulations on institutions which have to comply with them, against the broader benefits that those regulations have for the economy and society. With these principles in mind, I will now outline MAS’ approach to the issues I mentioned earlier. I will first touch on what Basel III will mean for Singapore’s capital adequacy requirements. After which, I will share MAS’ views on the current debate on universal banking. Capital requirements for locally-incorporated banks MAS has reviewed its bank capital adequacy rules. We will require Singapore-incorporated banks to meet Basel III earlier and at a higher standard. Singapore-incorporated banks will be required to meet the Basel III minimum standards by 1 January 2013, ahead of the Basel Committee’s January 2015 timeline. Singapore banks are well-capitalised and are in a good position to adopt Basel III sooner than 2015. Moreover, the long phase-in period provided by the Basel Committee was to ensure that the new requirements did not stall the economic recovery in countries that were at the centre of the crisis. Singapore’s situation is different: the recovery has been robust and the economy is well above pre-crisis levels. MAS will increase the minimum levels of common equity that locally-incorporated banks will be required to hold. The experience of other countries in the recent crisis shows that common equity is the most effective capital instrument to absorb losses and write-downs.
The number of individuals affected by short-time working was rising fast at the beginning of the year, and unemployment is increasing at a regular pace. This trend is likely to persist in the next few months since the leading indicators of labour demand are falling sharply. Nevertheless, it is to be hoped that the signs of improvement observed abroad will be gradually transmitted to the Swiss economy. From the second quarter, the decline in exports is likely to slow down. However, growth figures will probably remain negative over the next few quarters due to the weakening in domestic demand as well as the reduction of inventory levels. For 2009 as a whole, the Swiss National Bank (SNB) continues to forecast a reduction in GDP of between 2.5% and 3%. These figures are still relatively moderate by comparison with other countries since Switzerland benefits from the broad diversification and relative flexibility of its economy. Even so, I wish to stress that the risks attached to our forecast are clearly skewed to the downside. Changes in monetary and financial conditions How have monetary and financial conditions developed since our last assessment in March? Let us begin by looking at movements in interest rates on the money and capital markets as well as currency movements on the foreign exchange markets. On the money market, three-month Libor moved down, but not as far as we would have liked. Its decline was checked by the level of risk premia, and it currently stands at around 40 basis points.

A cautious combination of a negative repo rate and bond purchases So how have we chosen to act, and what have the results been, so far? Up to this point, we have kept to changes to the repo rate and repo rate path, and purchases of government bonds. As it has not been completely certain how these would function in practice, there has been reason to proceed cautiously. We have combined several measures over the past year to make the combined effect sufficiently great. Over a number of stages, we have cut the repo rate and/or the repo rate path, at the same time as we have announced and initiated bond purchases in amounts that have been increased in several stages (see Figure 4 and Figure 5). In addition, in our communication, we have emphasised our preparedness, if necessary, to also rapidly increase monetary policy stimulus between the ordinary monetary policy meetings held every second month. In March 2015, we did exactly this – we took a decision on new monetary policy stimulus between two ordinary meetings. The repo rate cuts have largely worked As regards the repo rate cuts, so far we have been able to observe that lending rates followed to a normal extent, while deposit rates have stopped at zero for everybody except some larger companies.
This should help to deter future speculative attacks on the Hong Kong dollar. However, we have to acknowledge that the possibility of short term interest rates shocks does exist under the currency board mechanism and the banks therefore need to take this into account in the way in which they run their business and manage their balance sheets. 21. Bearing this in mind, I draw three main supervisory lessons from the regional crisis and its impact on Hong Kong: • First, it is important for banks to maintain a strong balance sheet that can withstand the interest rate fluctuations to which I have referred and maintain the confidence of the public. Banks in Hong Kong score well in this respect but it is not something that can be taken for granted. I think that it is true to say that some banks did expand their loan books too rapidly during the mortgage boom in 1997. As a result, loan to deposit ratios came under some strain. The banks were also exposed to growing interest rate risk because a substantial proportion of their assets are linked to best lending rate while their liabilities are linked to HIBOR. This has been a reminder of the need to maintain sound fundamentals: high capital adequacy and liquidity ratios; prudent loan classification and provisioning; and sound risk management. • A second and related lesson from the region is that banks need to beware of excessive lending to finance overheated asset markets.

BIS Review 28/1998  ˝  -5-  18. The latter point needs some further elaboration. As you will be aware, Hong Kong’s monetary policy is built around exchange rate stability in the form of the link between the Hong Kong dollar and the US dollar. This is backed up by the currency board system which requires the monetary base of the banking sector - the notes and coins in circulation and the clearing balances held with the HKMA - to be fully backed by foreign currency. When the Hong Kong dollar is under pressure as it was at the end of October 1997 and again in January of this year, the HKMA buys Hong Kong dollars from the banks in exchange for US dollars and the monetary base shrinks. This tightening of liquidity will in turn cause interest rates to rise, perhaps sharply so. This will choke off the inflows and restore stability to the exchange rate. 19. It is important to realize that this is an automatic process and that the HKMA has no room to maneuver to prevent the rise in interest rates from taking place. To do so would run counter to the basic principle of the currency board and would risk prolonging any attack on the Hong Kong dollar. 20. I think that there is now a better understanding of how the currency board system works. In addition, our determination to adhere to the system and to defend the linked exchange rate has been clearly demonstrated.
The architectural concept of Sasana Kijang is also inspired from our earliest form of currency that was used in the third century and which denotes a harmony of simplicity and class. And the facade design of the building is derived from the geometric patterns of the traditional Malaysian songket fabric which is woven with intricate gold and silver threads which creates a strong bond, thus giving the fabric its strength and elegance. This is similar to the Central Banking community that is interlinked through our similar objectives and bonded through collaboration and strategic alliances. Other features of the building is the extensive use of glass which allows for the greater use of natural light. The building also features a range of green technologies as part of our commitment and responsibility to the environment. Finally, another important part of Sasana Kijang is the Bank Negara Malaysia Currency and Economics Museum and the Art Gallery that will be opened to the public. These collections that have been built since the earliest days of our Bank over a period of more than five  BIS central bankers’ speeches  1  decades aim to foster greater understanding on the history of our currencies and of our economy and financial system, and also represents our support to contemporary art in Malaysia and thus contribute towards preserving the heritage of our country. Allow me now to invite Yang Amat Berhormat, Dato’ Sri Mohd. Najib bin Tun Haji Abdul Razak to deliver his address and to officially launch Sasana Kijang.

These collections that have been built since the earliest days of our Bank over a period of more than five decades aim to foster greater understanding on the history of our currencies and of our economy and financial system, and also represents our support to contemporary art in Malaysia and thus contribute towards preserving the heritage of our country. Allow me now to invite Yang Amat Berhormat, Dato’ Sri Mohd. Najib bin Tun Haji Abdul Razak to deliver his address and to officially launch Sasana Kijang. 2  BIS central bankers’ speeches
Michael C Bonello: Fiscal reform - an imperative for sustainable growth and development Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the Institute of Financial Services Annual Dinner, St Julians, 11 November 2004. *  *  *  I should first of all like to thank you, Mr. President, for inviting me to your annual dinner and for the opportunity to share my thoughts once again with such a distinguished audience. I must also congratulate you on your recent election as President of IFS - Malta and wish you and your Committee every success in your endeavours to ensure that the Institute’s educational programmes remain relevant in today’s complex financial services environment. As you rightly pointed out in your first message to your members, in a situation which is rapidly evolving, “we must be prepared to embrace change.” I have a similar message to convey tonight. Inspired by the words of George Washington that “There is no practice more dangerous than that of borrowing money”, mine is essentially an appeal to the country to leave behind its spendthrift ways and to learn to live within its means. I shall therefore make a case for fiscal reform. Now some might wonder why a central bank governor should be so concerned about the state of the country’s public finances. Put simply, the reason is that a persistent excessive deficit situation represents a potential threat both to price and financial stability, which are key objectives of most central banks today.

It is thus essential to ensure that society obtains full value for the resources devoted to public sector activities, both in terms of the quantity and the quality of the outputs produced. Now whereas in the private sector failure to deliver value for money eventually results in bankruptcy, there exists no such effective sanction in the public sector. This is partly because expenditures are typically financed through general taxation and borrowing, and the funds thus raised are not directly earmarked for specific expenditures. Inadequate enforcement of accountability standards is another reason. It is also the case that industrial relations and human resource management in the public sector are often undertaken without sufficient consideration for budget constraints, while job security and tenure are taken for granted irrespective of performance or productivity levels. A further dimension  BIS Review 67/2004  1  of this problem is the fact that the success of government spending tends to be measured more in terms of its potential to produce electoral dividends than in a longer-term growth perspective. All of these factors reduce the incentive to use resources efficiently. Similar arguments apply to the welfare system, where the size of the expenditure can easily exceed that required to maintain social cohesion and the focus be diverted away from genuine needs. This situation has materialised in a number of countries, including the more advanced economies in the EU, which are now facing hard choices regarding the future of health and pension systems.
The stabilisation policy conducted was on the whole too expansionary to be consistent with the monetary policy regime of the time, the fixed exchange rate, and eventually the fixed exchange rate had to be abandoned. I would like to point out that these are not some “homemade” ideas and theories. There is an international discussion, which does not seem to have received much media attention in Sweden, that the policy rate may have a role to play even when macroprudential policy is in place.13 It is also worth emphasising that in several of the countries that have come through the crisis well – those who, like Sweden, are up in the right-hand corner of Figures 1 and 2, and currently facing the same problems as us with regard to debt and the housing market – they are quite specific about the policy rate being an important variable in this context.14 But the supply side of the housing market is also crucial However, the question is whether even macroprudential policy and monetary policy in collaboration are sufficient to achieve a long-term solution to the problems. It is likely that an even broader intervention is needed. Macroprudential policy and monetary policy focus on the demand side of the housing market – by trying to dampen household demand for credit or through the banks restricting their lending. However, the supply side of the housing market is also of central importance in this context.

But usually one is then comparing it to countries that have been hit harder by the crisis, such as the United States and the United Kingdom, where housing prices have already fallen substantially and one therefore does not need to worry so much about a continued upturn from an already high level. Moreover, the relationship between the policy rate and credit growth, which is of course important in this context, is not straightforward. Figure 3 shows, for instance, that credit growth in Sweden is higher than in the euro area, despite the Riksbank’s policy rate being higher than the ECB’s. The Riksbank’s strategy has been to combine a marginally higher repo rate with communication that emphasises that we find the development of high credit growth worrying. The slightly higher interest rate does have some effect in itself, but perhaps its main function is as a concrete “reminder” of the risks, making it an important part of the communication. One may of course discuss how effective this type of policy is. However, I am fairly certain that, combined with the measures taken by Finansinspektionen (the Swedish Financial Supervisory Authority), it has had at least some effect in the desired direction – that both indebtedness and housing prices in recent years would otherwise have increased more and faster than they actually have done. I am even more convinced that the policy and the communication surrounding it have helped increase awareness of the problems.