samchain/econo-pairs-v1 huggingface dataset:
6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  Chart 6b: But households still optimistic about their own prospects Differences from averages since 1985 (number of standard deviations) 1.4 1.2 General economic situation expectations  1.0 0.8 0.6 0.4 0.2 0.0 -0.2 Personal financial situation expectations  -0.4 -0.6  Jan. 16  Jul. 16  Jan. 17  Jul. 17  Jan. 18  Jul. 18  Jan. 19  Sources: European Commission, University of Michigan consumer sentiment index, and Bank calculations. Notes: The chart shows the median across the G7 euro area countries (France, Germany and Italy) and the US. Reconciling market moves with global developments All in all, the risks to the global economy have shifted to the downside. But to what extent? Does the sea change in financial markets presage a sea change in the global economic outlook? And what does the UK experience suggest? A lot will rest on the scale and breadth of the trade effects. Traditional trade models suggest that the direct effects of the tariff measures implemented so far4 are likely to be small. The Bank estimates that these measures will reduce global GDP by only around 0.1%, and the further US-China tariffs that took effect in May and June will roughly double that effect (Table 1).5 But that may not be the end of the story.

This multiplier lies between the estimates published by the Fed for the two variants of their FRB/US model: one in which expectations are formed using a VAR and the other in which they are model consistent. In the former, a 1 percentage point shock to the federal funds rate boost GDP by around ¾%; in the latter, the same shock boosts GDP by around 1½%. 12  All speeches are available online at www.bankofengland.co.uk/news/speeches  12  That seems a bit extreme, since the US and China are far less closely integrated through trade, financial and labour market linkages than are the UK and the EU. For example, 45% of the UK’s trade is with the EU, while under 20% of the US’s trade is with China and only 7% of China’s trade is with the US. It is possible that concerns about still-quiescent inflation in major economies and the related risk of a global liquidity trap are contributing to the recent large moves in interest rates. In the US, core PCE inflation fell back below the FOMC’s 2% target earlier this year. In the euro area, core inflation has been hovering around 1% for much of the past five years. For both economies, market measures of long-term inflation expectations have drifted down over the past year (Chart 10).
Indeed, you might think of our task as a classic budgeting problem. In our case, we have a bundle of rules which deliver a certain level of resilience at a certain cost. What we are asking is whether a simpler bundle could deliver the same level of resilience for small firms at lower cost. The simpler regime will also need to be assessed against the Basel core principles for effective banking supervision.9 These are different to the Basel standards which apply to internationally active banks. The principles are an international benchmark for measuring the quality of supervision of all banks. We will design the simpler regime to be consistent with them. Before moving on to talk about what the simpler regime might look like, I need to address the fact that reducing small firms’ compliance costs from complexity might introduce another sort of problem if it erects new barriers to growth. The problem is that, whilst the costs of complying with a simpler regime will be lower for small firms, some small firms want to grow.

2  ‘Strong and Simple’, speech given by Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer, Prudential Regulation Authority (12 November 2020). 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  Scope, strength, simplicity Let me now highlight some of those choices about which I am especially keen to receive comments. I will do so by elaborating on three key terms. First, what do we mean by ‘non-systemic banks and building societies’? In other words, which firms should be eligible for the simpler requirements? Second, what do we mean by ‘strong’? And finally, what will ‘simple’ look like? To begin with scope: as Sam explained in November, a strong and simple framework could in time include graduated requirements for all firms not subject to the full set of Basel requirements for internationally active banks. That would be a major undertaking, so this Discussion Paper set out options for a first step, which would apply to the smallest banks and building societies. This is what I will refer to in this speech as a ‘simpler regime’. The Discussion Paper suggests that the firms eligible for the simpler regime could be identified using a size criterion (probably total assets) – but not what that size should be. It also suggests that other criteria might be applied to ensure that only firms with relatively simple operations are included. For example, we might only include firms without a trading book.
For instance: -  How could we design scenarios that account for what IPBES experts are telling us, for instance with regards to the different values of nature, the rights of indigenous people and the need to think comprehensively about economic, social and environmental inequalities? -  How much can the global economy grow while accounting for all planetary boundaries? And how to distribute this “remaining growth  8  Page 9 sur 12 potential” between rich and developing countries, as a fair transition is key? -  What could be the impacts of lower growth rates or potential no growth on global value chains, on employment, on different economic sectors that could win or lose from the transition? -  Which assumptions do we make about demographic trends? I actually greatly appreciated that in his review Professor Dasgupta mentioned demography. I am aware that this is a delicate issue but it has several ecological and macroeconomic implications and we should be able to assess them. -  How should we tackle climate change and biodiversity, taking into account the complexity of each of both issues but also their interaction? If you think that this is too political for central bankers, let me strongly oppose this view: what would be too political is to deny all the evidence gathered by natural and social scientists for the past decades. Just one year ago, before the war, it would have been unlikely to think about potential energy constraints linked with a hybrid war.

At the Banque de France, we published a study called “A “Silent Spring” for the Financial System?”,xix which explored the dependencies and impacts of the French financial system on biodiversity.xx Importantly, the study was interdisciplinary and involved several researchers and experts from various institutions.xxi As I will discuss later, I believe that this interdisciplinary approach is essential to address the challenges of the Anthropocene. These different studies enable us to understand that nature-related financial risks can be split between physical and transition risks, much like climate-related financial risks. Physical risks stem from the dependency of economic activities on ecosystem services and their vulnerability in the case of disruption. For instance, the loss of pollination could affect agricultural output and lead to food shortages or higher consumer prices, while new pandemics could disrupt entire value chains. Transition risks result from the negative impacts of some economic activities on biodiversity, which makes them vulnerable to transition policies. For instance, it is hoped that the COP15 that will take place in December in Montreal will lead to an international agreement to protect 30% of land and sea areas by 2030. Regional and national policies are also expected: the EU Green Deal contains several goals related to biodiversity, such as the need to increase organic farming practices from 9% to 25% cultivated areas. All these policies could have profound implications for different sectors (agriculture, industry, real estate, and so on), and it is important to assess the potential impacts for financial institutions and the financial system as a whole.
In the current environment, clear signs are now beginning to emerge that the recovery in the advanced economies is strengthening and that this is already positive for the region. While the pace of growth in the major industrial countries is still below their potential, it has been revised upwards to reflect improved consumption and business investment activity. Most encouraging has been the indicators of business investment, particularly IT investment, which has been stronger-than-expected. This has been supported by improved corporate cashflows and the low interest rates environment. In Japan, signs of recovery have emerged while in the euro area, indicators of business sentiment suggest a stabilisation from the current weakness. These developments augur well for growth in the region in the second half of this year and in 2004. Indeed, the positive performance of the global stock markets reflected an anticipation of stronger future growth. While these are encouraging trends for the region, we need to look beyond the prospects of the current cyclical recovery. Several significant imbalances however, still remain in the global economy. BIS Review 43/2003  1  An important issue that needs to be addressed is how the unbalanced growth that has taken place in the world economy can be resolved with orderly adjustments of both the economies concerned as well as of the respective financial markets. The adjustments need to take place while maintaining robust overall global growth. Global growth still remains dependent on the US as an important trading partner.

An additional element threatening the stability of the global financial system was that virtually all of the leveraged Treasury bond investors had similar positions, including major financial institutions. Banks’ direct exposures may be an important aspect of financial instability in periods of financial market volatility. In addition, banks may hold significant exposures with non-bank financial institutions, which themselves suffer from direct market exposures. The Barings crisis in 1995 is an example of the first case, while the LTCM case is an example of the second. In my view, the eventual scale of a systemic crisis might depend on the magnitude of the deviation of asset prices from fundamentals. How, then, do asset price bubbles get created in the first place? They may be created or exacerbated by some form of herding and overly buoyant investor expectations, as groups of investors imitate leading institutions’ strategies. Bubbles may be further boosted by a lack of adequate disclosure, problems of conflicts of interest, and destabilising trading or investment strategies. Once bubbles burst, portfolio insurance strategies in the event of falling prices - or dynamic hedging might heighten the downward spiral. Particularly in earlier episodes of equity-driven financial instability, such as the 1987 stock exchange crash, the initial wave of the sale of equity futures appears to have resulted in an accelerated decline in stock prices. However, the jury is still out on the role of tools such as portfolio insurance or automatic trading rules in exacerbating aggregate financial risk.
They need to cushion the social impact of globalisation, to help industries that are no longer viable make the change, to equip the population with the necessary skills for the new economy, and to provide a social safety net for those at the bottom. There is no real alternative to accepting globalisation in order to improve the lives of our people. BIS Review 111/2000  4  ASEAN economic cooperation It is also important for ASEAN countries to work together, both to strengthen cooperation among themselves, and to address international issues of common concern to all of us. ASEAN economic cooperation was progressively gaining momentum before the crisis. Major initiatives had been launched, especially the ASEAN Free Trade Area (AFTA) and the ASEAN Investment Area (AIA). These promised to increase significantly the flow of trade and investments among ASEAN countries. However the crisis has caused some countries to hold back, in order to give struggling domestic industries more breathing space. These pressures are real, but in their anxiety to protect individual industries, countries should not lose sight of the wider benefits of ASEAN cooperation to their economies as a whole. It is therefore important for ASEAN members to reaffirm their commitment to regional economic cooperation and integration, and implement AFTA and the ASEAN Investment Area in letter and spirit. The ASEAN members which are doing relatively better, such as Thailand, Malaysia, Singapore and Brunei, should take the lead, and work together to put ASEAN cooperation on track again.

On the one hand we can choose a path towards fully-integrated international regulatory and supervisory structures, in order to achieve a better match with the global format of the financial system. On the other hand, we can choose a path towards shrinking the financial system back inside national borders, within the perimeters of current regulatory and supervisory arrangements. Obviously, reality will not be as black and white as to make a simple choice between these two paths possible. Future regulatory reform will probably take some kind of middle road. But if someone asked me for directions my answer would be clear. The benefits of financial globalisation are too great for us to afford to close national borders and to roll back financial integration. A new European supervisory structure – the de Larosière proposals As you all know, the European Union chose its path already some time ago. Based on the belief that integrated markets contribute to economic growth (and also to other important policy objectives) the European Union has established a legal and institutional framework for the supervision and regulation of financial markets. However, even though we have come a long way towards establishing a single European market, the regulatory and supervisory structures are still very much fragmented along national lines – a fact that we have been painfully re-minded of during the current crisis. The problems experienced with the Icelandic banks and the Benelux-based conglomerate Fortis are just a couple of examples.
No: the transformation of the Banque de France is a modest but real illustration of such a reform; for years we have been lowering costs and providing greater services, while maintaining our territorial  Page 8 of 9 presence. I am not saying that efficient public management is easy, but I guarantee that it is possible. Better budgetary control will then be compatible with better financing of the most productive expenditures, which must be prioritised - these difficult choices are obviously a matter for democratic debate. The comparison with our neighbours only seems to indicate that in France, for example, spending on pensions, or "economic affairs" (subsidies and tax credits) is much higher.iv Some futureoriented expenditures (most investments - even if some of them are less useful - but also spending on education and research) have a crucial effect on growth, both in the short term and in the long term. France cannot and must not settle for a potential growth rate of 1.2/1.3%v if it aims to return to full employment and lower its debt in the coming decade. Focusing the debate on the quality of public spending  *** I would like to conclude with two authors who are not very “budgetary”. First, La Fontaine, The Swallow and the Little Birds: "To instincts not our own we give no credit, and till misfortune comes, we never dread it". Let us finally aim to anticipate our budgetary difficulties, in order to reduce them.

Conference of the Haut Conseil des Finances Publiques Paris, 10 May 2022 The sustainability of French debt, between rising interest rates and European rules  Speech by François Villeroy de Galhau, Governor of the Banque de France  Page 1 of 9 Ladies and Gentlemen, It is a pleasure to be with you today, and I thank the first President Pierre Moscovici for inviting a central banker to conclude this predominantly fiscal conference. I am especially aware of this privilege because monetary policy and its relationship with fiscal policy are often subject to two suspicions. Firstly, accommodative monetary policy is believed to be responsible for the rise in public debt. This is not true: the unconventional policies conducted over the past decade to support inflation (and activity), which was weak at the time, have merely had the effect of reducing the cost of debt. Several countries, not only Germany, have, on the contrary, taken advantage of this decade to bring down their debt. And unfortunately we have to acknowledge that in France, government spending was already systematically higher than revenues long before the low interest rates and government securities purchases. The second suspicion is that because of this high public debt, monetary policy is now unable to raise interest rates sufficiently to combat renewed inflation. This is also untrue: the independence of the European Central Bank and of each national central bank, starting with the Banque de France, is notably designed to prevent any risk of "fiscal domination".
Challenge 3 - The effect of balance sheet adjustments In the wake of the fall in share prices, we have thus far seen the effects on housing finance in the form of low interest rates, which have enabled households to increase their indebtedness at a slowly rising interest ratio. As the interest ratio has risen marginally, this in turn has led to a continued increase in residential property prices in several countries, including Sweden. The lower expectations of future earnings that have resulted from the stock market decline has so far not markedly reduced housing finance demand in Sweden. Thus far, the effect of the low interest rates appears to be the dominant factor. As the balance sheet adjustments come to an end, the geopolitical uncertainty abates and the economy continues to recover, risk aversion will decrease, which in turn will lead to a normalisation of market rates. Consequently, this will dampen household demand for housing finance. On the other hand, expected earnings flows will rise in tandem with the rise in economic activity. The ability of mortgage institutions to find "cheap" financing will also be affected by the normalisation of interest rates. Investors will return to riskier investments as risk aversion declines. Furthermore, rises in long-term interest rates will reduce the value of the bond holdings that were acquired by investors during the current risk aversion period. Consequently, mortgage institutions will face challenges in the time to come on both the demand and supply sides.

In the light of high  BIS Review 15/2003  1  expectations of future growth, households financed their consumption, and companies their investment, by increasing their indebtedness in the belief that these debts would be easy to repay due to high future earnings and income. Moreover, a large proportion of the companies' financing was obtained via the stock market. Balance sheets became inflated, as did the actual growth in the economy. When earnings prospects later proved to be lower than expected, there was a fall in both share prices and the value of assets. Debt levels appeared high, particularly in the corporate sector. In order to lower their debts, companies had to increase their income and reduce their costs, which resulted in weaker demand in the economy. Furthermore, the declining share prices prompted households and the financial institutions that invest households' money to seek out investment alternatives that appeared safer. The downward adjustment of the future outlook itself also resulted in uncertainty. This in turn was compounded by the uncertainty caused by international terrorism and the attempts to deal with this by putting pressure on Iraq. This contributed to an increase in the spreads between corporate and treasury bonds as well as to greater volatility in the markets. To counteract the effects of balance sheet and income statement adjustments on the real economy, monetary policy was eased in several countries around the world. At the same time, fiscal policy became more expansionary.
Migrants will be more willing to send and invest remittances if inflation is kept under control and exchange rate and financial conditions are reasonably stable. Furthermore, the Bank of Albania in cooperation with other governmental and nongovernmental institutions has been considering some more concrete measures in order to enhance the role of remittances in economy. I would like to mention a few of them: First: improvement of statistics on remittances. Reliable data regarding remittances is a key ingredient in designing and assessing policies about enhancing their developing role. The Bank of Albania has continuously stressed the importance of accurate estimation of capital inflows in the form of migrants’ remittances. Assisted by IMF missions, it has been working to bring the methodology closer to the international standards in defining remittances. Also, there is a close cooperation with our main partner countries Greece and Italy, as the main destinations of the Albanian emigrants, to harmonise our methodologies in order to improve the accuracy of remittances’ estimation. Second: Bringing workers’ remittances into formal channels. The high portion of remittances that goes through unofficial channels asks for actions to make official channels  4/5  more appealing in terms of efficiency, safety, cost and anonymity. Although, I mentioned earlier that emigrants seems to have more access to banking that their families back home, their relation with the banks is still difficult due to language problems (most often the forms are in the native language of the resident country) and in many cases excessive document requirements to open a bank account.

On making this announcement, it is crucial that I explain again the role which staff macroeconomic projections play in the ECB’s monetary policy strategy. The ECB’s primary objective is the maintenance of price stability in the euro area. Given the lags in the transmission of monetary policy to the price level, monetary policy must be forward-looking. Therefore, all analysis undertaken at the ECB is focused on the risks to future price stability. The analysis underlying monetary policy decisions is organised within two frameworks, which we refer to as the two pillars. The Governing Council’s forward-looking assessment of the economic situation and the outlook for price stability is based on both a prominent role for money, denoted as the first pillar, and a broadly based assessment of other economic and financial indicators, labelled the second pillar. The projections that will be published by the ECB as from December are, as with any conventional macroeconomic forecast or projection, derived from analytical frameworks in which money plays only a limited role, if any. Hence such projections, which mostly reflect developments in variables other than money, naturally form part of the second pillar of the ECB’s strategy. The projections help to underpin the forward-looking orientation of monetary policy. They summarise and synthesise a large quantity of information that might otherwise be too unwieldy to form a sensible basis for policy discussions.