samchain/econo-pairs-v1 huggingface dataset:
Benoît Cœuré: Interview with France Info TV Interview with Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, and France Info TV, conducted by Mr Jean-Paul Chapel on 9 November 2017. * * *  Global indebtedness is at record levels. Government debt in the rich countries stands at over 100% of GDP. Isn’t that sowing the seeds for the next global crisis? It’s a matter that calls for attention, but I don’t think it will be the cause of the next financial crisis. What will cause it then? I don’t know. But at the ECB we are more concerned about the rapid rise in private debt. Corporate debt? Yes, corporate debt, and shadow banking – those loans that are not made by banks. Dark banks... Shadow banks. They are insufficiently regulated. Also, there’s a widespread temptation to relax banking regulations, at a time when, as you say, interest rates are very low. All that is a source of risk. Government debt is a concern, but it doesn’t threaten to trigger a financial crisis. When the next crisis hits Europe we want to be sure that Member States, governments, have budgetary firepower. Today, that power is very limited or even non-existent. That’s why countries have to deleverage. But in the meantime, you, the central banks, the European Central Bank and other banks, with low interest rates, ample liquidity, you are inflating these bubbles… It’s true that the low rates can create financial stability risks; we’re aware of that.

Nevertheless, it is envisaged that the DFIs are expected to evolve from being the direct financiers to function as a strategic conduit to facilitate financing by the banking system, especially through the provision of credit enhancement. In addition, the DFIs would also increasingly become specialised institutions to render advisory and business support services, in order to increase their effectiveness in meeting the financing and developmental needs. At the same time, the need for DFIs to remain financially sustainable while performing their mandated roles cannot be over-emphasised. This would require continuous capacity and capability enhancement of the DFIs, especially the strengthening of human capital skills and institutional efficiency, together with the adoption of good corporate governance and best practices by the DFIs. In addition, to ensure that available resources are channeled adequately and appropriately to support the targeted sectors, DFIs would need to strategically reduce the channeling of funds to the sectors and businesses that have matured and, on their own, would be able to obtain financial resources from the banking institutions or the capital market. In conclusion, I must say that the theme for today's forum on "Revving up the SMEs as the engine of growth" is both timely and appropriate given the importance and potential economic contributions of SMEs, particularly in the developing countries. Therefore, it is important that the SME sector continues to receive adequate and appropriate financial and ancillary support to ensure their sustainable development towards meeting a nation's development objectives.
Given its size and its traditional low volatility vis-à-vis the DM, the market for Swiss franc denominated assets does not offer an attractive way to counterbalance the risks born by large holdings of key currencies. Our currency is thus less demanded as reserve currency and less involved in speculative capital movements. This is basically good news for the Swiss economy. 3. ... and what about the future? What conclusions can be drawn from the past? Will the Swiss franc remain stable vis-à-vis the euro, or will we see a more independent development of our currency? Again, the answer to this question will depend crucially on economic fundamentals in Switzerland and in the euro-zone. In both areas, the economy is now recovering from the recession, following a steady upward path. The expected growth rates for this year amount to 2.2% for Switzerland and 2.9% for the euro-zone. The central question  BIS Review 17/2000  2  for the exchange market is to what extent the economic upturn could endanger price stability, and what kind of central bank’s reaction can be expected. 3.1  Uncertainty about lasting convergence in European and Swiss fundamentals  While Europe is now growing faster, it still suffers from an unemployment rate of roughly 10%. At first sight, one might think that this big labor reservoir would allow the economy to grow without tensions on the labor market and without large wage adjustments. Inflation would remain subdued, and there would be no need for an all too restrictive monetary policy.

Generally, Macedonian economy has been relatively successful in offsetting the crisis consequences which was mainly due to the solid initial conditions prior to the crisis without massive macroeconomic imbalances, the establishment of few new production capacities based on foreign capital that largely contributed to the export diversification, stable and sound financial system and adequate macroeconomic policy mix. The environment for monetary policy implementation in 2013 is quite favorable, considering relatively stable inflation developments and comfortable foreign reserves level. In the first half of 2013, the average inflation was 3.6%, mainly due to higher food and energy prices. Our latest forecast for the average inflation rate in 2013 is 2.8%, with expected further slowdown to 2.3% (close to our historical level) in 2014, until when no pressures of higher significance by the demand side are being expected. However, there are risks related to this forecast, reflecting the uncertainty about energy prices as well as the world and domestic food prices dynamics and their direct and indirect pass-through to inflation. The performances in the external sector in the first several months of 2013 and the latest estimates indicate quite favorable position in the balance of payments for this year. The reduced trade deficit is neutralizing the lower net inflows through private transfers. Therefore, the current account deficit in 2013 is expected to remain moderate at 4.2% of GDP, which is similar to the previous year.
This effort should be expedited to provide issuance flexibilities and accelerate intra-regional cross border issuance. Much has been discussed and deliberated on this subject matter. It is timely to put idea into action. The benefits are significant, as ASEAN issuers will be able to raise long-term domestic currency funding not only from their onshore investors but across the region. Issuers would have access to a wider base of investors. A wider source of funding would also potentially enable them to better match funding and investment needs. Such a framework would also expedite the issuers’ compliance with regulatory process, leading to a shorter time to market, which would result in more reasonable cost issuance. Another bold step is to recognize the credit rating given by the domestic credit rating agency for domestic currency bond or sukuk issuance. Such recognition ought to be given should the rating agency had long enough credit cycle to prove its rating reliance. Domestic rating agencies have better local knowledge and insights. The rating methodologies are similar, technical model-driven and back tested. In addition, most domestic rating agencies have international partners for technical assistance, standard and quality assurance. Before I conclude, there are some ideas that could contribute to the further integration of our fixed income markets. Firstly, a crucial driver for greater financial integration is the availability of efficient and effective financial intermediaries. We should look to enhance and better connect the network of intermediaries in the region as it would support the development of a strong and integrated market.

Going forward, ASEAN with a sizeable population of 618 million offers vast investment prospects as the economy is expected to grow strongly for the next few years. ASEAN leaders have also embarked on an ambitious vision to create a single “common market”. Realisation of this vision will lead to a freer flow of goods and services, capital investment and skilled labour across the region. Many initiatives and measures have been implemented under the ASEAN Economic Community Blueprint since its launch in 2007 and many more areas of importance are being discussed and negotiated. Like most regional economic community, ASEAN aims to promote greater regional connectivity in which lessons of history in economic development had shown, would expand economic growth potential. Data has also shown that intra-regional trade flows have already grown substantially among ASEAN-10 members countries reflecting the increasing phenomenon of freer trade with its neighbouring countries in recent years. Consequently, the share of intra-regional trade has also increased, from 22.5% in 1999 to 25% in 2011. Against this backdrop, ASEAN financial markets had also grown significantly in tandem. In particular, the ASEAN fixed income markets, are instrumental to support the growth of intraregional trade, financing and investment in infrastructure. ASEAN fixed income markets have expanded by more than six folds since 2000, and now stand impressively at USD1.1 trillion.
Wage share is wages and salaries as a share of GDP. Special contributions capture one-off payments by firms which we have assumed represent one-off back payments to fill pension deficits. Chart 13: Typical wage growth of ‘stickers’ and ‘twisters’ Median annual growth (%)  12  "Twister" 10 8 6  "Sticker" 4 2  1994  1996  1998  2000  2002  2004  2006  2008  2010  2012  2014  2016  0 2018  Sources: ONS and Bank calculations, Note: “Twister” line shown includes job moves within firms, but results are near identical if only job moves between firms were shown. 24  All speeches are available online at www.bankofengland.co.uk/speeches  24  Chart 14: Voluntary job-to-job flow rate Percent of those employed in previous period 2.0%  1.5%  1.0%  0.5%  0.0% 2002  2004  2006  2008  2010  2012  2014  2016  2018  Source: ONS and Bank calculations. Notes: Dashed line shows average over time period in chart. Chart 15: Two empirical Philips curves – “stickers” and “twisters” “Sticker”  “Twister”  25  30  25  Wage grwoth (%)  Wage grwoth (%)  20  15  10  5  20  15  10  5  0  0 0  5  10  15  0  Unemployment (%)  5  10  15  Unemployment (%)  Sources: ONS and Bank calculations.

Rolling regressions suggest the effects of unionisation on pay were largest during this period. If we look at the sectoral level, similar effects are seen. Sectors of the UK economy with higher levels of unionisation have seen smaller falls in their labour shares (Chart 20). Over the past few decades, a sector like administration and support activities with under 10% unionisation rates has seen its labour share decline, while a sector like education with a unionisation rate close to 50% has seen its labour share rise. (c)  Automation  A third factor potentially affecting the pay power of workers is the degree of automation in the workplace. The easier and cheaper it is to replace human with machine, the lower is likely to be the wage bargaining power of workers relative to companies. Increased automation and the dawn of a Fourth Industrial Revolution could, then, result in slower pay growth and workers receiving a smaller slice of the income pie. 19  Recent research has confirmed that intuition. The IMF has found a significantly negative effect of automation on labour’s share. 20  Acemoglu and Restrepo (2018) look at the influence of multi-purpose industrial robots  on pay growth across different sectors of the US economy. They find that one extra robot per thousand workers lowers wages by 0.25-0.5%. At 71 robots per 10,000 employees, the UK’s degree of robot automation lies well below France (127), Spain (150), the US (170) and Germany (301) (Chart 21).
But the interest rates households and companies could borrow at did not fall as much, as risk and liquidity premiums increased at the same time. However, these observations do not mean that the effects of changes in the repo rate have altered. A more reasonable interpretation is that the cuts in the repo rate have been counteracted by, and perhaps sometimes drowned  BIS central bankers’ speeches  11  in, other effects.22 If the repo rate had not been cut as aggressively, households and companies would most probably have had to pay higher interest rates. Misinterpreted: Monetary policy in small economies is determined internationally A traditional textbook account would say that a country that has a floating exchange rate and allows the free mobility of capital across national borders can formulate its monetary policy to attain a domestic inflation target. But Rey (2013) claimed recently in a widely-read paper that this conclusion is no longer valid. She argued that globalisation and the increasing international flows of capital meant that monetary policy around the world must adapt to monetary policy in the dominant economies, primarily the United States. Rey’s theory is that large amounts of capital will flow into a country that tries to conduct a tighter monetary policy. The capital inflow will either lead to an undesired appreciation of the country’s currency or to asset prices in the country rising too quickly.

Moreover, in 2016, the wealthiest region in Romania was almost four times richer than the poorest one (measured by the regional GDP per capita as a percentage of the euro area average). The second guiding principle towards sustainable and smooth convergence is to keep going. By this, I mean that progress, once made, should not be undone. We now need to maintain the economy on an upward trend, while being extremely careful to preserve the macroeconomic equilibria restored through a painful adjustment after the crisis. The only way ahead is by means of a coherent macroeconomic policy mix and resolute structural reforms aimed to boost the economy’s growth potential, while making it more resilient. This approach should never leave room for pro-cyclical policies. As we have clarified that the consistency and the sustainability of real convergence are extremely important, now it is time to discuss how monetary policy can support these two dimensions of the convergence process. It is beyond any doubt that countercyclical monetary policy favours smooth convergence. This has always been one of the guiding principles for calibrating the stance of NBR’s monetary policy, as well as for developing and employing our policy tools. An example of the latter are the unorthodox prudential measures taken before the global crisis to mitigate the impact of extremely volatile capital flows; with these in mind, the IMF mentioned the NBR as being among “the pioneers” of what was later referred to as “macroprudential instruments”.
3  See Banco de España (2019) for a detailed discussion. 4  Andreeva and García-Posada (2019) estimate the impact of TLTROs on banks’ lending policies in the euro area. 4  Even though there is a broad consensus that these non-standard instruments have been effective in easing financing conditions and in supporting euro area inflation, economic growth and employment, their expansionary effects did not prevent inflation from remaining persistently below the ECB’s target for much of the last decade. This led the ECB to review its monetary policy strategy in order to search for ways to better fulfil its price stability mandate. 2 Main elements of the ECB’s new monetary policy strategy  The unanimous adoption in July 2021 of a new monetary policy strategy was an important achievement for the Eurosystem. This new strategy has drawn on an immense collective effort by the staff at the ECB and the Eurosystem national central banks over 18 months. Among the many new developments that this review has brought with it, let me now focus very briefly on three key aspects. For those interested, I provide a more comprehensive description of the new strategy in my article “The European Central Bank’s new monetary policy strategy”, The Euro YearBook 2022. First, the ECB has adopted a new medium-term inflation target of 2%. This target is symmetric in the sense that positive and negative deviations of inflation from the target are considered equally undesirable.

As a result, the ECB has a clearer and more credible inflation target, since this 2% target eliminates the possible impression of asymmetry that could stem from the previous target (“below, but close, to 2%”) and seeks to provide a clear anchor for inflation expectations. As I will highlight later on in my talk, this definition also confirms the medium-term orientation of monetary policy that already existed under the previous strategy. This medium-term orientation provides room for inevitable short-term deviations of inflation from the target, as well as for lags and uncertainty in the transmission of monetary policy. Moreover, the flexibility embedded in this medium-term orientation also allows for an appropriate monetary 5  policy response to inflation deviations from the target that takes into account the origin, scale and persistence of the underlying shocks to inflation. Second, the ECB has taken into account the monetary policy implications of the lower bound on interest rates. In particular, the new strategy establishes a requirement for especially forceful or persistent monetary measures when the economy is close to the effective lower bound, in order to prevent negative deviations from the inflation target from becoming entrenched. This may also imply a transitory period of overshooting in which inflation is moderately above target. I will also refer to this key aspect of the new strategy in the third part of my talk today. And third, the ECB has made explicit that the set of policy rates remains its primary monetary policy instrument.
One of the most important elements of the regulatory changes since the crisis is that we have adopted an approach of seeking to align those incentives with our public interest objectives as well as the private interest of the firm. You can also see this in our approach to the too big or too difficult to fail problem where the actions we have taken on loss absorbency are designed to create the right oversight incentives for shareholders and bondholders by literally putting them at risk of loss. This will without doubt have an effect on culture. I want to end with a few broader reflections on the role of culture. The basic difference between the role of the regulator and management of firms is that our objective is framed exclusively in terms of the public interest. For firms, it is important to recognise that a sustainable and viable business model is one that provides an acceptable rate of return to those who take the risk of providing the necessary loss absorbing capacity, typically its risk capital. Firms exist to service customers who make up the public interest, which of course means that service includes the notion of not exploiting customers, a value one might expect to be given in an organisation’s culture. Today, the public perception of banking, and some other areas of finance, remains too much towards the exploitative “Greed is good” end of the spectrum.

These two notions are different. I have said many times, but will keep doing so, that senior managers cannot delegate responsibility. To be fair, many have said to me over the last few years that this change does not make a difference for them as they always thought they were responsible. Good. But, set this against other conversations I have had which have doubted the enforceability of this notion of responsibility. This has concerned, but not distracted me. So, to be clear, responsibility is the central plank of the new Senior Managers Regime. We do want senior managers to feel this responsibility in all that they do and that includes a responsibility for forming and implementing a positive culture throughout the organisation. In this respect culture is no different to strategy; where are we today, where do we aspire to be tomorrow, how will we get there and what risks must we mitigate along the way. Responsibility, as embedded in the Senior Managers Regime, is therefore an important hook to assist in firms’ shaping their own culture, and also to provide regulators with the powers to conduct supervisory oversight and to act when needed. But, let me reiterate that it is not the job of regulators to enforce culture and to change culture. If we have to step in, and occasionally we do, the overriding conclusion is that management has failed. The common theme there is that the incentives facing a firm will determine its culture and will determine its success in terms of outcomes.
To paint with a broad brush, we can say that economic and financial developments in Iceland during the last decade or so are a combination of two separate but interrelated stories. On the one hand, there is Iceland’s boom-bust cycle and problems with macroeconomic management in small, open and financially integrated economies. This is a well known story that has played out in Iceland and other countries several times. On the other hand, we have the story of the rise and fall of three cross-border banks operated on the basis of EU legislation (the European “passport”). That story, at least for smaller countries, is much more unique than the first. In my remarks today, I will concentrate mostly on the second story, which is probably more suited to this audience, as I understand that the conference is oriented towards microeconomics and finance. However, it must be remembered that although these two stories are different, they interact in important ways. Thus the unsustainable boom that Iceland experienced during the years 2005–2007 was fuelled by a combination of favourable external conditions, macroeconomic mismanagement, and aggressive domestic bank lending. It may well be that the banks’ international activities and the easy access to foreign credit that came with those activities fuelled stronger growth in domestic bank lending than would have occurred in a more traditional small-country banking system.

This problem was significantly mitigated with the FX swap lines that the US Fed negotiated with the ECB and other major central banks, especially after these became uncapped in some cases. But the problem was not confined to currency pairs involving the US dollar, and a similar kind of dynamic played out for smaller currencies in Europe vis-à-vis the euro, especially where banking systems had significant short-term foreign refinancing needs, or what can also be called rollover risk in terms of foreign currency. In some cases, FX swap lines were granted vis-à-vis the dollar, the euro and the yen, and in some cases not. Where swap lines were granted, it helped. And for some of the smaller players, it might not have mattered terribly much which of the major international currencies they hooked on to in this sense, especially after the uncapped swap lines had been established. What we observed during this peak of the crisis was thus a run on cross-border banking operations. We know how to solve such problems domestically by letting central banks lend to markets and/or institutions through their almost unlimited short-run capacity to expand their domestic balance sheet. However, when it comes to foreign currency, a central bank’s capacity to help banks to refinance the foreign liquidity denied them on the market is limited by the size of its reserves or the willingness of its big neighbours to help. This is what did the Icelandic banks in.