samchain/econo-pairs-v1 huggingface dataset:
The UK has nothing to fear from the creation of a single euro area supervisor. What would have changed if the European supervision system had have been in place, for example for the Crédit immobilier de France (CIF)? Technically, not a lot. Instead of the French Autorité de contrôle prudentiel, the ECB would have asked the CIF to increase its capital. But make no mistake, banking supervision is not a catch-all insurance. In the case of the CIF, we were aware of its fragility stemming from its increasing refinancing difficulties and we knew that there were longer-term liquidity risks. The CIF is a textbook case where a downgrade by ratings agency expedited the disclosure of funding problems. Would you say that Moody’s was responsible for this situation? No, the primary responsibility lies with its management, which was unable to find a merger solution when it was possible and we had asked it to do so. Did you lack coercive power in this case? Yes, definitely. We have very great powers when an institution does not comply with regulations, but we do not have powers that enable us to prevent a crisis. As things stand, we can appoint temporary administrators if need be or revoke an authorisation, but we do not have powers of resolution allowing us to impose the restructuring of a banking group or transfers of assets. We worked on a draft regulation before the European project started to be discussed, but we underestimated the length of time needed to arrive at a European proposal.

Some have had to implement austerity plans and others, less drastically, are undertaking structural reforms and continuing to reduce their government deficits. This is the case of France. Even if these efforts appear moderate compared to those of other countries, they are necessary for our market credibility. Brussels has presented its proposals for a European bank supervisory mechanism; are they in line with your expectations? Yes, they are. The developments of the financial crisis have brought to light one of the euro area’s fragilities: the link between bank and sovereign risk. Following the collapse of Lehman Brothers, governments bailed out their banking systems and, in doing so, established a nexus between sovereign debt and local banking systems, which interferes with monetary policy transmission. When the euro area sovereign debt crisis erupted, bank refinancing conditions became correlated with sovereign risk, with the consequences that we have witnessed for ailing countries. The large amount of liquidity provided by the Eurosystem has reduced this impact, but funding costs have remained very high in some countries. It was therefore essential to decouple sovereign risk from bank risk. The banking union will ensure a sounder monetary union. Germany has expressed doubts as to the proposed set-up, in particular with respect to the number of banks covered by the ECB. Could this prove a threat going forward? The proposed union implies a transfer of sovereignty from States to the ECB, which Germany has always wished for.
We aim to be forward looking, developing both in developing the regulatory frameworks and in developing public systems and public money necessary so that safe innovation can flourish to the benefit of all. Thank you. I would like to thank the following for their input to and helpful comments on these remarks: Jyoti Shah, Louise Eggett, Laure Fauchet, Morgane Fouche, Adrian Hitchins, Jeremy Leake, Rajan Patel, Rachita Syal and Cormac Sullivan for their assistance preparing these remarks. I would like to thank Andrew Bailey, Charandeep Biling, Sarah Breeden, Emma Butterworth, Victoria Cleland, Philip Evans, John Jackson, Rebecca Maule, Tom Mutton, Sasha Mills and Matthew Osborne, for their helpful comments and suggestions. 1. Key public sector initiatives include the FCA’s regulatory sandbox, the development of Open Banking, the introduction of a mobilisation route for new banks, the forthcoming FMI Sandbox, HMT’s consultation on the regulation of cryptoassets and the provisions in the Government’s recent White Paper on AI Regulation. 2. As measured by investment (Innovate Finance  ). The significance of the UK Fintech Sector has been set out more  widely in detail as part of the Kalifa Review of UK Fintech  (2021). 3. See Bank of England: Quarterly Bulletin 2022Q3. While transactional cash use fell during the COVID-19 pandemic, the value of Bank of England notes in circulation increased as cash holdings were used as a precautionary store of value. 4.

The shape of things to come: innovation in payments and money − speech by Sir Jon Cunliffe Given at Innovate Finance Global Summit, London  Published on 17 April 2023  In his speech, Jon Cunliffe looks at four areas where the tokenisation of money is now being explored. The first is stablecoins used for payments, the second is the tokenisation of commercial bank deposits, the third is the next stage of the Bank of England’s work on issuing a Digital Pound and the last is the Bank’s work to ensure to ensure these new forms of money are robust and uniform. Speech Thank you for inviting me here today to talk about the ‘shape of things to come’. I want to concentrate my remarks today on payments and money – how we pay for things and what type of money we use. These once dusty and forgotten corners of the financial system have been transformed in recent years. And there are good reasons to believe that even more radical change is on the horizon. I will talk today about developments within in the UK, but much of the trends and the possibility of further technological advances that I will cover are relevant for cross-border payments which have lagged far behind the developments we have seen in recent years in domestic payment systems. And which merits a speech all of its own. I should start however with a health warning. Central bankers are very used to forecasting the economic future.
28.01.2020  Multilateralism and globalisation reforms Presentation of the book Excesos: Amenazas a la prosperidad global, by Emilio Ontiveros Pablo Hernández de Cos Governor  Good evening Honourable Minister and Authorities, ladies and gentlemen. It is an honour to be here at the presentation of Professor Emilio Ontiveros’s book Excesos: Amenazas a la prosperidad global (Excesses: Threats to global prosperity), and to share some thoughts with you on the subjects it addresses. As has habitually been the case in his extensive academic and popularised work, Professor Ontiveros hits the nail on the head in his analysis of one of the main challenges posed by the current international landscape: the characterisation of and the risks associated with the economic and financial globalisation witnessed in recent decades. His work is immense, as it requires deep-seated knowledge of the wealth of interrelated factors that shape the highly complex and changing economic, political and social situation at present. As is also habitual for the author, he is successful in his venture: he presents a profound and well-structured analysis of the issue. And one that is, moreover, reader-friendly and comprehensible. Our congratulations, Emilio. 1. The book’s main line of argument As Professor Ontiveros rightly says, the globalisation and growing openness of economies to the flow of trade, finance, persons and knowledge, lauded by many just some years back as the fundamental driver of global economic development, is now questioned by significant economic, political and social agents, at least in its current form.

These include better risk management, a modern range of products offered to customers, or the development of new distribution channels, to name just a few. Regional integration within the EU, however, means that the application of a uniform bank or insurance licence (i.e. taking up activity in any Member State under a licence obtained in the home country) may cause certain asymmetry in the availability of data and a conflict of interest between supervisors of the host country on the one hand, and institution owners and supervisors from the home country on the other. Such conflict may occur as a result of transformation of foreign bank subsidiaries, operating under local laws and fully supervised by the supervisory authorities of the host country, into branches supervised by foreign supervisory authorities. Individual foreign bank branches operating in the new EU Member States frequently constitute a vital element of the banking system, both in terms of the value of assets and deposits, operations on the domestic interbank market and the share in settlements in the payment system. Therefore, they are described as institutions of systemic importance for the domestic market. At the same time, they are not always equally important components of an international banking group, in terms of their size and the profit generated. In such a case, a relatively low importance of an institution may result in less focus on its supervision, both by the foreign bank and the supervisory authority of the home country in which the given bank has obtained its licence.
Eddie George: Sterling strength, the euro and UK monetary policy  Speech by the Rt Hon Eddie George, Governor of the Bank of England, to the Leeds and Bradford Chartered Institute of Bankers and Bradford Chamber of Commerce, Bradford, on 11 April 2000. *  *  *  It’s a real pleasure to be here in Yorkshire and I am greatly honoured to have this opportunity to speak to such a large and distinguished audience. I am honoured - but also, I must confess, somewhat daunted. I am acutely aware of the fact that, while there are some parts of the region that are economically - doing extremely well, other parts, particularly those most exposed to international competition, are under the hammer. That’s true of course of the UK economy as a whole. I’m equally aware that the suffering sectors ascribe their pain to the strength of sterling, particularly against the euro, which is certainly a contributory factor; and that they ascribe the strength of the exchange rate to our domestic monetary policy and to the Monetary Policy Committee. I should like to address some of these concerns this evening and then go on to say a few words about the great euro debate. Let me begin with some comments on the very profound changes that have occurred, gradually over a long period, in the approach to economic management in the UK and in our more recent economic performance.

Birgir Ísleifur Gunnarsson: Iceland in a global setting Keynote speech by Mr Birgir Ísleifur Gunnarsson, Chairman of the Board of Governors of the Central Bank of Iceland, at the Euromoney conference on the Nordic Financial Markets and Investment Opportunities, Stockholm, 13 September 2002. *  *  *  Mr. Chairman, ladies and gentlemen. It is a pleasure to participate in this ambitious conference on the Nordic Financial Markets and Investment Opportunities. I will in my remarks today mainly focus on aspects relating to Iceland. Size separates Iceland from the other Nordic Countries, Denmark, Finland, Norway and Sweden. Other factors separate the Nordic Countries as well. Finland is a member of the European Union and the Economic and Monetary Union, EMU, as well. Denmark and Sweden are members of the European Union but are outside the EMU. Norway and Iceland are outside the European Union but maintain very close ties to it, particularly through the European Economic Area Agreement. That agreement makes Norway and Iceland a part of the single market of the European Union, which entails among other things that they are obliged to maintain financial market legislation, which fully conforms to that of the European Union. The Nordic Countries have different monetary regimes. Finland is a member of the EMU, Denmark is linked to the EMU through an ERM II agreement entailing that the Danish krona is very closely tied to the euro. Sweden, Norway and Iceland have chosen an inflation-targeting regime as their monetary framework (Iceland in March 2001).
This logically implies that an exclusive focus on the two-year ahead central inflation projection will cause policymakers to miss the risk of undershooting the inflation objective sometime in the future, possibly by a non-negligible amount. In turn, this implies that the central projection for inflation does not represent a sufficient statistic for monetary policy, and that a more sophisticated approach, factoring in the possibility of “tail risks” such as the bursting of a bubble, should be taken into account. A possible way of addressing the problem  9  See Dubecq et al. (2010). 10  See Reinhart and Rogoff (2009). 6  BIS central bankers’ speeches  within the traditional forecast-based framework which has been dominant among inflationtargeting central banks is to extend the forecast horizon beyond two years ahead. The risks to the central inflation projection deriving, say, from excessive credit growth and the resulting build-up of an asset price bubble would then be encoded in the probability distribution for inflation at longer horizons. This would allow the central bank to meaningfully discuss the dangers associated with such a build-up, and – assuming that within future policy frameworks monetary authorities will be endowed with macro-prudential instruments – it will allow them to explain to the public the adoption of measures designed to curb credit growth.

Over the past two centuries, upswings or downswings in the trend money growth have usually been followed, a few years later, by swings in the same direction in trend inflation.2 This relationship has remained significant over the past two centuries, across a variety of different monetary policy regimes and in spite of financial innovation. This naturally suggests that it is “hardwired” into the deep structure of the economy, i.e. that it is structural in nature. In turn, this suggests that by analyzing monetary developments – and in particular, by identifying swings in trend money growth, as well as its components and counterparts – a central bank can implement a more forward-looking monetary policy. The monetary nature of inflation, and given that money growth at the long-run horizon is ultimately under the control of the central bank, logically leads to a fifth key principle: the central bank has ultimate responsibility for inflation. Of course, in the short-run macroeconomic dynamics, and therefore also inflation, are determined to a significant extent by events outside the central bank’s control. The last four years provided a forceful reminder with the 2008 shocks in food and energy prices, which led to a temporary hump in Euro area inflation, followed by the large contractionary shock associated with the financial crisis and several months of deflation. These exceptional circumstances brought euro area HICP inflation to 4 per cent in the summer of 2008 and then to –0.6 per cent one year later.
In the US, for example, public debt increased by $ trillion from the end of 2008, with the ratio of public debt to GDP rising from about 74% to the current 100%. Another striking example was Japan where the public-debt-toGDP ratio surged from an already precarious level of around 190% in 2008 to almost 240% in 2012, and is expected to rise even further to over 250% by 2020 along with still more fiscal stimulus under “Abenomics”. In terms of private-sector debt, while the US and the UK underwent more significant private-sector deleveraging, most European countries showed little progress on the reduction in private-sector indebtedness. The weak peripheral countries aside, even in core countries like France, the private non-financial sector debt ratio increased sharply from about 200% of GDP at the end of 2008 to 230% of late. 7. There are many narratives on why this trend of rising indebtedness has occurred. Perhaps the financial “deepening” had made credit much easier and cheaper for many households and corporates to obtain. Or, financial innovation in the form of securitisation and financial derivatives, such as CDS and CDOs, enabled leverage to be amplified and distributed throughout the financial system and beyond. But, the cause of this alarming trend is not the issue. The point I wish to make is that most people had become insensitive to the excessive levels of indebtedness and leveraging, and the resulting imbalances and vulnerabilities that had built up prior to the Global Financial Crisis and the European Sovereign Debt Crisis.

In Europe, the situation is even more disheartening, given the fact the output of many peripheral countries and the UK and France is not yet back to pre-crisis levels. Again, when faced with criticisms that the central banks had gone beyond their remit and capabilities by taking up the role of supporting economic growth, mainstream thinking argued that, even though QE was not as potent as it was hoped, the economic conditions post-crisis would have been a lot worse without these unconventional monetary policies. At this juncture, based on the empirical evidence available so far, it is hard to judge one way or the other whether the unconventional monetary policies have worked, or will work. 15. However, it should not take long to find out the answer. This is the fifth year of QE in the US; and the main issue now is not to what extent QE has helped economic recovery since 2009, but what happens when the Fed actually exits from these accommodative policies. Of course we don’t know exactly when the Fed will exit, which entails three stages: tapering in the asset purchase programme, ending the purchase programme and eventually raising policy rates. Chairman Bernanke and some FOMC members have made it clear the timing of these stages is still uncertain as it will depend on the actual pace of economic recovery and improvement in the job market. The three stages have long been known to the markets and are nothing new.
That was my starting point for our December meeting, the minutes of which will be published next week. Summary and conclusions Let me try to pull together some of my central themes. 21  “…households have increased their debt….more debt unavoidably leaves them more vulnerable to bad luck, eg adverse economic shocks”, Tucker, P. M. W. (2003), “Credit conditions and monetary policy”, speech at the Leeds Financial Services Initiative, Bank of England Quarterly Bulletin, Autumn 2003, p. 373. BIS Review 149/2007  9  I have stressed that we should take care to avoid talking about money when we mean credit. In a similar spirit, we should be clear when we mean total credit and when bank lending, but without assuming the two are divorced. I have also stressed the need for attention to the underlying drivers of credit conditions throughout the economic cycle. In today’s financial system, we may well need richer data on credit quantities and flows outside the banking sector, perhaps along the lines of the US Flow of Funds statistics. The Bank’s new Credit Conditions Survey is also designed to give us better qualitative information to put alongside the quantity and price data. Even so, as with asset prices more generally, we will sometimes find it hard to distinguish between changes in credit conditions warranted by fundamentals and those that are not. Failure to recognise fundamentally warranted and sustainable shifts would deplete welfare.

11  Chart 5: Securitisations relative to stock of M4 lending  Chart 6: UK household sector assetbacked security spreads Bas is points  Percentage of sectoral M4L stock 25  400  20  300  350  Basis points  Commercial mortgages Credit cards Prime mortgages Non-conforming mortgages (LHS)  150 120  250  Household secured 15  90  200 60  150  10  Household unsecurd  0 2002  0 98  99  00  01  02  03  04  05  06  07  0 2003  2004  2005  2006  2007  Source: LehmansLive Note: weighted averages of AAA, AA, A and BBB 5years spreads for prime and commercial mortgages and of AAA, A and BBB 5-year spreads fro credit cards and non-confirming mortgages.
IT is also a necessary condition for the methods used to calculate financial risks in portfolios of securities or credits. The new Basel Committee rules on capital adequacy in banks, to take an example, are entirely dependent on such calculations. Network effects in the payment system The banking sector in Sweden is, as we know, strongly concentrated. This can raise questions in certain contexts as to how well competition functions. However, the concentration has also enabled, as I pointed out earlier, a more rapid exploitation of network effects and economies of scale connected with IT developments. Let me go into this in more depth, hopefully without becoming too abstract. The development of payment services is governed, just as on other markets, by supply and demand. Supply is affected by costs and technology, while demand is affected by factors such as price, acceptance, comfort and accessibility. Advantages of scale within the production of payment services arise as these services are often connected with high fixed costs and relatively low flexible costs. Building up a new computer system is expensive, but every transaction that passes through the system costs less. The economies of scale effects provide incentive for various types of co-operation and joint solutions, where producers join forces to utilise the economies of scale and spread costs over greater volumes. There are also advantages of scale on the demand side, the in the form of positive network effects. Positive network effects mean quite simply that a particular system becomes more usable the more people who use it.

These risks can easily be passed on through the global financial system, because of the different time zones, and can bring about serious disturbances. There has therefore been a global collaboration on a project called CLS, Continuous Linked Settlement, for some years now. All of the dominant foreign exchange banks in the world are taking part in this project, with the aim that a joint system will settle all of the members’ foreign exchange transactions. This will enable payment in one currency to be made directly against payment in another, which will entail the credit risk that arose earlier disappearing. IT in a broad sense has, of course, also been necessary for the security of the systems for large payments that central banks around the world develop or oversee, where the trend in recent years has been towards real time gross settlement. Our own RIX system is an RTGS system, as is the TARGET system used by the ECB. I would be happy to discuss this, but it would involve a deviation from my subject here. Conclusion In conclusion, I would like to make two reflections. Firstly, it is of course the case that IT, while increasing both the efficiency and security of the financial system in general and the payment system in particular, also increases risks of a purely operational nature. Operational risks were strongly in focus prior to the new millennium, particularly in the financial sector, and extensive preparations were made to guard against them.