samchain/econo-pairs-v1 huggingface dataset:
Jean-Claude Trichet: Ten years of the euro – successes and challenges Speech by Mr Jean-Claude Trichet, President of the European Central Bank, Osnabrück, 12 February 2009. *  *  *  Introduction Dear President Pöttering, Dear Dr. Hentschel, Ladies and gentlemen, I thank you for inviting me to Osnabrück. Today I’m going to speak to you in German. That is for me both a pleasure and a challenge. I’m pleased to have come here, for the Osnabrück region is the home of Hans-Gert Pöttering. I have got to know, and have come to hold in high esteem, Hans-Gert Pöttering as President of the European Parliament. As the President of the European Central Bank, I am a regular guest at the Parliament. For us at the ECB, relations with the directly elected representatives of the people of Europe are very important. Osnabrück is also a suitable place for a speech on European integration. Its epithet is the “city of peace”. It was here and in Münster that the Peace of Westphalia was negotiated. It was the basis for peace in Europe in 1648 after the Thirty Years’ War. Today it is European integration that forms the basis for prosperity and peace in Europe during the last 60 years. Main part The euro is the most visible symbol of European unification. Economic and Monetary Union is the field in which integration has progressed the most. The euro is the currency now shared by 329 million people in 16 countries.

BIS Review 16/2009  7  The enlargement of the currency area for which we bear responsibility is a challenge specific to the ECB. No other central bank operates in an economic and monetary area whose expansion forms part of a structured integration process. No other central bank regularly integrates new institutions, as the Eurosystem does. With each addition to the euro area, the Eurosystem incorporates a national central bank in the “monetary team”, which consists of the ECB – the “captain” – and all the national central banks of the euro area countries. The euro was introduced ten years ago into 11 EU Member States as a single currency. At that time, the euro area had 292 million inhabitants. Today it comprises 16 countries with a total of 329 million inhabitants. Over the past ten years, five new members have joined: Greece, Slovenia, Malta, Cyprus and, on 1 January of this year, Slovakia. Slovenia and Slovakia were the first former communist countries from central Europe to join. Their entry bears witness to their transformation over the past two decades. The accession of five countries in ten years also reflects the openness of the euro area. We are not a “closed shop”. The euro area is open to all Member States of the European Union. To join, a Member State has to fulfil the Maastricht convergence criteria. These relate to inflation, long-term interest rates, exchange rates and state finances.
Financial institutions, together with their staff, were at the frontline of this mobilisation: banks by distributing EUR 130 billion of state-guaranteed loans – a record in Europe, and keep up the commitment – but also insurers – and this has been less frequently mentioned – with numerous payouts on claims not covered in policies. Your teams have demonstrated remarkable operational agility. This resilience also stems from the efforts of banks and insurers who went into the crisis on a firm financial footing, with large French banking groups having almost doubled their own funds since 2008 to 15%, and insurers’ capital requirement coverage averaging 239% at end-September 2020. But although we don’t currently need to worry about their financial soundness, we still need to remain vigilant: there is still a high degree of uncertainty, which calls for the maintenance of our fiscal support measures and an accommodative monetary policy. I won’t talk about the latter today as we are in the “quiet period” before the meeting of the Governing Council on 20 and 21 January. Page 2 of 4  II. The challenges for 2021 After a few more difficult months at the start of the year, 2021 should see the end of the pandemic and the beginning of the reconstruction. And in the financial industry itself, we will need to capitalise on 2020’s resilience to meet four challenges that I shall sum up using the four cardinal points of the compass. 1/ The first, of course, is Brexit, so in the North.

New Year wishes to the Paris financial centre – Paris, 19 January 2021  Speech by François Villeroy de Galhau, Governor of the Banque de France, Chairman of the ACPR  Press contact: Mark Deen (mark.deen@banque-france.fr) and Deborah Guedj (deborah.guedj@banque-france.fr)  Page 1 of 4  This video is a first. Our New Year’s wishes this year come in a “Covid-friendly” format: virtual but very warm. I am extending them on behalf of all the women and men of the Banque de France and the ACPR. I hope that 2021 proves to be a better year for our beloved country, with the vaccines that should halt the epidemic by the second half. A better year also for you and your loved ones, with a special thought for those of our fellow citizens who have unfortunately lost someone close to them during this epidemic. 2020 was an extremely trying year in many respects, but also a year of exceptional collective mobilisation (I). We need to capitalise on that resilience to meet the numerous challenges of 2021 (II). I. The fruits of 2020: Financing of the economy and resilience of the financial system In response to the Covid crisis, public authorities – the government and central banks – rapidly deployed a “financing bridge” to help businesses, especially VSMEs, withstand the shock and protect their employees.
If assets market are booming and perceived returns are high, banks will always find the necessary capital. Conversely, capital dries up during downturns, when it is most necessary. Introducing counter cyclical capital requirements will certainly help. But we may not have looked enough into the interrelated dynamics of stock and credit markets; or, put differently, on how capital flows in and out of the financial sector during different phases of the economic cycle and what are the consequences on credit flows. Finally, tailoring capital requirements to the definition of economic capital by banks themselves strengthens the incentive function. But from, a macroprudential perspective, by replicating closely private risk management methods and metrics, this encourages uniformity in behaviour, which, by itself, is a source of instability. It is becoming increasingly clear, it seems to me, that if we want prudential supervision to effectively pre-empt the build up of imbalances, it has to act more directly on individual and collective incentives. This should push us to look more closely at the "accountingcompensation" nexus. When looking at revenues drawn from a financial investment, it is generally impossible to distinguish excess return from additional risk taking. Ignorance of tail risk fits perfectly in this framework. This points to a possible solution: regulatory systems should force the pricing of risk in all its dimensions, including liquidity risk. Again, there is a clear analogy with tax theory: "internalizing" the risk eliminates market failures. The conceptual challenges in quantifying, for instance, liquidity risk, are enormous.

Jean-Pierre Landau: Bubbles and macro prudential supervision Remarks by Mr Jean-Pierre Landau, Deputy Governor of the Bank of France 1 , at the Joint conference on “The Future of Financial Regulation”, organised by the Bank of France and the Toulouse School of Economics (TSE), Paris, 28 January 2009. *  *  *  Looking at the future of financial regulation is specially challenging in the current juncture. Right in the midst of the crisis, we cannot be sure that we fully understand its ultimate causes, its roots, and its dynamics. Furthermore, we do not want to be fighting the last war. We need a vision on how the financial system will evolve in the future, something very difficult to figure out right now. And yet, there is a strong political demand for orientations and measures to fix the problems and make sure they never happen again. This demand is fully legitimate, considering the social costs that the crisis is imposing on our societies, and more specifically, the financial burden taken on by tax payers. I have chosen to present some remarks on bubbles and macro prudential supervision. They should be seen more as a work program than a full-fledged answer to the many questions raised for the future. I will deal with three issues: what are we trying to achieve? What are the main challenges? Which are the proper instruments? What are we trying to achieve? Here, we have two certainties, and many questions.
The idea is that if the central bank uses an active policy to do so, then it’s to correct distortions that exist in financial markets and ensure that lending rates to businesses and households in the economy as a whole are at the right level to get to the level of activity that would be desirable. If there are rigidities and distortions in the private sector that do not engineer the smooth functioning of the economy, then public intervention is fully justified. It does not add up to manipulation because the reality is not perfect to start with. I’m just now thinking in very abstract terms; this was never discussed at the ECB’s Governing Council. This is my personal take on possibilities; it is not more than that. We didn’t start any discussion about the medium-term future of monetary policy, it’s too soon in Europe to start thinking about that. But I’ll just say it’s a possibility and it can work. We could buy more bonds to enforce it – the 33% 1/8  BIS central bankers' speeches  limit [that the ECB has on buying all of the outstanding stock of a country’s government bonds] is a self-binding decision by the Governing Council. That decision could be slightly changed, theoretically, of course. What about the use of the other non-standard measures? There is a view that some of the tools, such as the Outright Monetary Transactions (OMT) programme, are closely linked with the current ECB leadership and not as much with the ECB itself.

The losses of CHF 3 billion announced by the bank for the fourth quarter show how important it was to reinforce the capital base. At UBS, the government package provided significant relief to the balance sheet from the burden of illiquid positions particularly affected by the crisis. With this package, the SNB made it possible for UBS to transfer illiquid positions to a special purpose vehicle. The UBS provided this special purpose vehicle with equity amounting to USD 6 billion. The Confederation compensated UBS for the capital requirement arising for this purpose by  BIS Review 157/2008  1  subscribing to mandatory convertible notes (MCN). Since the announcement of the package, the UBS liquidity situation has stabilised. The numerous international measures aimed at stabilising the financial system have also had a positive effect on the position of the Swiss big banks. Nevertheless, further losses cannot be ruled out in view of the difficult market conditions. The situation remains serious, and the SNB will continue monitoring it closely together with the Swiss Federal Banking Commission (SFBC) and the Federal Department of Finance. Lessons from the crisis and reforms in Switzerland I would now like to speak about the lessons learned from the crisis. The continuing financial crisis is almost unprecedented, in terms of both extent and duration. It is also unprecedented in terms of the measures taken by the authorities and the central banks with the aim of stabilising the situation and minimising the impact on the real economy. This also applies to Switzerland.
Már Guðmundsson: Fault lines in cross-border banking Speech by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, delivered at Les Encontres Économiques, Aix-en-Provence, 9 July 2011. *  *  *  My comments relate to cross-border banking and are motivated and informed, on the one hand, by the rise and fall of the Icelandic banks, and on the other hand, by research and policy work that took place at the BIS, during and after my tenure there. The financial crisis revealed major fault lines in cross-border banking. Some emerged at the global level, some at the EU/EEA level, and some at the national level. I would like to use my 10 minutes to take these in turn. The main fault line revealed at the global level is the operation of cross-border banks with large foreign currency balance sheets featuring significant maturity mismatches, but with limited lender of last resort facilities in terms of foreign currency. The nature and magnitude of this phenomenon were not well understood before the crisis. In this connection, let me stress that I am referring to maturity mismatches in terms of foreign currency and not currency mismatches, which was much better understood and somewhat better regulated, due to the experience gained during several past emerging market crises. Some studies still confuse these two phenomena, however, when analysing this latest international financial crisis. Maturity mismatches are, of course, the bread and butter of modern banking, although they make banks vulnerable to refinancing risk and runs.

In a context of persistent recession, this strategy would have important benefits, in the form of an increase in the economy’s potential growth, generated by the reforms, and an improvement in the credibility of the sustainability of public finances in the medium term, which would in turn expand the fiscal headroom available and boost the expansionary effects of the current fiscal actions. In short, to have the fiscal space necessary to be able to expand the support measures for the economy should the course of the pandemic make this necessary, the reform agenda needs to be implemented decisively, fiscal consolidation  5  See R. Blanco, S. Mayordomo, A. Menéndez and M. Mulino (2020), Spanish non-financial corporations liquidity needs and solvency after the COVID-19 shock, Occasional Paper No 2020, Banco de España. 17  needs to be planned and support instruments need to be reformed to make them more flexible and focused. In the case of structural reforms, the Annual Report, which I am presenting to you today is a veritable catalogue of the main challenges that, in the opinion of the Banco de España, the Spanish economy faces in order to raise aggregate well-being. These challenges are wide-ranging in type and require the following issues to be addressed: low productivity growth, labour market duality, high unemployment, population ageing, inequality, climate change action, changes in the globalisation model and the speed of digitalisation of the economy.
In addition, the forthcoming revision of the Codified Banking Directive will provide a robust underpinning for greater cross-border cooperation among authorities, especially for large banking groups. The revised Directive will tighten the requirements for the information exchange and coordination between the consolidating supervisor and host supervisors. It will also assign the consolidating supervisor a coordinating role in the gathering and dissemination of information about the group as well as the planning and coordination of supervisory activities. Following these two major reforms, efforts should now focus on their effective implementation. As regards financial stability, there has been a significant increase in cross-border arrangements in response to the recommendations of the reports by the Economic and Financial Committee (EFC) on financial stability and crisis management. The important role of the Financial Services Committee (FSC), which was responsible for monitoring the implementation of the EFC recommendations, should be fully acknowledged at this point. With regard to crisis management, the 2003 Memorandum of Understanding between EU banking supervisors and central banks, and to which the new EU Member States adhered in June 2004, was a great accomplishment. For the first time, principles for managing financial crises that may have a cross-border impact were agreed at EU level. Nevertheless, the Memorandum may be not sufficiently detailed to cover large cross-border banking groups comprising several authorities, where crisis management is particularly complex. Given the potential far-reaching implications of financial disturbances involving such groups, the development of group-specific agreements could be an important avenue to explore.

Here is Chancellor Denis Healey, writing in his memoirs3 about a spat with the Prime Minster of the day:  3  2  Healey, D (1989), The time of my life, Michael Joseph London. BIS Review 11/2004  ‘At this time my own relations with Jim were shaken by an incident just after the Party Conference. On October 6 I had asked him to let me raise interest rates by another 2 per cent to the then unprecedented level of 15 per cent…He refused. I said I wanted to take the matter to Cabinet that morning. ‘All right’ he replied ‘but I will not support you.’ Nevertheless I insisted…’ In the event this did not prove necessary: Callaghan backed down, leading Healey to comment wryly that ‘This was the only time I have ever used the threat of resignation to get my way.’ The new framework has taken the politics out of interest rate decisions without sacrificing democratic accountability or oversimplifying the policy process. It is an elegant institutional solution to the lengthy debate between those who favoured untrammelled discretion and those who advocated rules (such as monetary targets); one, moreover, which manages to respect the constitutional priorities of a parliamentary system. Achievements Performance over the six years since the Bank became independent has been impressive. Against the target of 2.5% for RPIX which ran from 1997 until December 2003, average inflation was 2.4%.
More importantly, while EMEs accounted for about 55% of global GDP since 2009, their contribution to global economic growth was as high as 80%. So, a slowdown in EMEs will be an impediment to recovery in the US and other advanced economies. 15. Fifthly, zero interest rates and QE have indirectly widened the income gap. Because of ultra-low interest rates and excess liquidity seeking better returns, stock and property markets rallied in many parts of the world. This is especially true in places with more promising growth prospects like Mainland China, Hong Kong and Singapore. However, lowincome groups, with little if any stocks and properties, have missed out altogether. And their savings in deposit accounts have earned next to nothing. This has exacerbated inequality, resulting in negative implications for social stability and harmony. 16. Sixthly, zero interest rates and QE have changed the global investment environment. Yields on the traditionally more conservative bonds and fixed income investments have declined. For example, 10-year US Treasuries’ yield has fallen from 5% to about 2%, and some sovereign bond yields in the Eurozone have even plunged into the negative. At the same time, both the exchange rates and bond prices in EMEs have experienced sharp swings recently. With the soon-to-start normalisation of US interest rates, and distorting low-returns and high-volatility in the bond markets, the investment environment will become even more complex and difficult. 17.

In 2014 alone, $ billion was spent in share buyback, bringing the cumulative amount to $ billion since 2009. As we all know, share buyback may buoy share prices and boost earnings per-share in the short run, but will not improve a company’s productivity and competitiveness, nor create any new jobs. 13. Thirdly, with the US financial system awash with liquidity from QE and with feeble domestic demand, excess liquidity soon found its way to emerging market economies (EMEs), such as China, Brazil and Russia, in pursuit of higher returns. Between the outbreak  2  BIS central bankers’ speeches  of the global financial crisis and the peak in 2014, total inflows to EMEs were estimated to be some $ trillion, with roughly $ trillion of it destined for Asia. In the face of the massive inflows, EMEs experienced currency appreciation, an increase in money supply, an expansion of the credit bubble, overheating in the economy and asset markets, etc. 14. Fourthly, the tide will eventually turn. Currently, with a strong US dollar and the imminent normalisation of US interest rates, EMEs are confronted with capital outflows, currency depreciation, and sharp falls in energy and commodity prices. Their economies and asset markets are coming under varying degrees of downward pressure, which will adversely affect the US and other advanced economies. EMEs have grown much larger in the past decade or two. In particular, China’s GDP ballooned from $ trillion in 2000 to $ trillion in 2014.
How shall monetary policy be designed if there is a risk for exaggerated indebtedness and overheating? A decision-making rule the Riksbank sometimes uses to motivate its monetary policy decisions can in simple terms be described as follows: when inflation exceeds the target in a one-to-two year horizon, then the interest rate is increased. Interest rate increases reduce the demand for goods and services, which in turn reduces inflationary pressure. In our simple conceptual framework, inflationary pressure is then assumed to vary with the use of resources in the economy. When there is free capacity, inflationary pressure is low in the absence of so-called shocks. When demand is so high that it exceeds the level that is compatible with the long-term production path, inflation tends instead to exceed the target. The line of reasoning is based on inflationary expectations being established close to the target for monetary policy. Price increases when demand is strong may for instance depend on bottlenecks being created in some part of the production chain. As the company in this situation, cannot improve its profits by increasing its volume of sales, profit margins are increased by price increases. Shortage of labour also increases the risk for excessively high wage increases. The result will be higher inflation. If we strictly apply such a simple rule for decision-making, we shall then disregard the risk of building up of financial imbalances and overheating as long as inflation is not deemed to exceed the target during the forecast period.

On 1 January 1999, a new Riksbank Act came into force. It states that the goal for the Riksbank’s activity is to maintain stable prices. The Riksbank shall also be responsible for a secure, efficient payment system. In the preparatory legal material on the Act, it is also further stated that the Riksbank, without setting aside the price stability target, shall also support the objectives of general economic policy with a view to achieving sustainable growth and high employment. The price stability goal has then been confirmed by law. The Riksbank’s Executive Board is responsible for making the price stability goal operational and designing the framework for monetary policy. Among other things, this means that the Executive Board decides on how the price stability goal is to be defined and over what period price stability is to be maintained. The Executive Board of the Riksbank has decided that price stability shall be defined as an annual increase in the consumer price index of 2% with a tolerance interval of plus/minus one percentage point. If the consumer price index is affected by factors that are considered to only have a temporary effect on CPI, the Executive Board has agreed that we shall be able to disregard this. The reason is that monetary policy otherwise risks leading to unnecessary fluctuations in employment and production. A lot has been achieved although some things remain to be done Economic policy has been very successful in many areas during recent years.