samchain/econo-pairs-v1 huggingface dataset:
The final tool available to the central bank is monetary policy. This tool is not likely to work as well as macroprudential tools because it is too broad. Typically, monetary policy will not address specifically the sources of the changes in supply and demand that are driving the bubble and, obviously, monetary policy will have big effects elsewhere. Some argue that monetary policy should “lean against” incipient asset bubbles. The notion is that by pursuing a slightly tighter monetary policy, the central bank would take out insurance against the risk that the rise in asset prices is a bubble and that its busting would be disruptive. Although this sounds attractive, it critically depends on how expensive the insurance is relative to the losses that the insurance protects against. It is not clear to me that a modest tightening in monetary policy beyond that needed to achieve full employment and price stability in the absence of a bubble would represent a favorable cost-benefit tradeoff. The costs of the deviation from the optimal monetary policy in terms of lost output and  10  However, in the recent crisis, the different outcomes in the United States and Canada might be instructive. Canada had a tougher regime in terms of mortgage underwriting standards. Also, Canada had imposed an overall leverage limit on its banks, which helped to limit the amount of gearing in the financial system.

Timothy F Geithner: Change and challenges facing the US financial system Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the New York Bankers Association’s Annual Financial Services Forum, New York, 25 March 2004. *  *  *  It is a pleasure to join you at the New York Bankers Association Financial Services Forum. The institutions represented in this room, together with the rest of the New York financial community, remain at the center of the U.S. and global financial systems. Your meeting today takes place against the backdrop of a relatively favorable national and global economic outlook. The U.S. financial system is in reasonably strong shape. Financial innovation has enabled substantial improvements in the quality of risk management and in the capacity of the system to handle shocks. But the benefits of innovation have come with significant challenges to the people who run financial institutions and to those responsible for supervision and oversight. How effective we are in responding to these challenges will determine whether the U.S. financial system is as successful in the future as it has been in the past. The consensus forecast for the U.S. economy expects solid growth this year and next, somewhat above the upper bound of the range of most estimates of U.S. potential growth. Confidence in the sustainability of the U.S. expansion, as measured by changes in these forecasts, for example, seems to be increasing.
·  While facing a financial crisis, the IMF could indicate the relative contributions of official finance and private sector finance as well as the domestic economic adjustments required to fill the gap. Before disbursing its share of financing, it should review and assess the country’s efforts to secure the contributions from private creditors required to ensure medium-term sustainability; failing to secure the needed contribution from private creditors could lead to a revision of the program to require additional domestic adjustment. Changes in the functioning of financial markets in the recent years also raise important issues that the international community may have to address. There is no need to underscore how much financial markets have changed in the last two decades under the combined impact of factors such as financial deregulation, technological and financial innovation, intensifying competition among financial institutions and increasing demands for more transparency and greater profitability. These changes have enhanced the overall efficiency of financial markets and, by extension, that of the developed economies: -  Markets have become more transparent and competitive. -  Financial innovations have made it easier for both governments and the corporate sector to raise capital or hedge risks. -  Economic agents with funds to invest, in particular households, can choose from a wider range of investment vehicles offering better returns. -  Growing disintermediation has contributed to less inflationary financing of economies. Despite all these achievements, there have been some surprising developments on financial asset markets.

Banks were an exception to this, and in different countries, the approach to privatization of banks varied. In the Czech Republic, the privatization of banks had been delayed for several years due to the government’s belief that privatized banks would stop providing soft loans to strategically important firms. This fear was underlined by the experience with foreign banks that were entering the market since 1992 and cherrypicking their clients. After several years, the bad debt burden on banks’ balance sheets reached such a scale that government had to step in. Most of the debt ended up with a special governmental agency and the losses are being paid from the state budget. The cost of the bank clean-up in the Czech Republic is estimated at approximately 21% of GDP. In some other countries [Hungary, Poland], the privatization of banks proceeded quicker and the fiscal costs were substantially smaller [est. 6% for Poland, 13% for Hungary; in Szapáry, National Bank of Hungary, 2001]. Given what I have just described, the financial sector in the accession countries is nowadays in remarkably good shape. The banking sector is sound and stable, the role of non-banking intermediation is growing, and clients have access to most of the products and services they have in the EU countries.
And indeed not only are restrictions still in force in some areas of activity, but it is also proving necessary to reintroduce others as a consequence of the fresh outbreaks of the disease. In this context, the euro area outlook remains highly uncertain and the risks to the area tilted to the downside. At the same time, there are already signs that the pandemic may give rise to certain structural changes, although the full extent of these is, for the time being, difficult to know. In this context, for me the key for economic policies is to strike the right balance between supporting the recovery and spurring economic adjustment to the structural changes that will emerge after the pandemic. This means first maintaining support measures and avoiding cliff-effects. Indeed, after the pandemic many euro area countries will be facing the highest level of public debt in many decades. And facing this challenge will require a gradual fiscal consolidation programme once the economy moves back onto a sound growth path. In the short run, however, the damage caused by the premature withdrawal of support measures would exceed the possible cost of maintaining them until the recovery shows signs of sufficient strength. Notwithstanding, given the significant heterogeneity of the effects of this crisis, in particular in this recovery phase, support measures should be much more focused now and their timing adjusted to the duration of the crisis. In addition, we have to adjust the specific instruments used.

We would like the guidance to be relevant not only to Basel Committee member countries, but to non-member countries as well. We would therefore value your feedback. As we take our work forward in the Basel Committee, and as the IFSB conducts its own work in preparing its exposure draft, I believe we would all benefit from keeping a sense of proportion. Clearly,  4  BIS Review 38/2005  we cannot have the same expectations for the governance of a large, complex bank that we have for a much smaller bank. When the Basel Committee issues supervisory guidance, we typically say that supervisors’ expectations should be commensurate with the size, complexity and risk profile of the institution. That applies equally here. My hope is that we can raise the bar for the governance of the banking industry as a whole, while concentrating our supervisory resources on the governance of the most complex and sophisticated institutions. Conclusion I realise that I am all that stands between you and a marvellous gala dinner, so I will keep my closing remarks very brief. I would just like to emphasise that sound corporate governance should be considered a key element of a bank’s ability to understand and manage its risks. As supervisors, we should direct our resources to helping banks improve their controls, culture and clarity in respect to risk management. In so doing, I believe that we will help achieve our objective of a stable and healthy banking system that contributes to the proper functioning of the economy.
But a significant amount of investment may have no identifiable link at all to domestic saving, because savings have flowed out of the country through one channel and investment funds have flowed in through a completely different one. I shall return to this point in a minute. Returning to the behaviour of domestic saving and investment, the chart shows the excess of saving over investment in graphic form. I have then added a column representing the recorded inflow of foreign direct investment. The latter may perhaps be regarded as the category of inflow likely to be most closely associated with physical investment. If you add that to the surplus of saving over investment (i.e. the two columns together), you can visualise in the majority of instances a significant potential over-funding of investment, even before taking account of any inflows of portfolio funds or bank finance which may head to the same destination. Does this mean that there has in practice been more than enough money around in these countries to finance all desired investment? Of course not. As hinted earlier, I have failed so far to take any account of capital outflows. Part - in many cases perhaps a substantial part - of domestic savings is 1  BIS Review 52/1999  exported.

That reflects the mark-down in global growth, heightened geo-political and financial risks and the weak pipeline of inflationary pressures from wages internally and commodity prices externally. Taken together, this implies interest rates could remain lower for longer, certainly than I had expected three months ago, without endangering the inflation target. Thank you. 8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches  BIS central bankers’ speeches  15  16  BIS central bankers’ speeches  BIS central bankers’ speeches  17  18  BIS central bankers’ speeches  BIS central bankers’ speeches  19  20  BIS central bankers’ speeches  References Acemoglu, D and Autor, D H (2010), “Skills, tasks and technology: Implications for employment and earnings”, NBER Working Paper No. 16082, National Bureau of Economic Research, Cambridge, MA. Autor, D H, Katz, L F and Kearney, M S (2006), “The polarization of the US labor market”, American Economic Review: Papers and Proceedings, Vol. 96, No. 2, pp. 189–94. Autor, D, Levy, F and Murnane, RJ (2003), “The skill content of recent technological change: An empirical exploration”, Quarterly Journal of Economics, Vol. 118, No. 4, pp. 1279–1333. Bank of England (2014), “August 2014 Inflation Report”, available http://www.bankofengland.co.uk/publications/Pages/inflationreport/2014/ir1403.aspx.
The primary question today is not so much how much further we need to go with interest rate hikes, but how large is the pass-through of what is already in the pipe. Overall, evidence shows a quick and smooth pass-through of ECB decisions to broad financing conditions, which is the first step of monetary policy transmission. The growth rate of bank loans to households and firms has slowed due to a combination of higher borrowing rates, lower demand, and - for firms - tighter credit standards. Volumes of loans are decelerating, even though growth in outstanding amounts remains positive [+3.3% in the euro area for mortgages to households and +5.2% for loans to businesses]. By the way, the growth of loans in France remains significantly higher than in the euro area average. The second step of monetary policy transmission goes from the overall financing conditions to the economy and to inflation. In the textbook theory, tighter financial conditions moderate aggregate demand, and then decrease inflation with some lags. The estimated transmission lags of monetary policy in the literature vary from one year1 to more than two years2. At the current juncture several factors may bring us closer to the upper range: The current tightening cycle started from exceptionally low levels of real interest rates. It is only from the end of 2022 that we achieved positive real rates at all maturities – but we are now clearly in restrictive territory. the proportion of fixed-rate long-term loans is particularly high by historical standards.

François Villeroy de Galhau: Monetary policy transmission Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Annual General Meeting of the International Capital Market Association (ICMA), Paris, 25 May 2023. *** Ladies and Gentlemen, It is a pleasure to deliver this address at this ICMA's Conference in Paris, and I would like to pay tribute to your collective contribution to Capital Markets. Let me thank among others Bryan Pascoe, René Karsenti, Mandy DeFilippo and the ICMA French Regional Committee. In particular, ICMA's emphasis on sustainable finance perfectly echoes our call alongside Christine Lagarde for a "Green Capital Markets Union". It is an important way forward for Europe in the coming years. In the short and medium term, let me focus today on the transmission of monetary policy. In the Euro Area, inflation has begun to fall back, from 10.6% in October 2022 to 7% in April, after 6.9% in March, and is expected to recede by the end of the year. But it will still be too high. And while headline inflation has been declining, underlying price pressures are showing persistence. The Governing Council has already taken prompt and forceful actions to tighten the stance of monetary policy. The increase in policy rates since 2022 has been exceptionally rapid by any historical standards: 7 hikes in less than ten months, amounting to +375 basis points.
As can be seen from Chart 1, throughout that year markets expected the Real to depreciate as evidenced by the fact that the implied forward exchange rate was lower than the spot rate by more than the crawl would imply.11 In order to defend the crawling peg, the central bank raised interest rates in September 1998 from 20% to 40% a year. The implied forward exchange rate promptly fell. Raising interest rates actually increased the expectation that the peg would be abandoned, since markets knew that high interest rates were likely to prove politically unsustainable. Any government prepared to keep interest rates that high was not likely to win re-election. In January 1999 a second speculative attack on the peg occurred. And this time the peg was abandoned. Although short-term interest rates were raised  8  Svensson (2003) takes a view that is related to the argument here. In his opinion, commitment to ‘targeting rules’ objectives that the central bank must pursue - are workable, while commitment to ‘instrument rules’ - reaction functions - are not, since it is “impossible” that “every conceivable contingency be anticipated” [p439]. 9  This is cited in David Dewey (1918), page 68. 10  The costs and benefits of discretion in a world where we cannot describe future possible states of the world are set out in Philippe Aghion and Patrick Bolton (2002). 11  The forward rate was below the spot rate even allowing for the devaluation implied by the crawling peg.

First, they expand the possibility frontier of the technology of collective decisions and can be designed to raise the cost of those decisions deviating from pre-announced contingent paths. Second, they are set up explicitly to exercise a degree of discretion - “constrained discretion” - subject to the broad objective of price stability. Discretion is inevitable because of the need to learn about the economic environment. Institutions thereby become repositories of experience and knowledge which they communicate to society as a whole. III. Case Study I: Exchange rate regimes in Brazil and the UK  I want to illustrate the importance of institutions and the credibility of their stability by three case studies. My first example concerns the collapse of exchange rate regimes in Europe and Latin America. It demonstrates that economic institutions require a broad base of political support if financial markets are to believe that those institutions are likely to survive. For a while fixed exchange rate regimes enjoyed a degree of support in both Europe, with the Exchange Rate Mechanism (ERM), and Latin America. But experience shows that, in terms of credibility in financial markets, the design of those policy regimes was less important than the fact of their having broad political support. Brazil in 1998-99 is a case in point. In 1998 Brazil operated a crawling peg exchange rate regime.
That compensation is paid for by those seeking to spend more today than their current income, such as people buying houses, or firms investing in new capital, who in return will not consume all their income in the future to repay the debt. There are two parts to interest payments – the real component which is the extra amount of goods and services you can buy in the future relative to today and the inflation component which compensates for the changes in the prices of goods and services in the future. Long-run nominal interest rates have been falling across major advanced economies for more than three decades. In major part, this is due to the success of central banks in taming inflation. The expected inflation rate and the inflation risk premium incorporated into long-run interest rates have fallen. Yet changes in expected future inflation that are in turn realised are benign for savers – it is changes to the amount of goods and services that can be purchased in the future that matter, not changes in nominal prices. But it is not just long-term nominal interest rates which have been declining; longterm real interest rates have also fallen. Factors beyond monetary policy have played a role in driving real rates lower, which are less benign. There has been a secular decline in productivity growth rates in advanced countries, and increased pessimism about future growth. With lower expected return on capital, firms are more reluctant to invest.

We assume that January’s indicators on consumer lending recovery will probably exceed those on income recovery, and if any signs of future overheating emerge, we may start already this year to increase buffers for newly issued consumer loans in order to prevent an inadequate rise in households’ debt load as compared to income growth. I would like to especially emphasise once again the fact that the decision to release buffers, rather than extend the regulatory easing is a matter of principle. Macroprudential buffers were introduced in the regulation not so long ago, and they are part of our countercyclical policy. What does this mean? This means that these capital buffers are accumulated when the environment 2/7  BIS central bankers' speeches  is favourable and are released to be used in crisis periods. Today, we are facing exactly such a situation. In contrast to regulatory easing, macroprudential policy does not camouflage problems, yet delivers more comfort to banks. The second topic I would like to dwell on is that we are going to return to our plan for curtailing irrevocable credit lines for systemically important banks. We announced this policy before the pandemic, but in spring 2020, amid all that turbulence in the market, we temporarily eased the requirements for systemically important banks’ compliance with the liquidity coverage ratio and made irrevocable credit lines granted by the Bank of Russia more affordable, postponing the termination of this instrument.
But others argue that it could accelerate further, as technology costs continue to fall, helping market users seek out more obscure venues where they might have an edge.5 Whatever happens, for today’s market participants, fragmentation is a fact. And that means – just like Lola – they can experience a markedly broad range of outcomes. That has important implications for all three of the characteristics – informational efficiency, resilience and fairness – I talked about a moment ago. Central banks are watching those issues closely.6 But today I want to focus on the effectiveness of the FX market in delivering the services needed by its users – using three storylines of my own. Our first fictional FX market user has never had it so good. With the resources and knowledge to connect to dozens of competing platforms and liquidity providers, analyse rich data sets in real time to work out the best way to deal, and using an array of algorithms (perhaps even arranged in an ‘algorithm wheel’) to execute at speed with minimal price impact, she gets an exceptional service from FX markets. I say ‘she’ quite deliberately here too – because, as I discussed back in June in a different speech,7 technological innovation means embracing diversity – of people, ideas, and working practices – is no longer a choice, it’s a business necessity.

In addition, the IoD provided input into the Corporate Governance Model Board Charter which has been developed with technical expertise from MTN Special Engagements led by Ms Mary Ncube. The outcome of this work is what will be presented to you today. The presentation will focus on the significant position that Boards of Directors occupy in the whole Corporate Governance process and how their role, functions and operations may be reduced into a charter that might guide their work., including;   Powers, functions and delegations of the board;    Board composition and mix – and the challenge in state-owned institutions;    The Chairperson and CEO – and whether they should be different persons and why;    Rights and duties of Directors – and that ultimately the buck stops here;    The role of the Board Secretary – and how they can help drive the right agenda;    Disclosure of conflict of interest and the challenge of ethical standards;    Members’ remuneration and expenses – and what is morally right?   Corporate social responsibility; and,    Evaluation of the Board’s performance, etc. But why do we need a Board Charter one may be tempted to ask?