samchain/econo-pairs-v1 huggingface dataset:
Mr Noyer discusses “the euro from A to Z”  Speech delivered by Mr Christian Noyer, Vice-President of the European Central Bank, at the European Union Centre, Sam Nunn School of International Affairs, Atlanta on 14 January 2000. *  *  *  It gives me great pleasure to speak to such a (young) audience about what is, after all, the world’s youngest and newest currency. As indicated by the title of my speech, I do not intend to enter into complex economic and political considerations concerning the pros and cons of the introduction of the euro under the specific economic and political conditions prevailing in Europe. Rather, I should like to provide you with a concise overview, from A to Z, of the main elements of the new institutional and operational framework under which monetary policy is being conducted in Europe following the introduction of the euro. Nonetheless, I do hope to be able to enhance your understanding of the euro, both in the broader context of European integration and in terms of the practical functioning and implications of Economic and Monetary Union (EMU) in Europe. In this context, you will see that there are some similarities between the institutional framework and conduct of monetary policy in the United States and in Europe. At the same time, there are also substantial differences, particularly with regard to the political and economic framework in which monetary policy has to operate on your side and our side of the Atlantic.

*** Talking with hindsight, after one year of experience since the successful launch of the euro on 1 January 1999, the most important challenge to the Eurosystem was the definition of the appropriate monetary policy for the euro area as a whole. In this respect, the Eurosystem had to navigate uncharted waters, since it could neither build upon practical experience with policies for the euro area as a whole nor on any reputation of its own, although it could draw upon the reputation and experience of the national central banks. In fact, apart from theoretical considerations and econometric test runs, we had - in that sense - to start right from scratch. The complexity of this challenge can easily be derived from the fact that the Eurosystem has to define a single monetary policy for a quite heterogeneous area that, as mentioned earlier, stretches from Lapland in the north of Europe to Andalusia in the very south. From a US point of view, this might not appear particularly demanding. The Federal Reserve System has always been confronted with the challenge of defining a single monetary policy for an even larger and likewise not fully homogeneous area. However, there seems to be a substantive difference. The US economy has evolved over decades, even centuries, under the conditions of the specific political set-up of the United States.
This is an area where I believe the official sector, industry participants, and researchers can all continue to make progress. Social and Private Perspective A second interesting issue reflects the perspective on risk and return. In traditional portfolio investment problems, it is clearly the risk and return to the private investor. When thinking about policy, however, the appropriate perspective of the official sector is for society as a whole, which likely differs from the perspective of an individual firm. That is, the official sector and private sector might measure the axes differently—particularly the risk axis—because the official sector cares about spillovers, externalities, and other market failures that private actors may ignore.11 This broader perspective is a critical part of the supervisory framework for large banks that was implemented after the financial crisis. In particular, the official sector recognizes the potential impact that stress at a large bank could have on financial markets or the real economy. As a result, the Federal Reserve supervisory program pursues two complementary goals for large bank supervision—one, to enhance resilience to lower the probability of failure or inability to provide intermediation services and, two, to reduce the impact on the financial system or economy in the event failure or material weakness does in fact occur.12 This difference in perspective potentially introduces some divergence in views and assessment of what an efficient policy looks like.

Low inflation is not simply an end in itself. What we are really seeking to do in pursuing low inflation is to keep aggregate demand in the economy more or less continuously in line with the underlying capacity of the economy to meet that demand as a means to the end of sustainable growth. And I think that the facts that I have quoted are more consistent with the view that monetary stability - low inflation - can indeed contribute to sustainable growth. But it may be that some of you voted no on the first ballot for the rather different reason - that with the monetary policy focus so clearly on low inflation we appear to ignore the strength of the pound especially against the euro, which is seriously damaging many of the internationally-exposed sectors of our economy, including most of agriculture, much of the manufacturing industry and also some services sectors, with differential regional effects. No doubt some of you are suffering from the strong exchange rate in your own businesses even here in London. The question is what can we do about it. The problem - and it is our biggest problem in operating monetary policy at present - is not so much the strength of sterling - we have after all been remarkably stable against the dollar for most of the past five years - it is rather the surprising weakness of the euro.
Efforts are being made both by the financial industry and the policy-making community to address the most important micro issues, including the lack of transparency, product complexity and inappropriate incentives in the  4  BIS Review 75/2010  originate-to-distribute model. However, in recent months there have been some, albeit nascent, signs of improvement in securitisation activity, in part supported by a narrowing of spreads on securitised products (i.e. yield on securitised products over Libor). The narrowing spreads, which reflects the compensation investors are demanding for holding these assets, could bring prices closer to levels where issuance of ABS securities makes economic sense. This has been indicated in the responses to ECB bank lending surveys and in lower retention rates by banks for newly-issued ABS. While it is difficult to disentangle the relative contribution of micro and macro factors to the improvement, it seems clear that the improved economic outlook has played an important role. IV. Overall assessment  Let me now conclude with the overall assessment of the identified risks to euro area financial system stability (slide 15). Although the main risks to euro area financial stability essentially remain the same as those to which attention was drawn in the last issue of the FSR, their relative importance has changed significantly over the past six months.

One specific concern that some have expressed about Basel II’s applicability in emerging markets is that banks with more basic risk management systems will rely on external credit ratings issued by rating agencies under Basel II’s standardised approach to credit risk. In some emerging markets, there may still be few, if any, rated companies. The Committee has been mindful of this concern. If supervisors are uncomfortable with the use of external ratings in their countries, they may opt to weight all corporate claims at 100%, while sovereigns and banks can be risk weighted according to the risk scores of export credit agencies. This eliminates the dependence on ratings issued by external credit agencies. Indeed, our discussions with colleagues and counterparts from countries outside the Committee, including India, as I mentioned, have been instrumental in addressing other concerns in the capital framework. Thanks to our consultations, we have endeavoured to address several other broad issues in the new framework, including the document’s apparent complexity and the consistency of its application internationally, which I will set out now. Complexity One inevitable by-product of designing a comprehensive three-pillar framework with a range of options for different circumstances is increased complexity. The members of the Basel Committee certainly recognise that it is far easier to enforce a simple rule than a complicated one.
Second, banks can increase the size of the precautionary balances or buffer they hold with the Bank by altering their reserves targets in our voluntary reserves system. 3 And, third, in the face of, say, a  1  “Managing the central bank’s balance sheet: where monetary policy meets financial stability”, Lecture to mark the fifteenth anniversary of Lombard Street Research, London, July 2004, Bank of England Quarterly Bulletin, Autumn 2004, pp359-382. 2  So I am using the expression in its older, broader sense, not narrowly to mean bespoke support operations. 3  Under the Bank of England’s Sterling Monetary Framework, individual reserves banks choose each month a level of reserves they wish to target on average over a month-long maintenance period running between Monetary Policy Committee meetings. The Bank supplies, via OMOs, the resulting aggregate level of reserves. In stressed circumstances, the Bank can permit a revision to the target during the monthly  BIS Review 67/2009  1  9/11-type event that disrupted the financial infrastructure and effectively closed the money markets, the Bank could temporarily substitute itself for the markets by allowing banks to borrow from, and deposit with, us at no charge relative to Bank Rate. 4 Beyond monetary policy All of those contingencies involve events affecting either the demand for reserves or their distribution around the system. And the measures designed to cope with them are therefore part and parcel of the Bank’s management of the banking system’s day-to-day sterling liquidity in the course of implementing monetary policy.

That would be a regime in which central banks would, in effect, be lender of second resort (ie as soon as some markets closed up) rather than LOLR (broadly understood). The equilibrium would surely be one in which less of banks’ balance sheets were liquid in the markets than is desirable; and in which the banking system in aggregate could run excess liquidity risk from a systemic perspective. Haven’t we seen the results of that already? Isn’t the purpose of regulatory standards to avoid that? Our own favored approach is that the regulators should define the “liquidity buffer” to comprise high-quality securities that can reliably be traded or exchanged in liquid markets, including in stressed circumstances. In practice, that would mean focusing on government bonds in many economies. 22  21  See Chapman G, Emblow, A and Michael I (2000), “Banking System Liquidity: Developments and Issues”, Financial Stability Review, Issue 9, December 2000.
By combining these two instruments, the SNB is able to determine the volume of liquidity it wants to drain from the system, thereby influencing the three-month Libor. The SNB continues to use a three-month Libor target range as its reference band for monetary policy. The use of SNB Bills and reverse repos The SNB has been issuing SNB Bills since October 2008. At beginning of this month, a secondary market for buying and selling these short-term debt certificates was established. This secondary market improves market liquidity. SNB Bills have other advantages. First, their flexible terms can be adapted to the monetary policy objectives. Second, they permit greater flexibility and can be issued at high volumes. The SNB has been stepping up the issuance of SNB Bills since March 2010. It currently offers SNB bills with terms ranging from one week to three months. The total amount of SNB Bills outstanding last week amounted to about CHF 80 billion. This made it possible to reduce sight deposits to around CHF 70 billion. SNB Bills and reverse repos are characterised by their extraordinary flexibility, allowing for an efficient implementation of monetary strategy that is fully compatible with the monetary policy concept that has been proven and tested for several years now. In employing these instruments, the SNB continues to operate in an environment that is both familiar to and stable for its different partners. It is nevertheless ready to adjust its monetary policy instruments quickly, should this be required by developments in the financial markets.

Hence, we are likewise engaged in a degree of “soulsearching” on the nature of financial risk and how it might best be managed and how the management of that risk might best be regulated. And we certainly have “bought-in” to the global regulatory reform agenda spurred by the Global Financial Crisis. Clearly Asian banking systems and Asian markets do not operate in isolation from global markets and hence, we are all in this together! 4. With this in mind, I would like to take this opportunity to pose a couple of questions, the answers to which would have fundamental relevance to the nature and shape of the global financial system going forward – a. To what extent is the mainstream thinking, that financial or systemic risks can be assessed and forecast through the use of the financial models that have been developed in the last two decades, still valid? b. The financial markets have become very complex and, as we now know, have generated huge risks for the global financial system. Is the current international effort on regulatory reform adequate in addressing the risks arising from this complexity? and  c.  The Basle Committee on Banking Supervision is undertaking major reform in upgrading global standards on the quality and quantity of the capital, and introducing global standards on the liquidity that banks have to hold in order to improve their resilience to risks and shocks. Some countries have already implemented these standards but some advanced economies have not yet done so.
By this point, buffeted by gloom and uncertainty, you may be considering joining the bankers in pushing me off the mountainside, so let me begin to outline how we can address these challenges. We can start by recalling that the global economy has been in similar circumstances before. Everyone knows that the 1930s marked the depressing aftermath of a great financial crisis. Less well-appreciated was that it also marked a period of intense innovation that laid the groundwork for post-war growth, particularly in the United States. Alexander Field in his book “A Great Leap Forward” contends that the 1930s were the most technologically progressive decade of the 20th century. He notes the development of chemical-based materials like Teflon, Nylon and synthetic rubber; the development of the Television, and the expansion of the public road network that paved the way for advances in distribution and transportation. In the 1930s, the collapse of demand meant mass unemployment and slow adoption of new technologies. It took a recovery in aggregate demand after the Great Depression, partly spurred by mobilisation for the Second World War, for many innovations to be applied and new markets to develop. Demand was persistently weak in the 1930s because policy mistakes were legion. A protectionist backlash closed global markets and ended global finance. Policies favouring liquidation led to widespread bank failures. Monetary policy was tightened dramatically. This time, thus far, is different. Protectionism is being resisted, banks recapitalised, and the global financial system rebuilt. In parallel, monetary policy is highly accommodative.

Caleb M Fundanga: Access to finance – corporate governance and sustainability Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official opening of the Microfinance and Small to Medium Enterprises Conference on “Access to Finance: Corporate Governance and Sustainability”, Lusaka, 17 June 2008. *  *  *  • Honourable Felix Mutati, MP – Minister of Commerce, Trade and Industry; • Mr Michael Mundashi – Non-Executive Director Standard Chartered Bank; • Mrs Mizinga Melu – Managing Director Standard Chartered Bank • Mr Prashant Thakker – Global Head of Microfinance Institutions of Standard CharteredBank • Distinguished Guests, Ladies and Gentlemen I am honoured to have this opportunity to make keynote remarks at this conference on Microfinance Institutions and Small to Medium Enterprises organised by Standard Chartered Bank, whose theme is “Access to Finance: Corporate Governance and Sustainability”. I wish to extend a warm welcome to all participants, particularly those that have travelled from outside the country. I hope that you will find time to see some of the tourist spots of Lusaka and experience the warm hospitality that Zambia has to offer. Distinguished Guests, following the liberalisation of the Zambian economy in the early 1990’s, the number of small- and medium-scale enterprises (SMEs) has increased significantly as the Government divested from running business in the economy to pave way for increased participation of the private sector.
In the US, the key rate is expected to increase by a further 50 basis points before peaking. In the UK, the key rate is expected to remain virtually unchanged in the period ahead. Interest rate developments and buoyant growth have led to a sharp rise in credit growth in the past few years. Property and equity prices are also rising sharply in many countries, including Norway. Debt developments in Norway through the 1990s can probably be viewed to some extent as a delayed adaptation to the deregulation of the housing and credit markets in the 1980s, after many households burned their fingers immediately after the deregulation. At the same time, the credit market has deepened. New loan products have emerged, and it is easier to raise loans. Borrowers can choose their repayment schedule. Credit and housing market liberalisation provides homebuyers with the opportunity to establish a high housing standard early in their adult lives and draw on this capital later in life. In recent years, household income growth has been solid, household confidence regarding the future has been strong and households probably perceive higher income levels as permanent. This may have resulted in a further rise in house prices and debt. In addition, low real interest rates are currently contributing to this.

The Norwegian authorities have been successful in ensuring that the bulk of the petroleum wealth benefits society as a whole. Both the state’s ownership interests through the State’s Direct Financial Interest in petroleum activities (SDFI) and the tax system have contributed. The companies that extract oil earn a reasonable return on their investments and have incentives to invest, but the economic rent has essentially accrued to the general public. The authorities have so far also been successful in smoothing the use of petroleum revenues over time. This is important for several reasons. First, it is misleading to look upon the cash flow from petroleum activities as income. The appropriate economic perspective is to see the transfer of cash flow to investments abroad as a way of transferring capital from one account to another – from petroleum to foreign securities. By doing so, we diversify risk. Second, the size of the cash flow from petroleum activities varies. If petroleum revenues were to be used as they accrue, this would lead to wide fluctuations in demand in the Norwegian economy. Third, the use of petroleum revenues has an impact on competitiveness in Norwegian business and industry. A high level and substantial variations in the use of petroleum revenues would have a negative impact on internationally exposed industries. The establishment of the Government Pension Fund and the spending guidelines for petroleum revenues are intended to meet these challenges.
This intermediation process needs to be performed in an environment of financial stability. Therein lies the importance of confidence and soundness of the financial system. Banking business inherently involves risks and these risks need to be rigorously managed. In an environment of heightened uncertainty and increased volatility, this needs to be reinforced with the development of a more robust and resilient banking system. Hence the importance of prudential regulations to ensure the soundness and stability of the financial system. An important component of prudential regulation is having a sound capital framework that measures risks accurately and allocates adequate capital to the risks. The current capital accord issued in 1988 has served as the international benchmark for capital adequacy assessment for banking institutions. While it has achieved the desired results in terms of developing more well-capitalized banking institutions globally, the rapid developments in the financial markets over the years, including the growth of off-balance sheet financing such as asset securitisation have rendered the broad-brush measurement of the existing accord to be less effective. Risk and risk management - the need for new accord New institutional structures and evolving market practices have reduced the effectiveness of the existing accord. While the basic categorization of risks have not changed significantly, the ways in which risks present themselves have changed quite substantially. With the introduction of new products and more complex financial transactions enabled by technological innovations, risks can be disaggregated and rebundled in new ways.

Christian Noyer: Bank of France – Bank of Japan: converging views Opening speech by Mr Christian Noyer, Governor of the Bank of France, at a joint symposium of the Bank of France and the Bank of Japan, Paris, 8 January 2008. *  *  *  Mr Ambassador, Governors, Chairpersons, Professors, ladies and gentlemen, dear friends, I am delighted to welcome you today to the Banque de France together with the Governor of the Bank of Japan, Toshihiko Fukui. Yokosso Ilashaïmase ! Some of you have come as neighbours, and others have made the trip from Tokyo to attend this symposium, for which I would like to thank you wholeheartedly. And, as 2008 has just begun, I would like to wish you a very happy New Year: the year of the rat in the Japanese calendar, “Akemashite omedeto gozaïmasu nesumi doshi”. I recently read the following prediction concerning this year: “It will be particularly favourable for all forms of investments and savings (we all know that rodents hoard their food)”. The prediction went on to say (every word is true) “The influence of the rat curbs inflation”. As a euro area central banker, I welcome this omen. But coming back to what gathers us here today, 2008 is the year of friendship between France and Japan, celebrating the 150th anniversary of Franco-Japanese diplomatic and economic relations.