samchain/econo-pairs-v1 huggingface dataset:
If reintermediation is significant, banks will be taking back on to their balance sheets conduit and investment vehicle paper or just holding onto loans for longer than usual before they can be sold onto the capital markets. 19  Perhaps nothing illustrates this as cleanly as the advent of credit derivatives. Derivatives of any kind unbundle funding (and so liquidity risk) from the underlying risk to which an agent is seeking exposure via a particular contract. So a credit derivative unbundles credit risk from funding. This further complicates interpretation of the bank lending data (M4L). Imagine that, due to their customer networks and screening capability, banks originate all credit, but that they use credit-default swaps to shed a great portion of the credit risk via CDS to non-bank financial institutions. In the limit, this would be a world in which M4L correctly measured (bank) lending and M4 was one useful measure of “liquidity”. But it would also be a world in which shocks to credit conditions from capital and risk appetite worked largely through non-bank lenders, and in which shocks to liquidity worked largely through depositor confidence in the banking system. In the real world, this story underlines the need to look at total credit, and to analyse the monetary data with finesse. 20  See Bank of England Inflation Report, November 2007, Section 1 on “Money and Asset Prices”, pages 16-17.

But in some circumstances one can do better to approach things the other way round, starting with general credit conditions, examining the interactions of non-bank and bank lending, and then broad money as a (partial) counterpart to M4L. My remarks today will follow that structure, which will provide a framework for some observations about the current tightening in credit conditions, as well as about the preceding expansion. 1  “The transmission mechanism of monetary policy”, a paper by the Monetary Policy Committee at the Bank of England, April 1999 and Harrison R., K. Nikolov, M. Quinn, G. Ramsay, A Scott and R. Thomas, “The Bank of England Quarterly Model”, Bank of England 2005. The Bank’s wider “suite of models” does include richer asset price channels. BIS Review 149/2007  1  Credit Credit is, of course, vital to any economy, enabling households and firms to make choices about whether to bring forward or defer spending from income. There are conditions in which it would play no active role, passively reflecting cyclical fluctuations in output, employment and inflation. In a world of more or less complete transparency between borrowers and lenders, very low transactions costs, and very low risk aversion, access to credit would not be rationed; and ex ante yields on financial assets, including loans and bonds, would not embody risk premia. So if households and firms wanted to bring forward spending in the face of shocks to the economy, they would be able to do so restricted only by their need to remain solvent.
By that criterion, inflation as projected in the Bank’s forecast will be at target for the entire forecast horizon through end-2017, apart for the last quarter of 2015 and the first quarter of 2016. According to the forecast, inflation will average 2.6% during the period 2014–17 and will therefore be at the 2½% target. If this materialises, it is hard to call it anything other than an acceptable performance. It is naturally less of a concern if inflation deviates temporarily from target if inflation expectations do not deviate in the same direction. Early this year, inflation expectations were above target even though measured inflation was below it. But fortunately, inflation expectations have subsided towards the target in the recent term and, by some measures, are close to it, particularly short-term expectations. This is important for monetary policy, as I will explain shortly. I have briefly discussed the current situation and the economic outlook. But what about uncertainties and known risks? There are risks attached to the global economy, which seems to be on the downside, at least in the near term, as regards both output growth and inflation. And there is the risk that our economic policy and contractual wage negotiations will not be successful, as has so often been the case during upswings. GDP growth will then be somewhat stronger in the short run, but the current account balance will deteriorate and inflation will rise, and ultimately GDP growth will fall below what it would have been otherwise.

Zeti Akhtar Aziz: Asian market integration and financial innovation Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the International Conference on “Asian market integration and financial innovation”, Tokyo, 10 February 2012. *  *  *  The world economy and international financial system is entering into a new phase of globalisation. Far from having an effect of slowing the pace of globalisation, the recent global financial crisis has intensified the process, resulting in a more connected and interdependent world. While – previously – globalisation manifested itself in the form of trade and investment between the emerging and developed world, emerging economies are now becoming more connected with each other within and across regions. This trend is being reinforced by similar changes in the pattern of financial flows. While previously, financial flows were predominantly between the developed and emerging world, greater financial integration among the emerging economies is facilitating the intensification of this connectivity. While unable to be in Tokyo, it is my pleasure to speak at this international conference on the topic of Asian Financial Integration. My remarks will touch on the main motivation for pursuing financial integration in Asia, despite the fact that its absence has not previously hindered economic integration in the region. Whilst Asia may draw lessons from the European experience, I will discuss the different approach that is being pursued in Asia.
8  BIS Review 113/2007  turmoil. It is all the more important to acknowledge these achievements since it was said in some quarters that the euro would never see the light of day or that it would create severe economic disruptions. Those scenarios have not materialised. In the post-war European adventure, the euro represents a major milestone. That said, and whatever its own merits, a currency is not an end in itself, even though the new EU members are keen on adopting it as soon as possible. Entry into Monetary Union must be founded on a sustainable convergence process. Enlargement of the euro area also gives renewed impetus to addressing the challenges ahead as it makes it more pressing for policy-makers to tackle long-ignored weaknesses. This is a crucial contribution to building a stronger EU, in which I strongly believe. All in all, let me express my confidence in the future of the euro and of the single monetary policy of a large Euro zone. BIS Review 113/2007  9  10  BIS Review 113/2007  BIS Review 113/2007  11  12  BIS Review 113/2007  BIS Review 113/2007  13

The two cities are situated in different regions and their real economies have different clientele. With capital account controls still in place on the Mainland, the further opening up of Shanghai, such as the development of its Free Trade Zone, will lead to closer and more extensive business, trade and financial links between the two cities, meaning more business opportunities. In 2000, there were 23 flights a day between Hong Kong and Shanghai. In 2013, this had increased to 75, clearly demonstrating that the continuous growth of Shanghai will result in more business exchanges with Hong Kong and creating a win-win situation. 9. Indeed, the launch of the Shanghai-Hong Kong Stock Connect on November 17 resonates with my assertions here in several ways. Last week, Vice-Premier Ma Kai told the visiting delegation of the Hong Kong Association of Banks that the scheme was not only a 2  BIS central bankers’ speeches  milestone for financial co-operation between Hong Kong and Shanghai, but also a strategic move towards the Mainland’s capital account convertibility and the opening up of its capital market. Furthermore, the Shanghai-Hong Kong Stock Connect adds another important channel for the circulation of renminbi between onshore and offshore markets. It is also a strong vote of confidence in Hong Kong’s development as an international financial centre, reaffirming our unique role as the offshore testing ground for the Mainland’s financial liberalisation. Zero-sum vs positive-sum 10.
The deadline for compliance is 30 June 2014. As part of its proposal, the SNB drew attention not only to the cyclical risks but also, once again, to the high risks in mortgage lending, especially in the area of affordability. Some three months have passed since the CCB was increased. Based on the data currently available for the first quarter of 2014, the all-clear still cannot be given, in our view. In the first quarter of 2014, momentum in real estate prices was similar to that in the previous year and therefore has not further diminished. However, for an idea of the overall picture we are still lacking important data. A definitive assessment of the latest developments would therefore be premature. So we will continue to monitor developments on the mortgage and real estate markets closely. Any decisions on further measures must be made in the light of these observations. The SNB therefore regularly examines, first, whether the CCB needs to be adjusted. Depending on how the situation develops, this might need to be an upward or a downward adjustment. Second, the authorities are working on the specification of measures that would target risks in the area of affordability. Monetary policy and the SNB balance sheet: Flexibility as the key factor In the case of the CCB, the SNB plays an important role because it can make proposals for its activation, alteration or deactivation. However, this instrument does not have any impact on our balance sheet.

The second example I would like to mention here is the introduction of the minimum exchange rate in September 2011. This rate was introduced to correct a massive overvaluation of the Swiss franc arising from adverse developments on the foreign exchange market, and thereby avert the threat of a deflationary trend. I have explained to you why this instrument is still needed and is being enforced by us without any restriction. A measure like the minimum exchange rate can only succeed if the central bank is totally credible, in other words, if people believe it will actually defend the rate, if need be. Words can certainly achieve a great deal in the financial markets. But this only holds true if they are followed up with deeds when necessary. In the case of the minimum exchange rate, the deeds in question are unlimited foreign currency market interventions. In 2012, we were required to enforce the minimum exchange rate with extensive foreign currency purchases, and our balance sheet total increased significantly. If there were statutory restrictions on our balance sheet we would be unable to introduce and enforce a measure of this kind. The financial markets would call into question both our resolve and our ability to see the measure through. Concluding remarks Ladies and gentlemen, I come to my concluding remarks. Even seven years after the onset of the financial crisis, the environment remains very challenging for our economy and for Swiss monetary policy.
Paris Europlace International Financial Forum – Paris, 9 July 2019 New Frontiers in Finance  Speech by François Villeroy de Galhau, Governor of the Banque de France  Press contact: Mark Deen (mark.deen@banque-france.fr; +33 6 88 56 54 03). Page 1 sur 5 Ladies and Gentlemen, It is a pleasure to be with you today: this Paris - Europlace International Financial Forum is more and more “the place to be”, as France and Paris are increasingly stimulating first-movers in Europe. The theme of this Forum – “New Frontiers in Finance” – prompts us to look towards new territories that we have to explore and conquer. Regarding finance, I will focus on two of them: digitalisation and green finance. But before looking at the future, let me stress two prerequisites for the present. ** I. Two prerequisites for the present My first message is to welcome the new European team, nominated in Brussels last week, starting with Christine Lagarde and Ursula von der Leyen. Once again, albeit at the last minute, albeit under the threat of a crisis, Europe has proved itself to be decisive and innovative. Now, it is time to begin the fundamental work on a true financial Eurosystem. Let us look beyond Brexit, and beyond the somewhat disappointing debates on the euro area budget. The top priority on the European agenda should be a Financing Union for Investment and Innovation, which will channel our abundant private savings through a combined Banking Union and Capital Markets Union.

Firms need this in order to raise equity and find European venture capital; keeping a European capacity in investment banking is a strategic imperative. Financial players need this in order to conduct cross-border mergers: European banking consolidation is overdue, and it is indispensable, not to reduce competition – quite the opposite – but to reach the critical mass necessary to make digital investments and allow savings to circulate. And, lastly, the euro area needs it in order to finally have an effective economic stabilisation tool to weather the shocks affecting some countries: “private risk sharing” is effective between states in the United States. If one doesn’t want a fiscal union – duly noted –, one must make even more resolute progress on the Capital Markets Union. We have talked enough about this, and it is now time to take concrete  Page 2 sur 5 measures: this must be the ambition of the new Commission. The ECB will support it, and France will be a committed player. My second prerequisite is the successful implementation of Basel III. It is vital that we do not forget the lessons from the financial crisis, nor break the promise we made in 2017. But this transposition must be fair – naturally involving the United States – and reasonable. The first estimates of capital requirements are premature and do not give the horizon: Basel III will be finalised only in 2027.
But the catastrophic risk, of dealers withdrawing from market making altogether because balance sheets have become dangerously overstretched, should be much reduced. Managing the impact of failure With a zero-failure regime neither feasible nor desirable, reform is also underway to reduce the impact of failure as well as its probability. And specifically to allow even the largest banking groups to fail and be resolved in a safe way without recourse to taxpayer funds. The key is to be able to recapitalise a failed group safely, quickly and credibly by bailing in the group’s uninsured, unsecured creditors, such as debt-holders. To be clear, the aim is not to resurrect every failed business, though that may be the outcome in some cases. The aim is to enable the critical parts of the group – the parts vital to the real economy and the parts that financial stability depends upon – to keep operating so the group can be safely resolved over time. The ultimate solution could involve a mixture of sales, administrations and run-off. The bail-in provides the time and the loss absorbing capacity to allow that to happen. The required legal framework is well progressed. In both the UK and US, it will in future be possible to bail-in debt holders. An EU framework has been agreed with the Banking Recovery and Resolution Directive, which will come into effect in January next year. This not only provides the powers for bail in.

Which of the two ratios binds first depends on the kind of risks that banks are running. The leverage ratio automatically places tighter limits on expansions in the balance sheet through supposedly low-risk assets. The international community has made progress on the leverage ratio. The definition guiding how it should be calculated was agreed at the start of this year. This will provide the basis for banks to disclose the ratio over the next 3 years in the light of which the international community will decide in 2017 on the calculation of a minimum standard. A number of authorities, including the US, the Netherlands, and the Swiss, have already introduced or are considering a leverage ratio in advance of the international standard. In the UK, the Prudential Regulation Authority has already asked the eight major UK banks and building societies to take steps to achieve a leverage ratio above 3%. The Financial Policy Committee has been asked by the Chancellor to review whether a leverage ratio framework should be introduced in advance of the international framework. This could include a power for the FPC to vary the ratio to counter macro-prudential risks. The FPC will consult on the review and expects to publish its conclusions towards the end of the year. There is also important work underway to ensure the risk-weighted framework is robust. Reviews are underway to build a credible standardised approach to calculating risk-weights for banks’ trading activities and their loan books; this too should help reduce the system’s exposure to model risk.
The Maltese taxpayer is still paying the price of past mistakes in this respect. On the other hand, the private sector must do its utmost to become more competitive without relying on subsidies, protection or unsustainable monopolistic positions. In the past, business used to agglomerate around what were perceived to be the safest and most profitable propositions, such as real estate development and importation. These activities have, unfortunately, also proved to be less productive than others. A fresh, export-oriented approach based on investment, innovation and higher value added is necessary for survival in today’s competitive global environment. This ties in very closely with the third factor involved in sustaining competitiveness, namely the need to increase the amount of resources in the economy and the productivity with which they are used. Productivity growth is perhaps the single most important objective for it determines how fast the economy can grow. And faster growth not only lifts living standards, but it also boosts tax revenues and makes it easier to do many socially desirable things, such as paying for tomorrow’s pensions. Turning first our attention to the labour market, human capital is the most valuable resource this country possesses. We must nurture it and use it as productively as possible. Towards this end, our labour supply and our work practices must be flexible enough to rapidly adapt to changing market needs. Training and development must be an on-going process, especially in the skills that are most in demand.

François Villeroy de Galhau: Franco-German experiences and challenges in the euro era  relations  -  Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Europadialog, organized by the Investitions- und Strukturbank Rheinland-Pfalz (ISB), Mainz, 21 March 2017. * * * Madam Minister-President [Ms Dreyer], Madam Finance Minister [Ms Ahnen], Mr Spokesperson [M. Dexheimer], Ladies and Gentlemen, I am delighted to be here with you today in Mainz, and I sincerely thank you for inviting me. On a more personal note, I am here as a committed European and a friend of Germany. I am particularly attached to the Franco-German friendship: I am French and live in Paris, but my family’s roots are in a neighbouring Land, Saarland, where my family has lived since the end of the 18th century and where its porcelain manufacturing company Villeroy & Boch forms part of the German “Mittelstand”. When I spend my holidays in Saarland and I go north, I admire Trier; or east, Neustadt an der Weinstraße. And when I come fortnightly to participate in the ECB Governing Council, I am very close to your beautiful town of Mainz. There is no doubt in my mind that “we, the citizens of the European Union, have united for the better”, as stated in the Berlin declaration of 25 March 2007. This was for the 50th anniversary of the Treaty of Rome, and this is still just as true four days before we celebrate its 60th anniversary.
Monetary policy: achievements and review? Már Guðmundsson, Governor of the Central Bank of Iceland. Monetary policy meeting of the Iceland Chamber of Commerce, held at Harpa in Reykjavík on 17 November 2016  Madame Chairman, honoured guests, The Iceland Chamber of Commerce has a long-standing tradition of holding a meeting like this one on economic developments and prospects and monetary policy. The meeting is held following the publication of the Central Bank’s autumn forecast and, in latter years, the Monetary Policy Committee’s interest rate decision. In recent years, it has been the practice to select a particular topic for the meeting, and in keeping with this, today’s topic is: Is independent monetary policy too costly? This departs somewhat from the contents of the Central Bank’s Monetary Bulletin and current tasks of monetary policy, but I will touch on these towards the end of my speech today. Yesterday the Bank published Monetary Bulletin 2016/4, which contained the Bank’s new macroeconomic forecast, and announced the Monetary Policy Committee’s interest rate decision. The big picture of the current state of the economy is that things have seldom been better. Icelanders have received a significant boost from improved terms of trade and growing goods and services exports, particularly due to strong growth in the tourism sector. It is this that underlies the vast increase in Icelanders’ real income and the country’s high employment level. In addition, Icelanders have proven more cautious this time than often before during an economic boom.

Second, the longer we keep inflation expectations at target, maintain a current account surplus, and continue to pay down debt, the more the risk premium component of interest rates and the equilibrium real rate in Iceland will continue to fall. The current propensity to save, adjusted for the business cycle position, is much greater than it has been for quite a while, and over time, it will contribute to a reduction in the long-term equilibrium real rate. If inflation expectations remain at target, both nominal and real rates will decline accordingly. Exchange rate of the króna and Central Bank foreign currency purchases Responding to the recent strong inflows into the foreign exchange market is one of the Central Bank’s most complex tasks at present. The problem lies, among other things, in distinguishing between short-term inflows, which are only loosely connected to economic fundamentals and are much more likely to stop suddenly or even reverse, and inflows that reflect more lasting positive changes in fundamentals, although these can change for the worse as well. It can be argued that, other things being equal, there should be more foreign exchange market intervention in the former instance and less in the latter. While the foreign exchange reserves were being increased to the desired size during the prelude to general capital account liberalisation, this distinction was less important for policy responses than it is now, as the premises were in place to buy the inflows and top up the reserves, more or less irrespective of the origins of the inflows.