samchain/econo-pairs-v1 huggingface dataset:
Transcript of the questions asked and the answers given by Dr. Willem F. Duisenberg, President of the ECB, and Christian Noyer, Vice-President of the ECB Question: I would be very interested if you had anything to say about the exchange rate of the euro, if the central bankers of Europe seem comfortable with it. It seems that the strategy of the ECB is now, in light of today’s actions, a double strategy to re-invigorate the European economy. On the one hand, you got the exports boosted by the euro and, on the other hand, you got an interest rate cut to lubricate the economy as well. Duisenberg: First of all, as far as the exchange rate of the euro is concerned, I always like to take a slightly longer term perspective than is normally done in articles and considerations about it. I would like to point out that, if you look at the rate of the euro, and look back to what we - in our jargon - call the synthetic euro, the euro that you can calculate before the euro was in existence, then you can observe that the rate of the euro to the dollar has been more or less stable at around a level of USD 1.08 to USD 1.10 from the middle of 1997 until early September 1998. In the middle of September it started to rise to reach a level of 1.16 at the end of the year, and that was the level at which we entered the euro era.

Mr. Duisenberg reports at a press conference on the outcome of the meeting of the Governing Council of the ECB. Introductory statement by the President of the European Central Bank, Mr. Wim Duisenberg, in Frankfurt on 8 April 1999. __________________________________________________________________________________ Ladies and gentlemen, the Vice-President and I are here today to report on the outcome of today’s meeting of the Governing Council. Let me start with the Governing Council’s discussion of recent economic developments and the decisions that the Governing Council has taken today in the field of monetary policy. After an indepth review of recent monetary, financial and economic developments, the Governing Council decided that the interest rate for the ECB’s main refinancing operations will, from next week on, be set at 2.50%. In addition, the interest rate on the marginal lending facility will be lowered to 3.50% and the interest rate on the deposit facility to 1.50% with effect from tomorrow. Let me report in some more detail on the reasons for which the Governing Council, in the context of the ECB’s monetary policy strategy, deemed it appropriate to lower interest rates. As regards monetary developments in the euro area, the acceleration of monetary aggregates seen in January 1999 was partly reversed in February. The 12-month growth rate of M3 declined from 5.6% in January to 5.2% in February.
In an open letter published three weeks ago on climate-related financial risks from the Governor of Bank of England Mark Carney, Governor of Banque de France François Villeroy de Galhau and Chair of the Network for Greening the Financial Services Frank Elderson, the significant effects of climate change are highlighted and a call for action from central banks and supervision is issued, with specific recommendations where central banks are encouraged to integrate sustainability into their own portfolio management. In closing, the authors recognize that “climate change is a global problem, which requires global solutions, in which the whole financial sector has a crucial role to play”. Today we have unlocked the gates towards exotic, yet newsworthy debates here, in Bucharest. Therefore, permit me to extend an open invitation to you all for further discussions at the National Bank of Romania about the impact of climate changes on economies, finance and central banking. We will be honored to host such a conference in Bucharest. Thank you for your attention. 2/2  BIS central bankers' speeches

The necessary reforms will call for short-term sacrifices from all walks of life, such as the relinquishment of protection and privileges. However, the long-term gains in wealth for the country at large will more than compensate for these short-term difficulties. BIS Review 42/2005  1
Ardian Fullani: Recent economic and monetary developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the press conference on the Monetary Policy Decision of the Bank of Albania Supervisory Council, Tirana, 25 January 2012. *  *  *  Today, on 25 January 2012, the Supervisory Council of the Bank of Albania reviewed and approved the quarterly Monetary Policy Report. Based on the analysis of Albania’s latest economic and monetary developments and following discussions on their performance outlook, the Supervisory Council of the Bank of Albania decided to cut the key interest rate by 0.25 percentage points. Following this decision, the rate for One Week Repurchase Agreement fell to 4.50%. The key rate is reduced under the conditions of contained inflationary pressures over the monetary policy horizon as well as expectations for a more prudent fiscal policy in the period ahead. The Supervisory Council deemed that this decision provides the appropriate monetary conditions to meet the inflation target over the medium run. Moreover, this movement increases the monetary stimulus and encourages the economic activity in Albania. (Let me now proceed with an overview of economic developments and main issues discussed at today’s meeting.) *** The Albanian economy faced challenges in 2011 as regards economic growth and maintaining of macroeconomic balances. Additional attention to public finance stability in euro-area countries is reflected in added risk premiums in international financial markets and reduced willingness to invest in emerging economies.

On the downside, the speed of the recovery in the world economy may be held back by a number of factors, including the large outstanding debt position of corporate and household sectors; investment in the UK might remain subdued; or the weakness in pricing pressures we have seen over the past year or so may persist. But on the upside, the US might bounce back more rapidly than anticipated; consumption growth might remain robust; or the sterling exchange rate might begin to adjust downwards. Against this background of risks, it is quite possible we may see rates at current levels for some time until the way ahead is clearer. But, as you know, economic events have a habit of developing quite rapidly, so even short term predictions are never easy. For our part, we will continue to assess the case for interest rate changes on a month-by-month basis. In carrying out our task, the MPC relies heavily on having the very best information at our disposal, and in that we are enormously assisted by our network of regional Agencies. Each month, our Agents drive thousands of miles, eat hundreds of rushed sandwich lunches and, on occasion, no doubt push your goodwill to the limit as they seek out the latest news on developments in your businesses. Nigel Falls, our local Agent, is here with me tonight, and for those of you who have not already met him I really do encourage you to do so after the dinner.
In the past, in carrying out its oversight role, the Board had tended to rely mainly on examination report of the Bank of Thailand and that of the bank’s internal auditors to identify problems created by managements and to follow up on their resolution. However, with increasingly rapid and complex business developments, this process needs to become more forward-looking, so that preventive measures or prompt corrective action can be taken to cap any problems before it can affect the bank’s soundness. Supervisory agents cannot do this job alone. The oversight of Board of Directors is needed as they are much closer to the institution and its on-going developments. For this reasons, regulators worldwide have shifted their supervisory framework to mandating that the Board of Directors take lead responsibility for overseeing the process of risk management which ensures that the banks have internal prompt preventive and corrective procedures. Supervisors or regulators role would be confined to setting the broad framework, to be supplemented with area-specific examination to help provide additional independent crosscheck. For this reason, the Bank of Thailand has called on bank directors to take on an even greater responsibility. And some of you may well be contemplating what you must do in order to discharge this broader responsibility. Today presents a good opportunity for me to discuss with you the important principles underlying governance and responsibility of bank directorship. The Bank of Thailand has drawn out 10 key principles as follows.

It is important to note, however, that the main focus of an investment policy evaluation rests in the model of the Central Bank's actions. Having been responsible for the areas of Capital Markets, Currency, Operations Desks, and Corporate and Sovereign Credits, I am confident in concluding that there is a consensus in the world today that the Central Banks that have been assigned a multiplicity of functions and targets are doomed to fail. Successful Central Banks are those that have price stability as their only mandate. In this regard, I would like to emphasize that competence, seriousness and patriotism are a legacy of Arminio Fraga's administration at the Central Bank. There is no doubt that the implementation of a floating exchange rate regime and of the inflation targeting regime in Brazil at a critical moment for the Brazilian economy in 1999 are a hallmark in the history of Central Banks in emerging economies. The substantial improvement in transparency and credibility that has taken place over the past three years has been incorporated into the working structure of the Brazilian Central Bank. Arminio, thank you for the loyalty and professionalism you showed in the transition process. Although there are many instruments a government can use to implement its economic policy, the task assigned to the Central Bank is to keep the rate of inflation at a low level, mostly because the Central Bank has only one instrument, which is monetary policy.
The FLS does not seek to allocate credit to particular parts of the economy directly – the Bank is not taking a view on this matter. But SMEs and first time home buyers in particular are thought to be credit hungry. Banks will collectively need to meet that demand if they are individually to make the most of the FLS. 10  BIS central bankers’ speeches  Not necessarily every bank will support every sector. But if the big firms don’t then the smaller banks will. We are relying on the pressures of demand and supply, and competition, to ensure that credit flows to where there is demand. The normal business model of a bank is that their lending rates are related to their funding rates. The process for doing so is not immediate and funding from different sources – both retail and wholesale, secured and unsecured, might be used to support lending activities. There is no reason to think that the provision of cheaper funding via the FLS will cause a bank to change its business model in this regard. Indeed the incentives in the scheme are for banks and building societies to cut lending rates and hence lend more to get the cheapest funding. Since the scheme was announced we have seen widespread falls in funding costs across different sources and an equally wide variety of lending rate reductions.

One could put off deciding on new rules – but the uncertainty would then still act as a drag. The best course seems to be to design and publish the new frameworks but delay their implementation. Even this isn’t entirely satisfactory – the market will reward firms who meet the rules early as they will be perceived to have the strongest balance sheets. Competitive pressure will encourage weaker firms to accelerate their own process so as to keep up, possibly reducing the benefits of a relaxed timetable. The answer to these practical problems of policy making is perhaps in the following key point: the new regulations should be designed as far as possible to be counter-cyclical so that they are less demanding during a crisis such as now, than at other times. Buffers are there to be used. If capital and liquidity buffers could not be used during the bad times then they serve no purpose: they would just be a deadweight loss on the banking system, shifting the point of failure for a firm to a more expensive and hence less efficient location. Putting this in concrete terms, the Financial Policy Committee recently recommended to the FSA that it make clear that the new liquidity buffers introduced by the FSA in 2010 may be used in part, in the event of a liquidity stress, without regulatory over-reaction. Firms don’t need to treat the FSA guidance as a hard minimum and hold an extra buffer on top.
In most countries, however, this mandate is purposely defined in comparatively loose terms, with the main focus on ensuring price stability. As has become evident in the past few years, central banks have considerable room for manoeuvre in implementing this mandate. In response to the crisis, they first lowered interest rates to zero and subsequently eased monetary policy further using new kinds of instruments. At the same time, central banks had to provide the banking system with largescale liquidity assistance to ensure financial stability. As a consequence, central banks’ balance sheets have now reached levels beyond all previous imagination. In addition, many central banks have been given additional responsibilities and have taken on new tasks, in particular in the area of financial stability. The shocks triggered by the global financial crisis did not leave Switzerland unscathed either. The Swiss National Bank (SNB), therefore, had no choice but to move into uncharted waters. During the crisis, maintaining a functioning Swiss franc money market and subsequently stabilising our country’s largest bank were the first priorities. At a later stage, the massive appreciation of the Swiss franc threatened the economy at its core, creating a risk of deflation. The SNB came to the rescue by injecting liquidity into the market, setting up the StabFund, intervening in the foreign exchange market and introducing the minimum exchange rate. Our balance sheet is a reliable indicator of just how intense these interventions were.

Prior to the outbreak of the crisis at the end of 2006, the balance sheet total was just over CHF 100 billion. Today, it amounts to nearly CHF 500 billion. In the area of financial stability, the SNB, too, was entrusted with some new tasks, especially with regard to macroprudential measures. The countercyclical capital buffer as well as the designation of systemically important banks and their functions are probably the most well-known of these measures. On the whole, central banks around the world have thus far been successful in their role as firefighters. They managed to prevent the global economy from falling into a depression and to ensure price stability. In addition, in many countries, they worked side by side with their governments to shore up the banking system. This has bought some time – time that in numerous places should be used to solve the underlying problems. In many countries,  BIS central bankers’ speeches  1  measures that should be undertaken to achieve this include well-designed structural reforms of the economy and comprehensive restructuring of government finances. The downside of the central banks’ success is that it could give the impression that treating the root of the structural problems is not necessary at all.
But if one compares it with the rigorous institutional framework that encompasses monetary policy, it is difficult to rid oneself of the thought that the “arm" which would mark the distance from present party politics would be on the short side. I believe that there are some worrying signs here. It appears as though there is a tendency, from a political point of view, to see stabilisation policy, or more precisely the repo rate, as the main solution to the problems we are currently seeing in the Swedish labour market. As I see it, there is an evident risk that this type of view would also colour the discretionary fiscal policy with an increased stabilisation policy responsibility. However, before I round off, allow me to say that it is possible that situations might arise that are so serious from a stabilisation policy point of view that discretionary fiscal policy measures could be warranted. Here I am mainly thinking of situations with a severe fall in demand in the nature of a depression, where both fiscal policy and monetary policy would be forced to make substantial departures from the normal principles. These would be extremely unusual circumstances, however, and do not provide any argument for setting up a permanent stabilisation policy committee. So, my answer to the question on whether monetary and fiscal policy should be developed is yes, but not in the direction LO appears to have in mind.

To be even more explicit; when we formulate our policy we have on several occasions deliberately chosen to allow deviations from the inflation target for short or long periods of time. When the consequences of the deviations have been lower interest rates than would have been the case with a stricter interpretation, there has been practically no criticism. However, it has been rather different with regard to deviations in the other direction. Neither the Riksbank nor any other central bank using inflation targeting can be described as an “inflation nutter”, to borrow a famous phrase from Mervyn King, now Governor of the Bank of England. That is, we do not focus solely on stabilising inflation; we also take into consideration the real economy – conducting what is usually termed flexible rather than strict inflation targeting policy. This is also entirely in line with our task as laid down in law. There are also other types of consideration that need to be made in monetary policy. One that is immediately apparent is how financial stability will be affected by the interest rate decisions. Over the past year, and also on a few earlier occasions, there has been extensive discussion of developments in the credit market at our monetary policy meetings. We have relatively short experience of how credit cycles affect the economy; up until the 1980s the financial markets were strictly regulated. Our knowledge of the risks entailed in a rapid increase in indebtedness and asset prices is thus limited.
This will help local bank managements to concentrate on their core business of banking and finance, and limit the risk of contagion from non-financial businesses to the banks’ business. Market discipline and caveat emptor Our efforts to promote market discipline and a caveat emptor regime have focussed on enhancing the amount, quality and timeliness of information disclosed by institutions. We have shifted from a meritbased supervisory approach to a disclosure-based approach that emphasises market discipline to incentivise financial institutions to conduct their business in a sound, efficient, and professional manner. The local banks in particular have significantly improved their disclosure practices. We must continue to update our disclosure standards in line with industry developments and international best practice. Furthermore, the mindset change is not yet complete. The public still expects to be protected from downside risks, for example when playing the stock market, but more so when depositing their money in banks. Hence one major motivation for introducing deposit insurance is to change this mindset, and get people to understand that only a limited first tranche of their deposits with a bank is protected should the bank run into trouble. But disclosure by itself is not enough. It must be accompanied by investor education. Investors have to understand and use the information provided to them. They must learn to make sense of this information and use it to look after their own interests.

In the US, weaknesses in housing and labour markets are persistent. Uncertainty over employment prospects will cap the strength of consumer spending. But business sentiments (as measured by the purchasing managers’ index) and new orders for capital goods point to continued economic expansion, though at a slower pace. In Europe, the core economies such as Germany and France should continue to perform well. Industrial output and business investment have been robust. But sovereign debt concerns in peripheral EU economies have escalated. They cast some uncertainty over Europe’s near-term growth prospects. In Japan, the economy has been hit hard by the earthquake and tsunami. But there are signs that the worst has passed as production has begun to gradually recover. Emerging Asia remains on a relatively firm footing. Domestic demand continues to be resilient, supported by robust income growth and generally healthy household and corporate balance sheets. On balance, the Singapore economy should register moderate growth for the rest of this year. Some industry-specific factors that dragged down growth in electronics and pharmaceuticals are expected to be transitory and the manufacturing sector should pick up from the soft patch we saw in Q2. The services industries, especially financial and tourismrelated activities, should remain firm due to strong regional demand. MTI and MAS are reviewing Singapore’s GDP growth forecast. For now, our sense is that the 5–7% forecast range remains intact. But if the pick-up from the downturn in Q2 is weaker than currently expected, growth could come in at the lower half of the range.