samchain/econo-pairs-v1 huggingface dataset:
Of course, I am deeply indebted to His Excellency the President for appointing me as the Governor of the Central Bank of Sri Lanka. I am also indebted to the Hon. Prime Minister and the Hon. Finance Minister for supporting my appointment and I very much hope that I will be able to fulfill the trust they have reposed in me. When I met the President, he just told me one thing, he said “Do your work in a straight way and do not fear anybody in discharging your duties.” Now my intention is to follow his direction. When I met the Honourable Prime Minister, he laid out his vision for where he wants to take this country and there is a big role for the Central Bank. And in many ways, if we are not able to fulfill our functions in the way it should be fulfilled – in-terms of creating a platform for macroeconomic stability with strong macroeconomic fundamentals, having financial sector stability so there is confidence right through the system – nothing else is possible. That is the first step, to get strong macroeconomic fundamentals, to have the financial sector which is the lifeblood of the country stable, and people within the country and outside having confidence in it. So that is our responsibility. And as I said, because I genuinely believe that nothing else will really take off, unless we are able to do our job well, to fulfill our functions well.

Let me briefly outline some of the biases we need to take into account in the context of our economic and financial assessment. For the sake of simplicity, I will distinguish two main categories of biases: technical biases and institutional biases, leaving aside the treatment of risk aversion considerations, which tends to introduce an upward bias in the break-even inflation rate. Technical biases The compound and the convexity biases: the definition of the break-even rate as the difference of the conventional nominal bond yield and the inflation - indexed bond yield is a first order approximation which does not take into account interest rate compounding. Consequently, the break-even rate is an upward biased estimator of expected inflation - provided that inflation expectations are positive4. Interest rate compounding has also another implication as it implies that bond prices will respond in an asymmetric manner to changes in the yield: indeed, bond prices are more sensitive to a fall in yields than to an increase in yield, and therefore, will also rise when the volatility of the yield increases, therefore pushing down the forward rates5. The net convexity adjustment will therefore bias the breakeven inflation rate either upward (the most likely) or downward. The inflation lag: by construction, bond cash flows can not be adjusted instantaneously for actual inflation. This implies that the break-even inflation rate includes another bias reflecting the discrepancy between the lagged and the contemporaneous inflation rate.
It is in light of this that the Riksbank’s gradual cuts in the repo rate down to zero should be regarded. It is thus a question of adapting monetary policy to changed circumstances and not of a 180-degree turn as a result of a sudden insight that the policy conducted has been wrong from the start. Criticism also from other quarters However, cutting the repo rate to zero has not only been criticised for being a “last-minute conversion”. It has also been criticised from other quarters. There are those who say that the Riksbank’s attempts to give consideration to the risks linked to indebtedness and housing prices have been well-founded, and that a very low interest rate over a long period of time is risky – like “throwing petrol on a fire”.20 Without doubt, the situation with regard to the housing market and household debt will become more problematic the lower the repo rate is and the longer it remains low. Nevertheless, I think that the Riksbank has made the right decision and that there has not really been any other alternative. In the end, a central bank’s main task is to maintain confidence in price stability and when there is a risk that this will fail – when the scale starts to tip – there is no other possibility than to give top priority to a faster return to the inflation target.

The reason I  8  BIS central bankers’ speeches  am returning to this forecast is that I don’t think anyone would question that the National Institute of Economic Research is a serious and competent forecaster – and it can scarcely be accused of deliberately spreading “misleading pictures of the future”. And as I said, the National Institute of Economic Research’s forecasts were not in any way unique, but reflected well how forecasters in general viewed the situation. Anyone who claims to have predicted the current low inflation back when the repo rate increases began in 2010 must thus have had much greater insight than all of the Swedish and international analysts. I would rather argue that this instead is a good illustration of the fact that things have happened in the economy, which could not be predicted and which have pushed down inflation in an unexpected manner. Unexpected international economic slowdown in 2011 and even lower inflation in 2013–2014 I would like to give examples of two occasions in recent years when developments have turned out rather differently than expected. The first is the slowdown in international economic activity that became apparent during the second half of 2011. Global growth prospects deteriorated in connection with increased unease over the sovereign debt problems in the United States and euro area. Uncertainty over the future led to increased pessimism among households and companies and also affected the financial markets.
11 If one argues for a fixed exchange rate, it is reasonable that one explains why the costs of having a floating exchange rate should now have become too great. As far as I am concerned, I cannot see that this has happened. On a more general level, one needs to explain why the general benefits of a fixed exchange rate are considered greater than those of a floating rate, including that the latter can function as a shock-absorber in times of crisis. If one thinks that the krona should be retained but tied to the euro, for example, it is of course an advantage if, in the light of our past negative experiences, one has a convincing story as to why this type of arrangement would work this time. It is also possible to go a step further and argue in favour of Sweden abolishing the krona and introducing the euro instead. This is obviously an even bigger decision as it is basically irrevocable. If one believes that adopting the euro would be a good idea, I am sure it is possible to find several good reasons for doing so. But I cannot see that one of these would be that the inflation-targeting regime has been ineffective and made us poorer as a people and nation. My most important messages Let me round off by summarising my main messages. I started by presenting my reasoning at the most recent monetary policy meetings.

In such a hypothetical case, we would thus not “give up the inflation target” and suddenly start conducting an entirely different policy and, for example, raise the interest rate. There would still be reason to conduct a policy that is as expansionary as we deem possible, to avoid taking longer than necessary to attain the target. However, one consequence might be that the Riksbank’s communication becomes even more central. The damage in a situation where monetary policy is not made more expansionary, despite inflation being expected to undershoot the target for a long time, will be much less if the general public can be convinced that the target has not been abandoned, but that it is merely a question of taking longer than normal to attain it. Clarifying this would be a difficult but hopefully not impossible task. Often unclear whether the criticism applies to monetary policy or the target Having gone through how I view the current situation and discussed a few related aspects, I would now like to widen the perspective a little and talk about more fundamental issues. More specifically, I thought I would go into why we have the framework we have, with an inflation target and a floating exchange rate, and what benefits this system provides. This is not the first time I have done so, but I  8 Jansson (2016). 6 [17]  believe it is useful and important to remind people of this now and then.
But what is at stake for the EU is nothing less than preserving the integrity of our single market and its competitiveness. In this regard, EU countries should maintain consistency in regulatory practices vis-à-vis all third countries – including the U.K. Even if there is a trade deal, which I do still wish and hope, Britain will have left the single market and hence things will change anyway significantly for financial services. It means that firms operating under the European passport must quickly finalise their relocation to the EU if they want to operate here as of next year. As of September, the ACPR authorised 43 entities to ensure continuity of activities in France, including 4 credit institutions, 21 investment firms and 7 third country branches. If we include asset relocations of French groups from their branches in the UK, approximately 150 billion euros in assets will have been relocated to France by the end of this year. In addition, 31 entities, mainly investment firms, have applied for a license in France and their projects are currently being assessed by the ACPR. All these are good news, but let me bring two matters to your attention. A handful of small firms, notably in payments electronic money and investment, must urgently accelerate the process or risk being caught out in January. Concerning European major institutions, the EU will not permit empty shells with only partial relocation of staff or booking arrangements.

François Villeroy de Galhau: Brexit, digital payments, seize the day Closing speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Paris Europlace International Financial Forum, Paris, 7 October 2020. * * * Ladies and Gentlemen, It is my pleasure to conclude this Europlace International Financial Forum, and to congratulate Chairman Augustin de Romanet and his team for having overcome all obstacles. Today, Paris is, thanks to you, a financial capital of Europe…. and it is more than a short-lived satisfaction, it is a lasting and collective success. The title of today’s session – “From crisis to recovery…” – reminds us of a quote from Hannah Arendt: “a crisis becomes a disaster only when we respond to it with preformed judgments, that is, with prejudices.1” Today crises are multifaceted and our duty as policymakers is to prevent them from turning into disasters. To this end, we have to put aside prejudices and come up with concrete solutions. In my speech today, I will focus on two short-term challenges: Brexit obviously, and perhaps more surprisingly the future of Europe payments. I. Preparing for Brexit: a top priority Brexit is a burning and unavoidable issue. I will not comment on the UK’s domestic politics nor on the ongoing negotiations with the EU. But amidst all this deep fog, one thing remains clear: achieving a fair and well-balanced Brexit deal would be in the economic interest of first and foresmost Britain but also the EU.
The stability and credibility of the banking groups operating here, supported by close cooperation between Baltic and Nordic countries also help Estonia overcome the crisis. Banks in Estonia have sufficient funds to support restructuring in both the business sector and the entire economy. Eesti Pank's analyses confirm that the current capitalisation is sufficient to cover possible larger loan losses without banks having to include additional capital. The resources of banks allow their lending decisions to be based on favourable medium-term and longer-term economic outlooks, since Estonia's economic convergence, i.e., the movement of our income level towards that of EU richer countries, will continue also in the future. Thus, the goal of banking and financial sector policy is cooperation with the home countries of the banks operating in the EU and Estonia to ensure the functioning of the common banking market and group-level stability. The steps taken by the home countries of the banks operating in Estonia have considered the interests of the entire group and thus supported financial stability in Estonia. In this light it has to be emphasised that the measures to support the economy approved in Estonia allow state aid also in a situation where financial markets no longer function normally. But the main aim of the state support measures is to organise the financing of starting and exporting enterprises. The total debt burden of Estonia's enterprises is relatively big and a decline in the total volume of debt in 2009 is a natural reaction to previous years' rapid increase.

Effectively implementing the enhanced governance framework, completing the banking union, and building a capital markets union to reduce risk and to allow for more private risk-sharing while establishing additional public risk- sharing mechanisms in parallel are some of the key near-term requirements in this regard. In the longer run, a more perfect EMU will form the basis for a stable, flourishing euro area economy that will not only enable the euro area to tackle challenges in other policy areas, but that will also be to the benefit of global economic and financial stability. BIS central bankers’ speeches  3
There are those who sometimes give the impression that they think the Euro could - by regulation or restrictions - be confined to within the territory of the Euro area, and that this would be “a good thing”. That I have to say is not our experience. In practice unnecessary or ineffective domestic regulations or restrictions have often been the cause of financial activity growing up elsewhere. In any event we live in a global financial world and the Euro is bound to become a widely-used and actively-traded currency internationally. Its liquidity is likely to be a key attraction to domestic and foreign users alike. The City of London both contributes to, and thrives upon, liquid markets, and the Euro-market, or the euro-Euro-market if we are an “out”, will be no exception. That can only be good for the development of financial activity - the provision of competitive financial services - across Europe as a whole, because we are not talking here about a zero-sum game. Euro-activity in London is likely to stimulate financial activity in other centres and vice versa; and much of that activity will be undertaken by branches or affiliates of the same major financial firms. The first ecu-Euro bond raised last week by a European borrower and managed from London by a Swiss/British and a French bank and by another French bank in Paris, is a good example not just of London’s international role as it is today, but of how it is likely to continue.

The simple fact is that there are real risks as well as real potential benefits in monetary union; and it would be foolhardy just to assume that the enterprise, if it is embarked upon, will inevitably bring about the political harmony and economic prosperity across Europe that anyone in their right mind wants to see. It is hugely important to all of us that Europe’s political leaders stand back and weigh the risks as well as the potential benefits, dispassionately, before any irrevocable step is taken. If the debate in this country encourages open debate elsewhere then we will be doing a service to Europe as a whole. It is something of a fashion these days to describe economic conditions in terms of fairy stories. I have heard the steady expansion in the United States, and more recently in this country, described as the “Goldilocks” condition - with the economic temperature not too hot, not too cold, but just right. In the same vein I might describe European monetary union as Beauty and the Beast. The Beauty of it lies in intra-European exchange rate certainty. And if you don’t find that instantly seductive I suggest you speak, as I have, to some of Britain’s exporters. They have seen, over the past six months or so, an erratically sharp appreciation of sterling, against the core European currencies in particular, which can’t be adequately explained in terms of economic fundamentals.
China remains a concern, either because short-term data has cast some doubt on the future growth trajectory or because of imbalances in some markets that still need to be corrected. Latin America lags behind in the recovery of its economies and some of them still require fiscal and monetary adjustments and, to a lesser extent, of their external sector. Recent political developments in Brazil could generate greater effects on the financial conditions facing the region. At home, inflation and activity have evolved in line with expectations, with no significant changes in prospects. The same is true of the labor market. However, after several years of slow growth, the risk remains that companies may need to further adjust their wage bills, especially if the expected recovery fails to occur, taking a toll on the wage mass and on expenditure. Conversely, both a stronger external impulse and improved expectations could prompt a stronger 5  reaction from investment, especially in a context where monetary policy has become more expansionary and both external and local financial conditions are good. In this context, the Board estimates that the risk balance is unbiased for both inflation and activity. Of course, this does not mean that we see no clouds on the horizon, but that the probability of occurrence is the same in one direction or the other. To the extent that these signal a change in the scenario going forward, the Bank will respond and adjust its decisions.

The committee is chaired by the Chief Executive of the HKMA and comprises members coming from multiple functions including monetary management, banking supervision, research and macro surveillance. 1/3  BIS central bankers' speeches  6. Some commentators have criticised the HKMA’s macroprudential measures as being ineffective because they have not been able to arrest the rising trend of property prices. This is a misunderstanding of the objective of the HKMA’s macroprudential measures. The objective of the HKMA’s measures is not to tame property prices. Instead, they are aimed at strengthening the risk management of banks and thus safeguarding long-term banking stability. In this regard, it is worth noting that the average LTV ratio of new residential mortgage loans has been consistently lower than 60% while the average debt servicing ratio of new mortgages has been consistently lower than 40%, suggesting that the banking system has built in buffer to safeguard its resilience. 7. Competition dynamics: Mortgage products in Hong Kong are homogeneous, in the sense that from the mortgagor’s perspective it makes little difference which bank is offering the mortgage facility. There is therefore a strong tendency for banks to compete for market share by lowering their underwriting standards. With the macroprudential measures in place, however, banks can compete for mortgage business only in terms of pricing (e.g. mortgage rate). Against a backdrop of rising property prices and a consistently low delinquency rate of mortgage loans, many banks tried to outcompete their peers by pushing down the mortgage rate to record low levels.
While the transport sector faces a carbon tax of more than NOK 400 per tonne of CO2 emissions, other sectors are exempt from all or part of this tax. When it comes to agriculture, domestic shipping and manufacturing, business policy and climate policy are pulling in different directions. In order to promote eco-friendly technology, it may be necessary to reinforce climate policy with funding for basic research and for the development and deployment of climate-friendly processes and products. At the same time, we should be on our guard against attempts to abuse the “green” epithet to qualify for public subsidies. The climate challenge will not be 6/9  BIS central bankers' speeches  resolved by having the authorities designate the “winners” in the transition to green technology. Regulations and subsidies in areas subject to emissions trading or carbon taxes often entail a waste of energy and money. The efforts to reduce global warming will provide a seedbed for new production methods, new businesses and new jobs. Some of these will be in Norway. But it is difficult to see how we have an advantage over other countries in this area. The transition to a low-carbon society is necessary but is unlikely to take over as a new engine of growth. Oil revenue spending needs to be reined in It may give cause for reflection that Norway, as a nation, has gained so much from a resource that is an important source of global warming.

There has always been a considerable risk from having a large share of the nation’s wealth linked to a single commodity. But this share has fallen. Only a decade ago, oil and gas reserves made up two-thirds of Norway’s petroleum wealth. Today that share has dropped to about a third. Our aggregate wealth has become more diversified, which means we can tolerate slightly higher volatility in our financial wealth. The Government has today announced that it will propose an increase in the equity allocation in the oil fund to 70 percent. At the same time, the estimated expected real return on the oil fund is adjusted down to 3 percent. The choice of equity allocation is an important decision. But an even more important choice is the level of oil revenue spending. Fluctuations in the value of the fund present challenges for fiscal policy and for the fiscal rule. Let me comment somewhat further on this issue. The oil fund and the fiscal rule have long been important pillars of Norwegian economic policy. One key goal has been to preserve large parts of our petroleum wealth for future generations. There has also been an explicit desire to shield the Norwegian economy from swings in oil prices. Allow me to quote from the Revised National Budget for 1995: “Revenues from the petroleum sector vary more over time than other revenues.