samchain/econo-pairs-v1 huggingface dataset:
It’s not easy being green – but that shouldn’t stop us: how central banks can use their monetary policy portfolio to support orderly transition to net zero Speech given by Andrew Hauser, Executive Director, Markets  At Bloomberg 21 May 2021  This speech launches, and draws heavily on, the Discussion Paper ‘Options for greening the Bank of England’s corporate bond purchase scheme’. That paper was produced by an internal team led by Matt Trott, and I am hugely grateful to him, Sadia Arif, Andrew Bailey, Ryan Barrett, Beth Blowers, Sarah Breeden, Jon Bridges, Rohan Churm, Eleanor Eden, Chris Faint, Bianca Ginelli Nardi, Maggie Illingworth, Zane Jamal, Josh Jones, Rebecca Maher, Nick McLaren, Tom McLaren, Rhys Philips, Dave Ramsden, Francine Robb, Philip Temme, Thomas Viegas and Sebastian Walsh for their input both to the Discussion Paper and this speech  1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Introduction I am delighted to be with you here today to launch our Discussion Paper on greening central bank asset portfolios. The Paper sets out our analysis and proposals in detail.

These are known as ‘transition risk’ and ‘physical risk’ respectively. In response, investors are increasingly keen to see those responsible for managing their savings take more forceful actions to support transition to net zero – channelling their holdings away from firms whose activities are seen as incompatible with that transition, and towards those whose are.10  For much of its history, the Bank of England has not itself been a direct investor in corporate assets. And, more recently, our primary engagement with the financial sector on climate issues has been to ensure that banks and insurers can manage their large transition and physical risks effectively, and in ways that do not threaten system-wide stability. In 2019 we became the first supervisory body globally to set formal expectations in this area. And this year we are conducting a system-wide exercise to assess its resilience to the sorts of climate scenarios shown in Chart 2.11  10  I discussed these trends in more detail in https://www.bankofengland.co.uk/-/media/boe/files/speech/2020/from-hot-air-to-cold-hardfacts-speech-by-andrew-hauser.pdf?la=en&hash=5D73B8F9748EC41ECFFAD676A6D1D71A93703E15 11 For more extensive information on the Bank’s work on climate change, see Climate change | Bank of England. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  In 2016, however, the Bank’s Monetary Policy Committee (MPC) voted to purchase £ of sterling corporate bonds in the secondary market as part of a package of measures designed to ease monetary conditions following the referendum on leaving the European Union.
In addition, the indices of business activity and household confidence has clearly turned upward again, even if they remain at historically low levels. The combined effect of all these developments leads us to modify our risk assessment but does not substantially affect our scenario for the global economy. We still believe that positive growth could set in within the US in the second half of the year and in Europe at the beginning of next year. We continue to expect a modest global recovery, so that the considerable under-utilisation of production capacities will not be eliminated in the next few quarters. Consequently, unemployment is likely to increase further in the developed countries as a whole. BIS Review 77/2009  1  Swiss economic outlook As expected, the Swiss economic situation continued to deteriorate in the first months of the year. In the first quarter, GDP contracted by 3.2% in annualised terms. However, this figure obscures a much sharper drop in final demand. As in the preceding quarter, part of production was, in effect, absorbed by an increase in stocks. External demand again plummeted and the level of capacity utilisation fell substantially in the manufacturing sector. Final domestic demand by private entities stagnated, and is most likely to weaken in the months ahead, since companies will reduce their equipment investment and household expenditure will be checked by growing uncertainty in the labour market.

[7] Whose Problem Is It? In setting monetary policies, should advanced economies take into account the spillover eﬀects on EMEs through capital flows? It is neither feasible nor desirable for advanced economies’ monetary policies to be constrained by considerations of the cross-border spillovers they generate. Advanced economy central banks have their own domestic macro stability goals they need to meet and cannot be expected to sub-optimise their policy outcomes. Moreover, accommodative monetary policies in the advanced economies have generated positive spillovers to EMEs, through strengthening export demand and enabling conducive financing conditions. At the same time, it must be recognised that monetary policy latitude in EMEs is to some extent compromised by large capital flows. Empirical studies have found that EMEs’ monetary policy responds to movements in US interest rates and exchange rates, besides their own domestic macroeconomic conditions. [8]  EMEs should therefore have the flexibility to use the policy tools at their disposal to protect their domestic economies from risks arising from large capital flows. Some Questions for an Integrated Policy Framework What are some of the questions that an integrated policy framework should seek to address? The existence of diﬀerent policy objectives and multiple sources of disequilibria necessitates the use of a range of policy instruments. These can be grouped under three broad buckets: foreign exchange interventions (FXIs), macroprudential measures (MPMs) and capital flow management measures (CFMs).
17.01.2018  PaPanel: “New challenges for central banks”** Russia and the world: values and virtues /Gaidar Forum Luis M. Linde Governor  *  On 17 January 2018, Governor Luis M. Linde participated in the 2018 Gaidar Forum panel entitled “New challenges for central banks”. The panel was structured around a debate format moderated by Ksenia Yudaeva, First Deputy Governor of the Central Bank of the Russian Federation, with the participation of Jacob Aharon Frenkel, Chairman of JPMorgan Chase International and former Governor of the Bank of Israel, and Petr Aven, Chairman of the Board of Directors, ABH Holdings S.A. This note includes the thoughts on central banking that were the focus of Governor Linde’s speech. I. Taking a step back: three main developments have defined the global economy in the 21st Century.  Globalisation. The period between 1990 and the early 2000´s was characterised by an intense process of globalisation, with rapid growth of trade and financial relations among countries. For instance, between 2000 and 2007 the growth of world imports averaged 7.4% per year, about twice as much as global GDP growth. Global banking also expanded markedly, in terms both of cross-border activities and local entry into banking sectors overseas. The crisis entailed a dramatic and severe reversal of this trend. Trade plunged by more than 10% in 2009, an extraordinary collapse by historical standards. Since 2012, trade has gradually recovered at a slower pace than pre-crisis levels, with imports growing around 3% annually.

the real interest rate consistent with inflation stability and output at its natural level) is now at historically low, possibly negative, levels. Some possible explanatory factors are of a transitory nature (such as the still-ongoing deleveraging processes), while others are more structural ( i.e. low productivity growth and demographic factors). We have to deepen our analysis further in order to have a full grasp of this “new normal” reality. Implications for monetary policy:  New conventional? The question that arises is whether the “new normal” should lead to a “new conventional” for monetary policy. Indeed, inflation and real interest rates are likely to persist at a low level in the future, and therefore nominal interest rates will also be lower and hence closer to their effective lower bound, limiting their effectiveness as a monetary policy instrument, which will possibly lead to balance sheet management as a permanent policy. There are still no conclusive debates about balance sheet management, including on its marginal effectiveness, the optimal size of the balance sheet and the repercussions it could involve in terms of financial stability. Again, in this area, we need further analysis. 4/6   Once the conditions for it are met, the exit strategy from the accommodative policies will require gradualism and predictability. As the recovery gathers speed, and as long as this translates into a sustained adjustment in inflation towards its objective, the need for monetary policy support will tend to diminish.
Switzerland would have an untested financial system that would differ fundamentally from that of any other country. This would create turmoil on the financial markets even before its implementation. The changeover would in any case be very difficult and the long-term consequences uncertain. Many questions therefore remain unanswered. This is not surprising since the introduction of a sovereign money system represents a profound change in the monetary order and a radical move away from the manner in which the SNB has conducted its monetary policy to date. Comments on digital central bank money for the general public  The second suggestion, which I would like to discuss briefly, is the introduction of digital central bank money for the general public. Digital central bank money is defined as electronic money issued by the central bank, denominated in the national currency. In Switzerland, academics have mooted the idea as an alternative to the sovereign money initiative. 9  9  Cf. D. Niepelt (2016), Elektronisches Notenbankgeld ja, Vollgeld nein, Neue Zürcher Zeitung, 237 (138), 16 June, p. 10; A. Berentsen, ‘Die Alternative’, vollgeld-initiative.com (consulted on 31 October 2017). Page 9/12  Proponents see the idea as a way of broadening the public’s access to central bank money, while at the same time avoiding the disadvantages of the sovereign money initiative. A simple way to envision digital central bank money for the general public is in the form of sight deposits with the SNB.

Likewise, customer deposits at a bank grow when customers make a shift in their portfolio from medium term debt certificates issued by the bank to deposits, or if they take cash to the bank and have it credited to their account. When transactions are conducted in the opposite direction, or when borrowers pay off their loan, the banks’ customer deposits decrease accordingly. Page 5/12  Let us take a step back and look briefly at what actually goes on at an individual bank. 7 A bank’s balance sheet typically contains comparatively illiquid, long-term claims such as loans on the assets side and comparatively liquid, short-term liabilities such as sight deposits on the liabilities side. The bank therefore engages in liquidity and maturity transformation, mediating between the diverging requirements of savers and investors. Savers want secure and readily available deposits, while investors need long-term loans to finance projects, which tend to be illiquid. The bank thus bears both credit risk and liquidity risk. Due to the large number of depositors and borrowers, these risks can be diversified. Moreover, with their focus on lending activities, banks have the advantage over individual savers of being better able to assess and monitor borrowers. This opens up access to loans for parts of the economy that cannot raise funds on the capital market and would hardly be able to finance their projects without a bank. By providing loans, banks therefore perform an important economic task.
Jean-Claude Trichet: The changing role of communication Introductory remarks by Mr Jean-Claude Trichet, President of the European Central Bank, at a dinner with members of the “Internationaler Club Frankfurter Wirtschaftsjournalisten”, Frankfurt am Main, 15 December 2008. *  *  *  Ladies and gentlemen, A very warm welcome to all of you and thank you very much for your invitation to this club evening. I am happy to see many familiar faces in the audience tonight. Communication is a very important issue for all times. Being here in Frankfurt I am thinking of the very profound remark by Goethe: “Niemand würde in Gesellschaften viel sprechen, wenn er sich bewuβt wäre, wie oft er die anderen missversteht“. Nevertheless let me be bold enough to share with you some thoughts on communication and central banks. Communication is a key element for central banks to enhance the effectiveness, predictability and credibility of their monetary policy decisions. It becomes even more important in difficult times, when the economic outlook darkens and confidence weakens. It seems to me that central banks have improved their communication significantly in good times – and also in bad times – while some years ago communication was almost seen as a breach of their professional code. Why this change? Why did central banks decide to become transparent? Prior to the 1990s, central banks were very much working on the assumption that monetary policy effectiveness is greatest when the central bank systematically surprises the markets.

This separation has been the critical factor behind the  BIS Review 160/2008  1  general decline in inflation that we have observed over the past decades. 1 But independence makes democratic accountability by the monetary authority all the more important. Many central banks have gone well beyond strict legal requirements in their pronouncements and communications than imposed by statutory accountability duties. The question is: Why? The reason rests on a simple though powerful insight: transparency renders monetary policy more effective. In a world in which policy-making by surprises has lost purpose, wide knowledge of the central bank’s preferences and objectives can only serve as a coordination device for private beliefs. Anchoring expectations around the objectives of policy help coordinate the reactions of economic behaviours to the macroeconomic shocks along the appropriate path of adjustment that the central bank wants the economy to follow. Many central banks have therefore started to communicate their firm commitment to a nominal anchor, through the announcement of a precise definition of price stability. In many cases, central banks have gone further and spelled out a more general monetary policy strategy, and the analytical framework that is used by policy makers to assess the risks to the achievement of the central bank’s objectives. A growing body of empirical evidence supports the assumption that transparent quantitative objectives and communication about the strategy reinforces monetary policy.
The support from all relevant stakeholders is needed to ensure that such objective becomes a reality. As the catalyst for e-payment growth, the banking and payments industry should explore the possibility of forming strategic alliances with non-traditional partners. The recent partnerships between banks and telcos in the roll-out of mPOS are a good example of such new partnership. Let me outline the key priorities for the banking and payments industry in the upcoming year of 2016. I would like to raise 6 points. i. First, as a group, we need to ensure there is no delay in the key payment card infrastructure projects such as migration to cardholder verification by PIN and the migration to contactless debit cards under the Chip and PIN and the MCCS initiatives. Coordinated constant and effective communication strategies must be undertaken to ensure an effective and seamless migration;  ii. Second, the payments industry must collaborate towards the achievement of an additional 50,000 payment card terminals and 137 million debit card transactions under the Payment Card Reform Framework. In this regard, the industry should devise creative measures to facilitate behavioural change. This may include offering incentives and educating merchants and cashiers to motivate customers to use debit cards instead of cash;  iii. Third, MyClear together with the banking industry should expand the biller base for JomPAY, a payment system launched in April 2015, to further enhance the efficiency and convenience of making and accepting online bill payments;  iv.

The same is true for your Study group: you are about to release a seemingly very attractive study on “net worth at risk” which aims at describing the ability of companies to face an external financial shock, with a focus on recent years: it will certainly attract a lot of attention when you publish this work. As it is time to conclude, I would like first to confirm that BDF, a founding member of the ECCSBO, is still very dedicated in all that is related with corporate analysis. Your presence here today is certainly the expression of a commitment similar to our own one; it is a good augur for your future works and an encouragement for our joint efforts to be pursued. Finally, I would like to thank personally President Manuel Ortega because I know all what you do to keep the dynamics of this Committee. Many thanks also to all of you for being here today, for your support and your participation in this meeting, because I have  2  BIS central bankers’ speeches  no doubt that you will have fruitful debates. If I may, I would add a special thanks for my colleagues from the Companies Directorate and for the protocol office, who deployed a lot of efforts in organising this event for the better: without their help we wouldn’t have been able to meet at this venue. Thank you for your attention. BIS central bankers’ speeches  3
Complementary steps could include creating pan-European venture capital funds and leveraging on the development of FinTechs, while maintaining a high level of consumer protection and efficient conduct of business rules in a digital environment. ** Let me conclude with a general remark. After Brexit and Mr. Trump’s election, many expected a euro area crisis. So far, exactly the opposite has happened: European growth is accelerating, at close to the pace of US growth. The French election gave a fresh political impetus to stability and reforms; public support for Europe has significantly increased: up 18 percentage points in France from last year (56% in spring 2017) according to a recent survey by the Pew Research Center; and the same trend can be observed in a number of countries. Most importantly, we in the EU-27 should not devote all our energy to Brexit, at the expense of investing in our own future. In this regard, it is the right time to move up a gear. To boost European growth, financial levers are of the essence, but economic levers play a role too. This is the reason why I often speak of Europe’s “growth triangle”. In my view, Europe needs to activate three levers: the Financing Union for Investment and Innovation that I have just described, but also implement national structural reforms on the one hand and a better euro area policy mix on the other. National structural reforms are a prerequisite for each country to unleash our collective growth  Page 5 sur 5  potential.

Think for instance of a real European venture capital market to promote equity financing, which is the most effective way to finance innovative businesses at different stages of maturity (seed, venture, and growth). More specifically, progress towards a Financing Union for Investment and Innovation is needed in three key areas: -  First, completing the Banking Union. This means, as a priority, finalising the Banking Union’s second pillar, namely the single resolution mechanism. Within a strong Banking Union framework, banks in the euro area will thus be able to engage in cross-border consolidations on a sound and safe basis and therefore contribute further to reducing financial fragmentation. -  Second, thoroughly reviewing the incentive schemes for cross-border investments, notably by promoting further convergence of tax and  Page 4 sur 5  regulatory regimes. Enhancing the free movement of capital within the EU requires addressing a wide range of legal impediments, including enhancing the predictability of insolvency frameworks, eliminating fiscal biases that penalise equity, and further increasing the transparency and harmonisation of accounting rules for small businesses. -  Third, expanding the supply of financial intermediation services. This can take the form of new pan-European savings products and investment vehicles – more long-term and risk-oriented – or new market initiatives in green  bonds,  private  placement  or  securitisation  for  instance.
But a positive interpretation is that if this is something central banks nevertheless have at the back of their minds, the risk of excessive interest rate hikes in individual countries is reduced. Easier communication when inflation is too high… The conditions are also favourable in terms of communication. As I stated earlier, it was not possible to use monetary policy for macro-stabilisation purposes in Sweden in the 1970s and 1980s, because the interest rate was directed at defending the fixed exchange rate. There was therefore, in principle, no monetary policy communication either. However, compared with the period we have gone through more recently, where it has been difficult to reach the inflation target from below, communication about monetary policy has in a way become easier. Everyone agrees that high inflation is a bad thing. You simply get fewer goods for the same amount of money when you go shopping and in that way you become poorer. This is something that is evident in everyone’s day-to-day life. The fact that it is quite easy to explain that high inflation is problematic does not mean that everyone will be in favour of the interest rate hikes that are necessary to deal with the problem. In addition, if a period of weak economic development is required for inflation to return to the target, a specific challenge arises: One needs to explain that this is preferable to a development in which the high inflation rate will instead be lasting.

At the same time, the regulatory framework for the banks’ operations was improved significantly. Now we have a banking system that primarily serves domestic households and businesses and, in terms of total assets relative to GDP, is about 15% of its precrisis size. As can be seen in their high capital adequacy ratios and sound liquidity position, the banks are quite resilient. Their capital ratios have fallen in recent years as a result of dividend payments, and it can be said that there was scope for such a reduction. But now their capital ratios are much closer to the Financial Supervisory Authority’s capital requirements, and under current conditions of elevated economic uncertainty, it would be imprudent to lower them much more with dividend payments. In this context, it is important to bear in mind that the current capital requirements also include buffers that can be used without the banks being deemed to have failed. These capital buffers are a sort of cushion, and if they are tapped, resilienceenhancing measures such as restrictions on payments of dividends and bonuses will be adopted. Furthermore, the countercyclical capital buffer can be lowered very quickly if conditions warrant it, although it has been decided to increase it to 2% in the coming term. On the whole, the 2008 IMF programme objective of rebuilding the banking system on firmer foundations was met successfully.