samchain/econo-pairs-v1 huggingface dataset:
Availing myself of my recent council member status, I would say that the guiding principle should be to avoid becoming complacent and, on the contrary, to harness the economic expansion so as to adopt the measures that may provide for sustainable growth, a greater degree of stability and more extensive room for manoeuvre in the face of potential future crises. This advice stems from a diagnosis that is worth emphasising: the Spanish economy still has significant factors of vulnerability. These include most notably high external debt, a level of public debt close to its historical high, an unemployment rate double that of our European partners and a financial system facing considerable challenges; and this in a scenario where the economy must face the impact of the phenomenon of population ageing and the structural problem of low productivity. It is further worth recalling that, although the recovery has rested on a diverse set of measures, in Spain and in Europe alike, it has also been underpinned by the support afforded by the European Central Bank’s extraordinarily expansionary monetary policy. Additionally, this expansion has been accompanied by a significant fiscal impulse in recent years. However, the effect of these monetary and fiscal impulses will tend gradually to fade in the coming years. Against this background it is necessary, firstly, to deepen the fiscal consolidation process.

The basis for establishing new businesses has not been as favourable as in Kongsberg, but there are now at last signs that the situation is improving. Kongsberg Våpenfabrikk was wholly state-owned. This was widely perceived as a guarantee for continued operations. The company repeatedly required state capital injections following unfavourable results. When the government allowed the company to fail, this also represented an important choice with regard to state ownership policy. Profit requirements bolstered discipline in the fledgling companies. At the same time, when the original company was split up, competencies and values became visible. The state still has extensive ownership interests in Norwegian business and industry, but it has adopted a completely different approach to the management of its interests following the experience in Kongsberg, Mo i Rana, Sulitjelma and Syd-Varanger. Corporate governance is now exercised through resolutions in general meetings and according to recommendations from nominating committees, and the board and management can run companies with the objective of increasing value. The state-  6  BIS Review 10/2006  owned companies are subject to exactly the same market discipline as other operators, with a required return and continuous adaptation and development. This is also the only way companies can avoid stagnation. Through the Government Pension Fund, the state owns equities worth more than NOK 500 billion, spread across nearly 3 500 companies in over 30 countries. The holdings are minority interests.
The bottom line is that the long-term sustainability of public debt should be ensured by credible but flexible fiscal rules. In parallel, we could maintain the possibility of responding to large shocks through a permanent common fiscal capacity; in this respect, the Next Generation EU package is a positive breakthrough, and could be made permanent, although with more limited amounts. A few days ago, Mario Draghi, speaking at the Italian Senate in his current capacity as Prime minister, rightly backed “an increasingly integrated European Union that will arrive at a common public budget capable of supporting countries in times of recession.” In addition, a fully-fledged capital markets union is more necessary than ever, in order to supplement public risk sharing with private risk sharing across the euro area. In conclusion, let me say a few words on chamber music. Many of you have already heard the famous Piano Trio Number 2 by Franz Schubert. The harmony of the three instruments has charmed generations of music lovers, including Stanley Kubrick in “Barry Lindon”. In this piece, none of the instruments should be the only game in its own town. And none of them should be dominated by any of the other two, otherwise the harmony is broken. Quite the contrary, we can hear each instrument and the beauty of the piece comes from the response of each instrument to the others. The same applies to the three macroeconomic policies: monetary, macroprudential and fiscal.

First, in the euro area, the latest consumer price data have surprised on the upside, and there are some signs of an upturn in inflation expectations. This is actually good news, as Philip Lane noted last week.1 That said, this rise shouldn’t be overstated; it primarily reflects temporary factors rather than a persistent and significant change in the inflation path. The euro area economy is in a different situation compared with that of the US (in terms of real activity, output gap and fiscal stimulus). There is no risk of overheating in Europe. Second, this less disinflationary environment shouldn’t raise questions about our future monetary policy, and our reaction function. Let me reiterate a strong conviction about our inflation objective: it is flexible, symmetric and medium-term. To put it clearly, these last two imperatives mean that 1/4  BIS central bankers' speeches  we cannot completely ignore the past inflation shortfalls, and that in the future we should be ready to accept inflation above target for some time. As necessary, our forward guidance could be strengthened to make this tolerance explicit. And third, there are other elements in this tightening of financing conditions, including excessive spillovers and tensions on the term premia. In so much as this tightening is unwarranted, we can and must react against it, starting with an active flexibility of our PEPP purchases, which we have made possible since its inception in March 2020, and enhanced last December. II.
It means in practice that the banks’ future  2 [5]  capital requirements must amount at least to a certain percentage of the capital requirements the banks would have if they instead used standard methods to calculate their capital requirements. Similar regulations already exist in the form of the old Basel I floor. The Basel Committee introduced the Basel I floor for the specific purpose of avoiding a situation where the banks’ capital requirements decline too much and too quickly when the Committee decided to introduce Basel II. The new regulations are not at all revolutionary in themselves, but focus on bringing the existing framework up-to-date. It is also reasonable to link together the standard methods and the internal models in this way, from both risk and competition perspectives. The fact that there is some relationship between standard methods and the banks’ own models ensures that the capital requirements do not differ too much. In addition to the floor regulations, the Basel committee will decide on the final form and calibration of the leverage ratio requirement. The Basel Committee is planning, as announced earlier, to introduce an international minimum requirement in the year 2018 of three per cent, and possibly somewhat higher for systemically-important institutions. Having a leverage ratio requirement is an important step forwards, as this gives us a commonly agreed highest level as to how much the banks can debt finance their operations , regardless of the level of risk in their operations.

Philipp Hildebrand: The Swiss National Bank’s ability to act in the crisis Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Executive MBA HSG, Universität St Gallen, St Gallen, 21 January 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The global financial system is in the midst of the biggest crisis of the postwar years. Above all, the crisis is the most complex of this period. Problems in the US sub-prime mortgage market led to the breakdown of both markets and general trust. In particular, the interbank market, the nerve centre of the financial markets, froze up for several months. Governments and central banks managed to prevent the financial system from collapsing. The interbank market has been revived and risk premia have come down from their former record levels. In the meantime, however, the financial crisis has worked its way through into the real economy, which is now moving into a sharp downturn. In order to fight the crisis, the central banks have lowered their key interest rates aggressively. The instrument of the Swiss National Bank (SNB), the repo rate, has practically reached zero. However, this certainly does not mean that the SNB is incapable of action. If needed, there are other options available. The National Bank can extend the terms of repo transactions or give consideration to the purchase of government and corporate bonds.
Jean-Claude Trichet: The European Monetary Union and the euro Speech by Mr Jean-Claude Trichet, Governor of the Bank of France, at the Financial Forum 2003, organised by The Wall Street Journal Europe and The New Economy Forum, Madrid, 25 February 2003. *  *  *  Ladies and gentlemen, it is a great pleasure and an honour to be with you today, on the occasion of the “Financial Forum 2003”, organised by the New Economy Forum and the Wall Street Journal Europe. I would like to present my views on the successful set-up of the euro, on the economic and financial integration of Europe and on the challenges that the euro-zone will confront going forward. The Euro: built on a successful set up Set-up of the Eurosystem The single monetary policy is formulated and implemented within a sound institutional framework, the Eurosystem, comprising the European Central Bank and the twelve national central banks of the euro area. Three principles underpin the Eurosystem: independence, transparency and decentralisation. The independence of both the European Central Bank and national central banks is enshrined in the Treaty. When exercising their powers and carrying out their tasks and duties, neither the central banks of the Eurosystem nor any member of its decision making bodies shall seek or take instructions from Community institutions, from any government of a Member State or from any other body. Independence refers to institutional, operational and financial independence.

ECB governance On 3 February 2003, the Governing Council of the ECB unanimously approved a Recommendation for a European Council decision, which is aimed at adjusting the voting modalities in the Governing Council in an enlarged euro area, in accordance with article 10.6 of the Statutes introduced by the Treaty of Nice. This adjustment became necessary so as to maintain the efficiency and timeliness of the Governing Council’s decision-making process. The Recommendation has been submitted to the EU Council. We hope that it will eventually be endorsed by the Heads of State and Government after both the European Parliament and the European Commission, which has already delivered its opinion, have been consulted. BIS Review 11/2003  1  As soon as the number of members of the Governing Council will reach 22, the total number of voting rights will be limited to 21. The six executive board members will have a permanent voting right and the NCB Governors will share the remaining 15 voting rights which will rotate among them according to pre-established rules. To ensure that all decisions taken by the Governing Council are representative of the euro area economy as a whole, Governors will be allocated to groups which differ with respect to the frequency with which their members will have voting rights. The allocation of Governors to groups will therefore be done in accordance with a ranking of their respective NCB’s, reflecting mainly the size of economies and of financial sectors.
18  See Barnett, A, Batten, S, Chiu, A, Franklin, J, and Sebastia-Barriel, M (2014), “The UK productivity puzzle”, Bank of England Quarterly Bulletin, Q2, for an analysis of the UK’s “productivity puzzle”. The standard view has been that the UK has suffered from a collapse in the underlying growth rate of productivity. On that basis, we would not expect there to be significant scope in future for either productivity or real wage growth. The interpretation of the recent behaviour of the labour market as a labour supply shock has more positive implications for the future. 6  BIS central bankers’ speeches  3. Monetary policy implications  One of our roles at the Bank of England is to deliver price stability in a way that supports jobs and growth. Our price stability objective is clear: the inflation target of 2% CPI inflation. Supporting jobs means helping the economy reach the maximum sustainable level of employment. That level changes as the economy changes. That is why, a little more than a year ago, even though inflation had been above the target for most of the past five years and economic growth was poised to accelerate, we did not raise interest rates from their historic low level of ½%. We did not because we recognised that the UK had a huge number of unemployed and under-employed workers and that the economy was running below full capacity. We expected inflation to fall back. We saw that confidence might have been returning, but it remained fragile.

6 An alternative interpretation is that the true expectation of market participants is for Bank Rate to increase more quickly than that, but that they are particularly worried about downside risks and are happy to accept a lower expected return in exchange for insurance against bad outcomes. 7 This would be consistent with the risks to the world economy that have come to the fore over the past year as emerging economies grapple with the twin challenges of transitioning to slower potential output growth and lower commodity prices. Although the direct trade links between emerging economies and the UK are relatively small, the indirect effects of a more dramatic emerging market slowdown through confidence and financial channels could be significant. I suspect this latter interpretation is closer to the reality. Personally speaking, should the downside risks from the world economy fail to materialise, and absent further shocks, once wage growth has returned to a level consistent with inflation returning to target I would expect the economy to warrant a path for Bank Rate that increases more quickly than implied by the market yield curve used to condition the November Inflation Report. I think it is interesting to note that surveys of economic forecasters – a more direct measure of the expected future path of interest rates – show expectations for a faster pace of increases in Bank Rate. Having said that, I think all agents, and all members of the MPC, expect the future path to be gradual and limited. 3.
They may develop aberrant norms that can undermine standard oversight and controls. Compliance can and should leverage its independence to spot silos—or any form of “groupthink”—before undue risks mature. Third, compliance can increase its influence through careful stewardship of its people. This means attracting and retaining talented compliance professionals, and, whenever possible, insisting on getting to know the business area. The role of a compliance officer should include building relationships and becoming a trusted resource. Such relationships can yield a deeper understanding of, among other things, the motivations and pressures that are affecting the business. These insights can inform and help improve policies, procedures, testing and monitoring. As I mentioned earlier, compliance can become more effective if it calibrates processes to actual circumstances and behaviors. Finding and retaining talented people for compliance roles is a major challenge facing firms across the industry right now. After all, compliance can be a nearly impossible job. And welltrained, experienced compliance personnel are scarce. Those are but two of the many challenges that compliance functions in financial institutions face. I certainly do not have solutions to every compliance challenge. But, having to manage the attraction, retention, and development of the New York Fed’s compliance staff, I am sympathetic. I am optimistic, too. As I mentioned earlier, I think the broad trends in compliance are heading in the right direction. Compliance functions are gaining influence. Greater clarity about roles can help. Compliance will always be a difficult job, but does not have to be a seemingly impossible one.

I am grateful to Ben Broadbent, Alan Castle, Karen Jude, Nick McLaren, Huw Pill, Dave Ramsden, Fergal Shortall and Seb Walsh for their assistance in helping me prepare these remarks.
Paul Tucker: Uncertainty, the implementation of monetary policy, and the management of risk Speech by Mr Paul Tucker, Executive Director and Member of the Monetary Policy Committee of the Bank of England, at the Association of Corporate Treasurers, Newport, 19 May 2006. *  *  *  Many of us would probably say that we do not much like uncertainty, whether at work or home. But we cannot escape it, and it provides opportunities. Rather, we want to be compensated for the risk, or to mitigate it, or both. What I think we actively dislike is avoidable uncertainty. And from the point of view of society, we should dislike uncertainties that are both avoidable and especially costly to mitigate for those who bear the consequent risks. I am going to discuss some sources of avoidable uncertainty – or volatility – that have affected you as corporate treasurers. And I will discuss some unavoidable sources of uncertainty, and what they might mean for risk management, at the level of firms and of the financial system as a whole. Avoidable uncertainties: the monetary regime, and the implementation of monetary policy For too many years in the UK, we lived with a large but avoidable element of macroeconomic uncertainty. It was unclear what rate of inflation households and businesses should expect to prevail over the medium-to-long run. In other words, it was unclear what policymakers were trying to achieve; whether their goals shifted about; and whether policy makers would succeed in delivering those goals.

As a result, financial stability is more of a collaborative task undertaken by various administrative bodies. The division of tasks in the area of financial stability varies from one country to another, but in the wake of the recent financial crisis, there has been a shift in attitude towards that division. Before the crisis, there was the tendency to believe that financial and monetary stability were well enough served if monetary policy focused solely on the inflation target, with interest rates as its primary tool, and if financial supervision and the regulatory framework aimed primarily at ensuring that individual financial institutions were sound. The market would then take care of the rest. Experience has shown that this view was too narrow, and in many places it is being abandoned. To a degree, this entailed a compartmentalisation of central banks’ previous tasks. Some countries – the UK, for instance – are addressing this problem by reverting to central banks with a wide-ranging role covering monetary and financial stability. But this is not the only viable response. Here in Iceland, the Financial Supervisory Authority and the Central Bank have stepped up their collaboration on systemic risk analysis and exchange of information. These efforts have borne fruit, and the collaboration between the two institutions is good, but it would be imprudent to let success rest mainly in willingness to cooperate, which could change with a change of actors. As a result, it is important to strengthen the statutory framework so that it can provide better support for these efforts.
According to, for instance, Dagens Nyheter newspaper’s editorial pages, the policy was instead “an interest-rate increasing experiment”, based on the Riksbank governors spreading “misleading pictures of the future”.10 The only explanation I can think of for this claim nevertheless being repeated and referred to so often and so uncritically, is that people simply assume that it must be true because it has been expressed with such emphasis and intensity. A hazardous policy But claiming that it has all been about leaning against the wind is not only a misleading description of the policy conducted and the motives behind it. There is also good reason to wonder whether a policy whereby the repo rate had remained unchanged since the crisis might not have been rather risky, regardless of what one claims it would have represented. According to the counterfactual analysis, there were only gains and no problems: inflation would have been close to the target and employment would have been higher if the repo rate had not been raised. But I also believe that there would have been a major risk of other, less pleasant things happening that is disregarded in the analysis, consciously or unconsciously. 8  See, for instance, Visco (2014): “An actual example of the debate on the macro-prudential use of the policy rate relates to the tightening of monetary policy by the Sveriges Riksbank that began in July 2010 and peaked in July 2011.

It is a natural part of the economic debate that the Riksbank is being criticised, isn’t it? Wouldn’t it then be better to ignore the criticism and look ahead instead? No, I don’t think so. One important reason is that in the wake of the financial crisis there has been a discussion on the activities and tasks of central banks, what central banks should do and how they should do it. It is, of course, important that our debate on this here in Sweden is anchored in reality and based on how monetary policy has actually been conducted and what it has actually achieved. But meeting the criticism is important not just for the discussion here in Sweden. The debate on Swedish monetary policy also has an international interest and has been followed abroad, not least by other central banks.1 The reason is that a central issue in the international discussion has been to what extent central banks’ policy rates should be used as a complement to macroprudential policy, to counteract the build-up of financial imbalances, for instance, by trying to prevent lending and housing prices from rising too quickly.2 This is what is often called a policy of “leaning against the wind”, and I will hereafter use this expression for the sake of simplicity. Monetary policy in Sweden has in this context been regarded as particularly interesting, as the Riksbank is one of few central banks that, at least this far, has been explicit about taking such considerations into account in its policy-rate decisions.