samchain/econo-pairs-v1 huggingface dataset:
Launched in 2017, this network, which I am honoured to have chaired from the beginning, brings together central banks and financial supervisors to track supervisory developments and develop climate scenarios for central banks and supervisors. The network also explores paths to scale up green finance and monitor its market dynamics, thereby bridging data gaps and coordinating research in the fields of climaterelated and environmental risks. I am happy to mention that the NGFS has just welcomed its ninetieth member. The Basel Committee’s Task Force on Climate-related Financial Risks will continue working on the further integration of climate-related financial risks into the Basel framework and expectations. To help address the remaining challenges in terms of measuring climate-related financial risks, the ECB is working closely with the European Banking Authority (EBA) on the management and supervision of ESG risks. We have also provided our input to the European Commission’s EU taxonomy for sustainable activities and its non-financial reporting directive 4/5  BIS central bankers' speeches  (NFRD), which requires large European companies to disclose information on their policies in areas such as environmental protection and social responsibility. In particular, the ECB supports the ongoing work by the Basel Committee and the Financial Stability Board (FSB) on effective and consistent regulatory and supervisory approaches for dealing with climate risks. Conclusion Let me conclude. When dealing with the risks arising from climate change, we must be forward-looking, comprehensive and strategic. But we must also be swift.

Making headway towards sustainable growth Ladies and gentlemen, The success of Asian economies in weathering the global financial crisis is certainly commendable. But it would be a mistake to be lulled into complacency by this success of short-term volatility management. In particular, there remain important long-term challenges to the sustainability of growth in Asia. Indeed, latest economic indicators already pointed to a  BIS central bankers’ speeches  1  less upbeat growth trajectory of the Asian region including China. The apparent slowdown in Asia, despite gradual improvement of the advanced economies, lends support to the idea that Asia also has its own structural bottleneck issues to deal with. The time is ripe for all parties involved to look beyond short-term fluctuations and give serious consideration to longer-term structural issues that are holding back Asian potential growth. This is the second topic of my talk today: what can Asia do to sustain its high pace of growth in the post-crisis world? Since the onset of the global financial crisis, most policy responses in emerging markets have been focused on demand-side management, through monetary or fiscal policy stimulus. But boosting demand alone could only get us thus far. The real lift of potential growth of the economy must essentially come from supply-side progress. This refers to either the more abundance or the better use of capital and labor inputs in the economy.
Concerning contagion, it is clear that both contagion across sovereign bond markets and contagion between sovereigns bonds and banks distort the working of all three channels on top of any idiosyncratic market malfunctioning. Faced with the risk of profound impairments of the transmission mechanism of monetary policy, the ECB has adopted several non-standard measures in order to maintain a stable relationship between its monetary policy stance and the conditions actually faced by households and firms. I will focus here on the Securities Markets Programme (SMP) adopted by the ECB in May 2010, given its direct relevance for addressing the malfunctioning of security markets. The programme was designed in the form of interventions in the euro area’s securities markets. The liquidity provided by the central bank via SMP interventions is fully re-absorbed by other liquidity operations. The liquidity neutrality of the SMP interventions is one feature making them distinct from “quantitative easing”, which has the very purpose of increasing the liquidity provided by the central bank.9 In addition, quantitative easing programmes have a numerical target for the amount to be purchased. This is not the case for the SMP. Finally, quantitative easing programmes have a much larger size, given their intended aim of “flooding” the market with liquidity. A better-fitting analogy may therefore be drawn between the SMP and sterilised exchange-rate interventions, which likewise do not necessarily have an announced target and aim to correct a misaligned asset price.

At the other end of the debate there are those such as Jeremy Stein who argue for the active use of monetary policy to lean against the wind because it “gets in all the cracks.” Or Jaime Caruana and his colleagues at the BIS who argue that it would be appropriate for advanced economy monetary policy to begin to normalise in order to head off emerging macroprudential risks. •  I will aim to show that there are merits to elements of all of these arguments. But where the institutional set up and full spectrum of macro-prudential tools are available, there is strong case for using monetary policy only as a last resort for tackling financial stability risks. I will try to illustrate this argument with experience from the UK. •  Let me start with a simple question: can monetary policy be used to lean against the wind? The answer to that question is “yes”, because monetary policy and macroprudential policy both affect financial conditions and clearly have implications for one another. •  To illustrate the implications of monetary policy for macroprudential policy, consider the example of Hong Kong, where the unusually low interest rates since 2009 (as a result of their peg to the US dollar) have fuelled sharply rising prices across a range of residential and commercial properties (He 2014).
Either because temperatures continue to rise as the transition is eluded; or because we face a disorderly transition - a so-called climate Minsky moment – as a significant number of otherwise productive assets have to be abandoned; or as asset prices adjust whilst risk and return are repriced. To avoid such outcomes, financial firms need to manage these risks not as they materialise but instead by looking ahead over much longer time horizons than they are used to. And, as our supervisory expectations of banks and insurers make clear, they need to act strategically and pre-emptively, taking different decisions today, well before the consequences of inaction become clear.3  Climate scenario analysis  Climate scenario analysis provides us with the toolkit for doing just that. To look forwards not backwards, with a horizon of decades not years. In recognition of the uncertainty we face about what might happen to our planet and our economy, some scenarios show the most efficient pathway to net zero, while others highlight the risks of fragmented policies or insufficient action. They can all help guide actions today. 3  See PRA supervisory expectations on the financial risks from climate change. Plotting the transmission channels of climate risks into economic and financial risks is a fiendishly complicated task [figure 2]. The channels from climate to financial risk are numerous, with significant interdependencies. The data and methodologies to translate climate outcomes into macroeconomic and financial risks are incomplete and inadequate.

Remedial actions need to be evaluated in terms of their short-term efficacy as well as their longer-term implications. •  Unbalanced financial systems create vulnerabilities. Financial systems that are unduly reliant on banks for financial intermediation are likely to be more vulnerable and slower to recover from the onset of weakness. Shallow capital markets limit lending alternatives and delay the recovery of financing to the real sector. The challenges can be daunting, but recent experience both within and beyond Asia confirms that a dedicated commitment to financial reform contributes to sustainable recoveries and greater crisisresilience. Just as strong financial systems act as stabilizers when a domestic economy is battered, weak financial systems amplify the scope and reach of the problems, making bad situations worse. Longer-term financial stability While financial sector rehabilitation will remain a key priority for authorities in Asia, longer-term measures need to be put in place to deal adequately with the increasingly complex and dynamic international financial marketplace of the twenty-first century. The threats to financial stability are many, and no one set of measures can be expected to ensure against the recurrence of future problems. Financial intermediation is a constantly evolving activity, involving new risks, instruments, and control challenges. Financial institutions and policymakers alike should continue to upgrade their processes to remain in command of these risks.
During the bust phase of the asset price cycle, the associated credit crunch might lead to an economic downturn and a negative deviation from the objective of consumer price stability, and possibly even to deflation, which would exacerbate a financial crisis. An environment of abundant monetary liquidity can affect the risk-taking behaviour of investors and financial intermediaries. Ample monetary liquidity and financial market liquidity 23 could be indicators of the ongoing execution of arbitrage strategies, such as carry trades, and short-termist or myopic “search-for-yield” behaviour, which can temporarily distort the pricing of risk. 24 It is not low inflation itself but rather low rates of return, which could trigger “searching-for-yield” investment strategies, providing financial market liquidity to previously much less liquid markets and affecting relative asset prices. In fact, ECB research shows that there is evidence that monetary liquidity shocks have played a role in driving asset prices, particularly housing prices across OECD countries, during the boom phase of asset price cycles, and that these shocks have also to explain the negative effects on economic activity during the subsequent bust phase. 25 The intriguing aspect of this hypothesis, and of the associated empirical findings, is that the monetary policy stance might be perfectly appropriate for and consistent with the preservation of price stability over the medium term. Nevertheless, the potential implications for asset price boomand-bust-cycles could signal that the monetary policy stance could prove accommodative for maintaining price stability in the long run.

It has been suggested by some that the effectiveness of monetary policy could be impaired as a consequence of the impact of globalisation on the structure and functioning of markets – product, labour and financial markets – which would affect – and in the extreme disrupt – important channels of the transmission mechanism of monetary policy. Various effects have been discussed and analysed, and a number of empirical studies have attempted to estimate their quantitative significance. Simply put, globalisation could undermine the effectiveness of monetary policy as a result of its impact on both domestic aggregate demand and aggregate supply. The channels through which monetary policy influences aggregate demand could be impaired if domestic interest rates and domestic aggregate demand are increasingly determined by  BIS Review 9/2008  1  global factors rather than domestic monetary policy. On the supply side, globalisation could affect inflation dynamics in various ways, notably by reducing the responsiveness of domestic inflation to domestic firms’ marginal cost increases, by making “global economic slack” rather than the domestic output gap an important determinant of domestic inflation pressure, and possibly by influencing the trend rate of change in the terms of trade. Effects of globalisation on aggregate demand With regard to the influence of globalisation on domestic aggregate demand, two arguments have been advanced.
The legal and judicial system must make the rights and responsibilities of both banks and their counterparties clear and enforceable so that banks and borrowers can make the most effective use of collateral, guarantees, and other measures to secure credit. Third, we must confirm that the banking industry is developing a sense of a “culture” of risk management. This is perhaps the hardest criterion to define. To a great degree, Basel II is intended to create incentives for the banks to renew their focus on a risk management culture. At a minimum, countries that seek to apply Basel II must ensure that their banks view risk management not as an exercise in complying with external requirements, but rather as a means for pursuing opportunities responsibly. We must all understand as well that risk management is an art, not a science: it is a way to approach business decisions, but it does not provide automatic answers. Its successful application requires that we constantly improve our skills and our expertise. It demands the use of the best tools and best data available to support our analyses. And ultimately, it requires that we apply our best human judgement to all significant decisions. All of us can take immediate steps to strengthen our financial and supervisory infrastructure along these three areas. We must ensure the effectiveness of our supervisory systems. We must improve the transparency of our markets. And we must promote the development of sound risk management cultures.

The present situation is difficult for the export industry and for parts of the tourism sector. We should not forget, however, that enterprises in the rest of Europe also have to contend with unfavourable conditions. High inflation or calls for massive pay rises, as seen in some countries, may cause production costs to surge. Switzerland as an industrial location remains attractive. Its advantages include low inflation, high social stability, performance-oriented and welltrained employees, trade unions with an awareness of economic correlations, a first-rate public infrastructure and administrative system and, last but not least, a low interest rate level and favourable financing possibilities in a first-class financial centre. The export industry's situation should improve rapidly once the global economy, and in particular the European economy, start to rebound. Experience has shown that the export industry always does everything in its power to further increase its productivity and to remain competitive internationally in the current exchange rate environment. Its efforts must be supported by a strengthening of domestic competition in Switzerland. The export industry will remain a key engine of growth in Switzerland and an essential basis of our prosperity. 2  BIS Review 39/2002  The main ticks on the horizontal axis indicate the beginning of the first quarter of the respective year. The value for each quarter is recorded in the middle of the quarter.
In this fast-changing environment, public policies should be agile and should help build innovation and growth • The success of the payment services directives (PSD1&2) has illustrated that the European legislation can accompany new trends and trigger innovation. With new settlement assets such as Global Stablecoins, the adaptation of existing regimes will have to fit into a larger regulatory framework, to be adopted at a global level. • Central banks need to have an in-depth understanding of innovation and souldn’t be afraid to “learn by doing”. The Banque de France is now engaging with the innovators from the private sector to conduct a program of 8 experiments, with a view to integrating a wholesale CBDC into innovative procedures for exchanging and settling tokenized financial assets. The expansion of the BIS Innovation Hub with the establishment, in Paris and Frankfurt, of the Eurosystem Centre will definitely accelerate the collaboration among central banks in innovative financial technologies. • We, the ECB and the Eurosysteme, may decide to issue a money in digital form. Let me be clear: we cannot allow ourselves to lag behind on CBDC. That may mean that we create if necessary a retail CBDC, in order to ensure the accessibility of central bank money for the general public, in particular in countries where the use of cash in payments is declining. And/or it may mean that we Europeans may decide to issue a wholesale CBDC, with the aim of improving the functioning of financial markets and institutions.

Real interest rates for long maturities have therefore registered an increase. This is a new development because up until now, long-term interest rates had not clearly reacted to the progressive increase in the Libor. This will reinforce our efforts to tighten monetary conditions, since economic activity reacts more noticeably to long-term interest rates than to short-term ones. By contrast, in foreign exchange markets, movements in the Swiss franc have resulted in a relaxation of monetary conditions. As of the beginning of 2006, the Swiss franc started losing ground steadily visà-vis the euro. However, it firmed slightly against the dollar during the same period. Since our March assessment, the actual depreciation of the Swiss franc, i.e. weighted in terms of exports , amounts to 1.7%. The corresponding relaxation in monetary conditions is weakening the effects of our policy of lifting interest rates and is increasing inflationary pressure through two channels. One the one hand, it is bringing about an increase in import prices, which could have an effect on consumer prices. Even though the impact of this channel may have diminished during the past few years due to increased competition, there is no guarantee that – against the current backdrop of near full employment – it will not again be reactivated. On the other hand, it is strengthening the competitive position of our economy, thereby giving exports and economic activity a boost. As a consequence, the weak franc could heighten inflationary pressure in an economy already running at full steam.
Globally interconnected markets have resulted in a situation in which financial institutions everywhere have been hit, even if not exposed to the institutions or assets at the core of the crisis. My home country Sweden is a good example of this. What we have witnessed in recent months, since the default of Lehman Brothers, is the acute phase of a global financial crisis. To respond, authorities have taken action to prevent a systemic break down of the financial system. Both the US and the EU have delivered financial support plans committing governments and central banks to providing the necessary support to the financial industry. BIS Review 134/2008  1  These plans are now being implemented and we cannot yet be certain of their success. However, in my view, the support plans contain the necessary measures to solve the most critical issue right now, namely to restore market confidence by providing guarantees to creditors that their money will be repaid. Therefore, the prospects for restoring financial stability and enhancing the availability of credit for firms and households should be good. That the support plans also provide measures for government capital injections and takeovers is obviously good, but for the purpose of getting markets to function properly ownership issues really are of secondary importance. After all, what creditors are looking for is to get their money back. To them it should not really matter from where or from whom that money comes.

Essentially, it all comes down to a choice between two alternatives. On the one hand, central banks can try to slow down a worryingly rapid price rise in the housing market by keeping interest rates higher than they otherwise would have been. The obvious risk is that if increasing prices actually are driven by fundamentals, then an incorrect assessment has  2  BIS Review 134/2008  been made and demand in the economy will be subdued unnecessarily. But if the assessment was correct, a rapid downward correction in house prices may be avoided, or at least mitigated, as well as a subsequent fall in demand. On the other hand, central banks can disregard the fears and refrain from raising the interest rate. If price increases in this case are due to fundamentals a needless slow down in demand will be avoided. But if prices are due, for instance, to over-optimism among households and lenders, then severe problems may occur in the future when there is a rapid downward adjustment of house prices and a subsequent fall in demand and inflation. Which of the two alternatives is preferable can always be discussed, and may quite likely vary from case to case. However, it is far from obvious that the best choice is always to wait and see when facing a rapid increase in the price of houses or some other asset.
Crude oil prices rose to about USD 75 per barrel over the summer, partly owing to the conflict in the Middle East and reduced production in Nigeria and the US. In recent weeks, oil prices have edged back again. Brent Blend futures prices nevertheless indicate that oil prices will remain high several years ahead. Export prices for Norwegian natural gas largely follow developments in oil prices with a lag. Since autumn 2005, prices for Norwegian gas exports have risen substantially according to the quarterly reports of the oil companies Statoil and Hydro. In the next few years, natural gas will account for a steadily larger share of total petroleum production on the Norwegian continental shelf. Petroleum investment has reached a high level after three years of strong growth. In 2005, investment was close to NOK 87 billion, and it is expected to edge up again this year. The large Ormen Lange and Snøhvit projects have contributed to high petroleum investment, and high oil prices have fuelled activity even at oil fields that have been in production for a long period. The development of the Skarv Idun fields will contribute to holding up petroleum investment from 2007. Information from our regional network suggests that petroleum investment provides considerable impulses to activity in Norway’s coastal regions. According to the network, suppliers to the petroleum sector are expecting strong growth to continue in the coming months.

Caleb M Fundanga: Bank of Zambia retirees Talking notes by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the luncheon in honour of Bank of Zambia retirees, Bank of Zambia, Lusaka, 12 December 2006. *  *  *  • Deputy Governor – Administration • Directors • Ladies and Gentlemen • Retirees and Potential Retirees in our midst Some people say “retirement is wonderful; it is described by many as doing nothing without worrying about getting caught at it”. That is to say, you now become accountable to yourself for your actions! Retirement marks an important milestone in one’s life, it is so important that in many cases you have to consult, and reflect extensively before you take that very important decision. It is a day one should not only anticipate during ones working life, but also plan for. Retirement can occur voluntarily as the case is with VESS, by attaining the age of 55 as provided by statute or prematurely due to a misfortune such as failing health. In all circumstances one must plan for the event. Ladies and Gentlemen, it is for this reason that the Bank has found it befitting to host a luncheon in your honor, by recognizing all the hard work that you have put in the Bank in the many years of service. Admittedly, relationships between the Bank and ex-members of staff have in certain cases not been so good.