samchain/econo-pairs-v1 huggingface dataset:
This outcome reflects the extremely low level (0.25%) of the ECB’s deposit rate and the Bank’s management of liquidity in the interbank money market. The very low level of interest rates in the euro money market and the generous provision of funding by the ECB to the banking system have gradually resulted in a marked decline in bank lending rates, especially on short-term credit to the private sector. 8 More generally, the real average cost of financing for euro area non-financial corporations has declined by 43 basis points over the past five months to 4.47%, from its peak level reached last October. However, the cost of financing for speculative-grade-rated firms (i.e. the high-yield segment of the corporate bond market), although it has also declined somewhat, remains at unusually high levels (at about 19% in nominal terms), reflecting the continuing high degree of risk aversion of investors that has prevailed since the intensification of the crisis last fall. Despite the improved conditions in the euro money market and in the average cost of bank lending to the private sector, bank credit standards have remained tight and the annual rate of credit growth to the private sector has decelerated steadily. Indeed, in recent months the flow of credit to both firms and households became negative. These developments partly reflect the reduced demand for banks loans by both households and firms. But they are also partly a consequence of the deleveraging of banks’ balance sheets and persisting stresses in the bank wholesale bank funding markets.

These measures are complementary to the actions of the ECB and play a crucial role in improving the financing of the economy and fostering its recovery. To give an idea of the scale of the governments’ banks support measures, let me mention a few figures: until early May, banks in the euro area had received just over EUR 113 billion of capital injections from governments and around EUR 300 billion of government guarantees. However, only one third of the commitments for capital injections had been used until the end of April and a smaller fraction, less than 18%, of the commitments to guarantee new bank debt have been called for. The use of government credit guarantees varies considerably across countries for several reasons. For example, banks’ needs for such guarantees depend on the time profile of the maturity of their debt, but they also reflect the relatively retrained demand for loans by the private sector. Moreover, the unlimited financing provided by the ECB also explains the subdued demand in most countries for guarantees on shortterm debt with maturity less than one year. Finally, certain factors might have discouraged the use of government guarantees, such as the associated “stigma effect” and the pricing, which may appear high in current market conditions. Overall, the use of government guarantees on bank debt is considered satisfactory in most countries.
The primary objective of the Eurosystem is to maintain price stability, which has been defined as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2% in the medium-term. In May 2003, the ECB Governing Council confirmed this definition and specified that, in the pursuit of price stability, it will aim to maintain inflation rates close to, but below, 2% over the medium-term. The monetary policy conducted by the Eurosystem has led to a low level of inflation, which averaged 2% between 1999 and 2004, and to very favorable financing conditions as both short-term and long-term interest rates have reached very low levels. •  Moreover, in principle, fiscal policies cannot undermine the objective of price stability as the Treaty prohibits monetary financing and as Member States are committed to implementing the Stability and Growth Pact. However, the lack of fiscal discipline in some euro area countries and the recent debate at the EU level have illustrated the fact that it is still necessary to enhance the efficiency of the European fiscal framework and, especially, to strengthen the preventive arm of the Stability and Growth Pact, which deals with the surveillance of budgetary positions. The fiscal framework enshrined in the Treaty on European Union and in the Stability and Growth Pact is a cornerstone of Economic and Monetary Union and, thus, of central importance to the cohesion of Monetary Union itself.

These 70 years, the National Bank has gone through various stages of transformation and evolutionary development. It has operated in various systems of social and political order. Over the years, it changed both its name and address. It has gradually acquired competencies and built its functions. With the constitution of independent Macedonia and the declaration of monetary autonomy, it established itself as an institution – carrier of the functions of a modern central bank. Today, I can proudly say that the National Bank has grown into a modern and highly professional institution, enjoying credibility domestically, and appreciated and recognized internationally. The National Bank has been maintaining price stability in the Macedonian economy for 20 years through a stable exchange rate. The inflation rate in the past 20 years has averaged about 2%, which is a level comparable to developed countries, placing us among the most successful economies in transition. The financial stability has been successfully maintained by promoting sound, safe and competitive banking sector that successfully defy risks and delivers robust credit growth. By achieving these two legally delegated objectives, the National Bank creates the best conditions for sustainable economic growth and therewith, serve the well-being of the Macedonian society. Yet, besides its primary activity, the National Bank has vigorously built capacities in other areas.
First, we want to be assured that there are no glitches operationally with somewhat higher transaction volumes than in previous tests, that we can accept cash from a larger array of counterparties, post collateral in the tri-party repo system and reverse the transactions each day smoothly. Second, while the limited size of the operations during this exercise will prevent the operations from having a significant impact on market rates, we will observe how the facility impacts individual  6  During the testing phase, a ceiling will be placed on the maximum amount that can be invested per counterparty. BIS central bankers’ speeches  7  investor demand relative to other market rates. Additionally, we can see how sensitive that demand is to changes in market conditions such as quarter-end that increase the demand for safe assets. These observations will give us some insight into how the facility could affect the entire constellation of money market rates. Only by testing and learning will we be able to assess how best to use the facility. In conclusion, let me turn back to the economic outlook and the role of monetary policy. I do believe that we are making progress towards our objectives of maximum sustainable employment in the context of price stability. The economic fundamentals are improving and I expect that the healing process will continue in the coming months and years. At the same time, it is important to recognize that the financial crisis generated significant headwinds that are only slowly abating.

The point I wish to emphasize is that any decisions on the pace of asset purchases (the rate at which we are adding accommodation) versus liftoff in terms of the federal funds rate (a tightening of monetary policy) should be viewed as largely independent of one another. One does not foreshadow the other – certainly not in any mechanical way or with a definitive timeframe. As Chairman Bernanke noted in last week’s press conference, our actions are data dependent and how the data will evolve is uncertain. In addition, it is worth explaining why we anticipate the federal funds rate is still likely to be quite low relative to what Committee participants consider normal over the longer run, even as the Committee gets close to its employment and inflation objectives. For example, in the September Summary of Economic Projections, the median projection for the federal funds rate in the fourth quarter of 2016 is 2 percent, far below the median long-run federal funds rate projection of 4 percent, at the same time that the unemployment rate and inflation are close to the Committee’s long-run objectives. How does one explain this? As noted by Chairman Bernanke in last week’s press conference, the still low federal funds rate projections for 2016 reflect the fact that economic headwinds – such as tight credit standards and ongoing fiscal consolidation – are likely to take a long time to fully abate.
And it is why we place importance on the minutes of our monthly meetings and the quarterly Inflation Report to convey a full explanation of our thinking. Explaining our analysis at some length is a richer source of information for markets than code words or statements about the future path of interest rates. Less weight should be placed on the short  15  See my discussion of money and risk premia in King (2002b). BIS Review 43/2007  9  statements that are published with the announcements of our decisions because such statements, as we have seen elsewhere, run the risk of becoming monetary policy by code word. They do not help markets understand how we are likely to react to future data. A number of academics have suggested that the MPC publish forecasts for the path of Bank Rate. Several central banks now do so, noticeably the Reserve Bank of New Zealand, the Norges Bank and the Riksbank. Although there is some superficial attraction in such a move, there are four points that suggest the need for caution. First, what markets need more than anything is not an unconditional forecast of where interest rates might go, but an idea of our contingent response to data as they evolve. That is not easily communicated by a path – even when shown as a fan chart – for future interest rates. It requires a careful reading of the Inflation Report, the minutes of our monthly meetings and speeches by members of the MPC.

Eurofi High Level Seminar – Lisbon, 16 April 2021 What fiscal policies beyond monetary policy support? Speech by François Villeroy de Galhau, Governor of the Banque de France  Ladies and Gentlemen, I am very happy to join you today. I would like to extend my warmest thanks to Didier Cahen and David Wright for fostering the fruitful European spirit that we all cherish, despite the difficulties of the moment. As you know, the ECB silent period has already started, so I won’t say a word on monetary policy. However, this will give me the opportunity to tackle a core issue of our incomplete Economic Union besides our successful Monetary Union: fiscal policy. Monetary policy cannot be – and fortunately no longer is – the only countercyclical tool available in the euro area. There are two other links between monetary and fiscal policy to which I would like to draw attention: an accommodative monetary policy, as we have today, supports an active fiscal policy. The second is the risk of a bank-sovereign loop, which as supervisors we are keen to avoid. Let me nevertheless stress that I have no such fear for the country I know best: French banks since 2014 have decreased their exposures vis-à-vis public debt in absolute terms and have done so dramatically as a proportion of their balance sheet. I will first talk about the “fiscal” lessons we can draw from the Covid crisis for Europe (I).
Over the past few decades, these flows have facilitated the efficient cross border utilisation of capital and have provided liquidity in financial markets. By adding an international dimension to financial intermediation, the mobility of international capital has clearly been helpful in promoting growth and development in both the capital exporting and the importing economies. The mobility of capital has more recently been boosted by advances in telecommunications and information technology, allowing capital to move into or out of an economy in huge amount and within a very short space of time. The virtue of capital mobility therefore carries the risk of capital volatility. The volatility is destabilising in both directions. Too rapid a build-up of capital inflows places severe upward pressure on domestic asset prices, fuels inflation, and exacerbates macroeconomic imbalances. Conversely, sudden and massive reversals of these flows place intense downward pressure on the exchange rate, and therefore upward pressure on interest rates, causing asset bubbles to burst and splatter. When rapid build-up is followed suddenly by massive withdrawal, we see the kind of crisis that swept across this region in 1997 and 1998. The volatility of international capital flows is also attributable in part to the phenomenal growth of derivatives and the global over-the-counter (OTC) market in the past decade. A survey by the Bank for International Settlements (BIS) in June 1998 estimated the size of the global OTC derivatives market at an aggregate notional value of $ trillion.

Such manipulation is often well timed and co-ordinated with the advance or reversal of capital flows, since essentially the same market players, acting in the multiple roles of advisors, agents and principals, are involved. One inevitable consequence of this is market panic and overshooting, to the extent of risking a meltdown in the monetary and financial systems concerned. The authorities, obviously, have a responsibility to act to prevent this from happening. Some have been in a better position to do so than others, using market means, particularly those with deep pockets. Some have been forced into closing their markets, albeit temporarily. Others have been quietly happy that they had been a little more conservative in their move towards financial liberalisation. In Hong Kong, where our commitment to maintaining open markets is strong, in addition to our unconventional market operation, we had to introduce measures that have effectively built us a big cushion. The purpose of this cushion is to help us to absorb the spasmodic international financial shock waves of mammoth dimensions that can now be generated by the international financial system. Some others, regrettably, have had to suffer the debilitating consequences of financial meltdown, and to face the often unjust accusation that these were entirely of their own making. Domestic responses by economies in this region cannot on their own address the root of the crisis or lessen the chances of another international financial shock wave.
Looking ahead, on the basis of current oil futures prices, headline inflation is likely to pick up further in the near term, largely reflecting movements in the annual rate of change of energy prices. However, measures of underlying inflation are expected to rise more gradually over the medium term, supported by our monetary policy measures, the expected economic recovery and the corresponding gradual absorption of slack. Turning to the monetary analysis, broad money (M3) continues to expand at a robust pace, with its annual rate of growth increasing to 4.8% in November 2016, up from 4.4% in October. As in previous months, annual growth in M3 was mainly supported by its most liquid components, with the narrow monetary aggregate M1 expanding at an annual rate of 8.7% in November, up from 8.0% in October. Loan dynamics followed the path of gradual recovery observed since the beginning of 2014. The annual growth rate of loans to non-financial corporations was 2.2% in November 2016, after 2.1% in the previous month. The annual growth rate of loans to households was 1.9% in November, after 1.8% in October. Although developments in bank credit continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and nonfinancial sector balance sheets, the monetary policy measures put in place since June 2014 are significantly supporting borrowing conditions for firms and households and thereby credit flows across the euro area.

Muhammad bin Ibrahim: Audit as a partner of change Remarks by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 5th PETRONAS Board Audit Committee (BAC) Forum “Audit as a partner of change”, Kuala Lumpur, 16 August 2016. *  *  *  The theme of today’s forum “Audit as a Partner of Change” is highly relevant and timely, as the events in the global market today, involving failures of large firms, frauds and market manipulation activities, underscores the criticality of the three lines of defenses in organizations. For confidence and trust to be restored in the marketplace, the role of the BAC and internal auditors as the third line of defense will be even more critical than ever. Our role as members of audit committees is much broader than what we may perceive it to be. Organisations such as PETRONAS are widely regarded as amongst the few key flag bearers for the country. Hence, it is incumbent upon the Board and the BAC members to be strong and energetic in upholding the highest standards of professionalism, ethics and integrity in discharging their roles and responsibilities. The people of Malaysia must have confidence and pride that an institution entrusted with much strategic natural resources are run with utmost integrity and professionalism. Before I proceed further on the topic for today, allow me to touch briefly on the current outlook on the global and domestic economy.
Their capital base is high by historical standards and they were able to build up their liquidity reserves last year. However, for these banks, too, the economic downturn will represent an increasing challenge. The outlook for the banks is also shaped by the negative forecasts for the entire world economy. These suggest a substantial deterioration in credit quality – including for  1  The figures published in our publication, Banks in Switzerland, are reported at parent company level, not at group, or consolidated level. According to these figures, the total loss for the big banks amounted to some CHF 38 billion. Cf. press release of 18 June 2009 on Banks in Switzerland for further details. BIS Review 77/2009  1  Switzerland. Consequently, increasing loan losses, substantial reductions in earnings and a deterioration in the capital situation may be expected for a large number of banks. However, cantonal, regional and Raiffeisen banks appear in relatively good shape to withstand these negative developments. The situation for the big banks appears more difficult. In addition to the still sizeable market risks, they face significant credit risks overall. Simple comparisons with earlier crisis periods show that potential losses on traditional lending are high, when set in relation to the capital cushion. The longer and deeper the recession, the greater these potential losses will be. In our basis scenario we expect the economy to recover gradually as of 2010, both internationally and in Switzerland.

As a result, French insurance companies remain fairly solid, and the own funds held largely cover regulatory solvency capital requirements for both life and non-life insurance companies, which is an important asset in the challenging environment in which they are operating. This is notably the case for the mutual insurance sector. Its solvency coverage ratio significantly exceeds 300%, which is higher than the average in France, thanks in particular to their prudent and long-term approach, with less pressure from the financial markets. However, adapting to a challenging environment does not come without new risks. For instance, it is necessary to closely monitor risks related to policyholder protection and advice, the excessive lengthening of bond maturities or the over aggressive search for yield. Now, I would like to focus on regulatory developments, which are numerous and may have an impact on the insurance business model going forward. The French insurance landscape has experienced major regulatory changes over recent years: a modification 3  of the taxation system of life/savings insurance contracts (Flat Tax), the possibility of changing credit insurance contracts annually (Loi Hamon/Amendement Bourquin), and the creation of a specific prudential status for French pension funds. The new Pacte Bill should bring about further changes that seek to promote long-term investment in equity, including a reform of the French life long-term insurance product (also known as Eurocroissance). In addition, at international and European level significant regulatory developments are also in the making.
For example, it was sometimes claimed that stock market prices had reached a permanently higher plateau and that further exceptional rises were to come. Others claimed the death of the business cycle or, in a more realistic version, that business cycle fluctuations could now be expected to be significantly and permanently dampened by the emergence of a New Economy. We cannot fully judge this at the current stage. And uncertainties regarding global economic developments have more or less pushed the discussion about the New Economy into the background. Therefore, in my comments, I shall adopt a rather cautious approach and address the more fundamental issues related to the New Economy. In my interpretation of the debate, there are two main components in the concept of the New Economy. These relate, first, to the way in which the New Economy manifests itself and, second, to the conjunctions of particular events that accompany the emergence of the New Economy. First, the New Economy is seen as leading to a permanently higher rate of potential output growth, with productivity gains driven by technological innovation being the main motor behind the upsurge. The increase in productivity growth that has been regarded as characterising the New Economy is typically seen as the result of an underlying economic process which may take some time to bear fruit and therefore may clearly precede the emergence of the symptoms of the New Economy in macroeconomic data.

It must be recognised that structural reforms, and specifically financial sector reform, is of crucial importance if this recovery is to be turned into sustainable economic growth. A bank with the mandate to promote development in Asia must surely have a role to play in all this and I look forward to greater involvement of the Bank, in whatever capacity, in maintaining the momentum of structural reforms in Asia. Mr President, the efficiency of financial markets in the region in performing the important function of financial intermediation has been found lacking. There has been notably little disagreement about the desirability of developing domestic and regional bond markets. But there has also been little progress. And there has been no lack of explanation of why this is the case. The often quoted impediments include the lack of clearing and settlement infrastructure, the absence of a broad institutional investor base, the lack of a benchmark yield curve, low liquidity, and so on. While these impediments are recognised and are being tackled earnestly by national authorities, there is one problem that has attracted relatively little attention so far. The problem relates to the generally low credit ratings of the Asian issuers, including the sovereigns, granted by the international rating agencies. 1  BIS Review 38/2000  I do not wish to provoke a debate on the objectivity and reliability of the ratings and the rating process of the international rating agencies.