samchain/econo-pairs-v1 huggingface dataset:
Keynote address by François Villeroy de Galhau, Gouverneur de la Banque de France, Official Monetary and Financial Institutions Forum webinar, 25 September 2020 « ROLE OF CENTRAL BANKS IN THE HEART OF THE ECOSYSTEM i »  Contact presse : Mark Deen (mark.deen@banque-france.fr), Déborah Guedj (deborah.guedj@banque-france.fr)  Page 2 sur 10  Good morning and welcome to this webinar, jointly organized by the Official Monetary and Financial Institutions Forum and the Banque de France. What better way to demonstrate the digital transformation than holding an event in cyberspace. It has been common in recent years to hear about disruptive technologies but over the past 6 months, information technology has instead been a crucial source of continuity in a highly disrupted world. Digitalization is one among many factors transforming central banking and this will be my broader theme this morning. The ECB Strategic Review rightly launched by Christine Lagarde, with an explicit list of challengesii, is the opportunity to reflect on how the Eurosystem should respond to them. The shocks that have hit the economy in the past decade have been unprecedented, but in hindsight, many long-term structural shifts were occurring that have caused the unstable and complex situation we face today. Global natural interest rates had already been falling since the early 1980s driven by the demographic transition and risk-aversion in key emerging markets. Digitalisation and globalisation, combined, have been pressing for “lowflation”. Financial vulnerabilities were also steadily, but invisibly, rising since the socalled Great Moderation.

Commentators sometimes attribute a perceived asymmetry to our current definition of price stability “below, but close to, 2%”. The Governing Council has frequently re-affirmed its commitment to symmetry – as it stands in our Introductory Statement since Mario Draghi. Nevertheless, we should examine whether the current formulation casts doubt on this. o medium term means that we should judge our inflation performance over a long enough period. We shouldn’t forget what Jean-Claude Trichet often stressed as an optimal performance in the first years of the euro. “Over these 12 years, the average annual inflation rate in the euro area has been 1.97%. We have achieved price stability in the euro area over what has already been quite a long horizon.”vi As I said in previous occasionsvii, our medium-term target needs to be viewed in two ways: it has to be forward looking to guide inflation expectations, but it cannot ignore the past either. Page 6 sur 10  All this is not explicit average inflation targeting ex ante, but would achieve very similar outcomes ex post. We will have to discuss that.  We will also have to discuss the precise formulation of our inflation objective, in at least two respects: the “below but close to” as already mentioned and the measure of inflation we use. Continuity is a positive asset but the inclusion of “owner-occupied housing” in the HICP is frequently, and somewhat rightly, suggested by the general public.
In the wake of the Great Depression, the UK abandoned the gold standard and Norway followed suit. After the Second World War, there was a substantial shift in economic policy. Direct regulation and an active fiscal policy were regarded as more effective instruments than the interest rate, also in terms of promoting price stability. This was an international trend, but few countries supported the new thinking more than Norway, spurred to a large extent by the negative legacy of the policy of parity. In practice, the interest rate was thereafter to be set by the government, and as a main principle the interest rate was to be kept low. Norges Bank’s discount rate was set at 2.5 percent in 1946 and was changed only once over the next 23 years. 1 Credit would be channelled to promote policy priorities and kept in check by means of regulation and foreign exchange controls. The policy regime eventually started to falter. In the 1970s, domestic inflation spiralled out of control, as it did in many other countries. In Norway, the government responded with stimulus measures, wage and price freezes and devaluations, but the measures had limited effect. High inflation had become entrenched. A policy change was needed to bring down inflation. The low interest rate policy was discontinued in the wake of the oil price collapse in 1986. Norges Bank was given broader responsibility for the conduct of monetary policy.

The krone depreciation has helped start the restructuring process. After a decade of higher growth in imports than mainland exports, export growth is now outpacing import growth. The tourism industry is one of many industries experiencing an upswing. Many export firms have announced plans to increase investments in 2016, which will likely entail an increase in production and market shares. Oil service companies are also benefitting from the krone depreciation. So far, around 75 percent of the field development contracts for Johan Sverdrup have been won by Norwegian companies, a clearly higher share than in recent years 2. The effect of the sharp fall in demand from oil companies is nevertheless predominant in the oil service industry. Both the oil production industry and the oil service industry must now go through a process of restructuring. Costs at many stages appear to have followed oil prices upwards. High prices may have created a sense of complacency. The profits from petroleum activities have nevertheless been substantial. Most of the economic rent has flowed into government coffers via the special taxation of oil production. But wages in oil production and oil services have also been relatively high. The  2  Statoil (2015): Press release of 9 December 2015. BIS central bankers’ speeches  7  rise in input prices and investment in the petroleum industry have been significantly higher than for other industries. The excess costs have reduced the economic rent.
The euro area has to act together, exerting some pressure on the IMF, which last year adopted a resolution to effectively strengthen its surveillance of currency markets. Lastly, regarding energy issues, it is necessary that developed countries, including Europe, put a stronger emphasis on energy savings and climate change. The experience accumulated in recent years has confirmed that although energy saving measures can slow down growth in the short term, costs connected to energy waste can be much greater in the long run. I will now close with the fourth line of action, which is linked to the previous one, though being on a more national scale. The ability of a European country to become part of the globalisation process depends not only on EU-wide initiatives but also on internal measures aimed at supporting economic growth. In essence, there are only two ways of absorbing the shock deriving from price increases in raw materials and to prevent it from becoming a reduction in purchasing power. The first way is to increase productivity in order to allow wages to grow in a non-inflationary manner. The second is the reduction in the price of items other than energy and food. Of course, these are not easy ways, but they are the only ones which can allow European economies to grow while preserving the purchasing power of its citizens, even in the presence of a worsening in the terms of trade.

BIS Review 61/2008  3  was characterised not only by its deepness but also by the policy mistakes committed at the time, which introduced protectionist barriers with the aim of protecting national economies from international competition in the hope that this would succeed in better coping with the crisis. Many countries adopted measures to restrict trade with the aim of favouring local production at the cost of imports and trying to protect jobs. In June 1930 the United States introduced the Smoot-Hawley Tariff Act, which imposed disproportionately high duties on imported goods. Other countries took retaliatory measures. International trade declined (some say it contracted sharply), deepening the depression and delaying the recovery. 2 At the current juncture one the few factors supporting growth is international trade, driven in particular by emerging economies. Without this contribution, growth would be stalling completely in advanced economies. Under these conditions, thinking of curbing international trade would be a mistake in the same way as in 1929. To isolate a country from globalisation means weakening it economically. The empirical evidence shows that there is a clear relationship between a country’s degree of integration in the global economy and its economic performance over a relatively long period of time. It is the more integrated countries that compete better and develop, not those which shut themselves off from competition. The microeconomic evidence confirms the macroeconomic trends.
The Monetary Policy Committee has needed to provide monetary stimulus not only to contain the short-term economic weakness but, even more important, to reduce its longer-run costs – social and economic. But we cannot do that at the expense of price stability – or, more technically, of allowing medium-term inflation expectations to drift away from the target of 2%. Were the anchor to slip, our ability to support recovery would be undermined. It is sometimes suggested that independent central bankers are more averse to inflation than to periods of low growth and increased unemployment. I hope the past few years have demonstrated that, in fact, it is the credibility of the Bank of England’s commitment to price stability that enabled us to provide such exceptional monetary support to help the recovery. It is unimaginable that, prior to Bank independence in 1997, any government would have been able to hold the policy rate at effectively zero and make a further monetary injection of £ without inflationary expectations – and government financing costs – spiralling out of control. But credibility is not to be taken for granted. Even we cannot provide stimulus without limit, without a wary eye to inflation expectations. Nor has it been at all easy to judge just how much stimulus has been needed to secure recovery given the extraordinary uncertainties about what is going on in the real economy.

Obviously, markets are responding in a short-term  BIS Review 40/2007  1  manner, as a function of current interest differentials or of expected changes in these differentials, without fully recognising the existing economic fundamentals or fearing the possibility of sudden adjustments in exchange rates. Inevitably, this speculative attitude is risky. History has shown us that reversals on foreign exchange markets often take people by surprise, that periods of strength in the Swiss franc may alternate with periods of weakness, and that the Swiss franc has a tendency to react excessively in times of uncertainty. Therefore, caution is called for. Our exporters need to retain control of their exchange risks even at times of low volatility. After all, nobody would think of doing without fire insurance just because their house had been spared for a number of years. Domestic demand on the right path Inevitably, the strong momentum of foreign trade has spilled over into investment and domestic consumption, and especially into employment. Initially, an improvement in equipment investment and employment results from an increasing level of capacity utilisation. Thus, in manufacturing, the rate of capacity utilisation has been rising steadily since 2002 and has now reached a historical high. The corporate sector, which in 2005 was still hesitant about the soundness of the recovery, held a more favourable view last year. As a result, companies considerably stepped up their investment plans for equipment. At the same time, they created jobs – in particular full-time positions – at a faster rate.
An increased use of electronic services is important for efficiency, including cost-effectiveness, in the payment system. We know there are considerable cost differences between various payment services and that there is an equally large potential for savings. In terms of cost, the transition to more cost-efficient paper-based services - such as the mail giro - is important. It is estimated that the total cost of the payment system in Western countries may approach 2-3% of GDP. Therefore, a transition to electronic - or more cost-efficient paper-based - services will be essential to the establishment of an efficient payment system. If we look at the breakdown between the various payment services in terms of value, we get a different picture. 6  Measured as number of transactions per inhabitant per year. 5  BIS Review 7/2000  Chart 4: Retail payment services (value) in 1990 and 1998  Retail payment services (value) 1990  1998  (approx .

But the continued relative decline of manufacturing – and indeed the strength of sterling – over the past decade or so reflects, not the stance of monetary policy, but the remarkable wind of change that has blown across the world economy with the advent of China, India and much of the former Soviet Union into the world trading system. To their great credit, business people and politicians have not resisted changes to the structure of the British economy, unlike many of their counterparts abroad. As a result, total output and employment here have grown rapidly, and our living standards are higher than could have been sustained with policies aimed to defend the old industrial structure. Those changes, however, have led to the closure of many manufacturing companies. There are over a million fewer people employed in manufacturing now than a decade ago, and 200,000 fewer in the West Midlands. It is just over a hundred years since car production started at Longbridge, just over thirty years since it was nationalised, and no vehicle has been built there for over a year. But there are also many success stories. Since I became Governor, I have made regular monthly visits to the regions and countries of the United Kingdom, and visited around one hundred companies, large and small, new and old.
Even the impact of oil price shock of 2014 on GCC banks have been muted at most, though degree of resilience certainly varies from one country to another. Still, there is broader agreement that our banks entered the low oil price environment from a position of strength which was built through prudent regulatory reforms. Now, as the rule book is mostly in place, it is time for supervision to step up. After all, regulation can only go that far; without effective supervision, it is hard to ensure timely and consistent implementation and achieve financial stability at large. Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  -3-  The role of effective supervision is also critical because not every risk can be pre-defined in a rulebook. While overseeing the dynamic world of finance, supervisors must be agile enough to suitably correct course in line with the constantly changing nature of the banking industry or the emergence of new risks. In the second part of my speech, I would like to touch upon two such emerging concerns; cyber threats and climate change. Addressing Emerging Concerns Ensuring resilience against Cyber threats First, consider the issue of cyber threats. Growing footprint of technology is influencing every facet of the banking business, transforming banks’ internal processes as well as their engagements with customers. As the role of technology deepens from a mere support function to a platform central to everything that banks do, the likelihood of new risks emanating from ubiquitous and connected technologies loom large.

The securitization markets have shrunk since the financial crisis and the Federal Reserve has further reduced the amount of available securities by snapping up trillions of dollars in bonds in recent years.” Let me repeat that last clause: The Federal Reserve has further reduced the amount of available securities by snapping up trillions of dollars in bonds in recent years. To be precise, $ trillion of Treasuries and asset-backed securities were purchased under QE3, on top of the $ trillion purchased under the previous rounds of quantitative easing. To be sure, we have instituted programs to counter this problem: We have developed sophisticated operations whereby we sell assets in our portfolio and promise to buy them back at a later period. This is known as our overnight reverse repurchase agreement (ON RRP) facility, and its net effect is to shift longer-term securities out of our portfolio and into the hands of market operators. This has expanded the traditional reach of our New York desk, where the aggregate portfolios of the 12 Federal Reserve banks are traded under directives given it by the FOMC. Thus the Fed's reach – some would say intrusion – into trading markets has been expanded. Now, let's bring together these observations with the thought I asked you to hold earlier. It strikes me that given current circumstances, it would do no harm to start slowly trimming our holdings by letting them roll off as they mature.
House price declines were reported in all but 11 states. House prices in Arizona and Florida, two of the housing boom states, declined by 8 percent. Distressed sales as a fraction of all repeat-sales increased to more than 40 percent after having declined into the low 30s earlier in the year. Some housing economists are forecasting house prices to fall by 10 percent or more this year. The growing inventory of defaulted mortgages continues to weigh down any recovery in the housing market. According to the most recent Mortgage Metric Report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision, there were 598,000 newly initiated foreclosures in the third quarter of 2010. 1 This inflow of new foreclosures exceeded the outflow due to completed foreclosures and properties sold through short sales and deeds in lieu. As a result, the foreclosure pipeline increased to 1.9 million mortgages – double the level from a year earlier (Chart 6). Efforts to modify mortgages have not managed to prevent the foreclosure pipeline from increasing. As a consequence, distressed sales are expected to grow even further over the coming year. The combination of declining house prices and increasing delays in the foreclosure process will put upward pressure on default rates as well as losses on defaulted mortgages. CoreLogic estimates that in the third quarter of 2010 there were 10.8 million borrowers in negative equity where the balance on the mortgage exceeds the current value of the property.

Joseph S Tracy: The shape of the recovery Remarks by Mr Joseph S Tracy, Executive Vice President of the Federal Reserve Bank of New York, at the Connecticut Business and Industry Association/MetroHartford Alliance Economic Summit and Outlook 2011, Hartford, Connecticut, 7 January 2011. *  *  *  It is a pleasure to be with you this morning. As the new year begins, it is instructive to look back over 2010 to try and discern what the shape of the recovery will look like over 2011. Let me note at the outset that my comments are my own and do not necessarily reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System. Just six months ago a topic of keen interest was whether the economy was experiencing a temporary soft patch or was heading into a double-dip recession. Real gross domestic product (GDP) growth had slowed from 5 percent in the fourth quarter of 2009 to 3.7 percent in the first quarter of 2010, and to only 1.7 percent in the second quarter. Soft patches are common in expansions but are difficult to distinguish from a more serious decline in momentum. Examples of soft patches include the expansions in 1976 and 2002 (Chart 1). Soft patches typically result when the initial boost from inventory restocking and fiscal stimulus from government spending fades and must be replaced by underlying strength in the economy.
Therefore, today, a need has surfaced where several regulators are compelled to act as a group to undertake consolidated supervision of the financial institutions, especially financial conglomerates, and this is becoming increasingly common. Regulators now tend to enter into MOUs to share information under the current legal provisions, and they also have periodical meetings, sometimes in the form of financial system stability committees or as inter-regulatory institutions committees to assess potential systemic risks/crises and to develop crisis prevention and resolution measures. In fact, in some countries, Regulators now develop common tools to conduct financial “fire drills” to prepare for possible failures of large financial institutions, and such practices include various simulation techniques as well. That is not all. The Regulators’ work has become even more complex due to the rapid internationalization of the banking system. Internationalization could take place in two ways: through ownership or business operations. “Ownership” involves international investors and/or international banks acquiring banks in other countries. Banking “business operations” gets internationalized through the use of modern IT where geographical boundaries and country regulatory boundaries are no longer applicable and it becomes increasingly difficult to identify a single particular location as being the operative area in respect of certain financial transactions. Modern IT and financial liberalization are the keys that have led to this type of banking internationalization. At the same time, it has provided for innovative electronic money and scripless settlements systems for cross-border financial transactions.

The need to focus on good practices of Corporate Governance mainly arose as a response to the separation of ownership and control following the formation of joint stock companies. The owners or shareholders of these joint stock companies, who were not involved in day to day operational issues, required assurances that those in control of the company, the directors and managers, were safeguarding their investments and accurately reporting the financial outcome of their business activities. Thus, directors were the original targets of Corporate Governance, and practices and principles were designed to protect the interests of the shareholders from misdemeanours of directors. However, current thinking recognizes a company’s obligations to society more generally in the form of all stakeholders, and it has been this new thinking that has driven the study and practice of good Corporate Governance to the levels it has reached today. Perhaps it is also such thinking that accounts for the hectic pace at which developments have taken place and are taking place in the practice as well. Since the latter part of 2001, the very lively and often controversial debate on Corporate Governance became an even more turbulent debate as a result of the massive corporate scandals and failures that rocked the business world, namely Enron and WorldCom. Almost as a knee-jerk reaction, new laws, e.g.