samchain/econo-pairs-v1 huggingface dataset:
17.04.2023  Participation in the Governance Workshop “Diverse and effective boards in a changing and competitive landscape” ECB and the Florence School of Banking and Finance Florence Margarita Delgado Deputy Governor  Thank you for inviting me to speak here today. I am very pleased and honoured to participate in this event. The oversight role of the board of directors is one of the core elements of good corporate governance and a key area of supervisory focus. The Single Supervisory Mechanism (SSM) deals with heterogeneous structures and different management approaches, which has made it necessary to design an open supervisory framework. Sound oversight is ultimately achieved by striking the right balance between challenge, involvement and independence. First, by challenge I am referring to board members’ ability to participate in discussions. In this regard, non-executive members should be able to improve the quality of the debate and have the opportunity, the capacity and the ability to question the decisions made by the executive members. In order to do so, they need to have reliable, timely information. Without it there can be no meaningful discussion or effective decision-making processes. But challenge is not at odds with the support that the board of directors needs to provide to senior management. Diverse knowledge is a relevant issue in this context. This is not just a matter of gender, although there are still banks that do not have diversity policies or internal targets for gender diversity at board level.

13  All speeches are available online at www.bankofengland.co.uk/speeches  13  Chart 11: Majority of long-horizon variation in UK equilibrium rates explained by international factors  Notes: Forecast error variance decomposition from a vector error correction model, share not explained by domestic R*. Sources: Holston, K, Laubach, T and Williams, JC (2016), ibid. Global factors also influence domestic financial conditions and therefore the effective stance relative to the shorter-term equilibrium rate of monetary policy, r*. The presence of borrowers and lenders operating in multiple currencies and in multiple countries creates multiple channels through which developments in financial conditions can be transmitted across countries. 35  For example, changes in sentiment and risk aversion can lead to international co-movement in term premia, affecting collateral valuations and so borrowing conditions. Work by researchers at the Bank of England, building on analysis by the IMF,  36  shows that a single global  factor accounts for more than 40% of the variation in domestic financial conditions across advanced economies. For the UK, which hosts the world’s leading global financial centre, the relationship is much tighter, at 70%. Highlighting the openness of the UK economy and financial system, a third of the business-cycle variation in the UK policy rate can be attributed to shocks that originate abroad. 37  One important channel of global spillovers is of course monetary policy.
This portfolio is associated with some $ trillion in excess  BIS central bankers’ speeches  1  reserve balance liabilities – a level at which the Open Markets Trading Desk (the Desk) will be unable to move the effective federal funds rate up or down with small variations in the supply of reserves, as it did before the financial crisis. 1 Against this backdrop, implementation of monetary policy will require a new operational approach to influence shortterm interest rates when the FOMC determines it is time to start raising them. The FOMC outlined its anticipated approach to policy normalization – that is, raising the federal funds rate and other short-term interest rates to more normal levels, and reducing the Federal Reserve’s securities holdings – in a statement of Policy Normalization Principles and Plans published after the September 2014 FOMC meeting, with additional details provided in the March 2015 FOMC meeting minutes. 2 In its September statement, the Committee noted its plans to reduce monetary policy accommodation by raising its target range for the federal funds rate. The Federal Reserve intends to move the federal funds rate into the target range primarily by adjusting the interest rate it pays on excess reserve balances (IOER), and will use an ON RRP facility and other supplementary tools, as needed, to help control the federal funds rate.

But this partly reflects the weight of past decisions and specific factors relating to the reintermediation, by banks, of previously securitised loans. •  All surveys point to a tightening of credit standards going forward. “Tightening” does not mean that credit will dry up, but rather that it will be more expensive and more selective. Banks are gradually passing on to their customers the increase in the cost of financing that they incur. •  We are closely monitoring this development that, at present, does not appear to be, in itself, a threat to growth. Indeed, the recent period had been characterised by an extremely high credit growth rate. As you know, the government has implemented measures to facilitate the financing of SMEs. To conclude, in the longer term, and in accordance with the guidelines laid down by European governments on 4 and 12 October 2008, I believe that it would be useful to revisit the foundations of our financial regulation. This should be done without haste, but no stone should be left unturned. We must be willing to address all the questions and challenges that this crisis has raised. These include the role of credit ratings agencies, the management of risk, market infrastructures, the scope of financial regulation and the question of remuneration. As regards the latter, we should not seek to over-regulate or punish, but rather to instil a sense of responsibility. Pay structures should not encourage short-termism or, as was the case, excessive risk taking. BIS Review 129/2008  3
As a result, policies have gained credibility and the inflation target has become a more credible nominal anchor for economic agents. This in turn has strengthened the disinflation policy and ensured its continuity. As another development, the Turkish economy has been enjoying high rates of growth for three consecutive years in the falling inflation environment. The GNP growth rate was 9.9 percent in 2004. Accordingly, the real growth rate compared to 2001 was 25.5 percent. 6  BIS Review 38/2005  However, even more important than achieving high growth rates is that dynamics of growth in the Turkish economy are now changing. Now, growth is mainly driven by the productivity increase, comes from the private sector and increase in exports. This provides confidence regarding achieving sustainable growth rates in the future. I want to emphasize that, not only recent developments in macroeconomic fundamentals but also the commitment to prudent policies in the medium-term economic program, prospects of EU membership and the new standby agreement with the IMF help the Turkish economy to operate in an equilibrium of good expectations. Dear Participants, I want to mention that the Central Bank’s commitment to start full fledged inflation targeting in 2006 will deliver extra confidence to economic agents in terms of prudent policies. The full fledged inflation targeting regime will bring more transparency to the actions of the Bank and also enhance the communication policy that the Central Bank put at the center of its policies since the 2001 crisis.

Though we are recording some early signals of a price acceleration – such as the services component of the HICP estimated at 1.6%6 in January –, we observe a weakening in the pass-through from wages to prices: here also, is this weakening temporary – due to an increased time lag – or attributable to more structural factors? We have to consider this issue carefully, which is also currently at stake in the United States. In this context, I still believe that the gradual normalisation of our monetary policy is desirable. Our chained guidance of last December has been less noticed than the successful end to our net asset purchases. But it is efficient in combining clarity about the sequencing – full reinvestments will last for an extended period after a first rate-hike – and flexibility about the timing of each step. Consequently, financial markets tend to adapt their calendar expectations – and hence financial conditions – to the perceived outlook: our chained guidance already provides some stabilisation function, without prejudice to our future decisions. Beside flexibility in the calendar, let me stress another capacity of our monetary policy: pragmatism in its intensity, thanks to the powerful “trio” of instruments at our disposal: the reinvestments of assets, interest rates and liquidity. Concerning this third instrument (provision of liquidity), everybody is aware of the forthcoming expiry of the TLTRO-2 programme, starting in June 2020. The Governing Council will decide about this in due time, with two prerequisites.
  Be aware of and act, as appropriate, in respect of non-compliance with minimum reserves and statistical reporting requirements, in accordance with Regulation (EC) No 2818/98 of the European Central Bank of 1 December 1998 on the application of minimum reserves and Regulation (EC) No 2819/98 of the European Central Bank of 1 December 1998 concerning the consolidated balance sheet of the monetary financial institutions sector.   Draft proposed Circulars and Monetary Circulars for approval by the Governing Council.   Approve internal circulars, to be endorsed by the Governor.   Authorise expenditure and order the related payments.   Submit the Banco de España’s budget proposal, annual accounts and proposal for distribution of profit to the Governing Council for approval. 9  ANNEX 3 - Rules for senior officers following termination of office. Spanish and European framework Institution  Applicable regulations  Law 13/1994 of 1 June 1994 of Autonomy of the Banco de España. Banco de España  Position  Term  Governor and Deputy Governor  2 years  Elected members  2 years  Limitations Scope of prohibition  Internal Rules of the Banco de España Code of Conduct of the Governing Bodies of the Banco de España.

As at 9 March 2012, the outstanding amount in the Malaysian bond market was RM899 billion compared to RM301 billion at the end of 2001. This represents a 300 per cent increase over the last decade. Within the region, both Hong Kong and Malaysia have participated actively within the EMEAP Group in promoting regional bond market development initiatives such as the Asian Bond Markets Initiative and the Asian Bond Fund. I am confident that this pilot platform will bring benefits, not only to Hong Kong and Malaysia, but the region as a whole. We envisaged that this pilot platform will increase the efficiency of issuance, investment and settlement of bonds through the increased harmonisation of cross-border processes and standards. We expect this initiative to strengthen the cross-border linkages and facilitate the intermediation of surplus funds within the region. This increase in cross-border flow of funds will further enhance the efficiency in the mobilization of surplus funds to meet the rising investment needs of the region. The implementation of this pilot platform is indeed timely and opportune and, will serve as an important catalyst for further development in linking financial markets within this region. This, I believe, is a development that we should all welcome. Thank you. 2  BIS central bankers’ speeches
Furthermore, rallying demand is likely to help ease pressure on margins in the coming months. We continue to expect a slow improvement of the economy. Our forecast for real growth in 2015 is unchanged at just under 1%. The global economy is likely to gather pace gradually over the course of 2016, and this should strengthen foreign demand for Swiss goods and services. Domestic demand is also likely to remain robust. For 2016 as a whole, we expect growth of approximately 1.5%. Interest rates, exchange rates and inflation expectations I will now review changes in monetary conditions and inflation expectations since the beginning of the year. When we discontinued the minimum exchange rate in January, the monetary policies of the major currency areas were set to diverge, and we were aware that this would have significant consequences for international monetary relations. This is exactly what came to pass, and is  2  BIS central bankers’ speeches  clearly reflected in the exchange rate path of the Swiss franc against various currencies. While the Swiss franc/US dollar exchange rate is now virtually the same as it was at the end of 2014, the Swiss franc has appreciated 10% against the euro since the beginning of the year. The export-weighted Swiss franc exchange rate is about 8% higher than it was in January, having gained approximately 20% at times in the interim. In January, concurrently with the discontinuation of the minimum exchange rate, we lowered the interest rate on sight deposits to –0.75%.

The Chinese economy is currently undergoing structural change, and growth in the country’s industrial output has therefore slowed considerably since the beginning of the year. This has curbed manufacturing activity worldwide and weighed on commodity prices. Global investment activity in the third quarter has thus been hesitant. This has especially impacted economies with strong global trade links as well as commodity-exporting countries. BIS central bankers’ speeches  1  In contrast to manufacturing, the services sector performed well in most countries due to robust domestic demand. Particularly in the US and Europe, private household consumption has regained momentum. Contributing factors were the decline in energy prices and a further improvement in the labour market. The SNB has revised its short-term growth forecast for the global economy slightly downwards, but the outlook for the medium term remains unchanged. On the whole, the moderate recovery in the advanced economies looks set to continue, on the back of highly expansionary monetary policy and low energy prices. Increases in public spending should also stimulate demand. In this environment, inflation is likely to pick up again. Our overall assessment of global economic prospects is cautiously optimistic. We nevertheless see significant risks. The structural change underway in China could continue to hold back global manufacturing and investment activity. Equally, structural weaknesses in Europe have yet to be addressed. Current concerns about public safety could also weigh on economic developments.
•  There is now a recommended template to help regional governments structure meaningful public-private-partnership agreements for infrastructure projects. The latest innovation is an infrastructure debt takeout facility. •  By providing a guaranteed takeout arrangement, the facility will enhance banks’ ability to originate, arrange and provide infrastructure project finance loans. •  At the same time, it will make it easier for institutional investors to invest in long-term infrastructure debt instruments as an asset class. Second, we need to deepen our markets. Take the asset management industry, where Singapore plays the role of a regional hub with $ trillion of assets under management. To deepen our market, we are embarking on several initiatives: •  To add diversity and resilience to the industry, we are seeking to anchor sovereign wealth funds and pension funds. 4  BIS central bankers’ speeches  •  To fund managers who use Singapore as their hub for Asian growth, build their investment capabilities and strengthen their local talent pool, MAS is giving out more investment mandates. •  To facilitate the domiciliation of funds in Singapore, MAS together with the Ministry of Finance is putting in place a more efficient corporate fund administration structure for asset managers. •  To meet the growing demand for family offices, we are providing greater clarity on the regulatory treatment of single family offices. The third way in which we build dynamism in the financial sector is by enhancing connectivity.

They will become genuine stations of information gathering about the economic and financial activity of the region, being preceded by further analyses and studies. This research work will serve not only to a more explicit monetary programming but also to the modernization of transmission elements of this policy from the higher authority to the lower authority and vice versa. I estimate that this initiative of the Bank of Albania to monitor the economic activity not only in the metropolis but also in other regions of the country would be of particular interest for all the interested groups. Further, I would like to add some other comments on the latest developments of the banking system, which I deem have created good premises for a real expansion of this business, an expansion that will positively impact on the performance of business activities. After completion of the Real Time Gross Settlement (RTGS) system, the Bank of Albania inaugurated some times ago the initiation of a very important project on the Automated Electronic Clearing House (AECH). The operation of this new system will considerably increase the payment speed for the customers, knowing that the lack of this element has maintained businesses far from banks. I take this opportunity to make businesses aware of the advantages of the operation of this system, as both systems together will help reach the international standards of ATM and AIPS (automatic and electronic payment equipments), per population number.
Global imbalances laid the foundations for the current crisis If we now move on to the current global financial crisis we can see that there are both similarities and differences compared to the Swedish bank crisis of the 1990s. The circumstances that formed the background to the outbreak of the current crisis in the summer of 2007 included the considerable global imbalances that had developed, with an enduring savings surplus in some countries and deficits in others. The surplus was invested on the global financial markets and the substantial capital flows there helped to push down interest rates. As a result, demand and prices on many asset markets around the world increased explosively and there was a general fall in the premiums for credit risk. The explosion in asset prices was fuelled by a rapid expansion in credit. Money was lent more carelessly than previously. Housing bubbles developed in several parts of the world. In the USA, the development of such bubbles was reinforced by the inadequate regulation of the mortgage market and a political agenda that aimed to promote house ownership among people on low incomes. The search for yield drove investors to borrow more in order to achieve greater leverage in their investments. Financial innovations also helped to drive this development. A steady flow of new and increasingly complex instruments were created to satisfy the demand for investments with a higher yield.

At the time, the Riksbank had neither the mandate nor the desire to be the lender of last resort, that is the body that the banks can turn to when they suffer a shortage of liquidity. The Riksbank was instead more like a bureaucratic, state-owned commercial bank that competed with the privately-owned commercial banks. There was, however, a growing realisation in the UK and other countries that it was important to have a liquid credit market and that the central bank could play an important role in safeguarding the stability of the banking system. One of the people who developed these ideas was Walter Bagehot, who was appointed edi-tor of the journal The Economist in 1860. The experience of countries that did not have a central bank, for example Switzerland, also pointed to the need for a central bank to safeguard the stability of the financial system. In connection with various bank crises in Switzerland the banks had tried to protect themselves by reducing lending, which in effect only made the crises worse. BIS Review 135/2009  5  In Sweden, it was not until the Riksbank Act of 1897 that the Riksbank was given an explicit role to stabilise the payment system. When Sweden and the rest of Europe were infected by the crisis in the USA in 1907, the Riksbank was prepared and maintained liquidity in the system. The crisis of 1907 was also, by the way, the event that hastened the formation of the US central bank, the Federal Reserve.
22  First, improved central bank communications can help stabilise the economy. They do so by improving outside agents’ information on the likely course of the economy (now and in the future) and/or on the likely course of policy (now and in the future). This reduces the degree of uncertainty felt by households and firms, better enabling them to make decisions about spending, saving, working and the like. Improved information about the economy or economic policy may also have an effect on expectations. For example, information on the target or instrument paths for monetary policy might help shape inflation expectations. In this way, transparency initiatives can also help improve the effectiveness of economic policy. 23  These are the ex-ante benefits of communications arising from improved understanding. Second, transparent communications improve the ability of outside agents to assess the performance of the central bank and hold them to account. They fulfil a democratic demand for accountability. 24  They also  increase incentives for the delegated party to make wise decisions in the first place, knowing they will be held to account. 25  These are the ex-post benefits of central bank communications arising from improved  trust. These conceptual benefits, improved understanding and trust, are fairly well-understood, if not uncontentious. 26  Over the course of the past couple of decades, a body of empirical evidence has built up to  21  Drawing on the methodology from Hansen and McMahon (2016). For example, Blinder et al (2008), Reis (2013).

Obtaining and retaining the staff resources capable of dealing with Year 2000 issues will be another increasingly difficult problem. There is a limited pool of skilled technical staff to make needed changes, and demands on this pool are growing as the time draws closer. In the short run, the ability to add to this pool significantly through training is limited. Qualified outside consultants already are heavily committed and will become even more scarce over time. Obtaining equipment on which to conduct tests also often requires significant lead time. All of this suggests that controlling the cost of Year 2000 projects will be a problem for many institutions as resource prices are bid up. Already, we have seen many institutions increase their Year 2000 budgets several times, and by significant amounts, as they develop their detailed plans. Security also is likely to be of increasing concern as we move forward. As time pressures mount, there is a risk that shortcuts will be taken. The checking of credentials for new staff or outside contractors or consultants may be rushed and less rigorous. Date-dependent security applications may be turned off to facilitate testing. In an industry like ours, with so much interconnectivity, any compromise of security simply cannot be tolerated. BIS Review 87/1997  -3-  Every financial institution needs its own comprehensive project plan to address the Year 2000 problem. In the United States, bank supervisors have suggested an approach that includes a number of phases.