samchain/econo-pairs-v1 huggingface dataset:
Robert Ophèle: Micro economic analysis of companies Introductory speech by Mr Robert Ophèle, Second Deputy Governor of the Bank of France, at the Plenary Meeting of the European Committee of Central Balance Sheet Data Offices (ECCBSO), Paris, 18–19 October 2012. *  *  *  Mr President, Ladies and Gentlemen, It is a great pleasure for me to welcome you in our new conference center. I am delighted to receive so many distinguished participants to this meeting, coming from the same universe of statistical institutions or central banks – whether they are members of the Eurosystem or not – and sharing the same interest for micro economic analysis of companies. We are very happy indeed to organise this year’s ECCBSO regular meeting which will enable you to discuss in depth about the past achievements of your task forces and the prospects, drawing possibly some kind of action plans. Undoubtedly, we need to explore further a number of those issues where your Committee is fully and often very successfully involved. I am grateful that BDF can provide, in its turn, the opportunity to host this conference. As you know, Banque de France is one of the co-founders of the Committee and has always shown its commitment by actively contributing to these task forces.

Quite in line with this subject, I would like to stress the quality of the work that has been done recently by the Working Group Risk Assessment, to compare the various European central Banks’ Internal Credit Risk Assessment Systems: this is a very topical issue which is a good example of what your Committee can bring to all of us. Second, information on non-financial companies is important for analyses on a macro level, e.g. by using aggregated company data to perform economic analyses or stress testing experiments. On a macro level, the analysis of the non-financial sector is essential both for policymakers and for central banks. From a central bank’s perspective, these analyses help to ensure financial stability, e.g. through performing different kinds of economic analyses and stress tests, the latter having gained dramatically in importance in the course of the crisis. The work performed by the working groups has thus several major fields of application. Be it by trying to fathom new accounting standards, building databases, or working on the model development and default definitions, the different working groups contribute greatly to enhancing our models and procedures and also, more generally our micro economic intelligence. Thus the publications of the different working groups, especially on the ECCSBO website can play an important role in consolidating our knowledge but also supporting works in other instances within all participating institutions and beyond, because we can only gain in keeping an open mind.
microprudential  and  macroprudential  policies,  We must be particularly vigilant about this point in order to ensure the overall macro-welfare of the economy and guarantee the smooth financing of the economy. For example, imposing stringent requirements on financial institutions during an economic downturn may not be an appropriate policy response. Although it would reinforce the individual robustness of financial institutions, it may further subdue economic activity by causing a credit crunch for example. We would then enter into a negative feedback loop where the social and economic costs of regulation have systemic repercussions. There is thus a need under such circumstances for a clear prioritisation of macroprudential policy over microprudential policy in order to minimise the economic and social costs of the adopted measures and to guarantee the smooth financing of the economy, throughout the economic cycle. My second point is that this need for prioritisation must be addressed in a wider and clear governance framework of the interplay between macroprudential policies and other public policies. An optimal macroprudential policy framework must resolve such interaction issues by ensuring complementarity with monetary policy and consultation with fiscal policy. (i)  First, macroprudential policy is complementary to monetary policy in so far as the two policies may reinforce or take over from each other, when one of them is constrained. For example, when monetary policy is at the zero lower bound, macroprudential policy can help to give the economy an additional policy impulse.

Analytically, the argument, as summarised in the main text, needs to be supplemented with a mechanism that somehow impedes checks and balances from preventing the overshooting of fundamentals. 8  Loutskina E. and P. E. Strahan (2006), “Securitisation and the declining impact of bank finance on loan supply: evidence from mortgage acceptance rates”, National Bureau of Economic Research (NBER) Working Papers, No. 11983. And Estrella, A. (2002), “Securitization and the efficiacy of monetary policy”, Economic Policy Review, Vol. 8, No.1. 9  For an overview of early work see Kashyap, A. K. and J. C. Stein (1994),”Monetary policy and bank lending”, in G. N. Mankiw, ed., Monetary policy, Studies in Business Cycles, vol. 29. pp. 221-56. 4  BIS Review 149/2007  behaviour is invariant to its capital gearing or to the composition of its liabilities. 10 We do, therefore, face questions about the extent to which a shock to banks’ liquidity or capital resources can bring about a shift in credit conditions with macroeconomic effects that, other things being equal, monetary policy should seek to offset in order to maintain aggregate demand in line with aggregate supply. Over the past 15 years or so, when banks have seemed anything but restricted, easier access to liquidity or capital may have brought about a progressive relaxation of bank lending conditions. That this featured in commentary on monetary policy rather less than the recent manifest tightening may say no more than that sharp contractions attract more attention than gradual expansions.
Since those long rates were set in world capital markets by the interaction between the demand for investment and the (very large) supply of saving, only a strategy of persistently higher interest rates at home than overseas – which to some extent we did follow – would have prevented a significant rise in asset prices, thus reducing some of the upward pressure on credit growth. 28 Such a strategy might have brought some benefits for financial stability. It is possible that without rising asset prices we might have kept expectations of future incomes on a more modest path that did not later require a correction. Higher rates and the resulting recession and unemployment might have reminded firms, households and financial markets that the economy was not  23  For the record, over the relevant period I was in a minority voting for a higher level of Bank rate on fourteen occasions. 24  See the minutes of the Monetary Policy Committee, especially during 2001. All MPC minutes are available at www.bankofengland.co.uk/publications/minutes/Pages/mpc/. See also Barker (2003), Bean (2003), King (2000, 2002) and Large (2005). 25  King (2000). 26  See in particular the Minutes of the MPC for January 2002. 27  http://www.bankofengland.co.uk/publications/Documents/speeches/2002/speech156.pdf. 28  The analysis in Bean et al (2010) suggests that the output cost of slowing credit growth to the non-financial sector would have been substantial. There is a good deal of simple-minded comment to the effect that central banks should have “burst the bubble” before the crisis occurred.

Their conversations during the 1930s, at the height of the Great Depression, are eerily reminiscent of the enormous challenges we face today, as you can see from the following exchange in 1930: KEYNES: Is not the mere existence of general unemployment for any length of time an absurdity, a confession of failure, and a hopeless and inexcusable breakdown of the economic machine? STAMP: Your language is rather violent. You would not expect to put an earthquake tidy in a few minutes, would you? I object to the view that it is a confession of failure if you cannot put a complicated machine right all at once. KEYNES: In my opinion the return to the gold standard in the way we did it set our currency system an almost impossible task ... If prices outside this country had been going up since 1925 that would have done something to balance the effect on this country of the return to the gold standard. STAMP: Hush, Maynard; I cannot bear it. Remember, I am a Director of the Bank of England. In some respects our experience today is no different: putting right our economic machine is proving a slow and difficult task. But in the 1920s the Government made the task substantially harder by reinstating the gold standard at a rate that left sterling overvalued. Today, monetary policy is part of the solution, not part of the problem. That is thanks, in large part, to the monetary framework we have had in place since 1992.
3/3  BIS - Central bankers' speeches

We cannot have a system where the private sector enjoys the profits of excessive risk-taking while leaving the public sector on the hook for the losses. The post-crisis reforms  The ways in which firms organise themselves, and the tools by which we apply our supervisory judgements, are shaped by global regulatory standards. And in those standards, there has been a revolution. Responding to the emergency of the 2008 crisis, governments set the direction of travel and parameters for regulators to act. We took our mandates, assessed the system accordingly, and set in train a series of unprecedented changes to deliver financial stability. Key to this effort was more effective co-ordination between national regulators and co-operation through international bodies. For banks, this was the right response to the financial crisis, which showed that the standards we had been using were woefully inadequate. The toolkit we have today is miles ahead of what the authorities had as queues grew outside Northern Rock branches – for example the UK has led the way in developing a resolution regime so that we can intervene to manage the orderly failure of a firm. At the same time, UK banks have increased their equity capital by approximately £ since the end of 2008 and now hold more than £ of high-quality liquid assets, four times the level they held before the financial crisis. Governments, regulators and firms together have transformed the banking system.
a: The coefficient δ in the regression Δρt = α + βt + γ1Δρt-1 + γ2Δρt-2 + δρt-1 + εt, where ρt is the deviation of the actual price level from a price path implied by the target measure of inflation. b: 90% critical level = -3.14 (-3.16 for euro-area regression). c: The coefficient δ in a pooled regression (omitting the euro area), where δ is constrained to take the same value in all jurisdictions. d: Adjusted t-statistic, following Levin, Lin and Chu (2002).

In that case, an instrument more directly targeted at the microeconomic distortion would be to increase the risk-weights attached to such lending when computing banks’ required capital. And, as we have seen in the present crisis, much of the action may take place outside the regulated banking system in the wider credit markets. In that case, varying margin requirements might be a more appropriate instrument for dealing with vulnerabilities building up in the capital markets more generally. Finally, there is the option of introducing direct constraints on the terms or availability of credit, for instance imposing maximum loan-to-value ratios in the mortgage market. The best approach seems likely to involve a portfolio of instruments. And while experience of the use of these tools may be limited, it is not entirely a tabula rasa. In particular, a number of developing and emerging economies have experience in applying some of these instruments, while there are also lessons to be drawn from the past experience of some advanced economies too. Our aim here, though, is not to analyse the optimal design of the macro-prudential policy toolkit, but rather to consider how the deployment of such instruments might affect the conduct of monetary policy. As yet, there has been relatively little analysis of how the operation of macro-prudential policy might interact with monetary policy. We explore two related issues. First, both monetary policy and macro-prudential policy are likely to affect both aggregate demand and supply on the one hand and conditions in the banking sector on the other.
On the other hand, some consequences of central clearing may increase systemic risk: •  as a result of growing risk concentration in CCPs and in a limited number of large global dealers, which act as general clearing members as a gateway for other financial institutions to CCPs,  •  as a consequence of mutualisation, risks may spread among participants and markets more widely and the distribution of losses is more difficult to predict,  •  in order to avoid mandatory clearing, we might see migration of risk outside of the regulated universe through the artificial creation of bespoke (and hence risky) products that are not suitable for central clearing. Moreover, the systemic effect of clearing depends on whether risk is redistributed to those who are more able to deal with it, which is difficult to determine. Finally, the overall systemic effect depends on the incentives for risk-taking and central clearing that accompany risk redistribution. [slide 5] To promote central clearing and avoid regulatory arbitrage, a number of reforms have been adopted including: (i) mandatory clearing, (ii) margin requirements for non-centrally cleared trades, and (iii) higher capital requirements for non-centrally cleared trades. This highlights the crucial complementarity between the regulation of banks and the regulation of financial market infrastructures (FMIs), with the overall objective that regulation reduces overall risk, and does not shift it around the financial system.

Cooperation between the Committee on Payments and Settlement Systems and the International Organisation of Securities Commissions (CPSS-IOSCO) on the one hand, and the Basel Committee on Banking Supervision (BCBS) on the other hand, is key in this respect. A macroeconomic impact assessment led by the BIS focused on the effects of these reforms and found net benefits of 0.12% of GDP per year. These are estimates of the long-run consequences of the reforms and are expected to apply once those reforms have been fully implemented and produced their full economic effects. However, central clearing also involves risk redistribution and potentially the creation of new risks. The overall impact is therefore less certain: there are significant benefits which need to be balanced against potential new risks and uncertain risk redistribution effects. Ultimately, it seems to me that the success of central clearing as a tool for promoting financial stability critically depends on two factors: (i) the ability of CCPs to handle the risks they are concentrating and thus the design of their corporate governance, risk management and recovery frameworks and (ii) the ability of the official sector to address effectively any unintended side effects and “new” risks that may result from the push towards more central clearing. Recovery versus resolution of CCPs [slide 6] A second issue that I should like to highlight today concerns the relationship between recovery and resolution of CCPs.
Øystein Olsen: The role of monetary policy revisited – welcome address Welcome address by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Norges Bank conference “The role of monetary policy revisited”, Oslo, 26 September 2013. *  *  *  It is a great honour and pleasure for me to welcome you all to this Norges Bank conference: The role of monetary policy revisited. In his famous 1967 presidential address before the American Economic Association, Milton Friedman set out to answer three interrelated questions. What should be the role of monetary policy? What can it contribute to achieving the major goals of economic policy? And how should it be conducted to contribute the most? Five years after the onset of the global financial crisis, these questions are yet again at the forefront of our minds. The crisis and subsequent recession have presented substantial challenges to monetary policy. Central banks have responded with great activism and have resorted to unconventional policies such as quantitative easing and an increasing use of forward guidance. And the crisis has led to a review of monetary policy frameworks. Successful as monetary policy has been in safeguarding low and stable inflation, many argue that it should take risks to financial stability into account. Moreover, a new set of macroprudential policy tools has been proposed to address systemic risks in financial markets directly. In Norway, inflation targeting was introduced in 2001.

Since 2005, we have published a projection of the future path of our key policy rate. This path reflects our view on the role of monetary policy. We consider an interest rate path to be appropriate when it meets three criteria. First, the interest rate should be set with a view to stabilising inflation at our 2.5 percent target. Second, the interest rate path should provide a reasonable balance between the path for inflation and the path for overall capacity utilisation. This implies that inflation targeting is flexible. Notwithstanding new macroprudential tools, we see a need to add a third criterion: The interest rate should be set so that monetary policy leans against a build-up of financial imbalances. At Norges Bank, we remain firmly committed to our flexible inflation targeting framework. But the global financial crisis has taught us to be both modest and inquisitive. Experience with new macroprudential policy tools is limited, and institutional frameworks are still in the making. Leaning against financial winds remains subject to debate. It is therefore important that we actively seek knowledge. It is our obligation as central bankers to continuously search for the best practice for monetary policy. And we do not have to agree with Friedman's prescriptions to revisit the important questions he posed. We are privileged to have such a distinguished group of central bankers and academics present at this conference to help us with this task.
Our macroprudential authority – the National Committee for Macroprudential Oversight, comprising representatives from the central bank, the Ministry of Public Finance, and the Financial Supervisory Authority – adopted last year a recommendation to the Government, seeking to improve financial discipline in the economy and the financial soundness of firms. I strongly believe that addressing these structural vulnerabilities in the corporate sector will significantly increase the number of bankable firms and enhance the financial inclusion of Small and Medium Enterprises. Last, but not least, the climate-related topics have become more and more prominent worldwide. The financial system should not ignore the effects of climate risks. Central banks and supervisory authorities have joined the scene. There is a significant interest at EU level in the role of sustainable finance, a High-Level Expert Group on Sustainable Finance being established by the Union. The Network for Greening the Financial 4  System, that brings together 34 members, out of which 8 are central banks and supervisory authorities, highlighted the role of climate risks as a source of financial vulnerabilities. Not only the increased frequency and severity of extreme weather can translate into economic and financial losses for the real economy and the financial system, but consequences can also arise from transitioning to a low-carbon economy. Governments’ climate policy, new technologies and consumer preferences will be the main drivers influencing the developments in carbon-intensive sectors.

10 Years of Romania’s EU Membership: Looking to the future Liviu Voinea, Deputy Governor, National Bank of Romania 26 October 2017  Ten years after Romania’s EU accession, the world has changed dramatically: the global financial crisis of 2008-09 led to the revision of rules in the international banking system, to growing social discontent with major consequences in terms of flourishing populism and protectionism, as well as to a reshuffle of maps – be they geopolitical, military or economic.  Uncertainty is running higher today than prior to the crisis and the room for quantitative easing policies based on stimulating demand has narrowed considerably.  Looking ahead, both the European Union and Romania need structural reforms. As regards the EU:  Many steps have been taken so far at institutional level: Stability and Growth Pact, CRD IV (Capital Requirements Directive), Banking Union, SRB (Single Resolution Board), SSM (Single Supervisory Mechanism), ESRB (European Systemic Risk Board). When needed, monetary policy undertook – in Europe as well, similarly to the US, UK or Japan – to escape recession and deflation and to foster renewed economic impetus.  A challenge to the EU is to maintain the pace of economic growth as the ECB gradually exits from quantitative easing.  Another challenge facing the EU is to manage Brexit properly and avoid other exits, which would question the very essence of European identity.
And this is the new topic I would like to focus the second part of my speech today. In summary, there is evidence suggesting that banks may be overly reluctant to use their liquid asset buffers when facing liquidity pressures. This could have negative impacts on markets and the real economy, and means that central banks may need to intervene faster and to a greater extent than is desirable. But before I discuss liquidity buffers, let me summarise my most recent thinking on capital buffers and float a potential way forward. Impediments to capital buffer usability and policy implications We now have clear evidence that fear of breaching regulatory thresholds played a crucial role in affecting banks’ behaviours during the pandemic. Banks mostly did not need to use their buffers  Page 3  due to sizable support from authorities, but those which got nearer to regulatory buffers have reinforced their capital ratios to a greater extent. The importance of market stigma as a factor in banks’ reluctance to use buffers has been confirmed in many conversations I have had with bankers during the peak of the pandemic crisis and thereafter. It has also been reaffirmed by empirical evidence. [3] The evidence shows that firms’ reluctance to use their buffers can have a negative impact on lending. Firms which entered the pandemic with low capital headrooms, were more likely to constrain lending during the stress.

Along with Pillar 2 add-ons in the UK, which are used to address additional salient risks not captured by the LCR. 34. A fuller discussion of the challenges in interpreting changes in the LCR can be found in Bank of England and PRA Discussion Paper 1/22 ‘The prudential liquidity framework: Supporting liquid asset usability’, March 2022 35. Goodhart, C (2008), ‘Liquidity Risk Management’, Banque de France Financial Stability Review. 36. Bank of England and PRA Discussion Paper 1/22 ‘The prudential liquidity framework: Supporting liquid asset usability’, March 2022  ,