samchain/econo-pairs-v1 huggingface dataset:
Nothing is lasting without institutions.” The ECB is, in my opinion, a remarkable illustration of the lucidity of the conceptual founder of the Community: the institutional construction is solid and has proved to be remarkably effective in attaining its goals. This ten-year period has been short compared with the duration of the deepening of the European Union, which is an historic endeavour. But this relatively short period of time has been rich in successes. These accomplishments call for celebration, for reflection and also for continuous efforts as regards the future. In the first place, celebration. My predecessor, our dear Wim Duisenberg, in his speech to celebrate the establishment of the ESCB ten years ago, referred to “the road we have to travel in the future to make the euro a success, which means to make it a stable currency”. What can we say now, after ten years? I can sum it up in five sentences. Since day one, the single currency has fully inherited the degree of credibility and confidence that was the privilege of the most credible national currencies before the euro. The credibility was such that the medium and long-term market rates of the euro were at the same low level as those experienced by the most reliable national currencies before. In spite of a series of global shocks resulting from the prices of oil and commodities, yearly inflation since 1 January 1999 has been 2.1% on average.

The crisis exposed many significant structural weaknesses in the U.S. and global financial systems. Among them: Systemically important firms were allowed to operate with inadequate amounts of capital and insufficient liquidity buffers, and were overly reliant on short-term wholesale funding. They were excessively complex and interconnected with each other and with the shadow banking system. Large firms came up woefully short in monitoring, measuring and controlling the risks that could—and did—materialize under stress. Securitization markets suffered from a number of defects, including poor design for many securitized products and misaligned incentives in the credit ratings regime. This led to inflated credit ratings for many mortgage securitizations that subsequently performed poorly as mortgage delinquencies increased. There were significant problems in funding and derivative markets, including flaws in tri-party repo, money market mutual funds that were vulnerable to runs, and massive and opaque bilateral OTC derivative exposures. Finally, all of these problems were magnified by the lack of a good resolution process for large, complex financial firms that got into trouble. As a result, policymakers were forced to develop ad hoc interventions to contain contagion and to prevent the collapse of the U.S. financial system. We should never forget how close we came to a full-blown depression, and we must resolve to never allow a return to conditions like those that existed prior to the financial crisis. That said, it is entirely appropriate to take a critical look at the changes that were made to the regulatory regime.
These events, along with the reversal of certain losses previously charged to equity and the effect of these adjustments on the corporate income tax charge, mean that we can anticipate a notable decrease in net worth, which, however, will remain positive. In sum, I have to inform you that the final adjustment figures are not yet available. Nonetheless, I can assure you that they are substantially lower than some of the figures that we have heard in the last few days. Also, the submission of the annual accounts by the provisional central bank nominees has been postponed in application of the powers established in Article 36.2 of Law 26/1988 of 29 July 1988 on the Discipline and Intervention of Credit Institutions, since it has been considered preferable to await the conclusions reached in the inspection now drawing to a close. With regard to liquidity, the turmoil of the last few months put CCM in a difficult position: •  Wholesale financial market tensions and the downgrading of CCM’s credit rating closed the door to institutional funds. This lack of access to funding via wholesale  BIS Review 42/2009  3  markets was particularly painful for it, as it had resorted extensively to this source of funds for its business expansion plans. •  The institution’s gradual deterioration was common knowledge and increasingly the subject of political and media discussion. This adverse publicity gave rise to a drain on deposits.

To conclude, I have personally conveyed to the Government and to the main opposition party the need for certain regulatory changes that might notably improve finding solutions in keeping with the principles informing our actions to date, which as you are well aware, were backed by a recently approved parliamentary motion. The purpose of my testimony today is not to debate what must be done in future, since that is evidently the primary responsibility of the Government and the parliamentary groups, since  4  BIS Review 42/2009  any changes must ultimately be approved by this House. However, I do want to mention some changes which we would view very favourably. For example, providing savings banks with the wherewithal to increase their own funds, at least on a comparable footing with Banks. This is important because, as I have reiterated today, it is essential to consider all possible private solutions before asking taxpayers to contribute more public funds. Evidently we must comply with the requirements of Monetary Union membership. But in this connection, one desirable institutional change, along the lines of the deposit guarantee funds that have worked so well for us, would be to avoid, as has occurred in the case of CCM, calling a cabinet meeting every time taking control of an institution is called for. These and other changes should also strive to ensure the orderly restructuring of banking institutions and, while maintaining the necessary discretion specific procedures require, comply with all government and parliamentary reporting procedures deemed necessary.
It is such action, called for at the level of the international community three days ago in Washington by the G7, the IMFC and the G20, that the Europeans considered indispensable, particularly in the euro area last Sunday, with the adoption of a concerted European action plan. This plan has six dimensions: ensuring appropriate liquidity; facilitating the funding of banks through various means (guarantee, insurance or similar arrangements for new medium-term – up to five years – bank senior debt issuance); providing additional capital resources to financial institutions; recapitalisation of distressed banks; ensuring appropriate implementation of accounting rules; and enhancing cooperation among European countries. The very day after the meeting, namely yesterday, a large number of euro area countries displayed their implementation of the Eurogroup commitments at the level of the Heads of State and Government. I will not hide the fact that I am impressed by the degree of responsibility and decisiveness that was demonstrated last Sunday and this week in the euro area. I am impressed by the will of the countries that share the single currency not only to work together, but also very closely with the United Kingdom and all EU Member States. And I see that the new decisions taken in the United States are further reinforcing this very impressive implementation of the plan that has been approved by the international community. This is no time for complacency. Central banks will remain solid anchors of stability and confidence.

Indeed, all financial sectors are impacted by market developments as the boundaries between financial activities are becoming increasingly blurred. More broadly, all competent financial authorities, central banks, supervisors and ministries of finance should strengthen their coordination mechanisms for managing a crisis impacting cross-border financial institutions. In Europe, an important step has been taken in this direction with the Memorandum of Understanding signed by the financial authorities of all EU Member States in June 2008, which established common principles, procedures and terminology to be used by all parties involved in a cross-border crisis. BIS Review 123/2008  5  Conclusion We are experiencing a very challenging and demanding episode of the market correction which started more than a year ago and was due to a significant underassessment and underpricing of risks in global finance. This fostered extremely high risk–taking behaviour, excessive leverage and a widespread use of toxic, obscure and abnormally sophisticated financial instruments. In this regard, global finance was potentially unstable before the start of the turbulence and this was mentioned publicly, particularly in 2006 and the first part of 2007, by a number of speakers, including myself. The sub-prime mortgage crisis has therefore played the role of a trigger but there was a good deal of explosive around. My experience of previous crises is that it is extremely important to analyse situations very carefully and lucidly and never to underestimate its gravity.
Looking ahead, inflation rates are likely to stay clearly above 2% over the coming months. Thereafter, on the basis of the path implied by futures markets for oil prices, inflation rates should fall below 2% in 2012. This pattern reflects the expectation of relatively stable wage growth developments in the context of moderate economic growth. The September 2011 ECB staff macroeconomic projections for the euro area embody these considerations and foresee annual HICP inflation in a range between 2.5% and 2.7% for 2011 and between 1.2% and 2.2% for 2012. In comparison with the June 2011 Eurosystem staff macroeconomic projections, the range for HICP inflation in 2011 remains unchanged, while the range for 2012 is slightly narrower. It is necessary to recall that the staff projections are conditional on a number of purely technical assumptions. The Governing Council views the risks to the medium-term outlook for price developments as being broadly balanced. On the upside, the main risks relate to the possibility of higher than assumed increases in oil and non-oil commodity prices as well as increases in indirect taxes and administered prices, owing to the need for fiscal consolidation in the coming years. The main downside risks relate to the impact of weaker than expected growth in the euro area and globally. Turning to the monetary analysis, the annual growth rate of M3 was 2.0% in July 2011, after 1.9% in June. The annual growth rate of loans to the private sector was 2.4% in July, after 2.5% in June.

Inflation is low in Norway and has recently edged downed further. Underlying inflation is estimated to be in the interval 1–1½ percent. Low external price impulses and an appreciation of the krone in recent years have held the rise in prices for imported goods at a low level. The analyses in the March 2013 Monetary Policy Report indicate that costs in householdoriented industries have risen at slower pace than in the mainland economy as a whole in recent years. This is partly due to relatively high productivity growth. At the same time, high inward labour migration is providing a flexible supply of labour, which is curbing wage growth. Wage growth in Norway is also being influenced by low wage growth in neighbouring countries. Trade-offs in monetary policy Norges Bank’s conduct of monetary policy is oriented towards low and stable inflation. The operational target of monetary policy is annual consumer price inflation of close to 2.5 percent over time. At the same time, monetary policy shall contribute to stabilising developments in output and employment. Since the introduction of the inflation target in 2001, annual consumer price inflation has averaged 1.8 percent, which is somewhat below, but close to, 2.5 percent. In Norges Bank’s assessment, consumer price developments since 2001 have been well within the flexibility provided for under the monetary policy mandate. The monetary policy response pattern can be summarised in three criteria for an appropriate interest rate path.
Likewise, Charles Babbage and Ada Lovelace have contributed to the origins of computing that underpins virtually every aspect of modern life. Each of the shortlisted scientists is worthy of celebration, so the Bank is delighted that this Museum is honouring them with a special exhibition that showcases their many and diverse achievements. Sadly, there is not adequate space to feature them all on the new £ note. A choice had to be made. And it is my pleasure to announce today that the scientist that will feature on the new £ note is Alan Turing. Why Turing? Alan Turing was an outstanding mathematician whose work has had an enormous impact on how we live today. As the father of computer science and artificial intelligence, Alan Turing’s contributions were far ranging and path breaking. Turing was insatiably curious about the world around him. With his mind ranging widely and freely, he approached a variety of seemingly intractable problems and found answers that passed others by. His genius lay in his unique ability to link the philosophical and abstract with the practical and concrete. All around us, his legacy continues to build. Turing is a giant on whose shoulders so many now stand. Born in Paddington, London on 23 June 1912, Turing displayed prodigious talent and vibrant interest in the sciences and mathematics as a schoolboy. This was reinforced by the untimely death of his close friend Christopher Morcom.

This is Statutory Instrument 32 now revised and re-named SI 55 on the Monitoring of Balance of Payments. Ladies and Gentlemen, as the name of the SI suggests, the aim is to “monitor” and not to “control”. There has been much public debate on this subject matter which seems to suggest a public misunderstanding of the intentions of the SI. Some quarters have gone so far as to link the issuance of SI 55 to the earlier issued SI33 as amended through SI78 (Currency Regulations) and concluded that Government is introducing exchange controls. BIS central bankers’ speeches  1  Managing Director, Distinguished invited Guests, Ladies and Gentlemen, allow me to clarify that SI33 was issued with the primary intention of reinforcing the use of Kwacha, which legal tender, for all domestic transactions. This is in line with practice in most countries around the world. The SI has is no way intended to stifle business. The initial Monitoring of Balance of Payments regulations were initially issued under SI 32. When the Government issued SI 32, Bank of Zambia embarked on an exercise to seek the views of the financial system players, the business community and the public at large. Arising from these stakeholder engagements, it became clear that some of the provisions of SI 32 would impede the smooth flow of business. It was also evident that the timeframe within which stakeholders were supposed to prepare for the implementation of the SI was not adequate.
So the only thing that remains rather difficult to understand is the former hegemon’s efforts to resolve what is, for it, the awkward situation of non-compliance with and infringement of the rules of the club (including its own infringements) by creating new and ostensibly better rules for the same club with the same members. Yes, Otmar Issing, for instance, rightly warns against Eurobonds and simple fiscal unification, but with the European Stability Mechanism and the planned banking union we are effectively creating something like common fiscal liabilities and common bonds, just with less transparency. Arguably, the German mark was – from a monetary point of view – a rather well administered pan-European public good. After the euro, this public good became overconsumed. Philipp  2  BIS central bankers’ speeches  Bagus, sitting today here in this room, argues that the euro is a classical example of a “tragedy of the commons” from the start, and that the smaller and weaker countries therefore inevitably ended up racing to make maximum use of the commons for their own benefit at the expense of the rest, thereby destroying this shared asset. The German mark can indeed be viewed as a sort of public good that became the subject of decisions made outside the public sphere in Germany and hence was fundamentally transformed. The average quality of the public good called monetary stability and good currency in the eurozone will very probably go down with the ultimate demise of the former European monetary hegemon.

Mojmír Hampl: The euro – the case of the European monetary integration project and its former hegemon Speech by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at the Mont Pelerin Society Annual Conference, Prague, 4 September 2012. *  *  *  Many thanks to the organizers for their kind invitation – I’m really honoured to speak on such a distinguished panel. But excuse me first for making a small detour: the organizers forgot to mention in my CV that I also had the honour – together with a group of distinguished colleagues (some of whom are here today) – to help launch Laissez Faire here 14 years ago. This is a magazine devoted to the promotion of liberal/libertarian ideas in the Czech public domain (“liberal” not in the American sense of this word). Such libertarianism is rather unusual intellectual equipment for a poor central banker, especially in the current times. However, I very much believe it is an advantage, and many of the ideas mentioned in Laissez Faire are very much missing from normal European policy debates. What a shame. But back to the topic: What is the euro? As Barry Eichengreen demonstrated, it is a really unique animal, a unique monetary arrangement. I do not buy into many of Barry Eichengreen’s ideas, but I do agree with this particular statement. Why? Here is my definition of the euro.
In practice, monetary policy has to some extent neglected the price stability objective and led to unnecessarily high unemployment. Against this background, it is remarkable that monetary policy in Sweden nevertheless seems to have been aimed at influencing household indebtedness. Any problems arising from household indebtedness could be better managed by other means than the policy rate, such as mortgage caps and tax regulations, which, unlike monetary policy, are effective in both the short run and long run (Svensson 2012c). The Riksbank’s mandate – price stability and the highest sustainable employment – demands a lower policy rate and policy-rate path I thus believe that monetary policy should be more expansionary than it is at present, that is, the policy rate and the policy-rate path should be lower. The Riksbank’s mandate should, in line with the Sveriges Riksbank Act and its preliminary works, be interpreted as price stability and the highest sustainable employment (Svensson 2012b).5 The highest sustainable employment is in practice the same as the lowest sustainable rate of unemployment. Every monetary-policy decision thus entails setting the repo rate and selecting the repo-rate path that best stabilises inflation around the inflation target and unemployment around a long-run sustainable rate.6  3  Andersson, Palmqvist and Österholm (2012) discuss the Riksbank’s target attainment during a different period, that is a period beginning in 1995 instead of in 1997, which gives an average of 1,5 per cent for CPIinflation in 1995–2011 instead of 1.4 per cent. During 1995–1996, CPI inflation was 1.8 per cent, which increases the average.

Looking forward to 2014, the key challenge is to stay on this path to create the fastest possible rebound in growth and job creation. This entails building a genuine banking union with a strong single resolution mechanism; it entails finding new ways to support structural reform implementation, for instance through so-called reform contracts; and it entails deepening our political union to ensure full legitimacy in the eyes of citizens. All this requires effort and determination to achieve – but it is well within our reach. BIS central bankers’ speeches  3
For example – and of particular relevance since the crisis – saving might be forced higher by the need to deleverage, in both public and private sectors.8 In addition to elevated risk premia between equity and bond yields, retail lending rates may be affected by lower liquidity in some wholesale financial markets.9 The debate about “secular stagnation” – the idea that the equilibrium real interest rate is sufficiently negative to be out of reach of monetary policy (given the zero lower bound) – has brought forth more potential factors still, including population aging, a shift toward less capital-intensive production and institutional changes that have increased the demand for safe assets.10 But what all these possibilities have in common is that they’re real economic changes – they have consequences for, but do not originate in, monetary policy. Those consequences are significant. If monetary authorities fail to recognise a decline in the underlying, natural rate of interest, leaving the official interest rate unchanged amounts to a tightening in policy. That’s precisely the charge levelled by some economists at the US Fed in the 1930s. It’s also why it was crucial, for the sake of the global economy, that official interest rates in developed economies were cut as sharply, and as promptly, as they were in 2008 and 2009. But one should see those cuts, and the earlier declines that preceded them, in context: they took place against a backdrop of a falling natural, or equilibrium rate.

But it’s unlikely the effect would endure for a very long time: the only lasting impact would be on inflation. And, in the real world, that’s not what’s happened – inflation has remained broadly close to target even as real interest rates, long as well as short, have trended downwards. This bears out, for me, that the real task for policy is to understand – and then adapt to – economic forces affecting the natural, or equilibrium rate of interest.13 For a variety of reasons, and over a long period of time, this underlying rate has been driven remorselessly downwards. An official interest rate that might once have been considered inflationary is now contractionary; failing to adapt to these changes sufficiently quickly would have depressed output and pushed inflation below target. And sharp falls in the equilibrium interest rates – which have probably not yet fully unwound – can be thought of as a significant driver of the substantial cuts in interest rates undertaken by the MPC in 2008 and 2009. As I say, those forces seem to have been at work for a long time, before as well as since the financial crisis. Over that time they have had differing effects on the performance of risky assets. During the 1990s all asset classes did well – bonds and equities alike. At least in terms of wealth, that will have benefited anyone who happened already to own long-dated assets, mostly older people. But over the last 15 years, equities have done poorly.