samchain/econo-pairs-v1 huggingface dataset:
NGFS Network for Greening the Financial System- conference, Paris, 17 April 2019 Central banks and supervisors taking action on climate change Introductory remarks by François Villeroy de Galhau, Governor of the Banque de France Risque Climatique – Call to Action  Ladies and Gentlemen, It is a great pleasure for me to welcome you to the Banque de France’s premises to kick off this public session of the NGFS conference. We have been waiting for this moment for a while, and here we are. The NGFS is releasing today its first comprehensive  report,  entitled  “A  call  for  action”,  including  its  six  recommendations. Thomas Paine, an English-born political philosopher and citizen of the world, said in The American Crisis (circa 1776): “If there must be trouble, let it be in my day, that my child may have peace.” Climate change is real, it is global and irreversible. Even if policymakers bear the primary responsibility, we need all hands on deck to tackle climate change, as demonstrated today with this wide audience. Indeed, “preventing the airplane from crashing” remains a continuous endeavour, which is now undertaken by many more institutions every day. In mainstreaming sustainable finance, finance cannot replace policymakers but finance can help. And as a central banker and supervisor, the Banque de France is determined to help. Last year, in Amsterdam, I even said that this challenge is our “new frontier”.

The amounts at stake vary, but as an illustration, the last Intergovernmental Panel on Climate Change (IPCC) report, published last October, estimates that until 2050, the energy-related mitigation investments to limit warming to 1.5°C amount to USD 900 billion per year whereas climate-aligned bonds issued in 2018 reached USD 149 billion. Green financing requires an innovation-friendly framework: green loans, green securitisation, green covered bonds, green derivatives, green crowdfunding platforms and green private equity should all be promoted, keeping in sight our heading, which is preserving financial stability. The work of the Technical Expert Group on Sustainable Finance of the European Commission on green bond labels and sustainable benchmarks should be well understood as a game changer by the financial system: green finance should definitely mature, upgrade its professional standards and be “greenwashing proof”. Green finance has actually the ability to be a powerful transformational force but there will be no transition to a low-carbon future without further engagement from corporates, from large companies to SMEs. Financial institutions can provide a trickle-down effect, thanks to comprehensive CO2 disclosures or divestment strategies. But the real economy must embrace the transition on its own. Once again, appropriate public policies, like a credible carbon price, will set the proper incentives. d. Further developing the climate agenda in an inclusive manner Climate change will trigger strong distributive effects: agriculture in Sweden might benefit from an increase in global mean surface temperature while 145 million  people in China are threatened by sea rise in a +4°C scenario.
Our long historical ties, going back to the 2nd century B.C., are an asset. Singapore’s Arab lineages run through our veins. But to build bridges between our peoples in the 21st century, we have to not only look back to our historical ties and roots, or rekindle and reinvigorate our ties in trade. We have to work with our young. Our young today grow up knowing very little of each  BIS Review 47/2005  3  other. We have to give them opportunities to meet, to find resonance in each other, and to strike up friendships. If we do this when our people are young, we build up trust for the future. And trust is what makes economic and business relationships last. Singapore, Kuala Lumpur and other Asian cities can play a growing role in this regard. For some years now, we have been creating what we call a “global schoolhouse” here in Singapore. Today, Singapore has some 66,000 international students pursuing different levels of education. At the university level, we have today some 16 of the best global institutions providing programmes in diverse areas. Top business schools such as INSEAD and University of Chicago have established their own campuses in Singapore. At our Singapore universities, there is already a small Middle Eastern presence, with 10 undergraduate and 16 postgraduate students from Middle Eastern countries (including Turkey, Jordan and the UAE).

Each of these initiatives may be small. But they all add to the soft infrastructure and networks that we have to create between Asia and the Middle East, to build enduring economic and business ties. Conclusion To conclude, let me just say that the financial centres of both our regions can play an important role in catalysing cross-regional flows of savings, and creating a multiplier effect on Asia and Middle East growth and investment. We must also establish and strengthen people-to-people links, and contribute to each others’ efforts to develop financial sector skills and build management capacity. And we must start with our young, bring them together, and help them dispel stereotypes of each other, not just by understanding their differences but finding what they share in common. I suspect they share far more in common than the generations before them. AMED provides a vehicle to jumpstart this process. I hope that the potential areas of cooperation that I have highlighted will throw up more ideas, for the financial sector panel session later today as well as in the field of education. Thank you. 4  BIS Review 47/2005
Norges Bank’s bank lending survey indicates a gradual tightening of banks’ credit standards, but so far the effects of tighter credit have not come into evidence. Developments abroad may also influence the Norwegian economy through reduced trade. It may be more difficult to sell our export goods when growth is declining in other countries, and prices for our products may fall. Oil prices and other commodity prices have increased appreciably since 2002. The rise in commodity prices has primarily been fuelled by rapid economic growth, particularly in China and other emerging market economies. Conditions are still favourable for shipping and oil and gas, engineering industry, aluminium, ferroalloys and salmon. In the event of a persistent setback in world economic growth, the Norwegian economy will eventually feel the effects through lower exports. 12  BIS Review 65/2008  The interest rate differential between Norway and our trading partners has increased. Coupled with solid growth in the Norwegian economy and very high oil prices, this has resulted in an appreciation of the krone. In krone terms, this reduces prices for imported goods and services. A strong krone may also result in lower activity in the business sector and gradually translate into lower wage growth. The krone exchange rate shows monthly, quarterly and yearly variations. The long-term value of the krone is determined by changes in the terms of trade and permanent differences between domestic and external inflation and productivity. In recent years, the krone has appreciated.

There are several reasons: HLIs are perceived as a highly risky industry which is not subject to supervision. HLIs are perceived as non-transparent and opaque. HLIs use complex financial instruments and employ non-traditional investment strategies, partially based on complex mathematical models. HLIs are active shareholders, as the recent example of ABN Amro showed. HLIs are part of the glamorous world of high-net-worth investors and high-salary investment managers. And, probably most important, in recent years, the importance of HLIs has grown tremendously. Why is the risk they pose to financial stability perceived as being so high? HLIs account not only for a significant share of trading volume in some market segments, especially complex ones, they are also important counterparties and clients which provide a significant source of revenue for large international banks. This raises the question of whether HLIs are indeed a threat to financial stability and, if so, whether there is a need for regulation. These are the two questions we will try to answer in this paper. To begin with, let me point out what central banks understand by financial stability and why we consider financial stability to be important. In our view, a financial system should be able to absorb shocks affecting financial institutions (e.g., banks) and/or links between institutions (e.g., payment systems) without jeopardising the system’s vital functions such as financial intermediation, i.e. the transfer of funds from savers to investors, monitoring debtors and transporting payments between economic agents.
India’s ascent to a formidable global ICT power has been mainly driven by economic reforms, establishment of a free market democracy, perseverance of some unbeatable private entrepreneurs and above all, continuous human capital development in engineering and electronic fields. 10 The last development came from the high educational standards maintained by a web of reputed state owned Indian Institutes of Technology (IITs) and permission given to private sector to set up higher learning institutes. This is definitely an eye opener for Sri Lanka. Even in the midst of growing evidence from India and elsewhere that privately owned institutes of higher learning could make a significant contribution to the globalization of education and training, Sri Lanka still keeps education as a closelyguarded relic in the public sector. As a result, its capacity to meet the demand for higher education is woefully low with one place being offered to satisfy about 16 aspirants. This has led aspiring youth to seek higher education in other countries at a high personal investment cost. Since every investment should yield commensurate returns, it also has compelled them to seek employment elsewhere. Whatever the intention, the closely protected public university education system has become a waste of scarce public resources, since only a fraction of the total registered students is reported to be in 11 attendance in classes. Hence, to gain reputation as a global centre of learning, it is necessary that the Sri Lanka’s university education system should undergo a complete overhaul and reform.

The corresponding consultation for U.S. dollar and some other non-U.S. dollar derivatives contracts closed just last week, and I look forward to hearing the results and next steps. Universal changes to derivatives contracts will take out about 95 percent of the exposure—the $ trillion number. If the market signs up to the ISDA protocol when it’s published early next year, it will be a huge step in the right direction. In addition, the ARRC has released four sets of recommended fallback language for different types of cash products. This fallback language clearly stipulates trigger events, replacement rates, and spread adjustments, and the triggers are close to those that ISDA has consulted on for derivatives. 2/3  BIS central bankers' speeches  And on Friday, the Securities and Exchange Commission (SEC) staff issued a statement highlighting risks and disclosures for market participants to evaluate proactively as they transition away from LIBOR. While derivatives and institutional cash markets make up the bulk of LIBOR-based contracts, consumer products are a critical area where the industry needs to focus. Ensuring a fair transition away from LIBOR is going to be particularly challenging, and it’s important consumers understand what the changes being made mean in real terms. Last week the ARRC published potential paths forward for adjustable-rate mortgages (ARMs). These include a set of guiding principles for ARMs and other consumer products, draft fallback language for new ARMs referencing U.S. dollar LIBOR, and a framework for use of SOFR in new ARMs.
The journey has not been entirely problem-free, and the experiences we have gained on the way have prompted us to make some changes to practical aspects of policy, or perhaps rather as regards how policy is communicated to the public. We have also had to change and improve our analysis of inflation in different respects. I intend today to touch upon the problems we have encountered on our journey and how we have tried to deal with them. Important to have explicit communication So what difficulties have we encountered as regards defining the inflation target in terms of the change in the CPI? To illustrate this I need first to say a few words about the principles that underlie the Riksbank's interest rate decisions. Like other central banks that have adopted inflation targeting, the Riksbank has worked from the premise that monetary policy affects inflation with a certain lag; it is generally assumed that it takes one to two years before a rate adjustment achieves its full impact on inflation. Against this background, and as a step towards clarifying how we try to attain our target, we have formulated a simple rule for monetary policy: if the forecast of inflation one to two years ahead exceeds 2 per cent the repo rate should normally be raised, and if the forecast is below 2 per cent the repo rate should normally be lowered.

Carney, Mark (2018), From protectionism to prosperity, speech given at the Northern Powerhouse Business Summit, Gateshead, 5 July. Carstens, Agustín (2018), Global market structures and the high price of protectionism, speech given at the Federal Reserve Bank of Kansas City’s 42nd Economic Policy Symposium, Jackson Hole, Wyoming, 25 August. Frankel, Jeffrey and David Romer (1999), Does trade cause growth?, American Economic Review, 89 (3), pp. 379–399. International Monetary Fund (2006), World Economic Outlook, April. International Monetary Fund (July 2018), G-20 Surveillance Note, G-20 Finance Ministers and Central Bank Governors’ Meetings, Buenos Aires, Argentina, 21/22 July. International Monetary Fund (October 2018), World Economic Outlook, October. OECD (2016), OECD Economic Outlook, Volume 2016, Issue 2. Ricardo, David (1817), On the principles of political economy and taxation, London: John Murray. Sachs, Jeffrey and Andrew Warner (1995), Economic reform and the process of global integration, Brookings Papers on Economic Activity, 1995 (1), pp. 1–118. World Trade Organization (2017), World Trade Report.
We have taken several progressive measures to communicate more information, including cut-off yield rates of the OMO auctions and overnight liquidity estimates with a view to encouraging more efficient price discovery in the money market and promoting informed decision making by market participants as well as to improve market signaling of OMO. The Central Bank will continue to actively engage in liquidity management, while guiding the short-term interest rates along a desired path. Several measures, such as reviewing the compilation methodology of benchmark interest rates, strengthening the operational framework pertaining to the Intraday Liquidity Facility (ILF), introducing a rule-based code of conduct for Authorised Money Brokers and promoting market development will be taken to improve the efficiency and compliance in respect of money market operations. 11  As announced last year, the Monetary Policy Consultation Committee (MPCC) was reestablished in mid-2017 to draw on external expertise to support the conduct of monetary policy. We will continue to take on board stakeholders’ views and align our policies in a way, which is mutually beneficial for stakeholders and the Central Bank. As the conduct of monetary policy is dependent on an effective and prudent exchange rate policy, the Central Bank has introduced a more market based exchange rate system. It has allowed more flexibility in determining the exchange rate based on the market conditions and has intervened only to smoothen volatility and to build up reserves.

The Bank of England voluntarily accepted DEFRA’s invitation to compile a Climate Change Adaptation Report, due for delivery later this year. A project team was established to inquire into the topics of climate change and stranded assets. We are seeking to understand how these changes may impact upon the PRA’s objectives and how that could shape our role going forward. We have noted that change to an insurers’ business model can be driven from many sources – which include changing consumer expectations. Today the consumer demands more control, flexibility and automatism having become accustomed to interactive, accessible and digitised services. Increasingly consumers – that’s you and I in our personal lives – expect the same digitised experience for all their buying needs, including insurance. Digitisation and the prominence of “smart tech” cannot be ignored and already innovation in technology is leading insurers to do business differently. This shift can be felt across the value-chain, whether it be changes in distribution channels and use of cloud-based infrastructure, to enhanced underwriting processes and use of “black boxes”. For the most part, digital includes putting the customer experience at the centre of insurers’ strategies. Whilst positive, as with any shift in business model and strategy, business developments need to be carefully managed and monitored to ensure the core objectives of enhancing the customer experience are indeed achieved. And new IT systems don’t come cheap, nor are they riskless. BIS central bankers’ speeches  3  Digitisation and enhanced technology can be a double-edged sword.
The Bank of Albania deems that the banking industry should review the banking activity growth strategies, aiming at their better harmonization with the necessary human, financial and technological resources. Operational risk identification and management remain a priority. In practical terms, this process should aim at placing internal mechanisms to prevent creation of excesses in certain directions of the banking activity, aiming at a better diversification of investments and supporting steadier forms of financing resources. All these require strengthening of internal audit systems, stimulation of structures that assess and manage operational risks in general, bank staff expertise, and establishment of stable relations with depositors and other beneficiaries of banking services through transparency enhancement.

Without this exchange rate support, we would undoubtedly have had to impose bigger changes in interest rates. Prior to the launch of the euro, we made it abundantly clear that in the event of a massive exchange rate distortion, which would have posed a serious threat to internal stability, we would be ready to take action in the foreign exchange market. We have not had to make use of this measure of last resort at all. CHF Exchange Rates 1.85 1.80 1.75 1.70 1.65 1.60 1.55 1.50 EUR/ CHF 1.45 USD/ CHF 1.40 1.35 1.99  3.99  5.99  7.99  9.99  11.99  1.00  3.00  5.00  7.00  9.00  11.00  1.01  Finally, not even the marked decline of the USD in the past months has led to any undesirable tremors. The effect, registered fairly regularly in the past, that a weakening of the USD is reinforced by an appreciation of the SFR vis-à-vis the DM, has been almost absent. It remains to be seen whether this undoubtedly destabilising "coffee cup effect" has disappeared for good with the advent of the euro. Do we want to maintain our own currency even in 10 or 20 years' time? That is certainly a good question. In economic respects, it seems advisable to remain noncommittal for the time being. Not only on the financial markets do available options have a positive value. They should not be given away lightly.
Has the ECB been successful in its monetary policy communication? Having talked about the objectives of transparency and modes of external communication, I’d now like to consider how successful the ECB has been in establishing credibility and predictability. Evidence can be gained from financial markets and economic surveys. A key indicator of the credibility of ECB monetary policy comes from expectations of inflation implied by the differences between the returns on index-linked and nominal bonds and inflation-linked swap rates. When looking at these market prices, one has to bear in mind that the spread between these nominal and real yields not only measures market participants’ inflation expectations, but also carries the inflation uncertainty risk premium which investors require as compensation for the risk of a loss in purchasing power. Keeping this in mind, and also looking at various measures of long-term inflation expectations in the euro area, such as Consensus Forecast and the ECB’s Survey of Professional Forecasters, one can say that long-term inflation expectations have been pretty well anchored by the ECB’s quantitative definition of price stability from the beginning of the Euro. This is a remarkable success that observers and markets considered quasi impossible before the euro was set up. This does not mean that there is any room for complacency. Continued vigilance is key to preserve credibility and some increases in long-term inflation expectations last year remind us how important it is to be permanently vigilant.

Each of us inside the 18-member Governing Council has to take into account the superior interests of the whole euro area. My colleagues and I are convinced that our present real time detailed communication is, in our case which is unique, superior to mentioning individual votes which could wrongly suggest in the eyes of some that the Governing Council is a place where we are confronting national interests which is not the case and should never be the case. BIS Review 5/2005  3  As the “porte parole” of the ECB and its Governing Council, I think it is remarkable that we act as a team with high team spirit as regards the handling of a complex communication network dealing with 306 million European fellow citizens speaking their languages. The “single voice” principle in monetary policy was introduced from the very beginning and has been efficiently applied in my judgement. As regards non-monetary policy decisions by the Governing Council we have adopted a new procedure in December by placing a communication on our website one day after the second meeting of the month. Previously we communicated these decisions in various ways, for example by press releases or by inserting information under other matters into the introductory statement. I hope that the new procedure will contribute to easier access to non-monetary policy decisions. The document refers to “Decisions” which means that, as a rule, it will cover those issues for which the Governing Council has concluded its deliberations, i.e. decisions have been taken.