samchain/econo-pairs-v1 huggingface dataset:
Second, actions need to be taken to get academia more involved in policymaking, to bring the discipline of theory-based analyses to the policy debates. That implies a better access to governmental data for academic researchers, to enable them to conduct independent and  BIS central bankers’ speeches  1  rigorous research and expose their results to policymakers and the general public, who should listen to them in return. Well, I hope this is no wishful thinking and I will now leave the floor to our distinguished speakers. Thank you. ***** Closing speech To close today’s conference, I would like to come back to the Foundation and its role. I will focus on a brief historical overview of the Foundation for Monetary, banking and financial economic research. A lot has been achieved since 1995, as you know. What was our goal? To promote excellence in academic research in the field of monetary policy and finance. And did we achieve it so far? Well, over three hundred conferences and seminars have been sponsored. The research grant program has also awarded 81 grants for about 2.4 million euros in total. While it is difficult to identify the potential outcome of projects at an early stage, the program has been rewarded by excellent outcomes. Most papers were published in the best international research journals. Yet not just academic successes were achieved. Some papers were also financed by the Foundation and later became hot policy topics, sometimes with very good insight.

Also, economic research outside central banks – which is not driven by direct “daily” topics – proved ultimately valuable for policy too. For example, some ideas developed in Krugman (1998) and Eggertson & Woodford (2003) on policy at the Zero Lower Bound, inspired by the economic stagnation in Japan, entered the United States and Euro Area policy debates years after their publication. The Banque de France Foundation has accompanied all these significant trends. By fostering research conducted by international teams. By sponsoring research unrelated to immediate Banque de France needs, but which would ultimately prove beneficial for our policies. In that respect, I do expect that the Foundation will still play an important role in the next decade in promoting excellence in research in the field of monetary and financial economics. I also hope – and this will be my conclusion – that this is no wishful thinking either. 2  BIS central bankers’ speeches  Once again, let me thank all the participants, speakers, discussants and chairs that have joined us today for such fruitful talks and congratulate the young researchers who received a well-deserved prize for their work. A special thanks also to all the actors of the Foundation, whose constant help and dedication to their missions are precious and appreciated. Now is time to have lunch and I believe a buffet has been prepared. Thank you. BIS central bankers’ speeches  3
BIS central bankers’ speeches  On the form and use of capital instruments, the Basel I Accord also allowed hybrid debt capital instruments to support the required deductions from the capital calculation, such as goodwill, expected losses (introduced later under Basel II with the internal models regime for credit risk) and investments in other banks’ capital instruments. However, as a matter of fact, rather than reporting, any losses arising from these items hit common equity because it will absorb losses first in the going concern state, according to the hierarchy of the capital structure. As a result applying these deductions at the level of total capital, or Tier 1 capital, has the effect of overstating the core equity capital ratio. The Accord therefore incentivised wrongly the issuance of hybrid debt capital instruments to cover deductions. A further flaw was that deferred tax assets were not deducted from capital and minority interest assets were recognised in full. This, too, was a mistake. DTAs depend on future profitability (which is not assured) and minority interests are not fully transferable to absorb losses for a group. Last on the capital side, there were problems starting in the original Basel Accord in relation to the treatment of provisions. Under the current international accounting standards provisions are based on incurred rather than expected losses.

In one sense, this should not matter if the regulatory capital calculation provides a robust floor below which the “economic” capital should not fall. But it was unclear how we could know this was so, and the lack of line of sight into how the firm managed risk was disturbing. The second weakness is generic to simple systems which conflate different levels of inherent risk, namely that they tend to create incentives for banks to increase the average level of riskiness of their assets. And, one thing we now know, incentives are hugely important in the capital regime. As I noted earlier, Basel II was not in place properly when the crisis broke, but the Market Risk Amendment was, and this introduced the use of banks’ own so-called “internal” models. As an aside, my experience suggests that the contribution of Basel II to the crisis was far more that it diverted the attention and effort of regulators and the industry away from broader risk management and into the implementation of a new and more detailed approach to regulation. This was especially so for large banks seeking approval to use their internal models. Moreover, this process was not well done. The Market Risk Amendment and Basel II dramatically increased the complexity of the capital framework, and whilst it intended to increase the scope of risk capture in the regulatory capital measure it ended up creating new opportunities for “optimising” regulatory capital.
Rather, I am interested this evening in those instruments, structures, firms or markets which, alone or in combination, and to a greater or lesser extent, replicate the core features of commercial banks: liquidity services, maturity mismatch and leverage. In that spirit, I will say something about money market mutual funds; finance companies; Structured Investment Vehicles and Asset Backed Commercial Paper; and securities dealers. I will also say something about some markets. In particular, the securities lending market; but also how the RMBS/ABS market can combine with repo funding to create investment structures whose leverage and liquidity risk creates some of the brittleness of banking systems. It is not intended to be an exhaustive, systematic survey. And beyond those interested in the details of how markets work, it is the general message that matters. Because some common threads are clear. Notably, maturity and credit transformation. Each of the vehicles, instruments or markets I will discuss has been used to transform longer-maturity, less liquid assets (loans) into shorter maturity, more liquid liabilities. In each case we need to decide whether or not we want to set constraints around the operation of those forms of shadow banking. And we need some principles to guide us when, inevitably, we confront new variants of shadow banking in the future. I do not have all the answers to these questions, so my goal this evening is to push them up the agenda. As the Governor of the Bank has underlined, it is vital we debate the structure of the financial system.

Willem F Duisenberg: Another step in the direction of a united Europe Address by Dr Willem F Duisenberg, President of the European Central Bank, on the occasion of an audience by Dr Carlo Azeglio Ciampi, President of the Italian Republic, in the context of the meeting of the Governing Council of the European Central Bank in Rome, Rome, 2 April 2003. *  *  *  On behalf of the European Central Bank (ECB) and all members of the Governing Council, I should like to thank His Excellency - Dottore Carlo Azeglio Ciampi - for his kindness and hospitality to receive us today, on the eve of the Governing Council meeting in Rome, despite the geopolitical tensions we are currently facing. Moreover, I should like to thank Governor Dottore Antonio Fazio and the Banca d’Italia for organising this meeting of the Governing Council outside Frankfurt am Main. The Governing Council has decided to meet, in principle, two times a year outside the ECB premises in Frankfurt, in order to emphasise the federal character of the Eurosystem, the collective consisting of the ECB and the national central banks of the Member States that have adopted the euro.
In my opinion, the pension funds’ increased foreign investments, made strictly with their own interests in mind, are likely to affect currency developments favourably. When the króna remains strong for a prolonged period, pension funds are more likely to sell holdings denominated in it and invest those funds externally, with the effect of a stabiliser. And vice versa, they are likely to buy weak krónur after profit-taking, thereby contributing to a recovery of the domestic currency. In such a scenario, pension funds would serve a secondary role as a foreign exchange reserve, even if they were acting solely in the interest of their own clients. The Central Bank’s Monetary Bulletin, published in December 2005, included an in-depth article on Pension funds – Future prospects and uncertainties by Guðmundur Guðmundsson and Kristíana Baldursdóttir. The study found that pension fund assets could peak at more than double the value of GDP. However, the pension funds’ future profitability is fraught with uncertainties. The most important criterion is return on investment, which could change and drastically affect the level of contributions required to sustain the pensions that the funds are expected to pay. Changes in life expectancy and disability expectancy will have some effect, although these are not as crucial as the uncertainty over return in investment. This indicates that the most important task ahead for pension fund management will be to optimise their return on investment, within the prudential limits that pension funds must respect.

One consequence is that the Icelandic Treasury’s future pension payments burden is negligible compared to most other industrial countries. Of course this represents an enormous economic and social strength for Iceland. The pension funds’ huge assets also impose a great responsibility on their management, who must invest these resources securely and profitably. Furthermore, relative to Iceland’s economy, the pension funds are now at a size where they can have a massive impact on developments in the domestic financial sector. In recent years, Icelandic pension funds have been consistently investing part of their disposable funds in foreign securities. They have considerable scope for making foreign portfolio investments, which by the end of March were estimated at almost 30% of their total assets. Holdings are mainly in foreign equity funds, but they have also invested in mixed funds and individual corporations. Pension funds have also been major players in the domestic equity market. At the end of March 2006, their  BIS Review 46/2006  3  estimated holdings exceeded 200 b.kr. and constituted 16% of their total assets. At the end of 2004, pension funds owned an estimated 12% of all equities listed on Iceland Stock Exchange. Corporate lending by pension funds has also grown rapidly. It is vital for pension funds to exercise the utmost care in their domestic equity investments, and to be cautious about wielding the power that these investments grant them. Likewise, diligence in corporate lending must be an important consideration for pension funds, to avoid an inordinate degree of risk.
As is well known, this guardianship and scrutiny constitutes the core of the Central Bank’s legally mandated role, and the fact that the Bank should be assigned the task of containing inflation is not absurd, nor is it a function of obsession or blind fundamentalist belief that a particular aspect of economic policy implementation should take absolute priority over all others. Both in Iceland and in most other countries, there is abundant experience to support the conviction that inflation is extremely harmful if it becomes immoderately high. It becomes a serious problem if deviations persist, and it will cause important damage if it continues to grow and the Central Bank cannot contain it through conventional measures within a reasonable period of time. It is possible to advance theoretical support for the idea that the Central Bank alone could hold inflation down, but in order to do so the Bank would have to implement its measures with such force and rigidity that its actions might have an extremely negative effect on many other aspects of people’s lives. It is therefore vital that those who are most influential in determining Iceland’s financial and economic development pull together as one in order to fight rising inflation. Short-term interests and viewpoints must yield in favour of the greater goal.

Basel III: A global regulatory framework for more resilient banks and banking systems. Borio, C. (2012). The financial cycle and macroeconomics: What have we learnt? BIS Working Paper No 395. Commission of Experts for limiting the economic risks posed by large companies (2010). Final report. www.sif.admin.ch/dokumentation/00522/00724/00725/index.html?lang=en. Schularick M., and Taylor, A. (2012). Credit booms gone bust: Monetary policy, leverage cycles, and financial crises, 1870–2008. American Economic Review, American Economic Association, Vol. 102(2), pages 1029–61. BIS central bankers’ speeches  5
Yet the race to achieve net-zero emissions (‘net zero’) by 2050 is a multi-decade marathon, where the starting gun has already fired, and getting to the finish line will require a sprint start, with a reduction in global emissions of a half by 2030 [figure 1 in the Appendix].1 What I would like to talk about today is how we get there – both what we know and what we don’t know - and the important role of climate scenario analysis in helping us plot the best course. Governments will of course play a central role in laying the track, removing hurdles and setting the pace as we move to net zero. Over 110 countries, including the UK, have now moved to enshrine net zero emission targets in policy or law and are working on detailed plans of what these look like in practice.2  But climate change and climate policy will affect everyone - businesses from all sectors of the economy, public bodies like the Bank of England, households and individuals. And so we all have a stretch of the race to run. Some will perform strongly, others may struggle, and some, particularly in less developed countries, might need a helping hand. But let’s be in no doubt. We need everyone to finish. Role of the financial sector  Let me first say a few words about financial institutions given the unique role they play in this race. As corporates, these firms have some direct emissions but they are not significant.

Rodrigo Vergara: Monetary policy through asset markets – lessons from unconventional measures and implications for an integrated world Opening remarks by Mr Rodrigo Vergara, Governor of the Central Bank of Chile, at the Central Bank of Chile’s Nineteenth Annual Conference, Santiago, 19 November 2015. *  *  *  Monetary policy has mostly been about setting the appropriate interest rates to stir the economy towards a path coherent with its fundamentals. In this sense, the developments in most central banks in the last 6 years have not been out of the box, so to speak. But we can probably say, with little risk of overstating reality, that the ways of achieving changes in the cost of credit through monetary policy has changed significantly since the global financial crisis. To fully appreciate the extent of these changes, it’s useful to do a quick recap of what traditional monetary policy was prior to 2008. In the vast majority of countries, the name of the game was setting the stance of the short term rates –indeed, the overnight rate at which banks lend to each other. The hope was that, by influencing this very short-term rate, monetary policy actions would feed into the broader economy by affecting longer term rates, as well as spreads of riskier forms of credit which in the end are the channels by which the policy stance affects the cost of borrowing of households and firms.
Sources: IMF, Statistics Sweden and the Riksbank  BIS central bankers’ speeches  7  Figure 3. World trade index Index, 2000 = 100, seasonally-adjusted 180  180  170  170  160  160  150  150  140  140  130  130  120  120 05  06  07  08  09  10  11  12  Source: CBP Netherlands Bureau for Economic Policy Analysis  Figure 4. Sovereign debts in various countries Gross public debt as a percentage of GDP 200  200  Greece Ireland Italy Spain  160  160  Sweden Portugal  120  120  80  80  40  40  0  0 90  92  94  96  98  00  02  04  06  08  10  12  14  Note. The broken lines represent IMF forecasts. Source: The IMF  8  BIS central bankers’ speeches  Figure 5. Real housing prices in various countries Index, 1996 Q1 = 100 300  300 Ireland Spain  250  250  USA Sweden  200  200  150  150  100  100  50  50  0  0 80  82  84  86  88  90  92  94  96  98  00  02  04  06  08  10  12  Source: Reuters EcoWin  Figure 6.

Household assets and debts in Sweden Percentage of disposable income 700  700 Total wealth Real wealth  600  600  Liquid wealth  500  500  Debts  400  400  300  300  200  200  100  100  0  0 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11  Note. There is no regular publication of official data for total household wealth and its components. The series are based on the Riksbank’s estimate of the households’ financial and real wealth. Real wealth is the households’ wealth in housing. Liquid wealth mainly consists of household assets in cash, bank deposits, bonds and shares. Sources: Statistics Sweden and the Riksbank  Figure 14. Unemployment Percentage of labour force, 15–74 age group, seasonally adjusted data 12  12  Average 1980-1991 Average 1999-2012 Q3 Outcome  10  10  8  8  6  6  4  4  2  2  0  0 80  85  90  95  00  05  10  Source: Statistics Sweden  BIS central bankers’ speeches  13  Figure 15.
Inflation in the Nordic countries has declined, and is now relatively low in Sweden, Denmark, Finland and Norway. According to the harmonised indices of consumer prices, inflation in February was around 1 per cent in Denmark, Sweden and Norway, while the year-on-year rise in prices was unchanged in Finland. By way of comparison, inflation in the euro area was a good 2 per cent. A common feature of the low level of inflation in the Nordic countries seems to be the sluggish trend in prices for imported consumer goods, even though developments have not been entirely the same in all the Nordic countries. The upturn is broadly based. This also applies to the counties in the central Norway region. Most industries here are continuing to show solid growth, and there is confidence that growth will remain firm for the rest of the year. The level of activity in the construction sector is high. Manufacturing industry producing goods for the construction sector is experiencing solid growth. In contrast to the prospects for the rest of the country, however, the pace of growth in the construction sector in central Norway seems to be moderating. Turnover growth is stable in retail trade, partly due to an increase in the number of sales outlets. The fish farming industry has also shown considerable turnover growth recently. The printing industry is still in decline. 4  BIS Review 27/2005  Employment is largely stable.

In the construction industry, the labour market is tight and enterprises are making use of foreign labour to some extent. The supply of skilled labour is, however, a constraint on growth potential. Signals from service industries also indicate that the supply of labour is becoming more limited. The general level of investment in this region is relatively stable. Investment activity in the public sector appears to be somewhat lower in 2005 than in 2004. In manufacturing and services, there are signs of increased investment activity. Tender prices are rising slightly in the building and construction industry as a result of increased costs and a higher level of activity throughout the country. Prices have risen slightly in manufacturing and service industries. In retail trade, prices have changed little or remained unchanged. Profitability is improving due to increased activity, but there are no major changes for small and medium-sized enterprises. In the approved budget for 2005, the structural, non-oil deficit increases compared with 2004. It therefore appears that fiscal policy will provide some stimulus to growth this year. In the National Budget for 2005, underlying spending growth over the central government budget was estimated at 5.2 per cent, which is somewhat lower than the previous year and somewhat lower than estimated nominal growth in mainland GDP. As from 2006, it is assumed that nominal growth in central government expenditure will be approximately the same as nominal growth in central government revenues and that the real tax level will remain unchanged.
This analysis had a considerable impact on economic policy. The global economic situation became difficult into the 1970s, with low growth and high inflation in Norway and other countries. The US and European authorities opted to pursue an active counter-cyclical policy rather than combating inflation. But the trade-off between inflation and unemployment did not hold in the long term, as economists had first thought. The analyses had not factored in expectations formation. When higher inflation gradually came to be expected by economic agents, it no longer led to lower unemployment. In his work, Phillips introduced the dilemma of short-term gains and long-term costs in a new area. The benefit was lower unemployment for a period. But confidence that inflation could be kept low would eventually be eroded. The cost was persistently higher inflation. The shortterm benefit evaporated along with confidence. It is easy to see that it can be tempting to exploit the short-term gains even though the longterm costs are known. In 1971, for example, US president Richard Nixon sought higher growth in the money supply and an attendant reduction in unemployment in order to increase his chances of being re-elected. 23 He was aware of the inflation problems that would subsequently arise, but his view was that they could be addressed at a later stage. Perhaps he believed that if he were not re-elected, the long-term costs would be someone else’s problem. The lesson we can learn from this is that a system involving changing governments may be particularly prone to short-term temptations.

The government recognised that the repeated devaluations were ineffectual. Confidence had been lost. In Norway, inflation had also soared without a fall in unemployment. Even if it was costly to restore credibility, in reality we had no choice. 29 The alternative was to bring the country even closer to the brink of financial chaos and runaway inflation. The devaluation in 1986 would become the last in the series. Internationally, the 1980s ushered in three innovations that would become decisive for the design of modern monetary policy as we know it today. -  First, market deregulation led to freer cross-border capital flows. Promises could no longer be relegated to the future. Failing credibility was promptly reflected in higher interest rates and weaker exchange rates. Nixon’s disinflation plan to bring down inflation at some point in the future would have had immediate consequences. On the other hand, it also became clear that a credible and transparent monetary policy could be more effective precisely thanks to financial markets’ swift reactions. 30  -  Second, the notion of central bank autonomy regained favour. The political authorities, who wanted to show the world that they were committed to delivering their promise of price stability, did as Ulysses and tied themselves to the mast. The mechanism was central bank independence and Norway was no exception. The new Norges Bank Act of 1985 gave Norges Bank the authority to set the interest rate.