samchain/econo-pairs-v1 huggingface dataset:
William C Dudley: Workforce development and reinvention in the Rochester economy Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the Rochester Business Alliance, Rochester, New York, 12 August 2015. *  *  *  Jaison Abel, Chelsea Cruz, Tony Davis, Richard Deitz, Eric Pajonk and Joseph Tracy assisted in preparing these remarks. Good morning. I am very pleased to be in Rochester and to have the opportunity to speak here today. I would like to give a special thanks to the Rochester Business Alliance for their part in making this event possible. My meeting with you today is part of our continuing efforts to understand what is going on at the grassroots level of our economy. During these trips I meet with a variety of stakeholders, which helps me develop a comprehensive view of local conditions and a fuller understanding of any major issues and concerns. This is my third visit to Rochester in the past five years. In my remarks, I will provide an overview of the regional economy and discuss the importance of workforce development, both for Rochester and the broader economy. As always, what I have to say today reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. Reinvention in the Rochester economy Like Upstate New York more generally, the Rochester economy has lagged behind the nation for a number of decades.

Moreover, labour demand continued to be met by a significant influx of labour from abroad. The opening of the labour market within the context of the bilateral agreements with the EU creates additional growth potential. The competitive position of our economy is high, and the recent depreciation of the Swiss franc on the foreign exchange market gave it an additional boost. While exports continued to increase at a rapid pace, their growth rate may slow down somewhat compared with 2006. The healthy state of the economy and the improvement in the labour market have a favourable impact on consumer sentiment. Since the beginning of the year, household spending has been increasing at very steady pace. A continuance of this trend is possible, since the current near full employment is likely to lead to an increase in real wages. During the next quarters, companies will continue to step up equipment investment since the rate of technical capacity utilisation – in particular in the manufacturing sector – is high. Construction investment should stabilise at a high level. BIS Review 67/2007  1  These developments in demand components led us to revise our GDP growth forecast upwards for 2007. For the current year, we now expect growth close to 2.5%. Development in monetary and financial conditions In the Swiss capital market, we have been observing a steady increase in long-term interest rates over the past three months. The yield on 10-year Swiss Confederation bonds reached 3% in May.
For instance, the low level of interest rates is still having a stimulating effect on the economy. Domestic demand continues to be supported by high immigration. In addition, the repercussions of the high Swiss franc value are not only negative. For example, imported preliminary products for companies and consumer goods for households have become cheaper. Finally, Swiss firms and their employees have made huge efforts to deal with this difficult situation. Overall, the SNB expects moderate economic growth of close to 1% for the year 2012. This modest economic momentum is likely to be reflected in a moderate increase in unemployment over the course of the next few quarters. The expected economic activity is lower than would be the case for normal capacity utilisation. This means there will be no inflationary pressure from this source. Our conditional inflation forecast of mid-March 2012 shows that there is no risk of inflation in Switzerland in the foreseeable future. The forecast also makes it clear that the threat of a deflationary trend has been kept in check. Inflation rates are only temporarily negative. Nevertheless, the monetary policy challenges for the SNB remain very considerable. I would now like to go into a little more detail on our reflections on monetary policy, particularly with respect to the minimum exchange rate. Reflections on Swiss monetary policy After being announced on 6 September 2011, the minimum exchange rate was rapidly attained. When our press release was issued, at exactly 10 am, the euro was trading at a little over CHF 1.12.

An appreciation of the Swiss franc at the current time would again expose Switzerland to considerable risks and, once more, endanger both price stability and the stabilisation of the economy. Given this situation, the SNB will enforce the minimum exchange rate with the utmost determination. If developments in the international economy are worse than foreseen, or if the Swiss franc does not weaken further as expected, renewed downside risks for price stability could emerge. Should the economic outlook and the threat of deflation require it, the SNB is prepared at any time to take further measures. As you will probably have deduced from this account, seen from today’s vantage point, interest rates in Switzerland are likely to remain low for a while yet. This expansionary monetary policy is indispensable from the point of view of the economy as a whole. In that it has significantly reduced the threat to the economy and the threat of a deflationary trend, the current monetary policy is also contributing to financial stability – in the short term. Both a deep recession and a deflationary trend would pose a threat to the banking system. In the longer term, a period of low interest rates carries the risk that imbalances will build up. In Switzerland, the current low-interest-rate period has now lasted for over three years. We are – in fact – currently observing increasing signs of adverse developments in the Swiss mortgage and real estate market for residential property.
That is an appropriate metaphor for us today. We must evaluate the environment we and our banks are entering and choose a way forward that enhances supervision and that contributes to the safety and soundness of our banks. At the same time, we should not invent new roads. There are already ‘roads’ of good practices used by leading banks that we can follow and support. We might discover a second relevant metaphor if we allow ourselves to be inspired by the beauty of the Federal Reserve’s Eccles Building and its architectural references to antiquity. In classical times, scholars divided the liberal arts into seven subjects. The first three related to language and formed the “Trivium,” which in Latin means “three roads.” In contrast, the “Quadrivium” – which is the Latin term for “four roads,” but also for “crossroads” – represented the study of four subjects related to numbers – namely, arithmetic and geometry, but also music and astronomy. The classical metaphor of the Quadrivium, or of the “crossroads” of subjects related to numbers, seems equally well suited to a discussion of contemporary banking and supervision. Leading banks in recent years have sought to augment subjective assessments of risk with more objective and formalised, more rigorous, and more numerically oriented analytical techniques. After all, good numbers are the best friend of good judgement.

The challenge then is for the leadership to chart a clear strategic direction at the group level that, in short term, prepares the organization in responding to those changing environment and, in long term, creates an organization that can sustain success. The strategic direction also must fully embrace the opportunities to leverage on the group's expertise, experience, infrastructure and its extensive networks abroad in offering diversified takaful products and enhancing customer services. Emphasis should also be directed on the enhancement of human capital that would serve as an enabler for the Commerce group to achieve greater height. With the entry of Commerce Takaful Berhad into the domestic takaful industry, we also hope that all takaful players fully internalize the spirit of "takaful", that is mutual cooperation and assistance among each other, so that the industry could collaborate towards common objectives of further enhancing the resilient and expansion of the industry. Initiatives such as developing human talent and finding better and more effective mechanism of venturing abroad should also be explored at industry level. More collaborative efforts may also be directed towards strengthening the retakaful sector in which we have also first mover advantages that would subsequently reduce dependency on conventional reinsurance as a risk mitigation tool. Indeed, in realizing our vision to sustain takaful as an important sector which contributes towards the economic growth of the nation, the industry players have to jointly demonstrate unwavering commitment towards elevating the industry to new and higher levels of achievement.
If in the coming months we achieve normalisation, understanding by normalisation a situation in which political agents act with a real observance of our entire legal framework to the letter, and I would stress real observance, that would very likely lead to a better growth scenario than that considered in our latest projections and to an ultimately moderate impact. If, on the contrary, such normalisation does not come about, that may affect consumption and investment more markedly. A further loss of confidence may prompt households to increase their precautionary saving and to postpone their consumer-durables and house purchase decisions. And, above all, it may affect business investment in Catalonia, given that the climate of uncertainty would delay the undertaking of new investment projects and set back hiring decisions. Moreover, these effects on investment and consumption decisions might extend to both resident and non-resident agents, adversely affecting variables such as tourism and foreign investment. The outcome would be a greater adverse impact on activity both in Catalonia and in the Spanish economy as a whole. Conclusions Allow me to conclude. In addition to the risks I have highlighted, we are facing other problems, chief among which, owing to its far-reaching and numerous consequences in the medium and long term, is the ageing of our population, which is expected to continue and even intensify in the near future. This process involves various adverse effects, including most notably, as we all know, the challenge that a progressively longevous population poses to the public pensions system.

Our “universal banking model”, based on a diversity of activities and sources of income has proven its resilience. Obviously, there is a circular causality between government debt and the banking sector. Spreads on public debt naturally act as floors for the funding costs of banks. And, conversely, doubts about banks’ solvency create expectations of public support and lead to a deterioration in public finances. This gives rise to multiple equilibria where sudden shifts in confidence can be self-fulfilling. In this context, the main purpose of stress testing is to break that circularity. Our first European tests included 81 banks, compared with only 19 for the United States. The basic exercise was sound and taken as such by analysts when it was published. Somehow clumsily, however, a few banks were added at the last moment, with only limited investigation, and these are precisely the banks which proved problematic afterwards and which undermined the credibility of the whole exercise. This mistake will not be repeated and the coverage for the new stress tests has been carefully examined. A lot has been made of the fact that no sovereign stress was made on the banking book. And indeed, as regulators, we did not want to give any credibility to a scenario that we consider unacceptable. However, there will be, like last time, full, total, and transparent disclosure of exposures to sovereigns for each individual bank. Everybody will therefore be free to make their own assumptions and calculations.
I am further informed that ATI has so far this year supported Zambian companies and businesses by offering insurance cover to some very large and essential projects primarily in the energy, mining, manufacturing and agriculture sectors valued at over $ million. The Agency has also continued to assist many African countries by facilitating foreign direct investments with its political risk insurance that protects investors. Ladies and Gentlemen, the role that trade plays in the economic growth and development of a Country cannot be emphasised. There are many regions and countries of the world that have been able to lift their peoples from poverty to prosperity through trade. However, although Africa in general and Zambia in particular has an economy which is characterized by a relatively high degree of openness, trade has not been utilized to an extent of achieving rapid and sustainable economic development necessary to eliminate poverty. This failure for trade to serve as a catalyst for sustainable economic development could be attributed in part to the nature of Africa’s export trade which is heavily concentrated on primary commodities that are characterized by relatively slow growth, price instability and long‐term deterioration of terms of trade. The need for African countries and Zambia in particular to participate in the dynamic sectors of global trade such as manufactures and services cannot be over-emphasised.

The Bank of Zambia therefore welcomes this Workshop as it bodes well with our strategic objective of increasing access to financial services to 50% of the population by 2015 from the current level of 37.3%. As I conclude, I want to assure ATI that the proposal for the Bank of Zambia and all Central Banks in the COMESA Region to relax the capital reserve rules, by considering applying a lower risk weight on transactions that banks and financial institutions have insured with ATI is receiving active consideration within the organs of the COMESA Central Bank Governors. Let me commend ATI for coming up with this innovative initiative which seeks to deepen our financial markets. Finally, I challenge all of you this morning, especially participants from commercial banks to explore ways on how you can improve your products and services to better serve the entire Zambian population with the products that ATI will present to you this morning. Distinguished Guests, Ladies and Gentlemen, it is now my pleasure to declare the African Trade Insurance Agency’s workshop for bankers officially opened and I wish you fruitful deliberations. I thank you for your attention. 2  BIS central bankers’ speeches
But the shares of assets allocated to growth capital assets like unlisted equity can be small. UK insurance companies and pension funds together allocate only around 3% of their assets to unlisted equity. The collective investment funds, in which they and others invest, allocate only 2%. [See slide 6 of accompanying deck]  There seem to be biases in the system. Even investors who should have the longest horizons seem to have a fetish for liquidity and an aversion to really illiquid growth capital assets. Getting to the bottom of this should be the focus of our efforts. Consider the £ trillion of assets in UK investment funds. The mass of these – just over 85% by assets – are open ended14, offering investors the opportunity to redeem their holding for cash each day by selling a slice of the funds’ assets. Because they offer this, these funds aren’t suited to investing in highly illiquid growth capital. The alternative closed end fund structures issue a fixed number of shares, which can be listed on a stock exchange. Because investors ‘redeem’ by selling their share to another in the secondary market (and typically at a discount), the assets held in the fund do not need to be traded. These funds are therefore more able to invest in truly illiquid growth capital. So it is no surprise that a bigger proportion of their assets is allocated to assets like unlisted equity [See slide 6 of accompanying deck]  But these funds are much smaller.

Further to this, in the Q&A on the use of liquidity and capital buffers, the PRA set out its general expectation that any required rebuild of capital buffers would be gradual, and that banks would not be expected to restore their capital buffers in full until a significant time after the end of the current stress. 8 See May 2020 interim Financial Stability Report 7  5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  The financial system is well on the way to filing the financing needs of businesses. [See slide 4 of  accompanying deck]  By no means all the additional finance to preserve productive capacity has yet been delivered, particularly given the limited appetite many businesses may have to run down their cash buffers in the face of uncertainty. Fuel must continue to be injected. And the fuel may need something extra to be added. That additive is equity. The case for equity  There are at least three reasons for adding more equity finance to the mix. First, half of the cash-flow deficit we have identified is accounted for by companies with net debt already more than four times their regular earnings. Although the UK’s corporate sector did not, as a whole, go into this crisis with a stretched balance sheet, a material subset of companies had levered up.
To give another example, under the transposition of the second European Payment Services Directive (PSD2) in 2018, third-party payment service providers – which do not hold client funds – are subject to reduced annual reporting requirements. However, this proportionality does not mean being less demanding, especially with regard to the fight against money laundering. The general principle of “same activity, same rule” must apply. Indeed, it is in the Fintechs’ own interest that we should help them to apply the regulatory framework. We also want to help them when new rules are put in place. Under the PSD2 framework, the ACPR was the first European authority to grant authorisations for payment initiation and aggregation services. In total, it has authorised more than 20 actors to offer these new services since 2018. It has also worked to promote the development of open banking, by making sure that all actors can work together on the deployment of APIs. The eight workshops this afternoon, led by experts from nearly all of the ACPR’s directorates, are testament to the focus we place on teaching and informing. But if we can do even better, even more, tell us today. I shall finish by focusing on the ACPR-AMF Fintech Forum which is what brings us here today. Created in 2016, it is a forum for exchange which we try to make as efficient as possible by setting up, where needed, targeted working groups to make concrete progress on key topics.

Thomas Jordan: Monetary policy and government debt – different perspectives Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the 13th Zermatter Symposium, Zermatt, 28 August 2007. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The effects of fiscal and monetary policy overlap. Fiscal policy can have a cyclical effect, while monetary policy can also generate income for the government. However, theory and practise have shown that, first and foremost, monetary policy must be used to ensure price stability and – to a limited extent – to dampen economic fluctuations. The principal aim of fiscal policy, however, must be to ensure that the national budget is financed as efficiently as possible. When government debt levels are high and budget deficits get out of hand, they pose a significant threat to a monetary policy that is geared to stability. Misusing monetary policy as an instrument of fiscal policy inevitably leads to a loss of purchasing power. Many episodes of high inflation have come about, ultimately, as the result of funding requirements on the part of the state. Nowadays, the independence of many central banks shields them – to a large extent – from the fiscal greed of politicians. Nevertheless, time and time again, when government finances have fallen into disarray, central banks have been seen to come under political pressure. From a monetary viewpoint, however, government debt is not entirely unwelcome.
Chart 11 plots UK Phillips curves over three periods: 1500-1700 (pre-Industrial Revolution); 1860-1950 (post-Industrial Revolution); 1950-1977 and 1977 to date (post-war period). In each case, wage inflation is measured on the y-axis and an estimate of the output gap on the x-axis. In the post-war period, the Phillips curve conforms to type. Since 1950, it has a clearly positive slope (less slack in the economy is associated with higher wage inflation) and an intercept which is positive (reflecting positive trend inflation). The Phillips curves covering the periods either side of the Industrial Revolution are more interesting. They share one important similarly and have one important difference. The similarity is that both are associated with an average inflation rate of around zero. This is consistent with the price level being broadly stable over these periods. The striking difference is in the slope of the Phillips curve. The post-Industrial Revolution Phillips curve has a conventional upward slope, similar to that operating after 1950. Higher growth or lower unemployment is associated with higher rates of wage and price inflation. The pre-Industrial Revolution Phillips curve is altogether different; it is as flat as a pancake. Indeed, it bears a close resemblance to the Phillips curves which have operated, in the UK and globally, since 2008. There are many potential explanations of this flatness in the pre-Industrial Revolution Phillips curve, including noisy data. And its similarity with the present-day Phillips curve may be purely coincidental.

This does not mean that we can rest; banks are not immune from any of the factors that I have just described. Indeed, if we were to look closely at bank failures large and small over the years, I believe we would find that poor corporate governance lay at the heart of many of these failures. Why should we have higher expectations for the governance of banks than we have for other firms? Fundamentally, because banks must act in a way that promotes “confidence” to the public and the markets in general and, more specifically, to their primary stakeholders. Banks play a crucial role in the flow of capital within an economy and are charged with a special public trust to safeguard customers’ wealth. A stable and healthy banking system is critical to the long-term growth of an economy. Banking supervisors have long recognised the importance of good governance; supervision can not function properly if sound corporate governance is not in place. Experience underscores the need to have appropriate levels of accountability as well as sufficient checks and balances. For banking supervisors, although the range of topics that corporate governance may encompass is quite wide, the focus is mainly on those elements that relate to the manner in which the business and affairs of an organization are governed by its board and managers.