samchain/econo-pairs-v1 huggingface dataset:
Benoît Cœuré: Interview with Europe 1 Interview with Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, and Europe 1, conducted by Mr Jean-Pierre Elkabbach on 9 December 2016. * * *  So, the ECB has extended its large-scale purchases of private and public debt. A sum of € billion was being injected per month, and it will be € billion per month until December 2017, i.e. an extra nine months. The ECB is changing the amount and the pace. Does that mean it’s a warning to Member States to get ready to fend for themselves? First of all, it’s a sign of confidence in the euro area economy. The fact that we can reduce the quantity of purchases also shows our confidence in growth and in the ability of inflation to return towards 2%, which is what we are aiming for. And how high will inflation be? It’s rising very slowly but it’s not at 2%. It’s going to increase very slowly and we think it will reach around 1.7% by the end of our projection period, so it will be approaching 2%. One way to sum up simply what the ECB’s Governing Council decided yesterday is to say that the euro area is recovering, it’s getting better but it still needs its medicine – an accommodative monetary policy with low rates. So we are reducing the dose because things are improving but we are extending the prescription for longer.

The euro area is not cured, but... It’s not cured. But it’s doing less badly. It’s doing less badly. But it can’t take care of itself. It’s doing less badly but it’s not doing well enough and that’s why the prescription has been extended, and there is indeed, as you say, a kind of “warning” or let’s say...  An alert. An alert, a message, which is as follows: all this won’t last forever, it can’t last forever, sources of growth have to be found that don’t depend on monetary policy. Long-term interest rates are going to rise and economic actors must prepare themselves – governments in particular, which have benefited greatly from the decline in rates. They must prepare for an environment in which monetary policy will be less necessary and where growth will have to come from elsewhere. That’s why you are making no commitment for 2018. We already have a commitment until the end of 2017, which isn’t bad, as this makes it possible to cover a whole year, when there will be many economic risks inside and outside the euro area, as we well know. But it was noted that Mario Draghi said yesterday that, if necessary, the policy would be eased and liquidity would continue to be provided so as to improve the economy and growth.
Firstly, monetary policy is not able to precisely fine-tune the output gap or employment. As I said earlier, it takes times for monetary policy to have an impact on inflation, which is why the Riksbank’s monetary policy decisions are based on a forecast of expected price developments in the future. Furthermore, our knowledge of the output gap even now is not exact, and even less so for the coming years. In reality, shocks to supply and demand are occurring all the time, which influence both actual and potential output. As a result, the output gap is almost never zero. In addition, each forecasting period has its events and political decisions that not only are difficult, but impossible, to foresee, a good example being the terrorist attacks on 11 September 2001. For that reason all forecasts will be more or less inaccurate, and the output gap will be positive or negative for long periods. The important thing is that the Riksbank, in attempting to stabilise inflation, strives to achieve as small and as short-term deviations from the inflation target as possible. With a symmetric inflation target like the Riksbank’s, the incentives and our efforts to avoid missing the target on the upside and the downside are equally strong. Short-term deviations from the inflation target thus will even themselves out over time and will not result in any permanent gains or losses in terms of growth or jobs.

Likewise, cheques declined at a faster pace of 9.8% or 10 million cheques for the first half of 2014 compared to 2% or 2 million cheques for the same period last year. While the data suggests some improvements, more need to be done. A particular area that requires huge efforts is the distortions in the debit card usage in Malaysia. Despite a seemingly high debit card penetration of about 19.2 million “active” debit cards in contrast with 5.5 million “active” credit cards, the per capita debit card transaction is only 1.7 compared to 11.3 for credit card in 2013, indicating a ratio of 1 debit card transaction to about 6 credit card transactions. Acquirers charge merchants the same merchant discount rate (MDR) for the acceptance of debit and credit cards despite their differing cost structure, which makes debit cards just as expensive as credit cards. It is difficult to comprehend the charges imposed on debit cards, which have ready cash in them, is similar to the charges on credit cards. There has also been a slowdown in the growth rate of POS terminals in Malaysia since 2012, which indicates a potential saturation of POS terminals at those merchants who can afford the MDR. This is further compounded by increases in interchange fees which are likely to cause the MDR to be raised to even higher levels on a system-wide basis, thus hindering the wider expansion of the POS network and depriving society from the convenience of using costeffective payment cards.
As we all know very well, Estonia does not have oil fields at the expense of which we could become rich. Innovation and willingness to develop should become a pervasive way of thinking for us, there should be a change in our values. •  The world economy is currently going through changes in its fundamental paradigm and turning into a knowledge- and innovation-based economy, founded on creating, introducing, and applying knowledge. And the focus is on the latter, application of knowledge, i.e. innovation. •  Innovation can be defined as a novel and successful application of knowledge and technology in order to achieve a competitive advantage. The competitiveness of companies in knowledge-based free market economy essentially narrows down to their innovation, i.e. their ability to find and sustain their originality and thus a market position enabling high returns. It is international competition between companies that ultimately creates an opportunity for economic growth and thus for the increase in the society's welfare. BIS Review 26/2004  7  •  Innovation requires at least three factors: firstly, educated and competent people; secondly, a well-functioning financial system covering the whole chain of innovation; and thirdly, a culture favouring innovation and entrepreneurship. •  Is Estonian labour really competitive? Do we want to be price or quality leaders? If the goal is to be price leaders, our salaries should be as low as possible. If we want to be quality leaders, the situation is vice versa.

For example, of all the bonds issued in foreign currencies by world governments and the private sector, bonds denominated in euros accounted for more than 30% in 2003 (prior to launching the euro the overall amount of the bonds denominated in the national currencies of the current euro zone totalled 20%). The share of the euro in the currency reserves of the world amounted to some 19% in 2003. •  The larger the common currency zone is, the smaller the transaction costs, and the more it will support economic development, increase stability and future security. •  Whether joining the monetary union is useful depends on the ratio of the costs of the lost monetary policy independence to the gains arising from the accession. Since the exchange rate is not an adaptation tool in the monetary union, prices and salaries must be flexible and factors of production (capital and labour) have to move freely. In general terms, open economies (and Estonia is a very open economy) and countries with similar economic cycles gain more from the monetary union. •  Why coordinated economic policy? Coordinated economic policy must contribute to creating a favourable environment for stable and sustainable economic growth. •  The most closely coordinated area between the EMU member states and institutions is the budgetary policy.
First, I will review trend developments in financial intermediation and single out a recurring theme in the evolution of the financial markets over the last 30 years: the rise of securitisation and collateralised finance. I will then consider the consequences of this innovation for the transmission of monetary policy in the post-crisis world. I will start by looking at the money markets and turn to the wider financial system, including the shadow banking sector. Looking forward, the main sources of collateralisation will be an issue to consider if the present trend towards downscaling the creation of private asset-backed securities continues. Public debt instruments are likely to play an important role. This will lead us to reflect on the role of central banking at a time of high public debt. 1. The rise of collateral  The financial system has undergone profound changes over the past few decades. Markets have grown significantly; competition has intensified. These are well-known phenomena. I would like to focus on the consequence of this, namely that the core of financial intermediation has moved from depository institutions – commercial banks – to a hybrid aggregate of institutions and functions, which is broadly referred to as the shadow banking system. The rise of the shadow banks, their ups and their downs, are inseparably connected with a key financial innovation of the last 30 years: securitisation. The emergence of a shadow banking system is not a new phenomenon.

First, the larger the intermediation offered by the central bank, the smaller, ceteris paribus, the incentives are for banks to reduce liquidity risk (for example, to reduce the maturity mismatch of assets and liabilities). After all, they can turn to the central bank if they need to. Of course, while central bank intermediation increases the incentives for banks to take liquidity risk, it also increases the liquidity insurance available to banks. That is, as long as a bank does not adjust its balance sheet when the central bank offers more intermediation, its net liquidity risk exposure may in fact decrease due to the increased liquidity risk insurance provided by the central bank. But which effect is stronger: the incentive or the insurance effect? Second, larger central bank intermediation can crowd out market activities. This might be perceived as a cost-reducing development by private banks. If the central bank lends larger volumes in longer-term operations, this might provide a boost to private lending at the same maturities: some banks might consider offering funds in the term money market only if they themselves can refinance such activities by participating in longer-term central bank operations. This may make term money markets more liquid in the end. However, this is not what the Japanese authorities observed in the first half of this decade.
It is not possible to see the road ahead clearly and nor is it possible to know exactly what will happen if one puts one’s foot down on the accelerator pedal – only that the effect will come after a fairly long period of time. Why haven’t we cut the interest rate? Let me now return to the present situation and the question of whether it is reasonable to lower the interest rate in order to rapidly bring the present low inflation rate back in line with the target. The Executive Board’s reasoning at its most recent monetary policy meetings has been roughly as follows. Firstly, as I mentioned at the beginning, the Swedish economy has developed at an increasingly strong rate in recent years, and our analyses during the winter and spring have come to an assessment that this will continue. We have thus seen a rise in inflationary pressure at the end of the forecast horizon. If our assessment during this period had been that demand was declining, I believe the situation would have been different. Secondly, the present low inflation rate can be largely explained by what is known as positive supply shocks, such as increased competition, lower import prices and surprisingly rapid productivity growth. These factors benefit economic developments. To attempt to push up prices for domestic goods and services to counteract a decline in prices for imported goods is not necessarily a wise choice. Thirdly, monetary policy’s impact comes through influencing demand, primarily corporate investment and household consumption.

Investment has begun to rise, albeit at a slightly later stage than we had assumed. However, it is unlikely that the problem of a low investment rate now is connected to interest rates being too high. Given the low interest rates we see now and the good access to credit in the financial system, financing costs can hardly be regarded as a factor holding back investment. With regard to households, it is possible that even lower interest rates could make them increase their debt burden and borrow in order to increase consumption, but to me this is not an obvious conclusion. In addition, there are risks here. This brings me onto the question of how households have reacted to the low inflation and low interest rates, and this issue deserves more detailed discussion. Households’ growing debt burden and rising house prices In recent years, households’ debt burden has increased gradually and now amounts on average to 125 per cent of their annual disposable income, which is almost as high as immediately prior to the property crisis in 1992. However, interest payments are now less than half what they were then, approximately 4 per cent of disposable income. The fact that households are loaning at an increasing rate, both in Sweden and many other countries, can be regarded partly as an adjustment to lower inflation, which is also expected to be permanent.
The jury is still out concerning the final verdict as to which of the two views is right. In my opinion, however, one general conclusion is valid: a monetary policy strategy which carefully monitors money and credit developments is likely to contribute to the detection of potentially destabilising financial imbalances is likely to help detect potentially destabilising financial imbalances at an early stage. V.  Conclusions  Our discussion on how to manage globalisation comes at a difficult moment in time, a challenging period for financial markets and institutions worldwide, and a period of heightened uncertainty about the potential impact of the ongoing reappraisal of risk on the real economy. This makes this joint intellectual effort to understand the underlying mechanisms and forces of globalisation even more topical, and our joint quest to identify ways to manage globalisation even more valuable. In my contribution, focusing on the central banker’s perspective, I argued, first, that globalisation does not fundamentally undermine the effectiveness of monetary policy in preserving price stability. Although the channels through which monetary policy affects economic variables are certainly influenced by globalisation, the respective effects are  22  See Borio and Lowe (2002). 23  See ECB (2007a), Box 9 for an elaboration of the measurement of financial market liquidity. 24  See Rajan (2005, 2006). 25  Adalid and Detken (2007). BIS Review 9/2008  11  estimated to be small.

[see Chart 3] The counteracting effects of these global price pressures on euro area inflation can be observed more clearly if we take a look at the development of the overall Harmonised Index of Consumer Prices (HICP) and selected components (energy and non-energy industrial goods). [see Chart 4] The prices paid by consumers for energy products, which account for approximately 9% of euro area private consumption, surged at an average rate of 5.4% per annum following the series of sharp oil price increases over the period 1999-2007. But, the prices of other consumer goods, such as non-energy industrial goods, which account for over 30% of total private consumption, increased at a more moderate rate of 0.7% per annum on average during the same period. In an environment of significant and persistent changes in the relative prices of energy goods and agricultural products, the price increases of these goods, which are comparatively more visible to consumers than the relatively more stable prices of many other consumer goods, may, therefore, adversely affect inflation expectations. Consequently, it is crucial for monetary policy to anchor inflation expectations to price stability, and to ensure that secondround effects of increases in energy prices and other commodity prices on price and wagesetting do not materialise. All in all, the empirical evidence on how globalisation has directly affected consumer price inflation in the advanced economies reveals a rather muted impact.
Nonetheless, whether these judgements on the output gap come to pass depends, ultimately, on the pace at which demand in the economy returns and the accompanying response of the economy’s supply potential. Let me discuss those two issues in turn. 14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14  Chart 12: Output gap – Global Financial and Covid Crises Compared  per cent  1 0 -1 -2 -3 -4 -5  t=0  t+5  t+10  t+15  Quarters GFC  Covid  (forecast)  Source: Bank of England. (b) Money and Money Spending I will discuss in some detail the components of private demand, consumption and investment, at a future event. But as after the global financial crisis, some useful insights into possible future paths for aggregate demand and aggregate money spending is provided by looking at developments in the banking system. Exceptional amounts of central bank money have once again been created during the Covid crisis to maintain borrowing costs at low levels. This additional QE is running at around $ ½ trillion so far and rising.15 Globally, the amount of QE undertaken during the crisis is already rapidly catching-up with the amount undertaken during the prior ten-year period. And in the UK, QE so far announced by the MPC, at £ billion, is already more than was carried out in the 10-year aftermath of the global financial crisis. 15  Based on Federal Reserve, ECB, Bank of England, Bank of Japan and Swiss National Bank.

Measures of broad (commercial bank) money globally rose by only around 85% in the decade following the global financial crisis and by even less  11  Global figures are based on data on OECD M1, while UK figures based on central bank reserves plus notes and coins in circulation. 9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  in the UK. Put differently, the money multiplier in the UK – the ratio of broad money to central bank money – fell by around two-thirds following the global financial crisis (Chart 9). Chart 9: Ratio of Broad Money to Narrow  M4ex/(Reserves+ Notes and Coins)  35 30 25 20 15 10 5 0  06  07  08  09  10  11  12  13  14  15  16  17  18  19  20  Source: Bank of England and Bank calculations. This should come as no surprise. The global financial crisis impaired financial intermediation, slowed the growth in bank credit and money and thus contributed to the sluggish growth in money spending. Interestingly, the relationship between broad money growth and money spending growth – the velocity of circulation of broad money – remained relatively stable following the global financial crisis (Chart 10). The velocity of circulation of narrow money, by contrast, fell dramatically. The Covid crisis has added to these long-standing disinflationary pressures.
Although such fiscal measures are politically needed, they should remain temporary, in addition to being targeted more precisely at consumers who need them the most, and targeted in keeping a "price signal" that provides an incentive to decrease energy consumption, in order to help minimise the risk of energy shortages. They should also be further coordinated at the European level. B.Monetary policy will be efficient to bring inflation back towards 2% Let me clarify something fundamental: in the medium term, the real answer to inflation is not fiscal, it is monetary. In the euro area and elsewhere, although it retains a strong external component (around half of headline figures in the euro), inflation is becoming more "domestic" and broad-based. In October, core inflation (which excludes energy and food) stood at 5.0% in the euro area. Monetary policy has a more direct impact on core inflation, and central banks cannot not let it get out of hand and persist. This our mandate, and our responsibility. Therefore a normalisation in our stance has been clearly warranted over the last year. The ECB Governing Council decided on 27 October to raise its key rates by another 75 basis points, the third significant increase in a row, bringing the deposit facility rate to 1.5 %. In doing so, we have removed a substantial part of our accommodative policy, and are clearly approaching the "normalisation range" which can be estimated at around 2% in the euro area. We should reach this level by December.

This allowed for a significant carry-over: according to Commission's forecasts published last Friday, euro area economy should grow by 3.2 % in 2022 as a whole(ii), more than the forecast for the United States. As for 2023, while slowing down, growth could remain positive at 0.3 %, and it should rebound to 1.5 % in 2024. All economic forecasts are nevertheless surrounded with high uncertainty at present times, in light in particular of the latest of an unprecedented series of shocks. By the way, this is why we need to regulate strongly and quickly crypto assets internationally: the last episodes show us that we cannot allow for a second "crypto winter" to still add to uncertainty and financial instability. The Russian war in Ukraine is feeding a further surge in energy prices and other commodities, hence a negative shock on terms of trade. This geopolitical and economic environment weighs on the confidence of businesses and consumers. In particular, inflation has become the prime concern of our European citizens. The rise in consumer prices has amplified in recent months, reaching 10.7% in October – France displays the lowest rate in the euro area with 7.1 %, thanks in particular to its "tariff  1/4  BIS - Central bankers' speeches  shield" which protects households from increases in energy prices.