samchain/econo-pairs-v1 huggingface dataset:
Øystein Olsen: Economic perspectives Address by Mr Øystein Olsen, Governor of the Norges Bank (Central Bank of Norway), to the Supervisory Council of Norges Bank and invited guests, Oslo, 17 February 2011. *  *  *  Nearly a decade has passed since the inflation targeting regime was introduced. In spring 2001, Norges Bank was charged with the task of setting the interest rate with a view to keeping inflation low and stable. At the same time, new fiscal policy guidelines, also known as the fiscal rule, were implemented, charting a course for petroleum revenue spending. For the first time in a long time, economic policy in Norway was given an overall long-term anchor and a binding operational objective. In Report No. 29 to the Storting from 2001, the Storting was informed of the new guidelines. The report may not qualify as poetry, but it is a document to which I have a close relationship. This evening I will take a look at the experiences of these operational guidelines and discuss the following questions. Has the inflation target and the fiscal rule lived up to the expectations of ten years ago? And how can the experiences of the past ten years be used in addressing today’s challenges? In 2011 it is also ten years since Georg Akerlof, Michael Spence and Joseph Stiglitz were awarded the Nobel Prize in Economics for their work on asymmetric information. The theories provide a backdrop to understanding the financial crisis that engulfed the world economy in 2008.

Without results showing that the inflation target is in fact reached over time, the credibility of monetary policy is put at risk. In assessing various considerations, monetary policy must be geared to meet its primary objective – low and stable inflation. Other instruments must be used to attain other objectives. 4  6  See, for example, Leif Johansen, Offentlig Økonomikk [Public Economics] (1965). BIS central bankers’ speeches  Implementation of the fiscal rule Chart 12: The Government Pension Fund Global. As a percentage of GDP. 2000 – 2010 We have also gained ten years’ experience of rules-based economic policy in the area of fiscal policy. The Government Pension Fund Global has grown from close to NOK 400 billion in 2001 to more than NOK 3.1 trillion today. As a percentage of GDP, the size of the fund is in line with that projected in 2001. When the Fund was established, it was natural to build on existing expertise in the central bank gained through management of the foreign exchange reserves – the wealth was to be invested abroad. The central bank has been and will continue to be an appropriate institutional setting for the Fund. Under the fiscal rule, government oil revenue spending over the past ten years has totalled NOK 730 billion in current kroner. This is around NOK 100 billion more than a strict interpretation of the fiscal rule would imply. Chart 13: Relative labour costs. Projections from the National Budget for 2003 and actual developments.
In 2006, as most of you well know, we issued a monograph on the sixty years of central banking operations in Macedonia, and today we have made presentation of the report on the NBRM operations in the last seven years, discussing, on about 400 pages, its main activities and accomplishments. These two books are, de facto, a first attempt for aggregate presentation of the historical course of the central banking in Macedonia, since the World War II. I think that this will help the students, the monetary policy analysts, teachers and professors engaged in this issue, and certainly many others in the financial sector. Tonight you can see the hard copies in Macedonian and in English, and the electronic version of the second book, the seven-year report where we extensively discuss the period that ends these days. Nevertheless, I assume that tonight many of you would like to ask to what extent am I (or are we) satisfied of what we have achieved, and, what would I, in few words, highlight as the most important? If there is such question, I would briefly say the following: All decisions in the last seven years were made by the National Bank, with zero influence from the outside, regardless of the verbal suggestions and insistence coming from well known addresses.

This is why there is an inflation target and why fiscal policy endeavours to have measurable surplus targets in public finances. It is thus important to have a measurable, quantitative target fulfilment not just for inflation but also for resource utilisation, and then in the form of unemployment. Monetary policy should not focus on financial stability as there are better instruments With regard to the view that monetary policy should also aim to limit growth in mortgage lending and more generally to maintain financial stability, I would like to state the following: The policy rate is a blunt, indirect and inappropriate means of influencing financial stability in Sweden and it has a direct effect on inflation and unemployment. As I said in the beginning, the objective of price stability and highest sustainable employment should not be neglected out of consideration for financial stability, except in extreme circumstances and then only for a limited time. This only includes such situations where there are clear indications of threats to financial stability and where there are no means to manage these threats without neglecting the objective of price stability and the highest sustainable employment. At the same time, there should be confidence that this type of temporary neglect will in the longer run lead to a better development of inflation and unemployment. This last condition is important.
Javier Aríztegui: Savings bank restructuring and institutional protection schemes Speech by Mr Javier Aríztegui, Deputy Governor of the Bank of Spain, at the conference organised by Caja Granada, Granada, 17 December 2010. *  *  *  It is a pleasure for me to be able to share with savings banks professionals and Spanish financial system specialists some reflections on what are known as “Institutional Protection Schemes” (IPSs). And it is all the more satisfying to do so in a city as magnificent as that hosting the event today. My thanks, then, to Caja Granada for kindly inviting me to participate in the closing of this conference. The year 2010 now drawing to a close has been a difficult one for the Spanish banking system, whose activity has continued to unfold in a sluggish economic setting marked by financial markets that have not yet managed to attain the degree of stability and confidence needed. It has thus been a year replete with management challenges, intellectual debates and legislative initiatives. But if we must choose one specific milestone marking it above all others, 2010 has been the year of merger agreements between savings banks, in possibly the most extensive banking concentration process ever undertaken in our country. A sizeable portion of these agreements has taken the form of Institutional Protection Schemes or – to make a further addition to the plethora of acronyms and initials characterising today’s financial jargon – IPSs.

Consequently, a major communication drive is needed to explain the changes agreed, the assets and liabilities of the new financial statements (which are still pro-forma) and the pending concentration programme. This is because suspicions arise in the markets from time to time that these changes, rather than amounting to wholesale reform of the organisations concerned, are merely window-dressing. And this task of educating people must be performed before the wholesale markets re-open in about three weeks’ time. When that happens, the new treasury teams resulting from the concentration and merger of savings banks will have to use that detailed information as the basis for their demands for financial resources from euro area creditors. Without fluid communication, matters will be very complicated indeed. It is now that the true extent of the value added by good management comes into its own. You must take decisions, at times disagreeable ones, to protect profit margins, to reduce operating costs and overheads, to promote business activity, to control risks and liquidity, and to complete the integration of operations. In short, you will have to convince the euro financial markets to commit money to your projects, in the form of loans and capital, and all this must be done very rapidly and in an adverse environment.
Paul Fisher: The corporate sector and the Bank of England’s asset purchases Speech by Mr Paul Fisher, Executive Director for Markets and Member of the Monetary Policy Committee of the Bank of England, for the Association of Corporate Treasurers Winter Paper 2010, London, 18 February 2010. The original speech, which contains various links to the documents mentioned, can be found on the Bank of England’s website. *  *  *  The start of corporate sector asset purchases On 19 January 2009, the Chancellor announced 1 that the Bank of England was being authorised to purchase “high quality private sector assets”, financed by the issue of Treasury Bills “… to increase the availability of corporate credit, by reducing the illiquidity of the underlying instruments …”. In this talk today, I want to address the rationale for intervening in this way and the opportunities and limitations of such operations. I will then go on to review the individual schemes and evaluate the results so far. I will not be talking very much about the wider programme of gilt purchases, which had different objectives – namely to directly boost the money supply and nominal demand. But there are some interactions which I shall come back to later. At the time the policy was announced, output in the United Kingdom economy was dropping sharply. GDP has fallen by 6% during the recession overall and fell by 2 ½% in 2009 Q1 alone, at the time these policies were being put in place (Chart 1).

The big moves in asset prices during 2009 – a 50% rise in equities, 150bp fall in LIBOR spreads, the 150 bps fall in targeted corporate bond spreads for example – will have been strongly supported by the Bank’s monetary policy operations. And by purchasing the gilts which asset managers and others would normally have bought, the impact of the quantitative easing programme will have been to increase the demand for more risky assets – like corporate bonds. So the corporate and gilt purchase programmes have been complementary. Conclusion In my talk this evening, I hope I have explained a bit more clearly the motivation for and the design of the APF corporate purchase schemes. The Bank has not sought to provide large scale funding directly using public money. Rather, the operations have been consistent with a central bank acting as “Market Maker of Last Resort”. The Bank has transacted in modest quantities designed to improve the liquidity of corporate credit markets, bring down the cost of credit and encourage private sector lending. That has been supported by the much larger programme of quantitative easing and the low level of Bank Rate. The evidence suggests that, in conjunction with a very large monetary stimulus, abroad as well as at home, the corporate purchases have been successful in helping to invigorate those corporate credit markets in which the Bank has intervened. References Benford J, Berry S, Nikolov K, and Young, C (2009), “Quantitative Easing”, Bank of England Quarterly Bulletin 2009 Q2, available at http://www.bankofengland.co.uk/publications/quarterlybulletin/qb090201.pdf.
The output gap reflects our assessment of the level of capacity utilisation. In our projections, we use several methods, a broad range of information and professional judgment. We can never determine the exact level of available resources in the 2 economy. We illustrate the uncertainty by fan charts. Growth in the Norwegian economy has been higher than we assumed a year ago. This reflects a large supply of labour from other countries and high productivity growth, but also increased use of domestic labour and other resources. It is likely that capacity utilisation will have to decline to prevent inflation from becoming too high. 2  8  See Norges Bank Watch 2008 for a critical view on measures on capacity utilisation. BIS Review 65/2008  Unemployment has declined considerably and is now historically low. The increase in employment has been accompanied by a decrease in wage-earners’ share of corporate earnings. Developments must be viewed in the context of the many positive factors that have been at work in the business sector. The impact of a number of these factors may now be diminishing. It is not likely that the improvement in Norway’s terms of trade will simply continue. Productivity growth seems to be slowing and wage growth is picking up. Wage-earners’ share of value added is therefore rising again, and this will probably curb labour demand ahead. A number of other factors may also contribute to reducing capacity utilisation even though petroleum investment remains high and public expenditure is growing at a fast pace.

Simon M Potter: Role of central bank interactions with financial markets Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at New York University’s Stern School of Business, New York City, 27 November 2012. *  *  *  It is a pleasure to have the opportunity to speak to you today. Having taught classes at New York University (NYU), I know firsthand the quality and analytical rigor of the students and faculty. You should all be proud of the excellent curriculum and education you are receiving here at NYU. I would like to thank Kim for giving me the opportunity to speak this evening and the public service he is providing through his leadership of the center. My remarks today will focus on the role of central bank interactions with financial markets. Because of the New York Fed’s position within the us financial system, our staff is in continuous contact with financial market participants, including investors, intermediaries, financial market utilities and analysts. Much of this contact occurs through the Markets Group at the New York Fed. For most of my professional life prior to becoming head of the Markets Group earlier this year, I had been a research economist working at the New York Fed. Like many research economists, I was trained to understand the economy with mathematical models that contain at best a rudimentary description of a financial system.
However other, well-known transmission channels from portfolio adjustments to the real economy are wealth effects on consumption and Tobin´s q on investment. Evidence in industrial countries suggests that the semielasticity of consumption to a permanent 2 increase in stock prices is of the order to 0.04 after two years . In emerging economies, where only a limited number of households own stocks in asset markets, the effect of changes in stock prices on consumption is substantially lower than in the developed world. In addition, as asset prices become more volatile it becomes more difficult to differentiate between permanent and transitory components. There is another channel through which the new economy may affect real activity levels, and that is 3 productivity . Several academic studies have examined the factors behind the spur in U.S. productivity during the last decade, assigning particular attention to the new economy and the effects of the 4 computer revolution. This issue is still under debate . The fact is that the internet revolution has increased the speed of information transmission, making information cheaper and more widely available. This acceleration is quickly changing the business environment, leading to significant savings in the business-to-business supply chain. One of the implications of this increase in the availability of information is a great improvement in inventory management. The optimal level of inventories is becoming smaller, so that the real economy reacts faster to demand and/or supply shocks, reducing both the length and the width of the cycle.

Mario Draghi: Monetary policy in the euro area Speech by Mr Mario Draghi, President of the European Central Bank, at the conference "The ECB and its watchers XX", Frankfurt am Main, 27 March 2019. * * * The last year has seen a loss of growth momentum in the euro area, which has extended into 2019. This has been predominantly driven by pervasive uncertainty in the global economy that has spilled over into the external sector. So far, the domestic economy has remained relatively resilient and the drivers of the current expansion remain in place. However, the risks to the outlook remain tilted to the downside. The monetary policy measures we took at the last Governing Council meeting reflect this assessment. In the face of a weaker growth outlook, they help maintain the accommodative policy stance that we managed to preserve last year as we rotated our instruments from net asset purchases to forward guidance. Our policy thereby continues to accompany the economy on its path towards our inflation objective. The outlook for the euro area economy We expected the expansion to slow in 2018 as the business cycle matured and growth retreated towards potential. But as the economy weakened in the second part of last year, it was not yet certain whether we were witnessing a temporary departure from this scenario, or a more lasting deterioration in the growth outlook.
All parts of an organisation need to understand cyber risk and their responsibilities towards improved cyber hygiene. This includes Board level engagement. Front line business areas need to understand and own the risk. Management of cyber vulnerabilities needs to feature in strategic planning. 3  2  The Bank, Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). BIS central bankers’ speeches  3. Cyber requires effective and regular testing: Of people, processes and technology. Industry investment in cyber is significant but testing the effectiveness of this investment has not kept pace. Assurance is often based on audits and control sampling which is not sufficient, not least because of the challenge for internal audit departments to keep pace with change in this area. And of course, given the dynamic nature of the threat, such tests should take place on a regular basis. This leads me onto the other element of our response to the FPC recommendation I wanted to talk about: vulnerability testing through the CBEST 4 program. CBEST is a framework that we have developed working with government, industry and commercial providers of penetration testing and threat intelligence. The idea is to bring to bear the best available intelligence on potential threats to test directly a firm’s ability to protect, detect and respond to cyber attacks. The scope of a CBEST test is tailored to the business of the firm and the critical services it provides.

The accent has been on assessing the vulnerability of the UK financial sector to cyber attack. We are doing that in two ways: a crosssector review of current risk management practices with regards to cyber and vulnerability testing via CBEST. Let me describe these in turn. As a first step in diagnosing the sector’s cyber resilience, the UK financial authorities 3 issued a questionnaire to thirty six firms that make up the “core” of the UK financial system. This included the largest UK and foreign banks active in London and the key payment and settlement systems, clearing houses and exchanges that together are critical for delivery of the financial services that the wider economy depends on. The questionnaire provided for a detailed self-assessment by firms of how they organise their cyber defences. Its purpose was to enable UK authorities to take stock of resilience across the sector and identify best practice across firms. Part of this was to be able to play back to individual firms where they stood relative to best practice. But lying behind this is the objective of raising resilience in individual firms by ensuring that the network as a whole is resilient. And given the importance of these firms to the stability of the financial system, this implies a level of resilience that goes beyond basic cyber hygiene but aims instead to ensure that firms are in a position to manage Advanced Persistent Threats (APT) that are the hallmark of some statesponsored attackers.
After Bretton Woods, Germany realised that price stability was possible with a stable nominal anchor – a monetary target – that would prevent excessive accommodation of the supply shock. The Bundesbank’s success made history. If others did not follow Germany’s example, it was probably because they were not willing to put the same emphasis on reducing inflation. Simply, policy priorities were not the same in all countries. I would therefore side with those who think that inflation moderation is largely thanks to a change in attitudes at central banks. A number of central banks, notably the US Fed, had already changed their reaction functions in the 80’s, placing greater emphasis on minimising inflation deviations from an implicit target. And then, into the '90s, we saw a trend towards governments granting independence to central banks. Many central banks immediately adopted explicit inflation targets, thus making a clear commitment to price stability. If inflation is now lower and more stable than before, it is because central banks have decided to become less tolerant of it, and have been allowed to do so. But these central bank changes were not a historical accident. Different countries’ experience in a tackling inflation has helped prove the theory that there is no such thing as a long-term inflationunemployment trade-off. We now accept that persistent inflation – even if it is low – involves a misallocation of resources with potentially heavy medium and long-term costs.

We have invested considerable effort into addressing these shortcomings by increasing coordination between authorities and ensuring that national authorities also have the right incentives to cooperate in a crisis. For example: •  We have developed firm-specific cooperation agreements (CoAgs) to increase cross-border coordination and information-sharing between home and host authorities. •  We have set up Crisis Management Groups (CMGs) to agree resolution plans for globally systemically important banks. The UK is involved in CMGs for four G-SIBs as home authority and 14 as a host authority. Through CMGs we are making concrete changes in the set-up of firms that will help ensure that when faced with a crisis, authorities will stick to their ex-ante agreements. So-called ‘internal TLAC’ is a notable example – it enables losses to be passed up to the relevant part of the group. 11  6  See Financial Stability Board (2015). BIS central bankers’ speeches  •  In the European Union, resolution colleges have been established in accordance with the BRRD for cross-border firms that have operations in more than one Member State, and the UK expects to be involved in around 20 as home or host authority. Impact of reforms to date This multi-pronged programme of measures to address too big to fail is already having an effect. Ratings agencies have started to reduce their ‘government support’ uplifts for big banks. Spreads between senior and structurally subordinated debt of UK G-SIBs also suggests that resolution regimes are gaining credibility.