samchain/econo-pairs-v1 huggingface dataset:
European Central Bank: Press conference - introductory statement Introductory statement by Mr Willem F Duisenberg, President of the European Central Bank and Mr Christian Noyer, Vice-President of the European Central Bank, at the press conference, held in Maastricht, 7 February 2002. *  *  *  Ladies and gentlemen, as the Treaty on European Union was signed in Maastricht exactly ten years ago today, it was decided that it would be fitting to hold the fifth meeting of the Governing Council of the ECB outside Frankfurt here in this city in order to mark the tenth anniversary of what has become known as the "Maastricht Treaty". Indeed, the Governing Council today met in the same rooms in which the Heads of State and Government successfully concluded the Treaty negotiations. I should like to thank Governor Wellink, the Queen's Commissioner in the Province of Limburg, the staff of de Nederlandsche Bank and the city of Maastricht for their hospitality and for the outstanding way in which the meeting has been organised. When the Maastricht Treaty was signed, many doubted whether Economic and Monetary Union (EMU) would ever amount to more than the solemn words of a Treaty or a laudable objective to be reached at some point in the distant future. However, during the 1990s, policy-makers, governments, central bankers and other political and economic agents showed great resolve and determination to ensure that the single currency would become a reality.

The International Institute for Management Development in its well-known Wor l d Competitiveness Report ranked our competitiveness position in finance for the year 2001, 44th from the top 49 countries in the world. -  Second, in term of financial service availabilities, there are still some people lacking adequate access to the mainstream banking activities, particularly those in the rural area and those with low-income in the urban area. Recent statistic reveals that 54 districts in Thailand have neither branches of commercial banks nor those of specialized financial institutions. -  Third, there are inherent weaknesses within our system. We are overly dependent on commercial banks as the main channel of financial intermediaries with bank loans accounting for 70 percent of external funding in Thailand, comparing to 20 percent in the US. Although large corporate and the Royal Thai government have recently turned to capital market as their alternative sources of financing, bank loans remains dominant, making the economy particularly vulnerable to changes in commercial banking sector. These are the issues that we will be focusing on today. And following this conference, the Bank of Thailand will embark on the process to articulate our medium-term plan to increase competitiveness of financial institutions, improve people access to financial services, ensure financial system sustainability, and take this opportunity to systematically correct problems which remain unresolved by financial reform implemented thus far. Ladies and Gentlemen Our financial institutions must be the sources of our national strength and should be the main instrument in our development.
After all, China is one of the world’s largest economies that in spite of its increasing openness follows a course of its own. Critics of the dollar peg believe that if the renminbi were allowed to float, it would appreciate, thus reducing China’s current account surplus and shrinking the US deficit. In the long term, I believe that it is right to allow the renminbi to float. In the short term, however, it is difficult to see this as the appropriate solution. The main reason for not floating the renminbi yet is the Chinese financial system. The Chinese banking system is still a long way from being adapted to market conditions, and a large proportion of its lending is still made to state-owned companies that are often unable to honour their payment obligations. If we take into account all the hidden and disclosed nonperforming loans in the banking system, these are estimated to be equal to as much as half of China’s GDP, and they are continuing to grow. Were the currency allowed to float before addressing these problems, it is just as likely to depreciate as appreciate since the Chinese public could take advantage of the opportunity to transfer its assets abroad instead of saving at low interest rates in the weak  4  BIS Review 47/2003  domestic banking system, a system that would then be rocked to its foundations.

The SNB is not closing itself off to changes that will be necessary over the course of time. However, it is worth recalling here that central banks are not all-powerful. What remains decisive for us is that our mandate for monetary policy and financial stability is formulated in a sensible manner and can be fulfilled. However, the SNB must also have the necessary instruments and be in a position to use them flexibly. In addition, it is essential that it can act independently when fulfilling its mandate. It can only take responsibility for its mandate under these conditions. This is another important reason why we are generally reserved when confronted with new tasks. A central bank which is guided by this model when fulfilling its mandate and consistently discourages excessive expectations makes the biggest contribution towards a prosperous development of the economy, thereby serving the overall interests of the country in the best manner. By fulfilling its price and financial stability mandate steadily and reliably over a  8  BIS central bankers’ speeches  longer period, a central bank builds up confidence in the general public and on the markets – confidence which is extremely important for the development of the economy. If I have succeeded in persuading you to share this conviction with me, or strengthened your belief in it, my talk this evening has achieved its purpose. BIS central bankers’ speeches  9
Please note that the Eurosystem sees SEPA as “an integrated market for payment services which is subject to effective competition and where there is no distinction between cross-border and national payments within the euro area.” Over the long term, all euro area payments will become domestic, reaching a level of safety and efficiency that is at least on par with the best performing national payment systems today. Let us consider together the potential benefits of SEPA for the Polish market participants. The following questions seem to be of particular importance here: •  What’s the role and place of Polish payment infrastructure in the SEPA world? •  Will SEPA increase the consolidation of the Polish banking sector? •  Will SEPA reinforce the competitiveness of Polish entrepreneurs? •  What roles are there to be played and who should play them so as to ensure that SEPA contributes to the success of the Polish economy and increased consumer satisfaction? •  What benefits may the Polish payment market participants gain before Poland joins the euro area? Now, let me ask the Presidents to take the floor. BIS Review 29/2007  3

ASEAN has made a strategic decision to strengthen the organisation politically. It is finalising a Charter that will lay out a bold and visionary future for ASEAN. This will provide an institutional framework for the grouping and transform it into a more effective and efficient rules-based organisation. The Charter will be signed at the Singapore Summit in November. Asia is evolving its architecture for regional cooperation. Today, there are already several overlapping fora and groupings: the ASEAN Regional Forum (ARF) and Shangri-La Dialogue which discuss sensitive security and defence issues, the ASEAN + 3 framework and the recently formed East Asia Summit (EAS). Countries in Asia understand that they must work together to strengthen regional cooperation. These structures complement one another and help to deepen regional integration and build an East Asian community. Building relationships with other regions While the final shape of the regional architecture will not be decided for some time to come, what is clear is that it will be an inclusive and forward-looking one. This was clearly demonstrated in the way participants in the EAS were determined. Instead of going by narrow and outmoded geographical and ethnic notions, the leaders in Asia wisely decided to adopt a forward-looking, inclusive and open definition. Asia will therefore continue to remain open in engaging external players on the understanding that in today’s context, what defines a “region” are ties, connections and interdependency, rather than physical boundaries and ethnicity. The US will continue to play a vital role in Asia’s stability and prosperity.
Based on what we know and understand today, I would suggest that risk-weighted capital requirements, broadly as proposed under Basel II, probably remain the most rigorous way to address banks’ tendencies to incur excessive risks and, ultimately, to ensure adequate capital levels. However, we must address the serious short-comings of the risk-weighted approach, which have become so powerfully manifest during this crisis. What Basel II needs, therefore, is a safeguard to provide the financial system with additional protection against the negative consequences of these short-comings. I want to stress that a safeguard of this kind is needed in addition to the improvements to Basel II that are currently under way as a result of the recent FSF Report to the G7 ministers and governors. 16 Which brings me back to the obvious and simple response to excessive leverage: The imposition of a limit on banks’ leverage as a complement to the risk-weighted approach reflected in the current Basel framework. The regulation of banks’ leverage is usually referred to as a “leverage ratio”. Specifically, the idea is to set a lower limit to the capital-to-assets ratio of banks. Let me stress again that this instrument is not meant to and should not replace Basel II. There is no reason to eliminate the benefits of risk-weighted capital requirements. The leverage ratio should be applied as a complement to the risk-weighted approach as reflected in the current Basel framework. That means we would have two independent measures of capital adequacy.

As Joseph Stiglitz put it, “Whenever there are “externalities”– where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated – markets will not work well.” 8 In the real world of banking, potential market failures are particularly relevant. An important market failure stems from the fact that banks enjoy the benefits of a safety net. Many countries have explicit deposit insurance schemes, which limit depositors’ losses. Moreover, in almost every country there is some degree of implicit government protection for large banks. In the current crisis, government protection has become manifest and explicit in the form of the recent G7 and G20 communiqués. Most notably, in October the G7 finance ministers and central bank governors declared unambiguously that they “agree to take decisive action and use all available tools to support systemically important financial institutions and prevent their failure.” 9 In other words, governments imply that large banks are simply “too big to fail”. Clearly, there are benefits to banks having safety nets. But there are also serious costs. It is a fact that the presence of insurance leads to less careful behaviour, otherwise known as moral hazard. If you rent a fully insured car, you will likely exercise less care driving it. 4  See the October 2008 issue of the IMF‘s Global Financial Stability Report, entitled ”Financial Stress and Deleveraging“. 5  Declaration of the Summit on Financial Markets and the World Economy, G20, 15 November 2008.
In these funds, the cost is the risk of suspension or the risk of dilution as other investors exit first. The opacity of those costs tilts the investment playing field towards funds that offer daily redemption. And that tilting of the playing field could have been a barrier to the opportunity to invest in the most illiquid assets – assets that require great patience, such as infrastructure, private equity or venture capital. The fund industry itself notes that funds offering daily dealing are “not realistic for funds investing in highly illiquid assets”. 20  See report by the Task Force on Climate-related Financial Disclosures (June 2019): ‘2019 Status Report’. See report to Government by the Green Finance Taskforce (March 2018): ‘Accelerating Green Finance‘. See page 49 of the Investment Association UK Funds regime working group report (June 2019) ‘Final report to HM Treasury Asset Management Taskforce’. 18 19 20  11  All speeches are available online at www.bankofengland.co.uk/news/speeches  11  So the unlevel playing field could have been a barrier to greater investment in patient forms of capital – a central tenet of the government’s framework for raising productivity.21  For a fair and transparent fight, the risk of suspension or dilution would be properly factored into the pricing and redemption terms of open-ended funds. If that were the case, those funds that invest for the long term and require more patience from investors could look relatively more attractive.

11 In particular, according to Met Office (2018), by 2100, in parts of the UK sea levels could rise by up to 70cm in a ‘low emissions scenario’, and by up to 115cm in a ‘high emissions scenario’, relative to their 1981–2000 levels. See Box 6 in PRA report (2018): ‘Transition in thinking: The impact of climate change on the UK banking sector’ for more detail on the impact of flood risk on residential mortgage portfolios. 12 See announcement. 13 See IEA and IRENA (2017), ‘Perspectives for the Energy Transition’. The estimates are for a scenario compatible with limiting the rise in global mean temperature to 2°C by 2100 with a probability of 66%, as a way of contributing to the ‘well below 2°C’ target of the Paris Agreement. 9  6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  Financial companies will need to continue to adapt if they are to be able to serve in this new environment. Their business decisions will need increasingly to reflect the risks. So we’re testing their ability to do this. We’re going to stress test individual firms and the financial system for resilience to climate risks. Our stress test will be the first of its kind to integrate fully climate scenarios with macroeconomic and financial system models. The Network – of central banks and supervisors – for Greening the Financial System is currently working to develop a set of climate scenarios for regulators to use.
It is a keystone of the European single market, which will ensure prosperity in Europe for the benefit of the rest of the world. I would like to draw your attention to why the euro and Monetary Union have been successful from the outset, and to the conditions and prospects for building on this success. I. The euro and Monetary union are based on a credible monetary policy and contribute to an appropriate economic and monetary equilibrium in Europe I.1. A credible, stability-oriented monetary policy a/ First of all, let me point out that, from a technical and operational point of view, the launch of the euro on financial markets has been an indisputable success. In this respect, one has to remember all the doubts voiced three years ago. The decentralised organisation of the Eurosystem has achieved the objectives it was assigned in three important respects: •  operational efficiency, as is demonstrated by the timely adjustment of banking liquidity and steering of short-term interest rates;  •  the security provided by the procedures and systems implemented by the Eurosystem, both for the execution of its operations and in the field of large-value payments. At the shortest end of the market, the integration of the interbank market took place in 1999, right from the start of Monetary Union, thanks to the setting up of the Target system for the transfer of large-value payments in real time throughout the euro area and other EU countries.

Additionnally, let me recall recent trends towards mergers or close co-operation between stock exchanges, securities settlement systems and clearing houses, and so forth. Had the euro not been created, would it have been thinkable that the Paris, Brussels and Amsterdam exchanges would merge, creating EURONEXT? It is evident that the introduction of the euro is fostering very large-scale market restructuring throughout Europe. The total stock market capitalisation of euro-area equity markets stood at more than 5.5 trillion euros at the end of 1999, compared with a market capitalisation of 3.6 trillion euros at the end of 1998. This figure reflects not only the increase in stock prices but also the powerful drive towards securitisation of private companies throughout Europe and, in particular, the take off of the “new markets” network. There are still some barriers to further integration of EU capital markets. In this regard, the Eurosystem has welcomed the objective of the European Council, meeting in Lisbon in March 2000, of accelerating completion of the internal market for financial services, and to set a tight timetable so that the Financial Services Action Plan is implemented by 2005. The Eurosystem also fully supports the initial policy conclusions of the Committee of the Wise Men on the integration of the EU securities markets, in the conviction that their implementation would contribute to an improved allocation of capital in the European economy and to developments in securities markets coherent with the needs of the single monetary policy. II.2.
The problem is that the level of potential output is inherently difficult to measure. For an individual firm, the notion of capacity is slippery. A car manufacturer might be able to say how many units can be produced if all production lines are operating 24/7, but he knows that to do so would prevent essential maintenance and impair the firm’s ability to produce output later. And in the service sector, the notion of capacity is even more complex. What is the capacity of a law firm, for instance? One might be able to say how many hours the existing partners could work, but that is not the same as how much output they could produce. Moreover, it is impossible to match unemployed workers to unfilled vacancies instantaneously, so it is not appropriate to ask what level of output could be achieved if all  3  Of course the margin of spare capacity is only one determinant of inflation. Other factors include commodity prices, the exchange rate and inflation expectations. And the rate at which the margin of spare capacity is closed may also matter – so-called “speed limit” effects. BIS Review 142/2010  3  those who wanted a job were actually in one. The frictions and the institutional characteristics of labour and product markets need to be taken into account too. Economists studying business cycles have used a variety of approaches to construct proxies for potential output.

But financial institutions and policymakers could – and should – have been more alert to the vulnerabilities that were building during the years leading up to the crisis and therefore to the possibility of a major shock to the financial sector and to the economy more generally. It is somewhat analogous to seismologists trying to predict earthquakes along a fault line. It is impossible to predict the day and magnitude of a shock with any precision, but it may be possible to say something about the likelihood of an earthquake occurring within a given period from seismic measurements and indicators of latent stress. Now it might seem natural to measure the severity of a recession by the magnitude of the fall in output. Indeed, a recession is sometimes characterised in the media as being two or more consecutive quarters of falling output, with the end of the recession being marked by a return to expansion. But that is not a very useful definition, as the mere resumption of growth will still leave some plants idle and some workers unemployed. From an economic perspective, it should be the margin of unused resources in the economy – the difference between actual and potential output – that we care about. And it is also the margin of unused resources that determines how much the economy can grow during the recovery before it puts significant 3 upward pressure on inflation , the control of which is the MPC’s primary objective.
The different developments that are underway should contribute to financial stability and increase the crossborder use of the CLP, as well as the participation of non-residents in the domestic market. Therefore, authorities and market participants should be prepared to be part of a bigger and more internationally integrated FX market. Let me conclude by remarking that this journey for the Chilean financial system, through a deep financial crisis, has led to just new bank regulation but also to valuable lessons learnt for the future. A deeper and properly regulated financial system contributes to financial stability, inclusion and increased welfare. Page 19 of 20  Central Bank of Chile September 2019  Preventing stress episodes is a task that requires constant monitoring and early detection of potential sources of vulnerabilities and risk. The enactment of a new Banking General Act and internationalization of the Chilean peso, among other measures, open up a new phase for modern regulation. Even though significant progress has been made in this regard, there are still challenges ahead that must be faced to further strengthen our financial system. ***  Page 20 of 20

Conclusions In the pursuit of financial stability, the importance of resilience can hardly be overstated: a persistent disruption to people’s ability to make and receive payments would cause great damage to the UK economy, so Parliament and others rightly hold the Bank and the wider  6  BIS central bankers’ speeches  financial community to the highest standards of stability. It is sometimes claimed that this relentless focus on stability makes central banks the enemies of innovation, and defenders of the status quo. I believe that is a fallacy. Innovation and stability can go hand in hand, as some of the history of payment systems has shown. The innovation of meeting in the Five Bells every lunchtime reduced the risk that Walk Clerks would lose track of their notes and coins while trooping from one bank to another around the streets of the City of London. The move to a central ledger at the Bank of England removed the need for notes and coins to be exchanged between banks at all. The advent of RTGS removed the risk that a bank would fail before it made a promised payment. More recent reforms have reduced liquidity risk in RTGS and extended access and hours of service. Our challenge will be to navigate a path that redesigns RTGS in such a way that its resilience is further enhanced, while at the same time enabling innovation for the public good. Thank you.