samchain/econo-pairs-v1 huggingface dataset:
2  BIS central bankers’ speeches  A special emphasis should be made on monetary policy challenges facing the central banks throughout the world. Easy monetary policies helped stabilise the situation in advanced countries, but the quantitative easing programmes were introduced as short-term interim measures allowing to gain time for structural reforms. As you know, however, nothing is more permanent than the temporary and structural reforms show little progress, while the easy monetary policy now involves more risks than benefits due to its longevity. Monetary policy in itself is not able to set the economies of advanced countries back to resilient growth, since there are structural limits and there is no room for reducing interest rates any further, i.e., they have already been negative in many countries. Nonetheless, low interest rates in advanced countries were conducive to fast accumulation of external debt in the emerging market economies subjected to capital inflow and bubble formation. On the one hand, we realise that an exit from the easy monetary policy is fraught with an about-turn in capital flows and consequently the need to tighten monetary policies in emerging market economies. This may bring down the global economy’s growth rates even further. Moreover, as a result of a quick monetary policy normalisation holders of these countries’ bonds may incur losses and financial stability risks cannot be ruled out. On the other hand, a refusal to normalise monetary policy may lead to stagflation.

New technologies add elevated threats of cyber-frauds and cyberattacks to traditional banking risks. These are global challenges. Meanwhile, the Russian banking system also faces specific challenges, namely: –  slack economic dynamics which shrinks banks’ earning capacity;  –  high debt burden of traditional borrowers;  –  persistently restricted access to external financial markets;  BIS central bankers’ speeches  5  –  weak players (some players faced difficulties following the worsened economic environment adding to the problems accumulated in the financial sector and not yet solved. The Bank of Russia has to stick to active supervision to check these problems);  –  another challenge is priority funding of financial institution owners’ businesses rather than competitive projects;  –  unavailability of long money in the economy due to underdeveloped collective savings (pension funds, unit investment funds, life insurance). The challenges I have mentioned affect not only banking, but the whole financial system and require different approaches in regulation and supervision. We shall restore a healthy financial market, clear from weak and unscrupulous financial institutions. This is an ongoing process, but it still takes time to be completed. I would say that the Russian banking sector’s higher resistance to serious external shocks is among our most important achievements in bank regulation and supervision. The banking system is stable, has a good capital stock and does not need regular easing to function efficiently. Stress tests held by the Bank of Russia and major credit institutions confirm that.
And while I’m not yet worried that we face a major and serious risk in the opposite direction, I do think we need to adjust the policy settings we put in place to head off the downside risks to inflation identified in the immediate aftermath of the big financial shocks in late 2008 and early 2009. It is possible to describe this challenge in different ways – as a gradual “normalisation” of policy or a gradual withdrawal of policy stimulus. Words which I don’t think create the right  BIS Review 99/2010  9  impression in the current environment – particularly in relation to an upward move of Bank Rate from 0.5% to 0.75% – are “rate hike” or “tightening” of policy. “Rate hike” implies a sharp rise in interest rates, which is not what I favour. I favour a gradual rise in Bank Rate which would be aimed to avoid destabilising confidence through a sudden lurch in policy. “Tightening” may be technically correct as the opposite of “loosening” but it implies that monetary policy might become objectively tight and restrain the growth of the economy significantly. Again, that is not my view about the policy stance we currently need. So how should we characterise the current challenge in front of the MPC? The Bank Governor, Mervyn King, is fond of sporting analogies. But I have always been pretty useless at sport and my greatest interest outside of my working life is music, and in particular rock music.

Like in most other crisis-affected Asian countries, these relationships played a critical role in the evolution of the crisis in Thailand. The problem of weak governance is not limited to the private sector, however. Regarding monetary policy, a post-crisis survey of stakeholders, consisting of domestic and foreign institutions, government agencies, as well as the general public, revealed that the BOT was also perceived to be plagued with several weaknesses: lack of good leaders, lack of experiences, and lack of transparency. Finally, in the macroeconomic framework as a whole, it is probably obvious from the experiences leading up to the crisis that high growth cannot be reached and sustained in the absence of consistent government economic policies. The most striking example here is the combination of the fixed exchange rate and the financial liberalization policy, which inherently led to underestimation of exchange rate risks. In the end, market stability that the fixed exchange rate regime was intended to foster was undermined by market-driven foreign borrowings. The lesson for Thailand as well as for other emerging economies is that the authorities must regularly review their policy stances in the drive to keep up with changing financial environments. A move towards liberalization, for example, should be examined carefully in the light of the public sector’s capability in stabilization and whether there is sufficient infrastructure in place to support the regime shift. Finally, the crisis reminds us the importance of monetary and fiscal policy coordination.
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Zdeněk Tůma: Education as investment in human capital Speech by Mr Zdeněk Tůma, Governor of the Czech National Bank, for the graduation ceremony, The New Anglo-American College, Prague, 20 June 2008. *  *  *  Ladies and gentlemen, dear colleagues, It is my pleasure to be here today and to share with you some thoughts that concern the role of education as an investment in human capital in the long-term development of our economy and society in general. Today it’s commonplace for politicians to swear by concepts like investment in education, knowledge-based economy or the effect of education on long-term economic growth. They are also quick to add something about the necessity to pay for university education, at least those on the right wing of the political spectrum. Don’t worry, we haven’t met today to assess individual political ideas, and we all know that sometimes it’s a long road from what politicians say to what they do. However, the fact that you are sitting here today indicates that viewing education as an investment has its place in today’s society regardless of political preferences. I would like to use this opportunity to point out that although the concept of investment in education may be somewhat misused and can have unfortunate overtones for somebody, it has a rigorous theoretical foundation and is of high empirical relevance.
Many representatives of trade unions and employers express a strong ambition and determination to arrive at wage increases that are commensurate with the macroeconomic situation. This is all to the good. But the fact remains that even in recent years, the rate of wage increases in Sweden has been higher than in major competitor countries and also above the macroeconomic potential. Real wage increases in excess of productivity growth enlarge the wage share and reduce the gross profit share. That is what is happening now in Sweden. Bit by bit, at least a part of the increased profit margin that resulted from the krona’s fall in the autumn of 1992 is being eroded. This is a difference from the United States. There the economy has entered what might be described as a good spiral, where higher productivity increases and comparatively moderate wage increases have generated profits that help to drive new investment in advanced technology. In such a process, unduly high wage increases can bring the changes to a halt, as happened in Sweden in the late-1960s and early-1970s. Present economic assessments do not generally suggest that a break is imminent in the path of Swedish wage formation. So will this have a negative impact on the propensity of firms to invest in the new technology? The financial system This brings me to the significance of the financial system and access for corporate financing in the transitional phase.

Am I to conclude from your comments that the ECB is prepared to strengthen the programme or take other measures in order to respond to any tensions that may arise? We have a programme that we are implementing. The ECB’s Governing Council has not made any decisions regarding further programmes. We are keeping an open mind in terms of how to respond to further developments and tensions within the markets. Because we are completely committed to maintaining stability in the financial markets and to avoiding the fragmentation that could prevent the functioning of the monetary policy transmission mechanisms. In countries such as Portugal, Spain and Italy, people are concerned that we could see another crisis, like the sovereign debt crisis in 2010–11. Can the ECB confirm that it will do all that is needed to avoid such a scenario? We have shown our commitment, with liquidity, by making capital requirements for banks more flexible and with the asset purchase programme. We are extremely committed. The current crisis is quite different to the one we saw in 2010–11. It did not originate in budgetary issues or the banking system. It was a massive exogenous shock. This is a health emergency which has become an economic problem. Our current efforts are focused on preventing it becoming a debt crisis. Are banks in Europe better equipped to deal with this crisis than in 2008? Or can we expect to see banks fail in various countries? Things are very different to ten years ago.
However, the TLTROs will not merely provide long-term funding. The TLTROs are targeted operations: the stronger the flows of new net lending to non-financial corporations and consumers (relative to a specified benchmark), the higher the amount that banks will be permitted to borrow from the Eurosystem at very attractive terms and conditions over a period of up to four years. Hence, we have built in strong incentives for banks to expand their lending beyond original plans – both banks with a recent record of positive lending and those that have been deleveraging. Overall, the measures adopted last month have already provided additional monetary policy accommodation. Even though substantial easing measures had already been priced in by markets before the Governing Council’s June meeting, money market rates and bond yields declined further after the announcement of our decisions. Expectations with respect to shortterm money market rates have come down some basis points from their already very low levels. Looking forward, we will maintain a high degree of monetary policy accommodation. In view of the outlook for inflation, we will keep the key ECB interest rates at current levels for an extended period of time. Moreover, the ECB continues to stand ready to take action, if necessary, to further address risks of too prolonged a period of low inflation. This could also include the use of other unconventional instruments in line with our price stability mandate. Challenges ahead Let me now turn to the challenges that the euro area will face in the years to come.

In the last legislative period, a great deal has been done to restore stability as a key prerequisite for economic dynamism. This has resulted in a return of confidence to the euro area. But high public and private debt, low growth and unacceptably high levels of unemployment are reminding us that the most pressing matter now is to bring the euro area back onto a path of shared prosperity. To achieve this, the focus in the next five years should lie on thoroughly implementing the reinforced policy framework that was agreed in the last term, and on further increasing the resilience of euro area countries’ economies. For us at the ECB, this means assuming a new role in the banking union by supervising the euro area banks as from November. With the comprehensive assessment exercise that we are currently conducting, we will contribute to putting euro area banks on a healthy footing, so as to enable them to provide financing to the real economy. For euro area Member States, this means undertaking the necessary structural reforms to foster growth, and to avoid any new build-up of macroeconomic imbalances. It also means continuing fiscal consolidation to rebalance public finances in line with the rules underpinning the Stability and Growth Pact. The euro area policy framework was strengthened considerably by the agreement between this House and the Council on the six-pack and the two-pack.
The Term Funding Scheme, for instance, launched in 2016, was  I described the evolution of the monetary policy toolbox in more detail in my recent speech “The monetary policy toolbox in the UK”. In practice the assets we buy through QE sit on a separate balance sheet, the Bank of England’s Asset purchase Facility (the APF), which is indemnified by HM Treasury. This has important institutional and financial implications which I’ll come on to cover, but does not affect its use as a monetary policy tool. 8 9  4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  intended to reinforce the pass-through of the August 2016 cut in Bank Rate to what was then a historically low level. Our current Term Funding Scheme with additional incentives for SMEs is intended to reinforce the transmission of the March cut in Bank Rate to 0.1% while also supporting Figure 1: A summary of the Bank’s balance sheet tools  Taken from the Bank of England Markets and Operations Guide, which gives full detail on all our balance sheet tools. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  lending to the real economy, particularly to SMEs. More recently the Bank’s response to Covid has included a Covid Corporate Financing Facility, launched jointly with HM Treasury, designed to lend cash, funded by reserves, directly to large companies, supporting their cash flow while leaving the banking system to focus on lending to smaller businesses.

I want to emphasise this last point. Some commentary that I have seen has suggested that in addressing market disorder the MPC somehow broadened its objectives and used a monetary policy tool for financial stability purposes. I don’t see it like that at all. The MPC took action in pursuit of its objectives, because further market dysfunction triggered by the Covid shock would have led to even worse outcomes for GDP and inflation. Their action had the welcome side effect of supporting financial stability, but it was taken for monetary policy purposes. Indeed it is quite possible to imagine other circumstances where the MPC would Joyce, M, Tong, M and Woods, R (2011), “The United Kingdom’s quantitative easing policy: design, operation and impact”, Bank of England Quarterly Bulletin, 2011 Q3 20 In his 2016 speech “The spectre of monetarism”. 19  10  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  10  not act to quell market disorder, if doing so would run counter to rather than in support of monetary stability. It’s for exactly this reason that the work I mentioned earlier, on whether central banks need new tools to deal directly with market dysfunction, is so important. QE and government financing One aspect of QE that has received particularly close attention has been its relationship to the Government’s finances. Specifically, some commentators have raised the question of whether, by buying government bonds at a time when the Government deficit is expanding, the Bank is somehow financing government spending.
3 Today, with my focus on the mortgage and real estate markets, I would like to explain the cyclical dimension of systemic risks in greater detail. Experience shows that cyclical systemic risks often stem from the mortgage and real estate markets. Upheavals on these markets after periods of excessive price and credit growth have repeatedly triggered chain reactions with a negative impact on the banking system, public finances and the economy as a whole. History also shows that crises originating in mortgage and real estate markets entail particularly high costs for the economy as a whole, for example by causing recessions that are typically long and severe. 4  3 4  Cf. Zurbrügg F., After the storm: ten years on, how weatherproof is the Swiss banking system today?, speech held at the University of Lucerne, 6 September 2018. Cf. Jordà, O., M. Schularick, and A.M. Taylor (2015), ‘Leveraged bubbles’, Journal of Monetary Economics, vol. 76(S): 1–20. Page 3/12  Let me remind you of the example from Switzerland in the early 1990s. After a long period of rising real estate prices, mortgage interest rates increased and prices declined significantly. This triggered a banking crisis, which in turn led to a recession and a lengthy phase of economic stagnation. The global financial crisis of 2008 was also closely connected with declining prices on real estate markets, particularly in the US, the United Kingdom, Spain and Ireland. In this case, lax lending standards prior to the crisis proved to be a key factor.

François Villeroy de Galhau: Between "shadow" banking and an angelic vision of the market – towards a balanced development of non-bank finance Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the presentation of the 22nd Financial Stability Review, Paris, 25 April 2018. * * * Ladies and Gentlemen, I am very pleased to welcome you this morning to this presentation of the 2018 Financial Stability Review (RSF), dedicated to non-ban k finance. Intended as a forum for dialogue and exchange, the FSR offers leading personalities from diverse backgrounds the chanceto have an open debate. I am delighted to see many of this year’s contributors here among us this morning, and I would like to extend my warm thanks to all the speakers: Klaas Knot, President of the Dutch Central Bank; Philip Lane, Governor of the Central Bank of Ireland; Robert Ophèle, President of the Autorité des marches financiers; Paul Hamill, Global Headof FICC at Citadel Securities; Yves Perrier, CEO of Amundi; and Richard Portes, Professor of Economics at the London Business School. The topic we have chosen to address is far from anodyne: [slide 2] according to the Financial Stability Board (FSB), non-bank financing totalled USD 160 trillion in 2016 [Monitoring Universe of Non-Bank Financial Intermediation, MUNFI], up 50% relative to 2008 and accounting for close to half of all financial assets held by financial institutions worldwide, compared with 40% in 2008.
And once we start, at least initially, we should raise rates slowly to make sure the economy can weather less accommodative financial conditions. In sum, we should be exceptionally patient in adjusting the stance of U.S. monetary policy – even to the point of allowing a modest overshooting of our inflation target to appropriately balance the risks to our policy objectives. Before I expand on these thoughts, let me note that the views I express are my own and do not necessarily represent those of my colleagues on the FOMC or within the Federal Reserve System. BIS central bankers’ speeches  1  Outlook Improving growth but slack remains After many years of false starts, the economy now seems to be in the midst of more sustained solid growth. My forecast is that real gross domestic product (GDP) will increase at an average rate of about 3 percent over the next year and half. The incoming data support this outlook. In the second quarter, consumer spending grew at a solid but unspectacular 2-1/2 percent pace, and it appears to have risen at roughly the same rate during the third quarter. The news from the business sector generally has been good. Reports from our business contacts have been improving for some months and are now almost uniformly positive.

For me, the biggest and costliest downside risk is that in our haste to get back to “business as usual” monetary policy, we could stall progress and backtrack to the economic circumstances of recent years – an economy mired in the ZLB. To say the least, conducting monetary policy at the ZLB has been a difficult experience that we all want to avoid repeating unnecessarily. In the winter of 2009, with the unemployment rate soaring to double digits, the Fed would have very much liked to lower the nominal federal funds rate an additional 300 basis points; but we couldn’t because the rate was already at zero. Faced with a pressing need to provide additional accommodation, we were forced to turn to innovative, but controversial, unconventional monetary policies. These policies have been extremely helpful. But there is no denying that they were second-best options; the ZLB had made lowering the fed funds rate, which is our first-best interest rate tool, infeasible. Everyone will welcome a return to more normal times and a reliance on the traditional policy framework of adjustments to the federal funds rate. But the decision about when to begin to raise rates shouldn’t be made prematurely. Rather, the decision for policy liftoff has to be made for the right reasons – that is, it should be dictated by economic conditions. Like my colleague Minneapolis Fed President Narayana Kocherlakota. 2 I think that policy at all times must be goal-oriented. Our experiences since the crisis began and current economic conditions are highly unusual.