samchain/econo-pairs-v1 huggingface dataset:
BIS Review 21/2009  5  Giving these responsibilities to the Bank is the right choice because they build on the role the Bank already has as LOLR in crisis handling (which nearly always involves a crisis of liquidity). More generally it provides a statutory basis for the Bank’s second core purpose – financial stability – which was not mentioned in the 1998 Act and appeared something of an orphan in the Bank when supervision moved to the FSA. Over the last 18 months of course that has changed and the Bank is now closely involved with the FSA in monitoring and intervening in banks and markets facing stress, as well as reviewing the risks to financial stability more widely and playing a role in forming international policy through bodies like the G20 and the FSF. In effect the Bank has become a second pair of eyes alongside the FSA watching the health of the financial system. The FSA, as the regulator, is informed by “bottom up” knowledge of the position of individual institutions; the Bank is informed by a top down view drawing on its own engagement in many markets and on its analysis of the wider economy. We come together to monitor institutions when they become vulnerable. Some argue that we should go further and move prudential supervision – at least of the main banks - back into the Bank.

But there are a number of strong indications that the ECB is not a relevant institution under the Climate Law. Let me explain why. The Climate Law does not contain many specific obligations. The law sets out a destination: climate neutrality. It does not tell us how to get there. How we do so will depend on environmental and economic policymaking. This is a Union competence the ECB does not have. There are further arguments that support this interpretation. If the ECB is deemed to be a relevant institution, then it would have to submit its policies to the Commission for assessment and the Commission would monitor progress. That would be a fundamental change to the ECB’s accountability framework. Under current law, the ECB is only directly accountable to the European Parliament and the European Court of Auditors. [7] A final reason for this view is institutional. If the ECB were deemed to be a relevant institution within the meaning of the Climate Law, this would be an implicit acceptance that the Council of the EU and the Parliament could set additional objectives for the ECB through the ordinary legislative procedure. However, the ECB’s objectives are laid down in the Treaty on the Functioning of the European Union (TFEU)[8], and their scope cannot be changed by secondary legislation. That would be a violation of the Treaty. Changing the ECB’s objectives requires a special procedure. The ECB is – it seems – not directly bound by the Climate Law. So, can we ignore it? Not at all.
It has also been said that it is not self-evident which measure of inflation should be used, that is, that some other index than the CPIF, for instance the CPI, could be appropriate as an operational target variable within the forecast period. Another objection is that monetary policy should also be aimed at maintaining financial stability, which then presumably becomes a separate objective for monetary policy. The objective of price stability and highest sustainable rate of employment could then be neglected for a certain period of time, for instance, to avoid unsustainable financial imbalances building up. A more precise objection is that monetary policy should counteract an unsustainable development in household indebtedness. In this case a sustainable development of household indebtedness will become a separate objective for monetary policy, which can justify neglecting the objective of price stability and the highest sustainable rate of employment. A more concrete variation of these objections assumes that there is a correlation between a low policy rate and the build-up of unsustainable financial imbalances. A normal level of the policy rate then becomes a separate target for monetary policy and can justify neglecting the objective of price stability and the highest sustainable rate of employment. 6 One kind of objection thus concerns the fact that, with regard to price stability, it is not as simple as to merely focus on the CPIF during the forecast period and the CPI in the longer run. It is actually not clear which target variable for inflation should be used.

BIS central bankers’ speeches  13  A higher average unemployment rate by 0.8 percentage points over 15 years is of course a very large cost to the real economy of undershooting the inflation target. At present, a higher unemployment rate of 0.8 percentage points corresponds to around 40,000 jobs. In comparison, it can be mentioned that the government’s own calculations show that the four stages in the earned income tax credit and the changes in unemployment insurance reduce unemployment in the long run by 0.6 and 0.7 percentage points respectively. 17 The respective reforms are thus expected to have a slightly smaller effect on unemployment than the calculated real-economic cost of inflation on average undershooting the target over the past 15 years. Implications for future monetary policy Why average inflation in Sweden has undershot the target over the past 15 years is a separate and important question that requires thorough examination. I do not intend to discuss this here. But a clear conclusion for future monetary policy is that it is important that the Riksbank ensures that average inflation is actually close to 2 per cent over a longer period of time and that it does not fall as low as during the past 15 years. This means that the inflation target must be regarded as symmetrical and that it should constitute a central point for the fluctuations in inflation. One should thus not be more afraid of overshooting the target during a limited period than undershooting it.
One of the biggest challenges to supervisors now is to develop more detailed guidance for the implementation of Pillar 2 and to follow that guidance in a consistent and coordinated manner across the supervisory community. Despite work done by the Basel Committee to encourage coordination among supervisors in this area, there remains a significant risk of inconsistent approaches and resulting supervisory arbitrage. While the rollout of the Basel II principles will be extraordinarily demanding, I am heartened to observe that there is momentum gathering among banks and supervisors around the globe to meet the challenge. BIS Review 42/2004  3  Beyond Basel II: what would further installments look like? Even though the ink is still drying on the final version of the new framework, and we are just starting to tackle the implementation issues, it is not too early to think about how Basel II capital framework might evolve in the future. Because we can be sure that Basel II is not the “End of History” as far as regulatory capital requirements for banks are concerned. Greater applicability of risk quantification techniques Beyond Basel II, there may be greater scope for use of quantitative tools in setting minimum regulatory capital requirements. The most promising areas are quantitative tools for interest rate risk in loan portfolios and concentration risk. Three robust pillars I also think, despite my fears about inconsistency and arbitrage, that over time supervisors will develop more consistent approaches to Pillar 2 of the capital framework, and greater harmonisation of supervisory reviews across jurisdictions.

John Palmer: Basel II and beyond Opening address by Mr John Palmer, Deputy Managing Director of the Monetary Authority of Singapore, at the MAS Risk Conference, Singapore, 12 July 2004. *  *  *  Introduction Good morning. Welcome to the MAS Risk Conference, and for visitors to these shores - welcome to Singapore. The Conference is held at an opportune time. It was only two weeks ago that the Basel Committee on Banking Supervision released the Basel II capital framework. This is enough time for all of you to have read the full text, and recent enough for you to remember most of what you have read. Not surprisingly, my remarks this morning will be focused on Basel II. They are drawn from my perspectives as a policy maker who actively supported the development of the Basel II framework, and as a prudential supervisor now faced with the challenge of implementing this new framework. I intend to offer a perspective on Basel II, some of the challenges that remain to be addressed and offer some thoughts on the future evolution of capital adequacy rules for banks. Later in the conference, my colleague, Low Kwok Mun, will discuss MAS’ approach to Basel II implementation, including requirements for local banks and some important home/host supervisory issues. Why Basel II? What is good about it? And what are the implementation challenges? Developing Basel II turned out to be an immense challenge. Implementing it will be no less challenging.
There are nonetheless a number of French specificities that could be playing a part in slowing productivity. Let me just cite three: First, failings in our system of initial and lifelong training, as highlighted by the OECD’s PISA and PIAAC surveys [slide]. France stands out as scoring only average overall among OECD countries, and, most importantly, as having high levels of inequality linked to parents’ social background. Second, corporate investment tends to be weighted more towards construction at the expense of equipment machinery and intangible assets. And while we’re on that subject, it is essential that French banks finance intangible assets better than they do today. Lastly, the specific features of the French labour market and the associated policies. A number of studies have highlighted factors such as the shortening of the duration of temporary contracts. Questions have also been raised as to the impact of labour policies. How can we strike the right balance between supporting productivity and supporting jobs? Policies aimed at reducing the cost of low-skilled labour – be they targeted cuts in employers’ social charges or the CICE – all have a positive effect on GDP per capita via an increase in the employment rate; but they can also have a detrimental effect on productivity, especially when targeted at sectors with low productivity. Put another way, these policies make it all the more necessary that we improve our system of initial and lifelong learning – failing this, we risk fuelling a downwards spiral in labour skills and productivity.

François Villeroy de Galhau: Productivity - a collective enigma? Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Bank of France - France Stratégie Conference, Paris, 1 February 2017. * * * Welcome to all of you. It gives me great pleasure to be able to open this conference on French productivity, organised in conjunction with France Stratégie. The subject is one that is both topical and of great importance to central banks: productivity is one of the principal drivers of growth, and its dynamics are a strong determinant of potential growth, that which is compatible with price stability. As you can see [ slide], after the major wave of expansion witnessed during Les Trente Glorieuses, which was particularly marked in the case of France, productivity growth in advanced countries has slowed in successive stages since the 1970s. Today, it has fallen back to a pace that is historically weak. What are the common factors behind this slowdown in productivity? And is there anything specific to France? I don’t believe so: if there is one thing that is specific to France, it is the high level of hourly productivity – one of the highest in the world, alongside that of the United States and Germany. So, rather than being a French enigma, the enigma we are looking at this morning seems to me to be more of a collective phenomenon.
Yet, in shaping strategies to capture these opportunities, there is also a realization that the business environment has become significantly more challenging after the global financial crisis. 8. The quantitative easing by the G3 economies is causing wide swings in exchange rates, asset and commodity prices which have heightened the need for hedging and risk management. The ultra-low yields of their treasuries (for example, yields of government bonds of Germany and France of maturity less than 6 years and 4 years respectively are in the negative zone) in turn has made cash management and portfolio investment difficult. The  BIS central bankers’ speeches  1  alternative of searching for yields in emerging markets has resulted in more risks to manage. The interbank market as a source of liquidity also can no longer be taken for granted. 9. Compounding the challenge of treasury management is the regulatory landscape after the global financial crisis. The capability of banks in providing funding and making market for hedging tools has become more constraint due to deleveraging and implementation of the global regulatory reform, in particular the Basle III requirements on capital and liquidity. The increased market volatility has also made the raising of funds in the capital markets more challenging. 10.

Broad strategies for effective provision of wealth management In recognition of the need to further enhance the regulatory framework supporting the development of the financial advisory sector, the Bank has recommended for further streamlining of the current dual licensing regime for FAs and financial planners (FPs) in the Financial Sector Blueprint 2011–2020. A Joint Working Group with the Securities Commission has been formed to assess the existing legislations and regulatory regime across both jurisdictions, with the aim of further reducing duplications and related costs of compliance for the benefit of industry participants. Some of the measures that have already been introduced include the harmonization of limits on foreign shareholding and streamlining of professional qualifications and requirements on continuing professional development. The Bank will be engaging with the AFA at a later stage as part of the consultative process towards further enhancing the regulatory regime for FAs and FPs. In line with our objective of promoting fair and responsible conduct by financial service providers, the Bank has recently reissued the Guidelines on Proper Advice Practices for Life Insurance and Family Takaful Business. The Guidelines which was previously applicable to the sales force and agents of insurers and takaful operators has now been extended to include all insurance and takaful intermediaries, including financial advisers. The Guidelines outline the minimum standards for proper advice and ethical selling practices of life insurance and family takaful products by insurance and takaful intermediaries, with the aim of ensuring consumers are provided with suitable advice to support informed decision-making.
We were unable to take in the complexity of the financial system and the contagion that this entailed. Although it was extremely difficult to make forecasts, the Riksbank did not stop making them. However, the forecasts were unusually uncertain and we were prepared to revise them significantly, which is what subsequently happened. The forecast for GDP was revised so much that we ended up far outside the uncertainty bands that surrounded the forecast before the crisis (see Figure 1). At a later stage, we also underestimated the strength of the recovery. 4  For a more detailed discussion of the role of assessments in relation to alternative scenarios see the speech “Flexible inflation targeting in theory and practice” that Stefan Ingves held on 12 May 2011. BIS central bankers’ speeches  5  Figure 1 GDP and forecasts for GDP at different times Annual percentage change, seasonally-adjusted data 8  8  6  6  4  4  2  2  0  0 90% 75%  -2  -2  50% Outcome  -4  -4  September 2008 September 2009 September 2010  -6  -6  April 2011  -8  -8 06  07  08  09  10  11  12  13  Note: All forecasts entail a degree of uncertainty but to preserve the graphic profile only uncertainty bands for the September 2008 forecast are shown. Sources: Statistics Sweden and the Riksbank.

Importantly, the latest policy decisions remained fully in line with the ECB’s mandate and the principles I mentioned just now. Those who say that we were or still are “behind the curve” should consider all the decisions the ECB has taken since the financial crisis has intensified and broadened. In this respect, let us not forget that a central bank has only one instrument at hand, namely monetary policy. It cannot be held accountable for meeting more than one objective. Any such attempt would  2  BIS Review 139/2008  overburden monetary policy. For this reason, the Treaty provides for a clear and efficient allocation of policy responsibilities, with price stability being exclusively and primarily assigned to an independent ECB as its primary objective. Not surprisingly, our debates yesterday and today have triggered the question of how to safeguard EMU and build on its achievements at a time when the world’s financial landscape is changing dramatically. In fact, the current financial turmoil – the origins and implications of which we discussed in detail – is likely to dampen demand in the euro area and the rest of the world for quite some time. It may well turn out to be a litmus test for the functioning of EMU, both in economic and institutional terms. Having carefully listened to the presentations, I remain confident that monetary union will withstand the test of time. As illustrated during the conference, the euro has already brought real benefits to the 320 million people in the euro area.
The Yom Kippur War followed two years later, with the OPEC countries’ oil embargo and the first oil crisis. The sharp increase in oil prices led to a recession in Western economies. At the same time, inflation took root in many countries. In Norway, the welfare state was rapidly developed and transfers to the business sector increased considerably, partly because we were expecting substantial oil revenues in the future. Economic policy sought to build a bridge over what was expected to be a temporary downturn in the global economy. This resulted in a contest for economic resources between the business sector and the public sector and between the internationally exposed and the sheltered sectors. In the 1970s and 1980s, there were wide fluctuations in the Norwegian economy, with high and variable inflation. This also resulted in wide swings in output and employment. The absence of a nominal anchor was one of the main reasons behind the pronounced swings. With a policy of low interest rates and devaluations, inflation took root. Nominal interest rates were kept at a low level even though inflation and the value of tax-deductible interest rose. Frequent devaluations from 1976 were not able to prevent a decline in manufacturing. On the contrary, they proved to be selfreinforcing. The wide fluctuations culminated in a credit boom in the mid-1980s, followed by a deep recession and high unemployment towards the end of the 1980s. History shows that low unemployment cannot be achieved through high inflation.

Today’s flexible inflation targeting regime establishes a firm framework for monetary policy and provides clear guidelines on how monetary policy is to respond in different situations. The fiscal policy authorities can thus internalise the monetary policy response pattern. This is only natural, since the mandate for monetary policy was laid down by the Government and the Storting. In other words, the proper framework is in place for delegating interest rate decisions, but the central bank’s response pattern must be known, so that the fiscal authorities can take this into account. Game situations that may arise with an independent central bank with an inflation target are further discussed in Leitemo (2000) and in Steigum (2000). Norges Bank analyses the inflation outlook three times a year in its Inflation Report. The Executive Board discusses the economic outlook at a separate meeting three weeks before the Inflation Report is presented. The following day, the Executive Board summarises its discussions and assesses the consequences for monetary policy for the next four months. This assessment constitutes an important internal reference when the Executive Board later makes a decision regarding the interest rate. It will also provide the basis for our external communication through speeches and the media. The key rate is assessed by the Executive Board every sixth week. Monetary policy decisions are announced in a press release followed by a press conference.
Turning to fiscal policy, the baseline scenario assumes that the trajectory of public spending is consistent with the fiscal rule and with the Administration’s announcements that it will  BIS central bankers’ speeches  3  follow a path of fiscal consolidation, which has resulted in an adjustment of expenditures planned for 2016. This is consistent with a lower trend price for copper than was assumed in the formulation of this year’s budget. Risk balance One of the main external risks comes from the international financial markets. New volatility episodes may be repeated like the ones we saw in the early months of this year, because many of the underlying elements are still present. In particular, doubts around the situation in China, and doubts concerning the Fed’s decision on the policy rate. This, because of both its difference with what can be inferred from market prices and the divergences with other developed countries’ monetary policies. Nor can we rule out that the increased appetite for riskier assets observed in the past few weeks could persist. Any outcome will have effects, among others, on external financial conditions and emerging economies’ currencies and, it will thereby have an impact on local output and inflation. Another risk scenario has to do with the outlook for world activity. On the downside, there are doubts about the growth capacity of China, which couples with doubts surrounding the solidity of the US recovery.

5  The path was not entirely untrodden: in the 1990s, Japan was facing weak growth and the threat of deflation in the wake of its asset price crash, even though the Bank of Japan (BoJ) had slashed rates to zero. The BoJ thus started to experiment with unconventional monetary policy measures. 2  BIS central bankers’ speeches  certain period of time. Both of these tools are intended to lower long-term borrowing rates and, through that channel, to stimulate economic activity. The SNB is a bit of a special case. In summer 2011, Switzerland was confronted with an excessive appreciation of the Swiss franc as a result of the euro area crisis, an appreciation that continued to the point where it posed a serious threat to price stability. As a result, we resorted to a range of unconventional tools to increase Swiss franc liquidity and – eventually – introduced an exchange rate floor of 1.20 Swiss franc per euro in September 2011. So, are central banks doing too much in terms of unconventional policy? The answer is – again – “no”, but less categorically than in the case of conventional policies. On the one hand, being the only ones left to react to weak economies and high unemployment forced many central banks to take further action – action that was justified by their mandates. On the other hand, the jury is still out on the overall assessment of unconventional policies.