samchain/econo-pairs-v1 huggingface dataset:
Jean-Claude Trichet: The ECB’s exit strategy Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the CFS conference “The ECB and Its Watchers XI”, Frankfurt, 4 September 2009. * I. *  *  Introduction  Ladies and gentlemen, It is a pleasure to be with you today to participate in this 11th edition of the ECB Watchers’ Conference. I am delighted to see that this conference has established itself so successfully as a venue for interaction between the European Central Bank and its observers. My remarks today come in the context of the ongoing financial crisis, the most severe the developed world has witnessed for more than sixty years. As the Governing Council recognised yesterday, “there are increasing signs of stabilisation in economic activity in the euro area and elsewhere. This is consistent with the expectation that the significant contraction in economic activity has come to an end.” Nevertheless, it would be too soon to call the crisis over. The Governing Council also underscored that uncertainty remains high and that the recovery is expected to be rather uneven. Exceptional times have called for exceptional actions. Faced with the financial crisis, we have introduced a set of non-standard measures, which we call “enhanced credit support”. These measures are intended to prevent the threat of a drastic loss of liquidity in the financial system as a whole and support the flow of credit to firms and households above and beyond what could be achieved through policy interest rate reductions alone.

Banks were granted access to essentially unlimited liquidity at our policy interest rate in our regular open market operations. This support enabled them to maintain their crucial role in financing the real economy. 1  See the speech “The ECB’s enhanced credit support” (Munich, 13 July 2009). BIS Review 103/2009  3  As a second measure, we expanded the collateral eligible in our liquidity providing operations. This offered an opportunity for banks to refinance assets that had become less liquid in the wake of the market turmoil. While the quantitative impact of this measure was not large in aggregate terms, it was important as it gave reassurance to banks that a larger share of their balance sheet could be refinanced at any time in case of need. A third motivation was to give banks a more medium-term perspective in their liquidity planning, making them less vulnerable to short-term shocks and attenuating the maturity mismatch on their balance sheet. By giving banks a longer planning horizon we could further support their credit provision to the economy. A fourth issue we needed to address was the currency mismatch in banks’ balance sheets and the malfunctioning of the international swap market. This was particularly relevant for US dollars, given the need of European banks to fund their dollar assets. We therefore began to supply liquidity to European banks in US dollars, backed by a swap facility established with the Fed. Finally, the Eurosystem acted in financial markets directly.
Unemployment is therefore decreasing, though it is still above the levels that were customary in earlier decades. So the situation before us today is completely different from what we experienced last autumn. During the past year, Sweden’s economic prospects have changed considerably in the eyes of various observers and the Riksbank has been no exception in that respect. Monetary policy in the past twelve months Last autumn the financial markets became increasingly turbulent in connection with, for example, problems arising from the hedge fund Long Term Capital Management and the suspension of Russian debt payments. The financial crisis was expected to add to the negative real economic effects of the Asian crisis. International observers, including the IMF and the OECD, therefore revised their global growth and inflation forecasts downwards. The Riksbank did the same. Although growth in Sweden’s domestic sectors was relatively good and the exchange rate tendency remained weak, the overall picture did point to slacker growth and lower inflation in the forecast period. In November and December the Riksbank therefore reduced the repo rate from 4.10 to 3.40%. The early months of this year were marked by continued repercussions of the Asian crisis in the world economy, with weaker international demand. In order to prevent this from leading to a dampening of economic developments in Sweden and an even lower rate of inflation, in February and March the Riksbank reduced the repo rate in two more steps to 2.90%. Since then the situation has stabilised.

During rapid economic expansion, problems with bottlenecks may occur temporarily because new production facilities are not always available just when they are needed to cope with increased demand. Experience in the 1990s suggests, however, that firms have become more flexible, both in the utilisation of existing capital stocks and in the procurement of new technology, machinery and plant when demand rises. This suggests that, if anything, it is not the level of unutilised capital resources that is critical at present. Instead, an analysis of resource utilisation should probably focus on the labour market. Another reason for this is that in a price analysis at macro level, the weightiest item in costs is wages; total wage costs are equivalent to over two-thirds of GDP. The level of unemployment has been reduced but remains high, particularly compared with the post-war period up to the early 1990s. Seen from that angle, some might say that the Swedish economy has plenty of unutilised resources. Experience from other European countries has taught us, however, that after a severe shock, as happened in the early 1990s, unemployment tends to stick at a high level, at least for a while. Estimates of the equilibrium level of unemployment in Sweden suggest that it moved up in the early 1990s and in terms of registered unemployment is somewhere in the interval 4.5 to 7.5%. Considering that the rate of registered unemployment is currently inside this interval, the estimates would suggest that the Swedish economy is now close to full capacity utilisation.
That means setting Bank Rate to eliminate the remaining slack in the economy, bringing about the sustained increase in costs necessary to achieve overall inflation of 2%. I expect that this will involve raising Bank Rate over the next three years from its current alltime low of ½ per cent. The need for Bank Rate to rise reflects the momentum in the economy and a gradual firming of underlying inflationary pressures – a firming that will become more apparent as the effects of past commodity price falls drop out of the annual inflation rate around the end of the year. It also reflects the lags in monetary policy, given that the peak impact on inflation of a given adjustment in interest rates is likely to materialise around 18–24 months after the change. As the economy evolves, different factors will become worthy of particular attention in informing the timing, pace and degree of likely Bank Rate increases. At the current juncture, three stand out. First are the prospects that sustained momentum in economic activity will wring out any remaining slack. This will require sustained growth above its past average of around 0.6 per cent per quarter. 22 Even though the current recovery has been the slowest since the Great Depression, taking around 1½ years longer to regain lost ground than it did following the recession of the 1930s, the signs are encouraging.

Sabine Lautenschläger: European banking union - the place to be? Speech by Ms Sabine Lautenschläger, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the European Central Bank, at the Biannual high-level networking seminar on economic and financial issues, organised by Danmarks Nationalbank, Copenhagen, 14 May 2018. * * * “Getting to Denmark” has become a catchphrase among those who study how societies and economies develop. And indeed, for many countries around the world, Denmark is the place to be – or rather the place to become. After all, Denmark stands for a stable democracy, sound institutions and a strong economy. And that’s not all. Denmark also stands for happiness. The United Nation’s world happiness index shows that, on top of all this, Denmark is also home to a very happy people. This has not gone unnoticed; indeed, there are many who strive to follow your example. Your idea of hygge has become a huge trend in countries as close by as Germany and as far away as the United States. So on many counts, Denmark is the place to be. And I for one am very happy to be here today. But I’m not here to talk about Denmark. I am here to talk about Europe, or rather the European banking union. In my remarks, I will argue that the banking union is also the place to be. Its beginnings, though, were not exactly hyggelig. In 2012, things were not going well in the euro area.
In the long run, the industry as a whole has a clear interest in informed, responsible and  2  BIS Review 24/2007  capable consumers. As past experience, whether in Malaysia or abroad, has invariably shown, the irresponsible and unfair treatment of consumers is damaging to the consumer, damaging to the firm, and damaging to the reputation of the industry. The Bank is encouraged by the high level of commitment shown by some insurers towards significantly improving their market conduct practices. Nevertheless, much more can be achieved across the industry to address overly aggressive sales practices that result in unsuitable products being sold to consumers. Bank Negara is investing significantly in raising the level of financial capability among consumers through initiatives under the Consumer Education Programme. Additional focus has been given to this task with the setting up of the Consumer and Market Conduct Department. But this is an extensive task, for which a significant improvement in the level of financial literacy among across a widereaching spectrum of consumers may only be seen in the next generation of consumers. It is, therefore, important now that insurers take their responsibility for the fair treatment of consumers seriously. In particular, we would like to see a far greater interest by the Board and senior management in improving selling practices, as well as the quality of disclosures and advice provided to consumers.

To its credit, the insurance industry has taken important strides in rising to the challenges faced. Generally, Bank Negara has been encouraged by the positive response of the industry to new regulations that further strengthen corporate governance and risk management standards and promote the fair treatment of consumers. Of course, some companies have been more progressive than others in absorbing the regulatory principles within their companies. But overall, our supervisory interactions with the industry have shown that the industry as a whole has made good progress in lifting standards of financial and business practices. This is encouraging as ultimately, both the industry and Bank Negara have a common interest in promoting an efficient and stable insurance market in Malaysia. At Bank Negara, we are continuing to strengthen our regulatory and supervisory capabilities as well as sharpen our focus. As those from Malaysia would be familiar, we are now into the fourth month of the Bank’s new regulatory and supervisory structure. The new organisational structure for the regulatory and supervisory functions within the Bank were realigned back in November last year to move from the previous sectoral approach to regulation, to one that will integrate the Bank’s regulation of the different financial sectors under its purview along functional lines. As a result, the functions previously under the former Insurance Regulation Department have now been assumed by the newly established Financial Sector Development Department, the Prudential Policy Department, the Consumer and Market Conduct Department and the Financial Surveillance Department.
Issues as basic as the advisability of diversifying saving between entities and products, or the absence of high returns unless greater risk is involved, are not yet part of consumers’ basic financial culture. And while this remains so, consumers will be exposing themselves to risks without being aware they are incurring them. National co-ordination mechanisms between the Ministry of Economy and supervisors were also strengthened in 2005. In response to ECOFIN’s recommendations, a memorandum of understanding was signed by the Ministry of Economy (not only in its main function, but also in its capacity as supervisor of the insurance industry), the Banco de España and the CNMV (National Securities Market Commission) on co-operation in financial stability. This agreement, which is the natural extension to the national realm of that signed in the EU by the Ministries of Finance, central banks and banking supervisors, without modifying their respective powers, simply gives written expression to what were already fluid relations between the Ministry and supervisors. As a direct consequence of this agreement, a national Financial Stability Committee was set up and has since begun operating. BIS Review 60/2006  11  As usual, the final part of my address shall be devoted to the recognition and appreciation of the Banco de España staff for their effort and dedication, and to the members of the Executive Commission and of the Governing Council for their support and collaboration. Especially so on this occasion, as this speech marks the end of an intense and enriching professional experience for me.

Conclusion What I hope this discussion highlights is that, in practice, the job of monetary policy makers comes down to making difficult and complex decisions in the face of uncertainty. Over the past couple of years the challenge has been dealing with a succession of real changes in relative prices (via negative supply side shocks) which have pushed up on prices whilst depressing demand and output. That is extremely uncomfortable for everybody. But there was, and is, no easy way for monetary policy to deal with the impact of such shocks. In our current projections there are very major risks to either side of the central case. On one side, higher inflation expectations could become entrenched making it very costly for the MPC to subsequently bring inflation back to target. On the other side, the economy could be much weaker than we expect pushing down on inflation and risking deflation. Recovering to the target from that could be even harder (at least in my personal view). MPC members place different weight on these possibilities and reach different judgements accordingly. But it is clear to all of us that both risks exist. I believe the MPC is charting the right course through these difficult times. Despite temporarily higher inflation for a period, and notwithstanding all the uncertainty, I want to assure you that we remain determined to bring inflation back to target in the medium term, consistent with our remit.
Given the strong data, this is not what and how a developed market should behave as there is ample FX market liquidity. If we look at the recent daily volume of FX trade, although lower than last year, it was still double the amount 5 years ago, between USD5-6 billion for the USD/MYR pair and between USD8-10 billion for all other currency pairs. What we need to do now is to remind ourselves and each other constantly that we need to put things in proper perspective. As a group, we constitute the market and individuals, we should behave responsibly. BIS central bankers’ speeches  1  On the other hand, despite the adverse market conditions, we noted that the Malaysian bond market has been holding up quite well despite lower level of liquidity, thanks to domestic institutional players’ support. Nevertheless, we also realized that significant foreign participation in our financial market can be both a boon and a bane for the industry. While high foreign participation has led to better liquidity and lower cost as what we have experienced in the past, it has also brought risks and vulnerabilities. The percentage of nonresident holdings itself has evolved into a risk indicator, regularly quoted by market commentators, where 48% is the number frequently quoted as the percentage of nonresident government security holdings. There was also the argument that large holdings by non-residents might leads to sell offs during period uncertainty, thus causing financial market instability. This is erroneous and misleading.

In this case, a supranational authority would be needed to ensure that this regulation is interpreted and applied in the same way across all Member States. Finding this balance between discretionary powers and centralisation comes to the fore, for example, in the context of supervision of securities markets, instruments and market infrastructures. Day-to-day supervision is currently largely done at the national level. We should consider whether this is still appropriate and what role the European supervisory authorities will play in the future. Their tasks and responsibilities are currently being reviewed in Brussels. Closing remarks As you see, the capital markets union is a bigger project that cannot be implemented overnight, not to mention the progress that is still needed in terms of integration in other political areas. But this should not discourage us from getting started on it. Political scientists would tell you that it is completely normal that we didn’t have a fully accomplished currency union from day one and that we still don’t have it today. Hardly any international agreement was as ambitious at the first attempt as some of the negotiators would have perhaps liked. The United States also needed many decades and went through several crises before its currency union achieved its current form. The “Four Presidents’ Report” (European Commission, European Council, Eurogroup and ECB) presented to the Heads of State or Government in 2012 discusses the need to complete the Economic and Monetary Union.
But harmonization takes time as the devil is in the details. And harmonization may go beyond regulations on the trade or issuance of bonds. As cross border initiatives, they inevitably involve regulations over international capital flows which we need to also respect both host country and home country authorities. For instance, the home country may allow their savers to invest abroad, but the recipient countries still maintain controls on inflows. Other regulators may permit non residents to make use of tools such as repo, as liquidity enhancing mechanism, but others may look at this measure as way to engage currency speculation. These are all delicate balancing acts which we would need to tackle as we strive to integrate our financial markets further. And while we pursue development and liberalization objectives we also need to strengthen our regional safety net. Today our regional cooperation has multilayer safety net consisting of Cross Border Collateral Arrangement (CBCA) for our banks to avail themselves of liquidity from the host central bank using collaterals at their home or head office, bilateral foreign exchange swap line, and the Chiang Mai Initiative Multilateralisation (CMIM) serves as second line of defense and should continue to be enhanced to counter possible market turbulence. As you have heard from the Minister of Strategy and Finance of Korea, Mr. Bahk Jaewan, the ASEAN+3 Finance Ministers and Central Bank Governors have made progress on important features of the CMIM. We have announced the doubling of the total size of the CMIM from $ billion to $ billion.

We have also lengthened the supporting period and increased the IMF delinked portion, from 20% to 30% this year with a view to increasing it to 40% in 2014, subject to review should conditions warrant. In serving as a regional safety net, such arrangements contribute to further development of the regional financial markets by providing a credible liquidity firewall, both for crisis resolution and crisis prevention, to anchor investors’ confidence. It is only with  2  BIS central bankers’ speeches  enough confidence that we can attract the participation of foreign investors into our markets for the sustainable developments of our economies and region. I look forward to an even greater success in the next 10 years. Thank you for your kind attention. BIS central bankers’ speeches  3
Benoît Cœuré: The known unknowns of central clearing Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the meeting on global economy and financial system, hosted by the University of Chicago Booth School of Business Initiative on Global Markets, Coral Gables, 29 March 2014. *  *  *  Accompanying slides can be found on the European Central Bank’s website I would like to thank Andreas Schönenberger for his contributions. I remain solely responsible for the opinions contained herein. Ladies and gentlemen, Today, I want to share some thoughts with you on central clearing. [slide 1] At the Pittsburgh Summit in 2009, G20 leaders committed to have all standardised OTC derivatives contracts cleared through central counterparties (CCPs). The mandatory use of central clearing as a regulatory tool for mitigating systemic risk is a fairly new feature in financial market regulation. Central clearing definitely has the capacity to promote financial stability, provided it is appropriately used and any potential side effects are well understood and effectively mitigated. In that context, there are still a number of questions that we need to look at. Let me call them the “known unknowns” of central clearing.

[slide 2] I want to touch upon the following issues: •  Systemic effects of mandatory clearing  •  Recovery versus resolution of central counterparties  •  Optimal design of loss allocation tools  •  Evolution of global clearing structures  Systemic effects of mandatory clearing [slide 3] Let me start with the systemic effects of mandatory central clearing. Clearing houses have done their job very well in the crisis, contrary to other financial institutions, and successfully faced the challenges of a rapidly growing volume of transactions. We want to make sure that the same holds true in the new world of mandatory clearing. [slide 4] The systemic effects of central clearing are numerous and, although the overall balance is undoubtedly positive, some of them are ambiguous and should be addressed carefully. On the one hand, mandatory clearing reduces systemic risk very significantly as it •  leads to the collateralisation of trades that might have remained uncollateralised otherwise,  •  enhances risk management by means of sophisticated margining methods,  •  allows for mutualisation of risk, which promotes the resilience of the financial system, especially in the event of catastrophic scenarios,  BIS central bankers’ speeches  1  •  offers multilateral netting so that less collateral is needed to manage risks, and  •  facilitates risk management as it helps to overcome information asymmetries that participants in non-centrally cleared markets face.