samchain/econo-pairs-v1 huggingface dataset:
Panicos Demetriades: The pros and cons of having a separate and independently managed asset management and development bank Welcome remarks by Mr Panicos Demetriades, Governor of the Central Bank of Cyprus, at the Institute of Directors (IoD) Open Panel Discussion, Nicosia, 27 August 2013. *  *  *  Good evening ladies and gentlemen. I think tonight’s panel discussion is very important. The Bank of Cyprus is our largest bank and it will shortly hold its Annual General Meeting. At the AGM shareholders will choose the Board that will run the bank. The strategy that the new Board approves will need to be aggressively pursued. The Bank of Cyprus in the future will have a greater focus on its core Cypriot business, serving personal, SME and corporate customers. It will also have to deal with the legacy of historic expansion and growth in non-performing loans. The Central Bank of Cyprus does not have a fixed view as to whether the Bank of Cyprus should be split into two or not. This is a decision for shareholders and the Board. The question is whether separating certain assets is the right answer today. Opinion is divided – some say that this would be damaging to borrowers, others that it is the only way to manage the assets and restore the bank to health. I believe that we need to confront this issue and the bank should investigate all options. Any decision should be based on the facts and merits.

In all options, the Bank of Cyprus will need to create an organisation to manage nonperforming loans. The bank is already moving in this direction, and should it remain as a single entity it is likely that there will still be a dedicated focus on managing the workout of troubled loans. Splitting the Bank of Cyprus into a commercial bank and an asset management/development bank would create a legal and management separation. This – as any other option – has a number of merits and challenges. Two institutions would provide specialisation. The asset management/Development Bank could focus on maximising value through the restructuring of the loan book with no immediate time pressures. It could also act as a specialist bank focussed on real estate and development related activities. The remaining commercial bank could focus on serving the domestic economy. However, a split could be operationally disruptive in the immediate term, even if it was beneficial over time. Substantial progress in the restructuring of the banking system has been made. This has not been easy, and market conditions remain fragile. In determining the way forward any solution should look to meet four objectives; Restoration of Confidence – It is essential that any solution furthers the restoration of confidence. Customers must have confidence in the future of the Bank of Cyprus whether it is one bank or two. As confidence is re-established we can further ease and ultimately lift capital controls. Funded Balance Sheet – The Bank of Cyprus’s reliance on emergency support is well known.
The responses revealed a strong support from market participants, mainly because of its potential contribution to increasing transparency, which is seen as an essential ingredient for more informed risk assessments and to restore weakened confidence in ABS markets. In addition, respondents  4  BIS Review 84/2010  issued a number of recommendations to the Eurosystem regarding specific implementation aspects that should contribute to a smoother introduction of the loan by loan level data. From a timing perspective, the Governing Council of the ECB will assess during the autumn the results of the final technical preparatory phase that has already started, also taking into account the recommendations put forward during the public consultation, before deciding whether to proceed with the final phase of the introduction of ABS loan by loan data requirements. This decision is envisaged to take place during the fall 2010. In case it is decided to proceed, a twelve-month phasing-in period – in line with the feedback received in the public consultation – would be sufficient for originators and issuers to adapt their systems to provide the required data. It should be noted that the Eurosystem’s initiative on loan level data is in line with certain amendments introduced by the Second Capital Requirements Directive (“CRD II”) that will enter into effect on 1 January 2011. Amongst other things, CRD II provides that the sponsor or the originator must ensure that investors and prospective investors have readily available access to all materially relevant data on credit quality and performance of the individual underlying exposures.

François Villeroy de Galhau: Technological innovations in payments and beyond Opening speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Bank of France and CNPS (French Payments Committee) conference "Technological innovations in payments and beyond", Paris, 6 January 2017. * * * Ladies and gentlemen, I am very pleased to welcome you all to Paris, for this conference on technological innovations in payments and, more generally, in the financial system. Representatives from a wide range of stakeholders, from market to regulatory spheres, are here today and I have no doubt that this variety of backgrounds will make the discussions fruitful. Before leaving the floor to the speakers and panellists, I would like to share with you a few thoughts on three challenges raised by digitalisation, from the perspective of a central banker. 1. Technological innovations are opening up new opportunities for payments, which can provide benefits to the whole economy Payments are often viewed as a very technical and incidental activity, and sometimes even just as a matter of “plumbing”. And yet they are crucial for our economy and for central banks. For the Banque de France, payments are of the essence in all our three missions – what we call the “3 Ss”: monetary strategy, financial stability and economic services. First, monetary strategy: what is at stake with payments is the future of money.
In a world in which the credibility of the central bank to keep inflation low is well anchored, the solvency of most agents is taken for granted and markets are well organised and hence liquid, interest rates remain low across the whole maturity spectrum and valuations high; changes in key rates do not affect inflation expectations that remain low and changes in real interest rates allow monetary policy decisions to be effectively transmitted to the economy. In normal times, interactions between central banks and markets are therefore important but fairly unintrusive:   Central banks influence markets through changing the level of short-term interest rates; they explain the rationale behind their interest rate decisions in order to improve the quality of economic agents’ expectations; they put in place technical mechanisms to promote liquidity on certain key market segments, for example by establishing the list of assets eligible as collateral in their refinancing operations or by setting up a discount window that ensures that banks with unexpected temporary requirements can refinance themselves.   While markets listen to central banks, central banks also listen to markets since the price formation in markets reflects agents’ expectations, in particular concerning inflation, and their assessment of risks; central banks require such information to make their analyses and take their monetary policy decisions. The smooth functioning of markets and financial stability are therefore essential for the effective transmission of monetary policy.

If Norges Bank intervenes in the foreign exchange market instead of changing the interest rate, foreign exchange market participants may receive ambiguous signals, and complicated game situations may arise between the market participants and the central bank. However, interventions may be appropriate if the krone exchange rate differs substantially from what is reasonable on the basis of fundamentals, and exchange rate movements also reduce the prospect of achieving the inflation target. Although the krone may fluctuate in the short term, it will tend to stabilise over time when inflation is low and stable. When inflation has been higher in Norway than among our trading partners for a longer period, the krone has tended to depreciate. When inflation in Norway is expected to be broadly  3  The basic balance is normally defined as the current account surplus minus net long-term capital outflows. BIS Review 47/2004  3  in line with that of other countries, the exchange rate will usually also return to its normal range following periods when the krone has been particularly strong or particularly weak. The real exchange rate The real exchange rate may be measured in a number of ways, for example, by relative consumer prices and relative labour costs between Norway and its trading partners, measured in a common currency. The real exchange rate measured by relative labour costs in a common currency is an expression of the cost competitiveness of Norwegian companies.
–  banks play the main role in meeting the private and public financing needs, and they rely heavily in local deposits to finance their activity;  Changes in the regulatory superstructure, and enforcement of the regulatory requirements, have had important impact on Albania’s financial sector and economy. More concretely: In the financial sector, we have experienced: –  deleveraging in local financial assets investments, particularly seen at subsidiaries of European banking groups, as they try to meet requirements coming after EBA and ECB stress tests;  –  increasing preference by financial institutions to place local funds in foreign investments (abroad);  In the economy, such behavior by some of the banks has materialized in: –  lower financial intermediation to both private and public sector;  –  negative impact on economic growth;  However, the stability of both, financial system and macroeconomic framework, have been saved and at this point I would like to state that we believe that there can be found ways to further avoid or mitigate any negative externalities. On deleveraging, Bank of Albania has raised the concern on such phenomena directly with the EU counterparts, but also through its role in Vienna II initiative. In this regard, we have highlighted the need to establish effective mechanisms to restore healthy lending to economies of non-EU countries where subsidiaries of EU banking groups operate.

Currently, they have an aggregate LCR of 149% which means a total liquidity buffer of £ trillion. That buffer comprises £ billion of reserves and cash and £ billion of other high quality liquidity assets, mainly government bonds. As QT proceeds, that mix will change as reserves decline. We can't assume that, going forwards, the current answer on the total size of liquidity protection is the correct one. We saw with Silicon Valley Bank that with the technology we have today – both in terms of communication and speed of access to bank account – runs can go further much more quickly. This must beg the question of what are appropriate and desired liquidity buffers that create the time needed to take action to solve the problem. Let me go on to the next stage of developments in money, digital money, how will it change things and is it needed? We tend to think about money in two ways at least: its uses and its forms. The uses are store of value, means of payment, unit of account. On the forms, we use the terms inside and outside money and commercial bank money and central bank money1. (Gurley and Shaw 1960; Friedman and Schwartz 1963). In this language, commercial bank money is inside money, and central bank money is outside money. We regulate banks in good part because money is a public good. Inside or commercial bank money is now the dominant type of money, and that supports the provision of credit in economies.
Compared with Taylor 1993 it can achieve significantly greater stability in employment without sacrificing the medium-term inflation objective or significantly increasing the variability of inflation outcomes. Finally, the remaining parameter in the Taylor Rule is the neutral, real short-term interest rate. This is the interest rate adjusted for inflation that neither stimulates nor slows the economy. It is typically set at 2 percent. Although there is no reason why the neutral real rate cannot change over time, the 2 percent rate is typically plugged in without further attention. Whether this is appropriate is a critical question in today’s economic environment that I will return to a bit later. Let me now discuss the economic outlook, and examine some of the implications for monetary policy. In doing so I will look at results obtained by applying some variants of the Taylor Rule, and explain some of my concerns about using simple policy rules in a mechanical way for setting monetary policy. As I see it, the U.S. economy is continuing to slowly recover from the after-effects of the housing boom and bust and the financial crisis. But the recovery has been disappointing. Indeed, when we look back at economic forecasts made over the past three or four years it is notable that growth has systematically fallen short of both the Federal Reserve and private-sector forecasts.

The concept Dutch disease stems from the negative effects on the Dutch economy of the spending of revenues from the substantial gas resources of the Groningen field. From the end of the 1960s, these revenues financed strong growth in public expenditure, which led to higher costs and a decline in manufacturing. The situation went too far, resulting in large balance of trade and government deficits which required tightening measures. This in turn led to a sharp rise in unemployment in the first half of the 1980s. But the Netherlands is not the first example of a nation that failed in this respect, and far from it 2. A very clear example is provided by Spain as early as in the 17th century when the colonisation of South and Central America provided the country with access to vast natural resources and gold. The historian David Landes describes the effects on Spanish society in his book “The Wealth and Poverty of Nations” where he cites a happy Spaniard who proclaimed the following in 1675: “Let London manufacture those fabrics of hers to her heart’s content; Holland her chambrays; Florence her cloth; the Indies their beaver and vicuna; Milan her brocades: Italy and Flanders their linen, so long as our capital can enjoy them. The only thing it proves is that all nations train journeymen for Madrid and that Madrid is the queen of Parliaments, for the world serves her and she serves nobody.”  1  See Report no.
Instead, the important question is when Basel II should be implemented. Only national authorities can answer that question. The text that we published this past June will now form the basis for national rule-making and approval processes. Yet adopting Basel II on the same timetable as the member countries of the Basel Committee may not be feasible for all countries. In fact, Basel II may be a lesser priority compared to other efforts to promote the fundamentals of safety and soundness in each country’s banking system. Regardless of when we intend to adopt Basel II in our countries, Cicero would have understood the task ahead for all of us: he wrote that, “In all matters, before beginning, a diligent preparation should be made.” Indeed, the success of Basel II in promoting the health of our banking systems tomorrow will depend critically on the diligent preparations that we undertake today. So now the journey begins anew for us. As we prepare for the next stage of our journey, all of us must encourage our banks to improve their management of risk. We must enhance our own skills as supervisors. And we must strive to make our markets more transparent. Cooperation and transparency will be key in this new journey and Basel II can play a catalytic role. Basel II offers us an important way forward and provides us with tools for enhancing our supervisory systems.

In addition, in risk-based supervision it is important to check the corporate governance of the bank including the control mechanisms. Where there is a good balance between the Board and the managers and staff and where the control functions such as the internal audit do a good job, the supervisor can to some extent rely on their reports. In summary, “risk-based” leads to less intervention in banks as long as they are well run. Of course, this does not mean that some banks will never be supervised – all banks must provide their periodic supervisory and financial reports and they will also receive onsite visits, although some banks less frequently than others. But we should be aware that risk-based supervision also brings its own risks, namely that some minor banks may run into problems which are not detected in time – depositors and other counterparts may suffer losses. Conclusion During the last twenty years, many countries have embarked on reforms of the banking and financial services industry. Such reforms provide obvious benefits in the form of a well functioning financial sector that better supports economic growth and financial stability. You need to retain some regulation and supervision but in more flexible and market-oriented forms than earlier. The balance between costs and benefits must be secured, as well as the balance between the objectives of financial stability and efficiency. The goals of regulation and supervision should be explicit and objective, and may include overall financial stability as well as consumer protection.
That said, we still have not reaped the full benefits of more harmonised regulation and more integrated supervision, and we need to make sure that we consolidate and build on the progress already made. From a regulatory perspective, aside from transposing the Basel Accords into EU law (the CRR 2-CRD 5 package introducing new prudential requirements such as the NSFR and the leverage ratio), we need to advance further on the application of uniform regulations. We also need to pull down all the barriers to euro area banking integration by removing all regulatory obstacles to cross-border transactions – in terms of solvency, liquidity or large exposures – and by adjusting the calculation of capital requirements for systemic institutions. In short, we need to recognise that the euro area must be treated as a single jurisdiction where a single rulebook is enforced. In terms of supervision, the priority now is to bring the largest investment firms within the scope of the SSM. We also need to increase cooperation between national authorities for the oversight of cross-border institutions (home-host relations), and for anti-money laundering and countering the financing of terrorism – the importance of which is recurrently driven home by the news. To complete the Banking Union, we also need to render its second pillar, the Single Resolution Mechanism or SRM, fully operational. The euro area has had a common resolution mechanism in place for banking crises since 2015.

It is a process we are particularly conscious of in London where major financial institutions from all over the world, including, of course, from elsewhere in Europe, have long been predominant players, especially in international wholesale market activity. But international ownership of banks (including newly privatised banks) and other financial institutions has increasingly become a common characteristic of financial systems in a wide range of other countries. I will not comment further on globalisation, which is certainly very familiar to you, except perhaps to say that I have often been teased by people who talk about the Wimbledonisation of the City of London – meaning that we provide the tournament venue but the prizes are mostly carried off by competitors from overseas. I think that many of those people now increasingly understand that it is activity rather than nationality of ownership which creates a competitive market place, and in turn provides employment and income and tax revenue, which are the things that really contribute to the macro-economy. As a broad generalisation the wider the range of participants the more efficient the market place. A third major driver of change in our financial systems – as elsewhere in our economies – is, of course, information technology. This has clearly transformed transactions processing, putting a premium on throughput, and encouraging some forms of specialisation and consolidation. It has made possible entirely new – and typically much cheaper – means of delivering financial services making it easier for new entrants to contest existing franchises.
Risks are still broadly balanced and with our monetary policy, in particular with the reinvestment of the maturing assets, we will provide ample support to the economy. Extending the net purchase programme would not bring significant additional benefits, but it would increase negative side effects. The reinvestments will act as a sufficient stimulus. This, in addition to all the other measures we have in place – the targeted longer-term refinancing operations, low key interest rates, the full allotment policy, among others – will ensure that there is still an expansionary, accommodative monetary policy. Will the ECB make changes to its bond-buying criteria in the new year, to maximize the impact of the reinvestments? With regard to the reinvestments, I think we should use well-established, known criteria, such as the capital key and limits on the issuer and the issuance. We should not bind ourselves for a long period of time with regard to the reinvestments, as we cannot exclude the possibility that we will reach our inflation objective earlier than expected or that there will be an increase in negative side effects from our expansionary monetary policy. Is quantitative easing (QE) a tool the ECB could use again in the future, as some current and former Governing Council members have suggested? 1/2  BIS central bankers' speeches  In the context of a monetary union with many different sovereigns and no fiscal, genuine economic and political union, QE should not be part of the normal policy toolbox.

But monetary policy has its limits too, which we must respect if we do not want this essential pillar of price stability to weaken. This is why, after having higher and more persistent inflation levels than we had foreseen, we have decided to withdraw part of the monetary impulse, with the objective of bringing inflation to the target within a two-year horizon. Monetary policy will remain expansionary, with the real rate below its neutral level for a prolonged period of time. With that, we are certain that we will continue to contribute to the recovery of growth and hold unemployment within boundaries. But, at the same time, we will also ensure the achievement of price stability. I would like to conclude by emphasizing that, despite the pessimistic atmosphere associated with the developments in the world economy, plus the cases of collusion and other legal issues and, I will say it, the stress that has pervaded some important local discussions, from a macro standpoint the conditions to resume strong growth are present. However, we must be ready to confront a more complex scenario. This means that every aspect that I have mentioned has to improve. As for monetary policy and our role as financial regulator, we will continue to work to pursue the objectives that we have been entrusted, namely to safeguard price stability and ensure the normal functioning of internal and external payments. Thank you.