samchain/econo-pairs-v1 huggingface dataset:
BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  References Ahearne, Alan, Joseph Gagnon, Jane Haltmaier, and Steve Kamin [and Christopher Erceg, Jon Faust, Luca Guerrieri, Carter Hemphill, Linda Kole, Jennifer Roush, John Rogers, Nathan Sheets, and Jonathan Wright] (2002). “Preventing Deflation: Lessons from Japan’s Experience in the 1990s”. Board of Governors of the Federal Reserve System, International Finance Discussion Paper Number 729, June. Dudley, William C. (2012). “Conducting Monetary Policy: Rules, Learning and Risk Management”. Remarks at the C. Peter McColough Series on International Economics, Council on Foreign Relations, New York City, May 24. Gagnon, Joseph; Matthew Raskin, Julie Remache, and Brian Sack (2010). “Large-Scale Asset Purchases by the Federal Reserve: Did They Work?” Federal Reserve Bank of New York Staff Report Number 441, March. Krishnamurthy, Arvind, and Annette Vissing-Jorgensen (2011). “The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy”. Brookings Papers on Economic Activity, 2011:2, pp. 215–65. Kuttner, Kenneth N., and Adam S. Posen (2001). “The Great Recession: Lessons for Macroeconomic Policy from Japan”. Brookings Papers on Economic Activity, 2001:2, pp. 93–185. Reinhart, Carmen M., and Kenneth S. Rogoff (2009). “This Time is Different: Eight Centuries of Financial Folly”. Princeton, NJ: Princeton University Press. Åžahin, AyÅŸegül; Joseph Song; Giorgio Topa; and Giovanni L. Violante (2012). “Mismatch Unemployment”. Federal Reserve Bank of New York Staff Report Number 566, August. Woodford, Michael (2012). “Methods of Policy Accommodation at the Interest-Rate Lower Bound”.

News conference on new banknotes  Berne, 3 September 2019 Fritz Zurbrügg  Introductory remarks by Fritz Zurbrügg  Ladies and gentlemen I am very pleased to welcome you to our presentation of the new 100-franc note, the last denomination of the ninth banknote series to be issued. To mark the final milestone in this challenging project, as well as inviting the media we also have some guests here who were heavily involved in developing and producing the new banknote series. It gives me great pleasure to welcome representatives from our suppliers Orell Füssli, Landqart, Sicpa and Kurz. I am going to start by unveiling the hotly anticipated 100-franc note, before showing you the full series, with all six denominations together for the first time. My colleague Thomas Jordan will then review the issuance process for the entire new series, before looking to the future. After that, we will take your questions on the new 100-franc note, and the ninth series in general. We do of course have all the denominations here with us, so that you can take photos of both the 100-franc note and the entire series. Finally, we will round off today’s event with a drinks reception, to which you are all warmly invited. But let’s start by unveiling the last denomination in the new banknote series. Voilà, the new 100-franc note. I’ll now take you through the details of the new note. Like its predecessor, the new 100-franc note is blue.
2  BIS central bankers’ speeches  advanced economies recovers more strongly. Therefore, over time some tensions should alleviate, and this depends crucially on a healthy recovery of advanced economies. The cyclical difference between EMEs and advanced economies, with the consequences on expected relative returns and risk, is inducing large gross capital inflows to EMEs. Net capital inflows, however, are well below the levels seen in the early 1990s. Indeed, at this time EMEs are running current account surpluses on average, while in the early 1990s deficit predominated. In the case of Chile, we have not seen net capital inflows yet. But, as the adjustment progresses we should observe rising net capital inflows to EMEs. In addition, large gross capital inflows raise concerns from a financial stability perspective, an issue to which I will turn next. Financial stability and capital inflows We can think of three ways through which unsteady gross inflows may affect financial stability in a country. The first one is that in small and often illiquid markets capital inflows may increase asset prices beyond fundamentals. The problem arises if asset prices respond significantly to inflows, and these inflows stop or revert suddenly. A sharp decline in asset prices affects the balance sheets of local and foreign agents. If, in addition, the financing of asset purchases is highly leveraged, the fall in asset prices may trigger solvency problems, just as those of the subprime crisis.

Many EMEs have been trying to mitigate the appreciation through exchange rate intervention, with partial success. Chile is one of the latest to join this group. Others have sought the use of capital controls or macro-prudential regulations, not only for exchange rate reasons, but also to avoid the buildup of excessive market or liquidity risk associated to the foreign exchange position. In January this year we announced a program of reserves accumulation of 12 billion dollars, about 5 percent of GDP. This measure had a dual purpose. On the one hand, it would relieve some pressures on the exchange rate, facilitating the adjustment of the economy to the current international environment. On the other hand, it would increase Chile’s international liquidity position to levels around 17 percent of GDP. Indeed, evidence shows that having a high level of reserves makes economies more resilient to financial turbulences, even though they are generally not massively used. Reserves act as a deterrent against sharp capital flow reversals.1 In addition, reserves allow central banks to credibly establish foreign currency liquidity facilities. These played an important role in normalizing both domestic currency and foreign currency short term debt markets in many EMEs during the recent global crisis. After an initial sizable depreciation, the peso has strengthened, for some days even reaching levels similar to those prevailing before the intervention announcement. This contrasts sharply with the experience of the previous period of reserve accumulation initiated in April 2008 (Figure 1).
My former colleague Lyndon Nelson gave a speech last year3 setting out how the approaches in the two policies complement each other. In his remarks he very clearly stressed that whilst firms can outsource services, their boards and senior management cannot outsource their ultimate accountability and responsibility for their resilience. Our Op Res policy further emphasises this point. The identification of IBS, determining the maximum tolerable level of disruption to those services and taking measures so that firms can remain within those tolerances under severe but plausible scenarios, means firms and their boards need to assess in detail the dependencies that they have on other parties. 2. Our initial supervisory assessment of firms’ progress Having provided a brief summary of the policy, I wanted to share some initial feedback on the progress that UK banks and building societies (firms) have made in meeting our expectations. We are still at a relatively early stage in our analysis and engagement with firms, with it being less than a month since we have received the initial responses from firms. So I want to emphasise that this initial feedback will be preliminary, and we won’t at this stage be able to say what “best in class” looks like for each aspect of the policy. However, there are some important 2/6  BIS central bankers' speeches  themes that are already emerging from our review of the board-approved lists of IBS and impact tolerances which we received.

After the Lehman bankruptcy, banks suddenly deposited an aggregate amount of around € billion. Deposits increased since the ECB responded to the tensions in the market by accommodating the increase in banks’ demand for liquidity. 4 The extent of banks’ use of the ECB’s deposit facility is a useful indicator of the impairment of the flow of liquidity throughout the banking system, especially when the group of depositing banks is different from the group of borrowing banks. 5 A further troubling indication of the malfunctioning of money markets right after the Lehman bankruptcy came from cross-border transactions. Before the bankruptcy, cross-border transactions accounted for 60% of all unsecured overnight interbank lending. Right after the bankruptcy, this proportion dropped to 50%. A fall in the cross-border flow of liquidity indicates a fragmentation of the euro area money market along national borders and threatens the implementation of a common monetary policy throughout the euro area. The ECB reacted and succeeded in calming markets, including money markets, first by conducting two monetary policy operations with a three-year maturity, and then, most recently, by committing to remove redenomination risk in countries having signed to an ESM assistance programme (the so-called Outright Monetary Transactions, OMTs for short). For example, the share of the cross-border overnight transactions increased gradually from 30% to 50% following the OMT announcement.
This in turn will help boost customers’ confidence and trust in their bankers, which in my view would be tremendously important to the sustainable development and credibility of our banking industry. 2  BIS central bankers’ speeches  What do we expect a bank to do in consumer protection? Just exactly what do we expect a bank to do in consumer protection? Under the guiding principle of “treating customers fairly”, we expect banks to do three things when they market banking or investment products: •  banks should set out and explain clearly the key features and risks of the products concerned, including any applicable fees, commissions or charges;  •  banks should conduct an assessment of the financial capability, investment experience and risk appetite of their customers. This is an important tool that enables the banks to have a more objective view of the risk tolerance level of the customers;  •  banks should assess the needs of their customers, and the suitability of a financial product for their customers. If a bank considers that a product is not suitable for a customer, it should not solicit or recommend the customer to purchase the product. I would like to point out that Hong Kong adopts a disclosure-based investor protection regime, which means that an intermediary is obliged to disclose and explain to the customers the key features and risks of an investment product.

There is a big difference though between a bank and a supermarket – you don’t entrust a supermarket with your hard-earned money or life savings; and if you are enticed by a supermarket promotion to buy something you don’t need, the loss is unlikely to be huge but this may not be case for investment or insurance products. You could lose your shirt. Therefore bank customers require protection not only on the safety of their deposits, but also in the way that they are treated as consumers and as investors. In terms of protecting the safety of customers’ deposits, the HKMA seeks to maintain prudential soundness of individual banks. We do this through the regulation and supervision of banks and, in the unfortunate event of a bank failure, through the activation of the Deposit Protection Scheme to safeguard customers’ deposits up to half a million Hong Kong dollars per depositor. In  BIS central bankers’ speeches  1  today’s speech, I propose to focus not on prudential supervision but on the protection of bank customers as consumers and investors. How do we protect bank customers? So the next question is : How do we protect bank customers as consumers and investors? The answer is the very same principle: “treat your customers fairly”. Now let me elaborate on how this can be achieved. First of all, when selling a banking product, such as a loan or a credit card the bank must ensure that the key terms and conditions are fair and equitable.
Norman Chan: The new membership regime of ACI - The Financial Markets Association of Hong Kong Remarks by Mr Norman Chan, Deputy Chief Executive of the Hong Kong Monetary Authority and Chairman of Treasury Markets Forum of Hong Kong, at the cocktail reception to mark the new membership regime of ACI - The Financial Markets Association of Hong Kong, Hong Kong, 14 October 2004. *  *  *  Good afternoon ladies and gentlemen, I am pleased to welcome you all to this reception to mark the successful launch of the new membership regime of ACI - The Financial Markets Association of Hong Kong, and the introduction of accredited educational programmes for market practitioners. This is a major milestone in raising the professionalism of treasury market practitioners in Hong Kong. The Treasury Markets Forum of Hong Kong was established in March this year with a view to promoting co-operation and synergy to raise the professionalism of practitioners and the overall competitiveness of the treasury markets in Hong Kong. The Forum brings together the providers, users and intermediaries in treasury markets, including representatives of Hong Kong Association of Banks, ACI - The Financial Markets Association of Hong Kong, Hong Kong Capital Markets Association, Hong Kong Association of Corporate Treasurers, DTC Association and Hong Kong Foreign Exchange and Deposit Brokers’ Association, to consider how we can co-operate in raising the professionalism of market practitioners. I am pleased to report that we are made major progress in raising the professionalism of treasury market practitioners.

Philipp Hildebrand: Developments in the current financial crisis Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Swiss Funds and Asset Management Forum, Berne, 2 April 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The financial market turbulence, which began some 20 months ago, has grown into the largest and most complex crisis since the 1930s. The real world economy is now feeling the full force of this financial crisis. We are currently experiencing a very difficult period, although there are a few signs that the global economy could possibly be close to the cyclical trough. However, the route to recovery is unlikely to be straightforward, and the downside risks to growth remain considerable. Throughout the world, governments and central banks have taken steps to stabilise the financial system. In addition, a large number of countries are pursuing fiscal policies aimed at stimulating demand. Central banks have lowered interest rates rapidly and sharply, and, in some cases, taken exceptionally far-reaching measures to alleviate the economic downturn. Cumulatively, these measures will ultimately help to ensure that the global economy returns to a growth path. The Swiss National Bank (SNB), too, has made decisive use of conventional monetary policy tools and innovative, far-reaching monetary policy measures.
Jessica Chew Cheng Lian: Evolving governance, risk and control in the digital age Welcoming remarks by Jessica Chew Cheng Lian, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Conference on “Governance, Risk and Control in the Era of Disruption”, Kuala Lumpur, 9 December 2019. * * * Dr. Firas Raad, World Bank’s Country Manager for Malaysia, Distinguished Guests, Ladies and Gentlemen. Good morning and welcome to Sasana Kijang. Bank Negara Malaysia is delighted to host this Conference on Governance, Risk and Controls in the Era of Disruption. Let me begin by sincerely thanking our joint host, the World Bank Group for working with us to put together a rich programme that speaks directly to issues that I am sure are keeping at least some of us awake at night. In the year 2000, the English author and academic, Sir Malcolm Bradbury wrote this: “We no longer live in the Age of Reason. We don’t have reason, we have computation. We don’t have a tree of knowledge, we have an information superhighway. We don’t have real intelligence, we have artificial intelligence. We no longer pursue truth, we seek data and signals. We no longer have philosophers, we have thinking pragmatists. We no longer have morals, we have lifestyles.” This rather grim view of the world was written almost two decades ago. Since then, the extent of technological change and disruption that has come to define our world gives these words a significance that few could have imagined.

The same goes with mBridge, the cross-border payment project that recently completed a number of pilots. For the platform to be sustainable, it is important for as many banks and their clients as possible to use it. The more the better. It is similarly important to include as many currencies and jurisdictions as possible. There is a virtuous cycle: the larger the network, the more the users, which in turn will further expand the network. So again, “more is more”. Beyond Tech 26. My third reflection is that the key to success is “beyond tech”. (Not “BioNTech” the vaccine!) Here I am referring to the need to go well beyond technology to create network effects. 27. Projects that fill a glaring gap in available services, as was the case with FPS for example, may achieve quick adoption more easily. But for other projects that seek to replace current products or practices, adoption could be an issue even if the new product or experience is far superior to what we have currently. 28. Let me illustrate this using our CDI initiative. The technology to construct this infrastructure and connect all parties is relatively simple. Creating a conducive environment to attract all stakeholders to join is far more challenging. 29. The project team spent most time not on technology, but in creating a commerciallyviable arrangement to ensure that there’s something for everyone: banks can use data to manage credit risks; data providers can earn fees; and data owners can borrow more easily and cheaply.
The effective functioning of sovereign credit markets was a critical development in the crisis, as it allowed fiscal authorities around the world to respond aggressively in a manner that helped stabilize financial and economic conditions. In the United States, net borrowing through marketable Treasury securities jumped from about $ billion in 2007 to $ trillion in 2009 – a shift that was achieved through a notable increase in issuance across all maturities. But the appetite for Treasury securities kept up with the increase in issuance, with auction coverage in 2009 even exceeding that seen in 2007. Moreover, the increase in gross issuance appears to be behind us, as the U.S. Treasury Department has indicated that the next adjustment to its issuance of coupon securities is likely to be towards smaller sizes. Markets for almost every asset class outside sovereign debt were adversely affected by the financial crisis. However, important distinctions can still be drawn across these affected asset classes in terms of their relative performance. While some markets completely shut down and have had difficulty recovering, others demonstrated aspects of resilience. The markets for U.S. equities and non-financial corporate bonds fall into this latter category. To be sure, holders of these instruments suffered sharp capital losses as the crisis unfolded. But a portion of the re-pricing was fundamental, in that it was driven by a significant revision to the economic outlook rather than to poor market functioning.

If the debt securitized by the government-sponsored enterprises (GSEs) is included, the amount of securitized credit had reached $ trillion in 2007. Clearly, the shadow banking system was not in the shadows, but was a market-based credit intermediation system that was at least on par with the banking system in terms of its importance to the economy. Moreover, this system was not completely separate from the traditional banking system. In fact, much of the risk that the shadow banking system had assumed was ultimately borne by banking organizations. Banks had provided backstop lines of credit and had other contractual or reputational reasons to absorb structured credit and other assets back onto their books once they could not be financed in the shadow banking system. In effect, regulated banks functioned to some degree as the lenders of last resort for the shadow banking system. The entire financial system, both in the banks and outside, got caught. It was holding too much risk on too narrow of terms, it did not have sufficient capital, and it was too leveraged and dependent on short-term funding. As it became clear that the value of the U.S. housing stock had to decline considerably, these financial conditions complicated the adjustment. Indeed, what started as a seemingly narrow concern about subprime residential mortgage-  BIS Review 40/2010  3  backed securities cascaded into a widespread and abrupt re-pricing of credit more broadly and a desperate scramble for liquidity.
The first such study dates back to 1980, but probably the best known and most cited article of its era is the 1993 one by Alesina and Summers. Although their analysis was by no means sophisticated, the authors cautiously concluded that central bank independence promotes lower inflation and its benefits probably outweigh its costs in the form of output volatility. In later interpretations, there was even talk of a “free lunch” for economies and governments that opt for an independent central bank. This article represented the mainstream view. Later studies refined the methodology but did not change anything fundamental about the finding, so it began to be accepted as the prevailing paradigm. The view that goal independence plays the main role gained a broad consensus. In the two decades leading up to the GFC, one central bank after another gained some form of independence and, hand in hand with that, low inflation was established in advanced economies. Alongside various forms of central bank independence, inflation targeting became the second pillar of optimal rule-based monetary policy. It introduced a high degree of transparency and predictability into monetary policy. Inflation targeting became a disciplining mechanism for central banks and simultaneously a tool for governments and the public to make central banks accountable. It marked a radical departure from the long-standing practice of “never explain, never excuse”. Yet critics can be found in every field. As early as 1993, for example, Adam Posen asserted that there was no reliably proven causality between independent central banks and low inflation.

Jiří Rusnok: The changing world of central banking Keynote speech by Mr Jiří Rusnok, Governor of the Czech National Bank, at the conference of the Czech Economic Society, Prague, 17 May 2021. * * * Ladies and gentlemen, members of the Czech Economic Society, esteemed guests from the Czech Republic and around the world: Let me start by thanking the organisers for inviting me to this conference. It is an honour and a pleasure to be here today to communicate some thoughts about central banks. I will split my address into two thematic parts. In the first, I will talk about central bank independence, about the central banking paradigm from the historical perspective, and about some of the challenges that central banks face today. In the second, I will try to shed some light on the humdrum reality of our monetary policy decision-making during the Covid crisis. I say that with tongue in cheek, because, as you know, real-life decision-making is fortunately never humdrum. Let’s turn the clock back a few decades and briefly remind ourselves how central banks gained their independence and what consequences it had. This will help us understand the framework in which central banks have long been operating and the it is now facing. How did central banks gain their independence? Central bank independence stands on theoretical and empirical foundations.