samchain/econo-pairs-v1 huggingface dataset:
Luis M Linde: United Kingdom and Spain – assessing current issues Intervention by Mr Luis M Linde, Governor of the Bank of Spain, at the dinner opening the 25th Tertulias Hispano-Británicas, Madrid, 26 October 2012. *  *  *  Almost a quarter of a century back, following the visit by her Majesty Queen Elizabeth II to Madrid in 1988, a group of Spanish and British diplomats, politicians, academics and civil servants had an excellent idea. They took advantage of the Gibraltar dispute not to further cool relations between Spain and the United Kingdom, or to squabble some more, but rather to seek to be closer friends and try and understand one another better. Today marks the 25th edition of the Tertulias. Let me welcome all those taking part, firstly and especially our British friends, who honour us with their presence. A few days ago, perusing James Boswell’s legendary book on the life of Samuel Johnson, one of European culture’s literary giants, I came across several paragraphs in which Boswell relates Dr Johnson’s interest in Spain. He was convinced that Spain was a greatly unknown country in England and in Europe, and he suspected it could teach much to those taking the trouble to travel there. Samuel Johnson made this statement around the mid-1760s. Today, Spain is no doubt much better known in the United Kingdom than in Johnson’s time, as it is also the case for the United Kingdom being better known in Spain.

As you will have so many other matters to discuss, apart from the economy and the euro, you must forgive me for dedicating so much time to my own specific subjects. To conclude, I am sure these present Tertulias will, as in all the previous meetings, be successful, that the participants will enjoy themselves, and that our British friends will have very good memories of this visit to Madrid. Thank you. 2  BIS central bankers’ speeches
As I see it, financial cycles, at least those which are big enough to create significant disorder, are often the result of the regulations governing the financial system not being sufficiently stringent or even, perhaps, of fundamental shortcomings in the entire ‘business model’ of the financial sector. The failure of important markets to function sufficiently well may also be of great significance. One example that I have raised before, but which is worth raising again, is the comparison of how policy rates and housing markets have developed in Sweden and Germany (see Figure 6). Despite a similar monetary policy, the development of housing prices in Germany has differed entirely from that in Sweden. Of course, a wellfunctioning financial sector and well-functioning markets would not generate completely stable credit paths, for example. But it is highly likely that the large and dangerous fluctuations would be heavily restrained. It seems reasonable that the financial system should be sufficiently stable and robust to be able to handle both an occasionally very low neutral interest rate – as is the case today – and that monetary policy is conducted in a manner that fulfils normal monetary policy targets – such as an inflation target – without collapsing.

Structural factors can push inflation down in a way that can be difficult to counteract for a relatively long time, even if not permanently. It is therefore quite an important discussion that the Borio camp has initiated. 18 How should a central bank act in a situation in which, despite conducting the most expansionary policy it deems possible, it does not expect to be able to reach the target in a foreseeable time frame? As I see it, the reasonable decision in such a situation is to hold fast to the inflation target and continue with the expansionary policy. 19 If the central bank instead were to change its policy in a less expansionary direction, the inflation target would become even more distant and even more  17 Friedman (1963). It should be mentioned that, according to the so-called ‘fiscal theory of the price level’, fiscal policy has crucial influence over inflation, see for example Christiano and Fitzgerald (2000). To achieve low and stable inflation, a well-balanced monetary policy is therefore insufficient. It also requires fiscal policy to be conducted in a way that is compatible with the inflation target. However, this theory is controversial and does not actually question the value of central banks having inflation targets. 18 It should be emphasised that the BIS, where Borio is chief economist, has often been early to bring up issues of fundamental importance for central banks.
In this respect, accounting regulators and banking supervisors have made statements regarding the application of IFRS 9, suggesting that the flexibility allowed within the international accounting standards should be used to avoid the mechanical application of factors and hypotheses to estimate expected losses, as this would be clearly procyclical and inappropriate in the situation arising from COVID-19. Supervisory response Allow me to end my address by referring to the actions taken by the SSM since the outbreak of the health crisis. I sincerely believe that our response has been highly transparent, as well as rapid and unified across the euro area. This would have been unthinkable before the SSM was created. Since March this year, the SSM has published almost a dozen press releases and created a detailed FAQs section on its website, where speeches and interviews with the Chair and various members of the Supervisory Board can also be found. In addition, frequent bilateral meetings have been held with banks and there has been considerable interaction with the press and other interest groups in various fora. As for the response itself, no sooner had the health crisis broken out than we took a number of measures to alleviate the operational burden arising from supervisory activities, to enable banks to focus on the continuity of their main business. At the same time, we wanted to avoid, or at least minimise, the undesired procyclical effects that might arise from application of the capital framework.

We should recall that credit in the private sector has not ceased to decline since the financial crisis. Firms only began to increase credit further to the health crisis and to the subsequent shutdown in activity. Indeed, the paradox is that it was after the outbreak of the pandemic that this variable began to indicate that the buffer should be activated, naturally, due to the growth of publicly backed credit and the simultaneous slump in GDP, not because of a real alert. The credit-to-GDP gap is known to emit erroneous signals in circumstances such as those currently prevailing. Consequently, as well as monitoring a series of indicators, the Banco de España has decided to use two specifications for this gap: (i) the standard one defined by the BCBS and (ii) an alternative, tailored to the characteristics of the Spanish economy’s credit cycle. However, the activation of this buffer has recently been justified in some jurisdictions with the aim of creating room for manoeuvre in good times that can then be used in periods of stress. The logic behind the activation of the buffer for this reason is similar to that which was applied in our now-extinct countercyclical provision. Finally, new responsibilities have been assigned to the three sectoral supervisory authorities in Spain, as a result of the implementation of this new policy, including to the Directorate General for Insurance and the National Securities Market Commission (CNMV), which have been given tools similar to those I have just described.
Therefore, in the long run, real economic variables are determined mainly by underlying factors such as natural resource utilisation, labour force quality, productivity, and the propensity to save. It follows from what I have just said that it is of little use to set long-term goals for monetary policy other than price stability or exchange rate stability. Although this is so, monetary policy can also attempt to mitigate volatility in real variables such as GDP and employment and counteract deviations in the exchange rate from equilibrium, particularly when such volatility and deviations originate on the demand-side of the economy. It also follows from what I have said that monetary policy must be forward-looking, as it takes effect with a time lag. Based on the findings from a number of studies, the rule of thumb is that the full effect of interest rate changes on inflation emerges in 2-3 years, while the bulk of the effect emerges within about a year. The short-term impact on real variables tapers off within the same time frame. And it follows from this that in order to pursue forward-looking monetary policy with any degree of success, it is necessary to make forecasts. These call for economic analysis and modelling. In order to understand the problems associated with monetary policy implementation, one must bear in mind that statistics relating to the recent past often contain significant measurement errors, that we do not know what the “right” economic model is, and that the future is always in some sense unknowable.

I would now like to summarise all of this and give you a sketch of how the post-capital controls monetary policy framework might look, after accounting for the points I have discussed today. In this context, I would also like to refer you to several reports issued by the Central Bank in recent years, including Monetary policy after capital controls (2010), Prudential rules following capital controls (2012), and Iceland’s currency and exchange rate policy options (2012). A number of the things I have said today can be found in these reports, which have stood the test of time quite well. It should also be noted that a number of measures have already been put in place, such as, for instance, increased intervention in the foreign exchange market and more effective prudential rules to reduce foreign exchange risk in the banking system. But in this context, I would like to emphasise that at present, foreign exchange market intervention is to a large degree aimed at building up the reserves during the prelude to capital account liberalisation. What would the monetary policy framework be? 4  BIS central bankers’ speeches  The main objective of monetary policy would still be price stability, and it would be specified as a formal numerical inflation target, as is currently done. Instead of a pure float, as we had before the financial crisis, we would have a managed float.
It wishes to divide the Riksbank’s toolbox into different parts and micro regulate which tools should be used when, where and how. The effect will be a narrowing of the concept of monetary policy, less independence and freedom of action for the Riksbank, and an impaired ability to adjust monetary policy to changed conditions. In this event, Sweden will have its own definition of monetary policy that deviates markedly from the rest of the EU and the world. As I have explained above, monetary policy is so much more than just a short-term adjustment of the interest rate and purchases of government securities. The Riksbank Inquiry is not characterised by this insight. According to my way of seeing things, the Inquiry is far too attached to the simple model used at the start of the 2000s. Despite the lessons of a global financial crisis, the Inquiry has chosen to cling to a model typical of this earlier period. It is extremely important for the Riksbank that we have a Sveriges Riksbank Act that allows leeway for a changing world and that accepts that monetary policy, not just in Sweden but internationally too, now looks different compared to twenty years ago. And what will the world look like in twenty or thirty years? If the Riksbank is to continue to function for many decades, it needs to focus more on principles and combine clarity over the Riksbank’s tasks with flexibility over how this can be achieved.

Eddie Yue: Why challenges reinforce Hong Kong’s value as an international financial centre Keynote speech by Mr Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, at the Asian Academy of International Law Conference “Why challenges reinforce Hong Kong’s value as an international financial centre”, 26 February 2021. * * *  Opening 1. Good afternoon. I am delighted to be your keynote at this important event today. I thank the Secretary of Justice, Tony (Neoh) and Stephen (Phillips) for inviting me. 2. This conference is titled ‘Why Hong Kong is irreplaceable’. And in the context of international finance, I think it’d be fair to start this session with a question rather than a statement and ask: why is Hong Kong irreplaceable? 3. The answer is that no city is totally irreplaceable as a financial centre. For decades, London has been established as one of the leading global financial hubs. But even with this entrenched position, we have been hearing questions whether London can maintain this dominance in Europe after Brexit. 4. Or look further back in time. Modern banking was probably pioneered in Genoa in the 15th century. But no-one sees this picturesque Italian city as a financial centre today. In China, Pingyao in Shanxi was once the cradle of banking during the Qing dynasty; it is now more of an open-air museum for tourists. 5. The truth is that what financial centres do is irreplaceable, not where they are.
Some of the products like the Letters of credit have been widely used in the emerging markets and some of the estimates indicate around 55% of all letters of credit to be related to export activities, indicating the relative importance of trade financing in export facilitation and growth performances. Trade finance is particularly considered to be important for SME, as an easy and chip access to financing, as it is structured and self liquidating. Despite the large importance and the low riskiness, the new Basel rules treat the trade finance in more conservative way, which might reduce the availability of trade finance, increase its costs and thus impair the export and growth  BIS central bankers’ speeches  3  prospects of the emerging markets. Albeit some amendments to the Basel rules in this area were done in October 2011, still there are views that they are relaxed asymmetrically, only for the importers, and as such they do not bring benefit for the emerging market exporters, where the problems might stem from. Longer-term infrastructure finance is also treated as important enhancer of the infrastructure project in the emerging economies, and crucial for enhancement of their structural competitiveness. The reforms of the regulatory framework, pose challenges in this respect as they might ask for a balance sheet rebalancing towards more liquid assets, which can reduce the availability of infrastructure finance.

Anita Angelovska-Bezoska: Financial regulation, implementation and transition effects on emerging market economies Speech by Ms Anita Angelovska-Bezoska, Vice-Governor of the National Bank of the Republic of Macedonia, at the Fourth OMFIF Main Meeting in Europe, Ankara, 5–6 September 2013. *  *  *  Special thanks for the preparation of the background note to Ana Mitreska, Monetary Policy and Research Department and Natasa Andreeva, Financial Stability and Banking Regulation Department. Mihajlo Vaskov and Ljupka Georgievska also contributed to the drafting of the Note. Background note prepared for the participation of the Vice Governor Anita Angelovska Bezoska at the Fourth OMFIF Main Meeting in Europe, Ankara, Turkey, 5–6 September 2013. Since the onset of the global financial crisis the financial regulatory overhaul has been put high on the policy agenda with the aim of increasing the resilience of the banking system and thus promoting global financial stability. Stronger banking system will be better placed to absorb financial or economic shocks and prevent transmission of these shocks to real economy. The regulatory reform basically addresses the lessons learned from the crisis that insufficient capital and liquidity buffers, non-adequate on and off-balance sheet risk coverage and excessive leverage can undermine the stability of the financial system leading to contraction of the economic activity that can further aggravate the financial instability and require public sector intervention to avoid full-blown banking crisis. In this vein the reform will undoubtedly contribute to creating more sound and resilient banking system that is a key for sustainable growth.
In addition, there is no previous experience of structural changes of this magnitude, which also require a very long-term perspective, and where the presence of non-linearities and irreversible tipping points are likely, conditioning the methodologies to be used. And there is limited research, and accompanying data, that explore how climate risks feed into the financial risks faced by banks. In this context, many supervisory and/or prudential authorities are opting to use stress tests and scenario analysis. The Bank of Spain is indeed preparing such stress tests for the Spanish banking sector and the results are expected to be published in Autumn. 3  A Pigouvian tax is assessed against private individuals or businesses that engage in activities with adverse side-effects for society that are not internalised by these private agents, as a result of not being an integral part of the costs and prices they face. In any case, recognition should be given to the fact that the efficacy of Pigouvian taxes may have a limit. This is because, at some point, the supply of polluting energy inputs may be so elastic that it absorbs all the taxes levied on them, without affecting demand. At that point, quantitative restrictions could become the best option. 4  As a result, we should accept that efforts to translate climate-related risks into quantifiable financial risks are in their early stages. And we will have to step up our efforts to address these problems and limitations.

14.06.2021  What will be the impact of climate transition on monetary policy? Central Banking Summer Meetings Pablo Hernández de Cos Governor  Ladies and Gentlemen, Let me start by thanking the organisers for the invitation to speak at these Central Banking Summer Meetings. Climate change could be a defining issue for our generation. It is therefore natural that climate change has come to the fore of the concerns of policy-makers. And we, financial regulators, supervisors and central bankers, have our share of responsibility too in the joint global effort to tackle climate change. Not surprisingly, climate change is one of the key topics in the ongoing review of the ECB's monetary policy strategy or on the work programme of the Basel Committee. Today I will focus, first, on how climate change affect (a) the financial sector, (b) inflation and (c) the natural interest rate. Second, I will tackle the issue of what regulators, supervisors and central banks can do to address climate change, within our mandates. Climate risks and the financial sector The financial sector is highly exposed to risks associated with climate change by funding other sectors including those exposed to extreme weather events or those that will be affected by the transition to a more sustainable economy. The impact of climate change on the financial sector can, therefore, be relevant for financial stability.
In particular, BELab has been created with the aim of providing the research community with greater access to high-quality microdata, in a controlled environment that ensures data confidentiality, through on-site or remote means depending on the sensitivity of the data. The microdata available at BELab include the Survey of Household Finances, the Survey of  1  Financial Competences, the balance sheet data of non-financial corporations and microdata on loans to legal persons. I would strongly encourage all of you to have a look at these data, because I honestly believe that allowing independent researchers to access high-quality data is a necessary step to enhance our knowledge of the Spanish economy. And this annual conference specifically should be seen as another step in furthering our commitment to research as an indispensable tool for improving economic policymaking, in this case with the focus on understanding and monitoring developments in the Spanish economy as a basis for promoting well founded economic policy decisions. We wish to strengthen our interaction with the research community in this field as a way of better discharging our legal responsibility to provide advice to the Spanish governments on economic policy matters. And related to this responsibility, the annual report of the Bank, that it´s regularly presented to Parliament, offers an analysis of recent developments in the Spanish economy within the global setting, as well as how it is likely to perform in the future and the challenges it faces.

In this regard, it should be emphasized that our projections on inflation, which currently anticipate that it will remain high in the coming months, but will moderate gradually thereafter to levels compatible with the ECB’s mediumterm inflation target of 2% is based on the assumption that there will be a slowdown in the growth of energy prices, in line with those on the futures markets, and that a moderate wage growth response and a squeezing of trade margins will prevent the emergence of the pricewage feedback loop. Avoiding this feedback loop from wages, mark ups and prices is precisely the main priority objective of the incomes agreement that we have been advocating in recent months at the Banco de España. It would consist of an agreement between firms and workers, under the framework of social dialogue, to share the inevitable loss of national income that higher commodity import prices entail. And agreement that should also, in our view, include the public sector, by avoiding both an across-the-board fiscal impulse in this context and a widespread use of automatic indexation clauses in expenditure items. The third session of this conference addresses this question. Over a longer horizon, the Spanish economy faces a series of structural challenges, some of them going back several years or even decades. In our conference we will be focusing on four of these challenges, namely the need to correct dysfunctions in the labour market, to boost productivity growth, to make public finances more sustainable and to address the challenges posed by climate change.