samchain/econo-pairs-v1 huggingface dataset:
Conference “Frontiers of climate and nature in macroeconomics and finance” Paris, 24 October 2022  Central banking in the Anthropocene: How to re-embed our economic and financial systems within planetary boundaries? Speech by Sylvie Goulard, Deputy Governor of the Banque de France  Page 1 sur 12 Ladies and Gentlemen, I am very pleased to open this conference, as nature is a topic close to my heart. I would like to start by thanking the organizers from the Banque de France, the NGFS, the Sustainable Macro initiative and the INSPIRE research initiative for putting together this important event on the frontiers of macroeconomics and finance with regard to climate and nature. In addition, I truly appreciate the presence of many young researchers. It is key to transform the study of macroeconomics and finance for a new ecological era. I would also like to use my time with you this morning to pay tribute to the next speaker at today’s conference, Professor Sir Partha Dasgupta, who published an incredibly powerful report last year.i The introduction of the so-called Dasgupta Review makes it clear that (and I quote): “My reader is the concerned citizen. She is someone who has watched television documentaries on the state of the biosphere and has read reports in newspapers and magazines on the extent to which Earth is being degraded and biodiversity is being lost.

Accordingly, the region’s economic performance has a most significant influence on Spanish banks’ balance sheets, and the risks arising from these exposures may potentially become systemic. At the Banco de España, then, several directorates general – including Economics, Statistics and Research; Financial Stability, Regulation and Resolution; and Banking Supervision – devote many resources to monitoring all that occurs in the Latin American region from the real and financial perspective. However, the Banco de España remains ambitious to strengthen its knowledge of and links to the region’s economic agents. Our first Strategic Plan, for the 2020-2024 period, approved in January last year, actually set as one of its priorities that of increasing our contribution to this objective. As part of this aim, we are pursuing a series of medium and long-term-oriented actions in the sphere of cooperation with Latin American central banks and institutions. We also seek to extend and enhance our analytical capacity in respect of the region’s economies and financial systems. We are convinced that these seminars are a firm step forward in this direction. The aim of this webinar is to shed some light on how remittance flows during the health crisis have influenced Latin America’s macroeconomic and financial stability. As you are well aware, the Latin American economic situation has been particularly affected by the COVID-19 pandemic. Along with the human cost in lives, the effects on poverty and income distribution have been very severe.
Thus, there is a long intellectual tradition linking rule of law and sound money to functioning of free markets. But this connection found perhaps its clearest expression in the ordoliberal school that developed in Germany in the 1930s. Conceived at the University of Freiburg by Walter Eucken and Franz Boehm, the central understanding of ordoliberalism was that a stable and well-functioning market economy required a strong legal and institutional  1  “Moneta debt esse quasi quaedam lex et quaedam ordinacio firma”. Nicolas Oresme, Traité de la première invention des monnaies (ca. 1355). BIS central bankers’ speeches  1  framework. Pure laissez-faire capitalism was unstable and liable to capture by monopolies. Collectivist central planning, on the other hand, led towards waste and totalitarianism. Thus, as the ordoliberals saw it, the role of government was to frame markets in such a way that actual outcomes would approximate the theoretical outcome in a perfectly competitive market. Achieving such outcomes could imply de-regulation, if government was interfering too much in market processes, or re-regulation, if market failures were apparent – a feature that distinguished it from a laissez-faire approach. In other words, the role of government was both to untie the “invisible hand”, and to keep it firmly cuffed to the rule of law. At the same time, ordoliberalism recognised the crucial importance of monetary and economic stability to a well-functioning market.

The domestic economy is expected to slow down during the rest of year, being conditioned by the weakening of the domestic and foreign demand. Given the consolidated fiscal behaviour and the slowed foreign demand, the performance of the private domestic demand will determine the economic activity growth. However, its two components, consumption and investments, have not shown any recovery signal so far. Expected developments at home and abroad result in a contained balance of inflationary pressures, determining a slow increase in consumer price in the future. The demand growth  BIS central bankers’ speeches  3  below the potential of the economy in the upcoming period will continue to exercise low inflationary pressures. At the same time, the pressures generated by supply-side factors appear contained. Based on the insofar developments of the determinant factors of inflation and the projections for their development in the future, with 90% probability, inflation will range within 1.0% – 3.3% band after 12 months. *** Based on the analyses of the information set out above, the Supervisory Council holds that pressures on consumer prices at home remain low over the monetary policy relevant horizon; they have been, however, on the downside over the recent months. On the demand side, below-potential economic growth will continue to generate low inflationary pressures, while shocks from the supply side are expected to be moderate. The expected developments in economy and inflation imply that the simulating nature of the monetary policy will be retained during the period ahead.
2  Defining dependence as the percentage of natural capital in total capital (i.e., natural, physical, and human) and abundance as the amount of per capita commodity exports in 1970. 2  BIS Review 106/2009  on comparative advantages, but it also induces better practices and technologies, as well as more competition in the markets, all factors that enhance economic growth. On the other hand, we know that Chile is rich in natural resources, especially mining ores, but our dependence on them is ever smaller. Actually, mining exports contribute every year a large amount of resources to the country, but their share of total exports has steadily declined over time, with the exception of the last few years due to the soaring price of copper (figure 3). Another critical element mentioned in the literature, that for Chile is a strong one, is the quality of its institutions. Sound institutions, including fiscal discipline, have prevented the “voracity” effects. A well educated labor force and full access to international capital markets have kept investments in other activities free of barriers, and the real exchange rate, although widely fluctuating, has not been detrimental to the development of the exporting sector. By way of example, and to see the good position we are in now as compared with previous years, let us recall what happened with nitrate.

Figure 3  Mining exports  (percentage) 50  0,7  Billions of USD FOB  0,5  30  0,4  20  0,3 0,2  10 0  % Goods exports  0,6  40  0,1 0  1984  1987  1990  Mining exports  1993  1996  1999  2002  2005  2008  Mining Exports/ Goods exports  Source: Central Bank of Chile. 6  BIS Review 106/2009  Figure 4  Earnings from nitrates-iodine and from copper  (percentage of total fiscal income) 70% 60% 50% 40% 30% 20% 10% 0% t  t+6  1880  t+11  t+16  t+21  t+26  t+31  Nitrates and iodine earnings  1959  t+36  t+41  Copper earnings  t+46  T 1930 2008  Sources: Jeftánovic, Jofré, and Lüders (2000); Central Bank of Chile. Figure 5  Government spending, exports and GDP  (index, 1880=100) 500  1,200  400  1,000 800  300  600  200  400  100  200  0  0  1880  1890 1900 Government spending Exports  1910  1920  1930 GDP  1940  Source: Braun, Braun, Briones, and Díaz (2000).
The simple truth is, unless you are on a train, you don’t have the chance to move forward and will never come closer to your destination: Success. BIS central bankers’ speeches  1  5. If you feel that I should not be depicting a rather scary train journey on this auspicious and joyful occasion, then please forgive me and let me try another scenario for you to think about, again using my train journey story. 6. Suppose that you have been bumped off the train once or twice and have found your way back onto the next trains to carry on with the journey. You will gradually realise that there are certain rules and disciplines on the train that determine who get the good seats, who can be upgraded from the economy cabin to the business class and then the first class cabin. There are also rules and booking system that govern who can enjoy a good meal at the dining car and when. So you will come to realise that the train is not a wild jungle filled with animals, or people, trying to eat each other alive. You will also discover that there are some passengers who have got upgraded to the business or first class cabin not just because they are muscular or clever. They are ahead of most other passengers because they possess certain qualities that we in modern time called leadership.

Moreover, if banks and fintechs did not both know how to innovate, and often innovate together, bigtechs would ultimately reap the rewards. Furthermore, we take very seriously the commitments we made to you last year: we have therefore worked with you this year on the deadlines and visibility of the stages in the authorisation process of fintechs. In this context, I am pleased to announce that a Fintech Charter will be adopted and published before the end of the year. This charter will clearly explain, in great detail, the stages in this authorisation process, from their first contact with the ACPR to their obtaining the required authorisation or registration. It will contain specific commitments on the part of the ACPR, firstly in terms of the visibility of the process: the appointment of a dedicated analyst, an indication of the additional information to be provided, and an authorisation certificate to facilitate procedures with investors. Secondly, in terms of deadlines: at each stage of the process, acknowledgement of receipt will be provided within two days and a response will be given on the content of the request within two weeks. The charter will also clarify our requirements regarding authorisation applications so that they can be prepared as well as possible. In order to help entrepreneurs navigate the regulations, a set of guides and Q&As will be posted on our website: these Q&As have been devised with representatives of the ecosystem to answer the regulatory questions that fintechs most frequently ask. III.
But it is distinctly uncomfortable for the world’s central banks to rely entirely on mopping up after a bubble bursts: one imbalance can lead to another. 22 The central banking community does not yet have a satisfactory way through this dilemma. And Money? It occupies one end of the liquidity spectrum, and so changes in the quantity of money might potentially affect risk premia, and so credit conditions more generally. Gauging that is a formidable challenge. As an input to policy, there is just no alternative to getting one’s hands dirty in analysing the monetary data. With an institutional rather than functional definition of broad money, special care is needed not to be misled by shifts in the demand for money from the plethora of non-bank financial institutions. This is important if we are to use money as an indicator of nominal trends alongside survey and financial-market-based measures of inflation expectations. That brings me back to where I began: with our policy reaction function. Occasionally the markets will be surprised by our policy decisions. But we should do all we can to avoid confusion about how we think about the economy and about monetary policy strategy. In the spring, my own view of the signals from broad money had not altered materially. So today I have tried to explain how I think about money, credit and the connections between them. That has provided a framework for some observations on the current conjuncture, underlining the need for careful attention to conditions in the banking system.

Yves Mersch: Opening remarks at the Academy of European Law Opening remarks by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Academy of European Law, Luxembourg, 29 June 2016. *  *  *  Ladies and Gentlemen, For over 20 years the Academy of European Law (ERA) has provided a forum for law practitioners to debate European legal issues. And the need for such a forum remains strong today – maybe stronger than ever. Shakespeare’s character Tranio in Taming of the Shrew exhorts us to “do as adversaries do in law – strive mightily, but eat and drink as friends”. This is an appropriate sentiment for tonight’s event: the ERA is providing food and drink and has invited me to give you all something to argue about. This is a critical juncture for the European Union (EU). A number of states have re-imposed border controls to stop the inflow of refugees, anti-EU parties are gaining popularity in many member states and one of the largest members has just voted in a referendum to leave the Union. These factors provide a challenge to our institutions and legal frameworks at EU and at national level – a challenge that also legal professionals across Europe need to engage with. I believe there are many reasons why the vision of a united Europe is worth fighting for.
Through price stability and efficient allocation of resources and finance, the economy will be able to achieve its potential growth. In this regard, it is crucial to establish an understanding between the central bank and the government of the laggednature of monetary policy transmission, and the need for targeting stability to effectively anchor long-term inflation expectations. To this end, coordinating with the fiscal authorities in setting a target aims to ensure that monetary policy is aligned with the country’s overall economic policy direction. By the end of this year, the Bank of Thailand’s Monetary Policy Committee, jointly with the Minister of Finance, will be required to set an annual target for monetary policy for 2009. More importantly, this understanding must also be shared with the public at large – that the only  4  BIS Review 119/2008  long-term role for monetary policy is in creating an environment of price stability which would help support sustainable economic growth. Ladies and Gentlemen, In raising the economy’s potential output, it requires that we pay attention to our capacity. I would like to raise two important areas of commitments that all economic participants together can help the economy build strong capacity. These are greater energy efficiency and advancement in education. On the commitment to improve energy efficiency, we must reduce our dependence on imported oil from the present net oil imports ratio to GDP of about 8 percent, which is the highest in Asia.

This has, in turn, affected the outlook for Thai exports as the economic prospects of Thailand’s major trading partners, such as European Union and Japan, became less positive. Overall, the impact of bleaker global economic outlook depends on the degree of decoupling from developed economies and the consensus among central bankers over the world is that it is perhaps unrealistic to assume that emerging economies in general will be able to decouple. Therefore, it is more an issue of a time lag and at the present time we must wait and see when this moment of truth arrives and what the impact will be. I believe that unless the global economy dips below what we anticipated, the impact on the Thai economy will be manageable. BIS Review 119/2008  1  At this juncture, let me emphasize that Thailand’s underlying economic fundamentals remain sound and growth momentum on track. During the first half of 2008, the Thai economy achieved a favourable growth rate of 5.7 percent, improving from the growth of 5.3 percent in the second half of last year. Even though three of the four main engines of economic growth, namely consumption, investment, and public expenditure, remained mostly subdued, the performance of net exports was notably better-than-expected. This reflected export sector’s substantial efforts to adjust to slowing global demand by diversifying into new markets. Meanwhile, on the supply side, agricultural production was the key growth contributor, due mainly to an increase in crop production in response to higher market prices.
Repeated US interest rate cuts have allowed a timely easing of monetary conditions in Hong Kong. But, up to a point, further cuts in interest rates are akin to pushing with a string. Given the gloomy mood that now prevails, it may therefore take some time for monetary easing to have an impact on economic activity. Of particular concern now is the unemployment rate. Having declined from a peak of 6.3% at the darkest time of the Asian financial crisis to 4.4% in late 2000, it has been slowly rising, and is likely to edge up further. Part of this is the result of the global slowdown. But unemployment is also complicated, and aggravated, by the structural transformation of our economy, as our manufacturing sector continues to contract and as skill mismatches make it difficult for the growth industries - such as financial services and, until recently, IT - to take up the slack. Behind all the figures are stories of individual pain and hardship - of lost jobs, negative equity, bankruptcies - and a general sense of insecurity and pessimism in the community. These are the conditions for very unfavourable, and potentially destabilising, interactions between the real economy and the financial sector. The Hang Seng Index has dropped by more than 30% since the beginning of the year. Sluggish lending is hurting banks' profits. The delinquency ratio for credit card receivables is on the rise.

Reforming and adapting financial regulation remains an urgent priority. G20 Leaders have agreed on detailed principles and a roadmap. The newly formed Financial Stability Board has the difficult task of steering regulatory reform. We are very fortunate that the FSB, as well as the Basel Committee, has been enlarged and become a true reflection of the world economy. As you may know, the European Union is moving towards the creation of a new European Systemic Risk Board (ESRB) which will be responsible for macro-financial supervision and will draw extensively on the resources and expertise of the Eurosystem. In France, the Government has decided to create a single authority responsible both for banking and insurance supervision, with very close links to the Central Bank. This will enable us to look at the state of and developments in the financial system from a truly systemic perspective. Much remains to be done. Let me outline the main objectives. In the current circumstances we should (1) try and keep up the momentum in the pursuit of reforms, (2) achieve balance in the implementation of the agenda; and, (3) ensure consistency between our regulatory actions and macroeconomic policy. Keeping up the momentum Over the last few weeks, major international banks have announced impressive quarterly profits. It is striking that these performances were achieved only a few months after some of those same institutions came very close to failure. This might give the impression that the financial sector has recovered its balance and that no further reforms are necessary.
Beyond the single monetary policy, there are various areas of European co-ordination in IMF-related matters although, as is well known, the different European states are represented on an individual basis in the Bretton Woods institutions. Spain, which adhered to the New Arrangements to Borrow (NAB) as from their creation in 1998, is today an IMF creditor country. And though we continue to benefit from the Fund’s excellent technical advice, we also provide technical assistance, in some cases in collaboration with the Fund, to other countries in the process of implementing systems or procedures in which we have a certain comparative advantage. Moreover, the Spanish authorities and, in particular, the Banco de España, co-operate increasingly closely with the Fund on matters relating to national and international financial stability. As I indicated earlier, this issue is becoming more and more important, and the objectives and the interests of the Fund tend to coincide in this connection with those of the competent national authorities. The reasons why national and international authorities pay greater attention to financial stability can be found in the crises a significant number of countries have undergone in recent years. These have highlighted the complex linkages between the real sector and the financial sector and the risk that the latter may not only be a source of instability, but also amplify the imbalances or shocks generated in other sectors of the economy.

The task of the capital markets is to channel capital to investment projects with a high return. If financial investors assess the return on investments in a particular country to be higher than in other countries, there is reason for the exchange rate to strengthen. One cannot rule out the possibility that this is exactly what happened in the USA. Whether the level of indebtedness, the deficit on the current account and the strong USD exchange rate comprise a significant risk of large fluctuations in growth and a threat to global financial stability in the near future depends to a great extent on whether the long-term growth in the US economy will develop much more weakly than was expected when decisions on loans and investment were made. And, as I mentioned earlier, the shaping of economic policy and improvements in regulatory frameworks and risk management systems should have reduced the uncertainty in investment and savings decisions and thereby also the risk of a build-up of large financial imbalances. However, it remains to be seen whether globalisation, IT and telecommunications technology and perhaps also more efficient financial markets have really created the potential for higher growth that lay behind the expectations that pushed up economic activity. So far, the economies have reacted fairly moderately to the shocks they have faced over the past year.