samchain/econo-pairs-v1 huggingface dataset:
Jean-Pierre Landau: An international financial architecture for the 21st century – some thoughts Remarks by Mr Jean-Pierre Landau, Second Deputy Governor of the Bank of France, at the 17th Central Banking Seminar of the Bank of Korea, Seoul, 1 June 2010. 17th Central Banking Seminar of the Bank of Korea; Seoul, 2 October 2009 (this text is a revised version: 1 June 2010). *  *  *  International financial and monetary arrangements are currently extensively debated. For many countries, both advanced and emerging, the crisis has shown that there is a close link between internal and international financial stability. In addition, rebalancing of the world economy stands at the forefront of the G20 policy agenda and there is a perception it may be difficult to achieve under current arrangements. In this paper, I would like to discuss the foundations for a future international financial and monetary system. One central point I will make is that “financial” and “monetary” aspects cannot be dissociated from one another. To a large extent, international monetary arrangements, as well as current account imbalances, are the by-products of policy choices made by countries on their capital account regimes and financial development. Therefore, one must try and take a long term view, encompassing all aspects of the financial interrelationships between nations. I will only deal tangentially with exchange rate regimes and their implications for monetary policies. Those have been abundantly analysed and discussed in the literature and the policy debate (Blanchard et al., 2005).

Ravi Menon: Bending the curve of nature loss Keynote remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore and Chair of the Network for Greening the Financial System, at the COP15 Finance and Biodiversity Day, Montreal, 14 December 2022. *** Ladies and gentlemen, I am honoured and delighted to be able to address you on this important occasion of COP15 of the Convention on Biological Diversity. The world is getting painfully acquainted with the impending climate crisis. There are promising efforts at mitigating this crisis, though far from what is necessary to avert disaster. But the planet faces a second crisis –– nature and biodiversity loss. The nature crisis is no less threatening than the climate crisis. But it is much less appreciated and much less is being done to mitigate it. We assiduously measure and seek to grow our physical and human capital. We speak of the importance of social and political capital. But we fail to appreciate let alone measure natural capital – the world's stock of natural resources, comprising soils, air, water, plants, animals, and minerals. These are assets that sustain our food supplies, underpin our economy and society, and enable human life. We are collectively depleting our natural capital and degrading the ecosystems that support it. We are consuming more resources than the Earth can produce in a year. At current rates of consumption, we use up 1.6 Earths' worth of resources. By 2050, our annual resource use will rise to 2 Earths' worth.
One possibility is to look for ways to expand the support for the formation of partnerships between higher education and industry, which have proven to be effective ways for regions to promote innovation, entrepreneurship and economic growth. Puerto Rico has many of the ingredients in place to harness the benefits of these industry-education partnerships and policymakers should begin to look for promising opportunities for mutually beneficial collaboration. A second step is to comprehensively reform the Commonwealth’s tax system, which is heavily dependent on income taxes and tends to levy high rates on narrow bases. When rates are high, it increases incentives for activities to be shielded from taxes, perhaps by moving activity to the informal sector, or perhaps by halting the activity altogether. Either way, collecting the necessary revenue requires rates to be even higher on activities that remain in the base, reinforcing the problem. Typically, comprehensive reform is necessary to break the cycle by simultaneously broadening the tax base and reducing rates across a range of taxes. Such a reform would likely produce a significant bonus in terms of faster economic growth, particularly in the formal sector. A third step would be to improve the Commonwealth’s financial reporting. Puerto Rico’s unique status means that it is one of few jurisdictions whose finances are not regularly surveyed by a public agency. The U.S. Census Bureau reports annually on mainland state finances and the International Monetary Fund generally reports on the finances of nations.

International trade and demand for investment in particular continue to be subdued. Inflationary pressure abroad also remains low. Although higher energy prices are currently resulting in a marked increase in inflation, core inflation remains at a low level in a number of countries and central banks are thus maintaining their expansionary monetary policy course. Among advanced economies, the economic cycle has progressed furthest in the US. Thirdquarter GDP growth in the US was again significantly above potential. Private consumption was once more the driving force. The situation on the labour market continued to improve as well; the US economy has now almost reached full employment. This is also reflected in more robust real wage growth. Inflation is now close to the target set by the US Federal Reserve. Against this backdrop, the Federal Reserve decided yesterday to raise its key interest rate by 25 basis points. This move is confirmation that – in the Federal Reserve’s view – the world’s largest economy is gradually emerging from a protracted period of crisis. The other major economic areas also recorded favourable economic activity in the third quarter. The euro area and Japan continued to register moderate growth, while in China, growth remained strong thanks to a variety of fiscal measures. In the UK, the economic impact of the Brexit decision has so far proved less pronounced than originally feared. However, the country’s economic performance is still expected to be impaired by this outcome in the coming quarters.
Unit labour costs are expected to increase marginally in the present year, before returning to a more normal rate of increase at the end of the forecast period. Inflation expectations are important to follow for the Riksbank, particularly in the present situation when the difference between CPI inflation and various measures of underlying inflation is great. Inflation expectations five years ahead have so far been stable and close to 2 per cent. This indicates strong confidence in the Riksbank’s ability to meet its inflation target over the long term. On the other hand, inflation expectations one and two years ahead have increased significantly over the last 12 months. However, this is largely a consequence of an increase in the actual measured rate of inflation (see Figure 10). A matter of some concern ahead of the wage bargaining rounds may be that wage expectations also largely seem to be a consequence of the actual measured rate of inflation. I shall return to this shortly. In light of this economic development, monetary policy has been aimed at successively increasing the repo rate towards a more normal level after the extremely low level it reached during the crisis. In April, we raised the repo rate by 0.25 percentage points for the sixth time in a row, to 1.75 per cent.

The economic conditions for wage formation in the years ahead I will now briefly present the Riksbank’s assessment of economic development in recent years. I will refer to the most recently published forecast from April. Of course, quite a lot has happened since then, but, at the same time, two months later you don’t normally know a great deal more about developments two to three years ahead. In any event, we will be publishing an updated assessment in the Monetary Policy Report in July. The international recovery is proceeding at a good rate For the world as a whole, we expect to see a GDP growth of over 4 per cent per year for the next three years. This is a high growth rate from an historical perspective (see Figure 4). But  4  BIS central bankers’ speeches  developments across the world are divided, with weaker growth taking place in the developed economies and stronger growth in emerging economies. The recovery of the United States and Europe is continuing at a fairly moderate pace. In the United States, GDP is now back to the level it was at before the crisis (see Figure 5). But the labour market has yet to recover. In the euro area, it seems likely to take a couple more years until GDP has returned to the same level as before the crisis. Growth in Europe is being restrained by the fiscal problems in several countries and the tightening of fiscal policies (see Figure 5).
Our economy has now returned to its growth path and the risk of deflation has been overcome; so there is no longer any reason to keep the short-term interest rate level so close to zero. The sharp decrease in interest rates certainly helped to bolster domestic demand and thus avoid an even worse downturn. It was nevertheless not possible to completely escape an economic slump. It goes to show, yet again, just how close Switzerland’s ties are with the EU and the global economy - both in good times and in bad. 3. Switzerland as a global player  Switzerland does not only feel the winds of change in Europe. As a small and open country, it is also strongly exposed to globalisation. Foreign trade - measured as the sum of exports and imports in relation to the gross domestic product - has risen further in the past ten years. At the same time, the export and import structure has become more diverse. While the old EU countries have lost some ground, the emerging countries in Eastern Europe and Asia have gained substantial shares. Globalisation brings with it an increase in competition for the most attractive business locations. In recent years, Swiss companies have founded or taken over companies outside Europe on a significant scale - partly to cut costs, but in many instances also to be closer to the markets. To what extent Switzerland has already become a global player is reflected by the impressive development of direct investments.

In June of this year, the preference clause favouring Swiss employees was abolished. A company in Switzerland may now employ EU nationals without first having to prove that an equally qualified person could not be found for the position in the country. Thanks to the agreement on the free movement of persons between Switzerland and the EU, Switzerland now has access to an extensive highly-trained workforce. It has not yet been possible to estimate just how much of this potential will be used. Up until now, there has been no major influx of people into Switzerland, although this may be attributable in part to the weak labour demand, which in turn is due to the current economic situation. In the medium term, we expect the proportion of labour coming from the EU to Switzerland to increase. However, opening up the Swiss labour market also gives rise to fears. People are concerned that Swiss salary levels will come under pressure and that employment conditions will deteriorate. In an effort to counteract any serious repercussions on the Swiss labour market, the authorities have implemented a number of accompanying measures. These, however, will not be able to completely prevent competitive pressures in Switzerland from intensifying. The attempt to avert any wage adjustments by introducing minimum wages across the board, for instance, would be counterproductive. Switzerland would be unable to benefit from the opportunities that this opening up presents. The Swiss labour market would become less flexible, and the country would lose one of its most crucial locational advantages.
Here he is, in his first fireside chat, explaining banking to the American people: AUDIO INSERT: “My friends I want to talk for a few minutes with the people of the United States about banking… We have had a bad banking situation. Some of our bankers have shown themselves either incompetent or dishonest in their handling of the people’s funds. They had used some money entrusted to them in speculation and unwise loans. This was of course not true in the vast majority of our banks but it was true in enough of them to shock the people of the United States for a time into a sense of insecurity and to put them in a frame of mind where they did not differentiate but seemed to assume that an act of a comparative few had tainted them all. And so it became the government’s job to straighten out this situation and to do it as quickly as possible and that job is being performed.”  BIS central bankers’ speeches  3  We too have had a “bad banking situation”. Roosevelt showed bold and decisive political leadership in explaining to his listeners the reasons why they should not fear banks but trust their Government to ensure that the economy could be saved from the bank failures that had led to the Great Depression. For the sake of future generations, we too must be bold and decisive and, while the memory is fresh, learn the lessons from this crisis. Reform is essential.

This exercise proved to be both very useful and reassuring: thanks to the improvement of banks’ capital position with the implementation of Basel 3, and despite the high level of uncertainty triggered by the ongoing pandemic, it shows that the European banking system is resilient to a very severe adverse shock. 2.3 Stress testing should also prove helpful for banks to assess and manage their exposure to climate change related risks The forward-looking perspective of stress tests should prove particularly helpful for banks and their supervisors to handle emerging risks such as climate change. Building on the work carried out by the Network of central banks and supervisors for the Greening of the Financial System (NGFS): we, at the ACPR and Banque de France, have recently conducted such an exercise, with French Banks and Insurers. Beyond helping us identify at an early stage their shortcomings and limitations that we will need to overcome, such stress test have provided us with initial 2/3  BIS central bankers' speeches  assessment of climate change-related risks, exposures of French financial institutions, which appears actually to be moderate. But may be more importantly, it has proved helpful to us in incentivizing financial institutions to give the proper level of priority and resources to the monitoring and management of climate-related risks.
14  In 2008, there were 100 branches per 100,000 inhabitants in Spain, compared with around 60 in France and Italy (data as at December 2020, which are the latest data available with comparable ECB information for the different European countries). 15  Second only to the Netherlands. 16  In Spain branch closures have affected municipalities of all sizes, albeit with slightly more cuts in larger ones (around 56% since 2008 for municipalities with more than 50,000 inhabitants) and fewer in smaller ones (around 40% for those with fewer than 5,000 inhabitants). The smaller municipalities are the only ones where the population declined in this period, in keeping with the demographic decline in Spain’s rural areas in recent decades. 9  Fifth, as regards the cost of bank funding, in the money markets secured interest rates stand at historically low levels. But wholesale market funding costs have risen, on expectations of a less accommodative monetary policy and the uncertainty prompted by the crisis in Ukraine. Indeed, expectations of interest rate rises have fed through to wholesale market interest rates on long-term bank debt (a measure of funding costs) more robustly than to the Overnight Index Swap (OIS) rate.17 Thus, banks’ credit risk spread has widened. There were mixed developments in the cost of new issuances in 2021 across instrument types and issuers. Banks stepped up their debt issuance to comply with prudential and resolution requirements, with issuances of Tier 2 instruments and contingent convertible bonds (CoCos).

We must stick to the reforms that work, in particular the tax credit for competitiveness and investment (CICE) and the Responsibility and Solidarity Pact (RSP), and we need to go further still. The unemployed and youth cannot afford to wait. There are at least four reforms that are a priority, because our neighbours successfully implemented them and they are fully compatible with the European social model that we share: the large-scale development of apprenticeships; simplifications, starting with labour law; the decentralisation of social dialogue to the company level, i.e. as close as possible to the economic and human reality; and lastly, the development of entrepreneurship. Second, we need to mobilise both public and private investment in order to take advantage of the exceptional financing conditions created by our monetary policy. To do so, we need to put the Juncker Plan back on the table. The Juncker Plan has yielded results, but they are insufficient. To support the revival of this Plan, I have proposed the creation of a true European “Financing and Investment Union”. To achieve this, we must combine the Juncker Plan, the European Commission’s plan for a Capital Markets Union, and the Banking Union. The aim is to create synergies in order to achieve three ambitious goals: better channel euro area household savings to productive investment and equity; better pool risks across countries; and thus better finance innovation and the networks our economy needs. This is the direction we should take now.
All in all, these results suggest that the pandemic outbreak led to substantial liquidity risks for Spanish firms. National and supranational economic policies in different areas (fiscal, monetary and financial) reacted quickly and forcefully to tackle these risks in Spain and other countries. Let me review the main measures taken in this domain and their main goals. 3  See Blanco, R., Mayordomo, S., Menéndez, A. and M. Mulino (2020): “Spanish non-financial corporations’ liquidity needs and solvency after the COVID-19 shock “. Occasional Paper No. 2020, Banco de España. 4  In the area of fiscal policy, the Spanish Government introduced tax deferrals for firms and a favourable furlough scheme with the aim of reducing firms’ short-term liquidity needs. Also, the Government launched a public loan guarantee programme with an envelope of EUR 140 billion to encourage banks to lend to firms and the self-employed. Under this programme, the Government covers up to 80% of the credit losses on loans extended by commercial banks to SMEs and the self-employed, and up to 60%-70%, depending on whether the operation is a loan renewal or a new loan, in the case of loans granted to large firms. In the area of monetary policy, the ECB took several measures aimed at supporting bank lending by providing financing to banks under very favourable conditions.

In the summer of 2013, the MPC provided guidance about the future path of monetary policy. This guidance was aimed explicitly at reducing uncertainty among households and companies, with simple and clear language about the future path of policy. It was accompanied by a communications plan focussed on the general public, including TV interviews and a published document. 43  Shiller (1997). Quoted in Thompson (2016). Sapienza and Zingales (2013). 46 See Haldane (2016). 44 45  11  All speeches are available online at www.bankofengland.co.uk/speeches  11  The Bank conducted a survey after the guidance had been issued, with the aim of assessing its impact on the general public. This painted a mixed picture. The Bank’s message got through to around 75% of companies, but only around one-fifth of households. Moreover, even among those households who heard the guidance, as many felt less confident as more confident about the economy (Table 2). In the US and the euro area, surveys have found a similar lack of understanding of central bank actions. They have also identified where these understanding problems are most acute. In the US, survey respondents with lower incomes or without a college degree are less likely to understand monetary policy. 47  In the euro area, a Dutch survey found respondents with higher education or income were more likely to answer questions about the ECB’s monetary policy correctly. 48  This is a puzzle.
The Norwegian banking sector and climate risks Norges Bank promotes stability in the Norwegian financial system. We have recently published our annual financial stability report. The report includes an analysis of adaptation to climate risk in the financial system. Economic losses resulting from changes in the regulation of greenhouse gas emissions, new climate-friendly technology or new consumption patterns must primarily be borne by the individual firm and its owners. In the event of very substantial losses, the firm's lenders will also be affected. In Norway, these lenders are largely banks. Climate risks, and transition risk in particular, may thus be a source of credit risk for banks. Norwegian banks' exposures reflect the Norwegian economy and industry structure. I have already touched upon the substantial importance of the oil and gas industry to Norway’s economy. Lending to this industry is a possible source of transition risk for banks. Chart: Oil-related exposures, DNB Although Norwegian banks have reduced their exposure to the oil industry in recent years, this industry remains important for banks. However, banks’ losses may not be substantial unless a structural decline in oil-related industries results in substantial spillovers to the wider economy. This applies not least if there is a sharp fall in prices in the commercial and residential property markets, where banks’ lending exposures are highest. Banks can make a number of adjustments to reduce their own climate risk, primarily by correctly pricing the risk associated with their own exposures.

Risk premiums on projects that do not meet green standards should reflect the higher risk associated with these projects. Similarly, discounts should not be given for so-called green projects unless there are financial reasons for doing so. A green investment does not necessarily involve lower financial risk. In order to identify and adapt to their own climate risk, banks depend on relevant disclosure by 4/7  BIS central bankers' speeches  the companies in their lending portfolios. Accurately pricing risk is difficult without information about the level of the borrower’s exposure. For banks, transition risk is also a source of financing risk. There is growing interest in climate risk among financial investors, including those providing credit to banks. The perception that some banks are particularly exposed to transition risk may have implications for banks’ funding costs and access to funding. Thus, just as banks should identify climate risk in their own lending portfolios, they must be prepared for their own investors to demand improved disclosure of climate-related financial risk. The recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) are in the process of becoming normative. Banks play a vital role in the intermediation of credit to households and businesses. Problems in the banking sector can quickly have negative consequences for the wider economy. Large credit losses or difficulties obtaining funding can have ripple effects in the form of lower lending to households and businesses. Transition risk may therefore contribute to systemic risk.