samchain/econo-pairs-v1 huggingface dataset:
Conference of the ACPR – Palais Brongniart, 8 June 2018 The major issues at stake in the review of prudential supervision of banks  Speech by François Villeroy de Galhau, Governor of the Banque de France, Chairman of the Autorité de contrôle prudentiel et de résolution (ACPR)  Press contact: Mark Deen (mark.deen@banque-france.fr). Page 1 of 6 Ladies and Gentlemen, I am very pleased to welcome you to this conference of the Autorité de contrôle prudentiel et de résolution (ACPR), which this morning focuses on major issues at stake in the review of prudential supervision of banks. The subject is not new, but it is always topical. Let me first stress the greater degree of security already achieved in prudential matters: the agreement of 7 December 2017 on the finalisation of Basel III and the now standard use of macroprudential instruments. I will then touch on what remains to be done in Europe, specifically the completion of the Banking Union, an essential step. ** I. The implementation of the Basel III agreement of 7 December 2017  in Europe, fully respecting the envisaged timetable, is essential The finalisation of Basel III – and not of Basel IV, definitely not – brings to an end a decade of regulatory efforts which have considerably strengthened the resilience of the international banking system. I reiterate that the agreement of 7 December 2017 is the best possible agreement for France and for Europe.

In this regard, the Bank of Albania considers remittances as an important source of income in the economy and a contributor to the Balance of Payments. From a narrower perspective, remittances are estimated to have a significant impact on Albanian households, for reducing the poverty and improving the quality of life. Even in the case of Albania, the studies performed by the Bank of Albania and the World Bank show that the income from remittances are allocated mainly for consumption, medication, and education, as well as for savings and investments, the latter mainly for residential properties. In addition to the above, the Bank of Albania treats remittances also from the perspective of their inflow channels in the Albanian economy. Recent studies show that the formal transfer channels dominate, mainly through money transfer financial institutions, and less through banks. In the meantime, remittances in cash remain at high levels, which is worth for an in-depth analysis. The World Bank survey conducted in 2016 concluded that the reasons for the limited use of the banking channels are the high costs on money transfers and the perceived cumbersome and complex procedures. To illustrate my point, according to this survey, the costs of remittances toward Albania are estimated at 9.4 per cent of the amount sent, compared to the 7.2 per cent average in the region. We are all aware that the more financial channels are used, the more finances penetrate in the economy.
In conclusion, I hope this description has given you a sense of the PRA’s intended approach to supervising insurers, and some of the big issues that we see ahead. We have grown all too accustomed to focusing heavily on banks, reflecting their capacity for damaging spillovers and externalities. Whether, or how much, insurers share some of these characteristics is the subject of extensive debate. I am yet to be persuaded that the similarities of insurers and banks are more important that the differences. But I am persuaded that insurance is a critical financial service provided by firms that have considerable complexity in terms of financial risks. This alone demonstrates why we care about the prudential supervision of insurers. I should stress that we are looking forward to the challenge. Thank you. BIS central bankers’ speeches  7

With respect to welfare benefits, the Stability Programme reflects the 1.6% settlement for the revaluation of public pensions, both in 2018 and 2019. This increase will be 3% this year, 2018, in the case of minimum and non-contributory pensions. I shall later return to this. In any event, given the trend growth in the number of pensions and the substitution effect arising from the new pensions replacing those that are terminated, which are generally higher than was earlier the case, the forecast growth in the budget earmarked for welfare benefits in 2018 (3.7%) may also be surpassed. Among the remaining expenditure items for this year, goods and services purchases will notably continue to be contained, and interest payments to decline, while there will be a significant increase in public investment. This latter development is partly in response to the inclusion in 2018 of the expenditure associated with amounts for which the government may be liable under the insolvency-related legal proceedings currently affecting certain toll motorways. But even after adjusting for this effect, public investment is expected to be more expansionary than other items, as was the case in 2017. All told, public investment is expected to stand at 2.1% of GDP in 2018, excluding the temporary effect arising from the above-mentioning legal proceedings, a level far below the average for the previous two decades, which was 3.6%. Overall, it may be concluded that the attainment of the budget deficit target for this year, namely 2.2% of GDP, is subject to significant risks.
I shall confine myself to a tour of some of the international and domestic reforms of banking itself, highlighting a few questions for debate along the way. Expose debt holders to losses: resolution regimes First and foremost, we need holders of bank debt to be exposed to losses when banks fail. This is not some macho thing. If banks’ cost of debt finance does not vary with the risks they are taking, what should be an important check on the tendency to excess is badly diluted. For the financial system to be safe, we need to be able to sort out distressed commercial banking and investment banking operations without massive disturbances to the provision of services and without taxpayer solvency support. That, in a nutshell, is what is meant by making a firm “resolvable”. The economy’s payments system obviously needs commercial banks that can be resolved in an orderly way. But, in addition, the capital markets need sound intermediaries which, if they become distressed, can expire safely or whose viable parts can be resurrected. I stress that because we need to do more than ensure that the most critical services are preserved come what may. We need also to avoid the massive destruction of value that occurs when, under standard bankruptcy proceedings, a trading portfolio is liquidated in stressed market conditions and without sensitivity to spillovers to the rest of the system. We need resilient capital markets.

Other factors will add to the inflationary pressures in the medium to long run. Without elaborating too long on them today, I want to mention in particular population ageing and climate change. The ageing of the population will lead to a significant increase in public spending, for retirement pensions and health expenditure. At the same time, the growth in public indebtedness during the past twenty years will require an adjustment at some point. Both issues will lead to a mix of economic policy decisions and there may be a conflict between firms and employees about the final burden sharing, with risks of a wage-inflation spiral. Climate change could also have both a direct impact on prices, through disruptions in production, and an indirect impact, through policy measures to curb down carbon dioxide emissions. Climate change, through unusual weather outcome – temperature, rain or unusual seasonality – or disasters, would disturb climate sensitive productions such as food products or electricity (e.g. hydroelectric energy). Scarcity of these products would then lead to temporary overshooting in their prices. Measures to curb down carbon dioxide emissions will have a direct impact on prices through increases of indirect taxes and an indirect impact through the necessary adjustment of the production process. This adjustment will involve heightened tensions on production capacities, as part of the equipment stock will have to be discarded due to changing regulations or due to increases in its operating costs with higher taxes. Some temporary impact on inflation may therefore be expected during this process.
In this situation it is possible that unemployment will still be high, as changes in employment often occur somewhat later in the economic cycle than changes in other variables, such as growth. This is illustrated in our forecasts for the repo rate and unemployment presented in the February Monetary Policy Report. It is important to remember in such a situation that monetary policy is forward-looking and that its primary task is to create good long-term conditions for the economy by maintaining price stability. Let me illustrate this by means of two monetary policy episodes. ”Too low” versus "too high” inflation The last time the repo rate was very low, with a lowest point of 1.5 per cent, was in 2005. Inflation was then below target and the Riksbank received criticism from various parties for not cutting the repo rate further. Sweden was on its way into an economic upturn, but the labour market was nevertheless relatively weak. There was a lot of talk about "jobless growth”, that is, growth that does not create employment. Some said that the reason more jobs were not created was that monetary policy was too tight. The Riksbank made a different assessment. The view of the Executive Board was that it was underlying factors on the supply side, such as productivity, increased competition in the food sector and low-price imports from emerging economies that were decisive for the low inflation and employment. None of these factors would have been affected by a repo rate cut.

After the licensing of Popular Bank, with Albanian capital, the number of banks increased from 15 to 16, and a preliminary license is granted to Union Bank (Albanian capital), which is expected to raise the number of banks to 17 over 2005. The system assets have further increased by 14 percent while there was an increase of banking products and an expansion of their network. During this year there will be sold the public shares of both the Italian Albanian Bank and United Bank of Albania, which will lead to an increase of effectiveness and banking competition, paving the way to the processes of selling, merging and acquisitions towards a new consolidation of the banking system. The lending activity increased by 38 percent where one can distinguish, inter alia, the significant growth of medium-term and long-term loans compared to short-term loans. The map of coverage of the country with the banking system has further expanded, including new areas ever covered before. At the end of 2004, the total number of branches reached 88, or 11 branches more that the end of the previous year, while the number of agencies recorded for the first time a full three-digit number, 100 and the number of the employed people increased by 26 percent. The high increase of the number of branches relative to that of agencies shows that banks are not interested only in providing the service of collecting deposits but also in providing other products like crediting to the economy.
Lars Nyberg: Swedish housing financing and the EMU  Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riskbank, at Economics Day held at HSB Bank, Stockholm, on 8 November 2000. *  *  *  I would like to start by thanking you for inviting me to HSB Bank’s Economics Day and giving me this opportunity to talk about Swedish housing financing from an EU perspective. Introduction One of the main purposes of the Single Market and the introduction of EMU is to create a more efficient market for goods and services, a market which is characterised by greater competition and better products at lower prices. On the mortgage market, this should mean that borrowers can expect a wider range of products, more choice of suppliers and lower interest rates. The national mortgage markets in Europe vary considerably, as does their significance to the country’s economy. This is illustrated in the following diagram (Figure 1). In countries such as Germany, Denmark, Sweden, the Netherlands and the UK, the total outstanding stock of loans with property as collateral amounts to over 50% of GDP. In other countries, such as Greece and Italy, the corresponding figure is less than 10%. The differences are mainly due to factors such as different regulations, tax legislation and market structures in the different countries. As in Sweden, housing financing issues have often aroused considerable political interest, a fact which is reflected in all of the above factors. The outstanding stock of European mortgage bonds divided by GDP 1998.

26  All speeches are available online at www.bankofengland.co.uk/speeches  26  Chart 18: Union membership Share of employment  60%  50%  40%  30%  20%  10%  0% 1892  1902  1912  1922  1932  1942  1952  1962  1972  1982  1992  2002  2012  Sources: Department for Business, Energy & Industrial Strategy, Bank of England and Bank calculations. Chart 19: Collective bargaining  Per cent 70 60 50 40 30 20 10 0 1998  2000  2002  2004  2006  2008  2010  2012  2014  2016  Source: ONS and Bank calculations. Notes: Share of employees with Collective Bargaining Agreement coverage. 27  All speeches are available online at www.bankofengland.co.uk/speeches  27  Chart 20: Union membership vs. change in labour share by industry  Change in labour share  0.3 0.2 0.1 0 -0.1 -0.2 -0.3  0  0.1  0.2  0.3  0.4  0.5  0.6  0.7  Initial unionisation rate Source: ONS and Bank calculations Note: Data shown at SIC1-digit level. X-axis shows unionisation rate in 2001, and y-axis shows change in labour share between 2001 and 2016. Size of bubbles represents size of industry. Trend line weighted by size of industry. Chart 21: Robot use by country in manufacturing  Robots per 10,000 employees in manufacturing 600 500 400 300 200 100 0  Source: International Federation of Robotics.
As historical evidence suggests, it is possible for financial imbalances to develop even in an environment of stable and low inflation. Therefore as the second implication, it is impossible to avoid crises without discipline in financial markets. Then it naturally follows that the risk management developed as a distinct banking discipline in the 1990s. New tools and methods to manage the market and credit risk were developed, and brought about a dramatic increase in the volume of capital movements in the financial sector and variety of instruments. Efficient supervision became the vital part of this internal discipline. I should also admit that, as financial engineering contributes to development of new and complex instruments, such instruments also create obstacles to supervisory authorities given their sophisticated structures. As a result, a long debate started among both academics and policy makers as to whether the objective of price stability or financial stability should take priority for a central bank. I do not want to take sides in this debate. We, central bankers, are responsible for providing a stable economic environment, in which the economy operates efficiently in the long run. And prerequisites for a stable economic environment are both price stability and financial stability. So, there is always a strong reason for keeping financial stability in the central banks’ reaction functions. Therefore, these two objectives are not in conflict in the long run, but are complementary to each other. Accordingly, financial stability has increasingly become an auxiliary objective of central banks to pursue.

The most important result of international efforts aiming at sound financial markets was the approval of modern risk management techniques as a part of regular financial intermediation process. In this context the Basel II, the new capital adequacy framework, is a very important outcome of the action taken in the international arena. Although, the main aim of the original Basel Accord, which was applying institutionalized and international standards to the global financial system, has not changed in the Basel II Accord, the Basel II puts more emphasis on the risk management aspect of the financial intermediation process. It is expected that a sound and resilient risk management in the banking sector would also lead to more efficient risk management in the real sector. Therefore, in this way, as the financial system becomes more stable, less pro-cyclical and reinforced against shocks, more sources will be available for the real sector. However, it should also be considered that healthy and efficient risk management requires more than the three main pillars of the Basel II Accord. A good understanding of the risks that a financial institution might encounter, a clear definition of risk taking procedures, compliance of risk taking decisions with the strategic goals of the institution, ensuring the risks are within the limits that were set by the management and adequate capital for given risk structure are other essential elements for a more significant advance in risk management in financial institutions.
I hope that sharing the Bank’s experience will reinforce the current initiatives you may have in your organisations and perhaps even trigger some new ideas about what more we all can do to achieve gender equality in the industry. Lessons from the Bank’s diversity and inclusion initiatives Diversity is not a one hit wonder: focus on the whole process from recruitment to development to promotion The Bank recognises that how it recruits affects whom it recruits. From school leavers to career returners, the Bank has programmes to attract diverse talent at each stage of life. To help develop the next generation, the Bank is working with schools to encourage a more diverse set of students to study economics and finance. We provide free classroom materials for students aged 11‐16 to equip them with the analytical skills to make informed financial decisions, using real‐world examples, captivating videos and accessible case studies.7 By the end of 2018 we had reached 90,000 students through our “EconoMe” programme, one quarter of all state secondary schools in the country. In an attempt to inspire children into finance, over the past year we have also made more than 300 school visits, of which 75 were by the Bank's policy committee members. 5  Farmer, H, McKay, R, Tsakiris, M, Trust in Me (2013): “Trust in Me: Trustworthy Others Are Seen as More Physically Similar to the Self”, Psychological Science. 6 Kahneman, D (2012) “Thinking Fast and Slow”, London. See also Sunstein, C.R, Hastie,R (2014), “Making Dumb Groups Smarter”, Harvard Business Review, December.

An important aspect of successful job applications and interviews is being able to demonstrate personal development. For too long at the Bank, the opportunities to broaden skills and experience were granted on an informal basis to those who either knew about the opportunity or were recommended by a colleague. This tended to further reinforce homogeneity in senior leadership. In 2017, to level the playing field we launched an internal “opportunities” board. This connects people who need help with a short-term project to those able to offer it. Since we launched the site two years ago, 700 opportunities, from speech research to short-term holiday cover have been advertised across the organisation. The Bank has also created a ‘high potential’ talent pipeline, which has 50% female representation, and coupled this with new approaches to development support. Our new sponsorship programme connects a high potential candidate and senior colleague to help sponsees identify assignments and opportunities to hone their skills and increase their experience. The pilot consisted of 19 colleagues, 84% of whom were female at the scale just below senior management. Building on this success, we have extended the programme and 80% of colleagues in the second phase are female. As well as sponsorship the Bank recognises that mentoring (both formal and informal) can have a positive impact on an individual’s confidence to progress their careers. That’s why we launched our One Bank Mentoring Scheme in 2017 and ensured it is open to all staff.
Congress learned of the availability of the transcripts shortly after this, and in February 1995, insisted that they be published with a five-year lag. Once committee members became aware that their meetings were being recorded, the structure of the discussion appeared to change. Before 1995 meetings had begun with prepared speeches followed by a freeflowing debate characterised by a frank exchange of ideas. But after 1995, there appears to be a much greater tendency for meetings to become an exchange of prepared statements, and some of the colour of the previous discussion may have been lost. Explanations of decisions in the form of press statements issued at the time of the announcement of decisions on interest rates have become less frequent. But this is principally because there have been fewer interest rate changes recently. In its first three years, the Committee moved rates 16 times and issued press statements on 14 of those occasions. It also issued two statements when it had not moved rates. Over the past two years the Committee changed rates seven times, accompanied by six statements, with no statements when rates were left unchanged. The purpose of a press statement is to explain a decision reached, by definition by a majority of the Committee. Because it is brief it cannot do justice to the richness of the discussion at the Committee, and the balance of views is not represented.

For the remaining five external members, the propensity to be in the minority has been very similar to the Bank executive (excluding the Governor), with dissenting as a proportion of total votes at 12% and 11% respectively. Moreover the differences in votes have been small. On only four occasions has the difference between the highest and lowest interest rate voted for exceeded 25 basis points, and, interestingly, all four were between August 1998 and April 1999, a period of great uncertainty about whether there would be a downturn in the world economy that did not in fact materialise. Since then differences of view have 5  4  Hall (1971), “Decisions, decisions, decisions”, Psychology Today, November. BIS Review 34/2002  never exceeded 25 basis points. The average difference between the interest rate cast by the member voting for the highest average level of rates and the member voting for the lowest average level of rates is less than 15 basis points! Such a small difference hardly corresponds to a major difference of view about the outlook for inflation. 3. Third, has the Committee explained clearly the reasons for its decisions? Transparency has been at the centre of the monetary policy framework since 1992 when it was recognised that clear explanations of policy would help to anchor inflation expectations on the target. The first major step in enhancing transparency was the Bank’s Inflation Report, which first appeared in February 1993, and was subsequently enhanced by publication of the minutes of the meetings between the Chancellor and Governor.