samchain/econo-pairs-v1 huggingface dataset:
Today, I will just express my own initial reactions to a few of the elements in the assessment that come closest to the theme of today’s address. First and foremost, I cannot, of course, avoid noting that Goodfriend and King also consider that Swedish monetary policy since the introduction of inflation targeting has been an overall success. Neither is there any doubt that they support an inflation target as the starting point for monetary policy. However, they would like to switch target variable to the CPIF, that is the CPI with a fixed mortgage rate. It would not be difficult for us to make such a change, as we already focus most of our analysis and communication on the CPIF. At the same time, I think that there may be reason to evaluate several possible measures, for example the internationally-comparable measure HICP, as my colleague on the Executive Board Per Jansson has previously discussed in a speech.7 I appreciate how much Goodfriend and King have endeavoured to base their assessment on the information and experience available at the time of each individual decision, rather than proceeding on the basis of everything we know today about how developments turned out. As they note, we have been through a difficult period with major challenges and difficult decisions. One consequence of this is that it has been particularly difficult to make a good forecast of the repo rate and to take into consideration the repo rate expectations reflected at that moment by pricing on the financial markets.

Total ESG assets in the region more than doubled, from about $ billion in 2019 to about $ billion in 2020. 12 Of the record $ billion global inflows into ESG funds last year, Asia attracted about $ billion. 13 But we need to do much more to allocate the capital that is necessary to support Asia’s transition to a sustainable future. As a centre for green finance in Asia, Singapore will play a purposeful role in this effort. We will do this in two ways: as the platform for developing green financing solutions customised for Asia; and 2/7  BIS central bankers' speeches  as the channel through which global capital is directed at meeting Asia’s transition needs. There are three areas where we need to intensify efforts: broaden the range of green financing solutions and markets; improve the consistency and transparency of ESG reporting and disclosure; and build knowledge and capabilities in sustainable finance. BROADEN GREEN FINANCING SOLUTIONS AND MARKETS Let me begin with broadening green financing solutions and markets. I will highlight three strategies that Singapore is focusing on. First, facilitate the issuance of more established green financing instruments, such as green bonds and green loans. Bonds and loans are a familiar and key source of financing for corporates of all sizes. Green, sustainability, and sustainability-linked bonds and loans enable corporates to raise financing as they take up green projects, invest in green assets, or move towards more sustainable business practices.
Chart 6: Zombie firms rising in AEs, falling in the UK  (a)  Per cent of firms 12%  Per cent of firms 30%  10%  25%  8%  20% UK measure (RHS) (c)  6%  15%  Global measure (LHS) (b) 4%  10%  2%  5%  0%  0% 2007  2008  2009  2010  2011  2012  2013  2014  2015  Source: European Commission, AMECO database; IMF, World Economic Outlook; Datastream Worldscope; The Conference Board; BIS calculations; Bureau van Dijk and Bank calculations. (a) Zombie firms are defined as firms with a ratio of earnings before interest and taxes to interest expenses below one. (b) Sample includes listed firms aged 10 years or more. Shown is the median share across AU, BE, CA, CH, DE, DK, ES, FR, GB, IT, JP, NL, SE and US. (c) Sample includes both publicly listed and private UK firms. Only firms whose turnover reached £ million in one of the past ten years are included. There are around 17,200 firms per year in the sample.

As an introduction to this FSR, we are extremely thankful to the roundtable participants that have accepted my invitation: •  A long-standing member of the Federal Reserve board: Governor Tarullo, thank you. It’s a privilege to welcome you today given your active participation and role in setting international financial regulation;  •  A Governor of one of the most advanced central bank in the area of macroprudential policy in Asia: Tae Soo Kang, Deputy Governor of the Bank of Korea, in charge of Financial Stability. •  A very active ambassador for macroprudential policy: José Viñals, Financial counselor and Director of the Monetary and Capital Markets Department of the IMF. •  A distinguished expert on the financial sector worldwide and its regulation: Douglas Elliott from the Brookings Institution. Thank you all for being with us today. As you know, for each issue of our FSR, we always try to pick topics that are both analytically complex and relevant to current policy-making. This is clearly the case with macroprudential policies. Indeed, macroprudential policy is a critical dimension of the public policy response to the crises we have experienced since 2008 and has figured prominently in the lessons we have drawn from them. Let me mention three of these lessons. BIS central bankers’ speeches  1  •  First, the oversight of individual components of the financial system is not enough to preserve financial stability. Having robust financial institutions is a prerequisite for ensuring financial stability but it is not in itself sufficient.
Also envisaged is a resolution fund fed by contributions from the industry to meet any needs for capital which cannot be covered by burden-sharing exercises. Furthermore, last December the Council of the European Union reached an important consensus after several months of complex negotiations, which, taken together with the aforementioned Directive, amounts in practice to the creation of a single resolution mechanism. Further to this consensus, a bank resolution board will be set up whose scope of action will be the same as that of the single supervisory mechanism. It will have considerable freedom to act urgently in cases of restructuring or winding-up. It was also decided to set up a single resolution fund which will be progressively endowed with financial resources. The bank resolution board will be entrusted with applying resolution rules uniformly, approving restructuring and resolution plans for banks supervised directly by the ECB and determining how the resolution fund is to be used. The details of the single resolution fund are to be set forth in an intergovernmental agreement of the participating countries before March. However, the consensus reached stipulates that the fund will be financed through contributions from the European financial services industry, although the resources contributed by the banks in each jurisdiction will not be fully merged until ten years have passed. During these ten years the fund will have separate compartments funded by contributions from the banks of each country, which will be progressively mutualised year by year.

However, obtaining a positive result in the exercise is only a favourable starting point for assuming the new supervisory regime in a macroeconomic and financial framework which, despite the recent improvement, remains beset by challenges to banks. Accordingly, irrespective of the results of the exercise, banks should continue to focus on implementing measures geared to capital preservation, improved efficiency and the pursuit of rigour in the recording and monitoring of asset quality. Single resolution mechanism and fund The second essential element of banking union is a single resolution mechanism. It has been said on numerous occasions that unified supervision will not suffice to eliminate market fragmentation. Another prerequisite is that similar banking liabilities of banks based in different jurisdictions must receive similar treatment in the event of solvency problems. In order words, the resolution of vulnerable banks has to proceed according to common rules applied on a centralised basis by a single authority. Regarding regulations, the agreement reached to approve the future Bank Recovery and Resolution Directive is a notable step forward because it offers a common framework for orderly bank resolution at a minimum cost to taxpayers. The Directive introduces burden-sharing or bail-in arrangements establishing a minimum amount and clear order of cost assumption by shareholders and creditors. It thus makes for accurate perception of the risk associated with each liability instrument and minimises the bill to be footed by taxpayers for the disorderly winding-up of banks.
To promote economic development in our local communities, we publish a lot of data and analysis on the local economy, including our small business poll findings. In addition we provide education outreach initiatives to help small businesses. For example, in October, we will host a workshop in Newark to help local businesses learn about export credit facilities and new tools for marketing. At the same time, we will launch our annual financial awareness video competition aimed at helping young adults make sound personal financial decisions. As you know, even states as wealthy as New Jersey have large pockets of poverty. So, we target some of our work specifically to low- and moderate-income groups. We have worked hard to help neighborhoods that face high foreclosure rates. This work is informed by analysis that suggests that high levels of foreclosures affect the value of neighboring homes, the local tax base and economic vitality more broadly. We have provided housing counselors and community development groups with the latest information on mortgage conditions, via mortgage briefs, roundtables, presentations and newsletters – including an interactive tool on our website that shows monthly delinquency and foreclosure conditions at the local level. This fall we will host a conference on distressed residential real estate to share what we and leading experts have learned with senior policymakers and practitioners from across the United States. All in all, there is a lot to keep myself and my colleagues busy. Regional economic conditions So how is our region doing?

As of the second quarter of 2012, for those people with a credit report, average debt per person in New Jersey was about $ roughly unchanged over the past several years. Delinquency rates on that debt are high: 8.4 percent of all debt in the state is seriously delinquent, up from 7.4 percent in 2011 and above the national rate of 6.7 percent. So, many New Jersey households are still struggling with their finances. Although there are some recent signs that home prices in the state are starting to firm, nevertheless, the housing crisis continues to take a toll on our homeowners. As of June, 9.3 percent of all mortgage debt in New Jersey was 90-plus days delinquent, three percentage points above the national rate. And that delinquency rate is actually a little higher here in northern New Jersey. National economic conditions The performance of the U.S. economy since the end of the recession in 2009 has been disappointing. Real GDP has grown at an annual rate of just over 2 percent over this period, and it was even slower in the first half of 2012. As a result, employment gains have been modest, unemployment remains above 8 percent – an unacceptably high level – and participation in the jobs market remains depressed. Moreover, about 5 million workers have been unemployed for six months or more.
As I mentioned earlier in my speech, the first quarter of 2009 is characterized as a period where impacts of the global financial crisis on the real economy were felt more clearly and inflationary pressures that dominated a major part of 2008 have been overtaken by fears of deflation and growth. With the effect of commodity price declines and slumps in domestic economic activity since mid-2008, inflation in Turkey took a sharp plunge in this period. Waning inflationary concerns have allowed the Central Bank to focus on restraining the potentially devastating effects of the crisis on the Turkish economy without conflicting with our primary objective of maintaining price stability. Considering the policies that have been implemented since the second half of 2008 within this context assumes great importance. Recent data point to an ongoing slowdown in economic activity of the first quarter of the year. Although domestic demand showed signs of a limited recovery over the previous quarter, it still maintains its weak course. Labor market data also indicate that this downward trend will continue and that it will take some time for economic activity to recover. Slumps in commodity prices and the significant slowdown in foreign demand in this period also add to the downward trend of inflation. Within this framework, the Central Bank adopted a strategy of front-loading policy easing by cutting overnight rates by a total of 700 basis points from November 2008 to April 2009 (Table 2).

Figure 14: Decisions on Interest Rates and Changes in Risk Premia (as of 16 April 2009) 300 Hungary  250  Change in CDS  Indonesia 200 S. Korea 150  Colombia  100 50  Chile  Mexico Poland Brazil Czech rep. S. Africa  Turkey  0 -7.5  -6.5  -5.5  -4.5  -3.5  -2.5  -1.5  -0.5  0.5  1.5  Change in Policy Rates (%)  Source: Bloomberg, CBT. Distinguished Guests, The measures taken against the global financial crisis were not limited to policy rate cuts. In this period, a lot of countries not only take measures to regulate the functioning of the markets, but also exercise non-traditional monetary policy implementations. In this period, the Central Bank of Turkey also took measures against the potential adverse effects on financial stability, a prerequisite for price stability. In the first quarter of 2009, a countercyclical monetary policy was adopted in the money market on the one hand and a number of decisions were made to regulate the Foreign Exchange and Banknotes Markets-Foreign Exchange Deposit Market on the other hand. In this framework, the maturity of foreign exchange deposit borrowed by the Banks from the Central Bank was extended; the lending rate for transactions, which the Central Bank is a party to, was reduced and the maturity of interbank transactions in the said market was extended. Besides, foreign exchange selling auctions were held at the times of ailing price movements in the foreign exchange market.
I was fortunate enough to be a member of both the interim and inaugural FPC. As with monetary policy after the ERM debacle, it was fascinating to erect the scaffolding of an almost entirely new policymaking edifice. Indeed, even less of this scaffolding was in place than in 1992. There were big issues to address about how to operationalise the objectives of macro-prudential policy, the transmission of these policies and which were the most effective macro-prudential tools.22 This new macro-prudential building was being constructed from ground zero, at the same time as being fully occupied. It has been fascinating, too, to watch the evolution of the FPC in the period since. The FPC has established for itself a clear and well-defined role, clear and well-defined tools and clear and well-defined transparency and accountability mechanisms, including the six-monthly Financial Stability Report and periodic stress-tests,  22  Haldane (2014). 14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14  conducted alongside the Prudential Regulation Committee (PRC) – the third leg of the Bank’s policymaking stool. Though they will never (and should never) be complete, the FPC and PRC are essential additions to the UK’s policymaking skyline. Crucial for the success of both the FPC and PRC is operational independence of decision-making, set in statute. Independence for financial regulation and supervision has received far less attention, analytically and practically, than on the monetary policy side.

As other countries have found, the scale and scope created by a Development Bank is necessary to reach SME start-ups and scale-ups across all sectors and all regions. The best time to have put in place a UK Development Bank would have been 1929. The second best time is now. Until recently one of the great financial puzzles was that, despite waves of innovation, there was little evidence of its effects in measures of the efficiency of financial intermediation. At the macro level, the work of Thomas Phillippon suggests measures of banking efficiency in the UK and US have flat-lined.27 At the micro level, this lack of progress was well captured by the late, great Paul Volcker in 2009 when we suggested the only useful piece of financial innovation over the preceding 20 years had been the ATM. 26 27  Stamp (1931). Phillippon (2015). 16  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  16  Today, the winds of technological change are blowing a gale through finance, led by payments. New technological barbarians are appearing at the gates, transferring monies cheaper, faster and easier than ever. Many private sector initiatives are underway currently to develop so-called “stablecoins” – digital currencies backed by pools of safe assets.
13  Darrel Duffie (2010), How Big Banks Fail and What to Do about It, (Princeton: Princeton University Press). BIS central bankers’ speeches  5  My experiences as a central banker directly observing and trying to think of ways to counteract the panic that took hold of global financial markets in September 2008 also underscore that published statistics and market prices may at best tell part of the story of developments in financial markets and how they might be affecting the economy as a whole. These experiences highlight the need of policymakers for real time market intelligence and having staffs with operational experience and a solid grasp of market functioning to develop appropriate policy responses.14 Recall that in just over four weeks following the failure of Lehman Brothers the global financial system experienced a panic of unprecedented speed and destructive power. Observing the panic up close was a sobering lesson about how quickly a complex financial system can freeze up. Like the study of economic history, knowledge of nonlinear and complex dynamics is important to diagnose potential risks in the financial system. However, even more so than economic history, the study of complex biological or physical systems do not offer actual detailed prescriptions about how best to understand and regulate the current global financial system.

As a result, an attempt to prick a bubble may lead to an intervention that puts a halt to “a good boom” which would have pushed the economy towards a higher level of development. The cost of such unwarranted interventions in the form of foregone growth could be substantial.5 How to deal with the cyclical dimension of systemic risk – a macroprudential approach The immense cost of the global crisis has led to a thorough rethinking of this traditional view on financial regulation and macroeconomic policy. For instance, estimates have been provided suggesting that the cumulated output loss incurred by the recent crisis could amount to 90% of 2009 world GDP.6 Naturally enough, the afore-mentioned approach of “benign neglect” is no longer seen as an acceptable way to deal with potential excesses building up through the financial cycle. Given that the cost of inaction when imbalances develop in the credit market can be huge, a more precautionary approach is indispensable (slide 3). In general, its goal should be, first, to enhance the resilience of the financial system to adverse shocks, and second – to the extent possible – to try and preventively contain the build-up of systemic risk. This is the thrust of the macroprudential approach. For instance, in order to address the root cause of cyclical systemic risk directly, the goal of this approach should be to reduce the procyclicality of financial agents’ behaviour. Can we hope to achieve this with monetary policy instruments, or do we need new specifically designed instruments?
José Manuel González-Páramo: Financial turmoil, securitisation and liquidity Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, at the Global ABS Conference 2008, Cannes, 1 June 2008. * 1. Introduction  *  *  1  Ladies and Gentlemen, It is a great pleasure for me to be here in Cannes. I would like to thank the European Securitisation Forum for giving me the opportunity to share with you some views on the current financial market turmoil, with a particular focus on the developments in the structured finance market, both from the perspective of market conditions and of monetary policy implementation. The fact that the markets for asset-backed securities (ABSs) have played a key role in the current market turmoil shows the increasing importance of credit securitisation for global financial markets. Securitisation, together with financial innovation and technological progress in the financial industry, has indeed changed the way many banks operate. The securitisation of their loan portfolios has provided banks with access to an additional funding source and enabled them to mitigate some of the risks intrinsically related to their core business of liquidity transformation. However, the market turmoil has also revealed vulnerabilities in the markets for asset-backed securities and the related “originate to distribute” model that need to be addressed in order to minimise the risk that, instead of contributing to social welfare, securitisation may in practice create risks for economic and financial stability. 2.

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.