samchain/econo-pairs-v1 huggingface dataset:
Christian Noyer: Monetary policy, the French economy and its outlook Introductory letter by Mr Christian Noyer, Governor of the Bank of France, to the Bank of France’s Annual Report 2006, submitted to the President of the French Republic, the President of the Senate, and the President of the National Assembly, 1 August 2007. *  *  *  I have the honour of submitting to you, as required by law, the report on the operations of the Banque de France, monetary policy and its outlook. The year 2006 was marked by robust and more balanced growth in global economic activity across virtually all regions. Thanks to this favourable international environment, the French economy saw a return to dynamic growth conducive to employment and the reduction of government deficits. This cyclical upturn should not, however, mask the structural difficulties facing the French economy, which is performing less well in all these areas than its main trading partners and which, moreover, is witnessing a further widening of its external deficit. Against this backdrop, I should like to outline a number of analyses of the growth environment, monetary policy, the state of the French economy and the main challenges that it needs to rise to in order to take advantage of globalisation and make structural improvements to growth and employment. In 2006, the European economy entered a period of sustained and balanced growth Growth in the euro area is sustained: after 2.9% in 2006, it could stand at 2.6% in 2007.

BIS Review 92/2007  7
This is an indication that the economy was exposed to sizeable unexpected disturbances. The exchange rate appreciated more than projected. After the publication of Inflation Report 3/02 in October last year, the krone appreciated further. This was related to unexpectedly weak developments in the global economy resulting in lower interest rates abroad and a wider interest rate differential between Norway and other countries. Negative events such as the accounting scandals in large US companies, fears of terror and war in Iraq and the spread of SARS contributed to weak growth and low inflation in other countries. Developments in the international equity markets and the risk of higher oil prices also contributed to strengthening the krone. In addition, the Norwegian business sector has clearly felt the effects of the high Norwegian cost level and the strong krone in 2002. Growth in private consumption came to a temporary halt last winter as a result of high electricity prices and general uncertainty. This probably affected profit margins in retail trade, particularly for durable consumer goods. Public entities have also had to make adjustments following last year’s wage settlement. Sluggish global and domestic growth has in turn had an impact on the Norwegian labour market. Inflation in 2003 has been pushed down by the fall in prices for imported consumer goods in particular. The low rise in imported price inflation is a consequence of the appreciation of the krone throughout 2002 and low inflation abroad. The rise in prices for domestically produced goods and services has also gradually slowed.

However, it would in general have been possible to attain the inflation target in the nearer term by changing the interest rate more rapidly and more markedly. Hence, in Norges Bank’s conduct of monetary policy, emphasis is given to variability in both output and inflation. This is called flexible inflation targeting. The impact of monetary policy occurs with a lag. The current inflation rate does not therefore provide sufficient information to determine the level at which interest rates should be set now. Our analyses indicate that a substantial share of the effects of an interest rate change will occur within two years. The choice of a two-year horizon is thus based on striking a balance between inflation stability and output stability and on a perception of how interest rates influence the path of inflation and output. Activity in the economy moves in waves. This variability can be described by developments in what is known as the output gap. The output gap shows capacity utilisation in the mainland economy measured as the difference between actual GDP and the level indicated by trend growth, estimated at 2½ per cent in Norway. When the output gap is positive, the economy experiences an upturn, and a downturn when the output gap is negative. The output gap increases in value in an upturn and decreases in a downturn. For the Norwegian economy, the 1980s was a period of relatively wide fluctuations in activity, with periods of high inflation.
With that, I wish everyone a successful forum and hope you continue to have engaging conversations ahead. Thank you. 4/4  BIS - Central bankers' speeches

But with hindsight, seen across the world as a whole, there was a case for somewhat tighter monetary policy to prevent the demand for resources outstripping supply (although I would note that our interest rates have been consistently higher in recent years than those elsewhere in the advanced economies). The rise in oil and food prices has appeared as an external pressure on each country on its own but it is not external to us all collectively. A particular problem here – that has yet to be resolved – is the expansion of the dollar bloc. The emerging economies were importing loose monetary policy, which scarcely seemed appropriate to their domestic conditions. However it is hard to believe that a somewhat tighter monetary policy would have been guaranteed to head off the credit boom and subsequent crunch altogether. Put another way, monetary policy is a blunt instrument. To prevent excesses in financial markets, we might have had to generate an unnecessary slowdown in the real economy. I share the view therefore that we have to look for new regulatory measures to complement interest rates. There are a number of specific lessons on regulation which have already been identified. The FSA, for example, is already strengthening its prudential supervision. And internationally, we need to fill gaps in the current framework – for example on mortgage origination in the US, increasing the capital requirements for some credit products and loan commitments, and ensuring that investors and rating agencies assess new products more diligently.
Jon Cunliffe: The role of the leverage ratio and the need to monitor risks outside the regulated banking sector Speech by Sir Jon Cunliffe, Deputy Governor for Financial Stability of the Bank of England, at the Financial Reporting Council annual conference, London, 17 July 2014. *  *  *  In early 2009, around the height of the financial crisis, the market valued the combined equity of the major UK banks at less than 2% of their total assets. In other words, the market thought these banks were, on average, over 50 times levered. Measured by their regulatory returns, average leverage was “only” 30 times or so. And on a risk weighted basis, the banks had 6.7% common equity capital – well above the 2% minimum. Tier 1 capital ratios were almost 9%. This was of course the time when fear in the market was at its peak. The message was crystal clear. When it mattered most, the market did not at all believe the published numbers for bank capital adequacy. And the market reacted accordingly bringing funding markets to a halt. This episode tells us two things. The first is that financial reporting matters. It matters at all times. But it matters most in times of stress. As an illustration here, I can recall heated discussions between European leaders about mark to market rules and about the transfer of assets from banks’ trading to their banking books in 2008 and 2009.

But systemic risk will depend on both the vulnerabilities that accumulate internally in the banking system and the sources of risk outside the banking system. The interest rate may only have a dampening effect on the build-up along some of these dimensions. In the March issue of the Monetary Policy Report, we wrote that the consideration of guarding against the risk of future financial imbalances that may disturb activity and inflation somewhat further ahead suggest that key policy rate should be increased in the near future. The consideration with regard to financial imbalances is thus part of the basis for setting the interest rate. At the same time, there are limits as to how many considerations the interest rate can bear. The interest rate also has effects on other assets prices, such as the krone exchange rate. A monetary policy that aims at bringing down the value of domestic assets can easily push the value of the krone in the opposite direction. In interest rate setting we can never lose sight of the primary objective of monetary policy, which is low and stable inflation. In assessing the different considerations, monetary policy must adhere to the operational mandate – low and stable inflation. Without results that show that the inflation target is actually attained over time, there is a risk that monetary policy will lose credibility. We therefore need more targeted instruments to dampen the build-up of risk in the financial system.
Let me cite a few excerpts from Walter Bagehot’s “Lombard Street”:1 “Mercantile bills are an exceedingly difficult kind of security to understand …in years like 1871 many active men make so much money at the end of the year they are worthy of altogether greater credit than anyone would have dreamed of….On the other hand, in years like 1866 a contagious ruin destroys the trustworthiness of very many firms…Persons who buy and sell again soon are often liable for amounts altogether much greater than their own capital; and the power of obtaining those sums depends upon their “respectability,” their “standing,” and their “credit,”…and more simply upon the opinion which those who deal with them have formed of them.” Whilst not directly applicable to the present times and taken out of the historical context of the financial panic around the failure of Overend, Gurney and Co. in 1866, there are still a number of thought-provoking passages that sound so familiar in comparison with what we have been experiencing over the past four years of financial crisis. This is not only the case because the offices of Overend in Lombard Street were only a few miles away from where we are meeting today. So, let me dedicate my speech to the issue of contagion, and more specifically to the experiences with sovereign contagion during the European debt crisis and the related policy responses. I would like to start out by discussing why contagion needs to be addressed by policy and how.

Financial stability is a much more difficult concept to define. You know it by its absence of course. But by then it is usually too late. So it is fair to say that over the first years of the FPC we have been ‘learning by doing’, building out our thinking on what we should care about as we have been identifying and mitigating risks – and setting out our thinking so that stakeholders understand why we have acted as we have and how we are likely to act in the future. Based on 17 possible UK financial crises between the Bank’s foundation and 1846/1847 cited in Ashton (1959), Hoppit (1986) and Dimsdale and Hotson (2014). 2 Huang and Thomas (2016). 3 Anson et al (2019) and Anson et al (2017). 1  2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  Almost exactly five years ago the FPC took its first action directed at housing related debt and, crucially, action aimed at the resilience of borrowers rather than lenders. In doing so, the FPC adopted a broad view of its responsibilities – one that went beyond the risks and resilience of the financial system to the risks of leverage in the economy more generally. I want to look today at the reasoning behind that action and the evidence that has accumulated since about the risks the FPC was aiming to contain and the effectiveness of the action it took.
As their employment began to decline, some workers left the area while others remained. Indeed the legacy of the “Big 3” lies not in what was lost, but in what remains in the skills and entrepreneurial spirit of the many talented people that are here today. Some of these talented people started their own companies, while others found different ways to contribute their unique talents to the local economy. As a result, Rochester continues to reinvent itself, and is now much more diverse, with an employment base that is no longer concentrated among a few large manufacturers. The top employers in the region, like the University of Rochester and Rochester Institute of  BIS central bankers’ speeches  1  Technology (RIT), Wegmans, the Rochester General Health System and Paychex, just to name a few, perform a variety of activities, from health care and education to consumer and business services. The process of reinvention and economic diversification, in part, allowed the region to better weather the storm of the Great Recession compared to past economic recessions. For Rochester, the downturn was both shorter and less severe in terms of job loss than for the nation as a whole – a situation quite different from what had occurred before. Though it still lags the nation, the Rochester area has continued to grow at a solid pace through the recovery. This is no small feat, and it certainly is not true for all of Upstate New York.

In order to remain relevant and effective in meeting the growing financial needs of an expanding economy, DFIs need to increasingly draw funds from alternative sources, such as the capital market. Sourcing funds directly from the market would also help instil certain form of discipline on the operations of the DFIs. Allow me this opportunity to now share with you an overview on the roles and developments of DFIs in Malaysia. There are currently 14 DFIs in Malaysia. Like those found in other countries, the DFIs were established and funded by the Government to develop and promote identified strategic sectors, in line with the overall industrialisation and economic development objectives of Malaysia. The first DFI was the Malaysian Industrial Development Finance Berhad (MIDF), which was established in 1960, to provide medium to long-term financing to promote the development of private industrial enterprises. Subsequently, several major DFIs were established, including Bank Pertanian Malaysia (or the Agriculture Bank of Malaysia) to promote agricultural development, Bank Pembangunan Malaysia Berhad (or the Development Bank of Malaysia) to promote Bumiputera indigenous community development in commerce and industry, Bank Industri Malaysia Berhad (or the Industrial Bank of Malaysia) to support development in the industrial and manufacturing sectors, as well as the Export-Import Bank of Malaysia (EXIM Bank) and the Malaysia Export Credit Insurance Berhad (MECIB) to promote international trade and support export diversification and expansion, especially to the non-traditional markets.
Brodsky, Bonni, Marco Del Negro, Joseph Fiorica, Eric LeSueur, Ari Morse, and Anthony Rodrigues. 2016a. “How Do Survey- and Market-Based Expectations of the Policy Rate Differ?” Federal Reserve Bank of New York Liberty Street Economics (blog), April 7. Brodsky, Bonni, Marco Del Negro, Joseph Fiorica, Eric LeSueur, Ari Morse, and Anthony Rodrigues. 2016b. “Reconciling Survey- and Market-Based Expectations for the Policy Rate.” Federal Reserve Bank of New York Liberty Street Economics (blog), April 8. Bruine de Bruin, Wändi, Wilbert van der Klaauw, and Giorgio Topa. 2011a. “Expectations of Inflation: The Biasing Effect of Thoughts about Specific Prices.” Journal of Economic Psychology 32, no. 5 (October): 834–45. Bruine de Bruin, Wändi, Charles F. Manski, Giorgio Topa, and Wilbert van der Klaauw. 2011b. “Measuring Consumer Uncertainty about Future Inflation.”Journal of Applied Econometrics 26, no. 3 (April–May): 454–78. Bruine de Bruin, Wändi, Wilbert van der Klaauw, Maarten van Rooij, Federica Teppa, Klaas de Vos. 2016. “Measuring Expectations of Inflation: Effects of Survey Mode, Wording, and Opportunities to Revise.” De Nederlandsche Bank working paper no. 506. Bruine de Bruin, Wändi, Wilbert van der Klaauw, Giorgio Topa, Julie S. Downs, Baruch Fischhoff, and Olivier Armantier. 2012. “The Effect of Question Wording on Consumers’ Reported Inflation Expectations.” Journal of Economic Psychology 33, no. 4: 749–57. Carroll, Christopher. 2003. “Macroeconomic Expectations of Households and Professional Forecasters.” Quarterly Journal of Economics 118, no. 1: 269–98. BIS central bankers’ speeches  17  Correia-Golay, Ellen, Steven Friedman, and Michael McMorrow. 2013.

However, as we know from Slide 10, this masks substantial changes in the underlying density forecasts, with the lower rate mode becoming more prominent. 50  See e.g. Crump et al. (2014), and more recently Brodsky et al. (2016a). 51  Market-implied rates were derived from futures prices at the same time as responses were received from the surveys. 52  Adrian, Crump, and Moench (2013). 14  BIS central bankers’ speeches  Finance models make a variety of assumptions that allows them to extract risk premia from asset prices. Once that is done, they can obtain the underlying so-called “physical” probability distribution of the marginal investor – that is, the actual probability she assigns to various outcomes. Brodsky et al. propose a complementary approach, called “tilting,” which is, in a way, the reverse of the finance approach.53 It starts from the survey probability distribution and asks: How much do I have to “tilt” the original distribution – that is, how much probability mass do I have to shift around – to obtain the market-implied path as its mean? There are many ways to tilt or alter the survey distribution such that its mean is the market rate. Our approach is to require that the tilted distribution is as close as possible to the original survey distribution, where the notion of distance is one that is commonly used in statistics, and is based on a measure called relative entropy or Kullback-Leibler information criterion (KLIC). This relative entropy approach is nothing new.
And so the South and West have been growing faster than the country as a whole for a very long time. Now there are some pockets of weakness there because we had a big collapse in energy prices, so some of the areas in the South and West that are very dependent on the energy sector are probably a little bit less robust. So, that’s the first way I would describe it. The second way I would describe it is rural/suburban/urban. There’s been a tremendous shift in people’s enthusiasm for living in big cities, and that’s really one reason why New York City is doing so well because people basically want to live in the big cities, especially younger people. And so you’re seeing the cities, especially the big cities, outperform the smaller cities and outperform the rural areas. New York City has actually been very much a beneficiary of this, relative to many other parts of the country. Dr. Olajide Oladipo: Thank you. I’m sure now that we may have questions from the audience. To my right we have – a stand there. And to my left, we have another. If you have questions, please, students, colleagues? It’s time for Q&A. If you have any questions, please. Audience Member: Good morning, and welcome to your college. Although the Die Hard scenario may not work in reality, cybercrime has been a greater threat to the financial system.

So, I would say Sarbanes-Oxley generally makes the system safer because it makes it much harder for people to – it really deters fraud and manipulation of financial accounts in a way that I think is very, very positive. The second part was? Audience Member: Glass-Steagall? President Dudley: Glass-Steagall. Well, I think that – the Glass-Steagall Act was an act that was passed in the 1930s that basically said that you could either be in commercial banking or you could be in 8 / 15  BIS central bankers' speeches  investment banking. You couldn’t be in both. And so this is an act that basically forced the Morgan Company to separate into Morgan Stanley and J.P. Morgan. Now what happened was many years later in the 1980s, I actually was involved with this because I was working at J.P. Morgan at the time, people started to say, “Look, if I’m a big commercial bank like J.P. Morgan, I’m losing all my customers who are going to the securities market. I need to follow my customers, but I can’t because of Glass-Steagall.” And they found that there was a loophole, Section 20 of the Glass-Steagall Act basically said that you can’t be principally-engaged in securities activities. So, it meant that you could be engaged but just as long as it wasn’t principally-engaged. And so this is a little loophole that a number of firms managed to exploit.
This is the sixth edition of this Conference, which brings together central bankers from both shores of the Mediterranean and representatives from international organisations, industry and academia. The first and third editions were in Barcelona, in 2014 and 2017, the second in Rabat in 2015, the fourth in Tunisia in 2018 and the fifth in Madrid in 2019. On this occasion, we have switched to a fully virtual conference, although we hope that in the next edition we can return to a face-to-face format, which helps strengthen the links among us. I firmly believe that fora like these are instrumental in enhancing regional cooperation and dialogue and in contributing to the design of economic policies that can have a tangible impact on the lives of our citizens. Furthermore, regional cooperation might be seen as complementing as well as supporting the strengthening of multilateralism. At the current juncture, where we are still suffering the consequences of the deepest economic crisis since the Second World War, the global recovery needs to be based, more than ever, on cooperation and solidarity between countries. Past editions of this conference had provided useful exchanges of ideas on different topics of relevance for the central banks in this region. The theme of this conference, Central banks at the frontline of the COVID-19 crisis, is closely linked to the pandemic besetting the world for almost a year and a half.

Pablo Hernández de Cos: Central banks at the frontline of the COVID-19 crisis - weathering the storm, spurring the recovery Welcome address and introductory remarks by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chair of the Basel Committee on Banking Supervision, at session 1 of the VI Conference of Mediterranean Central Banks, jointly organised by the Central Bank of Tunisia, the Organisation for Economic Co-operation and Development (OECD), the European Institute of the Mediterranean (IEMed) and the Bank of Spain, 28 June 2021. * * * It is a great pleasure for me to welcome you all to this Conference on Central banks at the frontline of the COVID-19 crisis: weathering the storm, spurring the recovery, jointly organised by the Central Bank of Tunisia, the Organisation for Economic Co-operation and Development (OECD), the European Institute of the Mediterranean (IEMed) and the Banco de España. Let me start by thanking our colleagues from the Central Bank of Tunisia, the OECD and the IEMed and, in particular, Governor El Abassi, Ambassador Florensa and Luiz de Mello for their cooperation in organising this Conference. We could not have asked for better partners to help set up this event. Under the resolute impulse of the IEMed, this Conference is becoming a mainstay among the fora for dialogue and cooperation in economic and financial relationships in the Euro-Mediterranean region.