samchain/econo-pairs-v1 huggingface dataset:
In recent weeks, the yields on German sovereign debt have on a few occasions started to move together with the yields of the periphery...  g.  Let’s turn our attention from clear fiscal solutions to monetary solutions and other ideas. Currently a lot of plans are being motivated by the idea that a eurozone-wide political commitment to a long-term plan for a deeper integration project is going to stabilize the markets. I will neglect the fact that to many observers these plans look like better or worse masked commitments to significant future fiscal transfers within the eurozone and that the markets are rather skeptical about Europe’s long-term projects. After all, the eurozone was one such project. In addition, the route to even the earliest targeted dates – in the second half of this decade – takes in one or more elections in most of the countries in question. Perhaps the markets would appreciate  2  BIS central bankers’ speeches  a nearer-term plan, one that signals, for example, that political players are willing to shift the voting powers on some pan-European solutions to bigger economies with larger stakes and more resources to spend in absolute terms. h.  Let’s go back to Philip Coggan’s observation that a “majority in failure” breaks financial systems based on the interests of savers. There are seven clearly conservative creditor countries in the eurozone: Estonia, Germany, the Netherlands, Finland, Slovakia, Austria, and Luxembourg. Seven is some way short of a majority in a group of 17.

Fourth, we have thoroughly analysed the issue of nonperforming loans (NPL), both at banking system level and at an individual bank level, and we are developing comprehensive measures which would create conditions for reduction of these loans, including strengthened loan-loss provisions, higher NPL write-offs, improved collateral valuations, enhanced disclosure practices, and strengthened data collection. Fifth, we are continuing the efforts to bring the regulatory framework fully in line with the EU law. For example, we are drawing up a completely new law on payment services and payment systems which, inter alia, would strengthen the requirements for security of payments made electronically and via Internet. I mention all these priority tasks of the BNB because for their performance we would largely rely on our constructive partnership with you, as we have done so far. Of course, we are well aware of the specific challenges that you too are facing. The strong pressure on profitability with a still weak, though increasing, and demand for loans requires that you keep seeking solutions for greater efficiency. The topics of credit risk management and costs policies would more and more be high on the agenda also because it is likely that we would witness another cycle of rising interest rates, given the worldwide trends and the expectations of such a development in the euro area sooner or later. These are topics that we will continue to discuss. Thank you for the good cooperation, and congratulations on the 25th anniversary! 2/2  BIS central bankers' speeches
During the same period as the volumes of credit derivative have grown most, interest rates have gradually fallen and credits have increased. There have been unusually few bankruptcies. The interest rate differences between high-risk and low-risk bonds have therefore declined, that is, credit spreads have shrunk. The price of credit derivatives has fallen correspondingly. The compensation for risk has thus reached a level far below the historical average. The question is what will happen when economic activity shows a downswing and the number of bankruptcies begins to increase again. If investors have in general underestimated the credit risk, we may see a substantial adjustment in risk premiums. This will also lead to a fall in prices of corporate bonds and credit derivatives. In this situation, individual actors with large net exposures in credit risks may be affected by significant losses. But I would like to emphasise that this is a general line of reasoning. If risk premiums rise, this would have effects on most markets. There is no particular reason to assume that the credit derivatives market would be hit harder than others. My opinion is that each of these risks should be taken seriously. But they are nevertheless not so large that they risk bringing about a serious systemic crisis in the international financial system. I have now discussed the credit derivatives trade in the international market. Here in Sweden trade in credit derivatives is still very limited. But let me nevertheless round off with a few comments on the Swedish market and its potential.

Allow me to express my sincere gratitude to Mr Benoît Cœuré, Executive Board member of the ECB and Mr. Tao Zhang, Deputy Managing Director at the IMF, for honoring us with their presence today. 1/2  BIS central bankers' speeches  It is a pleasure to have Mr. Luiz Awazu Pereira da Silva, Deputy General Manager at BIS and Governor Gudmundsson to address the audience. I would also like to express my appreciation to all other distinguished panelists in the today’s sessions – deputy governors, representatives from international organizations, global banks and investors and other honorable speakers for contributing to the event. It is an honor to have Mr. Dragan Tevdovski, Minister of Finance of the Republic of Macedonia and Mr. Vladislav Goranov, Minister of Finance of the Republic of Bulgaria to give their reflections on SEE region perspectives. I look forward to your discussions and wish all the delegates an enjoyable and rewarding conference day. I thank you all for coming, particularly given that many of you had to travel long distances to come to Skopje. I hope that all of you will enjoy the agenda and find the conference productive and worthwhile. In closing, I would like to thank all of those who have worked very hard to make this event happen. My most sincere thanks and appreciation goes to our co-organizer Marc Uzan, Executive Director of The Reinventing Bretton Woods Committee. Marc’s work is wellrecognized among the global economic community.
Firms should also pay closer attention to how they and the industry are broadly viewed by the public. Internally, one important marker for progress is the frequency of problems, and whether small problems stay small, or instead, grow into large problems. A healthy culture is one where problems are identified early and promptly addressed. In addition to a strong compliance function, firms need to foster an environment that rewards the free exchange of ideas and views. Individuals should feel that they can raise a concern, and have confidence that the issues will be escalated and fully considered. This is a critical element to prevention. A firm’s employees are its best monitors, but this only works well if they feel a shared responsibility to speak up, expect to be heard and their efforts supported by senior management. Let me give you an example to take this from the abstract to the more specific. As I noted in a speech a few weeks ago on the issue of reference rate reform, in the case of the LIBOR setting process, the information barriers between the traders and LIBOR submitters were paper thin and porous. 5 At times, traders and LIBOR submitters colluded to manipulate LIBOR for the gain of the traders and the firm. 4  Supervisory Letter SR 12–17. 5  Restoring Confidence in Reference Rates. BIS central bankers’ speeches  3  What should have happened instead goes like this: A trader asks the LIBOR submitter to adjust the submitted rate.

Given recent experience, a decade would seem to be a reasonable timeframe to provide sufficient time and space for any illegal actions or violations of the firm’s culture to materialize and fines and legal penalties realized. As I will argue below, I also believe that this longer vesting portion of the deferred compensation should be debt as opposed to equity. 6 I noted earlier that improving a financial firm’s culture will take sustained determination and commitment from its senior leaders. Deferred compensation can play a useful role in reinforcing buy-in of senior leadership to this endeavor. As I discussed last November, an important element of a Title II resolution under Dodd-Frank is that there is sufficient long-term unsecured debt at the holding company level to recapitalize a failing bank. I indicated in my remarks that it would be useful if a meaningful component of this debt was contributed by the senior management and the firm’s material risk-takers. That is, if a bank ran into solvency problems, this component of deferred compensation would be used to recapitalize the restructured bank. The goal is to incent senior management and the material risk-takers to focus on maximizing the long-term “enterprise” value of the firm, not just the short-term share price. In this framework, I would expect the relative size of the debt component of deferred compensation to increase as one moved up the management ranks to the senior managers of the firm.
Historically, increased capital intensity has often been a characteristic of periods when the growth of labour productivity was notably high. During the present upswing, however, capital intensity has been more or less constant. So, at least to date, this mechanism cannot account for our increased productivity growth. It is not the case that BIS Review 84/2000  2  business investment has been sluggish. On the contrary, investment growth, excluding the real estate sector, has been higher than for a long time. But as employment has risen equally strongly, capital intensity has been unchanged so far. But it would not be surprising if investment growth, and thereby growth of the capital stock, were to accelerate as the labour market becomes more and more strained and the utilisation of capital resources becomes high. A growth process driven by rising investment and productivity can result in good circles. Increased demand generated from the supply side leads to a favourable composition of demand that tends to strengthen the supply side even more. Let me mention some examples. One effect of higher productivity growth is an upward adjustment of future profit expectations and that often leads to rising share prices. Higher corporate values stimulate the companies in question to invest still more and also make it possible for new establishments to raise venture capital for continued expansion. Meanwhile, shareholding households see an appreciation of their net assets, at least on paper. Increased wealth and optimistic expectations of the future lead to a stronger growth of consumption.

A further component of economic policy’s new direction was Sweden’s membership of the European Union in 1995. Sectors that had previously been protected were now exposed to international competition. Stronger competition in a number of fields meant that prices for some goods and services began to be adjusted downwards towards European levels. This process may continue in the years to come, though we cannot take that for granted. There are a good many goods and services for which prices in Sweden are higher than elsewhere in Europe. The point I want to make is that in many respects the favourable economic trend in recent years stems from the economic policy realignment that began in the 1980s and has been in progress ever since. This conclusion has two positive implications. 1  BIS Review 84/2000  One is that the measures which have been taken have most probably contributed to what is happening now. The other is that a continued policy orientation on stability and credibility can yield even better results in the future. In the 1990s the new direction of economic policy was accompanied by rapid, worldwide advances in the new information technology, which is being adopted successively in various sectors in Sweden. This has lowered the thresholds for establishing and running companies. Existing production processes can be made more efficient. The internet has made information more accessible and many firms can cut transaction costs. There is less need to tie up capital by holding large stocks.
Our special focus is currently on information coming in from regions using our network. Leaders of the Bank of Russia’s regional branches are invited to each of our rate-setting meetings. They update us on the situation in their regions; ultimately, our estimates and outlooks are not solely based on the data provided by Rosstat. Rosstat data should indeed be treated as a reliable source of information, considering that alongside authorities virtually all market participants also use them. So, the more trust in Rosstat’s professionalism and independence the better. There are a variety of options on how we may address this. At the end of the day I believe this is up to the Government. I would rather reserve my judgement here. Thank you. QUESTION from Bloomberg: Two questions, again, please. One, following up on the question from my colleague, we heard both the economic development minister and the finance minister mention that the ruble is stronger than its fundamental values. In this connection, what does the Bank of Russia make of this; is the ruble close to its fundamental values, or is it actually stronger? And my second question, which is in some way related to the first. You mentioned that purchases of foreign currency are a possible means to replenish reserves, provided these purchases do not do damage to inflation targets. All indications are, we are on track to meet the 4% inflation target by mid-year. Can the Central Bank launch foreign currency purchases to replenish its reserves? Thank you. ELVIRA NABIULLINA: Thank you.

Christian Noyer: Inflation, financial innovation and monetary policies – some contemporary challenges Speech by Mr Christian Noyer, Governor of the Bank of France, at the GIC and CEPII Conference, Paris, 13 May 2008. *  *  *  Inflation pressures are now at work in most parts of the world. Today, I would like to start with offering some comments on this worrying development and then elaborate on the challenges raised by financial innovation for monetary policies. The current rise in global inflation appears in stark contrast with the price stability recorded over the past decades. During the last twenty years, globalisation has made a significant contribution to price stability. With new large players (such as China and India) entering the world economy, cheap imports of manufactured goods have become available to developed countries. The fall in import prices has allowed real consumption wages to grow without impacting real production wages. This, in turn, has lowered the inflation rate for any given level of employment. In parallel, the effects of globalisation have been felt more indirectly through increased competition, both on products and labour markets. Inflation dynamics have also changed. Maybe the most documented and commented-on of these changes has been the so-called flattening of the Phillips curve. This, in economic jargon, means that domestic inflation has become less sensitive to the domestic output gap, or, alternatively, that it has become more stable during the business cycle. There are several possible – and not mutually exclusive – explanations for this phenomenon.
17  The coronation charter of Henry I issued in 1100 (which was also endorsed by Henry II at his own coronation in 1154) is a pertinent example because it was effectively the draft on which Magna Carta was later based, containing several of the clauses now regarded as the most significant. The original text was written in one continuous flow. Its division into clauses is a modern construct. 18  Moreover it came after a lacuna of sixty years during which the House of Plantagenet had issued no similar conciliatory charters and whose actions in the meantime had caused sufficient damage to the relationship between nobility and monarchy as to make an uprising inevitable. BIS central bankers’ speeches  5  Despite the efforts of Coke and others, Charles I’s rejection of all enterprise to constrain his authority led to the English Civil War and to the king’s beheading in 1649. Meanwhile, Coke’s unstoppable Magna Carta redux had been set in motion. In contradiction to their behaviour at home, James and Charles had been busily granting royal charters promising the liberties of Englishmen to the American colonists. Coke himself had been involved in the drafting of the first charter of the Virginia Company in 1606, and similar English liberties were extended in the charters of Massachusetts, Maryland, Connecticut, Rhode Island and Carolina over the next sixty years. Some have argued that references to Magna Carta, however irrelevant its provisions might by then have been, were used as a way of “drumming up” New World settlers.

As we have already underlined, the main problem with regard to lending remains the low business and consumer demand for loans. However, banks’ lending policies appear more conservative, as reflected in the relatively tight lending standards. The forecast for subdued consumer prices and weak economic growth in the period ahead motivated the further easing of the monetary policy at the outset of the current year. In January, the Supervisory Council of the Bank of Albania cut the key interest rate by 0.25 percentage points to 3.75%. Through anchoring inflation expectations, easing liquidity pressures and cutting the short-term interest rates, the monetary policy has aimed at reducing the costs of long-term lending to the economy and supporting the growth of credit, consumption and investments in Albania. The Bank of Albania's easing policy did not reflect uniformly across the financial market segments. The latest key interest rate cut was reflected swiftly and completely both in the interbank market and the primary market of government securities. On the other hand, it was only partially transmitted to the deposits market and even less to the credit market. These developments illustrate the fact that, in the presence of added risk premiums and structural changes of behaviour in the financial market and the real economy, the effectiveness of monetary policy action is lower. Based on these reasons, the Bank of Albania decided to support its stimulating monetary policy with a number of changes on the easing side of the supervisory, regulatory and macroprudential framework.
The reason I have brought up this problem is that it, in my opinion, has at least some bearing on the monetary policy considerations we face today. I will come back to that in a moment. The current monetary policy situation Let me now proceed to the current economic and monetary policy situation. The outlook presented in the latest Inflation Report can briefly be summarised as follows. On the whole, the situation looks bright for the Swedish economy. The recent months’ data releases have reduced the uncertainty over economic developments, both in Sweden and internationally. Growth is expected to be firm in the next few years, partly on account of expansionary economic policy and firm export market growth. Much also suggests that demand for labour is now finally beginning to pick up more markedly. As regards price developments, we can note that inflation is still low, largely because various supply factors are contributing to low cost pressures. However, inflation is expected to rise in the period ahead when resource utilisation increases in Sweden and abroad, albeit at a relatively slow rate. The forecast in the Inflation Report’s main scenario means that inflation a couple of years ahead is estimated to be roughly in line with the target of two per cent. The risks of a higher inflation rate, though, which mainly stem from uncertainty over the oil price and developments in the krona, are currently deemed to be larger than the risks of a lower inflation rate.

They will become genuine stations of information gathering about the economic and financial activity of the region, being preceded by further analyses and studies. This research work will serve not only to a more explicit monetary programming but also to the modernization of transmission elements of this policy from the higher authority to the lower authority and vice versa. I estimate that this initiative of the Bank of Albania to monitor the economic activity not only in the metropolis but also in other regions of the country would be of particular interest for all the interested groups. Further, I would like to add some other comments on the latest developments of the banking system, which I deem have created good premises for a real expansion of this business, an expansion that will positively impact on the performance of business activities. After completion of the Real Time Gross Settlement (RTGS) system, the Bank of Albania inaugurated some times ago the initiation of a very important project on the Automated Electronic Clearing House (AECH). The operation of this new system will considerably increase the payment speed for the customers, knowing that the lack of this element has maintained businesses far from banks. I take this opportunity to make businesses aware of the advantages of the operation of this system, as both systems together will help reach the international standards of ATM and AIPS (automatic and electronic payment equipments), per population number.