samchain/econo-pairs-v1 huggingface dataset:
As such, the Committee can remain largely agnostic about the extent to which productivity is likely to pick up and instead respond to the signal provided by movements in the unemployment rate.6 At the same time, the three knockouts make clear that the Committee will continue to pursue such a policy only if it does not pose a risk to price or financial stability. Its levels that matter The second challenge relates to the need for the Committee to explain how monetary policy is likely to evolve as the economy recovers. The good news is that after several years of virtual flat-lining, a recovery appears to be taking hold. The UK economy grew by over 1% in the first half of this year, more than in the previous two years put together. And it looks set to grow even more quickly in the second half of this year. The most recent indicators and business surveys suggest that the economy may currently be growing at an annualised rate of between 3% and 4%. In the midst of this long awaited growth, there is the risk that people may overreact and expect the MPC to start raising Bank Rate relatively quickly. Such an overreaction would risk dampening the recovery, pushing up longer-term interest rates and, more generally, causing companies and families to pullback from investment and spending decisions for fear of an imminent rise in borrowing costs. And based on past experience, there would be good reason for people to behave in such a way.

In fact, this is one of the key innovations of Basel II compared to Basel I. Basel II is about much more than just setting quantitative minimum capital requirements. It is about establishing incentive-based approaches to risk and capital adequacy management, within a framework of three mutually-supporting pillars: minimum capital requirements, supervisory review and transparency. I think that Basel II represents an unparalleled opportunity for banks to improve their business strategies and risk management systems. In my view, the combination of better risk management, a stronger capital structure and improved transparency standards in the banking system could significantly improve the access of emerging economies to financial markets. This raises two additional groups of relevant questions that I will also address later in my presentation: the first group relates to the transition by different jurisdictions to the new framework, and the second to the necessary cooperation between home and host countries to make its implementation more effective and consistent. BIS Review 33/2004  1  Our discussions on all of these topics will bear on the very well chosen title for this event: “the international banking system at the crossroads.” That wonderful image of a “crossroads” suggests two metaphors that we should keep in mind. The most immediate image that the term “crossroads” calls to mind is, of course, a place where four roads meet. It is where a traveller, having followed one road to this point, must reflect to select one of the next three roads to continue a journey.
Mario Draghi: Keynote speech at the Eurofi Financial Forum Keynote speech by Mr Mario Draghi, President of the European Central Bank, at the Eurofi Financial Forum, Milan, 11 September 2014. *  *  *  Summary We are facing a set of conditions – low growth and low inflation, high debt and high unemployment – that can only be addressed by concerted action on both the demand and supply sides of the economy. This requires that all actors – both at national and European levels – play their parts in line with their respective mandate as laid down in the EU Treaties. No monetary or fiscal stimulus can be successful if not accompanied by the right structural policies – policies that foster potential growth and instil confidence. Investment has been one of the great casualties of the crisis. From peak to trough business investment in the euro area decreased by around 20% since 2008, against 15% in the 1992 recession. We will not see a sustainable recovery unless this changes. A decisive rise in investment is essential to bring inflation where we would want to see it, to kick-start the economy and to bring down unemployment. There are two key areas where national and European level government action can help revive investment. First, the regulatory environment should be made more favourable to economic growth. Second, companies need to have access to more diversified sources of financing: the launch of a capital markets union could contribute to achieving this.

This requires all actors – both at national and European level – to play their parts in line with their respective mandates as laid down in the EU Treaties. BIS central bankers’ speeches  1  No monetary stimulus, indeed no fiscal stimulus, can be successful unless accompanied by the right structural policies – policies that foster potential growth and instil confidence. I would like to illustrate this argument by focusing on investment, which will also be discussed at the informal ECOFIN this weekend. Investment has been one of the great casualties of this crisis. The downturn in business investment in the euro area since 2008 has been much more severe than in earlier business cycles. From peak to trough, business investment decreased by around 20%, against 15% in the 1992 recession. The level of business investment in the euro area has only slightly improved since 2008, whereas in the US it is above its pre-crisis level. We will not see a sustainable recovery unless this changes. A decisive rise in investment is essential to bring inflation closer to where we would want to see it, to stimulate the economy, and to bring down unemployment. So what can we policy-makers do to revive investment? My main message today is that only if structural, fiscal and monetary policies go hand in hand will the euro area see investment return. Let me focus in particular on the decisive contribution which structural policies can make.
In any event, if a strategy were deployed to correct the structural deficit by 0.5 pp of GDP per annum (in line with the Stability and Growth Pact requirement), under plausible macroeconomic scenarios, the public debt ratio would move onto a declining path that would place it towards 2040 at slightly below pre-crisis levels. The reduction would be greater if this strategy were supplemented by a structural reforms programme that increased the economy’s potential growth. One tool that may be enormously useful to this end is the NGEU programme. In terms both of its volume and, above all, the projects it is intended to finance, the programme has, a priori, the ability to substantially raise the economy’s productive capacity. But it can be no substitute for the necessary structural reforms. Spain needs an increase in its potential growth. It needed it before the pandemic and needs it even more now. 6  The Spanish economy’s low potential growth over the past two decades has been essentially due to poor productivity dynamics. Such dynamics have been constrained by several structural problems, including most notably the small average size of our firms, regulatory shortcomings in certain sectors and in the framework that determines business dynamism, and major human capital and technological shortfalls. We must urgently correct the causes behind these shortcomings. Evident, too, are the flaws of the Spanish labour market. A telling fact here is that the unemployment rate has been above that of other developed countries in recent decades.

Since the onset of the crisis, to prevent market-wide liquidity problems from turning into solvency problems for individual banks, the Eurosystem introduced, as of October 2008, a  discipline in the unsecured money markets as a provision of ex ante incentives to mitigate risk of borrowers’ investments; see M. Hoerova and C. Monnet, “Money market discipline and central bank lending”, presented at the workshop on the “Post-crisis design of the operational framework”, mimeo, European Central Bank, 2011. 17  The effects of asymmetric information and counterparty credit risk on the interbank market functioning are analysed in F. Heider, M. Hoerova and C. Holthausen, “Liquidity hoarding and interbank market spreads: The role of counterparty risk”, ECB Working Paper No. 1126, 2009. 18  See B. Cœuré (2013), “The implications of bail-in for bank activity and stability”, opening speech at the conference on “Financing the recovery after the crisis – the roles of bank profitability, stability and regulation”, Bocconi University, Milan, 30 September. 19  The LOLR should lend freely against good collateral, valued at pre-crisis levels, and at a penalty rate. These conditions are due to Bagehot (1873) and are also presented, for instance, in Humphrey (1975) and Freixas, Parigi and Rochet (2004); see W. Bagehot, “Lombard street”, H.S. King, London, 1873; Humphrey, T. “The classical concept of the lender of last resort”, Economic Review, 61, 2–9, 1975; and Freixas, X., Parigi B., and J.-C. Rochet “The lender of last resort: A 21st century approach”, Journal of the European Economic Association, 2: 1085–1115, 2004.
José De Gregorio: The Monetary Policy Report and the Financial Stability Report Presentation by Mr José De Gregorio, Governor of the Central Bank of Chile, before the Finance Commission of the Honorable Senate of the Republic, Santiago de Chile, 20 June 2011. *  *  *  The Monetary Policy Report of June 2011 and the Financial Stability Report of the first half of 2011 are available at http://www.bcentral.cl. Introduction Mr. President of the Finance Committee of the Senate, Senator Eduardo Frei, senators. I am grateful for the invitation of this Committee to the Board of the Central Bank of Chile to share our views on the recent macroeconomic and financial developments, their prospects and implications for monetary and financial policy making. These are contained in detail in the Monetary Policy Report (IPoM) of June 2011 and in the Financial Stability Report (IEF) of the first half of 2011. The March IPoM stated that our economy was facing important challenges. In particular, it configured a scenario where inflation could post significant increases in the following months. We then said that the duty of monetary policy was to withdraw the monetary stimulus in a timely manner, in order to ensure that the inflationary pressures we were seeing and, especially, the risks we faced, would not alter the convergence of inflation to the threepercent target. Consistently, the Board acted preventively and raised the monetary policy interest rate (MPR) by 150 basis points between March and May this year, taking it above levels forecast by the market.

Why Islamic finance has an important role to play in supporting the recovery from Covid – and how the Bank of England’s new Alternative Liquidity Facility can help Speech given by Andrew Hauser, Executive Director, Markets  UK Islamic Finance Week 2020 2 December 2020  I am grateful to Arshadur Rahman for his help in writing this speech, and to Sarah Hall, Maggie Illingworth, Rhys Phillips and Chris Worthington for their comments and guidance. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Introduction It’s a privilege to be with you today to talk about the Bank of England’s work on Islamic finance – and to announce the launch date for our new Shari’ah compliant non-interest based deposit facility, the first such account from a Western central bank. The facility, in which deposits from Islamic banks will be backed by a return-generating fund of high quality Shari’ah compliant assets, will further strengthen the United Kingdom’s role as the leading international financial centre for Islamic finance outside the Muslim world. But it also goes deeper – because the core principles1 of Islamic finance are strikingly well suited to responding to some of the biggest challenges we will all face in rebuilding our economy once Covid has passed. Prioritising equity-like risk-sharing over debt. Factoring ethical and environmental considerations into investment decisions. And embracing innovative financial solutions beyond traditional banking.
These global pipes increase efficiency, lower costs to the real economy and reduce risk. And because they are in essence global, we will have to find co-operative ways to manage the changing risks they present in order to maintain the benefits that they provide. 17  All speeches are available online at www.bankofengland.co.uk/speeches  17

In Switzerland, this means that as long as the economic recovery remains on track, we should not postpone for too long the process of normalising monetary conditions. Otherwise, we would put medium term price stability at risk. 1/1
Our “universal banking model”, based on a diversity of activities and sources of income has proven its resilience. Obviously, there is a circular causality between government debt and the banking sector. Spreads on public debt naturally act as floors for the funding costs of banks. And, conversely, doubts about banks’ solvency create expectations of public support and lead to a deterioration in public finances. This gives rise to multiple equilibria where sudden shifts in confidence can be self-fulfilling. In this context, the main purpose of stress testing is to break that circularity. Our first European tests included 81 banks, compared with only 19 for the United States. The basic exercise was sound and taken as such by analysts when it was published. Somehow clumsily, however, a few banks were added at the last moment, with only limited investigation, and these are precisely the banks which proved problematic afterwards and which undermined the credibility of the whole exercise. This mistake will not be repeated and the coverage for the new stress tests has been carefully examined. A lot has been made of the fact that no sovereign stress was made on the banking book. And indeed, as regulators, we did not want to give any credibility to a scenario that we consider unacceptable. However, there will be, like last time, full, total, and transparent disclosure of exposures to sovereigns for each individual bank. Everybody will therefore be free to make their own assumptions and calculations.

In short, in just one year, since May 2010, the EU has embarked on a radical overhaul of its economic governance, while managing the sovereign crisis. This is a great achievement, especially considering the multiplicity of actors involved and the creativity of the response, which also had to take account of public opinion. BIS central bankers’ speeches  3  Positive developments Looking at aggregate numbers, it is very difficult to understand many of the concerns expressed on the euro area. The euro area is the only major currency area with its external accounts in balance, and which therefore does not depend on external finance. This is an essential element of robustness. For outside investors, it provides a strong guarantee of long term solvency. Its aggregate fiscal balance (with a deficit of 6.3% of GDP in 2010) is the most favorable of all advanced economies (10.5% for the United States, 9.6% for the United Kingdom and 7.7% for Japan). The same holds true for public debt, which stands at 92% of GDP, close to that of the United States (93%), and much lower than that of Japan (200%). Looking at national fiscal situations, most analysts would acknowledge the magnitude of the efforts undertaken. Yet, some tend to take a very pessimistic view about future outcomes. In short, their argument is that the euro area, and more specifically, its periphery, will be unable to return to normal growth anytime in the foreseeable future.
The Level 3 Committees play a very important role in this respect. Furthermore, we see a need for the current regime for the supervision of liquidity risk to be reviewed against the background of financial market developments, including the introduction of the euro. As regards financial stability, which represents an area of particular interest to the Eurosystem, we are of the opinion that the refinement of financial stability arrangements should remain a key priority for the EU. There are three broad areas where the Eurosystem sees room for enhancing the present arrangements, namely financial stability assessment, the management of financial stress and deposit insurance. In this respect, let me recall that the provision of Emergency Liquidity Assistance is a central banking function and that there is an agreement within the Eurosystem on how this facility operates in the euro ara. Thus, there are no specific issues relating to the provision of Emergency Liquidity Assistance that need to be addressed in the context of the post FSAP work. Finally, let me stress again that the Governing Council of the ECB is very strongly attached to the full completion of the single market for banking services and to a level playing field making absolutely no difference between nationalities. I am now ready to answer your questions. 3/3

In particular Chapter III, Part III and IV of the BFSA deal with the boards of directors of banks and financial institutions.
12 The different rules are connected through the stylised view of the monetary policy transmission mechanism presented earlier:  The policy rate ( ) is determined by the well-known Taylor rule for monetary policy. The interest rate margin ( ) is influenced by regulation ( ), which is itself determined by nontime varying regulations ( ), the credit gap (measured as actual credit volume in relation to a level deemed sustainable over the long-term ( )), and the output gap (measured as the actual level of output in relation to a level deemed sustainable over the long-run, ( )):  Together, the Taylor rule for monetary policy and the rule for regulation form, through the bank lending interest rate equation, a system that describes the relationship between monetary policy and macroprudential policy. I should emphasise that this is merely an  11  Michael Woodford, “Inflation targeting and financial stability”, Czech National Bank seminar, September 2010. 12  Stefan Ingves, “Monetary policy and financial stability – some future challenges”, Swedish Economics Association, May 2010. 10  BIS central bankers’ speeches  illustration of a quite loose concept, rather than a description of a concrete proposal or model. But it helpfully illustrates the type of work that must be carried out before any theory or model can be applied in practice. The Riksbank has used a simple version of this rule to illustrate the effect that countercyclical capital buffers could have had in Sweden between Q1 1997 and Q2 2009 (see Figure 5).

The Storting (Norwegian parliament) has approved a fiscal guideline for the use of petroleum revenues. It states that, in general, petroleum revenue spending shall be limited to 4 per cent, or the expected annual real return on the Petroleum Fund over time. This fiscal rule shall ensure that the use of revenues in the Norwegian economy is at a level that can be sustained over time. The usefulness of a fiscal guideline is that it gives weight to long-term considerations when addressing day-to-day economic policy challenges. The fiscal rule stabilises enterprises’ expectations concerning competitiveness and the krone exchange rate, thus preventing abrupt and pronounced swings in the structure of the economy. If the government authorities disregard the rule, enterprises will lose an important reference. A policy rule can make matters worse if economic agents have drawn up longterm plans on a faulty basis. The fiscal rule for the budget states that the government can use 4 per cent of the Fund over time. This year, around 6 per cent of the Fund is being used. The deviation partly reflects an unexpected shortfall in tax revenues from the non-oil economy in recent years. The government budget deficit is the difference between total revenues and total expenditure. They each account for about half of total GDP in Norway. Even small deviations from expenditure and revenue projections can have a major impact on the deficit. Exchange rate changes will also lead to fluctuations in the value of the Petroleum Fund.
Indeed, this is the prevailing course of action at present, routed through, for example, the ECB Banking Supervisory Committee or the recently created Committee of European Banking Supervisors, a “level 3 committee” set up in application of the Lamfalussy approach to the banking sector. The functions of the Committee of European Banking Supervisors include promoting convergence of the supervisory practices of the EU Member States and increasing and improving co-operation between supervisors. Growing supervisory co-operation will become unavoidable as further headway is made in the necessary process of integration of the single financial market. In this respect, we cannot ignore that the pace of integration is far from homogeneous. Thus, the integration of the interbank market can be classed as full, particularly in the euro area, and very high in the wholesale, the securities issuance and the large company and bank financing markets. By contrast, the retail market remains markedly local in nature and it will only become integrated insofar as its cultural and idiosyncratic barriers are progressively lifted. The same is so of cross-border activity. Mergers and acquisitions of credit institutions have raised to forty the number of institutions with operations in various EU countries. If profitability is adequate, this trend will foreseeably continue and European institutions will keep exploring the opportunities for profitability and lower costs offered by operations of this type. Despite this, the more than 8,000 deposit institutions in the EU continue to exhibit a markedly local nature.

Previously, many probably had to refer to the interpretations made by financial advisers. But now the information is available in our Monetary Policy Report. Although the forecast for the interest rate will of course be regularly revised, it should reduce the uncertainty over how we ourselves view future developments. I believe this will be positive for everyone. The objections are not convincing But of course there are also some potential problems when a central bank presents its own forecast of the interest rate path. One is that the decisions in many central banks are currently made by a group of persons. How can a group of decision-makers agree on a forecast for the policy rate? The Riksbank’s experiences so far show that this need not be a problem. Nor does the Norwegian central bank, where decisions are made by an Executive Board consisting of seven persons, appear to have any major difficulties in agreeing on an interest rate forecast. Other arguments have also been raised against an own interest rate path. One such argument is that it could impair our credibility and instead make it more difficult for us to communicate with the general public and the financial markets. Let us assume that the Riksbank first publishes a particular interest rate path. Would our credibility be impaired if new information leads to our making another decision regarding the policy rate than we have previously announced? I don’t think so.