samchain/econo-pairs-v1 huggingface dataset:
Between them, board members must have a good range of skills and experience, including, but not limited to, being well-versed in risk management. They must have a clear picture and a good understanding of the risks banks face and be ready and able to mitigate those risks. In addition, banks’ boards must be diverse – not just in terms of gender, but also in terms of broader diversity, as set out in EU law. [4] We have engaged with those banks which do not yet have diversity policies or internal targets for gender diversity at board level. As at the end of 2021, a third of the banks under our direct supervision did not meet their internal targets for gender representation at board level. Of course, the economic environment and the skills required to navigate the banking business keep evolving. Nowadays, a bank’s board should be well-versed in climate and environmental risks, as well as IT infrastructure and digitalisation strategies. We therefore encourage banks to nominate board members with adequate expertise in these areas. Digital banks are increasingly complex structures and cybersecurity has never been more important. However, at the end of 2021, only around a fifth of the euro area’s largest banks had sufficient IT expertise at board level. Increasing this ratio will be key for banks to navigate the digital era successfully. Behaviour and culture  The elements I have mentioned thus far make up the design and structure of a bank’s internal organisation.

London’s position has developed gradually and the statistics rarely separate the group of wholesale financial markets and supporting legal, accounting and other services that make London special from a broader group including retail banking and insurance and business services. But there is some evidence that all three factors are at work. The story seems clearest with the specific factors of production. The cost of commercial property in London, for example, has grown rapidly. According to Jones Lang Lasalle Research, in the City average capital values are over $ per sq.m, above both Paris and New York. And the costs in the West End, the main home of the new hedge fund industry, are almost twice as high. There is no doubt that the success of London’s financial centre is helping to fuel demand for office space from Canary Wharf to Mayfair. And of course it is not just commercial property in London that has been booming. House price inflation in London has outstripped the rest of the UK (Chart 1), and in Kensington and Chelsea average house prices have risen by almost 40% since the start of 2005, compared with 20% for Greater London as a whole. ECA International published a survey comparing average monthly rents for a 70-square metre unfurnished flat in the largest cities and showed London over € 2,100, compared with New York around € 1,750 and Paris below € 1,500.
2  The expression above builds on a variant of the Ramsey model, which is a standard theory of economic growth. For a further discussion of this model, see Blanchard and Fisher (1989) ‘Lectures on Macroeconomics’, MIT Press and Romer (2001) ‘Advanced Macroeconomics’, McGraw Hill. BIS Review 10/2007  5  Potential growth and particularly the time preference rate are difficult to estimate. From 1979 to the present, average annual growth in GDP in mainland Norway has been about 2.5 per cent. If we confine ourselves to the past 10-12 years of low and stable inflation, average growth has been somewhat higher at around 3 per cent. There have been wide variations in the short-term real interest rate in Norway. In the 1980s and the beginning of the 1990s, the real interest rate was high and varied around 6-7 per cent. Since the mid-1990s, the real interest rate has been considerably lower and varied around 3 per cent. The  6  BIS Review 10/2007  period of low and stable inflation is probably more representative of the future than the 1980s when inflation was high and volatile. Against the background of historical developments in growth and real interest rates over the past 10-12 years, it may seem reasonable that the normal real interest rate level in Norway is in the range of 2½-3½ per cent. If we add the inflation target to this, a range of around 5-6 per cent may be a reasonably normal level for the nominal interest rate.

From the formal standpoint, the draft bill will consolidate in a kind of “Bank Code” all the regulatory provisions on the creation, activity and control of credit institutions, thus putting an end to the dispersion of legislation which has characterised the credit sector for various decades. Furthermore, the aforementioned consolidation aims to write into Spanish law the changes introduced in June 2013 by the so-called CRD-IV package, i.e. the Directive and the Regulation which incorporate the Basel III Accord into European legislation. As you know, that transposition has been partly handled by the promulgation of Royal Decree-Law 14/2013, which includes those matters considered essential for incorporation before 1 January 2014. Under the draft bill, and without prejudice to the framework resulting from the entry into force of the Single Supervisory Mechanism, the Banco de España will retain its current power to authorise the exercise of banking activities. Moreover, it will receive additional powers, such as that to revoke banking licences. Regarding the regime governing the purchase of qualifying holdings in credit institutions, the Banco de España will continue to be the authority responsible for assessing the proposals of potential purchasers, although now there are plans to give it powers of supervisory intervention, senior officer replacement, suspension of voting rights or, in extreme situations, licence revocation. As bank supervisor, the Banco de España will continue overseeing compliance with organisational and disciplinary regulations.
Housing starts and sales are now on a clear upward trend, and a widely followed national home price index is up around 12 percent over the twelve months ending in April.1 Indeed, anecdotal reports suggest that this higher-than-expected increase in home prices is due to a lack of homes for sale. Unfortunately, the improvements in consumer spending on durable goods and housing are not yet showing through in the overall GDP growth rate due to the significant headwinds that we continue to face. First, federal fiscal policy has recently become quite contractionary. Estimates from the Congressional Budget Office (CBO) indicate that this fiscal restraint is on the order of 1.75 percentage points of potential GDP this year. In the period since 1960, there have been only two previous episodes of fiscal contraction of this order of magnitude  2  BIS central bankers’ speeches  – 1969 and 1987 – both of which occurred when the economy was on a more solid footing than it is today. Second, the euro area is experiencing a protracted recession and growth in many of the largest emerging economies has slowed. This has resulted in a very sharp slowing of U.S. exports, with an associated slowing in production and employment growth in the U.S. manufacturing sector. Thus, I continue to see the economy as being in a tug-of-war between fiscal drag and underlying fundamental improvement, with a great deal of uncertainty over which force will prevail in the near-term. This tug-of-war is clearly seen in the monthly employment data.

Philipp M Hildebrand: Economic outlook and monetary policy Speech by Mr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, Apéritif Marché monétaire, Geneva, 17 November 2005. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  The Swiss economy has benefited from a favourable international environment. Activity has remained strong in the US, whereas it has improved in Japan and, more recently, in Europe. In Switzerland also, the latest indicators point towards stronger growth. Exports remain the engine of the recovery but private consumption has also picked up. However, consumer confidence remains fragile in the context of only modestly improving labour market conditions. The SNB expects the economic recovery to continue. A sudden adjustment of the US current account imbalance or a further increase of energy prices are predominant risks. From a monetary point of view, the current situation is characterised by different counteracting forces. On the one hand, the economic outlook is positive. On the other hand, some risks put this favourable picture into perspective. Furthermore, the increase of energy prices might endanger medium term price stability at a time when monetary conditions remain expansive. Last but not least, globalisation continues to hold down the prices of many goods. In this complex environment, it is important that central banks succeed in preserving their most important monetary asset, namely well anchored inflation expectations.
As an illustration, recent research showed that exposure to degraded land could  Page 3 sur 13 impact the value of listed companies in the food supply chain in Brazil: the market value of farmers operating on degrading land declined by 13 per cent following extreme weather, while those on healthy soils increased by 6 per cent.vii  3. Climate change, biodiversity loss and other nature-related risks are intricately linked First, biodiversity-related risks and climate-related risks are deeply intertwined, and subject to feedback phenomena – what we call the “climate-biodiversity nexus”. Climate change is indeed already the third driver of biodiversity loss behind land use change and overexploitation of living organisms; in turn, the loss of biodiversity undermines the capacity to adapt to and mitigate climate change. The canonical example of Amazonian deforestation is prime evidence of the synergies between these drivers: the Amazon rainforest is both a carbon reserve and a unique ecosystem hosting many endangered species. In fact, nature-based solutions represent several of the most valuable options to progress toward net zero according to the IPCC.viii  Page 4 sur 13  These interdependences also extend to several other aspects of nature-related risks: for example, both climate and land-use change drive imbalances in freshwater availability, notably caused by droughts – which we have been acutely aware of lately. Let’s acknowledge that so far, the contours of naturerelated risks are more vague, as they relate to risks posed by any phenomena relating to nature. We still have here a definition challenge.

Financing debt through the common budget would naturally lead to the creation of active mutualised insurance, helping to reduce the financing costs currently faced by individual Member States and to break the sovereign-bank doom loop in each country. This in turn would enhance monetary policy effectiveness, by making it easier to execute the Eurosystem's asset purchase programmes. 31  Further, if we are to increase the euro area's responsiveness to future shocks, the banking union must be completed through the creation of a common deposit insurance scheme. The lack of progress in this area and the incomplete harmonisation of national regulation go a long way to explaining the limited cross-border activity of European credit institutions and the low number of mergers between institutions of different member countries. Lastly, insufficient headway has been made in capital market integration in terms of harmonising market regulation and oversight, and insolvency proceedings. The degree of risk-sharing in these euro area markets is far less than that in other monetary unions, such as the United States. A single capital market would enable firms in the euro area to diversify and expand their sources of financing. In this respect, the progress in the capital markets union project in recent years can only be described as insufficient. That should spur the European political authorities to take more ambitious steps in this area without undue delay.
Dimitar Bogov: Modern payment systems’ impact on monetary policy and financial stability Welcome speech by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the 16th International Conference of Clearing Institutions in Central and Eastern Europe (ICCI), Skopje, 12 October 2011. *  *  *  Mr. Chairman, Dear Participants and Guests, It is an honour and pleasure to give a welcome speech to such a distinguished audience. I thank Klirinski Interbankarski Sistemi Skopje (KIBS) for this opportunity. My topic will be the link of payment systems with the two main central-bank tasks of monetary policy and financial stability. While money needs to circulate freely through the economy, without imposing excessive burdens, other economic agents also need to be confident that commercial banks will honour their sight liabilities by converting them into banknotes, i.e. central-bank money, at their demand. The central bank allows commercial banks to transfer among them funds held in accounts with the central bank. The development of a payment system is thus part of the development of a central bank and out of this operational capacity grew the cooperation with the commercial banking system when setting-up the facilities it operates and overseeing the facilities other participants operate. This pivotal role of the central bank, unmatched by any other participant, does make us humbly aware of the strong link between payment systems and monetary policy on one hand, and payment systems and financial stability on the other.

If the risk of significant damage to growth from these financial market pressures is attenuated and if global growth remains strong and drives a continuing rise in energy and commodity prices, then inflation may not moderate as much as we anticipate. If the medium term outlook for inflation deteriorates significantly, the FOMC will move with appropriate speed and force to address this risk. This requires a fine balance. The principal challenge for policy is to provide an adequate degree of insurance against the downside risks that still confront the economy as a whole, without adding to concerns about inflation over the medium term. We cannot know with confidence today what level of the short-term real funds rate will be consistent with our objectives of sustainable growth and low inflation, but if turbulent financial conditions and the associated downside risks to growth persist, monetary policy may have to remain accommodative for some time. Liquidity provision Although concerns about credit quality are at the root of the current problems in financial markets, a substantial impairment in market liquidity conditions can exacerbate and prolong the adjustment in credit conditions. To mitigate this risk, we have taken a series of actions to help reduce the risk that market liquidity conditions exacerbate the adjustment process in credit markets.
Third, financial stability may be in danger when strong action by central banks during a crisis leads market participants to rely excessively on central banks as a backstop in case of negative shocks. This is the moral hazard problem.9 Taken together, these channels underline the risks the current “low-for-long”-situation presents for financial stability. These risks have to be acknowledged and acted upon. The fact that it is possible for these risks to exist while monetary policy is responding appropriately to the macroeconomic situation perfectly illustrates the Tinbergen principle – the number of instruments must equal the number of policy goals.10 In the current environment, the interest rate cannot be the instrument of choice for addressing financial stability risks. The answer is to give more weight to what are known as macroprudential instruments implemented as a complement to, and along-side a monetary policy that remains firmly focused on price stability. These instruments directly target the risk-taking behaviour underlying financial stability risks. This is exactly the approach chosen in Switzerland with the activation of the countercyclical capital buffer. By forcing banks to build up additional capital in the current phase of strong credit growth, the regulators aim at improving the capacity of the banking system to bear losses in the event that the identified risks materialise, while also limiting the further build-up of these risks. Outlook We are now in a position to derive the implications of our analysis for the interest rate outlook.

In Sweden, our conclusions are published in a semi-annual Stability Report, where we analyse the development of risks in the banking system and where we state our overall view on systemic stability. The reports have increased the general knowledge about the stability situation of the Swedish financial sector and they constitute the basis for discussions with the financial institutions and with other authorities. Whether they will help us avoid the next financial crisis is still to be seen. International standards Financial systems and markets are increasingly interlinked across the country borders. In order to avoid international financial disturbances all countries that wishes to participate in cross-border transactions must adhere to a set of minimum rules for regulation. Also supervision must reach adequate levels in all countries, including cooperation and exchange of information between supervisors in different countries. In 1997, the Basel Committee took the initiative of writing the Core Principles for Effective Banking Supervision. Complying with the Principles constitutes a minimum platform for any country that strives to have basically sound regulation and supervision of banks. If I may say so, there is nothing radically new with the Core Principles - all the underlying standards that countries are asked to fulfil are well established and internationally recognised. The main use of the principles is rather as a yardstick, whereby a country can evaluate itself in order to identify weaknesses in its present regulations and supervision and to take remedial measures to improve.
Christine Lagarde: The path out of uncertainty Remarks (via videoconference) by Ms Christine Lagarde, President of the European Central Bank, at the inaugural session of the Italian National Consultation, 13 June 2020. * * * There is no doubt that the economic situation we face today is characterised by profound uncertainty. Looking into the future has rarely been harder. But, as Abraham Lincoln said, “the best way to predict your future is to create it”. And this is the theme that I want to emphasise in my remarks today. Obviously there are some major unknowns that we cannot do much about, such as possible second waves of the virus or when exactly vaccines will arrive. But there are steps we can take to help navigate out of the fog of uncertainty. Most importantly, we need to elaborate and propose a reliable compass – that is, a positive vision of what our economy will look like after. Our economies are entering an inevitable phase of transformation, but if policymakers can demonstrate that we will emerge together from the crisis stronger – with more agile, more modern and more equal economies than before – we can ensure a more resilient recovery today and more sustainable growth in the future. Uncertainty in euro area economy The crisis is weighing heavily on the euro area economy. Business investment looks to have collapsed in the first quarter, even more strongly than GDP.

As a macroeconomist whose work is grounded in thorough analysis, and a profound knowledge of models and data, he also takes into account the policy implications of the findings of his research. This is an important factor as he is a pioneer who has done groundbreaking work, and his research frequently encourages others. In this respect his work on the global decline in labour’s share of income has prompted a number of papers from academia and different institutions so as to understand this change over time and its implications for income distribution and productivity. Similarly, his work on capital allocation and productivity in Southern Europe has been widely influential. Mr. Karabarbounis, congratulations on my behalf and on that of the Banco de España. 2
Or, put somewhat differently, on an ex post (i.e., realized) basis, saving must equal investment. Investment in this case means current spending on new physical, human and intangible capital. This insight is the conceptual basis for national income accounting and the gross domestic product (GDP) statistics that we follow so carefully. Even so, economists have been debating the implications of Say’s Law since it was first expounded. Classical economists argued that this ex post balance would occur in a way that kept the economy quite stable at full employment. If there were shocks to saving or investment spending that pushed the economy away from full employment, prices and wages  BIS Review 41/2010  1  would adjust quickly, providing the market signals needed to bring about the reallocation of resources required to restore full employment. The global depression of the 1930s raised serious questions about this classical theory. Although saving must equal investment on an ex post basis, the two can diverge ex ante, potentially sharply. For example, when ex ante (i.e., desired) saving exceeds ex ante (desired) investment spending, inventories rise above desired levels. If prices of the products in question do not fall sufficiently rapidly so that this unwanted build-up of inventories is sold quickly, then production and employment must fall. Perhaps most famously, Keynes, in The General Theory of Employment, Interest and Money, argued that there are institutional rigidities that inhibit price and wage flexibility.

The road ahead Fortunately, the U.S. economy is very flexible and resilient. Although it does not adjust as fast as classical economists envisioned, in the United States prices and wages respond relatively quickly. Moreover, policymakers have been aggressive in supporting the economy by easing monetary policy and by implementing a large fiscal-stimulus program. As a result, although the unemployment rate remains unacceptably high, output has begun to expand again, and we appear to be on the verge of seeing sustained growth in employment. We’ll know more about this tomorrow when the March employment figures are released. Equity prices have recovered sharply and home prices and commercial real estate prices appear to be stabilizing. Household indebtedness is declining, due to a combination of debt  BIS Review 41/2010  5  repayment and credit that has been written off by lenders. After falling off a cliff during the first half of 2009, global trade has rebounded. Both U.S. exports and U.S. manufacturing output have expanded rapidly over the past six months (Chart 17). Although these are encouraging developments, I believe that the recovery is likely to be quite muted compared with past recoveries. This comes back to the framework discussed earlier. For faster growth, we need ex ante investment to rise relative to saving and ex ante spending to rise relative to the current trend of income. But it is difficult to see where this impulse will come from in the near term.