samchain/econo-pairs-v1 huggingface dataset:
12.07.2017  Congressional Hearing of the Governor of the Banco de España before the Commission investigating the financial crisis in Spain and the financial assistance programme  Luis M. Linde Governor  Thank you Madam Chair, Ladies and Gentlemen. I appear before this Commission following the summons received from the President of the Congress of Deputies in connection with the publication drafted and released by the Banco de España on 16 June entitled “Report on the Financial and Banking Crisis in Spain, 20082014”. The plans to draft a report on the economic and financial crisis that first broke in Spain in 2007-2008 were considered some time ago in the Banco de España, justifiably so given that this crisis has been the worst the Spanish economy and financial system has undergone in recent decades. The Parliament’s decision last February to set up this Commission confirmed for us the advisability of drafting the Report, understanding that it could be a suitable contribution by the Banco de España to the Commission’s work. Although some of its effects have continued to the present day, the crisis may be deemed to have ended or been brought under control, in general terms, in 2015.

Indeed, from 2008 to 2014 the Banco de España prepared a considerable number of releases, articles and reports on the crisis and the measures adopted, which were available in print or on our website no sooner were they drafted. That is to say, the Bank had already prepared and published extensive information on and various analyses of the crisis; but what was missing was an orderly overview, in terms of both the timeline and the different themes, addressing the key macroeconomic, financial, regulatory and supervisory aspects. The imbalances built up in the Spanish economy in the expansion prior to 2008 Allow me first to refer to the build-up of macroeconomic and financial imbalances in the expansion years prior to the crisis, linked most significantly to private-sector debt. In its opening chapter, the Report indicates that an intense process of indebtedness unfolded in Spain from 2001 up to 2007, as reflected in Table 1.1 (p. 66). The figures for the period 2001-2007 are as follows: set against nominal GDP growth of 67%, credit to the private sector increased by 221%, concentrated especially in the real estate sector, where growth of 250% in house purchase loans and of 513% in the case of credit to construction and real estate services companies was recorded. Peak growth in credit was in 2005 and 2006. In those two years, credit to the private sector grew by 60%, that earmarked for house purchases by 65% and that to construction and real estate services firms by almost 100%, i.e.
Stable and well-capitalised banks The global spread of coronavirus has led to a sharp deterioration in the economic environment and financial market conditions. Nonetheless, banks in Switzerland have so far withstood the effects of the pandemic well. Yet the turbulence has shown how important it is for banks and insurance companies to have adequate capital and liquidity buffers. A firm foundation for this is set out in Swiss legislation. Systemically important banks are required to hold sufficient capital and liquidity buffers. These institutions are also required to ensure their recovery or orderly wind-down in a crisis. Over recent years, the globally active big banks have significantly strengthened their capital bases, reduced their risk positions and implemented key organisational measures for crisis management. The resilience of domestically focused banks is also good overall. Thus, the regulations in place are particularly beneficial in the current environment given the high levels of uncertainty caused by the coronavirus crisis. At the same time, by focusing on the key aspects of capital, liquidity and resolution, regulations in Switzerland are typically lean. This is because we believe it is important that market players in this country should be subject to as few constraints as possible regarding their activities and their business model. Solid currency and price stability Another pillar of a stable and attractive financial centre is a reliable currency. A reliable currency is one that holds its value over time, thereby ensuring price stability. 1  Cf. Economic Impact of the Swiss Financial Sector, BAK Economics, 2019.

Speech  Embargo 26 October 2020, 4.30 pm  The importance of good framework conditions for the Swiss financial centre Lugano Banking Day  Thomas J. Jordan∗ Chairman of the Governing Board Swiss National Bank Lugano, 26 October 2020 © Swiss National Bank, Zurich, 2020  ∗  The speaker would like to thank Christoph Hirter for his support in preparing this speech. He also thanks Simone Auer and Alexander Perruchoud, as well as SNB Language Services. Page 1/5  Ladies and gentlemen, I am pleased that this important event can go ahead at the second attempt, despite the continuing exceptional circumstances. Of course, I regret very much that the audience cannot be physically present. Despite all the digital possibilities available to us now, direct contact with the general public and with business remains very important for the Swiss National Bank. Coronavirus has not only impeded the holding of this centenary celebration, it has also had a far-reaching impact on the economy and our social interaction. I am therefore particularly pleased to have this opportunity to congratulate the Ticino Banking Association in person on its 100th anniversary. As Chairman of the SNB’s Governing Board, I visit Ticino often and have meetings with representatives of the Ticino Banking Association on an annual basis – under normal circumstances. The SNB has had good relations with your association for many years. This is not surprising, since the Ticino financial centre has a long history, as this centenary anniversary proves.
The costs increased, but none of the banks dared take the initiative to debit customers for these costs. There were concerns that Swedes regarded payments by cheque as an inherited right and would, therefore, vocally protest. But this was not the case. When, at the beginning of the 1990s, one of the banks decided to charge a fee of SEK 15 per cheque (and the others followed suit) the majority of cheque payments disappeared over just a few years – and moreover without political convulsions. The reason for this was that there were excellent substitutes that were free of charge and which were marketed by the banks, primarily cards and credit transfers. When consumers discovered this, their grief over the death of the cheque abated. The United States has always been the promised land of the cheque. By tradition, US consumers have sent cheques in the post when they pay their electricity or telephone bills, for instance. The company receiving the cheque has then forwarded it to the bank, which has then transferred the money and returned the cheque to the consumer. In this manner, tons of cheques have crossed the American continent daily. But even in the United States cheque usage has begun to fall. Giro transfers, other credit transfers and direct debit are used for the larger payment flows.

•  The next generation will use cards to a far greater extent than we do at present, even for smaller transactions. There are banks today which will, with the permission of the parents, issue simple debit cards to children who are 13-years-old and above. In addition, payments via text messaging will grow in importance. Mobile phones are here to stay. •  Cards will develop technically. They will become safer with chips instead of magnetic strips and they will have several different functions – identity cards, driving licences, passports? Technology appears to have no limits here. The opportunities with wireless communication further expand the areas of use. •  Use of e-money will grow. Not cash cards, where there are good substitutes, but the server-based network money. As e-trading increases so too does the need for secure e-payments. •  Finally, I believe that paper-based payments will die a natural death, just as cheques once did. They are expensive for the banks and impractical for consumers. In a few years we will see them on display at the National Museum of Science and Technology. Thank you! 6  “Electronic money from a central bank perspective”, speech by Stefan Ingves, Sveriges Riksbank, 4 March 1998. BIS Review 16/2008  5
As seen on the slide, inflation followed a flat course during the third quarter as these two effects largely offset each other (Chart 7). However, exchange rate developments ended up being more dominant which led inflation to exceed the forecast range presented in the July Inflation Report. In the third quarter, exchange rate developments led to an increase in the underlying trend of core inflation indicators as well (Chart 8). This was mainly triggered by the increase in prices of core goods, while the underlying trend of services inflation remained relatively modest (Chart 9). BIS central bankers’ speeches  5  Distinguished Guests, Gross Domestic Product (GDP) data indicated more robust economic activity in the second quarter of 2011 compared to the outlook presented in the July Inflation Report. Therefore, the output gap estimates of this period were revised upwards. Private sector consumption and investment expenditures became the main drivers of growth in this period. While exports followed a weak course amid developments in the global economy, imports recorded a significant decline following the slowdown in domestic demand due to the policy measures adopted. Thus, the net external demand made a positive contribution to growth on a quarterly basis for the first time after a long stretch. In other words, the composition of growth started to change in the desired direction (Chart 10). Owing to the lagged effects of the contractionary reserve requirement and liquidity policies, domestic demand continued to lose pace in the third quarter.

Besides, we have explicitly stated that the CBRT, in line with the strategy announced today, will not allow exchange rates to deviate from economic fundamentals, nor will it allow a deterioration in price stability and financial stability. I would like to reiterate that various measures will continue to be taken in the forthcoming period, in order to ensure price stability. 3. Risks and monetary policy  Distinguished Members of the Press, In the last part of my speech, I would like to mention risks regarding the inflation outlook and how the monetary policy will be shaped should these risks materialize. The fact that inflation will hover above the target in the short term poses risk to inflation expectations and price setting behavior. Accordingly, as of October, the CBRT has adopted a policy stance aimed at eliminating these risks. These risks will be closely monitored and the necessary measures will be taken to avoid deterioration in the medium-term inflation outlook. Medium term projections assume that the global outlook will remain weak for a long period, but the situation will not worsen further. Nevertheless, uncertainties regarding the global economy continue to be of significant concern. Especially, mounting problems regarding the sovereign debt of euro area economies continue to pose downside risks on the global economy. Concerns regarding the debt sustainability of euro area economies have further increased since the publication of the July Inflation Report, exacerbated by the concerns of a possible contagion to the region’s banking sector.
In the summer of 2013, the MPC provided guidance about the future path of monetary policy. This guidance was aimed explicitly at reducing uncertainty among households and companies, with simple and clear language about the future path of policy. It was accompanied by a communications plan focussed on the general public, including TV interviews and a published document. 43  Shiller (1997). Quoted in Thompson (2016). Sapienza and Zingales (2013). 46 See Haldane (2016). 44 45  11  All speeches are available online at www.bankofengland.co.uk/speeches  11  The Bank conducted a survey after the guidance had been issued, with the aim of assessing its impact on the general public. This painted a mixed picture. The Bank’s message got through to around 75% of companies, but only around one-fifth of households. Moreover, even among those households who heard the guidance, as many felt less confident as more confident about the economy (Table 2). In the US and the euro area, surveys have found a similar lack of understanding of central bank actions. They have also identified where these understanding problems are most acute. In the US, survey respondents with lower incomes or without a college degree are less likely to understand monetary policy. 47  In the euro area, a Dutch survey found respondents with higher education or income were more likely to answer questions about the ECB’s monetary policy correctly. 48  This is a puzzle.

Second, studies have focussed on the impact of central bank communications on the key information intermediaries – Markets (M), Economists (E) and News (N) – rather than the general public. Empirical studies of central banks have been dominated by MEN. This is a notable gap. It is the general public who, ultimately, make decisions about spending and saving in the economy. And it is the public who decide, ultimately, whether central banks are serving society well or poorly. 38  Third, when it comes to assessing the impact of central bank actions on the trust and understanding of the public, little if any attention has been paid to some of the richer informational channels through which news 36  See Bholat et al (2015) for a summary of these methods. Ongoing work by Hansen, McMahon and Tong uses these techniques to analyse the Bank’s Inflation Report and finds that its text moves financial markets, even after controlling for the Report’s quantitative aspects. This suggests that the narrative explaining what drove the forecasts and how the committee interprets the data matters, not just the numerical forecasts. 38 For example, Blinder et al (2008) suggest that “Virtually all the research to date has focused on central bank communication with the financial markets.
Nor Shamsiah Mohd Yunus: Advancing digitalisation for recovery, sustainability and inclusion Speech by Ms Nor Shamsiah Mohd Yunus, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the MyFintech Week 2022, virtual, 24 January 2022. * * * Assalamualaikum, bismillahirrahmanirrahim and welcome to MyFintech Week 2022. MyFintech Week is an important event for Malaysia’s financial sector. It is here where changemakers from finance, technology, government, business and other disciplines come together to discuss how we can shape the future of finance through technology and innovation. The theme of this year’s conference is “Advancing Digitalisation for Recovery, Sustainability and Inclusion”. Over the last two years, we have seen an accelerated pace of digital adoption across government, society and business unmatched in recent history. Against this backdrop, this theme aims to tap into the enormous potential of digital technology to transform finance and help build a more inclusive, resilient and sustainable economy of the future. Over the next five days, over a hundred speakers will discuss a broad range of issues ranging from environmental sustainability, the future of money, emerging technologies and the financial health of consumers. At MyFintech Week 2019 two years ago, I spoke about the dynamic shifts that the world was undergoing, and in turn, the opportunities and risks they presented to the financial industry. These included changes in the global economic order, climate change, rising income inequality and the advancement of technology.

In the two years since, the severe global health and economic crisis faced by the world has brought these trends into even sharper focus. For example, the pandemic has highlighted and deepened long-standing vulnerabilities in Malaysia and many places around the world. These include the fragile state of social protection systems, under-investments in health and infrastructure, and the need to improve our education system. As a result, vulnerable groups bore much of the economic, social and health cost of the pandemic and they continue to be at risk. This will affect economic and social resilience and thus not only our prospects to recover and bounce back from the pandemic, but also to deal with other existential challenges further ahead, like those in the environment and climate. On the bright side, the pandemic has demonstrated the power and potential of finance to address the pressing problems of our time. The financial system has been resilient, with the ability to provide critical support to households and businesses during the difficult times. Digital financial services like electronic payments have made it easy for people and businesses to continue making transactions in a low touch setting, with even greater ease. The financial sector has also stepped up to provide various forms of relief to customers over the last two years, such as by giving borrowers breathing space and helping them get back on their feet while ensuring that depositors’ interests are not jeopardised.
Indeed, most of the time, central bankers avoid public remarks on issues like Too Big To Fail; Emergency Liquidity Assistance; flaws in insolvency regimes; burden sharing between national authorities, and so on. But surrounded as we are by failed banks, it is not only possible to talk about bank failures without scaring the horses; it would be irresponsible not to do so. And as central bankers and regulators free themselves from that mental strait-jacket, new and perhaps far reaching ideas are emerging. They amount to redrawing the third element of the Social Contract between the authorities and the banks. To recap, the third element has been that the banking system should bear the cost of insuring retail depositors with banks against loss. The lessons go, narrowly, to the construction of such insurance; but also to a broader reformulation in which deposit insurance is just one component of the overall package. Deposit insurance: risk-based premia and pre-funding For most of the past thirty years, deposit insurance in the UK applied to modest amounts, and provided less than 100% cover of the insured amount. The element of “co-insurance” was intended to leave retail depositors with an incentive to take care where they deposited  1  Blunden G, “Supervision and Central Banking”, Bank of England Quarterly Bulletin, August 1987. Since the Turner Report was published, Adair Turner has himself added this point to the FSA’s list of conclusions.

Pre-euro economic policy required careful monitoring of the balance of payments and the foreign exchange and interest-rate markets. The authorities received constant feedback on key indicators affecting national economic performance and could then react accordingly. These indicators were sensitive, multiple and very reactive. At present, with the advent of the single currency, economic managers must monitor the relevant competitiveness indicators with even greater vigilance, as economic policy errors  BIS Review 96/2001  5  could have slower and more insidious repercussions, such as rising unemployment and weak growth. The rules of a market economy continue to apply to all euro area countries. Jobs are created by consumers – totally free to purchase whatever they wish – when they choose the goods and services that they deem to be best value for money. Companies – totally free in their investment choices – locate their business according to the relative competitiveness of the different possible sites. It is therefore necessary to monitor competitiveness even more closely than before, in particular unit production costs, and the tax and regulatory framework. The multilateral surveillance carried out in the context of the Eurogroup, will help monitor competition trends in each euro area country and in the zone as a whole and, where necessary, suggest appropriate adjustments. III. A smooth changeover to the Euro will also be a determining factor for Europeans’ confidence in their new currency  Of course, the Eurosystem is at the heart of the euro cash changeover process.
But alongside the risk-based approach, as an alternative way of measuring capital adequacy, it guards against model risk. This in turn makes the overall capital adequacy framework more robust. The leverage ratio is often described as a “backstop” to the “frontstop” of the more complex risk-weighted approach. I have to say that I think this is an unhelpful description. The leverage ratio is not a “safety net” that one hopes or assumes will never be used. Rather, bank capital adequacy is subject to different types of risks. It needs to be seen through a variety of lenses. Measuring bank capital in relation to the riskiness of assets guards against banks not taking sufficient account of asset risk. Using a leverage ratio guards against the inescapable weaknesses in banks’ ability to model risk. Whether the leverage ratio or the risk weighted capital ratio bites on any individual bank will depend on what are the greatest risks facing that bank. BIS central bankers’ speeches  3  Work on an international standard for a leverage ratio is well advanced, though a standard will not be set before 2019. The Chancellor of the Exchequer announced last November that the Bank of England’s Financial Policy Committee should review whether a leverage ratio should be introduced in the UK before 2019. The Bank, accordingly, issued a consultation document last Friday on how a leverage ratio might work alongside the risk-weighted approach in the UK. We have made a great deal of progress in reforming the capital adequacy framework for banks.

And even if it is possible to model credit risk for, say, a bank’s mortgage book, it is much more difficult to model the complex and often obscure relationships between parts of the financial sector – the interconnectedness – that give rise to risk in periods of stress. Moreover, allowing banks to use their own models to calculate the riskiness of their portfolio for regulatory capital requirements opens the door to the risk of gaming. Deliberately or otherwise, banks opt for less conservative modelling assumptions that lead to less onerous capital requirements. Though the supervisory model review process provides some protection against this risk, in practice, it can be difficult to keep track of what can amount to, for a large international bank, thousands of internal risk models. The underlying principle of the Basel 3 risk-weighted capital standards – that a bank’s capital should take account of the riskiness of its assets – remains valid. But it is not enough. Concerns about the vulnerability of risk-weights to “model risk” call for an alternative, simpler lens for measuring bank capital adequacy – one that is not reliant on large numbers of models. This is the rationale behind the so-called “leverage ratio” – a simple unweighted ratio of bank’s equity to a measure of their total un-risk-weighted exposures. By itself, of course, such a measure would mean banks’ capital was insensitive to risk. For any given level of capital, it would encourage banks to load up on risky assets.