samchain/econo-pairs-v1 huggingface dataset:
François Villeroy challenges  de  Galhau:  Recent European  economic  Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Paris Europlace International Financial Forum, Tokyo, 5 December 2016. * * * Accompanying slides. Thank you for your invitation. I am very pleased to be here in Tokyo for the first time as a Governor. France and Japan have a lot in common. Both our countries have a long history and culture, a long-term vision and a strong private-public partnership. And Bank of Japan and Banque de France have developed a rich and fruitful relationship. Let me thank Governor Kuroda for his enlightening comments on digital innovation and FinTechs, which Banque de France clearly supports. I will focus for my part on European economic challenges. In 2016, the world in general, and Europe in particular, has experienced a period of high uncertainty: uncertainties relating to our security, with the threat of terrorist attacks; political uncertainties, with “Brexit” and, more recently, Mr Trump’s victory in the United States; as well as economic uncertainties, including oil prices or Chinese growth, and high market volatility at the beginning of the year. The referendum in Italy yesterday may be deemed as another source of uncertainty. However it cannot be compared to the British referendum: Italian people have been called to the polls to vote on an internal constitutional matter, and not about Italy’s long-standing EU membership. We will nevertheless look closely at its consequences.

In this spirit the ECB has been reviewing its monetary policy operations over the past year. The enlargement eastwards will entail a new, formative stage. I would gladly work actively to achieve increased clarity and transparency within the ECB if the result of the referendum is a “yes” vote. Is a national stabilisation policy necessary? The risk that Sweden could end up in a different situation from the rest of the euro area, and that this would cause serious economic policy problems, has been strongly highlighted in the Swedish discussions, much more so than in other countries where the monetary union has been discussed. The reason for this is, of course, the severe crisis that occurred at the beginning of the 1990s, with the collapse of the krona in 1992, which had such a tangible effect on the lives of many in Sweden. In my opinion, there is a tendency to overestimate the risks that developments in Sweden will differ substantially from the rest of the world and require unique stabilisation policy measures. When we have differed from other countries previously - such as during the crisis years of the early 1990s - this has usually been the result of conducting a different economic policy; of not having control over inflation or focussing on stability, as the core EMU countries did. However, there now appears to be a consensus that economic policy should be aimed at long-term stability and that this policy should stand firm.
There is a clear investment philosophy behind risk taking in Norges Bank. First and foremost, it is important to have a clear separation between activities directed towards achieving beta-exposure and activities linked to active risk taking. In that way, a true assessment of realised returns as well as costs associated with active management is possible. Moreover, active risk taking is done with humility and with a strong belief in the effectiveness of markets. Hence, we mostly apply active bets when we think we, either internally or through our external managers, possess an informational advantage. Such an advantage is sought through a high degree of specialization. Another type of active position is based on collecting risk premiums where we as an investor have a comparative advantage to bear the risk. An example of this is liquidity premiums. It has been a challenge to us to establish a professional and vigilant business culture within the central bank. I think we have succeeded. An important instrument in this respect has been performancebased remuneration for the Bank's investment managers. The investment management wing of the bank now resembles a private investment manager rather than a typical central bank investment office. In particular, all investments are delegated to professionals in a clear line structure. But recruiting and keeping skilled human capital requires more than competitive wages. Whether we succeed will depend on our ability to create an environment where such capital can thrive and prosper.

BIS Review 45/2007  3  An important key to the success of the Fund so far has been the clear separation between investment decisions by professionals in a performance-oriented environment, and the economic policy role of the Fund. We have been able to establish a setting where investments are made in a business-like manner. Another essential insight is the importance of political support for strategic allocation. There was a broad consensus in parliament behind the choice of investing in equities in 1997. This was important in order to navigate through the turbulent waters of equity markets in the beginning of this century – and such turbulence will certainly return. Perhaps most importantly, the Government Pension Fund and our fiscal guideline have helped us to avoid the common pitfalls in resource rich economies, e.g. lack of fiscal discipline and loss of focus in structural policy. We have managed to avoid creating a subversive second fiscal budget. The Fund has shielded the mainland economy from excessive variability and has to a large extent reduced the oil-price dependency of the exchange rate. Yet, I would like to end with a word of caution: The model we have chosen in Norway has evolved in a Norwegian setting and is not necessarily suited as a blueprint for other countries. But it is important to understand the basic, and maybe universal, principles underlying the model and adapt them to the particular fiscal situation and the particular political tradition of the country in question.
And to help us navigate this long, winding and foggy road, we should take a pause and look back, and ask ourselves what we did well, what we could have done better, and how to do things better in the future. 10. Today I would like to take this opportunity to share three reflections with you. I won’t pretend that these are in any way definitive. But these, I believe, are the key takeaways from our experience so far. Radical Open-Mindedness 11. The first reflection is the need for radical open-mindedness, a term that I borrow from Ray Dalio, who used it to describe idea generation in investments. I would say this is even more applicable to fintech innovation – we need to be radically open to new ideas and try things that could make the financial system better. 12. When we brainstorm ideas for new fintech projects, we usually won’t know where they will lead us. The only sure thing is that if you don’t try, you never get anywhere. The key is to learn from failure and move on. This mindset has gotten us the hugely popular FPS, eight virtual banks and a vastly more advanced data-sharing infrastructure in our financial system. 13. In the beginning we were sometimes a bit resistant, wondering how new creatures like crypto, stablecoins, DeFi and other blockchain-based innovations can fit into “mainstream finance”.

In tribute to the Governor, as I know that Fernando Pessoa is one of his favourite poets, I'd like to quote his “Odes by Ricardo Reis”, in which he reminds us of the importance of being truly committed to our work. “To be great, be whole: don’t exaggerate Or leave out any part of you. Be complete in each thing. Put all you are Into the least of your acts." Thank you all for being here. 5/5
I also think that this reduction in potential GDP should be ascribed to the recession of 2009, rather than being spread out over a longer period of time before and after the recession. This means that the GDP gap was approximately – 4 per cent when the crisis was most severe in 2009. Instead of increasing according to trend by over 4 per cent between 2007 and 2009, GDP fell by 5.5 per cent. This resulted in a fall in actual GDP of approximately 10 per cent in relation to the trend. However, potential GDP also fell as a result of the crisis by around 4 per cent. This means that the GDP gap only fell by around 6 per cent. The level of the GDP gap is significant for monetary policy. A large negative gap indicates both that inflationary pressures can be expected to be low and that there are more compelling reasons to support production and employment through an expansionary monetary policy. My assessments indicate that the GDP gap was lower before the crisis than appears from a GDP gap based on HP trends. HP gaps do not work well as measures of resource utilisation in deep recessions. However, despite this, my own assessment corresponds fairly well with the level that the HP gap indicates for 2009. It is also compatible with current forecasts indicating that the GDP gap should be largely normal by the end of the forecast period.

Experiences from previous deep recessions in Sweden in recent decades indicate that such steep declines in GDP have long-lasting consequences. During the recessions of the second half of the 1970s and the early 1990s, the GDP level did not return to the previous trend during the ten-year period following the decline in GDP. (Figure 2. Historical GDP trends). In connection with financial crises, it is normal for GDP growth to be significantly lower and unemployment higher for an extended period after the crisis, as compared to a period of equivalent length before the crisis. Reinhart and Reinhart have described this in a paper recently presented at a conference at Jackson Hole. 7 This is partially because credit expansion and increasing real property prices prior to a crisis tend to be followed by tightening and falling prices after the crisis. They also note that dampened growth and higher unemployment after a financial crisis may result in lower investment and the depreciation of human capital, which, in turn, may lower both the level and the rate of increase of potential production. Also in connection with the current crisis, the Riksbank expects lower GDP in the long term than we did before the crisis. We are now expecting GDP to be approximately 4 per cent  3  UC models (UC = Unobserved Components) involve using economic theory to identify which development of the non-observed potential variables is compatible with the development of observed variables, such as GDP, employment, unemployment and inflation.
However, the period of moderation in monetary growth has as yet been too short to allow a definitive assessment. Against this background, the Governing Council continues to hold the view that the information from the first pillar does not thus far point to risks to price stability. Nevertheless, the persistence of excess liquidity in the economy could become a concern once the economic recovery in the euro area gathers pace. As regards the second pillar, the trough in economic activity was in all likelihood reached at the end of last year. Further information received over the past few weeks, i.e. surveys, financial market and leading indicators, strengthened the expectations of a recovery in the course of this year. While some uncertainty remains as regards the precise pattern of the recovery, not least in the context of a substantial increase in oil prices, the latest evidence has reinforced our previous assessment. Real GDP growth rates in the euro area should again be in line with potential growth later this year. Domestic factors support the recovery. First, a reversal of the past inventory drawdown is under way and real disposable income growth is expected to benefit from lower rates of inflation. Second, financing conditions are favourable. We also expect the stronger international environment to play an important role in stimulating euro area exports, and both domestic and external factors should foster investment. Finally, the positive outlook for the euro area economy is very much supported by sound fundamentals and the absence of major imbalances.

It is vital that the commitments made to achieving balanced budgets by 200304 be firmly followed up in the Member States concerned. A continuation along the path of fiscal consolidation is essential, as is vigilance in ensuring strict adherence to the medium-term plans and rigorous implementation of the procedures of the Stability and Growth Pact. Equally, the expected recovery should be seen as an ideal opportunity to strengthen efforts towards implementing comprehensive structural reforms – in public expenditure and revenues and product, labour and financial markets. Heads of State and Government confirmed this objective during their recent meeting in Barcelona. If implemented vigorously, such reforms could increase the growth of real GDP and employment on a sustainable basis. Past improvements in the functioning of markets, together with wage moderation, have contributed to strong employment growth and a considerable reduction in unemployment. It is therefore clearly in the interest of all countries to continue to rigorously implement the agenda agreed in Lisbon and recently confirmed in Barcelona. We are now at your disposal for questions. 2  BIS Review 22/2002
Mario Draghi: ECB press conference – introductory statement Introductory statement by Mr Mario Draghi, President of the European Central Bank, and Mr Vítor Constâncio, Vice-President of the European Central Bank, Frankfurt am Main, 8 September 2016. *  *  *  Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council, which was also attended by the Commission Vice-President, Mr Dombrovskis. Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. We continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. Regarding non-standard monetary policy measures, we confirm that the monthly asset purchases of € billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. Today, we assessed the economic and monetary data which had become available since our last meeting and discussed the new ECB staff macroeconomic projections. Overall, while the available evidence so far suggests resilience of the euro area economy to the continuing global economic and political uncertainty, our baseline scenario remains subject to downside risks. Our comprehensive policy measures continue to ensure supportive financing conditions and underpin the momentum of the euro area economic recovery.

In this regard, we should bear in mind that inflation in the last two years has been predominantly negative. On the other hand, with an ongoing unfavourable international environment and a strong Swiss franc, the situation for our economy remains challenging. Should it become necessary, we will therefore enforce the minimum exchange rate by buying foreign currency in unlimited quantities. And, if required, we will also take further measures. In addition, we are leaving the target range for the three-month Libor at 0.0–0.25%. The SNB bases its monetary policy decision on a conditional inflation forecast, which assumes an unchanged three-month Libor of 0.0% over the next three years. You will find the relevant chart in your media kit. Compared to September, our forecast has been adjusted downwards slightly. Reasons for this are the unexpectedly low rates of inflation for October and November, which serve as a lower departure point for the forecast, as well as the decline in inflation in the euro area and the slight fall in the oil price, which both help to dampen the inflation outlook. For 2013, we still anticipate inflation of –0.2%. For 2014 and 2015, the inflation forecast is down in each case by 0.1 percentage points and is now at 0.2% and 0.6% respectively. Consequently, no inflation risks can be identified for Switzerland in the foreseeable future. Global economic outlook The SNB’s inflation forecast is embedded in a global economic scenario. I would therefore like to begin with our assessment of the global economy.
The Island has been suffering from a vicious cycle. As employment declines, people move to the mainland to find jobs. Accordingly, economic activity and tax revenues decline, forcing the government to raise taxes and cut spending, which further reduces employment and prompts still more residents to move. At this point, the outlook for anyone who has been living here must be bleak, and it may be hard to imagine this situation turning around anytime soon. And yet, history tells us that a turnaround, though not inevitable, is indeed achievable. Lessons from past crises New York City is probably the most famous example of a municipality that experienced a major fiscal crisis, recovered and is now thriving. New York City’s experience is viewed, in retrospect, as a major success, and some, including myself, have pointed to it as a hopeful example of what 1/4  BIS central bankers' speeches  could come to pass in Puerto Rico. But, there are important caveats to the New York City story and its applicability to the Commonwealth. Like Puerto Rico, New York City experienced a number of years of both political and economic pain as a result of its fiscal crisis in the 1970s. On the political side, New York City residents lost a large measure of their ability to chart their own fiscal direction for several years. Decisions about tax and spending policies were removed from elected city officials.

Jon Nicolaisen: Challenges for the payment system Speech by Mr Jon Nicolaisen, Deputy Governor of Norges Bank (Central Bank of Norway), at Finance Norway's payments conference, Oslo, 1 November 2018. * * * Please note that the text below may differ slightly from the actual presentation. Changing payment landscape The way we make payments is changing. New services and operators are constantly appearing. The underlying infrastructure, our payment system, must be adapted to the changes. But where is this all heading? How will we make payments in the future? And what will the future form of money be? The forces driving payment market developments are new technology, changes in consumer behaviour, globalisation, and new regulations, such as the new Payment Services Directive (PSD2). PSD2 requires banks to grant third-party providers (TPPs) access to their systems to enable TPPs to offer payment and account information services. PSD2 is both a response to developments in the payments market and a catalyst for future developments. At the same time, a number of large international technology companies are moving into the payments market. Apple offers mobile payment services to Norwegian customers. Google has just launched its own mobile payment solution in Norway. Other operators will follow suit. The role companies such as Facebook, Amazon and Alibaba may take remains to be seen. Vipps is now the only Norwegian mobile payment solution. A planned merger of the Vipps, BankAxept and BankID systems was announced towards the end of 2017. The merger was approved by the authorities in summer 2018.
Third, even in the case where the central bank knew that financial imbalances were building up, the size of the interest rate rise needed to reduce the imbalances might be so large that it could lead to a severe economic downturn. In Norway, the central bank is one of the institutions with responsibility for analysing and monitoring the financial system. As a flexible inflation-targeting country, we have chosen to incorporate financial stability considerations into the monetary policy decision-making process, partly because asset prices and debt are important for inflation and output, and partly because it provides focus on potential risks to financial stability. It may also be useful to cross-check by assessing our interest rate policy in the light of simple rules like the Taylor rule, which are less dependent on a specific analytical framework for the Norwegian economy. On the other hand, the rules will not capture all details in the projections, but can provide an indication of whether the current interest rate level is reasonably adapted to the economic situation. As we now publish our own interest rate forecast, market interest rate expectations are one cross check of particular interest. If expectations deviate from our projection, it may indicate that the market has a different view of future economic developments. If we are to influence interest rates in the money market, we must be able to explain such deviations. Of course, it might also be the case that the market’s view is the most accurate.

Measuring this effect precisely is of course hard, since we cannot easily identify what the counterfactual would have been in the absence of QE. But QE clearly acted to break a dangerous risk of transmission from severe market stress to the macro-economy, by avoiding a sharp tightening in financial conditions and thus an increase in effective interest rates. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  QE is normally thought to work through a number of channels: including signalling of future central bank intentions and thus interest rates; so called ‘portfolio balance’ effects (i.e. by changing the composition of assets held by the private sector); and improving impaired market liquidity. The Monetary Policy Committee’s decision on QE in March differed somewhat from previous rounds of purchases. A larger amount of purchases, £ was announced as this was judged as necessary to support economic activity and ensure a sustainable return of inflation to target. And the purchases were to “be completed as soon as is operationally possible” to address the emerging financial market dysfunction. In the paper we draw two lessons from the experience. First, it reminds us that the effect of QE can be state contingent. Consistent with that, second, the pace of QE purchases may be more important during a period of market dysfunction associated with a widespread shock to liquidity demand. Indeed, when the MPC voted to expand QE further in June, in more normal market conditions, the pace of purchases was reduced.