samchain/econo-pairs-v1 huggingface dataset:
Timothy F Geithner: The Fed Challenge Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the National Academy Foundation’s 2004 Dinner, New York, 8 December 2004. *  *  *  Thank you, Gene, for that generous introduction. It is a pleasure to be here tonight to celebrate the National Academy Foundation and all of your contributions to this important mission. I am very pleased to accept this award on behalf of the Federal Reserve Bank of New York. I want to compliment Sandy Weill on his commitment to education and the achievements of the NAF. And I want to recognize three important people from the New York Fed who are responsible for the Fed Challenge: Steve Malin, Lloyd Bromberg and Bob Diamant. Among these and other contributions to public service, Sandy serves as a member of the board of directors of the New York Fed. I want to tell you his reaction to a presentation early this year on our work in financial education. Sandy listened carefully to the description of the full array of New York Fed programs. Then, in his typically tentative and understated way, with the same soft approach he brought to building one of the most formidable financial institutions in the world, asked why the Bank didn’t limit its role in education to simply supporting the National Academy Foundation.

His belief, with justifiable pride in the Foundation, was that there was no more important contribution the Fed could make and no more competent institution engaged in this effort than the Foundation. Fortunately for the New York Fed, we have a long and productive collaboration with the Foundation. We provide support on curriculum design and professional development. We are working together to help create a new high school in the city with a finance theme. The NAF has adopted the Fed Challenge for its Academies throughout the country. And we benefit in turn by using the Academy’s work as a model for the economic and financial programs we support and initiate. If you care about the economic future of America, you have to care about educational reform and the mission of the NAF. This mission has always been important, but it is particularly important today. Confidence in America depends importantly on success in the education mission. Improving educational achievement will play a critical role in generating the innovations necessary to drive future productivity growth. And yet, US students remain math challenged, and we are awarding a diminishing share of the world’s PHDs in science and engineering. Improving the quality of education is vital to improving the capacity of our citizens to manage the challenges that come from global competition, rapid technological change, and the greater share of the risk they now bear for saving for retirement.
Notably, on the supply capacity of the economy and its prospective rate of growth; on the rate of unemployment below which inflation is liable to increase; on the natural (or neutral) real interest rate. Those judgments are, in truth, formidably difficult to make, because they need to be regularly updated given structural change in the economy; and because each of the variables is unobservable! Perhaps understandably, that leads some policymakers 8 to the conclusion that these concepts may be useful as just that – concepts – but not at all in practical decision taking. Whilst not wanting to deny their unobservability, I do not take quite that view. For example, the natural real rate may be unobservable, but there is no ducking the fact that a policymaker needs to form a view on whether its policy stance is stimulating or restraining demand, which amounts to broadly the same thing. Against that background, I can return to a central bank’s objectives. To maintain inflation in line with a target over the medium term. And, typically with less priority, to stabilise the path of output in the face of cyclical shocks; in the UK Government’s mandate to the Bank of England 9 , that is expressed in terms of, inter alia, the MPC avoiding ‘undesirable volatility in output’. I shall say something about both, before going on to discuss some issues concerning monetary policy strategy that have featured in recent academic commentary.

Philipp Hildebrand: The global financial crisis – analysis and outlook Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the NZZ-Podium, Zurich, 5 February 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  We are currently experiencing the most severe and most complex financial crisis in several decades. It has affected many people around the globe, and finger-pointing and casting blame happen all too easily. Yet only a careful investigation of the responsibilities is likely to point to ways in which our financial system, and ultimately our economy, can be made more resilient once this crisis has been overcome. Financial markets react to incentives, and these incentives were misplaced in the past. It is in our power to start lobbying for clearly defined and risk-limiting conditions. If the responsible authorities wish to enact more stringent regulation, we ought to give them our unconditional support. The National Bank is determined to employ all the means at its disposal to ward off an economic contraction. BIS Review 12/2009  1
Furthermore, in the light of the Commission’s proposals to strengthen the Directive, which have been supported by ECOFIN, it is clear that the resources available to the Maltese Depositor Compensation Scheme need to be significantly enhanced before the end of 2009. 4  BIS Review 155/2008  Looking beyond the crisis, we can already anticipate further changes at the international level. Major modifications are likely, for example, in the regulatory framework, covering liquidity, leverage and risk management. The role of credit rating agencies is also being reappraised. Clearly, the models used in the past to evaluate risk have proved inadequate. Entire types of financial institution, such as stand-alone investment banks, may cease to exist while certain categories of financial instruments, such as the more exotic derivatives, may never be traded again. As regards regulatory arrangements, the crisis has highlighted the importance of a close central bank involvement in prudential oversight. This stems from the fact that central banks need supervisory information to carry out their core functions, including the implementation of monetary policy. Information about the soundness of banks is important for them to be able to assess the health of their counterparties in the conduct of monetary operations. It is also valuable because central banks, including the Central Bank of Malta, are often responsible for the regulation and oversight of payment and settlement systems. Such information becomes essential when central banks are called upon to provide emergency liquidity in times of stress as lenders of last resort.

And when the whole edifice started to crumble, the shock waves travelled fast, a testimony to the efficiency of the transmission channels in a globalized economy. Thus, in no time at all, a crisis that had its roots in a narrow segment of the housing market in the United States moved across the Atlantic to Britain and then to the euro area. And as demand in the advanced economies and commodity prices began to tumble, emerging economies started to decelerate rapidly. So much for the decoupling theory! Unlike other recent crises, the current turmoil had its origin within the financial system itself. It followed a boom in asset prices, particularly house prices. Although some observers, including central banks, had warned about mispricing of risk, many investors purchased what are now known as “toxic” assets in a search for yield, increasing leverage to generate higher profits. The growing use of securitisation allowed banks to originate loans and distribute them, packaging risk and selling it to other investors. It was believed that this would spread risks more evenly, enhancing the stability of the system as a whole. But the financial engineering involved in this process was so complex that neither the regulators nor the credit rating agencies could calculate the risks. What the regulators also overlooked were the dangers that were developing as banks moved further away from their customers. On the financing side, banks were becoming increasingly dependent on wholesale investors for funding.
There will be no additional criteria but neither will there be a relaxation of the criteria that proved effective in steering the process of convergence across the founding members of the euro area. Conclusion Let me underline four points which, I trust, are of the essence in the present situation : First, I would like to stress the remarkable credibility of the euro and of the Central Bank that issues this currency, the European Central Bank. Neither the ECB nor the Euro existed six and a half years ago! Today we have a currency which is as stable as were the best national currencies in Europe, and a Central Bank which is as credible as were the most credible Central Banks in Europe and in the world. Our duty is to fully preserve and enhance this exceptional level of credibility and I am, as President, fully committed to this task. Let me in this respect pay homage today to Finn Kydland and to Edward Prescott, who were awarded yesterday the Nobel Prize in Economics. Their seminal work - as regards central banking - on the importance of time consistency, commitment in advance, and full independence and credibility in the delivery of price stability over time has been very important for institutional developments around the world, including the ECB and the Eurosystem, and instrumental in our success. We owe them a particular debt of gratitude. Second, price stability is a necessary condition to obtain sustainable growth and job creation. It is not, alone, a sufficient condition.

However, after some time, employment is expected to increase, as new products and services are being introduced and fresh energies are being unleashed and made productive. The liberation of large segments of activity that were previously suppressed will soon create a potent constituency for reform and  2  European Commission (2003): “Jobs, Jobs, Jobs. Creating More Employment in Europe”, report of the Employment Taskforce chaired by Wim Kok, November. BIS Review 59/2004  3  structural advancement. Importantly, all consumers and firms which in a regulated environment had to bear the cost of financing the subsidies will immediately enjoy the benefits from the reform. These prospective gains and the tilting of the balance of social preferences that these gains will bring about are often overlooked in the public debate. In fact, for the time being, the challenge to gain the support of parliaments and the public for implementing structural reforms is formidable. It is therefore imperative to make it clear to the public that, if governments and social partners deliver those reforms, the net benefits will be significant for the public at large. Fiscal policy Implementing structural reforms to raise potential growth is a major challenge for the European economies. But it is not the only one. In any economy, achieving sustainable, non-inflationary growth also requires fiscal soundness. In the absence of such fiscal soundness, price stability can only be maintained at a higher cost in terms of interest rates, and thereby lower growth and employment.
And by continuously adapting and refining its systems Hong Kong seeks to retain its attraction as an international centre. In none of these projects was any huge injection of public money necessary. These developments also illustrate very clearly the "can do" culture of Hong Kong. Most were executed in a fraction of the time that similar projects required, or are projected to require, in other centres. For instance, from start to finish the US dollar payments system took only about twelve months to implement. And this "can do" capability extends much more widely than the few examples in the financial sector which I have mentioned. There are many characteristics of Hong Kong which may help explain the strength of its "can do" culture. Let me mention just four: •  One is the limited amount of red tape. I don't say "absence", but, even though the creep of bureaucracy may not have been held entirely at bay, it is certainly less intrusive here than in many other places. 2  BIS Review 33/2001  •  Secondly, geography has an influence. I am thinking in particular of the physical concentration of business within Hong Kong itself.

BIS Review 33/2001  3
With hundreds of billions of pounds of pre-positioned collateral and regular, flexible and widely accessible Bank of England liquidity auctions, markets stayed open and price discovery was smooth and effective. 15  Today marks a step change in our ability to provide the liquidity that the new finance may eventually require. With the Chancellor’s announcement tonight of a ground-breaking new financial arrangement and capital injection for the Bank of England, we now have a balance sheet fit for purpose and the future. 16  One that  reflects the Bank’s much wider range of responsibilities including banking supervision, macro-prudential policy and resolution. And the framework enhances our independence, transparency and accountability. The additional capital will significantly increase the amount of liquidity the Bank can provide through collateralised, market-wide facilities without needing an indemnity from HM Treasury to more than half a trillion pounds. 17  This lending capacity would expand to over three quarters of a trillion pounds when, as  designed, additional capital above the target level is accrued through retained earnings. The new framework will also strengthen the Bank’s ability to fulfil its monetary stability remit. In August 2016, the MPC launched the Term Funding Scheme (TFS) in order to reinforce the pass-through of the cut in Bank Rate to 0.25% to the borrowing rates faced by households and companies. The Bank required an indemnity from HM Treasury for the loans it extended under the TFS. 18  Today’s announcement increases the amount of risk the Bank can carry on its balance sheet.

13  And the City is leading the underwriting of local  currency green bonds, where annual issuance could range in the hundreds of billions of dollars. For its part, the Bank of England has helped catalyse the private sector’s TCFD. We are working closely with the People’s Bank of China to build domestic and cross-border markets to finance the transition to a low carbon economy. And we are coordinating with fellow central banks and supervisors representing more than a third of global output and emissions to develop supervisory approaches to ensure the financial system is fit for the transition. c) The New Demographics As the world is changing it is ageing. The ratio of the population aged over 65 to those of working age in advanced economies has increased from 15% in 1950 to 30% in 2015, and is projected to rise to 50% over the next twenty years. Over the same period, this ratio is projected to double to over 25% in emerging markets. The macroeconomic consequences of these shifts are already evident, with the large, rapidly growing pool of retirement savings depressing interest rates and pushing up asset prices. 14  The need to manage this growing pool of savings will drive further growth in the wealth management, insurance and pension industries. And it will require new products, for example to meet the unpredictable costs of long-term care. In the process, market-based finance, which has already accounted for almost all corporate credit growth since the crisis, will become even more important.
This is essential in order to facilitate the transition from a planned to a market economy and, at the same time, to support the conduct of a single monetary policy in an enlarged euro area. Setting up such a financial infrastructure is, however, a difficult task. First, preparatory work in this field is subject to very long lead times and, therefore, needs to be implemented years before the adoption of the euro. Second, the target of this preparatory work is a moving one: certain components of the euro area financial infrastructure may need to be adapted before new Member States can be integrated into the euro area. Furthermore, there is an ongoing debate in international fora about the optimal structure of modern financial markets in an increasingly integrated global financial system. More and more, market pressures, economies of scale and efficiency gains point to the need for further consolidation of the financial infrastructure. In the context of EU entry, and taking into account the relatively small size of the financial sectors in the accession countries, plans to develop the financial market infrastructure may need to bear in mind the specific conditions applying to accession countries. Indeed, there is a risk that accession countries may now be investing considerable efforts and resources to develop infrastructures similar to those that some euro area countries are trying to rationalise. Concluding remarks Ladies and gentlemen, I shall conclude with a few brief remarks of a more general nature.

In my remarks today, I will address these two questions: (i) how can we better measure the long-term risks associated with climate change? (ii) and how can we develop the opportunities related to the financing of the transition? [slide 2] **  1. From physical risks to transition risks, and from a snapshot to a video Dr Shuckburg has just given an excellent presentation of the available research, which confirms 1/4  BIS central bankers' speeches  that the forces of climate change are powerful and inevitable. Physical risks – the increased frequency and severity of extreme weather events – are obviously the most visible and immediate source of risk for the financial sector. [slide 3] With 710 natural disasters in 2017, 9 we have just lived through another year of record climate turbulence. The 600 mark has been exceeded only five times, all of them in the last six years. Needless to say, the insurance sector is at the forefront in dealing with physical risks. Yet, contrary to widespread belief, if not covered by insurance, physical risks could loom large for banks as well. The lack of insurance protection when natural disasters occur, or what we call “protection gaps”, may increase credit risks for banks if it leads to suppressed economic activity and higher unemployment. Globally, protection gaps are already sizeable. 10 They could increase further, including in developed countries, if insurers increase their premiums or simply retreat from risky market segments. Physical risks should therefore be, at the very least, carefully monitored.
The heads of Joint Supervisory Teams will come from a country other than that in which the institution it is supervising is established. “In concrete terms: the head supervisor for Deutsche Bank will be a French lady; BNP Paribas will be supervised by an Italian man.” *  *  *  Ladies and gentlemen, In precisely two months’ time, we will usher in a new era in the euro area. With the establishment of the Single Supervisory Mechanism (SSM) on 4 November 2014, the European Central Bank (ECB) will assume key competencies in the field of banking supervision. However, unlike the introduction of the euro banknotes and coins in 2002, this step towards further integration will not entail a major symbolic change that is tangible for all citizens. Nevertheless, the start of the SSM means progress, not only in European integration, but also in day-to-day supervisory work. The ECB – one of the world’s largest supervisors The ECB will take on the direct supervision of around 120 credit institutions and more than 80% of the aggregated balance sheet for the euro area banking sector. In absolute figures, this means a total of more than € trillion as per 30 June 2014. In addition, the ECB will be indirectly supervising the less significant institutions, of which there are just over 3,500. Here, we will shape supervision by setting binding supervisory standards. This will make the ECB one of the world’s largest supervisors.

When we discuss appropriate levels of T-LAC we should keep in mind that the less we strengthen the credibility of the system for going concern capital requirements, the higher banks’ gone-concern capacity to absorb losses will have to be. Concluding remarks So, to wrap up: I see no reason to pull the brake on regulatory reforms. We mustn’t lose sight of the long-term benefits of limiting the costs to society that financial crises cause. And, although a lot has been achieved, challenges still remain – especially when it comes to implementation, implementation monitoring and calibration of the whole system. As I said earlier, I do not know how all the different parts of the reforms will play out together. This only further underlines the necessity to constantly monitor what is happening, very much in line with what the organisers of this conference are doing. And as financial systems have an amazing ability to reinvent themselves, regulatory reform is a never-ending task. Therefore, we need forums such as this conference to evaluate where we are, and where we should be going – hopefully, then, we won’t have to make regulatory leaps quite as far as we were forced to this time. Thank you! 6  BIS central bankers’ speeches
Be that as it may, with the solvency assumption in mind, the authorities had tried to build defences against potential foreign currency liquidity problems at the banks by negotiating swap lines and by tapping foreign capital markets, in both cases with limited success. The problem was surely exacerbated by the handling of a LOLR request from one of the banks in late September 2008. The announced solution was to nationalise the bank. This would have been a disaster if it had been carried out because it would have made the Government responsible for refinancing a bleeding foreign currency balance sheet, which it did not have the resources to do. FX reserves and swap lines amounted to only 35% of GDP, and at that point the Government itself was shut out of international capital markets. Nationalising the bank would have turned a bank foreign currency refining problem into a sovereign problem with the serious risk that the sovereign might have defaulted on such foreign currency payments. The decision was, however, never implemented because of the ensuing full-scale run on the foreign liabilities of the banks and the domino effects inside the Icelandic economy. But the time to consider the options was rapidly running out. Given the lack of international co-operation, the Icelandic authorities were forced at this point to consider radical solutions.

In the final analysis, it only works if the bank liabilities are flowing into a central bank that has the duty, willingness, and capacity to recycle them against collateral and expand its balance sheet as needed. The question therefore arises whether national deposit insurance systems should cover domestic deposits only and the payout should likewise be in domestic currency only, even for foreigndenominated deposits. In closing, let me note that the saga of the financial crisis in Iceland and its interaction with the European and global financial system is a complex one. My remarks today have only given you glimpses here and there. But as with other sagas, Icelanders will be writing about this for decades, if not centuries, and I think we can be confident that they will be better at writing about it than at running and supervising cross-border banks. Thank you very much. BIS central bankers’ speeches  5