samchain/econo-pairs-v1 huggingface dataset:
François Villeroy de Galhau: Twenty years after the introduction of the euro, what are the economic prospects for Europe? Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at The Bridge Forum Dialogue conference, Luxembourg, 10 January 2019. * * * Accompanying slides of the speech. I would particularly like to thank Olivier de Bandt, Chahinez Benmissi, Laurent Ferrara, Rémy Lecat, Bérengère Rudelle, Giulia Sestieri and Édouard Vidon for their help in preparing this speech. Ladies and gentlemen, I am delighted to speak before you this evening here in Luxembourg, one of the founding capitals of Europe and a bridge between France and Germany for 180 years. I would like to extend my warmest thanks to my friend and colleague Gaston Reinesch for his invitation to the Bridge Forum Dialogue. I stand before you as a committed European: this month – January 2019 – we celebrate 20 years of the euro, the common currency of 340 million Europeans. The three principles on which we have built this success (I) must guide us in addressing Europe’s challenges in the face of 2019’s uncertainties and in working towards the progress that we still need to make (II). **  I. The euro’s success was built on three principles that are now more vital than ever As to whether the euro has been a success; there are few among us this evening who would have any doubts.

I would also add that we have now clearly outlined the sequencing of our normalisation: first a rise in key interest rates, which will not come until at least through the summer, and in any case for as long as necessary to ensure sustained convergence of inflation towards our target – I shall come back to this later; then, and only then, after an extended period, a gradual reduction in the reinvestment of the stock of acquired assets. In my view therefore, we do not need to give additional guidance on the timing or other details of the process until next spring, when we could be more precise about the sequencing according to the latest economic data. Nor do I see any need at present to review the future operational framework of our monetary policy: because this question will only arise once we have actually achieved normalisation, and because the tools of our monetary policy are already well known. The range of tools was expanded considerably over the course of the crisis; we will no longer use them all once we have reached the "new normal", but it is in our interest to keep them all to hand. Clearly, our monetary policy will remain accommodative for as long as necessary to achieve our inflation target. 2 - A better understanding of the path of inflation Of course, our main focus remains price stability. In 2019, the fall in oil prices will have a significant downward impact on inflation.
Public finances in the OECD countries Percentage of GDP 50  50 Expenditure  48  48  Revenue  46  46  44  44  42  42  40  40  38  38  36  36  34  34  32  32 30  30 90  92  94  96  98  00  02  04  06  Note. Broken line represents OECD’s forecast  08  10  Source: OECD  General government net lending in the OECD countries Percentage of GDP 20  20  15  15  10  10  5  5  0  0  -5  -5  -10  -10  -15  -15 -20  -20 98  00  02  Note. Broken line represents OECD’s forecast  8  04  06  08  10  Source: OECD  BIS Review 56/2010  Gross public debt in the OECD countries Percentage of GDP 110  110  105  105  100  100  95  95  90  90  85  85  80  80  75  75  70  70  65  65 60  60 98  00  02  04  06  08  10  Note.

However, the aid measures promised so far have not succeeded in reassuring the markets. 3  See Reinhart and Rogoff (2010). BIS Review 56/2010  3  Several other countries also have serious problems with their public finances Other countries are also experiencing serious problems. Among the euro countries, apart from Greece, these are mainly Portugal, Italy, Ireland and Spain. Critical conditions for assessing how these countries shall attain a sustainable development of their public finances in the future are the current size of the public sector debt in relation to GDP, the credibility of their future fiscal policy and the conditions for growth in domestic and external demand. The larger a country’s debt in relation to its GDP, the greater its interest expenditure and the closer it is to an untenable situation. Among the countries I just mentioned, Italy has the largest burden of debt, with a gross public debt similar to that of Greece at just over 100 per cent of GDP. The other countries are not quite so vulnerable, but their debts are rising rapidly. (Slide: Gross public debt in Portugal, Ireland, Italy and Spain). The credibility of their future fiscal policy is a decisive factor, not least for the rate of interest they are forced to pay on their public debt. Here, earlier patterns of balance or deficit play an important role, as does, of course, the content of their fiscal policy consolidation programme.
Compared to the start of the year, the expected timing of any further Fed interest rate hikes has been pushed back, and the expected upward trajectory of U.S. short-term rates is now much flatter. There are several reasons to explain these shifts. First, assessments of the neutral real shortterm interest rate have declined as economic growth has consistently fallen short of consensus forecasts. With the U.S. economy having grown at only a 2.1 percent annual rate over the past seven years, it has become harder to sustain the view that the neutral real short-term interest rate is close to, or will soon be close to, its historical level of around 2 percent. Estimates of the neutral real short-term interest rate obtained from many of the DSGE models used within the Federal Reserve System are currently clustered around zero, and this seems reasonable to me. An implication is that at present there is only a small gap between the actual real shortterm rate of about -1 percent and the neutral real short-term rate. In other words, U.S. monetary policy is accommodative, but only moderately so. In addition, I suspect that many have come to question the view that headwinds from the financial crisis are temporarily depressing the neutral short-term rate, and that the neutral short-term rate will significantly rise in the near-future as these headwinds dissipate.

2 All three of these reasons – evidence that U.S. monetary policy is currently only moderately accommodative, the fact that U.S. financial conditions have been influenced by economic and financial market developments abroad, and risk management considerations – argue, at the moment, for caution in raising U.S. short-term interest rates. So, directionally, the movement in investor expectations towards a flatter path for U.S. short-term interest rates seems broadly appropriate. That said, to my eye, market expectations derived from futures prices – which price in about one 25 basis point rate hike through the end of 2017 – appear to be too complacent. If the incoming information validates my view of the outlook, then I believe that U.S. monetary policy will likely need to move at a faster pace than implied by futures prices towards a more neutral posture as the labor market tightens further and U.S. inflation rises. Moreover, market expectations may be putting insufficient weight on the possibility that the economy could outperform our expectations, that financial conditions could ease, or that the risks to growth from Brexit and other international developments could fade away. If such events were to occur, this might necessitate a faster pace of adjustment. For these reasons, I think it is premature to rule out further monetary policy tightening this year. As I said before, it depends on the data, broadly defined, and, as we all know, that is not something one can predict with any accuracy.
Third, the decisions to waive seniority and make full use of the EFSF and ESM instruments send an important signal to markets. That signal is: policymakers have understood the complexity of the crisis and are prepared to exploit the flexibility of the rescue funds to address it. This is also evident in the decision by the Euro Summit to allow EFSF/ESM assistance for countries respecting their fiscal and structural reform programmes, reducing the stigma of requesting support. The ECB will play its part too by acting as agent for the EFSF and ESM to facilitate effective market operations. Overall, it is difficult to uphold the caricature that Europe does not have the tools to handle the crisis. If anyone had known, in 2010, that within two years there would be a firewall of 700 billion euro usable for loans to sovereigns, bond purchases and bank recapitalisation, the euro area would have been called ahead-of-the-curve. Now that this exists, it is criticised for being insufficient. This is simply the nature of evolving expectations. But it should not distract us from the steps that have been taken. They are impressive both in historical comparison and in their own right. 2. Fiscal consolidation and growth  The second current criticism of the euro area is that its focus on fiscal consolidation is destroying growth prospects. The argument goes that in a weak economy experiencing  2  BIS central bankers’ speeches  private sector deleveraging, an active public sector is essential to maintain demand.

Chinese banks in Singapore have committed more than RMB 500 billion (USD 73.4 billion) in financing Singaporean companies involved in Belt and Road projects, including the issuance of project bonds. China Construction Bank Singapore branch issued RMB 1 billion (USD 145 million) of Belt and Road Initiative bonds in August last year. And in May this year, Bank of China Singapore branch issued Belt and Road Initiative bonds worth RMB 4 billion (USD 600 million). Expanding the role of capital markets in financing growth Second, the CCI has embarked on a demonstrative project to expand the role of our capital markets. This complements the role of banks in financing growth and development. Specifically, we should facilitate the participation of institutional investors in development projects. Why? China has many public-private partnership (PPP) projects, where the state and companies involved own and operate infrastructure assets. In Chongqing itself, RMB 800 billion worth of PPP projects are expected to be in the pipeline between 2015 and 2020. But infrastructure assets are illiquid by nature. The capital invested is locked up and not available for use in other development projects. 3/5  BIS central bankers' speeches  If we can securitise these PPP assets, we can help free up capital and diversify funding sources. We can make these securitised assets available to long term investors such as insurance companies and sovereign wealth funds, or even retail investors through a listing.
A dedicated high court of common law has been assigned to adjudicate Islamic finance cases more expeditiously, giving due recognition on issues surrounding Shariah. For a complete dispute resolution on Islamic finance, the Kuala Lumpur Regional Centre for Arbitration (or KLRCA) has introduced the i-Arbitration Rules. The first of its kind, the rules incorporate a reference procedure to a Shariah Advisory Council or Shariah expert for professional opinions whenever the arbitral tribunal has to form an opinion on a point related to Shariah principles. Thirdly, is to develop a strong governance framework for Islamic financial institutions. We introduced a dedicated governance framework in 2010 that outlined the requirement for the Shariah governance structures, processes and arrangements to ensure that all the operations and business activities are in accordance with Shariah. This framework ensures that talent in lead arranging of sukuk, among others, have the expertise and Shariah knowledge to ensure that the sukuk structures are in compliant with the necessary rules and principles. Areas of collaboration between Hong Kong and Malaysia There are a few areas where Hong Kong and Malaysia can collaborate for mutual benefit. Firstly, is to have both Hong Kong and Malaysian expertise to work together in the quest to launch the first sukuk out of Hong Kong. We look forward to sharing our Islamic finance marketplace with Hong Kong in terms of expertise in structuring, managing and distributing the sukuk, as well as providing advice on legal and Shariah matters.

In the medium term, various elements suggest that investment will regain strength. For the time being, the lower basis for comparison that the adjustment will leave in its 2019 growth will help to raise the 2020 record, the year for which the baseline scenario estimates a 5.1% growth in GFCF. The capital-to-GDP ratio has remained low in recent years (under 22% in real terms), with productive investment—excluding mining and housing— that practically grew zero in the 2016-2018 period. Plus, that the strong immigration of recent years reduced the capital/labor ratio. Absorbing this greater workforce requires adjusting the capital stock, so that, absent a more significant change in the vision about productivity, and/or the various costs associated with the formalities of investment projects, it should resume its former dynamism. The domestic conditions to finance this greater investment are favorable: local interest rates have remained low (Figure 9), something that will be reinforced with the decision of the last Monetary Policy Meeting. In the same way, external financing conditions have remained favorable and, in fact, the interest rates of US Treasury bonds are also low. All this occurs in a context of no imbalances in the local financial system, no elements hindering the flow of financing, and a bounded fiscal deficit. All in all, the first-quarter evolution of investment puts a note of caution in case the slowdown proves more persistent, especially because of the higher uncertainty abroad. For now, this has reduced asset prices and, with it, the incentives to invest.
Mr Bäckström reviews international financial turbulence in the 1990s  Speech given by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, at the Jönköping University Contact, Jönköping on 18 November 1999. *  *  *  First I want to express my thanks for the invitation to visit the University here in Jönköping and talk about the turbulence we have experienced over the past decade in both the international economy and in Sweden. What makes this topic particularly interesting is that from time to time the financial unrest, in Sweden as well as elsewhere, has shaped the economic situation in many countries and sometimes also in the world in general. Early in the 1990s the Nordic countries were beset by severe problems in the financial system. These difficulties were exacerbated by the turbulent situation at that time in Europe’s ERM system. Japan has had to grapple with a crisis for most of the decade. Mexico encountered problems in the mid-1990s, as did countries in Southeast Asia just a few years ago. Last autumn, global financial market unrest arose again when Russia chose to suspend payments on a part of government debt. When this was compounded by problems with an American hedge fund, Long Term Capital Management, the situation in Western financial markets became critical, fortunately only for a time. This year, it is Brazil that has experienced financial difficulties.

This applies to the generosity of domestic banks in financing asset investments of private players, as well as to the propensity of international banks to place foreign currency at the disposal of domestic counterparties. Lending to financial institutions tends to be highly concentrated and this exacerbates the situation in times of financial turbulence. It may also be asked whether credit assessments were as thorough as they should have been. What are the reasons for this? One is probably the difficulties for both banks and supervisors in judging the risks in credit commitments. Credit risks are not simple to handle, neither is it easy to obtain a clear picture of different players’ loan portfolios. So genuine difficulties in making assessments are one explanation. Another is that in certain cases, instead of attempting to assess risks independently, banks appear to have simply followed the herd. A recurrent theme in the decade’s crises accordingly seems to be the underestimation of credit risks. It is therefore up to the banks to establish a better credit policy in their institutions. This credit policy must pervade the whole establishment, from individual credit managers up to the more comprehensive strategies of executives and boardrooms. But that is not sufficient, or rather it probably will not happen unless measures are also taken by the regulatory and supervisory authorities. This is because in their lending and general behaviour, banks are influenced by their expectations of how authorities will act in the event of a crisis.
Rapid changes in the banking system in light of credit boom, and global market financial integration impose the need for higher standards of transparency, accountability and governance from the banking system itself. Not only with regard to Bank of Albania, but public as well. Banks should behave responsibly and must integrate the stability of the entire system into their utility function. Financial system reforms Since years the banking systems has been in a constant process of transformation. The Financial Sector Assessment Program (FSAP) marks a significant moment in this process. On behalf of the Bank of Albania I would like to thank IMF and WB, for their excellent efforts on this professional and transparent financial certification of the Albanian Financial System. Bank of Albania remains very much focused in fulfilling the recommendations of the FSAP following the priority and institutional hierarchy. •  Bank of Albania has increased the access and investment opportunities of commercial banks in the securities market. •  The draft on Banks Law is completed. •  Automated clearing house system is operational. •  The number of electronic transfers has increased significantly. There is concrete evidence that shows a continuous reduction of cash economy. •  Bank of Albania has extended its supervisory authority over all non-bank financial institutions that operate within the economic territory of the Republic of Albania. •  Supervisory Board of the Bank of Albania has further increased the transparency of its decision making process.

Ravi Menon: Basics for smart finance – common standards and seamless data Closing remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the SIBOS Conference, Singapore, 15 October 2015. *  *  *  Mr Yawar Shah, Chairman, SWIFT Mr Gottfried Leibbrandt, CEO, SWIFT Ladies and gentlemen, good afternoon. A. Revolution in communications  “What hath God wrought?” read the first telegraphic message sent by Samuel Morse on 24th May, 1844. The telegraph marked a revolution in communications at the time. •  Transatlantic telegraph cables cut communications between America and Europe from about 10 days – the time it took for steam ships to sail across the Atlantic – to a matter of minutes. •  In fact, the mid-19th century leaps in transport and communications technologies ushered in the first phase of economic and financial globalisation. Ground-breaking as the telegraph was, a text message that takes minutes to arrive will be considered glacial by today’s standards. It will certainly not be able to support the frenetic pace of communications in the global financial system. Thankfully, we have SWIFT. Last year, there were 5.6 billion messages carried globally on SWIFT’s network. •  Close to half the messages related to international payments, which lies at the heart of global banking. •  Technology has transformed cross-border finance. Smart Financial Centre It is MAS’s conviction that innovation and technology will be critical to the future growth and success of Singapore’s financial sector.
On the face of it, that would seem to square with the dotcom/telecom boom and bust. At least for the UK market, it does not obviously lend support to the suggestion in some earlier papers that there may have been an underlying increase in idiosyncratic volatility. For example, see Campbell J, M Lettau, B G Malkiel and Y Xu (2001), ‘Have individual stocks become more volatile? An empirical exploration of idiosynchratic risk’, Journal of Finance, vol 56, no. 1 pp 1-43, which covered the period from 1962 to 1996 for the US market. 8  Using a Dividend Discount Model. Further information on the Dividend Discount Model can be found in Panigirtzoglou N. and R. Scammell (2002), ‘Analysts’ earnings forecasts and equity valuations’, Bank of England Quarterly Bulletin, Spring 2002, pp 59-6. BIS Review 2/2007  3  volatile than in the past. Another candidate explanation is related to the possibility that the other component of the discount rate – the equity risk premium – may have risen since the late 1990s. If, as a result, the overall discount rate were broadly unchanged, a given shift in the default-free curve would not necessarily have a greater proportionate effect on equity prices than in past decades. Indeed, a bigger question would seem to be how to square the possibility of a rise in the equity risk premium with apparent falls, since the turn of the century, in term premia on default-free government bond yields and in credit risk premia across a wide range of assets.

Innovation has enabled risk to be dispersed more widely, including outside the banking sector. And capital markets are deeper. Nevertheless, it is a potential concern that, looking forward, financial markets may not be pricing for – which means that investors may not be insuring themselves against – the range of uncertainties that preoccupy the official sector. Maybe the official sector is wrong. Or may be there is an underestimation of risks in the market, perhaps associated with the widely discussed Search for Yield, and possibly also with overconfidence in the capacity of monetary authorities or liquid capital markets to smooth out all shocks. This poses three questions. Whether the risks will crystallise. Whether, if they were to, any such crystallisation would be orderly or disorderly in financial markets. And whether if asset markets were disorderly, that would feed back into the financial system in ways that both seriously amplified the adjustment and created serious threats to systemic stability. I fear that the answers are unknowable. But the task for central banks is nevertheless clear enough. Working with our partners in regulatory organisations and in other central banks, we must seek to understand today’s global banking system and capital markets well enough to tell the difference, if and when called upon to do so, between a problem requiring solely a macroeconomic policy response and a more complex financial stability problem.