samchain/econo-pairs-v1 huggingface dataset:
We need this collaborative approach to turn promises into practice. One glance at the NGFS website will show you just how much we are doing on that front.23  22 23  NGFS Climate Scenarios NGFS Website 8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  Green Finance and Green Recovery  Governments around the world are now considering green recovery packages to rebuild economies hit by Covid-19. Such measures to “build back better” offer a unique opportunity for the financial sector to step up by mobilising green finance to maximise the impact of these packages. The benefits for the financial sector go beyond managing the risks from climate change. Identifying the risks will also reveal the enormous opportunities of supporting the transition. And the innovation that follows will be good for business as well as good for the planet. Indeed, there is increasing evidence of a commercial benefit to sustainable investment, both during the recent market volatility around Covid-19 and over the long-term. 24 It is therefore no surprise that global sustainable funds reached nearly $ trillion in assets under management at the end of 2019.25  Next steps  So where does this leave us and what is next on the climate pathway? I like to think of our journey in phases. The first phase was identifying what risks climate change posed to the financial system and convincing the financial sector of the need to act. We have done this.

The correction of imbalances will be essential for regaining market confidence. And here, both budget policy and further structural reforms will be a pivotal contributing factor. The year 2013 poses considerable challenges and difficulties. If we manage to overcome them, they will put us on the path of economic growth and job creation. BIS central bankers’ speeches  5
Many of the key pieces of reform have been agreed and are 6  BIS central bankers’ speeches  already being implemented. As a result, there is already more resilience and lower risk in the system. Some key pieces remain to be agreed. Particularly important here are the remaining reforms on resolution that, when taken together with what has already been achieved, will mean that we will finally be able to say with confidence that no bank is too big to fail. BIS central bankers’ speeches  7

As in the case of the financial market turbulence of May 2006, the latest correction on the stock market has been negotiated without any major difficulties. The positive underlying sentiment in the markets and the appetite for high-risk investments remained for the most part unabated. Not least, this is probably attributable to the extensive investment requirements worldwide and the associated high level of liquidity on the part of the investors. This large requirement for high-risk investments originates from the dynamic growth rate that has prevailed for some time now, a high savings ratio worldwide, the globalisation and liberalisation of the financial markets as well as the increasingly professionalised asset management by private, government and institutional investors. The durability of the valuation of high-risk investments is extremely difficult to assess, since valuations depend on subjective expectations of future earnings, discount rates and volatilities. The latest turbulence is a salutary reminder of the risks, however. In the past, risk premiums at levels lower than ever recorded before, rapidly rising prices for many high-risk investment categories and hectic activity in the area of company acquisitions have been signs of developments that were not sustainable in the long run. Therefore, market participants should not allow themselves to be distracted by the short-lived nature of financial market setbacks so far and simply extrapolate the favourable market trends of the past few years into the future.
Moreover, although nominal interest rates may be at very low levels, if inflation continues falling, real interest rates will trend upwards, contributing to reducing consumption and investment. Secondly, in economies posting a high level of public or private debt, or both, very high or rising real interest rates may exacerbate the difficulties of bringing about a reduction in household, corporate and public-sector debt, the reason being that the stock of debt, though it holds constant in nominal terms, will rise in real terms. The macro adjustment of a highly indebted economy in an environment of very low inflation or, indeed, deflation, thus becomes difficult and complex. And, thirdly, in relation to financial stability, the events we have seen in recent years indicate that asset price bubbles and the misallocation of financial resources may coexist alongside low inflation. If the situation of low inflation extends over time and draws close to deflation, we will arrive at very low or even negative interest rates, and that will entail additional risks for institutional investors, for the allocation of resources and for the sound functioning of the financial system. This was what we experienced in the euro area in the second half of last year. What role can monetary policy play in such a scenario? In September 2014, the ECB decided to expand the tools available to monetary policy by adding a private asset purchase programme followed, in January this year, by public-sector and public debt purchases.

Luis M Linde: Brief comments on the interactions between monetary policy and macroeconomic adjustments Speech by Mr Luis M Linde, Governor of the Bank of Spain, at the XXXI Conferencia del Círculo de Economía, Sitges, 30 May 2015. *  *  *  Let me first thank Antón Costas, President of Círculo de Economía, for his invitation to participate in this final session of the XXXI Conference, which is a classic on our schedule of economic meetings and conferences. Many thanks, too, to Andreu Mas-Colell for accompanying us in this session, where we are joined by the Vice President of the ECB, Vitor Constancio, to whom it will be an honour for me to give the floor immediately after my address. First, by way of introduction, I should like to make some brief comments on the interactions between monetary policy and macroeconomic adjustments, one of the major matters raised in the euro area monetary policy framework in recent years. Long periods of very low inflation pose risks to medium-term price stability, to economic activity and to financial stability. The first of these risks is the de-anchoring of inflation expectations from levels consistent with price stability which, as we know, the ECB defines as an expected inflation rate below but close to 2% in the medium term. Being in the proximity of a deflation dynamic may encourage the postponement of spending decisions by households and firms.
Bandid Nijathaworn: National financial system and supervisory framework Address by Dr Bandid Nijathaworn, Deputy Governor of Bank of Thailand, at the Thai Insurance Forum 2008, Bangkok, 20 October 2008. *  *  *  Good morning, Ladies and gentlemen, It is my pleasure to be here this morning to speak at the Thai Insurance Forum 2008, organized by the Asia Business Forum. I would like to thank the organizer for the invitation. Today, my address will focus on two topics. The first is the global financial turmoil, and its implications for the Thai financial system, focusing on the regulatory framework and the banking sector. Next, I will talk about developments in phase II of the Bank of Thailand’s Financial Sector Master Plan, and how this will help position the Thai financial sector going forward. Let me start with the first topic, current developments in the global financial system and its implications. In contemplating the key issues for my talk a few months ago, the main theme that came to mind was the rapid development and growth of the financial system in emerging markets in Asia. Despite the current global financial turmoil, this theme will remain the subtext for our region in the medium-term. Indeed, the turmoil seems to have highlighted the importance of these developments going forward.

The enhanced strength and increased competition has fostered continued profitability as well as expansion of economies of scale and scope in the banking system, with wider range of products to serve the public. Going forward, Phase II of the Financial Sector Master Plan seeks to build further on this process, and ensure that the Thai banking system can meet future challenges. These challenges include globalisation and technological development which will increase competition in retail banking. The Thai economy will become more open, with increasing intra-regional trade and investment, due to the growing importance of regional economies in the world economy as well as various trade and investment treaties. Hence, financial institutions need to not only build resiliency and ability to adjust to these changes, but also build capacity to serve clients which will have growing needs for international businesses and risk management. Moreover, demographic factors point to an aging-society in the future, thus increasing demand for wealth management. The regulatory framework will continue to evolve with due regard to international standards and local needs. Indeed, with the current global financial turmoil, each of these challenges will become even more poignant in the future. The implication of these challenges to Thai financial institutions is that they must enhance their operating efficiency and risk management, while also becoming more responsive to clients, with fair and transparent treatment. Given these challenges, what do we envisage are the key features of the future landscape?
During the past year, however, there have been certain signs of incipient tensions between demand and supply. Firms are already having difficulties in recruiting some categories of labour. Shortages have not yet reached alarmingly high levels in general but each measurement is higher than the previous one. Moreover, the situation is more strained in some parts of the country than in others. It also seems to be considered that those in work have increased their negotiating strength. How else is one to explain that, according to the negotiating parties, wage demands in the coming round are higher than on the previous occasion? That at least is the picture which has emerged in recent weeks. Could this be a sign that the Swedish economy is approaching the point at which the increase in wage costs begins to accelerate, albeit from moderate levels? If that is the case, it can be concluded that, if the present rate were to continue, the Swedish economy is moving towards a situation where resource utilisation will be unduly strained. A gradual adjustment of demand to the long-term growth trend can result from a spontaneous slowdown in the economy, for instance because external demand slackens. It could also come from more subdued household demand for durable goods after the extensive purchases in recent years. Another possibility is a damper on demand from a diminishing effect of the positive supply shocks that have depressed prices and thereby benefited real wages.

Uncertainty and instability, because if imported inflation was high, and if monetary policy were to be targeted towards stable domestic prices (which is the general alternative to an exchange-rate-based regime), it may not be possible to keep interest rates low. If, heaven forbid, depegging were to be carried out in the conditions that we have now, then we might add a third word to "uncertainty" and "instability": "catastrophe", since nearly everyone seems to recognise that the worst possible time to change a fundamental monetary policy of this kind is when the economy is weak and when the outlook is full of risk. Those of you who are old enough will recall the circumstances that led to the creation of the Link in October 1983. At that time, we were facing a crisis in confidence in the future of Hong Kong, concerns about the soundness of a number of banks, and speculative attacks on the Hong Kong dollar. The crisis followed almost a decade of a floating exchange rate system, during which inflation rose to well over 10%, and sometimes hit 20%, and the value of the Hong Kong dollar declined from around five to the US dollar to a low of 9.6 on 23 September 1983. In the uncertainty that prevailed during that crisis, people rushed to the supermarket to stock up on rice, instant noodles, cooking oil, soya sauce, detergent and toilet paper, not knowing how much these basic commodities might cost in a week or a month's time.
A high leverage ratio makes the financial system, and in effect the whole economy, more sensitive to fluctuating asset prices. The present downturn in Norway was not triggered by moving asset prices, but rather by the international downturn. Still, the effect of the international downturn on our economy is probably stronger than it would have been with a better regulatory framework. A consensus is emerging internationally that new tools are needed in order to make the financial system more robust with respect to macroeconomic fluctuations. Moreover, the financial system should help dampen rather than amplify or even cause fluctuations. The new tools – macro-prudential policies – are needed regardless of the monetary policy regime in place in any given country. For Norway, as a small EU outsider, it is hard to see any better option than inflation targeting. Indeed, it has been a strength in the current downturn to have a credible inflation targeting regime in place. We have tried to have a long-term perspective on attaining the target. This was especially important when the economy was hit by a supply shock, and we needed to trade off reaching the inflation target and closing the output gap. Inflation was below target until last year. Now, hit by a demand shock and looking ahead, we know that a trade-off is absent – the economy needs stimulus. But in the face of an unusually high degree of uncertainty, and given an unusually large shock, I believe that it is sensible to continue to be patient.

I believe the Nordic countries could be a good testing ground for macro-prudential policies. Nordic owned banks cover most of the market in the Nordic area, including the Baltic states. One hurdle that one would have to overcome would be different cyclical developments across Nordic countries. Capital requirements would need to be linked to customer location. For example, credit to Norwegian firms would have to be subject to a higher capital requirement than credit to Finnish firms, if Norway were in a boom and Finland in a recession. I hope that this challenge can be solved and that the next recession will be met with a better macro-prudential framework in place. 2  BIS Review 69/2009  BIS Review 69/2009  3  4  BIS Review 69/2009
What instruments are on offer or traded in our markets that can serve as such tools? What are the policy changes that require rethinking to enable us to develop a deep and liquid hedging market? These are all issues that the FMC will deliberate and offer solutions. We all share the aspiration for our onshore financial market to become a highly competitive market. Not just the foreign exchange market but across all its market segments; money, interbank, bond and the derivatives markets. A market where pricing of ringgit assets are fully determined by a robust price discovery process onshore, driven by real trades and nonspeculative investment activities. We envision a financial market, where it has the breadth to cater to increasingly sophisticated needs of diverse market participants, going beyond trade and financing towards facilitating more effective and efficient risk management activities. A financial market, where it also has the depth to sustain and face any volatility in the market. A financial market, that has ample liquidity across different instruments in all market segments, and extends beyond the ringgit, to the point where it can anchor regional trades and investment activities. Ultimately, we want our onshore financial market to be the market of choice for all market participants, including non-residents, to meet all their financial needs. Before I end my speech, I would like to announce an award that will be presented to a leading derivative bank at the next annual PPKM dinner.

At the same time, with a 20% decrease in the cost of risk compared to 2015, lending to the economy remained buoyant: +4.9% in outstanding loans to non-financial corporations and +4.5% to households. This growth, the strongest in Europe, accelerated further at the end of March: 5.3% for non-financial corporations, 5.6% for households. While the management of these risks at the level of individual institutions does not give any cause for concern to the ACPR, this overall strong growth may call for special attention and a review by the High Council for Financial Stability in which I participate. For the insurance sector, Bernard Delas will give you more details, but I note the satisfactory situation of the French insurance groups with a median solvency ratio of more than 200% at the end of 2016. Overall, I would like to point out that the French banking and insurance sector is sound, one of the soundest in Europe and the G7. The quality of our supervision has contributed to this soundness, which is one of the assets of the French economy. III. Four major challenges that shape the ACPR’s action The first challenge in our supervision of banks and insurance companies is the low interest rate environment. These low rates weigh on bank margins, mainly on their retail banking business, although they are partly shielded by the high share of fees in their income.
4  BIS Review 134/2010  Reflections on judgements and monetary policy decision-making This leads me on to a slightly broader question regarding judgements and how they fit into the monetary policy deliberations. Let me therefore conclude with a few words on my views on this and how I approach a repo rate decision. It is sometimes claimed in the economic debate that we at the Riksbank rely too heavily on economic models and that this can lead us to make the wrong decision regarding the repo rate. My opinion is that economic models are important and absolutely necessary aids. They organise ideas and ensure that we have consistency in our analysis of inflation, production, interest rates, employment and so on. The models also help to identify weaknesses in one’s reasoning. The Riksbank has sophisticated models that provide good forecasts in themselves, but that also allow us to “experiment” with different repo rate paths and examine potential scenarios. Without these possibilities the preparation process would not function as smoothly as it does now. But of course this does not mean that we merely push a button, lean back and buy exactly what the models come up with. This is not how monetary policy decisions are made. And I don’t believe anyone would claim this was a good way of making these decisions. However good and sophisticated the models are, they are nevertheless simplifications of reality. They must therefore always be supplemented with judgements.

The remedy would be a negotiated reconstruction of the firm’s capital structure, writing off the equity and partially converting debt claims into new equity. In the US, that goes by the name of Chapter XI. In banking, which is subject to depositor and counterparty runs, there is not time for a process involving negotiations between the different classes of creditors and shareholders under the jurisdiction of the courts. And the public policy priority is the stability of the system, not only the welfare of creditors. An administrative agency needs to make and execute some rapid judgments. That is precisely what so-called bail-in via resolution is about. The essential difference from other resolution tools is, as I have said, that losses are applied ex ante, up front rather than at the end of a process of running down the assets associated with “non-critical” functions. I have been making a simplifying assumption: one legal entity. Now imagine a cross-border group with subsidiaries in many jurisdictions and with a holding company. Under the provisions of the FSB Resolution Standard, recapitalisation through reconstruction of liabilities can also prospectively cut through a number of the long-standing impediments to resolution stemming from conflicts between home and host country insolvency laws; in other words, the cross-border problem. If the bail-in I have described were executed at the level of such a banking group’s holding company, there should in principle be no need to trigger default clauses in subsidiaries around the world that are not themselves affected by the problem causing the group’s losses.
Third, the banks assessed the consequence of identified and potential losses on their loan loss reserves. The Basle Committee has just this month published guidance on the valuation of loans and loan loss provisioning. It urges that loan impairment be recognized promptly, that loan loss reserves reflect the potential for loss in the credit portfolio, and that adequate disclosure about credit quality, loan loss provisioning and loans losses be made. Fourth, banks, often with the help of supervisors, assessed the adequacy of their current and prospective capital levels in light of the loan losses identified and the loan loss potential estimates reflected in the reserves. In most cases, this meant a need for additional capital, whether by raising capital funds directly from the market or from existing shareholders, or by considering a merger or sale of all or some of the bank. This issue of raising capital when the bank is under stress is one of the most difficult questions for bank management and for supervisors, but our collective experience suggests that solutions can be found even in very difficult markets. The key to success appears to be a clear disclosure of the existing problems, an action plan to address the problem, and a viable business strategy going forward. We know from experience that when a bank takes these steps, current and potential investors are far more likely to react positively. Indeed, there is a well-developed community of investors seeking bargains among distressed institutions with decent prospects for recovery.

Thomas Jordan: Current monetary policy and its significance for the real economy Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, at the General Meeting of the Aargauische Industrie- und Handelskammer, Wettingen, 20 May 2010. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  In the current situation, the challenges for the SNB’s monetary policy remain formidable. On the one hand, against the backdrop of the economic recovery we have witnessed since mid2009, there is a danger of inflationary tendencies and the renewed formation of a bubble. This is because the current monetary policy is too expansionary in the long term. On the other hand, downside risks are still present or are again reappearing, and should not be underestimated. They relate, in particular, to the further development of the debt crisis in Europe. A deterioration of this situation entails the danger for Switzerland of renewed deflation and recession as well as the risk of another destabilisation of the global financial system. Between these opposing risks the SNB must walk a fine line, moving in terrain that is constantly and rapidly changing, depending on which risk gains the upper hand. With a monetary policy strategy aimed at maintaining price stability, the SNB is well equipped to face these challenges. What are the short and medium-term consequences for the real economy of addressing these challenges?