samchain/econo-pairs-v1 huggingface dataset:
Jaime Caruana: The impact of geopolitical events on the world economy Speech by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of The Basel Committee on Banking Supervision, at the International Securities Market Association Annual General Meeting, Madrid, 27 June 2003. *  *  *  It is a great pleasure for me to participate today in this International Securities Market Association Annual General Meeting. I would like to thank the organisers for their kind invitation to open this meeting and also to welcome you all to Madrid. The matters to be addressed in the Conference are not only highly topical, but are of crucial importance for all of us. Given the prestige of those who will be offering their opinions, I believe it will be a great opportunity to draw conclusions of enormous interest. The broad theme for this conference is the impact of geopolitical events on the world economy. By way of introduction, let me briefly share with you some thoughts on this topic. The world economy has been through a complicated period in recent years. The expected recovery has been slow, hesitant and disappointing. Several factors have come into play in this connection. On one hand, the persistent impact of the bursting of the IT and stock exchange bubbles has had a negative effect on business and consumer confidence as well as on investment.

In these situations deflation need not be the bugbear to economic development that it is often made out to be. On the other hand, if we move forward a few years to the period during and after the First World War, we do see large shocks - falling GDP combined with very high inflation, followed by severe deflation at  BIS Review 37/2003  1  the beginning of the 1920s. This was when Sweden experienced its most severe economic crisis, rather than during the 1930s as was the case in the USA and Germany, for instance. If we move forward to the post-war period, this was a unique time of high and constant growth. During the period following the Second World War and up to the 1970s, standards of living rose at a record rate throughout the world. An interesting fact is that although growth in Sweden during this period was higher than it had been at any other time, it was nevertheless rather low in an international comparison. Many European countries, including our Scandinavian neighbours, grew at an even more rapid rate. However, from the 1970s the problems increased. Growth waned and inflation rose. We managed to temporarily stimulate growth by means of substantial devaluations, but there was no proper follow-up and the economy overheated, only to turn around entirely at the beginning of the 1990s, resulting in extensive problems for the financial sector. Since then we have had a decade or so with better growth and more balanced developments.
The crisis showed that the cooperation and coordination between national resolution authorities is often incapable of taking swift and efficient decision on cross-border bank failures. In past cases, national interests tended to prevail, even if resolution costs became larger. In the SRM, the Single Resolution Board will take the resolution decisions for all cross-border banks and all banks under direct ECB supervision. Resolution decisions can be taken under a common interest, in swift and unbiased fashion, notably in the case of crossborder cases, while taking into account spill-overs and contagion risks. A robust SRM, as a complement to the SSM, will address all these shortcomings. The ECB has always been of the view that a robust SRM should contain key essential features for effective resolution, namely: (a) a single system, (b) a single authority with efficient decisionmaking procedures (c) a single fund and (d) a backstop facility for bridge financing. We have stated this in our opinion on the SRM proposal as well as in many speeches. I am therefore very pleased that the agreed SRM regulation broadly fulfils these criteria. A single system To begin with, the SRM follows an integrated approach, in which all banks of EU Member States that participate in the SSM fall under the SRM. Any Member State outside the euro area which opts to join the SSM will thus automatically also fall under the SRM. The powers of the SRM will embrace all resolution tasks, e.g.

In such a case, the Council should, still within these first 24 hours, either approve or object to the Commission’s proposal by a simple majority decision. In other words, they cannot amend it, only approve or  BIS central bankers’ speeches  7  The Single Resolution Fund Turning to the Fund, the Board’s control of a common resolution fund is an essential element of the SRM. The Fund will be key to ensure adequate resolution financing without drawing on public funds and for taking swift actions, since it eliminates the need for protracted burdensharing discussions for cross-border banks. Although the SRM Regulation set up the Fund, the order by which bank contributions are raised at national level and pooled at EU level are detailed in accordance with an Intergovernmental Agreement on the transfer and progressive mutualisation of those contributions into a single fund. According to the political agreement reached, the target level for the Fund will be 1 % of the amount of covered deposits of all banks authorised in the participating Member States. This target should be reached in eight years, with the gradual mutualisation being frontloaded with 40% of the total in the first year. During the transitional period of eight years, the contributions collected at national level will be allocated to separate national compartments corresponding to each participating Member State. These national compartments will be subject to progressive mutualised usage and will cease to exist at the end of the transition period.
Thomas Jordan: Challenges facing the Swiss National Bank Speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, to the General Meeting of Shareholders of the Swiss National Bank, 27 April 2012. *  *  *  Mr President of the Bank Council Dear Shareholders Dear Guests Also from a monetary policy perspective, the Swiss National Bank (SNB) has experienced another difficult year. In 2011, the escalation of the European sovereign debt crisis triggered a very substantial appreciation of the Swiss franc. In order to avert major damage to the Swiss economy, and work against the threat of a deflationary trend, the SNB had to react fast with exceptional measures. I would like to begin by giving you a review of economic developments and monetary policy in 2011. Then I will present our assessment of the international economic outlook and its impact on the Swiss economy. I will also outline the outlook for price stability. I will conclude by explaining the SNB’s reflections on current monetary policy. First, let me begin by reviewing the events of last year. Review of 2011 In terms of the economic cycle, the year 2011 certainly began well. Overall, economic activity was lively, and the situation on the labour market improved further. Despite the appreciation of the Swiss franc in 2010, goods exports were robust during the first few months of the year. However, in spring 2011, the international economic recovery stalled. This was attributable to several different factors.

An appreciation of the Swiss franc at the current time would again expose Switzerland to considerable risks and, once more, endanger both price stability and the stabilisation of the economy. Given this situation, the SNB will enforce the minimum exchange rate with the utmost determination. If developments in the international economy are worse than foreseen, or if the Swiss franc does not weaken further as expected, renewed downside risks for price stability could emerge. Should the economic outlook and the threat of deflation require it, the SNB is prepared at any time to take further measures. As you will probably have deduced from this account, seen from today’s vantage point, interest rates in Switzerland are likely to remain low for a while yet. This expansionary monetary policy is indispensable from the point of view of the economy as a whole. In that it has significantly reduced the threat to the economy and the threat of a deflationary trend, the current monetary policy is also contributing to financial stability – in the short term. Both a deep recession and a deflationary trend would pose a threat to the banking system. In the longer term, a period of low interest rates carries the risk that imbalances will build up. In Switzerland, the current low-interest-rate period has now lasted for over three years. We are – in fact – currently observing increasing signs of adverse developments in the Swiss mortgage and real estate market for residential property.
With banks having substantially reduced their exposures in the past decade, largely by reducing their lending to commercial property companies, the resulting losses amounted ‘only’ to £ And following the shrinking of banks’ trading books in the past decade, their losses on trading assets totalled ‘only’ £ The losses resulting from this, and other parts of the stress scenario, would have wiped out the entire banking system in 2007. However, major UK banks have tripled their capital strength. Even after a stress like this, they have more than twice the capital they had going in to the crisis. They can now absorb losses like this and continue to supply credit to the real economy. 5. Are bond markets resilient or might they amplify adjustments? This is the final channel through which stretched markets could affect the wider economy. It would magnify any effect on corporate and bank balance sheets. And it could affect the cost of finance directly, as market interest rates are driven up and credit availability tightened. We have a duty to spot new market developments that could drive this and to simulate, rather than wait for the empirical proof, because by that point it can be too late. And as your mission statement acknowledges, we must move beyond the causes of market fragility in the last crisis. The resilience of markets is not guaranteed by the safety of the banking system and other core intermediaries. To do that, we’re going to have to delve into some of the detail.

Market finance and financial stability: will the stretch cause a strain? Speech given by Alex Brazier, Executive Director for Financial Stability Strategy and Risk, Bank of England  The Brevan Howard Centre for Financial Analysis, Imperial College Business School, London Thursday 1 February 2018  I am grateful to Stephen Burgess, Shibo Feng, Harry Goodacre, Nowrin Hossain, Mike Joyce, Christiane Kneer, Javier Otegui, Liam Crowley-Reidy, Marek Rojicek and Ryland Thomas for their assistance in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/speeches  We’ve now passed the tenth anniversary of the onset of the global financial crisis; a crisis created by a fragile financial system out of a correction in the US housing market. What could have been an economic downturn was turned into a disaster. In this country alone, more than one million people lost their jobs. And the legacy of those effects lives on today in lower levels of national income. Looking back over the decade, the economic cost of the crisis has been equivalent to £ per person in the UK. 1  Such crises should be remembered, and their anniversaries marked, because forgetting them risks repeating them. In this country, Parliament hard wired the memory of the crisis into the institutional fabric. It tasked the Bank of England with meeting a ‘macroprudential’ objective. Cutting through the language of the statute, it is to guard against the financial system disrupting growth of the wider economy; to guard against it turning corrections and downturns into crises and disasters.
Some might be best reserved for the type of acute market illiquidity experienced in this crisis. It would be helpful for the Federal Reserve System to have greater flexibility to respond to acute liquidity pressure in markets without undermining its capacity to manage the federal funds rates at the FOMC's (Federal Open Market Committee) target. The authority Congress has granted the Fed to pay interest on reserves beginning in 2011 will be very helpful in this regard. We welcome the fact that Congress is now considering accelerating that authority. The major central banks should put in place a standing network of currency swaps, collateral policies and account arrangements that would make it easier to mobilize liquidity across borders quickly in crisis. We have some of the elements of this framework in place today, and these arrangements have worked relatively well in the present crises. We should leave them in place, refine them further and test them frequently. The Federal Reserve Act gives us very broad authority to lend in crises. We used that authority in new and consequential ways, but in the classic tradition of central banks and lenders of last resort. As we broadened the range of collateral we were willing to finance, extended the terms of our lending and provided liquidity insurance to primary dealers, our actions were carefully calibrated to improve overall market functioning by providing an effective liquidity backstop and to avoid supplanting either the interbank market or the secured funding market.

The aim of the setting-up of a one-stop consumer education centre is to address information gaps that may exist. The programme also aims to broaden the consumers' horizon by enhancing their knowledge on the new and more innovative ways of conducting banking. Internet banking, for example, is a fast and convenient mode of conducting banking transactions that has yet to gain widespread acceptance amongst banking consumers. With greater access to information on this, consumers can be better informed on the advantages of this form of banking. Any fears or apprehension on this mode of banking may be removed thus allowing for greater convenience derived from banking via desktops in the comfort of the home or office. BIS Review 4/2003  1  Increased access by the public to information will also increase the level of awareness not only of the rights of consumers but also on the responsibilities of both the consumers and financial institutions with regard to the financial products and services being offered. Consumers should be aware of their rights and how best to seek redress if there is dissatisfaction with the products or services purchased. Through active consumerism, banking products and services will need to keep up with the expectations of consumers and this will inherently contribute towards improved banking products and services.
In this regard, of course, this lending was also facilitated by special preferential programs issued by the government. The government adopted large-scale programs to support small- and medium-sized businesses, and we introduced our own mechanism: a special mechanism for preferential loans, which was in high demand. And we can see that banks, within the framework of such special instruments, issued about 18% of all loans to small- and medium-sized businesses. But the remaining increase in loans to small- and medium-sized businesses was carried out under normal market conditions, which is also a good factor. Moreover, in the first quarter of this year, we can see that the portfolio of loans to small- and medium-sized businesses 1/5  BIS central bankers' speeches  has also continued to grow adding another 5%. Mortgages grew at a high rate — as in the segment of small- and medium-sized businesses, there was and still is incentive offered by preferential programs. The mortgage portfolio also grew significantly, by more than 20%. Moreover, it already reached almost half of the total retail portfolio, and in the first quarter, it also continued to grow, also by 5%. As you can see, the figures are quite similar for both mortgages and small- and medium-sized businesses. That is to say that there are positive trends in both. However, when it comes to mortgages (we have talked about this repeatedly), we are worried about the accompanying rise in housing prices in the primary market.

No matter how hard times the European Union is going through and no matter how many challenges must be adequately dealt with, an in-depth analysis shows that political, economic and social interests converging towards the continuation of this great project, namely the strengthening of the European Union, are stronger and more motivated than  BIS central bankers’ speeches  1  those stemming from rather circumstantial fears, arising out of the difficulties and vulnerabilities brought along by the global crisis. In order to stick to the virtuous direction that I have referred to – or to return to it –, I personally think that in these difficult times for the European Union, we should not forget to put things into perspective. This means that short-term policies must be harmonised with the long-term vision and policies. Romania’s stance is to consistently support EU-wide economic and institutional reforms. We believe that efforts to strengthen governance in the European Union and the euro area should be made without delay, and they should be understood and supported by all Member States. At the same time, particular attention should also be paid to the small- and medium-sized enterprises. In any country of the European Union, small- and medium-sized enterprises generate most of the turnover and provide jobs for most employees. Romania is no exception to this rule.
It bears repeating that Congress did so after facing the terrifying realization that the lack of a credible 4/6  BIS central bankers' speeches  resolution mechanism for dealing with failing systemic firms left only bad choices, such as lending into a run, bailout, or the collapse of the financial system. Over the past several years, there have been efforts in Congress to repeal OLA and create a new, bespoke process for systemically important firms under the Bankruptcy Code. That process would largely mimic many of the features of the FDIC’s single point of entry strategy intended for use in an OLA proceeding. Those efforts have picked up steam this year with the passing of two different bills in the House of Representatives.13 From my perspective, there are attractive aspects to both OLA and the Bankruptcy Code. OLA is largely an administrative process that has the benefit of agility. It is administered by the FDIC, which will already have insight into the institution though the living will process. The FDIC also communicates with foreign regulators regarding systemically important firms. OLA has particular advantages in the context of a cross-border resolution, which means in this day and age the resolution of pretty much any systemically important institution. US regulators have established relationships with their foreign counterparts, and resolution processes similar to OLA now exist in many globally important financial centers.

2  BIS Review 35/2006  Globalisation involves both challenges and opportunities The increasing competition from, for instance, China, India and eastern Europe means that there is increasing pressure on the early industrialised nations to transform their trade and industry structure. This structural transformation will affect people, places and regions in different ways. However, history shows that free trade and increased economic integration lead to increased economic welfare for the world as a whole. The international division of labour that follows in the wake of globalisation leads to lower production costs and productivity gains, which in turn means that labour and investment in the industrialised nations can be moved to other sectors with more refined products and services. In that sectors and companies that are not internationally competitive are knocked out, scope is created for new employment in areas where different countries and regions have comparative advantages. However, for an individual country or region to benefit in this process, the “creative destruction” entailed in the structural transformation must lead to new jobs with a higher value added factor being created at the same rate as the old ones disappear. Effects on the labour market China’s and India’s integration into the world economy is sometimes described in the debate as a supply shock in the global labour market, which will result in rapidly-falling wages in the western world.
Lending to the economy shrank by 3% in the first five months (by 1.5% adjusted for foreign currency revaluation). Meanwhile, capital grew by 1.2%. It is important since capital growth is a key condition for increasing lending to the economy. The trend towards deposit outflow and dollarisation has been reversed (currently, we can see their inflow). Mortgage lending was supported by measures taken by the government. Currently, we can see this market recovering. According to our estimates, this trend will persist and residential construction will support the economy. It is the engine for many other sectors. Our banking system is generally stable and banks – also supported by the government – meet the emerging challenges. To allow banks to adjust to the new environment and support the banking system in the most challenging period, we temporary eased the regulation. Our task was far from allowing banks to disguise their problems, we rather aim at mitigating the impact of external factors and enabling banks to adjust to the new environment. Currently, we are gradually abandoning the anti-recessionary regulation regime. Following the discussion with the banking community, we decided to gradually reverse these measures. Undoubtedly, decisions on additional capitalisation of the banking system played a positive role. I would like to thank the State Duma for this decision.

I think that infrastructure is also a crucial factor. Last year we had to react quickly to changes in external conditions. Meanwhile, we did not abandon our strategic objectives, we still adhere to inflation targeting that allows us to control inflation and ensure its gradual reduction. Early last year, the Central Bank actively intervened in the FX market to ease the market response to the Crimea developments and to support the ruble exchange rate. In 2014, we implement interventions in the amount of about $ billion. At the same time, we were preparing for a floating exchange rate regime. We planned to have completed the transition by late 2014. During the year, the Bank of Russia took consecutive decisions thus gradually moving to the floating exchange rate. The policy to support the ruble through interventions was sound until two important events took place last autumn. The first one was the issuance of large-scale financial sanctions, and the second one was the decline in oil prices that began in summer and accelerated dramatically following the November decision of OPEC to maintain the volumes of oil production. Then we decided to accelerate the transition to the floating exchange rate. Looking behind, I would like to confirm once again that our country needed the transition to the floating exchange rate and it was a timely decision. It was the introduction of the floating exchange rate that quickly normalised the financial situation and saved us gold and foreign currency reserves. Different solutions were unlikely to stabilise the financial system.