samchain/econo-pairs-v1 huggingface dataset:
François Villeroy de Galhau: Economic Union, Financing Union, Banking Union Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Annual General Meeting of the Foreign Bankers’ Association, Amsterdam, 16 November 2017. * * * Ladies and Gentlemen, It is a pleasure to be in Amsterdam today and to give the keynote speech at your Annual General Meeting. I wish to warmly thank my friend Governor Klaas Knot and FBA Chairman Leonique van Houwelingen for their kind invitation. For a central banker, Amsterdam is a highly significant place, especially because the Bank of Amsterdam, in Dutch the “Amsterdamsche Wisselbank”, which was established as early as 1609, can be considered a precursor to central banks, before its role was taken over by the Nederlandsche Bank, which is also a venerable ainstitution since it was created by King William I in 1814. Furthermore, for a long time, Amsterdam has been an economic and financial capital and a major city at the heart of Europe. If I add your tradition of freedom and tolerance, your country is a paragon of many of the European virtues that we cherish. This afternoon, I would like to share with you some reflections as a central banker on a highly topical issue: the future of Europe. Your new Minister of Foreign Affairs, Halbe Zijlstra, gave a speech on this very theme last week and rightly called for “a Europe that is relevant to its people [and] which is again synonymous with prosperity and growth”.

Second, ensure that the IMF is adequately equipped to deal with the vulnerabilities of Low Income Countries, Emerging Market Economies and commodity exporters: GCC (Gulf Cooperation Countries), CEMAC (Central African Economic and Monetary Community) and Latin American countries have all been affected by the recent drop in commodity prices. Broad coverage requires making sure that the IMF is adequately resourced, both in terms of permanent resources, and through state contingent financing resources in case of common shocks or systemic crises. Third, there are also ways for the GFSN to operate better without the Fund extending more financing. There may be benefits in further use of “signaling” instruments, which share most of the features of regular programs but without financing. For example, countries like Sénégal or Nigeria have relied on the IMF Policy Support Instrument: this program enables low-income countries to benefit from Fund’s advice and support, which sends a clear signal to donors, creditors and markets. However, these instruments are only available for lowincome countries; there is to date no equivalent tool for emerging or advanced economies. Such instruments could help in certain situations (for instance during systemic crises) where it is essential to maintain market access and facilitate rollover of private financing. With this I would like to conclude my presentation. I very much look forward to our discussions today and to seeing the work of the IFA work stream in the coming months. 2  BIS central bankers’ speeches
In Malta, it is important that we maintain our reputation, and the credibility that goes with it, as a sound and well-regulated financial services centre. To this end, the institutional links between the Bank, the MFSA and the Ministry of Finance could be strengthened further in the light of the experience provided by the global financial crisis. Malta, moreover, is one of two euro area member states where the central bank is least involved in the conduct of banking supervision. Although the means already exist for exchanging views and information, it could prove mutually beneficial for the Bank and the supervisory authority to seek to deepen the level of existing cooperation. As for our capacity to manage any eventual financial crisis, the Domestic Standing Group was set up in 2007, chaired by the Deputy Governor and comprising senior representatives from the Bank, the MFSA and the Ministry. As in other EU countries, a crisis simulation exercise was held soon after to test communications between the parties, co-ordinate decision making and manage potential conflicts of interest. Useful lessons have been learnt. Another important problem area highlighted by the crisis, and which is also relevant for Malta, relates to cross-border issues. Foremost among these is the co-operation between the home and host regulators. In this regard, the spirit underlying the Memorandum of Understanding on co-operation to safeguard cross-border financial stability signed last June by EU central banks, regulators and ministries of finance, now needs to be translated into clear modalities for effective cooperation.

On 8 October, six of the world’s major central banks, including the ECB, cut official interest rates by half a percentage point in a coordinated move. Later in the month, the Eurosystem shifted the conduct of its monetary operations toward the injection of liquidity at fixed rates, with full allotment at the minimum bid rate, to ease funding concerns and to drive money market rates closer to official ones. A further half-point interest rate cut by the ECB followed in November, and yesterday we reduced rates by a further 75 basis points amid growing evidence that inflationary pressures are diminishing further. The crisis has so far had a limited impact on the domestic financial system and on the Maltese economy. While the latest data point to continued, if slower economic expansion in the third quarter, Maltese banks continue to benefit from an approach based on traditional intermediation between retail depositors and borrowers. Their funding model, therefore, eschews reliance on wholesale markets; they have substantial liquidity, adequate capital and prudent lending policies. Exposures to asset-backed securities or failed institutions are small, while lending in foreign currency to residents is limited. It would be naïve, indeed dangerous, however, to expect that the turmoil abroad will leave the Maltese economy and its financial system unscathed. First, Malta has a small open economy, highly dependent on trade. As the recession grips our major markets, Maltese exporters will be increasingly affected.
And if this is true in general, I think it’s particularly likely to be the case in this instance. The additional uncertainty brought about by the referendum involves the UK’s  Source: ONS  trading relationships once it formally leaves the EU. That is likely to be some way off – two years after the relevant treaty article is triggered. And by that time, much of the economic value in high-depreciating items like cars and computers will already have been exhausted. So a lack of clarity about events beyond that date won’t be as relevant as it is for longer-lived capital. As formal exit approaches the higher-depreciating items, and a greater share of investment, will become affected as well. That said, the shape of the UK’s trading arrangements may also become clearer during that time. Third, I should re-iterate that what we’re talking about here is a pure increase in uncertainty, not a change in the central expectation firms have about investment returns. The range of outcomes doesn’t have to shift downwards for firms to delay some projects, it only has to widen. But if that range were to shift, this would obviously matter as well. One thing this implies is that the effect of resolving uncertainty depends on how, and in which direction, the resolution occurs.

12  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  12  Chart 14: Surveys of business investment  Chart 15: Housing market indicators have  intentions have weakened  recovered  Source: Bank of England, BCC, CBI, CBI/PwC, Markit/CIPS and  Source: RICS survey and ONS  Bank calculations  But if I had to pick out three possible candidates, one would be the underlying momentum in domestic demand, which now looks to have been stronger than we thought at the time. Another could be the speed with which sterling’s depreciation, and the more general easing in financial conditions, have supported the economy. The foreign exchange market attempts to price long-run risk and, to my mind, the currency fell after the referendum for fear of what the result might ultimately mean for the UK’s access to global markets. But if that is a risk for the longer term, once the UK’s new trading arrangements come into force, those arrangements are for the time being unchanged. Against that backdrop, the fall in the exchange rate will help to support activity, cushioning the impact of greater uncertainty. While that was expected, the effect could be coming through faster than we’d anticipated. Finally, the near-term impact on housing activity may be more moderate than we feared (Chart 15). Because it’s a highly durable asset, investment in housing should in principle be subject to the same swings in uncertainty that affect business spending. But housing activity is in general well correlated with consumption, which is holding up better.
In addition to keeping inflation low and stable, monetary policy should help to keep the economy in balance by dampening fluctuations in economic activity. However, as I see it this should be done by means of what one might call coarse tuning, rather than by means of fine tuning. Our aim should be to not focus too much on trying to fine tune the real economy around uncertain numerical measures of long-term employment, potential GDP or equilibrium unemployment. It may appear “clear” to do so but it is an overly simplified representation of monetary policy and requires knowledge that we simply do not have today. In my opinion, coarse tuning also means that it may sometimes be necessary to react to risks, even if they cannot be quantified within a particular analytical framework. 12  BIS central bankers’ speeches

Since the beginning of this year, lower risk premiums have accompanied a stronger krone. Developments in the GRI were also an important factor during the Russian crisis in 1998-1999. When global risk premiums and interest rates are low, investors may turn to higher-yield currencies. There is also a tendency for more peripheral currencies to attract increased attention when volatility between the major global currencies is subdued and risk premiums are low. The interest rate differential has been an important explanation for the movements in the krone exchange rate, at least since the summer of 1999. A higher interest rate differential has accompanied a stronger krone. The krone has appreciated significantly since the beginning of this year, however, and apparently somewhat more than what can be explained by the interest rate differential alone. One explanation may be that market participants react to signs of pressure in the economy by adjusting their interest rate expectations in the longer term. This has an impact on longer-term interest rates. Thus, movements in the exchange rate may be a result of changes in forward rates, as well as current interest rates. Since early January, the 12-month money market differential appears to have followed the krone exchange rate more closely than the 3-month differential. The pressure on internal resources seems to have resulted in expectations of tight monetary conditions, which contributed to the recent appreciation of the krone. The nominal appreciation of the krone has been accompanied by a significant real appreciation of Norwegian labour.
Long-term shocks related to climate change are potentially difficult to manage for central banks because of their stagflationary nature, as they may result in both upward pressure on prices and a slowdown in activity. But climate change also has short-term effects on prices. Part of the recent increase in energy prices in the euro area was linked to higher electricity prices in Spain due to unusually cold weather, and to a carbon surcharge on prices of liquid fuels and gas in Germany. More, as is stated in the NGFS report on monetary policy of last March, “central banks ought to be aware of climate risks that could threaten the integrity of their balance sheets”v. Let's face it: the ECB's balance sheet is "exposed" to climate risk through the securities it purchases and the assets pledged as collateral by banks, to an extent that is insufficiently taken into account. How, concretely, might we reduce this exposure? Next fall, we will decide with Christine Lagarde, whose strong commitment I want to praise, and the Governing Council on the conclusions of our "Strategy Review". To contribute to this debate, I strongly hope the ECB will be the first central bank to decide the three following steps: (1) forecast, and therefore model.

Nothing will replace an appropriate carbon price. Second, we are acting in the very name of our mandate: our consideration for climate change is neither an abuse of our mission, nor a mere militant conviction, and we will act with the same technical credibility and professionalism as we do in our traditional domains. I. Not “too much”: what it is our duty to do In a somewhat “proliferating” environment, let me suggest some clarification, with a two-dimensional quadrant. The vertical axis – the most obvious one – relates to our missions as supervisors and includes both climate-related risks for financial institutions and opportunities – linked to green finance. The horizontal axis relates to our missions as central bankers and includes responsible investment of our nonmonetary portfolio and monetary policy. For many central banks, implementing responsible investment strategies has numerous benefits: central banks can then practice what they preach as supervisors, protect their own balance sheets and contribute to financing the green economy. Since 2019, the Banque de France has been the first Eurosystem central bank to publish a yearly dedicated reportii on our responsible investment policy. And we turn our words into action: the Banque de France is completely exiting coal by 2024. As regards green finance, climate change creates opportunities for investors: the expected transition to a lower-carbon economy is estimated to require around $ trillion of investments a year. I will now focus on the top right of the quadrant: climate-related risks of financial institutions and the greening of monetary policy.
This is how we can build “Hong Kong” as a world class brand for financial services. Thank you very much. BIS central bankers’ speeches  5

In the forecast of inflation that we will be presenting in the Inflation Report to be published next week, we will no longer be basing our forecast on the assumption of an unchanged repo rate. The point of departure instead is the policy rate expected by the market in the period ahead, as reflected in implied forward interest rates. With this point of departure - and taking into account the different risks that we envisage - it is reasonable to believe that inflation one to two years ahead will approach our inflation target of two per cent. When the Executive Board convenes to discuss monetary policy on Wednesday next week, future inflation prospects will of course will the decisive factor for our decision. It is likely that we also will have a discussion regarding how we should view the continued rise in house prices. Personally, I do not think that there is any immediate hurry to raise the repo rate, something that the Executive Board also communicated in August. But it is clear nonetheless that this is the next natural step if the current outlook remains unchanged. When it may become appropriate to modify the currently very expansionary monetary policy depends, of course, as usual primarily on economic developments in the period ahead and on the assessment of future inflation. 4/4
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.

And third, how to compensate for the democratic deficit of technocratic monetary policy decision-making. Concerning the first issue, empirical research has found out that greater central bank independence is on average associated with lower inflation, but not with higher volatility. This “free lunch” was a bit surprising in the light of the “conservative central banker theory”. It reflects the fact that the actual institutional and policy design has evolved over time to guarantee that the mandate to achieve low inflation is not interpreted rigidly. In fact, most central bankers pay attention to real economic developments in their policies. In the last decade, this fact has been formally and institutionally reflected in the “flexible” inflation-targeting regime. This regime is often described as “constrained discretion”, meaning that it aims at making the monetary policy-making constrained by understandable procedures and at the same time flexible in responding to unforeseen shocks. As far as the democratic deficit is concerned, this issue has been addressed by moving to greater transparency and accountability of central banks. The burden of proof in central banks’ communication has shifted over the last two decades. At present, it is necessary to give convincing arguments if one thinks that the central bank should not give out some information, rather than to argue why something should be revealed. This has been a significant shift in the central banks’ mentality. Regarding the issue of communication and co-operation between the central bank and government, no universal solution has been found so far.
-  •  These new areas will allow Islamic banks to reduce their exposure to the real estate sector, and to take advantage of the stronger growth potential of the emerging market economies. There are gaps to be filled in structured trade finance and in funding for infrastructural projects as the emerging markets grow, and as global finance consolidates. Third, Islamic finance can also seek to meet the increased demand for simpler and more transparent products and ‘back-to-basics’ finance. Investors are now much more circumspect about complex products and their risks. The crisis taught investors worldwide not only about the damage they can face from the risks that are known and unsurprising, but of the risks of ‘what we do not know’. Islamic finance, with its focus on transparency, price certainty and risk-sharing, can ride this wave of demand for simpler and more basic investments. However, Islamic finance will have to overcome a few important challenges in order to grow its share in global finance and contribute to cross-border finance. These include the need to reduce fragmentation in Islamic finance markets due to differences in accepted standards of Shariah compliance between regions, jurisdictions, and in some cases even domestically within jurisdictions. This has hampered the flow of liquidity between jurisdictions, and is in part why there is yet no Islamic equivalents to the international money and bond markets. There is considerable progress being made to address these challenges.

3  AAOIFI is Accounting & Auditing Organisation for Islamic Financial Institutions  4  International Organisation of Securities Commissions  5  International Association of Insurance Supervisors  2  BIS central bankers’ speeches  •  Between our two countries, we are seeing Malaysian banks collaborating with Singapore corporates and financial players to structure $ denominated corporate sukuk programmes. And Singapore-listed companies are venturing out to tap the Ringgit sukuk market in Malaysia. These are trends that we are keen to encourage. To repeat therefore, I am optimistic that we can realise the significant growth potential for Islamic finance in the next 10–15 years. Managing the challenge of capital flows in the post-crisis era Let me move on now to say a few things about the challenges that many in the emerging world face in managing capital flows, particularly in the face of the extremely low interest rates being set in the advanced economies (AEs). We are in an unprecedented situation. Interest rates are expected to stay extremely low in the US and much of the advanced world for a few years, reflecting decisions by their central banks to keep monetary conditions highly accommodative until their economies resume normal growth. There is debate among economists on how effective these activist monetary policies, such as the US Fed’s QE3 strategy, will be in reviving entrepreneurial spirits and private investments. If the strategy succeeds and the US economy recovers, it will be a plus for Asia as well.