samchain/econo-pairs-v1 huggingface dataset:
Kristina Persson: The impact of the euro Speech by Ms Kristina Persson, Deputy Governor of Sveriges Riksbank, at the Women’s Economic Round Table, New York, 29 October 2003. *  *  *  Allow me first to extend special thanks for this invitation. It is particularly important for me personally as well as for the Riksbank to be given this opportunity to meet women economists and discuss current economic issues. I am privileged to be one of three women on the Riksbank’s Executive Board, which has a total of six members. At the Riksbank we strive to attain an even distribution of men and women at all levels. This is a deliberate policy but also reflects the sharp rise in the proportion of women among qualified economists entering the Swedish business sector in recent decades. If this trend is to continue, and more women are to take the chance of achieving success in this traditionally male profession, we will need more role models like you here today. The subject of my speech is “The impact of the euro”, a topic that was decided before 14 September 2003, when Sweden held a referendum on introducing the single currency. Personally I am convinced for many reasons that Sweden should introduce the euro, and made no secret of that. However, as many of you know, the result was a clear ‘no’ to the euro. The question of the economic advantages and disadvantages of the euro often resembles a tug-of-war between the short- and long-term perspectives.

There must be a decision at some high managerial level which balances the interests of monetary policy and financial stability as well as other central bank responsibilities. The organisation and processes of the central bank must also be structured so that they facilitate the analysis preceding the decision leading to a balanced view, based on both monetary and financial stability considerations. For instance, there should be inter-departmental working groups. Financial stability lies within the Riksbank’s mandate The importance of having a well-structured framework for monitoring overarching financial system stability and identifying potential weaknesses is relatively new compared to the structures for conducting monetary policy. In Sweden (probably also in Norway), it started as a result of the banking crisis in the early 1990s. The Riksbank sees system stability as being in our remit. The Riksbank Act states that we shall “promote a safe and efficient payment system” and we interpret “payment system” in a broad sense including not only the narrow payment infrastructure but also major banks and other institutions and markets that are necessary for the intermediation of payments. BIS central bankers’ speeches  5  Should the responsibility for financial stability rest with the central bank? Yes, I think so. The supervisory agencies are structured to focus on the microprudential aspects, but the central banks are organised and staffed for macroprudential analysis, which is also needed for the conduct of monetary policy.
The countercyclical capital buffer is held to lean against the financial cycle, which is longer than a normal business cycle. Economists at the Bank for International Settlements (BIS) find that the average length of the financial cycle in advanced economies is around 16 years.5 The length of the business cycle, on the other hand, is 8 years at most. The difference is illustrated in the chart. Twenty years passed from the start of the banking crisis in 1988 to the financial crisis. Capital adequacy requirements are only one of several factors influencing bank lending margins and rates. And bank lending rates are only one of many factors that are given weight when the key policy rate is set. Our knowledge and experience of macroprudential regulation is at an early stage. Financial market participants can find ways to circumvent regulation. Taking into account the risk of a build-up of financial imbalances will therefore continue to be one of the criteria for an appropriate interest rate path and an important element of a robust monetary policy framework. Payment system Norges Bank’s role in monetary policy is laid down in the Norges Bank Act. The Act also assigns responsibility to Norges Bank for promoting an efficient payment system.6 The payment system and the systems for settlement of securities and foreign exchange  5  Drehmann et al. “Characterising the financial cycle: don't lose sight of the medium term”, BIS WP 380, June 2012. 6  Section 1 of the Norges Bank Act.

As deposits are readily available to depositors and many deposits are covered by a deposit guarantee, depositors accept a relatively low interest rate. The insurance premium banks pay for the deposit guarantee bears little relation to the risk the bank takes. In addition, since investors can expect that the authorities will come to the aid of banks in distress, they  BIS central bankers’ speeches  1  may be satisfied with a lower return. The result is an underpricing of risk, potentially leading to excessive risk-taking. Low equity ratios reduce loss-absorbing capacity and, at the same time, strengthen the incentive to take risks. While owners cannot lose more than their equity stake, there is a potential for high returns on the equity they have invested. To avoid a situation where banks hold inadequate equity capital, banks are subject to capital requirements. Each bank should hold capital in proportion to its risk exposure. This is the basis of microprudential bank regulation. But even if banks appear to be solid individually, the banking system as a whole may be vulnerable. Banks are exposed to one another and can inflict losses on one another directly. Banks can also suffer substantial losses indirectly if they have shared exposures outside of the banking system. This was clearly evident during the financial crisis. When a bank is forced to sell off assets, they fall in value. This weakens the balance sheets of other banks holding the same type of assets.
17 See Simon Potter, The Failure to Forecast the Great Recession, Federal Reserve Bank of New York Liberty  Street Economics (blog), November 25, 2011. 18 Warren Buffett’s letter to Berkshire Hathaway Inc. shareholders, February 25, 2017. 6/6  BIS central bankers' speeches

As we were making the key rate decision in February, the Finance Ministry was then yet to launch its forex operations as part of the budget rule. It was difficult to gauge the envisaged impact of such operations. The Finance Ministry-conducted purchases of foreign currency could have fomented a short-term deterioration in exchange rate and inflation expectations. Given a number of risks including these, we toughened our rhetoric at the time. To date we see that the foreign currency market has remained steady. The impact of these operations on the ruble exchange rate was immaterial if its strengthening factors prevailed. Fourth, the updates to the outlook are mainly related to 2017, with the mid-term prospects for economic development unchanged. A conservative approach to the baseline scenario assumes oil prices to drop to $ a barrel by the end of 2017. In this case, the average annual oil price will hold near $ in 2017, that is, well above the previous scenario’s assumptions. It would be difficult at this point to make a definitive forecast as regards the potential extension, in the middle of the year, of oil producers’ output cut deal. This is indeed an uncertainty factor. Oil prices may also be under downward pressure coming from rising outputs of shale oil, as well as a potentially stronger dollar on the back of the US Fed rate rise.
Mark Carney: Crossing the threshold to recovery Speech by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at a business lunch hosted by the CBI East Midlands, Derbyshire and Nottinghamshire Chamber of Commerce and the Institute of Directors, Nottingham, 28 August 2013. *  *  *  Introduction I’m delighted to be in the East Midlands today to deliver my first speech as Governor of the Bank of England. With leaders in retail, manufacturing, engineering, logistics, information services, biosciences and education, Nottingham and the East Midlands are integral to the success of the UK economy. The businesses here will make good on the promise of recovery in our economy. So I’m very pleased to have the opportunity to listen to business people in this region. In my years in central banking, I have found that there is no substitute for hearing directly from those who deliver economic growth. What I hear from businesses here and elsewhere is that a renewed recovery is taking hold amid a rising tide of optimism. The signs are that this recovery is broad based and set to continue. This is welcome and should be encouraged. Over the past five years, a pervasive sense of uncertainty has held the economy back. The British people have been through the virtual collapse of the financial system, the worst recession in living memory, large job losses, falls in real wages and a, at times harrowing, crisis in the euro area, our most important trading partner.

Specifically, we announced that we do not intend to raise Bank Rate at least until the unemployment rate falls to 7%, provided there are no material threats to either price or financial stability.1 All nine MPC members agreed to set monetary policy in future according to this framework of forward guidance. That does not mean Bank Rate will automatically rise when unemployment falls to 7%. Nor is 7% a target for the unemployment rate – it should ultimately fall well below that level. Before the Great Recession, the UK’s unemployment rate stood at just over 5%. The 7% threshold is instead a staging post along the road to recovery. When unemployment reaches 7% the MPC will reassess the state of the economy and the appropriate stance of monetary policy. Our forward guidance provides you with certainty that interest rates will not rise too soon. Exactly how long they stay low will depend on the progress of the recovery and in particular how quickly unemployment comes down. What matters is that rates won’t go up until jobs and incomes are really growing. The knowledge that interest rates will stay low until the recovery is well established should give greater confidence to households to spend responsibly and businesses to invest wisely. It may seem that unemployment doesn’t have far to fall, from the current 7.8% to the 7% threshold. The MPC’s central view, though, is that this could take some time – for three reasons.
In other words, if our prices become misaligned against foreign prices because of some movement in exchange rates (such as by the US dollar moving against other major currencies and pulling the Hong Kong dollar with it), Hong Kong prices are quick to adjust in order to restore competitive equilibrium. At the same time, it appears that prices in the Mainland are, by international standards, also quite flexible. Two conclusions can be drawn from these observations. One is that prices between Hong Kong and the Mainland are well able to adjust relative to one another without any assistance from the exchange rate. The other is that, if the exchange rate were to move around and create disequilibria between prices, domestic prices would adjust to offset that disequilibrating tendency. In other words, it seems unlikely that shifts in relative price competitiveness would be greatly different under conditions of exchange rate variability than without it – there would simply be a different mix between shifts in relative domestic prices and the exchange rate effect. It is evident anyway that the Hong Kong economy complements the Mainland's more than it competes with it. Hong Kong benefits from a buoyant Mainland economy. If this buoyancy is judged to be best sustained by some increased flexibility in the renminbi exchange rate – and I make no judgement here as to whether that would or would not be the case – then Hong Kong would be likely to benefit.

In doing so, I will perforce refer to some of the findings included by the Single Supervisory Mechanism (SSM) in its recently published thematic review of the determinants of profitability and business models.1 A comprehensive reflection Taking the first adjective, when I say a comprehensive reflection is necessary I refer to the fact that a bank should examine its income and costs at the greatest level of detail possible: by product and not by customer, by business line and by geography. It should seek to gain detailed knowledge of which activities generate recurring profits, and which occasional profits or even losses, delving into the reasons that may explain each of these results. This will allow the bank to identify whether there is scope to turn the profitability of certain activities around, or whether it is better to change tack or abandon such activity. In addition, the bank will be in a position to judge whether the reality of its business, understood as its assets/liabilities mix, and the decisions taken in and bearing on such activity are appropriate or need adjusting. In short, if the bank has advanced tools to improve profitability, it can develop an appropriate, consistent and comprehensive price-setting policy to ensure that the price it charges for a product or service matches its total cost, including the risk premium.
As Andrew  BIS central bankers’ speeches  1  noted, given the scale of the regulatory effort, that means that the business models pre-crisis are not necessarily going to be very effective now. Let me turn back to trust. Why is trust still so low? My sense from the discussions is that trust remains low for two reasons. First, because of misconduct, and secondly, because of a perceived – and, potentially, actual – lack of adequate client focus. The frequent references to misconduct reinforced in my mind the importance of individual accountability, the focus of the Fair and Effective Markets Review, chaired by Minouche Shafik. It also emphasised the importance of the senior managers’ regime coming into effect in the first quarter of next year, and the importance of applying it to true codes and standards in wholesale markets, in a manner that market practitioners understand. The people at coal-face – junior traders, investors and asset managers – must understand what a true market is and their responsibility to act in a way that is consistent with maintaining true markets. In terms of a perception of a lack of client focus, I took away two gaps that were raised. The first is a financing gap, which I felt came out during the first panel, and which some economic historians in the room compared to the ‘Macmillan gap’ – the distance between finance and industry being too great. People talk today about an excess of savings not finding a home.

Henrique Meirelles: Brazil-Argentina Local Currency Payment System Speech by Mr Henrique Meirelles, Governor of the Central Bank of Brazil, at the Inauguration of the Brazil-Argentina Local Currency System, Buenos Aires, 2 October 2008. *  *  *  It is an honor to attend today the launching of the Brazil-Argentina Local Currency Payments System (SML). I am certain that this initiative will be a watershed in the bilateral relations between the two nations. Coincidentally, the new system kicks off in a period of financial turmoil and liquidity crunch in international trade, in which cooperation among central banks becomes fundamental to facilitate trade and to deepen economic ties. Central banks are responsible for ensuring adequate international payments systems. In processes of economic, financial and trade integration, the objective is to establish an efficient payments structure for intra-regional transactions. When flexible and unobstructed payments systems are available, trade transactions flow with greater ease and lower costs, and financial flows tend to intensify. This is what we expect from the new SML system. Initial obstacles have been overcome. The mechanism of the SML will trigger significant changes in the way in which companies export and import. In Brazil, exporters may now operate in real, while Argentine businesspeople may operate in pesos. Each one of our countries established a consistent framework for management of the system.
The slack appears to be concentrated largely in the labour market, as survey measures indicate that businesses are operating at close to normal capacity (Chart 7). Broadly speaking, we will be aiming to absorb that slack over the next two to three years, while keeping inflation close to the 2% target. Of course, output can rise by more than 1–1½% before slack is eliminated because supply generally rises over time as well as demand. The extent and pace of any rebound in productivity will consequently be crucial in deciding how quickly slack gets absorbed. In our latest projections (Charts 8 and 9), conditioned on prevailing market interest rates, the central path for inflation remains close to the target throughout, while the margin of slack is diminished, though not quite eliminated, by the time the forecast horizon is reached. That market curve implies a first rise in Bank Rate in the spring of 2015, though I should stress that we are likely to learn a lot between now and then about the pace of the recovery, the amount of slack and the evolution of supply, and the impact on costs and prices. So I would counsel against getting too hung up about the precise date at which Bank Rate first rises.

As that uncertainty dissipated and households began to feel more confident about the outlook, so the saving rate fell back (Chart 1). There is probably some scope for it to fall a little further, but continued firm consumption growth really depends on us seeing a pickup in household income growth, of which I will say more shortly. There is more scope for housing investment to continue driving growth. Housing starts and the level of housing transactions are still respectively around 25% and 10% below their averages during the pre-crisis decade (Chart 2). But the supply of new housing is not as elastic as one would like, because of planning restrictions and the like. Consequently there is a risk that increased demand for housing ends up mainly in higher house prices rather than more houses. In turn, if associated with excessive expansion in mortgage lending, that may create future financial stability risks. For that reason, the Bank’s Financial Policy Committee, which is charged with maintaining the overall stability of the financial system, is keeping a beady eye on the housing market. BIS central bankers’ speeches  1  For the recovery to be both sustained and sustainable, however, we really want to see three things happen. First, business investment needs to pick up the baton in supporting demand growth. Second, we need to see a revival in productivity growth, which in turn would sustain both higher real wages and higher profits, thus supporting continued household and business spending growth.
There is, however, a simple explanation for the apparent looseness relative to the estimated reaction function in the United Kingdom, namely the change in the policy regime associated with the adoption of inflation targeting and the subsequent credibility gain from giving operational responsibility for monetary policy to the Bank of England. This represented a sharp change in regime after a somewhat chequered history of inflation control and probably contributed to a lower equilibrium real policy rate because of the associated reduction in the inflation risk premium. Second, those monetary policy deviations can explain only part of the excess credit growth and house price inflation in the two countries over 2002–5. In the United States, the monetary policy shocks are associated with, on average, an extra 0.6 percentage points on annual real credit growth and an extra 1.5 percentage points on annual real house price inflation. That is to be compared with average actual annual real credit growth over the period of 5.6 per cent and average annual real house price inflation of 5.8 per cent. For the United Kingdom, the corresponding figures are an average 1.3 percentage points on annual real credit growth and 6.0 percentage points on annual real house price inflation, compared with average annual real actual credit growth of 8.9 per cent and average annual real house price inflation of 13.0 per cent.

Significant findings from the survey were that 66.3% of the Zambian adult population did not have access to financial services and that only 33.7% used banks, other formal and informal financial services and products (such as those offered by microfinance and savings clubs). Above all, only 15% of the adult population had access to commercial banking services. This low level of financial access therefore constitutes one of Zambia’s main challenges in facilitating economic empowerment of every citizen. Arising from these findings, the Government has since set targets or performance monitoring indicators. One such target is to increase the level of access to financial services to 48% by 2008 and 50% by the end of 2009. Following the earlier survey, a subsequent study called the “Finscope Supply – Side Survey” was conducted in 2007. Some of the key findings were that: a.  bank charges are unaffordable for 90% of the rural adult population in Zambia;  b.  Zambian banks generally have high operating costs and interest rate spreads; and  c.  the physical coverage of financial outlets may not increase at current cost levels. It is therefore, my hope that this Forum will address these and other challenges that slow the pace of financial inclusion in our countries.