samchain/econo-pairs-v1 huggingface dataset:
24.05.2017  Welcome address I Conference on Financial Stability/Banco de España-CEMFI Luis M. Linde Governor  Good morning ladies and gentlemen, It is my pleasure to welcome you to this first Conference on Financial Stability, jointly organised by the Banco de España and the Centro de Estudios Monetarios y Financieros (CEMFI). Thank you very much for your interest in and attendance at the Conference. We have a very interesting agenda for today and tomorrow, structured around six sessions and a panel discussion covering a wide range of topics related to the theory and policy practice of financial stability. This event is bringing together distinguished speakers and discussants from central banks, international financial institutions and academia - a combination which will offer a diversity of perspectives and also ensure a lively and, for sure, interesting debate over the next two days. This conference has been possible thanks to the joint effort of Banco de España and CEMFI. I am very grateful to the organisers, in particular to Rafael Repullo, Director of CEMFI, as well as to all the members of the scientific committee responsible for promoting this meeting and selecting the papers to be presented in the programme. This event has aroused particular interest among researchers, with -I am told- nearly one hundred papers having been submitted for just twelve slots.

Furthermore, as the economic recovery continues, bank profitability will increase, bolstering equity. With less constrained equity, conditions will become more favourable for a return to more unsecured lending. 4/5  BIS central bankers' speeches  Conclusion Let me conclude. Banks and other market participants report a decrease in market making activities and collateral scarcity in repo-markets. The perception of a challenging environment can therefore not be denied. Pro-cyclical market reactions during and after the financial crisis and – related – changes in banking regulation clearly had an impact on the functioning of the repo markets. But with the continued economic recovery market stress should fade and conditions for unsecured lending might re-gain some attractiveness. Likewise, market players will adjust their business models over time amid a new regulatory environment. Regarding the ECB’s asset purchase program, two important points have to be made: 1. Although the APP might have some negative side effects on the functioning of the repo market as compared to the pre-crisis levels, other more potent factors were at work. To reduce spill-over effects the ECB has also introduced several mitigation measures. 2. Even more important: the ECB has one mandate, which is to ensure price stability. Elevated risks to its goal have made unconventional measures necessary on an unpreceded scale and on a temporary basis. And they prove successful. Although we try to minimise negative side effects, any of these considerations are without prejudice to the obligation to honour our mandate. 3. 1 Rates based on RepoFunds Germany, France, Italy and Spain.
Malta has taken full advantage of the opportunities offered by EU accession and euro adoption to diversify its economic base, from an economy driven mainly by export-oriented manufacturing industry to one characterised by the increasing importance of export-oriented services. It also engaged in structural reforms to increase competition in key markets and to encourage labour market participation. Malta now enjoys rapid growth, full employment and moderate inflation. The latest Economic Forecast by the European Commission, that of Winter 2017, shows that Malta’s economy is expected to remain on a sustained positive trajectory. According to the Commission: “Malta’s economic growth has settled down from the exceptional levels of 2014 and 2015 but is forecast to remain well above the EU average. Unemployment is set to remain at record lows while productivity gains contain unit labour costs and preserve competitiveness.” Malta’s real GDP growth is estimated to remain robust. For both 2017 and 2018, the Maltese economy is estimated to expand at the rate of 3.7%. This places Malta amongst the top performers in the EU. During 2017, GDP in the euro area and the EU is expected to grow at the rate of 1.6% and 1.8% respectively. For 2018 growth in the euro area is expected to increase to 1.8% whilst average growth in the EU will remain as in the previous year (1.8%). Malta’s historical low unemployment rates are envisaged to be maintained over the coming period.

MPRA Paper No 33464. 3  practice this ratio normally exceeded 100%. As capital controls were eased, interest rate policy was increasingly set with an eye on the spread vis-à-vis interest rates offered on the basket currencies (and, later, the euro). More profoundly, maintaining the exchange rate peg required discipline in domestic wage and price setting to safeguard Malta’s external competitiveness. Despite an element of wage indexation, the labour market was fairly flexible, with relatively low coverage of collective bargaining in the private sector and with wage negotiations being handled at the level of the individual firm. Broadly speaking, fiscal discipline was also maintained. The government debt to GDP ratio remained below 60% until the late 1990s, peaked at around 72% in 2004, and is now just at about the 60% threshold again. This discipline helped establish the credibility of the exchange rate peg, which became embedded in the decision-making process across the economy. For this reason, the Bank never adopted policy options that would have entailed greater exchange rate flexibility, even when this became possible, for instance in ERM II. Subsequently, this internal discipline also served in good stead after euro adoption, which, as we have seen before, entails the loss of the exchange rate and interest rates as a policy tool. Despite the several shocks that have hit the euro area since 2008, the Maltese economy has performed well.
Owing to the aforementioned reasons, many countries, including Turkey, has been able to be resilient beyond expectations, in the face of the crisis. However, it was undoubtedly impossible to fully avoid the adverse effects of the crisis. In fact, an analysis of quarterly growth rates of world economies suggests that almost half of the economies contracted in the final quarter of 2008, and more than 90 percent in the first half of 2009. The first half of 2008 became a period where problems driven by the crisis were ignored by the markets. Nevertheless, despite certain monetary policy measures that were taken, the global crisis entered the second stage, where the feeling of “denial and rejection” was replaced by “disappointment” and “anger” due to the growing frequency of problems emerging across financial markets. In this period, money markets were almost at a standstill due to the deterioration of risk perceptions, banks were faced with liquidity problems, asset prices experienced slumps, non-performing loans increased, balance sheets incurred losses that led to serious damage to the health of banking system, numerous banks and investment agencies came under strain and even went bankrupt – all of which describe the main characteristics of the second stage. Especially the rescue packages that were inevitably implemented by governments to prevent the collapse of the financial system in developed countries gave way to serious public anger directed towards banks and investment agencies.

However, with the normalization in financial markets, we foresee that the distinguishing characteristics of countries will come to the fore in the upcoming period and currencies of those countries with lower risk, stronger economic and financial fundamentals and high growth potential are expected to perform better. In this regard, it would not be surprising if Turkey’s credit rating is raised to reach the investment grade implied by the actual CDS spread. As for recent developments in the Turkish economy, the moderate recovery in economic activity continues. Quarterly growth in GDP continued in the last quarter of 2009. As tax cuts that were put into practice with the aim of spurring economic activity were phased out, private consumption demand displayed a more moderate rise compared to the first half and the gradual recovery in private consumption expenditures continued in the third quarter. Meanwhile, private investment expenditures continued to pick up in the last quarter but remained lower compared to strong growth periods. Taking into account the uncertainties pertaining to domestic and foreign demand and the low capacity utilization rates, it is estimated that it would take an extended period of time for investment expenditures to reach their pre-crisis levels and no significant rise is expected in the short run. Recently, imports have increased faster than exports and this indicates that the recovery in the economy is mainly driven by domestic demand. The course of exports in the upcoming period will be determined by the pace of global recovery.
I am confident that the FOMC’s plan will reduce the size of the portfolio in a gradual and predictable, “no surprises” manner; that the FOMC’s plan will promote good market functioning in the Treasury and agency mortgagebacked securities markets as the portfolio declines; and that it will not prove disruptive to the U.S. mortgage market or the U.S. Treasury’s debt management program. And I am also confident that the plan’s design, and the FOMC’s clear communication prior to the plan’s implementation, will mitigate the risk of sharp or outsized asset price reactions to the decline in the portfolio’s size over time. Of course, we cannot and should not prevent Treasury and agency MBS prices from reacting to relevant economic and financial developments, or indeed from gradually moving over time in response to the progressive decline in the size of the Federal Reserve’s holdings and consequent increase in the amount of securities held by the private sector. In fact, we very much want asset prices to respond appropriately and fully to economic and financial news. Over the coming years, such news could span a wide variety of topics, such as central bank policy in this country and abroad, the ongoing debate over fiscal policy, and the evolution of expectations for the longer-run neutral rate of interest. That said, we do seek to mitigate the risk that our operational actions contribute to unnecessary surprise, disruption, or volatility. There is of course always a risk that events could unfold differently from expectations.

Panel 1 shows a summary of the Fed’s assets and liabilities, as they are today. Substantially all of the $ trillion of assets consist of Treasuries and agency MBS. On the other side of the balance sheet, the Federal Reserve has three main categories of liabilities: $ trillion of bank reserves and other deposits, $ trillion of paper currency, and about $ billion of reverse repos. Before the crisis, the balance sheet was much smaller, at around $ billion. It reached its present size as a result of the FOMC’s large-scale asset purchase programs. Those programs were undertaken to support the economic recovery by easing financial conditions to a greater extent than could be achieved solely through reducing the federal funds rate, once that instrument became limited by the zero lower bound on interest rates. These asset purchases 2/7  BIS central bankers' speeches  greatly increased the size of the asset portfolio, and equally increased the size of the Federal Reserve’s liabilities, largely through growing the stock of bank reserves.5 The composition of the balance sheet also changed. On the asset side, the most important compositional changes were the addition of agency MBS and a substantial increase in the maturity of the Fed’s Treasury holdings. For many years, the FOMC has made it clear that it did not intend for these changes to the balance sheet to remain forever.
Andres Sutt: Emerging energy markets – key issues Introductory remarks by Mr Andres Sutt, Deputy Governor of Eesti Pank (Bank of Estonia), at the GIC/MKM/Eesti Bank Conference on emerging energy markets, Tallinn, 21 August 2008. *  *  *  Mister Minister, Excellencies, Ladies and Gentlemen, Dear Guests, It is a great honor to welcome you here in Tallinn. The issues of our conference on emerging energy markets are of great importance in today's world. We are very lucky to have an excellent lineup of highly distinctive speakers from both the public and the private sector, so our discussions will no doubt be interesting and useful. I also have to admit that that interest in the conference exceeded the organizers' most optimistic expectations. Energy issues and related policy choices have come forward forcefully and en masse for policy makers and public at large. Indeed, there is hardly any other area where choices that are made today will have a direct impact on the way of life of the generations to come. In this regard, I would like to briefly outline the key issues that will be discussed also today. First and foremost, human activity and energy consumption are, in all likelihood, having a direct impact on climate and, ultimately, on living conditions on the Planet Earth. While the direct effects of climate change on growth and prosperity vary, it is beyond any doubt that the challenges ahead are formidable.

Core inflation will hover around 3 percent throughout the same horizon (figure 7). 4  BIS central bankers’ speeches  The current account deficit of the balance of payments is forecast to stand at 3.6 percent of GDP in 2014, up a little from 2013, but below the December estimate. Behind it is the expected decline in the copper price this year, which more than offsets the lower growth foreseen in domestic demand and imports. This implies that, measured at trend prices, the deficit will narrow further, approaching 3 percent of GDP. As for GDP, the rate of total investment will go slightly above 23 percent in nominal terms (somewhat more than 25 percent in real terms), while national savings should amount to 19.5 percent (table 2). Aside from the already discussed trajectories foreseen for domestic growth and the world economy, this forecast uses as a working assumption that nominal wages will be adjusted in line with productivity and the inflation target. It also uses as a methodological assumption that the real exchange rate will remain stable, considering that it is now inside the range believed to be consistent with its long-term fundamentals. Finally, the baseline scenario uses as a working methodological assumption that the MPR will follow a trend comparable with the one that can be derived by the prices of financial assets prevailing at the statistical closing of this Report (figure 8).
The Principles’ provisions for an FMI’s recovery and orderly wind down will inform upcoming work by CPSS-IOSCO on the potential role and attributes of official regimes for the resolution of FMIs. This work is underway and should be completed later this year. I’m pleased to see what has already been accomplished. But let’s be clear, when the Principles are published that won’t be the end. To quote Winston Churchill, it will only be “the end of the beginning”. Thereafter, the resolution, disclosure and assessment frameworks will need to be finalized later this year. The CPSS and IOSCO members will have to adopt the new Principles into their regulatory and legal frameworks, with a target date of year-end. The new Principles will then be put into effect next year, with FMIs expected to observe the new Principles as shortly thereafter as is feasible. This is obviously an ambitious schedule, but one that is fully consistent with the G20 leaders’ mandate. 6  BIS central bankers’ speeches  Finally, we should recognize that the global financial system is a complex one that is continuously evolving and that we are introducing many significant changes into that system. We have to recognize that there may be trade-offs between some of our objectives, and that the system may evolve in ways that we do not expect. There may be unintended consequences.

So we are again impaled on the horns of our earlier dilemma, arising from continuing imbalance between the stronger domestic and weaker externally-exposed sectors of the economy. Believe me – it is not a comfortable place to be. The question is what to do? Of course, as with everything else, where you stand depends on where you sit. The suffering sectors – most of agriculture, large parts of manufacturing industry and some services sectors – are in no doubt. Cut interest rates again – they say – and again and again. They’re still twice as high as interest rates in Europe – and they might just as well add, they are over 150 times as high as interest rates in Japan! The many more net savers – including pensioners living off the interest on their savings – take the opposite view, although they do, of course, benefit from the low inflation environment through the protection it gives to the real value of their assets. What we have to try to do is to maintain stability in the economy as a whole, by keeping overall demand continuously broadly in line with the supply-side capacity of the economy as a whole. The  BIS Review 68/1999  2  inflation target is not some abstract end in itself – it is the measure, or barometer if you like, of how successfully we are managing to maintain macro-economic stability in the economy as a whole in this much wider sense.
This means that the curve normally has a negative slope. An outward shift in the curve can be interpreted as deterioration in matching in the labour market, as the number of vacancies for each given level of unemployment is higher. Movements along the curve may depend on economic changes. When there is an improvement in the level of economic activity, the number of vacancies and recruitment rise, but at the same time the difficulties and time required to fill the vacancies increase. The large rise in the unemployment rate in Sweden at the beginning of the 1990s was followed by a reduction in the number of vacancies, which can be interpreted as a movement along the curve. During the mid-1990s, unemployment appeared to have stabilised at a high level, but in recent years unemployment has been held back, while the vacancy ratio has risen. The Beveridge Curve appears to lie further out than before, which could indicate that the matching process has deteriorated and that the labour market has become less flexible. One reason for a possible outward shift could be that the persons who became unemployed during the crisis years of the 1990s have had difficulty in returning to the labour market.

This can be compared with the 1970s and 1980s, when inflation was at an average rate of around 8 per cent and growth amounted to an average level of 2 per cent. This positive development is due to a large number of factors. One factor is that there were a large number of vacant resources to begin with, but it appears likely that a more credible economic policy also has contributed. Fiscal policy has also played an important role in giving credibility to the economic policy pursued. The value of the budget consolidation can scarcely be exaggerated. Concerning the functioning of the labour market, the changeover from fixed exchange rates and a relatively high rate of inflation to flexible exchange rates and an inflation target implies that high inflation and devaluation, like those Sweden experienced during the 70s and 80s, will no longer take care of the effects of excessively high wage increases. In that sense one could say that the responsibility for employment to a greater extent has moved over to the social partners. Recent developments in the Swedish labour market During the course of 2001, growth in the Swedish economy was subdued, while inflation, excluding so-called transitory prices, rose slightly. This raises questions regarding the development of the supply  BIS Review 40/2002  1  side in the economy. A possible explanation as to why inflation has increased at the same time as demand has weakened is that the growth rate in potential output has been weaker than was anticipated earlier.
The result is that these proposals have almost all been adopted for the transposition of the 5th directive. We know how to think outside the box when necessary. However, to maintain a smooth risk management for projects that are likely to exploit huge network effects, and thus likely to create significant risks to financial and monetary stability, it would be prudent to ensure that regulation frameworks are perfectly tailored to the risks posed before rolling out these projects in the market. In order to help complete the adjustment of the regulatory and supervisory framework to these profound changes, central banks and supervisors first have the advantage of their legitimacy, which is primarily due to their institutional mandates: prudential supervision, financial stability, and conduct of monetary policy. Their legitimacy is also rooted in their experience of crises and their contributions to solving them. However, to live up to this legitimacy, it is up to  the public authorities to identify the new risks, both in terms of their nature and magnitude, and to provide clear, strong and relevant responses. (ii) An open mind is necessary to achieve this objective: it must lead us to propose frameworks that are tailored to the new challenges and associated risks.

The idea is to mobilise all employees, in order to bring out the innovations that are most suited to our missions and then have them implemented by “intrapreneurs", who are bestowed with great autonomy, comparable to that of start uppers, for the development of their project. Our first intrapreneurship programme will enable us, I hope, to benefit within 9 months to a year from artificial intelligence tools to conduct our supervisory missions. All of these initiatives are as vital as they are exciting. They are the DNA of our institutions, and I am convinced, the reflection of that of the French and European ecosystem. Thank you for your attention. 4/4  BIS central bankers' speeches