samchain/econo-pairs-v1 huggingface dataset:
But the monetary policy of the Banque de France was backed by the people. Historically, what matters is that all future euro area countries, including France and Germany, cooperated very closely from the very outset to ensure convergence. Today, people throughout Europe are convinced of the importance of price stability. And they are also aware of the fact that being addicted to inflation is like being addicted to a drug that over time has extremely negative effects: stagnation and the destruction of jobs. FOCUS: Nevertheless, many experts are expecting prices to rise significantly again in the near future ... Trichet: We have made it very clear that we always take the decisions necessary to guarantee price stability over the medium term: an inflation rate below, but close to, 2%. Observers and market participants are fully aware of this. It is precisely because of the challenges posed by price stability that we stand ready for action at all times. I call that “credible alertness”. FOCUS: At the moment, the markets are addicted to cheap money – to low interest rates. Politicians, bankers and stock market traders have already become too used to this situation, and as a result the risk of inflation is on the rise. How do you intend to change this? Trichet: You can be sure that the European Central Bank will continue, as before, to maintain price stability. Keeping inflation expectations solidly anchored – in line with our definition of price stability – protects us against the materialisation of both inflationary and deflationary risks.

Benefits and likely risks brought by this major transition in global finance will be discussed in length over the next two days by academicians and policymakers in six different sessions. I  BIS central bankers’ speeches  1  believe that this conference will produce fruitful and beneficial outcomes for global financial stability. I would like to thank our participants and distinguished guests for their contributions and for being here with us. 2  BIS central bankers’ speeches
The last few months have shown us an important advantage of the euro: in stormy seas it’s better to be on a large ship than in a small boat. In history – also in the economic history – it’s always a speculation to ask “What if…?” I want to do it nevertheless, because there are very well-founded hypotheses. One such hypothesis is: in addition to the financial market turmoil, the banking sector problems and an economic downturn, there would most likely be severe currency upheavals in Europe without the euro. We would likely face strong, erratic fluctuations between Europe’s national currencies. I call to mind in this context the crisis in the European Monetary System in 1992 and 1993. It was triggered, among other things, by a difficult European and international environment. We saw sharp tensions between individual national currencies. This led to abrupt shifts in competitiveness between individual countries. The European Union’s internal market and in particular the free movement of capital were subject to tension. Without the euro we would be facing similar difficulties today. The central banks would be in demand as crisis managers on an additional front. The euro does offer protection from distortions in the currency field which would worsen the current situation already marked by the financial markets’ turbulences and the global economic downturn. The commitment to the single currency of its founding fathers was visionary and trailblazing.

Payment of interest on reserves allows us to control short-term rates with even a large amount of excess reserves outstanding. In addition, we can drain excess reserves in several ways. We have developed term deposit accounts and the ability to conduct reverse repurchase operations with a large number of counterparties that would allow us to drain a large volume of reserves. Also, when the time is right, the Fed can always sell assets. Such asset sales would lead to a rise in longer-term rates and this would have a contractionary effect on the demand for credit. I am very mindful of concerns here and abroad that balance sheet expansion could be interpreted as a policy of monetizing the federal debt. However, I regard this view to be fundamentally mistaken. It misses the point of what would be motivating the Federal Reserve. The FOMC would only engage in large-scale asset purchases in order to push the economy more rapidly toward the dual mandate goals of full employment and price stability. Once these goals were accomplished, there would be no basis for further purchases regardless of the government’s fiscal position because additional purchases would not be consistent with this mandate. The second constraint is that further balance sheet expansion would increase the Federal Reserve’s interest rate risk by raising the maturity mismatch between its assets and liabilities. Recall that the bulk of the Fed’s liabilities are overnight reserves and the bulk of its assets are longer-term Treasuries, agency and agency MBS securities.
Domestically there is a good consensus about this goal, as is the case in most countries where central banks pursue the same or a similar objective. In an open economy such as the Icelandic one a stable exchange rate is necessary for favourable price developments. A stable exchange rate has, therefore, been an intermediate target for monetary policy. The Central Bank implements monetary policy mainly by setting its own interest rates and by intervening on the money market. In the short run the Bank can also influence the exchange rate through the purchase and sale of foreign currency. Given the conditions that prevailed in 1997, there was clearly a danger of overheating which led the Central Bank to pursue a tight monetary policy. After the Bank had raised money market rates in the fall of 1996 the differential between domestic money market rates and those in main trading partner countries widened to 3 percentage points. This was a necessary response to the growing uncertainty about the outcome of the pending wage negotiations, and it led to an acceptable equilibrium for some time. However, some currency outflow was experienced during the first weeks of 1997 until the outline of the wage settlements began to emerge. The wage settlements eased fears of rising inflation and increased confidence in a stable exchange rate. The Central Bank, nevertheless, maintained unchanged interest rates, and considerable currency inflow took place through July.

Yields on both indexed and non-indexed bonds have continued to fall this year, with the yield on government guaranteed indexed bonds now well below 5 percent which some had regarded as the floor. Although money and bond market yields declined in 1997 the lending rates of commercial and saving banks changed little. These rates have now begun to come down. Profitability of deposit institutions The profitability of banks improved during 1997. Current information on profits of the commercial banks shows a substantial increase compared with the preceding year. Their combined return on equity was 9.2% in 1997, compared with 8.2% in 1996 and 5% in the year before that. Nonetheless, profitability varied widely among them, and the different conditions that they faced complicate comparisons. Landsbanki (the National Bank) and Búnaðarbanki (the Agricultural Bank), for example, incurred large irregular expenses related to the final settlement of their pension obligations, which cannot be expected to recur in future. Provisions to reserves for loan losses have fallen sharply among all the banks. At the same time, the six largest savings banks recorded some decline in profitability compared with the previous year, and their return BIS Review 42/1998  -7-  on equity was 8.5%. I should underline, however, that profitability varied widely among individual savings banks.
This kind of flexibility is explicitly provided for in the new SFBC capital regulation. The orders already issued by the SFBC relating to the reform of the capital regulation state that the big banks will not be required to comply with the higher risk-weighted capital ratio and the leverage ratio until 2013. However, if the situation on the capital markets or the individual earnings position of the big banks make it impossible to achieve the objectives by 2013, it may be possible to defer this date. The long time period allowed for implementation is crucial. It will prevent the new regulation from having a procyclical effect. In the short term, priority will clearly be devoted to managing the crisis. In the area of liquidity, the SFBC and the SNB are in the process of drawing up a new regulation. The basic objective is to obtain higher liquidity buffers that better reflect the great complexity of liquidity risks. When calculating liquidity requirements for various crisis scenarios, the authorities use internal model calculations by the banks. In order to ensure the comparability and transparency of the internal calculations, the new regime foresees certain standardisations. The conclusion of the project is scheduled for early 2009. Both regulatory measures – capital regulation and liquidity regulation – are in line with proposals made by the Financial Stability Forum and the G20 action plan. The reforms are also compatible with the strategy of the Basel Committee on Banking Supervision for implementing the lessons from the crisis.

The past few weeks have seen some calming of global financial markets, but we are still a long way away from normalisation. With the worldwide deterioration in the economy, credit risks at banks will rise considerably. Attention was drawn to this in June 2008, in our last report on financial stability. Bank provisions for credit risks are currently at a historically low level, and they will need to be substantially increased. This will have a negative impact on their profitability. In the case of the big banks, the situation also involves considerable risks for trading portfolios. The worldwide economic downturn comes at a time when the international financial system is already in bad shape. In particular the big banks that have been hit especially hard by the crisis could be forced to curtail, or further curtail, their lending. This, in turn, could have additional negative effects on the real economy. In order to put a halt to this negative spiral, we consider it important that the economy be supported with monetary and fiscal measures. The interest rate reductions carried out by the Swiss National Bank (SNB) should be seen as part of these measures. ... but the resilience of the big banks has been increased Given this situation, the fact that it has been possible to increase the resilience of the Swiss big banks is crucial. Credit Suisse boosted its capital through private investors by a total of CHF 10 billion. It thereby strengthened its equity position substantially and increased its capacity for absorbing additional shocks.
IMF research has suggested that financial deepening can indeed be growth-positive – but within limits. There is a threshold at which private credit-to-GDP may begin to have a negative impact on GDP growth (Arcand, Berkes and Panizza (2012)). That threshold is found to lie at a private creditto-GDP ratio of around 80–100%. This finding is consistent with earlier cross-country evidence suggesting that, at credit-toGDP ratios above unity, output volatility tends to increase (Easterly, Islam and Stiglitz (2000)).3 This threshold lies significantly below current levels of financial depth in most advanced economies. In other words, taken at face value this evidence suggests that, at its current scale, banking could be acting as a headwind to medium-term growth. Accompanying this dramatic rise in banking scale has been an equally-dramatic rise in banking concentration. Chart 2 plots the evolution of the asset share of the three largest banks in the US, UK, Germany and Switzerland over recent decades. The US has undergone the most dramatic upwards shift, with the share of the top three banks rising from around 10% to 40% between 1990 and 2007. For other countries, there is a less dramatic rise in concentration but from a much higher starting point, with the top three banks accounting for between two-thirds and three-quarters of assets in the UK, Switzerland and Germany. This dramatic rise in banking scale and concentration has been driven by financial liberalisation. But it has also spawned an acute problem for society due to escalating expectations of state support for the banking system.

Admati, A., DeMarzo, P., Hellwig, M. and Pfleiderer, P (2011), “Fallacies Irrelevant Facts and Myths in the Discussion of Capital Regulation: Why Bank Equity is not Expensive” (March 23, 2011). Rock Center for Corporate Governance at Stanford University Working Paper No. 86. Alessandri, P and Haldane, A (2010), “Banking on the state”, Bank of England. Amel, D and Barnes, C and Panetta, F and Salleo, C (2004), “Consolidation and efficiency in the financial sector: A review of the international evidence,” Journal of Banking and Finance, Elsevier, vol. 28(10), pages 2493-2519, October. Boot, A and Ratnovski L (2012), “Banking and Trading”, IMF Working Paper WP/12/238. Boyd, J and Heitz (2011), “The Social Costs and Benefits of Too-Big-To-Fail Banks: A bounding exercise”, Working Paper. Brunnermeier, M, Crockett, A, Goodhart, C, Persaud, A and Shin, H (2009), “The Fundamental Principles of Financial Regulation,” London, Centre for Economic Policy Research. Cecchetti, S and Mohanty, M and Zampolli, F (2011). “The real effects of debt”, BIS Working Papers 352, Bank for International Settlements. Coase, R.H. (1937), “The Nature of the Firm,” Economica, New Series, Vol. 4, No. 16. (Nov 1937), pp. 386–405. Davies, R and Tracey, B (2012), “Too big to be efficient? The impact of too big to fail factors on scale economies for banks”, Mimeo Easterly, W., Islam, R., and Stiglitz, J. (2000), "Shaken and Stirred, Explaining Growth Volatility," Annual Bank Conference on Development Economics.
For example, the 10-year real rate beginning in 10-years’ time implied by current government bond yields is -¾%. The comparable number over 2000-2006 was +1⅔%. And even during the height of the financial and euro area crises over 2008-2012 it was +¾%. (Chart 7) In the long term, the most important determinant of potential output growth is productivity growth, which is in turn determined by the rate at which new ideas are generated and implemented. And given the very disappointing productivity performance of the UK over the past 7 years, it would perhaps be understandable were financial markets to have lost hope that productivity growth would ever return. Perhaps they agree with those who argue that recent innovations cannot contribute as much to productivity growth as historical ones such as the electric light bulb, the internal combustion engine and indoor plumbing once did. 14 Human history has had many periods in which pessimism about innovation and technological progress has been proven wrong, dating at least back to Malthus. There is much by way of exciting innovation that has yet to be fully exploited. 15 3D printing is transforming the R&D process by vastly increasing the capability to produce prototypes. Advanced robots are being developed that will allow increased precision and safety in their use, thus increasing our ability to automate many routine activities. Firms are learning how to harness the power of Big Data, which will allow them to personalise their products better and reduce waste.

William C Dudley: Improving financial institution supervision – examining and addressing regulatory capture Testimony by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the Senate Committee on Banking, Housing, and Urban Affairs Financial Institutions and Consumer Protection Subcommittee, Washington DC, 21 November 2014. * I. *  *  Introduction  Chairman Brown, Ranking Member Toomey, and members of the Subcommittee, thank you for this opportunity to testify on the effectiveness of financial institution supervision and the issue of regulatory capture. In 2008 and 2009 our country faced its worst financial crisis since the Great Depression. I mention those years as a touchstone for my remarks today. Despite the passage of time and an economy that is steadily improving, the financial crisis is hardly something that happened in the remote past. For the too many people who are still unemployed or underemployed, or who otherwise continue to struggle financially, it is living history. While the causes of the crisis remain subject to debate, it is undeniable that banking supervisors could have done better in their prudential oversight of the financial system. This conclusion raises two fundamental questions: •  First, how can we improve the stability of the financial system? In other words, how can we make the financial system more resilient and productive? •  Second, how can we improve our supervision of financial institutions? The Federal Reserve is working diligently to improve both stability and supervision. The two concepts are linked.
Zeti Akhtar Aziz: The changing face of talent Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the AIF (Asian Institute of Finance) International Symposium 2013 “Changing face of talent”, Kuala Lumpur, 28 August 2013. *  *  *  It is with great pleasure that I welcome you to the AIF International Symposium on the Changing Face of Talent. In preparing for the future, a future that is going to be fundamentally different from the current environment, talent development and its management will need to be accorded with an even greater priority than previously. This is on account of two significant shifts in the landscape that we are operating in that will fundamentally affect the human capital that we need. The first is the rapid and significant transformation of the economic, financial and business landscape which will continue to have far reaching changes on the talent requirements. The second is the changes in the character and nature of the talent that is now coming on stream. These emerging changes have warranted new approaches to human capital development and management. To not recognise these changes and their implications will not only affect business performance but also the overall economic progress of a country. My address this morning will briefly discuss the fundamental changes that are affecting the financial and economic landscape and its implications for talent requirements. My remarks will then proceed with some reflections on the changing nature and character of the talent that is coming on stream.

The changing face of talent, the new generation of talent coming on stream and its different nature and character also presents new challenges for human capital management. It calls for a transformation of human resource strategies. Given that in this new environment human capital has become a key factor that will drive results, it is therefore not only the investment in talent that has become key, but also their management. Human capital management therefore needs to be a top priority in organisations. Certainly this is the case for financial institutions for which the demands and expectations are high. New approaches and strategies for human capital management will be required. These strategies need to be aligned with the strategic objectives of the organisation. A vital part of this is the capacity building of the human capital management team itself to ensure that they will best serve their organisation. There also has to be strong engagement between the leadership and the human capital management team. There has to be an acute awareness of how the forces of change and the new environment is reshaping the demand and supply of talent and how the existing talent needs to be transformed to meet the objectives of the organisation in a highly dynamic environment. Human capital management is no longer about the efficient delivery of support services. It is now about the management of talent in the organisation to strengthen and enhance its performance.
The process of monetary cooperation was launched as a response to the potential financial and economic instability stemming from the collapse of the Bretton Woods system. It met with many obstacles and went through several crises. At some point, it came close to being abandoned altogether. But today, the Euro is alive and well: since 2002, it has been the sole currency with legal tender in all countries of the Euro area, providing more than 300 million of European citizens with a new, practical unifying symbol as well as many direct economic benefits. Before addressing the Euro area enlargement issues let me first elaborate on the successes and challenges of monetary integration in Europe. Enlargement should both preserve these successes and help handling the challenges. The first, and most obvious achievement of the Euro, is price stability. Over the last five years, inflation has stayed broadly in line with the price stability objective set by the European Central Bank, i.e. inflation below but close to 2% over the medium-term. Gone are the days when European citizens had to worry about the purchasing power of their savings. This stability goes beyond the behaviour of prices. Inflation expectations themselves have been remarkably stable, including during the recent period when oil prices jumped to new highs. This, by itself, illustrates the credibility achieved by the Eurosystem. Second, the ECB’s clear priority of price stability has reduced the risk premium incorporated in long term interest rates.

A second, related, factor is that even where the data has been collected, in many countries the default experience is distorted by the 1997-98 financial crisis: the question for banks is to what extent this experience should be factored into their risk management systems. A third issue is the extent to which off-the-shelf models that have been developed primarily for the US market can capture the behavioural characteristics of Asian borrowers. None of these problems are in principle insurmountable. However, they do suggest that a degree of caution is in order before banks make the leap to IRB. That is why we have been advising those banks that are considering using IRB approaches to "look before you leap." The most important consideration is for banks to make sure that their IRB systems are robust and well-founded, and that they are integrated with their overall systems for identifying, managing and controlling risk, for making credit decisions, and for product pricing. We are willing to allow banks as much time as they need to achieve these objectives. The implementation dates for the IRB approaches should not be taken as a deadline. Banks that feel they need longer to work on their systems will have our full support. Getting it right matters more than a specific date in the calendar. Looking ahead, both the regulators and the industry will continue to face many challenges over the coming months and years. Putting Basel II in place has been demanding for everyone involved, and will continue to be so.