samchain/econo-pairs-v1 huggingface dataset:
We participate in the process of making the most important decisions regarding the banking sector in the euro area, i.e. not only the Bulgarian banks but the European banks. In making all these decisions, our vote matters as much  2/5  BIS - Central bankers' speeches  as the vote of Germany, France, Italy, Spain, or any one of the other euro area Member States. So, instead of waiting for the relevant decisions to be sent to us for implementation, we actively take part in the process of making these decisions. I must assure you that there is a big difference. Financial implications are another important aspect of our membership. You can probably recall some observers' concerns as to how our membership in the Banking Union would burden the Bulgarian banks with unbearable fees. Indeed, the Bulgarian banks pay fees related to Banking Union membership, but the financial benefits are considerably greater. The Single Resolution Mechanism alone saves the Bulgarian banks not less than BGN 160 million a year which, in turn, improves their financial result. Or, if we use the terminology of insurance, the Bulgarian banks get a much greater protection for a much lower premium. As regards the BNB which, as I said, is already a part of the euro area in terms of its key activities, at this stage the preparedness for full accession is related most of all with technical and logistic issues. Organisation has been set up for monthly reporting on the progress and the outstanding challenges.

From that date until today another 200 decisions or so were made in the context of Bulgaria's participation in the EU's Banking Union, backed up by serious analytical work. Therefore, as far as the BNB is concerned, no stone has been left unturned on this topic. What I would like to stress is that there are enough representative, thorough and up-todate analyses on the implications of Bulgaria's accession to the euro area. The addition of more analyses at this moment would only further delay the process and would hardly enhance the quality. What we need now is not new analyses on this subject, but concrete actions. How prepared is the BNB to join the euro area? The BNB is in a unique situation. It is the first, and until now the only, Bulgarian institution which, since 1 October 2020, has been a full member of a key institution of the euro area, as is the EU's Banking Union with its two operating mechanisms: the Single Supervisory Mechanism and the Single Resolution Mechanism. Therefore, the BNB is the institution which, not based on theoretical analyses but from first-hand experience, can tell the difference between being outside and being inside the euro area, i.e. we are speaking not about anticipated but about real implications. Most recently, it's been two years since Bulgaria became a full member, and our assessments are unequivocally positive. Now we have information and a database which would have been inaccessible to us before our membership, even if we had invested huge resources.
Page 2 sur 7 Partly, because the not-so-good news is that inflation has changed in nature in the meantime. Indeed, core inflation (excluding energy and food prices), which accounts for no less than 70% of the consumption basket, remains strong and is proving sticky at 5.7%. In other words, inflation has become more broad-based, as also demonstrated by U.S. CPI this morning, and potentially more persistent. But the good news it that this is exactly what we central banks can and must fight back against. Our commitment at the ECB is unambiguous: to make sure that inflation returns towards 2% by the end of 2024 or the end of 2025. And rest assured we absolutely have the will and the capacity to deliver on this commitment. Faced with the surge in inflation, the ECB raised its policy rates at an unprecedented pace (+350 bp since July 2022) to reach a restrictive stance. Page 3 sur 7  But from now on, we are entering a new, more open phase of monetary policy; we are shifting from automatic pilot to navigation by instruments. What does that mean in practice? Our decisions on interest rates will be taken meeting by meeting. This navigation by instruments will especially rely on three cockpit dials: •  The outlook for headline inflation, based on our macroeconomic  projections. •  The dynamics of underlying inflation.

Macro Week 2023, Peterson Institute for International Economics – Washington, 12 April 2023 How central banks should face instability and fragmentation Speech by François Villeroy de Galhau, Governor of the Banque de France  Press contact: Mark Deen (mark.deen@banque-france.fr), Déborah Guedj (deborah.guedj@banquefrance.fr)  Page 1 sur 7 Ladies and Gentlemen, I am delighted to be here in person at the Peterson Institute for International Economics. I would like to warmly thank Adam Posen for the invitation to speak at this edition of Macro Week. Two years ago, I had the opportunity to discuss (online) “how to revisit central banking and financial stability”. Some of my remarks will no doubt echo these thoughts, however in a quite different context: shifting geopolitics, reignited inflation and some turmoil in the banking sector have since entered the arena. Today, I would like to provide a European perspective on both risks of instability and fragmentation, starting first with the conduct of monetary policy in this unstable economic landscape (I), before turning to the roads forward on a fragmented international stage (II). I. Monetary policy facing the risk of price and financial instability A. The ECB shows resolve in bringing inflation back to target Against the backdrop of the invasion of Ukraine, inflation in Europe accelerated sharply last year due to soaring energy and commodity prices. There has partly been a symmetric phenomenon: easing energy prices have led to a decline in headline inflation over the last few months, from a peak of 10.6% in October to 6.9% in March.
One approach to this challenge would be for the Bank to return to basics and improve the three channels of financial intermediation, namely, banking, equity and debt, through a number of measures. First, the Bank could increase investment in the financial infrastructure in Asia. Just as physical infrastructure, such as airports and highways, facilitates the movement of people and goods, financial infrastructure, such as the payment and settlement systems for the banking and securities sectors, facilitates the safe and efficient movement of money. The importance of a robust payment and settlement system in this region is underscored by the events of 11 September. Secondly, the Bank could expand the technical assistance programme to assist economies in restructuring the banking sector. Small and medium-sized enterprises employ the most workers in Asia and they are mostly dependent on bank financing. The banking sector in Asia, devastated by the Asian financial crisis, has not fully recovered. Banks understandably are adopting a very conservative lending strategy towards companies with a lower credit rating, such as Small and Medium-sized Enterprises. The Bank’s assistance in speeding up the banking sector reform would help SMEs to get back on their own feet, thereby reducing unemployment and poverty. Thirdly, the Bank could expand assistance in building up the institutional capacity of individual economies to improve corporate governance in the private sector. Emphasis should also be made to improve the auditing, disclosure and transparency standards of publicly-listed companies.

The framework seeks to reduce poverty through three core areas of sustainable economic growth, inclusive social development and good governance. The strategy is a sound one as it does not focus solely on physical infrastructure, i.e. the building of roads, bridges and other “hardware”, but also on the “software” of policy and institutional reform in the public and the private sectors. The Strategic Framework also attaches importance to private sector development, particularly in the fields of finance, banking and corporate governance. The quality of the “software” of a developing economy is precisely what international investors are looking for as they return to Asia. At a time when Asian economies are showing incipient signs of recovery against an improved external environment, international capital flows are triggering back to the region but in a more cautious and discriminate manner than before. Investors are now a lot more selective about who may lend to and where they put their money. International capital flows from OECD markets to Asia, in the form of bank credits, foreign direct investment and portfolio flows, have dropped significantly in the last few years. In the case of bank credits, total flows declined by about $ billion during the 1997-1998 period, although the decline has been at a more moderate pace in the last two years. In the light of this, it is important that the Bank plays a catalytic role in mobilising resources within and outside of the region.
Confronted with against-efficiency regulations, financial markets started to seek ways out. This is a lesson we should keep in mind. II.2. The ‘70s and beyond  These ways out primarily took the form of the emergence of competitors to the US dollar as a settlement currency, the collapse of the Bretton Woods system and the establishment of international syndicate banks which began in 1964. Under the pressure of market forces, starting in the `80s, financial sector deregulation gained ground by loosening up legal and administrative restrictions. Almost all restrictions imposed up to the ‘60s were removed. A new era dawned, with markets enjoying more freedom. One important result worth mentioning is that lending was no longer constrained by the volume of deposits or holdings of liquid assets. Banks could borrow on the interbank market at any time. Under the new circumstances, capital became the only factor containing the size of banks’ books (Goodhart, 2010). Setting appropriate requirements for bank capital was challenging to regulators and it remained so. On the one hand, a strong capital base is associated with the soundness of a bank. On the other hand, that comes at a price in terms of profitability. Capital adequacy requirements were unified under the Basel I Accord, which set them at 8% and established risk coefficients. But they were quickly watered down by the Basel II Accord, which allowed banks to assess their own risks, through sophisticated models. 2  BIS central bankers’ speeches  Starting with the ‘80s, credit expansion was relatively rapid.

In part, this communication strategy is anchored by our forward guidance on policy measures, so that everyone understands that the conditional future policy path supports convergence to the aim. It is also supported by demonstrating agility, with the central bank communicating that it stands ready to adjust its policy measures at any time to avoid undue delay in returning to the inflation goal and combat any adverse shock to inflation dynamics. It is also crucial to the successful anchoring of inflation expectations that the central bank shows it is a learning organisation that is committed in its search for the most effective policy tools in delivering its mandate. This general principle is especially relevant during phases when economic and financial conditions pose new challenges and require novel policy responses. 16 / 19  BIS central bankers' speeches  Whether through innovations such as the Outright Monetary Transactions programme during the sovereign debt crisis or through the package of innovative policy measures that have been launched in recent years, the ECB has shown itself to be creative and proactive in responding to new challenges. In common with other central banks, the ECB must always be open to new ideas and new methods, drawing from internal and external research and examples of best practice from around the world. Of course, not all new ideas withstand sustained scrutiny, but the exploration of new methods and formulations is essential for successful performance.
In my opinion the protection of the rights of debtors and creditors becomes more – and not less – difficult with the development of financial markets, both in a geographical sense as well as in the range of available products (financial globalisation and innovation). The challenges posed by financial globalisation are not difficult to understand: a financial instrument originated in country A, traded in country B by an intermediary whose headquarters are in country C and purchased by an investor who is resident in country D, to what legal system will it be subject to? How will the citizen of country D be able to enforce his rights, which courts will be responsible for any dispute, what kind of legal redress will it be available on citizens of country A and B? These are questions that lie at the very heart of financial globalisation. From the simple observation that the bulk of cross border capital flows still takes place among advanced countries, one may easily surmise that such legal uncertainties (arguably more important in emerging economies) play a fundamental role in the allocation of financial flows and financial capital worldwide. Over the last years, quite a number of initiatives dedicated at enhancing legal certainty regarding such cross-border financial transactions have been undertaken on a global as well as on a European level. International bodies dedicated to the harmonisation of laws [such as  4  2  Muellbauer et al.

Take, for example, the bank sector’s solvency, measured as the ratio of equity capital to the balance sheet total. This amounts to only a few per cent, whereas the level in non-financial firms is 20, 30 or even 40%. So a simple way of solving the bank sector’s vulnerability would be to raise the capital base to what is customary in other companies. Banks would then be in a better position to cope with unexpected disturbances in the financial markets. Maintaining a large reserve of equity capital for unexpected events is, however, costly and someone would have to pay for this. The solution would therefore lead to expensive credit and low interest on  1  BIS Review 9/2000  deposits. Projects that are not exceptionally profitable would not obtain finance and the level of saving in the economy would be low. With little investment and low saving, growth would ultimately falter and prosperity would suffer. From this it will be readily understood that unduly tight capital adequacy requirements for the bank sector can be very costly for the entire economy. So if the whole economy would be liable to suffer because the banking system opts for or is coerced into holding a sizeable capital reserve, one can say that this is not a viable remedy for ensuring the financial system’s stability. But how, then, are financial crises to be prevented?
Falling prices on the Baltic property market In terms of financial stability, the development of the Baltic property market is of course a cause for concern. This development is in many ways reminiscent of the Swedish property  BIS Review 105/2009  3  crisis. Exaggerated expectations of future price increases pushed up prices, particularly housing prices. Now the prices of both commercial properties and housing have fallen dramatically. For example, the average price of an apartment in Tallinn was more than 50 lower in June 2009 compared to the peak in April 2007. This means that prices will soon be back at the level of 2004 (see Figure 10). In Latvia, the average price of apartments fell in the same period by almost 60 per cent, which is among the largest price falls noted in Europe during this crisis. 6 In Lithuania, the fall in prices has been comparatively moderate: 28 per cent during the second quarter of this year compared to 2008. 7 We could say that after being a landlord's market for several years, the property market is now a tenant's market. In an economic downturn, it is common for landlords to offer rent rebates or to refrain from increasing rents in line with the index to the full extent allowed in rental contracts. Lenders can also put pressure on the construction and property companies to increase the level of occupancy.

After five years of independent conduct of monetary policy, the Banque de France has earned a high degree of confidence, as witnessed by the solidity of the franc and the relative level of French longterm interest rates. The Bank is proud to have been able to transmit this confidence to the euro, along with other central banks forming the core of the European Exchange Rate Mechanism. Nineteen ninety eight was a successful year for European integration: the remarkable convergence of European economies enabled the historic decision by heads of state and government to commit eleven countries to the road to the euro. The date of 4 January 1999 marked a first technical success in the changeover from national currencies to the euro. The major challenge now facing the euro area as a whole is to permanently guarantee good economic and financial performances. It is no longer a question of victoriously overcoming an obstacle, but of efficiently managing the monetary, fiscal and structural areas over the long term. This is naturally indispensable in order to ensure cohesion, stability, prosperity and consequently a reduction in unemployment in the euro area, i.e. in an area with 291 million inhabitants. And this is also a contribution necessary for the stability and prosperity of the world economy, within which Europe will play a central role, like the United States.
Third, it is timely for financial regulators to engage non-financial regulators such as telecommunication authorities at a global and national level, in order for regulation to keep abreast with the latest developments in financial inclusion solutions. Technology plays a significant role in rapidly scaling up financial inclusion by lowering the cost of delivery as well as increasing convenience and quality of services for the masses. Technology enables us to bypass legacy systems and constraints. For example mobile banking, where banks partner with mobile network operators to offer banking services anywhere, any time and in real time, that has enable reach beyond traditional boundaries without the need for a huge investment in infrastructure. Importance of the Global Symposium to galvanise action This leads on to why we are gathered here at this symposium. The Global Symposium will discuss and highlight the detailed next steps to implement proportionality in practice. This Symposium uniquely brings together the relevant key stakeholders to deliberate the issues of proportionality in practice. The AFI’s Working Group members on Digital Financial Services, SME Finance and Global Standards will share their perspectives on regulatory and supervisory matters. The private sector banks and remittance service providers share practical realities in the market to comply with international standards. In addition, we have international experts from the SEACEN, Toronto Centre and World Bank, who have a pivotal role in implementing effective projects to advance Proportionality in Practice.

BIS Review 128/2009  5  Chairperson, Distinguished Participants, In conclusion, let me simply state that I believe that we in Africa have an opportunity and an obligation to consolidate reform and ensure that we can return to and surpass the high growth rates, of above 5%, witnessed in the new millennium. This is important not just for Africa and the challenge of reducing poverty, but also the world, as demographic changes shift the burden of production onto the younger generation – which is concentrated in the developing economies, including Africa. I am happy to note that my invitation for colleagues to visit Zambia and see the wonderful opportunities for investment and progress that exist have been heeded as I did receive a delegation from Italy early this year. I cannot therefore end without encouraging all of you to visit Zambia when you have the opportunity – I can assure you that you will not be disappointed. I thank you for your kind attention. 6  BIS Review 128/2009
Between 2004 and 2009, this expanded at an annual average of 5.3%. On the other hand, government investment remained broadly unchanged during this period and declined in the last two years, in part because actual outlays often fell short of targets. The dual challenge of maintaining a high level of investment spending while reducing the budget deficit, therefore, implies that it is recurrent expenditures that must be cut. Progress has already been made by reducing subsidies, through the privatisation of the shipyard and by aligning utility rates more closely to production costs. For next year, however, while an increase of less than 1% in recurrent spending is planned, few specific cuts have been identified. In this context, the latest Annual Report of the National Audit Office suggests there is ample scope for controlling expenditures more effectively and for improving revenue collection. 13 While taxpayers have every right to expect value for their money, a substantial, durable fiscal correction requires a fundamental reappraisal of the role of the state in providing services. The need to prioritize expenditure programmes has not been fully addressed. As a result, the most difficult challenges, such as how to ensure sustainable funding for tertiary education, pensions and health services, remain to be tackled. 14 Domestic consumption must return to a sustainable level. It is an inevitable adjustment for economies like ours that have lived beyond their means for far too long.

Indeed, one criticism we could perhaps make of Optimal Currency Area theory is that is does not take account of the financial instability that may arise when capital reallocates across regions, both in terms of inflows and outflows. Banking Union goes some way towards redressing this, which is why it is essential for the longer term stability of the euro area. In terms of improving incentives, the Single Supervisory Mechanism (SSM) should in principle be better placed to prevent credit misallocation as supervision will be decoupled from national economic conditions. The shift towards bail-in ability under the new EU resolution framework should also, over time, increase the quality of scrutiny over allocation decisions by shareholders and creditors. And by removing supervisory barriers to retail banking integration, the SSM should provide the pre-conditions for greater foreign entry into national banking markets, which research suggests could improve capital allocation by increasing the distance between the main shareholders and management of a bank and the vested interests in the country where the bank operates.21 These same factors also provide stronger channels for risk-sharing within the euro area. A more integrated retail banking market would imply that losses from local banking crises would be shared across multiple jurisdictions, thus acting as a shock absorber as we see, for example, in the United States.