samchain/econo-pairs-v1 huggingface dataset:
Andrew Bailey: The future of banking regulation in the UK Speech by Mr Andrew Bailey, Executive Director of the Bank of England, at the British Bankers’ Association Annual Banking Conference, London, 17 October 2012. *  *  *  It is a great pleasure to be here this morning. I am going to talk about what has become the hot topic of the time, namely the role of bank regulation in macroeconomic policy. But before I do so, just a few words on progress towards creating the new system of regulation in the UK. The Treasury announced on Monday that they expect that the new regime will formally come into existence at the start of April next year. I expect that the PRA’s new home, near to the Bank of England in Moorgate, will be occupied by our supervisors shortly before then. On Monday, we published two important documents on the PRA’s approach to supervision, covering banks and insurers respectively. Next Monday, we are holding conferences at the QE2 Centre, covering banks in the morning and insurers in the afternoon. Please do come along. You can access the documents now on the Bank of England and FSA websites. I should add that Martin Wheatley and his colleagues in the FCA-to-be have also issued an approach document this week and are holding a number of events too. We are doing our best to keep you entertained! Let me turn now to the issues around bank regulation and macroeconomic policy.

Let me say something unusual now: I think that the banks deserve a thank you for the way in which they have sought to use forbearance. When I was Chief Cashier of the Bank of England, I was responsible for our work on the so-called London Approach whereby we seek to use our powers of persuasion to facilitate company re-financings which are in difficulty. That brought me into regular contact with the corporate loan restructuring bankers and I was always impressed by their commitment to helping companies in trouble. Sometimes the medicine could be hard, but there are many companies around today that would otherwise not be employing people. Now, I said earlier that we need to understand more not only about the size and cause of the capital gap but also how best to fill it. The choice of solutions matters because it can influence subsequent lending behaviour. It is often said that raising new capital dilutes existing shareholders. That is not really true in a literal sense if existing shareholders have written down the market value of the capital they own. But is true in the sense that it dilutes their claim on any future upside to the current market value reflecting the inevitable uncertainty about the future. This would be the effect of raising new equity. An alternative could be to raise the capital in the form of contingent equity, or “Co-Cos” for short.
The wood and wood products industry accounts for about a fourth of manufacturing employment. As in the rest of the country, the public sector and parts of the private service sector are important for employment in Hedmark. Business and financial services account for a smaller share than the national average. In spite of interest rate cuts and a stimulatory government budget, overall economic policy has been tight as a result of the strong krone. The depreciation of the krone exchange rate since January and the reduction in the interest rate have, however, contributed to an easing of monetary policy. In the Inflation Report, we presented two alternative scenarios for the Norwegian economy. In the baseline scenario, where the interest rate is held constant at 5½ per cent and the krone exchange rate at the average for the past month, mainland GDP is projected to increase by 1¼ per cent this year and 2 per cent next year. This is lower than what is considered the long-term growth potential in the economy. In 2005, growth is projected at 2¼ per cent. An alternative scenario, which incorporates monetary policy easing in line with market expectations - as they were then, points to higher growth over time. The rise in prices for goods and services produced in Norway is being influenced by markedly higher wage growth in Norway relative to trading partners. Wage growth moved up further last year, even in industries where profitability had weakened considerably.

A more moderate rise since last summer is related in part to lower air transport prices (increased competition between airlines) and a slower rise in house rents. The rise in prices for imported consumer goods has been pushed down by the strong krone exchange rate. The shift in clothing imports from high-cost countries to Asia and Eastern Europe has also contributed. In the near term, the appreciation of the krone over the past two years will be reflected in the underlying rise in prices. Subsequent developments will partly depend on developments in the global economy, the effects on the business sector of the high cost level, the krone exchange rate and how changes in the exchange rate feed through to consumer prices in Norway. In the baseline scenario presented in the Inflation Report, where the interest rate is held constant at 5½ per cent and the krone exchange rate at the average for the past month, inflation is projected to remain below 2½ per cent over the forecast horizon. The alternative scenario, incorporating monetary policy easing in line with market expectations, points to inflation above the target at the two-year horizon. Norges Bank has reduced the sight deposit rate from 7 to 5 per cent since 11 December last year. A lower interest rate differential has been followed by a weaker krone exchange rate. The lower interest rate and weaker krone have both contributed to a more expansionary monetary policy.
In exceptional circumstances, like Brexit, when the economy is facing profound structural change, the MPC can extend the horizon over which it returns inflation to target from above in order to balance the effects on jobs and activity. After all, even though monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU, it can influence how this hit to incomes is distributed between job losses and price rises. This flexibility cannot be used without limit of course, and the MPC has set out its framework for managing the trade-off including guidance for its tolerance of the overshoot of inflation.3 Developments in monetary policy In response to the challenging post-crisis environment, the conduct of monetary policy has made important advances that have helped to shape the expectations of both market participants and the public we serve. 2  The ECB also has flexibility to pursue its inflation target, but given the absence of trade-off inducing shocks has not yet had cause to use it. The ECB General Council adopted a quantitative definition of price stability in 1998 as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%; and from 2003, they clarified that this objective was to maintain inflation rates below, but close to, 2% over the medium term. 3 See Carney M (2017), Lambda, speech given at the London School of Economics, 16 January 2017.

The macroprudential buffers that are currently implemented in the SSM banking system are of a predominantly structural nature and are thus expected to be maintained over the cycle. [9] The countercyclical capital buffer (CCyB) is the only buffer that is intended to be released in case of a downturn. However, the CCyB has only been activated by seven of the 19 euro area countries and currently represents, in the aggregate, only 0.1% of risk-weighted assets [10] A lack of releasable buffers curbs the countercyclical role of macroprudential authorities. When breaching their combined buffer requirements, banks may uphold capital ratios by disposing assets to avoid the automatic restrictions on dividend distributions. If such behaviour becomes widespread in the event of systemic stress, it can result in a credit crunch, which would aggravate the downturn. This is exactly what we observed in previous crisis episodes, and what we should avoid in the future. Macroprudential space in the form of releasable buffers could serve as a potential macro-financial stabilisation in euro area countries. The release of the buffers in a downturn should help banks to sustain the flow of credit. To this end, releasable buffers would first need to be available. In sum, we are in a situation where the overall level of capital requirements is broadly adequate, but the composition may not be optimal. It is therefore important to have a discussion on the need to reallocate capital requirements towards releasable buffers in a capital-neutral manner.
Since the beginning of the 1990s, Norway, like Sweden and Finland, has become more closely integrated into Europe. The EEA Agreement, which provides for the free movement of labour, capital, goods and services, has enhanced efficiency in many industries. The recent WTO rounds have covered a broader range of goods and services and the number of member countries has increased. Almost all countries are now members or observers, and the issues are broad-ranging. Trade policy has paved the way for the change in the international division of labour which has brought benefits to Norway and the other Nordic countries. Third, the tax reform in 1992 was a crossroads. It made it possible to finance the welfare state with a substantially lower loss of efficiency and wealth creation than previously. The key was to reform the deduction schemes for personal and company taxation and to introduce more equal tax treatment of companies across industries and aim at neutral taxation of capital income and interest. Marginal taxes could be lowered. The tax deductibility rate for interest was considerably reduced for households. It became more advantageous to save and less advantageous to borrow. The pressure on our tax system has also been reduced because public spending control has improved over the past 10-15 years. BIS Review 15/2007  15  Fourth, Norwegian credit markets have undergone structural changes.

News conference  15 December 2022, 10.00 am  Introductory remarks by Andréa M. Maechler In my remarks, I will talk in more detail about the implementation of today’s monetary policy decision, which Thomas Jordan has already touched on. I will start, however, by giving you an overview of how we have steered interest rates since the switch to a positive SNB policy rate in September. The switch from a negative to a positive SNB policy rate required us to make an adjustment to the implementation of our monetary policy in the money market. The new approach comprises two elements: reserve tiering – that is, tiered remuneration of the sight deposits that banks and other financial market participants hold at the SNB – and reserve absorption. This approach has proved successful. Following our monetary policy decision on 22 September, secured short-term Swiss franc money market rates moved quickly towards the new SNB policy rate (cf. chart 1). We are also continuing to see solid activity among participants in the money market, which ensures a robust basis for the calculation of SARON. From the outset, the market responded favourably to the deployment of our monetary policy instruments to absorb liquidity. On the very day of the monetary policy assessment in September, we started conducting repo transactions on a daily basis and issuing SNB bills on a weekly basis (cf. chart 2). In this way, we were able to reduce the liquidity supply in the money market sufficiently to allow us to steer interest rates effectively.
Another perspective on the risks around debt is pricing – whether investors have taken all risks into account, and priced them prudently or whether there’s a degree of optimism that is reflected in the pricing (just as optimism can be a factor in rising debt levels). Pricing for much of the stock of global debt is not easily visible, but for debt traded in markets – typically corporate bonds – we can observe the following. Spreads – the amount charged for risk, be that credit risk or liquidity risk – are low by historical standards at the moment. The relatively low compensation demanded for risk can also be seen in the small difference between the price of investment grade and high yield bonds. We can observe some of these trends in non-traded debt. Spreads on leveraged loans are roughly 100bps lower than they were in 2015 for the US, which comprises most of the global market, and 70 bps lower in the UK. Alongside this low pricing for risk, volatility is low. The VIX ended April at about 13 – well below its 21st century average of about 20. And US equities are similarly priced – implying investors are demanding a low equity risk premium. Moreover, risk-free rates are low in many jurisdictions, and yield curves are broadly flat in all major jurisdictions. This suggests there is little market expectation of any pickup in growth or, perhaps more notably, inflation. Similar conditions have persisted for much of the last few years.

4  For example, the Capital Requirements Regulation for banks, and the Solvency 2 Delegated Act for insurers and the European Market Infrastructure Regulation for CCPs. 5 See for example, “The evolution of the financial services regulation in a post-Brexit Europe" - Speech by Robert Ophèle, Chairman of the Autorité des marches financiers – 13 November 2017 “This has led to a hypertrophy or swelling of regulations that - probably to avoid national drifts - has entered a stage of extreme luxury of details… and has led to a rigidifying of regulation of a very damaging sort.”  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Debt, its level, its growth, its composition and its sustainability lies at the centre of the financial stability mandate. Modern societies and economies are built around the claims we hold on each other. A very large proportion of those claims are expressed as financial claims to be honoured in the future. The future, of course, does not always turn out to be what we expect and the value of our claims has sometimes to be adjusted downwards. Some financial claims, like equity, adjust the value of the return relatively smoothly. Debt liabilities, however, are fixed and amplify the impact of any negative shock to the income or assets of the debtor. And if the impact cannot be accommodated, the result can be a painful write-down or deleveraging of the economy.
If we can build and nurture people within an organisation to be always attuned to risks that may affect the organisation, whatever their nature or origins, then there is a good chance that any system, process and framework constraints will be more easily overcome and less likely to inflict major losses on the organisation. When faced with challenging business and financial conditions and a highly dynamic environment, it is always more important to have excellent people than excellent models. BCM as part of enterprise risk management This brings me to the more specific area of business continuity management, or BCM. A paper published in 2008 by the Chartered Management Institute of the United Kingdom found that 76 percent of the survey respondents reported that business continuity management is seen as important in their organisations but only less than half revealed that they have specific business continuity plans. There are several reasons for this which I will not get into here, but a major one is the lack of metrics to measure success in the absence of a major institutional crisis. One commentator put it this way – the return on investment is simply that business stays open. Two contrasting examples of BCM help to underscore this point. Investigations by the Japanese Government into the Fukushima tsunami disaster revealed material inadequacies in the handling of complex risks associated with managing a nuclear power plant. This was demonstrated in poorly executed emergency procedures in evacuating residents during the incident. Consequently, the operations of the power plant were suspended.

Durmuş Yılmaz: Green shoots – how vigorous and how sustainable? Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the Conference on “Green shoots – how vigorous and how sustainable”, IMF-World Bank Annual Meetings 2009, Istanbul, 5 October 2009. *  *  *  Ladies and gentlemen, First of all, I would like to welcome everyone to Istanbul. It is a great pleasure for me to be here addressing such a distinguished audience as we convene for the 2009 Annual Meetings. “Green shoots” has been a popular metaphor to describe the recovery process. And today, I will try to elaborate on our path to build a career as a prudent gardener. I want to begin with discussing the path that brought us to this crisis. Then, I will talk about the recovery signals in both global and Turkish economy. I will conclude my speech with my thoughts on the solidity and sustainability of these signals. As is well known, financial strains originated in advanced economies abruptly mutated into a full-blown crisis and had a devastating effect on international capital markets. As the crisis intensified, measures of perceived risk escalated to record levels and major financial institutions suffered massive losses. At the same time, liquidity shortages, tighter credit conditions, and heightened uncertainty were associated with a sharp decline in both private consumption and investment spending. In fact, many economies fell into recession or have seen their growth rates decline sharply.
Then, and provided that precedence is respected, the ECB can support the economic policies of the EU on a broader scale. The legal formulation of the Treaty is an abstract determination of priorities. To define the objective precisely and establish a relationship between the objective and the policy – consistently conducted and communicated – a strategy is needed. 1  I wish to thank Tobias Linzert, Stefano Nardelli, Massimo Rostagno and Arthur Saint-Guilhem for their contribution to this speech. I remain solely responsible for the opinions contained herein. 2  Michel Aglietta: “Money: a matter of credit and trust”, Journées internationales d’économie monétaire et bancaire, Lyon, 6–7 juin 2002. BIS central bankers’ speeches  1  The strategy of the ECB makes the Treaty mandate more precise in three respects. First, it provides a quantitative definition of “price stability” by indicating a range for year-on-year changes in the harmonised index of consumer prices which the ECB considers consistent with conditions of stable prices. That does not necessarily mean zero inflation. The price stability range that the ECB considers equivalent to “stable prices” covers positive inflation rates lower than 2%. Second, the strategy identifies, within that range, inflation levels which the Governing Council of the ECB aims for, in its monthly policy decision. We aim at inflation rates that are below, but close to, 2%.

Benoît Cœuré: Restoring trust in the Economic and Monetary Union Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the Forum Eco Libération ESCP “Reprendre confiance en (l’)Europe”, panel discussion: “L’Euro méfiance, c’est fini?”, Paris, 1 December 2012. *  *  *  It is a great pleasure to participate in this panel that touches on a topic very close to our hearts at the ECB: trust in our common currency, the euro. 1 In any society, the monetary contract fundamentally rests on trust, and I will borrow the explanation from my co-panellist, Michel Aglietta: “Money involves trust because it is a debt between society as a whole and each of its members.” 2 Remember that credit comes from credere and fiduciary comes from fidere, both verbs meaning to trust in Latin. As for trust in a central bank, well, that is secured and reaffirmed by permanent assessment of the central bank’s performance against its mandate and strategy. Such an assessment has become very complicated as a result of the global financial crisis. Communication about the intentions and policy actions of a central bank has long been focused on its decisions on the level of the short-term interest rate and, in the case of some central banks, on the likely direction of that rate. But in a deep financial crisis this channel of policy interventions and communication becomes less significant.
This lending incentive will reduce bank funding costs by several billions of € each year. The Italian banking sector – and through it, Italian businesses and  Page 4 sur 10 households – is the main beneficiary of ECB refinancing operations with almost 30% of total credit operations outstanding. This even leads some in other countries to argue that our monetary policy is being conducted for the benefit of Italy: they are wrong. Monetary policy is not conducted for any one country, be it Germany, France or Italy. The Governing Council takes its decisions collectively and independently, taking into consideration the euro area as a whole. That being said, let us simply acknowledge that belonging to the Monetary Union has provided Italy with substantial financial relief in this crisis. The ECB has worked well for Europe and for Italy. Our Governing Council took note last week of the judgement by the German Federal Constitutional Court. Let me be crystal-clear: we remain undeterred, as President Lagarde said; furthermore, we are definitely dedicated to and determined to deliver on our mandate as conferred by the Treaty. As the  Page 5 sur 10 European Court of Justice has said, our past actions are indeed proportionate to that mandate. More broadly, I hear debates in our two countries shedding doubt on (i) the independence of the central bank – that should be brought “under political control” – and on (ii) its mandate – which should go beyond price stability, to include employment or the fight against the health crisis.

The establishment of new firms, changes in operating parameters and rationalisation in a number of industries may have contributed to this. In the first round, heightened competition affects companies’ profit margins. But enterprises will respond by reducing their costs. This will occur in part in the individual business, but subcontractors will also be required to reduce their prices and enhance efficiency. Increased competition therefore usually triggers higher productivity growth in the economy. Low inflation may thus be matched by higher productivity. In recent years, declining inflation has also been a feature in the other Nordic countries, where some of the same factors have played a role. Even though consumer prices have been low and, in some cases, falling in Norway and abroad, commodity prices in particular have shown a sharp increase. The price of coal, for example, a commodity you are well acquainted with, has shown a marked rise over the past year. Although the rise in commodity prices measured in US dollars is to some extent the result of the fall in the value of the dollar, it also reflects an increase in demand for commodities, which in turn is partly related to strong output growth in China. Prices for domestically produced goods and services are expected to rise in the period to 2005 due to higher capacity utilisation in the Norwegian economy. At the same time, domestically produced goods and services are affected by exchange rate changes, albeit with a longer lag than is the case for prices for imported consumer goods.