samchain/econo-pairs-v1 huggingface dataset:
We must push for building a forward-looking approach of the impacts of climate risks through the development of comprehensive climate stress tests. Third, green finance should mature and upgrade its professional standards. Financing needs for energy transition are huge; in Europe alone, it is estimated that an additional EUR 177 billion per year will be necessary over the period 2021-2030 to reach the EU’s energy and climate objectives for 2030. i The European Green Bond Standard proposed by the TEG should ultimately help to further develop the green bond market and channel more investments towards green projects. Let me add that France has strengthened its role as leader in green finance. Last week, Paris Financial Centre players have committed themselves to adopt a carbon exit strategy by mid-2020. ** To conclude, let me quote John F. Kennedy: “the New Frontier of which I speak is not a set of promises – it is a set of challenges. […] I believe the times demand new invention, innovation, imagination, decision. I am asking each of you to be pioneers on that New Frontier.ii” Today, almost 60 years later, we face other challenges. But let us keep the same energy. Let us not think that the battles have already been lost. Let us break limits and invent new practices taking into account both digitalisation and climate change. Thank you for your attention.

Page 3 sur 5 However, beyond traditional financial regulation, international cooperation should be developed in three areas, three cornerstones of the regulation of digital finance. First, cybersecurity is a sine qua non for a reliable and sustainable digital future. It is a clear priority of the G7 French Presidency next week in Chantilly. Second, regarding data protection, financial supervisors and authorities in charge of privacy have to invent new ways of cooperation to address data issues that have become central to financial services. Third, regarding competition and anti-trust policies, situations where “the winner takes most” while staying outside the scope of financial regulation should be adequately anticipated and addressed. “Stable coin” projects, including Facebook’s Libra, are a case in point. “Stable coins” are quite different from speculative assets like Bitcoins. However, regulators will have to keep a very close eye at the global level, and believe me, we will do it. France, as Chair of the G7 this year, has created a dedicated task force. Our aim is to formulate a response that is common to all jurisdictions, and holistic on all the issues. And to quote only two of many requirements: it is imperative that the projects comply with anti-money laundering regulations; the anonymity of the users creates heightened risks. In addition, if issuers of stable coins also want to offer banking services such as deposits, financial investments and loans, then they will have to obtain a banking license in all countries where they operate. Otherwise it would be illegal.
For example, as the recession has pushed up the unemployment rate, the demand for office building space has declined; as the recession has led to a reduction in discretionary travel, hotel occupancy rates and room prices have declined; and as retail sales have weakened, this has reduced the demand for prime retail property space. The decline in commercial real estate valuations has created a significant amount of “rollover risk” when commercial real estate loans and mortgages mature and need to be refinanced. The slump in valuations pushes up loan-to-value ratios. This makes lenders wary about extending new credit, even in the case when these loans are performing on a cash flow basis. This means that more pain likely lies ahead for this sector and for those banks with heavy commercial real estate exposures. 2  BIS Review 122/2009  For small business borrowers, there are three problems. First, the fundamentals of their businesses have often deteriorated because of the length and severity of the recession – making many less creditworthy. Second, some sources of funding for small businesses – credit card borrowing and home equity loans – have dried up as banks have responded to rising credit losses in these areas by tightening credit standards. Third, small businesses have few alternative sources of funds. They are too small to borrow in the capital markets and the Small Business Administration programs are not large enough to accommodate more than a small fraction of the demand from this sector.

All of these factors will tend to inhibit the pace of the economic recovery. Given that the recovery is starting with an abnormally large amount of slack, and the pace of recovery is not likely to be robust, this means the economy is likely to have significant excess resources for some time to come. As a result, the balance of risks to inflation lies on the downside, not the upside, at least for the next year or two. To see why this is the case, it is useful to note that inflation dynamics are mainly driven by two factors – the degree of capital and labor resource utilization relative to sustainable levels, and long-run inflation expectations. The degree of resource utilization is essentially driven by the business cycle and, and to some extent, by the Fed’s success in achieving the “maximum sustainable growth” component of its dual mandate. Inflation expectations, on the other hand, are driven by a combination of actual inflation outcomes and the credibility of the central bank’s commitment to price stability. If inflation is low and the central bank is credible, then long-run inflation expectations are likely to remain well anchored. In practice, the relationship between the inflation rate and the level of resource utilization is very difficult to estimate accurately. This stems, in part, from the fact that the data on inflation and resource utilization are “noisy” and because sustainable levels of resource utilization are not directly unobservable.
B.1  The growing role of financial markets and volatility  Let me turn to my first theme - the growing role of markets. This development means that financial stability threats could increasingly stem from financial market problems. As I alluded to earlier, sudden and extreme shifts in expectations concerning the value of an asset and increased volatility could represent one major type of financial instability. In Europe, most historical periods of financial instability have been linked to traditional loan losses by banks. However, if one looks at the longer-term perspective over the past 15 years or so, European financial markets have grown very rapidly. No doubt, the recourse to market-based finance in Europe is still significantly below that of the United States, but the gap seems to be rapidly narrowing. As the markets have grown and have become more liquid - thanks also to the euro - investors have been moving from bank deposits to direct and collective securities investments. Whereas sharp and large price adjustments may not necessarily have systemic implications, financial institutions with leveraged market positions may be directly affected. The Russian crisis of August 1998 illustrates the point well, as mature markets experienced spillover effects through investors’ leveraged positions in Russia and other emerging markets. One such leveraged exposure was held by the LTCM hedge fund. Prior to the rescue undertaken by private banks and aided by the US Federal Reserve, liquidity plunged and prices in many markets dropped to very low levels.

When thinking about the major challenges for maintaining financial stability I find it useful to first look at the notion of how the “real world” deviates from the “frictionless” ideal world of academic textbooks. In order to organise my reasoning, this can serve as a useful starting point, since in the ideal world there is no such thing as financial instability. Indeed, most of the concerns over financial stability actually stem from the fact that our “real world” financial markets have frictions or - in other words market imperfections. A fundamental friction is that financial market participants very often have imperfect information. When information is not perfect - or when markets are not fully transparent - investors’ decisions may be constantly subject to reassessment, which can lead to inevitable volatility in market prices. This does not necessarily mean that there is an inherent threat to financial stability. On the contrary, the very existence of some level of volatility indicates that markets are serving the function they are supposed to deliver - that they are an efficient exchange mechanism among economic agents. Nevertheless, some recent episodes of extreme volatility have drawn our attention to more accurately delineating the boundary between “normal” and what could be called “harmful” volatility. The second source of friction is that we also fall short of the ideal of having complete markets.
If we look at the development over the past ten years, we can see for instance that market capitalisation in relation to GDP has grown from approximately 20 per cent in 1990 to almost 90 per cent in 2000. This means that according to this measure, the euro countries have passed Japan, while the USA is still ahead of them. It is interesting to note that the EU countries  2  BIS Review 85/2001  outside of the euro area are at approximately the same level as the USA, or at just over 150 per cent. However, the stock markets in the euro countries are growing rapidly. Between 1995 and 2000 the value of the listed companies in the euro area grew by 276 per cent. The corresponding figure in the USA was 206 per cent. Looking at the number of new issues and number of listed companies also gives a picture of a strong development in Europe. All in all, there is a clear picture that companies in the euro zone use risk capital to a lesser degree than those in the USA, but that the differences are rapidly declining. The rapid developments have also put greater pressure on structural changes in the infrastructure of the stock markets. Since the introduction of the euro, we have seen several examples of co-operation and mergers between stock exchanges in Europe. Euronext, the merger between the stock exchanges in Paris, Amsterdam and Brussels, is one example.

The effects of monetary policy on financial market developments, in particular in fostering the subsequent financial bubble, have led to a reassessment regarding the conduct of monetary policy. The debate is under way and concerns various aspects, which I will summarise briefly. The first concerns the tools of monetary policy. Recent experience has shown that the approach followed by most central banks, based on inflation targeting (which involves forecasting inflation on the basis of an economic model and changing interest rates so as to ensure that inflation forecasts are in line with the target), does not sufficiently take into account financial developments, in particular with regard to asset prices, which may affect the stability of the markets and, in time, inflation. It is argued by some that monetary policy should act proactively to avoid the excessive tendencies of the financial markets, known as “leaning against the wind”. 5 In other words, one should be ready to hinder the creation of speculative bubbles, among other things by raising interest rates, before inflationary pressures emerge. This is easier said than done. If it is difficult to forecast inflation, it is even  2  Ben S. Bernanke (2002), “Deflation: Making Sure "It" Doesn't Happen Here”, remarks before the National Economists Club, Washington, D.C., 21 November 2002; Alan Greenspan (2004), “Risk and uncertainty in monetary policy”, remarks at the Meetings of the American Economic Association, San Diego, California, 3 January 2004.
Ardian Fullani: The current performance and development prospects of the Albanian economy Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Bank of Albania’s forum with representatives of main businesses operating in Albania, Tirana, 23 November 2009. *  *  *  Dear Ladies and Gentlemen, It is my pleasure to be among you today, to share with you our views on the current performance and development prospects of the Albanian economy. As the most dynamic part of the Albanian economy, your contribution has been tangible in the country’s economic development during transition. Your incentive, your willingness and devotion have brought about tangible results in the country’s development. In a single figure, the Albanian economy performance may be summarized in the growth of above 65 percent of gross domestic product and well-being per citizen during these years of transition. Our development prospect remains as much positive. The country’s macroeconomic stability, the continuation and deepening of structural reforms as well as the geopolitical reality of approximation to developed economies of the European Union, would help in a fuller release and remuneration of your potential and energies. Today’s forum aims to highlight the economic development of the country and initiate a broad public discussion on alternatives of the future economic growth models. Now, let me start by making a brief statement of the latest developments of the Albanian economy, and further dwell upon our viewpoints on the country’s economic development in the future.

We at the Fed need to very closely monitor the data to make sure that inflation remains contained. And we will. But as I believe I will demonstrate this morning, the most likely result is that these supply shocks cause slower growth in the near term while having only a modest effect on longer-term inflation rates – which has been the U.S. experience since 1986. Unemployment remains quite elevated, at 8.8 percent, and I anticipate a slower return to full employment than we would have experienced absent these supply shocks. With the core inflation rate over the prior year at a little above 1 percent, I anticipate only a gradual return of core and total inflation rates to something like our consensus “stable” rate of about 2 percent, over the medium term. If the economic data continue to support this outlook then the current, accommodative stance of monetary policy is appropriate, and can remain in place and continue to support economic growth – so that we continue to make progress toward our goals of returning to full employment and a sustainable long-run inflation rate – the two elements of the Federal Reserve’s dual mandate from Congress. 1  My colleague Geoffrey Tootell, Director of Research at the Boston Fed, has prepared an illuminating public policy brief that investigates whether commodity price spikes cause long-term inflation.
However, over the long term,  13  In the absence of empirical experience of conducting macroprudential supervision, theoretical analyses can provide guidance to the consequences that can be expected. However, academic research into this area is still in its infancy and it is therefore difficult to draw any unequivocal conclusions from it at present. Goodhart et al. (2012) is one example of a study investigating the interplay of a number of macroprudential policy instruments, which is to say whether these complement or substitute each other. BIS central bankers’ speeches  7  something more than a qualified discussion forum will be needed. To become really effective, macroprudential policy needs to acquire the distinct status of an independent policy area with its own tools for promoting stability in the financial system as a whole and a clear allocation of responsibility. Assessing and demanding responsibility demands a clear allocation of responsibility. Another benefit of establishing a clear and effective framework for macroprudential policy is that this will allow monetary policy to be relieved of taking account of financial stability. In my opinion, this consideration is creating a risk that monetary policy will become unclear and unpredictable. A functioning macroprudential policy will thus let us both reduce the risk of financial crises and give us a monetary policy that can more efficiently stabilise inflation around the inflation target and resource utilisation around a sustainable level. Thank you! References Borio, C., 2010, “Implementing a Macroprudential Framework: Blending Boldness and realism”, Bank of International Settlements.

We have therefore issued advice to the banks on the steps that they need to take, such as: review of business strategies and business processes that might be affected by the Euro; review of nostro accounts in the legacy currencies; adaptation of information systems; and review of contracts that might be affected by introduction of the euro. Secondly, we have thought it sensible to introduce legislation that will provide for continuity of contracts in relation to the introduction of the euro. In doing so, we are following the example of the EU itself as well as some other jurisdictions. In theory, such legislation may be unnecessary since the well-established “lex monetae” or “law of the currency” principle means that the currency of a payment obligation should be determined by the law of the country of that currency. This means for example that a payment obligation payable in French francs would become payable in euros after the introduction of the euro because that is the situation that applies under the law of France. However, despite this general principle, concerns have been expressed that parties to contracts might argue that the introduction of the euro represented a fundamental change of circumstances, bringing the contract to an end or requiring its terms to be adjusted. In addition, another feature of the introduction of the euro is that it will replace the ECU at a rate of one for one on 1 January 1999. The ECU is a currency basket but not a currency in its own right.
These factors include the extraordinary level of liquidity that’s been provided, access to IOER that is limited to depository institutions, and a number of international and domestic regulatory reforms. International regulatory reforms include the liquidity coverage ratio, leverage ratio, and net stable funding ratio. In the U.S., changes in deposit insurance premium calculations, rules governing money market mutual funds, and the potential for a capital surcharge based in part on short-term wholesale funding may also affect certain market participants. Many of the changes in regulation – along with changes in market structure, technology, and other factors – may affect market participants’ activity and relationships in money markets. On net, their balance sheet costs may be higher, which may prompt money market participants to require higher returns to engage in competition to arbitrage wedges in money market rates and to alter their participation in central bank operations and facilities. This outcome may affect the transmission of monetary policy or require central banks to adapt their operations to accommodate these realities. Conclusion In conclusion, I’d like to note that the framework for implementing monetary policy and the landscape in which we operate have seen important changes in the years since the crisis,  8  BIS central bankers’ speeches  and they continue to evolve. The Desk plays an important role in this process, carrying out open market operations at the direction of the FOMC, in pursuit of the operating objectives the FOMC deems appropriate to achieve its dual mandate of maximum employment and price stability.

Importantly, as the Chair noted during her post-meeting press conference, this statement is intended to provide information to the public about the eventual normalization process; it does not signal a change in the current or future stance of monetary policy. According to the principles, the Committee will adjust the level of monetary accommodation primarily by utilizing policy tools to influence the level of short-term interest rates – in the first instance, using tools with rates directly administered by the Fed. Tools that can immobilize or drain large levels of reserves to tighten control over the federal funds rate also remain available. However, the principles do not envision that active adjustments to the SOMA portfolio will play a featured role. Specifically, the FOMC indicated that the federal funds rate will continue to play a central role in the Fed’s operating framework and communications during normalization, and that it will raise the target range for the federal funds rate when economic conditions warrant a less accommodative monetary policy stance. Adjustments in the interest rate that the Fed pays to depository institutions on excess reserve balances – that is, the IOER rate – will be the primary tool to move the federal funds rate into the target range. Raising the IOER rate should put upward pressure on a range of market interest rates and influence overall financial conditions in a way that fosters the Federal Reserve’s macroeconomic objectives.
Some of that reflects vulnerabilities in business models and practices of specific market participants: including liquidity mismatch in funds; leveraged and trend-following investment strategies; or insufficiently forward-looking margining practices. But it also reflects a growing imbalance between the size of key markets, and the balance sheet capacity of banks and dealers who have traditionally helped transfer risk smoothly between investors and borrowers (Chart 1).1  Chart 1: Stock of US & UK government bonds relative to bank/dealer balance sheets  Sources: https://www.brookings.edu/wp-content/uploads/2020/05/WP62_Duffie_v2.pdf; UK Debt Management Office; Bank of England Regulatory Returns and Bank calculations. (a) Total assets for the holding companies of Bank of America, Bear Sterns, Citigroup, Goldman Sachs, JP Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley and Wells Fargo. (b) Based on quarterly averages available from 2008, excluding assets of banking entities authorised to operate in the UK through branches. Gilts outstanding as of end-March 2020. 1  These issues have been discussed in successive Bank of England Financial Stability Reports. For the most recent assessment, see https://www.bankofengland.co.uk/-/media/boe/files/financial-stability-report/2020/august-2020.pdf. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  The nature of these vulnerabilities, and the need to consider stronger measures to safeguard financial stability, have been extensively discussed in recent years. But last year’s Covid ‘dash for cash’ was a wake-up call as to the scale and urgency of this work. It is unsurprising that the initial wave of lockdowns last Spring caused a surge in demand for precautionary liquidity.

We should certainly be wary of drawing overly direct conclusions from the Covid pandemic, given how truly unique the circumstances have been. But many of the vulnerabilities in financial markets exposed last Spring have been staring us in the face for some time – and will only grow in importance in the years ahead, as households and firms come to rely ever more closely on such markets to care for their savings, and fund investment. So we must seize this opportunity for reform. The primary focus lies in strengthening the resilience of those active in financial markets, through the vital work underway at the Financial Stability Board. Prevention is better than cure. But central bank tools have a part to play too. I have discussed here today some of the design features that a new generation of such tools might have. I look forward to the debate to come. Thank you. 24  https://www.brookings.edu/research/enhancing-liquidity-of-the-u-s-treasury-market-under-stress/  13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13