samchain/econo-pairs-v1 huggingface dataset:
This led to the announcement by the ECB of the modalities for Outright Monetary Transactions (OMT), which helped to remove redenomination risk. 2. The monetary policy response to the crisis  Let me now outline in more detail how the ECB has responded to this multi-layered crisis. Before I delve into this, however, let me also first emphasise upfront that monetary policy can buy time for reforms that become effective with some time lag, but ultimately cannot substitute for reforms and decisions in the political sphere. Monetary policy is therefore only a crisis mitigation tool, and it is important to keep this fact in mind and not to expect too much from the central bank in terms of crisis resolution. In addition, monetary policy is surrounded by two goalposts: the overarching objective of price stability and the independence of the central bank. The ECB’s response included two types of measures, standard and non-standard measures. The standard reaction of monetary policy was to adjust our key interest rates downwards owing to a less benign macroeconomic outlook and downward risks to price stability. Short term interest rates are now close to zero in the euro area, and overall financing conditions are very favourable in the euro area as a whole.

Along with Pillar 2 add-ons in the UK, which are used to address additional salient risks not captured by the LCR. 34. A fuller discussion of the challenges in interpreting changes in the LCR can be found in Bank of England and PRA Discussion Paper 1/22 ‘The prudential liquidity framework: Supporting liquid asset usability’, March 2022 35. Goodhart, C (2008), ‘Liquidity Risk Management’, Banque de France Financial Stability Review. 36. Bank of England and PRA Discussion Paper 1/22 ‘The prudential liquidity framework: Supporting liquid asset usability’, March 2022  ,
For global growth to be sustained at a reasonably strong pace during this period of adjustment, the desirable increase in U.S. savings and the necessary slowing in U.S. domestic demand growth relative to growth of U.S. output would have to be complemented by stronger domestic demand growth outside the United States, absorbing a larger share of national savings. Exchange rate regimes, where they are currently closely tied to the dollar, will have to become more flexible, allowing exchange rates to adjust in response to changing fundamentals. The global nature of these requirements does not imply that the United States can put the principal burden for adjustment on others, or that we can expect the broader global adjustment imperative to easily alter the forces in countries outside the United States that have contributed to these imbalances. If we focus adequate political capital on the factors within our control, we will have more credibility internationally in encouraging policy changes outside the United States that might reduce our collective risks in the adjustment process ahead. The increase in macroeconomic stability in the United States over the past two decades, or the reduction in the volatility of growth and inflation, has contributed to what seems to be a significant reduction in expected future volatility of asset prices. And the U.S. economy is in many ways in a relatively favorable position to manage through the risks in the adjustment process ahead.

The group's objective is to develop appropriate educational materials that help teachers to introduce primary school pupils to the concepts of money, budgeting, credit and savings, and then to build on that knowledge in secondary schools and, if possible, up to the age of 18. The first information kits approved by the group of experts will be supplied to teachers for the beginning of the new school year in September 2017. The Banque de France will promote their use to teachers in academies in accordance with its brief defined by the Ministry of Education. *** 2/3  BIS central bankers' speeches  Allow me to conclude by quoting the American musician, Pete Seeger, who had these wise words: "Do you know the difference between education and experience? Education is when you read the fine print; experience is what you get when you don’t. "4 And I would add that it is financial education that should make all the fine print understandable. Thank you for your attention. 1 "Éducation financière : connaissances et pratiques des Français". Survey on the financial literacy of French  people carried out by the French public opinion institute, IFOP, for the Ministry of the Economy and Finance in September 2016. 2 Lusardi A. and Mitchell O. S. (2014), “The Economic Importance of financial literacy: theory and evidence",  Journal of Economic Literature, 52(1), pp. 5-44. 3 L. Arrondel, M. Debbich and F. Savignac (2013), “Financial Literacy and Financial Planning in France",  Numeracy, Vol. 6, Iss. 2, Article 8.
Christian Noyer: Financial systems for economic growth Speech by Mr Christian Noyer, Governor of the Bank of France, at the 3rd Conference of the Monetary Stability Foundation, Frankfurt am Main, 6 July 2006. *  *  *  Ladies and gentlemen, •  Thank you for inviting me to this conference. It is a great pleasure to address a topic, namely “Financial systems for economic growth”, which is of the utmost importance not only to central bankers but also to all economic agents, in mature as well as in emerging economies. •  In modern economies, financial systems fulfil two main functions: (i) first, allocate savings to investment opportunities and (ii), second, distribute and allocate risk between economic agents. I will address each in turn before concluding with some thoughts on the role of central banks. I  Financial systems, saving, investment and economic growth  It is generally recognized that financial development contributes to higher long-run economic growth. There is a debate however, as to whether some financial structures are more efficient than others in allocating savings to investment. My own pragmatic view is that financial intermediaries and markets should be viewed as complementing, rather than substituting one another. A  Financial development contributes to higher long-run economic growth  Well-developed financial intermediaries and well-functioning markets can generate growth by improving the efficiency with which savings are used and increasing the amount of funds allocated to firms.

He argues that monetary independence is still possible, but because of the impact of financial globalisation, monetary policy carries a much bigger burden in trying to achieve both financial stability and purely macro objectives. 26 Recent Asian experience is illustrative. The exuberance in Asian asset markets and consequent build-up of financial risk in recent years has been exacerbated by the global search for yield in a zero interest rate environment. Raising policy rates may not sufficiently alter the level of risk-taking in these economies. •  In fact, paradoxically, a central bank that tightens monetary policy to stem financial vulnerabilities could perversely attract more capital flows into the economy, resulting in stronger credit growth and rising asset prices. 27 Third, it is not clear that monetary policy can fill all the cracks. Monetary policy flows into all the cracks no doubt, but some cracks are just too big to fill. 28 Financial vulnerabilities are not evenly spread across the economy. They tend to be concentrated in specific sectors and segments, such as in real estate. So, even when monetary policy has configured overall liquidity and risk-taking settings appropriately, specific pockets of financial market vulnerabilities, e.g. a property bubble, could remain. 29 Monetary policy is too blunt an instrument for addressing such specific risks to financial stability, and it can cause significant collateral damage on the rest of the economy if it tries to do so.
Another benefit of centralisation of portfolio management through delegation is that it allows firms to aggregate the execution of trades across vehicles, thereby achieving better outcomes for the end investor. It enables multi-manager funds that allow investors to diversify exposure to managers while minimising costs. And from an investor protection standpoint, centralised portfolio management allows investment firms to more efficiently address ‘fair allocation’ requirements – fairly allocating purchases or sales across all clients in similar strategies and to aggregate similar strategies when forming the performance ‘composites’ that are presented to prospective clients. Delegation, of course, has to exist within a framework of regulation to ensure investor protection. Fund managers need to delegate responsibly. Delegation must not be allowed to become devolution. Managers should not use delegation to escape their obligations and accountability for managing their investors’ money. They must supervise and track activities that have been delegated. And the entities to which they delegate must be regulated appropriately in their own jurisdictions. Supervisors in the respective jurisdictions need to be able and willing to cooperate. There are of course already global norms covering delegation. In 2000, IOSCO set out broad principles to underpin the regulation of delegated functions. In the EU, these have been already implemented through the likes of UCITS and AIFMD. I do not want to comment here on the detail and motivation of the current EU proposals.

By contrast, US companies recorded a strong increase in profits. Furthermore, the prospect of lower corporate tax rates raised expectations of higher profits in the future. Against this background, US stock indices reached record highs. The S&P 500 has risen by about 10% since mid-year. Swiss companies have benefited from stronger demand from Europe and the weaker Swiss franc. The Swiss stock market (SMI) also made substantial gains, up some 5% (cf. chart 2). Page 1/5  Berne, 14 December 2017 Andréa M. Maechler  News conference  The low yields on ten-year government bonds from advanced economies have remained virtually unchanged since mid-year. In the US too, although key rate normalisation is underway and the Federal Reserve has initiated balance sheet reduction, longer-term yields have risen only marginally until now. On the foreign exchange market, the US dollar initially continued on the downward path it had been following since the beginning of the year. The dollar then strengthened again somewhat from autumn onwards against the backdrop of the Federal Reserve’s ongoing monetary policy normalisation and the prospect of tax reform (cf. chart 3). As Thomas Jordan already mentioned, reduced political uncertainty and favourable economic developments in the euro area contributed to the appreciation of the euro. In this environment, the Swiss franc has lost some 5% of its trade-weighted value since mid-year.
A surveillance procedure was also put in place to verify that all the parties involved complied with the agreed fiscal targets. And in the case of non-compliance, a “corrective arm” was envisaged, starting with warnings and ultimately culminating in sanctions, in order to ensure that governments would quickly reduce any excessive deficit through progressive corrective steps. The fiscal rules were complemented by additional elements, such as the Broad Economic Policy Guidelines, which were introduced as a tool to ensure a convergence of economic policies and performance across Member States and to foster economic growth and employment, as well as to attain the ambitious goals set in the “Lisbon Agenda”. How has the European framework for economic governance been applied and how well has it served Europe? It is true that the euro area has fared reasonably well in macroeconomic terms. For instance, real GDP growth per capita in the euro area has not lagged behind that in the United States. Over the same period under review, more jobs were created in the euro area than in the United States. However, the European governance framework was unable to ensure fiscal soundness and macroeconomic stability in all euro area Member States. Some Member States had already accumulated large fiscal imbalances in good times. The fiscal policy framework suffered from weak implementation, in particular after the reform of the Stability and Growth Pact (SGP) in 2005. Other macroeconomic imbalances, particularly divergences in competitiveness, were also allowed to develop over a number of years prior to the crisis.

Major progress has been made in terms of fiscal consolidation and the enhancement of the euro area governance framework. But we are not there yet. Governments need to urgently implement their fiscal consolidation programmes and to accompany these with well-designed structural reforms in the labour and product markets. The new fiscal and macroeconomic rules of the European governance framework need to be implemented to the letter. And the crisis management mechanisms at the euro area level need to be designed so as to ensure financial stability in the euro area. 6  BIS central bankers’ speeches
New spending cuts have been planned to consolidate the government finances so that the countries after a few years can take the next step and peg their currencies at the prospect of euro entry. However, this does not allay all concerns on the path to the euro. It is not sufficient either, for instance, to simply save so that a deficit during a boom exactly meets the criterion of 3 per cent of GDP. Firstly, the Stability and Growth Pact contains a requirement to keep budgets at least close to balance over an economic cycle. But most of all there must be margins in the budget to cope with situations when developments in a country are weaker than in the euro area as a whole (which was pointed out in the Swedish official report before the euro referendum, Stabilisation Policy in the Monetary Union (SOU 2002:16), and in the Riksbank’s statement on this). Otherwise there is a risk that the new member states will end up in Germany’s or France’s current situation - saving despite the fact that the slowing economy has needed stimulation. For this reason deficits during a boom should be considerably lower than 3 per cent so that a margin exists when the economy is put to a harder test during slowdowns. On the whole there is concern that the pressure to put government finances in order will lessen when the objective of joining the euro is postponed. The future will tell whether the saving plans are really implemented as intended.

Hungary is now competing with Ireland to attract computer assembly, and Slovakia is on the way to becoming one of Europe’s major car manufacturers, while Estonia is a subcontractor of both Swedish clothing firms and Ericsson. Perhaps the most interesting consequence of EU membership is mobility for people, or, as its known, labour. A common premise in that discussion is that labour from the new member states threatens to invade the labour markets of the old EU countries and that this will be a problem for the old countries even if it benefits the new member states’ inhabitants. I would argue instead that it is quite the reverse: Unfortunately not enough people from the new member states will work in the old countries, which is a disadvantage for us, but which possibly benefits them. Allow me to begin with what the studies say about the potential migration from the new member states. According to a number of studies by independent academics, the flow of people to the old countries if no country had introduced transition rules would not have been larger than after Spain’s and Portugal’s entry to the EU, amounting to 40 000-670 000, in other words less than 2 per thousand of the population in the old countries.
Under bankruptcy laws or out-of-court settlement guidelines, such as the London Rules, the Jakarta Initiatives or the Hong Kong Guidelines, when a corporate is facing financing difficulties, the responsibility is passed to the debtor and creditors to arrange debt settlements among themselves. Indebted companies can reorganise and restructure their operations to return to profitability. In turn, creditors agree to reschedule loans or accept the conversion of debt into equity. While the basic principles of private creditor participation in resolving the debtor’s dilemma are uncontroversial, the application of these principles to sovereign debt is much more complex. Debt workouts in the corporate and public sectors are quite different. First, assessing the solvency of a country is different from that of a company. The former requires not only an analysis of the cash flow, the balance sheet and the assets and liabilities but also an evaluation of the political will to implement the measures needed to ensure that the country remains solvent. The capacity to service debt requires both a willingness and an ability to implement policies that will generate the necessary resources. To quote the example of Greece: it has a gross debt of around € billion and marketable assets worth up to € billion, so the country is solvent to the extent that it is willing to sell off some of these assets.

Specifically, asset purchases are sometimes seen as “quasi fiscal policies” both on the asset side (due to the potential risks attached) and the liability side (when they contribute significantly to meeting the funding needs of the sovereigns). BIS central bankers’ speeches  1  At the time they were decided, those exceptional interventions were absolutely necessary. Although it had been forgotten, central banks were initially created to protect the economy from excessive financial disturbances. This was, historically, their “raison d’être”. As ultimate and unique providers of liquidity, they cannot escape this responsibility and let the financial system and the economy collapse. At the same time, by doing so, central banks have exposed themselves to a number of risks First, there are risks linked to balance sheet expansion. They cannot be ignored, although all central banks have been extremely careful in valuing the assets purchased or taken as collateral. Second, they run the risk of blurring the lines between fiscal and monetary responsibilities. A dynamic use of their balance sheets by central banks has effects on the allocation and distribution of resources in the economy. They may favour or penalise some types of collateral or certain borrowers. If central banks take on additional responsibilities in the area of financial stability, they will have to do so in close cooperation with fiscal authorities, thus exposing themselves to possible interferences with monetary policy. The major risk, however, is the risk of confusion. A multiplicity of interventions could be interpreted as a relative dilution of objectives.
And if the bank does fail and needs to be resolved, there is the bail-in. The bail-in is one of the SRB’s resolution tools, and it ensures that the burden of failure is indeed borne by the owners and creditors of a bank. The bail-in establishes what you might call a hierarchy of loss-bearers. 5/9  BIS central bankers' speeches  First in line are shareholders, followed by holders of subordinated debt, followed by other creditors. The question is, of course: how much can be bailed in? And the answer is: everything! Well, in theory. In practice, there is a safeguard: the Single Resolution Fund, or SRF. The SRF is financed by banks from all 19 euro area countries. It was set up in 2016, and by 2023, it should amount to about € billion. In a resolution, the SRF can contribute up to 5% of the bank’s balance sheet. But it can only do so after shareholders and creditors have borne losses amounting to at least 8% of the bank’s total balance sheet. So, shareholders and creditors have to bear a large part of the losses first, and then the banking industry as a whole can step in through the SRF. The basic idea of bail-in is quite clear. But, as is so often the case, the devil is in the detail. However, I will spare you that particular discussion and turn to three more general questions related to bail-ins.

Do the banks have enough capital to absorb any losses in either scenario? And the crucial question that follows is, of course: what if they don’t? Well, let’s take a brief look at the upcoming stress test. This year, the European Banking Authority, EBA for short, will conduct a stress test involving the largest banks in the EU. This test includes 37 banks from the euro area which are directly supervised by the ECB. To obtain a fuller picture, we will, in parallel, stress-test most of the remaining large banks in the euro area, using the same scenarios and methods as the EBA. In respect of capital shortfalls, the stress test is not a pass-or-fail exercise. The banks do not have to meet certain thresholds. Instead, we supervisors will decide on a case-by-case basis whether banks have a capital shortfall, taking into account their individual risk profiles and their individual capital needs. 7/9  BIS central bankers' speeches  At the end of the day, stress tests may deal with hypothetical scenarios, but their results can have very real consequences for the banks. They inform the work of supervisors, and they inform market expectations when the results are published, as they will be in the case of the EBA’s stress test. They are also a moment of truth for the banks. More generally, stress tests help supervisors and banks to spot and remove weak points in banks’ resilience early on. If this is not done, problems can quickly mount up.
And that is part of what is occurring today, with Japan, Germany and China running excess surpluses relative to fundamentals; and the US and the UK running excess deficits (Chart 2). And although the euroarea excess surplus is relatively modest relative to its GDP, in absolute terms it is at least as important as 6  those of Japan or China (Chart 3). So while the distortions are few in number, those that exist are large in scale and systemic in importance. 4  Canadian deficits averaged 8% of GDP in the thirty years before World War I. ‘Canada in a multi-polar world’, speech by Mark Carney, 16 May 2011, available at http://www.bankofcanada.ca/2011/05/canada-in-a-multi-polar-world. 5 See Lisack, N., Sajedi, R. and Thwaites, G. ‘Demographic trends and the real interest rate’, Bank of England Staff Working Paper forthcoming. 6 Small economies hosting large financial centres like Singapore and Switzerland are special cases for which it is difficult to estimate ‘norms’. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 2: Actual current account balances and IMF estimates of fundamental balances  Sources: IMF July 2016 External Sector Report, WEO April 2017 and Bank calculations. Notes: The data point for the 2016 current account for the UK has been adjusted; see notes to Chart 1 for more details. Chart 3: Excess current account balances  Sources: IMF July 2016 External Sector Report and WEO April 2017.

Accordingly, in order to raise its expenditure levels (or alternatively, to provide more funding to the government), it may go back on its tight monetary policy and reflate the economy so as to extract real resources from the public. It, therefore, tries to fool the people by generating inflation without their knowledge. However, the public are also smart and aware that the central bank would reverse the course of its policy by inflating the economy after it has made small gains. This mistrust of the public about the policy actions of a central bank is well revealed by the exceedingly high inflation expectations they normally form about the future trends in inflation. Consequently, they also try to fool the central bank by asking for higher wages, if they are employees, or higher future contract prices, if they are producers, than the normal wage or contract price levels permissible under the now low inflation rate. This battle between the central bank and the people will trap the economy in a high inflation-high wage spiral making it a self-defeating enterprise for both the central bank and the public. The high inflation in the economy now exerts pressure on the exchange rate to depreciate.