samchain/econo-pairs-v1 huggingface dataset:
Jean-Claude Trichet: Preserving monetary and financial stability in an increasingly globalised world Keynote address by Mr Jean-Claude Trichet, Governor of the Banque de France, at the OECD Forum 2001 on Sustainable Development and the New Economy, Paris, 16 May 2001. *  *  *  Ladies and Gentlemen, It is a great pleasure for me to be invited today to this OECD Forum to talk about preserving monetary and financial stability in an increasingly globalised world. One should keep in mind that financial globalisation has brought about improved macroeconomic efficiency. As you know, the globalisation of the world economy and the development of financial markets were driven by two key factors: •  firstly, financial deregulation – reinforced in Europe by the setting up of the single market and subsequently of the Economic and Monetary Union – which liberalised capital flows and enhanced competition among financial sectors;  •  and secondly, technical and financial innovation, which simultaneously paved the way for the creation of financial markets that are deep, liquid and interconnected. What is interesting to stress is that the interaction of free capital movements within interconnected markets, increasing integration of market segments and hedging opportunities provided by new financial instruments have allowed a better fit between the financing capacities and borrowing requirements of both governments, households and companies. The use of market interest rates, which represent the markets’ consensus on the risk incurred at a moment, as a driving force is fully beneficial to an efficient allocation of capital.

The point is that, even while capital requirements are fulfilled, losses can reduce banks’ own funds at a time when capital issuance is difficult or costly; in such a juncture, some analysts argue that banks may be led to restrict credit lending during downswings although they are not bound to do so for prudential reasons. I consider that the future capital requirements of the New Accord will significantly improve the situation as regards the risk-sensitivity of capital requirements. Let us now turn to asset price moves. As previously mentioned, financial asset prices may fluctuate widely and sometimes deviate from economic fundamentals for long periods of time. Several factors may be in play when this happens. I shall give a few examples. •  Some market participants may have become more inclined to engage in "short-termism", that is, they are only preoccupied with their short-term results. This trend might result, in particular, from growing pressure to yield high immediate financial results that are not necessarily sustainable. Marking-to-market financial products may also have contributed to this widespread focus on immediate financial performances. This focus on short-term performance can translate into additional volatility in the price discovery process: the shorter the investment horizon of market participants, the bigger the impact of any new information on prices. •  Mimetic behaviour is of course by no means a new phenomenon on financial markets.
This has prompted several emerging economies to restructure their fuel subsidies in an effort to create more efficient economies and to achieve more sustainable fiscal positions. This has been followed by the consequent adjustments in consumer prices as the gap between international market prices and domestic prices narrow. In Malaysia , petrol prices were adjusted by  BIS Review 90/2008  1  40.6% while diesel prices by 63.3%. This adjustment would be reflected in the consumer price inflation in June, which is expected to exceed 6%. Beginning 1 July, electricity tariffs have also been raised by up to 18% for households and an average of 26% for some commercial and industry users. While domestic inflation is expected to remain elevated for the remaining part of this year and early next year, it is expected to moderate in the second half of 2009. In the current international environment, the policy response needs to be contextualised to the conditions prevailing in each individual economy. In those economies that are experiencing overheating and strong demand conditions, there is greater clarity in terms of the need for policy to rein in demand. However, for economies that are experiencing moderating growth, the risks to growth and inflation need to be carefully evaluated. In addition, consideration needs to be given to the deflationary impact of the fuel price increases on consumption.

In facilitating this transition, Bank Negara Malaysia is reducing transaction fees for the RENTAS system (the real time gross settlement system operated by Bank Negara Malaysia) for payments made by financial institutions on behalf of their customers. With effect from 15 July 2008, the RENTAS transaction fee imposed on the member banks will be reduced by RM1.00, from RM2.50 to RM1.50. This reduction in fees will result in a corresponding reduction in bank charges imposed by member banks on their customers for RENTAS payments with effect from the same date. In addition, the banking industry will be reviewing the fee structure for fund transfers to apply a fixed fee instead of the existing Inland Exchange Commission of 0.03%. In this environment, the SMEs also need to initiate their own measures to complement those undertaken by the Government and the banks. Achieving cost efficiency and productivity improvements needs to be a priority for SMEs. SMEs should look at every facet of their business operations to identify ways to streamline processes, eliminate waste, consolidate activities and adopt new technology and energy-efficient processes. SMEs that operate in common geographical locations and that have similar production inputs, should also consider pooling their purchase requirements to benefit from bulk discounts by suppliers, in addition to sharing common costs such as transportation. In this regard, the Chambers of Commerces and industry associations can have a key role. They can facilitate the bulk purchase of raw materials for their members.
2.4 Stress testing should also prove helpful in informing macroprudential policies While stress tests have become an important part of the microprudential toolkit, they have also taken a key role in macroprudential analysis in recent years for financial crisis prevention purposes, enabling central banks and macroprudential authorities to assess the vulnerabilities of the financial system as a whole. Informing macroprudential policy with a comprehensive overview of the financial sector’s resilience is and will remain an essential objective for the future of stress testing. In that regard, improving the accuracy and relevance of our top-down models is one of our priorities at Banque de France, but also at the European level, to better use them in the macroprudential field. 3/3  BIS central bankers' speeches

Although equity and property prices serve as important indicators for the future development of economic activity, they are not a goal of monetary policy. Many reasons militate against a direct monetary-policy response to changes in asset prices. The question nevertheless arises as to whether monetary policy could not do more to prevent any speculative bubbles from forming in the first place. BIS Review 53/2003  1
Chart 12: Pay for alternative work Median real weekly income (2018 prices), 2007/08 = 100 Employees  120  Self-employed without workers Self-employed with workers  Zero Hour Contract Workers  Median real hourly wages (2018 prices)  All Workers  14  110  12  100  10 8  90  6 80  4  70  2  60 2007-2008 2009-2010 2011-2012 2013-2014 2015-2016 2017-2018  0 2002 2004 2006 2008 2010 2012 2014 2016 2018  Sources: ONS and Bank of England calculations. With thanks to Steve Machin and Rui Costa at the CEP for kindly providing the data for these charts. 5  Datta, Giupponi and Machin (2018). For example, Datta, Giupponi and Machin (2018) and https://www.tuc.org.uk/news/two-thirds-zero-hours-workers-want-jobsguaranteed-hours-tuc-polling-reveals 7 https://www.tuc.org.uk/news/1-9-workers-are-insecure-jobs-says-tuc 8 https://www.bankofengland.co.uk/events/2018/november/townhall-blog-scotland-november-2018 9 Tomlinson (2018). 10 Mas and Pallais (2017). 6  11  All speeches are available online at www.bankofengland.co.uk/speeches  11  These changes in the nature of work are likely to have contributed to the recent weakness of pay. The creation of larger numbers of, on average, lower paid jobs will have had a direct, dampening effect on pay. And income insecurity and the lack of unionisation among gig workers may also have lowered their pay bargaining power. Summing up, then, a jobs boom has reduced the scourge of job insecurity that troubled workers in the past. But in its place has emerged a different scourge – static or lower pay and rising income insecurity.

The value of the Norwegian krone against the Deutsche mark was nearly halved between 1973 and 1987. We paid about 2 kroner for 1 mark in 1973 and close to 4 kroner in 1987. Since 1987, the krone exchange rate against the Deutsche mark has remained more or less unchanged. During this period, price inflation in Norway has been no higher than that in Germany. We cannot be sure how fast the inflation differential between Norway and other countries will translate into changes in nominal exchange rates in the future. Nevertheless, we must expect that any differences in the rate of inflation may be a key cause of changes in the nominal krone exchange rate over time. The Norwegian monetary authorities abandoned the devaluation approach in 1986. From 1986 to 1992 Norway had a fixed exchange rate with a defined central rate and fluctuation margins. This system was abandoned in 1992 following extensive speculation against the krone in connection with the turbulence in European exchange markets. After the krone was allowed to float on 10 December 1992, the guidelines for monetary policy were also revised. Monetary policy was still oriented towards the objective of krone exchange rate stability, but no specific central rate with fluctuation margins was stipulated. The krone depreciated slightly in 1992, but thereafter it remained relatively stable. Looking back at developments in the Norwegian foreign exchange market in the 1990s, no significant change really appears to have occurred in 1992. However, there was a marked shift in January 1997.
12 We have vacancies only at what’s known as the “section” level (i.e. across a crude division into 18 broad sectors). Chart 18 uses official output data at a “two-digit” level (100 sectors). The DMP allows us to look at variations at the level of individual firms. 11  14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14  mismatch rose sharply during the pandemic and, despite the recovery in the first half of this year, remains relatively elevated. One reason for this might be continuing divergence in demand. Chart 18 plots the degree of dispersion in output growth across sectors, this time at a much finer level of disaggregation, over the previous two years. As we know, the pandemic was highly skewed in its effects, hitting some sectors and regions far harder than others. Some even benefited. You can see that in the big jump in the series from the second quarter of last year. And at least up until the first quarter of this year (we don’t have any data since) there was no sign of any sort of correction. Chart 17: Relatively poor correspondence between available jobs and furloughed employees so far  Sources: ONS vacancy and Labour Force Survey data and Bank calculations. Chart 18: Up until 2020Q1 there was still significant sectoral dispersion in output  Sources: ONS and Bank calculations.

17  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  17  You’d expect all this to lead to matching reallocations in employment – job shedding in the weaker sectors and regions, strong rates of hiring where demand has picked up the most. And in the DMP survey that is indeed what you do see (Chart 21). But it hasn’t yet happened to the same degree as in firms’ reported sales – nor, if we extend the series backwards with other sources of data14, to the same extent as after the financial crisis, whose impact on firms’ output was also highly uneven. Chart 21: Employment reallocation has picked up but still looks lower than after the financial crisis  Sources: Decision Maker Panel, Bureau Van Dijk (based on Companies House data) and Bank calculations. For similar reasons, and again both on the demand and supply side, I would expect these imbalances to subside somewhat as the economy recovers. The underlying dispersion in demand is more likely to narrow than widen further. We’ve already seen some signs of that across sectors, with “social consumption” recovering faster than areas of spending since the economy re-opened (Chart 14 again). In the meantime, the reallocation of jobs, which should also reduce these strains, is likely to continue and may even pick up for a while. However, I’m more uncertain about this process, and the implication for costs in aggregate, than about the transitory nature of goods-price inflation.
Hence, addressing the global risks to financial stability requires that source countries also properly monitor and control these risks with adequate supervision and regulation. BIS central bankers’ speeches  5  Figure 1 Nominal Exhange Rate (CLP pesos per US Dollar; day of intervention announcement = 100)  116  116  112  112  108  108  104  104  100  100  96  96  92  92 t  t+5  t+10  t+15  t+20  2008  t+25  t+30  t+35  2011  Source: Central Bank of Chile. Figure 2 Copper Price (day of intervention announcement = 100) 110  110  105  105  100  100  95  95  90  90  85  85 t  t+7  t+14 2011  t+21  t+28  t+35  2008  Fuente: Bloomberg.

Not dealing with inflationary pressures in a timely manner, however, could result in economic overheating and rising inflation. Most emerging markets have enjoyed great success from trade openness and export-led growth, and hence their worries arising from exchange rate appreciation are well justified. However, it is important to distinguish between real appreciation – the relevant variable from  BIS central bankers’ speeches  1  the competitiveness standpoint – and nominal appreciation. Exchange rate actions that attempt to mitigate a real exchange rate appreciation will have only transitory effects, which could provide valuable time for the economy to adjust to a new global environment and might hence be relevant from the point of view of welfare, but cannot be thought of as a permanent tool to foster competitiveness. In order to sustain the real exchange rate, real actions need to be taken, such as increasing domestic savings. It is time to rebuild fiscal buffers in emerging market economies and accelerate the pace of reforms to achieve productivity gains that can sustain competitiveness. It is important to note that the economic strength of EMEs relative to advanced economies is the main reason why their real exchange rates are appreciating. In addition, the correction of global imbalances requires both an increase in consumption in surplus economies and a shift of this greater demand towards goods produced by advanced economies, especially since in the latter growth of domestic demand will be sluggish because of the post-crisis deleveraging process. Relative price adjustments around the world should help this process.
In the long term, wouldn’t “Grexit” risk putting on record that a country can, in fact, leave the euro area, and thus that the euro is not irreversible? If Greece had to leave the euro area, that would risk casting doubt on the nature and functioning of the monetary union. That would create fragility. It would be a tragedy for Greece and, moreover, for its economy. It would be a challenge that Europe would have to rise to as quickly as possible, by substantially reinforcing its institutional framework. The stability of the euro area depends on a balance between responsibility and solidarity. In order to be stronger and more convincing, concrete initiatives are required to reinforce these two dimensions. What would you say to the Greeks to convince them not to leave? It is vital to put Greece back on a growth path, to reach a consensus in order to recreate a viable economic model for the country. Total factor productivity in Greece grew at a rate of only 1% per year between 1981 and 2014, against 2% per year in the euro area, and that happened despite the sizeable transfers Greece has benefited from. To achieve this, the Greek economy must remain within the single European market and be able to rely on its institutions. What’s more, were Greece to leave, austerity would be far worse. The country would no longer benefit from the solidarity of the euro area, which has given it the time to make the necessary adjustments.

On the other hand, there is the outstanding debt under the debt purchase programme established in 2010 (SMP), which amounts to close to € billion. Are we looking at a scenario entailing a potential loss of close to € billion if Greece leaves the euro? I do not want to speculate on that. Greece can remain in the euro area. What would be the consequences for the euro area of a “no” vote in the referendum, which would undoubtedly lead to “Grexit”? A distinction must be made between the short and long-term impact. The reaction of global financial markets on Monday demonstrated that they were surprised. Up until Friday evening, it was not envisaged that the negotiations would break down and a referendum would be  2  BIS central bankers’ speeches  called. The markets have become risk-averse. But their reaction remains relatively calm. This shows the extent to which Greece’s current situation is a unique one – it is a special case. Other countries in the euro area have experienced great difficulties. They have been through adjustment programmes, and come out of them. For these countries, this has been a chapter with a successful conclusion. This is the case in Ireland and Portugal. The Cypriot programme is still ongoing and proceeding well, which should allow the ECB soon to begin purchasing Cypriot securities. I do not underestimate the efforts these programmes have required, or their social costs. The citizens of these countries have paid dearly.
For instance, effective supervision and stress testing could inform the decision to release the CCoB with an ex-ante assessment of the banking system ability to absorb potential future losses without breaching minima – a number of authorities did and published such tests in the midst of the pandemic. We would also need to ensure that an effective capital conservation mechanism is in place. This would prevent the released capital from being distributed inappropriately and ensure that firms would be able to rebuild the buffer in the future. The current tool, known in the UK as Maximum Distributable Amounts (MDAs), cannot serve this function because it does not apply to the portion of released capital. MDAs restrict dividends, AT1 coupons and bonuses when non-releasable buffers are used and appear to have two effects – one intended and one unintended. The intended effect is to prevent banks distributing away capital that could be otherwise used to build capacity to absorb losses and support lending. This is exactly what some global banks did in the early stages of the subprime crisis, which left them weakly capitalised when the Lehman shock hit the system later on. But MDAs can also have an unintended effect – they can disincentivise banks from using their regulatory buffers, for fear of market stigma, pushing them to cut lending and hurting the economy and therefore ultimately themselves. Page 5  A recent study co-authored by colleagues in the Bank of England sheds light on both these effects.

[17] And the liquidity framework has been designed from the start to facilitate the usability of those liquid asset buffers when banks face liquidity pressures. For example, there is no minimum and buffer structure in the LCR. It’s all one giant buffer. And there are no automatic restrictions that result from drawing down liquid asset buffers, unlike in the case of usage of capital buffers that incurs distribution restrictions. There is no specific time period in the regulatory framework within which banks need to rebuild their high quality liquid assets (HQLA) after a draw down. And there is no expectation on banks to hold excess liquid assets in order to avoid falling below the regulatory standard in the event of a potential stress. And some jurisdictions, like the PRA, had gone out of the way before the crisis to say that liquid asset buffers should be usable. [18] Yet during the early stages of Covid-19, we saw evidence that suggested banks were overly reluctant to use their HQLAs, reinforcing similar evidence gathered from the Bank of England’s exploratory liquidity stress test. In February 2020, the market reacted to the Covid-19 stress through a typical flight to safety leading to increased prices of safe assets and falling safe asset yields. In mid-March however, the illiquidity of other markets turned a ‘flight to safety’ into a fevered ‘dash for cash’: to meet sudden large margin calls, firms began to sell their most liquid assets, which drove safe assets prices down.
Elvira Nabiullina: Speech at congress of Association of Banks of Russia Speech by Ms Elvira Nabiullina, Governor of the Bank of Russia, at congress of Association of Banks of Russia, 28 May 2021. * * * Good afternoon, dear congress attendees, The pandemic is slowly but abating, there are signs that life is returning to normal, and in-person conferences are gradually coming back. All the same, we are lacking in real-life communication, so I am very glad to welcome you here today. Of course, there are changes taking place not just in how we communicate. We can see that the actions taken as part of our anti-crisis agenda are gradually being replaced by those on a development trajectory, as before. With account for the fact that the pandemic has had a serious impact on society, on the economy as a whole, and on the financial sector, we must think about the future, and about how the financial sector will help the development of the economy. Last year, the banking sector made a positive contribution amid pandemic conditions. It supported the economy, its clients, and, I am sure, will be able to further support the development of the economy. I would like to take this opportunity to thank the entire banking community for their wholly responsible behaviour during the pandemic. It is thanks to you, really, that we managed to greatly mitigate the negative effects of the pandemic.

Following the monetary policy meeting on 11 August, the Executive Board stated that with the prospect of continued low inflation for a period ahead, wide deviations from projected economic developments would be required before the interest rate should be increased. The Executive Board also stated that uncertainty concerning the effects of previous monetary policy easing and the unusually low interest rate imply, on the other hand, that we should exercise caution with regard to further interest rate reductions. 6  BIS Review 47/2004