samchain/econo-pairs-v1 huggingface dataset:
Many in the industry noted that a capital regime based on banks’ internal ratings, which reflect a wide range of information about borrowers, can prove to be quite sensitive to the level of risk in a bank’s portfolio. Our analysis indicates that a wider range of institutions could be eligible to use the internal ratings approach, than the narrower set of large and sophisticated institutions, as implied in the Consultative Paper issued in June. We now envision extending the applicability of the internal ratings method approach to banks of varying sizes, including small and medium-sized institutions provided such ratings systems are accompanied by strong internal controls, supervisory oversight and ample disclosure. With this in mind, the Committee is working on how to link banks’ internal ratings to a regulatory capital scheme. We are seeking to develop flexible approaches, since all banks wishing to use internal ratings may not yet be able to generate the full amount of information necessary to tie their ratings to capital requirements. Thus, for at least some banks, we are considering the possibility that some information would be supplied by the supervisor, although the core elements would be generated by a bank’s internal ratings scheme. There would be a parallel track for the more sophisticated institutions, which would rely fully on internal information. In practice, the two approaches are part of a single evolutionary framework, in which banks can rely increasingly on internal processes for regulatory capital allocation as their risk measurement and management practices improve.

Secondly, Paris is bolstering its position as a European leader in digital innovation. Last year, the ACPR has launched a task-force on artificial intelligence. Paris has also been a pioneer in the development of sustainable finance. The creation of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) by the Banque de France in Paris in December 2017 has been a decisive step forward. In 2 years, this coalition of the willing has increased from 8 founding members to more than 50 members from all 5 continents. ** Let me conclude with an unusual quote for a central banker, a sentence from Hayao Miyazaki in one his animated films: “You cannot change fate. However, you can rise to meet it.”4 This is exactly the state of mind in which we have to be to face the challenges of our disruptive world. We cannot stop the course of phenomemons such as digital transformation or climate change. But we can roll up our sleeves to tackle them – together and across continents. This is the purpose of such a forum today. Thank you for your attention. 1 Rostagno, M., Altavilla, C., Carboni, G., Lemke, W., Motto, R., Saint-Guilhem, A. and Yiangou, J., “A tale of two  decades: The ECB’s monetary policy at 20”, 2019, forthcoming. 2 Speech by François Villeroy de Galhau, Governor of the Bank of France, at the Conference of the Chair Bank of  France/Paris School of Economics, at the Paris School of Economics, Paris, 24 September 2019.
In addition to this commitment, I also suggest creating a Stabilisation Lending Instrument at the euro area level, and I would like to detail some key aspects regarding its objectives and operational efficiency. I will then talk more broadly about a possible European Monetary Fund. Let me start with the objectives. The SLI would provide loans to euro area Member States faced with an asymmetric economic shock, in order to support their countercyclical policies. Finland for instance was faced with a triple asymmetric shock in the late 2000s, due to the collapse of Nokia, the decline of the paper industry and the aftermath of the Russian crisis – real GDP contracted by 9% in 2009. Such a shock could also stem for instance from temporary political uncertainty – as long as it is not fuelled by inadequate economic policies – from natural disasters or from an irrational loss of confidence in the financial markets resulting in excessive pressure on the sovereign spread. The SLI would be a complement to and not a substitute for national stabilisers. It would help Member States not to abandon their long term investments, especially by preventing an unwarranted widening of their financing conditions. Beyond this Stabilisation Lending Instrument, the creation of a “rainy day fund” with fiscal resources could be considered at a later stage once confidence and economic convergence between Member States have increased. On the operational efficiency of the SLI, access to the instrument should be simple, subject to carefully chosen macro-financial criteria.

In due course, it would be beneficial to bring an EMF into the fold of the Community method, which means anchoring this institution in the framework of Union law [the Commission has suggested proceeding on the basis of art. 352 of the TFEU]. Within this framework – and only within it – it would make sense to entrust an EMF with a broader surveillance mission, including the task of monitoring compliance with the common rules, a role that is today assigned to the European Commission. II. A micro accelerator, including the completion of the banking union Let me now turn to the micro accelerator for the Economic Union: a Financing Union for Investment and Innovation. The aim is to better steer the euro area’s EUR 350 billion annual savings surplus towards productive investment, notably by shoring up equity which is the key to an innovation economy. Thanks to unified governance, this Financing Union would help circumvent bureaucratic barriers and foster synergies between the existing building blocks: the Juncker Investment Plan, the Capital Markets Union and the Banking Union.
20 [30]  However, the interdependence between monetary and fiscal policy is not reflected in the monetary and fiscal policy frameworks. The frameworks are designed so that the two policy areas function independently of each other. The Riksbank has a high degree of autonomy and a mandate that prioritises price stability. The budgetary policy objective of fiscal policy is to ensure that fiscal policy is stable over time, which in practice means that government debt should be sustainable in the long term. This approach is based on the view that fiscal policy has little impact on inflation; that monetary policy has negligible fiscal consequences; and that a fiscal policy mandate that stabilises government debt and budget deficits is sufficient to support the central bank's inflation target.38 Central banks' difficulties in bringing inflation up to target without relatively drastic measures after the financial crisis may indicate that this view has been too simple. A fiscal policy that is expansionary when inflation is too low and contractionary when it is too high makes it easier to achieve the inflation target.39 It may of course be politically easier to conduct an expansionary fiscal policy, but it is important that it is symmetrical so that the national debt does not risk becoming too large.

1  ‘The future of savings’ conference – 4 November 2016 Introductory speech by François Villeroy de Galhau, Governor of the Banque de France Savings glut, or investment deficit? First and foremost, I would like to warmly welcome you all here at the Banque de France. I am delighted to open this conference dedicated to the future of savings, with such distinguished speakers and panelists: leading academics, bank and insurance industry experts, as well as regulators. Before leaving the floor to them, I would like to share with you a few thoughts on the role that savings can play in the current challenging macroeconomic context. Post-crisis growth has been disappointingly weak, both at the global level, with growth standing only marginally above 3% in 2015 and most likely in 2016 as well; and in Europe, where growth is levelling off. So what is the problem? (slide 2) In the mid-2000s, Ben Bernanke famously coined the term “global savings glut” to refer to the situation of surplus savings in emerging market economies. Savings are still abundant worldwide, but one thing has dramatically changed in recent years: (slide 3) investment, which has sharply dropped as a share of GDP in advanced economies. This is what I call the “investment dearth” or “investment deficit”.
Traded goods’ inflation – a portion of which are imported and the rest are directly affected by global prices – increased substantially compared to the previous two years. Its contribution to headline inflation was about 73 percent in 2009. 1.5.2  Bank of Albania’s monetary policy  The weakening of economic activity and domestic inflationary pressures, our forecasts for a contained inflation in the future and the anchored expectations of economic agents provided room for pursuing an easing monetary policy in 2009. This policy was materialized in two interest rate cuts by 0.5 percentage points each in January and October 2009 to 5.25 percent, and in the continuous injection of liquidity required by the market and the economy. By means of this prudent monetary policy, the Bank of Albania aimed at creating appropriate monetary conditions for a balanced and long-term development of the country. The key interest rate cuts were instantly passed through to the short-term interest rates in the interbank market, which declined and were less volatile than in 2008. On the other hand, these movements were not fully and instantly transmitted to the interest rates on banking loans and deposits. As in all other countries, the increase of the liquidity premium, the higher uncertainty and the deterioration of the banking system’s financial results were amortizing factors for the easy monetary authorities’ measures. However, our monetary policy and our interbank market operations managed to successfully avoid a detrimental contraction of banks’ balance sheets, something that many emerging countries had to go through.

The 1.00 percentage point cut in 2009 relaxed the financial burden of the banking system’s intermediation activity. The Bank of Albania has consistently supported the banking system with the required liquidity. In addition to cutting the key interest rate, the Bank of Albania has helped Albania’s banking system activity through:   the change of the refinancing auction form from fixed-amount auction to unlimited-amount auction;    up to 3-month extension of the maturity term of injected liquidity;    expansion of the range of collateral in our refinancing operations;  BIS Review 78/2010  5    increase of the use of required reserve; and the reduction of the overnight loan interest rate. We have employed almost all of our range of instruments for implementing monetary policy. The amount of liquidity injected by the Bank of Albania peaked in summer with ALL 40 billion. As a result of the deposits entering the banking system, this amount reduced gradually to about ALL 28 billion at the end of 2009. 2. Banking supervision and financial stability  The banking system performance was significantly conditioned by the economic slowdown and wavering of confidence, aspects that were elaborated at length in my speech. Consequently, there was higher uncertainty, higher bank sensitivity to liquidity, a more cautious lending behaviour, and an increase in non-performing loans. These are the main highlights of the banking system performance during 2009. Despite the downward profitability, capitalization indicators remain at satisfactory levels.
Having peaked at 48% of GDP in 2003, government expenditure declined to 42% of GDP in 2007. Similarly the fiscal deficit contracted from almost 8% of GDP in 1999 to below 2% this year, and the public debt/GDP ratio has gone from a peak of 73% in 2004 to 63% today. At the same time, the share of the public sector in total employment has shed five percentage points to 30%. The private sector, meanwhile, has adjusted well to the changing composition of domestic and external demand. Between 2000 and 2006 the contribution of service providers to total employment rose from 65% to 70%, thanks largely to growth in financial and ICT-related services, while a leaner but more capital intensive manufacturing sector now employs 17% of all working persons, down from 23% in 2000. FDI has been instrumental in the development of this more diversified economy. As a proportion of GDP, in fact, net FDI inflows increased from 16% to 28% in the six years to 2006. Progress has also been registered in other areas. Particularly significant was the narrowing of the inequality of income distribution ratio from 4.6 in 2000 to 4.1 five years later, well below the euro area average of 4.8. In education, the proportion of students having completed at least an upper secondary education increased from 41% of the relevant age group to 50% over the same period, and the proportion of students in tertiary education rose from 11% to 16%.

However, many countries have gone further than these requirements, Switzerland among them. Why does it make sense for us to set high standards in this area? Switzerland has a particularly large financial centre relative to the size of its economy. The banking sector is directly responsible for around 5% of value added in Switzerland, and employs more than 115,000 people. Moreover, in its role as a financial intermediary it is essential for the efficient functioning of the economy. It is therefore of major importance to the economy as a whole. Efficient and internationally active banks play a key role in this context. A break-up of systemically important banks would therefore not be in Switzerland’s overall economic interests, making it all the more crucial that these banks be sufficiently robust. For this reason, the Swiss regulations require systemically important banks to hold a larger capital buffer than the minimum standard laid down in the international framework. You might argue that higher capital requirements are detrimental to the financial centre. In the case of Switzerland in particular, however, such requirements must not be viewed solely as a cost driver. In today’s world, a robust banking system is a significant advantage for a business location in the face of international competition. It attracts clients and businesses, and is therefore desirable not only in the interests of financial stability, but also from the perspective of the banks themselves. Furthermore, Swiss regulators have opted for a streamlined regulatory approach compared with other countries with major financial centres.
Indeed, the income returns on education are very high, and they continue to rise in spite of very significant increases in the supply of highly educated workers during much of the 20th century. Since the 1980s, however, increases in the supply of welleducated workers in the United States have slowed, while demand for these workers has accelerated due to technological change. These forces have been a major contributor to the increase in the college wage premium.7 While college graduation rates in the U.S. have stagnated, those in many other OECD countries have continued to rise. As a result, only onequarter of those in the 25-to-34 age bracket in the United States have more education than their parents, compared with an OECD average of one-third.8 This represents a dramatic decline in college education’s influence as an engine of upward mobility. So, part of a solution to the increase in inequality and the reduction in social mobility is to increase the level of educational attainment in the population. There are many barriers to expanding post-secondary education, however. From the potential 3/7  BIS central bankers' speeches  student’s perspective, a lack of information, low college preparedness, and high costs are all substantial barriers to college attendance and completion, and these barriers restrict social mobility. Let me discuss each of these in turn. By lack of information, I mean the recognition that in spite of its high price tag, a college degree typically offers an even larger payoff in terms of future earnings.

William C Dudley: The monetary policy outlook and the importance of higher education for economic mobility Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Council for Economic Education’s 56th Annual Financial Literacy &amp; Economic Education Conference, New York City, 6 October 2017. * * * Good afternoon. It is a pleasure to have the opportunity to speak at this Council for Economic Education (CEE) event, marking the CEE’s 56th Annual Financial Literacy and Economic Education Conference. Given the hard lessons of the financial crisis—and the economic challenges still facing many Americans—there are few goals more worthy than promoting greater financial and economic literacy. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System.1  Personal educational experience Before discussing the economic outlook and the role of education in income mobility, I will offer a few remarks on my own educational experience. While it may not be surprising that I have a Ph.D. in economics, the path that led me to the University of California, Berkeley, is a bit unusual. I started college in the 1970s at Columbia University. On the positive side, the professors were engaging, and I had the opportunity to read the great books of the university’s core contemporary civilization curriculum. But, I was troubled by the emphasis on grades and test taking. I wanted something that was more free-form.
On the securities side, we are in the process of introducing a series of reform measures to lessen the potential for market dislocation. I am happy to say that our actions have been successful. There has been no indication of further market manipulation since the end of August. We have seen substantial unwinding of the short positions in our currency by the hedge funds, with considerable losses. And with the stock market having recovered substantially from the level at which we entered the market in the middle of August, more considerable losses were incurred also in their short positions in the stock index futures. Much of the interest rate premium of the Hong Kong dollar over the US dollar has disappeared, clearly reflecting with hindsight the extent of the excessive pain that had been so mercilessly inflicted on the community by the manipulative plays. I hope you are now more sympathetic towards the controversial actions that we have taken. But in case you still have doubts, let me specifically address four accusations that have been hurled at us. The first accusation is that we were trying to jack up the market against trends dictated by fundamentals. Alan Greenspan used those words. But this is simply not true. We do not mind where the level of the market is, if that is what the adjustment process demands. No official view on the “right” market level has been taken and there never will be such a view.

Rumors abounded and the shorting of the Hong Kong dollar ahead of the weekend had become a weekly affair. In the first half of August, Hong Kong’s GDP growth for the first quarter was revised down to - 2.8%. Wall Street was down sharply. The yen fell to over 147 against the US dollar. On the approach of the long weekend in the middle of August, rumors of a devaluation of the RMB and/or the abandoning of the Hong Kong dollar’s link with the US dollar intensified, risking the creation of panic and a breakdown of confidence in the currency. Fact number five: there had been much selling pressure on the Hong Kong dollar in the first half of August. In accordance with the discipline of the currency board arrangements, the HKMA would have had to sell foreign reserves and buy Hong Kong dollars passively. This would have created a serious shortage in the Hong Kong dollar monetary base, thus sending interbank interest rates sharply higher and the stock market sharply lower. Given, however, the need to fund the budget deficit for this financial year, the opportunity was taken to switch some of our accumulated fiscal reserves held in foreign currencies back into Hong Kong dollars, leaving the monetary base and therefore interbank interest rates largely unchanged. The amount of Hong Kong dollars absorbed in this manner was large, exceeding the $ billion accumulated by the hedge funds.
The excesses, which were particularly evident in the stock markets, are the most notable expression of the interaction of the belief in the “new economy” with developments in financial markets. However, the growth in debt markets also played its role. The introduction of the euro and the start of the single monetary policy seem to have had a strong, positive impact on the possibilities for corporate issuers both financial and non-financial - to resort to corporate bond issuance as a financing source. In addition, this process was fuelled by the surge in mergers and acquisitions, as more and more companies prepared to grasp the opportunities of the new dynamic environment. Furthermore, issuance activity by certain sectors linked to the “new economy”, such as the telecommunications and high-tech sectors, promoted the development of certain segments of the bond markets, for example the market for high-yield bonds. 2  B. van Ark, “Measuring Productivity in the “New Economy”: Towards a European Perspective”, De Economist 148, No.1, 2000, pp.87-105. 2  BIS Review 23/2003  We all know where all this optimism about the “new economy” led to. Since March 2000, we have seen both a substantial decline in stock prices and rising financial imbalances. I shall now discuss the aftermath of the boom and burst period that we experienced in financial markets.

At root was the rapid enlargement of stock market capitalisations in the latter part of the 1990s that arguably engendered an outsized increase in opportunities for avarice. An infectious greed seemed to grip much of our business community.”  BIS Review 23/2003  3  5  the widespread use of certain reward mechanisms such as stock option schemes. As Alan Greenspan aptly put it: “The highly desirable spread of shareholding and options among business managers perversely created incentives to artificially inflated reported earnings in order to keep stock 6 prices high and rising”. Trust, as has been demonstrated for example by Francis Fukuyama in his best-seller Trust: The Social Virtues and the Creation of Prosperity, may be invaluable for economic processes, as it facilitates 7 economic interactions and lowers transaction costs. Recent economic research is increasingly emphasising that social capital represented by trust may be as important as physical capital for 8 economic growth and prosperity. Policy-makers and regulators can help to restore trust in financial markets and auditing processes by enhancing corporate governance mechanisms. I fully support measures which promote adequate governance of corporate behaviour and thereby contribute to the restoration of trust in financial statements and capital markets. However, at the end of the day the crucial contribution to restoring trust has to come from the corporate sector itself. The sector has to recognise that easy profits are like killing the goose that lays the golden eggs. Executives in private business have a collective interest in promoting high standards of ethical behaviour.