samchain/econo-pairs-v1 huggingface dataset:
Dimitar Bogov: Challenges of bolstering growth rates and ensuring their sustainability Opening statement by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, to the Bank for International Settlements Working Party on Monetary Policy in Central and Eastern Europe, Skopje, 11–12 February 2016. *  *  *  Dear colleagues, dear guests, It is my honour to welcome you for the Annual Meeting of the BIS Working Party on Monetary Policy in Central and Eastern Europe, hosted by the National bank of the Republic of Macedonia. I look forward to discussions on the key issues the policymakers are currently facing. Many of the economies in our region have strong trade and financial linkages with the rest of the world. Therefore, a natural starting point would be to assess how conducive the global environment is for our key goal of bolstering growth rates and ensuring their sustainability. Unfortunately, almost a decade after the acute stage of the crisis, it seems that the global environment is still fragile. Although the world economy is recovering, growth rates do not seem to be strong enough, and what is even more problematic, this “low growth mode” might be here to stay. The frequent downward revisions of global growth prospects indicate that uncertainty is weighing on growth. Global growth rates are staggering slightly above 3%, on average, and the medium-term prospects do not seem to differ much.

Understanding this diversity is critical to better understanding the health of the labor market and the overall economy, and is important for informing policy. Now let’s turn to housing. Macroeconomists focus on aggregate residential construction as a measure of how the housing sector is contributing to overall economic growth. It is important to note, however, that housing market experiences vary substantially across individuals in ways not reflected in the aggregate construction data. For example, the type of housing units typically occupied by low-income households saw higher-than-average rent inflation from 2009 to 2011. Much of this difference appears to be due to contrasting ways that additions to the housing stock enter into different segments of the housing market. For households in the highest income quintile, new construction more than accounts for the net increase in housing  BIS central bankers’ speeches  1  units, which in turn tends to hold down rent increases for these households. However, as one moves down the income distribution, new construction represents a smaller share of the net increase in housing units. For households in the lowest income quintile, additions to rental supply come more from units that with age have depreciated and are no longer rented by higher income households. These supply additions tend to have higher rents than existing units rented by low-income households, thus putting upward pressure on rental costs.
And US corporate bonds are almost fully intermediated. 9 This was aided too when the NYSE, in 2001, reduced the minimum increment for trading in listed US equities to 1 cent from one sixteenth of a US dollar. 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  Finally, technology promises changes to wholesale payment, clearing and settlement infrastructure. Emerging technologies, such as distributed ledger, could in future offer significant gains in the accuracy, efficiency and security of processes across payments, clearing and settlement as well as better regulatory compliance. In the process, tens of billions of dollars of capital may be saved and resilience could be significantly improved. 10  Securities settlement in particular seems ripe for innovation; a typical settlement chain can involve many intermediaries, making securities settlement comparatively slow, operational risks and costs high. 3. Broader Public Policy Issues Before turning to some specific financial stability issues created by these developments, let me acknowledge a few of the other important public policy considerations that G20 authorities must bear in mind – not least because how they are addressed will influence the extent to which certain financial technologies are adopted and the system is transformed. First, a host of conduct issues with these new products and services, must be addressed including client suitability, Anti-Money Laundering (“AML”) and Combating the Financing of Terrorism (“CFT”).

In the process, they are systematically capturing the type of knowledge I used to gain from my daily interactions with customers in the bank branch. Some providers are leveraging this data to sell their customers non-bank products and services. This – and the desire to avoid regulation – reduces their incentive to integrate upstream to conventional banking. Traditional universal banking begins with the customer relationship – or what I used to have as a teller. This historic preserve of established financial institutions is now being opened up. Aggregators, making use of banks’ Application Programme Interfaces (APIs), are providing customers with ready access to price comparison and switching services. New pro-competition policies are reinforcing this competition. 3  Meanwhile so-called “robo advisors” are deploying algorithms to deliver affordable investment advice to retail customers. 3  The second Payment Services Directive (PSD2) will allow, conditional on FCA authorisation and customer authority, non-banks to access customers’ bank account data. In the UK, the Competition and Markets Authority has required that the UK’s nine largest banks adopt an open banking standard for APIs by early 2018. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  As customers become more willing to delegate decision-making to machines, their funds and loans are being better matched with the best rates from around the system. These flows could become seamless if public policy initiatives and new technologies combine to create digital credentials that are universal, durable and reliable.
4  Capgemini, RBS and EFMA, World Payments Report 2009, September 2009. 5  ECB, Payments Statistics (formerly known as the Blue Book) (see www.ecb.europa.eu). BIS Review 151/2009  3  Moving forward with an e-payments solution give a flying start to “SEPA for online payments”. Moreover, it could take the wind out of the sails of providers who make use of banks’ infrastructures but are not subject to the same strict security requirements. In my view, security is of crucial importance, especially for the online world. Overall, e-SEPA online services would come to the great benefit of corporate customers and consumers. At the same time, e-SEPA will be an additional revenue source to the banking sector. When can the payments industry expect to reach the full SEPA finishing line? As I have outlined, the key implication of SEPA is that the whole economy – consumers, corporates and banks – will benefit from it. So how can we bring this project closer to success? Let me mention two important ingredients, namely, first, a further improvement in the SEPA governance and, second, the necessity of a SEPA migration end date. On first point: SEPA governance. The EPC clearly plays a pivotal role in organising the stakeholder involvement around the design of the SEPA products, currently the SCT and SDD Rulebooks, and the SEPA Cards Framework. However, the governance of a project like SEPA requires that stakeholder involvement at the European level is made more balanced, bringing together stakeholders from all sides of the SEPA project.

The banks and the card industry can help by intensifying their efforts to protect customers against unauthorised transactions. One element of this may be to accelerate the phase-out of magnetic strips and replace them with chips or similar technology. The requirement that all card terminals and ATMs should use chips is a good first step as skimming and the use of stolen cards constitute more than half of all the cases of card fraud in Sweden today. 7 It is important that the customers feel that paying with cards that contain chips is simple and convenient. A uniform standard for how cards should be placed in card terminals can save time and reduce the risk of customers leaving cards behind after purchases have been made. The principle should be the same as for cars: Irrespective of the make of car, we know where the accelerator and the brake pedals are placed! Better reporting of the number of frauds and how much they cost the card industry would also be desirable. It is after all the cardholders that ultimately have to foot the bill and it is reasonable to expect that all the relevant information should be available to them. Such an approach would also increase the cardholders’ confidence in the cards. In France there is a forum for representatives of the authorities and the card industry. They work to inform customers, shop owners, car issuers and other authorities about the security levels in the various card systems.
Ultimately, the common theme in all our efforts is to further the aims of the European Union. These are to promote peace, its values and the well-being of its peoples. As the recent events in Ukraine demonstrate, these aims remain as attractive and compelling as ever. Thank you for your attention. BIS central bankers’ speeches  5

Many questions, including the following, should be answered when developing the vision of SEPA PL: -  what is the target model of the European payment infrastructure and how to make sure that economies of scale are used on the single payment market in order to lower the costs of services for consumers, the appropriate competition is simultaneously provided and specific niche needs of each country are met;  -  what is the best pace for implementing changes, considering the lack of straightforward declarations of the government regarding the date of Poland’s accession to the euro area;  The experience gained so far suggests that the maintenance of the national payment infrastructure is beneficial for Poland. For instance, the launch of Euro-Elixir and Sorbnet-Euro significantly reduced fees for cross-border payments in correspondent banking. So far, the decrease in prices has benefited mainly banks while their clients have felt the positive effects to a lesser extent. The National Bank of Poland hopes that clients of banks will soon more strongly experience positive price developments brought by the modern, safe and effective infrastructure of euro payments. Such a development would indicate undoubtedly that the National Bank of Poland should strengthen its activities to counter the marginalisation of the Polish settlement and payment infrastructure because the existence of a national payment infrastructure would not only support payments specific to Poland (such as ZUS – Social Insurance Institution payments and payments to tax offices), but also bring unquestionable benefits to Polish citizens and companies.
While common monetary policy has been successful, the crisis has shown that we need more solid common institutions in other policy areas. In particular, a common monetary policy requires a common regulatory framework for the financial sector to be able to adequately repair the financial system, thereby securing a durable recovery in the euro area. The adverse impact of “zombie banks” and the evergreening of loans in Japan serve as a stark warning signal. Given the challenges ahead, we should not relax our efforts to put the euro area economies on track to strong and sustainable growth. That way, we can turn the current challenges into opportunities – as the title of today’s event suggests. Further managing the deleveraging process will be key, especially balancing the speed of adjustment and reforming euro area governance. Let me elaborate on these two aspects in turn. Managing the deleveraging process To overcome debt overhangs, we have basically two options. We can consolidate or restructure debt to address the nominal debt stock; or we can implement growth-enhancing structural reforms that make our economies fitter to grow out of the debt burden. Or we could opt for a combination of both. A third theoretically possible option allowing for higher inflation to reduce the real value of the debt would go against the core mandate of central banks. In recent years, we have seen some consolidation in Europe.

As regards public finances, euro area fiscal deficits exceeded 6% at the peak of the crisis in 2009 and 2010, but are expected to fall below 3% this year, while primary budgets are even expected to post a surplus of 0.2%.4 This adjustment strategy has brought with it painful cuts in our social models and has not been without controversy. In fact, some commentators and academics suggest that governments should continue increasing deficits to support aggregate demand while the private sector is deleveraging. They argue that parts of the private sector are debt-constraint and need to reduce their leverage, while parts that are unconstrained are not increasing their leverage sufficiently.5 In such an environment the role for government spending is to expand demand for funds, and especially so when the nominal interest rate is constrained by the zero lower bound.6 I would agree to this approach if the fiscal budget allowed for room for manoeuvre. But the recent sovereign debt crisis has shown that fiscal space is very limited for many European countries. In Japan, the strategy of fiscal expansion has led to a situation in which gross government debt levels now exceed 200% of GDP. The continued favourable financing conditions appear to also be owed to the fact that more than 90% of Japanese government bonds are held domestically. This situation can be seen as a special privilege for the government.
Jean-Pierre Danthine: After the crisis – improving incentives in the financial sector Speech by Mr Jean-Pierre Danthine, Member of the Governing Board of the Swiss National Bank, at the Founding event of the School of Finance, University of St Gallen, St Gallen, 20 May 2011. *  *  *  I would like to thank Gero Jung, Peter Kuster, Pierre Monnin, Angelo Ranaldo and Marlene Amstad for their help and comments. Introduction It is a great pleasure for me to be here for the inaugural ceremony of the new School of Finance at the University of St. Gallen. Naturally, finance has been an integral part of the University for a long time, but I am sure that today’s ceremony represents both a new step forward and the realisation of a new objective. These are certainly warranted if we consider the need for improving financial decision-making made clear by the recent financial crisis. I will take this opportunity to reflect on three fundamental questions that have come to the forefront during this episode. The first issue I would like to address is the question of risk and risk-taking in banking. While there is evidence that the excessive risk-taking that led to the last financial crisis was at least partly attributable to knowledge or competence problems, another important element was the misalignment of the incentives of the various stakeholders of financial institutions. This is particularly apparent in the case of institutions that were deemed too big to fail.

Targeting a very high return on equity is very likely to be inappropriate from a social point of view, as excessive risk-taking imposes an externality on the stability of the system. Concluding remarks Let me conclude with a brief summary. Today I have first reviewed the incentives for risktaking by the various stakeholders of a bank. This review showed that, in particular in the case of a TBTF institution, no single stakeholder group is confronted with a natural incentive for a prudent weighting of risks. I have concluded that we should not be surprised by the assessment that the financial crisis could have its cause in excessive risk-taking by financial institutions. Pursuing the case of TBTF institutions we have considered a set of measures that have the potential to correct the incentive structure. Higher capital requirements in general, a capital surcharge for systemically relevant institutions, Cocos and organisational measures designed to allow for “partial” bankruptcies naturally belong to a programme  8  BIS central bankers’ speeches  aiming at improving financial incentives. It is worth noting that these are essential elements of the TBTF package currently submitted to the Swiss Parliament. Finally, I have discussed the impact of such measures on the incentive to lend, the cost of capital and the return on equity. The aim of these measures is, first, to improve the incentives for balanced risk-taking and, second, to mitigate the implicit subsidy granted to TBTF institutions. These are the firstorder effects.
We have tried to delegate more matters more specifically to the heads of department, leaving them to run the operations and provide continuity and competence. At the same time, the number of departments has been reduced so as to have an organisation that is less top-heavy. The Executive Board's responsibilities have been shared out among the members. That does not mean that we are to manage day-to-day operations, which is a matter for the department heads. Our task is to act instead as a source of support and dialogue. The internal management and the way we handle monetary policy are interconnected. An arrangement with reservations and so on could lead to a polarised picture in the media and that in turn could have repercussions on the internal work. Even though we do not see any differences of opinion as something unnatural, others may do so and that might make it difficult to avoid splits in the organisation. In this respect I think we have been broadly successful. At times the media have presented a dramatic scene with major differences of opinion but with the passage of time we seem to have become less and less newsworthy. At the same time, we have handled the system rather carefully and abstained from arguing with each other. That I thing is wise because the system is rather fragile. BIS Review51/2001  3  Let me conclude by referring back to my opening remarks.

This was a clear break with the earlier arrangement where the management was closer to that of a conventional company with a managing director and a board that exercised control and took the overriding decisions. I should like to conclude with some remarks on the challenges this change involved. As regards monetary policy, it was not all that difficult. In the light of experience from the German, British and American central banks, for example, we had drawn up proposals for working procedures which we have largely adhered to. Our internal process is very open and the staff are deeply involved. The minutes of the Executive Board's monetary policy discussions are published, which dispels any sense of mystery. At the same time, a better foundation is hopefully provided for a discussion of monetary policy in society in general. The matter of internal control has been trickier. One alternative would be to treat the Executive Board as a board of directors; that, however, would have meant working with as many as 18 chief executives in the form of the heads of department. Another possibility would be to see ourselves as chief executives but that, too, has its pros and cons; few organisations have six chief executives, presumably for very good reasons. Perhaps the closest parallel is the board of a group with a number of subsidiaries. In practice we have adopted a variety of approaches.
However, the finding that policy should respond more gradually in the face of uncertainty is not a general one. For example, Söderström (2002) suggests that there is uncertainty about monetary policy’s ability to return inflation in the medium term, that may call for a pre-emptive response. BIS central bankers’ speeches  3  2. Consider all of the outcomes  In the presence of uncertainty, it is wise not to put all of one’s eggs in one basket, but rather to hedge against undesirable states of the world. That is something that market participants know well, and it means that financial asset prices reflect not only what is thought to be the most likely outcome, but also the full range of other possible outcomes and the probabilities attached to them. So what is implied by a literal interpretation of markets – including government bond and interest rate swap markets – is not necessarily a true reflection of what participants expect is going to happen. 5 For example, at the time we were producing the November Inflation Report, the market yield curve implied the first increase in Bank Rate would come in March 2017, and that it would reach 1¼% by the end of 2018. A literal interpretation of this would suggest that in 33 of the coming 36 months the majority of MPC members would have to return home to their respective dinner tables reporting they voted for no change in Bank Rate.

“Life beyond Solvency II: A view from the top of the regulator” Speech given by Charlotte Gerken, Executive Director of Insurance Supervision  Remarks delivered at the Association of British Insurers (ABI) Prudential Regulation webinar keynote address 19 May 2020  I would like to thank Megan Bell, Fred Schneider, Alan Sheppard, Manuel Sales, Lewis Webber, Santosh Pandit, Stefan Claus, Paola Vega and Patrick Cleary for their help in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Good afternoon. Many thanks to the ABI for inviting me to speak at this prudential regulation webinar. When I was asked to give a view from the top of the regulator, I can’t say I’d been expecting to give that view from south west London. Thinking about the theme of today’s webinar, ‘Life beyond Solvency II’, the scope of my talk is two-fold: Firstly to reflect on what we have learned about Solvency II during a first test of the regime, to inform how our regulatory framework may develop following the end of the EU withdrawal implementation period. And secondly beyond the Solvency II regulatory regime, what some of our key supervisory priorities are. As a result of the challenges presented by Covid-19, we – like you – had to shift resource from our longer term business priorities – including supervision and policy reform – to short-term crisis management.