samchain/econo-pairs-v1 huggingface dataset:
Peter Praet: Deleveraging and the role of central banks Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the Conference “The effect of tighter regulatory requirements on bank profitability and risk-taking incentives”, Bocconi University, Milan, 26 October 2012. *  *  *  I would like to thank Roberto Motto, Fédéric Holm-Hadulla, Cornelia Holthausen and Angela Maddaloni for their contributions to the preparation of this speech. Ladies and Gentlemen, I am pleased to speak today at this renowned banking conference at Bocconi University. The banking sector’s deleveraging process in the euro area has been underway since 2008. Until recently, most of the adjustment was achieved by increasing capital via equity issuance, conversion of hybrids, capital injections and retained earnings. With the intensification of the sovereign debt crisis there has been stronger pressure to also adjust via asset shedding, especially those assets with higher risk weights. The deleveraging process, while necessary, always bears the risk of becoming abrupt and disorderly, thus threatening the provision of credit to the non-financial sector and the transmission mechanism of monetary policy. In my remarks today I will highlight the challenges for the central bank in dealing with this process, arguing that the measures undertaken by the Eurosystem in recent years have helped to prevent self-enforcing spirals and a credit crunch. I will then focus on the special circumstances of the euro area, given its institutional features.

1 Beverly Hirtle, The Economic Health of the Region, Remarks at the Waterfront Alliance Regional Symposium:  Recovery and Resiliency in a New Era (delivered via videoconference), January 14, 2021. 2 Jaison R. Abel and Richard Dietz, “Some Workers Have Been Hit Much Harder than Others by the Pandemic,”  Federal Reserve Bank of New York Liberty Street Economics, February 9, 2021. 3 David Dam, Meghana Gaur, Fatih Karahan, Laura Pilossoph, and Will Schirmer, “ Black and White Differences in  the Labor Market Recovery from COVID-19,” Federal Reserve Bank of New York Liberty Street Economics, February 9, 2021. 4 3/4  BIS central bankers' speeches  4 Small Business Credit Survey: 2021 Report on Employer Firms, a collaboration of the twelve Federal Reserve  Banks (2021). 5 Claire Kramer Mills and Jessica Battisto, “Double Jeopardy: COVID-19’s Concentrated Health and Wealth  Effects in Black Communities,” Federal Reserve Bank of New York, August 2020. 6 Outreach and Education, Economic Inequality & Equitable Growth hub, Federal Reserve Bank of New York. 7 Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, January 27,  2021. 4/4  BIS central bankers' speeches
And today I am pleased to announce a launch date, June 2021. The exercise will explore three different climate scenarios, testing different combinations of physical and transition risks over a 30-year period. We expect to use the exercise as a tool to size the risks faced in these scenarios, to understand how different bank and insurance business models will be affected and how they might respond, and finally as a way of improving firms’ risk management practices through the process of carrying out the exercise. We set out our proposed approach to this exercise in a discussion paper at the end of last year. Building on feedback we received in response to that paper, ahead of the launch, we will share with participants more detail on some key aspects of the exercise – for example around data requirements and scenario variables. This active engagement with participants, which we will map out this week, will help build their assessment capabilities and prepare for the exercise. We will not use the results to size firms’ capital buffers. But that does not mean firms should not be thinking about near-term capital requirements. As we have set out in our supervisory expectations, firms must assess how climate risks could impact their business and review whether additional capital needs to be held against this. Investments that look safe on a backward look may be existentially risky given climate risks.

When activity picked up after the pandemic and inflation accelerated, it was necessary to normalise the interest rate level. Both the aim of stabilising inflation and the aim of stabilising the real economy implied a markedly higher policy rate. Chart: Monetary policy trade-offs Further out, the trade-offs between inflation and employment are likely to become clearer. In our projections, the output gap declines and turns slightly negative in the course of next year. [8] Inflation abates but remains above the target throughout the projection period. The fact that inflation remains above target in the projection reflects the fact that we also put weight on employment in the trade-offs. If our sole concern had been to rapidly return inflation to target, we would have set the policy rate higher. Chart: Cost shock - monetary policy trade-offs  The surge in energy prices since winter can be viewed as a cost shock. A cost shock is a price rise that is caused by conditions other than the level of economic activity. What does the economics literature say about how monetary policy should respond to such a shock? Let me illustrate this with the aid of a textbook model. [9] I look at a situation where the economy is initially in balance, but inflation rises due to a cost shock. Under a flexible inflation targeting regime, the central bank will weigh the rise in inflation against the aim of high and stable output and employment.
Since 1997 we have applied a simple policy rule in order to make our monetary policy even easier to understand: If the forecast shows that inflation will be above target level two years ahead, we usually raise the repo rate, and we lower it if the forecast is below target level. But, as I intend to argue here, the policy rule cannot be applied mechanically. It should instead be regarded as a rule that on average provides a good picture of the policy, but where departures from the rule can and should be made under certain circumstances. The first argument is connected with the time aspect. As there is a time lag before monetary policy has an effect – it takes around 1-2 years before interest rate adjustments achieve full impact on inflation – the Riksbank’s policy must look ahead. Our interest rate decisions are therefore based on forecasts of, for instance, the prospects for inflation and economic activity over the coming two years. It goes without saying that these forecasts, like other assessments of future events, are uncertain. Forecasting errors are often due to genuinely unexpected things, which we have not been able to assess in advance. At the beginning of 1999 the Riksbank made a decision to clarify the principles for monetary policy, as a complement to the simple policy rule. This clarification states that monetary policy is normally aimed at bringing inflation onto the targeted path one to two years ahead.

Gent Sejko: Bank of Albania highlights for 2015 and priorities for 2016 Speech by Mr Gent Sejko, Governor of the Bank of Albania, at the press conference on Bank of Albania highlights for 2015 and priorities for 2016, Tirana, 3 February 2016. *  *  *  Year 2015 was a challenging one in the light of maintaining and consolidating the economic and financial stability and of improving the institutional framework of the Bank of Albania. The Bank of Albania has provided substantial contribution to maintaining and consolidating macroeconomic balances and financial stability in Albania. The accommodative monetary policy, implemented throughout 2015, was a pivotal underlying factor for ensuring an economic and financial environment with low interest rates, amid ample liquidity. The prudential supervision of banks, the regulatory improvements, along with the intensive exchange of information with European and international counterparts contributed to strengthening and safeguarding banking system's financial stability. The beginning of 2015 coincided with a set of institutional decisions adopted by the Parliament of Albania and the Supervisory Council of the Bank of Albania, which provided the ground for the return of public confidence to the institution.
Expressed in USD, the average selling price was USD 351,40 per ounce, which was 17.2 USD higher than the average London fixing price between Mai 2000 and March 2005 (334,2 USD). The bulk of this excess  BIS Review 31/2005  3  performance (13.4 USD) resulted from the currency hedge of the expected USD proceeds (CHF 829mio). In the context of increasing gold prices, the profile of the yearly quotas, with their overweight at the end of period, contributed with 3.1 USD to the excess performance. The residual performance (0.7 USD) was related to the combined effects of the option programs, the spot sales and the sales through the BIS. SNB spot sales were realized at a price corresponding to the fixing plus 22 cents, whereas the average premium over the fixing for the cap sales was USD 1.9. IV. Lessons and conclusions  Last week, the SNB’s General Assembly approved the 2004 accounts of the SNB, thereby formalizing the disbursement of the CHF 21.1bn proceeds of the 1300 tonnes of gold. One third of that amount will go to the federal government and two thirds to the 26 cantons. Beginning on May 12, the SNB will disburse the money in ten weekly tranches. The disbursements will have no impact on the Swiss yield curve or the exchange rate as the necessary portfolio adjustments were made in the run up to the pay out.

The official parity also determined the valuation of the gold stock on the SNB’s balance sheet. In order to eliminate these residual relics of the gold standard and enable a change in the SNB’s gold policy, the Swiss Constitution as well as the Coinage Act needed to be amended first. BIS Review 31/2005  1  Whereas during the 1980s and the early 1990s, the political climate did not permit such constitutional and legal amendments, the situation finally evolved in the late 1990s. The deterioration of Switzerland’s public finances led to a growing awareness of the opportunity costs of maintaining the existing structure of the SNB’s assets. The vast gold holdings increasingly gave rise to concern in the context of bearish market sentiments and of gold sales by other central banks. In November 1997, a partial revision of the Swiss National Bank Law increased the flexibility of the SNB’s reserve management activities. However, further legislative reforms were required to enable gold sales. In February 1997, a first decision regarding the demonetisation of gold was taken by the Committee for Economic Affairs and Taxation of the National Council, the lower chamber of the Swiss Parliament. Two months later, against the backdrop of mounting international criticism about Switzerland’s role in WWII, the President of the Confederation proposed to allocate some of the gains in the likely event of a gold revaluation to fund a Swiss Foundation for Solidarity which would provide assistance to persons in needs in Switzerland and abroad.
He succeeded, proof of which is that the department now has the Pentti J.K. Kouri Career Development Associate Professor of Economics. Today, rather than attempting to elaborate on Kouri’s contribution, I think this is a good opportunity to address some issues on the state of macroeconomics and policymaking, which is the purpose of the conference, and are two aspects to which Rudi and Pentti contributed a lot. If they were here with us today, their deep insights and provocative ideas, regardless of whether we agreed with them or not, would certainly make us think. Changes in the world economy, macroeconomics, and policymaking More than 30 years after Kouri’s influential work, the world has changed dramatically, and so have economic theory and policymaking, especially in emerging market economies. There is a growing role of markets in the determination of prices, in particular interest rates and exchange rates. There is much greater trade and financial integration, which is a source of greater interdependence cross economies, but is also a source of much greater opportunities for developing countries. Finally, financial markets are much more sophisticated, which is also a source of vulnerabilities and opportunities. There has been also a profound evolution of macroeconomics. Developments, such as rational expectations and dynamic inconsistency, changed the views on what macroeconomic policies could achieve. They were also the basis for the discussion of rules versus discretion, and the general preference for the conduct of policies under flexible rules, or constrained discretion.

Zdeněk Tůma: Education as investment in human capital Speech by Mr Zdeněk Tůma, Governor of the Czech National Bank, for the graduation ceremony, The New Anglo-American College, Prague, 20 June 2008. *  *  *  Ladies and gentlemen, dear colleagues, It is my pleasure to be here today and to share with you some thoughts that concern the role of education as an investment in human capital in the long-term development of our economy and society in general. Today it’s commonplace for politicians to swear by concepts like investment in education, knowledge-based economy or the effect of education on long-term economic growth. They are also quick to add something about the necessity to pay for university education, at least those on the right wing of the political spectrum. Don’t worry, we haven’t met today to assess individual political ideas, and we all know that sometimes it’s a long road from what politicians say to what they do. However, the fact that you are sitting here today indicates that viewing education as an investment has its place in today’s society regardless of political preferences. I would like to use this opportunity to point out that although the concept of investment in education may be somewhat misused and can have unfortunate overtones for somebody, it has a rigorous theoretical foundation and is of high empirical relevance.
There is a view that the euro should in some sense ‘belong’ to the participating countries and to them alone. If that view were to prevail it would point in the direction of one form of bureaucratic regulation or another - no doubt with a nod in the direction of monetary policy considerations as justification - which would damage the euro at least as much as it would harm the financial markets of the City. At the same time some of these same people argue for a successful, strong and widely-used euro that will take its proper place alongside the dollar and the yen as an international BIS Review 23/1998  -4trading and portfolio currency, and in that context they positively welcome the active participation of London. In the end I do not think there is very much choice. In a world of increasingly integrated capital markets and liberalised capital movements it is inconceivable that the international use of the euro could be unnaturally constrained. There will be active euro markets in the major financial centres of the world, including in London, which will be ready to trade in the whole range of euro wholesale financial products from day one. And that will be in the interest of financial activity right across Europe. Like trade in goods, trade in financial services is a positive sum game, so that London’s success is not a threat to other European financial centres.

As a major interface between Europe and the rest of the world I have little doubt that euro-activity in London will mean more rather than less euro activity in other European financial centres like Frankfurt, Paris, Milan, Amsterdam or Copenhagen. And I have little doubt either that what is good for those centres will be good too for the City. Thirdly, and perhaps most fundamentally, the United Kingdom, even while it does not participate in the euro, can contribute to its success by continuing to pursue macro-economic, both fiscal and monetary, discipline in parallel with the euro-area countries. The Government is committed to this course as a matter of national economic self-interest - one of its very first acts in Government for example was to hand operational independence for the conduct of monetary policy to the Bank of England. But these same policies are calculated, too, to make us a more prosperous and active trading partner for Europe as a whole, and to ensure that we do not have any avoidable disruptive effect on the policies or on the economy of the euro participants. More than this they are calculated to foster sustainable economic convergence as the necessary precursor to our eventual adherence to the euro club. And in the meantime the British Government will continue to pursue, and to advocate in the councils of Europe the supply-side flexibility that will be vital to its success.
Secondly, inflation expectations rose steadily – albeit from a low level – particularly in the UK and the US (cf. chart 2b). This trend was reinforced by the outcome of the US election, which fuelled expectations of a more expansionary fiscal policy and a stronger increase in US government debt. The rise in yields also reflects higher risk premia caused by generally heightened uncertainty surrounding the future course of US fiscal and monetary policy. Page 1/7  Berne, 15 December 2016 Andréa M. Maechler  News conference  Thus, the increase in yields was particularly pronounced in the US. Ten-year US government bonds recently stood at around 2.5%, 1 percentage point up from mid-year. By contrast, yield increases in Japan and Europe were on a smaller scale. Yields on ten-year Swiss Confederation bonds recently stood at –0.1%, half a percentage point up from mid-year. Approximately 60% of outstanding Confederation bonds are currently still generating negative yields, compared with around 95% at the end of June. The global rise in yields has led to a reduction in the share of negative-yielding government bonds worldwide from over 30% at the end of June to around 20% most recently. Although this trend can be seen as a step towards normalisation on the bond markets, it is important to recognise that higher US yields and the associated appreciation of the US dollar could become a burden for some emerging economies.

A major reason for this is the debt brake, which is extremely important for monetary policy and contributes to safeguarding an independent monetary policy. By pursuing a monetary and fiscal policy oriented towards stability, the negative impact of the crisis on the Swiss economy could be mitigated. As the events of the last two years have brought into focus, the monetary policy of a small open economy must also be able to rely on healthy fiscal policies in other countries. The debt crisis and the way the markets perceived it have considerably impaired the conduct of monetary policy in Switzerland. To fulfil its mandate, the Swiss National Bank has had to take far-reaching measures, such as setting a minimum exchange rate against the euro. BIS central bankers’ speeches  1
Although, it is worth acknowledging in this context that Congress did approve legislation setting up a special contingent resolution process for the government-sponsored enterprises (GSEs) in the summer of 2008. A final lesson from this phase of the crisis was the critical need for policymakers to question the validity of the assumptions that are often taken for granted in assessing the risks to financial stability. For example, most macroeconomic models do not have an explicit banking sector. Thus, in simulations of the effects of house price declines, the main channel of propagation is an indirect one through a wealth effect on consumption. As house prices continued to decline at unprecedented rates, many analysts started to reconsider the adequacy of what had previously been considered ample capital in the U.S. banking system, and thus the extent to which this capital would be a firebreak against a significantly sharper contraction. If this firebreak was insufficient or perceived to be insufficient, then these analysts correctly anticipated that a vicious adverse feedback loop might take hold: declines in economic activity would make financial institutions reluctant to lend in order to conserve capital for possible credit losses, the decline in lending would further reduce economic activity and so on. This type of nonlinearity had not been part of pre-crisis evaluation of the risks of large house price declines, but by the spring of 2008, it was becoming a central concern.

Mr Chairman, The new ACCA qualification is designed to provide accounting knowledge skills and professional values which will deliver finance professionals who are capable of building successful careers across all sectors, whether they are working in the public or private sectors, practising in accounting firms or pursuing a career in business. ACCA has designed a qualification which embeds the global accounting education standards set by the International Federation of Accountants (IFAC). There is a strong focus on professional values, ethics and governance. These skills are essential as the profession moves towards strengthened codes of conduct, regulation and legislation with an increasing focus on professionalism and ethics in accounting. They will be examined at the highest level in the new ACCA Qualification, and will be a core element of students’ practical experience requirements. Mr Chairman, allow me now to dwell on the main theme of our discussion this evening. Going through the literature one finds it difficult to obtain explicit definitions as regards the concepts of “integrity” and “professionalism”. However, the associated behaviours and characteristics of the two concepts are fairly unproblematic. In this regard, behaviours associated with “integrity” include honesty, sincerity, truthfulness, punctuality, ethics, fairness and justice while professionalism is characterised by expertise, generalised and systematic knowledge, a high degree of self control and governance by a code of ethics. Mr Chairman, the behaviours and characteristics described are virtues which are desirable in finance, industry and business.
The Czech Lands had been a key industrial and economic part of the former AustriaHungary and hence had a relatively well-developed banking sector. An awareness of the close links between government finances, the banking sector, firms and households shaped the economic policy of the First Czechoslovak Republic. Karel Engliš worked systematically to balance the budget and deserves most of the credit for sorting out public finances in the early 1920s. In 1927 he submitted three tax laws that substantially lowered corporate taxation and supported the creation of capital. At the same time, though, he tied the tax reform, which led to lower revenues, to cuts in government expenditure and a streamlining of the civil service. So, Rašín and Engliš established a trinity of traditions in our country: a stable currency, sound government finances and non-inflationary economic policy. These traditions became a theoretical, practical and moral legacy for subsequent generations of economic policymakers. It is unusual these days to look back to the communist period for economic inspiration. The socialist system was inefficient and cumbersome and discouraged initiative and innovation. Central planning by definition made the system less adaptable to change and created an economy of shortage. Despite this, the Czechoslovak version of socialism tried to eliminate the most glaring imbalances and preserve basic macroeconomic equilibrium. Fortunately, our central planners didn’t cause any major imbalances in the consumer market in the 1980s, so the savings surplus wasn’t as large as in other communist countries.

I wish you an interesting debate. Thank you for listening. 2/2  BIS central bankers' speeches