samchain/econo-pairs-v1 huggingface dataset:
It mainly relates to the significant growing number of Banka Popullore branches, which opened 15 new branches throughout the territory of Albania over 2005, and to several other banks within this group, which expanded with some new branches and agencies after a period of long inactivity. The number of employees grew considerably over 2005, by 24 per cent, from the growth of 26 per cent over 2004. This significant growth in the number of employees is mainly related to the expansion of the banking system network and to the extension of the banks’ activities, which requires a better division of work and a more complete organizational structure. By the end 2005, the Albanian banking system had 3,479 employees, from 2,816 over the previous year. Compared to the previous year, the number of employees per banking unit decreased over 2005. In 2005, banks had 13.9 employees per banking unit, compared to 15 over 2004. Such a decrease has been a consequence of the growing number of branches and agencies with higher rates than the growth of the number of employees. A considerable number of branches and agencies have been established in sparsely populated areas; as a consequence, the number of employees in these branches and agencies has been quite small. The number of loan officers has increased considerably, following the significant growth of lending over 2005 and in the upcoming period. A considerable number of banks have restructured their loan departments, aiming at a more distinct division of duties and responsibilities.

Although the decoupling of countries seems highly difficult in a global environment where all countries get increasingly interpenetrated via capital flows and financial integration, it is a fact that developing countries have ended up in a much better position in the recent global crisis in comparison to their economic performance in the past crises. It would not be wrong to assert that the main reasons underlying this transformation are the increased commercial, financial and economic relationships among developing countries, accompanied  BIS central bankers’ speeches  1  by strong economic and institutional governance practices formulated in view of lessons learnt from past crises. The increase in the volume of trade among developing countries has reduced the adverse effects of the weak course of external demand from advanced economies. Therefore, production and employment levels in developing countries have assumed a more rapid pace of recovery. At this point, by using Turkey’s export data, I would like to exemplify the importance of diversification of export markets driven by improving relations with countries in the region. As it is known, the European Union countries have the largest share in Turkey’s exports. Nevertheless, the share of member states of the Organization of the Islamic Conference (OIC) in Turkey’s exports is rapidly growing. During the period between end-2000 and end2010, while the share of the European Union countries in total exports of Turkey declined from 56% to 46%, that of OIC member states rose from 13% to 29%.
It’s also easy to understand why. On the whole the mortgage stock grows not because the same people, living in the same property, progressively take out bigger mortgages over time. It does so because, if house prices go up, new entrants and those trading up the market have to  4  Even some of this is not debt as commonly understood. For example, if you use your credit card for retail spending but pay it off every month, never incurring any interest, the rolling balance counts as debt in these statistics. Partly for this reason, and probably because there has also been a rise in “zero-interest” offers on new cards, the share of credit card debt currently paying no interest at all seems to have risen. A simple comparison of actual interest payments on credit cards to quoted interest rates suggests it’s currently around one half, twice what it was a decade ago. 5 Over the past five years, and for every £ of debt, write-downs on mortgages have averaged just under £ per year. The comparable figure for credit cards and consumer loans is over £ This gap is not untypical. 6 This is a repeat of some of the points in Broadbent (2012). 9  All speeches are available online at www.bankofengland.co.uk/speeches  9  borrow more than their predecessors did – those now moving down the market – to buy the same properties.

If so, one wouldn’t expect to pick up any levels effects, even when they genuinely exist, in simple cross-country comparisons like that in Chart 3. Those might simply be telling you that, for various structural reasons, a  3  All speeches are available online at www.bankofengland.co.uk/speeches  3  pound of debt is not quite the same thing, or equally risky, from one country to the next.2 Besides, the distinction between levels and growth rates is in any case a bit fuzzy. If one country has a higher debt burden than another it’s probably gone through a period of faster growth as well. That’s got to be the case if one’s comparing levels of debt in the same country but at different points in time. Nevertheless, the comparatively poor predictive power of the level of debt is quite striking and I think there may be a few lessons one can draw from this. First, if there are structural differences in the nature or terms of debt, whether across countries or over time, it is important to try and take account of them. One example in the UK is within unsecured household debt. This is now a pretty broad category. It includes two things – PCP (“personal contract purchase”) contracts for car purchases and student loans – both of which are relatively new and neither of which, arguably, is really unsecured debt in the conventional sense or at least carries the same risks for borrowers. PCP contracts are more like rental agreements.
Yet, after more than a year of crisis, credit markets remain very fragile, normal interbank relationships have not been reestablished, and those frictions could destabilize the financing of the corporate sector, thus further threatening economic growth. With our last decision, we have given financial intermediaries full assurance that their liquidity needs will be met, in an environment of total clarity and absolute predictability. We hope that this will contribute to reduce uncertainty and restore confidence between counterparties, which is a prerequisite to a functional money market. This may depend on more than simple liquidity provision. But central bank’s ability – and willingness – to use their capacity are a major source of stability in the financial system, and should be seen as such, both by market participants and the general public. BIS Review 122/2008  1  Second, on monetary policy. We have participated in a concerted action by major Central Banks This is a major, and unprecedented, move to restore confidence, but one, I want to emphasize, fully and absolutely consistent with our mandate. It is obvious to all observers that the overall environment has dramatically changed in the last three weeks. Declining oil and commodity prices, together with stagnant activity have significantly altered the inflation outlook. Based on current conditions, we can expect "instant" inflation rate to come under our definition of price stability somewhere in the middle of 2009.

The Eurosytem will keep fulfilling its priority mandate of price stability while also contributing to the broader objective of financial stability. Governments are increasing their cooperation. So the eurozone has shown it is well equipped to live up to its responsibilities as a truly global player in the international monetary system of the 21st century. I thank you for this opportunity to present my views. BIS Review 122/2008  3
Going the other way, very rapid inflations have been bad for real output growth and they’ve also tended to push up the real cost of public-sector debt thereafter, via a higher risk premium. For those reasons, and even from the narrow perspective of the government finances alone, I think these  11  Giovannini and de Melo (1993). 11  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  11  simulations should be seen as relatively optimistic, at least over the longer term. But they do at least give us some sort of handle on the marginal effects of higher inflation. As a starting point, we should begin by recognising that if the extra inflation is fully anticipated it will have very little impact on the public finances. That’s because investing institutions, which care about real returns, could then take account of it in the price they’re prepared to pay for the debt. If everyone knew in advance that inflation was about to rise permanently by (say) 1% point you’d expect nominal yields to be 1% point higher, across the curve, than they otherwise would’ve been. In real terms, the government wouldn’t pay any less for its debt – the newly sold debt, at least – even after the inflation arrives. The real value of the principle declines by an extra one per cent a year. But the interest payments – the coupons – are also a percentage point higher.

All else equal – for a given setting of monetary policy – it was also disinflationary. Qualitatively, at least, the same thing is going on right now. Public sector debt has risen significantly, across the developed world, in response to the pandemic. But, as was the case after the financial crisis, this has not been caused by any material rise in governments’ spending on goods and services, or their direct demand for underlying economic resources. It’s because tax receipts have fallen sharply and, more materially, because governments have compensated people for the impact of mandated lockdowns. Private and aggregate demand have fallen, below the economy’s supply capacity – despite these huge transfer programmes, rates of unemployment and wider measures of spare capacity are rising. And it’s in response to these disinflationary pressures that independent central banks everywhere, including in the UK, have eased monetary policy. Anyhow, having set out at some length the points I want to make, I hope I can be reasonably concise in the body of this talk. I’ll cover first the cyclicality of interest rates under inflation targeting. Via some very simple simulations I’ll then look briefly at the impact of inflation on the public finances, focusing in particular on the effect of paying interest on central bank reserves. After an equally brief canter through some of the relevant bits of UK history there’s a short concluding section.
As is well known, Spain’s current system for valuing assets is highly demanding, both in terms of the criteria for classifying assets as troubled and in terms of provisioning and write-downs. One example would be the treatment of savings banks’ exposure to the construction and real-estate development sector. The total amount of this exposure is € billion, of which 28 billion (13%) is made up of doubtful assets. That said, the requirements of the Banco de España force the banks to also record as potentially troubled investments, and make the necessary provisions for, assets acquired in payment of debt, as well as standard loans under surveillance owing to some observed weakness, even if payments are up to date. As a result of these rigorous asset classification criteria, as at 31 December 2010 savings banks were obliged to recognise € billion of potentially troubled lending to construction and property development, i.e. 46% of their total loans and receivables in this sector. This gives an idea of the transparency efforts made, which have been far beyond those required in other parts of the world. Accumulated specific loan loss provisions represent 31% of these “extended” troubled assets, and if we add the general provisions this percentage reaches 38%.

Perhaps the most natural explanation for the fact that inflation in the 1990s has been lower than its historical relationship with growth suggests, seems to be the markedly lower inflation expectations. This is also indicated by data from studies at the Riksbank. From a level between 6 and 8% in the 1970s and 1980s, in recent years expectations of longer-term inflation have gradually moved down to about 2%. This is an impressive change that stems in the main from regime shifts in various fields that have been achieved since the late 1980s. Furthermore, it looks as though expectations are now anchored relatively firmly in the vicinity of that level. Once a low-inflation regime has been established and people count on price increases being low in the longer run, the rate of inflation is determined mainly by the demand situation in relation to production capacity. During a process of disinflation, however, low capacity utilisation and falling inflation expectations both exert a downward effect on actual inflation. This can give the impression that the relationship between demand and inflation has changed. In that the pattern in the 1990s has been dominated by the reduction in expected inflation, the partial relationship between demand and inflation has been difficult to analyse, not least because it is hard to arrive at statistical measurements of the output gap, structural unemployment and their impact on the inflation process. Still, the hypothesis that inflation’s sensitivity to resource utilisation has changed from the 1980s to the 1990s does seem to have some support.
Over the next two years, the current process of disclosure by the users of capital, reaction by the suppliers of capital, and adjustment of these standards will be critical to ensure that the TCFD standards are as comparable, efficient and as decision-useful as possible. Risk management With better information, the frontier will be to upgrade risk management and optimise returns. As the supervisor of the world’s fourth largest insurance industry, the Bank of England knows that general insurers and reinsurers are on the front line of managing the physical risks from climate change. Insurers have responded by developing their modelling and forecasting capabilities, improving exposure management, and adapting coverage and pricing. In the process, insurers have learned that yesterday’s tail risk is closer to today’s central scenario. And leading insurers also understand that the breadth, magnitude, and foreseeable nature of climate risks— mean the biggest challenge will be to assess the resilience of firms’ strategies to transition risks. That’s why, the Bank of England just set out our supervisory expectations for banks and insurers regarding their governance, risk management, strategic resilience and disclosure of climate-related financial risks. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  And in June the Bank announced that we will be the first supervisor to stress test our financial system for resilience against different climate transition pathways: ranging from early and orderly to late and disruptive.

Thereafter, the MPC expected that inflation was more likely than not to fall back and be below target for a period [Slide 5]. You can see that the most likely outcome, shown in the darkest band, was for inflation to stay below the target at the end of the forecast period. But the MPC also saw upside risks to that projection, stemming from the possibility that the current high level of inflation might become embedded in inflation expectations, so making inflation itself more persistent. To make these risks easier to discern, the MPC also makes available charts of the cross section of the probability distribution at particular points on the forecast horizon, like the one shown in [Slide 6]. The upside risks mean that at the end of the forecast horizon, the MPC judged that inflation was as likely to be above the target as below it. We can see this in the chart, because the narrower bands towards the left hand side mean that the mass below the vertical line marking 2% is about the same as the mass above it. But why do we show our projections like this? Many other economic forecasters publish their forecast as a single, most likely outcome. In our view, this sort of forecast is not very informative, as the actual probability of it being correct is very close to zero. In contrast, the whole distribution contains much more information. What matters for policy is the entire distribution of outcomes.
The prevailing international view during the great moderation was that financial crises could best be managed by monetary policy when they arose – this view has been described as the “Jackson-Hole consensus”. Another description of this view is that crises are managed by “mopping up afterwards”. This did not mean that there were no differing opinions, but as you know the advocates of these different views were talking to deaf ears. 11 However, the most recent financial crisis illustrates with great clarity the size of the costs of “mopping up afterwards”. In this context, it should be pointed out that the Riksbank warned about developments in the Swedish housing market long before the financial crisis. 12 This was in turn connected to the fact that we in Sweden had not in every aspect learnt our lessons from the 1990s crisis. One can say that the new stabilisation policy framework had given us control over public debt and inflation, but that there was no natural limit for indebtedness in the private sector. This led to the substantial increase in housing prices and household indebtedness we have seen – with a few brief intermissions – since the middle of the 1990s. The experiences of the global financial crisis have also led to extensive international regulatory work and to many countries now establishing new organisational structure and tools within what is known as macroprudential policy.

Negative repo rate and bond purchases – to safeguard the credibility of the inflation target The fact that we now have introduced a negative interest rate and begun purchasing government bonds in Sweden is basically because we want to safeguard the role of the inflation target as nominal anchor. I mentioned earlier that monetary policy should give consideration to financial stability. But this is because financial stability is a necessary condition for attaining stable inflation in the long run. Conditions for being able to give  23  For further information, see “Low global interest rates”, article in the Monetary Policy Report, October 2014, Sveriges Riksbank. See also Hamilton, D., Harris, E. S., Hatzius, J. and West, K.D., “The Equilibrium Real Funds Rate: Past, Present, and Future”, University of California at San Diego Working Paper, 2015. BIS central bankers’ speeches  9  consideration to financial stability in monetary policy decisions are that inflation expectations are firmly anchored around the target and that inflation is fairly close to the target. With hindsight, we can see that inflation has been lower than the Riksbank and most other forecasters had expected. And this doesn’t only apply to Sweden; inflation is very low in most developed countries. What happened in Sweden last year, when inflation continued to be lower than expected at the same time as inflation expectations continued to fall, has thus rather dramatically changed the conditions for monetary policy.
This is currently my best assessment of the sustainable rate of unemployment in Sweden after having read a number of papers on the subject and having discussed the issue with several specialists in the field of labour market economics. 12 The lower repo-rate path is also better if one assumes a level of 6 per cent. 13 At a press meeting on 3 March, the Minister of Finance, Anders Borg, announced that the Ministry’s assessment of the equilibrium rate of unemployment has been revised downwards from 6 per cent to approximately 5 per cent by 2015. 14 The Ministry of Finance plans to publish its calculations in a ministry memorandum in connection with the spring budget bill 2011. One could perhaps object that it is not certain that the lower repo-rate path in panel a of Figure 8 is necessarily the best repo-rate path. It does, however, appear to fulfil the Qvigstad condition in that the inflation gap in panel c is mainly positive and the unemployment gap in panel d is also positive (for the entire forecast period if the sustainable rate of unemployment is 5.5 per cent and for most of the forecast period if it is 6 per cent). One can show that an even lower repo-rate path leads to a lower mean squared gap for unemployment but to a higher mean squared gap for inflation. It is thus no easy matter to stabilise both better. However, a somewhat different profile for the low repo-rate path may perhaps provide a better result.

The repo-rate path chosen by the majority does not meet the well-known necessary but not sufficient condition for a well-balanced monetary policy formulated by the Deputy Governor of the Norwegian central bank Jan Qvigstad (2005). Applied to inflation and unemployment, this condition means that the inflation gap (the difference between inflation and the inflation target) and the unemployment gap should have the same sign. As the inflation gap is negative and the unemployment gap is positive for the majority’s repo-rate path for most of the forecast interval, this condition is not met. With a lower repo-rate path, on the other hand, the gap for both would be reduced and target attainment for both inflation and unemployment would thus increase. The fact that monetary policy is not well-balanced for the majority’s repo-rate path is clearly demonstrated if one uses mean square gaps to measure target attainment as in Figures 7 and 8. Figure 7 shows the forecasts for the CPIF and unemployment that are compatible with the main scenario’s repo-rate path and the higher and lower repo-rate paths published in Chapter 2 of the Monetary Policy Report in February. Panel b shows that the repo-rate path of the main scenario does not meet the Qvigstad condition. Neither is it effective, as a lower repo-rate path stabilises both inflation and unemployment better. Figure 8 shows the main scenario’s repo-rate path and the lower path that Karolina Ekholm and I advocated at the meeting.