samchain/econo-pairs-v1 huggingface dataset:
In addition, on account of the high liquidity levels prevailing in the banking system, reserve requirements were introduced. The capital structure of the banks was also strengthened through new share issues and an augmentation of internal reserves, while a capital market, in the form of the Malta Stock Exchange, was set up. Supporting economic reforms included a relaxation of the extensive system of import controls, the partial lifting of wage-price controls and an overhaul of the income tax system. The introduction of reserve requirements and of open market operations by the Central Bank of Malta in 1994 opened the way for the removal of administered interest rates. At the same time, the Bank encouraged banks to manage their liquid assets more actively, setting the stage for the development of an interbank market. The Central Bank of Malta’s engagement in open market operations was followed by the establishment of a market-driven interest rate structure, which is, of course, of paramount importance for the transmission of monetary policy signals. The Bank began to use weekly auctions to influence the size of the monetary base, while gaining control over the excess liquidity in the banking system. Maximum interest rates on bank loans and advances were linked to the Central Bank’s discount rate, injecting some flexibility into the interest rate structure. Soon after, preferential lending rates were abolished, with a margin of three percentage points above the discount rate being permitted for almost  BIS Review 31/2004  1  all categories of lending.

By the end of 2003 for example, the domestic banks’ assets amounted to over 277% of GDP, compared with a euro area average of 273%, while the ratio of domestic bank credit to GDP stood at 155%, as against 143% in the euro area. More significantly, spreads between short-term lending and deposit rates in Malta, at 2.41 percentage points in 2003, were even narrower than the euro area average of 3.48 points. This suggests that the local banks compare favourably in terms of efficiency with banks elsewhere in the European Union. Furthermore, despite the global economic slowdown and the recent weak performance of the Maltese economy, the profitability of banks in Malta, as evidenced by the return on assets, has been fairly stable at around 0.8%. This compares with an average return of 0.6% recorded by European banks in 2001. At the same time, bank liquidity remains very high, with the domestic banks’ holdings of liquid assets as a share of short-term liabilities, just under 50% at the end of 2003, consistently exceeding the 30% prudential requirement. Maltese banks are also strongly capitalized. Their aggregate capital adequacy ratio, defined as the ratio of own funds to risk-weighted assets, stood at 16.7%. On the other hand, the banks’ loan portfolio still tends to be concentrated on a few sectors, reflecting the structure and small size of the Maltese economy. Furthermore, they still rely too heavily on property as collateral.
Unfortunately there is no measure of inflation that in every situation can show whether monetary policy is properly balanced or which measures are called for. I have already mentioned the CPI’s advantages. The main drawback is that from time to time this index is markedly affected by price movements that the Riksbank neither can nor wants to counter. Not wanting to counter them mainly has to do with the time lag before monetary measures bite; another reason is that we would be chasing our own tail if, for example, we were to raise the interest rate to counter an increase in interest expenditure that stems from our own earlier interest rate hikes. We have therefore clarified how policy is formed in relation to price movements that are transitory. In practice, monetary policy in recent years has been based on forecasts of inflation excluding indirect taxes, subsidies and interest expenditure, that is, on the index known as UND1X. •  The third issue is the exchange rate’s role in monetary policy. There is less talk about this today but in the early years with the inflation target the public debate was all the more lively. The discussion subsided when the Riksbank, early in 1996, made it clear that policy is guided by the long-term outlook for inflation and continued to lower the repo rate even though the krona had weakened. For monetary policy the central consideration is thus the exchange rate’s impact on inflation.

In this context, a high enough level of real convergence (in addition to the compliance with the nominal convergence criteria) is needed when joining the euro area, to limit the costs associated with losing monetary policy independence. A high enough level does not mean that we are so ambitious as to aim for a convergence level of 90% of the Eurozone average or a level equal to that of Germany (as is the case with certain approaches put forward in Hungary or Poland). However, we need to achieve a real convergence level of at least 70–75 percent of the Eurozone average. Otherwise we would be insufficiently developed and, therefore, vulnerable to asymmetric shocks and unable to synchronise our business cycle with that of other euro area economies. However, we must take care that the level of convergence increases in a sustainable manner. We should be able to preserve the pace of this process, and once steps forward have been made, we may not stop or go backwards. Past achievements in nominal and real convergence, while significant, do not guarantee future success. To this end, allow me to bring up an old, but reliable principle. The Latin saying festina lente is perfectly suitable in this case: hurrying in a slow manner, if I can say so, on the convergence path means achieving a sustainable pace in the medium and long term. In other words, we need to be a marathoner, and not a sprinter.
When banks have the right incentives to improve their management of risk and they are well capitalize, we believe that the banking sector becomes more resilient, less sensitive to the business cycle, and better able to serve as a source for credit and sustainable growth of the economy. 2  BIS Review 29/2004  This workshop explores the role of transparency in promoting the resilience and stability that Basel II has as its overarching goal. The Basel Committee certainly agrees that markets can serve as powerful allies of official supervision. We recognise that, in some cases, market discipline can exercise a more binding constraint on banks’ activities than regulations do. But I would emphasise that transparency does only part of the job. For transparency to promote stability, it must be combined with other policy approaches to achieve a goal that is as far-reaching and as significant as greater financial stability. Certainly, the Committee would agree that, when banks disclose sufficient information about their activities and controls, marketplace participants can create strong incentives for prudent behaviour. Markets can reward banks that manage their risks properly and penalise those that hold unrealistically low amounts of capital for their risk. So there is a great deal of merit in a markets-based approach. But we must remember that markets can behave inefficiently. They may overreact to minor events yet ignore significant indicators of risk, or they may be too short-sighted.

The real sector is showing signs of constant recovery, corroborated by some positive developments in the external economy. I would like to underline that a clearer prospect of the political and economic situation in Greece will have a positive impact over the upcoming period. The Bank of Albania has been continuously monitoring the developments in our Southern neighbour, aware of the various risks that could spill over in the Albanian economy. But, thanks to the precise and duly interventions, especially in the banking sector, these risks never materialised. BIS central bankers’ speeches  1  The constant easing of the monetary policy seems to be reflected especially in investment indicators, with the domestic and foreign ones showing significant improvement over the first half of the year. On our side, we are happy that these investments were not only due to public sector interventions. There was also a substantial component by the private sector. This makes us believe that well-studied projects by the investors, coupled with an increasingly sound and pro-investment business climate, will serve as main drivers for the economy towards not only higher but also more sustainable growth in the near future. In accordance with the best contemporary practices, the Bank of Albania has endeavoured to enhance the transparency in its communication with the public, not only about the actual decisions but also about our forecasts. The Bank of Albania has constantly conveyed to the economic agents the idea that the monetary policy will remain accommodative and will sustain the revitalisation of the economy.
But there is a need also to reduce vulnerability by building bigger, deeper, more robust and diversified capital markets. While the interesting subject of monetary integration, which would provide a long-term solution, has been receiving some nascent attention, efforts to enhance the efficiency of financial intermediation within the region should be stepped up. Asia as a whole is one of the largest exporters of capital and, at the same time, also one of the largest recipients of foreign direct investment and foreign portfolio investment. The underlying process of capital flows associated with this roundabout phenomenon involves much greater financial volatility and instability for the region than the situation where a greater proportion of savings in the region could more readily find their way into investments in the region. This underscores the importance of greater efforts to enhance the efficiency of financial intermediation within the region. Indeed, capital market reform is high on the agenda of most Asian economies. There has also been considerable progress in the diversification of financial intermediation channels, specifically in the development of the bond market. At the end of last year, the amount of domestic bonds outstanding in eight economies1 that we have surveyed was equivalent to 47 percent of the combined GDP, more  1  Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand. BIS Review 30/2004  1  than double the 20 percent at the end of 1995. Over that eight-year period, the bond market’s share in total financing grew from 11 percent to 19 percent.

Joseph Yam: Asia’s ability to cope with the continuing challenges of globalisation Statement by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority and Alternate Governor on the Board of Directors of the Asian Development Bank, at the 37th Asian Development Bank Annual Meeting, Jeju Island, Korea, 15-17 May 2004. *  *  *  Mr President, I join other Governors in: first, thanking the Government and the people of the Republic of Korea for their warm hospitality in hosting this year’s Annual Meeting; secondly, thanking the Bank’s management and staff for the excellent arrangements made; and thirdly, welcoming our two new members - Luxembourg and Palau. Mr President, on the governance of the Bank, I would like to commend the Bank for adopting a number of reform initiatives in the past year to enhance accountability and efficacy of operations. Greater transparency and accountability in all aspects of the Bank’s operation is to be welcomed. Measuring, monitoring and managing development results are essential. The creation of the independent Operations Evaluation Department will enhance the credibility of the Bank’s achievements. These initiatives will put the Bank in a stronger position in meeting the many tasks ahead. On the region, Mr President, I would like to focus just on the continuing challenges arising from globalisation and the ability, or rather the lack of ability, of Asia in coping with them. The Asian financial turmoil of 1997-98 demonstrated this vehemently.
Neither is it possible for anyone to say how soon after 2021 a downturn may occur. It could come soon after, or some years later. 4 Now 0.5–0.75 per cent is not a particularly high level for the repo rate, if one looks at it from an historical point of view. But on the other hand, history may not be as informative in this case as there has been a downward trend in global real interest rates in recent decades, as I just pointed out. It is therefore difficult to know what is currently a neutral, “normal” level for the repo rate. What one can say with some certainty is that it is much lower than it was 10–15 years ago. But even taking this into account, a repo rate of 0.5–0.75 per cent does not appear particularly high if an economic downturn were to occur in early 2021. How much is the interest rate usually cut in economic downturns? In Sweden, it is not so easy to have a clear idea of this as we have had a floating exchange rate and an inflation target for just over 25 years, and that is not long enough to have experienced so many economic cycles. It is only when the exchange rate floats that one can use the policy rate to counteract economic downturns – when the exchange rate is fixed the policy rate is in principle locked on defending the chosen exchange rate.

Mario Draghi pointed out the fundamental difference between a monetary policy institution and fiscal rules, which are exemplified by the track records of the ECB and SGP respectively. Third, there is room for an intermediate level of integration, which I would call “full coordination of national policies”, a presently missing link between integration, as we have for monetary policy decision-making, and rule-based surveillance such as is currently the case for national fiscal policies. To illustrate this, a matrix is obtained by comparing the 4 components of economic policy (monetary, financial, fiscal and structural) in columns with the 3 levels of integration in rows: namely the lowest level of “monitored national policies” (with recommendations), the intermediate level of “fully coordinated national policies” (with incentives) and the upper level of “integrated policy” (with common instruments). The four components of economic policy displayed here are quite distinct, but they all contribute to the same objective: to boost growth but also to smooth shocks. Their classification is organised more or less – from left to right – in terms of their effect on stabilisation vs. allocation, in other words of their cyclical vs. structural effects. I do not need to elaborate on monetary policy. As a complement to monetary union, economic union can be seen as the combination of three main policy instruments: (i) financial, (ii) fiscal and (iii) structural. All three policy dimensions indeed have a supply-side impact on resource allocation (to a growing extent going right).
BIS Review 70/2006  1  Globalisation and UK manufacturing Looking wider than the UK, one of the most striking changes of the last few years has been the integration of China, India and countries from the former Soviet Union into world markets and the sharper competition that is bringing first into goods markets and, increasingly, into services also. The EEF report, ‘Where now for manufacturing?’, published at the end of 2004, highlighted the ‘huge increase in the importance of lower-cost countries as competitors’. Just under half of companies surveyed by the EEF saw China as the biggest competitive threat to their activities and nearly 60% identified China as a major competitive threat over the next five years. That was sharply up on the equivalent figure of 18% in 2001, illustrating that the change was occurring faster than companies then foresaw. One of the consequences of the globalisation of production is that a reduced proportion of output in the developed economies is in manufacturing. This is true of the UK, where manufacturing accounts for less than 15% of GDP, but also of France, Spain, the Netherlands and US (Chart 2). 4 Some have felt the blunt end of this competition from Asia. But the emergence of China and others has also created opportunities. It has encouraged UK manufacturers to specialise in those products for which they have a comparative advantage over their competitors, prompting a change in structure and focus of the UK manufacturing sector.

Underlying this principle is also the recognition that we cannot predict how the world will evolve. We must be open to and prepared for the unexpected. We have seen how sudden events, such as the Global Financial Crisis and more recently the pandemic can lead to a fall in the value of the GPFG. Looking ahead, our management model may face new challenges. Analysing different scenarios of possible outcomes is certainly useful, but making major strategic changes based on a particular vision of the future is still a risky undertaking. Broad diversification should continue to be a pillar of the strategy. CONCLUSION Nicolai Rygg delivered his final annual address on 12 February 1940. When the tradition was reinstated after the war, it was under a new governor. The time also represents an important turning point in Norwegian economic policy. The ideal of an independent central bank with decision-making authority over the instruments at its disposal had been abandoned. The Bank’s primary task was to carry out the Government’s decisions, and the policy rate was geared towards objectives other than low and stable inflation. It was to take forty years for the pendulum to swing back. In 1986, responsibility for setting the policy rate was returned to Norges Bank. The Bank was tasked with maintaining a fixed exchange rate. Again, the objective was price stability. 5 Hylland, A. (2005) "Statens reservefond 1904-1925. Et forsøk på å binde politisk handlefrihet?" [The State Reserve Fund 1904-1925. An attempt to restrain political freedom of action?].
But except in the US, securitisation has in fact so far made only limited progress, and debt sales have been focused mainly on impaired developing country or corporate debt. One reason why prime corporate loans are not so far traded is the importance that both banks and borrowers still attach to their mutual relationships. My guess is that the liquidity of bank assets by these means will gradually increase; and that process may be helped by the development of techniques such as credit derivatives. But for the time being - and indeed some time to come - bank loans are, for the most part, likely to remain illiquid in most countries. BIS Review 13/1997  -5-  We can nevertheless look at the crude balance sheet data, and, for what they are worth, we have looked at the share of loans to non-banks in total assets as a measure of the liquidity of the asset portfolio for a range of different types of institution. These data show that: for some representative small, domestic, UK banks the loan ratio is still some 70-80% of the total, apparently with no particular trend; for large UK, internationally-active, banks the share of loans is currently around 50%, having fallen quite sharply from some 65-70% some five years ago, perhaps reflecting the expansion of their investment banking activity; for large continental banks the share of loans is either side of 50%, having fallen more gradually. Again JP Morgan and Bankers Trust are outliers.

The picture is, however, complicated by the exaggerated strengthening of sterling since last summer - particularly against the European currencies - which probably reflects uncertainties affecting the Continental countries at least as much as developments in our own economy. This strength of sterling poses, for the time being, a genuine monetary policy dilemma. It will lead to a fall in inflation in the short run - over the rest of this year - as import prices fall. And it makes life very difficult for UK manufacturers exposed to international competition, so that our external trade position is likely to deteriorate - and that may have a BIS Review 29/1997  -2-  longer-lasting effect on inflation. But these effects may not be enough to offset the gradual emergence of inflationary pressure looking forward to next year, stemming from continuing above-trend growth of domestic demand. On that basis we advocated a moderate tightening of policy in order to slow the domestic expansion to a pace that can be sustained in the medium and longer term. Let me be quite clear, for those who insist on over-dramatising these things, we were not calling in the Inflation Report for “an immediate interest rate hike to bring an incipient boom to a juddering halt!” I should like to think that in the present more stable environment that kind of language is anachronistic.
  Could otherwise hit inflation and growth hard   M onetary policy can alleviate the effects   12  Other measures required to solve the problems entirely  BIS Review 138/2008  Financial turmoil and the inflation target     Situation changes rapidly in mid-September Repo rate has been cut to 3.75 per cent Further cuts over the coming six months  To: …alleviate the effects of the financial crisis on economic activity and… …manage the inflation target of two per cent  Behind the interest rate decision Financial turmoil important          BIS Review 138/2008  Impact of interest rate cuts (initially) Credit crunch Falling wealth Deeper economic downturn Uncertainty and falling exchange rate Falling commmodity prices Lower inflationary pressures  13  Pessimism among households… Net figures 80  80  60  60  40  40  20  20  0  0  -20  -20  -40  -40 The Swedish economy  -60  -60  Own finances Labour market  -80  -80 98  99  00  01  02  03  04  05  06  07  08  09  Source: National Institute of Economic Research  … and in the business sector Seasonally-adjusted index and net figures, manufacturing industry  65  15  60  10  55  5  50  0  45  -5  40  -10  35  -15  30  Purchasing managers’ index (left scale)  -20  Confidence indicator (right scale)  25  -25  01 02 03 04 05 Note.

My point is that, in addition to analysing vulnerabilities in individual countries and general macroeconomic linkages between countries, you also need to look in particular at the major cross-border financial groups and financial infrastructure. The good news is that these are not so many, after all. Of the approximately 8,300 credit institutions in the EU, only nine are defined as truly pan-European and less than fifty have cross-border establishments in more than two countries. When assessing preconditions, regulation and supervision you need to look not merely at individual countries but also at whether there are major differences or gaps in the application between countries or between financial sub-sectors and if this might lead to vulnerabilities, in particular in a crisis situation. As we all know, a common European approach to bank problem resolution has so far not been developed. In a potential or actual crisis situation, we may face “the prisoners’ dilemma” in which the optimal solution may not be achieved since each country would tend first to look to its self-interest. Hence, it is important for a regional FSAP to identify vulnerabilities stemming from potential conflicts between home and host countries in the resolution of a failed financial group, which for instance might have systemic importance in the host country but not in the home country. The common thread in all this is that an FSAP should focus on two things: The weak spots as well as the channels for contagion of weakness. This is what the IMF is doing in its single-country FSAPs.