samchain/econo-pairs-v1 huggingface dataset:
Traditional channels, – through interest rates- have become ineffective: first of all because economies have hit the zero lower bound; and in some case, like in the euro area, because transmission – through credit – has been clogged. The expansion of balance sheets results from attempts to overcome those limits and allow monetary policies to fulfill their mandates via large scale of assets purchases. 2. Is it the size of the balance sheet or the means of its increase that matter? The causes and consequences of changes in balance sheets size are rather diverse. Broadly speaking, both liabilities and assets of Central Banks matter. An expansion of liabilities occurs when, as the Eurosystem did in many instances, the Central Bank increases liquidity provision to the banking sector, with the explicit objective of easing pressures on funding, reducing its costs, and ultimately, influence lending behavior. Expansion of liabilities may be  BIS central bankers’ speeches  1  more passive though when setting an exchange rate floor such as in the case of the SNB. Looking, now, at the asset side, asset purchases bring down risk premia, they trigger portfolio rebalancing, flatten the yield curve, increase risk taking in the private sector and shift expectations in a more positive territory. As you all know, the Eurosytem has now embarked into a major purchase program, the PSPP, that follows other programs of smaller sizes for asset-backed securities (ABSPP) and covered bonds (CBPP3). There are many technical discussions.

Consequently, we do not think that aligning the regulatory framework to banks’ contemporary risk measurement techniques will make lending patterns more volatile. Nor do we think that it will harm competition or dry up capital flows into emerging market countries. The Committee has worked to ensure that the new framework contains sufficient options and simpler forms of rules so that its basic principles can be applied to many kinds of banking organisations in many countries. Basel II presents an excellent opportunity for emerging and developing markets. By stimulating banks to upgrade and improve their systems, business models, capital strategies, risk management systems and disclosure standards, Basel II should improve their overall efficiency and ability to compete globally. It will help to reduce the risk premiums of emerging and developing markets and will help to ensure the stability of the financial system. Still, it is clear that, to accomplish all of these intentions, the new capital framework will be a very different approach to supervision than what we have known so far. It will require hard work on all of our parts. Bankers must work to ensure that their risk management systems meet the standards to qualify to use the more sophisticated measures of risk. For our part, supervisors must ensure that we are comfortable with banks’ progress. But we must also be ready to supervise a more comprehensive capital framework. We will need to share information on the issues we encounter in moving from the 1988 Accord to the three pillars of the new framework.
8  See, for example, Genre, V., R. Gomez-Salvador and A. Lamo (2005): “European Women: Why do(n’t) they work”, ECB Working Paper Series, No 454, March 2005. 9  For a further extension of this topic see European Commission (2004), “The link between product market reforms and productivity: direct and indirect impacts”, the EU Economy: 2004 Review. 10  See for example G. Nicoletti and S. Scarpetta (2003): “Regulation, Productivity and Growth: OECD Evidence”, OECD Economics Department Working Paper No 347, P. Cavelaars (2003), “Does Competition Enhancement Have Permanent Inflation Effects?”, Kyklos, 56 (1) and M. Przybyla and M. Roma (2005), “Does product market competition reduce inflation? Evidence from EU countries and sectors”, ECB Working Paper No 453. BIS Review 44/2006  3  changes in some services sectors and thus temporarily on aggregate inflation. Overall, a higher level of competition in the services sector would tend to support more efficient and flexible services markets, facilitate adjustment processes and increase the resilience of the euro area to economic shocks 11 . In this context, an internal market for services and the adoption of the Services Directive would constitute an important step forward. It would remove barriers to cross-border provision of services and make it easier to set up services businesses in other Member States. In the EU, some progress has already been made in improving the functioning of product markets. For example, several network industries, like telecommunications and air transport, are now fully or largely open to competition.

In the EU we have about 5.3 scientists and researchers per 1000 workers, which compares to the US figure of 9 per 1000. 17 In addition, ICT investment, which is an indicator of the diffusion of innovation, represented 6% of GDP in the US over the period 2000-2004 compared to only 3% in the euro area. ICT diffusion appears to be particularly relevant in the services sector given the higher potential for employment creation in that sector combined with the evidence that there is no apparent trade-off in the medium term between labour productivity and employment growth at the level of the sector as a whole. As a result, the key issue for the larger euro area countries is how to increase their future capacity to promote the diffusion of innovation and, in particular, technological changes in the service sectors, a field in which the Nordic EU countries have performed particularly well 18 . The state of structural reforms If euro area countries would now summon up their strength and ambitiously push forward with structural reform, this will support and broaden the improvement in economic activity in the euro area. This is why the ECB has always encouraged the implementation of structural reform within the Lisbon strategy. Five years later, progress has been made in some areas - as also indicated by an increase in the euro area employment rate. Still, all in all the reforms have not been far-reaching enough 19 .
Furthermore, companies are financing themselves much more often in the market today, by issuing certificates and bonds. Thirty years ago, most of them borrowed from banks. Changes in financial markets can affect the transmission of monetary policy, which we need to take into account in our monetary policy assessments. Diagram 9. Borrowing among non-financial corporates Percentage of GDP, quarterly data 100 80 60  40 20 0 1990  1995  2000  2005  2010  2015  2020  Loans from monetary financial institutions Securities borrowing  Note. Includes securities borrowing in both Swedish kronor and foreign currency. Sources: Statistics Sweden and the Riksbank. In short, the development of the Swedish economy over the past 30 years may be summarised as good on the real economic side, but with some worrying signs on the financial side. 12 [16]  Forward planning difficult but important I would like to broaden the perspective a little. Thirty years ago, Swedish economists and politicians alike agreed that a steadfast defence of the fixed exchange rate was the only way to break with the weak development of the Swedish economy and lead it onto a new path. Many in Sweden were stuck in a particular way of thinking, a paradigm, where we did not realise that economic reality had changed so much that our frameworks also needed to be fundamentally changed. With free capital movement, a deregulated credit market and a poorly functioning economy, the fixed exchange rate was not a good instrument for creating economic stability and prosperity.

The inflation target and the Industrial Agreement together contributed to this development. This underlines the importance of the inflation target as a nominal anchor for the Swedish economy. 6 [16]  Diagram 3. Swedish real wages from 1970 Index, 1970 =100  Note. The broken line marks 1995, the year when the inflation target entered into force. Sources: The National Mediation Office and Statistics Sweden  Thirdly, the fiscal policy framework has contributed to the successful consolidation of Swedish public finances and these are now in a very good state. This has increased market confidence in Sweden's ability to keep its public finances in order. The difference between Swedish long-term market rates and those in other countries can be seen as a measure of this and of confidence in the Swedish economy as a whole. At the beginning of the 1990s, the long market rate in Sweden was quite a lot higher than the European and American rates. Confidence in the Swedish economy was low and most people believed that the rate of inflation would remain high. During the thirty years that have passed, the interest rate differential has shrunk and for quite some time the long-term interest rate in Sweden is at roughly the same level as in Germany. 7 [16]  Diagram 4. Government debt and interest differential Central government debt as a percentage of GDP and interest differential on 10-year government bond yields  Note. Share of GDP and percentage points difference.
An update of our monetary strategy became necessary. In 2000, we decided to abandon our traditional monetary targeting in favour of a new monetary policy concept based on an inflation forecast. 2  BIS Review 70/2004  Overall, despite difficult times, our policy has been a success. The annual average rate of inflation in Switzerland over the last 25 years amounts to 2.8%, one of the lowest in the world, and price stability has provided Switzerland with an important comparative advantage: the so-called Swiss interest rate bonus, which means that nominal and real interest rates are lower in Switzerland than in the rest of Europe. Strategy towards monetary stability Is there any secret about Switzerland’s success in preserving price stability? I do not think so. Switzerland, as a small and open economy that is deeply integrated in trade flows, has always felt that price stability was a necessary ingredient of competitiveness. In the almost 100-year history of the Swiss National Bank, fighting inflation has been a permanent objective, and there were only rare occasions of disagreement between the government and the Bank on monetary issues. Actually, central bank independence had been a tradition in Switzerland even before it became fashionable elsewhere. In my country, most politicians consider monetary stability as a kind of common good which should escape partisan disputes. The fact that our federal government plays only a limited role in economic policy also supports the view that monetary decisions should be left to technicians.

Indeed, the notable reduction in business activity further to the restrictions associated with the state of alert prompted a much sharper decline in non-financial corporations’ operating revenue than that in the payments they must meet. The latest Central Balance Sheet Data Office figures give an idea of the severity of this shock to firms’ liquidity. There was a strongly adverse impact on these agents’ profits already in Q1, despite the fact that the sharp contractions in activity and operating revenue associated with the declaration of the state of alert only affected the last two weeks of this quarter. The reduction in the return on assets for the overall sample of firms was so significant that it pushed ROA below the cost of borrowing, a development not seen since 2014. The information on bank lending shows firms resorting to this source of financing to cover a large portion of these liquidity requirements. Specifically, the outstanding balance of bank financing granted to Spanish non-financial corporations rose to 8.7% in May after having shrunk by 1.1% year-on-year in February. And the preliminary data for June would suggest that this trajectory has been holding in the most recent period. Yet for financial institutions to have been able to meet such a notable increase in firms’ applications for credit, the contribution of the support measures launched at both the European and national levels has been decisive.
Licensing and regulatory framework During 2004 the banking system in Albania was characterized by dynamic developments, either in terms of increasing the number of banks operating in the market or in terms of extending the banking network in various areas of the country. At end of 2004 the number of banks in Albania was 16, from which 2 banks are totally with domestic capital and 14 other banks have foreign capital. On April 2004 the banking system was further consolidated with the approval on the ownership transfer of 100 percent of the Savings Banks’ stock to Raiffeisen Zentralbank, as a crowning of the privatization process of this bank. Also, the Popular Bank Jnt. Stk., the second bank with totally Albanian capital entered into Albanian market. An application for establishing a new bank with wholly Albanian capital was also submitted. This application has recently received the preliminary approval for licence, pursuant to requirements of the Law “On Banking System in the Republic of Albania”. Parallel to development and extension of the banking system and the products it offers, further improvements and amendments have taken place in the regulatory packet of banking supervision. During 2004, the Guideline “On bank regulatory capital, the Regulation “On capital adequacy”, the Regulation “On credit risk management” were revised, and the Regulation “On money laundering prevention” was adopted. Also, during 2004 work was done for making improvements in the existing Law “On Banking System in the Republic of Albania”, with the goal to realize its adoption by the Albanian Parliament within 2005.

In absolute value, the total foreign assets were raised by Lek 17.2 billion. Contribution to foreign assets growth was also given by foreign reserve investment in foreign markets. However, the appreciation of domestic currency versus two main currencies, Euro and US dollar, has negatively impacted on existing foreign assets value by about Lek 8.5 billion, expressed in the reduction of Revaluation Reserve, on which the Ministry of Finance has projected the issuing of securities, in compliance with the Law “On the Bank of Albania” and the Law “On State Budget for 2005”. Also, the Bank of Albania, in implementation of its monetary policy, has used the instrument of outright Treasury bills sales. This has brought about the reduction of portfolio of domestic assets of the Bank of Albania by 10.5 percent or Lek 8.0 billion. On the other hand, the easing policy has impacted on the decrease of Treasury bills yield through interest rate cut. The combination of both factors has impacted on the level of income from investment in securities portfolio of Albanian Government for Lek 2.3 billion or 30 percent less in comparison to the plan. This reduction constitutes 100 percent of the dropping of total income from operations. Under the conditions of almost the same level of operative expenses, compared to the previous year, the net profit of the Bank of Albania over 2004 resulted to Lek 5.5 billion or Lek 2.4 billion less than in 2003. ******* Honored deputies!
Developing the methodology to assess effectiveness  I mentioned earlier one of the promising new tools to assess the effectiveness of ethics and compliance programs, and that is the PEI, the Program Effectiveness Index. The excellent report by the Ethics Resource Center, The Federal Sentencing Guidelines For Organizations at Twenty Years, has drawn attention to standards for assessing program effectiveness. The report states: “Altogether, the lack of assessment standards and guidance on how the quality of a compliance/ethics program should influence the outcome of a matter create the impression, validated by the [Ethics Resource Center] and Conference Board studies...that too many judgments are being made inside a black box.”2 While we seem to be on the cusp of a number of promising indicators, like the PEI, the truth is that we are not there yet. We simply do not have a tool that will give us an accurate and reliable measure of program effectiveness. Instead, we have a situation where enforcers (including those agencies with civil enforcement authority, such as the banking agencies) tend to be result oriented. When we see that a particular organization has experienced a major compliance failure, we tend to view the failure as evidence of the ineffectiveness of the  2  Ethics Resource Center, The Federal Sentencing Guidelines for Organizations at Twenty Years at 51 (2012). BIS central bankers’ speeches  3  ethics and compliance program.

One related to fear on the part of the chief ethics and compliance officer to engage in action to resolve a conflict with a key business person – a fear of losing one’s job or her place in the corporate hierarchy. The other problem concerned access to the board of directors. It is one thing to go before the board of directors annually to have the compliance program approved. It is quite another to go before the board of directors to do battle with a senior executive who is probably before the board of directors on a regular basis. One possible solution as we move to the next level is to embed ethics and compliance issues in the disciplines that are more typical of governance issues involving the board of directors. These would be issues like strategy, business goals, and risk management, all of which touch ethics and compliance. Another solution would be to create escalation pathways to the board of directors for resolving conflicts between the chief ethics and compliance officer and a senior business leader. Conclusion As I said at the outset, ethics and compliance have come a long way in a very short time. We have learned a great deal during the journey. As I look out over the road ahead, I believe we will continue to make significant progress in business organizations that deliver on their value proposition, not only to shareholders, but to the other constituents that these organizations serve, their customers, employees, and communities.
With regard to the euro area as a whole, optimism among households and companies has been somewhat subdued in recent months, probably as a result of the crisis in Greece. However, the most recent survey in July indicates that optimism among companies is rising again, which may be due to the third loan programme for Greece appearing to be within reach. GDP growth in the euro area in the second quarter, compared with the same quarter last year, was 1.2 per cent according to our forecast. US developments still looking good We see continued signs of good economic growth in the United States. GDP rose by just over two per cent in the second quarter, compared with the same quarter last year, see Figure 7, entirely in line with our forecast. Household consumption remains strong. Exports also rose significantly in the second quarter despite the dollar appreciating for a period of time. The housing market is continuing to recover and this creates an increasing number of jobs. Unemployment fell to its lowest level since 2008. The US Federal Reserve signalled at the end of July that it still has plans to raise its policy rate this year. The labour market is expected to be able to develop better than was previously believed an only a “few” further improvements are needed before monetary policy may need to be tightened. However, although most signs are pointing in the right direction in the US economy, the recent statistics on wage developments have been at relatively low rates of increase.

Figure 15 shows that the population has increased much more than the number of completed homes over the past ten years, which is an indication that housing construction has been too low. Despite housing investment now increasing, it is important that structural problems on the housing market are discussed so that we can obtain greater efficiency on this market in the longer run. Several inquiries have put forward proposals regarding what needs to be done, most recently this was done in an annex to the Long Term Survey of the Swedish Economy. Not having an efficient housing market is not merely a problem for indebtedness, it can also comprise a threat to a healthy development of society and it can create conflicts between the generations. The Riksbank has long pointed out the risks linked to the high level of household indebtedness and has previously also weighed in them in the repo-rate decisions to some extent, by setting the rate somewhat higher than would otherwise have been the case. However, the effect these considerations have actually had on monetary policy – the amount by which the repo rate has actually been set higher – has been exaggerated substantially. There are quite simply limits as to how far the policy rate can be used for this purpose. And 6  BIS central bankers’ speeches  let me emphasise that the main focus for monetary policy has always been to bring inflation back on target and to attain a good development in the real economy.
This pattern reflects the expectation that, in an environment of weaker growth in the euro area and globally, underlying cost, wage and price pressures in the euro area should remain modest. The Governing Council continues to view the risks to the medium-term outlook for price developments as broadly balanced. On the upside, the main risks relate to further increases in indirect taxes and administered prices, owing to the need for fiscal consolidation in the coming years, and possible increases in commodity prices. The main downside risks relate to the impact of weaker than expected growth in the euro area and globally. Turning to the monetary analysis, taking the appropriate medium-term perspective, the underlying pace of monetary expansion continues to be moderate. The annual growth rate of M3 decreased to 2.0% in November 2011, after 2.6% in October. As in the previous three months, monetary developments in November were affected by the heightened uncertainty in financial markets. The annual growth rate of loans to the private sector, adjusted for loan sales and securitisation, decreased to 1.9% in November, from 3.0% in October. The annual growth rates of loans to non-financial corporations and loans to households, adjusted for loan sales and securitisation, both moderated in November, and stood at 1.8% and 2.3% respectively, with slightly negative monthly flows observed for MFI loans to non-financial corporations.

Overall, despite the moderation in loan growth, the figures on lending do not so far suggest that the heightened financial market tensions led to a sizeable curtailment of credit in the euro area as a whole in the period to November. At the same time, given that credit supply effects can manifest themselves with lags, close scrutiny of credit developments is warranted in the period ahead. The soundness of bank balance sheets, supported by the increase in capital positions, will be a key factor in facilitating an appropriate provision of credit to the economy over time. It is essential that the implementation of banks’ recapitalisation plans does not result in developments that are detrimental to the financing of economic activity in the euro area. To sum up, incoming information broadly confirms our previous assessment. Inflation is likely to stay above 2% for several months to come, before declining to below 2%. As expected, ongoing financial market tensions continue to dampen economic activity in the euro area, while, according to some recent survey indicators, there are tentative signs of a stabilisation in activity at low levels. The economic outlook remains subject to high uncertainty and substantial downside risks. In such an environment, cost, wage and price pressures in the euro area should remain modest and inflation rates should develop in line with price stability over the policy-relevant horizon. A cross-check with the signals from the monetary analysis confirms this picture, with the underlying pace of monetary expansion continuing to be moderate.