samchain/econo-pairs-v1 huggingface dataset:
Mario Draghi: ECB press conference – introductory statement Introductory statement by Mr Mario Draghi, President of the European Central Bank, Nicosia, 5 March 2015. *  *  *  Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference, here, in Nicosia. I would like to thank Governor Georghadji for her kind hospitality and to express our special gratitude to her staff for the excellent organisation of today’s meeting of the Governing Council. Based on our regular economic and monetary analyses, and in line with our forward guidance, we decided to keep the key ECB interest rates unchanged. As regards nonstandard monetary policy measures, the focus is now on implementation. Following up on our decisions of 22 January 2015, we will, on 9 March 2015, start purchasing euro-denominated public sector securities in the secondary market. We will also continue purchasing asset-backed securities and covered bonds, which we started last year. As previously stated, the combined monthly purchases of public and private sector securities will amount to € billion. They are intended to be carried out until the end of September 2016 and will, in any case, be conducted until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term. Further information on certain implementation aspects of the public sector purchase programme will be released at 3.30 p.m. CET on the ECB’s website.

To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirms the appropriateness of the Governing Council’s recent decisions. The determined implementation of all our monetary policy measures will provide support to the euro area recovery and bring inflation rates towards levels below, but close to, 2% in the medium term. 2  BIS central bankers’ speeches  Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic activity. However, in order to reap the full benefits from our monetary policy measures, other policy areas need to contribute decisively. Given high structural unemployment and low potential output growth in the euro area, a cyclical recovery along the lines of the March ECB staff projections is no grounds for complacency. In particular, in order to increase investment, boost job creation and raise productivity, both the decisive implementation of product and labour market reforms and actions to improve the business environment for firms need to gain momentum in several countries. It is crucial that structural reforms be implemented swiftly, credibly and effectively, as this will not only increase the future sustainable growth of the euro area but also raise expectations of higher incomes and encourage firms to increase investment today, bringing forward the economic recovery. Fiscal policies should support the economic recovery while remaining in compliance with the Stability and Growth Pact.
But if inflation moves away from the target by more than 1 percentage point in either direction I shall expect you to send an open letter to me setting out the reasons why inflation has moved away from target …and the period in which you expect inflation to return to target’ In 1998 Charlie Bean, now (but not then) the Bank’s chief economist, calculated that open letters might be triggered at least 40% of the time, on the basis of past experience 3 . This did not seem unreasonable at the time. But after 114 monthly decisions, inflation has always been within 1 percentage point of the target. And I take the fact that no Governor has yet sent an open letter as further evidence that there has indeed been an unexpected increase in stability. 2  Mais lecture, June 1997. 3  “The new UK monetary arrangements: a view from the literature”, Charles Bean, Economic Journal 1998. 4  BIS Review 116/2006  Where are we now? Are we now entering choppier waters? The world economy continues to grow at an impressive rate, with few signs of sustained inflationary pressure. Globalisation continues apace. But it is not difficult to think of things that could go wrong, ranging from an outbreak of protectionism, to another sharp surge in oil prices in response to geopolitical events, to a sharp correction in housing markets, which in a number of countries are very richly valued.

But the extraordinary stability of the past decade may have given people an exaggerated idea of what to expect of monetary policy. While the Bank can deliver low inflation, we cannot reliably deliver rock steady growth in output and employment, still less falling unemployment. Whether or not that happens depends on events in the wider world – what economists like to call ‘shocks’ - and other economic policies, including taxes and regulations. All we can do is try to keep demand growing in line with supply. And in fact, most economists a decade ago would have said that the Great Stability, as we have experienced it in the UK, represented a pretty unlikely set of outcomes. The then Governor, Eddie George, said he hoped that low inflation would contribute to a more stable economy but warned: ‘We cannot hope to achieve that with any great precision’ 2 . The MPC’s formal remit from the Chancellor, originally drafted nearly a decade ago and still in force, seems to be predicated on a more turbulent world. It makes specific allowance for situations in which inflation might be thrown sharply off course. It reads: ‘The framework is based on the recognition that the actual inflation rate will on occasions depart from its target as a result of shocks and disturbances. Attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output.
As our experience has shown, during times of high volatility it is crucial to avoid rash responses to shocks (shocks being any big changes, both positive and negative). This policy suggests that rushed decisions should be avoided. For example, if at the beginning of the year we had lowered the rate at a faster pace, as many wanted us to, we might very well have faced the need to sharply increase it again shortly thereafter. However, there are clearly also shocks such as those in 2014 that require a more decisive response. However, it is important to contend with both the consequences of shocks on inflation as well as the reasons behind them. These reasons are often beyond the Central Bank’s control but this does not mean it is impossible to hit upon suitable state policy measures on the whole. This primarily concerns the dynamics of food inflation and regulated prices and rates. The state policy of developing infrastructure, logistics, market competition (primarily food markets), and the regulation of natural monopolies’ rates can go a long way to reduce price volatility and thus lead to a faster reduction in inflation expectations. This, in turn, will allow the Central Bank to draw the key rate closer to the equilibrium-neutral level faster (I would like to reiterate that, in our estimation, it stands at 2.5-3% in real terms or 6.5-7% in nominal terms).

When this collateral is easily withdrawn, the quality of the loan drops sharply. In cases where the bank’s license is revoked, the bankruptcy estate receives nothing. The rights of depositors and creditors are compromised. In our opinion, collateral should only be taken into account when calculating reserves if the Central Bank has the right to impose a moratorium on operations with it. Similarly, bankruptcy law must undergo improvement allowing honest creditors faster access to collateral acquired under a contract or other assets by court decision. I would like to reiterate that the regulator is of the firm belief that secured lending should not dominate the lending profile. This is precisely how the banking system will contribute to economic development. Lombard loans should not establish themselves as the mainstay of banking business. Banks need to work with clients and examine their business models rather than expect to acquire their assets. I would like to address our priorities in supervision. Over the course of the year, the Bank of Russia reengineered its supervisory activities: it established a risk analysis service (which assesses the quality of loans and the values of securities and derivatives, as well as collateral). We are already seeing certain results. We are now centralising supervision – we have created an ongoing banking supervision service in order to accelerate the use of supervisory response measures and establish a uniform supervisory practice in Russia. We call the model we are pursuing advisory supervision.
The second change is that we will now hold press conferences in connection with all of the monetary policy meetings, and not, as before, only when we have adjusted the interest rate. The motives for keeping the interest rate unchanged are just as important as the motives for adjusting it. Together with publishing our own interest rate forecasts, press conferences after each monetary policy meeting will provide better and more regular information on the considerations we make. Finally, we Executive Board members will normally avoid implying prior to a meeting what interest decision might be made there, what is known as signalling. And by this I mean signalling above the interest rate forecast, press releases and minutes of meetings that have earlier been published. The actual need for signalling has declined, not least with the publication of our own interest rate path. Our assessment is that it is enough to communicate our intentions clearly in connection with the seven monetary policy meetings held every year. Moreover, we publish our own interest rate forecasts in connection with three of these meetings, when a Monetary Policy Report is published. On the other four occasions we will report a qualitative assessment of how the most recently published interest rate forecast relates to the new information received. I would like to point out that the individual members of the Executive Board will continue to express their own opinions in public.

It is clearly very important that the New Accord be implemented in a consistent manner across various jurisdictions. Market competition should be driven by each bank’s strengths, rather than by differences in each country’s rules. Accordingly, the Basel Committee established the Accord Implementation Group. As you know, this group is responsible for promoting the consistency and quality of implementation of the New Accord and facilitating the exchange of information among national supervisors about bank and supervisory practices. Through the implementation group senior line supervisors are beginning to share among themselves very practical insights on how to assess internal risk management processes. We think that this detailed sharing of information among people who are on the front lines of supervision will go a long way to ensuring that assessments can be done in a more consistent fashion across jurisdictions. We appreciate the very strong endorsement that both the BBA and LIBA have offered in welcoming the formation of the Accord Implementation Group. Indeed, we know that both associations are keenly interested in how the group may well help ensure that a single banking organization active in many jurisdictions not face divergent sets of expectations from different banking supervisors under the New Accord. I am pleased to note that the Accord Implementation Group has taken up this concern among its first topics for discussion. An important goal of the coordination and information sharing is to help ensure that national supervisors, in assessing the eligibility of an internationally active bank’s internal rating system, do not arrive at different conclusions.
The Board is constituted in a similar way to the other committees in that it is chaired by the Governor and has both internal executive members and externally appointed independent members. On the basis of current announcements it will have a total of 5 internal members 3, and 6 independent members 4 including the CEO of the Financial Conduct Authority (FCA). It meets approximately twice a month for formal meetings. In summary, the Board is responsible for meeting the PRA’s statutory objectives, including taking all the major supervisory decisions for the 1700 or so firms and groups it authorizes; formulates regulatory policy to meet those objectives; and has a range of strategic and management responsibilities including delegating some matters, principally to the CEO of the PRA or to formal PRA committees. Matters reserved to the Board and its delegations can be found in documentation on the Bank’s website via a link in this text. 5 In what follows I shall treat the PRA Board and the PRA as one policy making body, referring to one or the other as best fits the context. Before moving on, it is worth completing the picture by noting that the PRA works alongside the FCA, creating what is known as a “twin peaks” regulatory structure in the UK. The FCA is a separate institution and not part of the Bank of England.

The key to solving this policy dilemma is to make sure that firms hold enough liquidity (and capital) in the good times so that, when a downturn hits, supervisors can take a relaxed view about firms using those holdings as buffers to absorb the macro shock. That was not the position post 2008/09 when banks had not been holding enough liquidity or capital in the good times. It is an aim of the new regulatory frameworks put in place post-crisis, that banks should hold bigger liquidity buffers in normal times. The Bank of England’s balance sheet can also be used actively to backstop liquidity for the system as a whole, via the banking system, and the new operating frameworks put in place over the past 5 years will allow that to happen more quickly and easily. How will this all co-ordinate in practice? When the Bank, HMT and FSA took joint action in 2012 to reignite the recovery via the Funding for Lending Scheme – reviewed in my two previous talks to you – the FSA, as predecessor to the PRA and having two members on the interim FPC, contributed by relaxing liquidity requirements and making it clear that liquidity buffers were there to be used. This was a crucial element of the package.
They are also likely to rely on importing price stability from abroad during the interim period. Larger countries that have invested heavily in developing a credible independent monetary policy but still have more to do in the area of fiscal policy reforms and flexibility of domestic economies, will probably opt for a more cautious approach. They are likely to prefer avoiding double regime switches, opting instead for a smooth and fast transition from the current regime to euro adoption. The Czech Republic belongs to the latter group. The Czech strategy for euro adoption is based on a cautious timescale. In the pre-EMU period, we want to ensure low inflation domestically, not by importing it. In the strategy, we have pointed to the years 2009-10 as the most likely entry date. In comparison to other new EU member states, this timescale had been viewed as relatively cautious. However, it should be said that other countries in the region have recently pushed back their initially more optimistic estimates. The primary reasons for this more cautious timescale are - in all cases fiscal developments. In the pre-EMU period, we will continue targeting inflation. This strategy has gained a substantial degree of credibility in the Czech Republic since its introduction in 1997. Our inflation target for the period beyond January 2006 is set at 3% (for CPI), which should allow us to fulfil the monetary side of Maastricht convergence criteria, and at the same time to reflect the long-term real convergence needs of the Czech economy.

My role today as the opening speaker is a privileged one. Like a university professor during exams, I can ask questions. Unlike a good professor, I am certainly not in possession of all the answers. I am confident, however, that the exceptional group of people assembled here will make a positive contribution to this difficult and complex debate. II. The problem  Arguably, much of the debate surrounding the international monetary system boils down to the following question: how sustainable is an international monetary regime, in which one national currency serves as the international reserve asset? Over the past few decades, this question has been examined under different perspectives. A first perspective was the so-called “Triffin dilemma”, discussed in the context of the Bretton Woods fixed exchange rate regime. This discussion highlighted that increasing indebtedness of the reserve-issuing country would in time undermine the very confidence that forms the basis for the reserve asset status. A second perspective refers to the alleged “exorbitant privilege” of the reserve-issuing country. It highlights the asymmetry in the adjustment to shocks, as the reserve-issuing country has the privilege of not being under much pressure to adjust to current account deficits, at least over the short and medium term. It is worth noting that part of Keynes’ goal in setting up the IMF was to try to create symmetry between the need to adjust for both deficit and surplus countries. More recently, the question appeared under the perspective of global imbalances.
This significant step frontloads the transition from the prevailing accommodative level of policy rates towards levels that will enable the timely return of inflation to our two per cent medium-term target. Current challenges of monetary policy Let me now elaborate a bit more on some of the most important challenges that Monetary Policy faces today. The crux of the matter is that the pandemic and the war in Ukraine have created significant macroeconomic uncertainty, associated with a high degree of output growth and inflation volatility. In such an environment of lasting output and inflation volatility and uncertainty, one of the main questions is how governments and central banks should formulate policy. Fiscal policy will be critical in improving the robustness of our economies. With debt ratios at record highs, expenditure should be targeted and prioritise social cohesion and productive green investments that will help assure long-term prosperity and develop fiscal flexibility needed to cushion future shocks. Non-targeted fiscal policy will counteract monetary policy efforts to contain inflation. At the same time, central banks must safeguard price stability through, mainly, monetary policy. When the degree of inflation persistence is unclear, effective policy suggests a strong reaction to deviations from the target in order to limit the risks of inflation continuing to be high for an extended period. The risk of high and persistent prices, together with signals of tightening in the labour market, create an environment which makes it possible for higher inflation expectations and higher prices to become entrenched.

Gent Sejko: Bank of Albania – strengthening governance and recent other challenges Introductory statement by Mr Gent Sejko, Governor of the Bank of Albania, presenting the Annual Report 2015 to the Parliamentary Committee on Economy and Finance, Tirana, 29 March 2016. *  *  *  Honourable Chair of the Parliamentary Committee on Economy and Finance, Honourable Members of the Committee, It is my special pleasure to present, in this hearing session with the Parliamentary Committee on Economy and Finance, the Annual Report of the Bank of Albania for 2015. In 2015, the Bank of Albania has worked to successfully fulfil its objectives stemming from the Law “On the Bank of Albania”, as well as all the other obligations arising from relevant sublegal acts and relations with our international partners. I would like to start my presentation, focusing on the activity of the Supervisory Council of the Bank of Albania. 1. Decisions of the Supervisory Council  At the beginning of 2015, the management team of the Bank of Albania was rendered complete. Thus, thanks to the support of the Assembly of the Republic of Albania, the vacant positions in the Supervisory Council were completed, the Governor, the Second Deputy Governor and Inspector General of the Bank of Albania were appointed. During 2015, the Council met 15 times and approved 98 decisions. Of them, 63 consisted in acts approved for the first time, and 35 in amendments to existing acts.
The macroprudential buffers that are currently implemented in the SSM banking system are of a predominantly structural nature and are thus expected to be maintained over the cycle. [9] The countercyclical capital buffer (CCyB) is the only buffer that is intended to be released in case of a downturn. However, the CCyB has only been activated by seven of the 19 euro area countries and currently represents, in the aggregate, only 0.1% of risk-weighted assets [10] A lack of releasable buffers curbs the countercyclical role of macroprudential authorities. When breaching their combined buffer requirements, banks may uphold capital ratios by disposing assets to avoid the automatic restrictions on dividend distributions. If such behaviour becomes widespread in the event of systemic stress, it can result in a credit crunch, which would aggravate the downturn. This is exactly what we observed in previous crisis episodes, and what we should avoid in the future. Macroprudential space in the form of releasable buffers could serve as a potential macro-financial stabilisation in euro area countries. The release of the buffers in a downturn should help banks to sustain the flow of credit. To this end, releasable buffers would first need to be available. In sum, we are in a situation where the overall level of capital requirements is broadly adequate, but the composition may not be optimal. It is therefore important to have a discussion on the need to reallocate capital requirements towards releasable buffers in a capital-neutral manner.

I am happy to say that quite some research on the interaction of these two policy areas has been undertaken here at the ECB. [1] In particular, two papers of the Research Task Force are dedicated to this issue: one documents the macroeconomic impact of macroprudential policy measures and its interaction with monetary policy[2]; a second one sheds light and quantifies the transmission between monetary policy and bank stability. [3]  On-going research at the ECB Moreover, ECB research has showcased the particular importance of remaining vigilant about banks’ resilience in episodes of increasing cyclical systemic risk. Recent work quantifies how exuberant credit and asset price dynamics lead to large downside risks to bank-level return on assets, putting a banking system’s capital at risk over the medium term. [4] The quantification of bank capital at risk can support the calibration of macroprudential instruments. In turn, by subjecting the banking sector to specific shocks, a macroprudential stress-testing framework can help in assessing the capital shortfall in times of stress. Whereas traditional stress-testing frameworks focus on initial capital shortfalls, macroprudential stress-testing frameworks quantify the propagation of costs for banks and the real economy over time. This is the aim of the macro-micro approach, which takes into account the heterogeneity in banks’ reaction functions. [5] More generally, stress-testing has become a key instrument in the macroprudential and financial stability toolkit for assessing risks to the banking system in adverse conditions.