samchain/econo-pairs-v1 huggingface dataset:
It allows a smooth and relatively painless adjustment if the economy looses competitiveness. Summing up, I have discussed selected aspects of the cost-benefit analysis of Poland’s adoption of the euro. Although the costs may seem substantial, one has to bear in mind two things. First, the probability that these costs will have to be incurred is relatively low. Second, their magnitude depends crucially on domestic policy – prudent banking sector supervision, labor market reforms and sound fiscal policies to name a few. In my view, given the evidence that reforms have been halted in many countries after entering the eurozone, these measures should be taken before the euro area accession. Thank you for your attention. References: Borowski J. 2003. “Potential Benefits of Poland’s EMU Accession”, Focus on Transition No. 1. Brzoza-Brzezina, M. 2005. “Lending Booms in the New EU Member States: Will Euro Adoption Matter?”, ECB Working Paper No 543, European Central Bank, Frankfurt. BIS Review 6/2007  3  Brzoza-Brzezina, M. 2006. “The Information Content of the Neutral Rate of Interest: The Case of Poland”, Economics of Transition 14(2), s. 391-412. Csajbók, A., Csermely, A. (ed.) 2002. “Adopting the euro in Hungary: expected benefits, costs and timing”, MNB Occasional Paper 24, National Bank of Hungary DeGrauwe, P. 2003. “The Enlarged Eurozone: Can it Survive?”, Jelle Zijlstra Lecture, NIAS. Demirgüç-Kunt, A., Detragiache, E. 1998. “The Determinants of Banking Crises in Developing and Developed Countries”, IMF Staff Papers, Vol. 45, No. 1, Washington, D.C. Eickmeier, S., Breitung, J. 2005.

51, No. 4, s. 657-665. Schadler, S., Drummond, P.F.N., Kuijs, L., Murgasova, Z., Elkan van, R. 2005. “Adopting the euro in Central Europe: Challenges of the Next Step in European Integration”, Occasional Paper No. 234, International Monetary Fund, Washington. Wicksell, K. 1898. “Interest and Prices”, tłum. R.F.Kahn, MacMillan, New York, 1936. Woodford, M. 2003. “Interest and Prices”, Princeton University Press, Princeton and Oxford. 4  BIS Review 6/2007
Zdeněk Tůma: Europe's club of nations needs a rule change Comment by Mr Zdeněk Tůma, Governor of the Czech National Bank, in the published Financial Times (London, England), 4 January 2007. *  *  *  The European Union is a pretty big club and it will only get bigger. The rules and institutional framework used by the 27 members to make decisions are, however, much the same as they were when there were six or 15 members. The process of enlargement poses a dilemma: with the number of members growing we need rules respected by everyone more than ever before, but at the same time such rules can be a straitjacket, especially given that the present rules were designed for a very different club. One example is monetary policy and the process of adopting the euro. Policymakers designed a set of rules 15 years ago that are applied any time a country wants to join the single currency. The country is required to comply with the Maastricht criteria and also to stay for at least two years within the exchange rate mechanism-2 framework. Back then, these rules might have been perfectly legitimate, but today they are outdated and -counter-productive. The ERM-2 might have made sense in a situation where monetary policies around western Europe were based primarily on fixed exchange rates explicitly or implicitly pegged to the D-mark. Then, the ERM-2 framework worked as a platform for co-operation among countries with interlocked currencies.

BIS Review 3/2007  1  We are caught between two poles. We need rules for policymaking, yet we must also retain some discretion. The response to the economic arguments should certainly not be: "The legal department has decided that the treaty says . . . ". 2  BIS Review 3/2007
In 2016, according to the draft State Budget, the planned reduction in the deficit will stem firstly from lower public spending, whose ceiling for the year as a whole, excluding that derived from local and regional government financing arrangements, will entail a reduction of 4.4% in relation to that set for 2015. The key expenditure-side measures are the 1% increase in the remuneration of public sector employees and the refund in 2016 of the remaining 50% of the extra salary payment eliminated in 2012. With regard to public employment, a standard 50% replacement rate has been established for public-sector vacancies, rising to 100% in priority sectors. Overall, these measures would lead to growth of 2.7% in wage expenses in the State Budget relative to the 2015 Budget outturn projection. The restrictions on current expenditure on goods and services are maintained, with a 14% reduction. Notable with regard to the Social Security system is the 0.25% revaluation of pensions, in keeping with the provisions of the 2013 reform. The projected growth in spending on contributory pensions in relation to the initial 2015 budget is rather higher, at 2.8%. This is as a result of the foreseeable increase in the number of pensions and of the substitution effect in terms of new pension claimants as opposed to deregistered pensioners, meaning that the weight of pensions spending relative to total consolidated spending of the State and Social Security system rises to 38.5% (37.8% in 2015).

Within the Eurosystem, the ECB has established a high-level task force to prepare a comprehensive analysis of the possible benefits and challenges related to retail CBDC, to be discussed in coming weeks within our Governing Council. • In this journey, we must set up appropriate synergies between public and private actors. Unequivocal support should be given to the European Payment Initiative (EPI): this project is essential for the safety, the rapidity and the European sovereignty of payments. Success of EPI is determined by (i) access to a large customer base, (ii) adherence of large merchants, and ultimately interoperability should EPI have ambitions to develop outside of Europe. • Let me stress there is no contradiction, as sometimes feared by commercial banks, between considering a euro-CBDC and supporting EPI. We may probably need both, and build complementarity. My preference would be to seek a renewed public / private partnership for the dissemination of central bank money in a retail form. Possible impacts on the banking sector could be reduced with different tools: for instance, limiting the quantity of digital euro in circulation would prevent excessive shifts of commercial bank money into digital euros. For the Eurosystem, this strategy would imply to clarify the interplay we would like to put in place between EPI and the CBDC, thus validating an intermediated model while providing enough customer proximity and value added to intermediaries (like front-end solutions).
When making that assessment, we have to take into account that Iceland’s recession was the result  2  BIS central bankers’ speeches  of two stories: the macroeconomic boom-bust cycle in a small, open, and financially integrated economy, and the rise and collapse of three cross-border banks operating on the basis of EU legislation. The first is familiar, and Iceland was already on its way into a recession as a result of it when the banks collapsed. The second was unique at the time, as it occurred during the first international financial crisis since the birth of the EU single market. Iceland lost around 12% of GDP from peak to trough during the recession. But the recovery began in the middle of 2010, and the Central Bank forecast from February is that Iceland’s economy will grow by just over 2% this year. The recovery has already reduced the seasonally adjusted unemployment rate from over 9% at the peak to around 4½%. New banks, smaller and domestically oriented, have been rebuilt. But there are still significant legacy issues and challenges, including capital controls and inflation expectations well above target. Source: Philippon (2008): The Evolution of the US Financial Industry from 1860–2007. Source: Philippon and Reshef (2008): Wages and Human Capital in the US Financial Industry 1909–2006. BIS central bankers’ speeches  3  Before I close, let me expand my scope again and say a few words about possible broad long-term future trends regarding the relative size and importance of the financial sector.

Some of that is inevitable, and some retrenching from the excess levels of finance in relation to the real economy is probably beneficial at this stage, both at the national and the global level. The risk, however, is that the process could go too far. Yes, there are risks to financial globalisation, but there are also benefits. In order to reap those benefits, we need a safer framework for cross-border banking at the regional and global level and some ground rules for capital flows and capital controls. Let me briefly turn my own country, Iceland, into a case study of some of the issues involved. During the financial crisis, three small European countries that had relatively big banking systems but no apparent fiscal problems prior to the crisis have suffered very serious financial and economic crises. These are Iceland, Ireland, and Cyprus. In all three countries, the balance sheets of the banks were around 8–9 times GDP. All three are members of the EU single market – in Iceland’s case, through the agreement on the European Economic Area. That includes free movement of capital and provision of financial services. The underlying principles are those of home licensing for operation anywhere in the area and of a level playing field for competition, where size and location are not supposed to matter. It therefore goes against the underlying principles of this framework to consider the size of banks relative to GDP as a metric for concern, as is now so rightly in fashion.
My special welcome goes to the IMF's Managing Director Kristalina Georgieva - it is indeed our great privilege to have you on the conference and to host you for the first time here in Dubrovnik. I also thank our Prime Minister Plenkovi for being with us today to open this event and to set the stage for fruitful discussions that will follow. Finally, I want to thank all of you for coming here to enrich the conference by sharing your great knowledge and experience with us. Last time we gathered here in Dubrovnik, on a similar occasion, was in 2019. We had to skip 2021, for the known reason, namely one of the shocks that hit us in this short period of time – the pandemic. I'm happy that we are back here in a better shape than in spring of 2020 most believed we would be at this moment in time. And while the main objective of the conference has not changed much – that is to discuss policies needed to enable sustainable growth and prosperity in Central Eastern and Southeastern Europe – the underlying circumstances at that time were so much different than today. From an economist's perspective, it seems that 2019 was not years ago, but decades ago.

Commercial banks operating in the eurozone are willing to borrow around 250 billions Euro from the European Central Bank paying the key policy rate and at the end of the same day to deposit the same money at the European Central Bank being paid the discount rate, which is 1 percentage point less, but the spread between the short-term money market rates and the key policy rate still persists. Magnitude of the commercial banks’ position compared with the European Central Bank shows how huge the uncertainty has been. Only restoration of confidence about solvency and financial stability among commercial banks can most probably solve this problem. The third frontier we are concerned about is connected to the emergency liquidity assistance. Under standard circumstances central banks provide liquidity to commercial banks only. In case of an urgent need a commercial bank may ask the central bank for an emergency credit. What we see in the United States today is an attempt to extend this emergency assistance beyond the banking system and provide liquidity against collateral to non-banking firms. On one hand, one understands the effort of the Federal Reserve to provide funding also to the non-banking sector of the economy when the traditional channels are freezing. On the other hand, the Federal Reserve is effectively printing money against collateral with uncertain value and there are concerns when and how the Federal Reserve will close and null these operations to avoid potential inflationary consequences.
Plus high investment levels that will help us sustain this growth trend into the future. Still, there are big challenges ahead. Risks are present and the policies we need to adopt to confront them are not always evident. So it is essential that we keep the road clear and take good care of that which has taken so much effort to achieve. Let me say again what I said at the beginning: self complacency is one of the worst mistakes the entities responsible for our country’s economic policies can make. Thus we must pay close attention to events. As a central bank our focus is on ensuring the stability of prices and the financial system. This is the best contribution we can make to the well-being of our population. Thank you. 6  BIS central bankers’ speeches  Figure 1 GDP and demand (annual change, percent) 18  18  12  12  6  6  0  0  -6  -6  -12  -12 09  10 GDP  11  GDP minus natural resources  12 Domestic demand  Source: Central Bank of Chile.

This is a task that is not confined only to the Central Bank, but is for all economic and financial policy makers. Beyond these risks, in the scenario we consider today to be the most likely, the Chilean economy will expand at a pace that is consistent with its trends. Inflation will gradually return to 3% as specific temporary factors that have influenced recent indicators dissipate. Let me describe this scenario and the risks identified in some detail. Macroeconomic scenario Since the last Monetary Policy Report, the Chilean economy has continued to show high strength and inflation has remained limited. Contractionary risks coming from abroad have eased, while expansionary risks originating domestically have gained importance. Domestic output and demand growth exceeded projections, with a greater boost from investment and more recently also from private consumption. Dynamic expenditure has resulted in a smaller trade surplus and a high degree of internal resource utilization. Headline and core inflation indicators have dropped to near 1% annually because of a number of temporary factors, and forecasts are that they will return to 3% within the projection horizon. Internationally, the threats associated with the situation in the Eurozone are still in full force, but other risks, relating to the U.S. and China, have moderated. In this scenario, the Board has held the Monetary Policy Rate (MPR) at 5%. As I mentioned at the beginning, Chile’s GDP grew 5.6% in 2012.
In this vein, I must specify that, once Romania joined the European Union and the National Bank of Romania became a member of the European System of Central Banks, we are not only entitled, but also bound to present our viewpoint where we see that fundamental equilibria of the economy may be jeopardised by a particular development. Hence, I will refer to the NBR’s objective to ensure and maintain price stability and bring inflation rate down to a level compatible with its capacity as a member of the Eurosystem. Generally, a lower inflation rate is associated with a slower economic growth and even with recession. However, this phenomenon occurs only when there is a contradiction in the economic policy mix and when subdued inflation is not the primary objective of other policies, particularly fiscal and income policies. When the policy mix is balanced, inflation rate may be curbed while maintaining a sustained growth pace. Behind this development stand mainly foreign direct investment inflows which enhance the productive capacity of the economy and ensure the sustainable financing of a relatively high external deficit. In Romania’s case, the experts working with the central bank as well as the independent analysts estimated that the national economy may further rise at a fast clip amid alleviating inflationary pressures, even in the context of a current account deficit of 8-10% of GDP. Nevertheless, in order for capital inflows to continue, Romania’s economy must stay attractive.

Christian Noyer: Views on the Capital Markets Union project Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Paris Europlace International Financial Forum, Paris, 9 July 2015. *  *  *  Ladies and Gentlemen, It is my great pleasure to be here today at the Paris Europlace International Forum and I am particularly thrilled to exchange views on the Capital Markets Union project with one of its major architects, Olivier Guersent. This project indeed echoes many concerns tackled at the Central bank level, in particular how to achieve a better balance in the funding structure of the economy, and improve access to funding for businesses, notably SMEs and infrastructures, while ensuring financial stability. Although this initiative was announced only a year ago, it has soon become topical with the public consultation launched in February by the European Commission. The Banque de France was committed to answering this public consultation, which constitutes a milestone in the construction of a Capital Markets Union. Let me briefly share with you our vision. I welcome and support the CMU initiative as a promising avenue for growth. However, I believe that three major pre-requisites have to be met in order to make it a successful endeavor: (i) a clearly defined framework focused on a limited set of operational deliverables, (ii) the right articulation between market-based financing and bank financing, (iii) the necessity to ensure financial stability in the long run.
BIS Review 139/2009  15  Chart 5: Bank of England’s balance sheet as % of GDP 20  (a)  (c)  (b)  (f)  (e)  (d)  (g)  (h)  (i)  (k)  (j)  18 16 14 12 10 8 6 4 2  (a) Famine / End of railroad boom (1847) (b) Overextension of credit from 1855-1866 (c) Failure of Overend Gurney (1866) (d) Failure of City of Glasgow Bank (1878)  (e) Support for Barings (1890) (f) W W I (1914) (g) Currency and Bank Note Act (1928) (h) W orld W ar II (1941)  2004  1998  1992  1986  1980  1974  1968  1962  1956  1950  1944  1938  1932  1926  1920  1914  1908  1902  1896  1890  1884  1878  1872  1866  1860  1854  1848  1842  1836  1830  0  (i) Secondary Banking Crisis (1973) (j) Small Banks Crisis (1991) (k) Current Crisis (2007)  Source: Bank of England.

Since the 1970s, capital injections to the banking system have averaged around 8% of GDP at crisis time. 12 Taken together, this evidence paints a consistent picture: a progressive rise in banking risk and an accompanying widening and deepening of the state safety net. There is a ratchet. This ratchet is evidence of a policy time-consistency problem. 3. Time-consistency and the banking safety net  What explains this time-inconsistency? A simple framework is developed to explain the existence of, and ratchet in, the safety net. It focuses on the incentive structures facing owners of banks and the risk strategies they pursue. The run-up to the present crisis provides several examples of those incentives and strategies at work. Take the payoff profile facing a bank shareholder. Assume that the sensitivity of the bank’s assets to aggregate risk – in the language of finance, its beta – equals 0.1. So for every 10% movement in the market as a whole, the bank’s assets move by 1%. Assume too that the beta of the bank’s deposits is zero and that the bank has an equity capital ratio of 10%. While arbitrary, these numbers are broadly plausible. Conveniently, under those assumptions the  10  Laeven and Valencia (2009). 11  Logan (2000). 12  Laeven and Valencia (op.cit.). 4  BIS Review 139/2009  beta of the bank’s equity equals one. Figure 1 shows the payoff profile facing owners of the bank. The return on a bank’s equity lies on a 45 degree line when market returns are positive.
It is my hope that in that book of the future, the Basel II framework would be portrayed as a revolution in our approach to financial regulation. It would represent the introduction of a new regulatory and  BIS Review 8/2005  1  supervisory paradigm, one premised on the need to begin to depart from blunt requirements and instead to develop rules that incorporate nuance, rules that align capital requirements more closely to the actual degree of economic risk a bank faces. Our author might write that Basel II represented an important step forward in continuing to replace static rules with rules that offer incentives for firms to improve constantly their internal governance and management of risk. And that it marked a milestone in the trend toward leveraging the power of the market place to exert discipline over firms’ decisions and strategies, such that other marketplace participants can better serve as effective allies of regulation and supervision to achieve financial stability. Yet I must confess that, with the evolution in practices and technology that can reasonably be expected by the year 2046, the Basel II capital framework released in June 2004 might well be judged to be excessively simple. Still, its greatest virtues might be considered its forward-looking nature and its flexibility, and its ability to adapt to new circumstances and to the emergence of better risk management practices.

Jaime Caruana: Basel II - back to the future Speech by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the 7th HKMA Distinguished Lecture, “Basel II - Back to the Future”, Hong Kong, 4 February 2005. * 1. *  *  Introduction  Let me begin by expressing my gratitude for this invitation to participate in the “Hong Kong Monetary Authority Distinguished Lecture”. I am honoured to join the list of prestigious speakers who have discussed critical issues in economics and finance in this forum, issues made especially prominent by the important role that the Hong Kong Monetary Authority plays in promoting financial stability under the leadership of Joseph Yam. From my perspective as Chairman of the Basel Committee on Banking Supervision, I am indebted to Mr Yam for his support and initiative in contributing to the development, and now the implementation, of the new bank capital framework, or “Basel II”. “Nothing endures but change,” wrote the ancient Greek philosopher Heraclitus more than two thousand years ago. In a world where change is the only constant, success depends on the depth of our awareness of the risks and rewards on the horizon and on the quality of our preparations to respond to them appropriately. That is true not just in the banking industry, but certainly also in the formulation of public policies geared to promoting more sustainable economic growth through greater financial stability.