samchain/econo-pairs-v1 huggingface dataset:
However, due to the pace of the recovery, disruptions and bottlenecks in production chains caused by anti-pandemic restrictions, shifts in the structure of final demand from services towards products, a number of industries faced a situation when the expansion of demand surpassed their potential to ramp up output. This involves not only a shortage of production capacities, but also of labour resources. Among other reasons, this was caused by restrictions on the inflow of labour migrants and a larger number of employees who are on the sick leave 1/4  BIS central bankers' speeches  or in self-isolation. Although many of the factors fuelling inflation this year are due to supply issues, this is the expansion of demand which makes it possible for companies to simultaneously and fully pass their increased costs on to output prices and build up their output. No less important is the fact that higher inflation expectations also boost demand, especially for durable goods. In the middle of this year, households’ and businesses’ inflation expectations in Russia rose to their five-year highs. When the expectations regarding future inflation are elevated, households have a lower propensity to save and rather prefer to spend more for current consumption. Moreover, as interest rates are low, households opt to invest in higher-risk securities market instruments, rather than deposit their savings. Companies tend to revise their prices more often. Employees assume that the growth rate of wages will be higher.

And third, a reinterpretation of central banks’ financial stability mandate towards a more active role in crisis prevention is necessary to reduce the need for another round of extensive crisis management in the future. This, in a nutshell, is the main argument of my speech today. In what follows, I will elaborate on the rationale behind the conventional and unconventional measures that central banks have adopted to mitigate the crisis, and explain why central banks need to play an active role in the new regulatory framework which is being implemented in response to the crisis. Central banks may not exactly have a reputation for being big innovators. But just as the Foire du Valais has developed into French-speaking Switzerland’s pre-eminent fair over the past 50 years by successfully combining innovation with its core strengths, central banks have evolved over the past few decades by remaining focused on their core mandate – price stability – while adapting to a changing environment and being open to learn new lessons when they present themselves. The financial crisis was such a moment, and a reinterpretation of central banks’ financial stability mandate is an important lesson to take away from it. Preventing the collapse: conventional monetary policy The economist John Kenneth Galbraith quipped that financial memory is brief and that “there can be few fields of human endeavor in which history counts for so little as in the world of finance”.
Not only is the share of young people declining in the euro area, but unfortunately, despite being the best-educated generation ever, they have more trouble in entering the labour market. Youth unemployment exceeds overall unemployment in all countries and for the whole area the difference is a staggering 12 percentage points. This is already harming the economy, because the young who are willing to work but unable to find a job are prevented from developing their skills. To avoid creating a “lost generation” we need to act quickly. The younger generation is also being dragged down by the high level of debt it is set to inherit. A combination of negative demographics, weak productivity growth, poorly functioning labour markets and a steep increase in public and private sector debt burdens means that a dwindling number of young people in our societies will have to carry an increasingly heavy financial burden[15]. This limits their ability to be entrepreneurial, to innovate and compete in international markets. The good news is that a lot can be done to improve that gloomy outlook[16]. Today, I won’t be talking much about fiscal reforms, or about policy initiatives that could improve the demographic outlook, but I will instead focus on reforms that could boost medium- to long-term growth and employment. Comprehensive and well-sequenced reforms When you look at a range of OECD structural indicators, it is clear that most euro area countries are well down the league table for best international practice in one or several policy areas.

The maximum bid amount and rate have varied over the life of the exercise in order to ensure usage sufficient to generate useful observations about counterparty demand under various market conditions during the testing period; however, as authorized by the Committee, they cannot exceed $ billion per counterparty and 5 basis points, respectively.18 It bears emphasizing once again that, like the Federal Reserve’s other  16  The facility does, however, raise new collateral management issues for the Desk, which would have to ensure that SOMA securities are appropriately allocated to meet policy and operational needs across multiple operations. 17  The Desk has been conducting periodic, small-value term reverse repo exercises with its expanded counterparties through tri-party arrangements since October 2009. These exercises have been limited to $ billion in total amounts outstanding and have been conducted according to the traditional, fixed-quantity model of Desk operations. In August 2013, the exercises were arranged for same-day settlement and overnight maturity in anticipation of initiating overnight fixed-rate reverse repos. 18  All 139 counterparties are eligible to participate, but they are able to choose whether they do so. Each counterparty was initially limited to a maximum bid of $ million. This amount was raised to $ billion on September 26, after we ensured that the initial launch of the exercise did not operationally overwhelm the  8  BIS central bankers’ speeches  operational readiness exercises, this one is a matter of prudent advance planning.
Mugur Isărescu: 10 years since the launch of Ziarul Financiar Speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, on the occasion of 10 years since the launch of Ziarul Financiar, Bucarest, 16 December 2008. *  *  *  It is a great pleasure for me to be present at this special anniversary of Ziarul Financiar. The one-decade long presence of this prestigious economic daily newspaper overlapped a turbulent period in the history of Romania. Allow me to dwell for a while upon a series of events that occurred shortly after the release of the first issue of Ziarul Financiar. In the wake of the crises in Russia and Southeast Asia, Romania’s need for external financing was much more difficult to cover, while the then level of foreign currency reserves left the authorities with little room for manoeuvre. Back then, the same as today, the rating agencies were extremely cautious in assessing Romania’s country risk, and according to the headlines disseminated obsessively by international agencies for over a year, Romania would have faced an imminent payment default. At that moment, the situation became even more complex due to the fact that the International Monetary Fund resorted to a new approach to indebted countries, called P.S.I. (private sector involvement) or “burden sharing”. This approach, which was tested in four countries including Romania, proved to be a failure, and the IMF later abandoned it.

I was head of government during the critical period of 1999-2000 and I know exactly how difficult it is to adjust domestic consumption, even by two percentage points of GDP only. This time, the difficulty posed by the adjustment will be perceived as rather big, because it must be accomplished after several years of significant increases in consumption. The trend seemed to go on forever, which led to the decoupling between aspirations and real possibilities to fulfil them. Therefore, it is adequate to adjust domestic demand sooner rather than later, as long as we still enjoy a marked economic growth, given that at this point adjustment implies only resizing and not amputation. An essential issue that the Romanian society must solve without delay refers to what should be adjusted first: consumption or investment. I realise that we must ponder on this matter. The question is whether we should opt for buying an increasing number of cars or set aside resources in order to build the adequate road infrastructure. In a few years, the former choice could lead us to a total traffic jam, and the only additional consumption left for us could be that of carbon monoxide released by the exhaust pipes. This example is not only metaphorical.
Expectations concerning the next six months indicate accelerating growth for domestically oriented industry and continued solid growth for the export industry. Higher growth is also expected in both household and corporate services. The solid growth in retail trade is expected to continue in Region North, while growth in the building and construction sector appears to be slowing somewhat. According to our regional network contacts in the region, employment has fallen somewhat in the manufacturing and public sectors. In the near term, employment in building and construction and the service sector is expected to increase, while employment in all other sectors is expected to remain unchanged. The supply of qualified labour in the region is satisfactory, and growth in profitability is solid, but moderating. The global economy Global economic growth is expected to be somewhat lower this year than in 2004. In the US, growth was solid during the first half of 2005, and it appears that this trend will persist. In the longer term, growth is expected to moderate somewhat. In the euro area, growth is expected to remain fairly weak during the next couple of years. In the UK, growth has slowed markedly and is expected to be moderate in the period ahead. In Sweden, growth has edged up following a couple of weak quarters and is expected to remain at approximately the same level. In Japan, there was a marked decline in growth from the first to the second quarter, and growth is expected to be fairly moderate in the period ahead.

Ardian Fullani: Overview of recent economic developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the press conference on the Monetary Policy Decision of the Bank of Albania Supervisory Council, Tirana, 27 July 2011. *  *  *  Today, on 27 July 2011, the Supervisory Council of the Bank of Albania reviewed and approved the Monetary Policy Statement for 2011 H1. Based on the analysis of Albania’s latest economic and financial developments and following discussions on their performance outlook, the Supervisory Council of the Bank of Albania decided to leave the key interest rate unchanged at 5.25 %. The Supervisory Council holds that the actual monetary conditions are appropriate for meeting the inflation target and for continuing to stimulate the economic activity. Let me now proceed with an overview of economic developments and main issues discussed at today’s meeting of the Supervisory Council. *** The Albanian economy continued to grow during 2011 H1, although in the presence of added challenges generated by the internal and external economic developments. Tensions in global economies and financial markets, as well as increased prices of raw materials and foodstuff led to shrinkage of Albania’s economic activity. The first factor raised the uncertainty of economic agents as well as risk premiums in financial markets, while high inflation imported from world markets decelerated domestic demand and increased inflation expectations at home. Despite unfavourable factors, Gross Domestic Product posted growth and main macroeconomic balances and financial stability remained stable.
Not because I have dramatically revised my assessment of inflation prospects but rather because resource utilisation is still rising and a shift can be discerned in the risk spectrum. We will have to bear these things in mind so that the development of production and employment can remain stable. 3  BIS Review 109/2000

There is another lesson that I draw from this history, namely that there must be some difficult impediments to achieving the goal of institutional stability in financial regulation. To start with, achieving consistency and clarity in identifying the objective of regulation has been a problem in the past. The new approach anchors the PRA’s primary objectives of the safety and soundness of firms and the protection of insurance policyholders in the broader goal of the stability of the financial system. This very clearly ties together micro and macro-prudential regulation, whose objectives are consistent. And, we now have a secondary objective around the competition implications of our actions, which I welcome. Just under two weeks ago we announced changes to the Bank of England’s strategy and structure. In doing so, we adopted a single mission, namely to promote the public good through achieving and maintaining financial and monetary stability. This single mission is much more than just the speak of management, it is a clear change intended to promote the integration of the Bank of England’s objectives of monetary and financial stability. This integration of objectives into a single mission represents a very deliberate decision that the Bank of England should not be organised as a series of silos defined by our different statutory objectives and by the structure of policy making committees given to us in legislation.
The “prudential” suffix, for its part, refers to the fact that it has to act pre-emptively; it will seek firstly to mitigate the accumulation of systemic risk or its potential materialisation, and secondly to generate buffers (mainly capital buffers in the case of banks) enabling the impact of systemic risk, should it materialise, to be cushioned. The multi-dimensional nature of systemic risk One characteristic of macroprudential policy is the multi-dimensional nature of its objective: to prevent systemic risk. Theoretical and empirical research appear to concur that there are at least two dimensions to this risk which, moreover, can interact with each other. The first is the time dimension, which is related to how systemic risk evolves over the course of the financial cycle. A good example of this dimension can be found in the run-up to the global financial crisis. During those years, there was strong growth in credit to the nonfinancial private sector in Spain (in particular to real estate development and construction activities), attaining levels far above those considered sustainable. This situation was accompanied by price rises and increases in real estate market activity, also to unsustainable levels. Against this background, household and corporate debt associated with real estate transactions mounted to such an extent over time that, when its sustainability was questioned and financing ground to a halt, there was a sharp correction to these financial imbalances.

AMCESFI is structured as a collegiate body in which the senior officials from the aforementioned institutions participate. It is entrusted with the oversight of the financial system as a whole, acting in an advisory capacity with respect to the proposed macroprudential measures put forward by the sectoral authorities. 5  The need for coordination in this field is also very necessary at the supranational level, and in particular in Europe since the creation of the Banking Union, which centralises at the European Central Bank (ECB) the supervision of the significant banks in the 21 EU countries.3 In this respect, although decisions on macroprudential instruments in Europe are in the hands of national authorities, the ECB scrutinises these national banking authorities’ proposed macroprudential policy measures to ensure that they are consistent across the euro area countries. In particular, the ECB is empowered to tighten the measures applied by national authorities to specific instruments envisaged in Community banking legislation. The European Systemic Risk Board (ESRB), on which the heads of the EU central banks and regulatory and supervisory authorities for banks, securities, insurance and pension funds sit, has been in place since 2011. The ESRB, whose Advisory Technical Committee it is my honour to chair, has macroprudential oversight functions and is empowered to issue opinions, warnings and recommendations on matters relating to the emergence of systemic risks, and the suitability of macroprudential measures proposed at the national level.
2  BIS central bankers’ speeches  When leaning against the wind of the credit cycle, macro-prudential authorities do, like their monetary policy colleagues, still need to find the optimal path. To use the words of the UK Chancellor, their objective is not to ensure “the stability of the graveyard”. How they balance cost and risk, where they set the trade-offs, will depend in large part on how confident they are about the underlying resilience of the system – in other words how well they have done on the first impulse. International governance The second big change I want, therefore, to highlight is the development since the crisis of much stronger international governance. This stems from the creation, at the April 2009 G20 London summit, of the Financial Stability Board (FSB). And, equally important, from the decision at the Summit that the FSB should report directly to the G20 Leaders and Finance Ministers to give it the necessary “clout”. Working with the standard setting organisations like the Basel Committee, the FSB has provided the drive and coordination to reform and develop global standards for bank capital, liquidity, and resolution. If one remembers the best part of a decade that it took to develop and reach agreement on the Basel 2 capital standard, the progress made and international agreement reached over the past 5 years has been extraordinary.

Take a simple example of an investment that provides a long, regular stream of profits interspersed with occasional large losses, such that on average you would expect it to have the same return as a safe investment – not an unreasonable characterisation it would now appear of many of the investment strategies of recent years. Over short time periods, where it is unlikely that disaster will strike, it is more likely than not that investors will come out ahead, with a high return. But over long periods, where the risk that disaster will strike at some point is higher, it is likely that the overall return will be worse than the safe investment. And, because charges are often structured so that investment managers receive more of the upside from risky behaviour than they share in the downside, they have an incentive to promote the risky investment strategy. That, allied to a massive increase in the complexity of financial products and instruments in recent years, has meant that investors have, perhaps unwittingly, aided an enormous increase in the risks being run in the financial system. Given these problems, it seems to me that regulation should aim to be simple and robust. Overly complex measures of risk and capital adequacy are rarely robust to developments that are easy neither to anticipate nor calibrate. And robust rules for regulation will of necessity need to be simple or supervisors will be lost in a morass of unnecessary detail. For the same reasons we should not expect too much of regulation.
Moreover, Puerto Rico’s power outage was, by far, the most severe in U.S. history, in terms of total customer-hours lost, and it will still likely take many more months to fully restore electricity and other critical infrastructure to all of the Island’s residents. As a result, a sizable number of residents went to the U.S. mainland in the weeks following Maria, and it still is unclear how many will return once circumstances improve. Even before the storms hit, Puerto Rico was struggling with severe fiscal difficulties and a long period of poor economic performance. For over a decade, the Island has been experiencing a shrinking economy, contracting employment, low and declining labor force participation, and persistent out-migration of residents to the mainland. Furthermore, public debt reached a problematic level, and the Commonwealth and its instrumentalities—including the power and water authorities—lost their ability to borrow in the public markets. Defaults and ongoing debt restructuring efforts followed. In the U.S. Virgin Islands, the situation is similar in many ways. St. Thomas and St. John were ravaged by Irma, and St. Croix was devastated by Maria just two weeks later. Their economy, which is much more dependent on tourism than that of Puerto Rico, has also been contracting for the better part of a decade. However, the population of the U.S. Virgin Islands has not fallen nearly as sharply as Puerto Rico’s, and its economy had stabilized in the past two years following the closure of a major refinery in 2012.

Still, while by some measures the U.S. Virgin Islands are not as fiscally stressed as Puerto Rico, they, too, do not have access to the debt markets. Recovery and rebuilding The combined impact of complex preexisting economic problems and the hurricanes has made recovery much more challenging. The loss of market access has severely hampered the ability of the governments to mobilize resources to respond to the damage and rebuild and upgrade infrastructures. One example is Puerto Rico’s electrical grid, which is a major obstacle to recovery. Even before Maria, Puerto Rico suffered frequent blackouts, and the high cost and unreliability of electricity 1/3  BIS central bankers' speeches  had reduced business competitiveness. Puerto Rico’s power plants are largely outdated and inefficient, and the electrical distribution system is poorly maintained and extremely fragile. In my mind, given this poor starting point, now is a perfect opportunity for Puerto Rico to essentially start from scratch and build a resilient power generation and distribution network. I would assume that an emphasis on renewable energy would be part of this effort, especially given the dramatic fall in costs for this form of electricity generation. The challenge, of course, will be how to finance this investment, when the Commonwealth is already mired in debt. Despite these woes, there are signs of resilience in Puerto Rico. As we will show, job losses following the storm were very substantial, totaling around 4 percent in Puerto Rico and 8 percent in the U.S. Virgin Islands.