samchain/econo-pairs-v1 huggingface dataset:
In fact, the downsizing of current accounts can be attributed to both public and private sectors. This means that aggregate demand was affected for a longer period, and measures to stimulate it, when the economies experienced negative output gaps, were needed. Despite very low interest rates, credit was not a main driver of the recovery; and public investments, as the report outlines, are on average 2 percentage points of GDP lower than their pre-crisis levels. Although it is nowadays a demand-led recovery, we do not have sufficient demand-push inflation, with the notable exception of countries that have closed the output gap – and these are the New Member States. This justifies the report recommendation of further accommodative policies from the ECB. However, as Mr. Thomsen highlighted in his presentation, policymakers need to seize the good times to advance further with fiscal consolidation and structural reforms. But the low rate environment and the strong sovereign-bank nexus are feeding the beasts and provide the wrong incentives for reforms. This is where policy trade-offs step in. Monetary policy has been overburdened in times of crisis, trying to address the market failures and the pro-cyclical fiscal policy. Yet, monetary policy is not a universal medicine, and it cannot work in isolation. Jens Weidmann, the President of Bundesbank, once made an analogy between monetary policy and Coca-Cola’s all-round curative properties: monetary policy is also currently being branded as a cure for assorted ills.

Nevertheless, these non-observable variables become visible, sooner or later, in two indicators that eventually separate oil from water: the twin deficits. Let me start with the case of Romania. In the aftermath of the global financial crisis, we had one of the largest adjustments of the budget deficit in the EU: from 9.5% in 2009 to less than 1% in 2015. Romania exited the excessive deficit procedure in 2013 and also in 2013 reached the Medium Term Objective of 1% of GDP structural deficit, down from 8.8% of GDP in 2009. Since I was the Budget Minister in 2013 and for most of 2014, and I was responsible for the IMF and EC negotiations, I can praise the role played by the IMF and the EC in the three successive agreements (2009–2015). The current account adjustment was also impressive, from –13% in 2007 to just –1% in 2013–2015. However, in the last couple of years, the trend of fiscal consolidation has been reversed. This has also impacted the current account, which has deteriorated by 2.2% of GDP, of which 2.1% of GDP came from the budget deficit widening. The main advantage of the country is its low level of public debt, but this can be reversed in the medium term unless a prudent policy mix is implemented, including a gradual return to MTO. Broadening our perspective, all EU countries have adjusted their budget deficits over the last 10 years. Most of them also adjusted their current account deficits.
Michael Held: Keynote remarks at Union of Arab Banks’ anticorruption conference Keynote remarks (delivered via video conference) by Mr Michael Held, Executive Vice President and General Counsel of the Federal Reserve Bank of New York, at the Union of Arab Banks' Conference on Anti-Bribery Corruption, the Sixth European Union Anti-Money Laundering Directive, and the Anti-Money Laundering Act of 2020, 3 February 2022. * * * As prepared for delivery It is a pleasure to be with you virtually for this important Conference. I am thrilled to be able to share a digital stage with my distinguished colleagues – Liz Rosenberg, the Assistant Secretary for Terrorist Financing and Financial Crimes at the U.S. Treasury Department, and Dr. Fahad Ibrahim Alshathri, the Deputy Governor for Supervision at the Saudi Central Bank. I also want to thank my friend Wissam Fattouh and the Union of Arab Banks for the invitation to be part of this timely event. Before I start my remarks, I want you to know that the comments are my own and may not necessarily represent the views of the Federal Reserve Bank of New York or the Federal Reserve System. Like my colleagues and our respective institutions, I have serious concerns about corruption, kleptocracy and international bribery schemes. The Federal Reserve System supports the U.S. government’s actions to limit those activities through prosecutions and sanctions.

The general principle is straightforward: it consists in ensuring that supervision manages to limit risks for the stability not only of a particular institution, but also of the entire financial system. Its implementation, however, is complex. For the moment, we are only at a preliminary stage, contemplating which tools a macro-prudential policy could be based on, and how these tools could be used. As regards supervision, this crisis has shown three things. First, it has highlighted the merits of having the banking supervisor close to the central bank. The point is not to claim there is an optimal supervisory structure that fits any country’s circumstances. Rather, it is to note that a system such as the one we have in France has proved very useful in allowing for an in-depth knowledge of the banking sector and the various financial institutions. It also allowed for very swift and timely exchanges of information, and, as a result, allowed us at the central bank to quickly pass sensitive judgments, not least on the usefulness of injecting liquidity. Second, the crisis also revealed that, as far as supervisory infrastructure is concerned, simple, robust and pragmatic plans have shown their efficiency. Thirdly, the crisis stressed the need for supervisory structures to adapt to their environment. This is very true for Europe. I guess it is also true for other countries and regions.
With respect to inflation, as long as growth remains strong enough to lead to further improvement in labor market conditions – and this is an important caveat – I am becoming more confident that inflation will move up toward the FOMC’s 2 percent objective over the medium term. The firming of inflation that I anticipate reflects my expectation that resource utilization will increase and the fact that some of the factors that have pulled down inflation, such as lower oil and gas prices and a firmer dollar, have already stabilized or partially reversed. Putting this all together, I still think it is likely that conditions will be appropriate to begin monetary policy normalization later this year. But the likelihood and timing will depend on the economic outlook, and that will be largely shaped by the incoming economic data. When the FOMC begins to raise short-term interest rates, this will occur in a very different environment than in the past. Reserves in the banking system are very plentiful, reflecting the large increase in the Federal Reserve’s balance sheet over the past few years. But this circumstance should not adversely affect our ability to push the federal funds rate into a higher target range. We have the appropriate tools to push up short-term interest rates. However, lift-off may not go so smoothly in terms of the impact on financial asset prices. After all, lift-off will represent a regime shift after more than six years at the zero lower bound.

As always, what I have to say today reflects my own views and not necessarily those of the FOMC or the Federal Reserve System. 1 The economic outlook Turning first to the economic outlook, the real GDP growth rate appears to have slowed sharply during the first half of 2015. Based on the revision we received last week, firstquarter real GDP fell by 0.7 percent at an annualized rate. Although most projections anticipate a pickup in growth to around 2 percent or slightly higher in the current quarter, there is little question that economic growth has slowed significantly from last year’s secondhalf pace. What’s going on? Why has growth slowed and what does this portend for the remainder of the year? As I see it, the contraction in GDP growth in the first quarter represents a mix of factors. These include another unseasonably cold and snowy winter, a sharp contraction in oil and gas investment, a deterioration in the trade balance due – in large part – to the stronger dollar and sluggish foreign demand, and a slowdown in consumer spending growth after a very strong fourth quarter. After adjusting for weather effects, I think seasonal adjustment issues probably also played some role. For example, real defense spending has declined eight times in the past nine years in the first quarter, suggesting there is a seasonal adjustment issue. But I judge that this has had only a modest effect on measured real GDP growth.
8  In 2021 extraordinary gains were recognised as a result of two mergers € billion in total), the spin-off of an insurance company € billion) and restructuring costs at the two big banks € billion). In 2020, extraordinary items included the negative adjustments to goodwill of the two banks with the largest international presence € billion), the adjustment for deferred tax assets € billion), restructuring costs at one bank € billion) and capital gains on the sale of business lines € billion). 9  However, as the year-on-year increase in net interest income (1.4%) in 2021 was lower than the increase in average total assets (3.8%), its contribution to the change in ROA in 2021 was negative. 10  This decline is explained by the larger drop in interest income than in interest expenses. The fall in consolidated net interest income over the last two years, concentrated in 2020, is due to a narrower interest rate spread (price effect) and a drop in the volume of assets combined with an increase in the volume of funding (volume effect). The latter represents an important difference compared with business in Spain, where the volume effect partially offset the likewise negative price effect. 11  Since 2015, net fee and commission income as a percentage of total assets has increased from 0.41% to 0.45%.

In the long term, wouldn’t “Grexit” risk putting on record that a country can, in fact, leave the euro area, and thus that the euro is not irreversible? If Greece had to leave the euro area, that would risk casting doubt on the nature and functioning of the monetary union. That would create fragility. It would be a tragedy for Greece and, moreover, for its economy. It would be a challenge that Europe would have to rise to as quickly as possible, by substantially reinforcing its institutional framework. The stability of the euro area depends on a balance between responsibility and solidarity. In order to be stronger and more convincing, concrete initiatives are required to reinforce these two dimensions. What would you say to the Greeks to convince them not to leave? It is vital to put Greece back on a growth path, to reach a consensus in order to recreate a viable economic model for the country. Total factor productivity in Greece grew at a rate of only 1% per year between 1981 and 2014, against 2% per year in the euro area, and that happened despite the sizeable transfers Greece has benefited from. To achieve this, the Greek economy must remain within the single European market and be able to rely on its institutions. What’s more, were Greece to leave, austerity would be far worse. The country would no longer benefit from the solidarity of the euro area, which has given it the time to make the necessary adjustments.
Many lending decisions are agreed weeks or months in advance and cannot be readily reversed. So the approach will not stem a very fast drainage of liquidity. Moreover, as one bank tightens lending conditions to restrict balance sheet growth, other banks facing similar pressure will react to limit any additional diversion of funding pressure onto their own balance sheets. The second is that a retrenchment in lending can have significant implications for the wider economy, as fewer funds are available to companies and households to support long-term investment and consumption. We are seeing some signs of that beginning to occur as highlighted in the most recent Bank of England Credit Conditions Survey. These defences suffer from a common shortcoming. While they may work well when one bank is facing funding pressure on its own, when liquidity pressures are widespread every bank will attempt to use them at the same time. The actions of one bank will work to negate those of a competitor in these circumstances as gains and losses of market share will net out. That implies an increase in the economy-wide costs of adjustment, posing increased risks to financial stability during the adjustment process. 2  See, for example, Bank of England: Financial Stability Report October 2007. BIS Review 50/2008  3  There is, however, one last line of defence left.

We have seen that the links to the central banks work best when the staff at the Swedish embassies in the respective countries are actively involved and regularly follow up what is happening in the respective banks. At the beginning of this year, Sida commissioned an evaluation of the Riksbank’s cooperation so far with Sri Lanka and Vietnam. The evaluation showed that the Riksbank’s efforts in these central banks had been both successful and appreciated by the recipients. The very fact that we are colleagues, that we do the same things, have the same responsibility, was one of the key factors. There are many  BIS Review 123/2006  1  consultants; colleagues are harder to find. The long-term thinking behind the cooperation is also an important factor. We do not merely make an analysis, write a report and disappear. We are still here and can continue the discussion whenever necessary. The problems that were indicated in the evaluation were more of an administrative nature. For instance, it is difficult to find a place in a foreign aid context for low-cost projects like this, as they do not really follow the set patterns for other aid efforts. Finally, I can mention that the Riksbank has allocated resources in our internal business plan for next year to extend our cooperation with some of the central banks in Sida’s cooperating countries.
Were that in doubt, consider that, in 2002, Churchill was voted “the greatest ever Briton” in a BBC poll. Or that he continues to command vast international recognition as a hero of the free world. Churchill’s contributions extended beyond his pivotal roles in the nation’s martial and political histories. He is the only British Prime Minister to have won the Nobel Prize in literature. He was a prodigious painter, and, perhaps thankfully, the only Prime Minister to enter the music charts. The wisdom of his witticisms is legion, extending as far as the dismal science. Central bank forecasters can identify closely with his advice that, “it is a much better policy to prophesy after the event has already taken place.” Polymer But in some prophesies we can be confident: for example that our new polymer banknotes, of which The New Fiver is the first, will stand the test of time. Polymer marks a major innovation. It is cleaner, safer, and stronger. It is resistant to dirt and moisture, so the note won’t wear out as quickly as the current fivers but will stay in good condition for longer. It is stronger than paper and can better withstand being repeatedly folded into wallets or scrunched up inside pockets. Polymer notes can survive a splash of Claret, a flick of cigar ash, the nip of a bulldog, and even a spin in the washing machine afterwards to boot.

Since 2010, the cumulative positive effect of these companies on the trade balance is about Euro 200 million, or 2.6% of GDP. This reduces the external vulnerability and improves the risk profile of the country and its foundations. The raised technological level, the increase in manpower, the improved access to capital, the spillover effects on domestic companies (which is already visible in our country), the absorption of the workforce, are also significant favorable effects. In the medium term more positive effects should be expected. The second key factor that significantly contributes to achieving solid rates of economic growth is the fiscal stimulus, through the increased number of investments in infrastructure projects. Large investments in road, rail and energy infrastructure are, on the one hand, an important impetus for growth in the short run, while on the other, they improve the competitiveness of the economy and contribute to the increase in the potential growth. The public sector share in the investments during the crisis has increased (from 20% in 2007 to 34% in 2010), offsetting the smaller investments from the private sector and providing positive stimulus for the economy. It is expected that Government’s announcements of infrastructure projects will continue to provide significant support for the growth in the medium term. What is also important is that the growth in recent years has created preconditions for improving the conditions in the labor market.
4  Individuals might receive intrinsic utility from being thought of as high ability, or it might matter materially if future job prospects (including wages) depend on current reputation (see Scharfstein and Stein (1990)). The threat of corporate takeovers might also generate shortened managerial horizons, or agents might engage in hyperbolic discounting, which generates a short-term bias. 5  We assume no discounting, as in Rajan (1994). The qualitative results would not change were we to consider it. 6  is the probability assigned by the market of the bank being high ability, conditional on the bank setting a risky policy (unobserved by the market), the asset being bad, the macro state being and proportion other banks also setting risky policies. 4  BIS Review 168/2010  When the loan is bad, setting a tight (superscript ) policy yields  as the probability of a loss is unity under a tight policy and the bank obtains reputation . 7  The evolution of reputation is key for determining behavioural dynamics in the model. The marginal effect on reputation of banks adopting risky rather than tight policies is given by  improvements in the macro state increase the incentive banks face to We posit liberalise their risk management policies. When the macro state is good, any negative earnings are more likely to be attributed to low ability. This is the “Prince constraint”.

Andrew G Haldane: Curbing the credit cycle Speech presented by Andrew G Haldane, Executive Director, Financial Stability, Bank of England, at the Columbia University Center on Capitalism and Society Annual Conference, New York, 20 November 2010. *  *  *  The speech was prepared by Messrs David Aikman, Andrew G Haldane and Benjamin Nelson. The views are not necessarily those of the Bank of England. We are grateful to Piergiorgio Alessandri, Richard Barwell, Salina Ladha, Roland Meeks, Victoria Saporta and Alan Taylor for comments. Thanks to Vijay Balle and Clare Rogowski for excellent research assistance and to Moritz Schularick and Alan Taylor for making their data available to us. 1. Introduction  Credit lies at the heart of crises. Credit booms sow the seeds of subsequent credit crunches. This is a key lesson of past financial crashes, manias and panics (Minsky (1986), Kindleberger (1978), Rogoff and Reinhart (2009)). It was a lesson painfully re-taught to policymakers during the most recent financial crisis. This time’s credit cycle has been particularly severe and synchronous. In 2006, private sector credit across the UK, US and euro area rose by around 10%. During 2009, private credit in these countries fell by around 2%. 1 The knock-on consequences for real growth were equally severe and synchronous. Peak to trough, G7 real output fell by 3.6% during the Great Recession. In response, there have been widespread calls for remedial policy action. These proposals come in various stripes.
And in circumstances when market functioning is unusually strained, as was the case prior to the Fed’s first LSAP program, asset purchases may enhance liquidity through the central bank’s consistent and significant presence in the market. Over the past six years, the FOMC has been flexible in using these tools, adapting as it learned and as individual circumstances changed. In the first two LSAP programs and MEP, for example, the FOMC communicated an expected total size and completion date for each program. However, the third (and current) LSAP program has been outcome-based, with the FOMC announcing only a monthly pace and composition for its purchases and noting that purchases would continue until there is a substantial improvement in the outlook for the labor market in a context of price stability. Other central banks have also used conditional asset purchases effectively. Perhaps the best example is the Outright Monetary Transactions program announced by the European Central Bank (ECB) in September 2012. This program is credited with helping to stabilize euro-area fixed income markets by ruling out certain bad equilibria. This success was achieved without the purchase of a single asset. Another example of conditional asset purchases is the BoJ’s statement of a commitment to continue QEP until inflation registered stably at or above zero. Changes in the Fed’s balance sheet and implications for normalization So where are we now? The current purchase program appears to be nearing its completion.

As the U.S. economy continues to grow and expand—as I expect it will—your personalized customer service, commitment to relationship banking, and adaptability to technological advances will serve you and your communities well. I will miss many aspects of my role at the New York Fed, particularly the opportunities I’ve had to interact with the community bankers in our district. Please enjoy today’s conference, and thank you for coming. 1 Sumeet Batra, Richard Ciccotelli, and Jacqueline Fenton assisted in preparing these remarks. 2 See William C. Dudley, The Importance of Incentives in Ensuring a Resilient and Robust Financial System,  March 26, 2018. 3 Keeton, William & Kahn, George A. & Schroeder, Linda & Weiner, Stuart E., 2003. “The role of community banks  in the U.S. economy,” Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 15–43. 2/2  BIS central bankers' speeches