samchain/econo-pairs-v1 huggingface dataset:
Following are some of the strategic objectives of the Bank of Albania: -  maintaining price stability around 3%;  -  strengthening financial stability;  -  strengthening banking supervision;  -  enhancing financial market security and efficiency;  -  enhancing and approximating institutional capacities to the European model. To materialise the strategy, the medium-term budget has been prepared for the financial management of the institution in the upcoming three years. Approval of the new organisational structure of the Bank of Albania The new structure of the Bank of Albania adapts the activity of its units to the needs and new process imposed by economic developments and changes in the banking legislation. Moreover, it aims at improving the institution’s management and strengthening the internal control. The establishment of the specialised unit to monitor and manage the operational risk is a crucial step in this regard. Also, the new structure aims to strengthen the vertical and horizontal control in compliance with international best practices, models and standards. Strengthening cash security and management systems The Supervisory Council and other administrative structures have reviewed the entire regulatory framework for the security and protection of physical values and information at the Bank of Albania, enhancing both human and technology-related elements. A series of decisions have been made to strengthen the security measures and physical monitoring of the premises where cash is stored and processed, in the form of banknotes and coins.

However, the corporate sector faces major challenges down the road. Against a backdrop of lower expected cash flows and higher debt, the solvency position of some firms has worsened, especially in the case of those operating in sectors more adversely affected by the pandemic that are still facing some restrictions. Thus, with the crisis stretching out, concern has now shifted from liquidity risk to the deterioration of the solvency position of firms. Therefore, economic policies should now focus on supporting viable businesses whose solvency has worsened as a result of the COVID-19 shock, given that the potential liquidation of these firms would be a drag on economic recovery via different channels. First, due to the loss of employment and capital that follows the closure of any company. Second, firms’ solvency problems may end up affecting the health of lenders if these problems are significant and widespread within the corporate sector. And third, in extreme scenarios, the ability of of some banks to provide new lending could be affected, generating negative financial loops. We should take into account as well that a high level of corporate debt, even if not leading to defaults, can still be a drag on investment in the following years, lowering productivity and economic growth, as the experience from the global financial crisis indeed shows.
For example, the central bank could commit to being the lender of last resort as long as it judged the firm to be solvent and with sufficient collateral. This would reduce the coordination problem and the risk of panics sparked by uncertainty among lenders about what other creditors think. If the central bank is willing to provide backstop liquidity, then a lender that judges the financial firm to be solvent should be willing to lend. The backstop liquidity ensures timely repayment. The lender of last resort role eliminates the externality in which the expectations about the willingness of one lender to lend influences the decisions of others. However, providing a liquidity backstop is not without its own set of problems. If firms have liquidity backstops that are viewed as credible, then this creates moral hazard. Firms do not have to worry as much about what lenders think about their capital adequacy or the size of their liquidity buffers. This creates incentives to run leaner in terms of capital and liquidity, which increases the risks to the backstop liquidity provider. To mitigate such effects, the backstop liquidity provider could presumably charge financial firms for the value of the backstop. But what fee would be appropriate? It is difficult to assess the probability of financial panics and the value of backstop liquidity facilities.7 Fifth, regulators could take steps to reduce the difference between the value of the firm dead versus alive.

The idea behind the recent policy has been to avoid the exchange rate appreciating too rapidly and in this way to hold inflation up until economic activity takes over as the driving force. Thus, the plan has not been to try to permanently battle against fundamentals. 12 This has so far worked relatively well, but we are now beginning to approach the critical stage where economic activity is supposed to take over the baton. One cannot escape the fact that inflation outcomes have been somewhat worrying recently. It is now mostly the CPI that is showing a clear upturn. The more underlying rate of inflation measured by the CPIF excluding energy prices has over the year developed more or less sideways, or even shown a tendency to decline slightly. The inflation outcomes in coming months will be very important. 10 See, for example, Goodfriend (2016). 11 For a more detailed discussion of the problem of very negative policy rates, see Alsterlind et al (2015) and  Nessén (2016). 12 However, for my own part I am not convinced that fundamentals currently need to lead to a signifi cant krona appreciation in real terms, see the minutes of the Riksbank's monetary policy meetings in September and October. 10 [20]  The conditions for economic activity to soon take over as the main driving force behind inflation nevertheless look good, given the positive development we are seeing in the real economy.
The film “It’s a Wonderful Life” illustrates this point well. Rumours spread fast, depositors queue to get their money out while the bank still has funds available. In the film of course James Stewart came to the rescue, and he did that by convincing the queuing depositors that they should have faith in his bank. Loss of deposits is a symptom of a wider problem – in other words, typically a bank becomes illiquid because its depositors fear a problem which is more often than not to do with the expected future solvency of the bank. I want to put the emphasis here on the word “expected”. Very few banks fail because they are insolvent today. They don’t get that far. Typically, they fail because of a rising probability that they are expected to be insolvent at some point(s) in the future. This is important because regulating banks has to be forward looking, and in my view has not been adequately so in the past. It also means that a problem in a bank can spread to create a problem in the wider financial system, so called systemic risk. Maintaining the stability of the financial system – financial stability – is therefore at the heart of the efforts of the authorities to prevent problems in banks spreading out of control. The financial crisis of the last three and a half years has illustrated starkly what can happen when financial stability is not maintained.

This is buttressed by the way in which the Bank’s Court of nonexecutive directors approaches its statutory responsibility of reviewing the MPC’s processes, involving annual bilateral meetings with each MPC member. And, externally, it is similarly underpinned by the Treasury Select Committee holding us individually accountable for our monthly votes, which are published as part of the minutes of our meetings. This establishes very powerful incentives for each member to reach their own considered view. There is no free-riding in the MPC; and our policy debates are full and free. That lies at the very heart of the MPC’s operation, performance and communications. Indeed, it might be wondered whether the tone of some of the public scrutiny could set up incentives to cast minority votes with the aim of demonstrating independence of thought and action. 23 That, of course, would be perverse. Each member wants their individual decisions to matter – to the current Bank Rate, and to the expected path of policy and so the monetary conditions embodied in the money market yield curve. One votes in a minority when one disagrees with the immediate decision and the strategy it might convey. Occasionally, doing so, with the reasons disclosed in the minutes, can be an effective way of influencing monetary conditions. The make-up of the MPC’s majorities and minorities shifts around over time. There are no “blocs” on the Committee. And there is no distinction between “internals” and “externals” in that respect.
This could be illustrated on the table describing developments in the Czech Republic, Poland and Hungary in terms of inflation and GDP growth: 1991  1992  1993  1994  1995  1996  1997  1998  1999  2000  2001  2002  CPI Czech R. Poland Hungary  52,0 60,3 35,0  12,7 44,6 23,0  18,2 37,7 21,9  10,2 29,4 21,6  7,9 21,8 29,2  8,6 18,8 20,3  10,0 13,2 18,8  6,8 8,4 10,5  2,5 9,8 11,4  4,0 8,6 10,2  4,1 3,6 6,8  0,6 0,8 4,8  GDP Czech R. Poland Hungary  –11,6 –7,0 –11,9  –0,5 2,6 –3,1  0,1 3,8 –0,6  2,2 5,2 2,9  5,9 7,0 1,5  4,3 6,0 1,3  –0,8 6,8 4,6  –1,0 4,8 4,9  0,5 4,1 4,2  3,3 4,0 5,2  3,1 1,0 3,8  2,0 1,4 3,3  EIU Country data, national statistics  As already mentioned, since the financial sector consisted mainly of the banking sector, the impact of economic reform was felt mainly by the banks. There was no alternative source of financing for corporations, so difficulties in the corporate sector were passed on directly to the banks. The situation was complicated more by the fact that the government owned some of the most important corporations, as well as the main banks. Political rationale preceded economics. In most of the countries, the privatization of most firms happened early in the transformation process.

The Government has also provided increased loans and guarantees to Norwegian export industries, and has raised lending limits for state banks. In addition, Folketrygdfondet (the Government Pension Fund – Norway) has been permitted to increase its purchases of bonds. 6  BIS Review 139/2009  The extraordinary monetary and liquidity measures implemented were tailored to a situation in which financial markets no longer functioned. In Norway, it has been appropriate to start winding down the unconventional measures earlier than in other countries: In recent months, Norges Bank has not supplied liquidity through the currency swap lines or liquidity in foreign currency. Loans in NOK at long maturities have not been provided since February. Surplus liquidity in the banking system was increased to more than NOK 100 billion, but is now close to a more normal level. This motivates banks to revert to money market funding. The swap arrangement involving covered bonds (OMF) in exchange for government securities has made an essential contribution to securing banks’ long-term funding. The first signs that the covered bond market was beginning to function appeared in spring. The minimum price in the swap arrangement has been raised by 0.9 percentage point, from NIBOR-0.2 percentage point to NIBOR+0.7 percentage point. Use of the arrangement is currently being phased out. Norges Bank eased its collateral requirements to enable banks to increase their borrowing in the central bank. This measure is now being reversed.
Lending only against self-liquidating commercial paper does nothing to prevent an acceleration in prices, as the central bank’s balance sheet simply accommodates any increase in credit driven by a rising general price level. As central banks around the world came to concentrate on preserving stability in the value of their money in terms of goods and services, they put the Real Bills Doctrine in the dustbin of ideas. Wind forward a hundred years. The buzzword is “macroprudential”. And the talk is of how to lean against speculative bubbles or tame the credit cycle; of how to contain contagion and systemic crises; of the role of central bank liquidity facilities; and of how to give banking supervision a more systemic perspective.1 It is striking that those concerns are not so distant from those of the framers of the 1913 Federal Reserve Act. Much is said about “missing  1  See, for example, “Enhancing Financial Stability and Resilience: Macroprudential Policy, Tools and Systems for the Future, Group of 30, 2010. BIS central bankers’ speeches  1  instruments”. It has been a mistake for central bankers, and the legislators to whom they are accountable, to focus at different points of their history on only one of either the stability-threatening excesses of (real) credit cycles or, alternatively, inflation. In the language of the Bank of England’s 1991 statement of Core Purposes, central banks need a mandate for both monetary stability and financial stability.

European integration is a dynamic project, permanently under construction, which is today facing up to the challenges of a global economic recession and an international financial crisis of proportions unseen in many years. Over ten years ago, before the euro was created, there was an academic debate turning on the theory of optimal currency areas, which questioned whether a single interest rate and, therefore, a single monetary policy could possibly be appropriate for such diverse countries. Ten years after the birth of the euro those of us who joined EMU, and many of those who did not, acknowledge the enormous advantages of being inside the monetary union. Today, the contribution of the single currency in lessening uncertainty for economic agents is clear. The enormous advantages of moderate inflation, of interest rates with a limited range of volatility and of the fact that companies need not consider the exchange rate when buying and selling in an area with almost three hundred and thirty million consumers, are obvious. The upshot is stability, which is a valuable contribution to growth, as we have seen in other, similar-sized monetary areas such as the United States, and we should build on it. We should also celebrate the institutional success of the Eurosystem. The ECB has fulfilled the goal entrusted to it by the Treaty, of keeping inflation expectations anchored, even at very difficult times. And the Eurosystem is in itself a truly fascinating experiment.
Fourth, the defence of the exchange rate will create a liquidity shortage in the domestic money markets. The central bank may recoup the liquidity by expanding its domestic assets by lending to commercial banks and also to the government which is now unable to raise funds from the market due to the liquidity shortage. 2  Finn Kydland and Edward Prescott in their 1977 paper introduced this problem See, “Rules rather than discretion: The Inconsistency of Optimal Plans” Journal of Political Economy, 85: 473-92  3  Alex Cukierman has chosen to call the problem “Prisoner’s Dilemma”. See, Central Banking Strategy: Credibility and Independence (1992), MIT Press, p 17-8. 4  BIS Review 58/2009  Fifth, to pay interest on foreign loans and repay the principal, a central bank may be forced to make further foreign borrowings. This will enlarge the net foreign liability position and cause the interest payments to surpass the interest earnings. The losses so made will continue to mount, gradually eroding a central bank’s capital base. The end result will be the conversion of a central bank’s net-worth from positive to negative. At that stage, a central bank will become technically insolvent. It actually becomes insolvent when it is unable to make further foreign borrowing and the domestic high inflation makes it impossible for it to fund itself by further issuing currency. It is the duty of the auditors to be vigilant on the emergence of these signs and alert the management and legislators in time.

In May and June we purchased about $ million per day, or about one percent of average daily trading volume in the secondary market, and that pace declined to about $ million per day by September, or less than 0.1 percent. Currently, the SMCCF holds about $ billion of overall exposure across corporate bonds and corporate bond ETFs. This is less than 0.2 percent of the outstanding bonds in this $ trillion market.15 As we’ve said previously, if further improvement in market functioning occurs, we could slow SMCCF purchases further and potentially pause daily purchases entirely. Conversely, if market functioning measures indicate deterioration, the SMCCF remains available to ramp up support. Despite the small footprint of the CCFs, we know the signaling effects have been potent—indeed, this is the main channel through which these facilities have had an impact—and we remain watchful for the risk of creating distortions. One possibility could be that companies issue shorter maturities than they would otherwise to benefit from presence of the CCF backstop. So far, we see no evidence of this behavior; if anything, there has been a tendency toward refinancing maturing debt at longer tenors.16 Another distortion could be excessive amounts of corporate debt issuance based on future expectations of an official sector backstop. This “moral hazard” risk will bear watching over the coming years, but there are at least a couple of reasons to believe it’s muted in the current circumstance. For one thing, global pandemics are an extremely infrequent occurrence.
Although the debt market has, over the past 15 years, become a significant channel of financial intermediation, sizing it against GDP it is still a lot smaller than the banking and equity markets, and by quite a wide margin. Furthermore, retail interest, increasing as it may have been, is still lacking by the standards of the developed markets in the US, Europe and Japan. And the further promotion of retail interest, specifically in Exchange Fund Notes, is the focus of attention of our gathering today. As you may be aware, over the past year or so, we made various experimental attempts to attract retail investors to the primary issues of Exchange Fund Notes. On the basis of the experience gained, and subject to three refinements to be introduced to the arrangements, we have decided to continue offering Exchange Fund Notes to retail investors. The first refinement is the introduction of greater flexibility in the selection of specific issues of Exchange Fund Notes to be offered to retail investors in the primary market. Instead of indiscriminately opening up all the 2-year and 3-year Exchange Fund paper for subscription by retail investors, we intend to take account of market conditions and consult our Distributors in deciding on the timing and tenor for issues with a retail feature. Initially, one issue will be selected for non-competitive bids from retail investors in each quarter. The number of issues per quarter may be increased subsequently, subject to market response.

In this respect, I would like to thank Ambassador Maître, the Swiss Government, the State Secretariat for Economic Affairs (SECO) and its Bilateral Assistance and Capacity Building for Central Banks (BCC) program for supporting research activity at the Bank of Albania. This 1/2  BIS central bankers' speeches  cooperation has been a significant instrument for improving our research work and exposing it to academic and international research community. Our cooperation will continue in the future to improve research methodologies and products. We are currently working with SECO toward the optimization and institutionalization of research agenda and research implementation in central banks. These important issues will be discussed in a jointly-organized workshop with all BCC partners on capacity building for central banks, in Tirana in spring 2020. Dear ladies and gentlemen, Our SEE Research Workshop has become a cherished tradition for Bank of Albania and central banks of the SEE region. It is a great pleasure, and we are very happy to see that the workshop continues to generate interest beyond the SEE region and central banking community. The list of participants has expanded to include speakers from academic institutions in the EU, the US and South-Eastern Asia, as well as from international financial institutions. Your participation is contributing to broadening and enriching our network and we hope that discussions will help our researchers to improve their work and strengthen their research recommendations.
Together with the existing institutions such as the IMF, the World Bank and the BIS at the international level, we have probably now an efficient structure to cope with current and future international financial challenges. -  The implementation of internationally acknowledged standards will contribute to reduce emerging market economies’ financial vulnerabilities and, together with enhanced transparency, improve market discipline and market participants’ ability to better assess the risks of their investment decisions. ·  2  Many efforts have already been achieved with the design of 65 internationally agreed standards and codes; the Financial Stability Forum identified 12 out of them as key for  BIS Review 49/2001  the international financial stability and suggested incentives to implement them. The implementation of these standards is in the self interest of all partners in the process of economic and financial globalisation. The commitment of countries to implement Codes and Standards is likely to be reinforced if market participants actually reflect information on observance of Codes and Standards in differentiated credit ratings. 1.1.2  ·  International Financial Institutions have also continued to proceed toward greater transparency, in particular the participation of 60 countries on a voluntary basis in the pilot initiative for the release of IMF article IV reports. ·  As regards the private sector, progress may take the form of voluntary improved disclosure, more demanding statistical reporting and extended requirements for nontransparent segments of the financial markets. Prevention also lays on sound economic conditions.

The IMF should not thus provide unlimited and unconditional financial support, its catalytic role remaining a core element of  BIS Review 49/2001  3  financial crisis resolution. As a consequence, IMF financial assistance should be ex ante limited in terms of quotas. Access above these regular limits should be exceptional and allowed only in cases of systemic risks. However, if short-term financing is the bulk of IMF lending role, the IMF should also promote macro-stability, including structural matters relevant for macro-economic policies. As a consequence, the IMF needs a medium and long term surveillance and medium and long term facilities for adjustments to take hold. -  2. As regards its role in crisis management, the IMF could concentrate on agreeing with the crisis country a program which ensures adjustment and financing over the short and medium-term: ·  This means, for example, that IMF conditionality should cover short and medium and long term issues. The Asian crisis has led to an extension of IMF conditionality to structural areas, mainly as regards financial systems restructuring issues. This extension was somewhat criticised but I do not share such views: including structural matters in the IMF conditionality is clearly in line with IMF missions as regards financial stability and should reinforce its efficiency. In that respect, the review of IMF conditionality under process should not mean, in my opinion, that it should necessarily be weakened, by focusing only on short term macroeconomic variables.