samchain/econo-pairs-v1 huggingface dataset:
Firstly, it gives recognition to the fact that we are all aware of the potential of this sector in generating employment, promoting economic growth and reducing existing poverty levels. In low income sub-Saharan African countries, SMEs and micro-enterprises make up about 90% of all enterprises. However, due to the various constraints they face, their overall contribution to GDP can in some countries be as low as 20% although estimates show that this could be scaled up to 60% with the greater realization of the sector’s potential. Contribution to employment can be as high as 63%. For most low income countries, SMEs are the main  BIS central bankers’ speeches  1  source of jobs and income after subsistence agriculture. Particularly significant is that they are a great source of livelihood for women who own more than half of SMEs while over 70% of Africa’s rural population survives through the formal and informal SME sector. There is little doubt, therefore, that SMEs form a solid basis for sustainable economic development on our continent. Secondly, the continued discourse on SMEs reminds us of the possibility that we have probably done more talking about the problem than fixing it. Although the development of SMEs is varied extensively across Africa, what is clear is that in most countries a major obstacle to their growth is the lack of sustainable and cost effective financial products. South Africa and Mauritius in this region and North Africa have done a commendable job in developing flourishing SMEs sectors.

Part of the reasons for success in these countries can be attributed to their modern financial systems and clear policies that support the growth of the sector. However, the fact still remains that for most African countries, a sustainable way of financing SMEs has yet to be found. As I mentioned earlier, the programme for this meeting is broad and extensive. But I would wish to draw your attention to a number of broad areas of reflection which I believe can help in delivering greater finance to the sector. The first area is that there is a need to accept that not all banks can or should even be expected to provide SME financing products. The cost structure and skills orientation simply make some financing institutions completely unsuitable to deliver SME products cost effectively. The implication of this is that greater effort must be placed on developing financial institutions that see SME financing as the core business and therefore set out to develop the expertise required to finance the SMEs successfully. Fairly often the discussion on SME financing is reduced to two diametrically opposed positions. On one hand, SMEs are considered by banks as representing a high risk and therefore, should be avoided or only dealt with cautiously and at a premium price. On the other hand, banks are accused of being inflexible and risk averse and consequently irrelevant to the sector. It is important to understand where the truth lies in these two statements in order to advance the cause of SME financing.
It is a centrally located country with eight neighbouring countries and close proximity to the large market of South Africa, a surface area of over 750,000 sq km, and an approximate population of over 11 million people. It also boasts of a suitable climate, peace and a multi-party competitive democratic political system. The country possesses all the necessary attributes for sustainable economic growth and development. Competitive production costs, incentives, and reforms have also enhanced the attractive investment climate for both local and foreign investors. Numerous investment opportunities exist amongst the agriculture, manufacturing, tourism and mining sectors across various regions of the country. Almost all provinces in Zambia remain potential areas of investment whose resources remain largely untapped. Its active participation in the SADC Trade protocol and the COMESA/FTA offers preferential tariff access to market potential of nearly 380 million people. The Zambian Development Agency (ZDA) Act ensures that property rights are fully respected with full compensation on market value made in case of expropriation. The country is also a signatory to the Multilateral Investment Guarantee Agency of the World Bank which guarantees foreign investment protection in cases of disasters and other disturbances. Bilateral investment treaties with a number of countries also encourage, promote and protect foreign investment. Foreign investors seeking joint venture partners can approach ZDA which registers investors together with project profiles of domestic investors seeking collaboration.

It has highlighted the importance of improving our knowledge and assessment of interconnectedness in the financial system, both via the direct links between financial institutions and the indirect ones created in financial markets. Micro-supervisory assessment, institution by institution, typically investigates the vulnerability of each entity, under various assumptions of stress. In contrast, systemic risk assessment investigates the possibility of the whole system, or significant parts of it, being vulnerable, and considers that major risks may emerge from the financial system itself. Such risks may arise, for example, because large parts of the system might have similar exposures, may rely on the same funding sources, can be exposed to rising financial imbalances, may comprehend large similar currency or maturity mismatches inducing liquidity vulnerabilities, and can be exposed to large scale underassessment and mis-pricing of risks. In the assessment of the systemic risk of the financial system itself, the judgement on the robustness of financial infrastructures is particularly important. One important issue in assessing systemic risks is to measure the degree of procyclicality which is embedded in the financial system itself, namely the capacity of the system to amplify fluctuations and to produce after a certain period of time, excessive booms and busts starting from relatively modest initial shocks, up or down.
A proverb says: “No matter how long the journey is, one has to take the first step to start off.” This philosophy was made concrete through this twinning project, which along with the assistance in the afore-mentioned areas, was also the first step on the path of our institution to EU standards, as one of the priorities of the Stabilization and Association Agreement. I would like to extend my sincere thanks to the Banca d’Italia and the Banque de France for the outstanding cooperation we have had during the project implementation. I commend the efforts of both honoured institutions and hope that the successful implementation of this project will provide us with an example to involve more in such initiatives in the future. Also, I want to extend my thanks to the Delegation of the European Union for its ongoing assistance and prudence throughout the project performance. I am deeply confident that these are only the first steps towards a close cooperation. I would like to conclude by bringing to your attention a statement of Mr. Shimon Peres, who, listening to his advisor, Agassi, who was speaking about developing alternative oil sources in the absence of oil, interrupted him by saying: Nice speech, but what are we going to do? In light of this, we should think about what to do in the future. I think that the political coverage of this approximation process is important, with which I mean Brussels’ probable acceptance of Albania’s application for membership in September.

Ardian Fullani: Strengthening the capacities of the Bank of Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Closing Ceremony of the IPA-funded Twinning Project on strengthening the capacities of the Bank of Albania, Tirana, 16 July 2012. *  *  *  Dear guests, Central banks, since their inception, have been vested with a “veil of mystery”. This relates to their exclusive right to issue money, set a loan interest rate and control liquidity in the market. Precisely, this important role of central banks and the recent global developments put these institutions on the spotlight. Responding to these developments, central banks worldwide, in perfect coordination with one another and in addition to traditional instruments, took extraordinary measures that had never been employed before. Through those measures, they intended to provide sufficient liquidity in the market, with a final goal, which has remained unchanged since ancient times, to restore public confidence in financial institutions. The Emperor Tiberius, dating to A.D. 33, had to inject one million gold pieces of public money into the financial system to keep it from collapsing. Today, cooperation and coordination among central banks have become an integral part of institutional management. Technological developments and the globalisation process have aroused the need for coordination among decision-making institutions all over the world.
In a bank-based economy, such as the euro area, the short-term interest rate may simply not be sufficient to characterise the monetary policy stance and, hence, the financial conditions ultimately determining the decisions by households and firms. The imperfect substitutability between market-based financing and bank loans was already recognised by Modigliani (1963) and later refined by Bernanke and Blinder (1988). Indeed, it is enough to recall the period after the outbreak of the sovereign debt crisis, and the associated financial fragmentation, to see that the interbank market rate is a biased measure of the financing conditions facing the private sector. 13 In other words, unless there is a perfect transmission from changes in short-term rates to the ultimately relevant borrowing rates, estimates using the former will yield inconclusive results. This conjecture is also supported by the data. In specification 6 we replaced the short-term interest rate with a measure of the composite bank-based cost of borrowing for non-financial firms. If we use this measure instead, the real ex ante interest gap in our IS curve has the expected sign and becomes statistically significant at the 10% level: a 1 percentage point reduction in the gap increases output by 0.13 percentage point. The interest rate channel becomes even more powerful once we estimate a New Keynesian IScurve that is closer to first principles – that is, one that is also forward-looking in output, as in specification 7.

The fact that inflation remains subdued rather reflects constraints operating at the third stage of transmission – from activity to prices – that are often outside the control of monetary policy. Before I conclude I would like to illustrate one last point. Bank lending rates are without doubt a key variable in explaining output movements in the euro area. The evidence I provided today further emphasises this point. At the same time, the financial conditions that are ultimately relevant for firms and households may be broader than that. One of them – the exchange rate – I discussed in more detail earlier in my remarks.16 Other factors may include equity prices or long-term interest rates that are often relevant for household mortgages.17 One way to summarise these factors is to use financial conditions indexes (FCIs). My colleague 10 / 14  BIS central bankers' speeches  Peter Praet gave a detailed speech on such indices earlier this year, which I strongly recommend reading.18 Here I would like to focus on the relevance of these broad measures for economic activity. As you can see in column 9 of slide 7, FCIs are highly statistically significant when used in a New Keynesian IS curve. This is unlikely to be a statistical artefact.
Apart from the adverse economic effects, the NBR’s intervention to help the domestic currency appreciate against the CHF to a level similar to that recorded prior to the Swiss National Bank removing the 1.2 EUR/CHF floor would also impact public policy. Such an intervention would result in changing the benchmark currency on the foreign exchange market from EUR to CHF, contradicting not only the economic reality, but also the EU membership legally binding Romania to adopt the single currency at a certain point in time. As for the possibility of the NBR imposing a ban on CHF-denominated loans, such a decision would have entailed the restriction of CHF-denominated capital flows, thus violating one of the fundamental prerequisites of Romania’s accession to the EU: full capital account liberalisation, completed in 2006. Besides, even assuming such a measure had been possible, it would have affected trade with and investment from Switzerland, as well as the financing of CHF hedged borrowers (exporters, as well as employees of companies with Swiss capital, whose incomes are expressed in CHF). The relevant presence of Swiss capital in Romania is pointed out by the direct investment from Switzerland, which totals around EUR 2 billion, as well as by the number of companies with Swiss capital (over 2,000). These companies’ annual turnover is worth about EUR 7 billion, while the number of employees has ranged between 50,000 and 60,000 (nearing the number of CHF borrowers).

In line with new framework, banks establish maximum indebtedness levels by category of customers based on internal lending norms, by observing the risk profile and strategy assumed by banks in relation to borrowers’ financial capacity. These caps are subject to prior validation by the central bank. •  In February 2008, stricter requirements were applied for the provisioning of foreign currency-denominated loans granted to borrowers earning incomes in currencies other than the loan currency. •  In August 2008, the regulation on lending to households was amended so that banks were required to determine borrowers’ indebtedness levels in such a way that the debt service might accommodate the materialisation of currency and interest rate risks, as well as higher fees and commissions, over the entire life of the loan. On the same date, the legal provisions were supplemented by imposing the use of the borrower’s annual tax record instead of the monthly income certificate throughout the income validation process. •  In October 2011, the NBR introduced additional restrictions on foreign currencydenominated loans to households, consisting in stricter requirements on establishing the maximum indebtedness level allowed for consumer loans, loan collateralisation, etc. C.  Prudential supervision  Prudential supervision of credit institutions is one of the NBR’s main tasks, according to the law. To this end, the NBR is empowered to check, based on reports and on-site inspections, the compliance with legal provisions and with the NBR regulations in order to limit and prevent risks specific to the banking activity.
According to the Central Bank’s forecast from February, GDP growth will be robust in 2016 and above its historical average for the two years thereafter. This certainly entails an increase in the positive output gap this year, but that tension will subside as the forecast horizon progresses, owing in part to a tighter monetary stance. Inflation will also rise with a larger positive output gap and reduced deflationary pressures from abroad as the year progresses, but monetary policy will counteract it. According to the forecast, inflation will peak at just over 4% in 2017 and then taper off over the remainder of the forecast horizon. Unlike in many previous forecasts, the strong current account surplus will persist for the entire forecast period, which extends until 2018, in part because national saving will remain above the historical average. In this context, we must bear in mind that things can change quite suddenly. It is also worth noting that numerical economic forecasts, by their very nature, have a tendency to be much more stable than historical reality. In the recent past, we have reaped the benefits of developments abroad, but we do not know how long this will last, and tailwinds could turn into headwinds. History also tells us that we have a tendency to make economic policy mistakes during booms and mistake temporary positive shocks for permanent improvements. If history repeats itself, domestic demand and inflation could increase more than is assumed in the forecast.

The assumption underlying both reports was that the Central Bank’s key objective would continue to be price stability, as is mandated by law, and that the exchange rate of the króna would remain flexible, although it would not need to be entirely free-floating. I will not explain the grounds for these assumptions here, as they have been discussed widely, except to point out that it is unrealistic to entrust monetary policy with objectives other than those it has the chance to fulfil using the available instruments, and that adopting a fixed exchange rate would eliminate the advantages of an independent currency and independent monetary policy without eliminating the disadvantages. Therefore, policy formation lies in finding a framework that can work under the above-described conditions. There were a number of drawbacks to Iceland’s pre-crisis monetary policy framework. A major flaw was the lack of an adequate response to the excessive capital inflows that contributed to credit and asset price bubbles and domestic residents’ significant foreign exchange risk, which was to a large extent unhedged. Furthermore, monetary and fiscal policy were not well enough aligned, and the same can be said of other Government decisions that affected demand. The burden on monetary policy was therefore greater than it would have been otherwise, which further stimulated capital inflows. This, together with strong demand, pushed the real exchange rate higher than it would have been otherwise and exacerbated macroeconomic imbalances, as could be seen most clearly in a sizeable current account deficit.
We have nowadays in our countries the same financial institutions and the same behaviour of such financial institutions in response to a centralized business development policy, growing cross-border interaction among businesses and households, similar trends in social life. Monetary and supervisory authorities in different countries in the region, to a large extent have responded to such developments with establishing formal cooperation with home country supervisory authorities, particularly in the area of banking system supervision, by signing bilateral Memoranda of Understanding (MoU). The fact that our countries are at the borders of the European Union (EU) has caused an increased presence of EU financial institutions, including banks. Hence, the MoU’s have been signed with these EU countries supervisory authorities. The quality of cooperation varies in different countries but one can say with reasonable confidence that the willingness of the host countries to cooperate has not always met the same interest from our counterparts. To an extent this is expected, because the assets of their banks in our single countries sometimes represent only a fraction of their total assets. Nonetheless, they should take notice of our concern that this cooperation is very important for us, particularly in cases where these foreign banks dominate our local markets. The liberalisation of the financial markets in Albania has been a desirable move. We consider the inflow of foreign capital an important factor to upgrade the level of our banking system, improve its efficiency and the quality of its products, by improving competition conditions in the marketplace.

Although there is a considerable stock of equity in owner-occupied housing, with banks tightening the supply of both secured and unsecured credit, consumers will find it more difficult to borrow to finance spending. So in 2008 it is likely that a less buoyant housing market will go hand in hand with slower growth of consumer spending. Tighter credit conditions mean that, as a nation, we are likely to save more of our income this year than in the recent past. In the short run, that will slow economic activity, possibly quite sharply. And there is a risk that weaker activity and lower asset prices could result in another round of losses for banks and a further tightening of credit conditions. The adjustment which not only the British but the world economy is experiencing is necessary as the imbalances, between spending and saving and between domestic demand and trade, unwind. As part of a longer-run rebalancing of the UK economy, an increase in our national saving rate, both private and public, is necessary. The low level of national saving is apparent from the current account deficit – our new net borrowing from overseas – which in  2  BIS Review 8/2008  the third quarter of last year was, relative to GDP, the biggest in the past fifty years and the largest in the G7. It is possible to run a current account deficit for a considerable period. Australia, for example, has done so in every year since 1974.
Despite a situation of increasing  BIS Review 168/2009  1  investment rates, the ratio of total savings to GDP reached 57% in 2008 against 48% in 2004, leading to a context of excess saving rates of 13% to 24,7% over the period. These developments have allowed sizeable reserve accumulation, particularly from 2004 $ billion 43) to 2008 $ billion 143) as a cushion against possible external shocks, including shocks of a “sudden stop” nature. Anchored to regained macroeconomic stability, a large public investment program was launched in 2001 (2001–04) followed by a larger one in 2005 (2005–09). Implementation of the two public investment programs significantly stimulated gross fixed capital formation, with public investments representing 56.5% of total investment in 2008 up from 40.8% in 2004. Over the past five years, public investments (economic and social infrastructure, housing, agriculture and water, others) amounted to $ billion 80 (representing 51% of a total of $ billion 156). It should be noted that foreign companies, particularly from Asia, hold a significant position in terms of implementation of the public investment programs. In parallel, the national oil company (Sonatrach) implemented ambitious annual investment plans over the past 3 years, increasing the annual investment envelope from $ billion 4.8 in 2006 to $ billion 8.5 in 2008. For the past 5 years, the ratio of Sonatrach’s investment to total investment reached 17.6% (17.1% in 2008). For 2009, Sonatrach’s investment program amounts to $ billion 16.5.

Jean-Pierre Roth: As the financial crisis recedes, what are the lessons for central bank efforts in the future? Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Centre International d’Etudes Monétaires et Bancaires, Geneva, 24 November 2009. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  The financial crisis of the last two years has caused people to re-examine a number of generally accepted ideas. Corrective measures are being undertaken, particularly in the area of banking regulation. For central banks, the most delicate issue will be how to contribute to macrofinancial stability without jeopardising their objective of price stability and, in turn, compromising their own credibility. As regards banking supervision, close cooperation between central banks and banking supervisory authorities is essential. The temptation to concentrate forces is strong. In Switzerland, placing centralised oversight responsibility with the Swiss National Bank would risk weakening the SNB’s independence from the political sphere. With respect to systemically important financial institutions, everything possible must be done to limit the likelihood and the risks of further problems. Major efforts are underway in this regard at the Financial Stability Board. To ensure that central banks have the necessary means to act in a crisis, a liberal legal framework and a safety cushion in the form of equity are needed. The SNB is in a favourable position in this respect. BIS Review 152/2009  1