samchain/econo-pairs-v1 huggingface dataset:
Kahneman, D (2012) ‘Thinking, Fast and Slow’ Penguin See Carney (2015) ‘Three Truths for Finance’, Remarks given at the Harvard Club UK Southwark Cathedral dinner, London. http://www.bankofengland.co.uk/publications/Pages/speeches/2015/843.aspx 5  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  It has been bolstered by two important institutional innovations since the crisis. The first is the handing of responsibility for the supervision of individual banks and building societies to the Bank of England. That has meant a change in approach to supervision, to one that’s prepared to make judgements about risks and act pre-emptively. The second is the creation of a new authority in the Bank – the Financial Policy Committee – with new powers, tasked by Parliament with monitoring risks in the financial system that could cause problems for the wider economy and with doing something about them. This has been christened ‘macroprudential policy’. Macro because it’s focussed on the wider economy; prudential because it’s about protecting that wider economy from excesses in the financial system. It is the institutional memory of the financial crisis; designed to hardwire into the system the vigilance to growing risks and the imagination of their consequences that were so dangerously absent before the crisis. In short, someone has the job of worrying intelligently. Is the same movie already playing again? Now let’s turn to the movies. The old classic, Debt Strikes Back, in which the spiral of complacency upends the economic galaxy, has been seen many times before.

It is this complacency that prompts lenders to make credit cheaper. They think they need less compensation for risk. Interest rates on their loans come down and terms become looser. As it becomes cheaper, credit is taken up more widely. As mortgage debt expands, house prices rise. Lenders think borrowers have more valuable houses against which to secure mortgages. And as terms and conditions ease up, it becomes easier to service debts. More borrowers get access to consumer debt and make their repayments. Credit scores improve. Lenders then think they’ve really cracked it. What Governor Carney has described as the four most expensive words in the English language start to be heard: “This Time Is Different”. 5  The spiral continues and borrowers rack up more and more debt. Lending standards can go quickly from responsible to reckless. The sorry fact is that as lenders think the risks they face are falling, the risks they – and the wider economy – face are actually growing. So the safety of the economy needs a further defence line beyond the lenders; a defence line that guards against this spiral of complacency, and that takes account of the full, collective effect of individual decisions on the wider economy. That line is regulation – a defence line that was, frankly, missing in action in the run-up to the financial crisis. 4  This is a form of the ‘optimism bias’ documented by Daniel Kahneman.
For this reason, the ECB has been very clear that the measures it has taken are designed to be temporary in nature. Let me also emphasise that our non-standard measures do not in any way impinge upon our capacity to tighten our monetary policy stance in response to inflationary pressures. In all our actions, we have been careful to keep inflation expectations well-anchored and have remained faithful to our mandate to preserve price stability in the euro area over the medium term. Our mandate is what has guided, and will continue to guide, all our monetary policy decisions. But the success of the ECB’s crisis measures in maintaining monetary stability in the euro area should not let anyone believe that monetary policy is the medicine that can solve the underlying, more structural problems in the euro area. The lasting resolution of the crisis is the responsibility of the euro area governments. The euro area governments’ responses to the crisis Euro area governments face three main challenges. First, they need to address the internal and external macroeconomic imbalances. Second, they have to restore confidence in, and stability to, the European financial system. Third, they must deal with the remaining shortcomings in the institutional design of EMU. Let me elaborate on these factors in turn. First, the rebalancing of the euro area economies requires, first and foremost, that public sector expenditure is brought back to a sustainable path and that the debt overhang is reduced.

This is, of course, particularly true for those euro area countries that are currently under an EU/IMF programme or are experiencing disruptions in their sovereign debt markets. Much remains to be done, but we should not forget the steps that have already been taken – although there is no room for complacency. Based on a direct estimation of revenue and spending (rather than on the cyclically adjusted primary balance), the cumulative fiscal consolidation achieved thus far is in excess of 10% of GDP in each of the three countries under EU/IMF programmes. While some countries have, most regrettably, fallen behind the targets in their programme, the consolidation efforts are significant in absolute terms. One of the reasons why countries did not reach their headline deficit targets is to be found in the economic headwinds they are experiencing. Negative economic growth, higher interest  4  BIS central bankers’ speeches  payments and higher social security spending have led to quasi-automatic increases in expenditure and obscure the fiscal consolidation efforts. This stresses the importance of the implementation of well-designed and ambitious fiscal adjustment programmes being accompanied by growth-enhancing structural reforms. There is no doubt that the long-term effects of fiscal consolidation on growth and employment are positive and significant. Whereas fiscal consolidation may have a dampening effect on economic activity in the short run, the extent to which it does so depends on several factors, such as the composition of the fiscal adjustment. National authorities need to set ambitious and credible targets, and to stick to them.
In the meantime, the low volume of credit to agriculture speaks for constant structural problems that inhibit lending to this sector. Given the geographical coverage with loans, it is observed that 68 percent of the portfolio is concentrated in Tirana. Durrës and Vlora come afterwards, by respectively 8 and 4 percent of the loans portfolio. This reveals the high economic importance of Tirana, and the need for improving the economic infrastructure in the rest of the country. Net foreign assets The foreign currency position of the banking system improved during 2006. Net foreign assets of the banking system amounted to $ 2.4 billion at yearend, recording an annual growth of about $ 440 million. Government demand for money The government account has had an unusual performance during 2006. During the major part of the year, the government demand for money was negative, concentrating the planned domestic borrowing on two last months of the year. The overall deficit financing for 2006 resulted to about ALL 22.6 billion. 5. Financial market and interest rates  Year 2006 was characterised by an increased activity in money and capital market, while the interest rate performance was generally oriented by the Bank of Albania’s monetary policy. Under the conditions of excess liquidity, the interest rates had a downward trend during the first half of the year. The interest rates went upward after the tightening signal of monetary conditions in the second half of the year.

This has entailed a turnaround in our balance of payment on current account, and will lead in 2013 to a positive contribution of the external sector to GDP of around 2%, the best performance by this variable in recent decades. Competitiveness and export capacity also depend on how productive resources are distributed across sectors and across companies within a single sector. One fundamental challenge the Spanish economy faces is to reallocate the surplus productive resources in non-tradeable sectors to others with higher growth and export potential. At the aggregate level, 8% of the firms existing in 2007 have been destroyed in the 2007–2012 period, while in the construction sector this figure exceeds 30%. In the industrial and services sectors, and having due regard to their high heterogeneity, positive signs are discernible. The sectoral reallocation is only just beginning and still has a long way to run. Economic policy has to contribute to completing this process by removing the obstacles associated with barriers to competition and the red tape hindering business start-ups. Some recent legislative initiatives which pursue these objectives are the law on business support measures, the law to ensure market unity and the future law on professional services and colleges. Market unity and legal certainty are absolutely necessary for sustained growth and job creation, and can and should be objectives shared by government at all levels. Another task is that of completing the adjustment of Spanish corporate and household debt.
The rapid pace of the appreciation, and the resulting – at times massive – overvaluation of the Swiss franc, heightened the economic challenges and gave rise to the threat of deflation. On the one hand, the appreciation reduced global demand for goods and services produced in Switzerland, and the associated negative effects on the economy curbed inflation. On the other hand, the appreciation led directly to lower prices for imported consumer goods. Owing to the high share of imports in Switzerland, this weighed additionally on inflation. Page 2/16  This pronounced appreciation pressure was attributable to two specific characteristics of Switzerland. First, the traditionally low level of interest rates in Switzerland meant that there was less leeway to the effective lower bound by international comparison. Interest rates in Switzerland are generally lower than abroad since the Swiss franc is valued as a safe investment given Switzerland’s long-standing political, fiscal and monetary stability. As central banks lowered interest rates significantly due to the global financial crisis, the interest rate differential between Switzerland and other countries decreased, making the Swiss franc comparatively more attractive. Second, when risk sentiment deteriorates globally, our currency typically gains in value owing to its characteristic as a safe haven. This was especially the case during the financial crisis and the European sovereign debt crisis. Heightened uncertainty worldwide following the outbreak of the coronavirus pandemic and Russia’s attack on Ukraine also increased upward pressure on the Swiss franc.

We have moved from a time where cash was king; in 2010 56% of payments were made using cash, this fell to 45% in 2015 and further declined to 17% in 2020.1 It is predicted that by 2028 just 9% of all payments will be made by cash.2 Transitioning through an era that has seen the continued decline in popularity of cheques and a rapid increase in card usage, we are now in a world where many of us today will have paid for a summer iced-coffee or groceries using our smartphones or even watches. This evolution in payments in the UK and globally is delivering transactional capability that is more reliable and quicker than ever before. But customers want more and there is a continuous drive for further improvements in speed, cost, transparency, safety and resilience. In Shakespeare’s A Midsummer Night’s Dream, some characters are transported to a new world and new, not always desirable, experiences. But this was merely temporary, and an illusion 1/6  BIS central bankers' speeches  rather than reality. Here a payments transformation is under way that could render the next decade almost unrecognisable from the transactional landscape of the past: but is a real and lasting change, bringing benefits to many. It is an environment where future generations will benefit from a new world of possibilities: one in which fast, frictionless and future proofed payments “just work” invisibly behind the scenes to unlock individual and commercial potential.
However, such growth strategies should perforce provide economic opportunities for the poor to earn income and participate in the development efforts of their respective nations as responsible citizens. This growth strategy, known as inclusive growth, would enable a country to universalise the availability of income earning opportunities to all citizens alike. There are certain prerequisites which have to be satisfied for a country to gain the best results out of such pro-poor growth policies 6 . Since the main asset which the poor possess is  4  In fact, the expected socio-economic explosion occurred during 1988-92 in the form of an ultra-leftist youth insurrection in the southern parts of Sri Lanka. See, Report of the Presidential Commission on Youth, 1990. 5  The World Development Report 1990 on Poverty reports that the achievements by some countries in this respect have been dramatic: Indonesia within a generation reduced poverty from 60% to 20% in 1970s and 1980s, p 1. 6  Pro-poor growth implies faster growth of income of the lower income categories so that it would not only help the low income people to cross the poverty line but also would bring about a narrowing of income distribution as well. See, World Bank, Economic Growth in the 1990s (2005), p 121. 2  BIS Review 22/2008  their own labour, it is these labour services which they could transform into income earning opportunities.

Moreover, although the minimum 8% bail-in envisaged in the regulation and the € billion resolution fund established by the Intergovernmental Agreement accompanying the SRM Regulation will probably provide a sufficiently large buffer to meet resolution costs in most cases, it remains to be ensured that a suitable public backstop – for instance in the form of an ample credit line for the Singe Resolution Fund – would also be available, following the example of other jurisdictions, such as the US. 4  Lessons from the Spanish experience  Finally, let me comment on some of the lessons learnt from the Spanish experience. Amid intense debate on the precise specifications of the resolution framework, but before the BRRD was approved, Spain passed in 2012 a relatively ambitious legislative reform which anticipated many of the main features of the Directive. That new legal framework allowed the Spanish authorities to employ new resolution powers – alongside public support – to resolve as many as five financial institutions and to restructure four more under the financial assistance programme. In all cases, previous shareholders were almost completely wiped out (in six institutions) or suffered considerable dilution. Junior debt holders were also bailed in to generate around € billion in new capital. In addition, all nine banking groups receiving State aid were required to transfer problematic assets to an external asset management company at prices that were administratively set.
The non-performing loan ratio has continued its downward trend and stands at 11.2  3/4  BIS - Central bankers' speeches  percent as at June 2022, with total non-performing loans amounting to € billion, which is the lowest level observed since 2014 when the definition was harmonised across the European Union. So far the first round effects from the geopolitical crisis have been manageable and of limited direct extend. Nevertheless, the second round effects are yet to be materialised. Adverse macroeconomic developments may weaken banks' profitability and deteriorate asset quality, causing delinquencies and an upward pressure on impairments and provisions. It is therefore important for banks to adapt their business models to the new realities as shaped by the consecutive crises. Challenges emerge through various channels. Intense competition, from entities not falling in the traditional banking spectrum, threat of additional provisions due to increased credit risk, the need to invest in digitalisation to streamline operations, and the costs of managing climate change and the transition towards a sustainable greener economy are among the challenges that the Cyprus banking sector faces. It is important to say that these challenges are not country specific to the banking system of Cyprus. They are challenges that are commonly faced by European banks. Especially the issues of digital transformation together with the management of climate risks and the transition to a green economy are key issues that should be on top of the agendas' of European economies and banks. They surely are on the top of the supervisory agenda.

The spike in the domestic inflation is mostly attributed to the significant negative impact of the war, as well as the continued consequences of the pandemic. More specifically, the energy component is the largest contributor to the surging trend of domestic headline inflation (with around 45% share of HICP). We expect that our domestic short-term inflation outlook will continue to remain, overall, at very elevated levels, similar to the euro area inflation developments, amid the ongoing significant uncertainty and volatility resulting from the war. More specifically, Cyprus HICP inflation for 2022 has been revised upwards in our most recent projections, now reaching 8,4 percent compared with 7,0 percent in the CBC June 2022 projections. The Cyprus banking sector Let me now give you a brief overview of the banking sector developments in Cyprus. The Banking sector exhibits a healthy financial standing, with solid solvency and liquidity buffers. The solvency position, as measured by the Common Equity Tier 1 ratio amounts to 17.5 percent in the second quarter of 2022, a level higher than the respective European average of 15.2 percent. The Liquidity Coverage Ratio, indicating the availability of liquid funds against deposit outflows over a 30 day stressed period, stood at the level of 320 percent in August 2022 which is more than 3 times higher than the minimum regulatory requirement of 100 percent, placing Cyprus amongst the most liquid banking sectors in the Union, where the average LCR amounts to 165 percent.
Interest rates are changed more gradually with less impact on output than under a strict inflation target, and inflation is allowed to deviate from the target over a somewhat longer period. This is called flexible inflation targeting. (See for example Svensson (2000).) Flexible inflation targeting both provides the economy with a nominal anchor and contributes to smoothing fluctuations in output and employment. In the countries that normally figure in our comparisons, the responsibility for monetary policy has now been delegated to a central bank. The first and most widely known examples of independent central banks are the Bundesbank and the Federal Reserve. The delegation of monetary policy decisions to an independent central bank also finds support in economic theory. It contributes to securing credibility, confidence and consistency because an independent central bank must adhere to its mandate. This increases the scope for monetary policy to contribute to stability. For a discussion of central bank independence, see Hylland (2000). The benefits of autonomy are related to the way in which it induces economic agents to look ahead when making decisions. They take into account economic policy as they expect it will be tomorrow and the day after. It is thus important that the authorities do not sow doubt, but on the contrary act in a predictable manner within a long-term framework. The authorities must be credible and inspire confidence. There must be consistency between the stated objectives of economic policy and what is actually done to achieve them.

Svein Gjedrem: Monetary policy in Norway Lecture by Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the Norwegian School of Economics and Business Administration, Bergen, 17 October 2002. The text below may differ slightly from the actual presentation. The references for the speech can be found on the Norges Bank’s website. *  *  *  A year and a half ago, the Government and the Storting adopted new guidelines for economic policy in Norway. The guidelines outline a medium-term strategy for the use of petroleum revenues over the government budget. Government petroleum revenues are transferred to the Government Petroleum Fund. The guidelines provide for the use of the expected real return on the Fund, i.e. 4 per cent of the Fund’s market value each year. As the Fund’s market value grows, so does its return. A gradual increase in the use of petroleum revenues ensures greater stability than a rapid withdrawal. The Government laid down a new operational mandate for monetary policy at the same time. Norges Bank shall set the key interest rate with a view to maintaining low and stable inflation. The inflation target is set at 2½ per cent. The responsibility for implementing monetary policy is delegated to Norges Bank pursuant to the Norges Bank Act and appurtenant regulation. Norges Bank sets the interest rate on the basis of our understanding of the regulation.
Even where disintermediation creates new chequing facilities, as for example, in the case of money-market mutuals, these are still cleared through settlement banks. It is true that new forms of money transmission - e-money are being developed, sometimes outside the conventional banking system. But I suspect that they, too, will typically depend upon clearing through the banking system. To the extent that they come to involve the creation of what are effectively direct deposits, they will represent banking in a different form and become special, and logically subject to regulation, in much the same way as conventional bank deposits. In the payments system context, too, important progress is being made to reduce inter-bank exposures (through the introduction of real time gross settlements systems in many countries, for example, and through the netting of foreign exchange settlements) but those exposures, as well as inter-bank exposures incurred in direct inter-bank transactions - the large bulk of all of which are unsecured - remain extraordinarily large. Individual inter-bank limits can substantially exceed 25% of capital (the normal supervisory limit for large exposures), and as an example of aggregate inter-bank exposures the major UK retail banks currently place some £ billion, or 16% of their total assets, with each other or with other UK banks. Turning to the assets side, there is some evidence of a gradual erosion of the role of banks in financial intermediation.

This means that there is still a distinct public interest in the activities of institutions that are engaged in banking - as defined - whether as free-standing entities or within a broader group structure. That interest includes a micro-prudential concern to provide some measure at least of protection to public depositors, reflected in the supervision of individual banking institutions and in deposit protection schemes. But it includes also a macro-prudential concern with the stability of the banking system as a whole, because of its peculiar vulnerability to contagious - systemic - disturbance, reflected in central banks’ preparedness to provide liquidity to the system where that is judged to be necessary. Other forms of financial activity also perform distinctive functions, and have distinctive characteristics which make them special in their own different ways. And these special features equally may - and often do - give rise to special public interests. The public interest in these other financial activities may be driven by a social concern to protect consumers (for example the prospective beneficiaries of pension funds or life insurance policy holders, or investors, whether in collective funds or individually, through different kinds of intermediary, in capital markets), which is similar to the social concern relating to depositor protection. And it may extend to other aspects of the particular activity, including aspects of business conduct as well as the financial integrity of the institutions involved.