samchain/econo-pairs-v1 huggingface dataset:
While acknowledging the role of the microfinance as an important tool for ensuring development opportunities to small businesses that otherwise may never access financial resources, one should keep in mind that microfinance is sound if it is provided by sound institutions. There is not much benefit if such institutions fail because of lenience of their internal rules and procedures, and/or because the supervisory authority has closed an eye on them because of their social role. This will also make other institutions become hesitant in engaging in microfinance. The relationship between the microfinance institutions and the banking sector regarding their interaction in the economy financing, is a delicate issue. Their coexistence is certainly “peaceful” at the early development stage of at least one of these groups of institutions, but as the economy grows and competition increases, they tend to move toward each-other. At that stage, it is important to pay special attention for ensuring clear “rules of the game” for their activity and to provide adequate policies that allow for structural reforms of these institutions and of their market influence. In conclusion, microfinance is a very important mean to achieve a balanced economic growth, by providing financial support to small and medium businesses which are vital for the medium and long term economic growth. Compared to some other countries in the region, microfinance in Albania have shown higher growth rates with good quality. However, there is ample room for enhancing it further.

Mandated with this role, the Bank of Albania has approved several regulations focusing on microfinance institutions and development. This regulatory framework, comprises the supervisory requirements to start and operate a Saving and Loan association, the indicators that enable their reporting and their financial analysis, and the principles based on which the on-site examination of such institutions occurs. The regulation of the Bank of Albania “On licensing the Savings and Loans Associations and their Unions”, is the first document issued by the Bank of Albania in this area, representing a big step forward into the formalization of these institutions. It defines the documentation requirements for the license application, the deadlines and the authority that should grant the license. These requirements are directed to the single associations, to the Union, and to the Union member association. It has been recognized the role of representing Union proposed member associations in the licensing process, meant also as an important tool to induce single SLA to become Union members. The number of the Unions is certainly not limited. The other important regulation is that of “The Supervision of Savings and Loan Associations and their Unions”. In this regulation, the Bank of Albania has defined supervisory indicators for certain typologies of risk that are characteristic of current stage of development of the microfinance institutions in Albania. Counterparty risk is assessed through the requirements for a consistent process of loan portfolio analysis.
This reflects the fundamental reforms these EMEs have put in place over the past 15 years, as well as the hard lessons they learned from past periods of market stress. Among the positives are: •  The absence of the pegged exchange rate regimes that often were undermined violently in the past during periods of stress;  •  Improved debt service ratios and generally moderate external debt levels;  •  Larger foreign exchange reserve liquidity cushions;  •  Clearer and more coherent monetary policy frameworks, supporting what are now generally low to moderate inflation rates;  •  Generally improved fiscal discipline; and  •  Better capitalized banking systems, supported by strengthened regulatory and supervisory frameworks. Of course, progress has not been uniform across EMEs, and more work remains to further strengthen institutional structures in some countries. In particular, vulnerabilities remain in several important EMEs. Still, the fundamental improvements I’ve cited leave many EMEs better positioned than in the past to weather those times in the cycle when the external environment turns from welcoming to wary. The impact that changes in Fed policy can have beyond our borders has led to calls for us to do more to internalize those impacts, or even further, to internationally coordinate policymaking. As I’ve already noted, Fed policies have significant effects internationally, given the central place of U.S. markets in the global financial system and the dollar’s status as the global reserve currency.

William C Dudley: Panel remarks at the International Symposium of the Bank of France Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the International Symposium of the Bank of France “Central Banking: The Way Forward?” Paris, 7 November 2014. *  *  *  If all goes according to our forecast and the U.S. economy continues to make progress towards the Fed’s dual mandate goals of maximum sustainable employment and 2 percent inflation, the Federal Reserve will likely begin to raise its federal funds rate target off the zero lower bound sometime next year. For the United States, the start of the normalization of U.S. monetary policy will be a very welcome development. It will indicate that the U.S. economy has made great strides in healing itself from the damage caused by the U.S. housing boom and bust, and the financial crisis. However, this shift in policy will undoubtedly be accompanied by some degree of market turbulence. Moreover, it could create significant challenges for those emerging market economies (EMEs) that have been the beneficiaries of large capital inflows in recent years. What can the Federal Reserve do to minimize these risks? These are some of the very important issues raised by Helene Rey’s work. Let me begin by highlighting some of the key points I will be making.
This has resulted in an extension of the clearing obligation to all standardised OTC derivatives; (ii) improve their resilience by further strengthening their risk management framework, as the concentration of clearing among a small number of entities requires a particularly robust framework. The principles applicable to financial market infrastructures have also been strengthened, with the publication in 2012 of the Principles for Financial Market Infrastructure (PFMI). This is still the reference text for market infrastructure regulation today. In Europe, these PFMI were translated into hard law through the European market infrastructure regulation (EMIR), which was adopted in 2014 and is applicable to CCPs and central trade repositories. (d) Better regulate the non-bank financial system to enable sound market financing: the aim is to strengthen supervision of shadow banking as the financial crisis showed that the accumulation of risks on the periphery of the banking system, sometimes without effective oversight, could have devastating effects. We now have a better understanding of the non-bank financial system, thanks to the FSB’s mapping work, which makes it possible to measure its developments and the risks associated with it. The FSB has also worked to strengthen investment fund regulations to better manage liquidity risk – recent episodes of massive capital outflows by UK and French funds have demonstrated the importance of managing this risk well – and leverage risk.

The sum effect of these behaviours is that we inadvertently imported the NDF volatility into the onshore market. Given the importance of this, let me dwell a little further on the dynamics of the situation. The offshore market, which is driven by speculative interest, lacks the onshore market’s diverse spectrum of market participants and information. This was notably mentioned by the Federal Reserve Bank of New York paper in May 2005, that an estimated 60 to 80 percent of NDF volume is generated by speculative interest. Because of this, NDF tends to promote herd behavior which compounds the lack of two-way market liquidity. Prices may move rapidly in one direction or another driven purely by fickle sentiment, as well as leveraged positions taken on by the speculators, making them inherently unsuitable to represent an efficient and objective price discovery process for the ringgit. Compounding this further, the offshore NDF markets are highly opaque and information on these markets can only be gleaned through the BIS’ triennial survey and other sources such as through mandatory reporting of derivatives and swap data repositories on US financial institutions. Actions by BNM/the market With increasing concern over the offshore market negative spill-over impacts, BNM has taken a broad spectrum of actions to reduce the speculative and damaging influence of NDF activities. Because of the estimated volume and its opaqueness, the NDF market clearly has the potential to undermine the integrity and financial stability of the onshore market.
This helps to align economic cycles and makes a common monetary policy more appropriate. 16, 17  11  The classic early contribution on this point was made by McKinnon (1963), who argued that the more open the economy, the more flexible would be domestic prices and wages so that movements in the exchange rate would have little impact on competitiveness, and would be less effective as a stabiliser. In that case moving to a fixed exchange rate would be less costly. 12  Mundell (1961). 13  Some, including Bean (1992), have expressed scepticism that factors of production could in fact move over a shorter timescale than that over which prices and wages adjust. 14  This is consistent with evidence that labour moves less in Europe in response to regional shocks than is the case in the US – see Blanchard and Katz (1992) for the US, and Decressin and Fatas (1995) who apply the same methodology to Europe. The latter find that participation reacts by more to a labour demand shock, and migration by less in Europe than the US. 15  Office for National Statistics, 2011 Census. 16  Frankel and Rose (1998) found that countries with closer trade links tend to have more tightly correlated business cycles. Since joining a currency area promotes trade integration, it also is also likely to help align international business cycles. That means one of the key optimum currency area criteria is endogenous to the decision to join.

It simply is addressed at seizing the moment to kill three birds with one stone and do so with minimum violence to the market. Of course, a more effective way to put collateral back into the market would be to sell outright a carefully measured portion of our portfolio. There could even be room for the market to stomach this in its current condition. But in my opinion, this might be too radical a departure from the exit principles we announced and would risk undermining confidence in the FOMC. This is my personal view. I realize it represents thinking “outside the box”. But in my final four months at the Fed, I plan to urge my colleagues to think more outside the box in this and other ways in the interest of securing sound money, a sound economy and sound markets. And now to some Texas brag. 2  BIS central bankers’ speeches  Texas brag Allow me to walk you through some charts and comment on each on them. Thank you. And now in the great tradition of central bankers, I would be happy to avoid answering any questions you and your colleagues might have. BIS central bankers’ speeches  3
For example, the recent reports issued by the Senior Supervisors Group (SSG), which is composed of regulators from five major countries, indicated that the banking regulators both here and abroad should have been tougher in the assessment of the quality of management, of governance, and in terms of these banks’ risk management  1  There is a growing body of economics literature on this issue that links monetary policy to leverage. See, for example, Tobias Adrian and Hyun Shin, manuscript in preparation for the forthcoming Handbook of Monetary Economics, volume 3, currently circulated as Federal Reserve Bank of New York Staff Reports, No. 398, October 2009. 2  BIS Review 161/2009  capabilities. 2 We should also have pushed harder for better management information systems and more simplified corporate organizations and structures. We should have done more to identify best practices in terms of risk management, liquidity, capital, and compensation and pushed harder to force the laggards to move to best practice standards. We are learning a lot about how to do supervision better and are working aggressively to apply those lessons to our current practices. The Supervisory Capital Assessment Process or SCAP is an important example of the value of broad, horizontal examinations. In the SCAP, the Federal Reserve worked in conjunction with other U.S. regulators to assess the impact of a stress economic environment on the 19 largest banking organizations in the country simultaneously. This approach made the SCAP a particularly powerful exercise.

But there is a limit, largely determined by market forces, on how much debt an individual or a firm can incur. Lenders, whether banks, finance companies or bond investors, would look at the creditworthiness of the borrowers and demand high interest rates to cover the credit risks or simply refuse to lend any more if the repayment ability of the borrower is in doubt. Moreover, a person with a reasonable mind would need to consider the risk of facing the unpleasant consequence of bankruptcy if he fails to repay his debts on time. The same applies to the owners or managers of companies. However, it is quite different when it comes to government debts. 13. In times of war, the government has no choice but to borrow from every possible source to finance the warfare as it is a question of survival of the nation. We all understand this and BIS central bankers’ speeches  3  so did the peoples of the countries at war. However, the developed countries have not been at war with each other for a long time since 1945 and why did their governments keep on piling up public debts to unsustainable levels? There are many complicated reasons as well some rather simple reasons. Let me go straight to the simple reasons today.
Indeed, as part of the Eurosystem, as a participant in the Single Supervisory Mechanism and given its responsibility for the proper functioning and stability of the financial system, the Banco de España regularly collects a wealth of financial and supervisory information from credit institutions, which is key to performing all our duties. This information is also necessary for strengthening the performance of other functions of the Banco de España, such as the conduct of monetary policy, the oversight of the stability of the financial system and the compilation of statistics. We are also responsible for designing financial reporting as efficiently as possible and, in this endeavour, both the Banco de España and the European authorities have some substantial challenges ahead. I shall refer to these later. Some of the key statistics produced by the Banco de España are present in the Spanish National Statistical Plan (the PEN, as we refer to it). They include some macroeconomic statistics, such as the balance of payments and the financial accounts, which complement and have to be consistent with those compiled by INE. In this regard, I think we can be proud of the long-standing tradition of close and candid cooperation between our two institutions. Joint discussion continuously enriches our professionals, and their efforts to ensure the consistency and complementarity of the results are a guarantee of the quality of the statistical system.

I really hope that the conference provides an excellent frame for communication and exchange of ideas. It is important that the collaboration in investment finance leads to the implementation of effective investment policies to ensure the engagement of both the public and the private sectors for economic growth. As a part of the European Union, Romania needs to align and redefine the economy, to deepen the integration and to enhance the convergence with the Euro Area countries in the light of the Euro adoption objective. This statutory obligation as an EU member is assumed in the accession treaty; however the process requires significant efforts to prepare, on economical, political, social and cultural levels. This process requires making good use of all instruments and the financial investments make no exception. We still need to develop the analysis capacity, the European investments absorption and the acceleration of funds distribution in the Romanian economy. The cooperation and the technical assistance for co-financing of investment projects under the Multiannual Financial Frameworks 2014–2020 and the next one, as well as the active role played by the European Investment Bank in the approval of structural funds under the Juncker plan in Romania are key priorities to ensure the enablement of economic growth potential in action towards sustainable economic development.
One example was when the authority of a European country suggested letting a bank go bankrupt for having made management mistakes. Wisely, it quickly changed its mind, showing that wisdom does not mean never committing errors but rather recognising such errors in time. The consequences of the other example of the mishandling of moral hazard were worse. I refer here to the initial reaction to the euro area sovereign debt crisis. As we have often repeated at the European Central Bank, the negative consequences of openly admitting the possibility of sovereign debt default by one of the euro area countries, and even of demanding default as a centrepiece of any bail-out programme, were perhaps not taken sufficiently into account. And these factors have no doubt contributed significantly to the crisis attaining its current scale. But let us be clear: avoiding the costs associated with the potential bankruptcy of or default by banks and countries is perfectly compatible with laying down rigorous conditionality criteria when extending aid to resolve crises. Averting bankruptcies in specific cases does not mean going “soft” on banks or countries which took on too many risks or incurred excessive debt. Countries or credit institutions should be helped only in exchange for strict conditions. And not only for moral reasons (never helping those who do not help themselves), but essentially because to be able to stand on one’s own two feet it is necessary to enact far-reaching restructuring and reforms.

And while central banks no longer seek to spring surprises on the market, our community could not rule them out if circumstances were to evolve where the market misperceived the implications of a central bank’s analysis of the outlook. But perhaps the most important point for the pricing of risk in capital markets is the following. To the extent that a structural story of some kind holds true, the consequent reduction in risk premia, and the associated rise in asset prices, would broadly be a one-off – even if drawn out. In other words, it would not be sensible for market participants both to place weight on the argument that risk premia were lower because there was fundamentally less risk, and at the same time to extrapolate ex post returns on assets into the future. Headline returns would be lower than in the hypothesised ‘old world’ when risk premia were higher; and would be a lot lower than during the period when risk premia were falling to a new, lower level (Diagram A). This may not be completely idle speculation in a market environment where, anecdotally, fund managers have been chasing returns. And, of course, to the extent that past returns have in degree been extrapolated into the future, the effect might be an over compression of risk premia. That has to be for you and other market participants to judge.
The Bank of Albania has been present in the foreign exchange market throughout 2003 by buying foreign exchange. The foreign exchange activity of the Bank of Albania helped in injecting liquidity in the market and it has smoothed the Lek appreciating tendencies during the year. The forecasts for the main trends and inflation for 2004, suggest that the Bank of Albania should apply a similar policy in 2004, too. Developments in the consumption prices are characterized by low inflationary pressures. Our forecasts show that the inflation target of the Bank of Albania will be met during 2003. In case no shock phenomena emerge, inflation will be under control also for 2004. Besides, the expectations on the economy seem to speak about an inflation level sticking to the present one. Liquidity ratios and structures seem to be near their historic levels, whereas interests rates were characterized by downward trends during 2003. Therefore, the Bank of Albania might reconsider the possibility of a further reduction of interest rates, a possibility consisting in the future performance of the monetary and inflationary indicators. This will be in support of the economic activity or inflation target. Judging from the analysis of actual trends, we could say that interest rates during 2004 will be generally stable or in downward trend. The analysis of monetary indicators for 2004 shows that the Bank of Albania is going to be present in the foreign exchange market so as to impede the further appreciation of Lek.

3.1  Money supply and its constituents  Money velocity is forecasted to be relatively stable during 2004. This assumption is based on keeping up the monetary developments trends of 2003 even for 2004. Thus: •  Inflation is expected to be within the target of the Bank of Albania  •  Interests rates are expected to be stable or in downward trend  •  The government demand, which is also the main source of requiring funds, is expected to be at the same level, 2.7 percent of the GDP  •  The growth rate demand for the economy is expected to be almost the same as the 2003 one. Based on these considerations, the M3 circulation velocity - as to trimesters - is presented as follows: Table 3. Money circulation velocity in 2004. (GDP as to trimesters*100 / M3) Dec '02  March  June  42.9  43.9  43.9  September Dec '03 42.9  42.9  March  June  44.1  43.3  September Dec '04 43.2  43.1  Based on this forecast, the money supply is expected to grow by 10.6 percent or by Lek 47.4 billion. 3.1.1  Money supply constituents  The ratio of money outside banks versus the money supply noticed during 2003 is not expected to undergo significant changes during the coming year. However, an upward trend of the foreign currency deposits ratio versus M3 is expected, bringing about a decrease of the Lek deposits weight versus money supply.