samchain/econo-pairs-v1 huggingface dataset:
Allow me to emphasize once more the willingness of the institution I govern for meeting all the obligations deriving from the Constitution of the Republic of Albania and from the Law “On the Bank of Albania”. This will be achieved through further perfecting the framework of monetary policy and monetary operations and simultaneously through deepening our knowledge in terms of functioning and causative inter-dependence characterizing the Albanian economy. I believe that year 2005 will be a successful year in terms of research, particularly in increasing the forecasting power on inflationary developments and in improving the Bank of Albania governance. I would like to cite that adaptation of inflation targeting regime remains our political aspiration, a fact that makes us be seriously committed to prudentially follow the relevant pre-conditions. For this purpose, we will continue the relevant theses we need for finding understanding and proper support of the Assembly and other state institutions. I would like to ensure the Assembly of Albania that our recent steps and expected ones take into account even our national aspiration for a faster integration into the European Union. We have already understood that no genuine integration can exist without financial integration. The country needs more income, more political stability, more social and cultural integration, but as much important is the financial integration as well. From this viewpoint, I think that the role of the institution I govern, the role of the banking system and of the financial sector is primary and we have many challenges ahead of us.

During 2004, Albania’s balance of payments recorded a flow of financial assets and capitals of about 1.5 times higher than the previous year. The rise of inflows in the financial account and the non-deepening of current deficit brought about the increase of foreign reserves by about USD 290 million over 2004. Albania’s foreign reserve is sufficient to cover about 5.2 months of imports of goods and services. 4  Government debt including other sectors debt guaranteed by Government. BIS Review 38/2005  3  Notwithstanding the positive developments of the recent years, the economic growth and the macroeconomic stability of the country are two parameters, which, according to our consideration, cannot and should be considered as issues already accomplished. The high trade deficit requires the ability to find stable long-term coverage resources, especially to promote foreign direct investments, which will raise the productive capacities of the Albanian economy. A major interest should be given particularly to the sectors such as agriculture and tourism. Fiscal policy must continue to conserve its positive contribution in the consolidation of the macroeconomic stability, a contribution being expressed in the reduction of budget deficit, in the increase of income and in the establishment of priorities according to the National Strategy for the Socio-economic Development, in the performance of budget expenses.
Their aggregated profit, down 36% compared with 2010 to 14 billion euro was substantially higher than the 2008 and 2009 level, and this allowed them to significantly bolster their own funds and to continue financing the French economy. The ACP’s vigilance has been decisive in helping the banks to maintain a satisfactory liquidity and solvency situation. In 2011, the ACP conducted 136 on-site inspections; the risk profiles of 700 institutions were analysed according to a harmonised procedure with, notably, a sustained pace of meetings with the senior managers and heads of the main business  BIS central bankers’ speeches  1  lines, thereby allowing the ACP to draw up detailed maps of the main risks to which they are exposed. During 2011, the two principal dimensions of prudential supervision – monitoring credit institution liquidity and solvency – required particular vigilance by the ACP. Credit institutions’ liquidity levels were monitored more closely, particularly in its dollar resources dimension; this is an area where the rationale behind the ACP’s being placed under the aegis of the Banque de France – which is responsible for central bank refinancing – is clearly demonstrated. By ensuring that the adequate risk provisioning, the reduction of management’s and market participants’ compensation and the allocation of the bulk of profits to strengthen own funds, the ACP has managed to ensure – over the longer term – the solvency of the French banking sector. Today, all the major banking groups have Core Tier 1 own funds ratios above 9%.

Since the beginning of the recovery, the number of people employed in the euro area has risen by 9.2 million. Euro area unemployment declined to 8.1% in August, its lowest level in almost ten years. Consumer spending is being driven by steady growth in households’ real disposable income. Strong labour markets – with increasing job creation and rising wages – boost household income and, in turn, consumer spending. The investment outlook remains solid on the back of robust demand, improving profitability and favourable financing conditions. Since the end of 2014, bank lending rates in the euro area have declined significantly, by around 130 basis points for non-financial corporations and by around 110 basis points for households. Lending rates on very small loans, which can be used as a proxy for loans to small and medium-sized enterprises (SMEs), have fallen by more than 210 basis points. This is encouraging, as SMEs provide two-thirds of total private sector employment in the euro area. Overall, the underlying strength of domestic activity in the euro area continues to support a sustained adjustment in inflation. According to the flash estimates, HICP inflation increased to 2.1% in September, from 2.0% in August. On the basis of the latest oil futures prices, headline inflation is expected to hover around the current level for the rest of the year. Our most recent projections foresee annual headline inflation at 1.7% in 2018 and in each of the two subsequent years.
Second, IMF facilities generally cannot match the swap lines in terms of speed of delivery, as the decision processes at the IMF are unavoidably more cumbersome. At present, the IMF’s maximum lending capacity is just over a trillion US dollars. At their peak in early December 2008, the USD swaps amounted to over USD 580 billion, after having increased very rapidly to that level in a matter of a few weeks11. If needed, the total could have risen much higher because the swaps had been uncapped vis-à-vis key central banks, which also mattered greatly in terms of signalling. If the IMF or any other international organisation is to be able to provide a credible alternative to the swaps, it must be able to expand its balance sheet speedily and on a large scale when the need arises. In short, it would have to function like a global central bank. This is not likely to be in the cards in the near future. So where do we stand regarding cross-border banking? In some sense, we are in the middle of a strong river. Some want to go back, as they do not find it safe to continue – perhaps because they are not offered a helping hand – and given the choices currently available, it could be better for them to stay on the other side. Others are banding together to hold hands and wade across. And still others are strong enough to go it on their own.

“The Fault Lines in Cross-Border Banking: Lessons from the Icelandic Case”. SUERF Studies 05/2010, European Money and Finance Forum (2010). Baldursson and Portes give a recent assessment of the rise and fall of the Icelandic banks: Friðrik M Baldursson and Richard Portes (2013), “Gambling for resurrection in Iceland: the rise and fall of the banks”, CEPR Discussion Paper 9664, September. 5  Fleming and Klagge describe the Federal Reserve’s foreign exchange swap lines: Michael J. Fleming, and Nicholas J. Klagges. “The Federal Reserve’s Foreign Exchange Swap Lines. Federal Reserve Bank of New York: Current Issues in Economics and Finance”, 16, 4 (2010). Allen and Moessner analyse the important role of the US Dollar surplus in the policy response to the crisis and compare it to the policy response during the Great Depression: William A Allen and Richard Moessner (2010), “Options for meeting the demand for international liquidity during financial crises”, BIS Quarterly Review, September 2010, http://www.bis.org/. 2  BIS central bankers’ speeches  of the safety net and the associated moral hazard-mitigating mechanism in cross-border banking applied across the board to regulation, supervision, LOLR, deposit insurance, and crisis management and resolution. The adjustment that needs to take place after the crisis in order to make cross-border banking safer is clear in principle: the market action and the public framework in the form of the safety net and other arrangements has to be better aligned.
In the first two cases (2001 and 2002) events in international financial markets led to rapid depreciations, unrelated to country fundamentals. In the last case – 2008 – we considered it prudent to build up reserves in a period in which the exchange rate was below fundamentals and global financial markets were under extreme stress. Let me now refer to the interaction between financial and price stability from an ex-post perspective, i.e. once a financial shock (crisis) has hit the economy. From an ex-ante point of view I discussed that there are occasions in which these two objectives may not be completely aligned. From an ex-post perspective, these objectives are in general consistent, which will reinforce the need for strengthening the ex-ante dimension of financial stability. Suppose that a shock in financial markets (of a domestic or external nature; based on fundamentals or simple contagion) hits the economy. This shock will result in an increase in the cost of capital, bringing down investment and aggregate demand. The reduction in aggregate demand reduces output and therefore also reduces inflationary pressures. This example shows that dealing with this “financial shock” is usually – and I will be explicit regarding this conditionality – consistent with pursuing price and output stability. From this ex-post perspective, financial and price stability can be addressed simultaneously. The instruments that monetary policy can use to deal with these financial shocks will depend on the nature of the financial shock.

Following the implementation of inflation targeting, the report will be published quarterly; - a model calibrated by the Bank’s staff is currently being tested and will be used for forecasting purposes. Instead of going into the details related to the Inflation Targeting framework, I will let my fellow speakers tackle the most important issues. Shortly after this, Deputy Governor Ms. Rachel Lomax will present a compelling account of UK’s experience and, may I add, success as a benchmark inflation targeter. After the lunch break, Gill Hammond, Deputy Director of CCBS, will give you an excellent presentation dealing with specific issues and challenges faced by emerging market economies when adopting inflation targeting. Later on, we will have our guests from the Czech National Bank and the National Bank of Hungary giving you a purposeful insight of such challenges and of their countries’ experiences with the IT framework. Mr. Ludek Niedermayer, Deputy Governor of the Czech National Bank, will first explain to you “why and how” inflation targeting was adopted in the Czech Republic – the first country to embrace this regime in our region. Then, it will be for Ms Csermely Agnes, Director with the National Bank of Hungary, to share with us the “Lessons and Challenges” put forth by the Hungarian experience with inflation targeting.
The optimal mix depends on the level of development of the financial market, but a more active role has to be played by the authorities to achieve the public policy objectives of retail payment reforms. 4.3  Policy elements  4.3.1 Central banks to play a catalytic role: Central banks should be at the centre, take the leadership and coordinate the development process as other stakeholders tend to have vested interests. While it is important to enhance oversight and supervisory functions by the central banks and ensure that governance arrangements for infrastructure and service providers are in place, it is also necessary to ensure that such arrangements do not lead to unnecessary restrictions on competition and innovation. 4.3.2 Stakeholder participation: It is essential that central banks engage in effective participation and secure cooperation from all stakeholders in the payment systems, through establishing National Payment Councils (NPC) or National Payment Committees/Advisory Councils etc. India, Sri Lanka, Pakistan and some others have already established NPCs and they are the highest level policy making authorities for development of national payment systems. Banks have a good opportunity to give their inputs at these meetings, especially on operational matters. 4.3.3 Declare public policy objectives of retail payment system development: The undeclared and unsaid public policy objectives have been a contributory factor for ad hoc retail payment system developments in the past.

The risks he discusses are mainly linked to central banks that buy assets other than government bonds. The more the central bank involves itself in risk and capital allocation in the economy, the greater the risk of it being exposed to political pressure with respect to how it should conduct its policy. And more generally, the larger the central bank’s balance sheet, the greater the risk of politicians wishing to utilise the resources in a specific way. Plosser’s arguments are important, but they are not particularly applicable to the Riksbank’s current situation. The Riksbank has only purchased government bonds, and we have spread our purchases fairly evenly on the outstanding bond stock in order to affect the general level of interest rates rather than specific bond prices. And despite the Riksbank’s balance sheet having grown rapidly in recent years, it is significantly smaller in relation to GDP than in many other countries. As far as the Riksbank is concerned, I consider the financial risks to be more problematic. The large bond portfolio means that the interest rate risk on the balance sheet has increased. The bonds we have purchased have an average maturity of 5 years, but are funded with Riksbank certificates with a maturity of one week. If the interest rate rises, the funding costs will therefore increase while the return on the bonds already purchases remains unchanged. In addition, the expected return on the Riksbank’s bond portfolio is low.
Within the ECB Governing Council, around Mario Draghi, we take very seriously the task entrusted to us by the European Treaties of maintaining price stability, meaning medium-term inflation of close to but below 2%. Our monetary policy has safeguarded the euro area against the threat of deflation in recent times, and is achieving tangible progress towards our inflation target: inflation rose to 0.5% in October and should exceed 1% in early 2017. It is supporting demand while narrowing the output gap, which has been reduced from -2.4% in 2014 to -1.0% in 2016 according to European Commission estimatesii. The Eurosystem has already  Page 3 sur 8 provided ample liquidity to the European economy: our holdings under the expanded asset purchase programme amounted to nearly EUR 1,400 bn in October 2016. We can take stock of this progress, while remaining alert to the latest financial developments and their mixed economic effects: the rise in the equity market but also in the long term interest rates; the appreciation of the dollar but quasi-stability of the global euro exchange rate; and the increase in inflation expectations. We should be both confident in our progress, and vigilant with respect to our environment. Until March, we will go on implementing exactly what we said we would: our clear success today in purchasing a volume of EUR 80 bn of assets per month, including corporate bonds, is the best guarantee of our credibility tomorrow.

The credit easing package and expanded APP has been effective too in reducing wholesale funding costs for banks, allowing banks to pass on better funding conditions to their customers. Since summer last year the average cost of borrowing for euro area non-financial corporations has fallen by around 70 bps, and by 90 bps and 110 bps for NFCs in Spain and Italy, respectively. The latest evidence from the July Bank Lending Survey confirms the improvement in credit conditions. During the second quarter of 2015 credit standards continued to ease for firms, and even more so for households. Reflecting the endogenous relationship between credit supply and demand, credit demand also increased among both groups driven mostly by the low level of interest rates. The impact of the expanded APP on bank funding costs has been partially reversed by the recent market repricing. Here, however, the credit easing package and our broader asset purchases could act as complements, in particular the Targeted Long-Term Refinancing Operations. For the APP, the ECB defines the volume of liquidity it would like to inject, but cannot determine the price; for TLTROs, we define the price of the liquidity, but banks determine the volume. One tool can therefore act as an automatic stabiliser for the other. Indeed, as wholesale funding costs for banks have risen, so has the attractiveness of the TLTRO. This substitution effect accounts in particular for the higher participation in the fourth operation by banks in less vulnerable countries.
High tax rates promote tax planning and hamper the growth capacity of an economy. Low, broad-based tax rates are preferable to high tax rates with a narrow base. Norway made headway with the tax reform of 1992. There is still room for considerable improvement in the Norwegian system. Many public services are of considerable economic importance. Infrastructure, education, sound legislation and a solid judicial system are necessary for the economy to function and grow. Public services may be important in order to secure equality and security. At the same time, the public sector is so large that it affects the economy at large. This means that requirements concerning efficiency and adaptability must also apply to the public sector. Chart 18  Over a twenty year period, the number of employed in the health, care and education sectors increased by 240,000, which account for about 60% of the increase in overall employment in Norway. The number of employed in the health and care sector has more than doubled in 20 years. More people are now working in this sector than in the whole of manufacturing. Nevertheless, every day we receive reports of personnel shortages at hospitals, in elderly care or at schools. The authorities constantly signal increases in appropriations in order to remedy these problems. Norway imports labour from other countries to cover its resource shortages. What are the reasons behind this situation? BIS Review 14/2000  16  Chart 19  Demand for health and care services rises sharply when incomes increase.

It is probably also easier if inflation is not too far from the target to start with, as inflation expectations are to some extent affected by the current rate of inflation. Also, a deviation from the inflation target is in itself more costly the larger the deviation is. Lack of practical experience So what is the current status of the debate? For natural reasons, an important dividing line here is the view of macroprudential policy and how well it can function as a first line of defence. Can it efficiently manage to counteract imbalances arising, or is it doubtful whether it can do so alone? This is essentially an empirical question, so the route taken by the international debate in the coming period will to a great extent be determined by the practical experiences from macroprudential policy and the tools at its disposal. So far, these experiences are relatively limited. Another important dividing line in the debate is the view of monetary policy as a tool to counteract financial imbalances. One argument that is often put forward against using monetary policy as such a tool is that it is far too blunt for this purpose and has limited effects  4  The arguments for and against that were put forward in the debate are summarised in Roubini (2006) and Posen (2006) respectively. 5  See, for example, Billi and Vredin (2014) and Woodford (2012). 6  See, for instance, Sveriges Riksbank (2013).
When nominal rates are negative, creditors pay debtors interest, and debtors earn interest on their debt. That is, instead of your money working for you, you have to work for your money. To explain why we are seeing these negative nominal rates, we can invoke the Fisher equation. In Denmark, Sweden, Switzerland and the euro area, rates of inflation, and  2  BIS central bankers’ speeches  expected inflation, had been falling and were near zero. Other things equal, the resulting real interest rates were too high for comfort. In an environment of low inflation, one policy to reduce real interest rates would be to boost expected inflation. However, there may be few or no easy ways to raise those expectations quickly; policies such as quantitative easing may take time to implement and have complications of their own. An alternative approach to reducing the real interest rate, the Fisher equation suggests, is for the central bank to set a negative nominal rate. In addition to this straightforward influence of negative nominal rates on real rates, setting negative nominal rates may stimulate the economy in less predictable and clear ways. For example, setting a negative nominal policy rate – a move that is, by nature, unconventional – may surprise people and thereby send a strong signal of the central bank’s intent to pursue its policy objective. Such a signaling channel may reinforce the effect of the negative rate and have an independent effect on boosting inflation expectations.

9  Ben S. Bernanke and Vincent R. Reinhart, “Conducting Monetary Policy at Very Low Short-Term Interest Rates,” paper presented at the International Center for Monetary and Banking Studies Lecture, Geneva, Switzerland. January 14, 2004. 10  See the Securities and Exchange Commission, “SEC Adopts Money Market Fund Reform Rules: Rules Provide Structural and Operational Reform to Address Run Risks in Money Market Funds” July 23, 2014 http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370542347679 for a discussion of reforms that limited fixed NAV designs for money market mutual funds to retail and Treasury-only funds. 11  A theoretical model that captures this idea is described in Jess Benhabib, Stephanie Schmitt-Grohe, and Martin Uribe, “The Perils of Taylor Rules,” Journal of Economic Theory 96, (January/February 2001): 40–69. 12  There have been a couple of informal polls by Swiss newspapers. For instance, in December 2014, after the SNB first announced negative rates (25 bps), the Tagesanzeiger (one of the biggest Swiss newspapers) asked readers whether the decision was a good one. Of the respondents, 47.7 percent said, “Yes, it’s necessary to maintain the exchange rate” [the floor was still in place then], while 52.3 percent said, “No, this policy punishes savers.” http://www.tagesanzeiger.ch/wirtschaft/geld/Geldpolitik-Nationalbank-fuehrtNegativzinsen-ein/story/26525077). BIS central bankers’ speeches  9  Conclusion Even though nominal rates can become negative, zero is still an important benchmark: below that level of rates, society faces a distinctive set of complications and costs that can blunt the intended good effects of a negative nominal rate policy.