samchain/econo-pairs-v1 huggingface dataset:
But, for what it is worth, the Monetary Policy Committee’s view – described in considerable detail in our recent quarterly Inflation Report, which I can make available to you for a remarkably modest fee if you care to get in touch with me afterwards – is that while we will  BIS Review 19/1999  6  not see much growth in the first half of this year – certainly in the internationally-exposed sectors of the economy – overall output growth will pick up on the back of stronger domestic demand as we move towards the Millennium to around trend or above from the second half of next year. We can’t of course altogether rule out an actual downturn in total output over the next few months, though the odds are against that for the economy as a whole. And we are reasonably confident that the slowdown will be relatively mild and short-lived – certainly compared with equivalent periods in the past, for example at the beginning of the 1980’s and 1990’s. The good news is that we expect inflation to remain close to the Government’s 2½% target over the next two years, which should allow the relatively steady growth we have seen in the overall economy since 1992 to resume on a sustainable basis. Within this overall picture, we are still confronted with the difficult problem of imbalance between external and domestic demand and the sectoral and regional stresses that this implies.

Not only because of the obligation arising from the Treaty of the European Union. Rather because euro area membership provides ultimate monetary and economic security for our nation that is already used to the “de facto membership”. Competitiveness in today’s world Ladies and Gentlemen let me now turn to the topic of today’s conference: competitiveness in today’s world. I would like to look at it from the perspective of a really small country. As we all know, globalization has changed the understanding of success factors for countries. Oldstyle economic policies and market protection are of no use any more, since today whole factories and industries are moved within a short time. How can a small country survive in this world at all? It is often said that real wages should be kept artificially low to attract investment and provide high returns on capital. I do not think this is the right way for a small country. We could never compete with major economies when it comes to mass production. Instead, we should make use of the fact that globalization creates also a huge spectrum of niche markets. Mass production cannot meet countless individual needs, as people all over the world demand more and more personalised products and services. This is the key to success for smaller economies. BIS Review 63/2007  1  The point of departure for a society to remain competitive is to get over the fear of globalization. The new world is after all an opportunity, not a cause for sorrow.
Only if the krona were abolished and replaced as legal tender by the euro, in a similar manner as Panama and Liberia have done with respect to the dollar, would exchange rate risk and the associated interest rate risk premium disappear. However, it is good for thought that no country with its economy in good order has chosen this path. Seignorage then accrues to another country or group of countries and all influence over monetary policy is surrendered. Nor is it clear that such a path would be acceptable to the European Central Bank. Participation in the Monetary Union would be a preferable option to adopting the unions currency unilaterally as this would allow for a share in seignorage and give the possibility for influencing monetary policy decisions. This would, however, require membership of the European Union as I mentioned earlier and any decision in that regard of course concerns wider issues than only monetary and exchange rate arrangements. This is of course a very general analysis of the options we face, but nevertheless shows that the issue is more complicated than we are sometimes led to believe. All the alternative options have strengths and weaknesses. Also, future developments and what will actually be on offer are still in doubt. One reason is that the European Monetary Institute, the precursor of the European Central Bank, has not been empowered to discuss linkages with any non-member of the European Union. The task of preparing Monetary Union has been more than sufficient.

A new overnight facility for credit institutions subject to reserve requirements was established at the Central Bank. Collateral for overnight loans will be provided by government guaranteed securities held by the credit institutions. The next step in these changes will take place on April 1 when new rules governing reserve requirements will take effect. The reserve base will be widened to include the foreign borrowing of credit institutions while the reserve requirement ratio will be lowered as the change is intended to be broadly neutral with respect to required deposits, thus making the change neutral from a monetary policy perspective. The reserve requirement ratio will be 4 percent on obligations under 1 year to maturity but 1.5 percent on obligations tied for longer than 1 year. Also, the reserve requirement will cover more institutions than before, and only institutions subject to reserve requirements will have access to facilities at the Central Bank. It will be possible to meet the reserve requirement more flexibly than has been the case. Indexation of required deposits will be abolished but the interest rate on them will initially be set on the basis of prevailing yields. BIS Review 42/1998  -5-  The last step in these changes will be taken on May 21 when the first calculations based on the new rules concerning reserve requirements will be done. At the same time, the so-called discount quota, which is a facility that the Central Bank has offered to deposit banks, will be abolished.
These international funds are generally highly alert to shifts in the expectation of risk, return and liquidity. They can therefore be highly volatile, with the tendency of reversing direction whenever there is the slightest hint of trouble, in respect of the macroeconomic policies, in particular financial policies pursued by governments, the robustness of the financial markets in which they operate, the soundness of the financial intermediaries with which they deal, etc. 8. Those economies which are dependent upon such capital inflows are clearly vulnerable to their reversal. Ideally therefore they ought to pay a lot of attention to pursuing sound macroeconomic policies and be transparent about them. This has perhaps proven to be politically difficult to achieve in some cases. They also need to ensure that they are in a position to deal with the volatility that characterizes the flow of international capital. And this means having: first, an effective monetary management mechanism that is capable of delivering currency stability; second, a regulatory and supervisory framework that safeguards the integrity of financial markets and the financial intermediaries in accordance with internationally accepted standards; and third, a robust financial infrastructure that enables financial transactions to be conducted efficiently and with a minimum of risk of failure. 9. This is a tall order, even for a relatively closed financial system that operates under more benign circumstances, not to mention for a newly liberalized financial system under stressful conditions.

Furthermore, when stable exchange rates are replaced by flexible, volatile and, in all likelihood, depreciating ones, the demand for hedging in the more volatile environment and under liberalized arrangements may drive exchange rates to such debilitating levels that many would regret the lack of resolve in pursuing sensible policies and in the defence of stable exchange rates in the first place. There is no doubt that confidence in the stability of a few Asian currencies has now been badly undermined and rebuilding it may take more than just time. Nevertheless, as the very productive Asian economies find their feet again, they will soon be on their way with renewed vigour. 23. For Hong Kong, as very much a service-oriented economy, any erosion of competitiveness, as a result of our currency holding stable against the US dollar while others have fallen, is likely to be mild. Our economy is not particularly sensitive to exchange rate changes. The IMF forecast for Hong Kong’s growth rate next year is 4.25%, only a shade below our trend growth rate of 5%, representing a healthy consolidation in the circumstances. BIS Review 115/1997
Gent Sejko: Bank - business relationships: common economic challenges in face of global Covid-19 pandemic Address by Mr Gent Sejko, Governor of the Bank of Albania, to the Discussion Forum on ''Bank business relationships: common economic challenges in face of global Covid-19 pandemic”, Tirana, 13 May 2020. * * *  Dear representatives of business community in Albania, Dear banking system executives, First, I would like to thank you for your participation in this round table, held to discuss on the way and optimum instruments to face the common challenges ahead. This meeting is being organised under extraordinary circumstances. The outbreak of Covid-19 pandemic and the prudential measures adopted to confine it, drove to a rapid drop of the demand for goods and services, in the domestic and foreign markets, and to a considerable contraction of output. The challenges we are facing are serious, in terms of both size and complexity. The Albanian economy is expected to undergo a strong drop of the economic activity during 2020, in those levels never being experienced during the last two decades. It will be accompanied by an increase of unemployment, fall of revenue, and financial difficulties to firms and households. In the microeconomic view, the fall of revenue, reduction of liquidity and worsening of solvency will test the financial stability of firms. In the macroeconomic view, the increase of private and public debt will test the stability of economic equilibriums of Albania.

I repeat, this agreement was and remains the best possible one for France and for Europe. I recall that the removal of internal models was a key element in the negotiations. We fought hard to gain the lasting recognition of these models while committing ourselves to further improving their comparability. The application of Basel III will not require a dedicated capital increase for any French bank. The implementation of this agreement will not have a negative impact on the financing of our economy. This concern traditionally voiced by the banking industry has always proved unfounded: on the contrary, credit growth in France remains very robust at 7% per year. But we are fully aware, as is Bercy, of the negotiations that remain to be conducted. And France will fight for a transposition that is both fair and reasonable. Fair because there would be no question of transposing it in Europe if the United States did not apply the agreement. 1/3  BIS central bankers' speeches  Reasonable in terms of managing capital requirements under Basel III. Firstly, I believe it is necessary to apply the output floor at the consolidated level of the banking groups. The Basel requirements will also have to be intelligently integrated with the capital buffers that are already applied in Europe under Pillar 2 2020 will also be the year of the Solvency II review. We had expressed our reservations about the document circulated for consultation by EIOPA.
These five Principles encapsulate values that are crucial for the well-functioning of Malaysia’s financial market such as professionalism, integrity, transparency, competition and good internal governance. In addition to this, the Bank also enhanced standards for corporate governance, strengthened requirements for KLIBOR rate setting and introduced a Code of Conduct for the Malaysian Wholesale Financial Markets. These are a few recent examples of initiatives aimed at promoting greater professionalism, integrity and quality service to the public, consistent with the Hippocratic Oath to ‘Do no harm'. To add seriousness in upholding ethical standards and integrity, beginning 1 January 2018, a strengthened transparency framework for our enforcement actions will also be introduced to serve as an added deterrence against misconduct. The recent findings published by the Financial Services Professional Board, based on a 2016 survey of Malaysian banking professionals, are sobering. 23% of respondents observed that supervisors reward behaviour derived through unethical means. Another 15% expressly stated that they would act unethically when not being watched or monitored. These disheartening results are a clear manifestation that our journey is far from over and that, much more needs to be done to further strengthen the character within the banking community. There are economic consequences related to ethical choices. It is not a subject of discussion reserved only for the morally enlightened. The consequences are real. They can be dire and they can be expensive. The 2008 financial crisis alone cost the U.S. economy more than USD22 trillion.

Misconduct costs by banks globally have exceeded USD320 billion since 2008, with USD42 billion incurred in 2016 alone. At the institutional level, there should be a ‘clear tone from the top’ that unethical behaviour will not be tolerated. This culture of ‘zero tolerance’ for unethical behaviour should permeate across all levels of the organisation, including in the process of recruitment, retention and remuneration. As a community, we cannot possibly expect ethical behaviour to be burnished if we persist in retaining, hiring or rewarding people who had acted otherwise. Our work environment should also evolve, making it conducive and safe for individuals to speak up on ethically questionable practices. Encouraging conversation about ethical behaviour in the workplace can go a long way in empowering all layers in the organisation to serve as an ethical beacon. This can significantly reduce the probability and occurrence of unethical conduct. The third is Calling. We should marvel at the deep sense of purpose and identity contained in the medical profession. One sentence in the modern version of the Hippocratic Oath is particularly resonating: “I will remember that there is art to medicine as well as science, and that warmth, sympathy, and understanding may outweigh the surgeon’s knife or the chemist’s drug.” Ultimately, to make sense of what we do in our profession, we cannot shy away from its purpose.
This is another reason to make these interventions only in exceptional circumstances. Controls on capital inflows If capital inflows are believed to cause trouble, one solution is to limit them by applying controls. This can be done in economies whose financial systems are not well-developed. As the economy and its financial systems develop, limiting capitals becomes more complex and ineffective, in particular due to difficulties in discriminating which types of flows should be curtailed. Also, in economies with high levels of international assets such as Chile, it is difficult to control capital inflows because of the need to distinguish between inflows by nonresidents and repatriation of capital by residents. In the 1990s, before adopting the current monetary and exchange rate regimes, the Central Bank of Chile imposed controls on capital inflows together with a gradual liberalization of capital outflows. The main instrument used to limit inflows was the reserve requirement, whereby a fraction (initially, 20%) of capital inflows had to be deposited in a Central Bank account bearing no interest. The stated purpose of this policy was to reduce net inflows by increasing related costs, and stop the appreciation of the peso, as a competitive exchange rate was thought to be a key factor in the successful economic recovery since the mid-1980s. The reserve requirement would also favor the independence of monetary policy in the context of an exchange rate managed within a band. Finally, the reserve requirement was also intended to reduce short-term capital inflows and thus limit financial vulnerability.

Since then, the Central Bank has intervened on three occasions. The first time, in August 2001, the Central Bank announced that it might intervene at any moment from then to the end of the year. It also explained that the exchange rate was depreciating very fast and with great volatility, which was cause for concern in financial markets, despite the fact that the peso was weakening largely because of stressful conditions abroad. The intervention consisted in a sale of up to $ billion of international reserves and issuing another $ billion in dollarindexed bonds. The final intervention amounted to a sale of slightly above $ million and the full issuance of bonds. The second time, in October 2002, the Bank announced a similar package, as it considered that the depreciation reflected an overreaction, high volatility and a liquidity shortage. $ billion were issued in exchange rate indexed debt and no reserves were sold. The third time, in April 2008, because of the high global uncertainty, the Bank decided to increase its holdings of reserves, while recognizing that, at the time of the announcement, the exchange rate was appreciated relative to its long-term fundamentals. The intervention consisted in daily purchases of $ million intended to accumulate $ billion in eight months. The outburst of the global financial collapse in September 2008 made us suspend these measures. The evidence at hand indicates that these interventions had an immediate impact on the exchange rate of around 3%, but on some occasions they also altered its later trend.
The recent work by Rogoff and Reinhart suggests this would mean making sure that the 90% debt to GDP ratio is not reached, even after a plausibly serious stress scenario.4 Seen in this light, we may doubt that the 60% debt to GDP ratio that has been the reference since the Maastricht Treaty is sufficiently prudent. Let us now turn to the case of household indebtedness. Here the intermediating factor has been, in most recent examples, the burst of a housing bubble leaving, in particular, the most recent generation of buyers with a mortgage exceeding the value of their houses – that is, with negative equity. Besides system design failures which include policies that portray home ownership as a goal to be reached by everyone (President Clinton declared in 1994, “More Americans should own their own houses!”) and that are encouraged by public sector institutions, behavioural biases can be blamed as the main drivers of indebtedness.5 I could mention, first, a form of herding which is the simplest explanatory factor for an asset price bubble and, second, a “keeping up with the Joneses” effect, which is a plausible reason for the very low American savings rate and which Rajan, among others, uses as a potential link between the rise of inequality and increased indebtedness.

It lowers the real interest rate and contributes towards further increasing demand. When confidence in the inflation target is weak and inflation expectations are not well anchored, the result thus becomes larger fluctuations in the economy. We went through such a development in Sweden in the 1970s and 1980s, when the fixed exchange rate did not act as a sufficiently strong nominal anchor, which in turn resulted in recurrent cost crises and devaluations. The reason that debaters do not address the problems of abandoning the inflation target could, of course, be that they consider that the process of inflation has changed so much that central banks simply no longer can reach their inflation targets. This seems after all to be quite a common view in the debate. This would imply that it is not meaningful to set up targets for inflation, as it is determined by factors outside monetary policy. However, this is an assumption that, were it correct, would actually turn much of what is considered accepted within economic science on its head. Economic paradigms do change every now and again, of course. But, at a minimum, one may argue that quite a heavy burden of proof lies on those claiming it is no longer possible to choose an inflation target. Among other things, they would have to disprove Milton Friedman’s thesis that inflation is basically a monetary phenomenon. 17 Having said this, in practice, it is probably more of a gradual scale than a binary zero-one solution.
But in many cases these entities had back-up credit lines to the supporting bank, so that when funding difficulties arose, the securitised loans in effect came back onto the bank’s balance sheet. And even where there was no formal obligation to act as a lender of last resort, originators often chose to provide back-up finance in order to protect their name in funding markets. The motive for setting up these off-balance-sheet entities was entirely one of regulatory arbitrage. Off-balance-sheet vehicles were not required to hold capital in the same way as a bank would if the loans were on their balance sheet. So it appeared to be a neat way to boost profits without having to raise more capital. The Banco d’España, the Spanish banking supervisor, insisted that Spanish banks would have to treat conduits and the like as on balance sheet for capital purposes. As a result, Spain did not see the mushrooming of these off-balance-sheet vehicles. A third distortion lies in the nature of remuneration contracts. Incentive contracts that offer potentially unlimited upside rewards, but cap the downside losses, encourage traders to take on excessive risk. One unintended consequence of financial innovation was that it enabled clever traders to create positions with considerable embedded leverage – that is, portfolios requiring little payment up front, but whose returns amplified changes in the value of the underlying assets. Traders then had a natural incentive to gravitate towards these types of highly risky instruments.

Following a long period of unusually good economic performance, characterised by relatively steady growth and low and stable inflation in the advanced economies and rapid growth and development in key emerging market economies, we have seen the eruption of a systemic financial crisis of quite unusual intensity and international reach. The nearest precedent is probably the widespread closing of international capital markets on the eve of the First World War. And associated with that, we have seen the sharpest internationally synchronised slowdown in growth in the post-war period, together with an unprecedented contraction in world trade. To the public at large our present troubles are the fault of: whiz-kid financiers, who created financial instruments that even they didn’t properly understand; greedy bankers, who pursued profit and personal reward without regard to risk or common sense; somnolent supervisors, who failed to adequately regulate and restrain those bankers; and negligent central bankers, who allowed an explosion in liquidity, credit and asset prices that supported the whole rotten edifice. And all the while, the culprits were cheered on by an economics profession that was over-enamoured of theoretical models, blind to the lessons of history and subject to a severe case of “group think”. Wasn’t it blindingly obvious that the whole house of cards would come crashing down at some point? As one of those involved in responding to the crisis – and some might charge also a bit part in creating the conditions for it – I want to look this evening at how we got here.