samchain/econo-pairs-v1 huggingface dataset:
There is then a risk that the Riksbank would lack the means to manage its stabilisation policy task. On the other hand, if we continue to have very low interest rates at the same time as the growth rate is high, there is a risk of imbalances arising in the housing market. Conducting flexible monetary policy means being prepared to deal with this type of economic shock. The bank is therefore working on further clarifying the principles published in 1999 that explain how the Riksbank’s inflation target will be applied and the considerations that sometimes need to be made between inflation, stability in the real economy and stability in the financial system. This does not involve any fundamental changes in monetary policy strategy but may make it easier to understand how monetary policy is applied. 7/7

Let me stress it for French and European bankers who are gathered here: accepting good compromises is often a sign of intelligence; maintaining for ever excessive demands is not, and can be a road to failure. III. Maintaining the momentum to implement the Capital Markets Union Let me now turn to CMU, which is the natural complement to the Banking Union. Capital markets and banks together provide diversified sources of financing, offering both safety and flexibility to economic agents. From a central bank point of view, a deeper and more integrated financial system is desirable to improve the transmission of our single monetary policy to all parts of the euro area and help absorb asymmetric shocks. In the United States around 60% of the impact of state-level shocks is alleviated through private capital flows, against a poor 20% in the euro area where, financial flows even tend to worsen imbalances and fragmentation in times of crisis. We need to reverse this trend, and in particular to foster equity financing which is the most appropriate tool for innovative projects. Insofar as innovation will be the key factor of success in the two major transformations ahead of us – digital and ecological –, we ought to pay special attention to the take-off of venture capital in the EU, which is still fivefold less developed than in North America. The EU has the world’s greatest pool of savings at its disposal: the surplus of domestic savings over investment structurally exceeds EUR 300 billion.
If the bleak prospects for the world economy translate into lower prices for oil and other export goods, this may also lead to a depreciation of the krone. We have already observed that investors sell NOK in periods of turbulence. If the krone depreciates, the interest rate will then have to be set higher to keep inflation at bay unless a slowdown in activity has a dampening impact on inflation. The opening of the labour market to the new EU countries has provided us with access to a reserve of labour. There has been a substantial flow of labour into Norway. Labour migrates to locations where potential earnings are highest. Growing numbers of workers are moving to Norway and establishing residence here. Many workers are only here on short-term assignments and will perhaps move on when the job is done and when there is an economic turnaround. In 2007, Norway’s population increased by about 55 000, with net inward migration coming to 35 000. This is the highest population increase ever registered. Employment has grown rapidly over the past two years, the highest rate recorded over the past few decades. Even though there has been an ample supply of labour, unemployment is low and the number of job vacancies is record high. The labour market is tight. High pay increases have often been awarded in the late phase of an expansion, and been followed by rising inflation.

There were reports of defaults on mortgage loans, but it was generally believed that the loans at risk were confined to a small segment of the market. The first warning of more severe problems came in winter last year. In the course of summer, it became clear that the losses had spread, and in the first instance to state-owned German banks. Other banks, funds and financial establishments in Europe, Asia and the US also felt the turbulence and gradually losses emerged where we perhaps least expected them. A European colleague compared the financial turbulence to a film production: It was shot in the US, premiered in Germany and is now playing all over the world. As you know, it also came to small-town cinemas in Norway last autumn. In addition to German banks, a small Danish bank and a fairly large British mortgage bank were faced with serious problems. At St James’ Park in Newcastle, advertisements for the crisis-hit British bank Northern Rock shine towards us. We are indeed witnessing crises at banks in neighbouring countries. 1  Yngvar Ustvedt (1994) “Henrik Wergeland – En Biografi”, Gyldendal Norsk Forlag A/S. 2  Source: www.dokpro.uio.no. Text from “Henrik Wergeland – Samlede skrifter”, ed. Herman Jæger, Didrik Arup Seip, Halvdan Koht and Einar Høigård, published by Steenske Publishers, 1918-1940. Poem translated by Anne Born, published in "The Army of Truth", The University of Wisconsin Press. BIS Review 18/2008  1  The turmoil spread to money and credit markets in August.
ECB policy interest rates were already then at their lower bound, at practically zero, with negative rates on the deposit facility. At the same time, liquidity provision by the ECB through its regular open market operations and its longer-term operations followed an on-demand principle, granting all the liquidity requested by banks; indeed, for several years a policy has been pursued under which, at the interest-rate marked for monetary policy operations, the ECB has not rationed the volume of liquidity provided to banks. After a few months’ experience, we can state that asset purchases have clearly contributed to re-anchoring inflation expectations, in line with the medium-term objective and, most importantly, they have checked and reversed the rise in real interest rates. Their effects have also been manifest in portfolio re-balancing, encouraging investors to shift holdings from riskBIS central bankers’ speeches  1  free or very low-risk securities to riskier ones, thereby reducing the cost of financing for consumers and investors. The second aspect I would like to mention is the role of economic policies in countries that have had to set about correcting the deep-seated imbalances built up in the expansion that ended with the onset of the crisis in 2007–2008. I would refer to policies aimed at improving competitiveness in goods markets and at reducing labour market inefficiencies, which are most significant in countries with high unemployment, in particular in those cases in which high indebtness is a constraint on the possibility of implementing demand-boosting policies.

Reforms are conducive to wage moderation and to the containment of the inflation rate, with the potential to initially dampen domestic demand owing to lower wages, the increase in the real value of debt and, in some cases, the increase in real interest rates. However, these initial adverse effects could be offset and, as experience shows, exceeded by gains in competitiveness, increases in exports and gains in confidence that positively affect consumption and investment decisions and generate employment and growth. Another matter to be highlighted is that of the synergies between structural reforms and monetary policy. The Spanish economy is a good example of a positive interaction and of the fact that, at least occasionally, reforms and policy are mutually reinforcing. After a period in the euro area with considerable stress combined with very marked segmentation in the credit markets, despite the ECB’s increasingly loose monetary policy, this interaction between structural reforms and a strongly expansionary monetary policy finally began to be felt in late 2013 and, naturally, in 2014, in any event in Spain. Unquestionably, some of the reforms launched in 2012–2013 contributed to relieving stress on the financial markets owing, above all, to their contribution to improving confidence. The improvement in public finances governance in the euro area no doubt played a key role in enhancing confidence.
The first is how to ensure that we have a strong and resilient financial sector with disciplined risk management so that it can help mitigate the risk of major imbalances in the economy. The second is how to reduce the procyclicality of the financial sector so that the risk of a credit-driven bubble can be avoided, especially at the time of strong and persistent capital inflows. And the third is how to develop a deep and liquid financial market that can help improve the ability of the economy to adjust to shocks. In the context of financial regulation in emerging markets where the dominant part of the system is typically the banking sector, the challenge for policy is to calibrate a regulatory policy that fosters a strong and resilient banking sector with good and disciplined risk management, that makes use of the necessary macroprudential measures when needed to help reduce or counter the procyclicality in the financial system, and that provides momentum for reform to strengthen financial infrastructure and governance. Thailand, like most emerging markets, has also been struggling with this issue. And I want share with you some of the policies that we have pursued in response to the challenge. It is a long journey, and it is the journey that we are making. On the issue of reducing risk from procyclicality of the financial sector, prevent excessive lending, and ensure adequate capital.

Being pragmatic means having the right reservation about it, taking a careful step toward it, and be willing to take the needed action to deal with the unintended consequence. This is not going to be easy, but it is probably the best that we can do for now. Thank you. BIS Review 142/2008  3
Mr Ardian Fullani: Towards a solid, sound and efficient banking system in Albania Greeting address by Mr Ardian Fullani, Governor of the Bank of Albania, at the 5th anniversary ceremony of the privatisation of the National Commercial Bank, Tirana, 18 October 2005. *  *  *  Ladies and Gentlemen, Today I am honoured to see in this jubilee meeting how the National Commercial Bank has grown and consolidated and together with it the whole banking system in Albania. I am delighted to consider that after a long restructuring period the banking system is now taking its proper role in the economy, that of the provision of free funds to the growing needs of the Albanian business and consumer, improving at the same time the number and quality of services. For this reason, I am honoured to have the opportunity of taking the floor in this meeting, to address and discuss jointly with you some present and future issues, which, I estimate, are important for the further enhancement of the banking system contribution to the country’s economic development. Allow me to start discussing first about the work we are doing as Bank of Albania to create a favourable climate for the business and economy development. Monetary policy followed during the recent years in succession has targeted to further reduce money price in order to give aspiration to the economy, while we have been successful in keeping inflation under control.

The contribution of bank crediting to the production investments is still low and furthermore, considering the high share the credit takes in supporting trade activity, we can come out with the conclusion that the major part of credit is going for the financing of imports. Likewise, the degree of using the banking system is not within the required parameters of the time and, furthermore, the degree of cash use continues to be high. In addition, the financial markets continue to remain superficial and subject of speculations. The restricted alternatives of investing free funds are indeed a reason to this situation. The financing of budget deficit continues to be still as the best alternative. However, the banking system should think seriously of enriching the market with other instruments rather than of using at maximum this riskless investment. To be more concrete, I will highlight further on some directions, which, I think, in the medium-term perspective are of priority to further stimulate and activate the bank credit in the economy, as the main instrument through which the banking system promotes the economic development of a market economy. Beginning with the Bank of Albania contribution, it relates first to the duty of meeting the legal obligations to achieve the overall macroeconomic stability with a special emphasis on inflation control. We remain determined in our position that inflation under control is a valuable contribution to achieve the objectives of the country’s economic growth, the enhancement of employment and of the living standard in general.
It is important that we continue reducing the cost of doing business, in conjunction with the private sector, in order to improve investments in various sectors of the economy. The agriculture sector, for instance, remains underdeveloped despite the country possessing large tracts of arable land, adequate water and relatively good weather. This is one sector where the country can easily take advantage of its comparative advantage. The achievement and maintenance of a low and stable inflation rate, preferably single digit, therefore remains key to promoting investment, enhancing business planning and confidence in the economy, maintaining external competitiveness and stabilising people’s incomes. In the medium-term, Government continues to pursue market and structural reforms in partnership with the private sector with the view of consolidating the gains so far attained for sustained economic growth and development. Despite the adverse effects of the global economic meltdown, there are still prospects for appreciable economic growth in 2009 and the years ahead. GDP growth is expected to be led by growth in agriculture; construction; financial services; manufacturing; transport and communication; and wholesale and retail trade. Conclusion In conclusion, we all agree that Zambia remains vulnerable to effects arising from the ongoing global financial crisis, particularly if it is prolonged. We hope that the actions that most affected countries, led by the US and the EU, have taken would help cool down the financial crisis and bring back the much needed confidence in the financial systems.

Tourism Apart from mining and related companies that are affected by the effects of the global recession, tourism has also been negatively impacted. The number of foreign tourists is anticipated to decline owing to financial problems and credit crunch their countries of origin are facing. Availability of credit Perhaps the most challenging effect of the global financial crisis, especially for developing countries like Zambia, is its impact on private sector investment. Between 2006 and 2008 credit to the private sector grew strongly (at an average of 45.6% per annum), largely driven by the expansion of consumer credit and the strong growth in the domestic economy. An immediate consequence of the financial and economic crisis has been a curtailment of credit lines and a slow-down in FDI flows. In 2009, domestic credit is expected to slow down as financial institutions adopt more conservative lending practices and tighten their lending standards. In addition, the deterioration in corporate and household balance sheets is now being translated into higher non-performing loans (NPLs) as a percentage of total assets in the banking sector (from 6% in mid-2008 to 10% in May, 2009 – an increase of 67%.). The deterioration in NPLs is now across all the past due loan categories. BIS Review 86/2009  3  Policy response In responding to the crisis, the Government is taking steps to maintain macroeconomic stability and continue encouraging investments that will lead to diversification of the economy and safeguard vital social services.
Of course, it is arguable that the search for yield in riskier assets is due in part, no doubt, to the historically low interest rates and abundant global liquidity, partly a result of recent expansionary monetary policy around the world. This has encouraged greater risk-taking, resulting in a substantial reduction in risk and liquidity premia over the entire maturity spectrum. On the other hand, however, low risk premia could also reflect changing risk appetite. More importantly, it is unclear whether this change in risk appetite has arisen from permanent or transitory factors. I make this distinction because permanent factors would imply that this reduction in risk premia is here to stay. Transitory factors, on the other hand, imply that the risk premia would rise once these factors reversed. Let me try to identify some of the permanent factors that have resulted in the shift in risk appetite and preferences. These include, firstly, changing demographics. The aging population has led to a larger volume of pension funds, which need to seek higher returns in emerging market assets. Secondly, technological advances, such as the IT revolution and decline in costs of telecommunications and transportation, have substantially lowered costs for cross-border financial transactions. Thirdly, changes in exchange rate regimes and capital account liberalization over the years have lifted many of the previous obstacles to crossborder financial transactions. Fourthly, financial innovation has made credit risk transfer mechanisms more widely available, increasing the appeal of riskier assets.

An example of such a change is the wave of worldwide mergers and acquisitions, resulting from globalization, and improvements in efficiency through economies of scale and integration. While this has exerted upward pressure on equity prices, this may not be a great concern for stability. On the other hand, some changes drive prices away from fundamentals. This includes asset price moves caused by excessive investment in developed financial markets, or short term capital inflows into emerging markets in search of yield, or through carry trades, etc., which may result in asset price misalignments. In this regard, the question arises whether the central bank’s price stability objective is enough for financial stability, given destabilizing asset price movements, coupled with movements in the exchange rate, which may not be in line with fundamentals. BIS Review 74/2007  3
William C Dudley: Opening remarks at the Transatlantic Economy – Convergence or Divergence Conference Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Transatlantic Economy: Convergence or Divergence Conference, Federal Reserve Bank of New York, New York City, 18 April 2016. *  *  *  It is my pleasure to welcome you to today’s conference. Over the past decade, the New York Fed has been working together with the European Commission and the Centre for Economic Policy Research in sponsoring a number of conferences on interdependencies and policy challenges on both sides of the Atlantic Ocean. Today, as in the past, we have a great program with many distinguished speakers from academia, and the private and public sectors. In particular, I would highlight the keynote speech following lunch by Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs. As the two largest economies in the world, the United States and the European Union have a shared stake in the vitality of the global economy. Without growth in both our regions, the global economy will not prosper and we will not be able to provide the conditions to enable our citizens to fulfill their aspirations. Both the United States and Europe suffered large social and economic costs from the financial crisis and the deep recession that followed. We continue to take steps to minimize the risks that we will ever find ourselves in that situation again.

On the macroeconomic side, the news for the United States is mostly favorable. Labor market conditions have significantly improved over the past few years and unemployment is now around 5 percent. The household sector is much less leveraged, the housing sector is recovering, the banking system is much healthier, and the corporate sector is highly profitable, even as business fixed investment spending remains quite weak. Although inflation has fallen short of our objective, I am confident that inflation will return to our 2 percent objective over the next few years as the labor market tightens further and the transitory factors that have held inflation down dissipate. After years at the effective lower  BIS central bankers’ speeches  1  bound for short-term interest rates, economic conditions have finally warranted the start of U.S. monetary policy normalization. But these monetary policy adjustments are likely to be gradual and cautious, as we continue to face significant uncertainties and the headwinds to growth from the financial crisis have not fully abated. For Europe, the economic outlook has started to improve. The European Union is experiencing a cyclical recovery and the unemployment rate has been steadily declining over the past two years. The end of fiscal tightening appears to be a key factor in this recovery. Risks of low inflation, however, remain a concern for the European Central Bank and have motivated their aggressive use of unconventional monetary policy instruments.