samchain/econo-pairs-v1 huggingface dataset:
Ardian Fullani: Albania’s Financial Sector Development Program Opening remarks by Mr Ardian Fullani, Governor of the Bank of Albania, at the inaugural reception of the Financial Sector Development Program, Tirana, 9 February 2012. *  *  *  Dear Mr. Spindler, Dear Mr. Williams, Dear Ms. Timofeeva, Dear participants, It is a special pleasure for me to be here in this ceremony, which marks the commencement of a new phase of cooperation with the Financial Services Volunteers Corps (FSVC). This is evidence of the successful existing cooperation and our commitment to take it further in the future. The Bank of Albania has benefited largely from the cooperation with the FSVC. In concrete terms, this cooperation has focused primarily on strengthening the institution’s oversight function. The assistance from the FSVC has addressed specific training needs for the Bank of Albania’s supervision staff and has complemented with concrete activities other development projects we have had with the International Monetary Fund and the World Bank. More specifically during this period, we have been assisted to draft and implement the Supervision Development Plan in 2004–07, in the framework of the cooperation with the World Bank. Later, cooperation challenges and needs became more concrete and specific against the background of the proliferation of the international financial crisis, re-conceptualization of international banking supervision standards and re-assessment of the role of other public authorities working to maintain the financial system’s stability.

The expertise has proven rather useful for many of our staff and, at times, was provided as on-  BIS central bankers’ speeches  1  the-job training, for example, FSVC experts joined the Bank of Albania’s Supervision Department inspectors in their on-site examinations. I am confident that these qualities of FSVC’s assistance will be maintained in the future. A result of this fruitful cooperation is our shared commitment to extend it to the medium run. The parties have been in constant contact to identify the fields for future cooperation and I reckon that this process is being finalized in terms of project design and relevant details on development methodology and expected results. A preliminary assessment reveals that the scope of our future cooperation has expanded. Projects will continue to serve the objective for ongoing supervision capacity building in the fields of improvement of contingency plans, implementation of latest amendments to international banking supervision standards, risk assessment and improvement of regulatory requirements for responsible management by banking and financial institutions. The assistance may be expanded to include underlying standards for payment systems and use of e-money, thus laying the grounds for the adoption of relevant requirements arising from EU directives. The cooperation of the FSVC with ADIA will focus on the implementation of the Strategic Development Plan 2012–14 and will address, more concretely, the modernization of the IT infrastructure and reporting system as well as other ancillary processes.
An ongoing active exchange of supervisory information will be established between us and the ECB concerning the other banks that will remain under BNB’s direct supervision. Countries like Hungary, Poland and especially the Czech Republic are markedly against joining the eurozone at this point. Is the currency board the main difference between them and Bulgaria which explains this discrepancy between policies, or are there other factors at play? 1/3  BIS central bankers' speeches  This is a political decision, above all. What’s positive in our case is that this decision is based on strategic and not conjunctural considerations. Practically, there isn’t a serious political factor in our country that does not support this decision. On the technical level, the monetary regime in Bulgaria allows for its implementation to happen quicker and seamlessly. You said in an interview for Market News this spring that the downturn in Europe could turn out to be temporary, but that would remain to be seen. How would you comment the developments in recent months? Uncertainty is on the rise and a lot of current data indicates a continuing economic downturn in the eurozone. This motivates the ECB to make decisions for an even more stimulating monetary policy. The technical details and the degree to which the ECB decided to step up its policy are a subject of debate, but the basic macroeconomic motivation behind these decisions is clear, in principle.

The last time this was done was back in 2003. There are expectations that the new ECB leadership will initiate such a review. What effect do the low interest rates have on the Bulgarian economy? The immediate effect is positive. The increased credit activity is one of the indicators for this. Such a development, however, is connected with some serious challenges, for Instance the profitability of the banks as a result of the diminishing interest margins. I should say that so far the Bulgarian banks manage to deal with this challenge. Cyclical risks are also accumulating, due to which BNB activated and subsequently increased the level of the countercyclical capital buffer for banks. In recent years we have seen a few large deals in the Bulgarian banking system. Do you expect the consolidation to continue in the future? Is it a completely positive phenomenon? Consolidation is one of the possible responses to the challenges facing the banks. I expect this process to continue. 3/3  BIS central bankers' speeches
It is therefore of course desirable that the extended repo-rate path is perceived as credible. As I mentioned earlier, it is possible that the extended repo-rate path with an unchanged repo rate further ahead would be perceived as less credible than a lower repo-rate path with a reduced repo rate now. In this case the effects are shown by the curves marked “Unexpected”. However, as the extended repo-rate path can be justified by the fact that it provides better outcomes for inflation and resource utilisation than the main scenario it may perhaps be perceived as being more credible, in which case the effects are shown by the curves marked “Expected”. 4  4  The effects of deviations from the repo-rate path of the main scenario on inflation, output and hours worked are calculated using the Riksbank's model Ramses with the methods described in Laséen and Svensson (2009) for expected deviations and Leeper and Zha (2003) for unexpected deviations. They are discussed in more detail in Svensson (2010c). The lower repo-rate path gives as an expected deviation (unexpected deviation in parenthesis) a largest increase in CPIF inflation of 0.42 (0.22) percentage points, in output of 0.33 (0.21) per cent and in hours worked of 0.35 (0.22) per cent. The extended repo-rate path gives as an expected deviation (unexpected in parenthesis) a largest increase in CPIF inflation of 0.48 (0.25) percentage  BIS Review 60/2010  5  Figure 2.

There should be a continuing place in the market for many transactions that do not qualify for the STC designation, including synthetic transactions, managed portfolios and pools that do not meet the granularity requirements. Turning to capital requirements, looking at historical losses on securitisation tranches, we think the calibration of bank capital requirements that the Basel Committee published in December is broadly right. But there is a case for some lowering of capital requirements for STC transactions on the grounds of lower structure risk. A stronger argument can be made that Solvency 2 standardised capital requirements for EU insurers are still too high, especially at longer maturities – although it should be noted that these will not apply to insurers using internal models. For banks and insurers, part of the issue with securitisation capital requirements is the comparison with covered bonds, which tend to be treated favourably in EU regulation. Issuers looking to raise secured funding may therefore see covered bonds as a more cost effective alternative to securitisation. Covered bonds have a legitimate role in the market as a source of stable long-term funding. But securitisation has the advantages of risk transfer and lower encumbrance of underlying assets. We would support moves to put securitisation and covered bonds on a more level playing field. To conclude, we support the European Commission’s current work on an EU framework for securitisation as part of the longer-term objective of growth in stable, market-based financing markets alongside bank lending.
At the same time, it remains our priority to reinforce the stability of financial institutions by strengthening capital base and improving risk management, to cushion against potential shocks under adverse circumstances. This year, we will establish a licensing framework for foreign commercial bank subsidiaries, with a view to enhancing the competitiveness of the banking industry as envisaged in the Financial Sector Master Plan Phase 2. Meanwhile, a guideline will be laid out allowing domestic commercial banks to expand and integrate into the Qualified ASEAN Banks (QABs) network under the AEC. This integration offers an opportunity for Thai banks to step up their efforts to fortify their strategic strengths and prepare for a fiercer competitive environment. Stronger institutions could seize the opportunity to expand internationally and diversify their risks. A balance must be struck between the three objectives of increasing financial service efficiency and access, safeguarding financial system’s integrity, and strengthening consumer financial protection. Payment systems policy The priority this year will be to expand the coverage of the ICAS across the country, to speed up the provincial cheque collection from 3–5 business days to 1 business day. The initiative will help promote a more efficient payment system, enabling fast, safe, and secure economic transactions as well as promoting a substitution of electronic for cash payments.

18  Kohn (2006, 2008) specifies three conditions that should be fulfilled for central banks to take “extra action” to deal with a possible asset-price bubble: “First, policymakers must be able to identify bubbles in a timely fashion with reasonable confidence. Second, a somewhat tighter monetary policy must have a high probability that it will help to check at least some of the speculative activity. And third, the expected improvement in future economic performance that would result from the curtailment of the bubble must be sufficiently great.” He concludes, also in 2008 and after thorough considerations, that those conditions would rarely be met. See also Kohn (2009). 6  BIS Review 16/2010  In particular, if there is evidence of rapidly-rising house prices and mortgage loans, and these developments are deemed to be unsustainable and a possible bubble, there are much more effective instruments than policy rates. Restrictions on loan-to-value ratios and minimum mortgages and requirements of realistic cash-flow calculations for house buyers with realistic interest rates are much more effective in putting a break on possible unsustainable developments than a rise in the policy rates. In particular, more transparency about future policy rates, in the form a policy-rate path published by the central bank, may help in providing realistic information about future interest rates.
Finally, I will mention a number of issues concerning the role of the Riksbank in the event of entry into monetary union and the implications for our operations. But before I go into these issues I would like to emphasise a number of points. This is not a campaign speech. In 1994 and 1997, the Riksbank adopted a position in favour of Sweden joining monetary union from its inception. The General Council of the Riksbank was then of the opinion that the advantages of participation outweighed the disadvantages. However, the Executive Board of the Riksbank has decided against taking a position on the issue. We have interpreted our role as being a provider of factual information to make it easier for the Swedish people to form their own opinion on the matter. Having said that, there is nothing to prevent individual members of the Executive Board from expressing their personal opinion on the issue. We have all done that. I myself am in favour of Swedish participation in monetary union. The preparations Should a majority of the Swedish vote “yes” to the euro, work will begin to pave the way for Swedish entry into monetary union. The Riksdag is then expected during the autumn to make a formal decision that will enable Sweden in practice to become a member of monetary union.

Although developments in Iceland showed many of the same characteristics as those in some of the other Nordic Countries during the post-liberalisation rapid expansion, such as credit expansion, current account deficit, exchange rate depreciation and so on, Iceland escaped the difficulties suffered by banking systems in some of the other countries. Icelandic bank credit grew very rapidly in the late 1990’s and into the year 2000 and a sizable portion of the credit expansion was financed with credit from abroad. The capital adequacy ratios of banks fell for a while but nevertheless remained comfortably above the minimum required and internationally recognised levels. The year 2001 also turned out to be quite favourable for the banks, a development which continued by and large into the current year. Consequently, the capital position of the banks has improved and all the major banking institutions have relatively strong capital adequacy ratios at present. Loan losses have increased, as was to be expected in the wake of the credit expansion, but nowhere on the scale experienced in some of the other Nordic Countries a decade ago and very much less than they did during the downturn in the Icelandic economy around and after 1990. The conclusion to be drawn is, therefore, that the Icelandic banking system weathered the relatively turbulent post-liberalization boom period of 2000 and 2001 pretty well and is well poised to meet new challenges, including continued rationalisation and intensified competition from foreign banking institutions. In the most recent decades, the Icelandic economy has also seen structural shifts.
My response is that you do not need to see the words “financial stability” in the Federal Reserve Act for that to be a key part of our mandate. The Federal Reserve’s financial stability mandate is seen in the penumbra of the Federal Reserve Act, and that is legally sufficient. Without trying to cover this important topic exhaustively as in a formal legal opinion or a brief filed with a court, let me outline here the essence of the analysis. The starting point in every discussion of the Federal Reserve’s mandate is Section 2A of the Federal Reserve Act, known to many as the dual mandate. It directs the Federal Reserve “to promote effectively the goals of maximum employment, stable prices, and moderate longterm interest rates.”3 While there are actually three discrete objectives in the dual mandate, most economists would say that moderate long-term interest rates are a tool to produce maximum employment and price stability. Such economic reasoning also involves some clever and simple arithmetic – it reduces a tripartite mandate to a dual mandate. With respect to financial stability, leading economic thinkers would now say, and the financial crisis seems to offer us the perfect illustration, that price stability and maximum employment are possible only in a context of financial stability.

In this context, structural reforms, if properly designed, lead to greater prosperity in each country and, at the same time, ensure greater resilience of EMU as a whole, thereby contributing to economic and social stability. Growth and stability are therefore mutually reinforcing. The convergence process should consist of two legs: on the one hand, it should underpin the convergence of economic policies and structures at the national level. On the other hand, it should facilitate joint action. At the national level, convergence implies that euro area governments need to step up structural reforms, in particular those which have the greatest efficiency gains given the relative distance to best practices. And policy-makers should pay due attention to ensure that the burden of the adjustment effort is shared fairly. BIS central bankers’ speeches  1  The convergence in national structures could be complemented by joint action at the European level to increase investment and by the transfer of certain budgetary responsibilities to the European level with a view to strengthening risk-sharing within the currency union. But joint action can only occur once trust has been restored across countries and within countries, and the convergence process has advanced successfully. The level and the form of budgetary responsibilities, and how they are matched by appropriate democratic arrangements, should emanate from the political process. The biggest threat to the Single Market is not euro area integration: it would be euro area stagnation. The challenge of making the EMU work is far from over.
The spread between the rate of return on risky investments and the risk-free rate of interest has been historically high since the financial crisis. I think this has probably contributed to lacklustre investment and weak productivity growth over that period. But the risk premium seems to have taken another leg up since the EU referendum in 2016. And if you believe the surveys, the perceived downside risk in this case – the thing the firms seem to view most negatively – is a no-deal, no-transition outcome to Brexit. The economics also tells you that the value of waiting for relevant news – and therefore the disincentive to invest in the meantime – is higher if you think that news is going to arrive relatively soon. This helps to explain why the impact of Brexit uncertainty on investment seemed to intensify as we got closer to the assumed exit date of March 2019. It also explains why the firms most reluctant to invest have tended to be those that expect an early resolution to the Brexit process. It would be wrong to conclude from this that the best thing for investment is to resolve this uncertainty as soon as you can, by any means necessary. Deliberately choosing the outcome firms say they view most negatively is more likely to mean that capital projects that have so far been deferred are then simply cancelled. And however long the process actually lasts, investment is likely to perform better if firms don’t continually expect an early resolution in the meantime.

The blue bars in Chart 3 plot what firms expect to happen to their own output and employment in that case. And, over time, the impact of that nervousness has started to come through in the official data. It didn’t to begin with, in the first year or so after the referendum. The series is quite volatile, and prone to revision, so one should be careful not to over-interpret shorter-term movements. But on current estimates, business investment was 3% higher at the end of 2017 than in mid-2016. Chart 1: Businesses invest less when  Chart 2: Brexit is an important source of risk for  uncertainty is high  UK businesses  Sources: ONS, Bloomberg Finance L.P., CBI, Consensus Economics, Dow Jones Factiva, Eikon from Refinitiv, GfK (research on behalf of the European Commission) and Bank calculations. Growth in business investment is one quarter ahead. Sources: Decision Maker Panel and Bank calculations. 1  See Bloom et al (2019) for more information on the Decision Maker Panel. 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  Chart 3: Firms say output and employment  Chart 4: Investment has been weaker than in  would fall in a no-deal, no-transition Brexit  previous expansions  Sources: Bank of England and Bank calculations. See Bank of England (2018, 2019). Sources: ONS and Bank calculations.
A long term of office may also be advantageous from the standpoint of accumulation of experience, and may determine the capacity of influence in the different international fora in which the senior officials of supervisory bodies take part. In this respect, the term of office of the Governor (and of the Deputy Governor and Council Members) of the Banco de España – currently six years, nonrenewable in the case of the Governor and the Deputy Governor – although longer than a Parliamentary term, is relatively short by international standards (see Annex 4).8 A good benchmark for the future could be the term of office of the members of the ECB’s Executive Board which is set at eight years and is non-renewable (as is the case at the Bank of England). The explicit prohibition of renewable terms of office is, in my opinion, a key element that should be preserved. While few of our central bank peers share this characteristic, non-renewable terms of office are warranted because they nullify the incentives for the incumbents in the highest positions of authority at those institutions to ingratiate themselves with those who decide on their possible re-election. In the case of the Banco de España, as I have mentioned already, the Governor and the Deputy Governor have non-renewable terms, but the members of the Governing Council do not, since their term is renewable once. Non-renewable terms could therefore also be considered for members of the Governing Council.

In addition, the UK Commissioner for Public Appointments, who is responsible for reviewing the appointments of senior officials of more than 300 public agencies, approves the other appointments on the central bank’s Court of Directors. 7  According to Issues in the Governance of Central Banks, a study published by the Bank for International Settlements (BIS) in 2009, the power to appoint the Governor of most central banks lies with the Head of State or the Prime Minister (60% of the 47 institutions surveyed), while in 23% it lies with the Government or the Minister for the Economy and in just 11% with Parliament. In turn, according to the OECD (2016), “Being an independent regulator”, in most cases (more than 60%) it is the executive that nominates and appoints the members of senior management of regulators in the countries analysed. 7  I believe it would also be desirable to unify to some extent procedures for appointment of the senior officials of the various independent agencies existing in Spain. These procedures are currently highly disparate. The possible introduction of improvements in the appointment of institutions’ senior officials could also be accompanied by a reflection on their terms of office. Terms that extend beyond the electoral cycle are crucial to reinforcing the independence of individuals and, ultimately, of the institutions themselves.