samchain/econo-pairs-v1 huggingface dataset:
This perception, however, is incorrect for a number of reasons. First, the “euro project” is to be seen as a further logical step in the European integration process, which started more than half a century ago, immediately after the Second World War. Its objectives were not - and are still not - purely economic, as European integration aims not only at the creation of a prosperous but also a stable and peaceful Europe. For a large part, trade, economic and financial integration aimed at the removal of all barriers to free competition has been the engine of this process. In this context, the euro is to be seen as a major contribution to the completion of the Single Market in Europe. The primary objective of the ECB is to maintain price stability in the euro area. Second, the international use of the euro is, first and foremost, the outcome of a market-driven process, not to be steered by central banks or by political bodies. The ECB has adopted a neutral stance on the internationalisation of the euro. The ECB intends neither to foster nor to hinder the use of the euro. In the past, major countries have, at times, tended to promote the international use of their currency, primarily with a view to potential benefits for their national financial sectors. There have also been cases in which major countries have resisted the internationalisation of their currency, owing to the uncertainties that this process may imply for the conduct of monetary policy.

For these countries, accession to the EU will mark the completion of the transition from the former centrally planned economies to fully-fledged market economies. The prospect of EU membership is an incentive for transition efforts of accession countries and the ultimate adoption of the euro is already taken into account in their monetary and exchange rate policy strategies. However, the countries concerned will not adopt the euro by the date of their entry into the EU and the timing for this step might be quite different from country to country. The path towards full euro area participation implies progress towards nominal and real convergence. Ultimately, these countries are required to observe the same convergence criteria with regard to public finance, long-term interest rates, exchange rate stability and inflation as the current euro area countries. In the legal area, accession countries will be required to provide their central banks with the same degree of independence as today in the euro area. In the technical area, preparations will require long lead times, and the ECB has already established a dialogue with them, to assist when requested. Outside the euro area, an ongoing debate on deepening regional integration beyond trade liberalisation is taking place among Mercosur countries. The relative economic conditions of these countries appeared even more differentiated than those of European countries when the integration process started more than fifty years ago.
The aggregate net book value of permitted property holdings will be subject to a revised Section 33 limit of 20% of a bank’s capital funds (reduced from the existing 40%). The 20% limit translates into less than 5% of each of the local bank’s total assets currently. It will apply on the basis of both bank and group capital. As with the present Section 33, properties held for the purpose of the bank’s business premises will be excluded from this limit. But whilst the present Section 33 applies only to properties directly held by banks and their subsidiaries, the new limit will also include properties held by companies in which the banking group has shareholding of 10% or more. Investments made by insurance funds Most of the local banks have insurance companies within their groups. These insurance companies present a slight complication. They invest two separate types of funds: the equity in the company belonging to its shareholders, and the insurance funds managed by the company but belonging to the policyholders, For example, the life fund of life insurance companies. Portfolio investments made using the shareholders’ funds of the insurance companies will be subject to the same single security limit of 2% of the group’s capital funds and the limit of 10% of the investee company’s capital. The portfolio limits for the banking group as a whole will therefore include the investments using these shareholders’ funds of their insurance companies.

For many years the Glass-Steagall Act restricted commercial banks even from certain other financial activities, particularly investment banking and insurance, much less non-banking business. Now that Glass-Steagall has finally been repealed, allowing for more competitive banking institutions, the US Federal Reserve Board is proposing that US financial holding companies should only undertake a well-defined range of approved activities. BIS Review 53/2000  2  In the UK, there is no legal prohibition on banks participating in non-financial activities. But in practice few of the banks do so. This is partly the result of stringent treatment of capital adequacy by the regulator - banks are required to deduct from their regulatory capital dollar for dollar of any investment they make in non-financial activities. It is also because the banks are widely held, with no dominant shareholder who has other non-financial interests. The banks therefore have little incentive to control non-financial companies through their investments. Germany has had a different approach. German banks have traditionally held major long-term equity stakes in industrial groups, such as Daimler-Benz or Thyssen. This arrangement gave the industrial groups long-term strategic shareholders, who could look beyond the next quarter’s financial results. But it has also frozen the structure of the industrial groups, and prevented them from merging, restructuring and rationalising, as US companies have done. It has made it harder for the banks to deploy their assets flexibly, to maximise their own returns, and to become as spry and competitive as US banks.
We’ve also taken two steps to improve our communication of the Fed’s monetary policy strategy and plans. First, we released a statement of our longer-run goals and strategies – essentially, a declaration of our monetary policy principles.7 That statement noted that we view a 2 percent inflation rate as most consistent with our mandates. It also emphasized that we will continue to balance our goals of maximum employment and price stability in making policy. Second, we now regularly report our views about the probable course of short-term interest rates over the next few years. Under current economic circumstances, most Fed policymakers judge that near-zero short-term interest rates will be appropriate well into 2014. In this way, our interest rate forecasts reinforce our public guidance. Releasing the views of policymakers in this fashion should further reduce public uncertainty about our plans. And that, in turn, improves the effectiveness of our policies. We at the Fed are broadening our commitment to openness and accountability. And we’re doing all we can to carry out the mission Congress gave us. The Fed’s powers are limited. Lower interest rates alone can’t fix all the economy’s problems. But monetary accommodation is indispensible. The economy would be in much worse shape if the Fed weren’t acting so energetically. Looking ahead, we may need to do more if the recovery falters or if inflation stays well below 2 percent. If the economy does need more stimulus, restarting our program of purchasing mortgage-backed securities would probably be the best course of action.

For instance, the Economist magazine estimated that about USD 500 billion to USD 1.5 trillion is laundered through banks each year. Further, the Financial Action Task Force (FATF) - an intergovernmental organization under the auspices of the Organisation for Economic Co-operation and Development (OECD) also estimates money laundering to be in the ranges of USD 590 billion to US1.5 trillion. As a percentage of world economic output, money laundering accounts for about 2% to 5%. Obviously, given the secrecy and the illegal nature of this business, it is difficult to tell exactly the extent of money laundering. Nevertheless, these figures give us an indication of the magnitude of the problem. In this regard, financial institutions, in particular, banks provide a conduit through which money (including laundered money) flows. Because of this, the financial system is the focal point of antimoney laundering initiatives because dirty money is most visible when it is first introduced into the financial system. Ladies and Gentlemen, before I proceed in discussing the various aspects of money laundering including stages in money laundering, its effects on the economy, the global and local initiatives to fight money laundering and the role that banks can play in combating money laundering, allow me to define what money laundering is. For the purposes of my presentation today, I shall define money laundering as the method of hiding, mixing and disguising the proceeds of criminal activities through legally operating institutions for the purpose of destroying the origins of the proceeds.
Domestic demand should also be further supported by our monetary policy measures leading to ongoing improvements in financial conditions, as well as by the progress made in fiscal consolidation and structural reforms. Moreover, demand for euro area exports should benefit from improvements in price competitiveness and from the global recovery. However, the euro area recovery is likely to continue to be dampened by the necessary balance sheet adjustments in various sectors and the rather slow pace of implementation of structural reforms. This assessment is also broadly reflected in the March 2015 ECB staff macroeconomic projections for the euro area, which foresee annual real GDP increasing by 1.5% in 2015, 1.9% in 2016 and 2.1% in 2017. Compared with the December 2014 Eurosystem staff  BIS central bankers’ speeches  1  macroeconomic projections, the projections for real GDP growth in 2015 and 2016 have been revised upwards, reflecting the favourable impact of lower oil prices, the weaker effective exchange rate of the euro and the impact of the ECB’s recent monetary policy measures. The risks surrounding the economic outlook for the euro area remain on the downside but have diminished following recent monetary policy decisions and the fall in oil prices. According to Eurostat’s flash estimate, euro area annual HICP inflation was –0.3 % in February 2015, after –0.6% in January. The negative outcomes largely reflect the impact of the significant fall in oil prices since July 2014.

To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirms the appropriateness of the Governing Council’s recent decisions. The determined implementation of all our monetary policy measures will provide support to the euro area recovery and bring inflation rates towards levels below, but close to, 2% in the medium term. 2  BIS central bankers’ speeches  Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic activity. However, in order to reap the full benefits from our monetary policy measures, other policy areas need to contribute decisively. Given high structural unemployment and low potential output growth in the euro area, a cyclical recovery along the lines of the March ECB staff projections is no grounds for complacency. In particular, in order to increase investment, boost job creation and raise productivity, both the decisive implementation of product and labour market reforms and actions to improve the business environment for firms need to gain momentum in several countries. It is crucial that structural reforms be implemented swiftly, credibly and effectively, as this will not only increase the future sustainable growth of the euro area but also raise expectations of higher incomes and encourage firms to increase investment today, bringing forward the economic recovery. Fiscal policies should support the economic recovery while remaining in compliance with the Stability and Growth Pact.
In the public sector, where employment growth has been strong the last few years, budgets will only allow a moderate increase in employment in 2003. Overall, employment is projected to fall by ½ per cent in 2003 and remain unchanged in 2004. Employment followed a similar course in the early 1980s. At that time, employment rose markedly as a result of continued strong growth in the labour force. Labour force participation in Norway is currently at a record-high level, and the demographically determined supply of labour is low. At the same time, labour force growth may be lower than implied by demographic trends for various reasons. More people may choose to study until the situation in the labour market improves. Some of the unemployed may exit the labour market on retirement schemes. Outflows from the labour market and low labour force growth as a result of demographic trends may limit the increase in unemployment. Nevertheless, unemployment is projected to rise, especially in manufacturing. The increase through 2002 primarily reflects a rise in unemployment in the service sector. Manufacturing unemployment remained stable until end-2002, but has increased substantially in the last few months. More lay-offs and lower expectations regarding manufacturing employment point to increased unemployment in the manufacturing sector ahead. In addition, statistics show a 40 per cent reduction in the number of  1  Labour costs’ share of value added after direct and indirect taxes (factor income). BIS Review 14/2003  3  vacancies in manufacturing advertised in the last year.

Svein Gjedrem: Monetary policy and the economic situation Speech by Mr Svein Gjedrem, Governor of the Central Bank of Norway, at a meeting of the Troms Fish Farming Association, Harstad, 13 March 2003. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 5 March and on previous speeches. Please note that the text below may differ slightly from the actual presentation. The Charts in pdf can be found on the Norges Bank’s website. *  *  *  The operational target of monetary policy as defined by the Government is inflation of close to 2½ per cent over time. Norges Bank sets the interest rate so that future inflation will be equal to the inflation target of 2½ per cent. Interest rates were reduced this winter in response to the change in the inflation outlook. The inflation projections were revised downwards as a result of weaker cyclical developments in the world economy, a sharp drop in interest rates internationally and a strong krone. In addition, the Norwegian business sector is feeling the effects of the high Norwegian cost level. Moreover, growth in domestic demand has slowed. Household purchasing power has been reduced as a result of higher electricity prices. The weak prospects at home and abroad are in turn having an impact on the Norwegian labour market and the outlook for wage growth and inflation in the years ahead.
A bank must hold enough capital to cushion both depositors and senior lenders against losses, while leaving the bank able to meet the needs of its customers. Banks must maintain capital commensurate with the amount of risks that they take and hold enough to weather financial storms, which can at times be severe and of considerable duration. Banks with low equity capital ratios and a high variability of operating earnings have proven particularly vulnerable to financial distress. However, banks do not just hold capital to overcome distress, but also because it provides them with financial flexibility. Banks that are strongly capitalized can take advantage of growth opportunities. Also, strongly capitalized banks are better able to promote innovation, whether in the form of new products, new services or new distribution channels. This is not just a capital resource issue, but a human resource issue. Bank managers who are able to focus on the business of banking, strategy and competition, rather than on financial difficulties, can create and innovate and, therefore, add value for shareholders. Banks also hold capital as a sign of strength to their customers. Clearly we know this to be true with depositors on the retail side, but it is equally true on the wholesale side. When an institution or corporation enters into letter of credit guarantees or swap contracts, it needs to be confident that its bank will be around in three or five years, at the maturity of the contract.

The relevant monetary policy trade-off at this juncture, then, is not the traditional one between inflation and growth but between inflation and growth on the one hand, and financial stability on the other. How, then, should central banks respond to this new trade-off? I see three main avenues. First, central banks need to expand their set of policy tools. Measures to limit excessive risk-taking in the boom and limit losses in the bust, such as counter-cyclical capital requirements, leverage limits, and stable funding ratios are the most obvious additions. These fall under the heading of macroprudental tools. For emerging markets where the brunt of the impact from excess global liquidity 6  has been felt in exchange rates, capital flow management measures would help to alleviate these pressures. Moreover, central bank operational frameworks – such as collateral rules that dictate which types of securities can be pledged for central bank liquidity, the types of assets central banks choose to hold, or the structure of liabilities that they choose to issue – offer ways to influence certain segments of financial markets directly. The challenge going forward is to operationalize these micro and more targeted policy tools in a systematic way. Here it is important to stress that any one set of instruments working alone is unlikely to be sufficient. Interest rate policy, macroprudential levers, and capital flow management measures all interact and their application should be viewed as a whole rather than in isolation.
Accordingly, a commitment to rationalise costs must be a management priority for banks. The third and final challenge that will exert even more pressure on banks’ income statements in the coming quarters also arises from the weakness of the economic situation. Apart from the global deceleration, which primarily affects consumption and capital investment, we must not forget that the Spanish economy is in the midst of adjustment in the property sector. This adjustment had already begun, gradually, before the summer of 2007, bringing the sector progressively into line with the change in the determinants of residential investment. This gradual rate of adjustment was altered by the international financial crisis, which established a climate of mistrust and uncertainty which, in turn, intensified the slowdown. The consequence for the banking sector has been a rapid growth in doubtful assets ratios since end-2007. This growth has been recorded across-the-board, but especially in construction and property development. Despite the counterweight provided by the existence of the general provision in Spain and the very low starting levels of the doubtful assets ratio, this has led to the need for greater credit write-downs, which have to be taken to the income statement, and that is the third reason why profits will be under pressure in the banking sector. What must we do in this situation? Having reached this point, allow me some reflections on what we should do to address this situation.

In my opinion, we are now entering the third phase of the crisis, which banks are facing from different starting points, according to the extent to which they have been penalised in the first two phases. The basic characteristic of this phase will be the sharp slowdown in the most developed economies which will, in turn, be adversely affected by the global slowdown in lending. The recessionary tendencies are going to pose further problems for banks in the next few quarters although they will be more traditional, limited and familiar than those experienced so far. The factors which have given rise to such a dismal outlook as that described are diverse and have all interacted with one another. Let me present them now, merely so as not to bore you,  BIS Review 133/2008  3  as a chain of errors committed by all the agents that have participated in the financial system. To start with, the institutions that granted loans made mistakes, especially in the United States, where the originate-to-distribute model became widespread. In the United States, in the years preceding the summer of 2007, lenders granted mortgage loans against collateral (real estate), whose value rose ever higher, generating incentives to lend to individuals with the lowest credit quality.
The great efforts of other public sector organisations, led by the Office of the Principal Permanent Secretary and Malta Enterprise, to radically streamline business enabling procedures across the board, are critical if we are to succeed to radically upgrade the business environment. I insist on the word “radical” because only a radical upgrade (an upgrade from the very roots of the system) will make a difference. We need to enhance competition. It is essential to ensure that consumers and businesses can acquire the goods and services they need at fair prices. Within the banking system, we believe that there remains scope for payment services charges to respond to more  Page 7 of 8  competition and for further pass-through of the current low interest rates to customers, although it is encouraging that we have seen reductions in recent months. Fast economic growth does not come without some pain and costs. Infrastructure  development has not kept up the pace and translates into practical problems. There are no easy solutions to such problems. Building infrastructure takes time and adopting urban development policies is inevitably complex, especially in a very small island where every space is somebody’s back yard. At an international level, as an extremely open economy, we need to take a resolute stand against policies that close borders to trade and to international flows. As a small open economy we need to defend open borders and globalisation.

However, as the last line of defense, monetary policy can be used to lean against the winds of excessive asset prices. The prudential measure we implemented some time ago – a loan-tovalue limit of 90 percent for condominium purchases – is an example. The measure in itself is not particularly binding; it is more significant as a pre-emptive move designed to signal policy resolve in mitigating possible build-up of real estate bubbles. At present, the risk of real estate bubbles is not significant but should capital inflows surge again amid strong  BIS central bankers’ speeches  3  domestic demand and credit growth in real estate, macro-prudential measures may need to be tightened. On capital flow liberalization, we are moving to liberalize capital outflows so as to foster more balanced capital flows. This will help to balance fund flows and support exchange rate movements in line with economic fundamentals. In addition, with the rise of the AEC, crossborder investment will facilitate regional competitiveness and realize supply-chain synergies. Lastly, on financial sector liberalization, ongoing financial sector reform will also build financial sector resiliency to shocks from within and without. Thailand’s financial master plan, now in its second phase, continues, and focuses on liberalization through increased competition, raising efficiency, and strengthening the financial infrastructure. We also view an efficient financial sector as supportive of unleashing long-term engines of growth, such as structural change.