samchain/econo-pairs-v1 huggingface dataset:
From that moment on, the Financial Stability report would not be merely another book in the library shelves of the Bank of Albania, but a valuable input to policy decisionmaking. Therefore, information becomes more complete, including the assessment of banking activity risks performance. This would mean that our philosophy becomes more preventive and more farsighted, because the collected information is used to minimise future risks. BIS central bankers’ speeches  1  We believe that these actions were the right therapy to buffer the effects of the global economic and financial crisis on the domestic banking sector and economy that appeared at the end of 2008. The shocks in the global financial system transmitted insecurity to the Albanian public and, subsequently, huge amount of deposits were withdrawn from the banking system. Additional need for liquidity as well as contraction of crediting during this period had a negative effect on the situation of financial resources, revenues and capital of the banking sector.

In addition, banking institutions and their staff need to reflect, in their public relations, the highest standards of security, communication and transparency, care and support so that this relationship of trust and confidence becomes a characteristic of mutual developments. The supervisory regulatory framework is being completed with a view to take these developments even further.   Banking supervisors, in turn, need to pay more attention to examinations and reports they prepare, integrity and behaviour that characterises the work of each bank.   Another great lesson we may draw from the crisis is to avoid at any cost huge concentrations and dependency on short-term financial funds. A top priority remains the adoption of prudent practices on risk management.   Composition and capacities of banks managing structures is another challenge for the banking industry in the future. The last crisis showed that in many cases, board members represented only short-term interests of shareholders, at the expense of other interests of the group. Likewise, their expertise and knowledge should be closely connected to specific activities of the bank.   The market and innovation move faster than the supervisor does. Therefore, any innovation or new banking product, prior to being marketed, needs to be tested responsibly, assessing carefully all potential accompanying risks. In a more national context, it is necessary and actually completely possible for the banking sector to accelerate the process of crediting revitalisation, a development that supports not only the economy and the clients, but also the banks.
Wellconducted monetary policy – which achieves monetary stability – reduces the scale of economic fluctuations over time, mitigating risks to financial stability. And a more stable financial system reduces the extent to which the financial system causes or exacerbates economic fluctuations, making the job of monetary policy easier. But the detail underneath this headline, how monetary policy and financial stability interact, is more complex. Monetary policy affects the whole financial system, “getting in all the cracks”[1], and so it affects financial stability via a number of transmission channels. First, monetary policy, by design, changes incentives to borrow. It does this by affecting interest rates[2] as well as the value of assets that can be used as collateral[3]. Similar effects can occur for lenders like banks. By affecting the value of their assets and liabilities, monetary policy can relax or tighten lenders’ solvency constraints, affecting their incentives to lend[4]. Second, monetary policy affects the assets financial institutions choose to hold. Changes in shortterm interest rates or Quantitative Easing (QE) affect the relative attractiveness of different assets. Investors may then adjust their portfolios, for example purchasing riskier corporate bonds[5]. Monetary policy can also affect investment decisions by changing investors’ risk tolerance[6] or their incentives to ‘search for yield’[7], although the strength of this risk-taking channel is  Page 4  debated[8]. Third, there is market liquidity, the ability to buy and sell assets easily. Liquidity is a key financial stability concern, and another area where monetary policy can have powerful effects.

That means we spend most of our time looking at the horizon, trying to spot the big risks to financial stability and to the economy – tail risks as we call them. And then we take actions in advance of those risks crystallising – known as macroprudential policies – to reduce their potential impact. The Bank has a number of other important responsibilities too. For example we have the Prudential Regulation Committee, which covers the microprudential supervision and regulation of individual banks and insurers. But today I want to focus on the MPC and FPC and how their different objectives for monetary and financial stability interact. These objectives are complementary: achieving one helps us to achieve the other. Indeed I like to think of them as two sides of the same coin. But the way they interact can be complicated. I’ll cover some theory on this, and consider a few of the shocks we faced recently. I believe the setup we have – close but separate committees – has handled these challenges well. As interest rates rise after well over a decade at very low levels, it’s an important time to look again at this topic. How do monetary policy and financial stability interact in theory? Now let me cover some of the theory of how monetary policy and financial stability interact. There’s a lot of it, so I’ll just mention the most important links. As I’ve already said, the headline is that monetary and financial stability are complementary.
Oil is back to $ a barrel (see Chart 2), while the Economist food index has fallen by over 30% (in dollar terms). Last week, we published our latest Inflation Report, laying out our current assessment of the outlook. It does not make for pleasant reading. Global demand fell sharply in the fourth quarter of 2008 and most forecasters expect a contraction in the advanced economies this year and negligible overall growth (see Chart 3). Here in the United Kingdom, GDP is estimated to have fallen by 1.5% in 2008 Q4. Business surveys point to a similar contraction in the first quarter of 2009. Household spending is declining. Investment intentions have fallen sharply. Credit availability has continued to worsen. And the four-quarter rate of growth of overall money spending in the economy has fallen to its lowest since 1959 (Chart 4). A sharp contraction in activity, both here and abroad, is already baked into the cake for the first half of this year. But there are grounds for thinking that conditions may start to improve later in the year, as there is a substantial economic stimulus already in the pipeline. First, since October, the MPC has cut Bank Rate by four percentage points to 1%, the lowest level in the Bank’s 315-year history. The dysfunctional credit markets mean that a given reduction in Bank Rate has less impact on the economy than in normal times. Even so, it still represents a powerful stimulus, which will take much of this year to work through.

In addition, Banque de France has launched in June 2017 “Le Lab”. Le Lab is a genuine Open Innovation laboratory: its goal is to bring new practices and technologies into our activities, and to that end experiment where necessary within short and flexible cycles. To do so, it works in close collaboration with innovative firms. And, we launched this year our first “suptech” program to promote the use of artificial intelligence in the performance of supervisory tasks. To illustrate how we can leverage on the daily contact with innovators, to help changing regulation or defining supervisory expectations, I will take the example of the on-going work on artificial intelligence by the ACPR Fintech team. When the ACPR published their report on AI in 2018, we made it clear that the purpose was not to regulate ex ante, with a risk of hindering a promising technology. However, it seemed to us important to raise at an early stage the key  issues of governance, ethics, auditability and explainability, in order to promote a sound development of AI in the financial sector. And the Fintech team did not stop there. They have been conducting experimentations with voluntary financial institutions or providers to explore these issues further, on a few significant AI use cases (AML-CT, internal models and consumer protection). Bilateral meetings were complemented by tests in real conditions, where ACPR experts and data scientists from the Banque de France were able to run algorithms, modulate parameters, test new population samples or compare different models.
Following the Barings episode, banks were required to publish their balance sheets on a monthly basis; whilst this heightened awareness of competition between the banks, ultimately it did little to change the role of the Bank in overseeing the sector. The Bank’s interaction with firms continued largely unchanged and the system of regulation relied on the Bank’s soft power (partly derived from its position as defender of the gold standard) and willingness to intervene in a crisis as the lender of last resort (or at least coordinate such a response). During the first half of the twentieth century, the status of the Bank (as a private institution with semi-public responsibilities and lack of statutory powers) explains in part why the system of regulation relied on a high degree of self-regulation and a light supervisory touch throughout the early decades of the 1900s. Nonetheless, in the rushing about at Threadneedle Street to deal with the Barings crisis more than a century ago I can clearly discern people doing what I and colleagues have had to do at various times when firms have been under stress over the last decade – it is called supervision. 5 6  Ibid, p.137 Ibid, p.148 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  A number of factors began to change the nature of supervision in the UK. First, the Bank’s nationalisation in the 1940s moved it onto a different footing as a truly public institution.

Extending the term of a deposit by a few days to mature exactly just after the boundary of the liquidity risk measure is compliant with the letter of the regulation – but the overriding principle of safety and soundness must be considered. Firms should expect supervisors to ask these questions and they should be prepared to defend their compliance, not only with the letter of the regulation, but also with our principles of prudence, effective risk management and adequacy of financial resources at all times. Indeed, our approach has been to bake the spirit of the law into the letter of the regulation, via our Fundamental Rules. These rules define broad principles which firms must respect in addition to their compliance with the detail of any particular requirement. The Fundamental Rules require firms to act prudently, to conduct their business with skill, care and diligence, to have effective risk management as well as adequate financial resources, and to be open and co-operative with the regulator. The Fundamental Rule requiring firms to maintain adequate financial resources is supplemented by the overall financial and liquidity 49  adequacy rules . These provisions require firms to look at their financial resources in the round, not limiting their assessment to the specific financial ratios set out in the regulation. Moreover, they are backed up in statute  50  by the PRA’s Threshold Conditions for authorisation of  deposit-takers and insurers, which stipulate that firms should have adequate financial resources and adequate non-financial resources at all times.
3  According to Eurostat business statistics data, (SBS_SC_OVW) in 2021 Spanish firms’ productivity (measured as sales over employment) in industry, construction and services, as compared with the average for French, German and Italian firms in the same size group, was 62% for firms with between zero and nine workers, 77% for those with between 10 and 19 workers, 75% for those with between 20 and 49 workers, 87% for those with between 50 and 249 workers, and 79% for those with more than 250 workers. 4  A persistent negative gap can also be seen when looking at investment in intangibles (Banco de España, 2018). A similar diagnosis can be drawn from certain international innovation indicators, such as the European Commission's European Innovation Scoreboard (2022) or the Global Innovation Index (WIPO, 2022). 5  Community Innovation Survey, 2018  6  See the White Paper on Tax Reform (Committee of Experts, 2022) and Almunia and López-Rodríguez (2023), forthcoming. 7  See, for example the assessments of the effectiveness of R&D tax incentives in: the United Kingdom, Guceri and Liu (2019) and Dechezleprêtre, Einiö, Martin, Nguyen and Van Reenen (in press); Canada, Agrawal, Rosell and Simcoe (2020); and the United States, Rao (2016).

There is a need to understand our competitive position, amplify our strengths and double our efforts in areas that we need to catch up. 16. For this purpose, the Financial Secretary tasked the HKMA in 2014, with the assistance of consultants, to conduct a reality check on Hong Kong’s competitiveness vis-avis our competitors and to devise a strategy to promote Hong Kong as the CTC hub in the region. 17. The reality check shows Hong Kong excels in many of the key factors that determine the competitiveness of CTCs. In terms of strengths as a business location, Hong Kong ranks third in the World Bank’s “Ease of Doing Business” ranking and third in the 2  BIS central bankers’ speeches  Global Financial Centres Index after only London and New York. We are also a leader in terms of access to capital markets. Hong Kong is a major international banking centre, with the presence of over 70 of the world’s top 100 banks. Our equity market is one of the most active in initial public offers. Benefited from the recent launch of the Shanghai-Hong Kong Stock Connect, the market capitalization of the Hong Kong Exchange has reached almost $ trillion as of two days ago. As of March 2015, it was the third largest exchange in Asia and the sixth largest in the world.
Accordingly, it was then decided by the MoF and the CB to use the funds so placed, as the nucleus of the Deposit Insurance Fund. Thereafter, the regular premia paid by the banks and finance companies, based on a pre-determined formula, could be credited to this new Fund, and thereby, build up the Fund. In order to implement such plan, an arrangement had to be made with the Government, in that, instead of crediting the abandoned property funds to the fiscal coffers of the Government, such funds could be retained by the CB for the purpose of initiating the Deposit Insurance Fund. In that manner, the new deposit insurance fund was created, and as a result, a long felt need was fulfilled! In fact, that scheme was innovatively designed not only to provide for a “pay out” in the event of a financial institution collapsing or being rendered dysfunctional, but also to provide funds for the purpose of reviving and/or restructuring viable financial institutions that face liquidity crisis from time to time. In that context, I am pleased to state that the Monetary Board has recently decided to invest a part of the fund to deal with some of the structural imbalances that have arisen in certain finance companies, so that such an infusion would encourage new investors to take over, revive and restructure such troubled institutions, with greater confidence and certainty.

We in the Bank consider research as very important because it forms the basis upon which we formulate our policies and execute our operations. To underscore this point, the Bank of Zambia launched the BOZ Reader series a few years ago as a means of having articles of economic interest being published for the benefit of the Zambian public. The three publications of the BOZ Reader that have been published so far have largely contained articles prepared by BOZ members of staff. However, our intention has always been to have a wider network of contributors. With the signing of this agreement, we hope to see more economics related research being undertaken by faculty members in the Department of Economics on behalf of the Bank. We further urge the University of Zambia to be a key and keen contributor to the publications. The University of Zambia Economics Department should coordinate with our Economics Department on this matter. In addition to the research fund, the monthly salary supplementation for faculty members in the Economics Department has been adjusted up by 64%. Meanwhile, the Bank has continued to recognize academic excellence among economics students at UNZA. For this reason, the bank has been providing fully funded scholarships to five outstanding economics students at third and fourth year levels. This support is also expected to shift to postgraduate economics programmes as soon as the modalities are agreed between the two institutions.
In this regard, the automatic adjustment of wages to inflation through the COLA mechanism, irrespective of the level of productivity, is one of the factors that has been contributing adversely to the cost structure of these enterprises, and consequently to their competitive position. Here I must reiterate that a currency union member country like Malta, whose only sustainable source of long-term growth are its exports, cannot afford to allow nominal wages to grow faster than productivity, which is what has happened during the past decade. The competitive position of these enterprises is also constrained by their ability to introduce more efficient production processes. The proportion of enterprises that did not undertake some form of restructuring last year was one of the highest in Europe. This is probably one reason why Malta has lagged behind its European peers in pursuing the targets set by the Lisbon Innovation Scoreboard, in particular in the areas of entrepreneurship and human resources. 6 Another frequently mentioned cost factor are administrative burdens. This is an endemic problem in Malta, confirmed by a recent survey in which a reduction in such burdens featured as the priority recommendation by executives of foreign-owned companies operating in Malta as a means of enhancing the attractiveness of the island to foreign investors. 7 Finally, with regard to the constraint represented by the small size of the domestic market, Maltese entrepreneurs have no option other than to attempt to break into foreign markets. This is not an easy task.

A number of banks have established dedicated funds or have tailored business packages that are specifically designed to meet the demands of small enterprises. In contrast, however, the concept of investing private money in small enterprises has yet to gain currency in Malta, and the commitment of government funds for the establishment of the first official venture capital fund has so far not been followed up by private investors. Conclusion Small businesses have undoubtedly contributed to the resilience shown by the Maltese economy during the recession. Indeed, the majority of emerging niche industries in both the manufacturing and the services sector belong to this category. Going forward, they could also play an important role in sustaining the recovery. This calls for the creation of a more  8  Flash Euro Barometer No. 196 – Observatory of European SMEs. BIS Review 50/2010  5  congenial environment, which not only allows entrepreneurship to flourish but also focuses on the ingredients that will become increasingly important in the post-crisis economic environment. These include a greater emphasis on innovation, research and development and marketing, drawing on EU and public and private financial assistance schemes. Without such a proactive orientation, small businesses cannot hope to overcome the limitations inherent in a small domestic market. 6  BIS Review 50/2010
After a period, the rise in prices for domestically produced goods and services also slowed. Inflation measured by the CPI-ATE reached its lowest level in the first months of 2004. Inflation remained at less than ½% until after the summer before picking up in the autumn. Inflation moved up primarily as a result of a slower decline in prices for imported consumer goods. The depreciation of the krone since the beginning of 2003 has contributed to these developments. In addition, the rise in prices for domestically produced goods and services stabilised, and towards the end of 2004 there was a tendency towards a higher rise in prices for these goods and services. Prices for imported consumer goods fell more than expected at the beginning of 2005, while the tendency towards a more rapid rise in prices for domestically produced goods and services has persisted. So far in 2005, inflation measured by the CPI-ATE has been around ¾ per cent. The other Nordic countries have also experienced falling inflation. Inflation has declined, and is now relatively low in Sweden, Denmark, Finland and Norway. The year-on-year rate of underlying inflation in these countries was around 1 per cent in March. A common feature of the low level of inflation in the Nordic countries seems to be the sluggish trend in prices for imported consumer goods, even though developments have not been entirely the same in all the Nordic countries. BIS Review 34/2005  1  Reliable information about the economic situation is important when setting the interest rate.

At times where there was still high uncertainty, and there was a higher demand for safety and liquidity, the long-term interest rates of various public instruments in Chile went to record lows. As this uncertainty faded, the precautionary demand followed suit, pushing up long-term interest rates in pesos and in UF until the end of May. In the last couple of months, because of a string of episodes of higher and lower doubts about the true strength of the global recovery, long-term interest rates have fluctuated, but always above the levels of early this year. A similar pattern has been seen in long-term interest rates around the world (figure 2). We are not indifferent to the evolution of long-term interest rates. This is evident from the facts that, to enhance our last monetary policy measure, we have not only begun providing liquidity at the current MPR level for up to six months, but we have also suspended issues of instruments at one to two years’ terms. Furthermore, we permanently take into consideration bond issuance plans of the Treasury before defining our own programs. Nonetheless, it is necessary to undertake a careful analysis of the long-term interest rate levels to properly assess their implications. After all, very low long-term rates are a symptom of depressed prospects for long-term growth and strong demand for safety.
The founding fathers of the euro knew this. Yet, we know from psychology that the first seven years of a person’s life are the most important ones and critically influence how he or she will behave as an adult. Judging from the first years of the euro, we can be confident that our currency will be up to the challenge. Thank you for your attention. 6  BIS Review 20/2009

I believe that the line-up of expert contributors for this Programme will 2/3  BIS central bankers' speeches  be able to provide delegates with insightful perspectives on best practices to lead the transition to sustainability. The network built today among delegates can continue and be built upon for future collaborative initiatives, either through a local platform by IBFIM or internationally, through CISL. To end my remarks, I would like to share this quote by Winston Churchill, “I never worry about action, but only inaction.” With that, I wish all of you a productive programme. Thank you. 1 Industries Most and Least Impacted by COVID-19 from a Probability of Default Perspective – September 2020  Update 2 COVID-19 to Add as Many as 150 Million Extreme Poor by 2021  3/3  BIS central bankers' speeches