samchain/econo-pairs-v1 huggingface dataset:
4  Recently, a group of economists agreed to and published a “consensus narrative” of the causes of the eurozone financial crisis, focusing on the external imbalances across countries within the eurozone, which led to a sudden stop in lending, and the flow of capital, across those countries. See http://www.voxeu.org/article/ez-crisisconsensus-narrative and http://www.voxeu.org/content/eurozone-crisis-consensus-view-causes-and-fewpossible-solutions. 2  BIS central bankers’ speeches  1)  Significant signs of financial distress in the banking system (as indicated by significant bank runs, losses in the banking system, and/or bank liquidations)  2)  Significant banking policy intervention measures in response to significant losses in the banking system. To be clear, and to apply this definition to the U.S. crisis in 2007–09, I’ll expand it from the banking system to the financial system more broadly, as many financial firms that experienced distress during the most recent crisis weren’t licensed as banks. It may seem odd to include policy interventions to be counted as a sign of a financial crisis, but when deposit insurance and lender of last resort services are available, a crisis may not kick off a bank run. That means the government must intervene to keep the stress from worsening, and so extraordinary action by the government can itself be a gauge of the severity of a crisis. Laeven and Valencia review the frequency of financial crises around the world and count 147 crises since 1970. What problems are caused by a financial crisis?

The U.S. Treasury and the Federal Deposit Insurance Corporation extended guarantees for money market mutual fund shares, issuance of certain types of debt by bank holding companies and unlimited amounts of deposits in transactions accounts of commercial banks. Later, with the passage of the TARP legislation, the federal government addressed the excessive leverage and shortages of lossbearing capacity through the injections of capital in October 2008 and in April 2009 in conjunction with the Supervisory Capital Assessment Program, or stress test of the major U.S. bank holding companies. Ultimately, the 2007–09 crisis was about both leverage and liquidity in the financial system as a whole, and not only in the tightly supervised sector of banking firms. This suggests that official sector efforts should aim at forward-looking monitoring of financial vulnerability that take both leverage and maturity transformation into account, and to broaden supervision to include broader coverage of the financial sector. In addition to many other efforts, the Federal Reserve is conducting tests of exactly that sort through its capital and liquidity assessments, the Comprehensive Capital Analysis and Review, or CCAR, and the Comprehensive Liquidity Analysis and Review, or CLAR. CCAR is the Federal Reserve’s annual process for evaluating capital adequacy of large and complex financial firms under normal and stressed conditions. CLAR is the Federal Reserve’s annual, horizontal exam to evaluate the liquidity position and liquidity risk management practices of those firms.
In the last few days, these prices have recovered a little, but volatility remains unusually high (cf. graph 1). Graph 1: prices of securities backed by sub-prime mortgages with AAA ratings 1  105  100  95  90  85  80  75 10.10.06  1  29.11.06  18.01.07  09.03.07  28.04.07  17.06.07  06.08.07  25.09.07  14.11.07  US Subprime Residential Mortgage Backed Securities price index (ABX.HE, subprime RMBS), 2-2006 vintage with AAA rating. Source: Markit. BIS Review 150/2007  1  Crisis caused by high risks, insufficient transparency and inadequate risk management The sub-prime segment accounts for 12 to 15 percent of the US mortgage market. The US mortgage market, in its turn, corresponds to significantly less than 10% in value terms of total bonds and shares traded worldwide. How was it possible, then, that problems which were initially limited to just one segment could spread, triggering such widespread turmoil? Unfortunately, a lot of what has been unfolding has confirmed our fears of last June. First, it has become evident that the risks incurred by many banks were too high overall. There was an ever increasing willingness on the part of banks to accept high risk, which, for example, resulted in strong growth in lending and expanding balance sheets. Moreover, markets probably assessed existing risks too optimistically, as was evident in view of the extraordinarily low risk premiums on bonds, for example.

This has strengthened banks' earnings situation in areas outside of the real estate business, thereby enabling banks affected by the credit crisis to compensate part of their losses. If the  2  Benchmark index of credit default swaps (CDS) on US securities covered by commercial mortgage-backed securities (commercial MBS), 2-2006 vintage with AAA rating. Source: Markit. 3  "Delinquency Rate on Credit Card Loans (All Commercial Banks)", USA. Source: Federal Reserve. BIS Review 150/2007  3  general economic environment were to deteriorate, this previous important source of stability would be adversely affected. Nevertheless, we must stress that the banks are still operating in a stable real economic environment, and that economic data from Europe, Latin America and Asia continue to provide evidence of robust growth momentum. What can be learned from the current crisis? How can we ensure that the kind of market turmoil we are experiencing at present can be avoided in the future, or at least does not occur on this kind of scale? And how can we make sure that the banking sector will be in a position to emerge from comparable or even worse disruptions unscathed? Once again we need to stress that definitive conclusions cannot yet be drawn because the current crisis has not yet been overcome. However, as initial provisional lessons from the crisis, the following points seem particularly important to me. First, banks need to improve their transparency on a sustainable basis.
This weakens the balance sheets of other banks holding the same type of assets. Systemic risk also arises from externalities in the interaction between the financial system and the real economy. Financial crises generally occur following a period of mutually reinforcing increases in credit, property prices and demand for goods and services, culminating in a bubble that reaches bursting point. Each individual loan makes a scant contribution to overall risk, but gradually, as debt burdens increase, the economy becomes more vulnerable to shocks. Chart 1 shows that Norway has also experienced periods of especially strong credit growth that have been interrupted by financial crises. The subsequent losses in the real economy have been substantial. Ahead of both the banking crisis of the 1990s and the financial crisis, lending growth far outpaced growth in deposits. Banks relied increasingly on short-term wholesale funding, exacerbating the vulnerability of the banking system itself. Wholesale funding often dries up or becomes considerably more expensive in turbulent times. Banking regulation must therefore include a macroprudential perspective. The purpose is to dampen the build-up of systemic risk and ensure that the banking system as a whole is resilient to shocks. In a number of countries, frameworks are now being established for macroprudential regulation, along with efforts to put policy instruments in place. In Norway, the Financial Institutions Act has recently been amended, with effect from July 2013. The amendments have been harmonised with new EU regulations. The amended act sets higher capital requirements for Norwegian banks and includes a countercyclical capital buffer.

This was a fundamentally different approach to that taken in QE, where the goal was to achieve the MPC’s stock targets. As a consequence, our eventual total purchases were far lower than some early estimates – and that, combined with the short holding period, very clearly differentiated the LDI operations from the much larger and more persistent path of QE holdings (Figure 4). Page 11  Judged against the criteria we set ourselves, these operations were highly successful, a view supported by most market participants and commentators. But there were many important learning points for us, and for anyone contemplating such operations in the future too. The first is simply to underscore the value of effective preparation across every element of design. As I mentioned at the start, we had benefited substantially from the thinking of the BIS working group in the months ahead of the LDI crisis. Establishing and communicating a rigorous approach to governance is critical. Ensuring your operations genuinely are temporary is a vital but high stakes decision: make sure your deadlines are credible and clearly communicated. Most importantly of all, invest heavily in how you want to price your facility. The standard MMLR theory of operating at a spread wider than in normal market conditions but narrower than in stressed conditions is nice in theory.
We at the Dallas Fed have investigated the links between wage inflation and the unemployment rate using the aggregate data that are available for the U.S., and also using state-level data. These investigations have led us to three main conclusions. First, wage growth responds to the unemployment rate with a lag. That’s no mystery: Many employers adjust wage and salaries just once each year. Second, wage growth becomes increasingly sensitive to the unemployment rate as the unemployment rate reaches lower and lower levels. A drop in the unemployment rate from 9 percent to 8 percent may not do much for the negotiating leverage of the typical worker. But the story is different when the unemployment rate drops from 6 percent to 5 percent or below, for example. Finally, taking these two factors into account, there’s been nothing at all unusual about the behavior of wage growth over the period since the national unemployment rate peaked nearly five years ago. We went through a deep recession. Coming out of a deep recession, it takes time for the unemployment rate to reach levels where wage growth picks up noticeably. Wage growth was about 1½ percent in both 2010 and 2011 – not too surprising, given that the unemployment rate was 9.9 percent in the final quarter of 2009 and, at 9.6 percent, nearly as high in the final quarter of 2010.

Here is the CliffsNotes summary: The play opened with the great financial tempest of 2008–09, during which it appeared the ship of the mighty American economy would founder. A humble, once unassuming but suddenly daring captain named Ben Bernanke took firm control of the nation’s monetary helm in Act II, working with his officers – the FOMC – to contrive innovative ways to keep the economy afloat by jury-rigging monetary policy and adopting radical tactical maneuvers. These efforts succeeded in steering the ship of the economy away from the shoals of depression and deflation and into more tranquil waters. Act III began with a recovering economy heading on a more promising course. But the headway being made was substandard, hindered by the flotsam and jetsam of fiscal incompetence and rising fears of a new storm brewing in Europe. In an effort to propel the economy forward at a better clip, the FOMC commanded that unprecedented amounts of monetary fuel be provisioned for the financial system through large-scale asset purchases, the proceeds of which were pumped into the stores of banks. But as Act IV began, the banks lingered in the wings rather than taking center stage. Rather than shovel their abundant means into their loan boilers, they were parsimonious and hoarded their fuel. Other members of the financial fleet, however, were heartened by the turn of events, especially those who finance themselves through the issuance of stocks and bonds rather than through bank loans.
This was a higher rate of inflation than the Central Bank had expected. Revised macroeconomic aggregates published in mid-September also showed that the economy is more robust than preliminary statistics had indicated. It should be pointed out that the labour market is still extremely tight, with unemployment of less than 1% in spite of large-scale imports of labour. The only conclusion that can be drawn is that inflationary pressures are still stronger than had been expected, and the challenge ahead correspondingly greater. I repeat that this will not be solved with a laxer monetary policy or changes to the monetary policy framework. Reining in inflation is vital for the interests of households and businesses. Iceland now has the same monetary policy framework as many other countries. Most of them have been more successful than we have in containing inflation. Neither have they had to accommodate investments on the scale that Iceland has witnessed, relative to the size of the economy, and their domestic capital markets have not undergone as extensive and sharp changes as Iceland experienced when the banks entered the mortgage loan market. At the same time it is unlikely that household disposable income in any country has risen on the scale seen in Iceland over the past two years. In most countries it is considered natural to set price stability as an objective for central banks. They can only have a short-term impact on other aggregates. Under present conditions Iceland has no option of a different monetary policy framework.

This has complicated the Bank in its efforts to constrain inflation in recent times. One factor has been the changes that took place in the mortgage loan market in autumn 2004 when the commercial and savings banks began competing with the Housing Financing Fund (HFF). The Central Bank’s policy rate hikes impact the interest rates of non-indexed lending by commercial banks and savings banks and the non-indexed end of the domestic bond market. However, for a long time they had little impact on long-term interest rates. Some critics cite this as proof that the Central Bank of Iceland’s measures do not have the same effect as those of other central banks. Yet the development in Iceland is by no means an isolated occurrence. The US experience offers an immediate example. The Federal Reserve began raising its federal funds rate early in 2005 in progressive steps until early this year, from 1% to 5.25%. These hikes had no effect on long-term interest rates in the US, which have been broadly steady since 2005 apart with only minor fluctuations in either direction. US monetary authorities were puzzled by this development. I cite this example because it has been claimed that, unlike the Central Bank of Iceland’s decisions, the impact of changes in the Federal Reserve’s rates is immediately transmitted in full to long-term interest rates.
Indeed, a coherent operational framework has been provided for the co-ordination of economic policies through close mutual surveillance (under the responsibility of the "Euro Group" and the Ecofin Council) and through the implementation of the Stability and Growth Pact, as I mentioned earlier. Moreover, the Broad Economic Policy Guidelines, discussed each year by the Heads of States and Governments, help monitor macroeconomic and structural developments in the Member States. 3  I will recall some Treaty provisions that gave rise to the Stability and Growth Pact’s importance: -  By supervising the fiscal policies of the euro area Member States, the pact together with the Broad Economic Policy Guidelines ensure the appropriate policy mix within the euro area. This is essential for monetary policy, to counterbalance the fact that Europe does not have a significant federal budget, just as it has no federal government. -  The pact also helps prevent well-managed economies from having to bear an unjustified risk premium by setting up a penalty system for excessive deficits. As regards the second common reproach against EMU, that is to say the lack of instruments to respond to asymetric shocks, I would like to stress that the Stability and Growth Pact itself allows us to disprove this assertion. Indeed, by urging governments to aim at a fiscal position "close to balance or in surplus" in the medium term, the pact enables them to let fiscal deficits increase providing that they do not exceed the 3% reference value.

Indeed, real convergence is essential to create economic cohesion within EMU and promote integration between Members States, thereby helping to minimise the risk and the effects of asymetric shocks. The Eurosystem, and notably the Banque de France, is following the enlargement process with a great deal of attention. Let me stress a few points of particular relevance for the Eurosystem and for accession countries themselves, on the road towards catching up with the EU and achieving convergence. -  Firstly, nominal convergence with the EU constitutes a medium-term objective. The strict compliance with Maastricht criteria will be key for joining the euro area, but should not be seen as an immediate requirement to join the EU. Indeed, the EU Treaty calls, as a prerequisite for adopting the euro, for a high degree of sustainable convergence, which presumes that sufficient preliminary progress has been made towards real and structural convergence. Therefore, nominal and real convergence should be pursued in parallel, and are not conflicting. -  Secondly, I noted that many accession countries have already expressed their intention to join ERM II as soon as possible after EU entry. This intention is to be welcomed, although it should be clear that ERM II membership needs neither to happen immediately after EU accession in all cases, nor to be limited to only two years, which is the minimum for adoption of the euro. It would be misleading to consider ERM II as a mere “waiting room” before joining the euro.
On average the term structure of volatility is relatively flat, making this a reasonable approximation for the one-year volatility. 9  Hördahl, P. and O. Tristani (2007) “Inflation risk premia in the term structure of interest rates”, ECB Working Paper Series No 734, and Garcia, J. A., and T. Werner (2009), “Inflation risks and inflation risk premia”, ECB Working Paper Series, forthcoming. 10  Ciccarelli, M. and J.A. Garcia (2009), “What drives euro area break-even inflation rates?”, ECB Working Paper Series No 996. BIS Review 81/2009  5  particular, actual inflation readings are the main reason for movements in short-term BEIRs, but play no role in explaining long-term ones. Thus, the expected brief spell of negative overall inflation in the coming months does not seem to have no noticeable impact on longerterm BEIRs, thereby supporting the idea of well-anchored expectations in the euro area. At least so far. Overall, the evidence suggests that the euro area is a long way from generalised, persistent and expected deflation. The severity of the recession points to inflation remaining low in the next two years or so, but this is not expected to lead to the emergence of outright deflation. In any case, continuous monitoring is needed, as history shows ‘that deflation and deflation expectations can take root surprisingly quickly’. 11 The overall assessment is supported by a number of other indicators, in particular by developments in the labour market. In early 2009, wage growth remained fairly robust, although this may partly reflect hysteresis (slide 16).

Lorenzo Bini Smaghi: Inflation and deflation risks – how to recognise them? How to avoid them? Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at XXI Villa Mondragone International Economic Seminar “Global Crisis and Long Term Growth: A New Capitalism Ahead?”, Tor Vergata Economic Foundation and CEIS – Centre for Economic and International Studies, University of Rome, Rome, 24 June 2009. *  *  *  Introduction 1 Let me begin by thanking the organisers for inviting me to this conference in Villa Mondragone. It’s a honour to give the “Riccardo Faini Lecture”. Riccardo was not only a great Colleague, at the IMF and at the Italian Treasury, but also a friend. The international economy is going through one of the worst recessions in generations. Demand and output have fallen sharply and synchronously in many developed and developing economies. Unemployment has drifted up. Global trade has shrunk for the first time in almost three decades, leading some to talk about incipient ‘de-globalisation’. Spare capacity has grown, dampening inflationary pressures – in central bank speak, downside risks to price developments have emerged – and fears of a sustained period of deflation are spreading. On the other hand, unprecedented recessionary forces have elicited an unprecedented policy response. Monetary policy has been swiftly loosened, both with conventional and unconventional tools. Governments have embraced aggressive fiscal expansions.
Gent Sejko: Address - Assembly of the Republic of Albania Address by Mr Gent Sejko, Governor of the Bank of Albania, to the Assembly of the Republic of Albania presenting the Annual Report of the Bank of Albania for 2022, Tirana, 6 July 2023. *** Honourable Speaker, Honourable Members of Parliament, Allow me to start this communication by stating that the Bank of Albania adheres to an open and transparent communication with the Parliament of the Republic of Albania. This communication is important as it ensures the BoA's accountability and responsibility as well as the improvement of the process for compiling and implementing the economic policies through the establishment of a common vision on the challenges ahead and the best ways and instruments for addressing them. Dear ladies and gentlemen, A series of frequent, complex and unprecedented shocks have battered the Albania economy in recent years. After the 2019 earthquake and the pandemic in 2020 and 2021, we faced the economic and financial lingering consequences triggered by the Russia's invasion of Ukraine over 2022. This aggression caused a sharp surge in food, oil and energy prices across global markets, heightened uncertainty amid economic and financial agents, as well as an increase in the overall financing costs both in Albania and globally. The new economic and geopolitical reality tested the sustainability of the economic and financial equilibriums of Albania, posed serious challenges to the Albanian enterprises and households, and called for the fast and coordinated reactions from public authorities.

In this regard, we have adopted the necessary by-laws which regulate the activity, supervision and management of risks for entities which provide the payment services. In addition, we have maintained a safe and efficient lek-denominated payment infrastructure, and we have expanded the latter with AIPS EURO for the settlement of the domestic euro-denominated transfers in 2022. The operation of AIPS Euro is less costly and time consuming than the previous process. Our estimations show that this system has saved around EUR 10 million to the Albanian enterprises and households in the past year. In response to these developments, the use of electronic payments has considerably increased over 2022, by exceeding the objectives laid down in the Albanian National Retail Payments Strategy. In parallel, I would like to point out that - over 2022 - the Bank of Albania has exercised its legal duties and has fulfilled its institutional engagements throughout the spectrum of  4/5  BIS - Central bankers' speeches  its activity.