samchain/econo-pairs-v1 huggingface dataset:
In this way, the intended shifting of funds toward lending in the country may be conducted even by those banks that have a lower capital adequacy ratio. These measures are not administrative. The decision to conduct funds shifting to private sector credit in the country will be decided by the bank itself. As in any other case, the bank should balance all the factors affecting risk, costs and benefits from such a shift. The implementation of the above measures requires amending the existing regulatory framework, which will be temporarily applicable (ad hoc). After that, banks should gradually return to complying with the existing regulatory framework, as regards the methodology for calculating capital requirement. In this way, we preserve, at any time, the necessary stimulus in banks to lend prudentially. Focusing on the need to address non-performing loans, we deem that it represents a concern both for the banking industry and the Bank of Albania, not so much for the stability of the system, as for the costs that this phenomenon brings to banking activity, consumers and related services. Also, public authorities may take measures in this regard. I take this opportunity to iterate the need for settlement of public sector’s liabilities to private entities. This would positively contribute to settling a part of liabilities that these companies, or connected ones, have to the banking sector, hence mitigating the level of non-performing loans.

Highlights on the recent economic and financial developments in Albania;  2. A retrospective view of the confrontation of our economy with the global crisis;  3. A package of measures we propose to revive lending to economy. Albanian economy during 2012 Year 2012 was a challenging one for Albania’s economic development. The Albanian economy recorded positive growth and its economic and financial balances were stable. Economic growth, however, has pursued a clear slowing path over the past four years and the concerns accounting for this performance remain present. As we have continuously stated, Albania’s economic activity suffers from lack of final demand for goods and services. Consumers and businesses, in particular, appear reluctant to consume and invest due to higher uncertainty and tighter lending standards. The lack of this demand is reflected in partial utilisation of productive capacities, yielding, in turn, low economic growth, a sluggish labour market, business financial constraints, and deteriorating loan quality. Although as at end-2012, non-performing loans rose to 22.5% as a percentage of total loans, the banking sector appears stable. Capitalisation and liquidity figures stand at good levels. Profit was distinctly better than in 2011. Loans and deposits grew higher than in 2011 but at a lower growth rate. The decelerating lending was particularly significant, growing by merely 2.1% in the past year. Only lending in Albanian lek provided a positive contribution, while lending in foreign currency shrank on a year earlier. Banks increased their prudence in lending, leading to a relatively tightening credit supply.
Why by raising interest rates and not by reducing the size of our balance sheet? I see three important reasons. First, we understand better the transmission mechanism of interest rate rises than that of quantitative tightening. We have decades of experience with the former, but we have never reduced the size of our balance sheet from such large levels. Second, quantitative tightening could potentially cause market turmoil in certain market segments, as supply may outgrow demand and liquidity may dry up. This could imperil the policy normalisation path at a time in which all our efforts should be focused on it. Third, monetary policy transmission in the euro area is heavily dependent on bank credit. Loan pricing is typically benchmarked to short- and medium-term rates. Policy rates are thus a more effective instrument to tighten monetary policy. Going forward, a key question is: by how much should our key interest rates eventually increase? That is, what is the value of interest rates that guarantees that inflation converges to 2% by the end of our medium-term horizon? I will call this level the “target-compatible terminal rate”. A second, related question is: how fast should this terminal rate be reached? Let me address the second question first. What should the optimal path towards the terminal rate be? One possibility would be to raise rates to the terminal level straightaway.

In our June meeting we concluded that the conditions in our forward guidance for raising interest rates had been fulfiled; we therefore communicated our intention to raise rates in July and again in September, and –consistently with our chained forward guidance 8  See, for instance, Carvalho, C., S. Eusepi, E. Moench and B. Preston, “Anchored Inflation Expectations”, American Economic Journal: Macroeconomics (forthcoming). 9  See Gáti, L., “Monetary Policy and Anchored Expectations: An Endogenous Gain Learning Model” ECB Working Paper No. 2022/2685, 2022. 4  between rate hikes and asset purchases- we announced that net purchases under the APP would end at the start of July. In that month we raised our rates by 50 basis points, a larger increase than we had signalled in June, based on our updated assessment of inflation risks and the reinforced support provided by the new Transmission Protection Instrument (TPI) for the effective transmission of monetary policy across the euro area. Earlier this month we hiked rates by an unprecedented 75 basis points, motivated by inflation levels that were far too high and likely to stay above our target for an extended period.10 This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will support a timely return of inflation to our two per cent medium-term target. As you can see, we decided to start the normalisation of our policy by raising our interest rates, instead of by reducing the size of our balance sheet –the so-called “quantitative tightening”.
Labour participation by the white population was, by contrast, on a slightly downward trend prior to the GFC, after which it has flattened off. That leaves participation rates for ethnic minorities today slightly above the levels of the white population. There have been some striking gender-related shifts in the pattern of work. The share of part-time employment among females has been declining, with a corresponding larger share of females working full-time. The opposite is true among males, with the share of men working part-time increasing by 5 percentage points over the sample. For ethnic minorities, part-time employment has steadily increased, with a pronounced pick up following the crisis. Next, we look at three variables which are often used to capture aspects of “human capital”: the highest qualification achieved, the occupation of a person, and the sector in which they are employed. For illustrative purposes, we split the sample into four sub-groups – white men, white women, ethnic minority men, and ethnic minority women – though we also consider more granular sub-sets of these groups. Chart 2 compares the highest qualification attained among the four sub-samples in 1994 and 2019. The main trend is the same across the board: the share of people with degrees or higher education has almost doubled since 1994. The increases are, however, most pronounced among women and ethnic minorities. For example, ethnic minority females have seen a 31 percentage point increase between 1994 and 2019. In 2019, around 60% had a degree or a higher education qualification.

For example, if the education system is working inequitably across gender or race, in a way that causes pay gaps to emerge, this would be a clear market failure that would justify policy intervention. In other cases the choice of an occupation or sector may be a personal decision, reflecting lifestyle and values, and less obviously a market failure or policy concern. 21  All speeches are available online at www.bankofengland.co.uk/speeches  21  The decompositions we carry out aim to identify the role of individual and environmental factors. One way of doing so is by using the so-called Oaxaca-Blinder decomposition. This decomposes the gap between the wages of two groups into two parts. The first captures the share of the gap explained by the different compositional characteristics of the two groups. The second captures the sensitivity of pay to those characteristics, something which is not typically observable. Suppose y is our variable of interest, in this case wages. We have two groups, say male and female. We assume y is explained by a vector of determinants, x, according to the following model:  (1)  =  where the vectors of the β parameters include intercepts. To keep things simple, assume there is a single factor – education – and that males benefit more, wage-wise, than females from a given level of education. In other words, at each educational level (x), the level of wages (y) are higher for males than females.
14 The economy was growing at a solid, if unspectacular, rate. There were signs growth was slowing, albeit gently, towards trend. Meanwhile, price pressures remained weak. Energy prices had fallen, and sterling had risen, in both cases sharply. This had lowered inflation significantly below target. Domestic wage growth was also weak, despite the significant improvement in the jobs market. I was doubtful, then, there would be any significant pick-up in wage pressures, dampening the reflationary process necessary to return inflation to target. With the risks to costs and prices to the downside, my view a year ago was that maintaining Bank rate at its historically low levels was necessary to provide support to the recovery and momentum to the reflationary process. Indeed, given the asymmetry of risks to growth and inflation, my view was that monetary policy should stand ready to move in either direction, with the chances of a rate rise or cut broadly balanced. A year on, in the run-up to the referendum, my view on both the economy and on the stance of monetary policy was essentially unchanged. The UK economy had continued to grow, steadily if unspectacularly. At the same time, there had been accumulating evidence, from surveys and from GDP figures over a period of three years, of growth continuing to slow gently  13  Belfield, Cribb, Hood and Joyce (2015)  14  Haldane (2015). 10  BIS central bankers’ speeches  to the point where it was little different than trend.

It is 2% as measured by the Consumer Prices Index or CPI, formerly known as the Harmonised Index of Consumer Prices. What is this new inflation measure, and how will it affect monetary policy? On the RPIX measure, inflation was at or above target for the whole of last year. In contrast, the CPI measure of inflation was below 2% throughout the same period. Indeed, CPI inflation has been below 2% for all bar three months since May 1997, and it is almost six years since it was last above 2%. How can it be possible for inflation to move from above to below target - just like that? To answer that question, we need to examine how inflation is calculated. Inflation is measured as the increase in the price of a particular basket of goods and services over the previous twelve months. So there are as many measures of inflation as there are baskets. Since no two people in this room spend their income on exactly the same items, in principle each of you could construct your own measure of inflation. The Office for National Statistics calculates an average inflation measure by weighting together the inflation rates of over 650 different goods and services, using as weights the estimated expenditure on each item for a representative household. But where  1  Unpublished writings of J.M.Keynes, copyright of the Provost and Scholars of King’s College, Cambridge to whom I am grateful for permission to publish this extract.
Resolution We also must have an effective resolution mechanism that allows a firm to fail without threatening to bring down the entire financial system. We are not quite there yet—given some of the challenges in executing resolution on a cross-border basis—but we have made significant progress. In particular, I would point to two developments that are especially important. The FDIC and the Federal Reserve have used the authority provided by Title I of the Dodd-Frank Act to oversee the so-called “living will” process—the resolution planning that large financial firms must do as a contingency for their potential failure. Developing living wills necessitates that firms and regulators consider, in advance, how bankruptcy can serve as the basis for resolution, and take actions to address any obstacles to an orderly resolution under the bankruptcy code. This effort has helped to reduce the complexity of large financial firms and has made them better positioned to enter bankruptcy without imposing large costs on society. In addition, the Federal Reserve recently finalized a rule that requires systemically important bank holding companies to have minimum levels of total loss absorbing capacity (TLAC). Firms are expected to meet this requirement mainly via the issuance of long-term debt by the holding company parent. In bankruptcy, this debt could be used to recapitalize these firms and would be available to absorb any additional losses. The Dodd-Frank Act also created a “last resort” option for the resolution of a large financial firm— Title II Orderly Liquidation Authority.

While we do not yet have evidence of how these reforms will hold up during the next economic downturn, many have been in place long enough that we can begin to evaluate their efficacy. In such an evaluation, we should keep in mind the three goals I mentioned in my introduction. First, we must ensure that the probability of failure for a systemically important firm is exceedingly low. Such a failure can lead to contagion that can damage a broad set of financial market participants, and impede the ability of the financial system to support the economy. The failure of a single systemically important firm—because of its size and interconnectedness—can significantly weaken the entire financial system. We saw this firsthand following the failure of Lehman Brothers. Second, if a systemically important firm does fail, we must have mechanisms in place to minimize the damage to the rest of the financial system. While we can make individual firms stronger, more robust and less prone to failure, I expect that there will still inevitably be failures in the future. In principle, we could make individual institutions completely bulletproof in all possible environments. However, this would require such high levels of capital and liquidity that it would likely make them uncompetitive in their ability to provide financial services to their customers. 2/6  BIS central bankers' speeches  Third, we must keep in place the structural changes that have made the global financial system less vulnerable to adverse shocks.
(i) First, a Capital Markets Union should be structured along a clearly defined and articulated framework and focused on a limited set of operational deliverables. As an overall priority, we believe that the initiative should seek to promote equity instead of debt financing for long-term financing. Equity financing is crucial for firms to grow and operate over the long run, all the more since we must pay attention to the high level of indebtedness in Europe with respect to both the public and private sectors, including SME borrowers. The current ratios of debt-to-income are indeed to be adjusted to a more sustainable path. Notwithstanding this primary objective, debt instruments remain an indispensable funding tool. As far as operational deliverables are concerned, we share the view of the European Commission that the development of both Simple, Transparent and Standardized (STS) securitization and Private Placements is achievable in the short to medium run. 2 Securitization is indeed a useful tool to help fund the economy, as a means to free regulatory capital and to create liquid assets, particularly in the context of tightened capital requirements for banks. The CMU could for instance promote initiatives such as that carried out in France, where banks, with the support of the Banque de France, have taken steps to monetize their pools of credit claims. Banks now have the option of structuring these loans into marketable debt securities which are issued by a securitization vehicle (called Euro Secured Note Issuer or ESNI), in order to raise funds over the medium term.

Regarding private placements, market-led initiatives have already allowed the effective development of European common standards. The French financial industry has been particularly active in this field, with the development of a Charter for Euro Private Placement for France in 2014. This Charter has been re-used by the International Capital Market Association (ICMA) to elaborate a market guide on common market standards and best  BIS central bankers’ speeches  1  practices. These initiatives could leverage on a common European definition and classification of SMEs to develop a Pan-European Private Placements market. (ii) Second, market-based financing should be seen as a complement to, not as a substitute for, bank-based financing. It is essential to foster the development of market-based financing as a complement to bankbased financing. Although this process has already started, the speed and extent of the shift differ across countries and sectors. Even though a rebalancing of the European economy financing mix is a desirable outcome as it diversifies the available sources of funding, banks will still have a major role to play. Some segments of the economy, namely SMEs and infrastructures, heavily rely on bankfinancing, due to the existence of high fixed costs and significant information asymmetries. Banks are indeed better equipped to assess the credit-worthiness of such counterparties or projects. Having said that, clear and transparent information on credit risk is a prerequisite to the recourse to any source of funding, be it intermediated or not.
And, for derivatives, there simply may be no further fallback. You can imagine the litigation risk when the reference rate for a 20-year contract disappears and there’s no clear path to replace it. Now imagine 190 trillion dollars’ worth of those contracts. This is a DEFCON 1 litigation event if I’ve ever seen one. Where Are We Now? Those are the issues that the ARRC, the other IBOR working groups, and central banks in general have confronted over the last few years. Let me turn now to the work at hand. There are two urgent tasks for every market participant with LIBOR exposure. First, if you find yourself in a hole, stop digging. What market participants must do right now is stop writing new contracts on LIBOR and start using SOFR or at least another robust alternative. And, especially if you need to keep using LIBOR, make sure your new contracts have strong and workable fallback language. That was one of the original recommendations the various official sector groups made as far back as 2013, but the people writing the contracts don’t seem to have been paying attention. As I’ll describe in a moment, very soon there will be specific fallback language that represents the consensus best practice to use in each type of U.S. dollar LIBOR-linked 3/8  BIS central bankers' speeches  financial product going forward. The second urgent task is to deal with the trillions of dollars of existing contracts that extend past 2021 and don’t have effective fallbacks.

Two trends are clear here: first, a very active market in transfers of books of annuities and closed life books between firms, with insurers specialising in particular niches; second, transfers of annuities to life insurers from corporate, defined benefit pension schemes – the bulk purchase annuity market that is the subject of this conference. Risks for insurers in the bulk purchase annuity market  The bulk purchase market has grown over recent years from a flow of around £ in 2010 to over £ in each of the past four years. With the funding position of many defined benefit schemes improving and company boards still keen to shed pension risks, commentators expect the market to expand further. 2  Transfers in excess of £ are predicted this year . The number of life insurers active in this market has increased, with most of them seeing it as a priority for future growth. Our sense is that the market has become more competitive. This is good news for UK companies seeking to shed pension risks. For the insurers, finer margins make it more important that they understand the risks on deals and get the pricing right. A concern is that firms might relax risk management standards or take short cuts in order to win deals and meet new business targets. I want to highlight three areas of risk: data due diligence; longevity and its reinsurance; and asset selection, rating and valuation. I will touch briefly on the first two before spending more time on the third.
So if we only take the elderly into account,  BIS Review 56/2003  5  each person of working age today supports 0.29 people that are 65 years or older. By 2030, this is forecast to have risen to 0.42. So the problems we are seeing today with the public sector’s financing are a trifle compared with what awaits us if nothing is done. The population’s age structure will entail great demands on welfare services and thereby a heavier burden on the public finances. In addition, a smaller supply of labour and a resultant lower level of production will mean a drop in receipts for the Government. However, the problems would increase even in the event of even population growth. The structural shift implied by an ever larger production of services is also a problem in this context. Workers in the services sector demand the same wage as other parts of the population despite considerably slower productivity growth compared with the industrial sector, which is exposed to competition. The latter is undergoing constant rationalisation through an increasing ratio of capital per employee - something that is not quite as feasible in the services sector. This means that the relative price of services is increasing over time, which is a particularly large problem when services, like in Sweden, are largely provided by the public sector and financed via taxes. The wage rises that are being driven forward by the high-productivity industrial sector are spreading to services and could entail consequent increases in prices and taxes.

François Villeroy de Galhau: New Year wishes to the Paris financial centre New Year wishes to the Paris financial centre by Mr François Villeroy de Galhau, Governor of the Bank of France, Paris, 18 January 2018. * * * I would like to thank all of you for coming, like each year, to our Golden Gallery. I am pleased to welcome you, together with Denis Beau, Deputy Governor since July and first Deputy Governor since yesterday. I also commend Anne Le Lorier, who unfortunately left us on 5 January but who has contributed so much to the Banque de France over the past six years: this evening is an occasion to thank her. And I am delighted to announce the appointment of Sylvie Goulard, who will be taking over from her. As of next Monday, she will bring to the Banque de France all her competence and independence. I would like to start by extending to you our warmest wishes for 2018, for you and your loved ones, as well as for all of your staff, hoping that 2018 will be an excellent year; an excellent year, not only for each of you, but also for Europe and our country. But before presenting my collective wishes for this new year, I would like to return to 2017 and three positive elements that marked it. 1.