samchain/econo-pairs-v1 huggingface dataset:
The synchronized recession which ensued has made it even more urgent not only to ensure that our financial systems are resilient and able to absorb external shocks but that sufficient attention and resources are also available for achieving the financial inclusion agenda. We are now entering a period of improved international economic and financial conditions. However, even in times of economic stability, financial inclusion is a demanding endeavour. Firstly, the outreach needs to be comprehensive to include the low income and underserved segments, given that that they are generally geographically dispersed and have low levels of financial literacy. Secondly, micro finance institutions need to generate sufficient sustainable returns to cover the high costs involved in providing such services and the lack of potential for economies of scale so as to remain viable. Thirdly, such financial institutions also face the challenges of obtaining sustainable and competitive funding. Recognising the challenges in addressing these issues to achieve financial inclusion, this programme, which started more than two years ago, is an outcome of a proposal I made at the Langkawi Commonwealth Partnership for Technology Management (CPTM) Heads of Government meeting in 2007, which discussed the subject of poverty eradication through human capital development. The purpose of the Financial Inclusion Advisers programme was to provide practitioners and regulators in the area of financial inclusion with practical ideas via the sharing of knowledge and experiences on developing institutional structures, creating an enabling environment and enhancing financial literacy.

For this very reason, the award ceremony for the best diploma thesis has become a consolidated activity of the Bank of Albania geared toward supporting promising students in the field of scientific research within the scope of central banking. This year, students also showed a high interest in presenting their diploma theses. We received 1/2  BIS central bankers' speeches  27 studies on a wide range of economic, financial, and legal topics focused mostly on the Albanian economy. It is a delight to see how these studies use contemporary research methodologies and valuable information intelligently to analyse economic phenomena, employing theoretical and empirical arguments. In spite of the challenge of choosing the most interesting studies, we now have our verdict on the “Governor’s Award for the Best Diploma Thesis 2018”. The selection has not been easy. Each year, we receive increasingly more qualitative studies in terms of research methodology, topic originality and methods applied in research. I take this opportunity to congratulate all the contestants for the high quality of the presented studies. I hope and encourage you to further enrich your theoretical and empirical capacities as you advance in your careers, wherever that may lead, in academia or as experts in specific fields. I hope you will be unremittingly engaged in scientific research, in a relationship of which only the starting date is known. Thank you and happy holidays! 2/2  BIS central bankers' speeches
In Italy, the recent pension reform which approves the full transition to a contribution system completes the necessary correction of the pension spending dynamics which was started years ago. As Germany shows very well, large and effective welfare systems can be made more efficient without compromising social goals. We are living at a critical juncture in the history of the Union. The sovereign debt crisis has exposed serious weaknesses in the institutional framework; in this context, the difficulties in finding common solutions are having a negative impact on market valuations. The extraordinary measures taken by the ECB have gained us time; they have preserved the functioning of monetary policy. 2  BIS central bankers’ speeches  But we have now reached a point where European integration, in order to survive, needs a bold leap of political imagination. It is in this sense that I have referred to the need for a “growth compact” alongside the well-known “fiscal compact”. A growth compact rests on three pillars and the most important one, from a structural viewpoint, is political: the economic and financial crisis has challenged the myopic belief that monetary union could remain just that, and not evolve into something closer, more binding, into an arrangement whereby national sovereignty on economic policy is replaced by the Community ruling.

Central bank credit to banks has been a complement to – rather than a substitute for – private credit: in the first quarter of this year, the amount of bonds issued was equal to the total issued in 2011 as a whole, which shows that the operations, at least in the first few months of the year, provided the markets with liquidity, reactivating a number of credit channels. The two LTROs removed one of the obstacles – the only one over which the ECB has any influence – to credit, namely a lack of liquidity. The ECB cannot do anything to make up for a lack of capital, to change intermediaries’ risk perceptions, or to remove other structural obstacles present at national level. More generally, the size and complexity of the two LTROs is such that it will take time for all of their positive effects on the euro area economy to be fully felt. However, it is essential for growth and employment that credit institutions regain their ability to provide refinancing to the economy. 8  BIS central bankers’ speeches
4  BIS Review 6/2004  from a presentation by Professor Lars Svensson at a conference hosted by the Federal Reserve Bank of St. Louis:9 “A recent innovation of the Bank of Norway […] is to plot the inflation forecast and the output-gap forecast in the same graph. This clearly serves to emphasize that the bank is concerned with the stability of the real economy as well as with inflation, emphasizing the flexibility in its inflation targeting.”  Transparency and communication Confidence in monetary policy makes it easier to achieve the inflation target and increases the possibility of stabilising output and employment. Transparency can contribute to strengthening confidence. Transparency makes monetary policy more predictable. In an environment where market participants understand the central bank’s response pattern, the reaction of market rates to new information about economic developments has a stabilising effect. Norges Bank wants to be open about its monetary policy work. An account of the methods we use for our inflation projections, analyses of the functioning of the economy and our professional judgment is provided in our Annual Report, Inflation Report, strategy documents, speeches and other publications. We also try to have a systematic procedure for interest rate decisions where we operate with a preannounced calendar for the monetary policy meetings. The interest rate decisions, together with a thorough explanation of the background for the decision, are published after each meeting.

Let me say a few words about these issues. -  The exchange rate stability is one of the five (nominal) Maastricht convergence criteria. Consumer price stability, long-term interest rate convergence and fiscal consolidation are the other conditions a country has to fulfill in order to gain EMU membership. Clearly, the burden of ensuring compliance with these conditions does not fall solely and exclusively on the monetary policy authorities. The fiscal and labor policies must be aligned with the monetary policy objectives and the achievement of political commitment to ERM II is of paramount importance. I find the practice of monetary and fiscal policies dialogue, as stipulated in Accession Strategies of some of these countries, a commendable achievement. BIS Review 1/2007  1  -  Financial instability has been identified as a potential negative outcome of the bilateral fixing of the exchange rate for accession countries. Limited exchange rate flexibility under ERM-II and disinflation conditions expose the EU acceding countries to large ‘convergence play’ capital inflows. 1 If the exchange rate in accession countries is forced to fluctuate within a relatively narrow band, the outcome might be additional and unnecessary inflation. The central bank’s reaction to increasing inflation would restrict economic growth. Such an outcome is even more likely in the presence of the Balassa-Samuelson effects, commonly experienced by the transition economies. 2 In such a scenario, the dual task of preserving the domestic and international value of the currency can be jeopardized.
But obviously, it is also important for us to continuously assess how the Riksbank’s earnings will be affected during the course of the journey. This is something we have discussed in different contexts. 4 Our latest estimate indicates that the effect on earnings from the bond holdings could be quite close to zero seen over the entire holding period. But how earnings will be ultimately affected depends on how the interest rate develops in the future. Can households cope with higher interest rates? Swedish households current have record-high debts in combination with a large proportion of variable-rate mortgages (see Figure 7). As you are no doubt aware, the Riksbank has been concerned for many years about the high level of household indebtedness and the potential negative effects on the Swedish economy of rising interest rates or falling house prices. 5 From our horizon, it is therefore important to carefully analyse the interest-rate sensitivity of households. We have also returned to this issue on a number of occasions, most recently in the Monetary Policy Report in December. 6  4 See, for instance, “The Riksbank’s bond purchases affect government finances”, speech by Martin Flodén on 9 November 2016. 5 For example, we published an extensive inquiry into the risks on the Swedish housing market as early as in the spring of 2011. See Sveriges Riksbank (2011), “The Riksbank’s inquiry into the risks on the Swedish housing market”. 6 See “How are household cashflows and consumption affected by rising interest rates?” article in Monetary Policy Report, December 2018.

Michael C Bonello: Fiscal reform - an imperative for sustainable growth and development Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the Institute of Financial Services Annual Dinner, St Julians, 11 November 2004. *  *  *  I should first of all like to thank you, Mr. President, for inviting me to your annual dinner and for the opportunity to share my thoughts once again with such a distinguished audience. I must also congratulate you on your recent election as President of IFS - Malta and wish you and your Committee every success in your endeavours to ensure that the Institute’s educational programmes remain relevant in today’s complex financial services environment. As you rightly pointed out in your first message to your members, in a situation which is rapidly evolving, “we must be prepared to embrace change.” I have a similar message to convey tonight. Inspired by the words of George Washington that “There is no practice more dangerous than that of borrowing money”, mine is essentially an appeal to the country to leave behind its spendthrift ways and to learn to live within its means. I shall therefore make a case for fiscal reform. Now some might wonder why a central bank governor should be so concerned about the state of the country’s public finances. Put simply, the reason is that a persistent excessive deficit situation represents a potential threat both to price and financial stability, which are key objectives of most central banks today.
That is, they cannot reduce the volatility of both inflation and output growth. An example of that “stability possibility frontier” is shown in chart 4. Points B and C represent alternative choices by central banks with different reaction functions, corresponding to the different weights they attach to the costs of volatility in inflation and output. Central bank B tends to bring inflation back to target more slowly than central bank C. So the real surprise is that, over the past decade, we have moved not along the frontier, say from point B to point C, but instead to A. The frontier itself has moved significantly inwards.6 The conventional wisdom has been overturned. Was that the result of luck: an absence of shocks and favourable structural changes in the economy? Or has the new monetary framework itself played a role? How might the MPC have been lucky over its first decade? First, there might have been unusually few significant economic shocks to which the Committee had to respond. Output and inflation would have been more stable even without a change in the monetary framework. Second, when shocks did occur the economy might itself have responded in a self-regulating manner. On the first, it is difficult to argue that there have been no major economic shocks since 1997. At the outset, the Committee had to confront the consequences of a 25% rise in the effective exchange rate and the resulting fall in import prices.

available  at:  King, M A (2005), “Monetary Policy: Practice Ahead of Theory”, Mais Lecture at the Cass Business School, London, Bank of England Quarterly Bulletin, Summer 2005. Lombardelli, C, Proudman, A J and Talbot, J (2005), “Committees Versus Individuals: An Experimental Analysis of Monetary Policy Decision Making”, International Journal of Central Banking, 1, 5. 12  BIS Review 43/2007  Svensson, L E O (2003), “The Inflation Forecast and the Loss Function”, in Mizen (ed. ), Central Banking, Monetary Theory and Practice: Essays in honour of Charles Goodhart, London: Edward Elgar. Taylor, J B (1979), “Estimation and Control of a Macroeconomic Model with Rational Expectations”, Econometrica, 47, 5. BIS Review 43/2007  13  14  BIS Review 43/2007  BIS Review 43/2007  15  16  BIS Review 43/2007
An important task here will thus be to assess GDP growth in various parts of the world and what significance it has for the Swedish export market. One of the most difficult questions in this context is to assess how increased uncertainty abroad will affect international developments. Inflation in Sweden is also affected by trade with other countries, for instance, when the prices of goods imported into Sweden are adjusted in the world market. As I have already pointed out, energy and commodity prices have fallen since last spring, which we will also have to take into account in our inflation forecasts. …and via the financial markets The Swedish economy is also affected through the financial markets. Interest rates abroad have fluctuated substantially and this also affects Swedish interest rates. This is clear from the strong covariation between government bond yields in the United States, Germany and Sweden. Developments during the summer have entailed falling interest rates in Sweden, which is in itself positive for growth (see Figure 12). At the same time, share prices have fallen and the stock market is very volatile. Since the Monetary Policy Report was published on 5 July, the Stockholm Stock Exchange has fallen by around 20 per cent until the beginning of this week (see Figure 13). This could mean that  6  BIS central bankers’ speeches  households increase their precautionary saving and that companies postpone investments. We must also take a stance on how this may affect our forecasts.

Krona exchange rate, TCW index Index, 18 November 1992 = 100 160  160  155  155  150  150  145  145  140  140  135  135  130  130  125  125  120  120 115  115 04  05  06  07  08  09  10  11  12  13  14  Note. The outcomes are daily rates and the forecasts refer to quarterly averages. Data are updated with new outcomes after the publication of the July Monetary Policy Report. Source: The Riksbank  14  BIS central bankers’ speeches
It is not part of the real political agenda, and we now have a fourth or so government in a row declaring that this issue will be left “for the next government after the next elections” – so it is being postponed to political infinity. The anteroom for euro adoption, the ERM II, is not being considered either. This approach has the full backing of the central bank. Ten years ago, supporting the euro was a sign of “good social morals among the better classes”, whereas today only the brave confess to ardently supporting it. That’s how much the mood of the elite and the electorate has changed over the last decade. Why is that so? Here my eight personal comments come into play. 1. The euro and political union: A stateless monetary union is inherently unstable. A currency is usually a consequence, not a cause, of the establishment of a state. In Europe, however, we began to build the “currency house” from the roof down, and then in 2008 everyone was very surprised at how the tiles flew off when the first wind appeared. Is there a prospect of a political union – a single European state – in the pipeline? Even if there is, do we want to be part of it? If the question is no, which would seem to be the case, thoughts of introducing the euro in the Czech Republic should, for that reason alone, be left on the back burner. 2.

Macro costs and micro benefits: The Eurozone has so far failed to make its member states wealthier quicker (the non-euro EU states are constantly growing faster on average) or to make them converge structurally. Rather, one could argue that the opposite is true. A truly strong measurable result of the euro is lower and less volatile inflation. This is hard to see as a bonus for our country, where we are consistently achieving the same objective with our own currency. The oft-mentioned bonus of lower interest rates due to the euro does not apply to us either. We have long known what it’s like to live with rates below the Eurozone level. Likewise, it’s hard to believe that the euro will deepen our trade relations with the euro countries given that we are one of the few countries enjoying not only growing trade, but also a constantly rising trade surplus with Germany. The euro has micro benefits at firm level, but unfortunately they come with the aforementioned macro costs. The latter are constantly rising and their final size and structure are impossible to quantify. Besides the known contribution to the stability funds, they include mandatory participation in the banking union, which is another unfinished structure. For a country of our type, currency arrangement and monetary history, joining the Eurozone is generally an extremely tough question. It was ever thus, but it is currently all the more so.
The PRA also expects insurers to set a risk appetite for the levels of capital that are to be maintained in reasonably foreseeable market conditions: for example, as assessed through stress and scenario tests, or 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  through some suitable alternative approach, to provide no more than a 1 in X probability that Solvency Capital Requirement (SCR) coverage might fall below 100%. 5  We published Supervisory Statement 4/18 on  Financial Management and Planning by Insurers earlier this year. It explained that if an insurer’s capital management policies are calibrated such that frequent or foreseeable breaches of SCR are likely to occur, the PRA may consider whether the insurer is meeting the requirement to have in place an effective system of governance. Similarly, if the level of capital of an insurer regularly or persistently falls outside of its risk appetite, or an insurer makes frequent changes to its risk appetite for its planned levels of capital, the PRA may consider whether this indicates failings in the governance process by which the insurer sets its risk appetite.

The new series of targeted refinancing operations (dubbed “TLTRO 2”) should improve medium-term funding conditions for banks and foster bank lending to companies and households. 1  INSEE: Indicateur de climat des affaires et de retournement conjoncturel. BIS central bankers’ speeches  1  3/ Structural policies Moreover, monetary policy is not the only game in town. It is supported by structural reforms that increase potential growth, particularly in countries with a high unemployment rate. History has shown that ambitious reforms can contribute durably to growth. Sweden in the 1990s and Germany a decade later have demonstrated that structural reforms enhance employment rates, potential growth and resilience. They also reduce labour market duality, and provide more opportunities to new entrants in the labour market, particularly young people. In the wake of a severe crisis, Sweden and Germany rebuilt their economic models and, as a result, have been better able to weather the latest downturn. Indeed, a number of European countries are conducting major reforms to bring high and sustainable growth back. Those reforms are particularly challenging when it comes to the labour market, but they are needed. We need to improve labour flexibility and reduce the duality in the labour market between permanent and temporary contracts, which generates both high structural unemployment and inequality. The most emblematic example is Spanish reforms. Their results are impressive, especially when we consider the very difficult economic situation in the country during their implementation.
And though they are not of interest exclusively to policy makers in accession countries, financial stability issues are especially pertinent for these countries, since they aim to meet the requirements for adopting the single currency as soon as possible after joining the EU in May 2004. First, because the existence of a positive link between financial system stability and economic growth means that anything that harms stability would slow down the pace of real convergence with the EU economy. Second, because the break out of a systemic crisis has immediate effects on asset prices and other price variables, it could also imperil the nominal convergence process and, with that, an early entry in Economic and Monetary Union (EMU). Accession countries, therefore, have a specific interest in keeping at bay forces which are known to be inimical to financial stability and in adopting structures and practices which have proved effective in countries which have already completed their journey to EMU. It is thus appropriate that the seminar  5  European Central Bank. 2003. Press Release on the Memorandum of Understanding on high-level principles of co-operation between the banking supervisors and central banks of the European Union in crisis management situations. Frankfurt. 10 March. should be brought to an end with presentations on the experiences of three euro area member countries.

In general, most of these ideas are heading in the same direction: toward greater regulation and centralization of the financial sector, and toward less competition and a greater publicsector presence in the financial industry from now on. These thoughts – often presented in soft "Eurospeak" so as not to sound too alarming – seem as if their proponents thought them up long ago and were just waiting for a good opportunity to unveil them as miracle cures for all the financial world's ills and woes. It is as if we hadn't all known for years that unfortunately – in the world in general, and the financial one in particular – there are no such things as perfect rules, perfect regulation or, above all, perfect certainty. It is as if we'd forgotten that competition, rivalry, profit opportunities and staff motivation are not the spawn of the devil but do a lot of good. More important, the private part of the financial universe is being presented as a self-evident culprit of the crisis, while the role of the state faces much less scrutiny. The question of whether monetary authorities, prior to the crisis, properly regulated interest rates as a key price in the economy attracts much less attention in the debate than it should. The same is true for the question of whether the existing store of individual countries' supervision tools was used correctly and adequately before the crisis. This is interesting, as the crisis poses some new challenges and questions.