samchain/econo-pairs-v1 huggingface dataset:
Through spill-over, these tensions are also affecting non-financial corporations and, more broadly the financing of the economy. They also have spilled over to emerging market economies, which had until the autumn 2008 remained largely unaffected. The crisis also emerged as a crisis of securitisation. Securitisation is an old and successful technique used to refinance a range of loans. What was new about it is that it got used extensively in highly unstable financial structures. These were financing short-term illiquid and complex assets whose value proved to be uncertain and contingent upon models. The instability of such structures was largely masked. Indeed, cheap money allowed easy refinancing of poor quality debt and of assets with uncertain value. Also, favourable ratings and credit enhancements artificially boosted the quality of loans underlying structured products. The rise in defaults on such loans, first on subprime mortgages, triggered a chain of reactions whose consequences are still unfolding now. Credit protections proved illusory. Liquidity dried up much more quickly than it had appeared. Rating agencies massively, suddenly and sharply downgraded products which until then were deemed of the highest quality. The demise of the “new” securitisation chain highlights two fundamental realities. The first one is that far from being spread across the whole system, credit risk was implicitly or explicitly concentrated in the hands of specific institutions, foremost among which were the major investment banks.

As you know, at the French President’s instigation, huge efforts are made to think about what has been termed a “new Bretton Woods”. Beyond these ambitious words, I do believe it to be useful to take a fresh look at the existing financial regulation. As a contribution to this debate, I would like to make two final sets of remarks. One has to do with the fluctuations of financial systems. The other concerns financial supervision. Financial systems that operate in the context of a developed market economy are, by nature, subject to cyclical forces. Some are a consequence of the business cycle. Credit activity is an obvious example, as credit demand is heavily influenced by economic activity. Others are from within financial systems. For instance, financial institutions’ equity position moves in line with asset prices especially in a fair value world where fluctuations result in capital gains or losses. The challenge for the authorities is to assess whether and to what extent regulations reinforce these dynamics and impact the entire financial system. With these questions in mind, work is being undertaken to examine the impact of prudential standards. It is also on this basis that the accounting adjustments that I mentioned earlier have been made. The need to develop a “macro-prudential” policy is now under debate. The general principle is straightforward: it consists in ensuring that supervision manages to limit risks for the stability not only of a particular institution, but also of the entire financial system. Its implementation, however, is complex.
More people are becoming increasingly comfortable resuming activities in person, and this is starting to show up in robust consumer spending, job gains, and economic growth. So, now that we are on our second trip around the sun during this pandemic, many are looking to answer the most common question raised when traveling by car. And that is, “are we there yet?" With respect to the virus, I’ll leave that question to the public health experts to answer. But with respect to the economy, I will say this: while I am optimistic that the economy is now headed in the right direction, we still have a long way to go to achieve a robust and full economic recovery. In my remarks today I’ll set the scene for both the U.S. and global economies. I’ll also highlight a few of the factors I consider when evaluating the outlook for the economy. Finally, I’ll explain what that means for our monetary policy decisions. But before I continue, I need to give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or others in the Federal Reserve System. Economic Outlook Let me begin by saying that despite the challenges and uncertainties we’ve faced since the pandemic took hold, the economy is now positioned to grow quickly.

Over 900,000 jobs were added in March, and I am hopeful that we will see very strong job gains over coming months as the economy continues to reopen. It is very encouraging to see people getting back to work and to see these gains starting to be more widespread, including in the sectors and regions that were hit hardest by the pandemic. But, even with the gains that have occurred, let’s not forget that there are about eight and a half million fewer jobs today than before the pandemic. To put that number in context, this is a shortfall similar to what we saw at the worst point of the aftermath of the Great Recession. This means we will need big jobs numbers for some time to fully get the country back to work. The labor market indicator that gets the most media attention is the unemployment rate. But that statistic may not be the best measure of the overall health of the labor market because people who temporarily drop out of the labor force don’t get counted as unemployed. It’s vital that we look at a wide range of indicators to gauge the health of the labor market. One measure that I find useful is the employment-to-population ratio, or “EPOP” as it’s affectionately known. EPOP is the share of the population that have jobs according to a monthly survey of households. Before the pandemic, when the labor market was quite strong, EPOP was about 61 percent.
I would like to emphasise once again that this was possible due to the steadily low inflation rate we achieved. Owing to the accommodative monetary policy, companies were able to raise cheaper loans, which supported the revival of economic growth. Last year, corporate lending was up by almost 10%, which is twice as much as in 2019. In other words, companies really had the opportunity to use borrowed resources when they needed this. As we know from experience, small and medium-sized enterprises are especially vulnerable to crises. In 2014–2015, banks actually stopped providing lending to SMEs. This is why, immediately after the outbreak of the pandemic, we launched a special refinancing instrument amounting to 500 billion rubles at a low interest rate, which dropped as low as 2.25% at the end of the period. This instrument was aimed at incentivising banks to expand lending. We granted these loans only to those banks whose lending to SMEs was at least 90% from the beginning of the pandemic. Coupled with accommodative monetary policy and the Government’s programmes, this made it possible to increase lending to small businesses by nearly 23%, which is twice as much as in 2019. As regards mortgage lending, the Government launched its subsidised programme. It boosted the growth of mortgage lending, households were able to improve their housing conditions, and construction, which is a very important industry for the economy, received the required resources for its fast recovery.

3 Under the RBC model in its more traditional versions, the economy is fully flexible and there is no role for macroeconomic policies, whereas under the NKM there are sticky prices that result in money not being neutral, which assigns a role to monetary policy. These provide the conceptual basis for the formulation of inflation-target regimes. It is important to place both types of models in their right dimension. The strategy of RBC models is to try to replicate economic fluctuations in the simplest, least distorted model possible. It originated in the attempt to use the neoclassical growth model to explain the business cycle as a result of productivity shocks, which is surely an interesting effort with theoretical consistency. These are very elegant models, but the difficulty of solving them analytically results in having to solve them using calibrations. As a result, there are often doubts regarding the values of the parameters, which in general are unobservable. To the extent that these models are free of distortions, there is no role for active monetary policies, since economic fluctuations are socially optimal. Certainly this is an attractive theoretical proposition, but it is absurd to think that this is how the world works. It will be difficult to explain the financial collapse with this type of model, because it has no frictions and provides very limited policy implications.
From the aggregate demand, it was driven by the growth in consumption, investments and exports. The services, industry and construction sectors mainly benefited from this expansion of aggregate demand. A notable development in 2017 was the positive performance in tourism, which provided a positive impetus to economic growth. Together with the high levels of foreign direct investments, it contributed also to the 2/9  BIS central bankers' speeches  increase in foreign currency inflows in the Albanian economy. Employment increased by 3.3% in 2017, driven largely by the increase in the services sector. In parallel to the increase in employment, the unemployment rate fell, from 14.2% at the end of 2016, to 13.4% at the end of 2017. The decrease in the current account deficit averaged 6.9% of the GDP in 2017, against the 7.6% registered in the previous year. Its improvement reflected the increase in tourism and other services of the business. Fiscal indicators marked consolidation, reflecting a low level of budget deficit and the maintained control over the public debt. From the financial aspect, the Albanian banking system maintained good indicators of liquidity, profitability and capitalisation. The financial situation of enterprises has been improving, as illustrated by their high liquidity levels and the progressive decline in the nonperforming loans ratio. Lastly, inflation has been upward, averaging 2.0% from 1.3% in the previous year.

The upward inflation reflected the improvement of economic activity, but its undershooting continues to reflect the operation of the economy below the potential, the low level of inflation in trading partner countries, as well as the strong exchange rate. I would like to focus on the last item – the exchange rate. The appreciation of the Albanian lek over the last two years has been at the focus of the Bank of Albania, as a result of a comprehensive impact of this factor on the overall economic and financial indicators, including inflation. Our analyses show that the appreciation trend of the exchange rate reflects the improvement of fundamental factors, such as narrowing of the trade deficit and of the current account deficit, high levels of foreign currency inflows in the form of foreign direct investments, and the improved confidence in the national currency in the domestic financial market. For as long as such appreciation reflects the effect of stable economic and financial factors, it does not lead to harmful consequences for the Albanian economy. However, its effects appear in the form of reduced inflationary pressures in the domestic market. The appreciation of the Albanian lek is estimated to have reduced the inflation rate for 2017 by 0.2-0.3 percentage point. In the context of the not-yet-complete utilisation of production capacities and of low inflationary pressures, the Bank of Albania maintained the direction and intensity of the monetary stimulus unchanged over 2017.
International banks and other creditors could make do with less compensation than if they had had to reckon with taking the losses in full. The support programmes have accordingly accentuated the problems associated with the growing flows of volatile capital. Neither has the corresponding support been provided in practice for more long-term direct investment, which presumably would be at least as valuable for developing countries in that such investments primarily depend on domestic economic development in the longer run. This policy has in fact been questioned all the time. It has been maintained on account of an interest in avoiding failures that would be costly both socially and politically. Moreover, the provision of government funds has been frequently advocated by strong private interests in the major industrialised countries, particularly the United States. It should also be underscored that problems of this kind do not have self-evident solutions. A way out in some cases has been for private creditors, with government encouragement, to agree voluntarily to prolong their loans. One difficulty here is that the discussions with private creditors have to be initiated by the country that is in a crisis. In practice, the countries in question have been reluctant to take measures that might harm their future access to international capital markets. An international bankruptcy procedure, which should have been instituted long ago, is now being officially discussed again in the IMF. Such a system would probably help to make the management of acute financial crises more predictable.

Opening up the market to competition and authorizing a second credit bureau in 2016 was a further step towards improving the quality of services provided to credit institutions and consumers. The range of products offered has expanded to include new decision-aiding tools, such as “behavior scoring”, “portfolio monitoring” and “alerting”. In close coordination with the Ministry of Economy and Finance, Bank Al-Maghrib is currently working to rapidly develop the legal and regulatory framework of “credit bureaus” in order to expand its scope to other nonfinancial data providers, including telecom operators and water/electricity suppliers. This will help the unbanked population to have access to financing, as demonstrated by the experience of pioneering countries in this area. 2  As regards the implementation of the second pillar, the Bank has undertaken since 2016, in collaboration with the IFC, an appraisal of the existing system and has identified the characteristics of the future credit registry. In this connection, today’s seminar is a real opportunity for us to learn about the experiences of forerunners in this field, with a view to finalizing our own roadmap. Ladies and gentlemen, Six regulators, well known for their optimal use of credit registries, will present to us today how they use credit reporting data to achieve their core missions, particularly micro and macro prudential regulation, systemic risk control and monetary policy, and strengthen off-site supervision.
On the other hand, the private sector should continue taking precautions to increase efficiency; establish strong and transparent balance sheets; shift towards capital markets; pay attention to the principles of risk management and pay effort for the allocation of resources to the research and development activities. Parallel to this, banks should increase their contributions to the sustainability of growth through diversification of credits they offer to the private sector. Dear Guests, Upon mentioning the growth process in our country, now I would like to dwell on another important item on the agenda, which is employment. Looking at the data about the labor market, we see that the number of the employed has been on the increase as of 2002. This increase is more apparent especially in the sectors other than agriculture. 660 thousand new jobs were created in the last year in the sectors other than agriculture as of September 2006. A comparative improvement in the unemployment figures was recorded parallel to the increase in employment. When compared to the same period of the last year, decreasing by 0.6 points, the unemployment rate became 9.1 percent in September 2006. Nevertheless, these favorable developments in the labor market have not yet arrived at a satisfactory level. The main reason for the delay and weakness of the improvement in the labor market despite the results taken in the other fields of economy are the structural problems in the labor market. Agricultural sector leads the list of these structural problems.

Upon the emergence of the possibility of a permanent deterioration in expectations causing inflation to diverge from the targets in the medium term, the Monetary Policy Committee made effective use of the short-term interest rates as the basic policy instrument. Within this context, the Committee implemented a strong tightening policy and increased the policy rates by 425 bps to 17.5 percent in the June-July period in order to put an end to the deterioration in medium and long-term inflation expectations and also to render the inflation targets attainable in the medium term. Following this strong monetary tightening of the Monetary Policy Committee and the measures taken for financial stability, fluctuations in financial markets gradually decreased and medium and long-term inflation expectations partially improved. In this regard, inflation expectations of 12 and 24 months decreased to 7.1 percent and 5.6 percent respectively, as of the end-2006. The Monetary Policy Committee kept the policy rates unchanged in the period between AugustDecember in 2006 due to this improvement observed in inflation expectations, mild progress in international liquidity conditions and a gradually favorable outlook of the future course of inflation compared to the first half of the year. 2  BIS Review 28/2007  Dear Guests, I would like to draw your attention to two rather important factors about our decisions regarding shortterm policy rates. Firstly, the decisions that the Central Bank took regarding the short-term policy rates affect the economic activities with a certain lag, as is the case with the other economies.
In some cases, new guidelines are altogether needed for regulating new products and innovations such as mobile banking, internet banking and Islamic banking. The need for quick and appropriate responses to market developments and innovations while important also need to be balanced by a well designed regulatory framework that ensures the maintenance of a stable and sound financial system. Chairperson, the stability and soundness of the financial system is in turn, heavily dependent on the adequacy of capital. It is essential for the right balance to be struck between the need for banks to hold adequate capital to absorb losses and the need to ensure that capital requirements do not unduly constrain from lending to the real economy. It is also important that banks are not so highly leveraged relative to common equity as to create incentives for excessive risk taking. The required capital ratios should therefore be viewed in the context of the high quality capital – Core Tier 1 and Tier II definitions and should exclude subordinated debt as providing relevant support. Distinguished delegates, Basel II provides a pragmatic approach to determining overall capital levels. It introduced a new approach to the definition of relative capital requirements to be held against specific asset categories. The challenge in this approach is in deciding what an optimal level of capital is especially in light of massive scale of economic losses now being suffered as a result of the banking system collapse.

Although Zambia did not experience bank failures during the current global crisis, work on the establishment of the deposit protection scheme is currently in progress. Quick bank resolution is also an essential element that inspires confidence in the financial system. In Zambia, for instance, work on liquidations has been going on for some time in some cases. The establishment of an effective depositor protection scheme should assist in early bank resolutions while providing protection to the most vulnerable depositors. Chairperson, although the Bank of Zambia has exercised the function of lender of last resort (LOLR) in the past during the banking crisis in the 1990s, there was no clear LOLR policy framework in place. There has been renewed concern that the economic slowdown, if prolonged, could create liquidity pressures in the banking system in Zambia. Past  BIS Review 63/2010  3  experiences and current global slowdown build a strong case for a clearly designed LOLR framework in which the central bank can exercise this function. The challenge in the regulatory and supervisory arrangements is that of operationalising the lender of last resort. Lender of last resort should be seen in light of its role in promoting wider public good and systemic financial stability and ultimately, the wider economic stability. It plays an important role in the economy to avoid the social cost of a bank failure. Some bank failures may lead to contagion effect on other banks which has the potential to transmit to the entire economy.
More worryingly, we have seen major cyberattacks occurring globally which caused disruptions to essential financial services and destroy savings or financial assets that the underbanked depend on. Financial institutions are not only prime targets for cyberattacks but bear tremendous fiduciary and legal, regulatory, and compliance responsibility to protect customer data and privacy. Safeguarding trust in the formal financial system is now particularly important for the newly included grassroots. In financial services, the push for digital innovation, disruptive technologies, delivery of more personalized customer experiences, and seamless access to consumers for more inclusion continuously introduces new threats. Forrester Research calls this dynamic an “epic” battle between privacy and digital innovation, and predicted that by 2020 financial services and insurance companies expect to generate the biggest portion of their total sales from digital products, services, or items sold online. Alongside this drive toward digital business, many organisations rely on legacy IT systems that are expensive to maintain and susceptible to more vulnerabilities, greatly compounding the cybersecurity challenge. Importance of cybersecurity The current chairman, president and CEO of IBM, Ginni Rometty had described cybercrime as “the greatest threat to every profession, every industry, every company in the world.” While cybersecurity used to be considered an issue primarily for the IT folks, these days it is an agenda item for the entire C-Suite. What has really changed? It is not just the frequency of media reports on cybersecurity breaches. If anything, these are merely symptomatic of a larger shift underway.

I’m glad to say that our efforts to reform and strengthen the risk focus have paid off. Excellencies,  2  BIS Review 15/2009  In summary, the Thai economy has achieved significant structural improvements since 1997. Our economy has strong fundamentals, underpinned by price and financial stability. Nevertheless, it is perhaps inevitable that we may yet see more negative impacts from the present international financial market turmoil before the improvement, since no one knows how much deeper or longer this global downturn will be. What we need to do now is to ease some of the pain currently experienced, build up safeguards and prepare for the eventual upturn. In Thailand, policymakers on all fronts together with the private sector are doing just that. BIS Review 15/2009  3