samchain/econo-pairs-v1 huggingface dataset:
At the time there was evidence of a breakdown in communication and trust between small firms and their finance providers which threatened the effectiveness of the provision of finance to this sector of the economy. Since that time, the situation has improved, in part against a background of economic growth but also with a change in the structure of small business finance with a move away from overdrafts towards some element of fixed-term  3  BIS Review 19/2000  lending. A particular interest has been financing for high technology companies, focusing attention on the access that technology-based firms have to the equity they need in their early stages. The Bank produced its first report in this area in 1996 and has since held an annual forum with regular meetings with small business groups, venture capitalists and fund managers. Small business investment is especially relevant for Wales given the ongoing need to attract more knowledge-based industries to replace more traditional sources of investment. One final area where the Bank has taken an active role is worth mentioning; and that is in assisting the UK financial sector in its practical preparations for EMU. This was concentrated in the run-up to the introduction of the euro at the end of 1998 but the UK’s readiness at that time has meant that a large part of cross-border business in euro, whether in bonds or equities, is transacted with the UK, particularly in London.

The committee, has discussed issues such as: (i) annual work plan and internal audit engagements for the year; (ii) periodic reporting by the Inspector General on the auditing activity; (iii) financial statements; and, (iv) performance of operational risk management at the Bank of Albania. It has met regularly, without the presence of the administrators, with the Inspector General. Lastly, I would like to emphasise that the Council has regularly complied with Bank of Albania’s accountability obligations to the Assembly and its transparency obligations to the public, and the financial system. Albanian economy and monetary policy in 2018 The monetary policy maintained, even strengthened, the accommodative stance in 2018. The policy was in line with our inflation target convergence objective, consistent with the cyclical position of the Albanian economy, and aligned with the consolidation trend of the fiscal policy. 2/8  BIS central bankers' speeches  The Albanian economy performed positively throughout 2018. Aggregate demand increasingly expanded, enabling thus a further increase in production, employment and wages, and contributing to the improvement of the main economic and financial balances of the country’s economy. A few figures to illustrate it. According to INSTAT data, the pace of economic growth accelerated to 4.1% in 2018. Economic growth was broad based; it reflected positive contributions from the expansion of the consumption of households and enterprises, and of exports. According to INSTAT data, employment in the economy rose by 1.6% in the previous year, whereas the unemployment rate fell to 12.3% from 13.4% a year earlier.
22  See, for instance, the IMF, WEO October 2014. 8  BIS central bankers’ speeches  1970s, real interest rates were also close to zero or negative in many countries, but at that time inflation was high. A practical example that is close to hand of how the conditions for monetary policy in Sweden are affected by international developments is that the ECB has chosen to conduct a very expansionary monetary policy in the euro area. In the slightly longer term, it is good for the Swedish economy that the ECB’s policy stimulates growth and inflation in the euro area, as this contributes to higher exports and higher imported inflation in Sweden. In the short term, however, problems may arise if the krona strengthens so that inflationary pressures risk being lower in a situation where inflation is already too low and has been so over a long period of time. As I demonstrated earlier in the simple model, a lower international interest rate risks having a restraining effect on Sweden in the short term via the exchange rate, if we keep our interest rate at a relatively higher level. Current monetary policy reflects earlier lessons This brings me to current monetary policy. As I have argued, monetary policy has changed over time and has been adapted to the new situations that have arisen. And that’s how it’s been this time too. I would say that current monetary policy has learnt many lessons from earlier episodes.

As far as risk appetite and capitalisation are concerned, the situation of domestically focused banks has not changed significantly during the last six months. On the one hand, banks’ risk appetite has not diminished overall. This is substantiated by the following: First, in the case of new mortgage loans, both the loan-to-value ratios and loan-toincome ratios have remained at a high level. Second, interest rate risk has not declined and remains high. Third, the already low margins on interest income have continued to decrease. There are nevertheless considerable differences from one bank to another, in particular as to how their risk appetite has evolved. Certain banks have reduced their risk-taking significantly during the last quarters, while others have increased their exposure to risk. On the other hand, average capitalisation for domestically focused banks relative to regulatory requirements is still at a historically high level. However, as the SNB already emphasised in its latest Financial Stability Report, the resilience of these banks, as measured by the regulatory capital indicators, is overestimated. Therefore, six months after being announced, the stricter capital requirements for mortgages and the revision of the self-regulation rules for mortgage lending have not, or not yet, led to a significant trend reversal in mortgage and real estate markets, although there is some anecdotal evidence pointing in that direction. It cannot be ruled out that the impact of these measures has not fully materialised or is simply not yet reflected in the data available.
It is very likely that once the dust has settled, banks everywhere will have to face a much changed operational and regulatory environment. This will entail a number of longer-term challenges. For a start, when established business models no longer work, innovation cannot be far behind. New banking institutions, both physical and virtual, will appear. This will accentuate the degree of competition in the limited retail deposit and loan markets and result in narrower interest rate spreads. In Malta, the traditional dependence on retail funding will also be put to the test. All this will happen against a backdrop of a more stringent regulatory regime. In sum, the challenge will be to meet the higher regulatory standards without stifling the dynamism that has characterised our banking industry in recent years. In the remaining part of my remarks, I will focus on some issues that are likely to become especially relevant in the future. New accounting regime Changes in the regulatory framework are expected to include revisions to accounting rules. Accounting standards are a key aspect of the financial infrastructure and essential for market discipline. In line with the recommendations of the recent de Larosière Report, accounting standards should not distort business decisions or promote pro-cyclical behaviour nor discourage long-term investment. Several standard-setting bodies had already emphasised the need for the exercise of sounder judgement in the estimation of fair values, particularly for instruments that do not trade in active markets. This raises concerns of both a macro- and micro-prudential nature.

But the intention – the international commitment to macro-economic stability – is clear. Acceptance of the aim of macro-economic stability served to bring into sharper focus the structural, supply side, of the economy – that is the whole raft of influences that can affect the underlying growth rate of capacity and thus the growth rate of aggregate demand that can be sustained. And here, too, there has been a strengthening international presumption in favour of open markets and free competition – both domestically and internationally – with a continuing strong presumption against predatory trade or exchange rate manipulation. The justification is that undistorted competition contributes to potential global economic growth through increased efficiency and the more effective allocation of productive resources. Faster growth in turn provides a more favourable context for addressing social concerns, including the issue of poverty. The international presumption in favour of free markets in itself is somewhat remarkable, given that, at the micro-economic level, increased competition invariably constitutes a threat to established producers – and their employees – who might well be tempted to urge protection in one form or another on their national governments. Consumers, who benefit from such competition, tend to be less vocal or well organised. The threat of protectionism is never, therefore, far away. But in fact the presumption in favour of competition has proved encouragingly robust. And that is not just in relation to international trade.
Globalisation, with increased trade and mobility between different countries, has been one reason why we have had favourable economic development, including low and stable interest rates and low inflation.2 If conflicts in the world were to result in globalisation slowing down, this would probably have negative consequences for both Sweden and the global economy. If trade decreases and the mobility of labour and capital deteriorates, the conditions for economic growth will also deteriorate. Greater protectionism means slower development in, for example, information and communication technology, a sector that has been a strong driving force behind the pressure for change and productivity improvements in various parts of the economy. Several of the factors that have dampened price pressures in recent decades thus risk becoming less important in the future. Risks increasing in the financial system Despite the global financial crisis 2007-2010 and the pandemic 2020-2022, GDP has grown significantly in recent decades. Higher incomes and wealth have also led to the financial sector becoming a larger and more important part of the economy. Furthermore, rapid technological developments combined with globalisation have paved the way for new players and services within the framework of what is commonly referred to as FinTech. While this is essentially positive, it has also exposed the financial system to new risks, while many more traditional risks remain. The bank collapses in the United States and Switzerland are concrete examples of this.

However, and as I discuss below, this may not be enough to ensure macroeconomic stability. Monetary policy in the context of an inflation targeting regime also contributes to stability by leaning against the wind. Capital inflows that lead to an appreciation of the currency reduce inflationary pressures allowing for an interest rate cut. This, in turn, reduces incentives to capital inflows and takes pressure off the currency. This phenomenon has been recently experienced in Chile. In recent weeks, the peso has appreciated significantly. At the same time the economy has been showing a rapid expansion: despite the earthquake we suffered this year growth is expected to be between 5% and 5.5% this year and between 5.5% and 6.5% next year. Although in our latest Monetary Policy Report we said that the bank will keep withdrawing the significant monetary stimulus, without the strengthening of the currency the withdrawal would certainly be faster. However, these macro policy actions may not be enough, in particular because capital inflows may be a source of bubbles in domestic asset prices. Indeed, in emerging markets bubbles normally take the form of an exchange rate appreciation. In this way, all assets become overpriced, not necessarily by higher prices in domestic currency, which may also be happening, but by increasing the value of the currency. A much debated issue in industrial countries has been whether tightening monetary policy could help burst a bubble in asset prices.
(Slide: General government net lending in the United States and the euro area). There are also major differences between the countries in the euro area. In some of the euro countries the deterioration in public finances has been dramatic. I will come back to this later. 1  These figures are taken from the OECD’s latest Economic Outlook, November 2009. BIS Review 56/2010  1  There are several reasons for the deterioration in public finances There are a number of causes behind the substantial deficits in public finances. Firstly, many countries were in a weak initial position even before the crisis began, as their public finances were already in deficit. Many countries failed to save money for a rainy day when times were good. This is illustrated by the fact that in the decade prior to the crisis average general government net lending was –2 per cent of GDP in the OECD area, the USA and the euro area. In the case of the euro area this is remarkable given that the so-called growth and stability pact stipulates that the aim should be to achieve a balance or a surplus in public finances in the medium term. (Slide: Average general government net lending). Secondly, a downturn automatically leads to a weakening of public finances. Tax revenues fall and cyclical expenditure, for example on labour-market policy, increases. The OECD estimates that this effect has accounted for just under half of the total deterioration in public finances since 2007.

This put us in a situation with a gross public debt of 84 per cent of GDP, a central government debt of 76 per cent of GDP and interest expenditure amounting to over 6 per cent of GDP in 1996. (Slide: Sweden’s central government debt and gross public debt). Like the countries in the euro area whose public finances are in a poor state today, Sweden had also experienced problems with the development of costs. However, unlike these countries, it was possible for us to limit the loss of competitiveness by means of a depreciation of the currency, just as in the United Kingdom today. We also had a long-established pattern of substantial surpluses in public finances in normal times, which probably increased the credibility of our consolidation measures and thus limited our costs for financing the central government debt. At the beginning of the current downturn we had a surplus in public finances of around 4 per cent of GDP in 2007 and it looks as though we will have a deficit of approximately 1–2 per cent of GDP in 2010. This is a weakening of the budget balance of the same magnitude as that expected for the euro area, and unlike most other EU countries, it appears that Sweden will be able to stay above the stability and growth pact’s deficit limit of 3 per cent of GDP. The comparison with the euro area and the United Kingdom is striking. (Slide: General government net lending in Sweden, the euro area and the United Kingdom).
BIS Review 65/2009  9  Figure 7 Consumers and entrepreneurs' perception indexes 90  140  70  70  70  120  60  60  50  100  50  50  30  80  40  40  60  30  10  86  90  94  98  IPEC (1)  02  06  04  05  06  07  Total IMCE (3)  U. de Chile (2)  08  09  30  Minus mining (3)(4)  (1) Values above (below) 50 points indicate optimism (pessimism). Before January 2003, the index was published quarterly. Since then it is published on a monthly basis. (2) Index, March 2001 = 100. (3) Values above (below) 50 points indicate positive (negative) expectations. (4) Weighted average of three sector confidence indicators: manufacturing Industry, retail and construction. Sources: Adimark, Universidad de Chile and ICARE/Universidad Adolfo Ibáñez.

José De Gregorio: Monetary Policy Report Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, at the presentation of the Monetary Policy Report before the Finance Commission of the Honorable Senate of the Republic of Chile, Santiago, 13 May 2009. *  *  *  Introduction Ms President of the Finance Commission, Senator Evelyn Matthei, senators integrating this Commission and senators present, On behalf of the Board of the Central Bank of Chile I am grateful for your invitation to share our vision of recent macroeconomic developments, prospects and implications for monetary policy that are the substance of the Monetary Policy Report (the Report) of May 2009. When we began presenting our Report to this Commission in January this year, we said we were in the midst of the worst economic and financial world crisis in several decades. Today, four months on, we can say the situation has worsened. The world at large is in a severe recession. This year the level of global output will fall for the first time in over sixty years, and world trade will see an unprecedented decline. Since the Great Depression we hadn’t seen a world crisis of the magnitude we are going through today. Big challenges remain open, but in the past few weeks there has been “a glimmer of hope” that suggests that the developed economies may be stabilizing.
The entrance of new, large emerging economies into the world trading system has strongly influenced economic developments. For some years now, the short-run trade-off between inflation and economic growth has been extraordinarily favourable. Inflation has been low and economic growth high. We have been hit by massive and long-lasting positive supply shocks thanks to globalisation. To accommodate a higher growth potential and to maintain the nominal anchor, central banks worldwide for a long period held short-term interest rates well below what can be regarded as a normal level. History has shown us that low and stable inflation is the best contribution monetary policy can make to growth and macroeconomic stability. A new, globalised world does not change this paradigm. Today, monetary policy aimed at price stability is the norm, and in most countries monetary policy has been delegated to independent central banks. Frederic Mishkin from the Board of Governors of the Federal Reserve System will be joining us this afternoon to speak on advances in monetary policy. We are privileged to have such a prominent group of speakers here today. I am also happy to see that our conference has attracted such a large number of participants from various institutions both in Norway and abroad. This conference is Norges Bank’s gift to Jarle Bergo, as a thank you for all his contributions to the Bank over the past four decades. I hope that both Jarle and the rest of you will enjoy it.

Ladies and gentlemen, there are small risks and big risks. There are risks that affect a single 1/2  BIS central bankers' speeches  bank and risks that affect the entire sector. And then there are risks that stretch across sectors and even countries. In that regard, there is one thing that comes to mind: Brexit. Right now, it is still very unclear how the world will look after the UK has left the EU. Still, banks and supervisors must prepare for any scenario. The worst case would certainly be a “hard Brexit”. In that scenario, the UK would become a “third country” from the viewpoint of the EU. As a result, UK banks might lose their European passport and, with it, access to the Single Market. This would affect many of the 40 UK banking groups that currently operate in the Single Market. They would then have to find another way in. Most likely, they would seek to obtain a banking licence in an EU country to regain the passport. In the euro area, these licences are granted by the ECB. We obviously don’t care whether UK banks move to Frankfurt, Dublin, Paris or some other location in the euro area. What we care about are safe and sound banks. We will therefore resist any supervisory or regulatory race to the bottom. Any bank that moves to the euro area will have to meet our standards – regardless of whether it comes from the UK or any other place.
But the slowdown was still modest, it affected only house purchase loans and it did not suffice to curb the rising trend of the sector’s debt/income ratio. The associated interest burden also increased, further boosted by the rise in interest rates. Thus, although there has been some headway in Spanish households adapting their spending and saving patterns to the progressive withdrawal of the monetary stimulus, this is still limited. In the corporate realm, however, the presence of other factors meant that the increase in interest rates scarcely affected corporate investment and debt. As earlier stated, investment in capital goods  BIS Review 67/2007  5  became the most dynamic expenditure component in 2006, owing principally to two factors: the pressure exerted by demand on the degree of capacity utilisation, which drew close to its historical high; and the sound results posted by most companies along with their favourable outlook. The buoyancy of investment was duly reflected in the sector’s debt ratios. These increased once again, fuelled by bank lending growth rates of around 30%. Significantly, however, a very sizeable portion of funds raised was earmarked for financing Spanish institutions’ participation in various mergers and acquisitions. These M&A operations showed renewed vigour in 2006 not only in Spain but also worldwide. As in the case of households, the simultaneous increase in liabilities and in the related borrowing costs translated into an increase in the interest burden borne by corporations.

In 2006, as the strength of economic growth progressively alerted to the emergence of inflationary pressures, the monetary policy stance became less expansionary in virtually all economies, developed and emerging alike, and inflation rates held at low levels overall, without any substantial passthrough of higher energy prices to core inflation being discernible. Yet the reduction in spare capacity and labour market tightening will heighten inflationary pressures in many economies, and further oil price rises cannot be ruled out. Moreover, as the business cycle matures, the task of monetary policymakers may become more difficult, especially for certain central banks like the Federal Reserve which will have to square inflationary risks with those stemming from the economic slowdown. The euro area As already stated, the euro area economy finally managed to emerge from the phase of low growth experienced in recent years. GDP for the area grew at a rate of 2.9% in 2006, almost double that of the previous year and the highest rate since 2000. For the year as a whole, inflation, measured by the rate of increase of the HICP, stood as in 2005 at 2.2%, much influenced over the course of the year by oil price movements. Core inflation moved mildly upwards during the year, perhaps reflecting some  BIS Review 67/2007  1  minor indirect effect of the rise in energy prices against a background of strengthening activity and employment. Nonetheless, there has been notable wage moderation so far, perhaps in response to greater labour market flexibility and growing competitive pressures worldwide.