samchain/econo-pairs-v1 huggingface dataset:
(2009), Fiscal Policy with Credit Constrained Households, European Economy Economic Paper No 357 and ECB Monthly Bulletin Box (2012), Fiscal multipliers based on the ECB’s New Area-Wide Model, December 2012, pages 83–85  11  See Reinhart C., V. Reinhart, K. Rogoff (2012), Public Debt Overhangs: Advanced-Economy Episodes since 1800, Journal of Economic Perspective, 26(3), pages 69–86, and Checherita-Westphal C., P. Rother (2012), The impact of high government debt on economic growth and its channels: an empirical investigation for the euro area, European Economic Review, 56, pages 1392–1405. 12  See De Fiore F., H. Uhlig, 2011, Bank Finance versus Bond Finance, Journal of Money Credit and Banking 43, pages 1399–1421. BIS central bankers’ speeches  5  alleviated the funding constraints of banks extending loans to SMEs by accepting such loans, and asset-backed securities (ABS) backed by pools of loans, as collateral in its monetary policy operations. The Banco de Portugal has been proactive in implementing these measures. Additional credit claims alone account for around 15 percent of total collateral posted by Portuguese banks with the ECB, and help to generate a large collateral buffer. The ECB will support a revival of the ABS market in the euro area, which would help SMEs to benefit from the improving financing conditions. Let me also point out that the restructuring and strong capitalisation of banks is an important condition for restoring the smooth provision of credit to euro area corporates and households.

The yields of government securities and interest rates on lek deposits have also fallen, whereas the interest rate on lek loans continues to move in line with a medium-term downward trend. Overall, while downward, the credit cost takes into account high risk levels arising from loan default. Monetary indicators have reflected developments in the real economy and exercised low inflationary pressures. Broad money expanded 2.8% in January, from 2.3% a month earlier, in annual terms, driven mainly by the expansion of the forex component. Credit to the private sector maintained the annual contraction rates in January, standing at – 1.4%. The banking system continues to be well capitalised, with sound financial parameters. But, the banking system’s lending continues to reflect the private sector’s weak demand for funds, resulting from the downward credit demand and added prudence by banks when lending. *  *  *  New available data support our assessment for gradual growth of the economy in the quarters ahead. The transmission of the monetary stimulus, payment of arrears by the Government to businesses, and improvement of confidence are expected to boost consumption and investments in Albania. Also, the steady recovery of the global economy is expected to boost foreign demand and its contribution to aggregate demand. The Albanian economy, however, is expected to operate below its potential in the period ahead. Below-potential economic growth and low inflationary pressures from the foreign sector are expected to be reflected in low inflation rates, in the short-term period.
Therefore, the Central Bank must be attentive to steer monetary policy to avoid secondround effects on other prices, wages, or private sector inflation expectations due to supply shocks, that could end up driving inflation persistently away from the 3% target. Of course it also has to foresee the consequences of the business cycle over inflation. It also The efficacy of this monetary policy over the 2000s is evident (Figure 3). BIS Review 97/2007  3  Figure 3: Deviation of inflation from its target  Source: Central Bank of Chile. The international financial turmoil Regarding recent developments in world financial markets, the first thing to do is recognize that the adjustment they are undergoing is part of an overdue normalization process in credit risk spreads for a large variety of securities, and volatility levels of the riskier assets prices (Figure 4). In fact, for some time our Financial Stability and Monetary Policy reports have stated that a correction in risk premiums and an increase in market volatility were to be expected, because the good conditions would not last indefinitely, in particular given the monetary policy normalization period in the main economies that was already prolonging for some years. It is very likely that today we are witnessing precisely that correction in risk valuation and volatility. Figure 4: Sovereign risk premiums and volatility (basis points)  (1) Risk premium on developed market corporate bonds with less than investment grade risk ratings (CCC to BB), according to Standard and Poor’s.

In parallel, commercial banks have encountered difficulties in transferring to other investors the credit risk assumed when financing private equity funds engaged in leveraged corporate purchases. In sum, in this scenario of increased uncertainty regarding the value of some assets, demand for safer financial instruments has risen sharply, with increases in risk premiums and large downward corrections in the interest rates of government bonds (Figure 5). BIS Review 97/2007  5  Figure 5: Long-term interest rates (percent)  Source: Bloomberg. The measures adopted in the past few days by central banks in industrial economies to pour liquidity into banking systems have been directed at both preventing financial swings to affect monetary policy conduction in the main economic zones and to facilities the operation of credit markets. Rather than sustaining the valuations of asset prices, the main central banks focus on ensuring that the process of credit risk revaluation can proceed without jeopardizing access to funding and liquidity of solvent entities which, if occur at a generalized scale, could have negative effects on payments’ stability, economic activity and the financial system at large. So, as time goes by, information on the quality of ABSs held by agencies and hedge funds should become clear, together with the materialization of equity contributions and/or liquidation of funds that have lost a big portion of their capital. This process is currently under way.
Third, price stability provides markets with an indispensable nominal anchor for adjusting changes in wages consistently with productivity growth, thereby contributing to preserve competitiveness. And fourth and not the least, price stability prevents the economically and politically undesirable arbitrary redistribution of wealth and income that arises in inflationary as well as deflationary environments. Ensuring price stability and ensuring the credibility of price stability over the long term is the most important contribution of the ECB and the Eurosystem to growth and job creation in Europe. The ECB makes also an important contribution to safeguarding financial stability in the euro area. This should not be underestimated, given that a well-developed and stable financial system improves the efficiency of financing decisions and ultimately fosters economic growth. Over the last five years, the ECB’s stability-oriented monetary policy has resulted in low and stable inflation and has ensured that medium and long-run inflation expectations have been well anchored. Furthermore, the euro area has enjoyed a high degree of financial stability. However, a monetary authority such as the ECB and the Eurosystem provides a necessary condition for growth but is not responsible for the other conditions that are equally necessary to ensure higher long-term growth and prosperity. This requires in particular sound fiscal policy and bold structural reforms. 2. The need for sound public finances  Sound public finances support a stable macroeconomic framework.

This relates first to the completion and implementation of the FSAP and its follow up. The FSAP should give rise to genuine common financial legislation and regulation for market players. The so-called Lamfalussy framework, which allows for flexible technical rules at the EU level complemented by enhanced co-operation as regards national implementation and enforcement, has for good reasons been extended from the securities field to banking, insurance and financial conglomerates. A second area of structural reform in capital markets is the further consolidation and integration of market infrastructure and the further harmonisation of the standards and conventions routinely used by market participants. There is a large variety of remaining obstacles to a fully integrated and efficient euro area market which still needs to be addressed by the relevant actors. A simple but telling example of the benefits that collective action can bring in this regard is the development of the EONIA overnight interest rate index by market participants organised within a trade association. This index has become the generally accepted reference in the euro overnight interest rate swap market, leading in turn to the impressive development of this particular market segment. Turning to labour markets, a number of structural reforms have been undertaken in recent years and efforts are still on-going in several Member States. Although unevenly implemented across countries, the positive impact of past reforms in the labour market has become visible.
I had a unique perspective on this event, witnessing its start when I was a finance minister and seeing it continue to unfold during my time as IMF Managing Director. This crisis produced the second lesson I would like to highlight, which was possibly easier to see when one was looking from the outside. It was clear early on that our monetary union was lacking a full set of institutions and needed to be strengthened. We became painfully aware that the euro area was particularly vulnerable to self-fulfilling panics. What became evident is that the perceived commitment of policymakers was a crucial variable in effective policymaking. Initially, we perhaps underestimated how important those perceptions are. It took time to realise that, in a period of high uncertainty, being seen as fully committed could shift financial markets between polar opposites – from working against us to working with us. That is why the crisis abated very quickly in 2012 when – within a few months – the Heads of State or Government agreed to launch the banking union and the ECB acted to remove unwarranted fears in financial markets. It became clear that our commitment to the euro was beyond doubt. The euro is, of course, irreversible. The lesson was also that, in times of crisis, the most important signal for policymakers is their determination to act. And this lesson was absolutely crucial when the pandemic hit us last year.

I believe that we can say something similar about the arc of progress. Europe moves forward in stops and starts. It often learns lessons the hard way. But its arc bends towards a stronger and more united Europe for all citizens. The common currency 3/4  BIS central bankers' speeches  reflects this continued progress, with support for the euro at its highest level on record at 80%, up from 66% a decade ago.8 This should give us hope as we look to the future. And it should give us confidence that, even when Europe may seem divided or lacking in direction, there is a thread guiding us forwards. Over my career, I have had the privilege to watch this process unfold up close, to share in its highs and lows. I have been lucky enough to see it from three different perspectives – national, European and global. And I am honoured to continue working to take Europe forwards. I am very pleased to see the contributions of the European Central Bank recognised through my acceptance of this prize. Thank you. 1 Common Equity Tier 1. European Banking Authority (2020), “Basel III monitoring exercise – results based on  data as of 31 December 2019”, December. 2 Lagarde, C. (2019), “The future of the euro area economy”, speech at the Frankfurt European Banking  Congress, 22 November.
When the monthly allocations to the Petroleum Fund are larger than the foreign exchange transfers from Petoro (SDFI), Norges Bank will purchase foreign exchange in the market to cover the difference. The Ministry of Finance determines the amount of the monthly transfers to the Petroleum Fund on the basis of its estimates in the National Budgets and the Revised National Budgets. The Ministry may also adjust the amount on the basis of new information concerning, for example, developments in oil prices. Given the current high level of oil prices, purchases in the next few months will probably be considerably larger than they have been during the summer. Norges Bank has not defined a target for the exchange rate. Nevertheless, developments in the krone are of considerable importance to interest-rate setting because the exchange rate influences inflation and output. Portfolio investments may easily dominate movements in the krone exchange rate in the short term. Themes in foreign exchange markets shift. In periods, investor focus on stock returns feeds through to exchange rate movements. During periods of political and economic unrest, investors may choose individual currencies as a safe haven - often the Swiss franc. The Norwegian krone was probably also perceived as a safe haven when oil prices rose in the autumn of 2002 as a result of the uncertainty concerning a possible war in Iraq. In the period from March to May 2003 and throughout the autumn, the krone showed a tendency to appreciate.

Besides these measures, with an extensive arrangement made in December, the TL required reserve ratios were differentiated by maturity and the reserve requirement base was expanded to include certain foreign and domestic repo transactions which were formerly not subject to reserve requirement. This arrangement aims to reduce maturity mismatch in banks’ balance sheets by extending the maturity of banking sector liabilities and also aims to encourage long-term capital flows. 46. The ongoing strong course of credits as well as other domestic demand indicators in March implied that additional monetary tightening would be necessary. The CBRT assessed that implementing monetary tightening through reserve requirements, rather than using policy rates, would be more effective in containing macro financial risks resulting from the divergence of domestic and external demand. In this respect, the CBRT decided to deliver a notable hike in the weighted average of required reserve rates on short term liabilities. Accordingly, TL required reserve ratios for sight deposits and short-term deposits/participation accounts and other liabilities were raised. Our measures regarding the required reserves are displayed on the slide. With the last arrangement to be effective as of April 15, 2011 in addition to prior adjustments since October 2010, a total of TL 38 billion liquidity will have been withdrawn from the market. 47. Our measures are expected to have an impact on domestic demand and credits starting from the second quarter. The adopted policy measures ultimately aim to contain macro financial risks by inducing a more balanced growth path for aggregate demand components.
Indeed, the first time I came to Reading was in 1977 when I was supporting a pub-rock band called Sounder, who persuaded me to drive the band members to a gig in the town centre. Also around that time, the great rock band Led Zeppelin released a film and soundtrack album called “The Song Remains the Same” – featuring their live performances around the world in the mid-1970s. The question in my mind now is how long the monetary policy song can remain the same, when it might be out of tune with the rest of the background music from the real economy – of economic recovery and above target inflation. That Led Zeppelin album “The Song Remains the Same” contained an extremely long live version (lasting nearly half an hour!) of a track which appeared on their first album – entitled “Dazed and Confused”, in which Jimmy Page plays his guitar with a violin bow – something I must say that I have not attempted in my guitar-playing career. There have been many aspects of the current financial crisis and the recent performance of the economy which have left us all “dazed and confused”. The financial crisis has served as a severe jolt to the prevailing view in the mid-2000s that the economy had entered a period of “Great Stability” of steady growth and low inflation.

In my view, that now points to a gradual withdrawal of some of the stimulus we provided to the economy in more difficult circumstances last year – not so much as to undermine the recovery, but to keep it on a low inflation path, consistent with the Committee’s remit. 7  10  See Sentance (2009a) and Sentance (2009b) for a more detailed discussion. BIS Review 99/2010  References Eurostat (2010) “Regional GDP per inhabitant in 2007”, Press Release 25/2010 – 18 February 2010 Lee, N. (2010) “No city left behind”, published by the Work Foundation, July 2010 Sentance, A. (2009a) “Monetary policy in turbulent times” Speech at the Agricultural Engineers Association Annual Conference, Institution of Civil Engineers in London on 21 April 2009 Sentance, A. (2009b) “Energy and environmental challenges in the new global economy” Speech at the British Institute of Energy Economics Sustainable Energy Seminar, London on 21 September 2009  BIS Review 99/2010  11
At this time, consistent with developments elsewhere, more positive signs in the real economy are also beginning to emerge in Asia, and this has led to a view that conditions for recovery look more promising in Asia, given the lesser impact on the region’s economic fundamentals and the banking sector. I find this view quite plausible. This is because, in the case of Asian financial crisis, it was also the countries that did not have a serious financial sector problem or external vulnerabilities that were able to recover relatively more quickly. On this note, let me digress to the issue of decoupling. If we divide the dynamic of financial crisis into three phases, namely, first the shock of the news phase when everything is on a downturn, to the second phase of market stabilization, and the third phase of economic  2  BIS Review 92/2009  recovery, it is clear from what has happened so far that, on the downturn, it is a recoupling story both for the real economy and for finance. The downturn has been quite synchronized because of the globalized nature of the world’s production, trade, and financial investment. Nonetheless, for the market stabilization and the economic recovery phases, I see decoupling in the timing and in the pace of recovery being a strong possibility.

4  BIS central bankers’ speeches  The housing bust and the onset of the recession in 2007 strained state and local government finances. Most local governments rely heavily on property tax revenue to fund their schools and other activities. This was particularly true during the first half of the decade, when the housing boom strongly supported property tax revenues. Then came the bust; steep declines in the housing market led to corresponding drops in local property tax revenue. State governments’ revenues also fell, as rising unemployment cut income tax revenue and reduced consumption shrank sales tax revenues. Since most state and local governments spend at least half of their budgets on education, these developments have constrained funding for our primary and secondary schools. To stave off drastic state and local government spending cuts, the federal government allocated $ billion to states, including New York and New Jersey, for education through the American Recovery and Reinvestment Act (ARRA). Research done here at the New York Fed reveals that school finances in both New York and New Jersey were impacted by the Great Recession, with New Jersey sustaining particularly severe cuts.4 ARRA funds helped school finances in both states, yet did not completely compensate for lost state and local revenues. With ARRA funding drying up and our local and state economies still under stress, a question looms before us. How might we expect school finances and student learning to fare in the near future?
At that date, the Governing Council will decide on whether to launch a digital euro. We will then need a few years of serious preparatory work to turn an e-euro into reality. * Let me say it again: on both digital currency and payments, we in Europe must be ready to move as quickly as needed or risk an erosion of our monetary sovereignty – something we cannot tolerate. European citizens must have access durably to effective and independent means of exchange. Recent experience in another field shows that we can do it. Six years ago, there was almost no climate policy among central bankers. Today it has become an important topic with concrete technical advances. I could have spoken of another “road for the future”: green finance. Here also, France and Europe have a strong initial advantage: Paris is home to the global secretariat of the NGFS with about 100 members now; its financial centre participants are ahead in their disclosure of and commitments regarding climate-related risks; France is the  first European country in terms of outstanding of green bonds. And last month, the French ACPR published the first climate pilot exercise worldwide actively involving both the banking and insurance sectors.

5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  Informed by these findings, the PRA will soon publish its final Supervisory Statement for banks, insurers and investment firms.10 This statement will set out the PRA’s expectations regarding firms’ approaches to managing the financial risks from climate change, including with respect to:   Governance, where firms will be expected to embed fully the consideration of climate risks into governance frameworks, including at board level, and assign responsibility for oversight of these risks to specific senior role holders;    Risk management, where firms will need to consider climate change in line with their boardapproved risk appetites;    The regular use of scenario analysis to test strategic resilience; and    Developing and maintaining an appropriate disclosure of climate risks. Recognising the need for industry to build capacity and to develop best practices, the PRA has established a Climate Financial Risk Forum, jointly with the FCA, to work with firms from across the financial system.11 The responses to our supervisory consultation reflect the urgency and significance of the issues. Perhaps for the first time in financial regulation, firms are both thanking their supervisors for raising an issue and pushing us to go further; with some asking for more prescriptive recommendations and others for mandatory disclosures.12 Certainly, while climate risk management is improving, there is more to do particularly when assessing strategic resilience. For companies, that means conducting scenario analysis.