samchain/econo-pairs-v1 huggingface dataset:
On the other hand, a developed and financially integrated region will be more attractive for foreign strategic investors, opening up the path toward regional development projects, particularly infrastructure ones where region’s banks might be directed in financing and investment. Further on I would like to give to you a short overview on the latest Albanian banking system achievements. After many years of difficult transition, in this late spring of 2005 the banking system is growing on a stable basis. Dear participants, I would like to ensure you that recently there are many qualitative developments of the Albanian banking system. I use the opportunity of this event to express that positive assessments on the banking system have been given also in the report prepared by the World Bank and International Monetary Fund after the completion of their assessment made on the Albanian financial system (FSAP-Financial System Assessment Program). Of course, this is good news. Conclusions of FSAP, of this important international passport, are an indication of our earliest conclusions that the Albanian financial system is characterized by a supervised and effective banking system. Regardless of what I mentioned above, sincerely feeling myself as a part of the banking system I would envisage that it needs better and faster motivation to reach higher contemporary standards in all the aspects of the banking activity. The banking system has experienced remarkable developments recently.

Since early 2003, we cut several times the core interest rate bringing it at its minimum historical level, 5 percent. In taking any monetary policy decisions we had considered the further invigoration of economic activity, keeping always an eye on inflationary developments and financial stability as well. As I would like to often mention in the IMF premises, Albania is considered as a successful story. The Board of directors have recently declared that Albania is enough mature to sign a new three-year agreement by the end of this year. The new arrangement will be a more flexible one leading Albania to a better access in the international financial market. Of course, what I mentioned above was just a brief resumé regarding the current situation of the banking system and the overall economic performance. There is no doubt that Albania’s attractiveness has further enhanced, and partially this reflects also the increase of confidence in the Albanian banking system. Using the opportunity of this very prestigious forum, I would like to share my voice with that of the Albanian representatives present in this panel, expressing that my country is more open, more consolidated, ready to absorb more ambitious projects and, of course, global projects. I wish you successful and fruitful proceedings of this meeting. Thank you. 2  BIS Review 41/2005
Payments between banks – or their customers – are effected via the Swiss Interbank Clearing (SIC) system and result in the reallocation of sight deposits across the participating banks’ accounts at the SNB. Moreover, banks are obliged to fulfil the minimum reserve requirements of the National Bank Act, i.e. to hold sufficient reserves either in the form of banknotes or as sight deposits with the SNB. Deposits with commercial banks are distinct from central bank money. When speaking of these deposits in my remarks today, I will be referring to the sight deposits – also known as demand deposits – of their customers. Customers also hold savings and time deposits with banks. These cannot be directly drawn on for transaction purposes, but they are cash equivalents and are therefore included in broader definitions of money. Bank customers can use their sight deposits to make payments. Unlike central bank money, the deposits with commercial banks are not legal tender, but they do represent a claim on central bank money. Bank customers can withdraw sight deposits in the form of banknotes, i.e. central bank money, or instruct their bank to make a cashless payment. The latter leads to a reallocation of SNB sight deposits – again, central bank money – from the customer’s to the payment recipient’s bank. From the public’s perspective, cash and deposits with commercial banks are virtually the same for payment purposes. However, deposits are subject not only to the risk of inflation, but also to credit risk.

The deposits created by the banking system belongs to the banks’ customers. It is the customers who can use it to procure goods or services, or to meet financial obligations, not the banks. 8 What also needs to be pointed out is that the impetus for credit and money creation comes not from the banks, but from their customers. A bank sets the conditions and must be able to transact the payments that its customers want to make with their deposits. But it is the customers who decide whether or not they want to take up the bank’s offer. The idea of ‘creating money out of thin air’ is more applicable to central banks. Since the demise of the gold standard, central bank money can no longer be exchanged for gold. This means that central banks really are in a position to simply ‘print money’, as the expression goes, which enables them to meet their obligations in their own currency anywhere and at any time. But even central banks face certain restrictions. Their tasks are defined by law, which in most countries requires them to ensure price stability. The instruments that allow them to create money thus serve the sole purpose of fulfilling a central bank’s legal mandate. Calls for broader access to central bank money In the second part of my speech I would like to address two proposals calling for broader access to central bank money. The first calls for the introduction of so-called ‘sovereign money’.
The fact that official purchases of financial assets are determined by different factors than those influencing private investors suggests that we would probably see a somewhat different combination of capital flows, exchange rates and interest rates in the absence of official intervention. To the extent that the factors affecting capital flows act to raise asset prices, lower interest rates and reduce risk premiums, it is harder for the markets to assess how much of the currently very favorable conditions are likely to reflect fundamentals and prove more durable. If the prevailing patterns of capital flows were to exert downward pressure on interest rates and upward pressure on other asset prices, they would contribute to more expansionary financial conditions than would otherwise be the case. Among other things, this outcome complicates our ability to assess the present stance of monetary policy. It can change how monetary policy affects overall financial conditions and the economy as a whole. Such complications can mask the effect of other forces that might otherwise find expression in risk premiums or interest rates: forces, for example, associated with the concern about fiscal sustainability in the United States or the sustainability of our external imbalances. Moreover, the policies that have played an important role in this pattern of global capital flows are already in the process of evolution, thus adding still further to the considerable degree of uncertainty we face about the longer-term outlook for the economy. In today’s rapidly evolving global economy, monetary policy makers cannot ignore the international dimension.

Rapid demand growth; commodity price volatility; the influence of a broad range of global conditions on wages: all these factors can trigger large changes in relative prices, and this makes the job of capturing underlying inflation harder. So we have to be careful not to focus too narrowly on one particular measure. Instead we need to look at many. And indeed here in the United States we look at a range of different measures of core inflation, for example, that take energy and food prices out of the overall index. We look at these over different time horizons. We look at a variety of other measures that use different statistical techniques to strip out the more volatile parts of the index. These all have limitations, and their relative merits may change over time. Central banks approach this challenge of capturing underlying inflation differently, but ultimately we are all judged by what happens to overall inflation over time. These issues are common to central banks everywhere. But economic and financial integration has brought particular challenges for monetary policy makers in emerging market economies. The broad pattern of exchange rate and monetary policy regimes in emerging market economies has shifted dramatically over the past decade. Most now operate a more flexible exchange rate regime, though a significant number have moved to the opposite extreme, relinquishing monetary sovereignty in favor of full monetary integration.
In the long run, this project will simultaneously be an investment for improving the operations not only of the National Bank and the Ministry of Interior, but indirectly also of other institutions that are actively involved in the system for fighting counterfeiting money: the Customs Administration, the Financial Police Office of the Ministry of Finance, the Public Prosecution Office and the judicial authorities. I believe that after the implementation of this Project, our interinstitutional cooperation in the field of monitoring and prevention of counterfeiting banknotes and coins will be further developed. I believe that very soon after the completion of the project activities, we will jointly state and announce that our national system for fighting counterfeit is at a higher level, compatible with the systems of the EU member states. At the end of my speech, I would like to emphasize that I am pleased that our twinning partners in this Project are two older EU member states – Germany and Austria. Having in mind that they are direct participants in policy making, overcoming all the challenges associated with the euro since its introduction twenty years ago, I believe that in communication and cooperation with their experts we will gain knowledge that will be of great benefit for us in the process of strengthening our capacities.

Consequently, my statements last year were devoted to the growth in foreign currency reserves and the associated challenges. Today I would like to discuss the question of whether a return to normal is on the horizon either for monetary policy – initially in the US – or for financial markets. Although various signs on the financial markets point in this direction – including the calming of the bond markets in Europe’s peripheral economies, record highs on stock markets and the rise in long-term interest rates since mid-year – other observations are less encouraging. Global economic recovery is merely sluggish and the risks for growth are still to the downside. Unemployment, particularly in the euro area, is very high and many structural reforms have been postponed. Against this background, financial markets are not expecting any of the major central banks to raise their reference rates before 2015. In answering the question above, I will begin by talking about developments in financial markets, with a special focus on the Swiss franc. Then I will discuss monetary policy at the US Federal Reserve and its first attempt to bring about a restoration of normal conditions. Afterwards, I will give a brief presentation of the economic situation with a focus on Europe. In conclusion, I would like to draw your attention to the dangers associated with a prolonged period of low interest rates.
This leads to my second topic this morning, namely how supervisors will complete the “virtuous circle” by adopting regulations that foster continued improvements in the measurement and management of risk. In the insurance sector, this movement is visible in the European Union’s “Solvency II” project. The IAIS’s initiative to establish a new international insurance regulatory framework will likewise be significant to the industry in the new future. But certainly a lot of attention has been paid to the work that the Basel Committee and other supervisors are undertaking to reform the international bank capital adequacy framework under Basel II. Basel II represents one of the most important reforms in banking supervision. For the past few years, central bankers, bank supervisors, and the industry have been discussing ways to revise the 1988 Basel Accord, which constitutes a cornerstone of the bank regulatory framework. The 1988 Accord was a landmark achievement in its own right. It represented the first internationally accepted “yardstick” for determining the adequacy of a bank’s capital. It was relatively simple to apply and, perhaps as a result of its simplicity, was adopted by supervisors in over 100 countries. But its simplicity may have led in some ways to its gradual decrease in relevance for sophisticated banks and systems. Leading banks made substantial improvements in their measures of risk. As the Joint Forum reported, industry leaders introduced integrated risk management functions and raised their standards for quantifying and aggregating various risks.

Among these new standards are expectations that financial market utilities, including those that act as central counterparties (CCPs), be more resilient to shocks – with a particular focus on enhancing liquidity and liquidity risk management. While CCPs reduce aggregate risk, they also concentrate the remaining risk. That is, CCPs create potential single points of failure in global derivatives markets. Thus, CCPs need adequate capacity to absorb potential losses from the default of one or more of its members, and they need to have access to liquidity so that they can always fully settle their obligations. The new risk management standards include requirements that CCPs have pre-funded default arrangements, that CCPs measure and collect initial and variation margin even in extreme stress scenarios, and that CCPs be able to withstand, again in a plausible stress scenario, the failure of a member having the largest exposure to the CCP. In some cases, this last element is enhanced to require the ability to withstand the failure of the two largest members. As these standards are fairly new for the global population of financial market utilities and in many jurisdictions the standards have yet to be issued in new rules and regulations, progress across the industry in meeting these standards is mixed. •  In some cases, liquidity risk management frameworks are underdeveloped, with needed additional focus on measurement and monitoring to make the frameworks more robust.
But gauging the scale of that borrowing, and whether it is hedged either with derivatives or dollar income receipts, is a real data challenge. This is a significant gap because unhedged dollar borrowing is one potential fault-line in the international financial system at present (BIS (2014)). (b)  Modelling  Once the necessary data is in place, a natural next question is how best to use this to understand the dynamics of the macro-financial system of systems. There are a number of potentially fruitful, if fledgling, avenues of research currently being pursued on that front. In making sense of the macro-financial system, it would be desirable to have a quantitative framework for understanding and evaluating interactions both within the financial system and between it and the wider economy. Pre-crisis, such models were close to non-existent. Indeed, many mainstream macro-economic models did not even contain a well-defined financial sector, much less interactions within it (Roger and Vleck (2011)). The Bank of England was an early pioneer of an approach which placed the financial sector centre-stage, with its so-called RAMSI (Risk Assessment Model of Systemic Institutions) model (Burrows et al (2012)). A stylised overview of RAMSI is given in Chart 16. RAMSI embodies interactions between the elements of individual banks’ balance sheets (the microprudential layer), between individual banks (the macro-prudential layer) and between the financial system and the economy (the macro-economic layer). As an example, RAMSI embodies an interbank network which allows counterparty network contagion to propagate.

Brad Delong has speculated that, just as “peak horse” was reached in the early part of the 20th century, perhaps “peak human” could be reached during this century (Delong (2014)). In the words of Marc Andresen, in future there could be two types of worker – those who own the robots and those who work for them. If these visions were to be realised, however futuristic this sounds, the labour market patterns of the past three centuries would shift to warp speed. If the option of skilling-up is no longer available, this increases the risk of large scale un- or under-employment. The wage premium for those occupying skilled positions could explode, further widening wage differentials. And labour’s share of the pie could fall even more dramatically than in the past. On this view, the tree could become hollowed-out to the point that it may no longer be able to support itself. This too may sound like science fiction. Yet in a survey of almost 2,000 (admittedly selfselecting) technologists and economists in 2014, the Pew Research Center found that almost half thought AI and robots would cause a significant and persistent displacement of labour in future (Pew Research Center (2014)). Maybe Ricardo and the Luddites had a point after all, albeit two hundred years too early. Public policy implications If one of these scenarios were to play out, its implications for the economy and society, for industries and individuals, would be massive.
Only if a central bank does what it promises to do will expectations be solidly anchored. Of course, this does not mean mechanically following a set policy trajectory regardless of how the outlook changes, but it does mean that the stance of policy over time must evolve in ways consistent with the criteria established in the guidance. It is important to communicate how policy will respond to changing economic circumstances over time. This is particularly important when the outlook changes, because expectations about how policy will respond can be an important self-stabilizing element of monetary policy. In this regard, a framework that ties the use of policy tools explicitly to economic outcomes has many advantages. Good public communication is also important. For example, press conferences offer an opportunity to ground the policy actions and stance in a framework that is explicit about how the central bank plans to achieve its mandated objectives. Asset purchases are an effective tool Credibility requires taking action in the present as well as providing guidance for the future, and we are fortunate to have learned that asset purchases can indeed be an effective tool to support growth, employment and inflation expectations at the zero bound. While I believe that managing expectations is crucial, I am somewhat skeptical of the view that forward guidance on the policy rate alone is sufficient in these circumstances. This is particularly the case when guidance extends out several years in the future.

12  Indeed, even when purchases of additional longer-term securities cease, the enlarged balance sheet will provide substantial ongoing stimulus. It is important to recognize that the Fed could remain in this posture with policy “on hold” for a significant period. BIS central bankers’ speeches  9
These are important components for putting together a suitable financial safety net and I welcome the Riksdag’s  4  BIS Review 138/2008  decision. I also believe that it would be good if we further develop this legislation in the long term. It should be possible for the government to reconstruct a credit institution without having to take over ownership. And it is not only in situations where financial stability is seriously threatened that such laws and regulations are needed for banks and other credit institutions. It is important for the credibility of the banking system as a whole that there is a regulatory framework which amongst other things enables depositors to quickly regain their money. Monetary policy and the financial crisis A small, export-dependent economy like Sweden’s is not unaffected by world economic activity and what is happening in the global financial system. In a way, I think that one can say that the distinction between monetary policy and financial stability is erased when a financial crisis breaks out. If one does not forcefully counteract the crisis, there is a risk that it will have a strong impact on inflation and growth. The decline in production and employment can then be both profound and prolonged. Monetary policy cannot solve all of the problems in the financial markets. This requires additional measures. And as I said, such measures are now being taking in most parts of the world now, as well as in Sweden.

As I mentioned earlier, this has a restraining effect on the economy, not least in that investments fall. Developments on stock markets around the world have fluctuated considerably and on the whole there has been a substantial fall. In many countries property prices are also falling, but in Sweden the decline has on the whole been fairly limited so far. However, all in all this development has led to a decline in wealth for many Swedish households, which is expected to dampen consumption. Various surveys indicate that households and companies have a more pessimistic view of the future now. The financial crisis has contributed to a deterioration in the prospects for global economic activity and to dampening international demand. The price of many commodities, such as oil and food, has fallen. This gives lower inflationary pressures. When international demand is lower, the Swedish economy is also affected via exports. We are assuming that exports will slow down next year, but recover during 2010. It is also clear that the uncertainty in the economy has increased in general. This affects households’ and companies’ financial decisions regarding the future. The uncertainty can also have contributed to the recent substantial weakening in the Swedish krona against most other currencies. It is not unusual that the value of currencies of small and very exportdependent economies, like Sweden’s, falls in times of market turbulence. This was the case, for instance, after the Asia crisis and the acts of terrorism on 11 September 2001.