samchain/econo-pairs-v1 huggingface dataset:
It was the Governor's casting vote that decided the issue and that led to the repo rate being increased rather than being left unchanged. Before I explain what lay behind the decision and present my own view, I would like to say something more general about the even result of the vote. There are a number of observations and reflections that can be made and that I feel are worth highlighting. I intend to conclude by saying something about the new statistics that have been presented since our meeting. A great deal has happened recently, not least on the financial markets. An entirely divided Executive Board is unusual A first observation is that if we look to the past it is very unusual for the Board to be split down the middle. During the almost ten years that the Board has existed and the approximately 85 monetary policy meetings that have been held, this has in fact only happened four times, counting the latest meeting. The most usual result, not surprisingly, is that the Board has been unanimous. Fairly frequently, however, at about a third of the meetings, at least one member has entered a reservation against the interest rate decision. As an aside it may be worth pointing out that for some time now it has perhaps been more noticeable than before if we are in disagreement. These days, we also have to decide on a forecast for the repo rate.

Dear ladies and gentlemen, I hope that this project will deliver long-term results, and will strengthen the regulatory and operational frameworks at the Bank of Albania, an institution that makes substantial contribution to the sustainable economic development of Albania. On behalf of the Bank of Albania, let me iterate our readiness and commitment for the successful implementation of the Twinning Project, as we strive with professionalism and responsibility to achieve its objectives. Concluding, I would like to thank the European Commission, for its support in securing funding for this project. I am certain that the Commission will continue to support future initiatives of the Bank of Albania, as we deal with approximation challenges and endeavour to progress toward the European family. I would also like to thank the EU Delegation to Albania for their support and valuable suggestions during the design and consultation phases of the project, as well as the General Directorate for Financing and Contracting, for their insistence throughout the design and selection process for compliance with all EU procedures related to fund management. Special thanks go to Banca d’Italia, an institution that has constantly supported us with their invaluable experience. I believe that the experience and dedication of Mr Gola is an added guarantee in this regard.
It is worth noting that the annual variation core CPI has hovered around 11 percent for several months now, despite the fact that most inflation fundamentals have been easing. While the Chilean peso has appreciated around 11.5 percent with respect to the statistical close of the December Report, global cost pressures have decreased. The prices of commodities, including copper, have dropped, supply chains have normalized and transportation costs have fallen too. All in a context in which monetary policy has maintained a clearly contractionary stance (figure 2). In addition, compared to the projection of the last MP Report, the core part of the CPI accumulates an important upward surprise, around one percentage point. Most of the difference lies in the prices of non-volatile goods. In any case, services inflation also showed higher-than-expected increases. In annual terms, it has risen to maximum levels (figure 3). One important factor behind the persistence of high inflation has been the slow unwinding of the high levels of private consumption of previous years. The revised National Accounts that we published on March 20th showed that between 2020 and 2022 household consumption exceeded our forecasts by about 4.3 billion dollars. With this, national savings figures were revised downward and the current account deficit increased, indicating that macroeconomic imbalances were larger. Meanwhile, data for late 2022 and early 2023 show that the pace of reduction in private consumption has been slower than expected (figure 4).

Table 2  Domestic scenario 2022  GDP Domestic demand Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Private consumption Goods and services exports Goods and services imports Current account (% of GDP) Gross national savings (% of GDP) Nominal GFCF (% of GDP)  2.4 2.3 3.0 2.8 3.1 2.9 1.4 0.9 -9.0 16.4 24.8  2023 (f) 2024 (f) 2025 (f) Mar.23 MP Dec.22 MP Mar.23 MP Dec.22 MP Mar.23 MP Report Report Report Report Report (annual change, percent) -1.75 / -0.75 -0.5/0.5 2.0-3.0 1.0-2.0 2.0-3.0 -5.3 -4.0 1.7 1.1 2.1 -4.6 -3.0 1.9 0.7 1.9 -5.0 -2.9 -0.2 -0.7 2.3 -4.5 -3.0 2.5 1.1 1.8 -5.9 -3.8 2.5 0.9 1.9 6.0 4.5 3.2 3.7 2.2 -5.4 -6.5 0.9 2.5 0.5 -4.9 -4.0 -4.1 -4.1 -4.0 20.2 18.7 19.8 18.9 19.2 24.3 23.3 23.8 23.2 23.2  (f) Forecast. Source: Central Bank of Chile. 19  Figure 13  Real consumer credit flows  (millions of UFs, moving quarterly average)  40  Rolling credit cards Credit card in installments Loans in installments Overdrafts  Households' financial burden (*)  (percent of monthly income, moving annual average)  20 19  30 18 20  17  10  16  0  15 14 15 16 17 18 19 20 21 22 23  19  20  21  22  (*) Median debtor's financial burden. Monthly income includes labor component (salaried formal) and pension fund withdrawals prorated over six months as from receipt of payment.
However, there was a marked change over the course of 2003; between the first and second halves of the year growth rose from 1.4 to 1.8 per cent. The situation at present is that the upswing in industry has progressed somewhat. Export demand has gathered pace, and firms are fairly optimistic about the future. It also appears that capacity utilisation in industry is continuing to rise. Exports were unexpectedly strong during the final two quarters last year, and business tendency data point to continued optimism in the period ahead. Households’ expectations regarding both their own finances and the Swedish economy have also begun to rise again after having fallen somewhat at the end of last year. Retail sales figures indicate a continuation of robust consumption. Low interest rates, rising equity prices and low inflation will boost consumption in the period ahead as well. While on the subject of household consumption allow me to say something about the recent discussion on household indebtedness. Debt as a proportion of households’ disposable income continued to grow last year, and the debt ratio is now approaching the levels seen during the sharp expansion in credit at the end of the 1980s. At the same time, low interest rates mean that households’ interest costs as a percentage of income is at a historically low level. The latter means that it is not a great problem today for the household sector to bear its debt even if this debt of course limits households’ scope for consumption in the near future.

Monetary policy is most effective when it is firmly established. International upswing is continuing Both real economic activity and inflation in Sweden are highly dependent on developments abroad. Broadly speaking, demand and economic growth since the end of last summer have followed the paths expected by the Riksbank at the time and subsequently. However, when seen over the entire period, growth in the US has been somewhat faster than anticipated. This also applies to the situation in Asia and in Eastern and Central Europe. Conditions are different in Western Europe, particularly in the core countries of the euro area - Germany, France and Italy. Here, demand has not risen as expected and the upswing has been delayed. What has happened since the Riksbank’s last decision on the repo rate in February has followed the same pattern. Recent developments in the US economy have also been unexpectedly positive. This also applies to large parts of Asia, led by China and Japan. In addition, a number of Sweden’s other important export markets such as the UK and Norway appear to have performed somewhat better than anticipated. As regards the euro area, the most recent data does indeed suggest that the recovery in industry has taken root but at the same time domestic demand continues to be weak. The situation in China deserves a special mention. Since 1990, output in China has grown at an average rate of 9 per cent per year. Over the past three years, it has been 8 per cent.
The blue line in Chart 10 measures profits of UK-quoted firms (including some that have operations outside the country) and, as the denominator, the market value of their capital (debt plus equity). Chart 11 subtracts the gilt yield from a national accounts measure of profitability: profits of firms located in the UK relative to the book value of their capital. But they’ve behaved in a similar fashion and convey very much the same message. 11  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  11  Chart 10: The required rate of return for UK firms  Chart 11: The combination of rising profit  has risen even as risk-free yields have fallen  margins, falling investment growth suggests significant increase in risk premium  Sources: Bank of England, Eikon from Refinitiv, TradeWeb, Bloomberg Finance L.P and Bank calculations. * Adjusted for changes in leverage. Sources: Bank of England, ONS and Bank calculations. UKCS are UK continental shelf companies. Before the crisis, rises in profitability (relative to interest rates) would lead to faster investment growth. That’s not been true in the past few years. Profits have been very healthy, relative to the existing stock of capital. The spread between the rate of return and the risk-free interest rate has risen significantly, from around 10% in the middle of the last decade to close to 15% today, a proportionate rise of 50%. On the face of it the financial incentive to expand capacity is very strong.

If, on the other hand, it thinks there’s going to be an imminent resolution (high q, low E[T]), there is every incentive to wait until that actually happens. In the meantime only extremely high-return projects would get the go-ahead. One general implication of this is that empirical estimates of the impact of uncertainty on investment, which generally assume that the effect is purely contemporaneous – investment today is a function solely of uncertainty today – are (strictly speaking) an over-simplification. At least in principle it will also depend on how long businesses expect any uncertainty to endure: the shorter the expected duration the greater the predicted impact. I doubt this would ever be straightforward to test empirically. As hard as it is to measure uncertainty very precisely it’s obviously harder to gauge accurately how long people expect that uncertainty to last. But the distinction may nonetheless matter on occasion. One such occasion is when there is thought to be a particular date at which important information is likely to be revealed. If so, then [3] suggests that the effect of uncertainty on investment should intensify the closer  8  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  8  one gets to that point. As the remaining time shortens the perceived cost of waiting for news falls with it.
Let’s be clear that the business model and the risk are owned by the firm – the PRA’s job is make sure that a firm’s approach to risk management is sound and that their policy holders are adequately protected. I believe Solvency II will help to do this. It will introduce greater risk-sensitivity; co-operation across jurisdictions; and consistency in approach. Being a risk-based regime means that insurers should be able to evolve and adapt to capture all risks they are exposed to and the qualitative risk assessment introduced under Pillar II will further support this move towards a more responsive, reflective and adaptable solvency regime. This in turn will mean that insurers will need to think carefully about the risks they are exposed to and how this is captured and managed. This does not mean that Solvency II should dictate firms’ business models. Rather, market forces and expectations of policy holders will inform insurers’ pricing and strategies. As referred to earlier, there is much we can do to prepare for the future by learning from mistakes of the past. One such area where this should be borne in mind is in the use of risk models which will play a huge role in Solvency II for the larger, more complicated firms. Firms need to be able to understand their models and their limitations, and be able to challenge them. As the Governor said last year: “The dangers of using poorly designed models were made all too clear in the banking sector.

These processes have positive implications for domestic banks incorporated in the mainland and for foreign banks, including banks incorporated in Hong Kong. For the domestic banks, expanding business and the challenge of foreign competition provide an impetus for reform and innovation. The banking reforms currently in progress in China are proceeding well. These include, among other things, the establishment of asset management companies to carve out the bad assets inherited from the days of policy lending. They also include the full introduction of commercial principles and market-based credit policies, and improvements in accounting standards. There will also be a profound impact on the governance and culture of the commercial banks, in terms of much better transparency and accountability, especially if these banks are to be floated as intended. To meet foreign competition, they will also put much more emphasis on recruiting good people, including those studying abroad, and giving them proper training. A good example is the recent joint venture between Qinghua University and Harvard Business School to provide extensive training for bank managers in the mainland. They will also need a much clearer business and IT strategy, which could include the need for consolidation. WTO entry will mean a phased opening of China’s banking market to foreign banks. Restrictions on foreign banks’ operations, in terms of the scope of business, 3  BIS Review 68/2000  clients and geographical coverage, will be gradually relaxed.
Since the revision of the National Bank Act in 2004, hardly any legal constraints have been set on the SNB’s leeway for investment. The SNB uses this leeway to achieve the optimum possible portfolio structure. Corporate bonds, for instance, were already introduced as an asset class in 2004, and equities in 2005. With the marked expansion of the balance sheet in the past few years, diversification has become increasingly important. In this respect, the SNB goes further than is common practice for central banks. For reasons of diversification, it is constantly evaluating new asset classes, currencies and investment opportunities in both advanced economies and emerging markets. Last year, for instance, the SNB expanded its investment universe to take in both Chinese government bonds and emerging market corporate equities. The SNB’s investment and risk control process is constructed using principles similar to those applied by large institutional asset managers. As you will see in slide 4, it can be split  2  Foreign exchange reserves consist of foreign currency investments minus repo transactions conducted for investment policy purposes and other foreign currency liabilities. BIS central bankers’ speeches  3  up into roughly five steps – investment policy, investment strategy, definition of guidelines and benchmarks, implementation (including tactical allocation of assets and portfolio management), and risk control. The SNB’s investment policy provides the framework for the management of assets and defines the overriding investment objectives.

·  Second, the New Accord will recognise that some banks treat their smallest business credits as retail exposures. In these cases, banks group and administer their small business loans on a “pooled basis,” similar to the way they manage most small personal loans. The New Accord will permit aggregate exposures to a single business borrower of up to € million to be treated as retail exposures. Because retail exposures enjoy a preferential treatment under both the standardised (reduction of risk weights by 25 percentage points, from 100% to 75%) and IRB (a different risk-weight curve) approaches to credit risk, banks making such loans may face lower capital requirements than are currently applicable. Moreover, for those who have monitored our work closely, the Committee recently eliminated a controversial requirement governing the “granularity” of such loans. In plain language, the rules will no longer require that retail portfolios contain exposures to a minimum number of unrelated parties. Instead, national supervisors will determine whether such portfolios qualify for retail treatment. Although the media has not reported on this change widely, it is quite important because it will help more banks to enjoy the preferential retail treatment for their smallest business credits. 2  BIS Review 32/2003  ·  Finally, the New Accord will recognise a far wider range of collateral and guarantees than the current rules do.
Solvency II is a one-time opportunity for us to embed policyholder protection and put in place the foundations required for the UK insurance industry to remain profitable, resilient and a key part of the UK’s economy. BIS central bankers’ speeches  3

I would put particular emphasis on the tasks of completing the creation of a credible bank resolution regime that will work on a crossborder basis, and developing effective recovery regimes for key financial market infrastructures. I also agree with Hélène that monetary policy in the United States—given the size of its financial markets and the U.S. dollar’s status as a reserve currency—can have a significant impact on 1/4  BIS central bankers' speeches  global financial conditions, including exchange rates, and that shifts in U.S. monetary policy can lead to consequential shifts in global capital flows. However, it is also important to note that the impact of U.S. monetary policy restraint on emerging market economies (EMEs) has varied widely across tightening cycles. The impact depends on many factors, including EME fundamentals, asset valuations, and the extent and composition of prior capital inflows to those economies. Importantly, the impact has tended to be more benign when U.S. yields rise in response to good U.S. growth prospects. In contrast, spillovers have tended to be more adverse when increased monetary policy stringency is associated with a deteriorating U.S. economic outlook.2 These observations point to the need for the United States to keep its own house in order. Promoting economic growth and financial stability in the United States, I believe, is the most important contribution we can make to promoting growth and stability worldwide. Like nearly all central banks, the Federal Reserve has a domestic mandate set for it—in our case, by the U.S. Congress.
The designers of the euro area clearly intended to build a consistent rules-based framework.6 The euro area fitted within a single market centred on a strong competition authority that could break-up monopolies and remove competitive distortions. The ECB was established with a mandate to focus solely on price stability. National fiscal policies were expected to be stability-oriented and conducted within a strict framework, known as the Stability and Growth Pact (SGP). This would be supplemented, it was believed, by the disciplinary force of financial markets. This begs the question: why did the euro area then have a major crisis? The answer, in short, is that the designers got it wrong. The accord of rules, instruments and institutions in the euro area was in fact inconsistent. There were two dimensions to this: •  The first was inconsistency within policy areas, which produced a fragmented and unstable governance framework. •  The second was inconsistency between policy areas, which caused negative interactions between them to appear. Let me address each in turn. Inconsistency within policy areas In a highly integrated currency area like the euro area, there are several types of economic policies that are “of common concern”. This may be because they have consequences on euro area aggregates – for example, excess domestic demand in one large country pushing up overall euro area inflation – or because they create spillovers for other Member States. These policies therefore warrant some form of coordination at the euro area level, notably via common rules.

Second, what is causing some people to turn against the EU, in my view, is not a dislike of European governance per se; it is a lack of delivery on jobs and growth. If European policy-makers can find better ways to get the most out the European project, I strongly doubt the voters as a whole would be against that. 4. Conclusion  Let me conclude. What I have tried to underline today is that a well-functioning market depends on getting the rules, institutions and instruments that govern it right. And the source of the euro area’s difficulties, in my view, is that policy-makers failed to do so. For this reason, it would be wrong to conclude that Europe, or the euro, has failed. It was policy that failed. But importantly, policy can also be fixed. What we need now, therefore, is to finish what we started in 1999 and make the euro area work. We have done much to stabilise the euro area with Banking Union and other reforms; but now we need to find ways to make the euro area sustainably grow. Voters in Europe have overall given policy-makers a mandate to do this; we have a pro-European majority in Parliament. If we do not seize this mandate, however, they may not provide another one. 7  For more details see Rahman, Jesmin and Tianli Zhao. “The Role of Vertical Supply Chains in Boosting Growth”, in Jobs and Growth: Supporting the European Recovery, IMF, April 2014. BIS central bankers’ speeches  7