samchain/econo-pairs-v1 huggingface dataset:
It is still hotly debated whether these sanctions are necessary and efficient, or on the contrary, whether they are counterproductive for the countries that initiated them. I believe that we should stick to a few simple facts and principles: (i) the surge in the prices of raw materials – primarily of oil – dates back to rumours of war and then to actual invasion in February, not to the sanctions that followed that invasion (ii) in the short term, the Russian economy seems to be losing less ground than expected, precisely because of that surge, but its long-term growth potential is obviously greatly weakened by technological sanctions (iii) there are moments where what is ethically fair prevails over what is economically necessary. Even if from time to time there may be contradictions between the two, a sustainable economy cannot exist without an ethical basis. But justice also enjoins us to deal with the situation of the poorest countries and people in this crisis. The world’s community drive to achieve unity, while respecting diversity, should nevertheless remain widely recognised as an essential aspect of the pursuit of  Page 8 sur 10 the universal common good. The tale of the euro is particularly inspirational in this regard. After several decades of incremental progress and preparation, it began in the 1990s, and it is worth reminding ourselves how far we have come, and the extent to which we owe this unique success to the will of visionary personalities such as Alexandre Lamfalussy or Jacques Delors.

In contrast, the UK banking system has, I have noted, so far been able to absorb the initial surge in demand for credit from firms6 and extend payment holidays to households. The FPC stress test indicates that banks have the resilience to continue to maintain credit to the real economy. Admittedly, given the risk around economic prospects and the impact on firms, much of the additional lending that is necessary needs to be supported by government guarantee. But we would be dealing with a very different credit environment now absent the resilience – both capital and liquidity – that has resulted from the post crisis reforms. The FPC stress test also illustrates one of the key lessons of the great financial crisis, that if banks have resilience and can use it to help to maintain credit in the real economy in a stress rather than deleveraging, the outcome is in the end better for banks themselves. The capital they might preserve by deleveraging is 4  Since the 2008/09 financial crisis, the Bank has increased the range of collateral it accepts, which now extends to loans and a wide range of securities. 5 To take a very simplified example: the aggregate CET 1 ratio of major UK banks was around 4.5% in 2007 (compared to over 14% now). A 3.8 percentage point capital drawdown (the drawdown we expect banks to face in the MPC’s illustrative scenario) would have depleted a very significant fraction of the capital banks had available.
Taking into account the favorable developments in the credit markets and the moderate recovery in economic activity in the last quarter of 2009, the Monetary Policy Committee (MPC) slowed the pace of rate cuts, and finally decided to keep rates unchanged at the last two meetings. However, it was also noted that lingering problems across the global economy were still a concern and that uncertainties regarding the strength and durability of the recovery remain. Considering these factors, the MPC reiterated that it would be necessary to keep policy rates at low levels for a long period of time. At its January meeting, the MPC indicated that tax adjustments and base effects would cause inflation to rise significantly in the first two months of 2010 and afterwards remain above the target for some time. Noting that the underlying trend implied by core inflation indicators would remain at levels consistent with medium-term targets, the Committee emphasized that, given the levels of resource utilization, the state of labor markets, and global economic conditions, general pricing behavior would not be affected adversely by the temporary rise in inflation, and therefore, inflation would display a declining trend once the transitory factors taper off. Market yields have been broadly shaped by the monetary policy stance during the last quarter of 2009. This is particularly important as it demonstrates the increased effectiveness of monetary policy. Market interest rates slightly increased in October with rising perceptions that the policy rate cut cycle is coming to an end.

Moreover, ongoing uncertainties regarding the exit strategies from unconventional fiscal and monetary stimulus continue to pose risks on the durability of the recovery process. BIS Review 31/2010  1  1. Inflation developments  Distinguished Members of the Press, During the final quarter of 2009, factors affecting inflation evolved in line with the outlook presented in the October Inflation Report. Both domestic and external demand displayed a gradual recovery, yet resource utilization remained at low levels. However, an unexpected surge in unprocessed food prices caused the inflation rate to realize one-percentage point higher than forecasted in the October Inflation Report. In other words, the deviation from the end-2009 inflation forecast presented in the October Inflation Report could be explained almost entirely by the increase in unprocessed food prices. Consequently, in the last quarter of 2009, annual inflation climbed to 6.53 percent, remaining within the uncertainty band, albeit slightly below the target set (Figure 3). While the contribution of food and energy items to annual inflation increased in the last quarter of 2009, no significant change was observed in the contribution of the categories excluding food and energy (Figure 4). Meanwhile, rising oil and other commodity prices as well as the withdrawal of tax cuts within the fiscal stimulus package were other factors leading to an increase in annual headline inflation in this period.
But at least they provide a conditional assessment of how much we expect our rates to increase in order to bring down medium-term inflation to our 2% target. 11  See Brainard, W. C. “Uncertainty and the Effectiveness of Monetary Policy”, American Economic Review 57 (2), pp. 411–425, 1967. 12  It will depend on the degree of persistence of the shocks that hit the economy, as shown by Ferrero, G., M. Pietrunti, and A. Tiseno. “Benefits of gradualism or costs of inaction? Monetary policy in times of uncertainty”, Banca d’Italia Temi di Discussione (Working Paper) No 1205, 2019. 13 See Söderström, U. "Monetary Policy with Uncertain Parameters," The Scandinavian Journal of Economics, vol. 104(1), pages 125-145, 2002. 6  Banco de España staff have conducted such an exercise using a suite of macroeconomic models. The exercise assumes that ECB rates increase linearly until March 2023, and then stay there for most of 2023 and 2024.14 The level of short-term interest rates in March 2023 consistent with a 2% projected inflation rate by end-2024 would be the terminal rate. The results show that, on the basis of current information, the median terminal rate value across models is at 2.25%-2.50%. Indeed this is estimated with significant uncertainty, as illustrated by the wide range of the estimated terminal rate across models15. Let me emphasise, in particular, that these models cannot capture the risk of expectations becoming unanchored or the severity of second-round effects and how they are affected by changes in the terminal rate.

15 16  In particular, the range of the terminal rate estimated with our models is between 1.75% and 3%. See the September ECB Survey of Monetary Analysts. 17  See, for instance, Costain, J., G. Nuño, and C. Thomas, “The Term Structure on Interest Rates in a Heterogeneous Monetary Union", Banco de España Working Paper 2223, 2022. 7  longer maturities, causing a tightening in overall financing conditions over and above that implied by our policy rate path. Therefore, to achieve the same degree of tightening withour overall policy toolkit, short-term rates would not need to increase by so much. Similarly, the run-off of the outstanding TLTRO-III operations in the next two years will entail a significant reduction in the size of the Eurosystem balance sheet, which may also contribute to the normalisation of our monetary policy stance. In this case, however, markets are probably already expecting this automatic reduction in the size of the balance sheet stemming from TLTRO-III. These considerations point to the need to reflect upon the right combination of interest rate increases and quantitative tightening in the coming quarters. Conclusion Let me conclude. There are a few key takeaways from today’s talk that I would like to emphasise. First, euro area inflation has risen mainly due to energy (and food) shocks outside of our control. This does not mean that we at the ECB Governing Council should remain idle. We should continue normalising our monetary policy in order to avoid the emergence of secondround effects and a de-anchoring of inflation expectations.
Early outreach to customers whose finances are most vulnerable in the current circumstances whilst bearing in mind relevant FCA guidance12. Ensuring that customer support and collections arrangements are appropriately scaled so they can expand rapidly if need be. This is, of course, not an exhaustive or comprehensive list but simply highlights some of the good practices we are seeing amongst the firms we supervise. However, the message is clear: the outlook is highly uncertain; and we expect firms to be proactive in enhancing the way you manage the risks in your credit portfolios – rather than simply  11 UK Deposit Takers Supervision: 2023 priorities (bankofengland.co.uk) 12 FG23/2: Guidance for firms supporting existing mortgage borrowers impacted by rising living  costs | FCA  Bank of England  Page 5  relying on historic approaches. Doing so will enable you to continue to support your members in a sustainable way. As your supervisor, we have been increasing our own focus on credit risks. You will probably have seen this in your firm’s engagement with our supervisory teams; through the questions we are asking, the data we are collecting and the reviews we are conducting both with individual firms and thematically. And, of course, our Annual Cyclical Scenario stress test will enable us to assess the resilience of the largest UK deposit takers. The results of this will be published in July. We expect all other firms to use the PRA published scenario as a benchmark in their own stress testing processes.

Two priority areas: That evolving regulatory approach is underpinning our approach to two pieces of policy I know are of keen interest to BSA building society members – Basel 3.1 and our Strong and Simple regime for smaller firms. 13 UK Deposit Takers Supervision: 2023 priorities (bankofengland.co.uk) 14 The regulatory foundations of international competitiveness and growth − speech by Vicky Saporta  | Bank of England  Bank of England  Page 7  Basel 3.1 In keeping with what I have set out, the PRA’s proposed approach to the Basel 3.1 standards15 maintains high levels of resilience and is aligned with international standards that we helped shape. The standards constitute a comprehensive package of measures that make significant changes to the way firms calculate risk-weighted assets for the purposes of calculating risk-based capital ratios. The proposed changes will make firms’ capital ratios more consistent and comparable. But we also need to make sure that the new rules work effectively, and in line with our objectives, both for banks and building societies. That is why we stressed in our recent Basel 3.1 CP that it was very much an open consultation and that we welcomed evidencebased analysis and feedback to help shape our final rules. Input from both the BSA and its members is core to that, and we are grateful for the feedback you have collectively and individually given.
Inflation targeting was introduced, the Monetary Policy Committee created and we benefitted from a sustained period of low and stable inflation. But as you know, this period of Great Stability came to an abrupt end with the largest financial crisis for at least a generation. Output fell like a stone and inflation was buffeted by a series of price level shocks. I want to continue this theme of reflection in my comments tonight. However, with 2010 drawing to a close, I will restrict my observations to events over the past year – and what they may herald for the future – rather than your entire 21 years. A progress report for 2010. This has certainly been a busy year. The UK economy continued along the road to recovery. A new coalition Government was formed and set in train what is planned to be the largest fiscal consolidation of the post-war period. The Government also announced a major reform of the structure of financial regulation, assigning considerable new responsibilities to the Bank of England. These events have taken place against a backdrop of strong global recovery, but one in which some countries, most notably within the euro area, continue to face acute fiscal and banking pressures, and large imbalances between surplus and deficit countries persist across the globe. You will be relieved to hear that I do not intend to consider all of these developments tonight. Instead, my progress report will focus on two key issues.

Information about future demand and supply levels ought to be reflected in the current price and in the prices of commodity futures. But the increases from Autumn 2010 onwards were largely unexpected, and have been a genuine surprise for our forecasts. For example, spot oil and gas prices have risen very substantially since their low points in 2009.2 Spot oil prices are well above the levels implied by futures prices at the time of the February Inflation Report (Chart 2). Gas futures prices have also moved markedly higher since then (Chart 3). Chart 2  Chart 3  Sterling oil prices(a)  Sterling gas prices(a)  Sources: Bloomberg, Thomson Reuters Datastream and Bank calculations. Sources: Bloomberg, Thomson Reuters Datastream and Bank calculations. (a) Futures prices for February and May are averages during the fifteen working days to 9 February and 4 May respectively. Each futures curve assumes that the sterling-dollar exchange rate remains constant at its average during those periods. (a) Futures prices for February and May are averages during the fifteen working days to 9 February and 4 May respectively. (b) One-day forward price of UK natural gas. (b) Brent forward prices for delivery in 10–21 days’ time converted into sterling. Third, we have been experiencing the ongoing effects of sterling’s fall during 2007 and 2008, when the nominal effective exchange rate fell by around 25% (Chart 4).
See Market Dysfunction and Central Bank Tools

This reflects the strong increase in overnight deposits made by banks with national central banks as a consequence of the switch to the full allotment fixed rate tenders in the ECB’s open market operations, following the intensification of the crisis after the collapse of Lehman Brothers in September 2008. Second, not surprisingly from September 2008 onwards, we see a remarkable increase in the number of sender limits along with a decrease in their value (see Chart 2). Nonetheless, these changes had a marginal impact on the smooth flow of transactions and did not cause delays to the timely submission of payments. Third, the level of non-settled payments remained fairly stable in the second half of 2008, amounting to just 1% or so of the total daily average value settled in the system (see Chart 3), indicating the overall resilience of the TARGET system in the face of the financial turmoil. Crucially, market infrastructures continued to function robustly. In particular, by providing stable networks despite the highly disruptive conditions in financial markets, market infrastructures played an important shock-absorbing role and helped to maintain overall public confidence in the financial system. Since central banking overseers and financial regulators recognised long ago the critical importance of the reliable functioning of market infrastructures for overall financial stability and efficiency, they took action together with the service providers. Stringent requirements ensure that EU infrastructures are adequately designed, effectively manage their risks, and operate efficiently and reliably, both under normal circumstances and at times of crisis.
We have made constant and joint efforts so that the conclusions and recommendations left by ALSAI become a useful, guiding, helpful, and corrective tool. In view of the insofar experience, this combination is an essential component in the work of audit institutions. I have believed and still do believe that auditing is a key instrument, which serves to further perfecting public sector governance. The ALSAI has contributed and will continue to contribute to identifying various problems facing public institutions, divergences from legal and regulatory framework, with subsequent financial effects, and their correction, in accordance with legal requirements and international standards. Focusing on the future role of ALSAI, I am confident it will increase the contribution to perfecting the three main dimensions – oversight, analysis, and vision – of public governance. More specifically, •  With regard to the oversight dimension, the great dilemma is whether public entities are accomplishing their mission in detecting and preventing corruption;  •  With regard to the analysis dimension, the great dilemma is whether these institutions are making responsible decisions about economic policies, development programmes, operations and the achieved results;  •  With regard to the long-term vision dimension, the great dilemma is whether the right directions and future challenges facing auditors are properly determined.

Gent Sejko: Oversight, analysis and vision of public governance in Albania Speech by Mr Gent Sejko, Governor of the Bank of Albania, at the presentation of the Supreme State Audit Annual Review 2015, Tirana, 1 February 2016. *  *  *  Your Excellency President of the Republic of Albania, Dear Chairman of the Supreme State Audit institution, Honourable Chairman of the Parliamentary Committee on Economy and Finance, Your excellency Ambassador Lu, Your excellency Minister, Dear representatives of public institutions, Honourable MPs, dear professors, dear participants, It is a special pleasure for me to be here today on the occasion of the annual review of the activity of the Supreme State Audit (ALSAI) for 2015. ALSAI is among the most important constitutional institutions in Albania, whose objective – ensuring good management of public finances – is highly significant. The effective use and certification of public funds in conformity with the laws regulating the economic and financial activity of the public sector, on-going public communication, in relation to irregularities and relevant responsibilities have been at the focus of ALSAI’s work in recent years. In this perspective, the role and mission of the ALSAI are highly important; therefore, the issues raised in ALSAI’s reports should be thoroughly analysed. They are both necessary and preventive instruments for the institutions subjected to ALSAI’s audit. Notably, the Bank of Albania and ALSAI have had a fruitful cooperation, in line with both current and prospective dynamics and developments.
Much of this “banking glut” 4 can be traced to the advanced economies: for example, around half of the gross inflows into the United States just before the crisis came from European institutions, rather than emerging economies. 5  3  See Borio and Disyatat (2011), Cecchetti (2011) and Tucker (2012) for more on this issue. 4  See Shin (2012). 5  See Borio and Disyatat (2011). BIS central bankers’ speeches  3  Now global capital flows of this nature can be valuable. They help to oil the wheels of the international financial system, allowing saving to flow to where it can be most effectively used. They allow banks to diversify across national boundaries, reducing their susceptibility to idiosyncratic domestic shocks. And they increase the degree of competition within the domestic banking market. But by increasing the linkages between financial systems, they can also increase systemic vulnerabilities. In this case, banks became dependent on shortterm funding from overseas, rather than their traditional domestic deposit base. When investors re-trenched, that funding dried up and banks struggled to find viable alternative sources of funding. Ensuring gross capital flows are not excessive is just as important as avoiding excessive net capital flows. Moving to a sustainable equilibrium requires a narrowing in the international payments imbalances. And we have indeed seen such a narrowing since the start of the crisis.

Second, credit conditions loosened substantially, supported by a sharp compression in perceived long-term risk-free rates, which was only unwound when markets began re-pricing in the risk of bank and sovereign default in the periphery (Chart 5). The decline in interest rates in the periphery in the pre-crisis period suggests that it was a case of capital being pushed into the periphery, rather than it being sucked in by a high rate of return as conventional analysis would suggest. The consequence of all this was an increase in demand in the periphery, much of it in construction, financed by borrowing from the core. This is illustrated in the contrasting experiences of Spain and Germany. Domestic demand in Spain consistently outstripped output growth pre-crisis, while the opposite was true in Germany (Chart 6). These growing external imbalances were accompanied by increasing internal imbalances, as the non-tradable sector in Spain expanded at the expense of the tradable sector, driving up unit labour costs in the former relative to the latter (Chart 7). That was not the case in Germany. 2 Restoring the euro area to strong and balanced growth requires dealing not only with the accumulated financial imbalances – the excessive banking and sovereign debts in the periphery – but also restoring competitiveness and rebalancing the structure of demand and production. On the face of it, that rebalancing is under way, with a narrowing in the current account deficits of the periphery.