samchain/econo-pairs-v1 huggingface dataset:
So a certain degree of dispersion of economic parameters might be possible within an integrated economy which has the dimension of the United States, provided this dispersion has economic justification. Il Sole 24 Ore: Even accepting a period of deflation, with all the possible social consequences this might have? Trichet: Yes. We are an immense economy. It is normal that some regions, after growing above the EMU average for some time, and after having accumulated high national inflation, experience a correction and therefore a period of negative inflation, as it is currently happening in Ireland. Il Sole 24 Ore: The recent EU declaration regarding the Greece plan says that member states should push ahead toward a stronger economic governance. What are you expecting: a more coordinated approach or a transfer of competencies from the national to the supranational level? Trichet: As citizens we all have personal opinions on this matter. As a citizen, I would call myself when time comes and when people are ready to move towards an accomplished political federation. As of today our aim is to make the current institutional framework work as best as possible. We call for the full respect of the present Treaty. EMU is politically a bold endeavour: don’t forget that with regard to fiscal policies the Treaty allows the college of governments to impose decisions on other governments and parliaments. Implementing fully the Treaty and the Stability and Growth Pact calls for a much stronger governance in the future than what has been experienced in the past years.

Thirdly, the Federal Republic is a major world competitor in sectors such as machine tools and industrial equipment. Its global competitiveness is a major asset for the euro area given how closely intertwined EMU countries are. Therefore, I would point out to all those who argue in a similar fashion that what looks as a disadvantage for the euro area as a whole from a specific angle is in reality an advantage when seen from the right perspective. Il Sole 24 Ore: But in a more general way Ms Lagarde did point out that the euro area is experiencing large economic imbalances. Is there a Europe-wide agenda to solve this problem? Trichet: The aim must be to elevate significantly growth potential in all countries through the structural reforms that are overdue in Europe. This will remain strategically important in the  2  BIS Review 45/2010  next decade. The 2020 Agenda will have to be implemented in a more effective way than the 2010 Lisbon Agenda, as President Van Rompuy has recommended. More generally let me say that given the nature of monetary union, some countries, because of a rapidly aging population for example, will have to run current account surpluses, while other countries with very significantly fewer pension liabilities will not be called to run such surpluses. Similarly, some countries, to regain competitiveness, will have to keep inflation below the EU average.
In order to produce a forecast that reflects a reasonable trade-off in monetary policy, we have also drawn up a set of guidelines, which are presented in the Inflation Report. The criteria cannot provide an absolutely precise guide as to how the interest rate should be set, but points to factors we should have considered and assessed. The central trade-off is between inflation prospects and the prospects for capacity utilisation in the economy, expressed in the chart by the output gap. The projections were published in Inflation Report 3/06. If monetary policy is to anchor inflation expectations around the target, the interest rate must be set so that inflation moves towards the target. Inflation should be stabilised near the target within a reasonable time horizon, normally 1-3 years. The inflation gap and the output gap should also be in reasonable proportion to each other until they close. Let me now look at monetary policy within a theoretical framework. In the literature on optimal monetary policy, the trade-offs are often specified in the form of a loss function, which the central bank attempts to minimise. In principle, many goal variables can be included in such a loss function, but it is normal to assume that inflation and the output gap are included. The cumulative loss can then be expressed by the following equation:  Here is inflation, is the inflation target and y is the output gap. is a discount factor.

Gent Sejko: Bank of Albania – strengthening governance and recent other challenges Introductory statement by Mr Gent Sejko, Governor of the Bank of Albania, presenting the Annual Report 2015 to the Parliamentary Committee on Economy and Finance, Tirana, 29 March 2016. *  *  *  Honourable Chair of the Parliamentary Committee on Economy and Finance, Honourable Members of the Committee, It is my special pleasure to present, in this hearing session with the Parliamentary Committee on Economy and Finance, the Annual Report of the Bank of Albania for 2015. In 2015, the Bank of Albania has worked to successfully fulfil its objectives stemming from the Law “On the Bank of Albania”, as well as all the other obligations arising from relevant sublegal acts and relations with our international partners. I would like to start my presentation, focusing on the activity of the Supervisory Council of the Bank of Albania. 1. Decisions of the Supervisory Council  At the beginning of 2015, the management team of the Bank of Albania was rendered complete. Thus, thanks to the support of the Assembly of the Republic of Albania, the vacant positions in the Supervisory Council were completed, the Governor, the Second Deputy Governor and Inspector General of the Bank of Albania were appointed. During 2015, the Council met 15 times and approved 98 decisions. Of them, 63 consisted in acts approved for the first time, and 35 in amendments to existing acts.
As Federal Reserve Chair Yellen explained in a recent speech, not only are there a plethora of rules to choose from, but following any monetary policy rule in a perfunctory manner would likely lead to inappropriate monetary policy at times—especially during economic turning points when the outlook is changing rapidly.6 Also, requiring the Federal Reserve Chair to explain frequently why the FOMC had deviated from a particular rule would unduly impinge on the ability of the FOMC to conduct monetary policy in a manner insulated from short-term political considerations. Of course, Congress has the right to hear from the Federal Reserve about its conduct of U.S. monetary policy. There are already several opportunities, including regular testimony and semiannual monetary policy reports. If Congress desires, such communications could become more frequent or enhanced. But, my point is that these exchanges should not be triggered by deviations from a mechanical rule. And, of course, I feel that this is especially true for a rule that does not account for financial conditions. Now that I have expounded upon the importance of financial conditions, I would like to discuss their implications for the current stance of U.S. monetary policy. As I see it, there were a number of factors behind the FOMC’s decision in March to take another step in gradually removing accommodation by raising the federal funds rate target by 25 basis points to a range of three quarters of a percent to 1 percent. Most importantly, the economy has continued to grow modestly above its sustainable long-term pace.

This can push up risk premia and credit spreads, and push down stock prices—which can more than offset the impact of an easier monetary policy. Divergences between short-term interest rates and financial conditions often appear to be larger and more persistent in the United States than in most other advanced economies. There are several reasons for this. First, the U.S. financial system depends less on its banking system to 2/6  BIS central bankers' speeches  intermediate financial flows than in other countries. The share of credit supplied by the banking sector fluctuates around 50 percent in the United States, which is much lower than in the euro area, Japan and the United Kingdom (Exhibit 2). Second, in contrast to most other countries, U.S. residential housing is financed mainly by 30-year fixed-rate mortgages, rather than—as is the case in most other countries—adjustable-rate mortgages with rates that much more closely track their central banks’ short-term interest rate targets. Third, the equity market plays a much more important role in the United States than elsewhere. The total market capitalization of the U.S. equity market is considerably higher than in the euro area and Japan (Exhibit 3). Because the evolution of financial conditions can diverge from the path of the federal funds rate, financial conditions need to be carefully considered in the conduct of monetary policy. However, I want to reiterate that what we care about is not financial conditions themselves, but rather their influence on economic activity.
the component that is not due to fluctuations in the demand for goods and services in the economy. And this requires completely different measures than those of monetary policy. In particular, it is a question of implementing measures that influence the functioning of the labour market. One indication that the employment problems we are seeing today are largely structural is the big differences in unemployment that exist between different regions and different occupational categories. (Chart 2.) Unemployment figures are twice as high in some regions as in others, and the percentage of people receiving benefit from their unemployment fund is twice as high in some occupational groups as in others. The fact that these differences remain over long periods, even when there is a shortage of skilled labour, suggests that the labour market doesn’t function as well as might be desired. The problems in the Swedish labour market are also underlined by the fact that open unemployment barely came down to 4 per cent when economic activity was at its strongest a couple of years ago. Target deviations and employment How the Riksbank works So, even though monetary policy cannot be expected to have any tangible impact on employment in the long term, short-term effects can arise. This is because a policy aimed at attaining the inflation target may entail changes in interest rates, which temporarily affect demand so that employment rises or falls.

“Requirements and Challenges of Rebuilding Banking Sector’s Capital and Liquidity Margins after lifting Stimulus Packages”  Two years ago today, the world was hit by coronavirus pandemic. Repercussions were far-reaching and severe posing challenges not only to the global markets but also the normal life that has been disrupted or almost disrupted. The pandemic had elements of both supply and demand shocks. On the supply side, closures in many economies around the world, and restrictions imposed on travel, gatherings, events and schools, as well as business interruptions led to supply chains disruption that had a negative impact on the growth of the global economy. This, in turn, affected the demand on energy that that witnessed a sharp fall, as brent crude oil plunged to 20-year low in April 2022 of USD 20 per barrel. The Purchasing Managers’ Index (PMI), concurrently, experienced a sharp decline during the same period reflecting deterioration of the operating environment for companies. In an effort to reduce the negative effects of the spread of the coronavirus pandemic and weather its repercussions and challenges, central banks around the worlds have taken exceptional measures. At the monetary policy level, interest rates have been cut to alltime low levels, reaching zero in some countries, liquidity injected exceptionally into the markets having eased the regulatory requirements to ensure the continued inflows, while fiscal policy stimulated economies by providing financial facilities and aids including payment moratoriums and extending financial aids to the affected segments.
Policy makers very well recognize that financial instability can harm growth and cause serious disruptions, revealing itself in decreased market liquidity, excessive volatility in asset prices and ending up in banking and currency crises. Therefore, many central banks now consider financial stability as an objective complementing the price stability. In recent years, there has been a noticeable increase in central banks’ autonomy in monetary policy, and also a transfer of supervisory and regulatory responsibilities regarding financial institutions to other autonomous bodies. The maintenance of financial stability is, and will remain, a core function for all central banks. In the modern era, central banks' involvement in matters relating to financial stability has become broader and more formalized. Central banks recognize financial stability as an important and self-contained objective. Central bankers see price stability and financial stability as connected due to the fact that serious disruption in the financial system would affect the implementation and effectiveness of monetary policy, while macroeconomic stability helps reduce risks to financial stability. BIS Review 76/2007  1  Obviously, measurement of financial stability is not as straightforward as price stability since there is no single measure or indicator, which shows if the financial system is stable or not. Considering the substantial developments in innovative financial products including hedge funds and the contagion risk inherent in them, accurate statistical data requirements step forward. Moreover, a thorough assessment of financial stability makes it essential to monitor the risks driven by household and corporate sectors.

Third, if the government is still running a primary deficit, it will not have the funds to pay for some of its key functions. Fourth, in the euro area the sovereign does not have a domestic central bank that will finance its deficit. Fifth, after a default/restructuring the banking system of the country would be unlikely to pass the stress test and have sufficient adequate collateral to access the ECB’s refinancing operations. What are the implications of this analysis? Imposing haircuts on private investors can seriously disrupt the financial and real economy of both the debtor and creditor countries. It ultimately damages the taxpayers of both the creditor and debtor country. This is particularly the case in a region like the euro area, consisting of advanced economies with highly integrated financial markets – an integration we have encouraged for years. This is why such restructuring should only be the last resort, i.e. when it is clear that the debtor country cannot repay its debts. Incidentally, this is the way the international community has functioned and cooperated since the Bretton Woods agreement, which set up the IMF. Countries are never encouraged to default or restructure their debts unless they are in a desperate situation and have no alternative. This is why there have been relatively few cases of debt restructuring and defaults, and they have affected poor and often undemocratic countries. Where is the problem?
Benefits for the non-participating Member States The SSM is open to the participation of all EU member States, including those that have not adopted the euro and perhaps many will do so. How will those states that do not participate in the SSM be affected by Banking Union? It is important to stress here that the playing field really will be level. There will be no disadvantage for banks in countries like Britain that stay out of the SSM. Banking Union will benefit all Member States that are part of the single financial market. And as the leading provider of financial services in Europe, I can see only advantages for Britain from its creation. First, Banking Union will facilitate the completion of the single financial market by simplifying supervisory and regulatory practices, which will facilitate wider market access for banks and investors across Europe. Second, Banking Union will reduce the scope for coordination failures between national supervisors, which will in turn allow for more effective implementation of the single rulebook and convergence of supervisory practices. In this way, the presence of the SSM can be seen as reinforcing the coordination function of the European Banking Authority. The SSM will operate in full compliance with EBA guidance and actively contribute to its work. Third, Banking Union will enhance financial stability in the Europe – and this, more than anything, is what is required for the single market in financial services to thrive.

I will return to the important issue of transparency in a moment, when I discuss the ECB’s monetary policy strategy. With regard to accountability, let me simply highlight that, drawing on the successful experience of several central banks, in October 1998 the Governing Council of the ECB decided to publish a quantitative definition of price stability. This definition of price stability as an annual increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2% provides a clear yardstick against which the public, its elected representatives and agents in the media can hold the ECB accountable. The ECB’s monetary policy strategy Within this institutional framework, how should price stability be maintained? This question is addressed by the ECB’s monetary policy strategy. It is obvious that the development of the ECB’s strategic framework drew heavily on the experience of euro area NCBs prior to Monetary Union. This is one area where the experience of national central banks was extremely influential and important. Prior to the introduction of the euro, several central banks, including the Banque de France, assigned a prominent role to money within their monetary policy strategy. Some announced intermediate monetary targets, while others adopted monitoring or reference ranges for monetary growth. At the same time, other euro area central banks emphasised the role of inflation forecasts as the key monetary policy indicator. Of these, several proceeded to announce direct inflation targets, as became fashionable in the 1990s.
And these challenges are likely to continue to require a substantial level of investment by financial institutions to improve the sophistication of the risk management process and the operational infrastructure that supports these markets. Thank you. Note: I want to thank Stefan Walter, Robard Williams, Tim Clark and Beverly Hirtle of the staff of the Federal Reserve Bank of New York for assistance and comments. BIS Review 14/2006  5

4  BIS central bankers’ speeches  non-constant parameters allow the identification of a range of values that quantify the cost in terms of growth failure for every two percentage point increase in steady-state inflation. This cost implies lower growth of between 3 and 5 percentage points over a period of ten years. Finally, monetary policy is a powerful tool. When used improperly, it may cause permanent damage. But it can become an effective, stabilising factor and contribute to collective prosperity in an independent and active way. The sine qua non for this is to build monetary policy decisions into a systematic and predictable strategy, based on price stability, which drives expectations and guides the economy but doesn’t shock it. This is perhaps the most important practical difference to what was studied in the early 1970s. The ECB’s monetary policy strategy  The ECB’s monetary policy strategy is based on the new theory of the instruments I have tried to outline, and takes into account the enrichment of the theory of objectives, which emphasises the contributions of price stability to the “general prosperity”. It also provides continuity for a monetary tradition in continental Europe that has ensured inflation-free growth for more than 60 years. The strategy is based on the objective of “maintaining price stability” that the Treaty has entrusted to the central bank and the quantitative definition that the Governing Council subsequently gave the objective.
On the contrary, monetary tightening works to constrain the growth of mortgage rates. They have risen far less than inflation. Unsecured consumer lending is rapidly expanding too. Banks often lure people with belowinflation rates — which may seem like an excellent offer. The borrower thinks: I take a loan for repairs and buy all the construction materials today, or else tomorrow they will be more expensive (indeed, prices have grown rapidly in this market) so I will end up overpaying less than if I bought the materials later. This is a typical situation. The same logic works with regard to other goods. And borrowers end up getting ripped off by a loan rate with an additional loan agreement attached, or through tied products forced on them. We are fighting this practice. Fines for misselling need to be raised. Banks should calculate the full cost of credit in such a way as to make all hidden fees visible to borrowers. It is an absolute priority for us protecting individuals’ rights in their interaction with financial providers. Now that inflation is above target, our action may even be tougher than before. It is important that we protect people from unnecessarily paying for openly pushed services they do not need and overspending on fees. I will spare you the details, but will say that we are developing regulatory measures to reduce consumer costs related to interaction with financial institutions. That would present an opportunity to improve people’s well-being, and we should use it.

You may remember that inflation at the time was below target: about 2.3% at the start of the pandemic. As the economic situation evolved and a downturn in multiple sectors sent inflation down, we were able to lower the key rate as much as the economy needed. Incidentally, it was precisely the sustainably low inflation of pre-pandemic years that enabled the focus of monetary policy on support of growth and recovery. Imagine what would have happened if we had needed to deal with the dual problem of a pandemic and high inflation. In addition to temporary financial losses of consumers and businesses and shrinking economic growth, we would have had to counter inflation that would be eating up whatever money people still had. Our policy would have been far less successful. It would have been more difficult for the economy to recover, and a recovery would have taken longer. The monetary policy we had conducted in pre-pandemic years gave us room for manoeuvre and helped set the economy on a recovery path. This year, the economy has returned to the pre-pandemic growth trajectory. The immediate task is to stage a switch from recovery to sustainable growth. In order to do this, it is necessary to overcome the negative effects of the pandemic, and above all, to deal with soaring inflation. This is the focus of our current policy, and this is why we are raising the key rate. What happened? Why did price growth accelerate in Russia and across the globe?