samchain/econo-pairs-v1 huggingface dataset:
The benefits of developing more aggregated measures of risk across diverse business lines are especially appealing to complex financial organisations whose activities span many kinds of activities. As a result, it is not surprising that large, mixed financial conglomerates have tended to invest most in the development of economic capital estimates. Using the concept of economic capital and its elements, banks can develop sound policies for monitoring exposure limits, risk-adjusted pricing policies and sound provisioning practices based on the inherent risks of the portfolios. They can also measure returns and assign capital on a riskadjusted basis. Let me add a word of caution. Despite the significant progress made in the banking industry in the use of models and new technologies, banks still depend largely on risk managers’ expert judgement. Quantifying risk involves making assumptions and judgements. And no model, and no software package, no matter how sophisticated, can ever replace the skills of a trained, experienced and conscientious risk manager. That is why we have made sure that the Basel II framework is much more than numbers and models. Such judgement should be reinforced, however, with the best possible information, techniques and tools for processing that information. To the extent that risk assessment and control methods become more formalised and rigorous, this will lessen the likelihood of making bad decisions. It will also contribute to the prompt detection of errors and deviations from targets, allowing banks to implement corrective measures at an early stage.

Further regulation in specific areas where Swedish banks are particularly vulnerable may also be necessary. Here I am mainly referring to the Swedish banks’ extensive market funding, particularly from abroad, which I discussed earlier. And which has in many ways enabled the expansion in the banks’ mortgage stocks. There is international work on producing new regulations in this area, too. When the work regarding the technical details for liquidity regulation is complete, we must also decide how and when the regulations should be introduced in Sweden, taking into account the structure of our financial sector. Don’t forget the supply side In talking about the housing market I have mostly talked about the demand side and how we can ensure a balanced development there. This is what much of the general debate has concerned. But I would like to conclude with some words on the supply side, or housing construction, and what role this plays and has played earlier. While this is something that is fairly often discussed in this context, I nevertheless feel it deserves a little more attention. One of the explanations usually put forward for the high housing prices is that relatively little new housing has been built in the past fifteen years or so (Figure 4). The low level of construction is what is usually termed a “fundamental explanation” of the upswing in house prices. And this is probably true.
Gent Sejko: Address - Assembly of the Republic of Albania Address by Mr Gent Sejko, Governor of the Bank of Albania, to the Assembly of the Republic of Albania presenting the Annual Report of the Bank of Albania for 2022, Tirana, 6 July 2023. *** Honourable Speaker, Honourable Members of Parliament, Allow me to start this communication by stating that the Bank of Albania adheres to an open and transparent communication with the Parliament of the Republic of Albania. This communication is important as it ensures the BoA's accountability and responsibility as well as the improvement of the process for compiling and implementing the economic policies through the establishment of a common vision on the challenges ahead and the best ways and instruments for addressing them. Dear ladies and gentlemen, A series of frequent, complex and unprecedented shocks have battered the Albania economy in recent years. After the 2019 earthquake and the pandemic in 2020 and 2021, we faced the economic and financial lingering consequences triggered by the Russia's invasion of Ukraine over 2022. This aggression caused a sharp surge in food, oil and energy prices across global markets, heightened uncertainty amid economic and financial agents, as well as an increase in the overall financing costs both in Albania and globally. The new economic and geopolitical reality tested the sustainability of the economic and financial equilibriums of Albania, posed serious challenges to the Albanian enterprises and households, and called for the fast and coordinated reactions from public authorities.

Banks have demonstrated in recent stress tests their resilience to a sharp adjustment in credit market, and markets, rather than banks, have been the driving force behind recent growth. 10  But recent IMF work shows how rapid growth of corporate debt overall, and any skewing of corporate debt towards riskier firms can – by creating a debt overhang – add to medium term risks to economic growth. 11  The jury is out on whether what we have seen in the UK is material in this respect. But to keep the wider economy protected from financial disruption, it’s important that banks are resilient to these risks if they do become material. And that’s one reason why (as the Financial Policy Committee said in the Record of its March meeting) the FPC intends to “re-consider the adequacy [of capital levels] in June, with a focus on the evolution of domestic risk appetite.”  Let’s move on to the other hidden risks: the underwater bergs that can make markets less resilient  There were certainly plenty of these lurking under the surface of the system of 2008, making it fragile and amplifying market adjustments. They help to explain how $ of losses on subprime mortgages turned into well over $ of write-downs in the global banking system. The post-crisis reform programme has dealt with them. But our duty is not just to prevent the last crisis, it is to keep up with new risks as the financial system evolves and, where needed, take action to address them.
Looking beyond current fiscal turbulences, let us think, for instance, of how euro area member countries would have absorbed the crisis with fifteen different currencies, fluctuating internal exchange rates, and, consequently, much higher volatility, uncertainty, risk premia and interest rates. This experiment speaks for itself. Let me add, also, that despite the perception of slow motion from European authorities, we share a great sense of urgency and solidarity. There is no benign neglect nor resignation/despair. The last type of reaction is support. It shows up in comments from a majority of observers and investors, especially in emerging economies: they praise the euro; they want it to succeed; but they sometimes question our collective ability, in current circumstances, to do what is necessary, to make the right decisions or make them at the right time and to set in place the proper framework for the future. These are the concerns I would now like to address. Where and how did it start? Most euro area and EU countries entered the crisis with significantly deteriorated fiscal positions, very far from the “structural balance objective”, which is the core of our fiscal framework and also the commitment made by Member States that adopted the euro. With the crisis, fiscal imbalances increased, not so much because of a rise in expenditure, but essentially through a massive loss in revenue.

These figures are consistent with developments in the 1990s. Wage growth averaged 4½ per cent and productivity growth 2 per cent in this decade. This resulted in an inflation rate of 2½ per cent combined with a stable krone exchange rate. 2  BIS Review 51/2002  An unexpected upward shift in labour costs will require an increase in interest rates in order to avoid higher inflation. When wage growth reaches a level that is inconsistent with the inflation target, the result over time will be higher interest rates, lower employment and higher unemployment. There is a relationship between wage growth and interest rates. The lower wage growth is, the lower interest rates will be, and vice versa. The differences between interest rates in various countries reflect to a large extent differences in wage growth. Japan represents the one extreme, with an interest rate of zero and no wage growth. At the other extreme are Iceland and Norway, with high interest rates and high wage growth. The relatively high wage growth in Norway is the result of a tight labour market. In other countries, the situation is different, with sluggish economic growth and abating inflation. As a result, the interest rate is higher in Norway than in other countries. Households are enjoying strong growth in income and are borrowing heavily. Wage growth is high. Financial savings are low. There is strong growth in retail sales measured in current prices. House prices are high. Petroleum investment is also high.
In some situations it may therefore be reasonable to use the policy rate as a complement to macroprudential policy, as the policy rate has a broad impact on financial markets.29 For monetary policy to effectively counteract financial imbalances, the monetary policy trade-off should be symmetrical. If the central bank only gives consideration to financial stability in times of financial stress – and not in times when financial imbalances are building up – the risks in the financial system may increase. Central banks can also become better at analysing how monetary policy operates in financial markets and how it affects the risks of financial instability. Central banks should avoid excessively expansionary monetary policy for extended periods if it is expected to have little impact on inflation, and risks having a major impact on the build-up of financial imbalances. Large purchases of securities and negative interest rates should be possible, but the threshold should be high. These tools are difficult to explain and justify to the public - especially if they were to lead to the banks starting to set negative interest rates on household savings accounts – and they may therefore reduce the Riksbank's credibility.30 Nor is it unreasonable that a very expansionary monetary policy over a long period of time leads to more risk-taking, higher indebtedness, less preparedness for changes in interest rates, etc. In such a situation, a sound risk assessment may be to raise the interest rate too early rather than too late.

All these developments through the decisive implementation of policies have reflected themselves in reducing uncertainty and increasing predictability, strengthening macroeconomic fundamentals, increasing resilience to shocks and changing the dynamics of the economy bringing the private sector to the forefront; rising productivity, changing behaviors and increasing competition. All in all, it is clear that the Turkish economy has been undergoing a structural transformation since 2001. After going through a deep structural transformation, it is safe to say that the Turkish economy has gradually been normalized. According to our studies, the impact of decisions of short-term interest  2  2  BIS. (1998). “The Transmission of Monetary Policy in Emerging Market Economies”. BIS Policy Papers No. 3. BIS Review 88/2006  rates on inflation and on the economy is observed up to 18 and 9 months respectively in Turkey. We also calculated that the lag has been lengthening as we progress with the structural transformation. Dear participants, The second challenge of central banks in some emerging economies is dollarization. In fact, the issue of dollarization has become a common characteristic of many emerging markets like Turkey since the beginning of the 1990s. Both our experience and that of Latin American economies clearly indicate that dollarization increases the fragilities of almost every sector of the economy, namely the real sector, public sector and financial sector. From the perspective of the real sector, dollarization appears in several respects. First, it affects pricing behaviors.
Specifically, it is particularly worrying that almost half of the unemployed have been in this situation for over a year and that the unemployment rate among low-skilled population groups stands at over 25%. The serious mismatch between the skills of employees and the unemployed that tends to arise in such cases suggests there is a need for active employment policies to foster the employability of all socio-demographic groups using the tools that have proven to be effective for each of them. A rigorous evaluation of all the existing programmes is therefore necessary. In addition to considerations of economic efficiency, as highlighted by a recent analysis by the Banco de España, a lower unemployment rate is directly reflected in an improvement in levels of inequality. This positive effect of employment on income inequality would be 12/14  strengthened by reducing the high level of temporary employment in the labour market, provided this decrease did not come at the price of reducing the incentives for permanent hiring. As regards productivity, Spain’s levels are low by international standards. Improving the dynamics of this variable requires measures in various areas. In particular, it calls for improvements in human and technological capital. In this regard, it is necessary to bolster the legal framework for education to raise quality and address the challenges posed by globalisation, technological progress and automation. This reform also needs to foster innovation in universities and channel it toward the productive system.

Also, as the IMF has recently indicated, it would be desirable to assess the suitability of bail-in strategies in the event of systemic crises, given their potentially adverse effects on the financial system as a whole, which may ultimately raise social losses and the cost to the taxpayer. In order to make further progress in reducing the risk of financial fragmentation within the euro area, it is necessary to boost private-sector risk-sharing channels, such as the credit and capital market channels, so that they work alongside the public-sector risk-sharing mechanisms. This requires, first, removing obstacles to the creation in the medium term of genuine pan-European retail banks. In particular, a single deposit insurance fund needs to be created, the euro area needs to be treated as a single jurisdiction for regulatory purposes and, above all, market pressure needs to reach broad segments of the European banking system, such as public-sector banks, cooperative banks and savings banks. Second, progress needs to be made on the various Capital Markets Union initiatives. The implementation of this project should lead to more efficient and integrated capital markets, enabling European businesses to diversify and broaden their sources of funding and to reduce their excessive dependence on bank finance. However, this is a complex objective that requires action on various fronts, including the development of market infrastructures, the review and harmonisation of market regulation and supervision and of insolvency procedures, and the elimination of the bias in favour of debt financing in some countries’ tax systems.
That means they are unlikely to be accessible to the vast majority of the general public. It is communication among the financial elite in the language of the financial elite. Perhaps that is no more than confirmation of what we already knew. Nonetheless, it means these communications are, by themselves, unlikely to have helped build, or rebuild, generalised trust in banking. It also begs the question of what more could be done to make banking more accessible to the wider public to help build trust. One option might be for the banking industry to conduct events similar in spirit to the Open Forum – events which seek to engage with, and take messages from, the general public. These might be one means of accreting personalised trust with customers – “Trust Town Halls”. To be successful, these would need to be repeated rather than one-off events, as personalised trust arises from repeat interactions. Another idea is to consider whether there was scope for something akin to an annual report for customers, rather than investors. This might be (considerably) shorter in length, (considerably) simpler in language and (considerably) easier to digest in a 5 minute sitting. It would be part of banks’ contract, social rather than legal, with their customers. A third idea  60  Shannon (1948). 61  DuBay (2004). 62  These include the Coleman−Liau, ARI, SMOG, Gunning fog, Flesch−Kincaid and Coleman correct completion measures.

In other words, monetary policy is always implemented under conditions of uncertainty – to varying degrees, of course. This is why we consider a large number of economic indicators and use several models. Furthermore, we do not put a single economist in front of a computer and assign that person the task of determining the monetary stance; instead, we have a committee that exchanges opinions and assesses the current situation and outlook at the time in question. The observations I have just made are general in nature and apply to large and small countries alike. But we know that monetary policy in small, open economies is accompanied by particular challenges – challenges that we must take into consideration when developing a monetary policy framework for Iceland. In this context, it should be noted, first of all, that smaller economies generally have a tendency to be more volatile than larger ones, owing both to less economic diversity and the greater relative weight of individual shocks. Second, the relative weight of the tradable sector is often greater than in larger economies. Because of this, economic developments are more dependent on the exchange rate, and pass-through from the exchange rate to inflation is generally stronger. Third, financial markets are shallower than in larger economies, other things being equal, and this contributes to greater volatility of financial prices. Fourth, in an environment of unrestricted capital flows and increasing international financial integration, the possibility for small economies to affect their own financial conditions through monetary policy diminishes.
Recognizing these changes, SIBA enlarged its membership, and took on its current name in 2000 to reflect its role in representing a wider group of members. That was a very timely move. Developments in Singapore's capital markets In the last 3 decades, Singapore's capital markets have grown in tandem with the growth in the global markets. New listings have grown, and the Singapore Exchange has attracted many foreign companies. Foreign listings now account for more than a quarter of total listings, making SGX the most international among Asian exchanges. Our debt market has also grown, with outstanding corporate debt issuance rising from $ billion in 1995 to $ billion in 2004. SIBA and its members have contributed to our success in developing our capital markets. The association has not only represented the interest of the investment banking community well; its initiatives have also facilitated the development of investment banking activities in Singapore. The professionalism and integrity of SIBA members in executing financial transactions have ensured that we maintain investor confidence in our markets. Going forward, capital markets worldwide will continue to evolve and present new challenges. For Singapore's capital markets to capitalize on fresh opportunities, we must all, as regulators, as market participants and as an industry body, do our utmost to keep up with changes. I hope we can work in close partnership to break new grounds for the industry here. I believe there are 3 fundamental factors that will enable our capital markets to stay ahead.

A framework for doing the latter is set out in the Basel Committee’s Sound Practices paper in the form of the two-dimensional matrix I described earlier, which assigns losses arising from the various loss event types to the major business lines of the bank. Conclusions Operational risk has many facets, and the events which give rise to it cover a huge range from highfrequency low-impact at one end to low-frequency high-impact at the other. There is a correspondingly wide range of controls and techniques that can be used to prevent or at least mitigate losses. Sound  BIS Review 33/2002  3  documentation lies at the more bread and butter end of the spectrum of such controls and techniques. But it is no less vital for all that. The Association is therefore to be congratulated for its initiative in putting in place an essential building block in the form of the standardised documentation that is being launched today. This will help to promote the development of the syndicated loan market in Hong Kong and in the region more generally, and will also serve the objective of enabling banks to better manage their operational risk. 4  BIS Review 33/2002
That criticism in my view was wholly unjustified. It was a classic example of expecting too much from monetary policy. The role of a central bank is - as I said earlier - essentially to maintain overall macroeconomic stability, and the measure of its success is consistently low inflation. On that criterion the ECB has been substantially successful. The Euro area economy grew at above trend with core inflation nevertheless remaining within the ECB's tolerance range of 0-2%, even though the headline measure of inflation, influenced by rising energy and food prices which were essentially shocks on the supply side, and by the weakness of the exchange rate, moved above that range. Had the ECB attempted during this period to target the exchange rate, presumably by raising interest rates, it is not at all obvious to me that it would have succeeded; and even if it had, the likelihood is that it would have put the internal stability of the euro-zone economy at risk. More recently the ECB has sometimes been criticised as slow to respond to the weakening of the US economy. Implicit in that criticism no doubt is a strong conviction about the extent and duration of the US slowdown and its likely impact on the euro area. As I have said there is in fact a great deal of uncertainty about that.

But the ECB has had to take account, too, of domestic demand pressures within the euro area, and of the fact that, even on the core measure, Euro area inflation was moving up gradually to the top of the ECB's 0-2% range. Frankly I don't see how anyone can be confident whether the ECB had it precisely right or wrong - it is perfectly normal for even the best-informed people to disagree on these judgements, as anyone who reads our own Monetary Policy Committee meeting minutes will tell you. But I am wholly confident that the ECB is sensitive to the issues surrounding those judgements, including the downside risks in the US, as indeed it demonstrated a fortnight ago. So, too, are we in the United Kingdom. In our case, we again enjoyed relatively steady overall economic growth through last year, combined with a further fall in unemployment to its lowest rate for over 25 years. Inflation meanwhile continued to run below the Government's 2½% target - and is currently running at around 1½% on the eurozone measure of inflation. This relatively low inflation rate was partly a result of the dampening effect of sterling's surprisingly persistent strength against the euro. The problem for us - and it is a real problem which has been with us for some time now - is the sectoral (and associated regional) imbalance within our overall economy.