samchain/econo-pairs-v1 huggingface dataset:
In the current year, while sustaining the effect of already implemented measures, we expect banking credit to grow with a rate below or near 20%. As I mentioned earlier, the dynamics of banking intermediation in the country cannot be contemplated in isolation from the process of free movement of capital and the accompanying dynamics of the balance of payments current account. Intuitively, many economists tend to seek direct cause and effect relation between bank credit growth and the current account dynamics. They rely on the logic that the growth of banking intermediation increases the possibilities for consumption and investment, which combined with the existence of free trade and the slower response of domestic supply leads to the accumulation of external imbalances. Such reasoning is to a great extent rational, but it should not lead, as is clearly manifested in the BNB’s policy, to defining the simple rule that the balance of payments dynamics can be directly controlled through controlling the banking credit rates of growth. This clarification allows me to turn to the next issue I would like to discuss, namely the dynamics of the country’s external position. The stable macroeconomic environment in Bulgaria, plus the sustainably high rates of economic growth and the prospects for its membership in the EU brought in an increasing amount of investments. Their share in the GDP in the first three quarters of 2005 increased to 26.6%, which marks the highest level reached since the beginning of economic reforms in the country.

Third, the value of their fixedincome financial exposures (e.g. bonds, especially those with longer maturities) has declined. How different banks and financial systems position themselves against these risks, which has become an investor focal point, will determine how resilient they are. Thus, in an environment as uncertain as the current one, including in relation to the degree of future monetary policy tightening, banks ought to implement a prudent provisioning and capital planning policy, and carefully preserve their current levels of resilience. As part of this, banks should regularly adjust their own capital projections under different scenarios. Such scenarios should include prolonged periods of severe stress, including interest rate stress. Banks should also ensure good visibility of their near-term liquidity risks and have contingency plans to tackle these risks. And, of course, the legislative implementation of the outstanding Basel III standards in a full, timely and consistent manner in the EU is a critical step towards safeguarding the resilience of our banking system. In addition, allow me to stress the need to analyse in depth the recent developments from the public authorities’ perspective.
As well as having pursued a brilliant academic career, Vitor Constancio has been at the commanding heights of Portuguese politics and economic government. Constancio has been a Member of Parliament, Minister of Economy and Finance, Governor of the Banco de Portugal on two occasions, the second from 2000 to 2009, a member of the 2  BIS central bankers’ speeches  Council of State and a professor at various Portuguese university institutions. In 2010 he was appointed Vice President of the ECB. Given his position, and also in light of his personality and experience, Constancio plays a very important role in steering and designing the ECB’s policies. He is a representative of what I would define as “flexible orthodoxy”, i.e. a rigorous point of view on ECB’s tasks and priorities, but one which flees from rigidity and never forgets common sense when it comes to the complex and often difficult decisions, in both the technical and political sense, that the ECB has to adopt. I give the floor to Vitor Constancio. BIS central bankers’ speeches  3

In this respect, the Bank looks forward to a code of conduct for the industry to be established and implemented by the industry this year. The code of conduct should comprise a set of key principles and guidance for proper business practices that instil greater market discipline and confidence, and to create a culture of healthy competition within the industry. This should be complemented by a process that ensures that individuals responsible for managing money services business operations have the relevant knowledge and experience to meet the minimum professional standards set by the industry, and are able to offer quality services to the public. In relation to this, the association should consider implementing a certification or qualification process, for example, by conducting entrance examinations for its members sometime in the future. We also expect the association to play a proactive role to improve the image of the industry players and weed out the black sheep within the industry, through the effective implementation and enforcement of the code of conduct, and by working with the relevant authorities to help combat illicit transfers of funds and unauthorised activities. Secondly, the association will also serve as the central platform to drive and implement development initiatives to enhance the capacity of the industry.
First, I doubt that a higher inflation target would be viewed as consistent with the Federal Reserve’s Congressional mandate to pursue price stability. Our employment and inflation mandates have been established by Congress, not by the Federal Reserve. Second, the risks of being pinned at the effective lower bound for interest rates may be overstated. Only once in the postwar period have we reached the zero lower bound. Upending several decades of effort to anchor inflation expectations around 2 percent might be too high a price to pay to reduce the effective lower bound risk by what might prove to be a small amount. In this vein, it is important to recognize that the FOMC now has a more credible set of tools available to use at the effective lower bound than it did in 2008, when those tools were largely unproven. Forward guidance about the path of short-term interest rates and quantitative easing have been effective in providing monetary policy stimulus in the post-crisis period. Because this is now more broadly appreciated, households and businesses should be more confident that the Federal Reserve has sufficient tools available at the effective lower bound to generate a sustainable economic recovery. This greater confidence, in turn, should help keep inflation expectations from declining—which should also mitigate the risks associated with hitting the lower bound. Third, there are arguably better ways of reducing risks associated with the effective lower bound than a higher inflation objective.

This has boosted consumption and private investments, reduced credit price, and eased debt servicing costs for all segments of the economy. Reflecting these actions, the Albanian economy has made notable progress towards steady and long-term growth. The progress has been characterised by gradual acceleration of the pace of growth, expansion of employment and decline in unemployment, as well as improvement of private sector balance sheets. In particular, the banking sector appears liquid, well capitalised, with good profitability indicators. Regulatory capital hovers around 18%, notably above the minimum requirement, whereas the ratio of non-performing loans has dropped to 11% against the 25% maximum level recorded in 2014. Dear ladies and gentlemen, 2/4  BIS central bankers' speeches  The ultimate objective of our work has been and remains promoting sustainable development for the country. The philosophy of our work is built on four main pillars: professionalism, responsibility, accountability, and transparency. This philosophy has been tested and enriched with some valuable lessons learned during the last decade: First, monetary, supervisory and regulatory authorities should adopt a proactive approach to the country’s monetary and financial stability. This requires adequate institutional capacities and adopting a counter-cyclical approach, both toward monetary policy and macroprudential policy. It also requires constantly identifying current and potential challenges in order to address them in due time. Second, long-term economic growth should be anchored in continuous structural reforms.
That transfer is bound to hit real wages one way or another but the more that is resisted and nominal wages are pushed up, the greater the cost is likely to be in unemployment and slower growth. We have no direct lever on public expectations. We need not just to assert our determination to bring inflation back to target but ensure that our words are credible. So, in setting interest rates we need not just to assess the balance between supply and demand pressures in the economy which will set the context for price and wage decisions in the medium term, but also ensure that our decisions are understood and seen to respond to the economic developments in inflation and output that people are experiencing. 4  BIS Review 94/2008  It is clear that with inflation rising well above target we need a period of slower growth to create a margin of spare capacity. The questions we discuss and reconsider each month are how big a margin is necessary and what level of interest rates is needed to bring it about. The Credit Crunch On the scale of the necessary output gap, for example, we need to take account of the supply effects of the doubling of oil prices and the impact of migration. On the other side we need to judge how sharp a slowdown is already in train. In deciding the necessary level of interest rates we need not just to focus on the level of Bank Rate.

There are some drawbacks to each of these particular proposals but we are discussing the best approach both with the FSA and with our international colleagues in the FSF. Current challenges for the MPC Making sure we do set in place capital and liquidity regimes which dampen the next cyclical upswing in financial markets is important. More immediately, we also have to deal with the present conjuncture and I want to finish this talk with some reflections on that. If the sharp credit squeeze was the only challenge we faced, the Monetary Policy Committee would be expected to continue reducing rates to mitigate the risks of an excessive fall in demand and in inflation in the medium term. But of course we do face another simultaneous shock, the sharp rise in commodity prices, which is driving up inflation across the world. And that raises the question whether we should be raising rates rather than reducing them. Moreover recently each month seems to have brought more worrying news on both fronts. The cost shock In the May Inflation Report, the Committee forecast a pickup in inflation to well over 3 per cent, above target and driven in large part by the huge rises we have seen in energy and food prices (Chart 3). Since those projections were put together, oil prices have risen a further 20% and food prices by a further 5%. And the Consumer Price Index has risen faster than we were expecting, reaching 3.8% in June.
Growth in Continental Europe, which is highly reliant on impetus from exports, may weaken markedly if the dollar continues to fall. Chart 15. Mainland GDP and employment Annual growth. Per cent 6  6 GDP  4  4  2  2  0  0 Employment  -2  -2 1990  1992  1994  1996  1998  2000  2002  2004  Sources: Statistics Norway and Norges Bank  BIS Review 11/2004  11  Norway, like other countries, experienced a period of strong expansion in the 1990s. The expansion in Norway lasted considerably longer than in other countries. In 1998, the economy shifted from an upturn with high growth rates to an expansion with lower growth but low unemployment, labour shortages in many sectors and strong growth in labour costs. Wage developments culminated in the spring of 2002 and the expansion was reversed in the second half of the year. Growth came to a halt and employment fell. A number of factors triggered this development. Higher wage costs weakened the purchasing power of public entities. Global stagnation had a dampening impact on Norwegian exports. In Norway, the interest rate was kept high after the wage settlement and a persistent, unexpected low level of interest rates abroad resulted in a strong krone. The sharp rise in electricity prices last winter also affected the domestic economy. Chart 16.

Ladies and Gentlemen It is a continuing concern of all key stakeholders that provision of financial services in rural areas continues to be significantly lower than in urban areas. This has constrained the rural populace from access to savings products. This largely on account of poor infrastructure coupled with low literacy levels. As of June 2020, 39 out of the 116 districts in the country, did not have either bank branches or agents. It is from this backdrop that the Bank of Zambia, the Ministry of Finance and National Planning and the Ministry of Health, commenced an initiative to help accelerate rural financial inclusion in Districts by promoting the use of health facilities as general access  2/4  BIS - Central bankers' speeches  points for financial services. The General Access Point Inspection Report was presented during the dissemination workshop on 13 September 2022 and is available for detailed information. Ladies and Gentlemen The implementation of the National Strategy on Financial Education requires the united responsibility of the financial sector. This has been demonstrated by the Pensions and Insurance Authority, the Insurers Association of Zambia as well as Securities and Exchange Commission and the Capital Markets Association of Zambia who successfully launched the Insurance Week under the theme "Insurance-Solutions for a better tomorrow" and World Investor Week under the theme "Learn more about Investor resilience and sustainable finance" earlier this month. I am confident that the key messages disseminated during these events will contribute to raising the levels of financial literacy in the country.
I suggest that:   the draw-down rate assumed in the Basel 3 Liquidity Coverage Ratio should be higher for committed lines to financial companies than for lines to non-financial companies. That is, banks should hold more liquid assets against such exposures. Without a policy of that kind, there will be a strong incentive for maturity-transformation to be undertaken off bank balance sheets but with an umbilical cord back to the banking system. It should apply not only to vehicles used for securitisation but more generally. Money funds Money funds do not use committed lines of credit from banks. Claims on money funds have, in effect, become monetary assets in the hands of savers. In parts of the world, especially the US, they are treated like current accounts. Given the restrictions on their asset holdings, they resemble narrow banks, in mutual-fund clothing. But for a normal mutual fund, as an open-ended investment vehicle, the value of investments in it fluctuates with the value of the vehicle’s asset portfolio. By contrast, most money funds hold themselves out as offering par under any circumstances; when they “break the buck”, they must unwind. Their investors run at that prospect; and so the funds themselves are flighty investors. Compared to most types of shadow banking, money funds do not borrow – in the usual sense. But by promising par, they are in effect incurring debt-like obligations. And they can be exposed to leverage.

And repo has enriched the money markets. But it is also true that anyone holding a securities portfolio can build themselves a shadow bank using the securities lending and repo markets. One simply lends out the securities at call for cash, and then one employs that cash by making loans or buying credit-assets with a longer maturity. This is leverage and maturity mismatch. That example assumes the shadow-banking business is built by the investor who holds the securities outright. But, of course, nothing is so simple. The first lender of securities might lend against securities collateral and do no more; that is relatively common in European markets. But the entity that has borrowed those securities could themselves repo out the borrowed securities for cash, and employ the cash in a lending or credit-asset business. And  4  BIS central bankers’ speeches  so on – ie at any point in the chain of securities lending, an intermediary can build themselves a shadow banking business. Such chains can prove fragile for all sorts of reasons – because many securities are at call, and because many secured lenders try to realise their collateral instantly upon default. It is also worth mentioning that some asset managers have no – zero – appetite to hold the underlying paper outright in the event of their counterparty defaulting, either because the assets are not covered by investment mandates or the fund managers do not know how to manage them, etc.
In 1986, Norges Bank provided substantial loans to the banks – at the highest around NOK 80 billion – to prevent a rise in money market rates after large-scale NOK purchases had been made in support of the krone. 44 The loans, which were unsecured, were kept on Norges Bank’s balance sheet when solvency problems at the banks began in 1987. Norges Bank was later criticised for providing these loans. Although the criticism was misdirected, the loans did make it more difficult for the government to manage the banking crisis. 45 Today the Bank no longer provides unsecured loans and we have gradually tightened collateral requirements. Many banks rely heavily on short-term funding in international and domestic money markets. The lesson from the most recent financial crisis is that a shortfall in foreign funding can weaken stability in the financial system in Norway, even if the banks’ financial position is not in jeopardy at the outset. The next step will therefore be not only to require collateral, but also impose requirements on our clients – the banks – to improve their funding strategies. Banks must not be given the scope to take on substantial liquidity risk in the belief or with the certainty that Norges Bank will intervene should foreign funding seize up. A market functions poorly in the long term with such hidden support. With large unsecured loans, Norges Bank ended up providing income support in one instance in the 1980s when a savings bank experienced solvency problems.

5 The Bank’s tasks were to issue Norwegian notes and coin with a stable value measured in silver, perform banking services for the government, provide loans and take deposits. Equity capital was procured by introducing a silver tax. The silver standard was replaced by the gold standard in 1874, and the following year saw Norway’s entry into the Scandinavian Currency Union. The Norwegian krone became the new currency unit. Norges Bank as the bankers’ bank Norges Bank became a more modern institution with the Act of 1892. 6 It became a bank for the banks that had emerged and a common national discount rate was introduced. The note issuing rules were also changed to enable Norges Bank to meet bank demand for liquidity more easily. It was legally established that Norges Bank would be the government’s treasurer. The Bank remained legally independent of the government authorities in its use of instruments: the Act of 1892 reconfirmed that Norges Bank could not be given instructions by the government or the Storting and Bank decisions could not be reversed by other authorities. The contemporary ideal was an independent central bank. 7 At the same time, a permanent chair and deputy chair were assigned to Norges Bank’s board, both appointed by the government. The other board members were appointed by the Storting, as were the members of the Supervisory Council who were responsible for supervising the Bank.
BIS Review 45/2007  3  An important key to the success of the Fund so far has been the clear separation between investment decisions by professionals in a performance-oriented environment, and the economic policy role of the Fund. We have been able to establish a setting where investments are made in a business-like manner. Another essential insight is the importance of political support for strategic allocation. There was a broad consensus in parliament behind the choice of investing in equities in 1997. This was important in order to navigate through the turbulent waters of equity markets in the beginning of this century – and such turbulence will certainly return. Perhaps most importantly, the Government Pension Fund and our fiscal guideline have helped us to avoid the common pitfalls in resource rich economies, e.g. lack of fiscal discipline and loss of focus in structural policy. We have managed to avoid creating a subversive second fiscal budget. The Fund has shielded the mainland economy from excessive variability and has to a large extent reduced the oil-price dependency of the exchange rate. Yet, I would like to end with a word of caution: The model we have chosen in Norway has evolved in a Norwegian setting and is not necessarily suited as a blueprint for other countries. But it is important to understand the basic, and maybe universal, principles underlying the model and adapt them to the particular fiscal situation and the particular political tradition of the country in question.

The Fund serves as a buffer between current petroleum revenues and the spending of these revenues in the Norwegian economy. It is important to note that the entire petroleum revenues, as well as the return on the Fund, go into the Government Pension Fund. Then, an amount equal to the non-oil budget deficit is transferred into the fiscal budget. This mechanism ensures three objectives: First, the variability in petroleum revenues is isolated to the growth rate of the Fund. Second, any use of the Fund is integrated into the ordinary budget routine and does not undermine the fiscal budget as a single instrument for assigning priority to different needs. And third, the amount of spending of petroleum revenues, that is the size of the non-oil budget deficit, can be aligned with the needs of fiscal policy as well as with the targeted intergenerational distribution. Note that this setup for the Fund can work with different fiscal rules or guidelines for how large the non-oil budget deficit should be. In Norway, the Storting (Norwegian parliament) has approved a fiscal guideline that implies that the annual non-oil deficit should, on average over time, be limited to 4 per  BIS Review 45/2007  1  cent of the Pension Fund. This is equal to the long-term expected real return on the Fund. Such a guideline provides predictability in the level of spending. If the government disregards the guideline, enterprises will loose an important reference in gauging the expansiveness in fiscal policy.