samchain/econo-pairs-v1 huggingface dataset:
The research carried out over the past twenty years has taught us, for instance, that it is not only the right economic policy measures to achieve growth that we need; institution building is at least as important, and this must be adapted to local conditions and help countries to tackle new challenges. These are important lessons to take into the future with us. What we can say with certainty is that the path entered upon, towards greater liberalisation and market economy and the promotion of technological advances, has shown good results. Many millions of people have attained a much better standard of living over the past sixty years, both in material terms and in terms of quality of life. At the same time, all of the available data clearly indicates that the countries which have had least success are those that are least integrated into the world economy, that have not managed to create a stable macroeconomic framework, have poor protection for property, complicated and inefficient bureaucracy, a high degree of corruption and a widespread informal sector into which a large part of businesses have been forced. There thus appears to be a great deal that developing countries can do themselves to improve their situations and create the right conditions for stable growth. However, the wealthier countries also need to do their share, for instance by opening up currently protected sectors of their economies to free trade. Moreover, the multilateral institutions play an important role.

Unfortunately, the final negotiations in the Doha round have once again been postponed, and a final agreement will probably not be signed until 2006 or 2007 at the earliest. Although the 147 member countries of the WTO took an important decision in principle regarding goals and rules for negotiations in the field of agriculture last summer, the contents are still incomplete. In other important areas, such as trade in services, the results were even less substantial. Europe and the United States can contribute in a very concrete way in the trade negotiations by reducing their own tariffs and subsidies, particularly in the industries where developing countries have their largest competitive advantages, such as agriculture, textiles and the steel industry. An example of the potential significance of the reforms is that a European cow receives an average of USD 2.50 a day in subsidies, while 75 per cent of Africa’s population are living on less than USD 2 a day.2 More free trade within these areas would lead to more poor people being integrated into the world economy, and would thus enable one of the major problems with the current system to be remedied. In addition, it would contribute to making the global distribution of labour more efficient, which would also benefit the industrialised world. However, when wealth reaches our levels, mobility in the labour market has tended to decline, at least in Western Europe.
Together this implies that the interest rate spread charged and earned by banks has increased substantially in the last 15 years. Figure 5: Lending and Deposit Rates in Sub-Saharan Africa (w/o SA) 25 20 15 10 5 0 1993  1994  1995  1996  1997  1998  1999  Deposit Rate (median)  2000  2001  2002  2003  2004  2005  Lending Rate (median)  What can African central banks do to foster deeper and more efficient financial sectors? In most African countries, central banks are responsible for regulating and supervising banks. Here central banks should ensure that regulatory requirements are not prohibitive for new  BIS Review 110/2007  5  market entrants, particularly foreign financial institutions who may bring cheaper capital and new technology to the sector. Moreover, central banks can foster the development of sustainable microfinance and rural financial institutions to cater to the vast agricultural and microenterprise sector. They can do so by adopting regulatory requirements which suit the limited sphere of activity of these institutions. 5. Conclusion  Ladies and gentlemen, let me conclude these brief introductory remarks. How can we assess the contribution of central banks to improving the business environment in Africa? Most African central banks have been successful in reducing inflation. This enables the private sector to plan ahead and engage in contracts without worrying excessively that their proceeds may be eroded by rapidly rising inflation.

BIS Review 110/2007  3  Figure 3: Share of Non-Cash Money in Africa (in%) 100 90 80 70 60 50 40 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 South Africa  Northern Africa (median)  Sub-Saharan w/o SA (median)  How can central banks foster the further development of safe and efficient payment instruments in Africa? First and foremost, central banks must take a leading role in the development, operation and oversight of necessary infrastructure, such as interbank and retail payment systems. In doing so, it would seem natural to take advantage of international knowledge and expertise. As financial sector regulators, central banks can further create a market environment which encourages the entry of new service providers, as well as the development of innovative payment instruments, such as SMS-banking and mobile-banking. As an oversight authority, it is then the task of the central bank to ensure that new payment services adhere to the security requirement desired by businesses, households and financial institutions. 4. Financial sector development  Third, let’s take a brief look at financial sector development. An efficient and deep financial sector provides enterprises with debt and equity to finance their growth, thus spurring economic activity. At the same time a deep financial sector can provide households with savings and credit products to smooth their consumption patterns, again increasing their return from economic activity, and reducing poverty. To what extent have financial sectors grown and become more efficient in Africa in recent years?
Firms may, therefore, have been reviewing their preferences between risk-taking in their core business and risk-taking via pension provision, and for a while may have been unusually uncertain about how equity markets value those different sources of uncertainty. If so, that may conceivably offer part of the explanation for the measured recovery in UK business investment having been weak, relative to the economy’s total output, compared with past cycles (Charts 11 and 12). Some have suggested that the need to close deficits may have been a factor, via the call on cash flows. The possibility I am airing is that another factor may be the size of a scheme’s discounted liabilities and the prospective volatility of the associated fund’s net value relative to the sponsor’s underlying business and capitalisation. I do not want to push that too far. There have, of course, been other possible explanations for weak fixed-capital expenditure. These include competition from China, India and elsewhere; the rise in oil and commodity prices; and the uncertainty about how both will play out, and thus about prospective demand for UK output. All of this might have been thought to make the external environment unusually risky and so to warrant deferral of investment decisions. Another possible explanation is, simply, that the level of investment has been under-recorded, and that the data will be revised up, as they have been frequently in the past (Chart 13).

Conventionally, in the framework of the Capital Asset Pricing Model, ‘alpha’ would refer to excess riskadjusted return (a nice thing if you can get it!). In practice, the term seems to be deployed rather loosely, being used variously to cover allocations to assets whose returns have in the past been relatively uncorrelated with a fund’s liabilities; leveraged – that is to say, risk-enhancing – plays across almost any asset class; and giving greater freedom to fund managers. For pension funds, one motivation has probably been to diversify asset portfolios, perhaps evidenced by bigger allocations to private equity, commodities etc. Another motivation, both here and overseas, seems to be to try to close deficits partly by earning high investment returns on some proportion of their asset portfolios. Cast in that light, it appears to be part of the broader ‘search for yield’, which has been offered by some as contributing over the past couple of years to the compression in credit spreads and other market-based indicators of risk, such as the price of options on most asset classes. Two responses to this have circulated amongst market participants, both intermediaries and asset managers. One is that falls in implied risk premia truly have reflected a reduction in risk. The other is that, while that story might hold up to a point, risk has been under-priced. It is certainly plausible that structural change has caused risk to decline somewhat over the past decade or so. First, monetary policy regimes have become more credible.
Ongoing profitability pressure creates an incentive for banks to step up their exposure to interest rate risk and adopt an imprudent attitude in their affordability assessments. Equally, banks may react to earnings pressure by expanding the volume of credit. Together, such developments would cause prices on the Swiss real estate market to gain momentum again, following a recently slowdown. This is particularly relevant given that real estate remains relatively attractive, not just to households but to investors searching for yield. The net result of this would be a renewed rise in imbalances on the real estate and credit markets. This would make borrowers and banks more vulnerable – to an unexpected future interest rate rise, for instance. In particular, it would increase the magnitude and overall economic impact of a price correction on the real estate market. In the spirit of a cautious, forward-looking approach, it is essential given the current interest rate environment that banks apply conservative principles in their lending activities. This is particularly necessary when it comes to assessing the sustainability of loans. Based on experience from the crisis in the 1990s, banks now typically assume an interest rate of 5% when assessing affordability risk; this is the approximate historical average of long-term mortgage interest rates.

Who would have thought that, four years later, we would be confronted with an even stronger franc and even lower – indeed negative – short and longterm interest rates? These extraordinary developments are ultimately a consequence of the global recession which hit the economy after the credit bubble on the US real estate market burst in 2007. As slide 1 shows, the banks around the world were, and continue to be, especially hard hit by this crisis and its consequences; since then, their share prices have performed significantly worse than those of other companies. This is principally due to the fact that many banks are still engaged in cleaning up their balance sheets and, where necessary, adopting costly restructuring measures. Furthermore, banks have been obliged to implement stricter regulatory requirements in the wake of the financial crisis. These requirements, which are needed to ensure systemic stability, are aimed at curbing excessive risk-taking. From the banks’ point of view, however, today there are lower potential returns in areas which were previously often lucrative but also highly risky. Banks are also faced with structural challenges. The accelerated pace of change in information technology and altered customer behaviour require high levels of investment. At the same time, the increasing digitalisation of distribution channels has stiffened competition, since it is easier for new rivals to enter the market. Another significant challenge for banks is the current economic environment. Weak global growth and persistently low interest rates in recent years are weighing on profitability in the banking sector.
Michael Gondwe: Enhancing access to financial services in Zambia Speech by Dr Michael Gondwe, Governor of the Bank of Zambia, at the launch of the Mpongwe branch of the National Savings and Credit Bank Zambia Limited (NATSAVE), Mpongwe, 28 June 2013. *  *  *  The Copperbelt Province Minister, Hon Mwenya Musenge, MP The Mpongwe Area Member of Parliament and Deputy Minister of Foreign Affairs, Hon Gabriel Namulambe, MP; The Copperbelt Province Permanent Secretary, Mr Stanford Msichili; The Permanent Secretary, Ministry of Agriculture, Dr Shamulenge; The Permanent Secretary Ministry of Agriculture, Mr Siazongo Siakalenge; Your Royal Highnesses the Chiefs Present; The Mpongwe District Commissioner; The NATSAVE Chairman of the Board, Dr Chiselebwe Ngandwe; The NATSAVE Managing Director, Mr Cephas Chabu; Distinguished NATSAVE Customers; Management and Staff of NATSAVE; Colleagues from Bank of Zambia; Members of the Press; Distinguished Guests; Ladies and Gentlemen. It is my honour and privilege to officiate at this very important launch of the National Savings and Credit Bank (NATSAVE), Mpongwe Branch. Let me begin by thanking the Board of Directors and Management of NATSAVE for inviting me to this momentous occasion, which marks the official opening of the Mpongwe Branch which is the first ever bank branch in this economically vibrant district. I commend the Board and Management of NATSAVE for the effort in opening this branch which will go a long way in supporting the Bank of Zambia’s strategic objective of increasing financial inclusion.

If we knew that “banks in the periphery will not face severe problems” or if we knew that “the recapitalisation needs will be a double digit bn figure” we could spare the effort in conducting this exercise. All these statements are mere speculation. The comprehensive assessment is an extraordinary opportunity to rebuild confidence in the banking sector and promote the long overdue repair of bank balance sheets, which in turn is a precondition for a sustainable economic recovery. One particular point needs to be stressed: credible national backstops must be put in place. If not, the credibility of the whole exercise is put at risk as the outcome will then almost certainly be negatively perceived by market participants. Doing this balance sheet assessment without a backstop in place would be a bit like getting on a boat in rough weather conditions, and not taking a life jacket on board. Any recapitalisation needs uncovered by the exercise should of course first and foremost be covered by the market. National budgets and national resolution funds may intervene as a second line. Finally, a European backstop, the ESM with its existing instruments, meaning a banking sector programme like in the case of Spain, may be available. The second key element of a banking union is the Single Resolution Mechanism, a European equivalent to the Federal Deposit Insurance Corporation. The crisis has shown that simple coordination among Member States has been inadequate to organise the resolution of crossborder banks in an efficient, quick and least-cost manner.
If the krona continues to develop along the path estimated by the Riksbank and many other analysts, and continues to strengthen in 2002 and 2003, it will help ensure that the economic upturn does not grow into overheating. 4  BIS Review 32/2002  The economic situation and monetary policy It is clear from the minutes of the most recent monetary policy meeting that the Riksbank is painting a fairly bright picture of the Swedish economy in future. The international recovery, particularly in the USA, may become slightly stronger than we believed earlier, and this, combined with a continued weak krona, will benefit Swedish exports. However, developments in Ericsson and the telecommunications industry constitute cause for concern and uncertainty. At the same time, the significance of one single sector should not be exaggerated. Industrial activity in Sweden is continuing to strengthen. Both order intake and industrial production indicate a recovery is on its way. This is also reflected in various confidence indicators. With regard to consumption, there are also signs that a turnaround is on its way; households’ confidence indicators and the demand for banknotes and coins all point in this direction. Retail trade sales have stabilised and there has possibly been a slight upturn at the beginning of the year. This applies particularly to consumption of durable goods. Low real interest rates and the expansionary fiscal policy indicate that consumption will pick up. Developments in prices and wages leave a lot to be desired, as I mentioned in the beginning.

But at others it was questionable, because credit and asset prices were rising rapidly, demand was at a decent level and the labour market was tight. And in some periods it was quite obvious that an inflationary potential was building up, i.e. that hidden inflationary pressures were accumulating which might one day come to light. The NK-DSGE models were unable to cope with such situations, nor could they detect them in time. As long as CPI inflation was low, they failed to recognise that the economy was dangerously overheating and that monetary policy needed to be tightened significantly. Some economists are now able to admit this thanks to the bitter experience of the last two years. They are equally able to admit that monetary policy decision-making should not ignore developments in financial markets and growing financial imbalances. New lending to households and businesses, the conflicting trends in asset markets and the nature of fiscal policy are rightly an important part of the debate on the appropriate setting of interest rates in the present situation of high inflation. Central banks in developed countries, especially in Europe, have lost price stability in the last two years. We now need to assess why this happened and how to prevent it in  4/5  BIS - Central bankers' speeches  the future. One reason is probably an over-reliance on recommendations based on narrow models.
It must be recognised that structural reforms, and specifically financial sector reform, is of crucial importance if this recovery is to be turned into sustainable economic growth. A bank with the mandate to promote development in Asia must surely have a role to play in all this and I look forward to greater involvement of the Bank, in whatever capacity, in maintaining the momentum of structural reforms in Asia. Mr President, the efficiency of financial markets in the region in performing the important function of financial intermediation has been found lacking. There has been notably little disagreement about the desirability of developing domestic and regional bond markets. But there has also been little progress. And there has been no lack of explanation of why this is the case. The often quoted impediments include the lack of clearing and settlement infrastructure, the absence of a broad institutional investor base, the lack of a benchmark yield curve, low liquidity, and so on. While these impediments are recognised and are being tackled earnestly by national authorities, there is one problem that has attracted relatively little attention so far. The problem relates to the generally low credit ratings of the Asian issuers, including the sovereigns, granted by the international rating agencies. 1  BIS Review 38/2000  I do not wish to provoke a debate on the objectivity and reliability of the ratings and the rating process of the international rating agencies.

First, it depends on how financial market conditions evolve in response to our monetary policy adjustments. Second, it depends on other factors, such as real potential GDP growth, which, in turn, depends on the growth rates of the labor force and of productivity. My current thinking is that the long-run nominal federal funds rate consistent with 2 percent inflation is somewhat lower than in the past. My point estimate is 3½ percent, but I place considerable uncertainty on this estimate. Global implications of U.S. monetary policy normalization Let me now turn to the implication of U.S. policy normalization for foreign economies. While our monetary policy mandate has a domestic focus, our monetary policy actions have global implications that feed back into the U.S. economy and financial markets. In some cases, these feedback effects can be disruptive. An example is the market volatility that we saw in the spring and summer of 2013 during the so-called “taper tantrum.” EME financial markets were hit the hardest, with declines in equity prices, a widening in sovereign debt spreads and a sharp increase in foreign exchange rate volatility. In the U.S., we saw a spike in Treasury yields, with the 10-year rate rising by more than 100 basis points from early May before peaking in early September. Despite the domestic focus of our policy mandate, we at the Fed take the potential international implications of our policies seriously.
We need to start with an admission of humility. Contrary to a widespread preconception, central banks do not bare full responsability for the low level of interest rates. The downward trajectory of global nominal rates is part of a trend that has been going on for nearly 40 years.ii  Source: FRED, Banque de France, Levy-Garboua and Monnet (2016), “Les taux d'intérêt en France : une perspective historique”. Page 2 of 14  However, the decade since the financial crisis has marked a turning point. Nominal rates have continued to decline and short-term rates have even fallen into negative territory in the euro area since 2014, a radical development and one that we share with Sweden and Switzerland, and with Japan since 2016. In parallel, inflation has stabilised at a low level, dragging real interest rates down in its wake. A long-term analysis of the global path of real interest rates shows that current levels are historically low, and that, over the very long run, global real long rates have instead remained between 2% and 4%. 1.1  Structural causes  To understand the origin of today’s low real interest rates, we need to consider the concept of the natural or neutral rate of interest: in other words, the real interest rate that would balance savings and investment in a context of full employment and stable prices. This “R*” rate, described by the Norwegian economist Wickselliii in 1898, has been back in the spotlight recently.

This is the focus of the related field of “behavioural economics” and the work of the Nobel laureate Robert Schillervi. Page 7 of 14  To respect the mandate entrusted to us under the Treaties, one thing remains certain: in the face of the too-low level of inflation caused by the cooling of the economy since the end of 2018, it is our duty to maintain an accommodative monetary policy to support economic activity. In September last year, the ECB thus announced a package of measures, the most innovative of which is the reinforcement of its forward guidance which gives visibility as to the future path of short-term rates. However, at our December meeting we noted the first signs of an economic stabilisation, consisting in a relative reduction in trade-related uncertainties. If this stabilisation is confirmed, it would need to be followed by a stabilisation in monetary policy. Put another way, the low point observed in growth justifies rates that are “low for longer”, but not, at the present time, “lower for longer”. II. Low rates: what are the effects? 2.1  Effective policies to support inflation and the economy  While these accommodative monetary policies are justified by their causes, are they also effective in terms of their impact? Here too, we need to take stock, both on an overall level and for each category of economic agent. From a macroeconomic perspective, low rates and, more broadly, accommodative policies, have indeed lent support to the economy.