samchain/econo-pairs-v1 huggingface dataset:
Lushnja is one of the main regions of the Albanian agriculture the recovery of our economy should start from – and holding this meeting here today is not mere coincidence. 2  BIS central bankers’ speeches  Bank of Albania’s analyses have been paying increasing attention to developments and related perspectives in this sector. As we speak, 47% of the Albanian population and around 49% of the labour force lives in rural areas and engages in agriculture-related activities. According to the latest data for 2012, around 24% of the land area is used to cultivate different agriculture cultures. However, despite the vast resources concentrated in agriculture and the important role it plays as the main source of income for a considerable part of the population, only 20% of gross added value comes from this sector. The low share in economy in proportion to the considerable number of the population involved in agriculture indicates the low productivity in this sector. The latest data show that the exports of “food, beverages and tobacco” account for 6.2% of total exports. Livestock and agricultural products share 0.78% and 2.3% in total exports, respectively, whereas agroindustry shares 3%. Fier district represents a considerable part of production factors in agriculture. The latest data show that Fier shares 18% in total agricultural land, thus being classified as the district with the highest share in the country. In 2012, more than 56 thousand farms were registered in Fier, the highest number on a country-level.

Averagesize farms continue to be relatively small, thus restricting the development and growth of average productivity, or differently known as “the economies of scale”. There are many reasons behind this. We can mention the inheritance of the communist system and the separation of land after its collapse. As it was stated above, the lack of a normal land market also due to ownership problems, naturally plays an important role in establishing larger farms and, consequently, more competitive ones. These problems also affect the agricultural sector-bank relationship and the lending activity at home. The recent data show that lending to the agricultural sector accounts for 1.25% of total lending to businesses, on average. It is a considerably low figure, which should raise our concern, considering that this sector contributes by one/fifth to the gross domestic product. I believe that there are two reasons driving the banking system to be reluctant to finance different projects in this sector. First, risk classification and categorisation for credit to agricultural sector is a commitment different from the other activities. The lack of formalisation, even for matters such as regular maintenance of information and statistics  BIS central bankers’ speeches  3  about ownership, and financial statistics, damage the farmers’ credibility from the early steps of lending. I find that there is room for prudential intervention by public institutions, not to condemn farmers, but to better prepare them and assist them in formalising their business.
Accordingly, the Central Bank is obliged to aim towards an annual rate of inflation which, measured in terms of the increase in the Consumer Price Index over a twelve-month period, should generally be as close as possible to 2½%. Inflation targeting was introduced in a climate where the economy was severely overheating. For this reason an adjustment period was set whereby the Central Bank should aim to attain the inflation target by no later than the end of 2003. In fact, this target had already been reached in November 2002. Now I shall turn to last year’s inflation developments in more detail. In 2001 inflation climbed rapidly, from 5.6% at the beginning of the year and hit a peak of 9.4% in January 2002. Last year, inflation slowed down steadily: it has been below the Central Bank’s target since November and around 2% over the past four months. In the beginning of August 2003 the twelve-month rise in the CPI measured 2%. While the CPI is used as the official inflation rate reference, two other indices are published, core indices which provide a clearer picture of the underlying rate of inflation. The core indices exclude price components that are either fairly volatile or more or less beyond the impact of monetary policy, or that reflect relative price changes that monetary policy should normally not respond to. Core Index I excludes prices of vegetables, fruit, agricultural products and petrol, and Core Index II excludes prices of public services as well.

Birgir Ísleifur Gunnarsson: The Central Bank of Iceland and monetary policy Address by Mr Birgir Ísleifur Gunnarsson, Governor of the Central Bank of Iceland, to a meeting of the Reykjavík Rotary Club, Reykjavík, 27 August 2003. *  *  *  I have been invited to discuss here the economic and monetary situation and prospects from the perspective of the Central Bank of Iceland. Before turning to that subject I believe I should devote some discussion to the monetary policy framework which has been in place since March 2001. My reason for doing so is the misunderstanding, which still often arises in public debate, about the Central Bank’s role and its possibilities for influencing specific aspects of the economy. What I have to say on that point, it seems, cannot be stated too often. Iceland’s monetary framework was altered in March 2001 when the Government and the Central Bank issued a joint declaration adopting inflation targeting as the anchor of monetary policy. The chief characteristic of this arrangement is that price stability is the main objective of monetary policy. It has also been declared that inflation will be kept within certain limits over a specific period. The Central Bank is granted independence to attain this target with the instruments at its disposal. Other aspects of the new framework include increased transparency in monetary policy and communication of information from the Central Bank to the public and government.
Should we not take into account during a broad purchase programme of securities the fact that government securities in the euro area are not without credit risk? There are very few shared competencies in fiscal policy. As long as this is the case, the ECB’s purchase of government securities is inevitably linked to a serious incentive problem. After all, the required cost-benefit considerations should also take into account the fact that other central banks bought government securities in a different economic environment with considerably higher long-term interest rates. In the euro area, the long-term interest rates on Spanish and Italian government bonds, for example, are already lower than those from the United States or the United Kingdom. It is therefore questionable whether we should “depress” interest rates for the securities class even further. Moreover, the interest on national government bonds in the euro area doesn’t operate as a benchmark for all further refinancing operations, as is the case in the United Kingdom or the United States for example. Besides, the effect of intervening in capital markets in a bankbased financial system is weaker than in a market-based system, as illustrated by wealth effects, for example. Therefore with regard to the purchase of government bonds, measures which are obvious in one place could be the last resort at best for us – for instance when there is the threat of deflation, but only if the cost-benefit analysis is favourable. As you see, there are more questions than answers at the moment.

Short-term developments are not key, especially when they are largely determined by energy and food prices. The underlying trend and the firm anchoring of inflation expectations are decisive, as well as the orientation of the euro area as a whole. Low inflation rates in some Member States – even when negative – are not in themselves a breach of the target. They can be necessary to restore lost competitiveness. One could also argue about whether it is really necessary to consider further measures given that the measures already taken have not yet been able to have an effect. Monetary policy does not take effect immediately, but only with a certain time lag. As a rule we should take this time and wait and see. Which measures are we talking about here? The large-scale purchase of securities, including government bonds, is often seen as a panacea. As I said, even for innovative or unconventional measures, the costs and benefits, and the opportunities and risks must be carefully considered. Some central banks have used quantitative easing to quickly and decisively provide monetary policy impetus, adjusted to the specificities of their environment. It is these particular central banks and their measures to which we are compared. For me, these are idle comparisons. The following saying applies here: those who constantly compare themselves with others might become more like them, but they won’t necessarily become any better.
Rather undermining my strictures to Adair on his use of “radicalism”, I’ve described it a number of times as revolutionary. The FPC’s success (or otherwise) will not depend solely on its own ability to identify risks. Rather we must ensure that the debate about stability – the flame if you like – never dies. For that reason, our accountability to the Treasury Select Committee can help greatly through the public debate and commentatory that our appearances will stimulate. 6  BIS central bankers’ speeches

In the event of conflicting objectives, it achieves a reasonable compromise between the stability of inflation and the stability of resource  BIS Review 112/2009  1  utilization. 1 Different central banks express this in slightly different words. The Riksbank has often used the term “well-balanced” monetary policy. 2 The forecasts of inflation and the real economy are then conditional on the central bank’s view of the transmission mechanism, an estimate of the current state of the economy and a forecast of important exogenous variables. The central bank uses all relevant information that has an impact on the forecast of inflation and the real economy. In this framework, the central bank takes financial conditions such as credit growth, asset prices, imbalances, potential bubbles and so on into account only to the extent that they have an impact on the forecast of inflation and resource utilization. Inflation and resource utilization are target variables here, that is, variables that are arguments of the central bank’s loss function. Hence, financial conditions are not target variables. Instead, they are only indicators, as they provide information about the state of the economy, the transmission mechanism and exogenous shocks to the central bank. Financial conditions then affect policy rates only to the extent that they have an impact on the forecast of inflation and resource utilization. 3 3. Financial stability as a rarely binding constraint – a pre-crisis view  What is the role of financial stability in a pre-crisis view of flexible inflation targeting?
If total saving is higher than domestic investment, some of the saving must be invested in foreign assets and thus used for investment abroad. If, on the other hand, total saving is not sufficient to cover domestic investment, the county will have to borrow from other countries (from private or public sources). This means that countries with a current account surplus can invest in or lend to others, while countries with a deficit borrow from abroad. In theory, capital should flow from more developed countries to emerging economies, as the return on capital should be higher there. This is also largely what we saw in Europe before the crisis – countries in southern and eastern Europe had current account deficits, while countries like Germany and Sweden had surpluses. Figure 1 shows current accounts, private net capital and GDP growth for eastern and central Europe. Many of these relatively rapidlygrowing countries experienced a rapid expansion of credit, which contributed to the build-up of substantial current account deficits in the years before the crisis. 6 These countries then experienced steep falls in GDP during the crisis, which raises some doubts about whether the capital flows were really motivated by high returns. At the global level, however, there are many cases where less-developed countries, such as China, are lending to developed countries, such as the United States and the United Kingdom. 4  This speech is largely based on a paper I have written together with Henrik Braconier, see Braconier and Ekholm, 2011.

1  See for example IMF, World Economic Outlook September 2006, Feldstein, 2007, Krugman, 2007. Obsfedt and Rogoff also warned about a substantial depreciation of the dollar as a result of global imbalances as early as 2005. 2  Some observers claimed, however, that the deficit could be sustainable as to a certain extent it could consist of “dark matter” in the form of the value of the knowledge transferred from direct US investments abroad and the implicit insurance services provided to the rest of the world by US financial institutions, see Hausmann and Sturzenegger, 2005. 3  IMF, WEO April 2011. BIS central bankers’ speeches  1  Today I intend to present my view of the global imbalances and their significance to the Swedish economy. 4 There is currently a widely-held view that the large current account surpluses and deficits make the global economy vulnerable, and that they should therefore be reduced. A move towards reduced surpluses and deficits could affect the Swedish economy in a way that has significance for monetary policy. Although it may be underlying imbalances that give rise to deficits and surpluses, we should not, in my view, set targets for how large these deficits and surpluses should be. Surpluses and deficits are to a certain extent a natural result of the different conditions in different countries and important mechanisms for redistributing capital in a way that makes the global economy more effective. Sweden, for example, has had a relatively large current account surplus for 15 years.
From a cyclical perspective, a proposal to ensure that banks implement countercyclical capital buffers was part of the recent consultations and is also pending approval by the Federal Council. The proposal foresees that the ultimate decision to activate or modify the capital buffer requirement will lie with the Federal Council. This decision will be made on the basis of the SNB’s proposal and the FINMA’s response to it. Finally, in order to enhance the SNB’s capacity to assess the stability of the financial system and to take appropriate measures, the Bank has also called for improved access to information on financial institutions. VI. Conclusion  The preceding discussion has, I hope, clarified some of the complex interactions between price and financial stability. Within the Swiss legal framework, I am convinced that the central bank has been given an appropriate mandate. In order of priority, the SNB must ensure price stability, while taking due account of the developments of the economy. It must also contribute to the stability of the financial system. One important lesson to emerge from the analysis of the recent crisis is that an interest rate policy cannot be the sole, or even the main instrument, used to promote financial stability. It is imperative that central banks be endowed  20  6  Borio (2011). BIS central bankers’ speeches  with alternative “macro-prudential” instruments. This assessment is not only the product of careful application of the “Tinbergen principle”, according to which one needs as many instruments as one has objectives.

While there is no doubt that unconventional monetary policies (UMPs) have helped stabilise the financial system and supported economic recovery after the Global Financial Crisis (GFC), many have argued that the economic or financial benefits created by UMPs have not been shared evenly. Some studies have highlighted that UMPs disproportionately enrich the “haves”, as they tend to hold more assets such as stocks and properties that benefited most from UMPs.3 Hong Kong has been experiencing this trend, especially in the housing market. With a prolonged period of close-to-zero nominal interest rates and negative real mortgage rates, Hong Kong’s housing prices have been rising for over 10 years. This has eroded housing affordability and widened significantly the wealth gap between home owners and those who have yet to buy a home. How should central bankers and policymakers think about this important issue and what can be done about it? We have lined up a couple of presentations focusing on housing today and tomorrow, which I hope will shed some light on 1/2  BIS central bankers' speeches  policymaking in this area. 6. Having looked at UMPs’ implications on asset prices, let’s now turn our attention for a moment to labour income. To the extent that UMPs have driven aggregate improvements in the labour market in terms of job creation, they have nonetheless failed to benefit some segments of the workforce that are the most in need. For example, many of the jobs created are low-paying and/or part-time in nature.
BIS central bankers’ speeches  3  Lending to owner-occupiers Second, lending to owner-occupiers at high loan-to-income (LTI) ratios remains significant. The FPC took action in 2014 to counter the risks arising from an increase in the tail of overly-indebted households. Its concern was that an increase in the tail of overly-indebted households posed a threat because such households cut back consumption very sharply in a downturn. 5 Transactions, house price inflation and the proportion of high LTI mortgages all cooled down following the FPC’s actions and other factors at the time like the introduction of the Mortgage Market Review. All of these variables have since bounced back. Prices and mortgage approvals for house purchase are growing at an annual rate of 7.5% and 19% respectively. 6 And nearly 15% of new mortgages extended in Q4 had LTI ratios just below the FPC’s threshold of 4.5 – almost double the proportion in 2008/9. Commercial real estate The third property-related area the FPC has been looking at closely is commercial real estate (CRE). Many countries have experienced repeated booms and busts in commercial property and the UK is certainly no exception. Over the past 100 years, the UK has experienced five CRE cycles and similar cycles have been seen in a range of developed economies. At the end of the 1980s CRE boom documented by Alastair, prices fell by over a third and 25 banks failed or were closed down.

In the fiscal area, the post-crisis recovery has not been accompanied in a significant number of countries, advanced and emerging alike, by a sufficient reduction of structural deficits in public accounts and the halting of the process of rising public debt. More generally, in many cases it may be necessary to move forward with fiscal reforms that seek to reduce the distortions to growth while allowing the most vulnerable sectors of society to be supported more decisively. The limited fiscal space available is exacerbated in the longer run in many economies, principally but not exclusively the advanced countries, owing to the adverse demographic prospects. Ageing populations pose significant challenges for public finances, as they bear on both the revenue and the expenditure sides. On the expenditure side, ageing will considerably affect pension and healthcare spending which, in many cases, will require rethinking pension systems to guarantee their sustainability. On the revenue side ageing leads to changes in the composition of tax bases as it does to lower labour income shares, to capital deepening and to changes in the composition of consumption. In the area of monetary policy, many advanced economies are still in a situation of zero lower bound. More generally, in most countries the room currently available to face a hypothetical recession is less than that existing at previous similar cyclical junctures. Monetary policy also needs re-thinking, on the basis of more long-term challenges for the economy. The natural interest rate has been falling since at least the 1980s.
In the United States, however, saving was low and investment was high partly because of the low interest rates. The low interest rates also stimulated the housing market which, in combination with decades of an  8  4  China has had a very high investment ratio, but aggregate saving is even higher. BIS central bankers’ speeches  expansionary housing policy, led to the build-up of a bubble that eventually burst. Many observers therefore believe that the global imbalances were one of the causes of the financial crisis. 9 There are better and worse reasons for current account surpluses and deficits In the 1970s and 1980s, large current account surpluses or deficits were generally regarded as something negative. This period was marked by fixed exchange rates and by the regulation of capital flows across national borders. A deficit was often seen as a sign of an approaching devaluation. However, after the capital markets were deregulated and the exchange rates began to float to a greater extent, the view became more positive. It was assumed that changes in the current accounts reflected an optimal redistribution of the freely-moving capital. In the 2000s, however, we began to hear warnings that, above all, a rapid correction of the imbalances could have serious consequences for the value of the dollar, resulting in rising long-term interest rates, recession and a possible financial crisis.

Central bank credit to banks has been a complement to – rather than a substitute for – private credit: in the first quarter of this year, the amount of bonds issued was equal to the total issued in 2011 as a whole, which shows that the operations, at least in the first few months of the year, provided the markets with liquidity, reactivating a number of credit channels. The two LTROs removed one of the obstacles – the only one over which the ECB has any influence – to credit, namely a lack of liquidity. The ECB cannot do anything to make up for a lack of capital, to change intermediaries’ risk perceptions, or to remove other structural obstacles present at national level. More generally, the size and complexity of the two LTROs is such that it will take time for all of their positive effects on the euro area economy to be fully felt. However, it is essential for growth and employment that credit institutions regain their ability to provide refinancing to the economy. 8  BIS central bankers’ speeches