samchain/econo-pairs-v1 huggingface dataset:
The argument for raising the inflation target is that this would increase the average scope for monetary policy in future recessions, as the average nominal interest rate is the sum of the real interest rate and inflation. If the real interest rate falls, the inflation target can, in principle, be raised by as much to restore scope. Does it matter to the economy if the inflation target is two or, say, four per cent? Empirical research has certainly identified a relationship between the level of average inflation and growth, but this relationship is quite weak and primarily seems to be relevant when inflation is relatively high. High inflation also seems to coincide with greater variation around the average level. There is thus a certain support for the view that the inflation target should be fairly low. However, the  12 [25]  inflation target’s most important function is to provide the economy with a nominal anchor, for example for wage formation activities to coordinate around. There are practical aspects that must be considered if the inflation target is to be changed. Establishing a new level may require a great deal of work, as it takes time for the participants in the economy to get used to new targets and a change may also lead to the private sector starting to expect further changes of the target later on.

To achieve this, it is key that commercial banks are involved in the transmission of such funds. In addition, money transfer companies like Western Union and Money Gram have played a significant role in transferring remittances. Their wide geographical extension throughout the country covering many rural areas has complemented adequately the rather slow expansion of the banking sector in facilitating money transfers. The recent development of the payment  BIS Review 2/2010  1  system in Zambia has also played a key role in the movement of funds through official means. Nevertheless, unofficial flows still remain high signifying a business opportunity for banks. However, banks and other financial institutions, despite being safer, are perceived to be more expensive than the alternative unofficial means to the point of inducing many people in diaspora to stick to unofficial means. It is therefore important for banks to be mindful of their cost structures for such services. In this regard, the Bank of Zambia welcomes the introduction of the “Ecobank Rapid Transfer” and the “Non-Resident African Account which we have been informed will be lower cost products. This will no doubt increase the level of access to financial services in the country as well as enhance the level of competition by increasing the number of participants in the market. We hope that the introduction of these lower cost products will push the transfer commissions in this market downwards.
BIS Review 75/2000  2  The difference today is that the timeframe for answering these fundamental questions is dramatically shortened. As supervisors, we must be able to look at rapidly changing financial institutions and assess whether their strategies make sense and whether they are effectively evaluating the risks associated with executing those strategies. Technology and innovation have also rendered geographic boundaries all but meaningless, and undermined the power and control of financial authorities. As you know, one of the principal means of supervising internationally active banks has been the process whereby the host supervisor approves the establishment of a brick-and-mortar presence in its country or jurisdiction. By way of a web-based platform, banks can now target customers far beyond the reach of a typical branch, and even cross borders into countries where they have no local offices and may never have conducted business before. We’ve already seen a few cases in which a bank is chartered in one country, handles its data processing in another, and targets customers in still others. Such situations will surely challenge traditional notions of “home” and “host” supervisor, and raise difficult issues regarding international coordination and cooperation, information sharing, law enforcement and privacy. In a world of instantaneous communication, interconnected markets, and more complex instruments and risks, effective supervision is more important than ever to maintaining financial stability, both locally and globally. To remain effective and relevant, supervisors must understand how and to what extent the “wired” economy and other technologies are changing banking and finance.

Conclusion In conclusion, let me simply say that the dawn of the twenty-first century is a time of unprecedented opportunities and unique challenges for financial institutions and supervisors alike. In meeting the challenges posed by technological advancements and the rapid innovations they enable, and in pursuing the objective of a modern, flexible yet stable financial system, we must acknowledge that both the public and private sectors have a critical role to play. While the perspectives of market participants and official supervisors may differ from time to time, our objective is the same – to maintain a strong and vibrant financial system. Indeed, it is evident to me, as a former commercial banker and now as a supervisor, that only if we work together, each meeting our responsibilities and reinforcing the other, will we be able to successfully manage a rapidly evolving, ever-more complex financial services industry. BIS Review 75/2000  10
In this framework, the membership would give both an opportunity and an obligation for local firms to improve their businesses at the micro level through increasing their productivity, enhancing their management and technical skills together with the quality of labour force and switching to products with high value added. In short, as the Turkish economy moves along the membership process and converges to the EU economy, we would see a high and satisfactory level of sustainable growth, advance further in economic stability and therefore in the enhancement of the welfare of the society. Ladies and Gentlemen, As you all know, we have started negotiations only a few weeks ago. It is obvious that the EU enlargement with Turkey will be very different from the previous enlargements in the sense that Turkey is not similar to the other countries in its dynamics including economic, demographic and political ones. However, a closer look at the enlargement periods of the new members reveals the fact that these periods are associated with both debates and concerns. But, when we look at the results, we see a win-win situation for both the EU and the new member states. And I believe that Turkey s membership will be another win-win situation as well. All in all, I believe that Turkey s membership will create a synergy in which both the EU and Turkey could enjoy a mutually advantageous conjunction of their different characteristics. However, one has to remember that during this process, both Turkey and the EU have their own responsibilities.

And according to a study of Capel and his colleagues in March 2004, bilateral trade between Turkey and EU can increase by around one third once Turkey has become a full member of the single European Market.23 Moreover, thanks to the intensive reform agenda, the investment climate in the Turkish economy would improve for both domestic and foreign investors. 21  Dansk Industry (December 2004). Turkey and the EU - Perspectives and Opportunities. 22  Commission of the European Communities (2004). Issues rising from Turkey’s membership perspective. 23  Capei, C.H., Lejour,A.M. and Mooji de R.A. (March 2004). Assessing the Economic Implications of Turkish Accession to the EU .CPB, No. 56. 7/8  In consequence, it is reasonable to assume that foreign direct investment (FDI) will increase strongly. According to some studies, the EU membership is estimated to result in 2-4 billion Euro24 worth FDI flows per year. This in turn will not only contribute to the strengthening of the economy as a whole, but will also help to deal with current macroeconomic concerns such as the current account deficit. I have to add that economic benefits of FDI are potentially high because FDI not only brings in longterm capital but also technology, management skills and opportunity to reach new export markets.
29.03.2021  The Spanish economy and the COVID-19 crisis: assessment, outlook and challenges Europa Press informative breakfast Pablo Hernández de Cos Governor  *English translation of the original speech in Spanish  Good morning, ladies and gentlemen. I would like to thank the organisers of this event for their kind invitation. I shall begin with a brief assessment of the period since the COVID-19 crisis broke. I shall then set out the Banco de España’s view on the outlook for the Spanish economy. Finally, I shall describe the medium-term economic policy challenges at the national and European level. Taking stock of a year of pandemic: an unprecedented, persistent and uneven impact COVID-19 has caused a global economic recession of an intensity which, in most geographical areas, is unprecedented. The crisis is, moreover, proving very persistent: as of today the pre-pandemic levels of activity have not yet resumed in most countries. Indeed, the successive waves of the pandemic have checked the recovery, particularly in the sectors most exposed to the restrictions. In Spain, this impact is particularly marked. GDP declined by 10.8% in 2020 as a whole, a slump appreciably greater than that in the euro area (-6.8%). At end-2020, Spanish GDP was still 8.9% below its pre-pandemic level, while this gap was 4.9 percentage points (pp) in the euro area. Several reasons account for this more pronounced impact in our country. One was the greater intensity of the pandemic initially, which led to harsher containment measures in spring last year.

That will require the sound functioning of the credit channel, which is so important in the European economies and, of course, in Spain. … and immediately tackle structural problems and challenges Beyond the short-term reaction, it is time for economic policy to focus on tackling structural challenges. Allow me to summarise some of these, both at the national and European levels, including those relating to monetary policy and the banking sector. As regards national economic policy, one of the major challenges is undoubtedly to restore health to public finances. I have already pointed out that one of the most adverse consequences of this crisis will be the strong growth of public debt. And high public debt increases the economy’s vulnerability. Hence, the necessary counterpoint to the current fiscal activism is the announcement of a multi-year strategy to correct budgetary imbalances, to be implemented once the health crisis is behind us. The scale of the challenge is substantial. Even before the crisis the structural budget deficit exceeded 3% of GDP. We must now add to that figure the increase in the interest burden owing to the greater volume of debt. Also, there are expenditure increases derived from the introduction of the minimum living income and, in the case of pension spending, from population ageing pressure and the decision to link pensions to the CPI, along with the potential structural increase in certain expenditure items, such as healthcare.
However, there is notable unevenness across geographical areas, with specific areas of the main Spanish cities and of the Balearic and Canary Islands where housing prices are rising sharply. This rise in real estate activity is not resulting in an increase in the associated lending. Bank credit to real estate and construction firms continues to fall at rates above 10%, partly due to the sale of packages of non-performing loans. In addition, the stock of household mortgage loans is practically stagnant. It is true that the flow of new lending is fairly buoyant, but starting from a low level. Furthermore, household mortgage credit standards remain prudent. Specifically, practically all the loans granted are for an amount below the value of the real estate transaction, as compared with only 50% before the crisis. Mortgages represent, on average, less than four times the annual income of households, and the related debt service (repayments plus interest) accounts for less than 20% of that income in 50% of mortgages. Also, mortgages with long maturities, of over 30 years, represent less than 10% of the total. In any event, it should not be overlooked that, although the credit associated with this activity is not increasing and new household mortgages are being granted with prudence, a potential downward adjustment to housing prices would still have a negative impact (although logically a smaller one) on deposit-taking institutions through the effect on foreclosed asset valuations and the indirect impact on aggregate levels of consumption and activity.

On many issues, we share common interests and positions. In 2010, MAS and Bundesbank established a cross-border collateral arrangement to enhance liquidity provision by widening the pool of eligible collateral for banks. MAS has a Supervisory Memorandum of Understanding (MOU) with BaFin that provides for mutual assistance and sharing of supervisory information in banking and insurance. MAS also participates in the annual Deutsche Bank Supervisory College for non-EU regulators and we are pleased to have hosted the most recent one last November. Given that financial activities are often cross-border in nature, such international co-operation will be of increasing importance, including to facilitate innovative services as well as to mitigate the risks that some these may present. It is also in this spirit that I congratulate the establishment of this partnership forum. It is an excellent example of a co-operation platform that allows our industry players to engage one another in open discussions, to identify common challenges and working opportunities. This forum also provides for perspectives from government, central bank, regulator and academia. 1/5  BIS central bankers' speeches  Future of banking Allow me now to share some thoughts on the conference theme around the future of banking. This is clearly a topical subject in the face of the ongoing Technology Revolution around us. Many of us will probably have heard of the famous quote by Bill Gates, that “people do not need banks, they need banking”.
Additional challenge #2: trying new and nontraditional policy responses when the economic stakes are enormous The second critical challenge is to take actions that respect both the feasibility of what monetary policy can accomplish and the enormous risks to the future prospects of the U.S. economy. For me, these risks are clear. It is painfully obvious that the large quantities of unused resources in the U.S. are an enormous waste. And it’s not just the current loss – over substantial periods of time, the skills of long-term unemployed workers decline, their reemployment prospects for similar jobs fade, and these reductions in skills have a lasting effect on the future growth potential of the economy. As I noted in the introduction, some argue that there currently are severe limits to what further accommodative monetary policies can do to address these risks. It is essential to delineate clear alternative scenarios in which this additional accommodation would be futile. Such scenarios clearly exist, but they are very dark and pessimistic interpretations of our current situation. I am personally much more optimistic and I don’t subscribe to this pessimistic view; but let me describe it as I understand it. Essentially, the hypothesis that limits aggressive policy actions assumes that the productive capabilities of the U.S. have declined markedly in recent years and that many workers who were productively employed just a few years ago are now essentially obsolete.

However, given how truly badly we are doing in meeting our employment mandate, I argue that the Fed should seriously consider actions that would add very significant amounts of policy accommodation. Such further policy accommodation does increase the risk that inflation could rise temporarily above our long-term goal of 2%. But I do not think that a temporary period of inflation above 2% is something to regard with horror. I do not see our 2% goal as a cap on inflation. Rather, it is a goal for the average rate of inflation over some period of time. To average 2%, inflation could be above 2% in some periods and below 2% in others. If a 2% goal was meant to be a cap on inflation, then policy would result in inflation averaging below 2% over time. I do not think this would be a good implementation of a 2% goal.1 With this in mind, I want to discuss the nature of policy-making under a dual mandate when we are far from our goals. What’s a central banker to do? (Warning: math ahead) Normally, the deviations of the real economy and inflation from our objectives are small enough that any conflicts are minor. And the well-known Taylor Rule captures normal policy adjustments well, appropriately weighting output gaps and inflation deviations in the setting of our policy rate.
“Recent developments in euro area labor costs and mark-ups” Box 4 of the Economic Bulletin 2/2019. 3. European Commission Country Report Bulgaria 2019 Including an In-Depth Review on the prevention and correction of macroeconomic imbalances. 4. European Commission Country Report Croatia 2019 Including an In-Depth Review on the prevention and correction of macroeconomic imbalances. 5. Financial Stability Reports of CESEE and Baltics countries. 6. IMF Global Financial Stability Report, several editions. 7. International Monetary Fund (IMF). 2019. “Wage Growth and Inflation in Europe: A Puzzle?” Chapter 2 of the Regional Economic Outlook - Europe, Washington, DC, November. 8. Private sector indebtedness and deleveraging in euro area countries, ECB Economic Bulletin issue 4/2017 - Boxes. 9. Recent developments in the indebtedness of the private non-financial sector in selected euro area countries, Deutsche Bundesbank, Monthly Report, January 2017. 18

Taking a euro area perspective, these results are interesting in at least two respects. First, the level of US interest rates are an essential feature of the world economy and the economic and financial environment of the euro area. Second, the experience of other major central banks is a natural benchmark for the design and the monitoring of our own policies, on which I would like to share with you a few thoughts. The predominant objective of our first wave of unconventional measures, which we have labelled the “fixed rate full allotment” supply of liquidity, was to ensure that liquidity shortages do not escalate into defaults, especially in the financial sector. This has mainly consisted in ensuring the correct provision of liquidity to the banking sector against the backdrop of a major confidence crisis. BIS central bankers’ speeches  1  Yet, by the end of 2010 the crisis had taken on a new form. The fiscal constraint became binding in a number of periphery countries. Investors started to price in sovereign credit risks. By 2011, it appeared clear that investors were also factoring in the risk of a euro area break-up. This, in turn, entailed an increased degree of market fragmentation within the euro area, with borrowers facing different credit conditions depending on their country of origin. Our Outright Monetary Transactions (OMT) programme was specifically designed to reaffirm the irreversibility of the euro. The OMT allowed investors to discard a specific form of systemic risk.
However, as the banking system became more and more levered, as banks’ balance sheets grew and grew, the measured riskiness of banks’ assets – measured in large part by their own models – declined. In the ten years to 2007, the size of banks’ balance sheets in the UK had doubled relative to the size of the economy. But over the same 10 years, the average risk-weight for the assets of the major UK banks had fallen to almost 40% – down by around a fifth from its level a decade earlier. As a result, the increase in banks’ balance sheets was not matched by anything like a commensurate increase in capital. When the crisis struck, not only did a significant portion of the assets turn out to be far riskier than estimated. Market confidence in the risk-weighted capital adequacy framework as a whole pretty much evaporated. We have taken steps, through the new international capital standard, “Basel 3”, to address the main failings in the risk-weighted framework. We have tightened up on the required quality of regulatory capital. The “hybrid” debt instruments that proved not to be loss-absorbing no longer count as Tier 1 capital. Efforts have been made to ensure losses are recognised at an earlier point. Material deferred tax assets are now deducted from the regulatory definition of capital. The minimum amount of common equity capital banks are now required to hold has been increased to 4.5% of their risk-weighted assets. And we have put in capital buffers.

As a result, dealers were, it is true, able to carry high levels of inventory and to accommodate easily shifts in the demand for market-making. But they were also vulnerable to falls in asset prices and tightening in wholesale markets conditions. When faced with severe stress, they were forced to withdraw from market-making altogether. In short, when conditions became really testing, market liquidity, like bank capital, proved to be an illusion. With regulation tighter, it may well be harder for market-makers to absorb inventory when end investors wish to off-load assets; market liquidity may start to fall away at an earlier point. The risk of another complete failure of market liquidity should be much reduced. But market participants will not always be able to sell what they want, where they want and when they want. BIS central bankers’ speeches  5  Investors need to recognize this change in market structure and adjust accordingly. In this respect it is perhaps worth observing that it is currently quite puzzling that, when market participants seem to be worried about market liquidity and the impact of regulation on market making, liquidity risk premia seem to be so compressed. It does raise questions over whether liquidity risks have been properly priced. Central bankers are, of course, supposed to worry about new risks. But I would not want to leave you with the impression that nothing has improved in the financial stability world.