samchain/econo-pairs-v1 huggingface dataset:
Nevertheless, the Report notes that productivity growth slowed down; hence, the firm dynamics is identified as one of the main issues that should concern our region. The main reasons of these developments seem to derive from some factors: First, the low capacity of markets and firms to regenerate, decelerates the replacement of non-productive firms with new innovative ones, and hinders the efficient allocation of resources. Second, small firms do not succeed in increasing their output or the number of employees. Studies show that their productivity is rather lower compared with larger firms. Smaller firms make up the majority of producing entities – around 80% in EBRD region, and 95% in Albania. For this reason, more should be done for the integration of smaller firms into global production networks, finding human capital, access in the financial system or capital markets. The Bank of Albania deems that the development of the financial system is indispensable for the economic development of the country. In this regard, through our policies, we are trying to encourage a more efficient allocation of bank lending, in order for it to be less fragmented or concentrated in certain sectors of the economy. Also, we are closely monitoring the financial and borrowing situation of micro-economic firms, including those in the agricultural sector. These firms have a considerable share in the gross value added and in the number of employed persons in Albania.

Before rejoining the IMF, where he had previously worked for 15 years in the European Department and the Monetary and Financial Systems Department, he was the Director for Financial Stability, as well as for Supervision Policy within the DNB, position that enabled the creation of the respective departments within the National Bank of Romania. Last, but not least, he shares his financial supervision knowledge as a Professor at Nyenrode Business University. It is my pleasure to offer the floor to Mr. Hilbers and thank him once again for being here with us today. 2/3  BIS - Central bankers' speeches  His remarks will be followed by a recorded message from his World Bank counterpart, Executive Director Koen Davidse. Mr Davidse is a more recent, but also very good, friend of our country. With extensive knowledge in development policies, having worked with the United Nations and the Ministry of Foreign Affairs of the Netherlands, Mr. Davidse has constantly supported the efforts for structural reforms and strengthening Romania's institutions in. Unfortunately, he couldn't join us physically today, but he is with us virtually. Thank you! 3/3  BIS - Central bankers' speeches
After this introduction, I will then go on to discuss the strong credit expansion in Sweden and the measures that a central bank can take if it assesses that this development constitutes a potential threat to financial stability. I will conclude by looking at international developments, since the development in Sweden is by no means unique. The Riksbank and financial stability The comprehensive changes that have taken place in the financial sector and the financial crises that have occurred in various parts of the world have meant that the work on securing financial stability has become increasingly prioritised. Those countries which have undergone severe banking crises in modern times are now leading the way in terms of the work on financial stability. For example, Sweden was the first country in the world to regularly and openly publish special stability reports analysing the situation of the financial system. We would say that the initiative was received with mixed feelings by other central banks, some of which were concerned that these kinds of reports would cause problems rather than preventing them. However, the attitude of the Riksbank has been that it is through open and honest communication with the financial players that we can observe and remedy potential problems at an early stage. Despite some initial scepticism, several countries have now followed the Riksbank’s example. Norway and the UK now publish stability reports and Denmark also recently issued its first stability report.

In the current uncertain environment, it is a challenging time to make predictions about the future. Nonetheless, to conclude let me say a few words on what these results might imply for the policy landscape going forward. As I discussed earlier, the new analysis presented in this speech suggests that the effects of the key drivers of Global R*, particularly increasing longevity, are expected to persist. Absent a significant reversal in the key trends that have driven down Global R*, we may expect it to remain low. So it is not unreasonable to expect that Global R*, the long-run anchor for UK equilibrium interest rates, will remain low. Therefore, cyclical adjustments in short-term nominal interest rates – like those we are currently witnessing in the United Kingdom and abroad – will for the foreseeable future continue to be played out against the backdrop of low global equilibrium real interest rates. While we have considered several important drivers of Global R* in the past, other factors may  Page 16  come into play over time. You may wonder, for example, whether the pandemic could have impacted some of the key drivers of Global R*, such as productivity growth. The simple answer, of course, is that we do not yet know. It is too soon to tell what the long-run impact of the pandemic will be for the economy.
An index over 50 indicates growth Sources: Institute for Supply Management, Markit Economics and Swedbank  In the Swedish economy domestic demand has so far been supported primarily by consumption and public investment. The expansionary fiscal and monetary policy has stimulated household consumption. This includes tax cuts, low interest rates and other measures. 6  BIS Review 25/2010  Figure 5 Economies around the world are now growing Outcome and forecast, Monetary Policy Report, February 2010 GDP level, index 2007 Q4 = 100  Sources: The Bureau of Economic Analysis, Eurostat, the OECD, Statistics Sweden and the Riksbank. However, the export sector has been hit hard by the fall in world trade and one can now say there is a divide in the economy. This can be seen, for instance, if one looks at how retail trade and exports have developed (Figure 6). But at the same time, export orders and world trade have increased, which indicates that exports will recover, albeit from a low level. Figure 6 Divided economy Index 2005 = 100, seasonally adjusted data  Source: Statistics Sweden  BIS Review 25/2010  7  Rising domestic demand but low resource utilisation The prospects for demand in the Swedish economy continuing to increase are good. Household income has developed well and households have a high level of saving. As public finances are sound, the need for fiscal policy constraint further ahead is lower in Sweden than in many other countries. As growth abroad increases, exports will also rise again.

One central area where I believe we should have achieved more is legislation and regulation with regard to how and by whom banks in distress should be managed. Following the previous crisis I saw important reforms in legislation being investigated over a long period of time only to be more or less forgotten with nothing implemented. I fervently hope this will not happen again. Quite simply, it must not happen again. Towards a cohesive and efficient financial regulatory framework The Executive Board of the Riksbank and the General Council of the Riksbank have presented a joint report to the Riksdag where we propose that one or several commissions of enquiry should be appointed to review the regulatory framework in the financial sector. We need to create a cohesive and efficient regulatory framework. It should contribute to maintaining financial stability and if a crisis nevertheless arises, it should minimise the costs to consumers and to society as a whole. These are questions that should neither be discussed endlessly nor allowed to come to nothing when the situation stabilises. If we are to  BIS Review 25/2010  11  prevent costly crises in the future, we must together investigate and implement changes. Urgently! Around the world there is already extensive work being carried out in this field, particularly with regard to the international supervision perspective. But implementing changes at international level can take time.
The report considered that the arguments in this respect were not clear-cut either way but that the advantages of staying outside for the time being predominated. With a national monetary policy at a time when the economy still had major imbalances and was highly vulnerable to shocks, Sweden would then be in a position to parry any negative repercussions that might hit the economy while leaving the euro area relatively unaffected. 1  BIS Review 92/1999  A radical change in conditions for the forest industries is the standard example of such a shock. But even a more general worsening of conditions for growth in the rest of the world might have particularly adverse effects for a small economy with a high level of foreign trade. Moreover, with an independent monetary policy, interest rates can be increased to counter effects of a specific domestic policy failure, for instance an excessively weak budget policy or inflationary wage settlements. At present some observers might perhaps regard this as the greatest risk. According to the report, the high unemployment that had occurred in Sweden since the early 1990s made constraints on Swedish monetary policy particularly risky. In the situation at that time, a shock could have serious consequences for unemployment, with a further increase from a level that was already high. Experience in other countries, moreover, pointed to a major risk of an increase in unemployment becoming permanent. Swedish monetary policy could then provide support for the necessary labour market reforms that were advocated in the report.

The question of whether or not to join the monetary union mainly has to do with long-term aspects of economic development and how we in Sweden view our future political role in Europe. In this perspective, today’s stronger Swedish economy is an argument in favour of adopting the euro now rather than for remaining outside. Some of the Calmfors report’s arguments against participation have been weakened. A decision to join – based on long-term, strategic considerations – is now associated with smaller short-term risks than it would have been some years ago. The report and the Riksbank on economic efficiency The next step of the analysis in the Calmfors report concerned the consequences of membership for resource utilisation, that is, how the long-term output trend might be affected by the impact of membership on, for example, investment, foreign trade and transaction costs. The report focused on the effects that are easiest to measure and assess. The decreased costs for currency exchange and covering foreign-exchange transactions were seen as definitely positive. The report was uncertain both about the magnitude of this effect and about the effects on foreign trade and investment but came to the overall conclusion that they were not particularly large. The Riksbank considered that the report underestimated participation’s effect on efficiency. One reason for this was the report’s assumption that firms could reduce the costs associated with exchange rate movements by covering them in financial markets.
Sweden remains a ‘pre-in’; we will have to consider euro adoption again at some point in the future. Therefore the evolution and enlargement of the euro area concerns us. Secondly, Sweden is probably one of the EU nations that will benefit most from the enlargement of the European Union. Our economy is one of the EU’s most integrated with acceding countries, with surging East-West trade and FDI. Also, should Estonia, Latvia and Lithuania adopt the euro, we would be directly affected because Swedish banks own most of the Baltic banking system. I would therefore like to share some reflections with you on two subjects of relevance to euro area enlargement: the risks associated with ERM II membership and long-term frameworks for fiscal policy. However, before doing this let me stress two things: First, the long-term advantages of euro area enlargement are evident. I believe the advantages would be roughly the same for acceding countries as they would be for Sweden: integration of trade and capital markets stimulates growth for both the euro adopter and the euro area. In the case of acceding countries, there are probably additional advantages of monetary integration; it gives added stability after the difficult years of transition and is important for their underdeveloped financial sectors. So the issue is not really euro area enlargement as such, but rather its timing and preconditions. Second, from the perspective of the euro area itself it is hard to see how acceding countries could pose any major risks to price stability.

The obvious solution to speculation against the upper band is to reach an agreement in ERM II to revalue. But this is often difficult in practice. When political decision-makers are forced to choose between the inflation and exchange rate targets, it takes courage - and good analyses - to give priority to low inflation and opt for revaluation. As the case of Ireland has demonstrated, this does not exclusively apply to acceding countries. In the end, the result can be inflationary pressures once inside the euro area. However, the most acute risk with ERM II is probably when the exchange rate is in the lower part of the band. Virtually all the currency crises that we have experienced in recent decades have been due to speculation against weak currencies. ERM II, of course, is different from these previous failed regimes of pegged exchange rates in the sense that it has a clear exit strategy with regard to euro adoption. But this does not mean that ERM II is immune to large fluctuations in short-term financial flows. I do not think this should be a big problem for the currency board regimes or the so-called hard pegs in the new Baltic member states. In their case, ERM II membership would merely be confirmation of a credible regime that has been successfully maintained for nearly a decade, even when confronted with severe shocks such as the Russian crisis.
The two most noteworthy examples of this are the Commercial Paper Funding Facility, which was introduced in October 2008, and the Term Asset-Backed Securities Lending Facility (announced in November 2008, but not up and running until last month.) Third, once policy rates were near the zero-bound, we expanded the type of assets that the Fed purchased. In order to put downward pressure on general longer term borrowing rates, particularly mortgage rates, the Federal Reserve has purchased the debt of the GSEs, namely, Fannie Mae and Freddie Mac and the mortgage-backed-securities they issue, and, more recently, longer-term Treasuries. So why has the Fed done so much in terms of special programs? As I see it, there are four major reasons behind the dramatic expansion of the Fed’s liquidity programs: •  To provide liquidity to banks and dealers in order to slow down the deleveraging process. •  To expand the balance sheet capacity of the private sector to counteract the shrinkage underway in the non-bank financial sector. •  To restore and improve market function. •  To ease financial market conditions. This financial crisis has been marked by the rapid deleveraging of the non-bank financial sector. This deleveraging has been driven mainly by the collapse of securitization activity, pressure on dealers to reduce leverage and the spillover of these efforts on to other financial players such as hedge funds. This deleveraging process, in turn, has put intense pressure on the balance sheet capacity of the banking sector.

Both regimes may be prone to fluctuations in interest rates in response to shocks, but with inflation targeting, which requires a flexible exchange rate even if managed to a degree, the central bank has a measure of discretion in the magnitude and timing of its response, whereas, with a fixed rate, defensive reactions must be more immediate and may hence be potentially sharper. Hong Kong context Recent criticisms of Hong Kong's currency board have focused mainly on two aspects - the implications for the competitiveness of Hong Kong vis-a-vis other economies and the problems of living with falling price levels. The remainder of this paper is directed mostly at these issues. Competitiveness Changes in competitiveness are typically measured by comparing movements in some appropriate measure of costs or prices at home and abroad, and adjusting for shifts in exchange rates. The  BIS Review 17/2002  1  1  measure of competitiveness thus produced is commonly referred to as the real exchange rate. A 2 stronger real rate means higher relative prices and therefore implies weaker competitiveness. I detect two common misconceptions about the real exchange rate. Influencing the real rate The first is the belief that the real rate is amenable to control by the central bank or government and that the chosen regime for the nominal exchange rate is therefore an important determinant of the real rate. Let me explain what I believe to be some flaws in this view.
Even though the current account surplus is increasing from 2003 to 2004 as a result of high oil prices, the adjusted basic balance is falling. In isolation, this is contributing to a decline in demand for the Norwegian krone. The decline is due to high import growth, which is reducing the current account surplus. In the Government’s budget proposal, the use of petroleum revenues remains virtually unchanged between 2004 and 2005. In spite of this, the krone exchange rate has appreciated recently. This reflects short-term capital inflows and may indicate that foreign exchange market operators expect that the use of petroleum revenues will increase in the years ahead. A levelling off or a fall in oil prices and a stable use of petroleum revenues could reverse these short-term capital flows. Inflation has been low this year. Consumer price inflation adjusted for tax changes and excluding energy products (CPI-ATE) was very low up to the end of the summer, but moved up slightly in September. Inflation is still being curbed by the fall in prices for imported consumer goods, in spite of the depreciation of the krone through 2003 and the global rise in producer and commodity prices. This is partly due to the increasing share of Norwegian imports from low-cost countries. Strong competition and high productivity growth in many industries in Norway have also exerted downward pressure on inflation.

Ravi Menon: Introducing Agustín Carstens Introductory remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Monetary Authority of Singapore Lecture 2013, Singapore, 5 February 2013. *  *  *  Dr Agustin Carstens, Emeritus Senior Minister Goh Chok Tong, Ambassadors, distinguished guests, friends and colleagues, good morning. 1. Welcome to seventh MAS Lecture. 2. Since its launch in March 2000, MAS Lecture has provided platform for distinguished members of international financial community to offer perspectives on significant economic and financial issues of the day. 3. And today, we are honoured to have as our speaker, Dr Agustin Carstens, Governor of the Banco de Mexico. Dr Carstens has an outstanding record of service and achievement in his country as well as on the international scene. 4. He was a Deputy Managing Director at International Monetary Fund between 2003 and 2006. From 2006 to 2009, he was Mexico’s Minister for Finance. And in 2009, he was appointed Governor of Banco de México, returning to an institution where he had started his career and served with distinction in several key positions. 5. Dr Carstens’ topic today is The Quest for Successful Policy Responses to Sovereign Crises. It is a topic that he is eminently qualified to expound upon. 6. As a former Minister for Finance, he would be familiar with issues related to sovereign debt and fiscal policy. And as a life-long central banker, he has dealt with crises first-hand.
But since the target is set at 2.5% on a symmetrical basis, the concept of “prudence” cannot be applied in the same way. The result is that we worry as much about being below the target as we do about being above it. And I believe this makes good economic sense: the problems of severe deflation are at least as great as severe inflation. The particular indexed measure of inflation the Chancellor has chosen is RPIX, that is the headline RPI number after excluding - this is the X bit - mortgage interest payments. Some believe that we should move to the Harmonised Index of Consumer Prices (HICP), widely used in Europe and, accordingly, making comparison with Euroland inflation easier. HICP inflation in this country has been running consistently below RPIX by about 1%. This reflects differences in the construction of the index, in particular the treatment of depreciation of property costs. Some have argued - most recently the Engineering Employers’ Federation - that if we moved to HICP, then interest rates could immediately be lowered. But this does not follow. If we moved to a different calculation of inflation, it would seem natural to revise the target at the same time. A 2.5% target for HICP would mean that we are targeting a higher level of inflation than we are at present.

Along with the flatter rank structure, we have introduced a more discretionary and merit-based pay system, removing some of the barriers to rapid advancement of the very best people. At the same time, we reformed our benefits arrangements, removing a system that geared benefits in part to length of service and replacing it with one geared to contribution to the organisation. In particular we removed subsidised mortgages, arguing that the Central Bank, now responsible for interest rates, should not insulate its staff against the effects, for example, of rising interest rates which might affect the rest of the country. The approach to the new flexible benefits is modern, offering staff a menu of benefits up to a percentage of their salary; if none of the choices appeal, they can take cash instead. Many of these management issues are dealt with in our Annual Report - and I hope this gives comfort that the Bank of England is not hiding behind its unique role to limit disclosure. Rather we recognise that we should play our part in being open and accountable. In aiming to achieve a high degree of efficiency we must recognise that we will never reach any absolute goal - but we do want to stand up well in comparison to other organisations in the public sector. We have set ourselves the goal of seeking excellence as one of the leading central banks in the world; and at home to stand out as one of the leading UK public sector institutions.