samchain/econo-pairs-v1 huggingface dataset:
Dear ladies and gentlemen, The promotion of the above objectives is not only important for the functions of the Bank of Albania as the monetary authority, but it also provides an essential contribution to the economic development and welfare of the general public. All these developments would provide the expected effects only if they are based on measures in the framework of financial education of the public. Being aware that financial literacy constitutes a significant instrument for promoting the development of the market, for more than a decade, the central bank has been engaged in designing and developing educational programmes to address the needs of groups of interest. It is not a coincidence that the focus of central bank, in both, advanced and developing countries, is on enhancing financial literacy. Numerous studies have shown that financial education has multiple benefits. Being familiar with the basic financial and economic concepts, appropriately knowing and using banking products and financial instruments as well as the ability to manage personal and household finances, are crucial to achieve individual, and societal welfare. On the other hand, a well-informed financial decision of households helps central banks to accomplish their mandate in achieving price stability and safeguarding financial stability. A better understanding of monetary policy accelerates its effective transmission to the real economy. Meanwhile, the quality of decisions for financing or investment has a direct impact on the stability of the whole financial system.

This is a clear example of how we are harnessing the advances made by the leading institutions within the industry. Furthermore, to encourage those institutions which are not at the leading edge in this field to make enhancements in their internal controls and risk management processes, the New Accord will offer explicit economic incentives to adopt - over time - more accurate measures of risk and more sophisticated means for controlling their exposures to such risks. However, the Basel Committee recognised that relying on uniform rules alone would have introduced certain drawbacks. Rules tend to be inflexible and therefore might preclude or ignore innovation. Applying uniform rules may also fail to account for a bank’s unusual businesses or risk profiles. Consequently, our second pillar, supervisory review, addresses some of those drawbacks. It introduces judgement into the policy mix. Banks and supervisors will exercise discretion in determining capital needs relevant to their particular businesses and risk profiles. That degree of discretion makes the supervisory framework more flexible and better able to adapt to change and innovation. Finally, the third pillar, market discipline, adds greater transparency to the process. When a bank discloses information that offers meaningful insight into its risk positions and exposures, marketplace participants are better able to assess its financial health. Counterparties, investors, rating agencies, and even customers can reward banks that manage their risks properly and penalise those that hold unrealistically low amounts of capital for their risk.
Many of the countries that were hit by depression and banking crises during the 1930s had beforehand witnessed steep rises in asset prices and a sharp credit expansion without any appreciable increase in inflation. We have seen a similar development in Japan in the late 1980’s. Also during the latter part of the 1990s we have seen examples of crises with a similar course of events, for example in Thailand and other parts of Asia. Countries can suffer considerably from adjustments made in asset prices and debts - even if they do not suffer a crisis in the entire banking system. This is shown by what happened in the United States, Spain and England at the beginning of the 1990s. Corrections after long periods of credit booms and increases in asset prices there led to private savings rising substantially, investment declining and it took a long time for demand to recover. A tighter monetary policy than was motivated by the inflation rate or by the exchange rate when this was the guiding factor could perhaps have reduced the fluctuations in the real economy. Structural reforms reduce the risks but provide no guarantee against financial imbalances. Several of the measures taken in recent decades have probably reduced the risks of seeing a similar development recur: •  2  The aim of the policy towards price stability, stable public finances and deregulated markets  BIS Review 62/2006  •  Extensive international efforts to develop standards and regulations regarding supervision, accounting and auditing. So far, so good.

This applied, for instance, during the depression in the United States in the 1930s, when the large credit crunch was not sufficiently taken into account in monetary policy, and to the period prior to the high peacetime inflation rate during the 1970s and 1980s, when the money supply expansion was not taken into account. If we judge that developments might lead to substantial disturbances, the choice lies between attempting in time to avoid the accumulation of large imbalances and waiting until the situation turns and then counteracting the fall in demand. Many in the central bank world consider that interest rate policy should not react to asset prices and credit expansion in an upswing phase, over and above their estimated consequences for inflation and real stability in the short term. The arguments they bring out are that it is difficult to make an accurate evaluation and that it is uncertain what effect an interest rate increase will have. Other objections are that it may be difficult to be clear with regard to what has affected the interest rate decision and that confidence in the price stability target may therefore be undermined. Those who advocate a more preventive strategy meet this criticism by saying that there are nevertheless theories regarding asset price and credit cycles and some methods for calculating when large deviations from equilibrium levels are building up.
The disadvantage of this approach at the time of its rollout was that this policy decision coincided with a drop in the price of oil, triggering a surge in inflation, which in turn necessitated a rise in the rates. But you will recall that we saw a comparable drop in the price of oil in early 2016 which had almost no impact on inflation. These are signs of an economy which is becoming accustomed to a floating rate and how it works. In my opinion this is where the floating exchange rate demonstrated its positive role as an economic adjustment enabler. We are indeed scared of floating schemes in the economy, explained by the many decades of a fixed exchange rate which changes only during a crisis, such as a devaluation crisis, and aside from which remains permanent for a period of time. Admittedly, this volatility of the exchange rate is a concern. But I will remind you that when the exchange rate was permanent, our interest rates were very volatile, as were other prerequisites to business. Therefore, it will take some time for the economy to adjust to some volatility. This is number two. 8 / 14  BIS central bankers' speeches  Third. Volatility receded drastically following the introduction of the floating exchange rate. It was very high according to various measures: both realised volatility and implied volatility, monthly and three-monthly. It is now down to levels seen in other emerging markets, possibly even lower. Moreover, it is substantially lower than oil volatility.

Which brings me to my last point. III. Big data raise issues that cannot be solved in a national context but require a public  global reflection. Very large worldwide corporates are hugely leveraging on Big Data. Public authorities have to forge answers to concerns that may arise on an international level. Which themes should be addressed? I would like to propose a few leads. 4 1)  Data sharing has to be developed on a worldwide basis, as rightly underlined  by the IMF in the ‘Data Gaps Initiative’ that has been launched by the G20. In Europe, existing legal provisions that authorize data sharing between supervisors and central bankers could become more prescriptive and be more largely implemented in practice in all countries concerned. Data sharing between tax authorities and other public administrations should be facilitated, subject to the respect of individual privacy of course. 2)  Private innovation is fostering growth and is increasing economic efficiency. It  should therefore not be discouraged by disenabling regulations. At the same time, it would be beneficial to the economy in the long run, and to financial stability more specifically, that the global actors that handle enormous volumes of data on physical persons as well as on private entities, comply with 3 core principles: security, transparency, accountability. In a fully interconnected world, it cannot be effectively addressed at the country level. I therefore believe that it would be useful for the International Organizations to carry out a reflection and issue recommendations in this regard.
Institutional responsibilities are divided between the Malta Financial Services Centre, which is responsible for the regulation and supervision of banking, insurance and investment services; and the Central Bank, which is charged with ensuring the stability of the system as a whole. The Central Bank is also responsible for the domestic payments system, which is being upgraded in line with developments in the euro area. BIS Review 46/2002  3  2  According to a recent background paper prepared by the European Central Bank(ECB) , Malta already has a domestic financial intermediation mechanism that broadly mirrors the composition of different financial market segments in the euro area member states. While there has been considerable growth of non-bank financial intermediaries and development in the money and capital markets, the banks remain the key financial institutions. Total bank assets amount to more than double GDP, whereas the ratio of domestic credit to GDP is broadly in line with the EU average. More importantly, the banking system is generally healthy, enjoying ample liquidity and a broad capital base, with the ratio between own funds and risk-weighted assets standing close to 14% in March of this year. Although there are concerns about the quality of loan portfolios after a recent period of rapid credit expansion, the banks have reinforced their capacity to assess and contain risk. In this regard, the sale of one of Malta’s two large banks to a major foreign banking group in 1999 was particularly important.

1  Nout Wellink, ‘The Role of National Central Banks within the Europeans System of Central Banks: The Example of De Nederlandsche Bank’, 30th Economics Conference, Oesterreichische Nationalbank, June 13 – 14, 2002. 2  BIS Review 46/2002  This would not, however, represent much of a change because already today the Bank has only limited autonomy in the conduct of monetary policy. As far as the transition to the euro is concerned, therefore, the path that Malta should follow seems fairly straightforward, given the starting point of the existing exchange rate regime. Today, the basket consists of the euro, the US dollar and sterling, with weights of around 52%, 26% and 22%, respectively. There is no fluctuation band. The peg is backed by official external reserves, which have comfortably exceeded the monetary base over the years and are equivalent to a fifth of broad money. The first step would be to increase the weight of the euro in the currency basket at the expense of either or both of the other component currencies. If the United Kingdom were to join EMU, this would automatically raise the proportion of the euro in the currency basket, making Maltese entry into ERM II that much easier. On accession, the timing for joining ERM II, as well as technical questions relating to the entry level and the fluctuation band will be up for discussion. If the Maltese lira were to join ERM II with the normal fluctuation band of ±15%, this would inject more flexibility into the system.
Lorenzo Bini Smaghi: Economic policies on the two sides of the Atlantic – (why) are they different? Lecture by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at the Collegio Carlo Alberto, Moncalieri, 7 November 2008. * 1. *  *  Introduction 1  The United States and the euro area are the two main economic and monetary areas in the world and they are reasonably similar in size, with a population of over 300 million (300 million in the United States and 320 million in the euro area) and GDP of around € billion at current prices (at the going rate of exchange of around USD 1.30 to the euro – US GDP is worth around € billion, while euro area GDP is worth around € billion). The economic policies implemented in these two areas act as a reference for the whole world’s economy. They are carefully scrutinised and compared by academics, market players and commentators. In recent years, the two economies have been compared in a largely asymmetrical way, possibly a hangover from an obsolete institutional setup and analytical reference framework. While in the United States economic policies are mainly assessed on the basis of the US economy’s underlying state, in the euro area the assessment is made on the basis not only of European economic fundamentals, but also, and indeed above all, with reference to economic policy decisions made on the other side of the Atlantic.

Our economy, which once was very much out of balance, is now in balance and developing about as well as could be expected in difficult circumstances. Furthermore, and this is very crucial, opinion polls show that public support for the euro appears to be rising and has clearly been above 50%. If one also considers recent improvements in the outlook for the euro area as compared to 6 or 12 months ago, I believe the support will continue rising in the future. Never in our history has Estonia been engaged in shaping Europe to such an extent. We have a say in the processes affecting us, from monetary policy decisions to the euro area’s future. For us, it is a matter of economic security, future prosperity and international credibility. I wish Latvia determination and success in following the same path. Thank you! BIS central bankers’ speeches  3
As the Governor noted in providing the Bank’s endorsement of the ILG’s initiative in October 2000, past experience suggests that a collective approach by the major creditors to a debtor company in financial difficulties can help to preserve value, to the benefit of the creditors as a whole and of others with an interest in the company. Although I know there have been tricky issues to resolve in the negotiations – notably those relating to the standstill, debt trading and the provision of new money – in the end, the Principles seem broadly consistent with the London Approach, based as they are on the enlightened self-interest of all the creditors. Ultimately, although some debt providers may be able to gain in individual cases by striking out on their own, in the long run a co-operative approach will ensure greater recoveries for creditors, including bondholders, in aggregate. Just as greater international co-operation can produce net gains at the workout stage, so that needs to be backed up by greater co-ordination in cross-border corporate insolvencies. That is why we welcome the UNCITRAL Model Law on cross-border insolvencies, which, as most of you will know, has been implemented into UK insolvency law. The Model Law is consistent with the UK insolvency regime and contains many helpful provisions relating to co-operation between insolvency courts in different jurisdictions, and to the granting of recognition to foreign insolvency practitioners. We would therefore urge other countries to enact the UML.

Against this backdrop, it seems appropriate to dedicate this year’s conference to taking stock of the transformations that have occurred in monetary policy, if not in the objectives, at least in the tools by which these objectives are achieved. Moreover, such introspection seems crucial to our understanding of how to go forward. Indeed, it is very likely that such measures will become standard practices, with the subtitle “unconventional” eventually scratched off altogether. In fact, there are several reasons to suspect these exceptional measures are here to stay. On the one hand, it might very well be the case that we are witnessing profound structural changes that imply a new normal of much lower interest rates that we have been accustomed to –I suspect the keynote address by Larry Summers tomorrow may touch upon such issues. If this is so, then it is more likely that we will run into the ZLB in future business cycles, forcing central banks to tap upon these so-called unconventional measures time and again. On the other hand, these measures have apparently worked. Why then should we not embrace them as part of our standard set of instruments? The structure of this conference follows the logic of addressing three main aspects of the transformation in the practice of Monetary Policy in the last decade. Our first session includes three papers that tackle, from both a theoretical and empirical perspective, the impact of such unconventional measures on interest rates at different horizons and over a wide variety of securities.
What is probably more relevant to the supply of credit at the current juncture is the amount of bank capital and the cost and availability of bank funding. QE may then boost credit supply indirectly if it leads investors to increase their demand for bank debt and equity. As you will be aware, the Monetary Policy Committee has so far purchased £ billion of gilts, £ billion in a first phase during the worst of the recession in 2009 (QE1) and £ billion in a second phase as the economy slowed at the end of last year and which was  1  Cash can be thought of a zero-interest perpetuity issued by the state. But it has value because it can be used in transactions. The MPC’s asset purchases are actually financed by issuing bank reserves which pay Bank Rate rather than nothing and which can be easily converted into cash. BIS central bankers’ speeches  1  completed shortly before our latest policy meeting (QE2). To give some context, that represents around a quarter of the total stock of UK government debt in issue. It is, though, important to remember that throughout this time the Debt Management Office has been issuing substantial net quantities of new gilts in order to fund the Government’s budget deficit. So, despite the scale of our purchases, the stock of conventional gilts held by the private sector is actually higher now than when we started our purchases (see Chart 1). What impact have our purchases had on asset prices?

Chart 2 shows the evolution of a representative gilt yield and an equity price index from the beginning of 2007, just before the start of the financial crisis. I have also marked on the periods when the MPC was buying gilts in grey. When there is bad news about the economic outlook, one would expect to see gilt yields and equity prices both falling. That is indeed what one observes during late 2008/early 2009 at the worst of the crisis after Lehman’s collapsed, and again in the early autumn of last year as the euro-area crisis intensified and growth slowed. As already noted, though, our asset purchases should drive down gilt yields and push up equity prices, other things equal. Equity prices behave as expected in both QE1 and QE2, as does the gilt yield during QE2. The gilt yield was, however, broadly flat over the period of QE1. That probably reflects the influence of other factors working against our asset purchases. In particular, during 2009 market concerns about the lack of a fully credible plan to close the fiscal deficit over the medium term increased somewhat, which would have tended to push up yields. In recent months the opposite appears to have been true. Market confidence in the UK Government’s commitment to fiscal consolidation, together with heightened concerns about the fiscal positions of some euro-area sovereigns, has exerted downward pressure on gilt yields. Quantifying the impact of QE requires one to abstract from these other influences on asset prices.
If productivity and labour force participation do not increase by a considerable margin, the return on fixed investment will fall. Low growth and low real interest rates may be the new norm. The Government Pension Fund Global (GPFG) – further growth depends on future returns Over the past 20 years, Norway has accumulated considerable foreign financial assets. Today, the Government Pension Fund Global (GPFG) is one of the world’s largest sovereign wealth funds. The GPFG represents our collective savings and is to be managed to the benefit of both current and future generations. As an investor, the GPFG makes capital available for economic activity in other countries. The return on that capital will thereby be a result of the value added in those countries. The GPFG is a long-term, responsible investor. The objective of investment management is to achieve the highest possible return at acceptable risk levels. Norges Bank’s work on responsible investing underpins that objective. As a long-term investor, a healthy and sustainable development of investee companies and markets is in our interest. The work on responsible investing has evolved in pace with the increasing size of the GPFG. As from this year, Norges Bank is charged with the task of issuing decisions on observation  6  BIS central bankers’ speeches  or exclusion of companies on the recommendation of the Council on Ethics. In such matters, Norges Bank can also consider using other ownership instruments.

The real test will come in the next few years when wage negotiations take place in the context of high capacity utilization and high demand for labour. BIS Review 39/2000  6  What should we expect of the labour market and the wage formation system? Basically, there is a general, long-term macro framework for how high wage increases can go before triggering rates of inflation that exceed the target. This framework only allows wages to increase in parallel with productivity and inflation. If we assume that productivity growth in Sweden is about 1 to 2%, this would allow wage increases of between 3 and 4% over time, given an inflation target of 2%. I know that many of those who are engaged in wage negotiations would not agree with this description of the scope for wage increases. Let me therefore mention some important reservations. First, this analysis is only valid in a situation where the economy is in balance as regards employment. In a situation with high unemployment, lower wage increases are desirable, since they stimulate growth in employment. The analysis also assumes that profits are balanced in the sense that sufficient investments are made to ensure continued desirable growth. This was a problem when the EFO model was applied in the late 1960s and early 1970s.1 Around 1970, wage increases became too rapid, and gradually investment in Swedish industry declined. The most important reservation, however, is that the analysis relates to the general, average scope for wage increases in the country as a whole.