samchain/econo-pairs-v1 huggingface dataset:
Charles Bean: Sustaining the recovery Speech by Mr Charles Bean, Deputy Governor for Monetary Policy of the Bank of England, at the North East Chamber of Commerce President’s Club Talk, Darlington, 10 March 2014. *  *  *  Good afternoon! The past six years have been a difficult time for businesses across the country. But at last there are unmistakable signs that a robust recovery is under way. According to the present vintage of official data, output has risen in each of the past four quarters, taking the four-quarter growth rate to a healthy 2.7%, the highest since early 2008. The message from business surveys, such as those produced by the Chambers of Commerce, is that growth has, if anything, been even stronger. Over the same period, around 400 thousand more people have found work. And consumer price inflation has fallen back to just below our 2% target. So more growth, more jobs, and stable prices – a conjunction we haven’t seen since before the financial crisis. But though the economic climate has certainly improved, it is still early days. So today I want to discuss what needs to happen if that recovery is to be sustained and what the Bank’s Monetary Policy Committee will be doing to support it. To date, much of the recovery has been on the back of higher consumer spending and housing investment, stimulated by a revival in confidence and improved access to secured credit.

The Bank of Sierra Leone has also recognised the need to bring the legal framework for regulating the banking sector consistent with international best practice. Hence, in consultations with our International partners, (ADB, IMF, World Bank, etc), the Bank of Sierra Leone is undertaking a comprehensive review of the Banking Act 2000, and the Anti-Money Laundering Act 2005 in order to align them with international best practices and to address some of the weaknesses which have been identified while implementing them. We anticipate that once these legislations have been amended, the legal framework will provide a conducive environment for a more robust banking sector. Going forward, the Bank of Sierra Leone plans to draft operating guidelines for other specialised institutions, including Merchant and Agricultural banks, in order to broaden the financial landscape in the economy. Traditional Commercial banks, on the other hand, should endeavour to increase product innovation and diversification. The real challenge for all of us is how to enhance savings mobilisation and effectively channel such savings to their most productive use. Madam Chair, Distinguished Guests, let me conclude my remarks with a serious appeal to the entire banking industry for the better packaging of banking products for our clients. This, I believe will enhance our service delivery, which in turn, will enable us offer more affordable banking services. Providing affordable banking services has the potential of drawing a larger number of Sierra Leoneans to the formal financial system, resulting in an expanded banking clientele.
My Executive Board colleague Per Jansson said in a speech in 2018 that of the various proposals circulating in the international discussions, a higher inflation target was preferable, although he also pointed out that it is difficult to make this kind of change independent of the outside world (Jansson, 2018). 5 [15]  how one can try to retain the scope that an inflation target of 2 per cent nevertheless offers. Preventing this scope from shrinking further would appear, after all, to be a more acute problem right now. The way forward – communication difficult but important So what is the best direction to take from our current situation? I intend to divide my response to this question into two parts: How I believe that one can act given the monetary policy framework and target formulation we now have, and what changes to the framework and target formulation might be conceivable. In the latter case, I will discuss the changes in strategy and objective implemented by the Federal Reserve, the US central bank, just over a month ago. In the speech I held in 2016, I argued that it is extremely important to clarify for households, companies and market participants that even if the forecast for inflation undershoots the target for the entire forecast period, this does not mean that the central bank has given up the inflation target. There is otherwise a risk that inflation expectations would begin to fall and finally become stuck at a very low level.

The other factor is that the already low interest rates around the world make it difficult for the central banks to cut their policy rates as far as would be needed to stimulate demand to the necessary extent. This was a problem that was much discussed even prior to the pandemic. For instance, I argued in a speech in 2016 that the situation we are in now, with an inflation rate that we don't expect to quite reach the target even at the end of the forecast period, was a possibility in the coming years.2 There was a similar debate in the United States, too, where the policy rate was significantly higher than in Sweden.3 I would like to make a brief digression about this, as it is essential to my continued reasoning. Low neutral rate hampers expansionary policy Interest rates in Sweden and abroad have thus reached historically low levels. This is essentially due to structural factors, which imply that globally there is a greater propensity to save than to invest.4 This in turn has meant that global real interest rates, that is, interest rates excluding inflation, have fallen in recent decades (see Figure 3). In addition, nominal interest rates around the world have also fallen due to many countries introducing inflation targeting. The nominal interest rate includes compensation for inflation.
With the agreements reached in recent years, including Basel III and the global agreement on Total Loss Absorbing Capacity, the overall international regulatory and resolution framework for banks is now largely settled. The FSB, Basel Committee and other authorities now need to build confidence about the stability of the overall requirements, deliver transparency about the extent to which institutions meet them, and fix some important remaining details. 3 For example, the Basel Committee is continuing to work on elements of the Basel III framework to ensure its overall coherence and maximise its effectiveness. In doing so, authorities are focused on not significantly increasing overall capital requirements across the banking sector. In short, there will be no Basel IV. Monetary policy By making the banking system substantially stronger, financial reform has made monetary policy more effective. That is essential because the force of the headwinds facing monetary policy are leading some to claim central banks are out of monetary ammunition. This is wrong, but the widespread absence of global price pressures demands that our firepower be well aimed. A set of powerful forces, both secular and cyclical, have depressed ‘equilibrium’ interest rates globally. These forces include demographic change, slower potential growth, higher credit spreads, lower desired investment, a lower relative price of capital, greater income inequality, sustained private deleveraging and lower public investment. 3  8  See for example the Bank of England’s Supplement to the December 2015 Financial Stability Report: http://www.bankofengland.co.uk/publications/Documents/fsr/2015/fsrsupp.pdf.

Despite a recent recovery, equity markets are still down materially since the start of the year. Volatility has spilled over into corporate bond markets with US high-yield spreads at levels last seen during the euro-area crisis. The default rate implied by the US high-yield CDX index is more than double its long-run average. And sterling and US dollar investment grade corporate bond spreads are more than 75bp higher over the past year. On the back of these concerns, risk premia have increased across the board, with “safe haven” assets and currencies benefitting at the expense of equities, credit and commodities. In this ‘risk off’ environment, correlations across asset classes are up sharply. Falls in market liquidity have contributed to strains in some markets. In treasuries and gilts, spreads between 30-year yields and the equivalent swaps have risen by over 40 basis points since the beginning of 2015. And there has been a widening in the spread between corporate bond yields and CDS premia which may reflect a reduction in arbitrage as dealers conserve their balance sheets. Banking stocks have been particularly hard hit, down about a quarter on average over the past three months, across the advanced economies, prompting some to question whether anything has really changed (Chart 5). This re-pricing likely reflects first and foremost renewed growth worries. Banks have always been high beta to the economy.
National differences will not entirely disappear While monetary policy is determined by developments in the euro area as a whole, there will inevitably be some differences in the performances of individual countries and also regions within the euro area. Since the start of the year, the focus of attention in the media has rightly switched more towards looking at the euro area as a whole, but this also provides a natural benchmark against which to compare national developments. That is why some attention has been directed towards the differences that exist in some areas between euro area countries, particularly differences in economic growth and inflation rate differentials. The latter is true for the Netherlands, which currently has an inflation rate which is about 1 percentage point higher than that of the euro area. 1  BIS Review 123/1999  There are a number of reasons why such differences will occur. These may broadly be considered under two headings. First, there are a number of reasons why, over relatively short periods of time, there may be clear differences in economic performances. Second, national rates of output growth and inflation may also differ within a single currency area over longer periods of time as a result of more structural factors. Short-term divergences among euro area countries Considering the short-term factors, with regard to price developments, there are various “country-specific” factors of a very temporary nature. Among these, government policies are perhaps the most obvious.

In closing, given the limited amount of time today, I could only briefly touch on two key themes in the broader opening up of China's capital markets. At the HKMA, we are continuously working with Mainland authorities and the industry towards new policy breakthroughs to better serve global investors and support the development of onshore markets. I warmly welcome your views and ideas on ways to further strengthen the connectivity between China's and Hong Kong's financial markets. Thank you, and I wish today's conference a great success. 3/3  BIS - Central bankers' speeches
The Bank’s supervisory body - the Prudential Regulation Authority (PRA)– surveyed banks in the UK last year and found that almost three quarters are starting to treat the risks from climate change like other financial risks – rather than viewing them simply as a corporate social responsibility issue.7 Banks have begun considering the most immediate physical risks to their business models – from the exposure of mortgage books to flood risk and the impact of extreme weather events on sovereign risk. And banks have started to assess exposures to transition risks in anticipation of climate action. This includes exposures to carbon-intensive sectors, consumer loans secured on diesel vehicles, and buy-to-let lending given new energy efficiency requirements. To embed essential climate risk management skills recommended by the TCFD in financial decision making, the Bank of England has set out its supervisory expectations for institutions in the world’s leading international financial centre with respect to:8   Governance, where firms will be expected to embed fully the consideration of climate risks into governance frameworks, including at board level, and assign responsibility for oversight of these risks to specific senior role holders;    Risk management, where firms will need to consider climate change in line with their boardapproved risk appetite;    The regular use of scenario analysis to test strategic resilience; and    Developing and maintain an appropriate disclosure of climate risks.

At the end of 2008, this led to a first significant appreciation in the Swiss franc. The SNB took a series of measures to increase liquidity in the banking system and prevent a further strengthening of the Swiss franc against the euro, including, from spring 2009, interventions in the foreign exchange market. A certain stabilisation of the Swiss franc exchange rate took place in 2009. Slide 1 shows that, at the time, the exchange rate was about CHF 1.50 against the euro. As you know, this situation did not last. In spring 2010, tensions on the financial markets increased rapidly again as a result of the debt crisis in Greece, and this was followed by another global flight into safe investments. In this environment, the Swiss franc came under substantial upward pressure against all major currencies, even reaching parity against the euro for a brief period  BIS central bankers’ speeches  1  in summer 2011. In this extreme situation, the SNB introduced the minimum exchange rate of CHF 1.20 against the euro at the beginning of September 2011, enforcing it consistently by means of foreign currency purchases. For more than three years, the minimum exchange rate proved its value as an exceptional and temporary instrument to counter a broad-based and extreme Swiss franc strength. It stabilised the situation and gave the Swiss economy time to adjust. However, in 2014, exchange rate conditions began to shift once again. Expectations that the US central bank would soon lift interest rates had been increasing since mid-2014.
3/4  BIS - Central bankers' speeches  5 BBM are implemented in Romania, Czech Republic, Slovakia, Hungary, Poland,  Slovenia. 4/4  BIS - Central bankers' speeches

But those that have come further along the liberalization road have to face a different music. 4  From the new External Wealth of Nations Mark II (EWN II) dataset, compiled by Lane and Milesi-Ferretti (2006). 5  Ibid. BIS Review 99/2007  3  Rapid appreciation in the exchange value of the currency renders part of the domestic industries less competitive in the global markets. It is true that with this appreciation, commodity imports such as fuel and energy as well as metal and raw materials have become more affordable despite rising world price trends. But these benefits are spread-out while the cost is centered on labor-intensive, high domestic-content primary sectors, such as agriculture and low-end manufacturing. As a result, even for net primary commodity importing economies, the nature of the problem is as much political economy as it is economic. There are strong and vocal constituencies in emerging markets that are averse to currency appreciation and part of them averse to variability in the exchange rate itself. Meanwhile, hot money, or indeed large inflows in general, can fuel asset prices and encourage excessive risk-taking behavior. Central banks may wish to counter that excess in the interest of financial stability. If the central bank chooses to maintain a high interest rate stance, the pressure on the currency to appreciate will likely mount. Not unlike today’s political economy in advanced countries, emerging market politics also risks being less favorable to openness, but more partial to protection of selected industries or protectionism in general.
Given this longer-term perspective, the Monetary Policy Committee concluded that capacity constraints in the labour market were threatening the attainment of the Government’s inflation target. Of course, since then, the earnings data have been successively revised, rebased and suspended – a piece of the jigsaw has temporarily gone missing. As you can see from chart 3, the profile of the old series showed a steady rise in earnings growth from around 33% in mid-1995 to nearly 52% or so by the spring of this year. In sharp contrast, the revised and rebased data (before they were suspended) followed roughly the shape of a slightly squashed capital N. From a trough of 3% at the end of 1995, earnings growth was estimated to have risen to a peak of over 53% in February and March 1997 before falling back below 4% in early 1998 and then bouncing back above 5% again by May. How would the MPC’s analysis of the labour market have changed if the revised (but now suspended) data had been available six months earlier? That question is not easy to answer. The quantity data would still have suggested that the labour market was both tightening and, by historical standards, tight. The MPC would therefore have had the unenviable task of trying to understand why the steady tightening in the quantity measures had produced a zigzag path for measured earnings growth.

Shocks of various kinds will mean that inflation will often deviate from the target and the MPC is required to take action to bring inflation back to the target. But it will do so gradually, if to do otherwise would have damaging consequences for employment or output. By looking ahead and aiming to bring inflation back on track over a horizon of two years or so, the MPC should be able to avoid undesirable volatility of employment and output. That is part of our remit. Conclusions Let me briefly draw two conclusions from my analysis tonight. First, the concept of a natural rate of unemployment, and the existence of a vertical long-run Phillips curve, are crucial to the framework of monetary policy. They help us focus on levels of output and employment rather than simply their growth rates. They also mean that there may be times when, although a rise in unemployment is undesirable, it is unavoidable. But the natural rate is of much less help in operational decisions on interest rates made month by month. This is because the natural rate is determined by microeconomic structural factors that are not easy to observe, and which are likely to change over time, and may not bear any close relationship to inflationary pressures in the short run. More easily observable in terms of its relationship to inflation and unemployment is the concept of the NAIRU.
11  14  16  18  Figure 3 Domestic demand  GFCF  (real annual change, percent)  (real annual change, percent)  9  18  6  12  3  6  6  0  0  0  0  -3  -3  -6  9 GFCF  6  Private consumption  3  -6  -6  -12  -9  -9  -18  14  15  16  17  18 Machinery & equipment  -6 Construction & other works  -12  -18 14  18  12  15  16  17  18  Source: Central Bank of Chile. Figure 4 2018 growth forecasts (MP Report) (real annual change, percent)  5.0  5.0  4.5 4.0  4.5  4.5 4.0  4.0  4.0  4.0  3.5  4.0 3.5  3.25 3.0  3.0  3.0  2.5  2.5 March  June  September  Source: Central Bank of Chile.

The monetary base has thus increased by around 300 per cent. In simpler economic models one usually assume that there is a fixed relationship between the monetary base and the money supply. 2 The question that has been discussed is whether the large increase in the monetary base could give rise to rapid inflation. But for this to happen the money volume in society must also increase, that is, as well as the monetary base increasing, the general public’s deposits in the banks must increase. This could happen if the increase in the monetary base leads to the banks increasing their credit granting to the general public and if this in turn leads to the general public depositing more money with the banks. In the prevailing economic downturn this has not been the case. The banks have tightened their credit granting, while demand for credit has declined, particularly from companies. A more reasonable interpretation of what has happened is that the banks have increased their demand for liquid reserves in the Riksbank. Put simply, one can say that the bank system as a whole has borrowed as much from the Riksbank as it is willing to invest as a deposit with the Riksbank. Thus, the ratio between the monetary base demanded and the money supply has increased, or in other words what is known as the credit multiplier has  2  Money supply here refers to the general public’s holdings of banknotes and coins and the general public’s deposits with the banks.
The move to a single shared platform with TARGET2, which on 19 May 2008 fully replaced the former TARGET system, will render wholesale euro payments even more integrated and efficient. Bond and equity markets also show clear signs of integration, especially the government bond markets. Progress has also been achieved in the corporate bond markets and, to a lesser extent, in equity markets. Both bond yields and equity returns are increasingly driven by common factors and the cross-border shares of bond and equity holdings have been growing to 60% and one third of total holdings, respectively. This suggests that euro area investors are progressively diversifying their portfolios on a cross-border basis. At the same time, country-specific factors still play an important role, especially in corporate bond and  1  London Economics (2002), “Quantification of the macroeconomic impact of integration of EU financial markets”, Report to the European Commission. 2  See the Report on Financial Integration in Europe at http://www.ecb.europa.eu/pub/pdf/other/financialintegrationineurope200804en.pdf. 2  BIS Review 86/2008  equity markets. A key obstacle to greater bond and equity market integration is the lack of a sufficiently integrated infrastructure for securities clearing and settlement in the EU. Substantial progress has also been made on the integration of banking markets, namely in the wholesale and capital market-related segments. Cross-border interbank loans have increased to almost a quarter of total interbank loans and euro area banks’ holdings of securities issued by banks in other euro area countries have almost tripled over the past decade.

Gent Sejko: Lending to and funding the Albanian agriculture sector Address by Mr Gent Sejko, Governor of the Bank of Albania, at an event, organized to discuss on lending issues of the agriculture sector in Albania and launch the initiative on Albania Agribusiness and Tourism Support Facility (AATSP), Tirana, 26 January 2022. * * * Your Excellency Prime Minister, Honourable Madame Ministers, Honourable Head of Albania for the EBRD, Dear friends and colleagues, Let me first to thank you for the invitation to participate in this event, organized to discuss on lending issues of the agriculture sector in Albania and launch the initiative on Albania Agribusiness and Tourism Support Facility (AATSP) mechanism. The Bank of Albania has continuously welcomed the transparent and constructive dialogue amid public authorities, private sector, banking industry and international partners, to address issues which serve to unclog the potential development and welfare growth of Albania. In particular, allow me to emphasize the fact that – despite the considerable progress in the last years – the Albanian agriculture sector, overall, and branches related with it- agritourism and agribusiness – are still far from the full utilisation of both resources and potentials they have. In figures, almost half of the Albanian population lives in rural areas and around 1/3 of labour force in the country are employed in agriculture sector.